SPEAKERS CONTENTS INSERTS
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REVIEW OF FEDERAL FARM POLICY
FRIDAY, MAY 12, 2000
House of Representatives,
Committee on Agriculture,
Boise, ID
The committee met, pursuant to call, at 9:00 a.m., at the City Council Building, Boise, ID, Hon. Larry Combest (chairman of the committee) presiding.
Present: Representatives Chenoweth-Hage, LaHood, Moran, Walden, Simpson, Ose, and Stenholm.
Also present: Representative Hastings.
Staff present: Tom Sell, deputy staff director; Pete Thompson, David Tenny, Christopher Matthews, and Jason Vaillancourt.
OPENING STATEMENT OF HON. LARRY COMBEST, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
The CHAIRMAN. The hearing will come to order.
Good morning and welcome to this ninth of 10 field hearings the House Agriculture Committee is holding in different regions of the country. I would like to thank everyone here for coming to this important event, all of you and certainty all of the members of the committee and other members who have similar interest.
As you may know, we started this series of hearings in Texas in March. We continued to Memphis, TN, Auburn, AL; Raleigh, CA; West Chester, OH; Kutztown, PA; Woodland, CA; and Sioux Falls, SD. At those eight hearings, 40 Members and well over 2,000 people have listened both in the audience and through the Internet. I tell people we carry all the hearings live in real-time over our Internet site. This hearing is one of those.
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I think the time spent by this committee in this endeavor has been very beneficial both to us as well as to members of the audience. And we're certainly pleased to be in Boise today. And we think that our time will be well spent here.
I have the pleasure this morning of introducing the Members who are with us. I am Larry Combest. I represent the High Plains of Texas. On my left is my good friend and neighbor, Charlie Stenholm, who is also from west Texas. On my right, probably don't need to introduce, she is our host, Congresswoman Helen Chenoweth-Hage from western Idaho.
Helen, I think in eight hearings, this is the first time that we had an applause for you. So whatever you're doing, keep on doing it.
Mr. STENHOLM. Mr. Chairman, they came to your district, not mine.
The CHAIRMAN. I think Mr. Stenholm got an applause in my district. Be that as it may, thank you for reminding me of that.
Congressman Ray LaHood from central Illinois, who will be hosting our final hearing tomorrow in Peoria. Jerry Moran represents the western two-thirds of the State of Kansas. Greg Walden represents eastern Oregon.
We don't have to turn this into a contest. We've got one more to go. Mike Simpson, who actually physically today is the host of this location. Doug Ose from California.
And joining our committee today is not a member of the committee but a Member who does have tremendous agriculture interest, and we appreciate the fact that he is here, Doc Hastings from central Washington State.
Today we will hear from 20 people who have built their lives and careers around agriculture. In selecting this panel of witnesses, as we have in every location, we have sought to bring folks together that represent different kinds of agriculture and, in fact, are producers, and that would bring a variety of thoughts to us about what the issues are and the concerns facing this industry. It is my hope that everyone in this room can identify with at least one of these witnesses. And I would certainly encourage anyone, for those of you who are here or for those of you who are listening, who would wish to submit additional testimony, we would invite you to do that. And we will consider that equally as important as those who have officially testified.
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I don't want to speak too long because we're here to listen to you. I want to let you know that all of the people in this committee recognize there is a problem in agriculture. That's the reason that we're here. What's more, we all fundamentally believe that it is in the best interest of this nation to have a strong agricultural industry and diverse, and that we've got to do that not only from the standpoint of our economy, but our national security.
What we want to do is try to answer the question of how can we best accomplish that goal. We want to find out what real producers think, what is working, and what is not working.
When we have completed this, we will have been in all regions of the country asking the same questions and getting quite a consensus of answers, but hopefully finding something that we will be able to move forward on that does have a consensus in agriculture.
I want to again thank everyone for being here and recognize Mr. Stenholm.
OPENING STATEMENT OF HON. CHARLES W. STENHOLM, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
Mr. STENHOLM. Thank you, Mr. Chairman. I'm delighted to see all of you here. I look forward to hearing from the witnesses. This, as you heard the chairman say, is ninth in a series of ten field hearings that we have scheduled around the country. We're coming out to ask farmers and ranchers what you think ought to be changed, what's working, and what's not working. There are some things that are working, but obviously we have a major problem with price, and that is something we are going to be looking at as to how can we, as producers, receive a fair price for that which we produce. And to do that, we're going to have to think outside of the box and that's what we're hoping to pick up, a few ideas here today. Delighted to be here with you. Look forward to hearing from you and then questioning some of the witnesses a little later.
The CHAIRMAN. Mrs. Chenoweth-Hage.
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Mrs. CHENOWETH-HAGE. Thank you, Mr. Chairman. I do have a statement that I will submit to the record in the essence of time.
But I just want to thank you so much, Chairman Combest, for bringing the committee to Idaho. We're a small State with a small population relative to other States, and the fact that you would pay attention to the concerns of the people of the Northwest by holding this hearing in Boise, I am deeply grateful. And I share that gratitude with the people of Idaho.
So, Chairman, thank you very much for bringing the committee here.
[The prepared statement of Mrs. Chenoweth-Hage follows:]
PREPARED STATEMENT OF HON. HELEN CHENOWETH-HAGE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF IDAHO
The CHAIRMAN. Thank you for that warm welcome. We appreciate that very much. Mr. Simpson.
Mr. SIMPSON. Mr. Chairman, I also, in the interest of time, will submit my opening statement for the record.
And I, as Helen, want to welcome all of you and thank all my colleagues for being here in Idaho. It was important, I think, that we come to the Pacific Northwest to be able to hear from the producers in this region.
But I also wanted to tell you when we sat down in January, we were talking as an agriculture committee about what we could do. One of the things we decided to do was obviously hold these hearings around the country and get input from producers instead of just those individuals that we hear from on a routine basis in Washington.
As we sat and talked about it, I don't think anybody realized somebody that hadn't been involved in it like myself, the extent and amount of work that goes into holding ten hearings all around the country in different places. I want to compliment the chairman and the ranking member, because this is the ninth out of 10 hearings and they have made it to every one of those hearings, which had been considerable dedication on their part in both time and effort to get out and listen to the producers. And I think it shows their dedication seeing what we can do to improve the agriculture economy in this nation.
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I will have made it to six of the hearings around the country, and it seems like that's all I've been doing all spring is going to agriculture hearings. But obviously it's very important to both the producers in Idaho and the Pacific Northwest as a whole. And I look forward to hearing the testimony of these witnesses as to what we may be able to do to help bring prices up, because ultimately that's what we have to do if we're going to save the agriculture economy in this country. Thank you, Mr. Chairman.
[The prepared statement of Mr. Simpson follows:]
PREPARED STATEMENT OF HON. MICHAEL K. SIMPSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF IDAHO
The CHAIRMAN. Mr. LaHood.
OPENING STATEMENT OF HON. RAY LAHOOD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS
Mr. LAHOOD. Mr. Chairman, I want to say a word about my friend, Helen Chenoweth-Hage, because Helen and I were elected together in 1994. And for those people in the audience, it's sad that Helen is going to be leaving the Congress at the end of this term. But I want all of you to know, and I think most of you know this, Helen has been a tenacious advocate and fighter for the people not only of her district, but her State. Every time we have a hearing, and every time the Secretary of Agriculture comes before our committee, Helen Chenoweth is there fighting for the people of her district.
And I just want to say that because I think most of you know it, but Helen, you've done a great job in representing the people of this State, and particularly the people of your district, and we're going to miss you on the committee. And it's a pleasure to be in your area.
It's great to have Mike Simpson on the committee, but I don't think anybody can match Helen's voice and advocacy for the people of her area.
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The CHAIRMAN. And I might say a very pleasant voice.
Mr. Ose.
Mr. OSE. Thank you, Mr. Chairman. I am reminded that the last time I was Idaho was in the winter of 1976. It has been too long because this State is too pretty to be away from for that long. I'm pleased to be back.
The CHAIRMAN. Mr. Moran.
OPENING STATEMENT OF HON. JERRY MORAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF KANSAS
Mr. MORAN. Mr. Chairman, thank you. It's a delight to be with you. This is my first visit to the State of Idaho and to Boise, and you do have a very beautiful State, at least what we saw of the sunset last night and as the sun rose this morning.
I, too, join my colleagues in expressing our interest in hearing what you have to say. I represent most of the State of Kansas geographically. And we're a wheat, cattle, corn producing district, State. The largest city in my district is about 40,000 people, very rural. And I'm interested to see if you have the same kind of things to say as my farmers and ranchers are telling me, in hopes that we can find some solutions to the problems that our producers face. And not only of keeping farmers on the farm, but allowing the next generations of sons and daughters to have that same opportunity to grow up in rural America.
And I, too, commended your two Members of Congress from Idaho. I don't think there is another delegation in Congress in which both Members, the entire delegation are members of the same committees, agriculture and resources. And both Mike and Helen have been strong advocates. Mike arrived after I did, Helen arrived before I did. But in both instances, they have been there on behalf of the kind of values that we share across rural America.
And I'm delighted to be here with you today and to hear what you have to say in hopes that we can make a difference on your behalf. Thank you, Mr. Chairman.
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The CHAIRMAN. Mr. Walden.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON
Mr. WALDEN. Thank you very much, Mr. Chairman. It is indeed a delight to be here in Boise. And I echo the comments of my colleagues who have gone before about the great job that Mike Simpson and Helen Chenoweth-Hage have done representing those issues that are so critical to those of us that represent rural districts. Sometimes I feel like I'm more a part of the Idaho delegation instead of the Oregon, especially when it comes to some votes.
I would like to introduce two staff people who are here today, back here in the back is Troy Nichols, who works for Senator Gordon Smith. Troy, if you want to stand up. And he'll be coming to work for me as a field rep for the northern and central part of Oregon.
And Brian Hard in the back, who is my senior legislative assistant for agricultural issues. So if you've got issues, talk to him.
I grew up on a cherry orchard in Deschutes, OR, Mr. Chairman, and understood as a young kid what it was like to try and make a living in agriculture. I remember the only summer vacation we ever took in those 11 years when I was on that ranch was when the cherries froze out. And that was because my dad also managed a radio station. So even back in the early sixties, you had to have another job to be able to be in agriculture, it seemed like.
So I'm somewhat familiar, growing up in a farming region, growing up on a farm, what is faced, and it's an enormous problem we face on the farm and on the ranch. And I'm really looking forward to the testimony today, Mr. Chairman. And I thank you and our ranking member for holding these hearings throughout the country so we can hear firsthand from farmers and ranchers about what the problems are. But moreover, about their specific recommendations for what we need to do in Congress to solve those problems so we can have a healthy and vibrant farm economy in this country. It's essential to our security and to our future. Thank you, Mr. Chairman.
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The CHAIRMAN. Mr. Hastings.
OPENING STATEMENT OF HON. DOC HASTINGS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON
Mr. HASTINGS. Thank you, Mr. Chairman. I want to thank the committee for the courtesy they've shown me in allowing me to be here today to participate in this hearing. I, too, look forward to the testimony that's given.
I wanted to add my 2 cents worth also with Mike Simpson and Helen Chenoweth-Hage because just last month we had a hearing of the Committee on Resources in Pasco, dealing with water and dams and salmon. And I know that's of great interest to everybody here, because without water, obviously we haven't got an agriculture economy in this part of the country.
But I represent a very diverse area in central Washington. It runs from the Oregon border to the Canadian boarder and is very diverse. In fact, it's probably as diverse as any area in the country, with maybe the exception of the central valley of California. And one thing that in those areas—the diversity of crops—that they all have in common, however, that I hear over and over from my growers, and that's that we need more markets in the long term, I'm convinced. I'm sure we'll hear today the testimony that the more markets we have, the better off we'll be.
My growers have been telling me over and over, ''Just give us a level playing field. If we have a level playing field, we'll compete with everybody.'' That's obviously a charge that we take very, very seriously. One of the big tests, as a matter of fact, will be coming up the end of this month when we vote on permanent normal trading relations with China. That will be a test to see the result that Congress has created to the problems that you have.
I look forward to your testimony. I will just point out one other thing when I mentioned, as diverse as we are, I need to put in a plug. Washington State leads the country in production of apples and pears and hops and sweet cherries and spearmint, dry teas, lentils, Concord and Niagara grapes, and asparagus. We also are huge players in wheat and potatoes. I know that's probably sensitive to Idahoans when I say potatoes, but I have to tell you a story.
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I was back at a local supermarket back in Virginia and they were advertising Idaho potatoes. And I'm all in favor of Northwest products, so I went in to buy some and they were from Quincy, WA. That's all right. It's all from the Northwest; we all benefit by that. But there is a bit of pride in Washingtonians in how they grow their potatoes.
So once again, Mr. Chairman, thank you very much for the courtesy you've shown for allowing me to sit with you today.
The CHAIRMAN. Very glad to have you, Mr. Hastings.
I will call our first panel of witnesses. And I will apologize to all the witnesses ahead of time if I happen to mispronounce your name or the city you are from.
I would also ask our witnesses, if they would, please, observe the lights to the extent possible, giving the members as much time as possible to get into an interchange. All of the testimony in its entirety and any additional testimony that you might be wishing to submit will certainly be accepted for the record.
Our first panel, Mr. Klaren Pete Koompin, a potato, wheat, canola producer from American Falls, ID. Mr. Perry Meuleman is a sugar beet and barley producer from Rupert, ID. John Payne is a wheat and barley producer from Waitsburg, WA. Mr. Sherman Reese is a wheat and barley producer from Echo, OR. Mr. Ritchey Toevs is a potato, sugar beet, wheat producer from Aberdeen, ID.
We'll start as introduced and go down the line. And I would ask you to begin, please. Thank you.
STATEMENT OF KLAREN PETE KOOMPIN, POTATO, WHEAT, CANOLA PRODUCER, AMERICAN FALLS, ID
Mr. KOOMPIN. Start with me, Mr. Chairman. You did a fine job with the name. I couldn't produce it until I was 12, especially my first name. Dad rode on a tractor for a couple of days but he had to come up with a name in order to get me out of the hospital because they wouldn't release mother, they said. So the way it came up is he remembered the name of a guy he didn't like. So anyway, I'll get started here.
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Mr. Chairman, members of the House Committee on Agriculture, again, thank you from Idaho and the Northwest for granting this audience on the 2002 farm bill. There are several issues which I believe need to be addressed in the 2002 farm bill. And I'm going to deviate just a second from my written statement with the chairman's permission. I would like to add a couple more thoughts after I finish reading the prepared statement. But hopefully I will still be well within the green light.
First and foremost, please, at the Government's earliest convenience, give me the Government definition of a family farm. For without the definition, I am at a severe disadvantage in the domestic and international markets. For in order for us, my brother and I who have a partnership, to stay in business, we must remain within the Government program. But if the Government uses gross dollars income to define a family farm as it's projecting to do or has some inclination there, then as a potato, wheat, and canola producer, we're out of the parameters as dictated by Washington. And you take 400 acres of potatoes itself will gross over $500,000. Now, if you were talking net income, well, I think then we could probably live with the $500,000. And basically it comes down to please, no more payment limitations.
It might be easier to define what a non-family farm is. And a definition might read, this is something I came up with Sunday: Any farm that is either owned, operated, or joint-ventured by a publicly traded or multinational person or company. Very simple and maybe will solve somewhat of the stigma of what a family farm is. Let's define what it isn't.
Multi-peril insurance, which I'm going to call full-coverage, all-crop, production-only insurance, will work in the United States if it is required for all producers to take and is administered by the FSA offices. As long as actual production is required every year, and is used to figure a historical average, and with the premium adjusted accordingly, then the 5- out of 10-year disasters that some farms experience will probably come to a stop. But we do believe that the Government should provide a farmer caught in these areas an option to CRP this ground or retrain him in some other vocation.
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You may wonder why we're not in favor of revenue insurance. I believe that any type of revenue insurance, whether Government sponsored or privately sponsored, is ripe for fraud. And furthermore, there are plenty of tools available currently for us to market our crops, including but not limited to forward contracts, futures, options, LDPs, and Government guaranteed payments.
No. 3, can the Government get out of farming? Unfortunately, no. The world free market is somewhat like trying to define the family farm. It may look good on paper, but very seldom works in reality. I have come somewhat full circle on this, starting with Jamie Whitten back in the late 1970's, from Mississippi, to thinking he was one way too far and going the other way, where we should get completely out. And I guess I'm somewhere in the middle and maybe leaning toward him.
I believe the USDA needs to get more involved in research funding, i.e., new uses for existing crops, new crops, enhanced environmental production possibilities, the carbon credits and so forth that people are talking about. We need international market access. And probably one of the most important, all phases of transportation efficiencies, both domestic and international need to be addressed by the USDA, for that's where our markets do lie.
With the support of our basic commodities, wheat, feed grain, soybeans, cotton, and rice, these things, if done by the USDA, then will ensure that agriculture will have a dynamic and prosperous future, an industry that I still believe would make Thomas Jefferson proud, and an industry that still is the foundation and driving force of all others, and one I hope my children choose. For agriculture is too big of a consumer in the American economy to be left unattended, and is one of only a handful of industries in the world that takes a renewable free resource, mainly being sunlight, and turns it into a brand new dollar.
Sirs, one last point I'd like to make is the importance of agriculture to the generation of dollars in the American and world economy. And these don't have to be probably said more than once, because everybody can understand them, real simple. Couple cents' worth of wheat we turn into a $1.35 loaf of bread, $1,500 worth of potatoes with another $3,000 worth of processing and $1,000 worth of transportation and soybean oil turns into $48,000 at a quick-serve restaurant. Those are big dollars. That puts a lot of people to work. I would say Micron wouldn't be where it is without the food industry.
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And I'm done. So we'll wait for my other comments that were developed. We'll wait. Thank you.
[The prepared statement of Mr. Koompin appears at the conclusion of the hearing.]
The CHAIRMAN. Thank you, Mr. Koompin. Mr. Perry.
STATEMENT OF PERRY MEULEMAN, SUGAR BEET, BARLEY PRODUCER, RUPERT, ID
Mr. PERRY. Thank you, Mr. Chairman and colleagues of this distinguished panel.
I'm a third-generation Idaho farmer and operate our family farm which was homesteaded in 1904. I farm 560 acres of irrigated land on which I grow sugar beets, alfalfa, seed barley, and malt barley. I presently serve as president of the Idaho Sugar Beet Growers Association and treasurer of the American Sugar Beet Growers Association.
Today I'm representing the 1,260 farm families who raise 252,100 acres of sugar beets in Idaho, Oregon, and Washington. These growers have a direct investment in our cooperatively owned sugar companies of over $350 million. In addition, all of the sugar beet seed for the entire U.S. industry is produced in Oregon's Willamette Valley. Almost $1.3 billion are generated each year in the three States by the sugar and corn sweetener industries.
Taking proactive action to secure the future of the sugar beet industry in the Northwest, in 1994 local sugar beet growers decided to form a cooperative and pursue the purchase of the sugar beet processing company. Our farmers made major capital outlays to purchase their stock in this cooperative. Many mortgage their land to secure these funds. These family funds are not the large sugar beet plantations that some envision. These are family-run operations that are the backbone of our rural communities. Since our financial commitments extend into the next decade, local farmers and bankers have a vital interest in the long-term viability of the sugar industry. Today's prices put us in serious jeopardy.
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I am here to tell you today that individual farmers, family farmers, are U.S. agriculture. And we are in a financial crisis. Since the 1996 farm bill, we have suffered a 25 percent drop in price. Processors and cane refiners are in a situation for the first time in 16 years where they are seriously considering forfeitures of sugar to the Government at the end of July because our price has been below forfeiture price.
There are a number of causes for this crisis. Admittedly, domestic production of sugar was up last year. The more significant forces at work, however, are very much beyond the farmer's control. The first is a quota circumvention scheme that brings a blended product called ''stuffed molasses'' into the United States from Canada. This blatant maneuver, unless stopped now, will add 125,000 tons to our domestic sugar market this year, an amount that our market cannot bear. This product, and others designed solely for circumvention, must be stopped legislatively. We are working with your colleagues in Congress to do so.
The second factor is the overhang of the anticipated Mexican sugar that will have access to our market on October 1. Under NAFTA provisions, Mexico's tariff-free import quota into our market will increase tenfold to 250,000 tons. The anticipation of this supply is also driving our price down.
We also have a WTO access commitment to other foreign sugar producers that we must maintain, regardless of our domestic consumption needs.
Possible solutions and options. The sugar industry has characteristics that make it unique among other commodities, The industry is import, not export, sensitive. By law, it must provide a guaranteed level of access to our market to foreign producers, regardless of domestic consumption needs. It is also subject to the volatility of the world dump market.
There is interdependence between sugar grower and processor. Production cannot be halted when supplies are high and then restarted when supplies return to balance. Sugar growers can neither market nor hedge their crops. Thus, they lack risk management tools available to growers of some other crops. Sugar is a multiyear investment and a high-value product, with total economic costs much higher than most other field crops.
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Options and solutions. Short term: Restore order and balance to the market, removal of excess sugar supplies must occur immediately. This requires a Government purchase of at least 370,000 tons. This would avoid costly forfeitures later and thus minimize economic loss to the Government and protect sugar producers' incomes and investments.
Stuffed molasses and like products designed to circumvent the sugar import quota must be stopped at our borders.
Long term: No. 1, the U.S. Government must negotiate with Mexico to reduce the threat of sugar access at levels that can destroy the balance in the U.S. market.
No. 2, in any future farm legislation, Congress should, through a technical correct measure, reinstate the no-cost provision that was eliminated in the drafting of the 1996 farm bill.
No. 3, Congress should abolish the 1-cent forfeiture penalty on sugar. The 1996 farm bill imposed this penalty on any producer who forfeits on a Government CCC loan when non-recourse loans are in effect. While aimed at maintaining a no-cost program by discouraging forfeitures, the penalty effectively and substantially reduced the income of sugar farmers.
No. 4, the bankruptcy provision, which protects growers in the event of a processor bankruptcy or other insolvency was made inapplicable to the 1996–2002 crops in the 1996 farm bill. The language should be reinstated so that growers can be assured of receiving the minimum benefits intended under the sugar policy.
I thank you for the opportunity and the time to express our concerns. I'd be happy to stand for any questions. Thank you.
[The prepared statement of Mr. Meuleman appears at the conclusion of the hearing.]
The CHAIRMAN. Thank you. Mr. Payne.
STATEMENT OF JOHN PAYNE, WHEAT, BARLEY PRODUCER; WAITSBURG, WA
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Mr. PAYNE. Good morning. Thank you, Mr. Chairman and your distinguished panel. My name is John Payne.
I'm a wheat and barley grower from the State of Washington. I have represented agricultural in various ways in the past and still have an active interest in agricultural policy at the Federal level.
A couple of months ago, a few of us farmers got together to talk about what was right with the present bill, what was wrong, and what the problem was. It was generally agreed that Freedom to Farm was working in many ways. The freedom to plant what we want is good, although we still need to be able to plant the hundred-plus crops we are still not able to.
The marketing loan is good. It's a good approach, but we need to address the level of the loan and the inequity of the loan level, for barley specifically. It was also agreed there were other problems and they needed to be fixed, but they weren't the problem. Well, the problem must be low prices. Prices that are at historical lows surely must be the problem. But if you look at the situation objectively, you have to admit the prices are a symptom rather than the actual disease.
This is the problem for wheat: That's 943 million bushels of wheat. That is the extra production we have for this year. It is called the carryover. It is the single biggest reason for our low prices. It is the 500-pound gorilla in the corner for the wheat farmer. It is the main indicator that determines price. This figure is used worldwide to project price trends. And as long as it stays high, we will continue to have to have these meetings to try to solve the problems of agriculture.
It is said, ''The hardest part of finding solutions is identifying the problem.'' So if indeed we have done this, the rest must be easy. I'm not so sure of that. Why do we have such a high level of carryover? Well, the answer is simple and complex at the same time. The simple part is the farmer hasn't sold his wheat. The complex part is why?
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There are those, including me, who thought that having a marketing loan would be enough incentive for a farmer to sell in the year of production and thereby not have a big carryover, and maybe, for the first time in history, the United States would not be the residual supplier for the world.
We could then be like all the other exporters of grains. We would be telling the buyers of our commodities to stock up, because we won't have any when the marketing year ends. Well, no such luck on that. There are many theories of why we won't sell our crops, but when we talked, it seemed to boil down to the simple fact that there weren't enough incentives to sell to outweigh the incentives to hold it. So what do we do? And Congressman Stenholm, if you want to go outside the box, here we go.
I think two things might help. First of all, if you take out a loan or take an LDP on your crop, the clock will start ticking. From that date on, you have 9 months to market your crop. The loan is a recourse and the same rules apply as far as timing if you take a loan deficiency payment. This puts the world on notice that this crop is coming to market and we're going to get rid of it. This is the stick part of the plan, but we need a carrot also.
The carrot is a Marketing Incentive Plan. The MIP would be a payment of, say, 30 cents a bushel to a grower who sells his crop within 30 days of harvest. If he sells within 60 days, it's 25 cents, and so on.
This would allow a person to sell a cash crop and pocket the money if he wants to, or if he wants to take advantage of the possibility of a rising market, he or she could buy calls in the options market with the payment. Of course, he could buy puts if he thinks the plan will depress prices further. This removes many of the excuses we hold on to to hold on to our crop.
The Pro Farmer magazine, in their April 8 edition, made some projections for the coming year with respect to prices. With a carryover of 982 million bushels, for the marketing year 2000–01, they figured the price would be $2.50 a bushel. Wow, big surprise. When they plug in bringing the carryover down to 691 million bushels, they see a price of $3.10. That's a 60-cent increase with the reduction in stocks of less than 300 million bushels. So if we have a stated goal of doing everything we can to keep this problem figured at the lowest possible amount, the better we are able to achieve long-term solutions for American agriculture. With this approach to reducing carryovers, I think we take a big step towards solving the problem.
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I want to thank you very much for your time.
[The prepared statement of Mr. Payne appears at the conclusion of the hearing.]
The CHAIRMAN. Thank you. Mr. Reese.
STATEMENT OF SHERMAN J. REESE, WHEAT, BARLEY PRODUCER; ECHO, OR
Mr. REESE. Thank you, Mr. Chairman. My name is Sherman Reese and I farm in the semi-arid Columbia Plateau of northeastern Oregon. Our operation is a single-family farm, run with the able assistance of my wife, four daughters, my father, and seasonal hired help. We raise multiple classes of wheat and some barley on irrigated and dryland ground in a 10-inch rainfall zone in Umatilla County, Oregon's No. 1 wheat-producing county. I am also the current president of the Oregon Wheat Growers League, and chairman of the Domestic Policy Committee for the National Association of Wheat Growers.
Mr. Chairman, let me thank you and Mr. Stenholm for the cooperative, results-driven, bipartisan way the committee is handling agricultural policy. Rather than get caught up in political posturing in an election year, the committee is coming to the country to hear the input of individual farmers. We're also very appreciative of the work of Greg Walden and his cooperation with his PNW neighbors to secure this hearing. The leadership all of you demonstrate is commendable, and should serve as an object lesson for others in Washington.
Today I wish to emphasize the following point: The 1996 farm bill is not broken, but it is incomplete.
The fundamental principles of the bill remain sound today, despite the depressed nature of commodity markets. U.S. policy should let the market rather than the Government give market signals which determine production. Farmers should be free to plant what makes the most economic and agronomic sense to their individual operations. Subsidies to farmers should be constructed to comply with trade agreements, linking to general support or conservation incentives instead of production or price. Supply management and large grain reserves are failed policies that belong buried in the past. All of these points are positive contributions of the bill.
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Where Freedom to Farm has fallen short are in the areas that were supposed to be completed along with the payment change, and in fact were promised by Congress in exchange for our support of the bill. Those included the broad categories of regulatory relief, aggressive trade negotiation, and research investments. Three years of experience with the lowest real commodity prices since the Depression have also convinced us that the bill lacks an effective safety net. Were it not for the emergency payments authorized by Congress the last 2 years, many farmers would have been forced out of business and the crisis would have been even worse.
Trade negotiation and PNTR. The U.S. Government has made some definite progress in the realm of trade negotiations, despite the global WTO embarrassment in Seattle. We are hopeful that the WTO round can be salvaged after the demonstrations and missteps, and that progress can be made in the next round. While there are legitimate concerns with state trading enterprises in Canada, Australia, and elsewhere, European subsidies are the primary issue that need to be addressed in the WTO. Europe accounts for 85 percent of all export subsidies paid in the world, according to our trade representative.
Paramount in trade negotiations is the urgent need to pass PNTR for China, and aid the accession to the WTO. China is an immense potential market for us, and the proposal on the table for granting them PNTR costs us nothing. And after a nearly 30-year struggle, it replaces the zero-tolerance on TCK with a science-based and achievable standard. The TCK victory is of particular interest to our producers, as it finally establishes a trade based on scientific protocols and makes the vast China market accessible to our wheat.
But beyond the benefits to us, a vote against PNTR will actually compromise the interests the opponents are trying to protect. Denying PNTR to China will cause our competitors to create long-term trade relationships with China. Denying PNTR would succeed in an isolation policy, but that isolated country would be the United States, not China.
Regulatory reform. The blanket of Federal regulations on our farms continues to grow and it imposes an enormous cost on raising food for the nation. Let me highlight a few examples.
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The Clean Water Act has launched a series of basin planning efforts to manage and improve water quality. In our State, agriculture is responding proactively to the challenge, but the very real possibility of heavy-handed enforcement by EPA lurks in the not-too-distant shadows. If their TMDL rule proposal is any example, such a result would have disastrous and counterproductive consequences.
The Endangered Species Act is being used by environmental groups and activist agencies to redraw the landscape in the West. ESA listing and Clean Water Act designations are used as the basis for trying to breach dams, take irrigation water rights, and restrict land use. Prescribe mandated farming and timber practices, stop timber harvest, and impose other heavy-handed, top-down regulation.
The Food Quality Protection Act is far more effective at removing crop protection products from the market than at labeling new ones. We learned this March that even in the registration process, EPA will tell a registrant that they need to give up some of their labeled uses in order to get their label renewed. EPA calls this a ''voluntary negotiation.'' Webster would call it ''extortion.''
We need Congress to fulfill its promise of regulatory reform.
Research funding. We fight an annual battle to ensure that research programs and the right research programs are funded. The administration removes projects each year, and we must come to you and ask that they be restored. This year was a little easier on that score. Perhaps after several successive years of addbacks, the message about the importance of these projects has been delivered. However, continued attention to aggressive investments in agriculture research must be maintained. The challenges in the area of water quality management, end-use quality, niche marketing of specific quality characteristics, production efficiencies, carbon sequestration, air quality, soil erosion, weed management, diseases, and other areas become more daunting each year.
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Providing an adequate safety net. NAWG and its State associations are working to develop a proposal for a countercyclical safety net to be incorporated into the 1996 farm bill. This will take time to develop. In essence, total AMTA payments for 2000, 2001, and 2002 would be made at double the 1999 level, with a corresponding change in the payment limitation until the bill is changed.
Two straight years of emergency assistance highlight the fact that the safety net is inadequate. It's time to provide a predictable, budgetable safety net that my banker will count on the revenue side of my budget.
In the longer term, we believe that a countercyclical structure in place of the emergency assistance will be effective for agriculture and palatable to the public. But in times of economic hardship, it would be good to have the general AMTA support and help family farms such as mine stay in business.
The decoupled payment scheme established in 1996 will continue to be necessary for the foreseeable future, given its exempt treatment by the WTO, given foreign subsidization with which we must compete. It will be important to craft this proposal to comply with WTO provisions, and be ready to defend it.
Thank you again for coming to the Northwest, and for holding these bipartisan hearings around the country. I look forward to working with you, both through NAWG and the Oregon Wheat League, as we work to develop a safety net addition to our existing farm law. Thank you.
[The prepared statement of Mr. Reese appears at the conclusion of the hearing.]
The CHAIRMAN. Mr. Toevs.
STATEMENT OF RITCHEY TOEVS, POTATO, SUGAR BEET, WHEAT PRODUCER, ABERDEEN, ID
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Mr. TOEVS. Good morning. Mr. Chairman and members of the House Committee on Agriculture, on behalf of myself as a producer and the National Potato Council, I appreciate the opportunity to testify on the number of ways I feel the Government can be of assistance and where it can be harmful to us in the ability of our growers to produce and market our crop.
First, we feel that any Federal program providing ongoing benefits to growers such as crop insurance or Agriculture Marketing Transition Assistance payments should not be designed or implemented in a manner that distorts the marketplace by providing subsidies which encourage farmers to grow potatoes which they would not do without the subsidy. This is why the NPC strongly supports the amendment to the Senate Crop Insurance Bill by Senator Larry Craig excluding potatoes from premium subsidies for revenue protection.
This is also why the NPC supported the amendment in the 1996 farm bill which expressly prohibited the planting of fruits and vegetables on contract acres, except under certain limited conditions. If the Congress decides to continue any form of contract payments in any newly authorized farm bill, the NPC would strongly support the inclusion of identical language.
Second, the U.S. Department of Agriculture's Plant Protection and Quarantine Service is essential to the potato industry domestically and internationally. In an era of unprecedented volume in international trade, stable funding to maintain quarantine inspection programs is critical.
In addition to stable funding, the PPQ statutes have long been in need of modernization and streamlining. Civil penalties for import violations have been inadequate. To remedy these problems, legislation has been introduced entitled ''The Plant Protection Act.'' This bill clarifies plant protection and quarantine laws designed to protect the United States from harmful plant pests and noxious weeds.
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Third, we want to discuss our industry's concerns and goals for the new WTO negotiations in agriculture. Although the U.S. potato growers and processors have developed a meaningful export market for U.S. fresh and processed potatoes, U.S. potato products continue to face high tariffs, sanitary and phytosanitary barriers, and competition from subsidized foreign producers both in our domestic and export markets.
To help the U.S. potato producer be more competitive at home and abroad, U.S. growers and processors have two goals for the new round of agriculture negotiation. First, we need a more liberalized and predictable access to foreign markets for our fresh and processed potato exports. The tariffs implied to frozen products often are of greater value than the raw product and the unjustified sanitary and phytosanitary restrictions continue to make it very difficult to export fresh to, for example, Mexico and Japan.
Second, we need assurances that trade-distorting subsidies in the potato sector will be disciplined and reduced or eliminated. Subsidies from Canada have been a longstanding issue for our industry and one we still seek relief from.
In the area of tariffs, the NPC is seeking reductions significantly beyond what was achieved in the Uruguay Round. The Uruguay Round left large disparities in U.S. and third-country tariffs on most potato products. As a result, high tariffs in our key export markets remain a problem.
Last year, the NPC supported the Accelerated Tariff Liberalization initiative to reduce tariffs of fries endorsed by the APEC, Asia-Pacific Economic Cooperation, countries. This position has been absorbed into the WTO negotiations. In the Uruguay Round, many of the APEC countries, which are some of our best markets, were considered developing countries and as such made only minimal tariff reductions from extremely high base rates. Thus, while U.S. tariffs on potato products were reduced across the board below already low U.S. tariff rates, many of our export markets were not required to make similar reductions. To correct this disparity, a different approach to tariff reductions will be needed. One helpful approach is to require significantly larger percentage cuts for higher tariff rates, for example, tariffs of 20 percent or above, and low or minimal percentage cuts for lower tariff rates.
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The NPC is also concerned that many WTO countries have also been slow at removing sanitary, phytosanitary restrictions on potatoes that have no scientific basis. If possible, the scope of negotiations should be broadened to cover SPS disciplines.
In addition, the NPC strongly supports a refined approach to domestic subsidy reform. We urge U.S. negotiators to seek sector-specific reductions and more clearly defined and enforceable rules for nontrade distorting ''green-box'' subsidies that are exempt from reduction.
A good example of this is last week we have been notified that Prince Edward Island has a $500 to $750 per acre subsidy providing a subsidy to the growers to plant cleaner potato seed. And we discussed it with Canada and they understand there is a breakdown between the Federal and provincial agreements under the WTO laws, but what does sound like political pork, I guess to them is just Canadian bacon.
In addition, the NPC strongly supports some of these WTO changes that put the U.S. potato grower on equal footing with other world producers. We also believe that if the agricultural negotiations are to provide any benefit to U.S., U.S. growers and processors, the negotiations must be completed within a reasonable period of time. We urge U.S. negotiators to support intensified negotiations over the next 2 years.
Fourth, in order to take advantage of improved trade opportunities, tools such as MAP, Market Access Programs, must be expanded. The NPC strongly supports reauthorization of MAP up to $200 million. The NPC can demonstrate a direct relationship between having MAP funds and the ability to effectively market overseas.
Panel, as you begin your deliberations to shape the new farm bill, I would like to remind you that in life there are bad problems and there are good problems. Having our youth with guns in the schools is a bad problem. Having an excess of safe, nutritious, and affordable food produced by less than 2 percent of the population is a tribute to the American free enterprise. I ask your decisions in drafting the farm bill are based not on political wishes, but on economic realities. That concludes my prepared remarks.
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[The prepared statement of Mr. Toevs appears at the conclusion of the hearing.]
The CHAIRMAN. Thank you very much. Mr. Raybould, you are issuing a joint statement?
Mr. RAYBOULD. Yes.
The CHAIRMAN. Did you have anything additional?
Mr. RAYBOULD. I'd just like to touch on two or three domestic things if I could, please, sir.
The CHAIRMAN. Do you have prepared testimony? We don't have it for the record.
Mr. RAYBOULD. It was submitted as a joint testimony.
The CHAIRMAN. In the testimony?
Mr. RAYBOULD. Yes.
The CHAIRMAN. Do you have a statement in regard to this specific testimony?
Mr. RAYBOULD. It should have been submitted along with Mr. Toevs'. My name should be on there as well.
The CHAIRMAN. OK. Thank you. Please proceed.
Mr. TOEVS. If there is a problem with that, Mr. Chairman, I'd be happy to remedy that.
STATEMENT OF JEFF RAYBOULD, POTATO, BARLEY PRODUCER, ST. ANTHONY, ID
Mr. RAYBOULD. If I could just take a minute and welcome you to Idaho. I apologize for being late, a little confusion on timing on my part.
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If I could talk about two or three domestic things that are very important to the potato industry. With regard to Federal crop insurance, we strongly support the amendment in the Senate crop insurance bill by Senator Larry Craig, excluding potatoes from premium subsidies for revenue protection.
The potato industry has already experienced marked distortions from revenue insurance provided by private companies. If risk management provides subsidies for this type of insurance, we believe the level of abuse will increase substantially. The temptation will be for potato growers to plant and market for the revenue payment rather than responding to market signals.
Also, in the 1996 farm bill, we had planning flexibility language that limited the ability of people to plant fruits and vegetables on acres that they were getting market transition payments from. And we think that it's very important that we have this language again in any future farm bills where contract payments are made for program crops in the future. Producers who have never received subsidies on their acreage for potatoes, for instance, cannot compete with producers who are receiving a payment on acres and then, in turn, are able to plant that crop. We realize that there needs to be some exceptions to that rule, and currently I believe there are some limited exceptions that allow that to happen under certain circumstances. And we're not opposed to that, but we would support identical language to what was included in the 1996 farm bill to cover that area.
I'd like to talk for just a minute about the Department of Agriculture's plant protection and quarantine service. It's essential to potato industry, both domestically and internationally. The PPQ statutes have long been in need of modernization and streamlining civil penalties for import violations have been inadequate. To remedy these problems, legislation has been introduced entitled ''The Plant Protection Act.'' This bill streamlines, clarifies, and enhances existing plant protection and quarantine laws designed to protect the United States from harmful pests and noxious weeds.
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The National Potato Council supports funding for this important program and opposes any attempts to tap the PPQ funds to fund other programs. And we also support the Craig Kennedy legislation and urge Congress to enact this legislation as soon as possible.
With regard to the Food Quality Protection Act, the National Potato Council supported Congress's recent updates to the U.S. food safety law. However, the new law needs to be correctly interpreted by the EPA and the true intent of Congress followed. We hope that the USDA can provide the needed oversight for the proper implementation of this important food safety law.
Also, the recent developments that have unfolded in Hunts Point, NY, at that terminal market with the inspection service and the abuse and corruption that have taken place there, have concerned the potato industry. USDA has made a lot of promises that they're going to solve that problem, that we're not going to have repeats of that kind of abuse, and violations of the law.
And we hope that Congress will provide the oversight to see that that in fact does happen, that we don't have repeat incidents. Because not only are there individuals who have immediate loss because prices are adjusted from these inspections, but the overall deterioration of market prices because of the low price product that's moved into that market at that time has an impact on every grower.
Mr. Chairman, that would conclude my remarks. And any questions, I'd be willing to answer those. Thank you.
[The prepared statement of Mr. Raybould appears at the conclusion of the hearing.]
The CHAIRMAN. Thank you. I just have a couple of questions and some comments.
Mr. Koompin, we have been looking for help in defining a family farm. A family farm in Texas, a family farm in Pennsylvania, a family farm in California, a family farm in Idaho, depends on who's defining it. And maybe you're right, maybe we look at everything that's not a family farm and throw it out and what you've got left is a family farm, but it is difficult.
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And as particularly when you are looking at gross income as the determining factor for payments for programs or whether you are looking at payment limitations or whatever, those are substantially, I think, misunderstood in areas that don't have that conflict and don't have that problem.
It's difficult to talk about the issue of payment limitations and its impact when you are particularly looking at a program, whether or not it works is going to be based upon—or what may seem to be a very good program, once you impose those limitations, then all of a sudden it's a totally different situation.
That's one of the reasons we think people probably have been as accepting and complimentary of the assistance which has come over the past couple years and extra payments is because of the fact that it was an additional payment.
So that's kind of like trying to chase Jell-O. It's hard to grasp it. And so we're looking for it and we're still hoping we can get some help on the thing.
I want to make for sure, Mr. Payne, your proposal on the recourse loan and how that would work is an interesting idea. Is that yours? Is that the association's proposal?
Mr. PAYNE. The association has agreed with the basic principle of——
The CHAIRMAN. Is that the state association?
Mr. PAYNE. State association.
The CHAIRMAN. Has agreed with the basic principle of it?
Mr. PAYNE. Yes.
The CHAIRMAN. I've just got a comment. One of the things that we found of interest back last summer when we were having hearings in our committee in Washington on what was right, what was wrong, what we needed to do, this sort of thing, part of the commodity groups that will go unnamed, came before our committee and read a statement of policy. They said, in all due fairness, they though they ought to tell us that that's the third time it's changed in the last year. And I said, ''And you-all expect us to write long-term farm policy based on what it is that we're told? So it does remain complicated somewhat. But it's interesting, and I think we ought to look at it. We're open to looking at basically anything.
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On the potato issue, I want to make sure I understand exactly what it is that you all were saying. You are supporting a position by Larry Craig that would exempt potatoes from the higher subsidy rates that are being considered in the crop insurance conference report now?
Mr. RAYBOULD. That would be for revenue protection. We have no opposition to the subsidy rates for the risk management portion of the policy.
The CHAIRMAN. Strictly for revenue?
Mr. RAYBOULD. Yes.
The CHAIRMAN. But from the production side or the loss side, you would not want to be excluded from the higher subsidy rates?
Mr. RAYBOULD. No.
The CHAIRMAN. OK. Good. I just needed to make for sure that I understood it. And the whole revenue section is something that has been discussed a great deal. I'll commend this committee for its recognition of the problems in risk management. We, almost a year ago now, passed a major reform, crop insurance. We are now in conference on that with the Senate. And that issue alone probably could have been a subject for most of these field hearings we've had because virtually every commodity all across the country recognizes the need for change. But I did want to make for certain what your association was asking. Mrs. Chenoweth-Hage.
Mrs. CHENOWETH-HAGE. Thank you, Mr. Chairman.
Mr. Koompin, I'm very interested in knowing what your father was thinking out there on that tractor.
Mr. KOOMPIN. I was the second one. Cavin was the first one, so that was pretty simple.
Mrs. CHENOWETH-HAGE. Must have been in a good mood then.
Mr. KOOMPIN. We started out Kovias, and somebody in New York decided we had to be Koompin. I've been accused of being Dutch, but we're actually Greek.
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Mrs. CHENOWETH-HAGE. Well, it's a proud name for your family in Idaho and we're very glad you're here.
You mentioned the transportation issue and that is a huge issue to us. We're seeing railroads being abandoned and reliance on more truck travel to get our products to market. And of course, the threat of the court of Lewiston and the dams being taken out means a major highway in the Northwest is going to be disrupted. It's somewhat capricious, but it seems to be a political reality that we're having to face out here in the Northwest. So I thank you very much for bringing up the transportation issue.
And you mentioned Thomas Jefferson and his proud words, those words being, ''Those who labor in the Earth are the chosen people of God, if ever He had a chosen people, whose breath He has made his peculiar deposit for substantial and genuine virtue.'' And I really agree with him and that is truly our American farmer.
Mr. Meuleman, you mentioned the problem with our sugar beet growers is the total economic cost production is so much higher by comparison. Would you like to elaborate on that for the record?
Mr. MEULEMAN. Well, sugar beets are a specialty crop. And it takes equipment just solely for sugar beets. And so you have a crop out there that you have to buy equipment that's $40,000, $50,000 or more. And all you can use it on is that one specialty crop. And that's why the input is so much higher.
Mrs. CHENOWETH-HAGE. I'm glad we had a chance to get that in the record. Sometimes it's hard for the Congress to understand that. And you provided, for the record, a chart. It's very startling. And it shows a precipitous drop in sugar beet prices.
Mr. MEULEMAN. I think that chart there, since January it has also went down lower than that chart.
Mrs. CHENOWETH-HAGE. What happened in August of last year that caused this tremendous drop in price?
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Mr. MEULEMAN. Well, I think the first was that there was an increase of production domestically. And I think that reason was because all other commodities are low. And sugar beets has been a pretty fair crop. And so they increased plantings. I think the other reason why the prices went down is the anticipation of the Mexican sugar that gets to come starting on October 1 of the 250,000 tons.
Also our stuffed molasses has a fair lean on it. I think that 125,000 tons coming in represents about 43,000 acres of regular sugar beet production. And also with the Mexican, the 250,000 tons represents about 93,000 acres. So where you've got an oversupply of market, it don't take a real big glass to overrun a five-gallon bucket. And I think that's our problem.
And as far as the stuffed molasses, that's circumventing in our tariff-rate quotas. And if it isn't stopped, I think there is opportunities for other companies to say, ''Hey, we can get in on that too.''
Mrs. CHENOWETH-HAGE. Thank you. Mr. Toevs, I took special notice when my colleague mentioned that Washington potatoes are being sold in Washington, DC under the Idaho label. Did you?
Mr. TOEVS. Yes. We're proud of the name.
Mr. KOOMPIN. Obviously everybody else is too.
Mrs. CHENOWETH-HAGE. Mr. Toevs, I wondered how you felt about the ad hoc disaster program which responds to an occasional natural disaster. What is the position of the council and you personally on that?
Mr. TOEVS. I think much in the way Klaren said, that if we designed programs so that actual production history determines payments and premium we'll solve the problem. And then we should politely provide those producers training and perhaps another use for their ground. I just think if I, as a businessman, am going to stay in this business, I can't be competing with a person that only has a good crop 1 out of 5 years, but then that crop depresses my price.
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Mrs. CHENOWETH-HAGE. So anything that happens here has to be more in line with current economic realities is basically what——
Mr. TOEVS. Right. I think actual production history needs to be included.
Mrs. CHENOWETH-HAGE. Very good. Thank you and thank you, Mr. Chairman. I yield back the balance of my time.
The CHAIRMAN. Thank you. Mr. Stenholm.
Mr. STENHOLM. Thank you, Mr. Chairman.
Just a few comments on each of your testimonies. To, I believe this is to Mr. Koompin. When you stated can the Government get out of agriculture, unfortunately, no, I wish more of our producers would honestly answer that question that way instead of the naive answers that are often given, that the basic fundamentals of the current farm programs, somehow if we unilaterally disarm our farmers, that we could complete in the world anymore than if we unilaterally disarmed the military. And I wish we could have more of that sentiment translated to our representatives, because that's the only way we will ever get to the bottom line, is be honest with ourselves.
And of the 160 witnesses that we had so far, one has been very honest. He said, ''The thing wrong with Freedom to Farm is you didn't do what you said you were going to do, make us live with the money we had. And then we would have had probably 30, 40 percent less producers, but maybe the ones that survived would have been doing better.'' One out of 160 said that. 159 have had a different version, recognizing that they and their backers recognized that had we not had the extra moneys appropriated, rural America would be hurting deeply.
But that's part of the fundamental decisions that we're grappling with in the Congress, in which we've got different views. And I'm pretty sure in this audience there are those that would differ radically with what I just said.
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I totally agree with you on the issue of insurance. Somehow, someway, we have got to get a recognition—I'm not sure we're going to get it in this conference, but as we look ahead to 2000, 2003, you cannot fundamentally do one thing or two things with one program. Ensuring price and ensuring yield with the same program does not work because the rest of the crop produced then in the case of potatoes and other specialty crops, when you can have an insurance program that helps you get into a business, that's not workable in the real world. And I couldn't agree more with you. And I hope that we will find ways to avoid revenue assurance, but also look for better ways to ensure cost of production, what you are actually spending.
And there are some proposals that we've got thinking outside of the box that time will not permit me to go into, but I ask each of you in your association to look carefully at these proposals when they are developed, to compile projects over the next year so that we might pick out the better ones for consideration for the next farm bill.
Sugar, the stuffed molasses question, people are bending the rules. And when you bend the rules, ultimately you've got to get in trouble. And there are some multinational companies that are bending the rules. And I hope that we will find a way to look at that and say, ''We've got rules, live by them.''
That gets into the fundamental question I'm sure we will have another battle with this year as to whether we need to keep a sugar program or not. Because there are those that are buying our sugar, consumers not benefiting. But there are those buying it that somehow, someway, believe that our producers can live with the dump price of the European market. And we have not been able to successfully—well, we keep winning, that's the good news. But you're right on target on that.
Let me say to those of you who point out one of the weaknesses of the current farm bill has to do with that we haven't dealt with the regulations, you're right. And also from the standpoint of increased investment and research and market access programs and some of the things that can help us compete in that market, all I've got to say to you, under the current budget, forget it. There is no money in it. We do not have the money to do that, what you are asking us to do. I think that's a mistake. We had a constructive alternative we thought, but it was not to be. So, as much as I'd like to see it, we'd like to keep what we've got.
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The one area that several of you mentioned, and this is one that I've been posing to each and every one of the witnesses and the audience on, because I think this is fundamental, if we're going to compete in the world market, we've got to compete in the world market, period. And that means we, I think, and this is a question that I want to ask of you: Do you believe that the United States should immediately lift all unilaterally imposed sanctions that we have applied to other countries as pertains to food and medicine?
Let the record everyone at the witness table is saying yes, all. Now that's all.
Now the audience, show of hands of you who disagree with the witnesses. If you disagree with the witnesses and believe there are cases in which the United States unilaterally is saying ''We shall not sell food to those countries,'' and somehow that's good, if you disagree with that, raise your hand.
Let the record show there is no one disagreeing with this panel.
Next question, permanent normal trade relations with China. We will vote during the week of May 22. Right now, we may not get a majority of the House Agriculture Committee to support permanent normal trade relations. And I cast no disparagement on any of my colleagues who disagree or anyone else who disagrees on this. It's something you've got to come to grips with. But I want to ask you the question: Do you believe that we should vote to lift all—or to pass permanent normal trade relations with China? Let the record show all six witnesses are saying yes.
Now, anyone in the audience disagrees with the table? One, two, three, four, five. I saw five hands being raised. Therefore, approximately 100 people in the audience, 95 have said they agree with the witnesses at the table and five disagree. For the record, that's about what each of the previous 2,000 audience members and 160 witnesses have said. We've had about 95 percent of the witnesses say yes, we should lift all unilaterally imposed sanctions and that we ought to vote for PNTR. My time is expired; I'll amplify a little bit more on that in the next round.
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The CHAIRMAN. Mr. LaHood.
Mr. LAHOOD. Thank you all for being here. If I could just ask each of you to say if there was one thing that you could do to improve the lot of farmers and ranchers, there is one thing, only one, what would it be? Start down there.
Mr. KOOMPIN. Thank you, Mr. LaHood. I guess, real quick, that after being in the game only 25 short years, I would say if you support the five basic crops at some livable level, marketed to the world at market level, you'll support all crops raised in the United States from apples to zucchinis. All 50 States have the ability to grow those five crops. And that would probably keep more people on the farm than trying to be everything to everybody to every crop.
Mr. LAHOOD. Good point.
Mr. MEULEMAN. I guess the first thing I would be looking at, we as farmers are not looking at lot of handouts. All we're asking is a fair return on our product. I think if we could establish that, we could all stay in business.
Mr. PAYNE. It would be my wish that the U.S. Government and the United States people would support agriculture at the same level you do. It's that simple.
Mr. REESE. Speaking for wheat, I would like to see the European subsidies on wheat completely removed. I think that would make a big difference.
Mr. RAYBOULD. What I think we need to do is we need to go out and we need to do market development in the world. And we need to do whatever it takes to get our products exported and create market here at realistic levels where we can return our cost of production and provide for our families and the communities that we live in. But we've got to look outside of our borders and we've got to do whatever is necessary, whether it be coming with our own subsidies to compete with an EU or working through the WTO to get their subsidies removed. We've got to get on a level playing field with our competition.
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Mr. TOEVS. Our future depends on exports. We as U.S. producers are provincial. We don't appreciate how big the world is. We're not the Dutch trader that's been doing this for 300 years. We need extensive education, explain to people how important it is. Start from the basics. It's a personal relationship.
When I sell to a Japanese buyer, it's a personal relationship. We need help through FAS. Man, we have good people in FAS and that makes all the difference in our interest in the country. India, we have a great person there and he's getting the door opened up. But you go to Thailand and very little has happened in 10 years. It just, it takes personal relationships with other companies to move the American product and help out an American producer. I can help out a multinational. We can help out our large processor, but he's going to source that product from whichever plant is closest, wherever it is in the world. To actually move American product, we as a producer have to develop that personal relationship with a foreign customer.
Mr. LAHOOD. One of the things that I thought I might have heard today and surprised me a little bit, is because of your proximity to Canada, that there might have been more heartburn and anxiety about imports from Canada. But since I haven't heard it, I'm going to assume that that is not a big problem. Is that a wrong assumption or a right assumption?
Mr. PAYNE. I don't think you've heard from the cattlemen yet, so I'm sure you will. I can comment on that partially. Being a barley grower, what we see is subsidized barley going into Canadian cattle to get the price down. They do not, most of the time they do not bring barley directly to the United States, although they do some. But what we really see is the barley coming in with four legs on it.
Mr. TOEVS. We have a huge problem with french fries, potatoes, both fresh and processed. We were a net importer in fries in February of this year for the first time ever from Canada. We are a net importer. We export about 13 percent of our total frozen product and about four percent of our total production is export. But our border is that wide open.
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In January, we went up to Lethbridge to speak to the Western Potato Council to explain to them how we need to work together, how the WTO probably didn't open any doors for us. And I spoke for 15 minutes and the audience got done and the audience had no question where their product was going to go. It's coming to the United States. They have no problem deciding where their export market is. We have to find new markets.
Mr. KOOMPIN. Mr. LaHood, I think the override question—NAFTA is fine. I think we have blinders on in agriculture and think that NAFTA isn't good. We sell two-thirds—we don't need to go through those numbers. But when you have a 40 percent exchange rate, from the basic economics, if I was ConAgra, I'd build my next potato processing plant in Canada. And there is no advantage in raising anything potatowise in Canada versus the United States except for that 40 percent. And we don't need a one to one. If we could get even 85 percent to one, there is no advantage other than on the very far east coast. That's it. But that affects us everywhere.
Mr. LAHOOD. Thank you, Mr. Chairman. Go ahead, I'm sorry.
Mr. PAYNE. I guess part of the reason that Canada was not mentioned specifically is because a lot of us have gone through this maze before, when we actually do get to someone with a beef, we all of a sudden have the same departments looking in our face. And they said we don't want to make our neighbors to the north upset. And it's kind of a brick wall sort of thing.
Mr. LAHOOD. Thank you, Mr. Chairman.
The CHAIRMAN. Mr. Simpson.
Mr. SIMPSON. Thank you, Mr. Chairman. Let me follow up on that question. I noticed somebody in one of the testimonies said subsidies in Canada have been a longstanding issue for our industry and one that we seek relief from. Obviously with stuffed molasses there is a problem. Clearly molasses is being used as a means to go around NAFTA and bring sugar into this country. 125,000 tons I think was mentioned. What is happening with that now? I understand that was taken to dispute resolution and we ultimately lost, right?
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Mr. MEULEMAN. The international trade court in November, the judge that looked at it said it was caprecious on our decision. We have since appealed. It is in the appeal board now. The earliest we can expect will be this month, May. And it could run 6 months.
Mr. SIMPSON. I understand last night that the Secretary announced that the Government was going to provide 50,000 tons of sugar?
Mr. MEULEMAN. I just heard that this morning, yes.
Mr. SIMPSON. So what we're saying, essentially, then, is that 125,000 tons of that is going to be from Canada?
Mr. MEULEMAN. Essentially, yes.
Mr. SIMPSON. And you are suggesting in your testimony that we need to purchase 370,000 tons to bring the prices of sugar up?
Mr. MEULEMAN. Yes.
Mr. SIMPSON. Can you tell me exactly what that means in price?
Mr. MEULEMAN. Well, the number, the net cost of purchasing and the disposal of 370,000 tons would be around $125 million and would probably avoid all forfeitures. The $279 million sugar producers paid into the U.S. Treasury in the past 9 years is more than double than the probable cost of this action. So as of the first disposal action, the Government exposed them to a forfeiture of sugar of value of over $550 million with an annual storage cost of $30 million or so. The cost to the Government would be a lot less than the forfeitures if they purchase it.
Mr. SIMPSON. Can we anticipate that since the Government is going to be buying 125,000 tons from Canada—to me, I don't know how else you look at that that we will see increased stuffed molasses coming in?
Mr. MEULEMAN. If we get a ruling against us, I can see that there would be more stuffed molasses coming in, yes.
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Mr. SIMPSON. I read in the paper not too long ago that potato producers, different organizations in Idaho and Canada had gotten together and started talking about the fact that producers in both countries were kind of under the gun and that they were trying to get together and form some alliance and work together. Could you tell me a little bit about that?
Mr. RAYBOULD. Mr. Simpson, in mid-April, that meeting was held here in Boise. And it included representatives from clear across the United States, as well as Canada. It's my understanding they are going to have another meeting on about the 6th of June, somewhere in that time frame, and continue discussions about how they might implement a North American Bargaining Association that would bargain with these multinational companies on a continent basis rather than letting one region be pitted against each other.
Mr. SIMPSON. Is it your opinion that this a Canadian versus U.S. producer problem more than it is a potato producer versus processor problem?
Mr. RAYBOULD. Well, it comes back to what Mr. Koompin said about the exchange rate. I'm interested to see how they put this program together because the minute a french fry comes out of a processing facility in Canada, it's got a 40 percent advantage over anything that we can produce down here. And how the volumes of potatoes that the companies committed for would be allocated out within the whole North American continent, I think would be an area that would be very difficult to try and negotiate. But possibly we could get our arms around it. I think it's something that needs to be explored.
Mr. SIMPSON. One last question, then I'll let this opportunity pass to help some of my colleagues that are not from the Pacific Northwest try to understand this issue. We have kind of a unique transportation system up here to get grain to the coast and a few other things, i.e., the Columbia River. And as you all know, the talk has been about removing dams and the impact that would have on the transportation system down the Columbia River. What impact would the transportation costs have on your industry in the cost to getting wheat in the cost and somewhat so forth?
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Mr. PAYNE. The figures are all around the town, but if we were to lose four dams, it would, at very minimum, if we could get to Portland with the wheat, just physically, because there aren't enough rails, there are not enough cars, there are not enough trucks, so putting all that aside, they're talking 50 cents just to start. And that's just with no headaches or anything. That's just where you start.
Mr. REESE. I think the other issue is what will that do to the transportation systems left in terms of crowding the rail, crowding the highway system. Each one of those barges is about 100 trucks. And so do we want to replace those barges with 100 trucks going down the highways?
Mr. SIMPSON. Each barge that goes down would require 100 trucks to replace?
Mr. REESE. Right, about 100,000 bushels.
Mr. SIMPSON. Thank you.
The CHAIRMAN. Mr. Moran.
Mr. MORAN. Mr. Chairman, thank you.
Mr. Koompin, thank you for raising this issue of the size of the family farm. This is my sixth field hearing I've participated in across the country. It is a topic that matters. And you gave me a topic to talk about to my farmers back home. On the radio this morning from Boise, ID, we talked about the definition of a family farm. And I think you may have hit upon something that I think is important. You defined by exclusion rather than by inclusion.
You all are talking, except in the wheat area, about many issues that I'm less familiar with than my colleagues from the Pacific Northwest. I'm interested in knowing, Mr. Meuleman, on the trade negotiations with Mexico and the October 1 import date, is somebody out there advocating, actively working for changes that will protect domestic sugar production? We used to produce sugar beets in Kansas, in the extreme northwest Kansas on the Colorado line. Both our processing facilities as well as producers are gone. And is there somebody out there that's championing the cause within the Department of Agriculture, within the State Department? Is there a solution in the works?
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Mr. MEULEMAN. Our American sugar beet growers' office, the executive treasurer, yes, he is working on negotiations to try to change the language. We did have a site letter agreement that was signed on some of these agreements, that Mexico, though, doesn't recognize.
Mr. MORAN. Do we have U.S. officials negotiating with them to solve this today?
Mr. MEULEMAN. Yes, we do.
Mr. MORAN. Is the same true on this issue of stuffed molasses, are there U.S. officials pursuing either enforcement or—either the Canadians or with the processors on this issue?
Mr. MEULEMAN. The U.S. Customs was the one that defined that it was illegal about a year ago. And then it went to the international court and the judge there overruled us. So now it's in appeals court. And we figured we couldn't do anything until we get that appeal, which could be from May, up to 6 months. So we went to the legislators. And we're going to try to solve the problem legislatively. And I think there are 23 legislators signed on to that bill.
Mr. MORAN. In Congress?
Mr. MEULEMAN. In Congress, yes.
Mr. MORAN. Thank you very much. Mr. Payne, you talk about wheat, which I do relate to, and particularly about the carryover, the supply. Do any of your suggestions or solutions include an additional set-aside production management, production control options, or do you believe that they are self-defeating?
Mr. PAYNE. They are self-defeating. You cannot control the supply with 12 percent of the wheat in the world. We tried it. We found out we couldn't do it before.
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Mr. MORAN. And many of our panelists have talked about the importance of a level playing field. And I heard that consistent theme here today. Do you sense that we're making any progress? And if not, what can we do, particularly as related to the European community, to get their attention?
It is nice for all of us to talk about the importance of a level playing field, but are we ever getting there and what is the incentive for particularly the European community to negotiate away the competitive advantages they have? And where I'm headed is should we be attempting, and I think that Mr. Raybould indicated you'd like to see us subsidizing what the Europeans do. Is that what it's going to take in order to get the European community and others to respond favorably to the ongoing negotiations?
Mr. PAYNE. I guess that may have been me talking about the support that European Union gave its agricultural sector. It's more of a mind-set, I think, than anything else. With us being such a small amount of population of the United States, we are not thought of as the European farmer is thought of in Europe. And, well, in fact, we're just jealous, is all. I mean, they're held up as the savior to the European Union. And, of course, even the people in town are supportive of that. And basically we're just jealous, is all.
Mr. MORAN. Well, my question is what do we do as policy makers? And I'll explore this with another panel. What do we do to get these negotiations to succeed? Is it the export enhancement program? What tools should we be using to get the attention of the European community? I don't understand what incentive they have to voluntarily walk away from their subsidized system of agriculture. And I'm looking for the leverage.
Mr. KOOMPIN. I have a thought. Basically it comes back to the export enhancement. You read in the paper, so I guess once it makes the paper, then it's reality, they were feeling the financial pressure of meeting $2 wheat. It was costing them a whole bunch of money. It was costing them more than it was us. And that started, that'll eventually help. And there are plenty of hungry people in the world, and I guess the United States, with this problem that Ritchey pointed out, which is a grand problem to have. I guess in all of the thousands of years in history, we're awfully short-minded to think this is constant. It's not. It's something that the United States and the European Union, through technology, and the American farmer starting with Thomas Jefferson, has created. So it's a great problem to have. There is a lot of people that could use $1.90-wheat. I can't afford to produce it at that, but the Government and their wherefore all, that's where the USDA needs to step in. Say, ''OK. We need to get it to the people that need it. And let's take the Europeans on in the international market head-to-head.''
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Mr. MORAN. Thank you very much for your responses. I apologize for attributing somebody else's words to you two gentlemen.
Mr. RAYBOULD. Could I add to that? I just think that maybe we should target those export enhancement programs. We pick a market that we want that makes them hurt in the European Union. And we go into that market, we target it and we try to make them feel some pain so they'll want to come and negotiate with us.
Mr. MORAN. It's been suggested French wines, for example. Thank you, Mr. Chairman.
The CHAIRMAN. Mr. Ose.
Mr. OSE. Thank you, Mr. Chairman. I'm a little bit interested in the testimony of Mr. Meuleman. One of the sugar processing plants is actually in my district. So I particularly read your testimony twice. I'm a little curious, the stuffed molasses issue, clearly there is a company in the United States that is finding a benefit from importing stuffed molasses, refining the sugar out of it, uses it as an in-product, shipping the residue back to Canada for further use. Who is that?
Mr. MEULEMAN. It's Heartland, Inc., in Michigan, I believe it is right there. Their big story is that they're just a little company, but actually they are part of EFPM, what they do is take the sugar and they add it to molasses and water, ship it over into the United States, they spin it out and sell the sugar, sugar coating on cereals and such.
Mr. OSE. The only possible explanation I can come up with sitting up here is that the currency differential allows Heartland to report on its bottom line more profit than it would if it bought that sugar here domestically.
Mr. MEULEMAN. Yes. We believe that that sugar is coming from Brazil. They buy it on the world market.
Mr. OSE. Comes from Brazil, goes up to Canada, gets mixed——
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Mr. MEULEMAN. Yes, and gets shipped down here and spun back out. The molasses and water is sent back to Canada, put the sugar back in, send it back. It's a way to get around the legal laws. And I kind of look at it as if you've got a pen full of cattle and you've got a weak spot in your fence and one gets out, if you don't fix that fence, pretty soon there is a lot more out there.
Mr. OSE. Let me go on to another item. Flying in here, I couldn't help but notice the topography is pretty barren except where there is water. Even in the land of fruits and nuts we get that part. I'm curious, your water comes from—there is a lake—I mean, we flew over a lake to the Northwest a little bit. Is that a Federal project, State project?
Mr. MEULEMAN. I don't know here in Boise. I think it was probably——
Mr. KOOMPIN. Anderson Ranch Dam.
Mr. MEULEMAN. Anderson Ranch Dam is one, but farther up on the headwaters of the Snake, it comes from up around. Jackson Lake is our first lake. We got Jackson Lake, Palisades Lake, American Falls Reservoir, and Minidoka Reservoir.
Mr. OSE. Are those State or Federal projects?
Mr. MEULEMAN. They are Federal projects.
Mr. OSE. Are you experiencing the same pleasure we are with this tiered pricing that the Bureau of Reclamation——
Mr. MEULEMAN. No.
Mr. OSE. Maybe I shouldn't mention it then. So you have a situation where you have a fixed single price?
Mr. MEULEMAN. Yes, we do.
Mr. OSE. And the term of your water contracts is how long?
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Mr. MEULEMAN. Well, I think it goes on forever. Or does it? I don't know.
Mr. KOOMPIN. Most of them work, that's how we got the American Falls. Falls irrigation was a 50-year project, started in 1959, so in 2009, that project is paid off. We then go from a district to a company, I understand. And we will be a private company with shareholders in the American Falls Reservoir, which Twin Falls is totally paid for. When they rebuilt the American Falls Dam, the Government did kick in some money due to shoddy workmanship in 1927, I guess, I don't know what excuse they used, but the dam only lasted 50 years, and they had to rebuild it. It's BOR, Bureau of Reclamation controls all water.
Mr. OSE. So the bureau operates it and the Government operating costs and amortization costs of the facility itself. And at the end of the 50-year contract, the expectation is that the fee title of the facility transfers to a new entity?
Mr. RAYBOULD. Mr. Ose, that would be a wonderful thing. I'm the chairman of the irrigation district who is seeking transfer of title to our Bureau of Reclamation storage facility.
Mr. OSE. To or from?
Mr. RAYBOULD. To our irrigation district from the BOR. We have a contract, a space holder contract. The bureau agrees to store water in space that they provide for our use. It's different than a water delivery contract. We don't have tiered pricing. We pay the O & M for the operation of the facilities, plus we have been required to pay back the initial construction costs of the facilities.
And in our case, we have completely paid out. It would be like if you had bought a home and completely paid for it and then the mortgage company said, ''Well, we don't think we are going to give you the deed.'' We're in negotiations to get the deed.
Mr. OSE. My time is about up. I want your phone number.
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Mr. RAYBOULD. I'll be happy to provide that.
Mr. OSE. Thank you, Mr. Chairman.
The CHAIRMAN. Mr. Walden.
Mr. WALDEN. Thank you very much, Mr. Chairman. I want to go back to this molasses issue because I was reading a bit on the Heartland decision. And I don't know who wants to take this, but isn't it true that the court basically didn't even look at the record of information when they made their decision? They didn't look at the evidence? I mean, Heartland never really disputed the fact they were stuffing their molasses.
Mr. MEULEMAN. I guess personally I felt their decision was here was a big sugar giant taking on a little company and I feel that's what solely she made her decision on. She didn't look at the facts.
Mr. WALDEN. The legislation that you mentioned, can you tell me who the lead sponsor is on that? Who are you working with?
Mr. MEULEMAN. Senator Larry Craig.
Mr. WALDEN. Is there a House version on that?
Mr. MEULEMAN. I don't know for sure.
Mr. WALDEN. We'll check with Senator Craig's office as well. There was a comment made about the European Union recognizing the cost of their subsidies. We had a meeting, I believe Congressman Simpson, maybe Congresswoman Chenoweth-Hage was there as well, part of the State legislature met with the European Union trade minister who, after we pushed him pretty hard on their subsidies, did make the comment that as these eastern block companies begin to want to come into the EU, they weren't quite sure how they were going to be able to continue at the same subsidy level. So I hope they just fall on their own sword on this level. But go ahead and make the comment.
Mr. PAYNE. That has been brought up many times. But I can produce statements of 8 years ago that said, ''Well, now, don't worry about the EU because they'll never stand for all this cost for all these years.'' And they have just continued to do it. I mean, 60 percent of the EU's budget is——
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Mr. WALDEN. I'm not making that argument at all. I just hope they do swallow and choke on their subsidies at some point. But it does get to the issue of PNTR, because one of the deciding issues for me on the bilateral agreement has been this argument. And I'd like your individual reactions to it.
That for agriculture, this is actually a good trade agreement. We're not left at the back of the bus, the bilateral agreement with China, and because of the lowering of the TRQs, the sanitary and phytosanitary standards, the access to the market, all those things. And that if we fail as Congress to pass PNTR, the Chinese have the ability to deny us access to this agreement while extending those low reductions and all to the people who are subsidizing and eating our lunch, the EU. Is that not accurate?
Mr. PAYNE. You got it.
Mr. WALDEN. So really, the feat of PNTR, the only people we can really stick it to is not the Chinese, but to the American farmers, let alone other businesses. Would you each respond to that, please? Because I don't think that's all that well understood.
Mr. PAYNE. I think you'll find that there is going to be a lobbying blitz next week by most all agriculture groups. Your offices hopefully will be inundated with agriculture people trying to add them to drive this point home, because it's the ultimate irony if this is defeated. It's just absolutely the ultimate irony.
Mr. REESE. The point that's been made several times in this panel is that we're an export-dependent industry, in almost every level and almost every crop. By denying PNTR to China, we are arbitrarily denying ourselves the largest market in the world. And why would we do that? And so from the standpoint of American agriculture, it's absolutely imperative that this be passed. And you're right. By doing that, that would also solve at least partially, I hope, some of the European subsidy problems.
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Mr. WALDEN. Anybody else want to briefly comment on that?
Mr. RAYBOULD. Just to say that we are in no way going to impact what the Chinese Government does with their people by denying this. We have the opportunity, we have the status to move product in there and help.
Mr. KOOMPIN. That, and one last point I think that a lot of people haven't realized that I've found sitting on the promotion board, Japan, China, Korea, the bulk of those people who are now doing a lot of the purchasing, and regardless of how great the Internet is, we will do business like the Chinese and Japanese and Koreans will, and that is one-on-one, eye to eye, that initially will make the sell. We will service it over the computer, but we won't make the initial sale.
The bulk of those people there—I met three ladies, KFC whatever, all were educated at the University of Idaho. They were thrilled to death to come back over here on the promotion trip. Almost anyone who is in a position to buy, to procure, who is educated in the United States, they are very, very fond of where they got their education, have a very close tie to the United States.
We have an opportunity that Russia, that France, England, do not have. We have those ties with those people and those need to be recognized or those people will hurt. We'll hurt those people by not doing it.
Mr. WALDEN. I was in China with Secretary Glickman 2 weeks ago, and I think the figure they said is there are 50,000 Chinese students studying in America today. And it is those relationships long-term that will help us.
My final comment, because my time is up, is I want to commend Congressman Hastings, for his legislation on MAP funding to $200 million authorization. I know I'm a co-sponsor of that, as I assume other members of this committee are as well. It's incredibly important. The final comment I'll make is we've got to spend more time talking about TMVL and UPA issues because that's going to kill us if we don't get these two straightened out.
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Mr. TOEVS. Congressman Walden, could I comment on that?
Mr. WALDEN. Yes.
Mr. TOEVS. On the PNTR issue, I think we're overstating the total volume that moved into China, because Hong Kong has been an open door to that country. But one of the critical things in establishing a new marketplace is teaching the consumer to like what we produce. The U.S. in frozen fries uses a russet and white type potatoes. Holland will be our largest competitor there. We need to be the first in that market, show them the superior quality. Let them know that ketchup tastes best on a white fry. I mean, it's just critical that we have access to those markets the same time the rest of the world does.
Mr. WALDEN. It's interesting you say that, because the secretary in our delegation toured a Fred Meyer-like store or Albertsons-like store, big grocery and variety store, where they were just unveiling and putting on the shelves American beef from Texas. They had bought hazelnuts from Oregon, sunflower seeds from North Dakota, apples from the great State of Washington, which obviously were raised in Oregon and labeled Washington—I tasted them. They were really good, and citrus from Florida. And the one comment and then I'll be quiet, I've really gone over my time.
The one consistent comment we heard from buyers of agricultural products to consumers to other officials was the quality of American-produced, whether it was cotton they needed to blend with their inferior versions, or the produce and the meats. By the way, the beef was specially packaged. We'd never buy it. It was this thin little strip thing, roll; I mean, I've never seen it. But we're talking advantage of what they need to buy. And it was very well received.
The CHAIRMAN. Mr. Hastings.
Mr. HASTINGS. I didn't mean to open up this whole thing when I was talking about Washington potatoes, but I'm glad I did. Mr. Ose brought up one thing that's not related to our discussion here on the farm bill, but I do believe it needs to be elaborated on, especially for those of you that grow irrigated crops and are in irrigated areas. We in the Northwest obviously are very reliant on water, as I mentioned in my opening remarks. At some time, I know right now we are learning, I think, a hard civics lesson that we are taught in school and that lesson is that a government that is big enough to give you something, in many respects is big enough to take it away. And we in the Northwest are the beneficiaries of these Federal water projects.
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And at some point, because of the payback you are talking about, sounds like you are doing this in Oregon, at some time, I think those of us in the Northwest are going to have to realize that it may be beneficial for us at the end of the day, sometime in the future, to completely own these projects that are funded, because we are paying them back. And my message to you is that I'm certainly willing to explore that, and I think my colleagues here in the Northwest are willing to explore that. But nothing is going to happen in that regard unless the emphasis of that discussion comes from you. So I would just invite you as commodity groups and individual farmers and irrigation board members and whatever you are to explore that with us. Because I'm certainly willing to listen to see where that comes. Because with these other Federal laws that Mr. Reese had mentioned earlier with the Endangered Species Act and Clean Water Act, that affects all of us.
What I would like to do, though Mr. Payne did bring up a very interesting concept. And that is thinking outside the box, as Mr. Stenholm said we ought to be thinking about. Because the reason I say this, I think it's appropriate to say it from this standpoint, this is the year 2000. Who would have thought 100 years ago in 1900 when we were largely an agrarian society that 100 years hence, i.e., right now, that American agriculture would probably have been made up of producers of about less than 2 percent of the total populous. And yet that same 2 percent is not only feeding more than we can feed in this country, but we're exporting products across the world.
And that is probably the highest compliment you can give to American agriculture. But yet farm policy is largely a political event. And a political event when you are only 2 percent of the population is pretty tough to deal with. That's really the political realities of where we are. So Mr. Koompin, he's offered a suggestion of thinking outside the box.
And, Mr. Reese, your farm is in close proximity to John's. I know you're just across the Blues a little bit, or down the river a little bit. Your rainfall may be a little less than what John's is, but you use the same transportation system. And you are a head of the Oregon Wheat Association. I don't know if John's talked to you about that, but from what you've heard he's talked about, just give me your observations of it.
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Mr. REESE. One of my jobs is nondomestic policy chairman at the national level which includes farm policy. Unfortunately, Mr. Payne didn't bring that before my committee. But I am intrigued by it. And I think it's something that NAWG would love to take up and discuss within our own bailiwick before we bring it up. But I think it has some merit.
Mr. HASTINGS. The only reason I say that is there is going to be a farm bill. And then with the realities of population that is in total agriculture as I mentioned before, I certainly think that needs to be explored. And I would be willing to look at that also. Sometimes these ideas come and we tend to look at stockpiling it rather than selling it. And, John, it sounds to me this is like a huge marketing tool. And any marketing tools we can use I think would be very beneficial. So, John, go ahead and respond.
Mr. PAYNE. What we're trying to do is get rid of that old joke, the difference between a farmer and a dog is when you let the dog in the back door, he quits whining. That's the approach we're trying. We would like that joke to go away. So if there is an incentive there to be able to take a position without actually owning a cash crop, then he doesn't have much to whine about.
Mr. HASTINGS. OK. Thank you very much. Thank you, Mr. Chairman.
The CHAIRMAN. I want to thank the panel. I've got to say in full disclosure, my first trip to Idaho was 2 years ago. And I told Helen and Mike after I made that trip that it's first time in my life that I've ever eaten in a restaurant and asked for doggie bag for the potato. That's something to be proud of. Now I found out it may have come from Washington. You-all got good potatoes up here.
Mr. SIMPSON. Mr. Chairman, that Washington potato came from Idaho.
The CHAIRMAN. Whatever. Thank you very much. And we'll call our second panel of witnesses to the table at this time.
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Mr. Greg Garatea, who is a livestock producer from Paul, ID; Mr. Gregory Goertz, who is a wheat and cattle producer from Wheatland, WY; Mrs. June Hartley, who is an onion, wheat, and corn producer from Nyssa, OR; Mr. John Hays, who is a cow/calf operator from Unity, OR. Mr. Brad Little is a wool producer from Emmett, ID. Mr. Felix Tomlinson is a tree fruit producer from Hood River, OR. Mr. Richard Wittman is a crop, cattle, and timber producer from Culdesac, ID.
We will take a brief recess before we begin this panel.
[Recess.]
The CHAIRMAN. Mr. Garatea, if you would, please.
STATEMENT OF G.C. ''GREG'' GARATEA, LIVESTOCK PRODUCER, PAUL, ID
Mr. GARATEA. Welcome to Idaho. Welcome back to Idaho. I'm the current president of the Idaho Cattle Association. I'm a private lands rancher and have a small feedlot in the Magic Valley, which is south central Idaho.
I'd like to briefly bring up a current issue, that being the fire in Los Alamos which is turning into a total disaster right now. What I want everybody to reflect back over the last 10 years is the increase of wildfires and intensity of these wildfires. And I know there is going to be an investigation that happens after this fire, and I want the people of powers that be to recognize the contribution grazing has to reducing fuel loads so these fires aren't so intense. We also recognize, as ranchers, the tool of controlled burning as it enhances forage and wildlife habitat. We also understand the intensity of these fires if the fuel load is not reduced.
As I travel around the State of Idaho as the president and talk to other ranchers and feedlot operators, I'm totally amazed and mind-boggled at just how bloated and intrusive our Government has become, both on our private and our business lives. And to bring it home, 30 years ago, the Idaho Cattle Association had a total of 23 resolutions on the books, not one of them dealing with private property. The year 2000, we have 129 resolutions to deal with, over half of them dealing with private property, public lands, and endangered species.
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When I produce and sell cattle, I am paid for the quality and the quantity that I generate, plain and simple. I'm paid more for better quality and paid less for a lesser quality. I would like to see the Government possibly use that same theory, in other words, using a vision, identify the target you want us to go for, the goals you want us to go for, then stand back and let American ingenuity and creativity take hold. Let us determine how and which way we're going to meet that goal and get to that goal. And get away from the mind-set of micromanaging and a one-shoe-fits-all type mind-set.
Currently, environmentally, from environmental standpoints in the State, the Cattle Association introduced legislation this past year which attempts to unify all oversight administration and enforcement of both Federal and State environmental rules and regulations under one umbrella, that being the Idaho State Department of Agriculture. We felt in doing this it would simplify and reduce duplicity and it would be good for the Government, the association, and most of all, the environment. The bill passed, the Governor signed it. We have one more major step to work with, and that's reaching a memoranda of understanding with the Environmental Protection Agency, which will be a four-signature document between the association, Department of Environmental Quality, Department of Agriculture, and EPA. That is under negotiation right now. We hope to have a target date the first of July.
Hopefully this can be used as a model for the United States where we put all rules and regulations under one hat. The dairymen preceded us. And they did it in a different way in Idaho. They did it through strictly an MOU, whereas we've gone to legislature and MOU.
The TMDL situation was mentioned earlier. Idaho, because of court action, is probably farther ahead than a lot of people in the United States. We're having problems. Cost of compliance is going to be burdensome. It could put some agricultural people out of business. We also question some of the authority that the EPA is using. And we question whether they have statutory authority on some of the rules and regulations that they're throwing at us.
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As far as private property goes, the Idaho Cattle Association has made the Major Species Act the No. 1 priority. We feel, especially as it pertains to private property, we feel it's probably one of the single most acts that could affect private property and the disposition of it.
The CARE Act, or Conservation Reinvestment Act we are totally opposed to, for one simple reason. It does not have a no-net loss of private property clause in it. Idaho is two-thirds public lands as it is, and we cannot afford to lose any more private property. And the timing could not be worse for an act such as this because of the agricultural economy. Everybody is worried about the landscape of the United States. What's the landscape of the United States going to be like 10 years from now, if $45 billion is given to the Government to spend on land acquisition? And you're going to be in a buyer's market because all the people in agriculture are broke. And they aren't going to be willing sellers. So let's just think of our landscape 10 years from now.
We oppose executive orders, especially as it's currently relating to the Antiquities Act. Unfortunately, this probably wouldn't be an issue if we didn't have the situation that's going on right now. And we feel that it's being abused.
Taxes, we need to rescind the death tax. It's crippling our industry. Reduce the capital gains tax, and immediately impose 100 percent deduction on our health insurance premiums.
We are striving hard, and we need your help to rescind the USDA grade stamp on imported carcasses and imported live cattle. We are and are affected by fat cattle coming into the Northwest to be harvested. And they've been given the USDA grade stamp.
We're in favor of the country-of-origin labeling, whether be it mandatory or voluntary, just so the consumer knows where the product is coming from.
We're striving to get legislation through for a dealer trust, which would be similar to the packers' trust, which gives a producer priority lien on payment of their livestock. Should a dealer go belly-up or bankrupt or inability to pay, we take priority lien before banks or anybody else. It's just common sense that a producer should have that protection.
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Crop and disaster insurance, we're in favor of assisting commodity groups, should it be an act of nature. We're opposed to any payments for low prices for cyclical market situations.
Thank you, and I'll stand for questions later.
[The prepared statement of Mr. Garatea appears at the conclusion of the hearing.]
The CHAIRMAN. Thank you. Mr. Goertz.
STATEMENT OF GREGORY J. GOERTZ, WHEAT AND CATTLE PRODUCER, WHEATLAND, WY
Mr. GOERTZ. Thank you, Mr. Chairman and members of the House Agriculture Committee, for being so willing to take the time to listen to the agriculture producers from around the nation. I am Greg Goertz from Wheatland, Wyoming. I'm a wheat and cattle producer. My wife and I harvest 2,000 acres of wheat per year, and raise and sell 250 cows from our cow herd each year.
I serve as chairman of the Farm Service Agency State Committee in Wyoming, and am on the board of directors of the Wyoming Wheat Growers. I served as county commissioner for 4 years, and gave up politics to try and save the farm. I think I made the wrong decision 10 years ago. I should have stayed in politics.
I want to share with the committee five ideas that I've developed for our area to help agriculture through this crisis and protect family farmers until long-term solutions can be developed.
First is the lengthening of commodity loans. Potential savings of at least $167 million should be reason enough to push for a change. The carryover grain stock is projected to be very high this year and lengthening the loan period would not be building stocks. The control of some of the stocks would only be moved into producers' hands instead of the grain companies.
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Congress needs to amend the FAIR Act to read, ''A market assistance loan under section 131 shall have a term of 30, plus interest for the first 9 months.'' Commodities would remain in control of the producers and not have to move into the pipeline, causing lower prices.
Basis levels have increased because termi