<DOC>
[107th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:78428.wais]
DEPARTMENT OF AGRICULTURE BUDGET PRIORITIES FOR FISCAL YEAR 2003
=======================================================================
HEARING
before the
COMMITTEE ON THE BUDGET
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
__________
HEARING HELD IN WASHINGTON, DC, MARCH 6, 2002
__________
Serial No. 107-26
__________
Printed for the use of the Committee on the Budget
Available on the Internet: http://www.access.gpo.gov/congress/house/
house04.html
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COMMITTEE ON THE BUDGET
JIM NUSSLE, Iowa, Chairman
JOHN E. SUNUNU, New Hampshire JOHN M. SPRATT, Jr., South
Vice Chairman Carolina,
PETER HOEKSTRA, Michigan Ranking Minority Member
Vice Chairman JIM McDERMOTT, Washington
CHARLES F. BASS, New Hampshire BENNIE G. THOMPSON, Mississippi
GIL GUTKNECHT, Minnesota KEN BENTSEN, Texas
VAN HILLEARY, Tennessee JIM DAVIS, Florida
MAC THORNBERRY, Texas EVA M. CLAYTON, North Carolina
JIM RYUN, Kansas DAVID E. PRICE, North Carolina
MAC COLLINS, Georgia GERALD D. KLECZKA, Wisconsin
ERNIE FLETCHER, Kentucky BOB CLEMENT, Tennessee
GARY G. MILLER, California JAMES P. MORAN, Virginia
PAT TOOMEY, Pennsylvania DARLENE HOOLEY, Oregon
WES WATKINS, Oklahoma TAMMY BALDWIN, Wisconsin
DOC HASTINGS, Washington CAROLYN McCARTHY, New York
JOHN T. DOOLITTLE, California DENNIS MOORE, Kansas
ROB PORTMAN, Ohio MICHAEL E. CAPUANO, Massachusetts
RAY LaHOOD, Illinois MICHAEL M. HONDA, California
KAY GRANGER, Texas JOSEPH M. HOEFFEL III,
EDWARD SCHROCK, Virginia Pennsylvania
JOHN CULBERSON, Texas RUSH D. HOLT, New Jersey
HENRY E. BROWN, Jr., South Carolina JIM MATHESON, Utah
ANDER CRENSHAW, Florida
ADAM PUTNAM, Florida
MARK KIRK, Illinois
Professional Staff
Rich Meade, Chief of Staff
Thomas S. Kahn, Minority Staff Director and Chief Counsel
C O N T E N T S
Page
Hearing held in Washington, DC, March 6, 2002.................... 1
Statement of:
Hon. Ann M. Veneman, Secretary, U.S. Department of
Agriculture................................................ 4
Prepared statement and additional submissions of:
Hon. Adam Putnam, a Representative in Congress from the State
of Florida................................................. 3
Secretary Veneman:
Prepared statement....................................... 7
Response to question posed by Mr. Gutknecht.............. 23
Data on government payments to farmers requested by Mrs.
Clayton................................................ 27
DEPARTMENT OF AGRICULTURE BUDGET PRIORITIES FOR FISCAL YEAR 2003
----------
WEDNESDAY, MARCH 6, 2002
House of Representatives,
Committee on the Budget,
Washington, DC.
The committee met, pursuant to call, at 2:24 p.m. in room
210, Cannon House Office Building, Hon. Jim Nussle (chairman of
the committee) presiding.
Members present: Representatives Nussle, Gutknecht,
Hilleary, Thornberry, Collins, Hastings, Brown, Putnam, Spratt,
Clayton, Price, Hooley, Baldwin, and Hoeffel.
Chairman Nussle. The full committee hearing on the budget,
Department of Agriculture budget priorities for fiscal year
2003, is the subject matter of this full committee hearing.
We have one witness today, and that witness is the very
Honorable Secretary of Agriculture, Ann Veneman, who we welcome
back to the committee. The hearing today is intended to examine
how the President's budget for fiscal year 2003 addresses three
important issues confronting America's farmers, agriculture,
and food security in this country:
Number one is expanding market opportunities for
agriculture; Two, providing relief to farmers from regulatory
burdens that they face; And three, maintaining an adequate
safety net for rural producers affected by unpredictable
fluctuations in weather or the ag economy.
Although the President's budget assumes enactment of the
farm bill which provides for $73.5 billion over 10 years, it is
likely that while the administration has, in the past, not been
specifically involved, they are now fully engaged. We are
interested in hearing today what the outline of the
administration's farm bill proposal will be.
In addition to that, we are interested in reviewing the
budget from the administration. Last year we had some
discussion over service delivery from the FSA offices, other
offices that are on the ground floor of delivering services for
farmers. I want to tell you, just from my own experience in
Iowa, that there has been a dramatic--well, maybe not dramatic,
but certainly an appreciable improvement in the delivery of
service. I want to be complimentary not only of your leadership
but also of the good people who serve all of us in those field
offices.
Then, finally, to talk a little bit about trade. We are in
an obvious situation where the economy needs a shot in the arm.
We have always felt--or many of us have felt--that trade at
least could provide an opportunity in that arena; although
never perfect, certainly some opportunities that we would be
interested in hearing from you today.
Finally, before I turn it over to Mr. Spratt, let me
suggest what we are hearing from the farm bill conference.
While the House version of the farm bill is not perfect, and I
don't think there is anyone, maybe one or two that might be
willing to come forward and suggest that what the House
produced is a perfect bill--what we have all learned in the
agriculture policy is that there is no such thing as perfect.
Certainly there is no such thing as one size fitting all
perfectly.
Let me suggest that the Senate version of the bill, which
appears to be more of an attempt to get to conference and do
everything they could to please every interest and provide all
the money as is humanly possible within some construct, is not
workable if it provides all of the front-loading of that money
and leaves no money available in the last 5 years for farmers.
So I think there is a real deep concern on the part of
those of us both in ag country, but also for those of us who
believe in fiscal responsibility, that it is unworkable and
unrealistic to assume that agriculture is not going to make the
same demands in the second 5 years that it made in the first 5
years.
So we have some real challenges, and that is in part why we
are very interested in the testimony from the Agriculture
Secretary today.
Before she begins, let me also--just for the record--
compliment Rich Meade and Tom Kahn for their work Saturday
morning in talking about the budget on C-SPAN. It is kind of
nice to see our staff step forward and do that. They did an
excellent job, particularly when the minority staff director
was complimenting the chairman as much as he did. I certainly
appreciate that. I don't know what he is looking for, but I am
watching my back, let me just tell you. No, they did an
excellent job, and I think it does point out that we have an
excellent staff that serve us in all of our capacities, and I
think they exemplified that on Saturday morning talking about
the budget priority and the challenges that face our country.
With that, Mr. Spratt.
Mr. Spratt. Thank you, Mr. Chairman. I understand they had
a good conversation until they had a constituent from Iowa call
in. The name was Nussle, or something like that, I think.
Madam Secretary, I will spare you an opening statement. Let
me simply extend to you a warm welcome. This is an important
topic--a vitally important topic, and we are looking at a
substantial increase in the budget for agriculture. We would
like your viewpoints on the cost to the changes and what the
agriculture program looks like 5 and 10 years down the road.
The $75 billion increment, are we adding something that will be
permanent and likely sustaining, or is this a temporary fix for
a sector of our economy that sorely needs help?
Thank you for coming. We look forward to your testimony.
Chairman Nussle. All members will have 7 legislative days
to put in an opening statement at any point in the record,
without objection.
[The information referred to follows:]
Prepared Statement of the Hon. Adam Putnam, a Representative in
Congress From the State of Florida
Thank you Mr. Chairman, and Mr. Spratt for this opportunity to
review the fiscal year 2003 budget for the Department of Agriculture.
Welcome Secretary Veneman. I appreciate the diligent work that you and
your Department have undertaken to address the concerns of farmers and
ranchers in the State of Florida and across the Nation. However, I am
sure you would agree there is much work to be done.
Today I would like to touch upon some of the specifics of the
Department of Agriculture's Strategic Budget Plan. In particular, I
would like to address the need to protect U.S. plant and animal
resources from inadvertent as well as intentional pests and disease
threats. I would also like to highlight the importance of issues
related to food safety through enhanced inspection and coordination
efforts.
The administration's 2003 budget proposal includes $1.1 billion for
the Animal and Plant Health Inspection Service (APHIS) reflecting the
continued and enhanced challenges to protecting U.S. agriculture at the
borders. I understand that this request will be used to more
effectively detect and respond to a pest or disease outbreak, enhanced
monitoring and surveillance for pest and disease outbreaks. Once
detected, prompt eradication of an outbreak is essential to limit
damages and reduce overall control costs. The 2003 budget requests $162
million in appropriations to continue funding several eradication
programs, including the Citrus Canker eradication program, vital to my
home state of Florida. I am concerned that the declassification or
normalization of the eradication program will lessen the urgency to see
it through.
Apprehension regarding food safety and proper food inspection
procedures represent a major area of concern for all Americans.
Safeguarding our food supply through adequate inspections is the first
line of defense in establishing a strong and well-fortified agriculture
infrastructure for homeland security. The Agricultural Quarantine
Inspection (AQI) program provides the front line of defense against the
introduction of plant and animal pests and diseases, whether
unintentional or by terrorist activity.
Ensuring the continued strength of our Nation's agriculture
infrastructure requires an investment in services to protect farmers,
ranchers, and consumers from the threats of crop and animal pests and
food-born diseases. I understand that a number of steps have been taken
to safeguard our food supply and ensure the Department has the ability
to prevent pests and diseases from harming agriculture and the food
system. As a result of the devastating outbreak of Foot and Mouth
Disease that hit the United Kingdom and other parts of Europe, the
Department conducted an intense review of its safeguarding programs.
Actions have been taken to increase the number of inspection personnel
at U.S. ports of entry by nearly 40 percent, and double the number of
inspection dog teams from levels 2 years ago. This is progress but with
only 700 inspectors the work that remains to be done remains enormous.
We need to utilize the resources of departments and agencies to work
together and cover as much ground as possible.
Last October, at a Government Reform subcommittee hearing on
Biological Warfare Defense, I raised the need for greater communication
and coordination between HHS' Food and Drug Administration and the U.S.
Department of Agriculture's (USDA) Food Safety Inspection Service,
which hold joint jurisdiction in the protection of our food safety. I
want to strongly encourage collaborative actions between the two
agencies, particularly in the coordination of inspection
responsibilities and the sharing of information.
I understand that efforts have begun to streamline and consolidate
inspection capabilities between FDA and FSIS. Currently, one agency's
inspectors may be present at a site and the other agency may lack the
resources to provide inspection services. Through cross-deputization of
agency inspectors, we may improve our inspection capabilities and
optimize staff resources. Similarly, disparities and overlap between
agency responsibilities to inspect food products should also be
reviewed. I wish to encourage concerted and continued efforts between
Federal and State agencies with the goal of providing more
comprehensive and efficient safeguarding of our Nation's food supply.
Chairman Nussle. And with that, Madam Secretary, your
entire testimony will be made part of the record and you may
proceed and summarize as you see fit. So welcome.
STATEMENT OF HON. ANN M. VENEMAN, SECRETARY, DEPARTMENT OF
AGRICULTURE, ACCOMPANIED BY: JAMES R. MOSELEY, DEPUTY
SECRETARY, DEPARTMENT OF AGRICULTURE; KEITH COLLINS, CHIEF
ECONOMIST, DEPARTMENT OF AGRICULTURE; AND STEPHEN B. DEWHURST,
BUDGET OFFICER, DEPARTMENT OF AGRICULTURE
Secretary Veneman. Thank you, Mr. Chairman. It is an honor
for me to be here with you and the ranking member, Mr. Spratt,
and other members of the committee to discuss our 2003 budget
for USDA, and some of the other important issues that we are
dealing with this year.
Here with me today is our Deputy Secretary, Jim Moseley;
our Budget Officer, Steve Dewhurst; and our Chief Economist,
Keith Collins.
I truly appreciate our working relationship with this
committee and look forward to working with you, Mr. Chairman,
and all the members of the committee during this budget
process. I appreciate you accepting my written testimony for
the record, and I want to provide a few thoughts on some recent
issues that are important to agriculture, particularly that
which you highlighted, the farm bill.
Passage and implementation of a new farm bill is a top
priority of USDA and of the administration. Both the House and
Senate have passed separate and different versions of the new
farm bill. Conference has begun, and the administration is
working closely with the conferees during this process, and we
are already working at USDA to ensure an efficient
implementation process is underway once a conference bill is
agreed upon and signed by the President.
We, like you, hope that the conference will move quickly in
reaching consensus. But I agree with what Chairman Combest has
said, and I have said it many times before: It is much more
important that we get it done right. Policies that serve the
best interests of the farm sector are critical, and this
administration is committed to that cause.
Mr. Chairman, you mentioned the issue of funding for the
farm bill. The President has said that a farm bill should
adhere to the $73.5 billion in additional spending over 10
years that was agreed to by the House and Senate Budget
Committees last year. He has also said that it should be spread
evenly over that 10 year period. While there has been some
debate recently on what the 5 year funding number should be,
the President feels strongly that we shouldn't spend an
unreasonable amount of money in the early years, which could
shortchange farmers down the road.
We think a fair and responsible level of additional support
for the first 5 years is around $37 billion or about half of
the 10-year total in the budget resolution. That is much closer
to what the House has agreed to spend during the next 5 years,
and doesn't cheat our farmers out of assistance over the long
term, or open the door to spending in excess of the budget
resolution. We would strongly oppose any farm bill that exceeds
the generous budget limits we have outlined, and I would again
add that the House-passed farm bill complies with these limits.
The new farm bill must provide adequate support for farmers
without encouraging them to overproduce, thereby depressing
prices which, of course, is self-defeating.
By setting loan rates too high, we could easily further
reduce producers' return from the marketplace. Loan rates are a
critical issue, and the new farm bill will determine what
future rates will be. The administration has been on record as
favoring the loan rates that are in the House measure. We need
to make sure that future loan rates don't cause an undue burden
on any particular sector, yet at the same time move us toward a
more market-oriented system.
The House-passed farm bill increases funding for fixed
decoupled payments for farmers, and continues the current
marketing loan program for traditional marketing crops. These
types of programs provide farmers a consistent, predictable
income safety net, while maintaining market-oriented planting
flexibility.
The administration has supported farm savings accounts as a
way to give farmers and ranchers an additional risk management
tool that complements our traditional farm programs. Some have
misconstrued this to mean these savings accounts would replace
commodity programs. Quite to the contrary. They are proposed as
an additional resource that could help farmers manage their
economic risks.
The Senate measure includes a very small pilot program on
farm savings accounts, but we would like to see the conferees
consider a broader approach to this program.
The President has also said that the new farm bill must
support trade and be consistent with our international
obligations. Increased trade is absolutely critical to
America's farmers. You have an administration and a President
that feel strongly that a new farm bill should not work against
our farmers in the international marketplace. Both the House
and the Senate versions of the farm bill have significant
increases for conservation programs. That kind of commitment is
unprecedented.
We need to make sure that conservation programs give
farmers and ranchers the ability to better manage their land
while giving them the utmost flexibility.
Regarding trade, creating new opportunities for America's
farmers and ranchers in the global marketplace is a very
important priority. In the past few weeks, several issues have
come to the forefront in this regard. Yesterday, Mexico
suspended the recently imposed tax on the use of high fructose
corn syrup in soft drinks. This tax, which was the latest in a
string of trade issues related to sugar and high fructose corn
syrup, threatened U.S. exports of corn and corn sweeteners. As
Ambassador Zoellick said yesterday, we welcome this move by the
Fox administration. Our concerns about Mexico's unjustified
antidumping duties on high fructose corn syrup have not been
addressed, and we will continue to work with Mexico to resolve
the full range of sweetener issues.
On another issue, last week we learned that Russia
announced plans to suspend U.S. exports of poultry. The Russian
market is a very important market to America's poultry
industry. We export nearly one-fifth of our poultry production,
and nearly 40 percent of that goes to Russia. So we are very
concerned about this decision and its potential impact. The
messages have been unclear from Russian Government officials as
to the reasoning behind this announcement. However, Ambassador
Zoellick and I have been very clear. We see no reason for this
action. We have personally had discussions with high-level
officials from the Russian Government.
A joint USDA-USTR-FDA team is scheduled to depart for
Russia this week to seek a resolution to this critical issue
that could cause a serious disruption of trade to this part of
the world.
As you know, the President just returned from Japan and
China. In both visits, the President discussed some of the
problems we are having with regard to agricultural trade. The
biotechnology regulations proposed by China are of particular
concern. If implemented as currently announced, they could do
severe harm to our exports, particularly to our soybean exports
and our farmers who rely heavily on this market.
Ambassador Zoellick and I have dispatched Allen Johnson,
Chief Agricultural Trade Negotiator at USTR, with a team from
USDA and USTR to China. They are there right now to try to seek
a solution that allows our exports to continue without
interruption.
China is now part of the WTO. That holds great opportunity
for America's farmers. But China has an obligation to abide by
the rules of the WTO. We need to hold them to those obligations
and work to ensure unfair barriers are not put in place that
hurt our producers. We will continue to keep you and other
Members of the House and Senate briefed on the status of these
issues.
Mr. Chairman, let me conclude my opening remarks this
afternoon by saying that today, America's farmers and ranchers
face many critical and challenging issues. We know that the
current economic climate in the farm sector has been hampered
by large foreign supplies, various natural disasters, a
struggling global economy, and a high value of the dollar that
have slowed growth and demand for agricultural products. We
have seen commodity prices decline, and without government
support many in the farm sector could suffer. The events of
September 11 have further caused additional burdens on the
agricultural economy.
However, with all of these circumstances and events, there
are bright spots in agriculture. As Keith Collins, our long-
time and well-respected chief economist has said, many markets
have slowly improved since 1999, but there is much work to be
done to provide assistance to our farm sector, and this
administration is committed to doing what needs to be done to
strengthen our farm economy. We hope to do that with a new farm
bill, increased vigilance on homeland security, securing new
trade opportunities, additional conservation and land
stewardship programs, and a commitment to enhancing our rural
communities, among other priorities.
The USDA budget submitted by the President moves us in the
right direction. Our budget protects farm program spending with
an additional $73.5 billion in support, as agreed to by both
the House and the Senate budget resolutions. It strengthens
homeland security and infrastructure protections; that is, pest
and animal disease prevention and eradication, food safety, and
the research that supports those activities. Our budget
promotes trade opportunities for our farmers and ranchers by
providing tools to help our producers export. It also provides
a record-level nutrition safety net for families who need
assistance.
Our budget promotes good conservation and environmental
stewardship, so critical to our farmers and ranchers today. The
budget also invests in our rural communities which often are in
need of our help, particularly in tough economic times.
Finally, our budget expands initiatives to make sure that
we can make government work better for the citizens that we
serve. Whether farmers, consumers, or low-income Americans, we
want to ensure that the programs are readily available and
accessible to the people who come to us for assistance. We
believe that this is a responsible budget. It funds key
priorities and programs at USDA.
I want to thank you again, and we look forward to working
with you during the budget process to advance the priorities
that we have outlined. I would now be happy to answer the
questions from you and members of the committee. Thank you very
much.
Chairman Nussle. Thank you, Madam Secretary.
[The prepared statement of Ann Veneman follows:]
Prepared Statement of the Hon. Ann M. Veneman, Secretary, Department of
Agriculture
Mr. Chairman, members of the committee, it is an honor for me to
appear before you to discuss the fiscal year 2003 budget for the
Department of Agriculture (USDA). I have with me today Deputy Secretary
Jim Moseley; our Chief Economist, Keith Collins; and our Budget
Officer, Steve Dewhurst.
I want to thank the committee again this year for its support of
USDA programs and for the long history of effective cooperation between
this committee and the Department in support of American agriculture. I
look forward to working with you, Mr. Chairman, and all the members of
the committee during the 2003 budget process.
As you know, the President's budget was released on February 4.
Total USDA outlays for 2003 are estimated to be $74.4 billion. This is
an increase of $11.1 billion above the level requested in 2002, and it
is only slightly below the 2002 enacted level.
The Department is addressing the Nation's new priorities in light
of the September 11 events in a fiscally responsible manner. This
requires recognizing our priorities and making difficult funding
decisions. I can assure you that USDA has done just that in preparing
its 2003 budget proposals.
We have also taken actions to assure that the $328 million of
emergency supplemental funds made available to USDA for security needs
in 2002 will be invested in ways to meet high priorities, particularly
to improve USDA's biosecurity operations for the long term. We are
working closely with the Office of Homeland Security and we have
established a USDA Homeland Security Council to coordinate our security
efforts and track progress in using those funds to ensure that priority
needs are met. The Council will play a significant role in establishing
the final plans for use of those funds.
For 2003, this budget supports the administration's principles for
the 21st Century as stated in our report, Food and Agricultural Policy:
Taking Stock for the New Century, issued last fall. Specifically, the
budget does the following:
Ensures that the new farm bill will be generously funded by
providing an additional $73.5 billion in mandatory funding over the
200-11 period to develop sound policies for farm commodity and income
support, conservation, trade, food assistance, research, and other
programs.
<bullet> Supports the administration's goal of opening new markets
overseas and expanding U.S. agricultural exports by providing over $6
billion in export program support.
<bullet> Provides the largest increase ever for the Special
Supplemental Nutrition Program for Women, Infants and Children (WIC)
thereby supporting 7.8 million program participants.
<bullet> Provides support for over 20 million food stamp
participants including legislation to allow more legal immigrants to
participate and other changes to simplify complex rules, support
working families and improve program delivery.
<bullet> Protects agriculture and our food supply from potential
threats--intentional or unintentional--and requests more than $146
million in new spending for food safety, pest and animal disease
prevention, and research.
<bullet> Improves the Department's management of its delivery of
programs.
<bullet> Improves the stewardship of our soil, water and forests by
making more resources available for conservation uses with less money
spent for overhead expenses.
<bullet> Maintains funding to support loans, grants, and technical
assistance to address a diversity of rural development needs including
financing electric and telecommunications systems, water and waste
disposal systems, rural housing, and business and industry.
With this as an overview, I would now like to discuss the details
of our budget proposals for each of the Department's mission areas.
farm and foreign agricultural services
The farm sector in recent years has experienced lower market
returns for several major commodities and losses from various disease,
pest and other natural disaster-related causes. Supplemental assistance
has been enacted to prevent farm income declines. While the situation
is improving for some commodities, market returns in other areas of the
farm economy are still low. The President's budget for 2003 provides
for an additional $73.5 billion in direct spending over the 2002-11
period to fund new legislation to replace the expiring 1996 farm bill.
This level is consistent with amounts contained in the Congressional
Budget Resolution. We will work with Congress to develop a bill which
contains sound policy consistent with the principles we have laid out
for 21st Century agriculture.
The new farm bill should be generous but affordable. It should
provide a reasonable safety net without encouraging overproduction and
depressing prices, establish farm savings accounts to help manage risk,
support our commitment to open trade, offer incentives for good
conservation practices on working lands, and enhance nutrition
programs.
international trade
In conjunction with the new farm bill, it is essential that we also
lower trade barriers and open new markets overseas since trade is
critical to the long-term health and prosperity of the American
agricultural sector. Enhancing the competitiveness of U.S. agriculture
in the world marketplace must also be one of the primary objectives of
our farm policy.
One of the most important strategies for enhancing trade is
continuing the liberalization of global agricultural trade. America's
farmers and ranchers stand to gain a great deal from further trade
reform through increased access to markets overseas and a reduction in
unfair competition in those markets.
The new round of multilateral trade negotiations is at the center
of our trade liberalization efforts. Our agenda for agricultural reform
negotiations includes substantial reductions in tariffs and increased
market access, elimination of export subsidies, reform of State trading
enterprises, and tighter rules on trade-distorting domestic support.
We also are pursuing trade liberalization through both regional and
bilateral negotiations, and we are closely monitoring existing trade
agreements to ensure that our trading partners comply fully with the
terms of those agreements and do not institute technical barriers to
trade that run counter to their spirit.
Another strategy laid out in our review of 21st Century agriculture
is ensuring we have the proper tools needed to expand exports in an
increasingly competitive environment. This starts with the granting of
Trade Promotion Authority (TPA) to the President so that we can
demonstrate to our trading partners that the United States is serious
in our pursuit of free trade objectives and in our negotiating
proposals. We urge the Congress to enact this important legislation
early this year. We also very much want to work with the Congress to
craft provisions of the trade title of the new farm bill so that they
are consistent with the principles we have established for 21st Century
agriculture.
Our work in the international area begins with the Foreign
Agricultural Service (FAS), the Department's lead agency in
implementing many of our international activities, and which plays an
absolutely critical role in our trade expansion efforts. For 2003, the
budget provides $140 million for FAS, an increase of $10 million above
the 2002 level. Included in the FAS request is much-needed funding to
support an e-government initiative that will upgrade the agency's
information technology (IT) resources and capabilities, and modernize
its business practices and operations. Over the last year, FAS has
faced a series of computer-related crises that have threatened to
cripple agency operations and communications. This is a particularly
serious problem for an agency that has offices throughout the world and
must work closely on a daily basis with many different agencies, such
as the State Department and Office of the U.S. Trade Representative.
The FAS proposals also include increased funding for the Cochran
Fellowship Program. This is a highly successful program that has
provided training and helped to establish positive linkages with many
agriculture officials throughout the world. The additional funding will
expand programming in a number of important areas, including
biotechnology, food safety, and World Trade Organization accession
requirements.
Another key to having the proper trade expansion tools is to ensure
adequate funding for the Department's export promotion and market
development programs, which our budget proposals are designed to do.
For the CCC export credit guarantee programs, the largest of our export
programs, the budget includes a program level of $4.2 billion. This is
an increase of $300 million above the projected 2002 level, reflecting
continued very strong growth in the supplier credit guarantee program.
For the Foreign Market Development (Cooperator) Program, Market Access
Program, and Quality Samples Program, the budget includes a total
program level of $120 million, unchanged from this year's level, and
$63 million for the Dairy Export Incentive Program, a slight increase
over the current estimate for 2002.
As the committee is aware, the administration has undertaken a
review of U.S. foreign food assistance activities in order to reform
and rationalize their implementation and to strengthen their
effectiveness. Among the results of that review is the decision to
provide a more secure and predictable foundation for our overseas food
aid activities by reducing their reliance on the year-to-year
availability of surplus commodities. At the same time, these activities
will largely be funded through discretionary sources, subject to
Congressional review and approval, and with reduced reliance on
mandatory CCC funding. Accordingly, the budget provides increased
funding for food aid donations under the P.L. 480 Title II program,
while donations of commodities under section 416(b) authority that rely
on the purchase of surplus commodities by CCC will not be continued in
2003. The budget includes a total program level of $1.35 billion for
P.L. 480 in 2003. Based on current price estimates, total commodity
shipments under P.L. 480 programs in 2003 should reach 3.7 million
metric tons.
farm program delivery
Farm Service Agency (FSA) salaries and expenses are funded at $1.3
billion in 2003. This would support continuation of staffing levels at
the current 2002 levels of about 5,800 Federal staff years and 11,250
county non-Federal staff years, including about 2,000 temporary staff
years. We expect the workload for FSA to remain relatively heavy in
2002 and 2003.
In order to help FSA meet this workload challenge, improve service
to farmers and enhance operating efficiency, the budget provides
increased funding of $56 million for FSA's information technology
efforts related to the Service Center Modernization Initiative. This
includes an acceleration of geographic information systems and other
common computing environment initiatives to help move the delivery
system into the e-government era. The budget presents these funds as
well as funds for the other Service Center agencies under the Common
Computing Environment appropriation to ensure that these activities are
well coordinated.
Management initiatives to modernize farm credit program servicing
activities and to review the Service Center office processes and
structure of FSA, Natural Resources Conservation Service (NRCS) and
Rural Development (RD) will also be undertaken in an effort to improve
our ability to provide services at less cost.
credit
We have also included in the budget a program level of about $4
billion in farm credit programs to assure that farmers have access,
when necessary, to federally supported operating, ownership, and
emergency credit. No additional funding is being requested for the
emergency loan program. Based on current estimates, the budget assumes
that carry-over funding in the emergency loan program will be
sufficient to meet demand in 2003.
crop insurance
The budget for this mission area also includes full funding for the
crop insurance program. The budget includes such sums as necessary to
meet producers demand for the program given that participation in the
program is voluntary on the part of producers. The program is delivered
by private insurance companies, and the Federal Government reimburses
the companies for their delivery costs. The companies also receive
underwriting gains on policies for which they retain the risk of loss.
In 2000, Congress substantially reformed the crop insurance program, in
part, by providing for substantial increases in the premium subsidy
available to producers, especially at higher levels of coverage. As a
result, participation in the program increased substantially. With the
increase in business, private insurance companies have received a
windfall as underwriting gains have increased about 400 percent from
the levels of the early 1990's. This budget includes proposed
legislation which would cap underwriting gains at 12.5 percent of the
retained premium.
marketing and regulatory programs
Marketing and Regulatory Programs agencies provide basic
infrastructure to protect and improve agricultural market
competitiveness for the benefit of both consumers and U.S. producers.
pests and diseases
Helping protect the health of animal and plant resources from
inadvertent, as well as intentional pest and disease threats from
terrorists, is the primary responsibility of the Animal and Plant
Health Inspection Service (APHIS). The importance of this
responsibility was recognized by the inclusion of $119 million
specifically for APHIS in the Homeland Security Supplemental funding
for 2002. These funds will be used to: improve effective border
protection, in part through the purchase of equipment and the hiring of
anti-smuggling personnel; work with the States to expand survey efforts
for plant and animal pest and disease detection; and meet enhanced
building security and other needs. Of the total, $14 million will be
used to relocate certain biohazard laboratory facilities to a facility
on the National Veterinary Services Laboratories campus in Ames, IA.
For 2003, we are requesting a net increase of about $120 million
over the regular 2002 appropriation for APHIS salaries and expenses
which consists of over $262 million in increases partially offset by
$142 million in decreases. While we have successfully kept foot-and-
mouth disease and bovine spongiform encephalopathy (BSE) out of the
United States, our inspectors remain highly vigilant, in part, because
of bioterrorist threats. The $1.1 billion 2003 budget request for APHIS
reflects continued and enhanced efforts to protect U.S. agriculture at
the borders, and also to promptly detect and respond to a pest or
disease outbreak, among other activities. An increase in total program
level of about $19 million is devoted to enhance Agricultural
Quarantine Inspection, and an increase of another $48 million is
devoted to enhanced monitoring and surveillance for pest and disease
outbreaks.
Once detected, prompt eradication of an outbreak is essential to
limit damages and reduce overall control costs. The 2003 budget
requests $162 million in appropriations to continue funding several
eradication programs that had been started with funds transferred from
CCC. Such continuing activities can no longer be considered
``emergencies.'' These funds will be used to combat species such as the
Asian Long-horned Beetle, citrus canker, Mediterranean fruit fly,
chronic wasting disease, plum pox, rabies, scrapie, and tuberculosis.
For any new emergency pest and disease outbreak, our legal authority to
use CCC funding would be relied upon. However, the administration is
concerned about rising Federal costs of emergency pest and disease
control and expects to seek public comment on flexible criteria to
share the financial burden with cooperators who receive benefits from
program activities.
marketing
Another important proposal in this area involves the Grain
Inspection, Packers and Stockyards Administration (GIPSA). The budget
includes a total program funding level of $43 million to help ensure
efficient market functioning. Included within this total is about $2
million being requested for improved enforcement of anti-competitive
laws and monitoring the use of new technologies to evaluate livestock
carcasses. Another $450,000 is requested to expand the newly
established biotechnology program to keep pace with the rapid
introduction of new products and the need for commodity certifications.
A further $3.4 million is requested to enhance the ability of GIPSA to
electronically provide and receive data and information. The GIPSA
budget also proposes user fees to recover costs of the U.S. grain
standards program, as well as license fees to recover costs of the
Packers and Stockyards program.
For the Agricultural Marketing Service (AMS) the budget includes an
increase of $1 million to expand international market news reporting in
Central America, South America, and Asia and increase the availability
of accurate, timely, and unbiased international market information.
This type of real time market information is required for American
producers to be competitive in a global economy. The budget also
requests an increase of $1.6 million to implement improvements to the
Pesticide Data Program and the Federal Seed Act Program. Improvements
to the program infrastructure for these programs are necessary to
ensure effective delivery of program services to American agriculture.
food safety
A safe food supply is one of the foundations of a successful food
and agricultural system. As we have witnessed, highly publicized
outbreaks of food-born illness have demonstrated how important
safeguarding public health is to both consumers and producers. With the
threat of terrorism, we must be even more vigilant in safeguarding the
Nation's food supply. USDA plays a critical role in safeguarding the
food supply and its policies have contributed to the recent decline in
pathogenic contamination of meat and poultry products. This
administration believes that continued investment in the food safety
infrastructure is necessary to ensure that the appropriate personnel,
tools, and information are available to address the emerging food
safety hazards that threaten public health and the viability of our
agricultural system. Therefore, the budget includes record funding for
the Food Safety and Inspection Service (FSIS).
For 2003, the budget proposes $804 million, an increase of about
$28 million over the 2002 current estimate. Funds are requested to
cover the costs of Federal inspection and for maintaining Federal
support of State inspection programs. This includes resources necessary
to maintain approximately 7,600 meat and poultry inspectors which will
ensure the uninterrupted provision of inspection services.
In addition, the budget requests an increase of $14.5 million to
improve FSIS' information technology infrastructure. FSIS' existing,
disparate information systems will be replaced by a new system with
enhanced data sharing capabilities. Upgrading these important
information systems will lead to improved science-based decision-making
for risk assessment and risk management functions, as well as improved
resource management.
The budget also requests an increase of $2.7 million to conduct
slaughter epidemiological surveys and risk prevention activities for
small and very small establishments. These surveys will improve the
quantity and quality of data available to FSIS for use in evaluating
the effectiveness of inspection strategies to detect animal disease
outbreaks and the food safety guidelines to limit the impact of those
outbreaks.
The 2003 budget includes a commitment to review the current
overtime fee structure for meat, poultry, and egg products inspection,
including an analysis of the manner in which fees are assessed and the
underlying statutory basis for those fees. There is no budget impact in
2003 as a result of this action, however, the analysis of the current
fee structure will begin immediately. The budget also proposed a new
annual licensing fee that will make funds available, beginning in
fiscal year 2004 and in subsequent years, to invest in food safety
inspection technology and other Federal programs that directly benefit
the industry.
food, nutrition, and consumer services
The budget includes $41.9 billion for USDA's domestic nutrition
assistance programs, the highest request ever, targeted to help
Americans in need. This request reflects our commitment to the
nutritional safety net, and to helping participants find and retain
jobs, and move toward economic self-sufficiency.
A major component of the nutrition safety net is the Special
Supplemental Nutrition Program for Women, Infants and Children (WIC).
The budget requests a record level of $4.8 billion for WIC, almost 10
percent above the 2002 appropriation. The request funds average annual
participation of about 7.8 million participants, and it provides an
additional $150 million contingency reserve should additional demand
for WIC appear. This request reflects the growing demand for WIC and it
also reflects a firm commitment by this administration to ensure that
resources are directed to programs that make a real difference in
peoples lives. WIC is just such a program. Ensuring funding for WIC is
one of our major priorities and is critical to the administration's
goal of guaranteeing stable funding for this important program.
The Food Stamp Program is funded at $26.2 billion, an increase of
almost $3.2 billion above the 2002 level. The increase would cover a
projected 2-percent increase in food costs with average participation
of about 20.6 million people. This is an increase of about 2 million
participants over the most current month reported, November 2001. The
request also includes a $2 billion contingency reserve, in case it is
needed to support a higher than expected level of participation.
Also of great importance is reauthorization of the Food Stamp
Program. The budget contains several legislative proposals for food
stamps that are consistent with the principles we have laid out for
21st Century agriculture. These proposals would:
<bullet> Allow legal immigrants who have resided in the U.S. for 5
years or more to apply for food stamps. This is consistent with welfare
reform as it would bring the Food Stamp Program into conformity with
other public assistance programs such as Medicaid and the Temporary
Assistance for Needy Families programs that work in concert together at
the local level. This change provides a nutritional safety net for
these legal immigrants while maintaining requirements that they look
first to their earnings, resources and the support of their sponsors to
meet their needs.
<bullet> Index the standard deduction to a percentage of poverty,
so it adjusts both to reflect household size and changes in living
costs. This, along with standardized medical and dependent care
deductions (and several other program simplifications) will allow
States to focus more on helping households get back on their feet, and
less on complex and error-prone details.
<bullet> Exempt one vehicle per work-able household member from
being counted as an asset to facilitate participant efforts to seek and
retain employment.
<bullet> Eliminate the requirement that 80 percent of the
Employment and Training funds going to childless unemployed adults so
that States can more flexibly direct these resources to help those most
likely to use them.
<bullet> Reform the Quality Control System to focus on recurrent
error problems. Although error rates are at their lowest level ever,
States issued nearly $1.3 billion in overpayments and underpaid
eligible households by nearly $460 million. This is just too high. The
proposed changes would allow States to receive meaningful incentive
awards for good performance and only sanction States with two
consecutive years of error rates exceeding the 75th percentile for all
States. Enactment of these changes will help all stakeholders to strive
for even better performance.
The Child Nutrition Programs are budgeted under current law at
$10.6 billion. The request anticipates an increase of about 2 percent
in food costs, growth in the programs due to the increased number of
school aged and younger children, and some expansion in the breakfast
and child care food programs. Program integrity will continue to be a
focus for these programs, not only to ensure the proper allocation of
Child Nutrition funds, but also because far larger sums of Federal and
State education money are targeted to low-income schools based on free
and reduced price lunch data.
natural resources and environment
The Natural Resources and Environment mission area promotes
conservation and sustainable use of natural resources on the Nation's
private lands through education, technical and financial assistance.
The mission area is also responsible for meeting public demands for
recreation, timber and other goods and services through management of
approximately 192 million acres of National Forests and grasslands. The
budget includes approximately $6 billion in budget authority for the
Natural Resources and Environment agencies.
The importance of conservation programs has grown well beyond their
historical purpose of protecting productive topsoil for the purpose of
food production. We are now realizing the significance of agriculture's
impact on other areas of the environment such as water quality. In
addition, public awareness and concern for the Nation's natural
resources have continued to grow as we gain a better scientific
understanding of soil and related resource problems and how best to
address them. The 2003 budget request in the conservation area
recognizes these developments, as well as the need to protect the
conservation partnership that has evolved over the years between the
Department and conservation districts and farmers.
The budget request for the Natural Resources Conservation Service
(NRCS) for 2003 proposes $1.2 billion in appropriated funding, and
assumes $1.0 billion in mandatory funding for the Environmental Quality
Incentive Program (EQIP) within the Commodity Credit Corporation (CCC)
baseline, including estimated spending in the new farm bill. The
appropriated request includes $787 million for conservation technical
assistance (CTA) which represents the foundation of the Department's
conservation partnership, as well as the primary means by which the
Department implements many of the critical natural resource programs
such as the Conservation Reserve Program (CRP) and the conservation
initiatives that will be called for in the new farm bill.
Addressing the problems associated with polluted runoff from animal
feeding operations (AFOs) remains one of the most critical challenges
and continues to be a high priority within the Department. To help AFO
operators develop and implement nutrient management plans, NRCS will
increase the level of technical assistance funding in 2003. Financial
assistance that AFO operators might need to implement the plans will
come from the EQIP.
The Department's 2003 budget request maintains funding for the 348
Resource Conservation and Development (RC&D) areas now authorized and
will also be sufficient to support any new areas authorized in 2002.
The ongoing program will continue to improve State and local leadership
capabilities in planning, developing and carrying out resource
conservation programs.
While maintaining and strengthening those conservation programs and
activities that are vital to a healthy natural environment, the 2003
budget ceases funding those programs that have not performed well, that
have a limited scope, or that have goals that can be better addressed
through other programs. The Forestry Incentives Program falls in this
general category and is not to be continued. In addition, all non-
emergency watershed planning and operations funding will be redirected
to other higher priority work within NRCS. Although support for regular
watershed operations and planning is being terminated, the 2003 budget
does propose to fund the Emergency Watershed Protection (EWP) program
at an appropriated level of $111 million, which is an amount equal to
the 10-year average for EWP spending. This would provide an important
level of security to rural areas in the event of sudden and unforeseen
natural disasters, and would enable the Department to respond to these
disasters in a much more timely manner.
Under the Common Computing Environment budget an increase of $13
million is included for NRCS activities for telecommunications costs,
GIS implementation, cyber-security initiatives and enhanced access for
customers.
The budget requests almost $4.9 billion in budget authority for the
Forest Service (FS). The budget includes management reforms to increase
resources directed to the field to achieve more on-the-ground work,
continues the administration's commitment to the National Fire Plan,
and emphasizes tangible contributions toward sustainable resource
management.
To ensure that the public gets the most value for its tax dollars,
the Forest Service will become more efficient and streamline to
increase funding at the field level, and continue to improve agency
accountability. FS has developed an initial workforce restructuring
plan that includes significant management reforms which will reduce
layers of supervision and administrative support.
The Department recognizes the importance of the continued
implementation of the National Fire Plan. The budget includes
approximately $1.5 billion in funding for the National Fire Plan. The
budget maintains funding for priority activities and is faithful to
commitments made to increase efforts to fight wildfires, reduce the
risk of fire, and assist communities, and includes approximately $235
million for hazardous fuels reduction; $627 million for fire
preparedness; and $443 million for fire suppression activities.
Funding for the National Forest System is increased $36 million.
This includes an additional $15 million to expedite endangered species
consultations, $5 million to assist in implementation of the National
Energy Plan, and $7 million to expand recreation, heritage and
wilderness management.
State and Private Forestry programs are funded at approximately
$282 million. This includes a new $12 million emerging pest and
pathogen fund to respond to new introductions of non-native or invasive
pests or pathogen. In addition, the budget includes full funding of the
Forest Service portion of the Land and Water Conservation Fund (LWCF),
including an additional $5 million in the Forest Legacy program to
protect against the loss of forests from development.
The Forest Research budget is proposed at $254 million. This
includes an additional $5 million for bio-based products and bioenergy
research and an increase of $20 million to fully implement the Forest
Inventory and Analysis program to provide timely information on the
status and trends of the Nation's forest resource conditions.
rural development
The administration's principles for rural development are to
recognize the diversity of rural America and the importance of the non-
farm economy to rural communities; to create an environment that will
be attractive to private investors to rural areas, encourage greater
education and technical skills for rural residents, and capitalize on
rural America's natural resource base; to protect lives and property
against certain hazards, such as forest fires; to expand rural
infrastructure, and to serve as a coordinator among the various levels
of government and private sector stakeholders in rural development
activities.
USDA's rural development mission area has the primary
responsibility for administering programs to meet these principles. The
2003 budget includes over $1.9 billion in budget authority for rural
development programs that would provide almost $11 billion in loans,
grants and technical assistance for a variety of purposes, including
the financing of electric generation and distribution systems,
telecommunications, water and waste disposal and other essential
community facilities, rural housing, and business and industry. The
2003 budget also includes a request for about $685 million for the
administrative expenses for these programs.
The total amount of budget authority for Rural Development is $2.6
billion, which is approximately at the 2002 enacted level. However, the
budgetary resources have been realigned so that the 2003 budget allows
USDA to efficiently and effectively meet the needs of rural America.
Most programs are funded at approximately the 2002 enacted levels.
About 60 percent of the program decreases are due to reductions in
demand. The 2003 budget also reflects the annual changes in subsidy
rates due to different technical and economic assumptions. Funding for
Round II Rural Empowerment Zones and Enterprise Communities Grants and
Multifamily Housing loans for new construction has not been requested.
The telecommunication programs are funded at program levels of $495
million in direct loans for the regular programs, $50 million in direct
loans and about $25 million in grants for the distance learning and
medical link program, and $80 million in direct loans and $2 million in
grants for the broadband and internet services program. These are the
same levels as appropriated for 2002 except for distance learning and
medical link direct loans, and broadband and internet services grants.
For the past few years, USDA has requested and received program level
funding for $300 million in direct loans for the distance learning and
medical link program. Unfortunately, there have been very few
applicants because
potential applicants are more interested in the grant program. The
reduced level of funding for 2003 is expected to fulfill actual demand.
As for broadband and internet services, the program was established
on a pilot basis in 2001. The $2 million in program level funding
available for grants in that year was targeted to a few small
communities that could not qualify for loans due to a lack of repayment
ability. While there is no lack of demand for grants for this purpose,
the Department believes that communities should bear a substantial
portion of the cost of such services, which means the program should
focus on loans rather than grants, as reflected in the budget request
for 2003. Further, the Department is again proposing that no funding be
provided for Rural Telephone Bank (RTB) loans. The RTB is fully capable
of obtaining funds to make loans through commercial channels which
would encourage privatization.
The water and waste disposal program would be funded at a level of
$814 million in direct loans, $75 million in guaranteed loans and $587
million in grants--the same as appropriated for 2002. This program
provides safe drinking water and waste disposal for rural residents and
encourages business and industry to locate in rural areas which means
more jobs and a more diversified rural economy.
The business and industry guaranteed loan program is funded at a
program level of $733 million. This is the same amount that will be
available from the 2002 appropriations.
The single family program levels for 2003 would support $957
million in direct loans and nearly $2.8 billion in guaranteed loans--
enough to provide about 50,000 home ownership opportunities.
The rural rental housing program would be limited to a program
level of $60 million in direct loans for repair and rehabilitation and
related purposes and $100 million in guaranteed loans for either new
construction or repair and rehabilitation. The Department is concerned
about the substantial cost to the government for rental assistance
payments to support its existing portfolio of about 17,800 existing
projects. These projects have an outstanding balance owed of close to
$12 billion. Many of these projects are over 20 years old and in need
of repair or rehabilitation. The Department has already initiated a
review of alternatives for servicing the portfolio. This review will
also consider options for making loans for new projects at less cost to
the government.
research, education, and economics
To maintain the unparalleled success of U.S. agriculture, it will
be necessary to make investments in research, education, and economics
as new challenges confront the agricultural sector. Continuing to
provide a secure food supply and maintaining and strengthening U.S.
farmers' competitive advantage in world markets within a restrained
budget will require a close assessment of priorities.
The 2003 budget for this mission area totals $2.3 billion. For
ongoing programs, there is an overall net increase of $15 million.
There are increases for critical intramural and grant programs,
decreases for less critical projects--many of which were specific
congressional earmarks for projects that could be funded through
competitive programs--and a reduction of $102 million in the
Agricultural Research Service (ARS) buildings and facilities account
following the large appropriations in 2002.
The 2003 budget for ongoing research and information activities in
ARS is $1.014 million, a net increase of 3 percent above the 2002
enacted level. The budget includes an increase of $13 million for
emerging, reemerging, and exotic plant and animal diseases, such as BSE
and Food and Mouth Disease (FMD), to protect the U.S. food supply and
increase the product longevity and market quality of agricultural
commodities; an increase of $9 million for bio-based products and
bioenergy from agricultural commodities, two initiatives that are
supported by the President's national energy policy; an increase of
$6.5 million for global climate change to improve our understanding of
carbon sequestration and support other aspects of the administration's
climate change research initiative; an increase of $5 million to
develop advanced pathogen detection capabilities needed for homeland
security; and several other critical initiatives.
We are pleased that Congress has responded positively to the urgent
need for a modern animal health facility in Ames, Iowa with combined
appropriations of $113 million in the regular and supplemental
appropriations acts in 2001 and 2002. In this regard, we are in the
process of preparing a report at the request of the Appropriations
Committees on our estimates of costs for the entire project, the
planned construction schedule, and our plans for managing this major,
multiagency undertaking.
The 2003 budget proposal for the Cooperative State Research,
Education, and Extension Service is just over $1 billion. The National
Research Initiative (NRI) is funded at $240 million, representing an
increase of $120 million from 2002. The Federal Government plays a
unique role in its support of the basic research needed to maintain the
technology-based competitive advantages we currently enjoy in so many
segments of the economy. In recent years, there have been especially
large increases in Federal commitments for research in support of
medicine and national defense. Unfortunately, commitments for
agricultural research have not kept pace and opportunities to take
advantage of some of the Nation's best university-based scientific
talent are being lost. The budget proposal for the NRI will enhance
agriculture as a scientific discipline; it will provide opportunities
to partner with other Federal agencies and bring an agricultural
perspective to topics of mutual interest; and it will make a
contribution toward encouraging and training the next generation of
agricultural scientists. Formula-based programs for research and
extension are continued at the 2002 level, and the budget provides an
increase of $2.4 million for higher education programs.
The 2003 budget for the Economic Research Service (ERS) is $82
million which supports the ongoing program of work and provides
increases for two initiatives. An increase of $2.7 million will support
the ERS share of the joint effort with the National Agricultural
Statistics Service (NASS) to improve the Agricultural Resources
Management Survey, known as ARMS, generating more dependable and
statistically defensible results and making results available through
web-based dissemination. This national survey of farms provides data
and analysis to characterize the economic conditions and rapidly
changing structure of the agricultural sector. ARMS is the primary
source of information about the financial condition, production
practices, use of resources, and economic well being of America's
farmers. As the principal source of data, ARMS makes it possible for
ERS to answer key questions from USDA policy officials, Congress,
Executive Branch officials, and other decision makers about the
differential impacts of alternative policies and programs across the
farm sector and among farm families.
An increase of $2 million will support the second initiative on the
effects of invasive pests and diseases on the competitiveness of U.S.
agriculture. The results of this initiative will provide information
that can be used to help guide resource allocation for efforts to
exclude and control invasive species. A major portion of this work will
be to assess cost effective means of the public sector in reducing
economic risks to U. S. agriculture from invasive species while
preserving economic gains from trade and travel.
The budget for NASS is $149 million which includes an increase for
four initiatives. An increase of $15.5 million is requested for the
cyclical change in statistical activities associated with conducting
the 2002 Census of Agriculture, with 2003 being the peak in the 5-year
cycle. NASS's portion of the initiative to improve ARMS is $4.6
million. In addition to improvements discussed previously, this funding
will support research efficiencies to integrate the ARMS program with
other data collection efforts. The NASS request also includes about $5
million in increases for additional computer security, for development
costs to move to electronic collection of data, and for development of
an annual locality based county/small area estimation program to
provide statistical data below the State level.
departmental management
The Departmental staff offices provide leadership, coordination and
support for all administrative and policy functions of the Department.
These offices are vital to USDA's success in providing effective
customer service and efficient program delivery. Salaries and benefits
often comprise 90 percent or more of these offices' budgets, leaving
them little flexibility to reduce other expenditures needed to continue
their operations. The 2003 budget proposes funding needed to ensure
that these offices maintain the staffing levels needed to provide
management, leadership, oversight and coordination.
These offices also have key responsibilities related to the
President's Management Agenda and other departmentwide and agency-
specific management reforms, which are crucial to making the Department
an efficient, effective and discrimination-free organization that
delivers the best return on taxpayers' investments. The 2003 budget
requests funding to achieve the following management priorities:
<bullet> As a direct result of the events of September 11, the
budget request includes specific changes to increase the level of
security and emergency planning for the Department.
<bullet> We will continue to streamline the Service Center agencies
(FSA, NRCS and RD) to improve efficiency and customer service. We will
also continue our efforts to provide electronic services to USDA
customers. A key element in these plans is the completion of a common
computing environment for the Service Center agencies and acceleration
of our efforts to acquire and use geographic information systems.
<bullet> We will continue efforts to process employment and program
civil rights complaints in the Department in a fair and timely manner
and promote a working environment in which discrimination against
employees or customers is not tolerated.
<bullet> We will continue to develop departmentwide administrative
information systems so that decisionmakers can receive timely and
reliable information on the Department's finances, people and
purchases. These systems will also make the Department's administrative
operations more efficient by eliminating redundant, stove-piped and
aging information systems. They are critical to the Department's
ability to achieve and maintain a clean opinion on its financial
statements and adequate computer security.
<bullet> We will continue to strengthen our information security
program to better protect USDA's valuable information assets from
intrusion and theft. We will also develop an Enterprise Architecture,
which is a key planning and risk management tool for information
technology investments.
<bullet> We will put more of the Department's work up for
competition and increase the use of performance-based contracting to
generate savings and efficiencies.
<bullet> We will continue renovations of the South Building to
ensure that employees and customers have a safe and modern working
environment.
<bullet> We are proposing to fund rental payments to the General
Services Administration (GSA) in the budgets of agencies occupying GSA
space instead of a central account in order to hold USDA managers
accountable for the full cost of their programs.
<bullet> The budget also provides increased funding for the Office
of the Inspector General to help it address an expanding workload and
provide active assistance to USDA agencies. It also provides for re-
engineering audit and investigative activities, streamlining
operations, and increasing office efficiencies.
That concludes my statement. I look forward to working with the
committee on the 2003 budget so that we can better serve those who rely
on USDA programs and services.
Chairman Nussle. Let me turn immediately to the farm bill
and ask you three general questions: one on timing, one on
money, and one on just general goals and policy. What is your
opinion or what is the administration's opinion or advocacy
with regard to timing of the farm bill? When should the
conference complete its work, in the opinion of the
administration?
Secretary Veneman. Well, I have had conversations as late
as yesterday with Chairman Combest, and they certainly hope to
complete the work on the farm bill before Easter. That is their
goal, and we would certainly agree with that goal and are
working very hard with the conference to try to make sure that
that timetable is achievable.
Chairman Nussle. And in part, I think the reason time is of
the essence is certainly predictability and planning decisions
need to be made. But is there a position from the
administration with regard to the possibility of an emergency
or emergency payments if, in fact, the farm bill is not
completed before Easter?
Secretary Veneman. Well, again, Mr. Chairman, we are
hopeful that a farm bill will be completed. In the event that
it is not, we would be certainly willing and able to work with
the committee and the Members of the Congress to work out an
appropriate supplemental. As we know, the money has been
certainly set aside through the budget resolution and carried
in the President's budget as well, the $73.5 billion over 10
years; but, again, we are hopeful that an agreement can be
reached on the farm bill before we would have to make a
distribution on a supplemental.
Chairman Nussle. Well, I agree with you. I think it would
be the height of your responsibility to move directly to a
supplemental for agriculture when we have had over a year's
worth of opportunity to begin the debate and the discussion and
the field hearings and all of the negotiations that need to go
into a farm bill. This is not news to anybody, particularly
those of us who, you know, believe that agriculture is pretty
important to our States and our constituencies. And so, to
somehow change the focus to a supplemental I think would be
irresponsible, given the opportunity that a farm bill
reauthorization brings.
Second is money. As you noted and I have noted and many
others have noted, while both bills seem to somehow get under
the wire with regard to the scorekeeping of $73.5 billion, the
Senate bill does it in an interesting way, to say the least. In
other words, it puts all the money in the first 5 years and
shortchanges the second 5 years in a number of very important
categories, which is just unrealistic; again, I believe
irresponsible. Certainly a strategy to get to conference,
because they were having trouble getting anything passed on the
floor, so they had to say yes to everybody to get it to
conference. But do you have a test? Would a good test be that,
for instance, half the money has to be spent in the first 5
years and half the money has to be spent in the second 5 years?
Is there a test that we can use, thumbnail at best, to show the
Congress, the administration and, for that matter, farmers that
this is a realistic approach from a budgetary standpoint?
Secretary Veneman. Mr. Chairman, as I said in my opening
statement, we believe that the money should be allocated in a
fairly even manner over the 10 years for which the money has
been designated, and we believe that if we are looking at a 5-
year number, that ought to be roughly half of the $73.5
billion. We think that makes sense. We think that gives farmers
more predictability.
Our concern about the Senate bill is that by front-loading
the money in the initial years, that it will shortchange
farmers in the later years. In fact, in the Senate bill there
are a number of programs that are funded during a 5-year period
that are not shown as having money allocated for the second 5-
year period. So in that respect, it would create uncertainty
for farmers, and I don't think any of us want to create that
kind of uncertainty for our farmers.
Chairman Nussle. Or uncertainty for taxpayers who foot the
bill for this, appropriately so, at least again for those of us
who support the safety net, but one that would I think fall on
pretty difficult ears in the future if we don't show a
responsible fiscal pattern here. I think 50:50, over a 5 and 5
time span, is at least a good thumbnail beginning of at least a
tester of a fence.
And finally, has the administration yet--and you touched on
it briefly--but could you reexamine what the goals of the
administration would be generally for a farm bill? What do you
want to see generally within these parameters as you begin the
negotiations, as we hopefully complete the negotiations?
Secretary Veneman. Yes, Mr. Chairman. As I mentioned in my
opening remarks, we want a bill that fits within the parameters
of the budget as outlined, one that does not front-load, one
that provides a safety net for farmers, that is as market-
oriented as possible and does not encourage overproduction,
which thereby depresses prices and creates oversupply. We would
like a bill that is consistent with our trade obligations, and
we would like to see a bill that provides adequate--or
significantly additional conservation programs, particularly
for working farm lands.
As I said, we believe both the Senate and the House bill
provide significant additional funding for conservation, and we
think that is a good thing. Obviously, there are a number of
issues to be resolved in the conference. I would say the final
issue is a new risk management tool for farmers. A farm savings
account to help them put away into something like a 401(k)
account in the better years; money to use in the years that are
more difficult, giving them an additional tool to manage risk
on their own account. In talking with farmers and ranchers
around the country, they like the opportunity to have more risk
management tools, because farming is such an uncertain
business.
Chairman Nussle. Well, as one of the lead sponsors on the
farm savings accounts, I appreciate that advocacy. I am not
sure we can accomplish it within the farm bill conference, but
it is something important for us to consider at Ways and Means.
You sound as though, just judging from those five goals, we are
close on four. The biggest challenge, it appears--we are close
on market. We are close on the production issues. We are close
on safety net. We are close on compliance with trade. The
biggest issue here is does it fit within the budget
realistically, and that one is clearly outside the goal.
So you may be interested in knowing that one of the
considerations that is being made at this point in time is that
a delegation from the Budget Committee be sent to the farm bill
conference. We are working with the Speaker's office at this
point in time. No decision, I don't think, has been made yet
but it would be my intention to go and ensure that farmers have
a similar safety net in the second 5 years as they do in the
first 5 years and that it fits within a responsible budget. So
if we do have the opportunity to go, that will be my advocacy,
and I am happy that the administration is there as well. So
thank you for your testimony.
Mr. Spratt.
Mr. Spratt. For clarification--you may have said it and I
may have missed it--does the administration support a 10-year
extension as opposed to a 5-year period for the farm bill? Have
you taken a stand on that issue?
Secretary Veneman. We have not taken a strong stand on that
issue, though we have said that we have some concerns about
extending a farm program out 10 years because, like other
businesses, this is a rapidly changing business environment for
our farmers and ranchers. There is some concern about locking
us in for a 10-year period of time.
On the other hand, as I said earlier, we want to make sure
that the amount of money that has been designated by the two
budget committees which is designated for a 10-year period is
allocated in a way over the 10-year period; regardless of
whether or not it is a 5-year bill or a 10-year bill, that it
doesn't shortchange farmers in the longer term for the sake of
putting more money in the shorter term. So, I think that the
issue of whether it is a 5 or 10 year bill is not as important
as how we allocate the money overall.
Mr. Spratt. How much money do you have in your request for
homeland security?
Secretary Veneman. We have added, I think, $142 million
additional this year. In addition, we got $328 million out of
the defense supplemental appropriation bill recently signed by
the President. So we are certainly taking a lot of action with
regard to homeland security.
Mr. Spratt. Could you tell us just briefly, a thumbnail, as
to where that money is going, what you are using it for?
Secretary Veneman. Just one second. On the 2003 request, we
have roughly 3,500 agriculture quarantine inspectors currently
located at U.S. ports and over 7,600 meat and poultry
inspectors that would be funded through our meat and poultry
inspection; and major research programs, exotic diseases and
emerging, that represent threats to the food system.
In addition, we have research complexes in Ames, IA; Plum
Island, NY; Athens, GA; Laramie, WY; and Fort Detrick, MD where
research and diagnostic work is done, where we would want to
put some additional funding to make sure our laboratories are
in appropriate condition.
Our 2003 budget includes increased funding to strengthen
key elements of our infrastructure, a $19 million increase in
the AQI program for improved point-of-entry inspection programs
by providing additional inspectors, expanding canine teams and
state-of-the-art high-definition x-ray machines at high risk
points of entry on the Canadian and Mexican borders and Hawaii
and elsewhere. It would include a $5 million increase to
strengthen the capability of APHIS, to assess and monitor
outbreaks of disease in foreign countries that have the
potential to spread to the U.S. A $48 million increase for
plant and animal health monitoring to enhance the ability to
quickly identify and respond to outbreaks that may occur. While
we have longstanding efforts that have kept FMD or foot and
mouth disease, and BSE or what is commonly referred to as ``mad
cow'' disease out of the U.S. Funds would be used to improve
the emergency management system which coordinates and
implements a quick response to an animal or plant pest or
disease outbreak.
Now, I might add that these are issues, particularly on the
animal health side, that we have been dealing with extensively
over the past year because of the outbreak of foot and mouth
disease particularly in the U.K., the spread of BSE with new
cases in Japan, and so we have been putting considerable focus
on these issues even before 9/11, and enhancing our efforts in
regard to animal diseases. Now, of course, we are putting even
more emphasis on these kinds of programs with the threat of
intentional as well as unintentional possibilities of threats
to our food system.
We also have a $12-million increase for other APHIS
programs to expand diagnostic response management and other
scientific and technical services. We have a $28-million
increase to provide additional funding for the Food Safety
Inspection Service, supporting food safety activities including
maintaining 7,600 meat and poultry and egg inspectors. Within
the $28-million increase is $14.5 million to improve the
information technology infrastructure and $2.7 million to
conduct slaughter epidemiological surveys and risk prevention
activities for small and very small establishments. There is a
$34-million increase to support research aimed at protecting
our agriculture and food system from attack by animal and plant
diseases, insects, and other pests.
Mr. Spratt. Are you satisfied at the level of funding and
with the coverage of all the risk?
Secretary Veneman. We continue to review and enhance all of
our programs. We believe that with the $328 million that we got
through the defense supplemental appropriations, in addition to
what we have added in 2002 by reallocating resources because of
things like the foot and mouth disease scares, together with
our requested increase for 2003, that year we would be
adequately covered if these requests were funded.
Mr. Spratt. Switching gears completely, I would just ask
you kind of a global question. I come from an agricultural
district; at least half of it is cotton farmers, soybean
farmers, tobacco farmers. And they are all hurting, every one
of them. First, with respect to tobacco farmers, is there
anything being contemplated by the administration for buyout of
the tobacco program, the quota program, funded, say, by levies
or some kind of imposition on tobacco?
Secretary Veneman. First I want to just say that I have
traveled around the country quite a lot, talking to farmers all
over the country, and I can tell you that I am hearing the same
thing you are in terms of farmers that are hurting out in the
countryside.
On the tobacco side, there has been some buyout of quotas
through some of the State programs. I believe Maryland bought
out quotas with some of their tobacco settlement money. At this
point, while I have heard some discussion among various
interest groups about the possibility of looking at quota
buyouts, we are not currently discussing such a possibility--or
such a system within the administration.
Mr. Spratt. Let me ask you about the other commodity
programs, just broadly and generally. I have read--it may have
been an exaggeration, but I have read that in recent years,
last year, a third--$1 out of every 3 earned by large farmers
came from the Federal Government, particularly if they were
farming program crops. Is that roughly correct?
Secretary Veneman. Let me have Keith Collins, our chief
economist, comment on that quickly.
Dr. Collins. If you look at U.S. agriculture as a whole,
out of net farm income, government payments were equal to about
half of net farm income. If you look at program costs----
Mr. Spratt. Last year?
Dr. Collins. That was in 2000.
Mr. Spratt. Half.
Dr. Collins. Half. If you look at program crops themselves,
food grains, feed grains, cotton and rice, government payments
are equal to about 70 percent of net farm income last year.
Mr. Spratt. Well, as you look at something like that, you
have to ask yourself how long can this kind of system be
sustained? Don't misinterpret this as hostility toward the
system. I am sympathetic to my farmers, but I have to wonder
what is the resolution of this. And the generic answer seems to
be trade. We have got to open up farm markets, because the
domestic markets are pretty well served already. What is the
answer, long run?
Secretary Veneman. Well, I think you are right, sir, that
we have to look at markets for our ag products overseas.
Certainly there has been some impact on our ability to export
from the value of the dollar. We need to maintain the markets
that we do have overseas. We export about 50 percent of our
wheat, this year it is going to be 50 percent of our cotton,
and the list goes on and on. We are a very export-dependent
industry, and so not only do we need to open up new markets,
but we need to make sure for the health of our farm economy
that we keep our markets open that we have for our farm
products here in this country.
That concerns me, and that is why I brought up a number of
the issues in my opening statement about markets we are trying
to keep open.
I agree with you that over the long term, as we said, we
want to have programs that provide a safety net that are as
market-oriented as possible. Any farmer you talk to would
prefer to get his or her income from the marketplace rather
than from the government, and so I think that we need to move
our programs as much as we can to make sure that they are as
market-oriented as possible.
We indicated our concern about getting loan rates too high.
They are much higher in the Senate bill and we are concerned
that they may create more overproduction, thereby depressing
prices and creating even more oversupply.
Mr. Spratt. Thank you very much.
Chairman Nussle. Mr. Gutknecht.
Mr. Gutknecht. Thank you, Mr. Chairman, and thank you,
Madam Secretary, for coming today. Normally this is a tough
committee for some of the members of the Cabinet to come to,
because we are the committee that says no. The good news for
you is we have already said yes, and we have already agreed in
the House, and we thought we had an agreement with the Senate
to a 10-year plan at $73.5 billion. Somewhere between the
Senate committee and today, they now have a program that looks
an awful lot different, and it makes it very difficult for us.
I am concerned and you have already expressed concern about
the front-loading in the Senate bill. I am very worried about
what will happen after that 5-year period is over under the
terms and conditions of the Senate bill. For example, a large
number of critical programs, like milk price support programs,
the wetland reserve program, value-added product market,
development grants, mandatory ag research funding is completely
eliminated after the first 5 years. Other programs that are
very important to our environment, like the environmental
quality incentives program, otherwise called the EQIP program,
and farmland protection are cut anywhere from 50 to 80 percent.
I am very concerned about that, and I wonder if you could
discuss that for a few minutes.
Secretary Veneman. Well, I am looking at a list that is
very similar to that which you are going through, and that is
absolutely true. The Senate bill provides for, for example, as
you said, a dairy program in the first 5 years that has
absolutely no funding for it in the second 5 years. Like you
said, the environmental quality incentives program, a key
program, particularly for our livestock producers as they work
to comply with waste disposal and water quality issues, has
more funding in the first 5 years, but substantially reduced in
the second 5 years. As you indicated, this is true for a whole
host of other programs.
That means one of two things: Either they don't have those
programs in the second 5 years, or we are looking at additional
budget authority in the second 5 years if you want to continue
the programs as they are. I certainly think that that is
something the Budget Committee would be concerned about.
As I said, we believe that it is better to have certainty
in the programs; to have, as the House bill does, more even
spending over the 10-year period; and that regardless of
whether it is a 5-year bill or a 10-year bill, we shouldn't
shortchange farmers over the 10-year period for which the
budget resolution applies.
Mr. Gutknecht. If I could add parenthetically, I think one
of the other concerns if we were to adopt the Senate plan, what
we would do, Members, during that sixth year is, we would
clearly be pitting farmers against environmental groups. And I
will tell you, that is not a fight that is a pretty picture for
any of us. I think they will be coming back to the Budget
Committee for more money, and that, in my opinion, is a
terrible mistake.
Secondly, though, I want to talk about in terms of the
front-loading. The Senate continues to say that farmers need
the money up front, but the independent analysis that I have
seen done by FMPRI and other groups suggests that in spite of
the fact that the Senate is spending more money during the
first 5 years, that eight out of every nine dollars of extra
money that is going to go supposedly into agriculture will not
go to farmers. In fact, I think that--and perhaps Dr. Collins
would want to comment on this--that actually the bipartisan
bill that passed out of the House actually provides more help
to farmers during the first 5 years than the Senate plan. Would
you want to comment on that?
Secretary Veneman. I would be happy to let Dr. Collins
comment on that because he has reviewed the FMPRI study.
Dr. Collins. I am not sure what the origin of that analysis
was, but from my own rack-up of the numbers, during the first 5
years, if you just look at the core commodity programs--that
is, the fixed payments, the AMPA payments, the price support
loan programs and the countercyclical payments--the House bill
would spend, by CBO scoring, $22.2 billion, whereas the Senate
would spend $21.1 billion. So I think that is your point, that
in fact of the core commodity programs, the House bill would
spend more.
If you look at that 5-year period total budget authority,
the Senate bill spends $9 billion more than the House. So here
you have the commodity--the core commodity programs, more
spending in the House bill than the Senate, but the Senate bill
spends $9-billion more overall.
Now, your question about every eight out of nine dollars
not going to farmers. The question is where does that $9
billion go? Well, it goes all over the place, but part of it
goes to conservation programs. Part of it goes to other
programs as well. So I can't verify the 8 out of the $9
billion, because some of those dollars I think may get back to
farmers. But clearly you are accurate in saying that when you
look at the core commodity programs, the House bill does spend
more.
Mr. Gutknecht. Well, finally, and my time has expired, I
want to make just one last comment. In terms of additional
markets, one of the areas we absolutely have to look at, and it
is great to look at foreign markets, but there are huge
domestic markets. If we can convert more of what we grow into
things like biofuels, and so I hope that as we finish up the
negotiations sometime this spring on our farm bill, that
biofuels and other uses of the things that we grow here in the
United States are a big part of that discussion.
And one last point and then I will yield back, and this--
perhaps, Dr. Collins, you could just send me a real short memo.
We have had a heated discussion up in our part of the country
about what is happening with milk protein concentrates, MPCs,
and we have had this discussion and one of the reasons you
adjusted the butter powder tilt was to address that problem. I
wonder if you could give me privately just a short report on
how that is working. Thank you.
Secretary Veneman. We will be glad to do that.
[The information referred to follows:]
Response to Mr. Gutknecht's Question Regarding Milk Protein Concentrate
Imports
U.S. milk protein concentrate (MPC) imports grew from slightly over
7 thousand metric tons in 1995 to 53 thousand metric tons in 2000.
Major exporters to the United States include the European Union (EU),
New Zealand, Australia, and Canada.
In 2001, imports fell to 28,500 tons, as imports from the EU,
Australia, and Canada dropped. On a monthly basis, the downturn began
in August of 2000 when imports levels fell from the 5-6 thousand metric
tons per month to 2-3 thousand metric tons (see attached chart).
Improved international prices for nonfat dry milk (NDM), which rose
from $1,600 to $2,200 per ton in early 2000, are generally considered
to have caused the downturn in U.S. imports. Higher international
prices for NDM increased the profitability of producing NDM relative to
MPC, causing milk to be diverted in the major MPC exporting countries
to NDM.
The USDA decision to reduce the support price for NDM, effective at
the end of May 2001, appears to be an important factor keeping imports
of MPC at a low level. Despite last fall's sharp decline in
international NDM prices from over $2,000 to below $1,700 per ton,
monthly imports of MPC have not returned to the early 2000 level.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Secretary Veneman. If I might just make a comment on the
value added and particularly the biofuels. I think it is
extremely important to emphasize that agriculture has
tremendous potential to provide a renewable source of energy
both on the biofuels side and the biomass side. There are a
number of new products that are being produced from
agricultural products. I just learned about how they are making
tractor parts from corn and soybean polymers.
The promise that we will see from new research and
technology for agriculture is tremendous. I think it is
important to point out that in the President's energy plan that
was released last year, there is specific and strong reference
to the role that biofuels can play.
It was interesting, I recently went out to speak to the
Commodity Classic, the corn and soybean folks, and after I
spoke I met with some of the leadership. And they said, you
know, ``we are as concerned about getting an energy bill passed
as we are about a farm bill passed,'' because they see the
potential for long term for agriculture in the biofuels area.
Chairman Nussle. Thank you, Mr. Gutknecht.
Just as one side comment--I don't usually do this, but
since we are on the topic, and maybe this is news; I hope it is
not--but $73.5 billion over 10 years is our final offer. I
don't know how clearly we have had to say this. We have said it
in the budget. But part of the reason that the Speaker may be
considering sending the delegation from the Budget Committee to
this conference is because we can have a lot of discussion
about what is in the first five, what is in the second five,
what the policies look like, what is important for trade, what
is a safety net and what isn't. But what fits within a balanced
budget and a balanced approach for agriculture has been clearly
outlined. It is $73.5 billion.
And to begin the bidding higher than that is irresponsible,
and that is a message that needs to be delivered, and I am
happy to deliver it. If we need an additional vote to that, we
may need to take it, but at least to start with today, that is
the chairman's position and I intend to enforce it.
Mrs. Clayton.
Mrs. Clayton. Thank you, Mr. Chairman, and Madam Secretary,
welcome to our committee.
I think all of us who are interested in agriculture will
probably make comments on the farm bill. I think we have a
number of interesting decisions to make about the farm bill.
Will policy drive the allocation? We know we have a cap. I
think the chairman is correct, the $73.5 billion is probably
understood by all of us that that is the cap. But still the
issue for policymakers to make is will policy drive the
allocation of that $73.5 billion, or will we allocate dollars
to titles and let them divvy it up?
The other question, whether we like it or not, is the 5
year and the 10-year issue. Now, I am not sure, Madam
Secretary, if you are saying, well, I like the 10-year
resolution, but I really like 5 years. Take the 10-year
allocation, divide it in two, and that is where we are. Now,
that is a different proposition. Maybe I ought to pause and let
you answer that for me.
Simply, are you suggesting that you like the idea of $73.5
billion over a 10-year period, dollar amount in time, and then
if we take that and divide it, in your response to the
chairman, that gives you a figure to work with. So if you are
at that position, we are really at a different stage than being
at $73.5 billion, if you prefer a 5-year program. It means that
we will have to make a decision whether you actually have a 5-
year program and allocate that half, or if we have a 10-year
program we have $73.5 billion for allocation over the period of
time. Those are different driving figures altogether.
Secretary Veneman. Well, as I said, Mrs. Clayton, we have
agreed to in the President's budget--I think it is fairly
unprecedented to agree in the President's budget before a farm
bill is passed--to the 10-year figure that the House and the
Senate budget resolutions agreed to last year, and that is the
$73.5 billion. We have said that if in fact the conference
committee agrees on a 5-year bill, then the amount of money
that should be spent in 5 years is roughly half of that, so
that you have additional money left for the second 5 years, and
that farmers and other program recipients from USDA aren't
shortchanged in the outyears.
Mrs. Clayton. So you would see that as a reserve, that we
could have that other 5 years funded by the remainder of that?
That wouldn't go into the general Treasury, right?
Secretary Veneman. No. The way I see it is that we have a
10-year budget resolution that has been agreed to by the House
and the Senate and the President in his budget that he proposed
this year. There is the same number for over a 10-year period
reflected in the President's budget. So we are not talking
about that money going in reserve, but it is actually in the
President's budget.
Mrs. Clayton. OK. I have a couple of areas. First,
nutrition: I want to thank you for the leadership that the
Department has made in the area of nutrition, and there are
some really significant areas, and I certainly want to express
appreciation for that.
The index standard deduction, poverty level rates. There
have just been a number of issues that we are about to talk
about and express appreciation. However, there is the area of
transition, and that is the area when you transfer from welfare
to other areas that you make some assistance for that. In child
care we have it. In Medicaid we have it. In food stamps you
don't provide it.
Can you comment as to how we should make adjustments for
that? These are otherwise eligible people who are known to be
eligible, who have to go through extra hoops to get food
stamps. How can we have that? Despite the good things we have
done, we haven't taken care of that.
Secretary Veneman. Well, as I know that we have discussed
with you and I know you have had several conversations with our
Under Secretary, Mr. Bost, we are committed to finding ways to
streamline the food stamp program and, as you say, I think we
have proposed several positive measures that will help make
that happen.
We would be happy to work with you in looking at this issue
to determine what might be done. I can certainly have Mr. Bost
work with you to look at this particular issue.
Mrs. Clayton. I do want to thank you for what you have
done. We did--as you indicated--have Under Secretary Bost with
us and Representative Price join us. We had people all over
North Carolina talking about hunger and what they thought would
be helpful.
I see my time has expired, but the able-bodied adults
without dependents is the area where we do not provide any
resources. And you know in the authorization of welfare, we had
a 3-month option. It was optional. In the Senate farm bill they
had provided at least a 6 month--they extended that to 6
month's option. Can you comment where the administration would
be on that? Every 3 months out of 36 months, something right
on----
Secretary Veneman. What is in the Senate bill is not part
of the administration's proposal in terms of what we have put
forward on the food stamp program.
Mrs. Clayton. If I can get some additional questions to the
Secretary, Mr. Chairman, in writing, I would like to do that.
The area I want to address your attention to is a reduction in
rural housing and the proposal to contract out the whole
processing for rural housing. There is a reduction in the
current budget over last year. So I will write my question to
you. Thank you, Mr. Chairman.
Mr. Gutknecht [presiding]. Without objection, we will allow
members to submit written questions, and with your
acquiescence, we will expect that they will get answers. Thank
you.
Mrs. Clayton. One other question. Did anyone request that
data that was in response to Mr. Spratt about the allocation of
funds and--if we could have that written out, the analogy of
how much other government monies go to--one-half goes to net
farming. Do you have that analysis you could share with the
whole committee? That would be extremely helpful.
Secretary Veneman. We will be happy to do that.
If I could just make one comment on rural housing. We do
have a reduction in our rural housing line item for this year,
and there is a reason for that. In terms of new construction,
we had an OIG report that said that we really needed to take a
look at our current inventory and the current state of that. So
basically, what we have done is we have pulled back on building
any additional new housing; the multifamily housing, I should
say--it is multifamily housing--so that we can take stock of
our inventory and do the necessary repairs that have been
outlined by a report that says that is necessary.
Mrs. Clayton. Well, we are suffering in rural housing in
rural areas, so I just want to----
Secretary Veneman. We will be happy to respond more
completely in writing.
[The information referred to follows:]
GOVERNMENT PAYMENTS AS PERCENT OF TOTAL GROSS INCOME AND NET FARM INCOME
[1992-2002]
------------------------------------------------------------------------
Total Government payments as
gross Net farm Government pecent of:
income income payments -----------------------
Year (billions (billions (billions Total
of of of dollars) gross Net farm
dollars) dollars) income income
------------------------------------------------------------------------
1992 200.6 47.8 9.2 4.6 19.2
1993 205.0 44.7 13.4 6.5 30.0
1994 216.0 48.9 7.9 3.7 16.2
1995 210.8 36.9 7.3 3.5 19.8
1996 235.8 54.8 7.3 3.1 13.3
1997 238.5 48.5 7.5 3.1 15.5
1998 231.8 42.9 12.4 5.3 28.9
1999 235.3 44.3 21.5 9.1 48.5
2000 241.5 46.4 22.9 9.5 49.3
2001f 248.6 49.3 21.1 8.5 42.9
2002f 240.6 40.6 10.7 4.4 26.4
1992-01 226.4 46.4 13.0 5.8 28.1
------------------------------------------------------------------------
Source: Economic Research Service, USDA
GOVERNMENT PAYMENTS AS PERCENT OF NET FARM INCOME BY SALES CLASS
[Year 2000]
----------------------------------------------------------------------------------------------------------------
Government
Net farm income payments (in Payments as
Sale class (in millions of millions of percent of net
dollars) dollars) farm income
----------------------------------------------------------------------------------------------------------------
Less than $20,000......................................... -2,315.5 1,403.6 na
$20,000-$49,999........................................... 955.5 1,524.9 159.6
$50,000-$99,999........................................... 1,796.8 2,756.7 153.4
$100,000-$249,999......................................... 6,725.9 6,633.1 98.6
$250,000-$499,999......................................... 7,822.9 5,527.2 70.7
$500,000-$999,999......................................... 7,047.4 3,239.8 46.0
$1,000,000 or more........................................ 24,404.9 1,808.8 7.4
-----------------------------------------------------
Total United States................................. 46,443.6 22,896.4 49.3
----------------------------------------------------------------------------------------------------------------
Source: Economic Research Service, USDA
GOVERNMENT PAYMENTS AS PERCENT OF CROP SECTOR GROSS AND NET CASH INCOME
[Year 2001]
----------------------------------------------------------------------------------------------------------------
Government payments as
Gross cash Net cash Government percent of:
Crop income (in income (in payments (in -------------------------
millions of millions of millions of Gross cash Net cash
dollars) dollars) dollars) income income
----------------------------------------------------------------------------------------------------------------
Corn.................................. 24,231 9,360 5,217 21.5 55.7
Wheat................................. 7,975 3,300 2,493 31.3 75.5
Soybeans.............................. 16,225 7,602 3,794 23.4 49.9
Upland cotton......................... 7,468 2,150 3,605 48.3 167.7
Rice.................................. 2,357 825 1,452 61.6 176.1
Sorghum............................... 1,456 390 452 31.0 115.8
Barley................................ 763 194 200 26.2 103.0
Oats.................................. 192 -152 16 8.4 na
-------------------------------------------------------------------------
Principal crops................. 60,667 23,668 17,229 28.4 72.8
----------------------------------------------------------------------------------------------------------------
Source: Office of the Chief Economist, USDA
GOVERNMENT PAYMENTS AS PERCENT OF NET FARM INCOME BY STATE
[Year 2000]
----------------------------------------------------------------------------------------------------------------
Government Payments as
State Net farm income payments (mil percent of net
(mil dollars) dollars) farm income (%)
----------------------------------------------------------------------------------------------------------------
Alabama................................................... 1,196,212 170,852 14.3
Alaska.................................................... 13,397 1,672 12.5
Arizona................................................... 616,638 107,066 17.4
Arkansas.................................................. 1,578,125 900,648 57.1
California................................................ 5,348,996 667,466 12.5
Colorado.................................................. 542,652 351,116 64.7
Connecticut............................................... 184,783 18,143 9.8
Delaware.................................................. 135,909 25,028 18.4
Florida................................................... 2,712,956 56,741 2.1
Georgia................................................... 1,998,777 380,057 19.0
Hawaii.................................................... 63,904 11,927 18.7
Idaho..................................................... 832,094 261,297 31.4
Illinois.................................................. 1,561,412 1,943,916 124.5
Indiana................................................... 821,529 938,464 114.2
Iowa...................................................... 2,578,305 2,302,094 89.3
Kansas.................................................... 956,147 1,231,923 128.8
Kentucky.................................................. 1,662,695 448,473 27.0
Louisiana................................................. 488,360 451,831 92.5
Maine..................................................... 96,510 13,851 14.4
Maryland.................................................. 409,650 88,470 21.6
Massachusetts............................................. 59,778 10,973 18.4
Michigan.................................................. 304,678 381,056 125.1
Minnesota................................................. 1,548,378 1,502,230 97.0
Mississippi............................................... 769,201 463,901 60.3
Missouri.................................................. 971,899 869,390 89.5
Montana................................................... 291,794 490,002 167.9
Nebraska.................................................. 1,419,762 1,406,971 99.1
Nevada.................................................... 88,948 3,918 4.4
New Hampshire............................................. 15,837 4,768 30.1
New Jersey................................................ 221,698 22,481 10.1
New Mexico................................................ 494,239 79,495 16.1
New York.................................................. 609,053 159,876 26.2
North Carolina............................................ 3,107,638 447,096 14.4
North Dakota.............................................. 749,127 1,170,234 156.2
Ohio...................................................... 1,177,321 678,104 57.6
Oklahoma.................................................. 1,144,662 439,851 38.4
Oregon.................................................... 342,656 137,401 40.1
Pennsylvania.............................................. 949,161 147,848 15.6
Rhode Island.............................................. 11,300 1,218 10.8
South Carolina............................................ 552,169 144,499 26.2
South Dakota.............................................. 1,398,608 789,895 56.5
Tennessee................................................. 448,601 298,873 66.6
Texas..................................................... 3,644,154 1,647,066 45.2
Utah...................................................... 219,096 36,181 16.5
Vermont................................................... 163,143 26,093 16.0
Virginia.................................................. 642,073 152,452 23.7
Washington................................................ 796,305 352,503 44.3
West Virginia............................................. 41,469 23,509 56.7
Wisconsin................................................. 347,614 603,213 173.5
Wyoming................................................... 114,239 34,302 30.0
-----------------------------------------------------
United States....................................... 46,443,651 22,896,434 49.3
----------------------------------------------------------------------------------------------------------------
Source: Economic Research Service, USDA
Mr. Gutknecht. The Chair recognizes the gentleman from
Texas, Mr. Thornberry.
Mr. Thornberry. Thank you, Mr. Chairman. Madam Secretary, I
think in the last 6 months not only have the priorities of
government changed, but what the American people expect from
their government has changed. And while no district is probably
more affected by the farm bill than mine, all of that in a way
pales in comparison to the potential consequences of
agricultural terrorism.
I was listening very closely to your answer to Mr. Spratt,
that you think that we have enough money for now. But I am very
concerned, and I think you make a good point. You got a head
start in dealing with foot and mouth and mad cow disease, but
maybe not a head start in dealing with intentional infliction
of those diseases, which is kind of a whole new ball game.
Somebody sneaking a small amount of powdery substance here can
have just devastating consequences.
I guess I would like to hear a little more from you. You
used foot and mouth as one example. How far along are we in
planning for how we would deal with an outbreak of foot and
mouth disease? I mean, surely we can do better than Britain,
killing tremendous numbers of animals and having huge areas
quarantined. I know the Department was reevaluating how we
would deal with an outbreak. I would like to know how far along
we are, and I would also be interested in your perspective of
how we are pumping APHIS up a little bit.
One brief example in my experience over the past year which
you are familiar with is an outbreak of a wheat fungus in my
area, Karnal bunt. You have had experience with it before. I
have got to tell you that my farmers have not had a lot of
confidence that the folks that they dealt with knew what they
were talking about. Their questions weren't answered and the
rules changed, and this is a quality issue with zero danger to
human health. If it is something that does affect human health
and the food supply, I really worry that not only the money
that we are spending, but the reforms of the Agency and the
priority we are giving, the seriousness with which we are
approaching this is not as much as it should be. So I want you
to make me feel better.
Secretary Veneman. I will try. Thank you for that question.
As you indicate and as I indicated before, the whole issue of
bioterrorism, in some ways we did have a head start;
particularly when it comes to something like foot and mouth
disease where we begin to increase our inspection at the
borders. We started reviewing all of our systems, looking at
how do we prepare not only to keep the disease out, but how do
we respond if it were to come into this country.
One of the things that we did with regard to the outbreak
in Great Britain is we had over 300 veterinarians and other
scientists who went to Great Britain from the U.S. to help with
the control of that disease. I met with the first group that
came back, and they had been over there about a month. I had
some of these people tell me that there is no better training
that they have ever had outside of vet school in any continuing
education, than what they got in the hands-on experience there.
That is important, because we now have a whole cadre of people
who are very much better trained in the detection, control, and
how to deal with that disease, and I think that is a real plus.
In addition, we have been working very closely with our
States, the State veterinarians associations, the State
departments of agriculture, and reaching out with our State
partners to the local veterinarians; because as you know, if
you get an outbreak, it is your first defense that is going to
make the difference of whether or not you have an outbreak like
you had in the U.K., or you have one that is contained very
quickly like it was in France.
And so we have really been working very, very hard with our
State partners and with farmers and ranchers and ag groups.
I have to tell you that the response of the agriculture
community, particularly on the animal side pre-9/11, was
extremely helpful in terms of what can we do to help train
farmers and ranchers on how to protect farms and ranches. Now,
post-9/11, that is a much broader issue. We are now looking at
protecting the whole food supply. We are working with the whole
food chain, from production of everything from fruits and
vegetables, to animals to growing crops, to processing, to
transportation, to the retail side, because all of these have
some vulnerable areas.
We want to help with best management practices throughout
the food chain. We are working very closely with our partners
at FDA and we are working very closely with the Office of
Homeland Security as we look at the whole issue of protecting
our food supply.
I have been asked many times: What are you most afraid of?
I am probably still most afraid of an intentional introduction
of something like foot and mouth disease because, while it is
not a human health issue, we always have to point out that it
is such a fast moving virus that it could economically
devastate our livestock in this country. That continues to be
one of our biggest areas of concern.
We have increased border inspection from the beginning of
2001. If we are allocated through the Congress and get the 2003
appropriation, we will have increased inspection on our borders
by 55 percent in terms of personnel in about a 2\1/2\-year
period of time, which we think is very significant.
So we are being very proactive in this regard and working
very closely, as I said, with the Office of Homeland Security
on border issues, on food issues.
Let me just make one comment about Karnal bunt. As you
noted, I met Karnal bunt when it was first discovered here,
because California was one of the first States that had the
outbreak. I was out there. As you indicated, this is an issue
that does not particularly pose any human health--it doesn't
pose any human health threat whatsoever, and it is basically a
fungus, but nevertheless it does cause problems in terms of
international trade because so many countries do limit that.
Basically, many of their systems were based on our own
regulatory system pre- the discovery of Karnal bunt. But Karnal
bunt I think underscores, as does foot and mouth disease, the
importance of animal-plant health inspection issues, whether it
is Med. flies or citrus canker--which I know is Mr. Putnam's
great interest--or it is, you know, glassy wing sharpshooter,
which we now have in California, or Karnal bunt or foot and
mouth disease or it is various other animal or poultry
diseases. These are such important programs, because it
protects the agriculture for basically every one of our
farmers.
Mr. Thornberry. And every one of our eaters, too.
Secretary Veneman. And our eaters. They are all food safety
issues, but the fact of the matter is it keeps our food supply
safe and secure. We put out a book last year called ``Food and
Agriculture Policy: Taking Stock for a New Century.'' This was
a written pre-9/11. There is a chapter in here talking about
the importance of the infrastructure that protects our
agriculture, pest and disease prevention and eradication, food
safety, and the people that support those. So these are
extremely important issues.
I appreciate you and your committee recognizing how
important these issues are to overall agriculture in this
country.
Mr. Thornberry. Thank you, Mr. Chairman.
Mr. Gutknecht. The gentleman from North Carolina, Mr.
Price.
Mr. Price. Thank you, Mr. Chairman. I want to continue Mr.
Thornberry's line of questioning. I appreciate the Secretary's
responses. I would like to bring some of this down to specific
budget numbers.
I have a shorter question first, though, that I think will
have a short answer, but it is an issue of major importance in
North Carolina and other States as well. It has to do with the
coming regulations of phosphorous standards. Nutrient
management is a major environmental issue in North Carolina and
elsewhere. Our 3,500-plus animal operations are going to be
subject to the USDA-NRCS phosphorous standards this year. As
one who is not on the Agriculture Appropriations Subcommittee,
but nonetheless has an interest in this budget item, let me
just ask you, does the President's budget include an increase
in the NRCS conservation operations for the next fiscal year or
subsequent fiscal years that would address the needs of the
States to provide technical assistance to help farmers meet
these major challenges? To what extent are you addressing that
under the budget and do the budget numbers reflect that?
Secretary Veneman. We are addressing that. We have about a
$48 million increase allocated for that particular activity.
But I think that you bring up an issue that is extremely
important and that is the importance of, as I said in my
opening statement, of having programs that assist our farmers
and ranchers with working farm lands. Our farmers and ranchers
are the best environmentalists there are. They need the land to
survive. But they also need help meeting all the regulatory
requirements. We do that through NRCS programs like the EQIP
program, programs like the CRP program, which are partnership
programs that help with water quality and a variety of other
issues.
So I think that as we move forward, it is extremely
important that we look at various ways--we have supported that
strongly in our policy book--ways that we can expand programs
that help farmers and ranchers with their working farm lands
and address the regulatory issues that they face.
Mr. Price. I appreciate that. And let me make certain I
understand; your answer is that an increase of $48 million is
included in this budget for technical assistance on the
phosphorous standard.
Secretary Veneman. Yes.
Mr. Price. Thank you. Let me return to the question of the
importation of animal diseases. This is, of course, not a new
subject. We had extensive discussions in the House last year
about the threat of foot and mouth disease, mad cow disease,
and how we could protect ourselves against this infestation. Of
course, this discussion has a new dimension since September 11.
You have proposed an increase of $75 million in pest and
disease exclusion and monitoring programs to guard against
foreign animal diseases.
The fiscal year 2003 budget is also proposing a $175-
million increase to fund ongoing costs of combatting insects.
That is presented as an alternative to funding through
emergency requests. Is that right?
Secretary Veneman. That is correct. The way these programs
are allocated in the budget is that those programs that have
initially been determined to be an emergency--I think citrus
canker is one example--are being moved in this budget into a
line item funding. After the first year of being an emergency,
they are requested in the budget, as opposed to keeping them as
an emergency.
Mr. Price. Alright. So we have those two items that are
directly relevant to our earlier discussion.
Now, last year in April, you released $32 million in
agricultural quarantine inspection, AQI, user fee funds to
address the increased need for security and inspections, mainly
looking at the mad cow and foot and mouth disease threats. The
supplemental that was passed prior to 9/11. It was a subject of
some contention here. The Agriculture Department asked for $35
million of that supplemental. The leadership of the House
granted only $5 million. I am not quite certain how that
affected your operations and your planned services prior to 9/
11, but before 9/11, it is safe to say that you were seeking to
obtain increased funds for these purposes.
So my question is twofold. How was this changed by 9/11,
and to what extent does your budget request reflect additional
measures on top of 9/11? And what more would you want to say
about the pre-9/11 efforts which, as I said, showed every sign
last year of falling short of your desired level of support?
Secretary Veneman. Well, I think, sir, that your question
really does indicate how we have been dealing with these issues
through a whole year and not just since 9/11, because we did
reallocate some funds so we could increase border inspections
because of our fear of foot and mouth disease particularly.
In addition, we were seeking additional funding, as you
said, of $35 million to enhance our overall programs. And we
did only get a $5 million appropriation. But to some extent,
all of that was superseded by events of September 11, followed
by the defense supplemental where we got $328 million, and
then, of course, the President being willing to looking at our
budgets now for homeland security purposes.
Things that have changed, for example, have been in
addition to increasing border inspections. We are now even more
urgently looking at how we increase the urgency with which we
address our laboratory needs, whether it is the Ames, IA,
laboratory where we assess things like mad cow disease, or what
we do with the Plum Island facility where we do the testing for
foot and mouth disease, or Athens, GA which is our primary
poultry laboratory, all of our laboratories.
Also we need to make sure that we have adequate laboratory
capacity because, again, of intentional threats as well as the
concern about unintentional spread of diseases. So we are
looking at increasing border measures, new technologies, new x-
ray machines, increased research on detection, for example, of
diseases. We think technology is going to take us a long way
with regard to some of this.
We are also working much more closely now, of course,
through the Homeland Security Office coordinating with other
agencies. We are working with all of the border agencies in
trying to get computer systems that have interconnectivity
between Customs and USDA, for example, so that you can have
cross-checking and referencing through our two systems as to
what is coming in. We believe this is an important part of
homeland security.
Let me make one comment also about the mad cow disease BSE,
which, as you know, unlike foot and mouth disease, is also a
human food safety issue. We released at the end of November a
3-year study that was conducted by Harvard University that
looked at the risk in this country and the likelihood of us
getting BSE. The study showed a couple of things. One is that
it showed that the likelihood of having it in this country was
extremely low, the likelihood of us getting it was very low;
and, if we were to get it, that the likelihood of it spreading
because of the measures we have taken is very slight.
So we have some reassurance but we are not resting on our
laurels. We are looking at all the recommendations of that
report to see what additional measures we can take. We are now
in the process of getting comments on additional measures that
we can take on things like on farm animals, where there is
higher risk, as pointed out by Harvard.
So we have been very proactive in looking at where
vulnerabilities might be with us and FDA in partnership on
things like mad cow disease, and we are going to continue to
look at all of our food safety and our protection systems.
These issues require constant review and evaluation, and we are
going to continue to do that. We are going to use our research
agencies to look at new ways of detection and new technologies.
And we are very committed to these issues and continuing to
enhance our structures.
Mr. Price. Thank you, Mr. Chairman.
Chairman Nussle [presiding]. Mr. Collins.
Mr. Collins. Thank you, Mr. Chairman.
Madam Secretary, I had a request from people in the
agribusiness in Georgia to inquire of Ms. Whitman, with EPA, as
to some kind of coordinated effort between the Department of
Agriculture and the Environmental Protection Agency as to the
drafting and implementing of regs pertaining to farming,
particularly small farms which seem to get hurt the worst. How
is that progressing, or is it?
Secretary Veneman. Mr. Collins, I am happy to report that
we have a very good working relationship with EPA. Governor
Whitman has been very responsive to USDA and to the concern of
agriculture and of farmers. She has for the first time in about
12 years appointed an agriculture liaison in her Department,
something that we are very pleased about; a position that Jim
Moseley, our Deputy Secretary, once held many years ago, and I
think he was the last one to hold it because it was never
reappointed.
We have worked with them on, for example, the regulations
that I know are of concern to farmers in Georgia, because I
have been there three times, and that is the AFO-CAFO rules. We
have worked with them to have them slow down a little bit on
some of these rules and let us determine whether or not they
can be complied with by farmers.
One of the things about regulations is we want to achieve
the objectives of the regulations--that is, cleaner water--but
we want to do it in a way that is achievable by the farmers.
And so I believe that we have a very good working relationship
with EPA. It is one we continue to keep and will continue to
keep a very close working relationship. I also believe there is
a real commitment to really listen to agriculture, the needs
that agriculture has, to have workable ways to achieve the
desired objectives.
Mr. Collins. That is good. I am glad to hear that report.
You mentioned you have been down to Georgia. You were there
last fall or last August, I believe it was, for Senator
Miller's symposium at Athens. I don't know if you heard the
comment made by one of the leaders of a national ag group. And
this has been a concern of mine. He stated that the problem
with the farm bill that was before Congress at that time is
that it is an incentive to farm the program rather than farm
the market. And he gave an example. He had been raising wheat
for years, because wheat was a commodity that best gave the
best results of subsidy through the program. The Congress
changed it. He is now raising soybeans because soybeans is the
best program to farm for subsidy. Do you have any response to
that?
Secretary Veneman. Well, there are a couple of things that
I think we have talked about in terms of the farm bill that we
want to achieve in terms of desired outcomes. One is that it be
as market oriented as possible. One of the things that the 1996
bill did is that it gave farmers flexibility to plant non-
program crops on program acres, which I think has been
something that farmers have appreciated.
I think one of the things that I know that the committees
are grappling with is how to create a system of loan rates that
aren't out of balance so that it encourages the production of
one crop over another, that those loan rates be in relative
balance to each other so you don't get the kind of stories that
you are talking about. There is really much more farming for
what the market is demanding as opposed to what may be more
beneficial under a program.
Mr. Collins. One other area that I want to touch on and
that is the food stamp program. I have had the question asked
of me, particularly pertaining to elderly who may have
something like a 500, 515, $525 a month Social Security check
coming in--that is their only income. They are eligible for 10
to $15 a month in food stamps. Oftentimes they will neglect the
purchase of prescription drugs due to the fact that they have
to have food and other living expenses out of that Social
Security check.
Is there any indication or anything that you are looking at
that possibly could raise that 10 to $15 of food stamps in
areas where people are having to make that choice?
Secretary Veneman. This is an issue that Under Secretary
Bost has had several discussions about, looking at how we have
a number of people in the senior ranks who really only are
qualified for a limited amount of food stamps. We are looking
to see if there is a way to both streamline and make that
program so that it is--I don't want to say more accessible, but
more----
Mr. Collins. Helpful.
Secretary Veneman [continuing]. Helpful to seniors who may
be in need of help. So we are reviewing that. I would be happy
to have Mr. Bost visit with you about your specific concern.
Mr. Collins. If I may, Mr. Chairman, I have one other thing
that I would like to bring up.
Madam Secretary, how do we answer the questions or the
concerns that we often hear from, say, a young couple, a young
family who is a family of four, moderate income, 35, 40,
$45,000 a year. They have to shop for their groceries based on
that income. But yet they are in a checkout line with an
individual who is ahead of them who will maybe have one or two
full baskets of groceries, and those items will be steaks,
other foods, shrimp, lobster tails, things of that nature; they
go through the checkout line and they pay with their debit card
or with stamps. And yet they are having to shop based on their
income and buying items that nowhere compare to the individual
in front of them. How do we answer that question, ``What are
you doing? What are you going to do about it Congressman?''
Secretary Veneman. Well, it is a difficult issue. As you
know, the food stamp program does not limit what you can
purchase with food stamps as long as it meets the requirements
of being food. So there is really no way we can police what
people are buying with their food stamps. However, we do have
education programs on how to make food stamp dollars go
further: recipes, buying tips, and so forth.
But I agree with you, it is a difficult question when you
have people who are using food stamps and buying things that
other people feel that they can't afford. I think to try to
limit what people can buy with their food stamps would be a
very difficult thing to administer and probably not something
that we could easily control.
Our WIC program, on the other hand, as you know, a very
successful program and one that we put additional funds into in
this budget, is one that is for pregnant, lactating mothers, or
small children. That is a program where we do specify what can
be purchased. That has been a very good program and one that we
think has provided substantial benefits to a very vulnerable
class of people in this country.
Mr. Collins. I know it is a very difficult question. I have
taped your response so that I can give it to my youngest
daughter, because the question was not ``Congressman,'' it was
``Dad, Daddy.'' Thank you, Madam Secretary.
Secretary Veneman. If I just might comment one more time on
your question, I was just told that the average monthly benefit
for food stamps for a family of four is only about $80 a month.
So there wouldn't be too many shopping trips that that family
could make buying steaks and shrimp.
Mr. Collins. We don't know how many were in the family
where the two buggies of groceries were. I just said the person
behind them had a family of four. Thank you.
Chairman Nussle. Mr. Putnam.
Mr. Putnam. Thank you, Mr. Chairman. Madam Secretary,
following up on the tremendous amount of interest that this
committee has shown in our food safety and exclusion inspection
and detection mechanisms. I recognize that you were very
involved in this issue prior to September 11; it is an issue
that I have had a lot of conversations with your Department and
with Health and Human Services, and that the dirty little
secret is that the inductions of these invasive pests, plants,
and diseases are far more frequent than any of us care to
publicize or admit. Fortunately, because of the strength of the
system, they are only an introduction and not an establishment.
But occasionally, and particularly in sentinel States like
Florida, California, Texas, New York, with high numbers of
ports of entry, high numbers of travelers, we do have an
establishment.
As the world grows smaller through lower-priced air fare
and increased interest in exotic locations to vacation, as
international trade agreements continue to open up new markets
and spread opportunities for these diseases, and as new
countries that have less of an ability to control these pests
and diseases become world trading partners, this problem is
only going to become worse.
So elaborate, if you would, please, on the new budget line
item that would, in my opinion, declassify introductions like
long horn beetle and plum pox and citrus canker and fruit fly
from an emergency situation to an established situation, and
what impact that has on the program and what kind of a message
that sends to the industry.
Secretary Veneman. Well, I think this is not a question of
really trying to send any kind of message to the industry. It
is really the way we budget the money and whether it comes out
of mandatory funds as an emergency expenditure or discretionary
funds. The administration believes that after the emergency has
been funded in the initial year, that it should then be--if it
is going to be an ongoing program like so many of these are, at
least for the short term, that it should be funded as a
discretionary ongoing program.
Again, it is a budgeting issue and not intended to send any
kind of message that we believe something is established or not
established, because, clearly, our goal with most of the things
that you talked about is absolute eradication.
Let me just also mention the fact that, you know, we have
also worked very closely with a number of other countries in
these programs, these control programs, particularly countries
like Mexico where we have worked with them on Med. flies, on
screw-worms, where we have had facilities in some of these
countries in a cooperative manner that have helped, I know,
both my home State and your home State.
In addition, one of the things that we have talked about as
we have launched a new round of trade negotiations, is the
ability of the developing world to have the capacity to
participate in global trade. One of those areas where we
believe and developing countries believe that they need
additional assistance is in the area of infrastructure
programs, of pest and disease prevention and eradication. I
think as we are able to help other countries, not just the
U.S., but I mean through international organizations like the
FAO and so forth, that as we can help countries get these
systems in place, we can have better global controls on the
kinds of things that you are concerned about. I think that is
an important goal as well.
Mr. Putnam. On that class of multi-year pest introductions
and these multiyear emergencies, you know I love my
appropriators and I put a lot of faith in the system, but it is
not--there is no room for discretion in our commitment to
eradicate these diseases. And so, regardless of which line item
we budget for it, do I have your commitment that, by hook or by
crook, we will maintain our commitment to eradicate these
diseases like citrus canker, whether it comes out of a
mandatory account or discretionary account?
Secretary Veneman. Mr. Putnam, I think you know me well
enough to know that I am absolutely committed to these
programs. As I have said over and over again, these programs
are so critical to the long-term health of our agriculture
sector, whether it is citrus sanctions or it is the threat of
foot and mouth disease or it is any kind of poultry disease or
it is Karnal bunt. There are so many of these different issues,
and we are absolutely committed to make sure that these
diseases don't become established because it undermines our
productivity, our agriculture and our farmers.
Mr. Putnam. I appreciate your commitment. I look forward to
working with you on ways that we can strengthen this and
improve coordination among all the agencies involved. Thank
you, Mr. Chairman.
Chairman Nussle. Thank you. Mr. Brown.
Mr. Brown. Thank you for coming and sharing this
information with us today. I am from South Carolina. It is not
a big farming State, but we do have tobacco and peaches and
some other products. Having heard some of the things that were
presented to us today about the amount of subsidies the Federal
Government is actually contributing to the whole process, do
you ever foresee this as a market-driven system?
Secretary Veneman. Well, I certainly think that has been
the goal. It was the goal in the 1996 bill in trying to
transition. Unfortunately, in the first couple of years of the
1996 bill, farmers suffered from a variety of low prices and
other conditions which created the unfortunate circumstances of
having to do ad hoc supplementals. As a result, I think that
now the programs that are being looked at in this farm bill are
looking at trying to give farmers some certainty. On the other
hand, I think it is very important that we make our ramps and
our safety nets as market oriented as possible.
Secondly, it is extremely important that we continue to
expand market opportunities, whether it is international trade
or it is new uses for agriculture products here at home and
expansion of marketing opportunities. But as I said previously,
any farmer that I talk to would much prefer to get their income
from the marketplace than from the government.
So I think that the objective that we should have is to
move toward programs that, while they protect our farmers
against unforeseen risks, that we should try to make them as
market oriented as possible, and that would be the goal. We
have had crop insurance reform. We have crop insurance now that
is available to many more people to help them manage risks. We
have the proposal that the administration has supported for
farm savings accounts, another risk management tool for farmers
and ranchers.
So we believe that we ought to be moving in the direction
of tools that help farmers manage risks and programs that are
as market oriented as possible.
Chairman Nussle. Any other members?
Mr. Brown. Mr. Chairman, just a follow-up. I also would
like to thank you for your assistance to the farmers in South
Carolina for the drought assistance. I just want to thank you
for that.
Secretary Veneman. Thank you, sir.
Chairman Nussle. Mr. Collins, do you have further inquiry?
Mr. Collins. Yes, sir. I would like to ask a couple of
other questions, if I may. Going back to the dependence by the
farmer on the government, on the farm bill, I think one of the
most concerning questions I had asked to me about the farm by--
was recently at a salt water conservation workshop at Calgary
Gardens in Georgia. A gentleman came up and said,
``Congressman, are you all going to pass the farm bill in time
for us to plant?'' And I commented back, ``Well, we are going
to pass the farm bill, but I don't know how soon.'' He said,
``well, we need a farm bill to be able to go to the bank to get
the funding to plant.''
Now, you know other businesses--and farming is business,
many of them small businesses--but other small businesses have
to have the wherewithal to enter on their own, not some
guarantee from the government. What are we going to do about a
situation like that where we have created so much dependency
that the farmers have to have a farm bill to go to the bank to
get money to plant?
Secretary Veneman. Well, I would refer to the answer that I
just made to the last question, and that is that, as I
indicated, we should be looking at programs that are as market
oriented as possible. As I said, farmers would rather get their
income from the marketplace, and to the extent we can create
programs that allow them to do that, that allows them to manage
risks through risk management tools, that is certainly a goal.
But I understand what you are saying. As I said, I think
farmers would rather get their income from the marketplace.
Mr. Collins. I understand that. I understand what you said.
But I also understood the previous question from the gentleman
from South Carolina was, do you ever think we will reach a
point where we will have marketplace performance? He never
received a yes or no. He received the same answer that I
received here. Marketplace farming, where farmers can stand on
their own as all other small businesses in this country do, is
much in need. I hope that some day you will work toward that.
One other follow-up question, because we are running close
on time, I know you probably have a schedule, too. Do you think
sanctions work? Oftentimes we use sanctions in agricultural
products as part of a sanction against other countries; naming
one in particular is Cuba. Do you think sanctions actually work
to the benefit that they are intended to? And if yes, give me
the reason.
Secretary Veneman. Well, sanctions are a very difficult
question. In many of the sanctions that have been utilized
around the world, things like food have been excluded. Now,
Cuba has been opened up to some extent as a result of
legislation that was passed, I think, a year-and-a-half or so
ago. We have now seen product moving into Cuba for the first
time in the last few months. In fact, I think we just had
additional sales this past week.
The programs that we have do not allow product to move with
government assistance, but certainly commercial sales are
allowed at this point to Cuba. So clearly there are difficult
issues regarding sanctions. The President has been very clear
on the fact that he doesn't want any new unilateral sanctions
that would impact agriculture.
Mr. Collins. Does the President also support the relaxing
of sanctions to support agriculture, whether it be a government
subsidy or what?
Secretary Veneman. I think that depends on the
circumstance.
Mr. Collins. You just said that the President--the previous
answer to that.
Secretary Veneman. I said he did not support any new
unilateral sanctions with regard to food.
Mr. Collins. OK. No new--but no relaxing of old, depending
on circumstance.
Secretary Veneman. It depends on the circumstance.
Mr. Collins. Well, that is a good middle-of-the-road
answer. That is OK. No harm done. Thank you.
Chairman Nussle. Thank you. I think part of the challenge
here, of course, is that these policies, for better or for
worse, are not made in a vacuum. Most of my farmers would agree
that receiving the kind of support that they are getting from
the government is appreciated, but they would certainly rather
go to the marketplace to get price for their product.
But as long as we have a system in the world where we have
countries that are willing to put in the subsidies that they
have demonstrated a willingness to put in, we have a choice
that we have to make. And with the prices that we have seen for
commodities overall, it has been a tough choice but a choice
that we have been gladly willing to make.
The challenge we have got is to rein that in, make it
responsible within a balanced budget. That is why we are so--I
think there is so much effort that I want to see us make toward
making sure that this farm bill stays within the budget fences
that have been outlined. So while we are all concerned about
the future of the commodities systems, and I know this
administration and past administrations have been willing to
try to negotiate for a better subsidy deal internationally, we
can't forget our responsibility to food security in this
country in the meantime.
So we are in a difficult situation and not in a vacuum. So
we have quite a bit of work to do.
Madam Secretary, your testimony is greatly appreciated
today. I personally look forward to working with you on this
whole farm bill debate that we have in conference right now. I
agree on timing. We need to give farmers a decision here
quickly. It is unacceptable to go through yet another year of
uncertainty. When we know that there are a number of other
economic pressures out there and with trade being in a
difficult situation as it is, to not have a farm bill I think
would be would be irresponsible; and certainly a farm bill
within the budget fences that have been provided, which have
been very generous.
So I look forward to working with you to put pressure on
this conference to get their work done in a responsible and
timely fashion. With that, unless there is any other business,
do you have any final comments you would like to make, Madam
Secretary?
Secretary Veneman. I, too, look forward to working with you
and appreciate the fact that you will be part of the
conference. We will work very hard to try to do everything we
can to make sure we get a farm bill as quickly as possible.
Chairman Nussle. Thank you. If there is nothing else to
come before the committee, we stand adjourned.
[Whereupon, at 4:02 p.m., the committee was adjourned.]
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