SPEAKERS CONTENTS INSERTS
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00–000 CC
2001
2001
FORMULATION OF THE 2002 FARM BILL
(FRUITS AND VEGETABLES)
HEARING
BEFORE THE
SUBCOMMITTEE ON
LIVESTOCK AND HORTICULTURE
OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
JUNE 19, 2001
Serial No. 107–10
Part 4
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Printed for the use of the Committee on Agriculture
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COMMITTEE ON AGRICULTURE
LARRY COMBEST, Texas, Chairman
JOHN A. BOEHNER, Ohio
Vice Chairman
BOB GOODLATTE, Virginia
RICHARD W. POMBO, California
NICK SMITH, Michigan
TERRY EVERETT, Alabama
FRANK D. LUCAS, Oklahoma
SAXBY CHAMBLISS, Georgia
JERRY MORAN, Kansas
BOB SCHAFFER, Colorado
JOHN R. THUNE, South Dakota
WILLIAM L. JENKINS, Tennessee
JOHN COOKSEY, Louisiana
GIL GUTKNECHT, Minnesota
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BOB RILEY, Alabama
MICHAEL K. SIMPSON, Idaho
DOUG OSE, California
ROBIN HAYES, North Carolina
ERNIE FLETCHER, Kentucky
CHARLES W. ''CHIP'' PICKERING, Mississippi
TIMOTHY V. JOHNSON, Illinois
TOM OSBORNE, Nebraska
MIKE PENCE, Indiana
DENNIS R. REHBERG, Montana
SAM GRAVES, Missouri
ADAM H. PUTNAM, Florida
MARK R. KENNEDY, Minnesota
CHARLES W. STENHOLM, Texas,
Ranking Minority Member
GARY A. CONDIT, California
COLLIN C. PETERSON, Minnesota
CALVIN M. DOOLEY, California
EVA M. CLAYTON, North Carolina
EARL F. HILLIARD, Alabama
TIM HOLDEN, Pennsylvania
SANFORD D. BISHOP, Jr., Georgia
BENNIE G. THOMPSON, Mississippi
JOHN ELIAS BALDACCI, Maine
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MARION BERRY, Arkansas
MIKE McINTYRE, North Carolina
BOB ETHERIDGE, North Carolina
LEONARD L. BOSWELL, Iowa
DAVID D. PHELPS, Illinois
KEN LUCAS, Kentucky
MIKE THOMPSON, California
BARON P. HILL, Indiana
JOE BACA, California
RICK LARSEN, Washington
MIKE ROSS, Arkansas
ANÍBAL ACEVEDO-VILÁ, Puerto Rico
RON KIND, Wisconsin
RONNIE SHOWS, Mississippi
Professional Staff
WILLIAM E. O'CONNER, JR., Staff Director
LANCE KOTSCHWAR, Chief Counsel
STEPHEN HATERIUS, Minority Staff Director
KEITH WILLIAMS, Communications Director
Subcommittee on Livestock and Horticulture
RICHARD W. POMBO, California, Chairman
JOHN A. BOEHNER, Ohio,
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Vice Chairman
BOB GOODLATTE, Virginia
GIL GUTKNECHT, Minnesota
BOB RILEY, Alabama
CHARLES W. ''CHIP'' PICKERING, Mississippi
TOM OSBORNE, Nebraska
MIKE PENCE, Indiana
ADAM K. PUTNAM, Florida
COLLIN C. PETERSON, Minnesota,
Ranking Minority Member
TIM HOLDEN, Pennsylvania
LEONARD L. BOSWELL, Iowa
RICK LARSEN, Washington
MIKE ROSS, Arkansas
GARY A. CONDIT, California
CALVIN M. DOOLEY, California
BOB ETHERIDGE, North Carolina
CHRISTOPHER D'ARCY, Subcommittee Staff Director
(ii)
C O N T E N T S
JUNE 19, 2001
Pombo, Hon. Richard W., a Representative in Congress from the State of California, opening statement
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Witnesses
Johns, Frank, vice chairman, Florida Fruit and Vegetable Association, Hastings, FL
Prepared statement
Answers to submitted questions
LaVigne, Andrew W., executive vice-president and chief executive officer, Florida Citrus Mutual, Lakeland, FL
Prepared statement
Lyons, William J., Jr, secretary, California Department of Food
and Agriculture
Prepared statement
Marshall, Maureen Torrey, vice-president, Torrey Farms, Elba, NY, on behalf of United Fresh Fruit and Vegetable Association
Prepared statement
McClung, John M., president and chief executive officer, Texas Produce Association, Mission, TX
Prepared statement
Wunsch, Josh, member of the board of directors, Michigan Farm Bureau Federation, Lansing, MI
Prepared statement
Submitted Material
American Vintners Association and the Wine Institute, statement
Florida Tomato Exchange, statement
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Griffiths, James T., Citrus Growers Association, statement
National Food and Agricultural Policy Project, statement
Ross, Karen, California Association of Winegrape Growers, statement
Sunkist Growers, statement
FORMULATIONOF THE 2002 FARM BILL
(FRUITS AND VEGETABLES)
TUESDAY, JUNE 19, 2001
House of Representatives,
Subcommittee on Livestock and Horticulture,
Committee on Agriculture,
Washington, DC.
The subcommittee met, pursuant to call, at 10:00 a.m., in room 1300, Longworth House Office Building, Hon. Richard W. Pombo (chairman of the subcommittee) presiding.
Present: Representatives Pence, Putnam, Peterson, Larsen, and Condit.
Staff present: Christopher D'Arcy, subcommittee staff director; John Goldberg, Elizabeth Parker, Callista Gingrich, chief clerk; Anne Hazlett, Claire Folbre, Susanna Love, and Danelle Farmer.
OPENING STATEMENT OF HON. RICHARD W. POMBO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. POMBO. Good morning. This morning the Subcommittee on Livestock and Horticulture will exercise its oversight jurisdiction with regard to fruit and vegetable production in this country with an eye toward the formulation of the upcoming farm bill.
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Currently, fruit and vegetable production in the United States is valued at nearly $30 billion annually. That figure is projected to rise to about $37 billion in the next 10 years. Today I want to continue the dialog concerning fruit and vegetable production that the full committee began with its hearing on May 2 of this year. I want the Members of this subcommittee, many of whom were not in Congress when the last farm bill was debated, to hear the story of fruit and vegetable farming in today's increasingly competitive and international arena. In this way, I hope that we can fashion a farm bill to meet the needs of the farmers without tying their hands.
All too often, the fruit and vegetable industry has been treated like an afterthought in the development and implementation of U.S. agricultural policy. Much of this is due to the fact that fruit and vegetables are not the traditional program crops, which rely on various subsidy mechanisms. However, in the movement toward an increasingly market-oriented agriculture policy, fruits and vegetables should serve as an example for others, as the rule and not the exception.
At the start of the 106th Congress, this subcommittee's jurisdiction was expanded, at my request, to include fruits and vegetables. One area that I was and remain especially concerned about is the serious threat posed by invasive species to American agriculture. It is for that reason that I strongly supported the Plant Protection Act last year and worked for its passage. That issue remains a priority of mine. I hope that we can determine how to better combat this growing problem in an era of increased and expanded agricultural trade between the United States and a growing number of countries.
Currently, it is very difficult to put a dollar figure on the total adverse economic cost associated with invasive species. This is due in part because no Federal agency compiles such statistics comprehensively. One recent estimate presented at the American Association for the Advancement of Science puts the figure at $123 billion annually, which includes the cost of control, decreased property values, health costs, and a variety of other factors.
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The testimony we receive will help me and my colleagues to better understand this industry's business and to promote its success. I welcome all of our witnesses and guests here this morning, and I look forward to today's important and timely testimony.
I would like to now recognize our distinguished ranking member, Collin Peterson, for any opening statement he may have.
Mr. PETERSON. Thank you, Mr. Chairman. I welcome the witnesses and look forward to hearing their testimony.
Mr. POMBO. The Chair will accept any other opening statemetns at this time.
[The prepared statement of Mr. Putnam follows:]
PREPARED STATEMENT OF HON. ADAM H. PUTNAM, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA
I welcome the opportunity today to review Federal agricultural policies affecting our Nation's fruit and vegetable growers for the 2002 farm bill. As a significant contributor to American agricultural production and balance of trade, it is extremely important that the issues affecting fruit and vegetable production play a major role in the development of the 2002 farm bill. Specialty crops including fruits, vegetables, and other horticultural crops currently represent 23 percent of U.S. agriculture's commodity sales.
Historically fruit and vegetable producers have chosen to base their economic decisions on the market place, and not relied on traditional farm programs. However, these markets are extremely volatile and producers face extreme and somewhat unique challenges including labor costs far beyond that of our competitors, subsidized foreign market competition, declining access to crop protection tools and ever increasing environmental regulations. At the same time, plant pests and disease continuously threaten agricultural production. Fruit and vegetable growers and the State and Federal Government struggle to control diseases and pest infestation, costing American farmers billions of dollars annually in lost production.
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The Federal Government must elevate its financial investment in key programs affecting fruit and vegetable growers and at the same time maintain relative marketplace equilibrium to achieve the industry's growth and prosperity. This investment would fund priorities including: pest and disease prevention and control; conservation incentives; greater use of fruits and vegetables in nutrition programs; international market access and food aid; marketing and fair trading priorities; risk management tools; infrastructure investments; research priorities; food safety and other initiatives of benefit to the produce industry.
With the combined fruit and vegetable sector in the United States at over $30 billion of farm gate value, it is extremely important that all issues affecting these producers be laid on the table for consideration and appropriately acted upon. I look forward to working with my colleagues toward the development of farm policies that will sustain the future financial viability of American fruit and vegetable growers.
Mr. POMBO. I would like to welcome our first person to testify here this morning, Secretary Lyons. Bill Lyons is from California, from my home State. He has been a long-time friend and neighbor, and I welcome you here this morning.
Mr. Secretary, if you are ready, you can begin.
STATEMENT OF WILLIAM J. LYONS, JR., SECRETARY, CALIFORNIA DEPARTMENT OF FOOD AND AGRICULTURE
Mr. LYONS. Thank you, Chairman Pombo, and members of the subcommittee. I thank you for holding this important hearing and for the opportunity to appear before you. In the interest of time and also your relief, I will briefly summarize my full statement.
Prior to becoming Secretary of California Department of Food and Ag, my family and I operated a diversified farming operation centered in the heart of California's Great Central Valley. I know firsthand the challenges that face our family farmers.
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As head of the California Food and Agriculture Department, I am proud of my Department's 2,300 employees, who work hard to ensure that quality food reaches the consumer, that exotic pests and diseases are detected and eradicated, and that there is an equitable marketplace for California's agriculture products.
Today I would like to describe California's fruit and vegetable community, its current economic situation, and the critical issues it faces.
California's $26 billion agriculture economy leads the Nation in the production of 79 commodities and produces 50 percent of the Nation's fruits and vegetables. Like so much of the farm economy, the fruit and vegetable industry faces low prices and declining markets.
While some commodities are faring betters than others, agricultural property values have declined throughout California and the drastic consolidation of processing and retail facilities impacts the economy of the Central Valley. As this subcommittee knows better than anyone, these are tough times for agriculture. In addition, California's farmers and ranchers, like all of our citizens, struggle with high energy costs.
With this background, let me turn to the policy issues facing the fruit and vegetable industry. I have been working with NFACT and the National Association of State Departments of Agriculture, NASDA, to assist in your efforts to craft a new farm bill.
In 1999, the heads of agriculture departments in New Mexico, Florida, Arizona, California and Texas formed an organization to advocate positions that benefited our States. All of these border States have significant fruit and vegetable production, which was a motivating factor in our forming this coalition.
NFACT States produce approximately 26 percent of all the Nation's agriculture production. NFACT has come to be known for its strong stance on issues such as animal and plant health, food safety, conservation, international and domestic marketing, research and risk management.
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As we began the farm bill debate, NFACT States held public hearings for producers to express their concerns and opinions about the future of agriculture. In California, we held 10 hearings and are in the process of reviewing the comments from those hearings and will be submitting a report to you within the next few weeks.
As you know, producers are looking at whether or not their future remains with the land. California's agriculture is marked by its diversity and by our farmers' willingness to grow for the market and to meet the changing tastes of consumers.
Five years ago, we did not even track the production of cilantro because it was insignificant. Last year, this crop brought in $17 million to California producers. Throughout this country, farmers are switching from growing a commodity to growing a product for a specific market. As important as this is for domestic markets, it is critical to winning international customers. For example, California is filling a niche market in Japan for high quality short-grained rice.
Farm policy may either foster this dynamic, market-oriented approach or stifle its growth by clinging to policies that no longer assist farmers. The next farm bill must account for and encourage a diversity that accommodates all agriculture, especially crops, livestock, poultry, and aquiculture must be included in the new farm bill.
As an example, many of the existing conservation programs do not address the needs of California agriculture. Often, the payment levels do not reflect the cost of living or land values in the State and the requirements appear to be drafted based on farming methods inconsistent with California agriculture.
The next farm bill must provide assistance in marketing, the creation of a level playing field for international competition, better access to conservation programs, tools to manage risk and other market-based programs that will empower producers. Many important recommendations to accomplish this are included in NASDA's farm bill policy, which I recommend to you and which is supported by the NFACT States.
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Without diminishing the many issues facing specialty crops, I wish to highlight two critical struggles. One is the continuing threat from exotic pests and diseases, and the other is the competition from foreign growers benefiting from enormous export subsidies.
The fruit and vegetable industry remains at peril from pests and diseases. This subcommittee recognized early that Pierce's disease threatens California's wine industry as well as other commodities. In the last year, we have built a model program involving both Federal, State, local and industry stakeholders, all of whom contributed to the effort. With Pierce's disease, a century old problem is now a multi-billion dollar threat to California's agriculture because of the introduction of a new pest. The glassy-winged sharpshooter was detected in California in the early 1990's, most likely arriving on plants transported from an infested area. The combination of the glassy-winged sharpshooter and Pierce's disease have been likened to matches and gasoline. Our task is to keep them apart while we research a long-term solution.
Pierce's disease reminds us that prevention of the spread of pests and diseases is far cheaper than the enormous cost of controlling them and the damage they inflict to both agriculture and the economy in general.
As you know, California is a hub of international trade and travel. This is an immense economic benefit to the State. However, it also exposes the State and the Nation to increased risk from exotic pests and diseases. Protecting the Nation from this risk is a fundamental role for government and an issue of resources. Congress needs to provide adequate funds to protect American agriculture. I wish to acknowledge this subcommittee's leadership in passing the Plant Protection Act.
We also must look forward to the upcoming exploration of the restriction on the use of AQI user fees. I respectfully request that Congress view this as an opportunity to increase funding for this critical safeguard.
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I come here as a supporter of trade and as an official of the State that exports in excess of $6 billion in agricultural commodities. My comments about pest issues are not designed to erect a protectionist wall around the State. Rather, with the enormous benefits from bilateral trade comes a responsibility to protect our producers from pest and disease threats, such as Medfly, the glassy-winged sharpshooter, and foot and mouth disease.
On the issue of trade, I must raise an issue that is having a serious impact on California's specialty crop industry. In international competition, some growing areas enjoy advantages over others. However, when foreign governments direct subsidies towards fruit and vegetable growers, domestic growers are unfairly disadvantaged, both in foreign markets and at home.
The primary forum to raise such an issue is during the WTO negotiations, and I hope Congress in general and this subcommittee in particular will insist that U.S. negotiators take on this topic and come away with solutions.
The consequences in California and throughout the country are painful. In our canned peach industry, for example, overproduction and foreign subsidies have eliminated our foreign markets and led to an influx of foreign product into the United States that is being sold at giveaway prices.
Our citrus industry faces unreasonable competition from EU countries that support their industries through a variety of assistance programs, reported by the European Commission to exceed $750 million.
California is working to strengthen its markets. On June 1 of this year, Governor Gray Davis announced he was dedicating $5 million to create a ''Buy California'' campaign to promote local products to local consumers. But we cannot undertake this effort alone. We need a combination of trade and promotion actions at both the State and Federal levels.
In my testimony today, I have attempted to raise some of these challenges facing this industry. As leaders, it is our job to protect and promote this Nation's bountiful harvest in all its diversity.
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Again, Mr. Chairman, thank you for having me, for inviting me to testify today. At this time, I would be happy to address any questions you or your subcommittee may have.
[The prepared statement of Mr. Lyons appears at the conclusion of the hearing.]
Mr. POMBO. Thank you. And I thank you for your testimony.
To start off, I would like to ask you about the issue of invasive species and pests as being introduced, and specifically about the working relationship between California and the Federal Government and how that is going. And do you have any suggestions for ways that the Federal Government could make it work better than what we are currently doing?
Mr. LYONS. Well, Mr. Chairman, I, in the last 2 1/2 years, have experienced an excellent working relationship with USDA and my Federal counterparts. The only thing that I would strongly suggest is that we really realize how important it is to protect our borders; increased funding in APHIS, strengthening our relationships with the Federal Government in the sense of communication. We in California have trade relationships with countries all over the world. We are a destination for many peoples of the world. So we experience the kind of issues that come with that type of trade, and we need to have strong borders. We urge USDA to strengthen APHIS. We think that is one of the most important things that they can do.
Mr. POMBO. That is one of the areas that this subcommittee has talked quite a bit about, and as we go through the appropriations process, that is one of the things we have asked the appropriators to take a real close look at, because I do think that, with the increased amount of trade, it is important that we address that, particularly with our border States that seem to have the brunt of it.
On the issue of trade, we come from the same part of California, and a lot of the growers in my area are not real happy with some of the trade pacts that we have had in the past. They feel that it is an area for improvement, and I would like to have your comment on that as well.
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Mr. LYONS. Mr. Chairman, I think it is very important, especially USDA and yourself, members of your subcommittee, to express to our trade negotiators how important some of these trade agreements are, how they impact specialty crops.
I think it appears too often that specialty crops are somewhat set aside in some of the trade negotiations. Some of the very farmers that you represent and that I represent in California experience those kind of issues. We have seen some dramatic problems within the peach industry, the prune industry, the garlic industry. We see people that have been in business producing, as far as I believe, some of the safest, most affordable food supply in the world, not being able to make it. It is a real economic hardship in California.
Mr. POMBO. I have another question, but before I go on to that, I think one of the problems that we have in dealing with that international market is the regulatory environment that we have created, and I think this is one area that the States and the Federal Government need to do a lot more work on, is taking a new look at everything that we expect from our farmers and all the new rules and regulations that continue to come out.
I know as Secretary in California you have tried to address some of those issues, but I think it is something that we need to go much further on if we expect to be competitive in that international market.
Mr. LYONS. Well, I think we need to try to level the playing field as much as we can. If there are requirements that are put on our farmers and ranchers, those same type of requirements should be put on people that we compete with.
The other thing I think would be very important is dispute resolution. When we do have an issue, and you can have issues, we need to get those disputes resolved quickly so that trade can continue.
Mr. POMBO. Finally, I wanted to question you about Pierce's disease. You brought this up in your testimony. How are we doing on that? Is it continuing to spread in California? And how is the working group working?
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Mr. LYONS. Well, we have been very proud of the fact that many people have compared our Pierce's disease, glassy-winged sharpshooter effort as actually a model of working together with both the industry, the Federal Government, the local government and the State. We are very proud of our efforts. We feel that we are in the process of really containing the disease and the insect. We are learning more and more about the insect as time goes on.
Both our research and biocontrol projects are moving along. I am very pleased—in fact I have a report here I would be very happy to pass on to some of the staff so they can share with the subcommittee—we are very pleased with our efforts. It is an ongoing issue. I mean, we have kind of a sense of a sprint and a marathon. The sprint is to stop the inspect from spreading the disease. The marathon is to find a solution for Pierce's disease. We are looking at a multiyear effort to do that.
Mr. POMBO. Thank you very much. Mr. Larsen.
Mr. LARSEN. Thank you, Mr. Chairman. I want to thank you for holding this hearing today. Your comments with regards to fruits and vegetables being treated like an afterthought at times is very true. I know in my district we are dealing with many issues. Agriculture is dealing with many issues, not only in dairy, but obviously in fruits and vegetables. So I really do appreciate the hearing this morning that you decided to hold.
I just wanted to make a few comments and ask a few questions. Your comments with regards to the peach industry in California, you could have easily removed the word ''peaches'' and put in ''raspberries'' or ''strawberries'' or something like that as it applies to Washington State and my district specifically.
I heard you talk about trade. I heard you talk about conservation. I didn't hear comments with regard to research, and I was wondering if the National Association of State Agriculture Directors had comments with regards to the research title in the farm bill.
Mr. LYONS. I believe that NASDA has some comments on that. I am not sure whether it has been formalized in actually a deliverable form yet. But we look at—I know in California, we are at the cutting edge of agriculture, at least we believe we are.
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Mr. LARSEN. Right behind Washington State.
Mr. LYONS. I was getting concerned about that. I could see the look on your face. We are at the cutting edge along with our neighbors to the north. But we have a strong working relationship, especially with our UC and State college systems, when it comes to research. I think that we need to fund those programs to stay at the cutting edge so that we can compete around the world.
Mr. LARSEN. You discussed trade a little bit. We had a hearing, a full committee hearing a few weeks back with Secretary Veneman and Secretary Evans as well as Ambassador Zoellick. Secretary Evans did testify that in the future agriculture would be placed on the same level with technology and with manufacturing in terms of negotiating with other countries; and it is certainly going to be partly our job to ensure that that continues to occur.
But one concern I have is that, just like agriculture tends to fall behind, if you will, in terms of attention paid to it relative to technology and manufacturing, fruits and vegetables as well tends to fall behind in terms of attention paid to it relative to some of the program crops.
I was just wondering if you had any further ideas about the role that we can play to punch up the attention, if you will, of the critical role that fruits and vegetables play in some of our districts because program crops don't play a large role in some of our districts.
Mr. LYONS. Well, I think, if I may, that is one of the reasons that we formed this coalition called NFACT. And we have had a very good relationship with the Washington State Agriculture Director also. I don't think people understand the importance of specialty crops and its impact across the Nation. We will be delivering a report some time in the next 3 to 4 weeks to the subcommittee and other Members of Congress about the importance of specialty crops within the Nation, at least from just those five States' view. I think just continuing education and continuing involvement.
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This series of 10 hearings that we held in the State of California was a real eye opener about how important specialty crops are, not just from a statewide perspective, but from a local perspective, too. I have 350 different crops in my particular State, and each one of those crops is important to me, and I think should be important to the State and to the Nation.
Mr. LARSEN. I am going to encourage you to get that report out as soon as possible. You are aware, like on July 9th, the full committee will start the full hearings on the farm bill. The sooner we get that, the more effective, I think, we will be able to make that case.
Mr. LYONS. We are trying to. It is actually at the printers right now.
Mr. LARSEN. All right. All right. Thank you, Mr. Chairman.
Mr. POMBO. Mr. Pence.
Mr. PENCE. Thank you, Mr. Chairman. I would like to associate myself with Mr. Larsen's very appropriate comments about you raising this issue in this hearing, and I also want to thank our witness today, Mr. Lyons, for speaking in English to this nonfarmer member of the Agriculture Committee.
Along those lines, I wondered if I might simply ask your sense of an issue that I don't believe you raised either in your prepared statement or in your opening remarks. But Indiana right now, which is the State that I serve, is, according to the 2000 agriculture statistics produced by Purdue University, we rank second in the Nation in growing tomatoes for processing. My district in particular, in Madison County in Indiana, is home to a company known as Red Gold. We are very proud of it. It does business all over the United States.
It is their judgment, expressed to me and also in the record today, Mr. Chairman, that the contracted crop regulations, which, in effect, prohibit the planting of fruits and vegetables on subsidized or contracted acreage, wages war in effect on the development of more acreage in Indiana for this industry and creating more competition in the industry.
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I know that we will hear in this hearing from alternative views of that, people that are interested, organizations that are interested, particularly I think in the statement prepared by our friends from the Florida Citrus Mutual organization, a different view of that.
I wonder if you, Mr. Lyons, could give this Hoosier a sense of that prohibition. Does it in fact provide a legitimate insulation to people in the fruit and vegetable area that it ought to be maintained, or are we to consider—if, in fact, the next farm bill contains farm payment programs, are we to consider some modification of that prohibition?
Mr. LYONS. Not speaking on behalf of NASDA, but we both at a national level and even within my State have had many discussions about that particular provision. It is my firm belief that that provision should continue. Basically, we think it is a competitive situation and one that, if an individual is going to enter the farm programs, that they should not also be allowed to plant specialty crops and vegetables.
I believe that I know the NFACT States have taken a position on that, and that will be coming out in this report about extending that prohibition. I believe that NASDA also will be taking that position.
Mr. PENCE. Thank you very much. I have no further questions, Mr. Chairman.
Mr. POMBO. Mr. Putnam, did you have any questions of this witness?
Mr. PUTNAM. Mr. Chairman, I will hold off till the second panel. Thank you.
Mr. POMBO. Mr. Condit just came in. I know that he is going to have a comment or a question or two.
Mr. Condit, before I excuse Mr. Lyons, I wanted to give you an opportunity to say something.
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Mr. CONDIT. Thank you, Mr. Chairman. I appreciate you holding the hearing today, and I apologize to you and to the Secretary of Agriculture from California for being late, but I had some other commitments that I had to look into.
The only question that I would have, and maybe you have already asked it, Mr. Chairman, is about the electrical crisis in California, the cost of energy to agriculture and what kind of impact that might have on the industry; and if in fact it has a negative impact, do you have any suggestions for us on how we might be helpful on the Federal level?
Mr. LYONS. Well, the energy crisis in California, especially as it affects agriculture, will be extremely severe from everything from pumping costs to processing costs. It will be dramatic this summer to the agricultural sector within California. It is one that I know that Governor Davis has spoken to me a number of times about and one that we are engaged in every day. We need help. As we see this energy crisis spread through the West, it is going to dramatically impact agriculture.
So individuals like yourselves that represent agricultural districts and individuals that come from the urban area have to know that this is going to really impact the agriculture community. Margins are so slim now that these dramatic increases will make the difference on whether some producers survive or don't survive.
Mr. CONDIT. Mr. Chairman, that is all I have. I once again would thank the Secretary for being here and let him know that you and I are extremely proud of him and what he is doing in California, and we are also very proud that he is a secretary that comes from an agriculture family and understands the issues very well. So thanks, Bill, for being here today. I appreciate it.
Mr. LYONS. Thank you, Gary.
Mr. POMBO. Mr. Secretary, before I excuse you, I want to thank you for coming back here and for carrying the banner for the State agricultural secretaries. You are doing a great job in California, and we appreciate having you there. So thank you very much.
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Mr. LYONS. Thank you. Thank you again, Mr. Chairman.
Mr. POMBO. I would like to call up our second panel of witnesses: Ms. Maureen Torrey Marshall, Mr. Frank Johns, Mr. Andrew LaVigne, Mr. Josh Wunsch and Mr. John McClung.
Ms. Marshall, if you are ready, you may start.
STATEMENT OF MAUREEN TORREY MARSHALL, VICE-PRESIDENT, TORREY FARMS INC., ELBA, NY, ON BEHALF OF UNITED FRESH FRUIT AND VEGETABLE ASSOCIATION
Ms. MARSHALL. Good morning, Mr. Chairman and members of the committee. My name is Maureen Torrey Marshall, and I farm with my two brothers in western New York. Torrey Farms is a family farm operation that specializes in the fresh marketing and processing of vegetables and also grains and, since 1996, includes two dairy operations located in Niagara, Genessee, Orleans and Yates Counties in New York State.
As a current member and chairman of the United Fresh Fruit and Vegetable Association's Education and Research Foundation, I appreciate the opportunity to testify on behalf of United before the committee regarding the future direction of farm policy and its impact on the fruit and vegetable industry.
As you are well aware, United is the national trade organization that represents the interest of growers, shippers, processors, brokers, wholesalers and distributors of produce working together with their customers at the retail and food service level and every step in the distribution chain.
I also come before the committee today as an 11th generation family farmer here in the United States who is extremely concerned about the state of our produce industry and what role Congress and the administration will play in shaping the policy for fruit and vegetable growers across the United States.
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Over the years, the produce industry has gone through tremendous changes in an effort to remain profitable, satisfy consumer demands, adapt to new technology, and compete in an increasingly global marketplace. Today growers are facing the lowest returns they have seen in decades. Wholesalers and distributors are being squeezed at both ends and retailers and restaurants are facing stiffer marketplace competition than ever. Meanwhile, the consumption of commodity after commodity seems to be stagnating. For fresh produce, this market climate leads to extreme stress between market segments looking to assign blame to one another for their losses and occasionally calls for support programs that would only accelerate the problem.
Fruit and vegetable growers produce crops that are vital to the health of Americans and represent a significant segment of American agriculture. However, because they are not considered program crops, fruits and vegetables are often ignored when it comes to the development and implementation of U.S. farm policy. Yet, like producers of program crops, the fruit and vegetable industry faces significant challenges in the production and marketing of their commodities that must be addressed if they are going to remain competitive in an increasingly global marketplace.
While the rest of the U.S. economy has enjoyed growth and success, much of agriculture, particularly the fruit and vegetable sector, is mired in a deepening crisis. Commodity prices from many produce crops are below the cost of production, and increased Federal regulations, such as the scheduled phase-out of methyl bromide as a fumigant, is expected to result in losses of $500 million, while impediments to international trade are stagnating the industry. Such challenges, coupled with threats from exotic pests, loss of important pesticides under the Food Quality Protection Act, increased buyer leverage cost by retail consolidation, shortages of labor that seemed to increase month by month and the produce industry's inability to get the guest worker legislation enacted for the past 6 years are increasing economic pressures on industry farm operations both small and large.
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As Congress continues to examine how our present farm policy should be reviewed and modified in this new era of global markets, it is critical that long and short-term solutions be considered that will help the U.S. agriculture industry to remain the world leaders in food production and competitiveness.
For the produce industry, issues surrounding pest exclusion, disaster assistance, food safety, nutrition policy, retail trade practices, technology and research, international trade barriers and promotion, risk management tools, produce inspection activities, and the current prohibition on flex acres are all critical to the future viability of the fruit and vegetable industry.
Let me be clear, while the perishable nature of our products represent unique challenges in highly volatile markets, the industry has not relied on subsidy programs to sustain our business. We are not only proud of our commitment to free markets, but we also believe subsidy programs that sustain or encourage production would be a blow to our industry.
As you are aware, the produce industry has been working together since September through the Produce Industries Farm Bill Working Group to identify areas where Federal farm policy can do the most good. These positions were presented in testimony to the committee by United on May 2, 2000. We strongly encourage the committee to embrace the produce industry's participation in these types of programs to ensure the continued viability of the U.S. fruit and vegetable industry.
This blueprint provides policy options to drive consumer demand for fruits and vegetables while providing menu options that growers can use to strengthen their current economic condition. More importantly, we believe these recommendations also present the opportunity for Congress and the new administration to shift through the perspective of farm policy from supply push to an informed demand pull model.
I strongly state that our industry has fought through the many conflicting views and priorities of different commodities groups and regional organizations to bring you this consensus package of recommendations, and that is a hard job to do.
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The alternative, I feel, is increasing grower frustration that drives pressure on a commodity-by-commodity basis, triggering calls for narrow relief programs that can divide, not only our own industry, but the committee and the Congress as well.
Let me briefly highlight some of the issues we have targeted in our package and ask the committee to consider these priority issues and areas in more depth as you move the farm bill process forward.
Conservation. Ultimately, the goal of conservation and environmental programs is to achieve the greatest environmental benefit with the resources available. For the produce industry, there continues to be mounting pressures of decreased availability of crop protection tools that can be used to provide the abundant and safe food supply the consumer demands. Because of these factors, the industry should consider any available assistance that encourages producers to invest in natural resource protection measures they may not have been able to afford without such assistance. Specifically, the industry supports doubling the current funding for the Environmental Quality Initiatives Program.
Nutrition priorities. The role of increasing the investment in Federal nutrition funding cannot be overstated. In turn, this investment in nutrition priorities can be utilized to increase the consumption of fresh fruits and vegetables and help Americans reach national health goals. To optimize the amount of fresh fruits and vegetables in the USDA feeding program, we would request a $500 million annual funding outlay for surplus purchases of produce commodities.
International market access. U.S. fruit and vegetable growers face significant obstacles in the development of export markets for their commodities and unique challenges due to the perishable nature of our products. Without further commitment to the export development by the Federal Government and commitment to reducing tariff and nontariff barriers to trade, the U.S. produce industry will continue to lose market share to global market competitors. Specifically, enactment of legislation to increase funding authority for the Market Access Program, MAP, by $110 million is strongly supported by the produce industry.
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Pest and disease exclusion policy. Economic damages from invasive pests and diseases now exceed $120 billion annually. The fresh produce industry supports expedited and aggressive actions by the Federal Government and cooperation with the industry and stakeholders at the State and local levels to eradicate and protect the domestic market from the increasing threat of exotic pests and diseases entering the U.S. through international commercial shipments of products as well as importation of agricultural contraband by vacationing travelers and commercial smugglers.
We call for enactment of legislation authorizing funding and providing direct responsibility and related expanded authority for APHIS to develop an adequate Emergency Eradication Research Fund that could be accessed to address economic and health threats posed by invasive pests and diseases as determined by the USDA Secretary. This fund would be set up as a revolving account which would be capped at $50 million. Consequently, the fund would be replenished based on fiscal year utilization. We believe this approach will lead to stronger plant and disease eradication efforts, bringing a national commitment to what is now a fragmented and piecemeal approach.
In conclusion, fruit and vegetable growers represent a vital important segment of American agriculture and bring to market crops that are equally vital to the health of all Americans. To help farmers, the Government needs to level the playing field for trade, improve the availability of our risk management tools, fund research to keep the U.S. farmer the best in the world, support marketing orders, purchase of U.S. agricultural products for School Lunch and Nutrition Programs, and then just stay out of the way and let us do our job.
The people in our industry are an endangered species. Very few young people are looking to come into production agriculture, not because of the long hours or the financial risk associated with unpredictable weather, but because of the lack of proactive support by our Government and consumers.
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We urge the committee to take these issues and the many other challenges facing the fruit and vegetable industry fully into consideration as you move forward in the development of farm policy.
Thank you, Mr. Chairman, and I would be happy to answer any questions that the committee may have at this time.
[The prepared statement of Ms. Marshall appears at the conclusion of the hearing.]
Mr. POMBO. Thank you. Mr. Johns.
STATEMENT OF FRANK JOHNS, VICE CHAIRMAN, FLORIDA FRUIT AND VEGETABLE ASSOCIATION, HASTINGS, FL
Mr. JOHNS. Mr. Chairman, and members of the committee, my name is Frank Johns, and I am vice chairman of the Florida Fruit and Vegetable Association. I am a fourth generation grower based in Hastings, Florida, and I have been farming since 1973. I grow mostly cabbage and potatoes on about 800 acres.
On behalf of the producer members of the Florida Fruit and Vegetable Association, I greatly appreciate the opportunity to appear before you today to speak about some of the challenges facing fruit and vegetable growers in Florida and other States. My comments here this morning touch on just a few of the recommendations contained in my written testimony.
A major concern among Florida's fruit and vegetable producers is Florida's vulnerability to damage from invasive pests and diseases. Florida's recent battles against the Mediterranean fruit fly and the ongoing eradication of citrus canker underscore the need for effective port inspections, pest and disease detection programs, and timely eradication capabilities.
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When APHIS must wait for OMB approval for CCC funds for critical programs to address these threats, it cannot respond quickly to minimize the impact of pests and diseases. FFVA asks that Congress enact legislation authorizing mandatory funding, direct responsibility and authority for APHIS to develop an emergency pest eradication capability. First year funding would be set at $50 million and set up as a revolving account no-year fund replenished annually at the $50 million cap.
A key recommendation of the USDA's Safeguarding American Plant Resources Report is the establishment of surveys for plant pests and diseases to ensure detection as early as possible. A specifically earmarked survey fund, preferably as a mandatory program within the farm bill, would allow APHIS-PPQ to employ additional inspectors to work with the States to conduct ongoing nationwide surveys to detect invasive species at an early stage.
Therefore, FFVA recommends that Congress establish an annual pest detection survey fund that will ensure early detection of harmful plant pests, diseases or other pathogens that have eluded detection at ports of entry. The mandatory fund would be at the $50 million level, designated as no-year, and replenished annually at the $50 million cap.
In the 1996 FAIR Act, Congress sought to provide planting flexibility for producers who historically participated in farm programs. Fruit and vegetable growers were concerned then and continue to be concerned today that if planting flexibility were applied to fruit and vegetable crops, they would be forced to compete with subsidized producers. Therefore, if the next farm bill contains farm payment programs, Congress should continue the FAIR Act prohibition on planting fruits and vegetables on subsidized or contract acreage. Significant penalties for violation must remain in place.
Since the North American Free Trade Agreement took effect in 1994, U.S. imports of fruits and vegetables have grown dramatically. Provisions within NAFTA intended to safeguard domestic fruit and vegetable producers from price-based import surges have proven to be ineffective.
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To ensure that the negotiations for the proposed Free Trade Area of the Americas do not lead to increased imports of Florida's most important fruit and vegetable products, FFVA asks that a request-offer approach to tariff reductions be pursued that explicitly authorizes exemption from tariff phase-out for Florida's import-sensitive commodities.
In addition, improved safeguard provisions are needed for import-sensitive fruit and vegetable products. Such safeguards should include all import-sensitive produce commodities, be triggered automatically based on price, not year-end volumes, and should also consider increased exports that occur when a country's currency unexpectedly devalues.
To help our producers promote exports to foreign markets, FFVA asks that annual funding for the Market Access Program be increased from $90 million to $200 million. Congress should enact legislation that also would provide a minimum of $35 million for the Foreign Market Development Cooperator Program, and allow up to 50 percent of the available funds under the Export Enhancement Program to be used for later market development and promotion activities.
As a vegetable grower, the costs of complying with environmental rules and regulations have often made me consider another vocation. Even though natural resource management and conservation programs help ensure an improved environment and more productive farm economy, producers of fruits and vegetables can rarely recoup their investments in these programs.
FFVA recommends the Federal Government provide funding assistance and credit to support conservation initiatives that would ensure a safe, healthy and sustainable environment within produce production areas. An equitable portion of this funding should be specifically earmarked for utilization in fruit and vegetable production areas.
In conclusion, U.S. fruit and vegetable production represents an economically significant segment of our Nation's total agricultural industry. What is more, fruit and vegetable growers produce crops that are vital to Americans. Yet, because they are not considered so-called ''program crops,'' fruits and vegetables have mostly been ignored when it comes to the development and implementation of U.S. farm policy. I urge Congress to consider the issues I have mentioned here today and outlined in my written testimony as you move forward in development of the next farm bill.
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I thank you for your time and welcome any questions.
[The prepared statement of Mr. Johns appears at the conclusion of the hearing.]
Mr. POMBO. Thank you. Mr. LaVigne.
STATEMENT OF ANDREW W. LaVIGNE, EXECUTIVE VICE PRESIDENT AND CEO, FLORIDA CITRUS MUTUAL, LAKELAND, FL
Mr. LAVIGNE. Thank you. Mr. Chairman, members of the subcommittee, good morning. I am Andrew LaVigne, executive vice-president and CEO of Florida Citrus Mutual, a grower cooperative association representing over 11,500 growers of processed and fresh citrus products. I appreciate the opportunity to testify today, and I have submitted my testimony for the record and will summarize the key points of that statement.
A quick overview. Our industry produces citrus on 800,000 acres in Florida. We are the No. 1 producer of oranges for processing in the U.S. and No. 2 in world behind Brazil. We are the No. 1 producer of fresh and processed grapefruit in the world. During the 1999 and 2000 season, we harvested 298 million field boxes of citrus, representing 76 percent of the U.S. citrus production. Florida's citrus industry provides 27 percent of the State's total farm receipts. And of the citrus that we harvested, 89 percent was processed into juice, and the remainder was sold as fresh fruit. We have in excess of $8 billion worth of economic impact to our State.
We are now completing a season that many people at this table will probably relate to that will likely prove to be the most economically devastating we have experienced in 20 years. The on-tree value of this year's crop is estimated at $805 million, down 30 percent, or roughly $350 million down from last year and the lowest crop value since 1985–1986.
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Mr. Chairman, Mutual played an active role in the United farm bill Working Group effort, and we support the overall farm policy in that document and a majority of the proposals contained within the statement presented to you and the House Agriculture Committee on May 2. We won't repeat all of that. We would like to just summarize some of these.
With respect to the actual farm programs for fruit and vegetable growers, given the breadth and the number of those programs, we are currently evaluating the proposals presented by the various industry groups and the potential impacts on our growers.
However, from a conservation perspective, the citrus industry provides a unique benefit to our environment. Citrus trees are planted with the expectation of a 20 to 25-year life-span. This extended productive life greatly benefits the Nation's air, land and water resources. The conservation program concept is attractive to our growers because of the greenbox nature of such programs under WTO guidelines.
With respect to the nutrition title, our key interest here is to attempt to add language that seeks to optimize the amount of 100 percent fruit juice, fresh fruits, and vegetables provided under USDA feeding programs, School Lunch, School Breakfast, and others. Incentives should be included in the legislation to encourage States to purchase domestically grown commodities. The greatest opportunity the U.S. Congress has to impact the health of all of our Americans is to work to improve the dietary education and eating habits of our citizens.
A sound, progressive agricultural research title is key to the citrus industry remaining competitive in the global environment. Our main recommendation under the research title is to establish a $10 million revolving account that would provide matching dollars to commodities seeking to improve their harvesting efficiencies by developing mechanical harvesting machines and abscission chemical products. The Florida citrus industry is working on this at this time and spending roughly $2 million a year of grower dollars.
The citrus industry supports the 300-plus recommendations contained in APHIS's Safeguarding American Agriculture Report. The administration, USDA, Congress and State governments must realize its strong interdiction and detection programs are much cheaper than eradication programs.
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Our legislative recommendations here mirror the ones at the table: A $50 million revolving emergency eradication fund, as well as enacting a provision that sunsets section 917(5) of the FAIR Act allowing for AQI user fee programs to be used in the AQI program.
Since the passage of the Agricultural Risk Protection Act, or ARPA, by the 106th Congress, the industry is aggressively working with RMA to develop innovative, flexible risk management programs that are more suitable for Florida citrus growers. The farm bill needs to reiterate Congress' support of the provisions of ARPA and encourage RMA to move as expeditiously as possible to implement those programs for the benefit of growers.
Mr. Chairman, I appreciate the opportunity to testify before you here today on behalf of Florida's citrus growers. There are many other issues that are in our testimony that hit to the core of what our industry is looking for on this. We want to stay competitive in this ever-changing international marketplace, and we feel that our growers can do that. We stand ready to assist you in this process in order to come to a conclusion that is favorable to the fruit and vegetable industry as well as the U.S. agriculture industry in total.
Thank you, Mr. Chairman.
[The prepared statement of Mr. LaVigne appears at the conclusion of the hearing.]
Mr. POMBO. Thank you. Mr. Wunsch.
STATEMENT OF JOSH WUNSCH, MEMBER OF THE BOARD OF DIRECTORS, MICHIGAN FARM BUREAU FEDERATION, LANSING, MICHIGAN
Mr. WUNSCH. Thank you, Mr. Chairman, for having me here today, giving me this opportunity to represent my particular group of producers.
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I am a fruit producer from northwest Michigan. Cherries and apples are what I do. I raise for both the fresh and processed markets. I make my price on the fresh; I take my price on the remainder. On the remainder, I discover I am several steps away from my farm to my consumers. I observe that, every step along the way, those margins are pretty well assured to the others that are involved there. Mine are not. I take the crumbs that are left over. When I am tight with that consumer on my fresh deal, I do fine; the consumer does great. Price to consumer in the grocery store is not a function of farm price, whatever anyone may tell you.
Now, you have been told that you are at the crossroads today, that you are at your day of reckoning, your moment of truth. The fact is a train wreck has occurred. The toothpaste is out of the tube. Congress has in very recent years overseen policies which have severely undermined the market, punished producers by destroying margins, eroding equity, trading hard-earned producer capital for short-term acquisition of cheap, imported consumer goods.
Specialty crop producers have not been here much in the past with their hands out. We have been deeply and, for the most part, successfully engaged in the dynamics of the market. The market has been a reliable source of at least poverty level wages for producers and better for others who understand how the market works. The same community is not as experienced with program or government farming, but it is learning fast.
Some want nothing to do with it. Others wanted to be completely swaddled in your safety net. The diversity of opinion within the ranks of the producer community is remarkably similar to the diversity of opinion regarding this in Congress.
In regard to supplemental financial support for market loss assistance, we in the apple industry continue to request $500 million for help to offset the $1.6 billion that has been taken from the industry through the failure to enforce trade policy. This $500 million shrinks every time a market loss assistance proposal is drafted, and yet Chinese apple juice continues to leak in around a ponderous and ineffective enforcement effort.
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Risk management, what we call crop insurance. We market guys will tell you that our most painful losses involve 11th hour weather relateds that leave us with enough to make our production costs but no margin. Too bad we can't do a better job of covering the risks of the above-average producer. Fruit and vegetable guys are tremendous risk takers so they have a pretty good instinct for risk management. We need to keep working on this.
Regulatory offsets. The lack of outcome-based regulation has resulted in an interventionist approach that is costly to enforce, ineffective and unfair. Until we can set measurable, realistic and achievable objectives and use a rational rather than emotional evaluation approach, regulation will continue to take an enormous economic toll even on the most compliant. We only ask that the account balance be reconciled.
Domestic food assistance. School lunch is good. Everybody wins. Only customer that buys exclusively U.S. fruits and vegetables.
Trade, from the standpoint of resolving the economic stress within the fruit and vegetable industry, this is the area that it all comes down to. A market system works but only if a market structure is intact. Good trade policy without mutual adherence to terms is no trade policy at all. A dual standard of compliance never worked in our domestic economy, and it certainly doesn't work globally, especially when U.S. farm producers are the designated chumps. Are we the only country in the world that is unwilling to state that we will not support and aid the economic interests of our agricultural producers and the food security of our citizens from any other interest, foreign or domestic?
Credit. In the apple industry, most of our equity has been inadvertently transferred to China. We owe big time. USDA is the major creditor. We are not going to be current or timely on repayment schedules, so our continued future as a revenue source for the Republic is, at best, shaky. If new money is as much of a problem as you all state, perhaps it is time to take a look at some restructuring, some forgiveness loans, reducing and capping interest rates on all USDA loans. As the economy booms, there are some of us making repayments at over 10 and three-quarters percent on USDA loans.
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We have got lots of definitions for what agriculture is. We can never seem to agree on that. I think we can agree on a few things that agriculture is not. Agriculture is not Novardis. Agriculture is not Archer-Daniels-Midland. It is not John Deere. It is not Burger King. It is not Sarah Lee. It is not Bayer. It is not Wal-Mart. It is not Hershey Chocolate. Agriculture is something that some guy does with a little dirt and food pops out.
We understand the need for rehabilitation of third-world economies and the importance of creating strong trading partners. But, hey, not on my wallet and certainly not on my wallet alone. We knew we would have trouble converting agriculture over to a market economy when we started talking about a this a few years back with you. We never imagined there would be this degree of difficulty that this change would make for the policy-making process.
Thank you very much.
Mr. POMBO. Thank you.
[The prepared statement of Mr. Wunsch appears at the conclusion of the hearing.]
Mr. POMBO. Mr. McClung.
STATEMENT OF JOHN M. MCCLUNG, PRESIDENT AND CEO, TEXAS PRODUCE ASSOCIATION, MISSION, TX
Mr. MCCLUNG. Thank you, Mr. Chairman.
My name is John McClung. I am president of the Texas Produce Association. We are headquartered in the Rio Grande Valley of Texas. I do want to thank you for holding this hearing today.
I think that when we memorialize agricultural policy in this country, as we will in the 2002 farm bill, we will be taking steps that are probably of as much importance to U.S. agriculture as anything since perhaps the Depression years. It has been never been easy in agriculture in my experience, but these are truly very difficult times. And for those of us in the produce business who have traditionally had relatively little involvement in farm bill programs we are grappling with what our role should rightly be and there is not yet consensus in our ranks, or at least not among my members in Texas, on several of the key farm bill components. I will come back to that in a few moments. But we do recognize, Mr. Chairman, that you have consistently been mindful of fruit and vegetable industry needs; and we look forward to working with you as this process evolves.
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In Texas, the fruit and vegetable industry has gone through about two decades now, perhaps a little more, of economic decline. We have slipped from the third largest producer of fruits and vegetables among the 50 States to fifth, maybe sixth. We are hopeful that we have turned the corner, but, in all honesty, it is too early to tell.
There are a lot of reasons for this situation, among them freezes and droughts, intense international competition, retail consolidation and our own shortcomings in product development and promotion and marketing. Certainly not all of these factors can be laid at the Government's door, but equally certainly we are in enormous need of enlightened Federal policy if we are ever to be able to stabilize and improve our lot.
If we are to retain a strong agricultural capacity in this country—by that I mean if the Congress and the administration believe that such a food and fiber community is desirable for national security or societal or other reasons—then the farm bill debate can really ultimately only be over how to pay for it. In other words, the American and world public must pay more, either directly in the marketplace or indirectly through the Government.
I know this sounds simplistic, but when I first became involved in discussions about agricultural policy, going on 30 years ago, the average family in this country spent something in the area of 15 to 17 percent of disposable income on food, as I remember the numbers. The most recent figures I have seen put this percentage at something just over 10 percent, and that is after the spike in eating away from home, eating outside the home, which increases food costs.
For our consumers in this country, the abundant food supply is a miracle, an inexpensive miracle. For foreign suppliers of fruits and vegetables, the U.S. marketplace is a lucrative magnet. For the U.S. economy overall, trade barrier reductions and international agreements such as NAFTA are a source of strength and economic reward. But for U.S. farmers and shippers, these factors combine to make for very tough sledding indeed.
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So where do we go from here? Perhaps the most contentious issue for fruit and vegetable growers and shippers has to do with direct subsidies. Most of us have concluded that we do not want, at this time, to pursue a traditional subsidy program. I concur with my associates in that decision but with some misgivings. We have credible reasons for not wanting to pursue subsidies in this farm bill.
First, we do not want to submit to the production controls that logically would attach to direct payments.
Second, we do not want to forfeit our ''flex acres'' protections, although we recognize they are not assured in future legislation.
I did want to remark on that point. I hope it is understood that when the flex acres language was put in the farm bill in 1996, it was simply because a very small increase in supplies in most of our commodities results in an enormous swing in prices. A two or three percent increase in supply makes a huge difference in the marketplace for any different commodity. That is the reason to try and keep those folks who are subsidized growing feed grains or food grains or other agricultural product from producing fruits and vegetables and still be subsidized. That is what that was all about. And if we are not to have some sort of direct payment system for fruits and vegetables in this farm bill, then my personal feeling is that the flex acres protections are going to be an imperative for us as we proceed.
And, third, we recognize that there is a finite amount of money to go around from the Government, and the traditional ''amber box'' recipients are ahead of us in that line. Obviously,the fairness of that situation is suspect, but that is the political reality.
We do, however, encourage market expansion programs, both domestic and international. We want to sell more produce. Our problem in Texas is not that we cannot produce enough onions or citrus or cabbage or melons or whatever it may be, it is that, far too often, we cannot sell it profitably. So we ask you to support extension and expansion of the Market Access Program, domestic feeding programs and efforts to educate the public about the dietary health benefits of produce consumption.
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I must tell you, however, I am far—and this is just a personal opinion—far from certain that sales expansion efforts will benefit U.S. producers as much as we would all like and intend. If I am a Central American melon producer or a South African citrus grower or Mexican onion or tomato producer, I view such U.S. market expansion efforts with every bit as much as enthusiasm as my U.S. counterparts, perhaps more. If I am a food retailer, profitability has little to do with origin. Therefore, I would ask that Congress examine every avenue for making sure that revenue from these kinds of programs finds its way to U.S. producers and shippers, when possible, and that is no simple matter. We all know the initial promise and subsequent reality of market expansion under the 1996 farm bill, and I hope accept that a false promise is worse than no promise at all.
I do want to vigorously endorse conservation programs that pay farmers to take acreage out of production for environmental and other wildlife purposes. These types of programs do put much-needed money into the producer's hands and meet the long-terms needs of all Americans, urban and rural.
Yet another area where it is possible for government to make concrete contributions to producers and shippers revolves around the exclusion of foreign pests. You heard a great deal about that today, and I will not belabor that. I will tell you we in Texas are absolutely terrified to think of what would happen if we got citrus canker in our little citrus deal in south Texas, as the Floridians have experienced. It could be absolutely devastating for us. Florida has something like 800,000 acres of citrus. We have in Texas something like 36,000 acres of citrus. You can imagine what would happen.
Now, interestingly in terms of foreign pests, one real problem is that, as the economy has become more difficult, a lot of folks have abandoned their little 5-, 10-, 20-acre groves. It is those little abandoned groves that represent a real problem for industry and for APHIS and the Texas Department of Agriculture in trying to deal with possible problems. We have a Mexican Fruit Fly Eradication Program under way in south Texas, but it is sadly underfunded and understaffed, and one of things we need there is adequate funding to make that Fruit Fly Program work. In any event, APHIS has simply got to be staffed and funded adequately nationwide to address foreign risks.
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I know I am over my limit, so let me close by saying one other area where we are very interested and very concerned is one of the safety net areas, and that is crop insurance. Many, many of my members continue to be highly skeptical about crop insurance for a couple of reasons.
First, they know it is exceedingly difficult to write policies that eliminate or even minimize the opportunity for abuse. The recent fiasco over watermelon insurance is the stuff of dark humor in many small town restaurants throughout Texas. We have similar if not so visible concerns about the current onion insurance policy.
Second, good farmers or those who believe themselves to be good farmers think crop insurance keeps less skilled and dedicated producers in business and contributes to oversupply.
We also, however, recognize and resign ourselves to the fact that crop insurance is a reality and we are now going to have to focus on how to make it work well. To do that, we want policies that are commodity specific. We want policies that cover, for the most part, true natural disasters, not engineered disasters, manufactured disasters or economic shortfalls, and we want a policing mechanism that discourages insurance farming.
Thank you for conducting this hearing, Mr. Chairman, and allowing me to be here today.
Mr. POMBO. Thank you.
[The prepared statement of Mr. McClung appears at the conclusion of the hearing.]
Mr. POMBO. I thank all the panelists for their testimony.
Mr. McClung, I would like to start with you and then have the other members of the panel respond to it. Recently, there has been a lot of talk about expanding a NAFTA-type program into Central and South America. Without actually having a bill in front of you or legislation in front of you, generally how do you feel about that—or the organization that you represent?
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Mr. MCCLUNG. If that program were to mirror the current NAFTA that we have now, I must tell you that many of my producers would have real mixed emotions about it.
If you look at Texas fruit and vegetable production in recent years, perhaps the company that stands out most visibly would be Star Produce in the west side of the Rio Grande Valley. That is the company that everybody sort of thought of as the Texas answer to California and Florida. Star Produce as of this year is still importing product from Mexico and growing a little bit of product in Mexico, but they have ceased domestic operations as a practical matter. The reason is very simple. They can't compete with the foreign imports.
That is true throughout south Texas. Particularly in those areas in the country where you are talking about commodities that are readily produced in Latin America and elsewhere in the world, you have a real problem.
We recognize that the country overall benefits from the macroeconomics of those kind of agreements that benefit the United States, but agriculture, by and large, producers do not benefit. All of that said, of course, we would have to look at the specifics of an expanded program.
Mr. POMBO. Mr. Johns.
Mr. JOHNS. I mirror Mr. McClung's ideas on that. If it has the same shortcomings as the NAFTA, I believe Florida would be against it.
There are some triggering mechanisms that are not being used and there are some methods of monitoring the flows of commodities that come across that I understand the reason behind it was to be able to level the playing field, but it doesn't seem like it has leveled. It seems like NAFTA has made it even more unleveled. So I would say, if it is along the same lines as NAFTA, our association would be against it.
Mr. POMBO. Mr. LaVigne.
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Mr. LAVIGNE. Mr. Chairman, realizing the need and the push in the Congress for the trade aspects, we would have serious concerns with respect to an FTAA proposal moving forward.
Our major concern in the international arena as we go forward is Brazil. There are two players in this arena, Florida and Brazil. And if you further degrade the ability of the Florida citrus grower to compete in the international marketplace you make it a cartel and you might as well give them the whole kit and caboodle. At this point, if citrus is not exempt from the FTAA, we would oppose it as it moves forward.
Mr. POMBO. Ms. Marshall.
Ms. MARSHALL. I would mirror what the other gentlemen have said. Any of us that are producing and farming in any of the bordering States, whether it be our southern neighbors or our northern neighbors, we are not able to compete at a level playing field and we have to struggle to meet the imports that are coming in. And as a grower I would be very scared of what is being proposed.
Mr. POMBO. Mr. Wunsch.
Mr. WUNSCH. We get close to the other border, with the other partner in NAFTA. We have concern among our producers in Michigan not only of specialty crops but particularly of program crops, of the effect of the large supplies of Canadian production that is available, particularly to a strong U.S. dollar. Yet looking overall at the—at again the apple industry, we know that in the first year of NAFTA the State of Washington prospered greatly from a sale of approximately $60 million worth of product to Mexico. We have got some logical hemispheric trading possibilities, and those are the areas that we should be looking first.
I think our huge, empty neighbor to the north, our rapidly economically developing neighbor to the south gives us a study in contrasts. The paradox is the amount of time we spend cozying up to the likes of the European Economic Union which must just break into laughter every time we have come to the trading table and the Chinese with whom we import $85 billion worth of goods and we only trade back about 12.
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I would say, yeah, look at something in South America. Look at something in this hemisphere, but learn from what we have done. There are opportunities for all partners, but we need to become more sophisticated traders. It is obvious from our recent track record that we ain't there yet.
Mr. POMBO. Well, thank you.
Mr. Peterson.
Mr. PETERSON. Thank you, Mr. Chairman.
Following up on some questions—I was yesterday at the White House and they were promoting what they now call trade promotion authority because the other term is not popular any more, I guess, or whatever. But anyway my question has do with if your groups have a position on whether Congress should grant trade promotion authority to the President.
Mr. McClung, you are first in the barrel there.
Mr. MCCLUNG. Let me take the cowards way out and say my board has not discussed this matter, so it is purely a personal question.
Mr. Peterson, we are talking here about what I know as fast track. Is that what we are essentially talking about here?
Mr. PETERSON. Right.
Mr. MCCLUNG. I think that we have probably—my people probably would endorse fast track but with misgivings.
Mr. PETERSON. My folks have done that, too. The sugar people, the wheat people, we are initially against it, and then they always get kind of browbeat into supporting it, and then when things go to hell they run up here and want us to bail them out.
The sugar people were just in, saying that you guys have got to change NAFTA. Well, that is going to happen when hell freezes over. We have no leverage to change it at this point. So I guess it is hard for me to figure out why, if your groups are concerned about FTAA, which I think they should be, why you would want to take Richard and I out of the equation so we would have nothing to say about it? Because that is basically what you are doing.
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Mr. MCCLUNG. Well, I think there is a hope that the administration would represent our needs adequately and that the administration should be able to do that without concern of its falling apart here in the Congress. But I certainly share your observations about it.
The sugar industry is an interesting one. Unfortunately, I don't represent those folks. But the cane people have been some of the only profitable farmers in south Texas in recent year.
Mexico is pushing hard to bring more sugar into the United States under NAFTA, and so you pose an interesting dichotomy about why we take the position we take on these things. But, nonetheless, I think my honest answer to you is, yeah, we would probably give the President fast track authority.
Mr. JOHNS. My understanding of the fast track is limited, but I would give my personal opinion on how I understand it to be. Certainly there are opportunities and situations that would evolve where the President should be able to make a quick decision. However, the system of checks and balances was set up for a reason. And if the deal—I don't think there is any deal that is going to be that good that needs to be made that quickly without coming back to Congress and the folks who should be able to have the final say on it. So that is my personal opinion of it.
Mr. LAVIGNE. Congressman Peterson, we are still looking at it from our perspective. Given the ground, the make-up has changed dramatically just in the last 2 years with respect to fast track and TPA at this point in the game and the dynamics of how that will unfold.
Again, without some kind of a consideration for specialty crops such as fruits and vegetables, it would be extremely difficult for us to support a fast track proposal.
Ms. MARSHALL. Again, I don't have a group opinion, but I have a personal opinion that we do need to give the President the flexibility to enter into a fast track agreement if we need be. Also, though, we also need to look at how it is going to affect our fruit and vegetable industry and the consequences of it.
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Mr. WUNSCH. I know you guys are probably tired of getting beaten up on this one, but if, Congressman, you and Richard are interested in assuming the authority, which you have now in the absence of the fast track authority with the administration, that I think we can come and revisit this apple juice dumping concentrate issue again. And I ask you, when is that going to stop?
The fast track authority has appeal because it is going to focus the authority on one individual as far as making some kind of a decision to pull the string on that. The process right now is, at best, impractical. The money that we are losing in the apple industry is hard dollars. It is not play money. That is money that has value, that took generations to amass, and it is being lost in a matter of months.
We need some sort of intervention. We need a mechanism that can respond quickly to enforce the agreements that we make. Is it the President? Well, it might be some President. It might be another President. Is it Congress? Well, in the time it takes me to grow a cherry tree, quite a few of you guys can come and go. So I don't know. Is it the Alan Greenspan of agriculture? Maybe. That is kind of the long haul approach that some of my colleagues were suggesting here. But right now what we have got isn't, with all due respect, working.
Mr. PETERSON. Well, I just might say I don't believe either one of us have either supported fast track or any of the trade agreements. We hate to tell you, but we told you so, and I just hope that people understand what the implications of this are.
I have spent the last—in the last 6 months, I went to South America three times, and I feel—trying to get the committee to go down there more to learn about what is going on because we need to understand this.
The other day I had the Australian ambassador in my office. They tell you that they have to have fast track or these people won't negotiate with you. That is not what they are telling me. They will negotiate with us. So some of this pressure I think is brought about to try to get us out of the loop, frankly, because they do not want to have to deal with us.
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So I would just encourage all of you to be circumspect as we go through this process so we do not get ourselves in a situation like we are in. We can't do anything about these problems because the mechanisms that were set up in these trade agreements don't work, and we told people they weren't going to work. These side agreements they signed in NAFTA they were not worth the paper to burn them up. Some of us tried to tell them, but we are flat-earthers, those of us who do not see the wisdom of all of this, right?
So, anyway, I think I agree with you more than you think.
Thank you, Mr. Chairman.
Mr. POMBO. Mr. Putnam.
Mr. PUTNAM. Thank you, Mr. Chairman. I thank you for the hearing, and I thank the witnesses for their candid and insightful testimony.
I think you can probably see by the attendance that this is kind of the fruit and vegetable caucus of the Agriculture Committee, and all of us are on the same page when it comes to the conservation and the research and the invasive pests and the trade invasion. It is just a matter of spreading the gospel.
Many of the individual commodity groups that make up fruits and vegetables and nonprogram crops have highlighted the trade issue, and all of us in the Congress tend to be fairly hypocritical on the trade issue in terms of who we want to open new markets with and who we want to make sure we have a level playing field with. And that is part of life and part of geography and part of competition, and we all understand that. But for Ms. Marshall and the others, to what degree as we have these imports flooding the supermarkets and the retail area, to what degree will some type of labelling requirement improve demand for domestically grown fruits and vegetables?
Ms. MARSHALL. This has been a major issue discussed in the produce industry, and you do have conflicting sides to it.
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My personal opinion on it as a family farmer is I would definitely like to see it happen. I know the retail industry is very much opposed to it because of the cost. But the consumer, young people coming up, they are going to be our consumer, have no idea of where their food is coming from or that when they walk into a produce department anywhere from 40 to 60 percent of that is produced somewhere else.
Many people do not realize that agriculture is the No. 1 industry in New York State, but yet the commodities that we grow, the supermarket shelves have—they are from Canada, they are from Chili, they are from anywhere in the world now, and the local industry and the industry of our State is not being supported. And I do definitely feel, that by requiring the labelling, it would help increase our domestic consumption of fruits and vegetables by just making an awareness.
Mr. PUTNAM. Mr. Wonsch.
Mr. WUNSCH. I guess I would have to echo the likelihood that in the producing community the notion of labelling would have a great deal of support. I do look at the flocks of our U.S. consumers that show up at the Home Depot every weekend, strip the shelves bare of hardware goods made in China and India and here, there and everywhere and not really give a rip about the point of origin and ask myself, what is the importance of labelling? It does increase consumer awareness.
We do have to remember that we were looking at trade as a positive. That means, for instance, if we are in a hemispheric arrangement we are looking at South America for a lot of our fresh veggies and fruit and things in the off season. For the consumer, that is a plus. Sensitivity to labelling, point of origin from the consumer point of view, less every day.
Mr. PUTNAM. Mr. Johns.
Mr. JOHNS. Thank you.
I was just informed that in the State of Florida since 1979 country of origin labelling has been a State law, and the consumers today are 90 percent in favor of that, and they like it.
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Also, the packer recently did research on—I kind of lost my train of thought—is that nationwide more than half of U.S. consumers had no idea that their store sold anything but produce from the U.S. They were unaware that it came from a foreign country. That is food for thought, I think.
Mr. PUTNAM. Mr. McClung.
Mr. MCCLUNG. If you look at the statistics on why consumers buy what they buy in the produce section, it has much more to do with quality and appearance than it does with origin.
But I also—we are in the middle, as you all probably know, of the melon season in this country now. Well, cantaloupe and to some extent honeydew have taken a very hard hit here in the last few weeks because of a salmonella contamination problem that has been widely discussed that has caused a couple of deaths and many illnesses in many States. And those melons came from Mexico. Now, it may be that origin labelling in the times of the food crisis or food emergency like that would have more bite with consumers than they do in normal times when people are simply looking at the product and considering the cost. So I think that we would always—producers certainly support country of origin labelling, but I also believe a little like Mr. Wunsch that it may not be all that important in day-to-day commerce.
Mr. PUTNAM. Mr. LaVigne.
Mr. LAVIGNE. As you look at it, echoing what Mr. McClung just said, the consumer is not sure where that product has come from. But one of the biggest burdens growers face today is compliance to make sure that we are producing a wholesome, safe product that our Federal Government requires us to do; and I think country of origin labelling gives some assurance to the consumer that we are following those guidelines, be it pesticides or other water issues in the fields and the groves and that kind of thing.
So Florida has had this on the books for 20 some odd years. It has been effective. I guarantee you the grocery stores have not gone out of business in Florida. They open a new one just about every week. And it is something that the consumer should know. They know it in every other country in the world.
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Mr. PUTNAM. Thank you, Mr. Chairman.
Mr. POMBO. Mr. Johns, just to follow up on Mr. Putnam's question, I think for us the question becomes, if it has been on the books for 22 years or 23 years in Florida, has it made any difference in terms of the percentage of domestically produced produce the consumer buys? And how does that compare—how does it compare in Florida versus, say, Georgia in what they buy?
Mr. JOHNS. Mr. Chairman, I wouldn't have those numbers off the top of my— I wouldn't be aware of those.
Mr. POMBO. If you can get those, I would be interested in those.
Mr. JOHNS. I believe we can get those, without question, yes, sir.
Mr. POMBO. OK. Thank you.
Mr. POMBO. I want to thank this panel very much for your testimony and the answers to the questions. If there are any follow-up questions that we have, they will be submitted to you in writing; and if you could provide an answer for the committee so it can appear in the committee record.
Mr. PETERSON. Mr. Chairman, I forgot to ask—I was wondering if they could grow square watermelons yet.
Mr. POMBO. Well, thank you very much. I will excuse the panel. The record will remain open for 10 days to accept statements and any additional information that you would like to produce. Thank you for your attendance at the hearing.
The hearing is adjourned.
[Whereupon, at 11:36 a.m., the subcommittee was adjourned, subject to the call of the Chair.]
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[Material submitted for inclusion in the record follows:]
Statement of William J. Lyons
Chairman Pombo and Members of the Subcommittee, I thank you for holding this important hearing and for the opportunity to appear before you.
Shortly after Californians elected Gray Davis the State's 37th Governor, he asked me to serve as the Secretary of the California Department of Food and Agriculture. Prior to then, my family and I operated a diversified farming operation centered in the heart of California's Great Central Valley. This experience has given me a firsthand understanding of the challenges that face our family farmers. As head of CDFA, I have gained experience in the challenges that state governments face to protect and promote agriculture. I am proud of my Department's 3200 employees who work hard to ensure that quality food reaches the consumer, that exotic pests and diseases are detected and eradicated, and that there is an equitable marketplace for California's agricultural products. Today, I would like to describe California's fruit and vegetable community, its current economic situation, and the critical issues it faces.
CALIFORNIA FRUIT AND VEGETABLE INDUSTRY
The history of the California fruit and vegetable industry is a history of the state. Early farmers transformed exotic luxury items, such as citrus, almonds, and walnuts, into American staples. In the process, these farmers sold not only their crops but also promoted the state itself. Generations of Californians came to the state enticed by the attractive scenes on packing crates and the promise of long growing seasons and rich soil. Today, California leads the Nation in the production of 79 commodities and produces 50 percent of the nation's fruits and vegetables.
Like so much of the farm economy, the fruit and vegetable industry faces low prices and declining markets. While some commodities are faring better than others, agricultural property values have declined throughout California and the effects of the drastic consolidation of processing facilities are still having an impact on the economy of the Central Valley. As this subcommittee knows better than anyone, these are tough times for agriculture.
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In addition, California's farmers and ranchers, like all of our citizens, struggle with enormous energy costs. Rates for electricity for farming operations are up 30 percent and diesel prices are soaring. Through our new fast track approval process, the State recently has licensed 16 new power plants, the first one just four months after Governor Davis took office. Ten plants are currently under construction and four will be online this summer. Meanwhile, though California leads the Nation in electricity conservation, our farmers—like citizens throughout the western states— face huge energy prices.
II. FLEXIBLE POLICIES FOR DIVERSIFIED AGRICULTURE
With this background, let me turn to the policy issues facing the fruit and vegetable industry. I have been working with the NFACT and the National Association of State Departments of Agriculture to assist in your efforts to craft a new farm bill and to help all America's farmers and ranchers meet the many present and future challenges facing production agriculture.
In 1999, the heads of agricultural departments in New Mexico, Florida, Arizona, California, and Texas formed an organization to advocate positions that benefited our states. All of these border states have significant fruit and vegetable production, which was a motivating factor in our forming this coalition. NFACT has coalesced into an organization known for its strong stance on issues such as animal and plant health, food safety, conservation, international and domestic marketing, research and risk management.
As we headed into the farm bill process, NFACT states held public hearings for producers to express their concerns about the future of agriculture. In California, we held 10 hearings and are in the process of reviewing the comments from those hearings. As you know, producers are looking at whether or not their future remains with the land.
California's agriculture is marked by its diversity, and by our farmers' willingness to grow for the market and to meet the changing tastes of consumers. Five years ago, we did not even track production of cilantro because it was insignificant; last year, this crop brought $17 million to California producers. Throughout this country, farmers are switching from growing a commodity to growing a product for a specified market. As important as this is for domestic markets, it is critical to winning international customers. For example, California now produces more cherries for the Japanese market than for the domestic market and is also filling a niche market in Japan for high quality short-grained rice.
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A farm, like any business, must have the ability to anticipate the needs of its customers and the demands of the market. Government policies that provide farmers with the tools to help themselves will empower farmers to succeed in the marketplace. Consumers have shown they will pay a premium for items that meet a particular desire and farmers who satisfy this niche may capture that additional revenue. This entrepreneurial spirit, long a tradition in California, is increasingly part of agriculture nationwide.
Farm policy may either foster this dynamic, market-oriented approach, or stifle its growth by clinging to policies that no longer assist farmers. The next farm bill must account for—and encourage—a diversity that accommodates all agriculture. As an example, many of the existing conservation programs do not address the needs of California's agriculture. Often the payment levels do not reflect the cost-of-living or land values in this state and the requirements appear to be drafted based on farming methods inconsistent with California agriculture. The next farm bill must provide assistance in marketing, creation of a level playing field for international competition, better access to conservation programs, tools to manage risk, and other market-based programs that will empower producers. Many important recommendations to accomplish this are included in NASDA's farm bill policy, which I recommend to you.
III. CRITICAL ISSUES
a. Pests and Disease Issues
Without diminishing the many issues facing the specialty crops, I wish to highlight two critical struggles: One is the continuing threat from exotic pests and diseases and two, is the competition from foreign growers benefiting from enormous export subsidies.
The agricultural industry remains at peril for pests and diseases that may wipe out entire agricultural operations. This subcommittee recognized early that Pierce's disease threatens California's wine industry, as well as other commodities. In the last year, we've built a model program involving Federal, state, local, and industry stakeholders, all of whom contribute to the effort.
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The California grape industry has long coped with Pierce's disease. In the 1880's, the disease destroyed 40,000 acres of grapes around Anaheim Significantly, a new vector transformed this century-old problem into a multi-billion-dollar threat to California's agriculture. The glassy-winged sharpshooter was detected in California in the early 1990's—most likely arriving on plants transported from an infested area. This insect is known to feed on hundreds of species of plants, using its needle-like mouth to tap into the water-conducting tissues of a plant. In addition to its mobility and its varied food sources, it is an especially dangerous vector because of its sheer thirst: equal to, in relative terms, a 150-pound human drinking 4,300 gallons of water a day. The combination of the sharpshooter and Pierce's disease has been likened to matches and gasoline. Our task is to keep them apart while we research long-term solutions.
Pierce's disease reminds us that prevention of the spread of pests and diseases is far cheaper than the enormous cost of controlling a pest or disease and the damage they inflict to both agriculture and the economy in general.
As you know, California is a hub of international trade and travel. This is of immense economic benefit to the state and we support the continued expansion of markets and the flow of goods and of people. However, it also exposes the state and the Nation to increased risk from exotic pests and diseases. Protecting the Nation from this risk is a fundamental role for government and it is an issue primarily of resources: Congress needs to appropriate adequate funds to protect American agriculture.
I wish to acknowledge this subcommittee's leadership in passing the Plant Protection Act. While I understand that appropriations are different from the issues debated in a farm bill, I ask you to continue to address the issue of adequately funding our safeguards and look for innovative methods of financing prevention and eradication efforts. We look forward to the upcoming expiration of the restriction on the use of AQI user fees and respectfully request that Congress view this as an opportunity to increase funding for this critical safeguard, and not as a chance to move those appropriated dollars to some other account.
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I come here as a supporter of trade and as an official of a state that exports $6 billion in agricultural commodities. My comments about pest issues are not designed to erect a protectionist wall around the state. Rather, with the enormous benefits from bilateral trade, comes a responsibility for increased vigilance to protect our producers from pest and disease threats, such as Medfly and the glassy winged sharpshooter.
B. TRADE THAT IS FREE AND FAIR
On the issue of trade, I must raise an issue that is having serious impacts on California's specialty crop industry. Without question, some growing areas enjoy competitive advantages over others. This will always produce winners and losers in a global competitive market. However, when the European Union directs its subsidies toward its fruit and vegetable growers, domestic growers are unfairly disadvantaged, both in foreign markets and at home.
The primary forum to raise such an issue is during the WTO negotiations and I hope Congress in general and this subcommittee in particular will insist that U.S. negotiators take on this topic and come away with solutions. The consequences in California and throughout the country are painful. In our canned peach industry, for example, overproduction and foreign subsidies have eliminated our foreign markets and led to an influx of foreign product in the U.S. that is being sold at give-away prices. Our citrus industry faces unreasonable competition from EU countries that support their industries through a variety of assistance programs, reported by the European Commission to exceed $750 million.
California is working to strengthen its markets. On June 1st of this year, Governor Davis announced he was dedicating $5 million to create a ''Buy California'' campaign to promote local products to local consumers. But we cannot undertake this effort alone; we need a combination of trade and market promotion actions at both the state and Federal levels,
In my testimony today, I have attempted to raise some of the challenges facing this industry. As leaders, it is our job to protect and promote this nation's bountiful harvest, in all its diversity. Further, we want family farmers and ranchers to thrive and prosper, not just because they are an important source of economic growth, but also because they represent a way of life. They are a unique and indelible part of our national character.
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Again, I thank you for having invited me to testify. At this time, I would be happy to answer any questions you may have.
Statement of Andrew W. LaVigne
Mr. Chairman, Members of the Subcommittee, good morning. I am Andrew LaVigne, Executive Vice President and CEO of Florida Citrus Mutual, a grower cooperative association representing over 11,500 grower members of processed and fresh citrus products in Florida. I appreciate the opportunity to testify before you today regarding the reauthorization of the Federal farm bill. We see this process, and eventual revision of the United States' farm policy, as a new and unique opportunity for the Florida citrus industry.
Our industry produces citrus on 850,000 acres in Florida. We are the number one producer of oranges for processing in the U.S. and number two in the world behind Brazil. We are the number one producer of fresh and processed grapefruit in the world. During the 1999–2000 season, Florida harvested 298 million field boxes of citrus representing 76 percent of the U.S. citrus production. Florida's citrus industry provides 27 percent of the state's total farm receipts. Of the citrus harvested, 89 percent was processed into juice and the remainder was sold as fresh fruit. We have in excess of $8 billion dollars worth of economic impact on our state.
Most of Florida's producers are third and fourth generation citrus growers who would prefer to pass that legacy on for many generations to come.
If you consider the number of acres we have in production, we offer an invaluable environmental benefit to the fragile ecosystem of Florida. Our groves provide ideal habit to wildlife and endangered species; we combat exotic and noxious weeds; we provide needed rainwater recharge and storage; as well as many other benefits.
Unfortunately, we are now completing a season that will likely prove to be the most economically devastating we have experienced in over 20 years. The on-tree value of this year's crop is estimated at $805 million, which would be down 30 percent, or $350 million, from last year and the lowest value crop since the 1985–86 season. Much like growers across this nation, Florida's citrus growers cannot afford to have too many more seasons like this one.
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Mr. Chairman, as you will no doubt hear several times today, farm gate receipts for the produce industry are reaching $30 billion. The fruit and vegetable sector is a strong and viable part of the U.S. agriculture industry and a vital part of the diet of America's citizenry. I will not attempt to repeat much of the testimony you heard earlier, but I will offer some suggestions on revisions to our farm policy that will help citrus, as well as the fruit and vegetable industry, remain a strong part of American agriculture.
Federal Farm Programs. Florida Citrus Mutual played an active role in the United Fresh Fruit and Vegetable Association's (UFFVA) farm bill Working Group and we support a majority of the proposals contained within the statement presented to the House Agriculture Committee on May 2, 2001. However, there are a few areas of specific interest to Florida's citrus growers and I would like to highlight those at this time.
Most importantly, we strongly support the working group's overall farm policy goal:
''Federal farm policy should be developed for the produce industry which ensures good producers are not put out of business due to forces beyond their control. Congress should utilize the farm bill to allocate funding that ensures the produce industry receives a proportionate share of the outlays of our industry program priorities. This investment would fund program priorities including: conservation incentives; loan mechanisms; nutrition; international market access and food aid; pest and diseases prevention initiatives; marketing and fair trading priorities; risk management tools; infrastructure investments; research priorities; food safety initiatives, and other initiatives.''
With respect to actual farm programs for fruit and vegetable growers, I want to state that many industry umbrella organizations have presented proposed farm bill programs for the industry. Given the breadth and diversity of these programs, we are currently still evaluating them for their potential impact on our growers. So, at this time, we are not prepared to provide a position of support or opposition to any programs that may be established specifically for the fruit and vegetable industry.
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However, I would like to add that, from a conservation perspective, the citrus industry, as well as other perennial crops, provide a unique benefit to our environment. Citrus trees are planted with the expectation of a twenty to twenty five year productive lifespan. Growers do not plant groves in anticipation of changing crops next year or in five years.
This extended productive life greatly benefits this nation's air, land and water resources.
Other benefits to the environment from citrus production are:
On sandy soils, land that remains planted in citrus provides significant water recharge to the Floridian aquifer, Florida's main source of drinking water.
This planted acreage reduces the spread of noxious and exotic weeds.
Citrus trees provide an important CO2 exchange function for the environment.
Land planted in citrus provides a rich wildlife habitat (especially for threatened and endangered species requiring large areas such as the Florida Panther).
Development mitigation—decrease infrastructure and sprawl.
In general, agrochemical inputs on citrus land are non-intensive and comparatively minimal over the course of one season to the next.
The conservation program concept is attractive to our growers because of the greenbox nature of such programs under WTO guidelines.
Federal Nutrition Programs
The greatest opportunity the U.S. Congress has to impact the health of all Americans is to work to improve the dietary education and eating habits of our citizens. We hear on a daily basis about the benefits of consuming ''five fruits and vegetables a day'' for promoting health, preventing disease, and improving our overall quality of life. Therefore, agriculture policies related to nutrition programs should support strategies that help Americans reach national health goals and ultimately reduce health care costs.
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The Florida citrus industry has spent a great deal of grower dollars to research the health benefits of Florida orange juice and fresh citrus products. Those benefits are supported by the American Cancer Society, American Heart Association, and the March of Dimes. It is imperative that the policies proposed in the farm bill reflect these benefits.
One key area of interest to us, under the Federal nutrition programs is language that seeks to optimize the amount of 100 percent fruit juice, fresh fruits and vegetables provided under the USDA feeding programs (including School Breakfast, School Lunch, Child and Adult Care, TEFAP, FDPIR, Elderly Nutrition Programs, and CSFP). Incentives should be included in the legislation to encourage states to purchase domestically grown commodities.
Agricultural Research. Sound, progressive agricultural research is the key to the Florida citrus industry remaining competitive in this global environment. The demands on growers have increased dramatically over the last decade and new, innovative production practices must be researched and refined in order to keep the industry in production.
The U.S. citrus industry has been working together to coordinate and consolidate research across the country. Through cooperative funding and research, USDA-ARS, USDA-CSREES,
land grant universities and other interested entities are seeking to find solutions to challenges such as: improved harvesting efficiencies; the prevention, detection and eradication of exotic pests and diseases; improved production and harvesting systems; new pest and disease resistant varieties; increased research on the nutritional benefits of 100 percent orange and grapefruit juice, and fresh citrus products; and many other areas of research. The research title of the farm bill should strongly support such nationally coordinated research efforts.
The fruit and vegetable industry is under siege from exotic pests and diseases being introduced into this country. Just over the last few years, we have seen introductions that have devastated growers and created a public relations nightmare for USDA, state departments of agriculture and the impacted industries. We simply cannot allow these introductions to continue and research is the key to ensuring the risk of introducing exotic pests and diseases is dramatically curtailed.
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Our main recommendation under the research title is to establish a $10 million revolving account that would provide matching dollars to commodities seeking to improve harvesting efficiencies by developing mechanical harvesting machines and abscission chemical products.
The Florida citrus industry is currently spending in excess of $2 million a year to develop such equipment and chemicals. USDA spent a great deal of time and money in the 1950's and 1960's to improve harvesting for major commodities and has since basically suspended the program. Cooperative research and funding between producers, USDA, state universities, and private entities must be reinstated in order for producers to stay competitive with countries whose growers pay labor on a per day basis the equivalent of what Florida producers have to pay labor on a per hour basis. Enactment of legislation authorizing funding and directing the ARS and CSREES to conduct research in the areas of mechanized harvesting and new production and processing methods for fresh and processed fruits and vegetables is also important.
Pest and Disease Exclusion Policy. The Florida citrus industry strongly supports the continued efforts by members of Congress to implement legislation that enacts the 300+ recommendations contained in APHIS' ''safeguarding American Agriculture Report.'' It is vitally important that we update our procedures for pest and disease detection, interdiction and eradication. As I stated earlier, American agriculturalists cannot continue to sustain the losses they have incurred through the introduction of foreign pests and diseases.
It is our hope that given the extremely high cost of eradicating citrus canker, plum pox virus, Pierces disease, Asian long horn beetle, and other diseases, the USDA, Congress
and state governments will realize that strong interdiction and detection programs are much cheaper than eradication programs.
In addition to general research, our specific legislative recommendations in this area are:
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&