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Tuesday, February 24, 1998.










Opening Remarks
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    Mr. SKEEN. Good afternoon.

    Today we have with us the Honorable August Schumacher, Jr.—I think he likes to be known as Gus—the Under Secretary for Farm and Foreign Agricultural Services—known by his former colleagues at Harvard and London School of Economics as just plain Gus. That's a pretty good group of folks to be ''Gus'' to.

    Mr. Schumacher is responsible for managing a wide number of programs of great importance to this committee including the activities of the Farm Service Agency, the Risk Management Agency, the General Sales Manager, and the Foreign Agricultural Service.

    In addition, we also have with us Mr. Len Rogers who is in charge of the International Food Aid Programs at the Agency for International Development. Mr. Rogers manages about $870 million in P.L. 480 title II and III programs, which are under the jurisdiction of this subcommittee.

    We have a lot of ground to cover this afternoon so I'll turn the hearing over to Mr. Schumacher for introductions and an opening statement.

Under Secretary's Opening Statement

    Mr. SCHUMACHER. Mr. Chairman, thank you very much. It's great to be back here. This is my first appearance before you in my new position. Ken Ackerman is with us. He's the most experienced of the agency administration. He's been here three or four years—I guess five years now, Ken.
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    Mr. SKEEN. You see what it's done for him. [Laughter.]

    Mr. SCHUMACHER. But I'm delighted that Keith Kelly, and Lon Hatamiya are here with us today. Keith is really working. This is his first appearance as Administrator of the Farm Service Agency. And again, I commend Keith for all of his hard work. He was out over New Year's, I think, working with you a little a bit in New Mexico and making sure hay got dropped.

    Mr. SKEEN. We appreciate that, too.

    Mr. SCHUMACHER. And actually flying in some of the airplanes. His Vietnam experience was with the National Guard.

    Mr. SKEEN. He sure tested out the National Guard's bombing ability.

    Mr. SCHUMACHER. He came close, thank goodness, but not on target—on target but not too on target.

    Mr. SKEEN. He did very well and we appreciate it very much. He did a good job.

    Mr. SCHUMACHER. Len Hatamiya did a wonderful job at AMS and now is the terrific head of the Foreign Ag Service. And he and Chris worked very hard, Mr. Chairman, over the Christmas holidays as well to get credits moving to Korea and Asia.
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    So, I'm very proud of this team. Steve Dewhurst is probably the most experienced here, and will help us get through some of the technical and detailed questions and maybe keep us all on track.

    I'll be very brief, Mr. Chairman, if I could put a full statement in the record.

    Mr. SKEEN. Certainly.

    Mr. SCHUMACHER. And I'll be just very brief in a verbal opening statement.

    Mr. SKEEN. The entire piece will be in the record.

    Mr. SCHUMACHER. Thank you, sir.

    I think within the framework of our administration's balanced budget, what we've tried to do in our mission area—the people before you today—is to fashion a budget proposal that most impacts family farmers and production agriculture in America. This is the budget that is most direct at working with America's 2.1 million farmers.

    And our mission very clearly and succinctly is to secure the long-term vitality and global competitiveness of American family farming. We do this by improving the economic and trade opportunities and helping farmers that are anxious to manage their risks.
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    And most of the themes I'll just briefly touch on before we move to the questions.

    Each of my administrators has a statement which I would also ask your permission to file for the record. They will not be making a statement today.

    Mr. SKEEN. They'll all be in the record as part of your submissions.

    Mr. SCHUMACHER. Thank you, sir.

    While we have moved from the traditional supply management and price support programs, USDA still provides a critical safety net for America's farmers and ranchers. This safety net has a number of critical elements: credit, crop insurance, other risk management tools, emergency assistance, and our overseas Foreign Agricultural Service and its wide ranging export assistance.

    We are carrying out our mission with a much smaller workforce—we're 30 percent down in our mission area from 1993 to the proposed budget in 1999—and with fewer offices. We're down 641 offices during the same period, mostly at the county level.

    We are working very hard to emphasize our GPRA efforts to look at streamlining, to invest in our delivery system centered around a common computing environment—and I expect we'll have some good questions on that—and the converged administrative services that Dallas Smith and his colleagues and I are working very hard to make sure that we get as much savings out of administration so that we continue our delivery services for mainstream American family farmers. We do not want to sacrifice, Mr. Chairman, services to farmers.
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    I'll touch on four quick topics: disaster assistance, crop insurance, the commodity program credit, and then end up with foreign trade—very briefly.

    You and I had some very good discussions over Christmas on the terrible snows and disaster that hit your State—but it's one we're working on very, very hard, and I think our budget proposal reflects some of this. It may need some strengthening in our ability to help producers in times of disaster. We have staff at local USDA service centers in most every county in the United States. And our employees at the local level play a key role working with FEMA to coordinate the emergency response as these El Niño and other unusual weather patterns occur in your area and in other areas around the country including the Northeast with the ice storm.

    Our ability to respond to recent and future disasters as we've learned in some of these disasters, is limited. And we need to talk about that over time.

    We provide some low-cost emergency loans, but these funds are limited. So far this fiscal year, we've obligated about $25 million for emergency loans, and we expect the remaining funds to be obligated before the end of the fiscal year. We're reviewing the availability of these funds very carefully and will decide in coming weeks whether to request, over time and under review, a supplemental appropriation for emergency loans. We have that under consideration.

    With 181 million acres insured, crop insurance is a critical risk management tool. The NAP program offers some protections that are non-insurable. One of the greatest problems lies in our ability to help dairy and livestock producers. And that's one of our most difficult areas. We've tried to help dairy and livestock producers where we can in disasters—in New Mexico and Colorado, in the Northeast. There's some limited emergency feed programs, a limited livestock indemnity program, and some American Indian livestock feed programs. But it's thin.
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    Let me touch on crop insurance very briefly because I think this is something on which we'll want to get into some great detail. Federal crop insurance, under Ken Ackerman's leadership, is a critical element of our farm safety net. We offer farmers protection against income loss due to production failures, and in some cases, market price declines. For the most part, crop insurance has alleviated the need for ad hoc disaster programs and disaster assistance. However, the program won't work if farmers don't participate. And we certainly learned that in the very difficult drought in Maryland when we were working very closely with some of the Maryland farmers, and it was just very, very difficult last summer because of low public participation. For that reason, we are expanding our efforts to educate all farmers about the benefits of participating in other methods of managing risk.

    The administration's budget provides full funding for the crop insurance program but proposes legislative changes to accommodate a shift in delivery expenses from discretionary to mandatory spending. Removing some of the uncertainty associated with discretionary funding will put this crop insurance program, which is so important to America's farmers, on a firmer financial footing. This, as we certainly heard from a number of our commodity groups, will require offsets, as we proposed, on the mandatory side to achieve these reforms and to make some additional reforms in the insurance program itself. There are proposals on step 2 cotton, and some changes in funding the Export Enhancement Program. Certainly, we can discuss those as well.

    Briefly, on conservation and the important commodity programs: the changes over the last decade in commodity disaster and conservation programs have changed the level, the mix, and the variability of CCC outlays. Since the 1980's the commodity programs' spending has declined dramatically. Spending for ad hoc crop disaster programs, as I've indicated, has been virtually eliminated, and spending for conservation programs has somewhat increased and it's become a significant portion of the CCC outlays.
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    The conservation program outlays will account for about one-fourth of CCC expenditures in the proposed budget for fiscal year 1999. The CRP is our largest conservation program with current enrollment of 27 million acres at the end of fiscal year 1997.

    I think the CRP 16th sign-up went quite well, and the budget now assumes enrollment under the CRP of about 32 million acres for this fiscal year, and then rising to 34 million acres in 1999, and perhaps going to an eventual enrollment of 36.5 million acres by the fiscal year 2001.

    These commodity programs will account for about two-thirds of CCC expenditures in fiscal year 1999. In the past, deficiency payments for producers of contract commodities, including feed grains, wheat, upland cotton, and rice, were tied to market prices. But with the AMTA payment levels fixed by legislation in the new farm bill through 2002, a great deal of the volatility associated with CCC outlays has been removed. While there is less volatility in CCC outlays, there is more variability in commodity prices, and farmers are having to depend more heavily on other aspects of the farm safety net.

    Turning, then, to the last two topics of credit and the international area: credit is a critical element of the safety net, along with crop insurance. Access to credit is one of the most important elements in the success of farming. And improved access to credit means more opportunities for beginning and small farmers, including women and minorities. For this reason, the 1999 administration budget proposes more funding for farm loans. It nearly doubles the funding for direct farm ownership loans and increases funding for loan guarantees. The budget also provides $2.4 billion for direct and guaranteed farm operating loans.
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    To help farmers—borrowers—resolve any financial difficulties, we are proposing to double funding for the state mediation program. This program gives family farmers an opportunity to remain on the farm by resolving credit program problems in the most economical fashion for both the farmer and the lender, through alternative dispute resolution.

    However, because access to credit is so critical, we will be proposing emergency legislation to modify the prohibition on loans to borrowers who have received debt forgiveness. We believe a lifetime ban is simply too strict. Farmers deserve a second chance.


    Let me conclude on the international side. One of our primary goals in USDA is to expand economic and trade opportunities for agriculture producers around the country. And this international safety net is critically important.

    We did very well in fiscal year 1997, export levels totalled $57.3 billion—the second highest level on record. But yesterday at the outlook conference, the Secretary indicated there is a lower forecast for fiscal year 1998—it's only a forecast, we hope we'll do better. Certainly, the Asia situation and the new competitors in Argentina and Brazil, and the strong dollar are having an impact. The forecasted decline of $2.1 billion in our exports to Asia is noteworthy. Such a decline might have been quite significant 10 years ago. It's difficult today, but I think it can be managed. We can go into that in detail.

    Let me just illustrate. For a variety of reasons, our exports are simply on a different plateau than they have been in years past. In the mid-1980's, we were bubbling along at about $30 billion in exports. In 1989, they reached a new plateau of $40 billion, and have been pretty steady up until 1995—around an average of $41 billion. In 1995, they reached another plateau, moving to about an average of $57 billion, with the average trade surplus over the past four years of about $24.5 billion which takes into consideration the lower fiscal year 1998 estimate.
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    Lon, Chris, and I visited aggressively a number of countries in Asia right after Christmas and did a lot of work on the GSM credit program—$2.1 billion was allocated. And, I think that's having some success in some countries in stabilizing export levels . But for these problems in Asia, I think the GSM is the right tool at the right time.

    The budget fully funds the GSM program and does not limit our authority to utilize the program under the authorized caps.

    The budget estimate projects a lower utilization of DEIP. But these projections do not limit our ability to use DEIP.

    The budget funds the MAP—a very important market access program—at the authorized cap of $90 million.

    It offers an innovative, multi-year approach for funding of the important Export Enhancement Program.

    The budget also provides a strong commitment for food aid through title I, title II, and title III of P.L. 480. The total budget proposal is $979 million; $112 million for title I. Funding for titles II and III remain the same as in 1998 at $837 million for title II and $30 million for title III.

    That's a brief opening statement, Mr. Chairman, covering some of the key issues that we are working on now in our budget, and working with you on the budget.
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    Thank you very much.

    [CLERK'S NOTE.—Mr. Schumacher's written testimony appears on pages 401 through 416. Mr. Kelly's written testimony appears on pages 417 through 433. Mr. Hatamiya's written testimony appears on pages 434 through 452. Mr. Ackerman's written testimony appears on pages 453 through 460. Mr. Roger's written testimony appears on pages 461 through 467. Biographical sketches appear on pages 398 through 400. The Farm Service Agency budget justification appears on pages 468 through 542. The Commodity Credit Corporation budget justification appears on pages 543 through 593. The Foreign Agricultural Service budget justification appears on pages 594 through 650. The Risk Management Agency budget justification appears on pages 651 through 673.]

    Mr. SKEEN. Thank you, Mr. Schumacher.

    Then let's get into the foreign trade balance which you mentioned, that has been, I think, one of the stellar operations we have in the federal government. It is a positive banking situation for us on the balance of trade. What's the latest forecast for our exports to Asia, given the financial problems?


    Mr. SCHUMACHER. The forecast now looks—Lon, correct me with the exact details—like we're down about $2.1 billion to Asia. Korea is down a little more than a billion dollars. And, it's made up a bit with our stronger exports to Latin America and especially to Canada—we're up $300 million. But it's not enough in Latin America to offset the projected and forecast decline for Asia.
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    Mr. SKEEN. For Asia?

    Mr. SCHUMACHER. We're down about $2.1 billion to that important region. We have total exports, I think, on the order of $23 billion to Asia. And the growth there was 45 percent, so it's been a very strong market. I think the use of GSM credit has been very helpful, especially in Korea in trying to maintain our financial liquidity so they can buy food from the United States.

    Mr. SKEEN. The Australians and New Zealanders are very tough competitors in Southeast Asia and I know that. But have we had an increase in exports from the United States or are we still relatively competitive as far as Australia and New Zealand are concerned?

    Mr. SCHUMACHER. Well, I think the GSM credit—because it was mainly a liquidity problem—has given us, I don't want to say an advantage, but certainly provided a continuation of our exports, especially on meat. Our meat exports have been taken up very sharply by the GSM credits. We certainly have that under review working with the Korean government, but that has been a pleasant surprise to see the way the meat exports have moved into Korea.

    Mr. SKEEN. Let's move on and let the rest of committee have their opening statements. I know Mr. Serrano wants to leave, so I'll let Mr. Serrano go next because I know he's got a pending meeting.

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    Mr. SERRANO. Why, thank you, Mr. Chairman. I have a meeting with the New York delegation of Governor Pataki, and I know he'll discuss many of these issues. He deals with you folks on a daily basis.

    First of all, let me thank you for all the work you do for us and, you know, the support you give all of us in the New York delegation and on this committee.

    I'm interested in Public Law 480, or the Food for Peace Program. There's the level of funding in 1999, do you think that puts us in a good position as a country to respond to any world emergency situation—famine? And is the structure and the expertise in place to deal with this should that happen?


    Mr. SCHUMACHER. The administration has proposed strong funding for P.L. 480, especially for title II and title III. You may want to ask Mr. Rogers to briefly follow up. We monitor the world hunger issue very, very carefully. We have an interagency working group that meets almost monthly, now, and it's been very productive—not just when there's a crisis. I think it's been very, very helpful. Targeting critical areas like the North Korean situation is very difficult. We're monitoring the situation in Africa very, very carefully as that is impacted. ERS has put out some new studies. I'm going to ask Len to follow up. I think it's okay for the moment, but, Len, do you want to follow up on that question?

    Mr. ROGERS. Yes, thank you, Gus. I might also point out that there is a food security commodity reserve which USDA maintains and which allows us to provide up to 500,000 tons a year of food in the event of an unforeseen emergency.
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    I would say that I think that the budget is adequate for what we can foresee now, particularly with this reserve, although I think it is also tight. We have seen some declines in emergencies in places like Bosnia and Rwanda, but we also can see other potential crises out there—North Korea is a good example, and Sierra Leone, and other parts of west Africa. There is potential for a crisis to which we will need to be able to respond. And, it is a tight budget. I've noted in preparing this testimony that in 1987, the total U.S. food aid budget was 8.2 million tons, and then by 1997 that level was down to 2.8 million tons. So, we are now shipping much less in terms of food aid than we did at one time. So, while I think the budget is adequate, I think it's also a tight budget and this reserve becomes increasingly important.

    Mr. SERRANO. So you feel comfortable that we could meet any crisis, any situation that arose?

    Mr. SCHUMACHER. We keep our fingers crossed. Because with these unusual weather patterns we simply don't know how crises will come upon us. So we monitor it very, very carefully. The World Food Program does a great job. Len does a great job. But we keep a very close eye on this, Congressman.


    Mr. SERRANO. Now, let me ask you a related question, and there may not be a fruitful response, but it is a related question. Since the Pope's visit to Cuba—and this piggybacks on a question I asked last year—there is now legislation put in by Senator Helms to kind of modify his own Cuban embargo and allow for food to be sold, or shipped, to Cuba. One, has the Department, to your knowledge, begun to look at the possibility of that kind of legislation coming into place? If so, what kind of items might be involved, anticipating, perhaps, that the Pope's visit will accomplish more than just a partial lifting? If we were ever to get into a trade situation with Cuba, do we have yet, or have we conducted a study as to what we could be purchasing from them as far as agricultural items and what they would be interested in purchasing from us?
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    Mr. SCHUMACHER. Very good question. I think it's not widely known that Under Secretary Eisenstadt's title is Under Secretary for Economic Affairs and Agriculture. So he is looking at this on an interagency basis very, very carefully. There has been some preliminary work done on Cuba, both on the export and import side, and what might occur if that were to open up in the future. And, I can come and visit with you a little bit about that if you would like.

    Mr. SERRANO. I would like that, yes; I would certainly like to discuss it, because that may be happening sooner than we think.

    Mr. SCHUMACHER. Well, certainly wheat and rice would be very interesting for our exports. And, then there are other issues on their import side that would be interesting. But we can brief you.

    Mr. SERRANO. So it would be mostly wheat and rice from our side.

    Mr. SCHUMACHER. Lon, do you want to expand on that?

    Mr. HATAMIYA. If I could—Mr. Serrano, let me also mention, the Foreign Agricultural Service has an agricultural trade office in Miami that covers the Caribbean. And, our officers there are, on a constant basis, doing analysis of that entire region, which includes some anecdotal evidence about the situation in Cuba. So we can come up to brief you more thoroughly about that situation.
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    I was in Miami about two months ago meeting with the staff there, and they have quite a bit of information on what Cuba is shipping to many of the other Caribbean nations and how that affects U.S. agricultural shipments into that region. So we can provide, certainly, some more information to you. But we are positioned, because of that office in Miami, to respond quite rapidly, if in fact that market does open up.

    Mr. SERRANO. Okay. Mr. Chairman, I have a few more questions, but in view of the time, what I'd like to do is just submit them for the record, and certainly look forward to meeting with you folks on that issue.

    Mr. SCHUMACHER. I look forward to visiting with you, sir.

    Mr. SERRANO. Thank you.

    Mr. SKEEN. Mr. Schumacher, I apologize to you. I understand that you have some of those that are with you that have opening statements that they would like to make.

    Mr. SCHUMACHER. I think we'd like to submit them for the record, if you wouldn't mind, to save time.

    Mr. SKEEN. Mr. Rogers, I think, has a——

    Mr. SCHUMACHER. Do you want to make an opening statement?
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    Mr. ROGERS. I'd like to make just a brief oral statement, if that's alright, Mr. Chairman.

    Mr. SKEEN. Absolutely.

    Mr. ROGERS. I'll submit mine for the record.

    Mr. SCHUMACHER. I apologize.

Statement of Mr. Rogers

    Mr. ROGERS. Mr. Chairman, members of the committee, it's an honor for me to testify before you today on food aid programs managed by the Agency for International Development.

    Title II and Title III of Public Law 480 continue to serve vital U.S. national interests. They support development programs which assist the most food-insecure countries to escape from hunger and poverty. Food aid is also the most valuable contribution the U.S. makes to victims of natural disasters and civil strife. Without U.S. food aid, millions more people would suffer, especially women and children.

    Food aid has a proud heritage of success. Many past recipients of our assistance are now major importers of U.S. agricultural commodities. To replicate this success in the future, we are preparing a plan of action to achieve the World Food Summit goal of reducing malnutrition by half by the year 2015. USDA and Under Secretary Schumacher have provided essential leadership in this effort.
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    The simple fact is U.S. food aid programs work. I had the privilege of leading a U.S. delegation to North Korea to assess the food situation there. There is no doubt our food helped avert a major crisis last year. Due to serious drought, we'll need to help again this year. And, we will again focus our assistance to prevent hunger and malnutrition among children.

    At the same time, we need to insist in North Korea, and elsewhere, that our assistance be properly managed. This includes careful monitoring to ensure that U.S. food goes where we plan and helps those in need.

    We're fortunate to have strong partners to oversee distribution of Title II food in the field. U.S. private voluntary organizations and the World Food Program are real heroes working in difficult and sometimes dangerous conditions. In 1997, Title II helped feed over 43 million needy people.

    Title III is equally important. Only if governments adopt the policy reforms necessary to support agriculture will food availability increase. Title III is now focused on the neediest countries such as Ethiopia, Mozambique, and Haiti.

    While real progress has been made with food aid, hunger and malnutrition remain widespread in the world. USDA estimates that the number of malnourished people in Africa will actually grow over the coming decade unless current trends are reversed. At the same time, overall food aid levels have declined sharply, from 8.2 million tons in 1987, to 2.8 million tons in 1997. The proposed funding for fiscal year 1999 for both Title II and Title III is the same as enacted for fiscal year 1998. These programs are critical to meeting the food security needs of millions of people. I urge the Congress to continue its strong support for U.S. food aid.
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    Thank you, Mr. Chairman, I'd be happy to answer questions.

    Mr. SKEEN. Thank you, Mr. Rogers.

    Ms. Kaptur.

    Ms. KAPTUR. Thank you, Mr. Chairman. We welcome all of the witnesses—the Under Secretary, and I assume the other panelists will have their full testimony submitted for the record. Is that correct? Alright.

    First of all, thank you for the very good job that you do in representing our country both at home and abroad. I have a couple of technical questions, and then a couple of broader ones.


    One of the more technical questions deals with crop insurance and the risk management aspects of what you attempt to accomplish there. You are aware of the serious disagreement that existed, perhaps, on this subcommittee over the issue of compensation for those who were actually the crop insurance agents that were handling this program. I think I still have a legitimate doubt as to the percentage. I think we left it at what, 27 percent, which I did not vote for last year. My question really is, now that there's a proposal to move this from the discretionary to the mandatory part of the budget through the Federal Crop Insurance Program, your budget says that you're going to fully offset this under PAY-GO. And, in the budget justification as we read it, it notes only a partial PAY-GO offset resulting from program changes that don't take effect until fiscal year 2000.
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    We asked the Secretary when he was here last week for a little more clarification on where this money is supposed to come from, and I would re-ask that question of you. But secondly, do you expect the authorizing committees to go along with this proposal?

    Mr. SCHUMACHER. We have, Ms. Kaptur, put up a, I think, first cut at a way of making the moving from discretionary to mandatory. Since crop insurance is so important as part of the safety net for the American family farmer, to alleviate the difficulties in appropriating it every year under discretionary, we propose moving all delivery expenses under the mandatory side with one set of options for paying for this under offsets. There are certainly a number of ways of cutting up the apple, but we have proposed, as I said in my opening statement, one set of options for paying for the offsets. I think also, Ken, we proposed the 27 to 25 percent reduction in the administrative expense reimbursement to companies.

    Mr. ACKERMAN. I feel like I can walk you through specifically where——

    Ms. KAPTUR. Yes, we'd like to know where the money is coming from.

    Mr. ACKERMAN. Right, right.

    Mr. SCHUMACHER. Why don't I have Ken do it because he's a little more on top of it than I am. We both are very involved in this one. It's been quite intricate.
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    Ms. KAPTUR. Thank you.

    Mr. ACKERMAN. As far as where, specifically, the money is coming from; yes, the proposal is fully offset on the mandatory side of the budget. The part that comes out of the crop insurance program represents about half of the total amount beginning in the year 2000. The other cuts on the mandatory side to pay for it are from programs other than crop insurance. So in the first year, the offsets come from the export enhancement program and others outside of crop insurance and then in the later years, about half of the reductions come from outside of crop insurance.

    As far as the reductions within the crop insurance program, they're basically three-fold: first, there is a cap put on liability for catastrophic level policies of $100,000; second, there is a proposed further reduction in the percent reimbursement to companies that would fall from the current 27 percent level to 25; and third, there are some smaller reductions for the buy-up program, taking the form of a small reduction in buy-up subsidy and a reduction in the loss ratio for policies from 1.075 to 1.06. Those items, and they are laid out in detail in our written testimony, add up to the full amount to offset the movement to the mandatory side of the budget.

    Ms. KAPTUR. And that starts in what year?

    Mr. ACKERMAN. The movement to the mandatory side of the budget starts in 1999. For the first year, 1999, the offsets come from outside of the crop insurance program. Beginning in the year 2000, about half of them come from within the crop insurance program.
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    As far as whether the authorizing committees will approve this or not, we are urging them very strongly to do so. We feel there is a strong case to do so. We have briefed, at this point, the staffs and members of both committees. On the Senate side, Senator Lugar has already scheduled a hearing for March 10 to focus on the issue. So we have every indication that the committees will focus on this issue early in the year, and we're hopeful. We'll be urging them very strongly to go forward with it.

    Ms. KAPTUR. In the proposal you just stated, the commission will be reduced somewhat. What happens to—I understand right now, there's also a provision in the Crop Insurance Program that even in down times, an insurance agent, when the Government loses money, that they can share in excess gains, even when the Government is losing money. How will your draft legislation fix that peculiarity?

    Mr. ACKERMAN. The draft legislation only deals with the expense reimbursement portion of our relationship with the insurance companies. That does not affect the gain-sharing and loss-sharing parts of it. To do that would involve renegotiating the Standard Reinsurance Agreement.

    Yes, you're correct, we have a gain-sharing and loss-sharing system with the companies. It's a complicated agreement. It involves a number of different risk pools. Last year we renegotiated it with the companies to put more of the risk on the private sector in the program.

    Ms. KAPTUR. All right. I thank you. That's the clearest explanation I've had to date of what's happening to the crop insurance program. And we'll look forward to your more specific reply in writing on those questions.
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    Mr. Secretary, you talked about the performance of our programs to assist with export—increases in exports. And we certainly have had record exports. We have also had record imports.

    Mr. SCHUMACHER. Correct.

    Ms. KAPTUR. I'm wondering why you don't deal with that in your testimony.

    Mr. SCHUMACHER. Well, as I said in my testimony, we had a reduction in our trade surplus. Imports are now forecast, Lon, at $38 billion.

    Mr. HATAMIYA. Yes.

    Mr. SCHUMACHER. So, the trade surplus has narrowed—or is forecast to be narrowed. Lon, do you want to just walk through the major components of those imports.

    Mr. HATAMIYA. If I could, Ms. Kaptur; I put together over the last 15 years some of the import demand shifts of some of the commodities coming into this country. And, although our trade balances remain quite large, as the Under Secretary has said, this current year we're going to see a dramatic change in that balance, although it's still a surplus.
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    Some of the areas that we see the largest changes are in the area of live animal shipments imported into this country, primarily out of Mexico. Also in the higher value products, such as fresh processed fruits and vegetables. There are others: vegetable oils, red meats, and tree nuts are some other commodities. I'll be glad to provide for the record a trend of what imports have changed over the last 15 years.

    [The information follows:]

    "The Official Committee record contains additional material here."

    Ms. KAPTUR. I really would appreciate that. We have got one excellent chart that probably came from you in some way in our office that I looked at that showed the imports that were coming in here. And these just weren't boutique items, but where competition was directly against many of our own producers. And I'm quite interested in that. And particularly, Mr. Schumacher, in your role with the Farm Service Agency as well as the foreign agricultural piece of this equation.

    I just left lettuce farmers from my district. And what are they fighting about? They are fighting about the fact that Dole is bringing a facility into Ohio that is going to package lettuce and other salad greens and so forth from anywhere in world, but Dole isn't trying to source from local lettuce growers. And you know, they make their own connections. These institutions get so big that sometimes they'll come into an area and just not pay any attention to the local source—they don't know where they are. It's hard for some of these farmers to meet the market. So they were talking to me about that additional pressure on them in the area of fresh greens.
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    The same has happened to us—very heavy duty—in the area of tomato production. It is certainly happening in beet production—sugar beet production.

    And so we see a lot of signs of this in our area where many farmers, now that they have freedom to farm, have used some of these other types of production to insulate themselves against the insecurity in the market for corn and soybeans, the kind of the mainline products that they grew. And now those niche markets are being pulled out from underneath them, and I'm very, very concerned about the import side of this equation. To take a look at the—there ought to be some kind of a red light that goes off at USDA when some of this stuff comes in here and we take a look at what's happening to our own U.S. producers and ask the question: how do we use our strength to help them meet the market.


    Mr. HATAMIYA. Can I also add, and I'll turn it back to the Under Secretary, but putting the numbers I just mentioned in context, in many of these same commodity areas also we're seeing gains in exports, primarily in the horticultural area. The largest area we've seen in export development has been in fresh fruits and vegetables to outside of this country. So we may be seeing more coming in here, but we're also shipping more outside of the country. So it has to be really put in context of the entire overall scheme.


    Mr. SCHUMACHER. One thing on tomatoes. I used to grow tomatoes, and my cousins grow tomatoes, and something that you and I have talked about a lot, Ms. Kaptur, is tomatoes. Yesterday we had a meeting at the Ag Outlook Conference and some of the California and Florida tomato growers were there. That is probably one of the most sensitive areas. And the California Tomato Growers Commission was reflecting, after working very closely with us, how we've managed to break open the Japanese market. They gave a very good presentation of how they're beginning to make some significant market gains. I think they said they were selling nearly 1.6 million cases to Japan next year at a 40 percent premium in that market than we're getting this year. And Florida has now taken a keen interest in this as well.
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    We are also working very, very hard to get that suspension agreement in place in Mexico and so that will assist us a bit more.

    California now produces, I discovered yesterday, 1 billion pounds of tomatoes. I didn't realize that it had reached that level. And, the fact that we've now opened up some additional markets, I think is helpful.

    But we certainly are well aware of the declining trade balance. Horticulture, which is interesting, has not been as affected in our forecast as perhaps others. We are still projecting this year an increase in horticulture exports worldwide. And I'm very proud of that. It's a little bit less of an increase than we anticipated but still an increase. So it speaks very well of our horticultural industry.

    Ms. KAPTUR. It certainly does.

    Mr. Chairman, I'll just end with a statement on this first round, and that is: when we have spoken to the Secretary about this and with Under Secretary Long as well, with her co-op responsibilities, but in helping many of these local farmers meet the market and bring product to market, if they don't have the capital position of a Dole, let's say, think about how one could organize a marketing cooperative among farmers market masters in the United States. Many of them are up on web sites. There is a tomato producer up in lower Michigan who is now marketing through the web six tomatoes—sends them out. You know, they're really good tomatoes. But, rather than letting this so-called catalogue be developed by a Hickory Farms where much of the wealth will not go back to the producers, perhaps there's a way that USDA through the Farm Service Agency, its co-op network, and knowledge of what's happening in these 15,000 farmers markets could create a new industry across markets. And if I didn't have this job, I'd love to do it for you. But, I just think there is an enormous power there of these producers coast to coast who are smaller and who do have great difficulty in getting access.
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    Thank you very much.

    Mr. SCHUMACHER. I did ask Mr. Kelly—not anticipating the question, Ms. Kaptur, but I did ask Mr. Kelly—coincidently, this morning, to have each of his State executive directors and county executive directors to talk to each market master in the United States and to work on this issue—coincidently.

    Ms. KAPTUR. If you need legislative help to do it, let me know.

    Mr. SCHUMACHER. Gets going on this.

    Mr. SKEEN. Mr. Walsh?


    Mr. WALSH. Thank you, Mr. Chairman.

    Mr. Under Secretary, administrators: thank you for your testimony.

    I have several questions I'd like to ask of Mr. Kelly regarding the Conservation Reserve Program. In the spring of 1996, Mr. Fazio and I wrote to Secretary Glickman regarding CRP asking that sufficient acreage be reserved for high-risk, priority environmental practices. And in response, the Secretary wrote that: ''our letter suggests''—these are in quotes—''your letter suggests that 8 to 9 million acres of the 36.4 million be authorized for enrollment in CRP—that are authorized for enrollment in CRP be set aside for the enrollment of buffers such as filter strips, riparian buffers, and the CRP enhancement program.'' Then he said, ''I strongly support such a policy.''
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    This statement has important bearing on my support for that measure. And since, however, the 16th signup, the Department stated that it intends to reserve only 5.5 million acres for rural buffers and enhancement. Could you explain what's happened since?

    Mr. KELLY. Yes, thank you. My name is Keith Kelly, and this is my first time to testify before a congressional committee.

    With regard to CRP and your question, 5.5 million acres are set aside for CRP enhancement programs like the one in Maryland. And many other States in the Northeast and Midwest are coming in with projects. Usually, those buffer zones and those types of practices are not large in terms of acres like the traditional 15th and 16th signup CRP programs are. And, the cost with regard to those particular acres, because buffers are very high-value areas, will tend to necessitate smaller quantities of land going in there so that we can still protect the environment nationwide.

    So 5.5 million acres have been set aside out of the 36.4 for the enhanced CRP, and we're in a very aggressive program with, I think, seven or eight States out there such as Minnesota, Washington, and others coming up with programs including buffer zones under the enhanced CRP.

    Mr. WALSH. So, you have 5.5 set aside, but there may be more?

    Mr. KELLY. There are 5.5 million acres set aside, Congressman, for enhanced CRP programs, which could include buffer zones; and then, in addition, there's the continuous signup, for high priority practices that may include buffer zones as well.
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    Mr. WALSH. Okay. Just point out that there are estimates that as many as half of the States might want to submit enhancement programs that could raise between 100,000 and 200,000 acres of land. Someone in California will probably submit even larger numbers for enhancement which would require something on the order 4 million acres with another 4 to 5 million for buffer programs. So, we're back up to that much higher figure.

    Mr. KELLY. Congressman, We're looking at 36.4 million acres total for the program, and right now a little over 28 million acres are enrolled in the CRP. If my math is correct that leaves a little over 8 million acres. About 5.5 million are set aside for the enhanced CRP, including buffer zones. Again, given the acreages required for the enhanced CRP and buffer zones they are not going to require as many acres usually. I guess we think we can live within our estimates; you've given a little bit higher number there than I think we're looking at.

    Mr. WALSH. Just reiterate that I think there's some support on the subcommittee for that use as the Secretary, himself, had expressed, and we would strongly—I would strongly urge that we work with States to meet as many of those demands as we can.

    Mr. SCHUMACHER. We understand, Mr. Walsh, we were, in fact, encouraging States to submit applications. And especially we've been in touch with New York in the Finger Lakes and in the New York watershed to be expeditious in submitting an application. We would work with you closely on that, but——

    Mr. WALSH. Yes, these programs will be absolutely critical to the success of any watershed protection programs for surface water of which—which in the case, for example, of the New York City watershed which would save New York hundreds of millions of dollars in water filtration and other abatement expenses, and, obviously, this treats the symptoms and provides a cure at the same time rather than treating it at the tail end of the system, we treat it at the head end and do a number of good things too.
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    Mr. SCHUMACHER. Could we visit? I mean, I think this issue is so important in a number of States. Keith and I could visit with you in your area and maybe you could also bring together Larry Beckhart and the people in the New York watershed who've been corresponding with us precisely for that reason, to get treatment upstream and save taxpayers' money downstream.


    Mr. WALSH. Yes, I'd like to do that. One other question and that's on disaster relief, catastrophic aid. As you know, the Northeast had a very severe icestorm; it affected upstate New York, Maine, Vermont, actually, a good deal of Canada; Canada's largest natural disaster ever—we can't do much for them. But I was wondering what, if anything, you've done in terms of disaster relief for New York, Maine, Vermont, Massachusetts farmers.

    Mr. SCHUMACHER. I'm going to ask Keith, and also we probably——

    Mr. WALSH. With New Hampshire.

    Mr. SCHUMACHER. And New Hampshire, some of Vermont, mainly your district in New York was very, very badly——

    Mr. WALSH. Actually, my district was unscathed but Congressman McKew and Congressman Solomon were hit pretty hard.
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    Mr. SCHUMACHER. Pretty hard. We're delighted that our SED for Minnesota was able to fly in some generators, and Keith has been working very hard on the disaster situation. It comes back to my earlier point, Mr. Chairman, in my testimony, that these natural disasters seem to be picking up in different parts of the country. We're certainly reviewing our emergency loan capability, and we're backing up quite a bit now in our applications. So, we may have to come back and work with you a little bit on a possible supplemental later on as we get all the applications in. Keith, do you want to just expand a little bit——

    Mr. WALSH. Well, you kind of anticipated my question. Do we—will we expect a supplemental for ag, and, if so, will some of this be in it?

    Mr. SCHUMACHER. Well, certainly, we're reviewing this very carefully right now. We're gathering all of the applications for emergency loans and other concerns. We haven't got them all in yet, but as we get them in, we'll then review them, and then we may come back to you; some of them are under review right now.

    Mr. WALSH. Keith?

    Mr. KELLY. Yes, Congressman. With regard to New York, we have approved allocations of $2.6 million under the Emergency Conservation Program, and we have pending applications there for another $4 million through February 18. So, yes, we're monitoring very closely the availability of dollar resources to address the icestorm, the storm in New Mexico, and others. There was a freak storm in Colorado and Nebraska in early fall; a snowstorm that caught some livestock in a mess there. And so we are preparing and working very closely, and we are probably going to be requesting a supplemental at the appropriate time to address this. In total, in the Northeast States, if I could just address that part of it, the allocations initially were over $5.2 million to address the icestorm that you had just several weeks ago.
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    Mr. WALSH. You mentioned livestock. That was one of the real key problems, because farmers couldn't get their milk to market, so you had a lot of sick animals; you had cows go dry; you had all kinds of problems plus the loss economics of all the lost milk that had to be dumped.

    Mr. KELLY. Congressman, under the direction and the request of the Under Secretary, I've put together a group of State directors from those Northeast States to look at some options that we can bring to you because of the need for disaster programs of this very nature, especially for the livestock industry—for the livestock caught in the snowstorm or the milk that had to be dumped and destroyed. We do not have a very good mechanism which really helps them when they take a hit like this, and so we're reviewing the situation. I've had a task force team working for about a month now trying to put together, for the Under Secretary, some things that we can look at with policymakers that might make sense on the livestock side of the equation.

    Mr. WALSH. Be happy to talk with you about that. Thank you very much. Thank you, Mr. Chairman.

    Mr. SKEEN. Mr. Fazio.


    Mr. FAZIO. Thank you, Mr. Chairman, Mr. Secretary, and administrators; good to see you all. I wanted to just follow up on a couple of things that Mr. Walsh mentioned.
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    First of all, on the Conservation Reserve enhancement programs, my information was similar to his if not more draconian in terms of the number of acres that had been made available, and the demand, I believe, will far exceed what some had estimated would be required. Without really engaging, Mr. Kelly, in any further discussions, because I think you've responded well to him, I just wanted to add my concern as well. We are attempting to change the program gradually, broadening its application to States that were not traditionally users, and we're going to certainly look forward to more applications from those States for purposes that I think we'd all generally consider to be totally in keeping with the authorization and its purpose.


    We are, as you know, going through a series of El Niño storms in California as well. I noticed you didn't reference any estimates for California, but you probably have some, and I think they're only getting worse as we speak. Most of the levees have held. We haven't had any serious concerns as we did last winter with human life and property except in the coastal range, but we are seeing a tremendous amount of ag land under water. It's going to threaten the orchards, permanent tree loss will occur, and an awful lot of crops are going to be laid into the ground this year. I'm wondering if you have anything you might want to comment on in terms of the impact in Central Valley.

    Mr. KELLY. Well, Congressman, I moved here from Arizona where some of those same El Niño storms are. The last report I recall seeing from our State directors said there was around a 60-some million dollar loss to agriculture, and the question is, whether it comes under the Non-Insured Assistance Program or if those are insured crops, and what type of recovery there'll be. We probably have the scarcest resources when you get into the big ticket items—replacing levees and some of the infrastructure that's necessary to put in place. That's the dollar drain on some of these type of programs as they get very heavy.
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    Mr. FAZIO. Yes. NRCS may well have some needs in that regard, but the Farm Service Agency will be directly involved in handling individual disaster claims, I assume.

    Mr. KELLY. Yes, we will. We're working with NRCS on this, our sister agency, and, perhaps, Mr. Ackerman on risk management; I know that they'll have some involvement.

    Mr. FAZIO. Sure, good. Thank you.

    Mr. ACKERMAN. Mr. Fazio, from the crop insurance side of the ledger, we're watching the situation very closely. As Mr. Kelly mentioned, most of the damage, as we understand it so far, has involved crops that are covered under the NAP program such as strawberries, asparagus, and some of the other vegetable crops. We're starting to see insured crops be affected as well; weed and forage in the Sacramento Valley, for instance. My understanding, from what I'm being told, is that the next two to four weeks will be very critical for many of the insured crops because they're going into the pollination period at this point; trees are in bloom for almonds, plums, apricots, peaches, nectarines, a number of crops of that nature. So, we're watching this very closely, and, obviously, we're making sure that the insurance side of the program will be ready to react very quickly.

    Mr. FAZIO. Well, the inclement weather, as you know, has kept pollination from occurring, and we may end up with some rotting and some other things, and it could be very, very difficult for this year's crop, but in some cases the undermining of the orchards occurring, we're going to lose trees, and——
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    Mr. SCHUMACHER. Well, I think John Smythe has been reporting that it's going to be a big issue if these rains continue. There's no question about that, Congressman, but he said the levees are holding, and then the planting issue that you're talking about, well, let's just hold our breath.

    Mr. FAZIO. Well, we may get a little break next week, but there are people estimating that we've got several more weeks of this, and if that occurs, I don't know what anyone could have done to prevent not only, ultimately, levees breaking but even more—even with the levee system's integrity, just a tremendous amount of field flooding that would be impossible to prevent. We've got an incredible saturation, at the moment, of soil everywhere. It's at record levels, and yet we've done fairly well with the levee system.


    I wanted to talk about the issues related to exportation of our crops, and, perhaps, several of you can respond, Mr. Secretary. The elimination of tariff barriers resulting really from the Uruguay Round and the World Trade Organizations existence has resulted in a new problem and that is the proliferation of technical trade barriers most of which are sanitary and phytosanitary in nature. The Economic Research Service has produced a publication that indicates that conservatively these are costing American agricultural exporters about $5 billion in non-tariff barriers, and I think that study is very useful. I wonder if you could comment on it, your interpretation of it. I know you were one of those that were behind its actual conduct, and it seems to me we've got a lot of work to do if we want to avoid having solved one problem simply to have it pop up somewhere else continuing to frustrate our need to export. This is one of the areas where we have a positive balance, and as I think we've all seen in recent months and will, I'm afraid, see even more over the next couple of years, we're going to be under tremendous import stress from Asia. What can we do to help create more export opportunities and success?
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    Mr. SCHUMACHER. Well, I think that your figures are correct. The estimate that we have indicated is about $5 billion, broken in various categories. Yesterday, at the Ag Outlook Conference, I was really amazed, we had a panel and Ed Beckman from the California Tomato Commission was there as I mentioned—I think we had 400 people come to that panel. Ten years ago, no one would have understood what the Codex Alimentarious or the National Plant Protection Convention are, but now it is right at the top of the agenda. I'm going to ask your wonderful colleague, Lon Hatamiya, who I'm just so delighted is here from California at the Foreign Agricultural Service who is working on this very much to comment further.

    Mr. FAZIO. We're happy to have him; local boy makes good.

    Mr. HATAMIYA. Thank you very much.

    Mr. SCHUMACHER. He's a vegetable farmer.

    Mr. FAZIO. That's right.

    Mr. HATAMIYA. Fruit and nut farmer. [Laughter.]

    Let me add to what Under Secretary Schumacher has just said. We have an interagency working group in the department that deals specifically with the sanitary, phytosanitary problems that we're faced with on an increasing level around the world. This group meets on a weekly basis to try to address these issues and to develop strategies on our best approach to leveling the playing field. We recognize that this is an important issue. There's also a WTO SPS committee that we're an important part of working with our colleagues at the USTR to ensure that our concerns are raised at that level through that process. In addition, there's a NAFTA SPS committee that we're actively involved in that's meeting on a regular basis to try to address the issues among Canada and Mexico and ourselves. So, we recognize that this is an issue that we have to remain diligent; remain certainly at the forefront to express the concerns on the part of this Government.
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    I might add, though, that we just recently entered into an agreement with Taiwan as part of their WTO accession ability, although they have a little ways to go before that happens, that includes some concessions in SPS issues, and I think it's important that on a bilateral basis we continue to move forward in that area. That's why fast track authority is so important for us; so we can maintain the ability to negotiate freely with our trading partners to ensure that these types of non-tariff barriers can be lowered and eliminated.

    Mr. FAZIO. I was talking with Charlene Barshefsky and she was pointing out the strengths of that Taiwanese agreement which has some potential as even a rice exporter in this case and my district would be salivating at, but also mentioning the potential breakthrough with the Europeans making very clear to me, by the way, there was no desire on the part of USTR to leave agriculture off the table in our future trade negotiations maybe even moving toward a free trade zone with the EC. But pointing out, once again, that these are the kinds of issues that need to be addressed when we talk with the Europeans, because they are just as likely as any to throw up these kinds of barriers. But the GAO has also chimed in on this issue. What is it that the GAO is saying to you? What is ERS saying to FAS in terms of the kind of research you need to do to be better prepared to document our case and to target it in trade negotiations?


    Mr. HATAMIYA. Again, I'll refer back to the working committee. I think the GAO report recommended that there be better coordination among not only USDA agencies but across the Federal Government to come up with strategies to best deal with these issues. Just this past week, we met interdepartmental-wise to come up with a strategy of how we look at international standards through the Codex Alimentarious and those applications through the sanitary, phytosanitary problems. So, we're working at a number of different levels to ensure that as much information is shared, and I think that's really the key; it's communication as well as education of our trading partners. They have to be aware of the science-based approach that we take; that the issues that we're dealing with are best dealt with by educating our trading partners and getting the information out there in the most appropriate fashion. So, I think that the process we have in place is a good one. There's always room for improvement, and we're continuing to push forward with these continued sessions and meetings.
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    Mr. FAZIO. The GAO also has produced a report which raises some questions about the effectiveness of our ag export programs indicating that there are, perhaps, some that need change or adjustment. I've always been a great proponent of our export promotion programs, the Market Access Program particularly. Your own statistics have shown a 16 to 1 benefit for every dollar we invest in programs like this, but there are still some doubters and people who are critical of the effectiveness, efficiency of some of these programs. We continue to have to battle for the authorization and the appropriation on the House floor almost annually. Are we in a position to defend these programs to our colleagues who don't have any agricultural constituency and don't see a direct benefit to their constituencies of Federal outlays?

    Mr. SCHUMACHER. Pretty much so. Lon and I are working very, very hard to articulate why these programs are so important especially with the Asian situation and the competition that we're seeing in the southern cone. I said yesterday at the Outlook Conference that EU and their member states spend $400 million trying to counter our very modest $90 million that was authorized for NAP which the President's budget proposes to be fully funded. Very, very important; I think it works very efficiently.

    I'm going to leave tonight to negotiate with the Europeans tomorrow. They spend $7 billion in subsidizing horticulture and value-added products in their internal EU budget which is now $51 billion. Our budget has gone down substantially; theirs' has not. I think this is a competitor challenge that we simply must address and continue the negotiations in the next round.
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    Mr. FAZIO. Yes, do you have any comment on this one? I know on the wine side alone, wine grape growers are very aware of the degree to which the Europeans, particularly, the Germans, Italians, and French subsidize theirs while we are constantly dealing with amendments to eliminate its application and that program's application to wine grape growers.


    Mr. HATAMIYA. Let me just address that issue. The MAP program or the Market Access Program that you mentioned. We do have a level of funding of $90 million, in conjunction with cost sharing from many of the companies that we work with; have a tremendous multiplier impact upon our exports.

    More importantly, our strategies since 1993 have shifted to an emphasis on small businesses. Fiscal Year 1998 will be the first year only small businesses can qualify for brand promotion under the MAP, and I think it's important that that be emphasized with your colleagues; that it's benefiting small businesses and small family farmers around this country. Many of the cooperatives that exist in our home area in California benefit from this, and as you well know, those are made up of small family farmers, and I think that has to be driven home; that the benefits are being derived there.

    Mr. FAZIO. Well, even major corporate exporters derive their product, typically, from a lot of small family farmers. There's no way to help somebody in the wine grape business unless you go through, probably, four or five of the larger wineries. They don't have the reach effectively overseas, but we may be already about to eliminate those kinds of people from participating. It's a great frustration to me, because I know the people who get the flow-through benefit of those programs. But the GAO seems to be operating on the basis that with the World Trade Organization and the Uruguay Round, we won't need this anymore; that these are going to be ruled out of order somehow by new policies. I think that's totally inaccurate. In fact, these are going to be more than ever valued because they are still permitted under these new trade agreements. In fact, other subsidies have been eliminated, and this becomes, it seems to me, the avenue of choice for countries that want to help their growers. So, any further comment?
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    Mr. GOLDTHWAIT. I can add just two comments, perhaps. First of all, our market promotion programs are very clearly green boxed programs in the WTO meaning of that term which is that they're considered to be absolutely allowable across the board.

    Secondly, I would simply comment that all of our programs need to be viewed as not static entities but as almost living organisms that are subject to constant change as we face new circumstances in the world markets. For example, we're using our GSM–102 program quite heavily in East Asia right now, but at the same time we're looking at making some changes in our suppliers' credit guarantee program that will put it in a better position to respond to some of the changes in circumstances in those markets.

    Mr. FAZIO. If I could, in summation, just ask that if you could supply for the record whatever information you are in possession of in terms of what our trading partners are doing to subsidize in every possible way their exporters compared to what we're doing if at all, if anything, in comparable areas.

    Mr. SCHUMACHER. We will do that, sir.

    [The information follows:]

    "The Official Committee record contains additional material here."

    Mr. FAZIO. I appreciate that. Thank you, Mr. Chairman.

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    Mr. SKEEN. Thank you. Mr. Nethercutt.


    Mr. NETHERCUTT. Thank you, Mr. Chairman. Good afternoon, gentlemen, and thanks for your testimony. I'm interested in your responses to the questions presented to you thus far, and I hear you say that we have great challenges to have our farmers be able to compete with the world market and other countries who dramatically assist their farmers and their agriculture programs. How much money did we spend on EEP last year out of that which was available to you?

    Mr. SCHUMACHER. We can divide that up by category quick. Do you want to just amplify on the allocation, or the overall export subsidy program?

    Mr. NETHERCUTT. How much EEP funds? I know about EEP2, but I'm talking about EEP.

    Mr. GOLDTHWAIT. With respect to EEP, specifically, last fiscal year, we did not spend any money.


    Mr. NETHERCUTT. All right. How about with regard to the Foreign Market Development Cooperative program? What's your budget request this year and how does it compare to last year?
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    Mr. GOLDTHWAIT. The budget request this year is $22.0 million, and that compares with an appropriation of about $27.5 million last year.

    Mr. NETHERCUTT. So, you're off about $5 million on that program? I noticed in Secretary Glickman's testimony of 10 days or 2 weeks ago a reduction in agriculture research of about $81 million, I think it is. I'll be frank with you, it's nice to talk about all the needs out there and talk about trying to have us compete with the European Union and others for grapes or wheat or sales of our product, and I hear you talk about GSM–102, but you're cutting in research, you and the administration, you're cutting foreign market development; you don't use EEP; we have to fight for MAP which is great, I'm with you on that fight. There's a disconnect here, gentlemen, I think.

    If I can be so bold as to say our farmers out in my State of Washington realize there's a cooperation here that has to exist between the federal government and the new market-oriented farm program that we're all struggling to have implemented properly, but actions, I think, speak louder than words, and I think the actions that I've seen at least in the budget side don't match the words, and I say that to you very respectfully. I know you're trying to do your jobs, and maybe you're getting squeezed by the Office of Management and Budget, but GSM–102—I was reading letters to the Secretary with regard to our relationship using that credit program for Pakistan. I had to fight with you to get—with all due respect, you, the administration—to get you to use that credit. We're having a suppression of the wheat price out in my State. We got problems in California weatherwise and otherwise. How do you explain this? I mean, I'm being real frank with you about how I see this, and I hear you, but I think, again, actions, I think, speak louder than words. I need to give my farmers some assurance that the Government is on their side whether it's through credit programs or using EEP funds or pushing the credit or, certainly, funding research. What's your response?
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    Mr. SCHUMACHER. This seems to be wheat day. My wife asked me to wear my wheat tie today. We had a wheat farmer in this morning from Montana—Bill Flore—came in to see me, and we spent a very productive hour and a half this morning. Quite frankly, Mr. Nethercutt, dairy and wheat are our two most difficult issues right now. I spent a lot of time personally in the northern plain States working on wheat. Mr. Moos, my predecessor, worked very, very hard on wheat for many, many years. Bill and I talked about a range of things we need to look at and EEP is a difficult one, and I'll address that in one minute.

    But I think one of the things we really worked hard on is to look at all of the tools that Congress provides us on exports, and, yes, we have a smaller proposed budget on the Cooperator Program, and we're looking for a little more cost sharing, and that's a proposal that we've put out. On the overall issue, though, we looked at the Korean situation and the Asian situation very, very hard, and we decided that at this time the GSM credits was the tool of choice because of the liquidity problem. We've spent about $36 million already on that and certainly our friends in Australia have made it very clear that they think that wasn't a very wise use of the tool you have provided us. We think it was a very wise use; we did it in a timely fashion, and we are working very, very hard. I think the access we're getting now in Indonesia will improve once those economies recover. Now, in the Philippines, there's the largest wheat market in Indonesia which blew them out of the monopoly business, and the security we've given our Korean friends and the reliable supply of our food will be very helpful.

    On the EEP, we have not used that, and we just haven't felt—and Chris can follow up—that market conditions since July of 1995 have called for the use of EEP. We're also going to work very hard on credit. Keith and I are looking—as some of the northern plains wheat growers are having some difficulties—to be quite flexible in looking at the credit needs to get them through these difficult areas. We've a number of issues we've discussed from this morning; we can discuss that in detail.
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    Chris, do you want to follow up on the EEP which is the most difficult one and one that is causing some pain in the northern plain States. We hear about it very frequently.


    Mr. GOLDTHWAIT. Yes, I'll make a comment about EEP, and, maybe, perhaps, one also about Pakistan which you raised, specifically. With respect to EEP, again, it's one of several tools and depending on what the problem in the world market is, we choose one tool or another tool to try to address that problem. As we have looked at the world market situation over the past couple of years, we have not seen that we would actually be able to get additional market share or increased prices for our producers by the use of EEP under the existing market circumstances. That could change if the European Union were to take a much more aggressive posture with their own export subsidies.

    Mr. NETHERCUTT. Have they, sir? I mean, have they not historically in the recent several years taken a more aggressive approach?

    Mr. GOLDTHWAIT. The policy that they have followed over the past year, year and a half has been relatively less aggressive than the policies they followed three or four years ago. So, we think it's important to have EEP there as a resource in the event that those market conditions change and we should see that it's going to have the intended impact of helping our producer prices if we use it.

    Mr. NETHERCUTT. What would trigger your using it? What market conditions would be necessary before you would say, ''Now's the time.''
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    Mr. GOLDTHWAIT. I think if we saw substantially larger quantities of subsidized wheat moving into world markets than we have seen in recent months. That would be a very important circumstance.

    Mr. NETHERCUTT. Is there a standard? I mean, is there a trigger?

    Mr. GOLDTHWAIT. We look at a number of things. We look at whether we'll get additionality. We look at whether we'll lose any market share dramatically. We look at world prices; whether we're going to have a beneficial or a harmful effect on our own producers prices.

    With respect to Pakistan, I might just note we have tried very hard to use a combination of programs in Pakistan. In fact, I even visited Pakistan in December to get a first hand look at the situation there, because they're quite an important market for us, and during that period of time that you referred to, when we found that because of the creditworthiness requirements of the authorizing legislation for GSM, we could not make as much credit immediately available as we would have liked to, we used P.L. 480, and we couldn't take up the entire gap, but we made the largest allocation in fiscal year 1997 of P.L. 480, title I, funding to Pakistan.


    Mr. NETHERCUTT. Is there not a reduction in P.L. 480 funding for 1999 by like 50 percent?
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    Mr. GOLDTHWAIT. There is a reduction in P.L. 480 in the title I area. Across the board, it's much less than 50 percent.

    Mr. SCHUMACHER. Is it the same than for 1999 as 1998? Am I not correct?

    Mr. GOLDTHWAIT. That is correct for titles II and III.

    Mr. ROGERS. Yes, it is the same level.

    Mr. NETHERCUTT. I understand, but title I's down about 50 percent. I don't mean to try to cause you problems, I just—seriously, I think there's a perception out there, at least in my part of the world that there needs to be a balance between the department's engagement in this whole new concept of market-oriented farming, and there seems to be—and I appreciate your explanation—but there seems to be a lack of timeliness, for the department to engage itself and really work hard to make sure our farmers aren't disadvantaged. And in farming work, if you lose a market, you lose a market. Then it's too late to look and see what the markets are. I think there has to be some anticipation on our part as a Government to try to help our farmers, because our farmers don't have two years to wait for markets to come around. They need Government assistance with marketing when they need it.

    And I'm really bothered by the research part of it—again, respectfully to you the administration; I don't know if it's coming out of your agency, necessarily, but at least, in effect, there's a reduction in research. I think that's the worst thing that we can do when the Europeans and other foreign governments are providing tremendous amounts of research funding. I met with some of pea and barley guys this morning who say, ''Here's the numbers. Look at what Australia and others are doing in terms of their research on just peas alone.'' It's far out-stripping ours. So, I think that's a necessary component of successful farm policy that I think we can't overlook. It's not necessarily your area, but I'm sure going to look hard at this budget and try to increase ag research for our farmers, because I think they must have it. Thanks for your time. Thank you, Mr. Chairman.
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    Mr. SKEEN. Mr. Bonilla.


    Mr. BONILLA. Thank you, Chairman, gentlemen. I'd like to start out with the problems that I have with the Farm Service Agency in my congressional district in the last year and a half. They've been very serious problems, in particular, in one county, in Reeves County, and I know the Inspector General's involved in trying to get that resolved, hopefully, any day now, as a matter of fact. Now something else has popped up in the County of Medina, a very heavy agriculture production area. I'm told that more than 400 payments are now being held up, and I'm very concerned. First of all, is this a problem that you're seeing in other FSA offices around the country? Is this becoming more prominent now or do I just happen to be getting the brunt of these problems in my congressional district?

    Mr. SCHUMACHER. We're certainly aware of the issue in Reeves County. I think the Secretary dealt with that to some extent; Keith can follow up. But Medina came to our attention quite recently. Keith, do you want to respond to that?

    Mr. KELLY. Yes, Congressman Bonilla, what we are doing there is not system-wide but because we are shifting resources. I know we were operating without a county executive director in charge of that office area with some of the cutbacks we've gone through and having to fill some vacancies, but in the interim we are shifting resources from adjacent counties and from the State office to get on top of the problem that's happened in that particular county.

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    Mr. BONILLA. The State has requested that they be allowed to receive the remainder of their advanced payments once each producer files or gets their eligibility documents in. Is that going to be possible? That they'll receive their payments?

    Mr. KELLY. Sir, would you please repeat the question, because I'm still missing out on that one.

    Mr. BONILLA. The State has requested that they be allowed to issue the remainder of advanced payments one each producer has filed their eligibility documents. Would you allow the State of Texas to do this?

    Mr. KELLY. I think to be safe on this, I would like to get back with you within the next few days on this particular question with regard to the advance payments, because having just been made aware of what the issue is, I'm at a little bit of a loss as to what to respond to you right now.

    [The information follows:]

Advance AMTA Payments

    Advance payments to Production Flexibility Contract holders are currently paid on December 15 or January 15, at the producer's discretion. The law does not allow for advance payments to contract holders at any other time. USDA is proposing legislation that would relax this restriction by allowing contract holders to request advance payments any time from November 1 through August 1 of the fiscal year. This would provide much greater flexibility for contract holders who were unable to finalize farm plans prior to January 15. Final payments are made to contract holders at the end of the fiscal year.
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    Mr. BONILLA. I appreciate that, and I also appreciate just from your earlier comment that there's a lot of attention being paid to these farmers in Medina County and, hopefully, we can get through this as quickly as possible.


    I only have one other question. As you know, you did not approve the Texas Agriculture Loan Mediation Certification program last time around, so now all mediation in Texas is put on hold and has been severely delayed. I'd like to know what steps have been taken and what progress has been made to ensure that Texas producers will continue to have access to mediation even though this program has been discontinued?

    Mr. SCHUMACHER. That's been a very difficult situation in Texas. Keith, do we have a new approach we're taking on that?

    Mr. KELLY. Yes, Congressman. With regards to Texas, as you're well aware, we've really suspended the mediation program with a particular institution that was doing the mediation before. We did offer to Governor Bush to work with any institution that wanted to step up to do the mediation program, to be the cooperator down there. Nobody really has stepped forward at this point, so we directed the Texas State office to pick up the whole ball on mediation, especially for those cases that are mandatory—there's mandatory and then there's some voluntary mediation. I think it's at the end of this week that the Texas State office will be giving a plan back to us on how to catch up on the mediation that they inherited from the particular institution that was put on suspension at the request of OIG.
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    Mr. BONILLA. Very good. I appreciate that very much. I have no further questions. Thank you very much, gentlemen. Thank you, Chairman.


    Mr. SKEEN. Thank you. Mr. Kelly, I want to tell you how much we appreciate the help that we got during the situation in southeastern New Mexico or all of southern New Mexico, because anytime you pile three foot of snow up on the flat plain over there you've got a real problem. You handled it very well, and I understand that you're also expecting to discuss the relief efforts that's in the New Mexico area.

    Mr. KELLY. That is correct, Congressman. We're trying to work hard with your office and be swift to follow up, because as I've discussed with the Under Secretary, the livestock industry is about one-half of our agricultural economy in this State, and it appears to me that we do not have a true mechanism to address bona fide disasters. What we did in New Mexico was use the remaining allocation for the Disaster Reserve Assistance Program. That money from the sale of disaster reserve grain is gone when it's gone, because we have sold the last of that reserve. So with the objective of almost a cost benefit study, we put $7 or $8 into feeding each animal in the hopes of not later paying for deceased livestock. I really want to visit with those New Mexico producers after the disaster's behind us and find out what would work better or what we could do better. We did a cost share on the feeding assistance to try to feed the cattle that were in dire need of nutrition right away.

    Mr. SKEEN. This is a whole new area of that question of disasters as I understand it. We haven't covered that ground. Yes?
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    Mr. SCHUMACHER. Keith and I were trying to discuss this with the Secretary and the administration. I think half our receipts in this country in agriculture are from livestock. Hundreds of thousands of cow, calf, sheep, and dairy operators are, perhaps, not as well covered in our safety net, particularly for disasters that are unforeseen. When you and I talked on the phone several times, it was unforeseen that we would have so much snow in your district; unforeseen that we'd have the biggest icestorm of a hundred years in the Northeast. Will there be other unforeseen tornadoes? Two of them came through Florida last night. These are all very unforeseen. I think we just need to think through a little bit more how we buffer the very critical livestock industry from these unforeseen disasters.

    Mr. SKEEN. I understand that and appreciate very much the statement and also the ability to be flexible enough to take care of events in this weather picture that we've been undergoing here in the last few months with El Niño. I don't know why they call it El Niño. El Niño is a little bitty character. This has gotten to be real big, but I do want to tell you that we do appreciate your quickness and responsiveness under terrible budgeting problems that go along with it; how you react and still stay flexible. I know that in California and some of the other areas where we've had this, you quickly adapted yourself to the situation. I have no further questions. Mr. Walsh? You can be the clean up batter here.

    Mr. WALSH. No, thank you.

    Mr. SKEEN. Where have you been?

    Mr. WALSH. I'll defer back to you, Mr. Chairman.
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    Mr. SKEEN. Thank you very much, ladies and gentleman. We appreciate very much the work that you do, and we hope that we get a budget up here before long that reflects the kind of help that you need, and we do appreciate the kind of attention and work that you do. We're adjourned.

    [CLERK'S NOTE.—The following questions were submitted to be answered for the record.]

    "The Official Committee record contains additional material here."

Tuesday, March 10, 1998.







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Opening Remarks

    Mr. SKEEN. The committee will come to order. We're on record.

    Good afternoon.

    Dr. WOTEKI. Good afternoon.

    Mr. SKEEN. Today, we have before the subcommittee the Food Safety and Inspection Service of the Department of Agriculture, FSIS, as it's known by. FSIS has one of the most critical missions in the Federal government, ensuring the safety of our supply of meat, poultry and eggs and also managing the biggest change in meat and poultry inspections since the Federal government got into that business, and they are an essential part of the new Food Safety Initiative.

    FSIS is operating this fiscal year on a budget of about $590 million in appropriated funds. For next year the official request is for about $150 million. That's $440 million less and the Administration says it's going to makeup the difference and then some with user fees.

    So Madame Under Secretary, I think I can say right here and now that you will get your full request for the fiscal year 1999, just under $150 million, no problem. I also want to wish you well in getting that user fee legislation passed and all the regulations written by October 1.
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    The Administration has already budgeted the user fee revenue for increases in WIC, and research, for the Inspector General, for salaries and expenses and a lot of things. If we have to find more money for FSIS because user fees didn't happen, we're going to refer the phone calls from all those people who thought they were getting more money to your office.

    Is that all right?

    Dr. WOTEKI. Why certainly, sir.

    Mr. SKEEN. We have a lot to discuss besides user fees, so Madam Under Secretary, please introduce your colleagues, make a statement for the record and then we'll have some questions.

    Dr. WOTEKI. Thank you very much, Mr. Chairman.

    Mr. SKEEN. Welcome to all of you.

Opening Statement

    Dr. WOTEKI. Thank you. I'd like to introduce those who are accompanying me today. With me are Deputy Under Secretary for Food Safety, Caren Wilcox sitting to my right, your left; FSIS Administrator Mr. Tom Billy who is sitting to my left and your right; USDA Budget Director, Steve Dewhurst, who I do not need to point out to you.

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    Mr. SKEEN. Absolutely not.

    Dr. WOTEKI. And Mr. Bill West, at my far right who is representing our budget office.

    Mr. SKEEN. Welcome to all of you.

    Dr. WOTEKI. Before I begin, I would like to first of all thank you and other members of this subcommittee for acting favorably on our FY 1998 budget request. The funding that has been provided for us this year has been extremely helpful to us in fulfilling our fundamental mission in assuring the safety of the meat and poultry and egg products supply in the United States, and also as you referred to in your opening comments, in implementing a new approach to improve on the safety of those food products.

    I have prepared written testimony, as has Mr. Billy and we both respectfully request that that be submitted for the record.

    Mr. SKEEN. It will be so done.

    Dr. WOTEKI. And what I would like to do, sir, since this is the first time that I'm appearing before you in this capacity, representing Food Safety, is to begin by talking briefly about the mission as I see it and then to talk more specifically about our budget request. I'd like to summarize my remarks.

    Mr. SKEEN. Any way that you'd like to do this why, it's all right with us.
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    Dr. WOTEKI. Okay. As you're very much aware in report language that accompanied the Department of Agriculture Reorganization Act of 1994, one of USDA's basic missions is to ensure the safety and quality of the nation's food supply.

    Congress created this separate Subcabinet office to lead the effort to reform our food safety programs. And it's my goal as Under Secretary, first of all, to focus on long term planning and policy development and on our legislative program to ensure food safety. Secondly, on oversight of the Food Safety and Inspection Service, and thirdly on providing general assistance and advice regarding food safety issues, as the Secretary of Agriculture requests that I do.

    My office has broad responsibilities in food safety, as well as very critical responsibilities related to the safety of meat, poultry and egg products. Two examples of these broader responsibilities are leadership in the international Codex Alimentarious Commission and an important role for us in coordinating the United States' position on international food safety issues. That's required us to work across commodity lines, beyond meat, poultry and egg products as well as to work cooperatively with the private sector and other federal agencies that have interest in food safety.

    A second example of these broader responsibilities is the leadership for the President's Food Safety Initiative within the Department of Agriculture. This has required us to work across virtually all of the mission areas within the Department to coordinate our activities, as well as to work closely with the Department of Health and Human Services, the Environmental Protection Agency and other interested organizations.
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    Our responsibility for safeguarding the nation's meat, poultry and egg supply is really our central responsibility and we've come to recognize that not all contamination of meat and poultry and egg products occurs either in the slaughter or processing areas which we regulate. It can occur during animal production, during storage and transportation as well as during distribution. Contamination can occur at the retail level, in restaurants and stores, as well as in the home. Because of this, we've taken a farm to table approach in the development of our strategy to further assure the safety of meat, poultry and egg products.

    The President's Food Safety Initiative, both in FY 1998 and in 1999 also embraces this farm-to-table approach. It focuses on research and on education and training, on surveillance, risk assessment, on improved inspection as well as on long-term planning. Another focus of the President's Food Safety Initiative is the building of partnerships to further all of these areas. One example of a very successful partnership that we've initiated under the President's Food Safety Initiative is the ''Fight BAC'' educational campaign. We've used some of the funds appropriated to us in FY 1998 as have other federal agencies to help the partnership in the distribution of educational materials that have been developed. This is very much a partnership, a private/public sector partnership, consisting of industry, consumer groups as well as government agencies.


    I'd like to turn now to emphasizing our commitment to fulfilling our basic mission, ensuring the safety of the nation's meat, poultry and egg supply. Protection of the public health is our mandate and that is really the guidepost for all that we do. Of course, our primary vehicle for meeting our responsibilities is the in-plant inspection and the oversight of these specific products.
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    As you indicated in your opening comments, we've begun the first phase of our new meat and poultry inspection system, based on hazard analysis and critical control points. A little over 300 plants began to implement this new approach in January of this year. These plants account for about 75 percent of the meat and poultry slaughtered in the United States.

    I'm pleased to report to you that from our perspective, we believe that HACCP implementation is going well. HACCP implementation though is an on-going process that we recognize is going to require fine tuning in the weeks and months ahead. And I think that this is to be anticipated and to be expected, given the complexity of the change that has been undertaken both within those plants that have begun implementation of HACCP, as well as by our inspectors who are stepping into their new roles.

    I'd like to assure you and Members of this committee that the Food Safety and Inspection Service is committed to working out any problems as they arise in implementation of HACCP and is firmly committed to using a common sense approach to problem solving.

    HACCP implementation will be continuing over the next two years as small and very small plants begin to come on-line in January of next year and January of 2000. These smaller plants are going to encounter some unique problems, and the Agency has been working closely with small plants, both through demonstration workshops in which 380 small plants have already participated, as well as through providing educational materials, technical materials, software, video information, to help small plants in preparing their own HACCP plans.

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    I'd like to note two items that I know are of interest to the subcommittee. One is how we are implementing our responsibilities under the Government Performance and Results Act. Our goal as stated in our strategic plan is to enhance public health by minimizing food borne illness from meat, poultry and egg products. To accomplish that we have multiple objectives that include pathagen reduction, implementing the President's Food Safety Initiative, implementing our farm-to-table strategy and fostering cultural change within the industry, as well as cooperating internationally to improve the safety of food.


    The second issue that I know is of concern to this committee as to others as well is how we're addressing the Year 2000 problem. Food Safety and Inspection Service began working well over a year ago to ensure that its information technology systems are prepared to support the inspection program successfully as we transition into the Year 2000. We've designated eight of our automated information systems as critical to our mission and we've been working to make them Year 2000 compliant within our existing resources. We're scheduled to have those completely implemented by March of 1999.


    Finally, turning to our budget request, the budget proposes a program level of $709 million, which is a net increase of $34 million over our 1998 current estimate. I might point out to you, Mr. Chairman, that our staff resources will be maintained at the current levels. The budget includes programmatic increases to build on our investments so that we can continue to implement the HACCP system. It also includes programmatic increases to support the President's interagency Food Safety Initiative.
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    That Food Safety Initiative is $101 million government-wide, for which $11 million is requested for FSIS. There are a number of high priority food safety activities that provide an integrated approach to reducing food borne illness and FSIS's contributions within the President's Food Safety Initiative will facilitate the transformation of State programs to Hazard Analysis Critical Control Point Systems by the Year 2000. Those funds would also be used to expand consumer education, and to develop voluntary measures to reduce the risk of pathogenic contamination of animals on the farm, as part of our farm-to-table strategy.


    In the very near future, the Administration will be transmitting to the Congress the legislation necessary to support the 1999 budget proposal to recover the full cost of providing federal meat, poultry and egg products inspection through user fees. Requiring the payment of user fees for the federal inspection services would ensure that sufficient resources are available to provide the mandatory inspection services needed to meet industry demand.

    We've estimated that the overall impact on prices as a result of these fees will be less than a penny per pound of meat, poultry and egg products produced. The implementation of the user fee would be designed to be fair and equitable, to promote accountability and efficiency and also to minimize the impact on the competitive balance among the affected industries. As you had indicated, we've requested about $150 million in appropriated funds to convert the Federal program to user fees and also for maintaining our obligations under the State inspection program.

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    Thank you once again for the opportunity to appear here and to discuss our goals to enhance food safety. I'd be happy to answer any questions. My colleagues here are prepared as well.

    [CLERK'S NOTE.—Dr. Woteki's written testimony appears on pages 783 through 793. Biographical sketches appear on pages 781 through 782. The Food Safety and Inspection Service budget justification appears on pages 819 through 881.]


    Mr. SKEEN. I'll lead off. Before HACCP began, there was much discussion about how quickly it could be implemented to replace the old system or whether the new one would simply be layered on top of the old. What remains of the old system in the plants where HACCP is being enforced?

    Dr. WOTEKI. This question of ''layering'' is one that comes up very frequently. As you're well aware, we have committed to a major review of our regulations as HACCP is implemented. And we are continuing in that review. We began last summer with the publication of new rules, essentially eliminating the requirement for review of blueprints of facilities and equipment. We view that as being a major down payment on our promises to continue in the review of our regulations. So as a general issue, we are firmly committed to reviewing our current regulations and streamlining them to the fullest extent possible.

    I'd like to ask Mr. Billy to comment specifically on the implementation within HACCP plans.
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    Mr. SKEEN. Thank you. Yes, Mr. Billy.


    Mr. BILLY. Thank you, Mr. Chairman. We are changing our fundamental approach to inspection with the advent of HACCP, given the fact that only 300 plants now are under mandatory HACCP. There are 6,000 plants that remain under the traditional inspection program.

    Mr. SKEEN. The old system.

    Mr. BILLY. The old system, except for the sanitation standard operating procedures in all plants and the requirement that slaughter plants do E. coli testing.

    Mr. SKEEN. I see.

    Mr. BILLY. In those areas, we have, in fact, shifted to a new way of carrying out our inspection activities. Historically, under our control system where we assign tasks to inspectors, we had about 550 tasks that they would carry out systematically over time to determine whether a plant was in compliance with the regulatory requirements.

    Under the new HACCP approach there will be 49 procedures they will carry out, a totally different approach. They stop doing the old way. They start doing the new way under HACCP. So as we continue to implement HACCP next year in the small plants, the year following in the smallest plants, that transition will be complete and we will be under the new HACCP-based approach.
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    Mr. SKEEN. As you phase the other one out, you have a clear definition of—from one technique to another?

    Mr. BILLY. Yes, that's right.

    Mr. SKEEN. You continue to do the old one as you phase it out and bring the new one on. You don't mix the two.

    Mr. BILLY. That's right.

    Dr. WOTEKI. That's correct.


    Mr. BILLY. The other area where we continue to carry out essentially the same functionsis in the area of carcass by carcass inspection in slaughter plants. It is in that area that we have announced and are now in the process of implementing some pilot studies to explore how we can modify that part of our inspection activity in slaughter plants. In fact, these studies will determine the extent to which we can shift some of the sorting activities we now carry out to the plants and free up some of our inspection resources for some of the HACCP tasks and some of the other farm-to-table areas we want to focus on from a food safety perspective.

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    Mr. SKEEN. Does the phase in cause the operators any problem? Are they complaining about it or are they working the system through?

    Mr. BILLY. We've gotten just a few complaints. Over a year ago we implemented the sanitary SOP requirements and the E. coli testing requirements. In the 13 months since, we've had significant problems with only 95 plants. That's 95 plants out of 6,000. So I would characterize that as not a major problem.

    Mr. SKEEN. Not significant.

    Mr. BILLY. Now the fact is, there's a major culture change going on, so while our training is focused specifically on that in teaching our inspectors their different roles, both in sanitation and in HACCP, not everyone gets it perfectly the first time within our agency, nor in industry. I view it as a work in progress and we've been meeting with industry weekly since the HACCP implementation began to identify problems and then address them.

    Mr. SKEEN. Both the operation and the inspectors are all working together and when a problem arises, you work it out together.

    Mr. BILLY. That is our commitment and our intent and we're working very hard to make that happen across the board.

    Mr. SKEEN. I don't see that there's going to be a lot of quarrel when you get through the thing. Usually, these things are very difficult.
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    Congress and the Administration are both required now to measure the performance and the results from the expenditure of the public money and you mentioned this in your testimony. What results are we getting for the money provided this year and what are your targets for next year?

    Have you pretty well covered that in your opening statement?

    Dr. WOTEKI. Yes, I believe I did, sir. Our goal though, within our strategic plan, as I had indicated, was to enhance public health by minimizing food borne illness from meat, poultry and egg products, and we've set for ourselves the objective of reducing food borne illnesses by 25 percent by the Year 2000. So that's the specific measurable objective that we're aiming towards.

    Mr. SKEEN. That's very good and I would like to compliment you two on this, from farm to table, atmosphere that you're going to work with because I think that's one of the problems we have, we have good inspection system, but also we've come to rely on it to the point where we're not too careful about what we do in the home with these foods and I think that's a very important aspect of the thing. I congratulate you on adding that increment to the overall picture.


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    Why are you requesting a waiver of the limit of 50 percent of Federal funding for cooperative programs with the States. Can't the States share their costs equally? What's the problem there?

    Dr. WOTEKI. We're requesting that waiver in one specific area and that is to increase the Federal contribution that will go towards special assistance for the States in implementing HACCP, including the information management system that goes by the title FAIM.

    Mr. SKEEN. What does that mean?

    Dr. WOTEKI. It is the Field Automation and Information Management project. It's essentially the software with the computers that we're providing to our inspectors to help them to do their jobs and also to help them communicate with us and for us to communicate with them.

    We believe that it will be a major assistance to the States that operate their own inspection systems to also be using this same software, and as an incentive to the States to adopt this software we're proposing that the federal contribution for that be raised to 75 percent.


    Mr. SKEEN. Under the progressive enforcement action, a plant can be noncompliant with your regulations and remain in production for 180 days. That could represent a significant volume of product that's going on to consumers. Should that 180 day period be shortened to give the consumer more protection?
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    Dr. WOTEKI. I'd like to ask Mr. Billy to respond because this gets into enforcement.

    Mr. SKEEN. Thank you.

    Mr. BILLY. Thank you, with the advent of the HACCP and pathogen reduction regulation and the shift to sanitation standard operating procedure systems approach, as well as phasing in HACCP, progressive enforcement falls by the wayside. It is being replaced by the systems approach that's represented in that new regulation where we will look to the plants to carry out a sanitation plan and a HACCP plan and we will be verifying that they're following that plan. When they're not, we will take action to, as appropriate, issue noncompliance reports and if there's an accumulation of those, then we will start the action to withhold the mark of inspection until a modification to their appropriate plan is made to assure us that they can live up to their obligation.

    Mr. SKEEN. The 180 days is a fair amount of time.

    Mr. BILLY. It's become moot. It's going to fall by the wayside.

    Mr. SKEEN. Thank you. Ms. Kaptur?

    Ms. KAPTUR. Thank you, Mr. Chairman. I want to welcome Dr. Woteki and Mr. Billy and all of your associates to the Committee this afternoon.

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    I wanted to ask Dr. Woteki or Mr. Billy, have you been at all surprised at the recent stories and reports that have been done about the poultry industry and the campylobacter percent? This is 1998, almost a century after we had all the revelations in the meat industry and you would think this would be one thing we could fix if we could put a man on the moon. What is going on in this industry here in this country?

    Dr. WOTEKI. No, I'm not surprised by the recent findings. I think you're probably referring to the recent Consumer Reports article about bacterial levels that are associated with poultry. Our own surveys and studies that had been done earlier had indicated even higher levels of campylobacter present on poultry carcasses that were tested.

    We're also learning more from the active surveillance program that the Centers for Disease Control is conducting to try to get a better understanding of food borne illnesses and their causes. CDC tells us that campylobacter is identified in about 46 percent of the diarrheal cases that are being detected in this active surveillance system. So it is a major cause of food borne illness in the United States and, as I said, the recent findings don't surprise me.

    Ms. KAPTUR. I'm not a scientist on this. What's going on with that? What is it? A virus? It's a bacteria?

    Dr. WOTEKI. It's a bacteria.

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    Ms. KAPTUR. What's going on with that? Where does it come from; the inside of the poultry to the outside? Is it that they're grown in cages and they're close together? Where is this stuff coming from? It doesn't come from my refrigerator, right?


    Dr. WOTEKI. When it comes into your home it has probably come on a piece of food that you have purchased and brought into your home.

    In the home, however, because of the many practices that we have, we can cross contaminate food that has been brought in and prepared with a knife and a cutting board. Then that knife and cutting board being used for preparing a salad or some other type of food product can cross contaminate other foods. But you're correct that most of the food borne illnesses that are traceable to food that's prepared and consumed at home, have come into the home on that food.


    Ms. KAPTUR. Now 46 percent of these intestinal conditions are caused by that particular bacterium. Knowing all you do about this industry, before it gets to the home, where would it come from in most cases?

    Dr. WOTEKI. Mr. Billy, you wanted to respond to this question.

    Ms. KAPTUR. What's going on?
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    Mr. BILLY. A lot of it originates during production and is carried with the birds into the slaughter operation. There's an extensive amount of research going on in ARS currently, primarily in Athens, Georgia to get a much better understanding of where that organism is coming from and how it's spread so widely in terms of the birds that are arriving at the slaughter plant and then further processed.

    Ms. KAPTUR. Sir, could I ask you if you will just look back though and help us in understanding, would this percent have been the same in 1950 and 1930? Has something happened of late?

    Mr. BILLY. I don't think we know the answer to that. One of the problems we have is that because of the nature of the organism, it's a very difficult organism to sample and analyze for, and it's very expensive to do a test. It can cost anywhere from $300 to $500 to do one sample and that's been a significant deterrent both to regulatory activity as well as research in this area because of the high cost. So part of the President's Food Safety Initiative is to fund additional research to develop new reliable, much lower cost tests that we can all use to get a better handle on this organism.

    One other thing I wanted to emphasize is that the good news in a sense is we're just now phasing in HACCP, so we expect the HACCP system to have significant impact in terms of the presence of organisms like campylobacter. That plus the new sanitation approach that we're taking, we think, will make a big impact in terms of this organism, salmonella and other organisms of concern. We're just getting started, so we need to build the data now because of these new systems and approach that industry is implementing, and we're monitoring and verifying to see that, in fact, they have the impact that we believe they will.
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    Dr. WOTEKI. One footnote also to add is that as Mr. Billy said, it's hard to look back historically and to say because we don't have information about the different types of bacteria that were present in the food system 50 years ago or more, but we do know that these organisms are constantly changing or mutating. As we develop antibacterials, the organisms are developing resistance to those. As we've developed new processing techniques, they've become resistant to acid, resistant in some cases to heat or to cold treatment. We've had the emergence of organisms like E. coli 0157:H7 only 15 years ago that have an increased virulence and disease-causing potential that weren't known to exist prior to that. So it's a constantly shifting microbiological landscape that we're dealing with.

    Ms. KAPTUR. With the recent revelations that have come out publicly, were these industry sponsored?

    Mr. BILLY. No.

    Ms. KAPTUR. They were, in other words, the research was done by either USDA or private consumer groups?

    Mr. BILLY. Yes.

    Ms. KAPTUR. The industry. Why do you think that the poultry industry wasn't more forthcoming to try to clean up their own act?
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    Mr. BILLY. I believe that the industry is, in fact, carrying out research. I know for a fact they are doing research in this area. They're also supporting the research being carried out by ARS. They're implementing HACCP in their plans. They're meeting our regulatory requirements so I think that we're going to see some improvement.

    We made it very clear in the preamble to the final HACCP rule that we're open to the idea that with better methodology and a better understanding of this campylobacter organism that it may well be necessary to establish a new performance standard for campylobacter like the one we've established for salmonella. More work needs to be done to arrive at a point where we'd have the science and the means to do that and make it work effectively. So in the meantime, I think benefits will be derived from the HACCP type approach and will be realized here in the next two or three years.


    Ms. KAPTUR. Tell me, Mr. Billy, you know we had an amendment in this Committee which I didn't support a couple of years ago that essentially eliminated, if a piece of poultry were going down the line and there was a possibility of fecal contamination there, you used to have to cut it out and throw it away. Now it just has to go through two washes on the line.

    Is this procedure being looked at in relation to the HACCP system to see whether this, in fact, is working or isn't working in terms of public health of our people?

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    Mr. BILLY. Yes, we published last summer a regulation that clarified the zero fecal requirement for poultry and that is a part of the implementation of HACCP, and we are enforcing that requirement in the HACCP plans that industry has developed.

    Ms. KAPTUR. What does that mean? If there's fecal contamination——

    Mr. BILLY. If plants fail to prevent fecal contamination, then that's a failure of their HACCP plan and we require them to take action to modify their plan or their practices to fix that problem.

    Ms. KAPTUR. Thank you. I have one other question and then I'll wait until the second round.


    I'd like to know if all of our trading partners are complying with the new meat and poultry HACCP program?

    Dr. WOTEKI. We've been undergoing a round of reviews of countries that export meat to us to determine that yes, they have implemented the E. coli testing that we implemented here in the United States last year, and that yes, they are operating systems that are equivalent to ours. In the cases where we have identified that they have not been operating equivalent to our expectations for plants here, we have indicated to those countries that they are not compliant with our expectations. Most of those have implemented the necessary steps that they have to in order to have systems equivalent to ours.
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    Ms. KAPTUR. You said meat. Only meat?

    Dr. WOTEKI. Meat and poultry.

    Ms. KAPTUR. And which countries do you feel—how many countries do you feel are out there that have not complied that we trade with and how many have?

    Mr. BILLY. As far as I know, all of the countries that are presently shipping to us have complied with the sanitation SOP provision of the HACCP rule.

    There are seven or eight countries that have submitted alternative approaches for E. coli testing which the regulation provides for and we've reviewed their submissions. In some cases we've accepted the alternatives and in others we've asked for additional data or information. That process is just about complete.

    HACCP just began in January. All of the countries that are shipping to us have informed us that they've implemented HACCP. They've submitted paperwork and information. We will review that. That process has started and then our audit teams that visit the countries will verify that, in fact, they have HACCP in place as required by our regulations. So that process is pretty well in hand.

    Ms. KAPTUR. Thank you. Thank you, Mr. Chairman.

    Mr. SKEEN. Mr. Walsh.
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    Ms. WALSH. Thank you, Mr. Chairman. Dr. Woteki, good to see you, Mr. Billy, all the members of the team. Thank you for coming today. I'd especially like to tip my hat to Mr. Dewhurst who comes to all of these Committee hearings and has mastered the art of looking interested in everything that's being said at every single one of these hearings. It's pretty remarkable. Only the Chairman is the only other person who can do that.


    I'd like to focus on the meat inspection, HACCP, but also, I'd just like to ask the question about irradiation. What is the current status of irradiation vis-a-vis meat and poultry?

    Dr. WOTEKI. Mr. Walsh, as you are probably well aware, the Food and Drug Administration has reviewed the safety of irradiation as applied to red meat and has found it to be safe. Food Safety and Inspection Service now has the responsibility for issuing regulations about the conditions under which irradiation can be used in meat processing and also for the labeling of that product. We are preparing the proposed rule, and we expect it to be ready for publication probably mid-summer.

    Ms. WALSH. So every package of meat will have a little nuclear sort of figure on it that——

    Dr. WOTEKI. The redura? Yes. But that's among the issues that are being reviewed at this point in time.
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    Mr. Billy.

    Mr. BILLY. Yes, given the action that Congress took in terms of raising questions about the labeling and the other information that was raised as part of the FDA rulemaking, it's appropriate for us to take a fresh look at the labeling approach as it relates to irradiation and it is our intent to do that through the rulemaking.


    Ms. WALSH. Good. Thank you. Now as far as the HACCP regulations, just this past month, right, it was implemented in the larger plants around the country?

    Dr. WOTEKI. In January.

    Mr. WALSH. The plan is to bring the next group which is approximately 3,000 plants on line next January?

    Mr. BILLY. Yes.

    Mr. WALSH. Could you sort of give us your assessment of how that's gone so far with the larger plants? Either.

    Dr. WOTEKI. Well, I'll start. Our assessment is that HACCP implementation has gone relatively well. We had anticipated that with the change as large in magnitude as this is for the companies and plants that were implementing HACCP, as well as for our inspectors, that there would be some initial problems with start up. There have been a small number of problems from our perspective. They were of the sort that were anticipated and in all cases the companies have worked quickly to correct the problems. Where the fault has been misunderstanding on the part of our inspectors of their new roles, FSIS has also worked very quickly to try to correct whatever misunderstandings some limited number of inspectors may have had.
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    My assessment is that HACCP implementation has gone as well as we could have expected it to go. And I'm pleased.


    Mr. WALSH. This is a fairly dramatic departure from the old ways and the people who are responsible for this new plan are on the industrial side and on the inspection side.

    Do they both have, would you say, is it fair to say that they both have an equal understanding of HACCP and there is a common knowledge of what is required of each of them and what their responsibilities are, vis-a-vis each other?

    Dr. WOTEKI. Let me take a first cut at answering that and I'm sure Mr. Billy will want to add to it as well. The kinds of knowledge that we are expecting our inspectors to master as well as the kinds of knowledge that those that have designed HACCP plans for plants and have responsibilities from the corporate side for implementing them—those represent three different, but complementary sets of knowledge. I think the sense of your question is how adequate do we sense that the inspectors' preparation was and how adequate do we assess the private sector's preparation to be.


    I think that the experience to date indicates that the training that our inspectors have undergone was appropriate to the task to be implemented. Several years of work that most of the companies have put into the development of their HACCP plans as well as the recent training that they have undergone in its implementation also indicate that industry efforts are adequate for the job. Mr. Billy might want to add to that from his perspective.
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    Mr. BILLY. There are many different roles that people working within a plant carry out in the area of HACCP, from the plant manager with the overall responsibility to an individual that is responsible for monitoring a critical control point, making sure that that critical limit is met and recording it. So the training, the learning requirements and responsibility varies significantly within the company setting. The same is true within our Agency. Our inspectors' primary responsibility is to be out there monitoring and verifying that the plant is following its HACCP plan and we've trained them to do that. They're not expected to be HACCP experts. We have HACCP experts. We have scientists who will look at the microbiological results. So there are varying roles within our Agency as well in terms of making HACCP work.

    Mr. WALSH. It's sort of compartmentalized, is that what you're saying?

    Mr. BILLY. Yes, but both are very important responsibilities. I wasn't sure how to answer ''equal'' but both are critically important responsibilities and are, I think, complementary in terms of this fundamental change that we're trying to accomplish.

    Mr. WALSH. I understand that in some countries that have implemented this, they have trained both industry and inspectors together. Does that make sense for us?

    Mr. BILLY. We looked very hard at that issue before we started our training and, for several reasons, decided that it was more appropriate to do the training separately.
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    Probably the common ground is the basic understanding of the seven HACCP principles. That is the same regardless. But beyond that very basic initial part of one day of the training, the roles then diverge. Training that has to occur in a company is about how you do a risk assessment, how you make decisions about where to set up your critical control points, how you set the limits, and on through, what recordkeeping you want to have, how that is going to be done, versus on our side looking at the plan, making sure all the parts are there, but then getting into monitoring and verification that the plant is following its plan. Because of the differences, I think it was appropriate to do training separately.

    The other key factors were logistics. We trained 2,100 people using a just-in-time approach to implement this first wave of HACCP. Most of those people had full-time jobs in plants. So we had to figure out the logistics of not shutting down plants, keeping the plants running, and doing the training in a manner that did not affect their operations but was effective in teaching our people their new roles.

    If you try to complicate that further by adding in the industry as well, it just got to be overwhelming, to be honest.

    Mr. WALSH. You considered that, rejected it because you thought that this process would work better.

    Mr. BILLY. I think so.

    Dr. WOTEKI. I might point out, though, that through the training center at Texas A&M the agency did make available to the private sector access to the same course materials as were prepared for the inspectors.
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    Mr. WALSH. Another issue is this issue referred to as layering. This was a big issue when we talked about this several years ago. As I understand it, the FSIS has eliminated pre-approval for equipment and blueprints.

    Dr. WOTEKI. Right.

    Mr. WALSH. Is that all of the layering that will be removed? We anticipated that HACCP, with a more scientific approach, there would not be the need for some of the processes that were followed before. What other layers would you anticipate removing from the process?

    Mr. BILLY. We are in the process of writing the final rule on sanitation. Our traditional approach to sanitation, as represented by our longstanding regulations, was a very hands-on approach, where our inspectors would check before the plant started and then walk through the plant continually and point out problems and then expect them to get fixed, a very command and control-type approach.

    The final rule on sanitation will strip all of that away. What will remain are a few performance standards in terms of what we expect to be accomplished. How that is done will be left to the industry.

    We are also modifying our regulations with regard to the cooked product area, where, again, we have very specific command and control-type requirements, step-wise procedures for preparing roast beef or many of the other cooked products.
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    Our proposal there will strip that away and set, again, performance standards. And consistent with the schedule that we provided to this Committee and to you specifically earlier, we are sticking to that schedule, reviewing and modifying all of our existing regulations. We will complete that process.


    Mr. WALSH. Mr. Chairman, if I have time for one more question, I will ask it. If I do not, I will wait until the next round. Thank you.

    My last question on this HACCP implementation, then, would be we are up and running. And the process is moving along and the inspectors are doing their job. And in the inspector's mind, there is a problem that he determines or she determines.

    As I understand it right now, the inspector has the ability with consultation with their supervisor to shut the plant down. And I can understand that. I think that is an important power that they have.

    But do they shut it down in every instance, for example, where they find examples of E. coli or if in the process, initial process, of recordkeeping, for example, if an i is not dotted, t is not crossed? At what point can you exert that very important power?

    Mr. BILLY. It turns on the specifics. If it is pretty clear that something was not recorded, but the information available and ascertained by the inspection team is that the product was produced within the critical control requirements, the limits were met and so forth, then we will issue what is called a noncompliance report, but no further action will be taken.
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    If, on the other hand, there is clear evidence of adulterated product from fecal contamination or for other reasons, that is clear evidence of a breakdown of the HACCP plan. The plan is written to prevent that.

    Mr. WALSH. At that point in the process, that should not happen.

    Mr. BILLY. Well, it depends on where it happened. If it happened during slaughter, for example, or during processing, under HACCP, there is a self-correcting procedure, where you are allowed, and it is absolutely accepted, to take what is called corrective action. So we sit tight and allow the plan to work.

    If corrective action is not taken by the plant, you have got that problem, adulteration, and the final check on the records does not pick up that this adulterated product was produced, then we have got a system failure. In that instance, we will take that kind of action. So it really turns on the specifics of what is going on in that case.

    Where there has been a breakdown and the plant tells us, ''We will take these actions,'' if those actions are not followed or they are not working and there is that pattern of repetitive breakdowns, it will also trigger that kind of response.

    Let me add one statistic.

    Mr. WALSH. Sure.
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    Mr. BILLY. We have been in this for about two months or a little less than that. And we have about 300 plants that have implemented HACCP. So far we have had ten plants where we have had to take that kind of action.

    Mr. WALSH. How long were they shut down?

    Mr. BILLY. It varied from a few hours to a few days. In every instance now based on revising the HACCP plan, those plants are back in operation and functioning. There are a couple of instances where our actions are under appeal. And that is working its way through the system and will be finally resolved.

    The bottom line to me with this substantial change is we have had only 10 instances in more than 300 plants. As Dr. Woteki said, I think that is a pretty good start.

    Mr. WALSH. I would say it would seem to be. And let me just end by saying that as you experience these spots in the process where something breaks down and there is a problem and you have to close a plant down, I would think each one of those would be some sort of a learning experience to make it a positive thing for the inspector, for the plant, and for HACCP itself, and that you continue to work with the industry to work out—I do not want to use the word ''bugs,'' but to work——

    Dr. WOTEKI. Glitches.

    Mr. WALSH. What?
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    Dr. WOTEKI. Glitches.

    Mr. WALSH. The glitches. Good. That is a nice, sanitary word—to work out the glitches so that this works well for everybody. It is really important that it improve the quality and the safety of our food product.

    So thank you very much.

    Mr. SKEEN. Mr. Fazio.

    Mr. FAZIO. Thank you, Mr. Chairman.

    I welcome all of you. I guess it is a commentary on the times that some of you are becoming nationally known public figures——

    Dr. WOTEKI. Yes.

    Mr. FAZIO [continuing]. Given the number of problems we have had, not you, Mr. Dewhurst, but——


    Mr. FAZIO [continuing]. Certainly the rest of the panel have, at one time or another, been put in the position of talking to the national media about food safety. I guess that is a healthy development in the sense that we have a lot more public interest and attention being focused on something that we all know is important to the public health of the nation.
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    Many of the issues that Mr. Walsh just brought to you were concerns that I shared. I think things are going relatively well, but there are clearly problems. And people in the industry are quick to report them to their members of Congress.


    When do you think it would be useful for, say, the GAO to come in and look at how the implementation is going? We are under way for two months. That is probably too soon. But at some point in order to put to rest criticism that might be warranted and to learn from the experience that we are having across the spectrum of plants, when do you think it would be helpful to have somebody come in and take a look?

    Dr. WOTEKI. Well, I know that we are keeping a very close eye on monitoring the enforcement actions that we are taking as well as periodically looking at the data that is evolving from the testing that is being done, particularly for salmonella.

    I would expect that since this is a work in progress and since the small and very small plants will be coming on in January of next year and January of 2000, that we really need to have an ongoing evaluation. It is difficult to say at any one given point: When would it be ready for such an evaluation?

    I think, as Mr. Walsh just pointed out, this is a learning environment. For us, it is a learning environment; and for the private sector as well.

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    Mr. FAZIO. Well, I do not see it as a punitive effort. It really is part of an effort to help pick up on problems, glitches, and try to learn from them. Mr. Billy.

    Mr. BILLY. The first set of requirements under HACCP kicked in 13 months ago with sanitation and E. coli testing. We did an internal review. Now, those requirements for sanitation were effective in all 6,000 plants.

    We randomly picked about 300 plants and did our own review and audit. And we are in the process of finalizing that report, which we could share with you. It shows what things worked well. They found some examples where our training was not as effective as it should be and actually caused us to change the training for HACCP to reinforce some things that we did.

    I will provide further information for the record.

    Mr. FAZIO. Good.

    [The information follows:]

    [CLERK'S NOTE.—The full study is too lengthy to print and will be retained in committee files. The summary follows:]

    "The Official Committee record contains additional material here."

    Mr. BILLY. We are planning to do the same thing again this summer sometime. We are going to do an audit similar to the audit of this first set of plants. We will pick some number of plants, interview all the company, our inspection team, and review all the records and data. We will summarize all of that because we need to learn from that——
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    Mr. FAZIO. Sure.

    Mr. BILLY [continuing] As well for the next wave of plants that are coming in.

    Mr. FAZIO. I am sure the Committee would benefit from that and others would want to review it as well and continue the dialogue to try to sharpen the process.

    I am particularly focused on potentially putting some sort of dispute resolution process in place, really following up Mr. Walsh's questions. Shutdowns are at times unavoidable, but when they could be avoided, that obviously would be preferable. But you do have issues that need to be resolved in very, very short order. I am hoping something along those lines could be looked at.

    Without going any further following some of the question he is already engaged in, I do think perhaps at some point we should on this first phase implementation ask the GAO to look unless you think the National Academy of Sciences or somebody else would be more useful. I would be interested in your thoughts. They are probably harder to rope.

    Dr. WOTEKI. Yes.


    Mr. FAZIO. Yes. Let us start with the GAO. I have had some people, particularly on the consumer side, say that FSIS and FDA are working more closely than ever before. But I know we have got two different agencies, two different cultures. And I am wondering at what point it makes sense to talk about perhaps moving to integrate them even more. As you know, I have a bias in that direction.
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    We have 24 staffers come in to brief us on food safety from a wide variety of agencies in the federal government. It sometimes requires us to think long and hard about how we could cut on overhead and work in the direction of putting together something that would be a little more streamlined.

    Do you see any future changes that USDA or the administration might advocate that would streamline and perhaps rationalize the staffing and the number of inspections?


    Dr. WOTEKI. Well, we are very much looking towards the review that the National Academy of Sciences is conducting now to provide us with some very specific recommendations about your first point: the organizational structure at the federal level for food safety and whether we can achieve any additional protections in public health by bringing together into a more coherent organizational structure the currently very diverse responsibilities that are centered in several different departments.

    As you are probably aware, the academy has appointed its committee. They are going to be holding their first meeting later this month, and they are expecting to have a report in late summer, I believe. So we are very much looking forward to that.


    In the meantime, though, we are working very closely with the Food and Drug Administration, with the Centers for Disease Control, and with the other organizations within the Department of Agriculture that have an important role to play in improving food safety.
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    Particularly on the inspection side, we are discussing at the staff level with FDA how to make better use of our FSIS inspectors that are in plants that are also producing foods that fall under FDA's responsibilities.

    So we do have talks underway. I am looking forward for recommendations to come to me as well as to the FDA Commissioner on how we can better use those resources.


    We are working very closely with the Agricultural Research Service as well as with the Centers for Disease Control and also with the National Institutes of Health to try to develop a better research basis for our food safety programs. We have got an ongoing review right now of the federal research portfolio as it relates to food safety research. I am hoping that out of that review will come some very specific recommendations about where we can get more return on our investment in federally funded research to again improve the safety of the food as it is ultimately consumed.


    So we have got those two specific examples. In addition, I have been working very closely with EPA as well as with FDA to better coordinate our responses to outbreaks. And we have established a federal outbreak response coordination group.

    Within the Department, I have also been working within our sister areas within the Department to better respond to and coordinate specific food safety problems that are exclusively within the USDA regulatory area.
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    So there are a number of very positive steps that we have been taking.

    Mr. FAZIO. Those all sound good to me. I hope we all look forward to the National Academy of Sciences study. That completion will perhaps give us some more guidance for the future.


    Let me just ask: Did HACCP in the long run project reductions in your staffing for the same or increased level of effective meat inspection?

    Dr. WOTEKI. For the immediate time, during this implementation phase, no. We are not projecting any decreases in the size of our inspection workforce. Indeed, since food safety is such a problem in the minds of the public at this point in time and because the data that we are getting from our surveillance systems does indicate that it is a significant public health problem, we would view that it would be a better use of those resources that are freed up with HACCP implementation to deploy them into other areas in which we could expect to have a significant gain in health outcomes.

    Mr. FAZIO. That was my assumption. And I wondered where the jurisdictional line with FDA is drawn under that scenario.

    Dr. WOTEKI. Well, we have been giving particular interest to the fact that of the food-borne diseases, about 70 percent or more of them are attributable to meat, poultry, and egg products. So redeployment of our resources would be into those areas in which hazards outside of the immediate slaughter and processing plants could arise.
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    Mr. FAZIO. For example?

    Dr. WOTEKI. In transportation, and in the retail area to improve our oversight in those areas.

    Mr. FAZIO. So you would be redeploying them to other elements of the food chain?

    Dr. WOTEKI. Correct.


    Mr. FAZIO. Okay. Let me just ask about a program that Jack in the Box has been using: an intensive testing system to check for hazardous bacteria in all hamburger. Apparently they have seen some significant results, the percentage of hazardous bacteria declining dramatically in the four years this program has been in operation.

    Are you observing this closely? Are you learning any lessons from it? Would you be in a position to comment on whether or not it might be applicable to other ground beef processors, particularly in light of what we have had with the Hudson recall and all the rest?

    Ms. WOTEKI. Yes. Well, because I know that Mr. Billy has been reviewing some of the data that have been forthcoming from that activity, I would like him to respond to that question.
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    Mr. FAZIO. Sure.

    Mr. BILLY. We are closely monitoring their approach. We do believe that their approach has application more broadly. They have taken advantage of the changes that we are implementing in terms of sanitation and E. coli testing. They impose other testing requirements on their suppliers in addition to the testing they do themselves. The statistical design of their system also has a great deal of merit.

    They are not alone. There are others in the industry that are using similar approaches, which we are also aware of. And what I see is that kind of approach will tend to become the norm to address the various pathogens of concern, that it will be within a HACCP framework, that that is what the companies will be doing.

    Mr. FAZIO. Those are the kinds of plans that will be submitted, which would be approved for their operation?

    Mr. BILLY. Yes. We do not approve HACCP plans, but I think the marketplace and our regulatory requirements will in the end result in those kinds of strategies being used by industry overall.

    Mr. FAZIO. You have got to be careful about using that term ''approve.'' We do not approve. But you would certainly view positively——

    Mr. BILLY. Yes.
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    Mr. FAZIO [continuing]. The successful operation of a variety of alternatives which work in the real world?

    Mr. BILLY. Yes.

    Mr. FAZIO. I thank you.

    Mr. SKEEN. Mr. Nethercutt?

    Mr. NETHERCUTT. Thank you, Mr. Chairman. Madam Under Secretary, welcome, ladies and gentlemen.


    I want to speak with you today about user fees. I have an understanding of why the budget reflects what it does. Last year as I looked at the F.Y. '98 versus the F.Y. '99 summary of increases and decreases for user fees, it looks like last year user fee proposal budget at about 390 million for import/export inspection as well as federal food inspection.

    This year that has increased to about what, $528 million, 33 percent increase on the federal food inspection, 200 percent increase on the export/import inspection. Why the large increases?

    Dr. WOTEKI. Our proposal this year is to recover the full cost of the federal inspection, which amounts to about $573 million. The prior proposal was to recoup some portion of that, some percentage of it.
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    Mr. NETHERCUTT. What is the justification for that?

    Dr. WOTEKI. Well——

    Mr. NETHERCUTT. Let me just stop you and say that the authorizing committees, interest groups, industry groups, interest groups, no one likes user fees. Why are you doing it?

    Dr. WOTEKI. I think the most straightforward response for you is the same one that the Secretary gave when he has asked this question. We believe that the federal inspection activities for meat, poultry, and egg products are extremely important ones, both for the public health and for the industry.

    We believe that the industry benefits from these inspections and that benefit is in ensuring the public confidence in the product that they are selling. Also, the federal inspection activities contribute to the development of a level playing field for the small as well as the large processors, and a user fee would be an incentive to the industry to implement changes that will over the long term lead to some reductions in the cost of inspection.

    So because these functions are so important to industry as well as to public health, we believe it is important that funds be provided for them. We are, therefore, making a user fee proposal.

    Mr. NETHERCUTT. In other words, you want them to pay for the inspections, notwithstanding the fact that these inspections are beneficial to the public at large? You do not think it is a public responsibility, as opposed to a user or an industry-wide responsibility? Is that what you are saying?
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    Dr. WOTEKI. We believe that the public benefits, that yes, there is a public health component to this, that the costs from analyses that we have conducted will be passed on to those consumers who are buying these products, that the costs will be less than a penny a pound depending on the specific product, and that yes, it is a public health program, but it also is of benefit to industry. So industry could bear responsibilities for it.

    Mr. NETHERCUTT. I guess that is an interesting way to look at it. You could use the user fee concept on everybody in the public from highways to food inspection to you name it. It can somehow craft a user fee. But all the while, the federal budget for your services does not go down.

    So I guess it is really you are wanting to tax the various parts of the industry, it seems to me, in order to use federal resources for some other purpose, the general taxpayers' obligation for some other purpose. Is that a fair statement?


    Dr. WOTEKI. Well, I would point out to you, sir, that this idea is not a new one.

    Mr. NETHERCUTT. I know it is not a new one, but——

    Dr. WOTEKI. It has been implemented in——

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    Mr. NETHERCUTT [continuing]. Would you disagree with my comment?

    Dr. WOTEKI. It has been implemented in the past. My understanding is in the Truman administration for one year, our meat inspection activities were reimbursed through a user fee proposal and that it has been proposed I believe 10 out of the last 15 years by the Reagan, the Bush, and the Clinton administrations.

    Mr. NETHERCUTT. So I take it based on past history, you think that it is okay? You have no objection to——

    Dr. WOTEKI. Based on past history——

    Mr. NETHERCUTT. Let me finish my question, please.

    Dr. WOTEKI. Okay.

    Mr. NETHERCUTT. You have no objection to expanding this concept of user fees, notwithstanding the fact that you do not disagree with what I say that it does relative to tax increases for the industry?

    Dr. WOTEKI. I believe that a user fee will help us to maintain a strong public health protection for meat, poultry, and egg products. I believe this is an important function to be continued. And if a user fee is the approach that we have to use to maintain that, I think it is appropriate to impose one.
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    Mr. NETHERCUTT. You mention in your remarks prepared for the hearing that user fee legislation will be prepared in the near future. Secretary Glickman said that same thing to us a month ago.

    A year ago, it was also stated that legislation will be submitted providing for authority for USDA to collect fees for the costs of salaries and so forth relative to food inspection. When is the legislation going to be forthcoming?

    Dr. WOTEKI. I believe it will be forthcoming fairly soon.

    Mr. NETHERCUTT. When is that?

    Dr. WOTEKI. There is a draft bill that is now going through clearance. I cannot give you a specific date as to when it will be delivered to you.

    Mr. NETHERCUTT. Will it be within a month?

    Dr. WOTEKI. I cannot commit to a date. As I indicated, it is going through clearance.

    Mr. NETHERCUTT. So nothing has changed from a year ago relative to the testimony that has been given here relative to legislation being forthcoming. Is that correct?
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    Dr. WOTEKI. No. I think there is one significant difference. And perhaps Mr. Dewhurst would like to comment on it.

    Mr. NETHERCUTT. Sure.

    Dr. WOTEKI. We do have a draft bill. It is going through clearance.

    Mr. DEWHURST. The legislation is in the final stages of clearance. I talked to the folks across town from us yesterday. They promised us a response by the end of the week. So I suspect that we will be able to send the legislation up much earlier this year than we did last.

    Mr. NETHERCUTT. Can you do any better, sir, on a time? When can we expect it? What is your internal review expected to be?

    Mr. DEWHURST. Our USDA internal review is completed. So if we get clearance by the end of this week, we will have it on the Hill within a week of that time.

    Mr. NETHERCUTT. That is what I am trying to get at. So maybe within 30 days? Is that fair enough?

    Mr. DEWHURST. Yes, sir.

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    Mr. NETHERCUTT. Okay. Thank you very much. Thanks, Chairman.

    Mr. SKEEN. Mr. Serrano?

    Mr. SERRANO. Thank you, Mr. Chairman. I want to thank all of you for being here today and for the work that you do.

    You are in an area where, unlike other agencies where the public and a lot of people want the federal agencies to do less, this whole issue of food safety is one where a lot of people want you to do more. So you are in a unique situation. And I take very seriously the work that you do.


    Looking through the various statements, there are some things that come to mind for some questions. For instance, Mr. Billy, you speak in your statement about lab testing for, among other things, antibiotic residues. I would like to know: First of all, how does it get into our food supply? And what does science say about antibiotics in food? Is this in any way related to the increasing antibiotic resistance that we are seeing in this country, at least that we read about every so often?

    Mr. BILLY. There are approved drugs, including antibiotics, for use in the production of animals. FDA evaluates the safety and approves drugs for use in that regard.

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    When they are used, there are procedures that are to be followed and including what are called withdrawal times that are based on the studies to determine when these residues will dissipate in the animal.

    People do not always follow the directions or the procedures, and in what is a relatively very small number of cases, we will detect residues. Then we follow up by notifying the Food and Drug Administration, and they will take appropriate action with the producer.

    It is not a significant problem area in terms of finding the residues. We have seen a huge improvement in that regard over the last 10 or 15 years.

    We also monitor imports in the same way for residues as well and make sure that foreign countries have similar kinds of systems in place. And then as an extra check, we will sample and test products when they arrive.


    There is a growing concern that the use of certain types of antibiotics may, in fact, be contributing to resistance by various organisms. And there is a lot of research going on now to develop a better understanding of that, including a fairly sizeable project in the Agricultural Research Service. The Food and Drug Administration, our agency, and others are cooperating in that. We hope to have a much better understanding of that as we see the results of that research.

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    Similar work is being done in other parts of the world, and we are monitoring that as well. There was a recent conference over in Europe that looked at this question, and we had people participate in that and monitor what they are finding and their results as well.

    So that is a very important area for us to stay on top of and, as appropriate, modify both current practices and approaches to animal production as necessary to address this concern.

    Mr. SERRANO. Mr. Billy, is the time element that you mention one that is very specific or does it function——

    Mr. BILLY. It is usually very specific, yes, a two-week withdrawal time, a four-week, that kind of thing. It depends on the type of antibiotic that you are talking about or other compounds that are approved for use.

    Mr. SERRANO. So you can control this somewhat if people who are producing, if you will, follow the rules?

    Mr. BILLY. Oh, yes. The resistance part is different because what is happening there is the organisms are actually changing and finding a way to resist the effect of the antibiotic. That is a real concern, particularly in the medical community, in terms of the use of various antibiotics over the years.

    So there is a lot of work being done in this area that applies both to humans as well as to the production of animals. It is a very important area for us to stay on top.
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    Mr. SERRANO. You are sort of caught at the present in a Catch-22 situation. You need the antibiotics, but then there is a problem at the other end if it is not handled properly. So the answer is never going to be not to use the antibiotic; right, unless you come up with something better?

    Mr. BILLY. There is a growing interest in the area of organic farming, including the production of animals. There are different views about that in terms of the efficiency with which we can produce animals, the cost of producing animals that would have a very real impact not only on the industry but the consumers as well.

    So, like in many things, it is a series of trade-offs. And you look at all of the factors and sort out your policy and approach based on that. So it is a very important area to us.

    Mr. SERRANO. Thank you.


    I want to move on to the area of egg regulation. Why is it split between two different departments? I mean, it seems that there is a concern about egg products, and then there is shell eggs. Could not we, using a terrible pun, keep all of the eggs in the same basket?

    Dr. WOTEKI. That is one of the questions that my mother keeps asking me, too. You have got egg products? What about the eggs? Who has got that?
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    I think there is a historical reason why those responsibilities are split. Clearly we have to work very closely with the Food and Drug Administration as well as with other agencies within the Department of Agriculture that are responsible for quality aspects of eggs, the Agricultural Marketing Service as a case in point. So we coordinate the various activities with respect to egg products inspection with those different agencies.

    I might also add just as a footnote we are in the process of completing the first farm-to-table risk assessment that we have undertaken under this farm-to-table strategy that I mention in my testimony.

    Mr. SERRANO. For eggs or for——

    Dr. WOTEKI. For eggs.

    Mr. SERRANO. Right.

    Dr. WOTEKI. And we have worked closely with the Food and Drug Administration in the development of that risk assessment.


    Mr. SERRANO. Doctor, you also say in your statement that many consumers have good knowledge of food safety, but there are some persistent misconceptions as well as confusion about specific food-handling practices. Could you give us some examples of consumer misconceptions and confusion?
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    Dr. WOTEKI. Most definitely. One of the biggest problems I think has to do with cross-contamination in the home: not understanding that if I use a cutting board and a knife to cut up a chicken and then I cut up my salad using that same cutting board and knife, that I can be contaminating the salad; not understanding that if I cut up a chicken and then wipe my hands on the dishtowel and then use that dishtowel to wipe my dishes, that I can be cross-contaminating. I think that the biggest misunderstanding has to do with the cross-contamination issues.

    Mr. SERRANO. It is usually from chicken? Chicken seems to be the culprit here?

    Dr. WOTEKI. Well, actually, any raw meat product coming in or poultry could be a source of contamination. Fruits and vegetables also can be. Undercooked eggs is another example. We are all coming up with examples.

    Mr. SERRANO. Right. But so that I can explain it better in my newsletter to my constituents—if I am allowed to talk about chicken and eggs, since we have a commission that tells you what you can put in those things and as long as I do not have a picture with a chicken—assuming that the chicken is okay to eat and the vegetables are okay to eat, why am I causing a problem by mixing one with the other?

    Dr. WOTEKI. Well, if that chicken or vegetable as you are preparing it is already contaminated with disease-causing bacteria, then you can be transferring them from one to the other.
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    Mr. SERRANO. What you are saying is that the best thing to do is to not take chances with anything, and try not to mix them up?

    Dr. WOTEKI. Correct, correct.

    Mr. SERRANO. Okay.

    Dr. WOTEKI. And, in fact, for that newsletter, if you would like some of the material that we have developed in the Fight BAC campaign, Fight Bacteria, we would be happy to provide it to you.

    Mr. SERRANO. That would be good. Sure, as long as there is no picture of me with a chicken.

    Dr. WOTEKI. We can help you with a picture of you with a big, ugly-looking bacterium if you would like.

    Mr. SERRANO. I think I have a picture of myself with my opponent. Thank you. [Laughter.]


    Mr. SERRANO. Doctor, speaking of newsletters, my congressional district in the South Bronx contains a heavy—and that is another issue for another day—a heavy concentration of waste transfer and waste processing facilities. In fact, one area, the Hunts Point area, has over 41 sitings for these facilities.
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    Emissions from these facilities and from the heavy truck traffic that serves them are already believed to be harming the health of nearby residents. Asthma is a big problem, and there is a study underway to deal with that, especially school-aged children, who have a very high rate of asthma.

    The most heavily affected part of my district also includes the Hunts Point Terminal Market, which is the major food distribution point in the Northeast. At least two national food companies—and I have their letters here—have protested against siting a new waste transfer station in that area, expressing concern not only for their employees' health but also for the proposed new station's closeness to the food distribution center.

    Is there any research or experience that would suggest a danger to the region's food supply from having these transfer stations so close?

    Now, please understand our situation. We have this problem with all these transfer stations. And it dawned on everybody that we also supply a large amount, if not the largest amount, of food to the Northeast from the Hunts Point area. And now are we creating a problem for a lot of other people by having those 41 and more plants in that area?

    Dr. WOTEKI. Well, certainly airborne transmission of disease-causing organisms is a potential route for contamination of food. Without knowing the specific nature of these transfer points and various plants that you have described, I really cannot respond in detail, but we would be happy to provide you with some technical assistance. If they are not issues that we can deal with directly within the Food Safety and Inspection Service, we can put you in touch with others that could provide that technical assistance.
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    Mr. SERRANO. A lot of them are regular waste transfer plants. By ''regular,'' I mean we have had everything from a place that processed waste from hospitals, everything left over from an operation to blood and everything else. And then we also have the largest sludge-processing plant in New York City. Something like 75 percent of all that is processed in New York City every day comes through that area. It so happens that that is where the largest food supply distribution center is.

    But you would be willing to help us perhaps have a little better understanding?

    Dr. WOTEKI. Most definitely.

    Mr. SERRANO. Well, I thank you in advance for that help. I have other questions that I will enter for the record.

    Mr. SKEEN. Thank you.

    Mr. Bonilla.

    Mr. BONILLA. Thank you, Mr. Chairman.


    First I would like to thank Dr. Woteki and Mr. Billy for coming by a little earlier for a preliminary discussion before the hearing. I really appreciate that.
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    I am encouraged somewhat by the HACCP Program being implemented with minor glitches, as we have discussed at this hearing. But I do want to concur with a question that was raised earlier by Mr. Fazio in my absence about the possibility of having an independent group evaluate and assess how this program is working because there are some complaints, very serious complaints, and concerns that are being expressed by some of our folks out there in the private sector. And one of the things that has helped make this work so far is people in the industry that have made significant investments in HACCP so far.


    I have a specific question about HACCP in a second, but my friend Mr. Serrano raised an issue that I think at some point we have got to start asking ourselves why there is not more common sense out in the heartland about food safety.

    I feel like I am the last person to learn things sometimes, the issue about chicken and the safety, if you use a fork to take the raw chicken before you put it on the grill, do not use that fork again in your salad, et cetera, et cetera.

    At some point you teach people things that 10 times, 20 times they do not learn. What else can we do in this area? How do you educate? How do you inject common sense into some people's minds that seems to be lacking? And they are blaming the government for getting sick.

    In some cases, it is just a matter of knowing simple things. It is like washing your hands to try to prevent catching the flu. Some people out there are shaking hands, using other telephones, doorknobs, et cetera. And then they put their fingers in their mouth. And they wonder whose fault it was that they got sick.
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    This is the same situation we have with food safety. In some cases, it is not about a lack of federal initiative. It is about a lack of people out there with enough brains to do something that is as simple as that.

    I do not know. That is a general statement. I do not know if you have any more comment on that.

    Dr. WOTEKI. Well, I think we have both got ideas about it. Probably everyone here does as well. I think there are two things that we need to pay attention to on food safety education. One is constant reinforcement and finding new ways to get that old message out.

    The Partnership for Food Safety Education that I referred to in my testimony that has produced this Fight BAC campaign is a good example of that, public service announcements, brochures, other kinds of things, you know, that are interesting but, yet, have a very informative message and very simple message that, if people follow, is going to help them to protect themselves against food-borne illness.

    The second issue I think that we need to focus on is education for school-age children. In past years when one person in the household, usually the mom and the wife, was the food purchaser and preparer, home economics classes were the primary source of information about food safety. Now just about everybody in the household has got responsibilities for purchasing food because half of our meals are eaten away from home or they are purchasing food, bringing it home, and perhaps even preparing it at home. So there are many more people who perhaps have not had that exposure to the food safety education that they had gotten in the traditional home economics classes.
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    The next thing that the partnership is turning its attention to is: How can we best focus on school age children, boys and girls, to provide them with the same kinds of food safety messages that are within the Fight BAC campaign?

    There are really very simple things that you can do that will achieve a significant level of protection.

    Mr. BONILLA. I think sometimes we forget to remind ourselves that we have got the world's safest food supply. To a great degree, it is because of the education programs out there and what we are doing at USDA. But, again, I think sometimes we tend to—this is a very general statement here—overreact when we have a problem that needs addressing in a plant somewhere and then everybody is up in arms because people get sick. Then the proposals are to throw a lot of money at this problem to try to improve it when, in fact, we have to remember that we do have a good system in place and we cannot be over-reactive as a society. And, again, I emphasize this is just a very general concern that I express.


    Back to HACCP because we were talking about that earlier. The users' fees being requested amount to about $573 million to be paid, proposed to be paid, by the processing plants. But another figure that I wonder if you have looked at is based on figures from producer industry representatives. They say that this could cost cattle producers as much as $9 to $12 per head of live animal sold.

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    When you calculated the cost to the consumer, did you also make any consideration for the economic impacts on the livestock producer?

    Dr. WOTEKI. Well, the economic analyses that have been done so far that I have reviewed have indicated that the majority of the costs would be passed on to the consumer and that the cost to the consumer would be, as I had indicated earlier, less than a penny per pound.

    Mr. BONILLA. So did you consider the costs to producers, as I indicate?

    Dr. WOTEKI. The economists who prepared the reviews or prepared the assessments that I have reviewed did take into account whether the producers would bear costs. And their assessment was the costs would flow through to the consumer.

    Mr. BONILLA. Okay. Do the figures $9 to $12 per head sound right to you?

    Dr. WOTEKI. I do not recall that figure. I will definitely ask about it.

    Mr. BONILLA. If you would dig into that a little bit because that can amount to a significant amount of money——

    Dr. WOTEKI. Yes. Preliminary estimates indicate that the cost of the proposed user fee would be less than $3.00 per head of cattle slaughtered and these costs would be passed forward to consumers.
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    Mr. BONILLA [continuing]. I would appreciate that very much.


    As you discussed in your testimony, the processing industry began implementing HACCP on January, earlier this year, in the 300 largest plants that exist. This represents $1.15 billion in commitments for food safety on behalf of the industry.

    However, I have a few concerns about the implementation of HACCP. And I have heard from many industry representatives that are concerned about a plant being denied due process and demonstrating that it is in compliance or that it have an opportunity to achieve compliance.

    In other words, we want to make sure. We have heard a couple of stories out there where a plant might report that they have seen something questionable and that before they are even given a chance to respond, that the new HACCP requirements would come in and shut them down before they even have a chance to address the problem.

    I understand that you are in the rulemaking process on this matter, but I want to hopefully make sure that this is being addressed.

    Dr. WOTEKI. Yes. Well, let me comment just generally, and then perhaps Mr. Billy would like to speak more specifically. You are correct that we are in the process right now of asking for comment about the rules of practice that essentially set the parameters within which we will be operating and the expectations of the industry for how they will be dealt with within those parameters. And we have received many comments from trade associations as well as consumer organizations and individuals and companies about those rules of practice.
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    We are very much committed to resolving disputes, resolving them at the lowest level possible and with the most common sense. I think with that as background, perhaps Mr. Billy could speak specifically to your question that deals with HACCP implementation and this whole question of due process within HACCP implementation.

    Mr. BILLY. One of the significant parts of our design of the new system was to ensure that there are checks and balances in terms of actions that we take at a plant. And towards that end, once inspectors have determined that there is a system failure we have implemented procedures that include the involvement of their supervisor right on up to the district manager being consulted before actions are taken.

    Also, to verify that the findings are accurate and well-documented, in our reorganization we have shifted the role of what we call our compliance officers. And one is sent immediately to that location to audit, if you will, what has happened to make sure, as I indicated, that the facts are right.

    The plants are notified. The plants have an opportunity to appeal. We are encouraging plants to appeal. If there is a dispute of the facts or the results, they are encouraged to appeal.

    In our HACCP training, we focused a fair amount of time on an attitude and approach that disputes of facts are okay and that is part of the process and needs to be addressed in a fair and equitable way. The training for our supervisors and managers in the field, in particular, has focused extensively on that. And we are monitoring that closely.
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    We also recognize that with the shift to HACCP, it is such a substantial change that it is fair to expect that there will be lots of questions by our own inspectors as well as people in the plants.

    So, towards that end, we established a new national technical center in Omaha. That center is available to both our people and to the industry to call and raise questions. It has an 800 number. It is available from 6:00 in the morning until 6:00 at night. In the first 5 weeks or so now, we have gotten over 3,000 calls, about equally split between our own personnel and the industry.

    They respond immediately if they can. If it is a very technical issue where they need to consult with some experts, there is an arrangement for that. Based on some discussions with industry last week, we are refining that process so that it, in fact, will react more quickly. And that is a good example of where we are trying to make improvements and speed up the process.

    As you indicated, we are also doing the rulemaking, which is a fundamental look at appropriate due process for firms through the entire HACCP approach. So we are getting a lot of comments in now from all of the interested parties, and we will take a close look at those in terms of other changes that we should make.

    Mr. BONILLA. I think it would be a good idea if we all kind of keep in mind in the beginning here the worst-case scenario down the road we have been in. I am not saying this is the situation with HACCP at all, but over the years well-meaning programs, whether through OSHA or the IRS, wind up turning into the most punitive, difficult issues that people out there deal with. Compliance is great, and food safety is our primary concern. We should always make sure that that goal is number one.
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    Sometimes these programs, the people who get involved in them take on a life of their own. And, before you know it, you are up here answering questions about punitive or Gestapo-like tactics that are being used out there.

    I know this is the very early stages, but, again, the reason I am asking now is to try to prevent this from occurring down the road. So I appreciate the attention you are paying to it at this point.

    I have some questions for the record I will submit, and I appreciate a prompt response on that. And I appreciate your time here today.

    Thank you, Chairman.

    Mr. SKEEN. Mr. Latham?


    Mr. LATHAM. Thank you very much, Mr. Chairman.

    Just a couple of questions. It is obvious the administration feels it is right for the meat processors to pay for the cost of actual meat inspection through users' fees, but is it right, do you believe, for those fees paid by the processors to pay for other things other than inspection, such as consumer and producer education, as proposed in the food safety initiative?
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    Dr. WOTEKI. Well, we believe that our fundamental goal is to enhance public health. And there are a variety of different mechanisms to follow to achieve that goal. We are proposing as part of the user fee proposal that a very small proportion of that money will go into some of these other areas that we expect were going to yield some significant public health improvements that include working with the states as well as with producers through education programs so that they can implement some of the preventive strategies that are going to lead to a safer food supply.

    Mr. LATHAM. I guess my question was: Do you think it is right for the packers to pay for that?

    Dr. WOTEKI. Well, ultimately the consumers are going to be paying for it because the cost will be passed through to the consumers. Those who are purchasing meat, poultry, and egg products under this proposal would be paying more.


    Mr. LATHAM. Do you support the interstate shipment of state-inspected meat?

    Dr. WOTEKI. We are working with our national advisory committee to develop a paper that would essentially lay out the principles under which state-inspected meat could be shipped in interstate commerce.

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    We have had two meetings with that advisory committee. They have provided us with some very useful comments. And they have also been rather enthusiastic about the draft proposal that they have reviewed and commented on.

    So I think the short answer to your question is yes, we can envision in the future a set of circumstances with HACCP programs fully implemented at the federal level as well as in the state-inspected plants moving to implement that proposal.


    Mr. LATHAM. Are you planning on soliciting any independent or third party review of HACCP implementation?

    Dr. WOTEKI. We have been considering some audits that Mr. Billy described earlier of HACCP implementation. We have been working closely with——

    Mr. LATHAM. I am sorry. By whom?

    Dr. WOTEKI. This was internally. But do you want to describe that, Tom?

    Mr. BILLY. Yes. With the first set of requirements in the HACCP regulation implemented about 13 months ago, last summer we put together a team internally that audited about 300 plants and interviewed the plant manager and the other plant officials, our inspection teams, reviewed all of the records and information, and pulled together a report that is in the final draft form that we will be making available.
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    It found that overall things work pretty well. There were areas where we made mistakes or our training was not fully effective and where we are now taking steps to address that.

    But as an overall sense of what happened in that area, we implemented SSOPs in about 6,000 plants. There were 95 instances or plants where we had significant problems out of 6,000. That is less than .2 of a percent of the plant. So we did have some real problems in some of the plants, and they were addressed. But we looked hard at those as well.

    We were going to do the same thing with HACCP and audit some number of the 300 plants. We will collect the information and report it and look to see how well it is going, where there are real problems, identify them, and then figure out what we need to do to solve them.

    Mr. LATHAM. I appreciate very much what you are doing, but I take it your answer really is no as far as anyone outside actually looking at it to see that maybe would not have a bias one way or another.

    Dr. WOTEKI. The exception to that is the Meat and Poultry Advisory Committee, which is a statutory federal advisory committee to the Secretary that has members that include representatives of companies, trade associations, state health and agriculture departments, as well as consumer representatives. They are reviewing and providing advice to FSIS on HACCP implementation as well as on other issues.

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    Mr. LATHAM. Where would they get their information?

    Dr. WOTEKI. The primary source of information is from the agency as well as all of their personal collective experience.

    Mr. BILLY. Plus, when we publish the meeting, we invite the public to provide input and comment. And we provide all of that to the committee. So there is also that opportunity. The public can also provide comment and input during the meeting itself. We think that is important input as well.

    Mr. LATHAM. Okay. That is all. Thank you, Mr. Chairman.

    Mr. SKEEN. Thank you.

    I think that we have had the first round and we will get started on the second and last one. I know that you are willing and also glad to see this point of inquiry come to an end.


    Let me ask Mr. Billy a question there. You had some Australian government officials that have had some disputes recently over their meat exports to the United States.

    I know that you are just back from there. Tim Sanders and I took a trip about a year ago Christmas. We had a similar conversation with a lot of the Australians about why they should not take our meat and so forth. Now there is some reasons why maybe we have a problem with their meat.
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    Can you tell us about the problem and where it stands now?

    Mr. BILLY. Yes. About a year or so ago, the Australian government submitted a project proposal to us to modify their traditional approach to meat inspection. We recognized in reviewing that proposal that it contained certain aspects that were a significant departure, not only from what we have traditionally done but also what we were planning under a HACCP-based inspection approach.

    One example of that would be to eliminate federal inspectors and, instead, have that responsibility carried out by the plants themselves. There would be one remaining veterinarian that would oversee the HACCP quality assurance plan that the company was required to have in place.

    Recognizing that that was a lightning rod issue for the people interested in meat and poultry inspection, we published the proposal in the Federal Register and invited comments from the public. It was very divided in terms of the comments.

    It was clear from all of that public input as well as our own concerns that we should not accept their proposal as submitted. And we informed them of that.

    Now, keep in mind that all of this time their meat is still being exported to the United States because they are still operating their traditional system. And we are inspecting and verifying it. So it has not had an impact on trade in that sense. This is about the future and the extent to which they could change their system.
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    After exchange of several letters and the meeting I held with my counterparts in Australia a couple of weeks ago, they now have indicated their plan to submit a modified proposal that takes into account all of our input. I expect to receive that in the next several days and will review it quickly to see whether it is something that we can work with.

    If it is, what will happen is in four plants,—at least that was the original plan—they would test out this modified inspection approach and collect data and information that would indicate whether with this modified approach they are able to assure us that safe product is being produced and exported to us in a manner equivalent to our own system as it is being changed.

    Mr. SKEEN. In our discussions with the same group of people, we talked about them taking more imports from our poultry and pork areas because we are swallowing a whole lot of their lamb.

    Being a lamb producer, I want to be sure that theirs is safe. I would hate to see us being accused of killing somebody in the United States with Australian mutton when we have got good mutton or lamb right here.

    Mr. BILLY. I understand.

    Mr. SKEEN. Anyway, I appreciate it.

    Are they willing to accept our HACCP system? I gather that they are.
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    Mr. BILLY. Yes. They have informed us that they are implementing our HACCP approach in all of the plants that will be shipping to the United States.

    Mr. SKEEN. Well, that is very good. I appreciate the fact that Australia has finally come to the line with the rest of us. Of course, they do not want us shipping any wheat into Southeast Asia either.

    Ms. Kaptur?


    Ms. KAPTUR. Thank you, Mr. Chairman.

    Dr. Woteki, do you think that as a consumer, it is reasonable for me to want labeling on meat and poultry and eggs when I go to the counter in the store; so, for example, if I pick up a pound of hamburger, it would say, ''Idaho Beef Lot Number 25'' and ''Processed by IBP, Indiana''?

    I really would like to know where my food comes from for my family. I have really been discouraged in the burger business. I do not mean if you go to McDonald's or another fast food restaurant, but I am talking about where you go up to the counter and you purchase meat or poultry for your family.

    And eggs. Is it unreasonable for me to want to know which farmer or enterprise created those? I see in my part of the country a real effort to diminish labeling and to make everything look generic. So if you go to a grocery chain and you buy eggs, the best you can do is find a number on the side of the carton. Then you have to figure out: Well, who has the code to the numbers?
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    Poultry at least, if you buy it in the counter, generally it has a label on it. Could you comment on that?

    Dr. WOTEKI. Yes. I think many consumers share the same desire that you have just expressed, ''I want to know where the food that I am purchasing was grown.'' And a lot of stores are responding in providing labeling to the extent that they can about the origin of those products.

    Certainly for the products that we regulate, my understanding is that there can be voluntary labeling as far as U.S. product. And I think that certainly on the commercial side, within what is permissible, that we are seeing companies pick up on that consumer desire and using it to their marketing advantage.

    Ms. KAPTUR. Why do we not see it in hamburger or steak or pork unless it is locally produced and some grower claims credit for it, when you go up to the counter? What percent of beef comes from the top 3 producers in America? Over 80 percent; right? So what is the big deal? Why is it so hard to get that package labeled?

    I mean, what is your observation? You are a professional in this business. I am not. Why will they not label what they produce?

    Dr. WOTEKI. As it has been explained to me by the producers, it is frequently difficult for them. It imposes an extra layer of recordkeeping. They are purchasing sometimes from the state in which they are operating, sometimes from adjacent states. So for them, it represents an additional burden to try to keep all of the product as it comes in associated with where it was produced.
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    It is not impossible to do certainly with the technologies that we have today. One could conceive of not only systems that would link to the state but actually all the way back to the farm on which a specific animal is grown.

    Ms. KAPTUR. I will be honest with you. Just if I can buy Ohio, I will. I am sure Joe will buy New Mexico if he can. You know, we like to help our local communities.

    Dr. WOTEKI. Sure.

    Ms. KAPTUR. But they just blend it all together. This is very interesting what is going on. So, even if you want to help your local growers, you cannot. Who is going to be able to read those labels on those egg cartons? First of all, you have to find the number. And it is so small that 80 percent of the people who shop cannot see it anyway on the side of the box.

    But, anyway, just yes, Mr. Billy?

    Mr. BILLY. Well, the one other aspect of this that I would point out that complicates it is—and we learned this firsthand as we were designing our E. coli 0157:H7 sampling program for hamburger—beyond the 2,000 federal plants that produce ground meat, ground hamburger, there are approximately 100,000 retailers that grind hamburger and receive raw materials from any number of sources and carry out that activity in their stores.

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    We do not regulate retail, and that is regulated at the state and local levels. And so I think, in part, the question you raise ought to also be directed back to your state officials that regulate the retail area because it is not just about what we do. A lot of raw material goes out of our inspected plants and is further processed at the retail level.

    So it is a very complex process or system. And being able to keep track of all of that information, as Dr. Woteki has referred to, is part of what is impeding it as well.

    Ms. KAPTUR. As I have mentioned to other witnesses from your Department, in my neighborhood, what is happening is the hamburger is now coming in in styrofoam packs with this stuff that looks like a clear wrap over it. And they are eliminating all of the people in the back rooms of these large retail stores that used to grind meat. So they are coming in from some central processor somewhere, probably put in refrigerated trucks. Again, it is not labeled. So you really cannot tell. It is sort of generic beef.

    I just find it very interesting as someone who likes to know where what I eat comes from. So to the extent through HACCP and the influence that each of you can exert, you can get better labeling of product and encourage that, this member at least would appreciate it very much.


    I wanted to ask you about under HACCP, the FSIS inspectors will now be assigned. Some of them will be redeployed to other assignments. You have referred to that generally what they might be doing. Could you be a little more specific, please?
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    Dr. WOTEKI. I think earlier that I did give you a fairly general description of how we are considering redeploying those resources.

    I might emphasize that for the current period in time and for the next two years, our primary emphasis is going to be on HACCP implementation and the maintenance of those inspectors within the current facilities. What we are talking about as far as redeployment is going to be dependent on some projects that we now have underway that are examining how to best use those resources in the HACCP environment.

    So what we are talking about as far as redeployment is something that is in the planning stage but in the very, very early stages. So we are talking about a longer-term project.

    Do you want to add to that, Tom?

    Mr. BILLY. Yes. HACCP by its nature changes, as I indicated earlier, eliminates a lot of the tasks that we have historically done. We are now shifting to a procedure approach.

    In doing that, it might allow us to shift more people, as an example based on the projects that Dr. Woteki just referred to, off of the slaughter line to other functions, both in the processing areas of slaughter plants, independent or separate slaughter plants.

    We are also looking at the whole area of transportation. We have done some studies that show that there are, in fact, significant problems with maintenance of temperature and sanitary conditions during the transportation of products to the marketplace and problems in the marketplace as well. We have been working with the states to see improvements in how they regulate and monitor retail practices.
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    It was not long ago when many of the processing operations that we regulate were limited to federal and state plants. Now you find those processing operations in retail stores. You have retail stores catering weddings, and you have retail stores, supermarkets with restaurants inside them serving food, and providing fully cooked meals to take home. And we think that there is a need to completely refocus a lot of our effort in terms of food safety to assure that that continuum with all of those changes is properly monitored from the farm right through to the consumer.

    So projects will give us a very clear indication of where we can be effective within our jurisdiction.


    Ms. KAPTUR. How much of that redeployment will involve helping the state inspect the facilities that are currently state-regulated?

    Mr. BILLY. We have talked to the states about different roles we can play. We have traditionally gone out and audited product at retail, but we do not have jurisdiction over the sanitary condition or the actual operations at retail.

    So we believe that there is assistance we can provide. In fact, this Committee supported our requests for this year to provide us some additional funds where we have now instituted a training program for the state and local regulators that oversee retail. And we are teaching them the approaches that we use in terms of monitoring meat and poultry and egg product-type operations. So you will see more of that.
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    Perhaps we can provide an audit function to the state program as well where we would independently audit the state regulatory activities at some frequency and provide technical support and other types of assistance as well.

    Ms. KAPTUR. Dr. Woteki, if State of Ohio Agricultural Commissioner were to say to you that Ohio's standards are higher than their own; inspection standards, that is, what evidence would you give to support or contradict that statement?

    Dr. WOTEKI. Well, first of all, I would say good for Ohio. And I would hope that all of the state inspection programs would be striving to achieve that.

    I would certainly look for some objective criteria with respect to the performance standards that we have set for salmonella. I would expect that the state inspection program would be able to provide the same data as we are getting out of federally inspected plants and that the pathogen levels on the finished product would be in the same range.

    I would also like to look at any data that the state would have on food-borne illnesses traceable to the inspected products to see how comparable that is to the overall national picture. So I would be looking for that kind of validation.

    Ms. KAPTUR. If you could submit for the record that type of comparison between federal standards in these areas and Ohio's standards, I would be interested in seeing if they are the same. Anything you could provide would be greatly appreciated.

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    Mr. BILLY. I will provide further information for the record.

    [The information follows:]


    Each State Meat and Poultry Inspection Program must submit an annual State Performance Plan in a format that addresses 9 basic items: laws, regulations, resource management, facilities and equipment, in-plant reviews, enforcement, specialty programs, and laboratories. The State Performance Plan for Ohio is consistent with Federal standards and does not claim or document that a higher standard is met.


    Ms. KAPTUR. I want to just go back to that original question I asked about labeling. We talked about meat. What about eggs? What about eggs? Why is it so hard to say where eggs come from on the box?

    Mr. BILLY. Shell eggs?

    Ms. KAPTUR. In the shell.

    Mr. BILLY. I think that it is possible to figure out a strategy that would keep track of that. It might add significant costs in terms of how they are cleaned and boxed and warehoused and shipped and so forth.
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    FDA currently regulates the shell egg area. So if shell eggs go in the marketplace, it would be under their jurisdiction. So I think it is an area you might want to explore with them in terms of what might be possible.

    Ms. KAPTUR. But they do not do the checking for salmonella, do they? They do? You do not?

    Mr. BILLY. For shell eggs.

    Ms. KAPTUR. So they would be the ones to encourage labeling, not yourselves?

    Mr. BILLY. They regulate the labeling of shell eggs. That is right.


    Ms. KAPTUR. I just wanted to ask a final question of Dr. Woteki about the conference that was recently held in Atlanta on food safety. There were some statements made in the paper, one of which you stated today. And that is 40 percent of the average family's food budget is spent outside the home in restaurants now.

    There was also a statement made in that article: Another reason for a lot more foodborne illness in the eyes of those attending the conference had to do with the rising level of imports, particularly in fruits and vegetables.
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    Is it our impression that levels of foodborne illness are rising and these are related to fruits and vegetables? I mean, they made that statement. Is that your impression?

    Dr. WOTEKI. The data that we have on foodborne illnesses so far has indicated that we have about 9,000 deaths a year. We have approximately 33 million cases of foodborne illness. And most of those are attributable to meat, poultry, and egg products. The data also, though, indicate that there has been an increase in foodborne illnesses that are related to fruits and vegetables.

    I do not know the original data that was reported in the news report. I read the same one today. It was just reported yesterday in Atlanta. And I believe that they are using some data that is coming from the active surveillance system that the Centers for Disease Control is currently maintaining.

    Those data do indicate, when compared to some previous data not collected in the same way but the best information that was available, that the average person has about 1.4 gastrointestinal illnesses a year that may be food-related. The inference that was drawn in the article was that yes, there has been an increase in foodborne diseases.

    I would like to see the data and see the original data upon which those reports were based in order to get a better sense and to give you a scientific answer to your question.

    I do have to say, though, that we are very much concerned about foodborne illnesses. They are preventable illnesses, by and large. And they do carry a very big economic cost in this country. We also know that the number of cases that we detect and that are reported is really a very substantial underestimate. So the handle that we have on foodborne illness from a scientific perspective is not the best.
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    We are trying very hard through the efforts of CDC to get better estimates of foodborne illnesses. And the data that are referred to are kind of a first installment on that. There is going to be a lot more information coming forward as these surveillance systems improve over the coming years that will be better able to give some good answers on which ways the tends are going.

    Ms. KAPTUR. Thank you. Thank you very much, Mr. Chairman.

    Mr. SKEEN. Thank you.

    Mr. Latham?


    Mr. LATHAM. I guess some of the things that Ms. Kaptur brought up I would be curious. You know, we are talking about food safety. Would the labeling of the point of origin or if you got down to which—I do not know whether you are talking about which chicken laid which egg. Is there a safety issue if we are talking about food safety?

    I am just curious. I mean, I understand. It would be nice to know if it was Iowa beef or whatever, but is it a safety issue?

    Dr. WOTEKI. Well, I do not think that the source of origin by state is an indication of safety. With the inspection systems that we have at the federal level and the state level, we should be assuring the same level of protection, regardless of what state the food is produced in.
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    Mr. LATHAM. I guess my concern would be that you would expend resources possibly trying to follow the carcass, whatever, and to maintain identity that could be resources devoted to food safety.

    Dr. WOTEKI. Well, I think you are touching on an important issues. There are two very different perspectives. One is the food safety one. The other is, ''the consumer wants to know.'' There is a demand from some segments of consumers to purchase locally. And to the extent that labeling——

    Mr. LATHAM. Can they not go——

    Dr. WOTEKI [continuing]. Can help them to do that, they would like to see labeling.

    Mr. LATHAM. But you could go to your local butcher, I would think, and ask them if the beef or the hog was raised locally if that was your number one concern. I would be very concerned about diverting resources that should be used for food safety.

    That is my only comment, Mr. Chairman. Thank you.

    Mr. SKEEN. Thank you.

    Mr. Serrano?

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    Mr. SERRANO. Mr. Chairman, it was not my intention to comment any further, but I am troubled by what I am hearing here today about the issue of food labeling, not troubled by these folks but troubled about the facts they bring to me.

    We know where this suit was made, and we know where so many products—where our cars are made, our TV sets are made. And if we do not know exactly what plant, we have a general understanding. At least we have somebody we can go to in their corporate office, and then we find out where it was made. We even found out that Kathie Lee's clothing line was made by children somewhere.

    We don't seem to know about the eggs I am eating. And I am hearing—and I know you are just bringing to us the information that other people present to you—about the added cost.

    I used to chair the Consumer Affairs Committee of the State Assembly in New York before I became Chairman of the Education Committee. And it ties in, right—education and consumerism? But whenever I heard someone say, ''It will add costs,'' I suspected that they were hiding something. Whoever tells me that they cannot label the eggs, I am wondering if they are always following the regulations.

    So I just want to let you know that I respect the fact that the information you are giving us is based on what people in the industry tell you. U.S. government officials have to bring it to us, but I know they could label it if they wanted to and if we forced them to. And I know the public wants it.

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    Let me tell you something else. You hear a lot of talk at these kinds of hearings, about money and how much it will cost to do something and what government should be doing with tax dollars. I would bet that if you took a poll nationwide, you would find out that Americans in general are very concerned about food safety, even if it affects someone else.

    In other words, if you hear about a program in one part of the country that helps certain children get certain breaks in society to get a head start or whatever, you might find people in other parts of the country or in that same part of the country in another strata of society who say, ''You know, government should not be doing that.''

    I suspect, though, that if you hear someone in one part of the country has a cancer that we should be doing more research about, there are other people who do not feel that, ''Well, that is their problem.'' But if you hear that someone got sick eating food, meat or whatever, I do not think a person in the middle class is saying, ''Well, that is that person over there'' or saying, ''Well, that is what they get for eating all of that food.'' It doesn't work that way.

    And so I would hope that we begin to look at this whole area and question deeply why people refuse to label, because it makes me very suspicious, as I said. And I will close with this. My experience has always been that when people say, ''It will add costs,'' it usually means that they found a way to get around the regulations imposed on them and that is their concern, the cost.


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    And speaking of things that are in good shape now, I will ask this question every week: Serrano ham is okay now from Spain?

    Dr. WOTEKI. Yes.

    Mr. SERRANO. Okay. I know it was not for years. Can you tell me quickly what has changed in the ham or what changed in us?

    Mr. BILLY. There are certain plants that another agency in USDA, the Animal and Plant Health Inspection Service, has approved to ship this type of ham to the United States. The concern is the African swine disease. Based on control measures and inspections on site there, there now are a very few plants that are permitted to ship this type of product.

    If Spain and any other country that produces that type of product can provide APHIS the assurances they need to ensure that that disease is not going to be introduced in the United States through their products, then more can be approved as well.

    Mr. SERRANO. So it is not an open market to this ham?

    Mr. BILLY. Not at all.

    Mr. SERRANO. It is just some places.

    Mr. BILLY. It is a very legitimate animal health concern that has to be very carefully controlled.
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    Mr. SERRANO. At $24 a pound, it should be. Thank you.

    Mr. SKEEN. That brings us to the close. I want to thank you, very much——

    Dr. WOTEKI. Thank you, Mr. Chairman.

    Mr. BILLY. Thanks.

    Mr. SKEEN. [continuing]. For your forthcoming and honest and open answers in the problems that you deal with and the way that you deal with them and the way that you make them produce.

    I want to thank all of you. Ms. Wilcox and Mr. West, we are going to give you medals for being so patient. Thank all of you. We are adjourned.

    [CLERK'S NOTE:—The following questions were submitted to be answered for the record.]

Food Safety and Inspection Service


    Mr. SKEEN. How many inspector vacancies have there been per year from 1992 through the current year?
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    RESPONDENT. Prior to 1997, FSIS requested significant increases in the budget to fill in-plant inspection vacancies based on a work measurement formula that reflected 30-year-old inspection methods and industry practices. In the 1997 budget, FSIS determined that it could accomplish its food safety mission and make the gradual shift to a new inspection system without additional permanent, full-time, in-plant inspection staff. The 1997 budget requested and the Congress provided an increase of $3.2 million for 100 other than permanent full-time staff years to facilitate the Agency's transition to HACCP-based inspection. No additional inspection staffing was requested in the 1998 budget, and the Congress provided the funding requested for pay cost increases which enables FSIS to maintain constant in-plant inspection staffing levels. Under this policy, we have operated with no vacancies in fiscal years 1997 and 1998.

    As part of the 1997 strategy, the Agency committed to employee groups that it would not let our inspection workforce go below 7,502 permanent full-time positions. For fiscal year 1998, we have increased this commitment to 7,530 positions due to Federal assumption of the Florida State inspection program with reprogramming of funds from Grants-to-States to Federal Food Inspection. The Agency's commitment to employees is part of the basis for our ongoing efforts to implement HACCP and modify online inspection procedures. Another part is our one-for-one policy; that is, when any inspector leaves, we hire another as quickly as possible to satisfy the most critical need, so as to maintain a constant level of inspection personnel.

    Following are the numbers of inspector vacancies at the end of fiscal year 1992 through 1996. These numbers are based on the work measurement formula that FSIS began using 30 years ago.
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    [The information follows:]

Table 1

    Mr. SKEEN. Please update the table on page 769 of last year's hearing record showing levels of permanent full-time employees and other employees from fiscal year 1990.

    [The information follows:]

    "The Official Committee record contains additional material here."


    Mr. SKEEN. Please identify any pilot programs FSIS has in operation and include those pilot programs to be established in fiscal year 1998 and those proposed for fiscal year 1999. Please also provide beginning and ending dates for the projects and estimated costs of each.

    [The information follows:]

    "The Official Committee record contains additional material here."


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    Mr. SKEEN. What closings or consolidations of field offices will be completed by the end of fiscal year 1998?

    RESPONDENT. All closings or consolidations of field offices in the reorganization of FSIS will be completed by the end of fiscal year 1998. Much of the field consolidation was accomplished in fiscal year 1997 with the opening of the District Offices, and the establishment of a Technical Services Center and Financial Processing Center. In fiscal year 1998 FSIS continues to consolidate activities within the new field office structure and is closing the Program Review Office located in Lawrence, Kansas.

    Mr. SKEEN. What do you plan for fiscal year 1999?

    RESPONDENT. No additional closings are planned for fiscal year 1999.

    Mr. SKEEN. What personnel transfers will be required as a result of any closings or consolidations?

    RESPONDENT. A small number of employees are being transferred in fiscal year 1998 as a result of the reorganization. These employees are working in the district offices until such time as they are transferred.

    Mr. SKEEN. Please provide a chart showing the number of field offices FSIS will have by the end of fiscal year 1998 with a comparison of fiscal year 1997 and the proposed number for fiscal year 1999.
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    [The information follows:]

Table 2


    Mr. SKEEN. What joint or coordinated research is FSIS conducting with the Agricultural Research Service (ARS) and other USDA agencies?

    RESPONDENT. FSIS coordinates 44 research projects with ARS and does not conduct research itself. These projects are broken out into four categories: control of foodborne pathogens in live animals (16 projects); pathogen control during slaughter and processing (9 projects); post slaughter pathogen modeling and control (7 projects); and residue detection and chemical analysis (12 projects). Most of these projects answer basic research questions, but some are applied research. These four categories follow the research project tracking system that FSIS uses to monitor this work to ensure that it meets the Agency's food safety research needs.

    FSIS acts as a research partner with the Cooperative State Research, Education, and Extension Service (CSREES), which administers research grant programs that focus on food safety research needs. FSIS works closely with CSREES and conveys its research needs both through the report, ''FSIS Food Safety Research Agenda: Directions for the Future'' and by involving them in the annual research meeting held in conjunction with ARS. CSREES uses the report to establish the focus of the research topics that they fund.

    Provided for the record are copies of the ''FSIS Food Safety Research Agenda—Directions for the Future'', and the ''1997 Progress Report on Food Safety Research Conducted by ARS.''
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    [The information follows:]

    [CLERK'S NOTE.—The documents are too lengthy to be printed and will be retained in committee files.]


    Mr. SKEEN. Is FSIS considering a change in its policy on mandatory inspection of ratite meats?

    RESPONDENT. In 1994, the Department received a petition dated December 31, 1993, requesting mandatory inspection of ostriches. In September 1995, FSIS received a second petition requesting mandatory inspection of ostriches. In March 1995, FSIS received a petition requesting FSIS to promulgate regulations governing the voluntary inspection of emu and emu products. FSIS denied all three petitions. FSIS does not plan on changing its policy on mandatory inspection of ratite meats based on amenability criteria.

    In 1997, the House Appropriations Committee directed USDA/FSIS to develop a cost benefit analysis of the impact of including ratite meats in the mandatory inspection program. The Agency's response is currently undergoing final clearance within the Department.


    Mr. SKEEN. Please provide a table showing the number of plants inspected in fiscal years 1996 and 1997 and the number estimated for fiscal years 1998 and 1999.
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    [The information follows:]

Table 3


    Mr. SKEEN. How does FSIS work with other agencies in USDA and with other U.S. government agencies on trade-related matters such as Sanitary and Phytosanitary regulations, new requirements under trade agreements, and trade disputes?

     RESPONDENT. The mission of FSIS is to ensure the safety of both domestic and foreign meat, poultry, and egg products. To fulfill this mission, the Agency provides technical support for FAS in negotiations with foreign countries, such as the European Union.

    With regard to sanitary and phytosanitary standard development in the Codex Alimentarius Commission, FSIS staff carries out two roles. One is the general coordination and management of U.S. participation in the Commission and the deliberations of its subordinate committees. The second is in substantive participation in the elaboration of issues in the Committees. The former involves work at both policy levels and technical levels in DHHS, Department of Commerce, and EPA, and within the Department, FAS, AMS, APHIS, GIPSA, and ARS. The latter involves participation as Chairpersons of Committees, US delegation heads to Committees, and delegation members. These latter roles are also carried out by employees from several agencies in the Department. Technical staff from several agencies and departments will frequently work together as members of delegations to Codex Committees.
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    Mr. SKEEN. FSIS is responsible for assessing the effectiveness of state meat and poultry inspection programs. What happens when a state program is found to be inadequate?

    RESPONDENT. FSIS regularly reviews each State's program. If a State program is found to be not ''equal to'' the Federal, USDA designates the State for full Federal inspection of all plants. Designation means Federal assumption of a State inspection program.

    Mr. SKEEN. Are any states currently operating substandard programs?

    RESPONDENT. Currently, there are no states operating substandard programs.

    Mr. SKEEN. What are Talmadge-Aiken plants?

    RESPONDENT. Talmadge-Aiken plants are federal slaughter, processing, and combination plants that are staffed with State employees who serve as Federal agents under Federal supervision.

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    Mr. SKEEN. How many computers have you delivered to date to field inspection staff under the Field Automation and Information Management Project (FAIM)?

    RESPONDENT. In fiscal year 1997 FAIM delivered 841 computers to field inspection personnel. Since the start of nationwide FAIM implementation, 2,116 computers have been deployed.

    Mr. SKEEN. What is the current schedule for completion of the FAIM project?

    RESPONDENT. Nationwide FAIM implementation is scheduled to be phased in over a five-year period. Implementation started in fiscal year 1996 and is on schedule to be completed at the end of fiscal year 2000. To date, FAIM has met all deadlines and schedules.

    Mr. SKEEN. Is the FAIM project coordinated with the Chief Information Officer?

    RESPONDENT. Yes, the FAIM project is coordinated with the Chief Information Officer (CIO) at both the Agency and Department levels. Each week, the FEIS Agency Chief Information Officer is updated by the FAIM Project Manager on all FAIM activities. The FAIM Project Manager also reports to the Agency IRM Steering Committee (IRMSC) which reviews and approves all major FAIM milestones, implementation plans, and development activities. The IRMSC is chaired by the Agency CIO.

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    From FAIM's inception, FSIS has coordinated efforts with the USDA Office of Information Resources Management (OIRM) and its successor organization, Office of the Chief Information Officer (OCIO). Following the granting of Technical Approvals by OIRM, FAIM has provided OCIO with annual status reports and quarterly briefings. In fiscal year 1997, FAIM submitted requests for waivers from the Department's Information Technology (IT) moratorium and received approvals from OCIO. OCIO continues to cite FAIM for its sound business case and endorsed FAIM's selection as one of the ''Top 20'' IT projects in the Industry Advisory Council report on Best IT Practices in the Federal Government.

    Mr. SKEEN. Is the FAIM project fully compliant with year 2000 requirements?

    RESPONDENT. FAIM is not a single application but an initiative covering multiple applications, hardware, training, etc. All FAIM software, applications are fully compliant with year 2000 requirements. All FAIM hardware and telecommunications equipment has been tested and is fully compliant with year 2000 requirements.


    Mr. SKEEN. Please update the table on condemned product provided on page 798 of last year's hearing record to include 1997.

Table 4

    Mr. SKEEN. How much of these products were imported?

    RESPONDENT. Since the early 1990's, less than one percent of product presented for entry into the U.S. has been refused entry and rejected as unfit. Imported product that has passed U.S. re-inspection at the port of entry is subsequently treated as domestic product and not accounted for separately if it is later found to be unfit during further processing.
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    Mr. SKEEN. What is the average length of time the 200 federally inspected plants were under some level of Progressive Enforcement Action in fiscal year 1997?

    RESPONDENT. The average length of time an establishment operated under Progressive Enforcement Action in fiscal year 1997 was approximately 18 months.


    Mr. SKEEN. Was early retirement offered to FSIS employees last year and, if so, what was the result?

    RESPONDENT. In fiscal year 1997 early retirement was offered to all eligible employees in FSIS, except in-plant veterinary medical officers and in-plant inspectors. A total of 28 employees accepted the early retirement offer. During fiscal year 1997, a total of 56 buyouts were taken. They were offered because of field consolidation as part of the Agency reorganization. Of the 28 employees who accepted the early retirement offer, 18 took buyouts.


    Mr. SKEEN. Please provide the number of people assigned to the Office of the Under Secretary for Food Safety including those detailed from other agencies or from other offices in FSIS? Please also provide the job title for each of those persons.
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    RESPONDENT. The Office of the Under Secretary for Food Safety currently has three individuals assigned and one serving on detail from FSIS. The office includes the Under Secretary for Food Safety, one Deputy Under Secretary for Food Safety and two secretaries, one of whom is on detail.


    Mr. SKEEN. In red meat inspection, only the veterinarian can make the final disposition on a diseased carcass; whereas, in poultry inspection, the inspector can make final disposition under veterinary supervision. Why is there a difference?

    RESPONDENT. Uniform inspection standards and procedures are to be applied during the postmortem inspection of each meat and poultry carcass. The regulations covering meat and poultry inspection provide that in red meat inspection, only the veterinarian can make final disposition on a diseased carcass, whereas in poultry disposition, the inspector can make a final disposition under direct veterinary supervision. Although the food inspector can condemn obviously diseased carcasses in poultry, the veterinarian is responsible for the uniform dispositions made by the food inspector. This is accomplished by setting standards and observing how inspectors handle normal as well as abnormal conditions. In both meat and poultry the inspector designates questionable carcasses for veterinary review and final disposition. A major factor in this difference has to do with the difference in the financial consequences of condemning a chicken vs. an animal carcass.

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    Mr. SKEEN. Please update the table that appears on page 805 of last year's hearing record showing the total number of labs that were accredited, the total number of accreditations, and the cost to include fiscal year 1997 actuals and estimates for fiscal year 1998.

    [The information follows:]

Table 5

    Mr. SKEEN. How much was collected in accreditation fees in 1997, and so far in fiscal year 1998?

    RESPONDENT. In fiscal year 1997 the agency collected $447,500 in accreditation fees. Through February of 1998, we have so far collected $385,00 in fees.


    Mr. SKEEN. Were there any transfers made to or from your agency in fiscal year 1997? If so, please list where the transfer came from along with a brief explanation as to why they were made.

    RESPONDENT. As provided by the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1997, Public Law 104–180, the Office of the Assistant Secretary for Congressional Relations transferred $309,000 to FSIS to maintain personnel at the Agency level.

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    Mr. SKEEN. Have there been any transfers so far this fiscal year?

    RESPONDENT. FSIS has received two transfers so far this year. As provided by the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1998, Public Law 105–86, FSIS received a transfer of $309,000 from the Office of the Assistant Secretary for Congressional Regulations to maintain personnel at the Agency level. Also, under the authority provided in the Department of Agriculture Reorganization Act of 1994, 7 U.S.C. 6912, FSIS has received a transfer of $155,256 and two staff years from Departmental Administration to maintain EEO counselors at the Agency level.


    Mr. SKEEN. An establishment is exempt from Federal and/or state inspection if the product is for the sole use by the owner of the livestock, the owner's family, or nonpaying guests. How many exempt plants are there?

    RESPONDENT. There are about 1,800 State plants and about 2,800 Federal plants involved in conducting custom exempt operations.

    Mr. SKEEN. Can a plant be exempt for a part of its production on a daily or weekly basis?

    RESPONDENT. Yes, a plant can be exempt for a part of its production on a daily or weekly basis. Such operations must meet clean up, product identification, and separation requirements.
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    Mr. SKEEN. Please provide the Committee with the current status of the Performance Based Inspection System (PBIS).

    RESPONDENT. The Performance Based Inspection System (PBIS) is a computer-based system for organizing regulatory inspection requirements, scheduling inspection activities, and recording and reporting inspection findings. PBIS provides FSIS with a centralized, easily accessible database on plant performance by scheduling and tracking inspection findings in all plants under Federal inspection. These records document plant performance forming a sound basis for uniform inspection decisions.

    Sanitation Standard Operating Procedures (SSOP's) were implemented in January of 1997. The changes required for this implementation, the revision and retirement of tasks in the Inspection System Guide have been in place since January 1997. The new tasks focus on process oversight by inspection personnel to assure that the regulatory requirements for SSOP's are met by inspected establishments.

    PBIS changes required for the first phase of HACCP, E. coli, and Salmonella for large plants have been completed and implemented. These changes include a revision of the Inspection System Guide (ISG) to a systematic process and performance standard approach for consistency with the PR/HACCP final rule. The inspection System Procedure (ISP) Guide contains the resulting consolidation of more than 400 ISG tasks into 49 ISP procedures relevant to the SSOP's, HACCP, E. coli, Salmonella, and all remaining regulatory inspection requirements. The revised version of PBIS for PR/HACCP continues to function to schedule inspection procedures and record inspection findings. The traditional version of PBIS will be used in establishments until they become subject to the provisions of the PR/HACCP final rule.
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    PBIS continues to function as originally intended in scheduling of processing inspection activities. FSIS is currently developing a strategic plan for standardizing and improving the flow of PBIS-generated inspection data from the field level to headquarters. Part of this strategic plan is the PBIS Centralization and Reporting Project, which will establish a central point for PBIS administrative operation schedule production and distribution, and feedback entry. The ability to access Management Reports will be provided at locations other than a central point. PBIS has provided the vehicle for implementation of agency responsibilities pertaining to the HACCP regulation to be phased in through the year 2000. Currently, about 300 traditional plants in PBIS have been changed to HACCP. PBIS has the capability to directly transmit HACCP data to computers in the Washington DC Headquarters office.

    Mr. SKEEN. Will PBIS be expanded to egg production?

    RESPONDENT. PBIS will be expanded to include egg products inspection when HACCP is implemented in egg processing establishments.


    Mr. SKEEN. How many countries are eligible to export to the U.S.?

    RESPONDENT. There are 42 countries eligible to export to the U.S., although only 34 of the 42 countries actually export.

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    Mr. SKEEN. Has the number of eligible countries increased over fiscal year 1996?

    RESPONDENT. No, the number of eligible countries is 42 for both fiscal years 1996 and 1997.

    Mr. SKEEN. Please provide a table showing the number of countries eligible to export to the U.S., the number that actually export products to the U.S., and the number of new countries that have applications pending to export to the U.S. for each of the fiscal years 1993 through estimates for 1999.

    [The information follows:]

    "The Official Committee record contains additional material here."

    Mr. SKEEN. How are exporting countries certified?

    RESPONDENT. Countries apply to FSIS for an initial determination of equivalence. Each country's inspection system must undergo a rigorous and lengthy review process to determine whether it is equivalent to the U.S. system of inspection. It begins with a review of the country's responses to five sets of questionnaires; the country's laws, regulations, and instructions; and additional documentation. After scientific experts within FSIS are satisfied with the results of the document review, a FSIS multi-disciplinary team conducts an on-site audit of the country's inspection system. If FSIS finds that the country's inspection system is equivalent, FSIS publishes a proposed rule in the Federal Register inviting public comment on the proposed listing of the country as a country eligible to export products to the United States. The final determination to list the country as equivalent and, therefore, eligible to export products to the United States must be published as a final rule in the Federal Register, along with FSIS's responses to the public comments.
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    Mr. SKEEN. How often are slaughter and processing plants in other countries reviewed by your Agency?

    RESPONDENT. FSIS conducts a periodic on-site audit of each of the countries that are eligible to export meat and poultry products to the United States, usually on an annual basis but more often as needed. As part of the audit, a random selection of certified establishments are selected to be audited. In addition, FSIS reinspects imported meat and poultry at the port of entry on a random sample basis.


    Mr. SKEEN. What is the cost to maintain the Library of Foreign Country Requirements?

    RESPONDENT. The cost to maintain the Library of Foreign Country Requirements is about $30,000 annually for staff and operating costs.

    Mr. SKEEN. How many requests for information did you receive from the export library system in fiscal year 1997?

    RESPONDENT. We received approximately 13,000 requests in fiscal year 1997. Most of these requests were from traders interested in exporting to foreign countries.

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    Mr. SKEEN. Will the Fast Antimicrobial Screen Test (FAST) be extended to pork inspection?

    RESPONDENT. There are no plans to extend FAST into swine slaughter plants at this time. A large scale validation study in swine would be required before FAST could replace the STOP tests.

    Mr. SKEEN. How widely is FAST being used?

    RESPONDENT. FAST is currently being used in approximately 80 percent of all cow and bob veal slaughter plants in the USA. All other slaughter species, including swine, use the STOP test.


    Mr. SKEEN. Please update the table that appears on page 815 of last year's hearing record showing the number of SOS, STOP, CAST, and FAST tests performed to include fiscal year 1997.

    [The information follows:]

Table 6

    Mr. SKEEN. What were the results of these procedures?

    RESPONDENT. In fiscal year 1997 there were 973 total violations detected, including 22 by SOS tests, 185 by STOP tests, 74 by CAST tests, and 692 by FAST tests.
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    Mr. SKEEN. In total, how many inspection hours were performed in fiscal year 1997 on a voluntary basis and how much was reimbursed to FSIS?

    RESPONDENT. In fiscal year 1997, 82,734 hours were spent on inspections not required by law. Fees paid for this inspection totaled $4,126,812.


    Mr. SKEEN. Please provide the Committee with an updated list of committees and working groups that have been established within the agency and briefly describe their activities.

    [The information follows:]


Safety and health steering committees

    The Occupational Safety and Health (OSH) Steering Committee monitors and assists the Agency with in-plant safety issues by providing an open channel of communications between labor, management, and safety/health professionals. The Steering Committee's principal functions include; monitoring and evaluating performance of existing OSH programs; reviewing and evaluating new OSH programs before implementation; and advising or making recommendations concerning existing and/or proposed FSIS OSH programs.
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Recall policy working group

    The recall working group is assessing the adequacy of FSIS recall procedures and policy and practices. The group is examining how FSIS does recalls, how the agency communicates recalls with consumers, the industry and other state and local agencies and what actions should be taken after product is removed from commerce.

Fermented sausage work group

    The Fermented Sausage Working Group was formed to develop the Agency's strategy on how to encourage establishments to either adopt a safe process or validate that their current processes for ready-to-eat products are safe. The working group is composed of members of each Agency program and members from the Office of the General Counsel

Advisory committee on microbiological criteria for foods (NACMCF)

    The advisory committee was formed in 1987 to provide a means whereby the Federal Agencies responsible for assuring the safety of the food supply can develop consistent regulatory policies that are uniform to the fullest extent possible. The committee is currently working on a variety of assignments related to food safety, including risk assessment, HACCP, microbial criteria for performance standards, and a variety of CODEX documents related to foods in international trade.
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Antibiotic residue analytic team

    The group was designed to resolve issues of new methods for antibiotic residue detection by Technical Services Laboratory personnel.


HACCP-based inspection models project

    A project team has been established to support each of three volunteer plants as technical advisors. The project will develop new inspection methods and protocols for testing them. Team members represent multiple program areas within FSIS.

Headquarters sampling management committee

    This committee plans regulatory microbiological and food chemistry sampling programs, formulates operating procedures and work practices, manages an ongoing scheduling system, provides guidance to the field as needed, reviews data and issues reports. Microbiological sampling is conducted on raw product, ready to eat products, and ground beef.

In-distribution working group

    This group is a sub-group of the HACCP Inspection Models project. The group is developing options and recommendations on: activities to be conducted by inspectors working in-distribution, how the activities will be scheduled, how in-distribution personnel and activities will be managed within the field organization, and the training needs of the in-distribution inspectors. The working group will develop models to be tested in areas near the HACCP Inspection Models test sites.
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Working group on small/very small plant demonstration project (SPDP)

    At publication of its Pathogen Reduction; Hazard Analysis and Critical Control Point (HACCP) Systems final rule, FSIS recognized that small and very small establishments might need technical assistance in meeting these regulatory requirements. FSIS also recognized that many small establishments lack the familiarity of HACCP that already exists in many large establishments. Therefore FSIS planned an array of technical assistance activities that will facilitate HACCP implementation in the small and very small establishments.

    The SPDP working group's major activities are: developing and distributing resource materials, conducting small plant HACCP workshops, purchasing and distributing HACCP ''new technologies'' and providing technical assistance to Institutional plant HACCP demonstrations. Institutional Sponsors assist in providing technical guidance to small and very small plants and include trade associations, Extension agents, and university professors.

Working group on experimental project for zero tolerance for HACCP livestock plants

    FSIS is preparing a Federal Register Notice announcing an experiment that may lead to new procedures for FSIS verification of the zero tolerance standard for visible fecal material on livestock carcasses. The Agency is seeking livestock plants operating under the Hazard Analysis and Critical Control Points (HACCP) system and employing antimicrobial interventions after the final carcass rail inspection point to participate in the experimentation.

    The experimentation will follow FSIS briefings for industry and consumer groups that were held on Friday, March 6, 1988. These briefings focused on the Agency's current thinking on making the zero tolerance verification point in livestock consistent with Pathogen Reduction/HACCP final rule requirements and concepts. FSIS believes that it is timely to permit experimentation with potential new procedures for verifying that the standard is being met.
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Humane slaughter working group

    Advises the Deputy Administrator of the Office of Policy, Program Development, and Evaluation concerning progress toward implementing a comprehensive strategy regrading humane handling and slaughter of livestock.

Interagency committee on animal production and food safety

    This committee involves fourteen federal agencies in four Cabinet departments. The purpose of the Committee is to assure coordination and collaboration of the member agencies activities to protect human and food animal health, including animal production practices on land and in water, that may impact food safety.

National residue program working group

    This group involves FDA, EPA, CDC and USDA agencies. The purpose is to make recommendations to revise the FSIS residue program to be based on public health risks and to function effectively in a HACCP environment.

Headquarters sampling management committee

    Plans and manages regulatory microbiological (including raw products for Salmonella) and food chemistry sampling programs. Responsibilities include: managing the ongoing sample scheduling system, coordinating sampling procedures and instructions for inspectors and receiving procedures at labs, analyzing data and lab results to provide information to OFO, OPHS, and other FSIS managers concerning the sampling process, planning and developing future sampling programs, and modifying current ones based on FSIS policy and planning.
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    Mr. SKEEN. Please update the table that appears on page 818 of last year's hearing record showing a cost breakout, by state, of the Grants to States program to include fiscal year 1997 actuals and fiscal year 1998 estimates.

    [The information follows:]

Table 7


    Mr. SKEEN. Please update the table that appears on page 819 of last year's hearing record showing the volume of meat and poultry inspected at slaughter to reflect the separate cost associated with each to include fiscal years 1997 and 1998.

    [The information follows:]

Table 8


    Mr. SKEEN. Please update the table that appears on page 822 of last year's hearing record showing the number of FSIS enforcement activities, to include fiscal year 1997.

    [The information follows:]
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Table 9


    Mr. SKEEN. Please update the table on page 821 of last year's hearing record showing the annual costs to operate the Donald L. Houston Training Center since it was first established

    [The information follows:]

Table 10

    Mr. SKEEN. How many FSIS employees are located at this training center?

    RESPONDENT. there are currently 34 permanent full time employees assigned to this training center.

    Mr. SKEEN. Do you plan to add or reduce staff at this center in fiscal years 1998 or 1999?

    RESPONDENT. We are planning to reduce the number of permanent full time employees to 31 by the end of fiscal year 1998.

    Mr. SKEEN. How many employees were trained at the Center during fiscal year 1997 and how many do you anticipate training during fiscal year 1998?

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    RESPONDENT. During fiscal year 1997, 2,300 FSIS employees were trained, and in fiscal year 1998, we expect to train up to 1,850 employees. This figure includes training provided for the implementation of the Field Automation and Information Management (FAIM) project as well as the Food Safety Education Program being conducted in cooperation with the Texas A&M University.

    Mr. SKEEN. Please provide a status report on FSIS' work with Texas A&M on developing new methods of training.

    RESPONDENT. The following listing shows the programs developed using new methods of training.

    a. The Food Safety Education Program for FSIS inspectors has been developed and is currently being delivered by Texas A&M University faculty. This Food Safety Science program prepares food inspectors for their regulatory roles in plants subject to the 1996 rule on ''Pathogen Reduction; Hazard Analysis and Critical Control Point Systems''.

    b. There are over 30 training modules that are in the process of being converted to a CD ROM format for the computer Based Training Program.

    c. The development of an Internet home page has been accomplished and will be developed as an information resource for both FSIS personnel and the public in general.

    d. Training continues to be delivered via Satellite Downlink for State and Local Sanitarians.
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    e. The district offices have been wired to receive training originating from the training center via Picture-Tel teleconferencing equipment.


    Mr. SKEEN. Please update the table that appears on page 823 of last year's hearing record showing the number of poultry carcasses inspected.

    [The information follows:]

Table 11


    Mr. SKEEN. Please update the two tables that were provided last year to include fiscal years' 1997 and 1998 data. One showed the staff years and cost of the labeling program and the other showed the number of labels processed and approved. Be sure to include the footnote on the staff year table to reflect the total staff year level devoted to actually reviewing labels.

    [The information follows:]

Table 12

Table 13


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Mr. SKEEN. Are any FSIS funds being devoted to the Organic Foods Production Act in fiscal year 1998?


RESPONDENT. No FSIS funds are being devoted to the Organic Foods Production Act in fiscal year 1998.



Mr. SKEEN. What responsibilities does FSIS have on the Codex Alimentarius Commission?


RESPONDENT. FSIS manages the program of planning, policy development, support and coordination for U.S. involvement and participation in the Codex. FSIS serves as a focal point for dissemination of information to Government officials and members of the public on Codex Alimentarius activities; performs outreach activities to educate the public on Codex activities; seeks mechanisms to enhance public participation in the process; assesses the effectiveness of U.S. participation in Codex; develops strategies to accomplish U.S. goals in the Commission; and supports the U.S. Manager's efforts at achieving harmonization of U.S. food standards development among federal agencies. FSIS also provides assistance to the U.S. Manager for Codex Alimentarius and U.S. delegates to the Codex Alimentarius Commission in carrying out activities handled by various committees. Additionally, FSIS plans and coordinates US Government hosted meetings of subsidiary bodies of the Commission.
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Mr. SKEEN. Are there any new responsibilities in light of the GATT/WTO agreement?


RESPONDENT. The GATT Uruguay Round Agreements Act designated USDA as the lead agency for U.S. participation in the sanitary and phytosanitary standards-setting activities of the Commission. FSIS coordinates USDA's participation in these activities. The Act also established a requirement for an annual public notice of the Codex standard-setting activities. FSIS published such notices on May 23, 1995, June 4, 1996, and May 23, 1997. A 1998 notice, covering the period June 1, 1997, to May 31, 1999, is anticipated.



Mr. SKEEN. Update the table that appears on pages 569 and 570 of last year's hearing record showing the number of livestock inspected at slaughter, by species, to include fiscal year 1997.


[The information follows:]
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Table 14


    Mr. SKEEN. Provide a list of countries that received U.S. meat and poultry exports, how much they received, and the dollar value for fiscal year 1997.

    RESPONDENT. The quantity is provided in metric tons.

    [The information follows:]

    "The Official Committee record contains additional material here."


    Mr. SKEEN. Provide a table showing a complete breakout, including all proposed increases and decreases, of your budget request to the Secretary, the Secretary's request to OMB, and the OMB allowance.

    [The information follows:]

    "The Official Committee record contains additional material here."


    Mr. SKEEN. Please describe FSIS responsibilities for egg products inspection and Salmonella enteritidis.
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    RESPONDENT. Under the Egg Products Inspection Act, Public law 91–597, FSIS is responsible for administering a continuous inspection program for the processing of liquid, frozen, and dried egg products.

    The act requires all egg products to be pasteurized to destroy Salmonella (all species including enteritidis) prior to distribution in commerce. Salmonella enteritidis is a pathogen of particular concern, which has increasingly been associated with egg consumption. FSIS and other experts are developing a Salmonella enteritidis risk assessment to help guide agency and other efforts in addressing this serious public health problem.


    Mr. SKEEN. Did you act on the recommendation from the Office of the Inspector General report on exporting procedures that has been open since 1987?

    Dr. WOTEKI. Yes, the Agency reviewed its action with the Office of the Inspector General (OIG) to reconcile the audit recommendation and the Agency's response. The resolution of this recommendation reflects the Agency's current organizational structure and implementation of the Pathogen Reduction; Hazard Analysis and Critical Control Point Systems; Final Rule. In addition, the Office of the Chief Financial Officer (OCFO) accepted the Agency's final action on the recommendation and closed the audit in its entirety, advising that no further reporting to the OCFO is necessary on this audit. Following is OIG's recommendation and the Agency response.
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    [The information follows:]

Exporting Procedures Audit #24097–1 AT, Recommendation #1 (the management decision was reached on February 5, 1987)


    Issue Federal regulations governing the Acceptable Quality Level (AQL) program for all classes of poultry that are expected to remain subject to the provisions of Meat and Poultry Inspection (MPI) (Directive 918.1.


    The food safety elements contained in the MPI Directive 918.1 ''Poultry Carcass Inspection Program'' dated December 10, 1973, were replaced by the January 26, 1998, implementation of the Pathogen Reduction; Hazard Analysis and Critical Control Point Systems and the February 4, 1997, final rule, ''Poultry Inspection's Revision of Finished Product Standards with Respect to Fecal Contamination'' (62 F.R. 5139, 9 CFR 381.65, and 381.76). In light of the final rule, the provisions in the food safety guidance provided under MPI Directive 918.1 have been codified. This action addresses the recommendation for FSIS to issue Federal regulations related to the food safety elements in the AQL program through MPI Directive 918.1


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    Mr. SKEEN. How many calls did the Meat and Poultry Hotline receive in fiscal year 1997?

    RESPONDENT. USDA's Meat and Poultry Hotline received 138,120 calls in fiscal year 1997.

    Mr. SKEEN. How does this compare with the two previous fiscal years?

    RESPONDENT. Some year-to-year fluctuation in call volume is normal. In 1997, FSIS expanded its call-processing capacity during the two weeks immediately following the Hudson Foods ground beef recall, which accommodated a significant increase in the number of calls received.

Table 15


    Mr. SKEEN. What is the status of the Export Certification Information System?

    RESPONDENT. The Export Certification Information System (ECIS) was referenced in a 1993 FSIS proposed regulation aimed at automating the export certification process. It was determined by FSIS that the specific system proposed was not adequate to accommodate industry practices and needs for the growing export market. However, FSIS remains committed to improving export certification, and the Agency is currently studying the process and will make recommendations for improvements.
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    Mr. SKEEN. What is the status of the ergonomically designed poultry inspection station that is being developed to help reduce the potential for cumulative trauma disorders?

    RESPONDENT. FSIS contracted for fabrication of a prototype ergonomically designed leaning/standing stool. A test plant was identified, but subsequently declined to allow test of the stool. No further action has been taken on the stool at this time.


    Mr. SKEEN. Please provide a table showing a breakout of your staff years by inspectors and non-inspectors for fiscal years 1990 through 1998.

    [The information follows:]

Table 16


    Mr. SKEEN. What type of on-farm investigations does the Food and Drug Administration (FDA) do?

    RESPONDENT. To assure human food safety from violative residues in animal products, FDA Center for Veterinary Medicine sets safe concentrations and tolerances for the approved drugs that may appear in animal tissue at the time of slaughter and investigates violations of residues above safe tolerances. FDA also ensures that animal feed is safe and wholesome and is free of violative drug, pesticide, and/or industrial chemical residues. FSIS reports violations found at slaughter to the FDA, who conducts field investigations with FDA field staff or with State agencies contracted to perform appropriate producer education and traceback activities for the FDA.
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    Mr. SKEEN. Does FSIS conduct on-farm investigations?

    RESPONDENT. FSIS does not conduct on-farm investigations. FSIS has no regulatory authority for pre-slaughter food safety.


    Mr. SKEEN. Please identify field hearings to explain the Pathogen Reduction and HACCP programs that you plan for fiscal year 1998.

    RESPONDENT. Thus far, FSIS has conducted four HACCP implementation field hearings in fiscal year 1998 and also plans to conduct additional meetings.

    [The information follows:]

A. HACCP implementation field hearings

    1. Planning meeting, Washington, DC—December 12, 1997.

    2. Des Moines, Iowa—January 14, 1998.

    3. Denver, Colorado—January 16, 1998.

    4. Memphis, Tennessee—January 21, 1998.
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B. Additional meetings on HACCP implementation

    1. Outcomes of Ground Beef Working Group—April 22, 1998—Arlington, Virginia.

    2. New Technologies—date and location to be determined.

    3. Small plant communications planning meeting—May 1998 (location to be determined).

    4. Series of meetings throughout the United States for small plant owners (Dates and locations to be determined).


    Mr. SKEEN. Please describe the operation of the Animal Production Food Safety program.

    RESPONDENT. As part of FSIS's farm-to-table strategy, the Animal Production Food Safety Staff works with constituent groups to encourage and coordinate voluntary efforts to address public health issues associated with food animal production. In this ongoing program, FSIS promotes adoption of voluntarily-implemented food safety initiatives and quality assurance certification programs. The Staff helps identify and supports adoption of animal production practices having the potential to reduce chemical residues, antibiotic resistance and human pathogens in or on animals or eggs presented for slaughter or processing. In carrying out this activity, FSIS builds partnerships among animal health and public health experts at State, regional, district and national levels to increase the understanding and adoption of HACCP-compatible animal production food safety practices. The staff works with industry, academia, the USDA Extension Service, and other State and federal governmental agencies to proactively address the challenges small producers and ranchers are facing in food safety. The Animal Production Food Safety staff also supports the USDA farm animal well-being efforts and coordinates Agency efforts to improve voluntary industry and regulatory oversight efforts in the humane slaughter of livestock.
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    Mr. SKEEN. How many plants in the United States have gone ahead with a HACCP system?

    RESPONDENT. Two hundred ninety-nine plants met the regulatory definition for a ''large'' establishment contained in the Pathogen Reduction and HACCP rule and implemented the use of the HACCP system on January 26, 1998.


    Mr. SKEEN. What affects will the HACCP rules have on imported products?

    RESPONDENT. Meet and poulty imported to the United States must be produced under an inspection system equivalent to the U.S. system. Following promulgation of the final Pathogen Reduction; HACCP Regulation, exporting countries were notified by FSIS that they would have to comply with the regulation or implement equivalent requirements. Foreign plants are required to adhere to the same deadlines as domestic plants. FSIS verifies that foreign countries meet U.S. requirements through review of relevant documents and on-site audits.


    Mr. SKEEN. Please identify the sentinel sites for the food safety initiative.
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    [The information follows:]

Sentinel sites for 1998 are:

    California—Alameda, San Francisco metro area.

    Connecticut—all countries.

    Georgia—counties of Cobb, Clayton, DeKalb, Douglas, Fulton, Gwinnett, Newton, Rockdale, Forsyth, Pickens, Cherokee, Bartow, Paulding, Carroll, Coweta, Fayette, Spaulding, Henry, Walton, Barrow.

    Maryland—counties of Anne Arundel, Baltimore, Carroll, Harford, Howard, and Baltimore City.

    Minnesota—all counties.

    New York—counties of Genessee, Livingston, Monroe, Ontario, Orleans, Wayne, Yates.

    Oregon—all counties.

    Mr. SKEEN. What are the criteria for selecting these sites?

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    RESPONDENT. The Centers for Disease Control and Prevention (CDC) manage the selection of sites. Site applications are ranked by a scoring system based on the State's existing infrastructure and ability to perform the programs. The criteria used by CDC in selecting the sentinel sites are part of their overall effort to establish Emerging Infections Program (EIP) projects with State and local health departments. These cooperative agreements will assist local, State, and national efforts to conduct surveillance and applied epidemiologic and laboratory research in emerging infectious diseases. CDC administers the EIP projects through an application and award process. Eligible applicants are the official public health agencies of States or their bona fide agents.

    Mr. SKEEN. How much do FSIS and CDC respectively budget for the sentinel sites program?

    RESPONDENT. For fiscal year 1998 FSIS is budgeting $1.5 million for the Sentinel Sites Survey, now known as FoodNet. For fiscal year 1998 CDC is budgeting $14.5 million for their entire food safety initiative, of which $4.2 million is for FoodNet, the active surveillance network for CDC.


    Mr. SKEEN. Please provide a table showing expenditures for the FAIM project from its first year with estimates for fiscal year 1998 and subsequent years.

    [The information follows:]

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Table 17


    Mr. SKEEN. Last year you testified that imported product that has passed inspection at the port of entry is treated as domestic product if it is later found to be unfit. Does this mean that we can not trace back a shipment of contaminated meat to its country of origin?

    RESPONDENT. The Federal meat and poultry inspection laws provide that imported product that has passed inspection and entered the United States is treated as domestic product. Thus, our ability to trace the origin of the product is the same as it would be for domestic product. All imported products are labeled with the country of origin. Consumer-size packages must maintain that labeling through final sale. In those cases where product is found unfit and the original labeling is intact, FSIS is able to trace it to the country of origin.


    Mr. SKEEN. What is the purpose of the increase in ''non-salary costs'' mentioned on page 13–10 of the budget justification?

    RESPONDENT. The increase in ''non-salary costs'' mentioned on page 13–10 of the budget justification will defray the estimated increase in non-salary operating costs resulting from economic increases in the cost of goods and services.

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    Mr. SKEEN. Why did Florida terminate its funding for the cooperative inspection program?

    Governor Lawton Chiles informed Secretary Glickman, in his letter of July 23, 1997, that the State budget adopted by the Florida legislature for the fiscal year 1997–98 reduced funding for the State meat and poultry inspection program sufficiently to necessitate termination of the State program in December 1997 when funds would be depleted. Details were not provided for the rationale used by the legislature to prioritize funds.

    Mr. SKEEN. Have other states done this and do you expect others to do so?

    RESPONDENT. FSIS has not received any notification that a State is planning to terminate its program. A list of designated states is provided for the record.

    [The information follows:]

Table 18


    Mr. SKEEN. Do you have any estimates of the percentage of foodborne illnesses originating in the home vs. retail, processing or production sites?

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    RESPONDENT. No, data is unavailable at this time to determine the origin of causes of foodborne illnesses.


    Mr. SKEEN. On page 13–11 of the budget justification, you describe the ''FIGHT BAC'' graphic as the foundation of the multi-year food safety initiative. You are requesting $500,000 for this program as part of a $100 million initiative. Is ''FIGHT BAC'' more important to the initiative than research, risk assessment, and surveillance?

    RESPONDENT. ''Fight BAC'' is the foundation of the multi-year Food Safety education initiative that is part of the overall President's Food Safety Initiative. The President's farm-to-table strategy for reducing foodborne illness recognizes that consumer education is necessary to ensure that preventive measures are taken at each step of the food handling continuum. The Fight BAC!TM education campaign is a critical component of the activities dedicated to preventing foodborne illness, such as research, risk assessment, and surveillance. From a public health viewpoint there is agreement in both the public and private sectors that investing in consumer education is an important step that should not be overlooked. No matter how safe the food supply, consumers will always be the last link in preventing foodborne illness.

    Mr. SKEEN. Are your food safety education initiatives coordinated with the Extension Service?

    RESPONDENT. FSIS and the Extension Service coordinate extensively on numerous food safety education projects. CSREES and FSIS were co-sponsors, along with ARS,FDA, CDC and the Department of Education of the recent Food Safety Education Conference. CSREES and FSIS are the USDA representatives to the partnership for Food Safety Education. Building on the national campaign launched by the public-private Partnership for Food Safety Education in 1997, FSIS, CRREES and FDA will target specific programs to change unsafe behaviors used by home food handlers, cooks and food handlers in retail settings and in congregate feeding sites.
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    Mr. SKEEN. Will meat and poultry inspectors also be trained in egg products inspection?

    RESPONDENT. Yes, meat and poultry inspectors will also be trained in egg products inspection when inspection coverage would be more efficiently provided by doing so.


    Mr. SKEEN. You are requesting increases in the Food Safety Initiative for education of consumers with parts of the requested increases going for import/export inspection and laboratory services. How do import export inspection and laboratory services relate to consumer education?

    RESPONDENT. The requested increase for food safety education will assist in changing unsafe behaviors used by home food handlers, cooks and food handlers in retail setting and congregate feeding sites, and provide for development of materials to assist in educating school children about how to prevent foodborne illness. This increase is distributed proportionately to the Federal food inspection, import/export inspection, and laboratory services activities because all three activities contribute to the production of safe food destined for consumers. The proposed expansion in food safety education will help to ensure the continued safety of both domestic and foreign meat, poultry, and egg products that have passed inspection by FSIS personnel and been subject to pathogen testing in FSIS laborators.
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    Mr. SKEEN. Please provide a table showing the distribution of the grants to states for fiscal years 1997, 1998 and 1999.

    [The information follows:]

Table 19


    Mr. SKEEN. What are Pulsed-Field Gel Electrophoresis patterns?

    RESPONDENT. Pulsed-Field Gel Electrophoresis (PFGE) patterns are also known as DNA fingerprints. The DNA is released from the pathogen, enzymatically fragmented, and then the fragments are separated by size along the exis of electrocal flow in an agarose gel matrix. After electrophoresis, the gel is trained with a dye specific for nucleic acid fragments and examined under a UV light source. The resulting visible, separated bands are referred to as the pattern. Some patterns may contain 30–40 distinct bands. DNA from different organisms, subjected to PFGE, produced their own specific patterns particular to that organism. PFGE patterns or DNA fingerprints are used to identify individual strains of various organisms and can determine if strains from different sources are related, especially in epidemiological investigations.


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    Mr. SKEEN. The Consumer Surveillance Information System (CSIS) logged 448 consumer complaints in fiscal year 1997. This seems to be a small number given the publicity food safety has received in the past three years. Did you expect this level of calls?

    RESPONDENT. Prior to 1996, the Meatborne Hazard Control Center (MBHCC) was responsible for managing complaints involving meat and poultry products under USDA jurisdiction. In fiscal year 1996, the Consumer Surveillance Information System (CSIS) replaced the MBHCC. In fiscal year 1995, the MBHCC processed approximately 213 cases, and in fiscal year 1996 the newly implemented CSIS logged 219 cases. Thus, the 448 cases processed by CSIS in fiscal year 1997 were over twice the number of cases in the previous two years. In the past, the number of complaints received by the MBHCC has varied from 290 to 420 cases per year. Therefore, the 448 consumer complaints reported to CSIS in fiscal year 1997, although higher than average, was not unexpected.

    Mr. SKEEN. What do FSIS and other USDA agencies do to publicize the availability of CSIS?

    RESPONDENT. The majority of complaints enter CSIS, which is managed by the FSIS Office of Public Health and Science, through the FSIS Compliance Program and the FSIS Meat and Poultry Hotline rather than direct consumer contact with CSIS. Therefore, complaints received by CSIS are generally screened by another agency division before entering the system. The FSIS Food Safety Education and Communication staff has published a document entitled ''What to Do If You Have a Problem with Food Products,'' which provides instructions on how to report a compliant to the Meat and Poultry Hotline. This document is available on the FSIS web site. Consumers may also lodge complaints by contacting the Compliance Program Office in their area. Compliance Officers are instructed to report cases involving illness or injury to CSIS.
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    Mr. SKEEN. What is the cost of operating CSIS?

    RESPONDENT. The cost of operating CSIS includes an estimated $71,000 for the salary and benefits of one full-time GS–12 staff person, long distance phone calls to contact consumers, and limited laboratory analysis of products.


    Mr. SKEEN. On page 13g–5 you state that only one to five percent of foodborne disease cases are believed to be reported to CDC. How was this estimate made and why is the figure so low?

    RESPONDENT. The estimates are based on CDC studies of disease outbreaks where the number of people exposed to a known source of contamination can be compared to the number of people who became ill, sought medical care, had stool cultures taken, had a pathogen isolated from the stool, and had that finding reported to the local health department and subsequently to CDC. FSIS does not have information on the specific studies or calculations used by CDC.


    Mr. SKEEN. On page 13g–9 you describe tracing dioxins to ball clay, an ingredient in soybean meal. Is ball clay widely used and are there now restrictions on its use?
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    RESPONDENT. Ball clay is widely used in the ceramic industry, and was used in feed as an anti-caking agent. It may no longer be used as a feed additive. In a letter dated October 7, 1997, the FDA asked producers or users of clay products in animal feeds to stop the practice of adding ball clay to animal feeds or to ingredients of animal feeds.


    Mr. SKEEN. On page 13g–10 you report that some ground beef turns a well-done brown color even when only cooked to a rare temperature, below 160 degrees. Why is this?

    RESPONDENT. Scientists at Kansas State University and the Agricultural Research Service (ARS) have observed that some ground beef may turn brown when cooked to less than 160 degrees. This observation has been shown to be related to the oxidation state of the myoglobin in the meat. That is, the oxidation state of myoglobin affects the temperature at which the ground meat turns brown. This means that the color of a cooked beef patty is not a sufficient indicator that pathogens such as E. Coli 0157:H7 have been killed. Additional studies by scientists at ARS have also found that freezing and thawing seems to have an affect on the temperature at which cooked ground beef turns brown. FSIS has conducted studies of cooking ground beef and has confirmed the ARS observation.

    The specific question asked, ''Why is this?'' can not be fully answered by FSIS at this time. The answer undoubtedly lies in a better understanding of the basic chemistry of myoglobin, a topic that requires a significant basic research effort.
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    The focus of the FSIS project, was to determine the prevalence of low temperature browning in ground beef purchased at retail and cooked at home. The reason for undertaking this study is to develop the scientific basis for advice that will be provided to consumers. Preliminary results indicate that some premature browning does occur. However, the premature browning appears to be more a problem of gradual changes and unevenness in color within a cooked patty than being a discrete effect (a sharp color change).


    Mr. SKEEN. Please list the countries for which you did equivalence determinations as described on page 31g–17 of the budget justification.

    RESPONDENT. The following is a list of countries for which FSIS did equivalence determinations as described on page 13g–17 of the budget justification.

    [The information follows:]

    Countries Which Received Equivalence Determinations: Argentina, Australia, Austria, Belgium, Brazil, Canada, Costa Rica, Croatia, Czech Republic, Denmark, Dominican Republic, Finland, France, Germany, Guatemala, Honduras, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Mexico, Netherlands, New Zealand, Nicaragua, Northern Ireland, Paraguay, Poland, Romania, Slovenia, Spain, Sweden, Switzerland, United Kingdom, and Uruguay.

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    Mr. SKEEN. When do you plan to carry out the BSE risk assessment mentioned on page 13g–21?

    RESPONDENT. The formal BSE risk analysis is estimated to be completed 24 months from the starting date of the cooperative agreement, which is estimated to be May, 1998. At this time an agreement has not been finalized.


    Mr. SKEEN. What is the General Standard on Food Additives?

    RESPONDENT. In 1989, the Codex Committee on Food Additives and Contaminants (CCFAC—a committee of the Codex Alimentarius Commission, FAO, WHO, UN)—began work on a General Standard for Food Additives (GSFA) to establish permitted levels of use of food additives in various food groups to ensure that the intake of additives does not exceed the acceptable daily intake. The GSFA is being developed by a Working Group of the CCFAC, which is chaired by Dr. Alan Rulis, FDA the United States delegates to the CCFAC, and is not completed.

    Based on input from the government of countries and from international non-government organizations participating on the CCFAC, the GSFA sets the conditions under which permitted food additives may be used in all foods whether or not they have previously been standardized by Codex. Only food additives which have been evaluated by the Joint GAO/WHO Expert Committee on Food Additives (JECFA) and found acceptable for use in foods are included in the GSFA.
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    Mr. SKEEN. Please explain the increase in Object Class 21, Travel, over the current fiscal year.

    RESPONDENT. The increase in Object Class 21, Travel, for fiscal year 1999 of $1.4 million is primarily associated with $0.6 million for defraying the estimated economic increase in the cost of inspection travel, which includes the use of GSA vehicles and mileage reimbursements for use of privately owned vehicles. In addition, the 1999 request includes $0.4 million for travel to conduct 25 State program audits, and $0.3 million for an enhanced compliance presence to conduct increased inspection activity in distribution channels beyond the in-plant setting in order to ensure food safety from the farm to the table. The balance reflects a net increase of $0.1 for travel associated with HACCP implementation in Egg Products Inspection, and Federal operation of the Florida Inspection Program; and a reduction in non-implant field travel as a result of FAIM implementation.

    Mr. SKEEN. Please explain the increase in Object Class 25.2, Other Services, over the current fiscal year.

    RESPONDENT. The increase in Object Class 25.2, Other Services, for fiscal year 1999 of $3.8 million is primarily associated with $3 million of increased obligations for the President's Food Safety initiative for contracts and cooperative agreements associated with risk assessment and producer education and $0.5 million for food safety education of consumers and those who prepare food. In addition, $0.3 million is for defraying economic increases in the costs of contracted services.
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    Mr. SKEEN. Please explain the increase in Object Class 31, Equipment, over the current fiscal year.

    RESPONDENT. The increase in Object Class 31, Equipment, for fiscal year 1999 of $2 million is primarily associated with $1.4 million of increased obligations for upgrading technology used by inspection personnel in the fully implemented HACCP-based inspection program. Examples of this technology include stethoscopes for veterinary medical officers to make a more through determination of the health status of incoming animals for slaughter and improved thermometers to perform verification tasks required by HACCP. In addition, $.03 million will support FSIS performing 25 State program audits. The balance of the increase is for defraying economic increases in the cost of goods and services.

    Mr. SKEEN. Please explain the increase in Object Class 41, Grants, Subsidies and Contributions, over the current fiscal year.

    RESPONDENT. The increase in Object Class 41 of $8.6 million consists of the total increase in two budget activities: the increase of $7.8 million for the President's Food Safety Initiative in special assistance for State programs, and $0.8 million for the increase in Grants-to-States. The request for special assistance for State programs reflects the proposed increase in the Federal share of State costs, from 50 percent to 75 percent, for assisting the State programs with HACCP implementation through infrastructure support in the areas of automation, laboratory pathogen testing, and inspector training. The requested increase in Grants-to-States is primary for the increased cost associated with pay for State inspectors, and is offset by decreasing associated with termination of the Florida State inspection program and projected savings from the implementation of FAIM in the State programs.
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    Mr. SKEEN. Madame Under Secretary, in talking about user fee legislation your testimony says ''in the near future.'' That is what Secretary Glickman told us one month ago. That is what OMB told us one year ago. When is that legislation coming up?

    RESPONDENT. The proposed user fee legislation is presently in clearance at the Office of Management and Budget (OMB) and will be submitted to Congress very soon.

    Mr. SKEEN. How did you arrive at the calculation of $515 million in user fees for the federal food inspection function?

    RESPONDENT. The user fee proposal is intended to recover the full cost of the Federal inspection program, which includes 100 percent of the cost estimates for the activities of Federal food inspection, import/export inspection, laboratory services, and field automation and information management. The fiscal year 1999 program level estimate for Federal food inspection is $515,660,000.

    Mr. SKEEN. Last year your user fee proposal was to cover food inspection costs and import export inspection. This year you have added laboratory services and the computer program known as FAIM. Why have you proposed to cover the additional activities with user fees?

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    RESPONDENT. The user fee proposal is intended to recover the full cost of the Federal inspection program. Laboratory services and FAIM are part of the Federal inspection program and provide essential support for inspection activities.

    Mr. SKEEN. Why do you not propose to pay for all FSIS costs with user fees?

    RESPONDENT. Appropriated funding is requested for the grants to States and special assistance to State programs activities in order to maintain the continuity of funding in the State inspection programs and ensure successful implementation of HACCP requirements. Special assistance to State programs is a critical element of the President's Food Safety Initiative to strengthen the Federal-State food safety partnership.

    Mr. SKEEN. Last year your user fee proposal budgeted $386.1 million for federal food inspection and $3.9 million for import-export inspection. This year your budget for those activities is $515.6 million and $12.2 million respectively, a 33 percent and a 200 percent increase. Please explain these large increases.

    RESPONDENT. The 1998 user fee proposal was intended to recover the direct, on-site cost of inspection. whereas the 1999 proposal is intended to recover the full cost of the Federal inspection program. While the 1998 proposal included only direct costs for inspection, the 1999 proposal includes both direct and indirect costs for all activities in the Federal inspection program. In addition, the 1998 proposal distributed one percent of the proposed fees to import-export inspection, which represented less than 30 percent of the total estimate for import-export inspection, and 99 percent of the proposed fees to Federal food inspection, which represented 78 percent of Federal food inspection. Therefore, on an activity basis, the percentage increase in the 1999 user fee proposal is much higher for import-export inspection than for Federal food inspection.
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    Mr. SKEEN. How would user fees be charged to plants/ by number of inspectors, volume of production, or some other means?

    RESPONDENT. Upon enactment of user fee legislation we will begin a rulemaking process, including public meetings, to address how fees will be charged. To expedite the implementation of user fees, the Department has evaluated several options for charging user fees and recommends that user fees be charged on the basis of volume of production. Under this recommendation, an average inspection cost per pound of production would be assessed in each of four industry segments—Egg Products Inspection, Imported Products Inspection, Meat and Poultry Processing Inspection, and Meat and Poultry Slaughter Inspection. Within each segment, the average cost per pound would be based on estimated fiscal year 1999 inspection costs and actual production for fiscal year 1997.

    Mr. SKEEN. From press reports and from our meetings with interested parties it appears that the authorizing committees, the industry, and consumer groups oppose user fees. Can you identify any groups who support the idea other than OMB?

    RESPONDENT. If the user fee proposal is enacted, the primary beneficiary will be the American public. User fees will provide the required funds to maintain a strong public health protection for meat, poultry and egg products.

    Mr. SKEEN. Let's suppose that user fee legislation passes. How long will it take the Department to product final regulations on user fees?

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    RESPONDENT. We will do what is necessary to produce final regulations on a timely basis in order to implement new user fees at the start of fiscal year 1999.

    Mr. SKEEN. You are requesting an increase of $100 million for start-up costs associated with the user fee program and to maintain a reserve. Please explain the reason for the start-up costs and the reserve and break down the costs for each.

    RESPONDENT. Establishments will be billed on a monthly basis, with fees due by the end of the month following the billing period. Because no fees will be received in the first month of the fiscal year, start-up funding is requested to cover FSIS budget obligations that must be paid in the first month. In addition, a reserve is needed to maintain a stable Federal inspection program as the flow of user fee revenue may not match estimated costs. Of the total $100 million requests, estimated costs include $48 million for fiscal year start-up, and $52 million for program reserves.


    Mr. BONILLA. You have requested $500,000 for the President's Food Safety Initiative for food safety education of consumers and those who prepare food. Why is FSIS engaged in these activities and not the Research, Education and Economic mission at USDA?

    RESPONDENT. FSIS has a long-standing mission to conduct national food safety education programs about safe handling of meat and poultry products. Throughout the 25 or more years of conducting food safety education the agency has worked very closely with the CSREES.
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    Most of the CSREES resource allocation is provided through grant funding to local extension offices in individual sates or localities. Projects are developed on a smaller scale. FSIS conducts educational programs on a national level and provides local extension specialists with tools to expand the impact of the national programs at the grass-roots level. For example, FSIS as a partner in the Fight BAC!TM campaign, contributed to the production of brochures, camera-ready art and action kits which are supplied to extension specialists. FSIS is funding the brochure's distribution through the Consume Information Center (CIC). Extension specialists can direct their constituents to that resource.

    For 1999, FSIS is proposing to develop extensive food safety education programs that will be designed to be able to be incorporated into core curriculums by science, health, and home economics teachers. Once the primary programs are developed on the national level, CSREES can provide the tools and material to each State and university specialist for their own use with teachers in their systems.


    Mr. BONILLA. What progress has FSIS made to eliminate old inspection regulations that were not compatible with HACCP?

    RESPONDENT. In August 1997 FSIS published the proposed regulation on Sanitation Requirements for Official Meat and Poultry Establishments, which will finalized in the summer of 1998. Also, in January 1998 FSIS published the proposed regulation on Rules of Practice. Both of these regulations eliminated unnecessary differences between old regulations and current ones. These regulations are more compatible with the HACCP requirements and convert prescriptive requirements to performance standards.
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    We are also currently drafting several performance standard regulations which replaces current prescriptive and detailed regulations. These performance standards would be consistent with FSIS requirements for establishment-operated HACCP systems and with the agency's food safety regulatory strategy.


    Mr. BONILLA. Do you think the ''Just-in-Time'' training approach by FSIS provided adequate training in HACCP for inspectors?

    RESPONDENT. Yes., The HACCP Technical Training Program provides inspection personnel with the required information and background on HACCP and its principles; and knowledge, understanding, and techniques to apply the inspection procedures established to determine plant's compliance/noncompliance with Pathogen Reduction and HACCP requirements. The ''just-in-time'' approach allows the agency to: (1) link the training to the four-phase implementation schedule contained in the Pathogen Reduction and HACCP rule spanning a period of 6 to 42 months; (2) make the best use of scarce human resources; (3) minimize the disruption of program services; and (4) have employees immediately apply their newfound knowledge and skills, thus eliminating the need to establish and maintain costly re-training or refresher programs.

    Mr. BONILLA. What follow up or additional training is available to inspectors that request it or have questions?

    RESPONDENT. We have established multiple means for employees to become more familiar and comfortable with the new Pathogen Reduction and HACCP inspection procedures as follows: (1) computer Based training programs; (2) issuance of a Reference Guide on the HACCP-based inspection; (3) around the clock availability of technical assistance from the Technical Service Center through the use of e-mail and a 800 number; (4) day-to-day guidance, support and coaching by supervisors; and (5) additional training when new needs are identified, especially for mid-level supervisors.
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    Mr. BONILLA. Did the final rule issued for HACCP specifically state that a HACCP plan is required to have a Critical Control Point in each of the nine slaughter/cut-up categories in meat and poultry plants?

    RESPONDENT. No, the PR/HACCP final rule requires that there be a CCP for each food safety hazard, that is identified by an establishment as reasonably likely to occur. There appeared to be some confusion on this matter, so FSIS published the following two January 30, 1998, Federal Register Notices for clarification purposes:

    1. Docket No. 97–082N; Contents of HACCP Plans; Critical Control Points.—This notice was issued to ensure hat the owners and operators of federally inspected establishments are award that the identification of appropriate critical control points is crucial.

    2. Docket No. 97–074N; Contents of HACCP Plans.—This notice was issued to ensure that the owners and operators of federally inspected establishments are aware that the hazard analysis and critical control point (HACCP) system regulations required that a HACCP plan be a self-contained document. In particular, the Agency does not view references to good manufacturing practices, or establishment actions in accordance with good manufacturing practices, as satisfying the requirements for the contents of an HACCP plan.

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    Ms. DELAURO. HACCP is a great victory for American consumers and their families. Congratulations on all of your efforts to ensure a smooth start to this program. While the benefits to consumers are obvious, could you highlight some of the benefits to industry of putting HACCP in place?

    RESPONDENT. There are several benefits to the regulated industry from implementation of HACCP. First, implementation of HACCP preventive process control systems, in conjunction with food safety performance standards like the Salmonella performance standard, provide the industry with maximum flexibility in choosing the means by which they meet regulatory requirements. One of the primary advantages of HACCP is that it provides industry the flexibility to innovate. Second, again it is the combination of HACCP and food safety performance standards, which we believe will enhance consumer confidence in the safety of the food supply. Finally, the broad international consensus that supports HACCP systems will result in enhanced trading opportunities for establishments that have implemented these systems.

    Ms. DELAURO. One of the unique characteristics of HACCP is that, rather than a one-size-fits-all approach, each plant has designed its own plan to meet USDA food safety standards. Would you give us a few examples of such customized plans? How have their differences benefited the individual plants while still guaranteeing the same level of food safety?

    RESPONDENT. HACCP does give inspected establishments the opportunity to have customized plans for meeting food safety regulatory requirements. This means that the plants that are required to meet the Salmonella performance standard have maximum flexibility in determining how they will do so. There are a variety of anti-microbial interventions that establishments might choose to make sure they meet this requirement. Some establishments that slaughter livestock may decide to use steam vacuum technology at various points in their slaughter and sanitary dressing procedures; others may decide to use steam pasteurization; still others may choose a very simple approach such as slowing production lines and taking more time and paying greater attention to each carcass as it moves through the process.
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    Ms. DELAURO. What food safety risks would we run if we did not implement HACCP?

    RESPONDENT. If we had not chosen to implement HACCP, it is likely that all food safety risks would be increased because of the inefficiencies and limitations of the approach we have used, which is to detect problems late in the process and try to remove product from distribution channels. HACCP is a means for industry to control and prevent problems. By controlling the production process from start to finish rather than detecting problems at the end of the line, food safety will be enhanced. Without HACCP, one would expect to see the same or increased levels of foodborne illnesses. It is the indivisible hazards—microbial contamination, especially—that are particularly well suited to a HACCP approach. Thus, the risks to the public of foodborne illness form microbial sources should be reduced.


    Ms. DELAURO. A lot of research has been completed on how to prevent foodborne illness. How do we take what we have learned and actually implement it so that American families can benefit from this knowledge?

    RESPONDENT. FSIS has begun to implement important improvements in how meat and poultry are handled in slaughter and processing plants with respect to pathogen reduction. The Agency is also incorporating preventative research findings into its total farm-to-table food safety strategy. Education programs have been initiated to teach food service workers and consumers on steps they can take to prevent foodborne illness. Through this farm-to-table approach, American families will benefit from research already conducted and from future research as findings are continuously incorporated into the processes.
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    Following is information on specific research projects that have a direct impact on consumers:

    The hamburger browning project conducted by ARS in cooperation with FSIS showed some hamburger meat could appear cooked before reaching a safe cooking temperature. FSIS is using these research results to develop educational material for consumers.

    Other ARS/FSIS projects include carcass cleaning procedures developed or in development at Clay Center, Nebraska for beef and pork; Wyndmoor, Pennsylvania for chickens, and Athens, Georgia for poultry. These procedures will give industry the ability to supply both consumers and restaurants with safer raw products.

    ARS has also been a pioneer in irradiation research of meat and poultry products. This research has shown both the factors optimizing destruction of pathogenic bacteria and factors that would increase consumer risk if not avoided. ARS irradiation research provided important information for the new regulations approving the use of irradiation in beef.

    For well over a decade, ARS/FSIS projects have focused on preventing pathogen colonization of food animals. Success has been noted at the Athens, GA and College Station, Texas facilities where methods on competitive exclusion in poultry have been patented and licensed to industry. These methods will enable producers to supply processors with live birds carrying lesser amounts of pathogens that are of public health concern.

    Other work performed by ARS has led to a better understanding of how to protect the food supply both in retail establishments and the home. Some of the findings from ARS investigations have been used by the FDA in its ''Food Code,'' which gives guidance to retail food establishments. Other ARS research was useful in developing the ''Fight BAC!'' campaign, which teaches school children about reducing foodborne illness.
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    A primary component of the sentinel sites project, known as FoodNet, is a survey of the general population to obtain information about what people eat, where they eat, how they handle and prepare food, and what their food preferences are. This information will allow FSIS to structure a consumer education campaign to target specific population groups with specific messages about food safety and proper handling and preparation techniques, thereby contributing to a reduction in the cases of foodborne illness.


    Ms. DELAURO. The President's Food Safety Initiative calls for better use of scientific analysis to improve our food safety system. Scientific testing is critical because many harmful pathogens cannot be detected using current inspection methods. How will FSIS train inspectors so that they have the skills to implement improved food safety standards?

    [The information follows:]

    The HACCP Technical Training Program being given to inspection personnel contains the following modules:

    1. Microbiological Testing—E. coli: Upon completion of this module, participants will be able to:

    Explain why E. coli testing is used.
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    State who will conduct E. coli testing.

    Explain the difference between process microbiological control guidelines and performance standards.

    Explain how industry defines greater than very low volume and very low volume plants.

    List dates for implementation of E. coli testing according to plan volume.

    List frequency based on plant volume.

    List the species that must be tested.

    Describe how industry may decide which of the three methods of sample collection to use for testing.

    Name the sites of sample collection for cattle, swine, and turkeys. Name the methods used to sample chickens and/or turkeys.

    List the plant record keeping requirements for its E. coli testing program.

    State the options that the industry may select for demonstrating statistically based process control.
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    Discuss E. coli sampling techniques recommended in the FSIS guidelines.

    2. Microbiological Testing—Salmonella: Upon completion of this module, participants will be able to:

    Explain why Salmonella testing is used.

    State who will conduct Salmonella testing.

    Explain the difference between process microbiological control guidelines and performance standards.

    List the species and types of product that must be tested.

    List the sampling sites for cattle, swine, and turkeys. Name the methods used to sample chickens.

    State what determines the compliance dates for Salmonella testing.

    3. E. coli—Basic and Other Compliance/Noncompliance: Upon completion of this module, participants will be able to:

    Identify the role of in-plant inspection personnel in E. coli testing verification.
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    State the regulatory requirements for E. coli plans and procedures.

    Verify that E. coli plans/procedures meet regulatory or performance standards requirements.

    Document findings and take enforcement actions when regulatory requirements are not met.

    Use noncompliance trend indicators.

    4. Other Compliance/Noncompliance, Salmonella Sampling: Upon completion of this module, participants will be able to:

    State who will conduct Salmonella testing.

    List the species and products that must be tested.

    State at what point in the process to sample each product.

    Describe the aseptic sampling method.

    List the sampling sites for beef, swine, and turkey carcasses.

    Describe the sampling method for chicken carcasses and ground product.
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    Describe the sample storage and shipping procedures.


    Ms. DELAURO. I understand that to get baseline data on the incidence of foodborne illness attributable to meat, poultry, and egg consumption, FSIS is working with the Centers for Disease Control and Prevention and the FDA to monitor seven foodborne illness sites through the FoodNet system. One of these sites is in Connecticut. Would you describe the monitoring program there? What results are you finding?

    RESPONDENT. Beginning in 1998, all counties in Connecticut are participating in FoodNet. Preliminary data for 1997 for Connecticut shows that the total actual number of laboratory-confirmed cases of foodborne illness was 1.041, of which there were 477 caused by Campylobacter, 34 from E. Coli 0157:H7, 7 from Listeria, 430 from Salmonella, 77 from Shigella, 4 from Vibrio, and 12 from Yersinia.


    Ms. DELAURO. I commend FSIS for its active role in consumer education, especially the FIGHT BAC! program. Educating children about the importance of food safety is essential. Would you give me some more details on this part of the program?

    RESPONDENT. FSIS recognizes the importance of reaching children with food safety information. Because understanding and practicing proper food safety techniques can significantly reduce foodborne illness, children are identified as a high priority group to receive food safety education under the President's Food Safety Initiative.
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    FSIS is involved in many activities to reach children with food safety information. Currently, FSIS is advising the Partnership for Food Safety Education on two school—based initiatives. The first is development of a ''Presenter's Guide'' for introducing the Fight BAC! TM message to children in kindergarten through third grade. The presenters, our partners at the local level—i.e., cooperative extension agents, health and consumer educators—have many opportunities to present information in a classroom setting. This program will include interactive activities to engage the children, as well as information to take home to parents. The goal is to have this program in place for September 1998.

    The Partnership is also in the developmental stages of creating a science-based food safety education program for children in grades three through six. This longer-term project will meet the educational needs of children as they are just beginning food preparation in the home.

    Both of these projects are based on findings of a report, Evaluating the Placement of Food Safety Education in American Schools, contracted for by FSIS and the Food and Drug Administration. Never before has an educational survey been conducted to identify at which subjects, grade levels, and school personnel food safety education should be directed. This report, currently under review, will serve as the foundation for developing relevant and effective education programs for years to come.

    Ms. DELAURO. How many children are you reaching?

    RESPONDENT. FSIS, in partnership with the American Culinary Federation, is reaching out to the youngest consumers—four and five year-olds—and their parents, with a coloring book on food safety. The coloring book, which teaches the basics of safe food handling and the very important message of hand washing, was distributed to 80,000 day care centers nationwide. Requests for an additional 100,000 copies are currently being filled. The Fight BAC! TM message is featured on the first page of the coloring book. In cooperation with FDA, the coloring book is now featured on the government's food safety Web site.
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    And teenagers are also getting the food safety message with a highly successful video program, The Danger Zone. Through a video tape and teacher's guide, the fundamentals of food safety are taught in an educational and entertaining manner.

    Ms. DELAURO. Are there plans to expand this program?

    RESPONDENT. Planning is underway for National Food Safety Education Month in September. FSIS is working with FDA, USDA's Food and Nutrition Service, and the American School FoodService Association to distribute a poster to all elementary school foodservice managers. The poster focuses on the ''keep it clean'' message on one side and the Fight BAC! TM message on the other. This poster will be sent to approximately 50,000 elementary schools in August.

    With various education materials now available or under development, FSIS has the potential to reach millions of school children with food safety information.


    Mr. WALSH. We have heard from several meat and poultry processors that FSIS is shutting down plants when legitimate factual disputes exist and before a plant can present its side of the story. Shouldn't plants have the opportunity to demonstrate it is in compliance, or have an opportunity to achieve compliance before plants are shut down?

    RESPONDENT. FSIS is fully committed to ensuring that plants are granted their full due process rights before taking enforcement actions. However, it is important to note that the courts have long recognized that prior notice and an opportunity to be heard are not mandatory when the Government must act immediately to protect the public health. Thus, under the Federal Meat Inspection Act and the Poultry Products Inspection Act, if an inspector cannot be sure that a product is not adulterated, he or she is empowered to withhold the mark of inspection, even though this means that the plant cannot ship the affected product and thus, in some circumstances, is effectively shut down, without providing prior notice to the plant. It should be noted, however, that most withholding actions have been preceded by numerous process deficiency reports or noncompliance reports that give the plant ample notice that it has a significant problem needing immediate attention.
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    Mr. WALSH. While I recognize that USDA is engaged in rulemaking concerning rules of practice, what are USDA's plans in the interim to address this serious issue of due process?

    RESPONDENT. If the plant does not take adequate corrective actions in response to the withholding action for adulterated products, the Agency frequently suspends inspection because of the continuing public health concern and provides an opportunity for appeal after the suspension is in effect. While the Agency believes that doing so is fully consistent with the due process rights of plants, it has recently discovered, as a result of its review of suspension and of industry appeals, that, in some instances plants should be provided additional notice and opportunity to be heard when available evidence shows there is no immediate concern about product adulteration. The Agency intends to modify its procedures to reflect this determination; to revise its guidelines on appeals to clarify what matters should be appealed, how to appeal, and the Agency's appeal procedures; and to review the comments on the Rules of Practice proposal and issue a final rule in a timely manner.


    Mr. WALSH. During the development of USDA's HACCP/pathogen reduction regulations, the department said it was going to eliminate old regulations that were not in compliance with HACCP. Can you tell me what progress has been made in addressing this issue? (Little progress has been made to date.)

    RESPONDENT. In August 1997 FSIS published a final rule to eliminate the requirement for prior approval of facilities and equipment. In August 1997 FSIS published the proposed regulation on Sanitation Requirements for Official Meat and Poultry Establishments, which will be finalized in the summer of 1998. Also, in January 1998 FSIS published the proposed regulation on Rules of Practice. Both of these regulations eliminated unnecessary differences between old regulations and current ones. These regulations are more compatible with the HACCP requirements and convert prescriptive requirements to performance standards.
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    Mr. WALSH. My concern is that we now have a new system that is enforcing the old rules. How does the department, and how quickly does the department, plan to rectify this situation?

    RESPONDENT. We are also currently drafting several performance standard regulations that replace current prescriptive and detailed regulations. These performance standards will be consistent with FSIS requirements for establishment-operated HACCP systems and with the agency's food safety regulatory strategy.


    Mr. WALSH. There have been reports from plants that inspectors are still operating in much the same manner as they were before HACCP was implemented in that they are shutting down plants based on questionable, subjective inspection decisions. Much of this is due to concern over inadequate training procedures for FSIS inspectors on the new HACCP system. What plans do you have to better train or educate inspectors in order to ensure that inspection decisions are based on scientifically sound principles?

    RESPONDENT. You can be assured that the agency is concerned about the way inspection personnel carry out their regulatory responsibilities. For the first time in the history of implementing technical program changes, the Agency included a module on Business Relations in the HACCP Technical Training Program. It focuses on the concepts and practices that inspection personnel need to know to establish and maintain an effective business relationship with plant owners, operators and employees. It is centered on the following five relationship principles:
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Principle 1—Maintain, open, honest, and straightforward communications:

    Meaning and intent is conveyed by more than words alone. Tone of voice, expression, listening ability and apparent receptiveness to the responses of others all has an impact on those you wish to reach. Policy that is published in regulations and directives must be known, understood and consistently applied to make communications effective. Communications must also be consistent with long-range interests and goals.

Principle 2—Have mutual respect:

    Give respect, get respect. As Civil Service employees, our behavior must not be abusive or disrespectful of those we regulate. Do not permit your behavior to give people cause to question your motives as being anything more than fair and objective.

Principle 3—Be issues-oriented, do not personalize:

    We must stay focused on the issue(s) being discussed and not let personalities get in the way of doing our jobs. If others personalize a situation, do not get hooked. We must discipline ourselves not to let personal problems and preferences influence our work behavior and actions.

Principle 4—Maintain a work environment that is absent of the fear of retaliation and intimidation:

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    We must have an environment that permits the decisions of inspections and supervisors to be questioned without fear of retaliatory and intimidation actions. Employees and supervisors must understand that it is OK for the industry to appeal decisions. Plant officials should feel free to question the decisions and actions of inspection personnel. Some industry officials believe that inspectors and supervisors will harass, retaliate, and intimidate them whenever inspection personnel decisions and actions are questioned. However, we must be sure that our regulatory decisions are able to withstand the scrutiny and criticism of others.

Principle 5—Understand each other's role and responsibilities:

    There are those who believe that the industry's first commitment is to profit, and secondarily to produce a safe, wholesome, and unadulterated meat and poultry product. However, meatpackers and processors must produce safe food in order to make a profit and to stay in business. We will operate under the premise that the industry is responsible for producing safe, wholesome, and unadulterated meat and poultry products.


    Mr. WALSH. Nearly three years ago, Secretary Glickman committed in a letter to me that FSIS would accelerate its work in the area of preventing bureaucratic layering and the waste of public and private funds in the meat and poultry inspection system. In the past three years. Can you specify which regulations from the old inspection system have been deleted?

    RESPONDENT. FSIS has published regulations to prevent bureaucratic layering in the meat and poultry inspection system. In August 1997, a final regulation was published titled Elimination of Prior Approval Requirements for Establishment Drawings and Specifications, Equipment, and Certain Partial Quality Control Programs. This regulation removed the requirements for prior approval by FSIS of establishment drawings, specifications, and equipment used in official establishments.
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    The Agency has also deleted approximately 15 directives concerning FSIS food inspectors. The deletion of these directives eliminates bureaucratic layering in the meat and poultry inspection system. All remaining program directives are being reviewed for revision or elimination.

    Mr. WALSH. What do you still have to accomplish and in your view, how long will it take?

    RESPONDENT. In the summer of 1998 the Sanitation Requirements for Official Meat and Poultry Establishments regulation will be finalized. When this rule is final it will delete some of the existing sanitation requirements that are no longer needed in light of the Agency's HACCP and Sanitation Standard Operating Procedure requirements. Also, the final Sanitation regulations will eliminate 11 pages from the Code of Federal Regulations.

    In addition, we are currently drafting several performance standard regulations that replace current prescriptive and detailed regulations.


    Mr. WALSH. With over 7000 individuals in the field inspecting meat and poultry for safety and wholesomeness, it must be a challenge to keep everyone equally trained and informed—particularly in light of all the new research and development in the area of pathogen-fighting technologies in plants. Can you tell us a little bit about how you communicate with inspectors, specifically: Do you have the ability to simultaneously inform all inspectors of a change in rules or a new hazard or outbreak?
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    RESPONDENT. Yes, FSIS can inform all inspectors about regular and routine changes, through written agency regulations, directives, and notices, coupled with special training and correlation programs. Through electronic mail, FSIS has the ability to broadcast a message immediately to all FAIM users. Through FAIM, as of the end of fiscal year 1997, FSIS can simultaneously reach all Circuit Supervisors, all Compliance Officers, all import inspectors, plus all domestic inspectors in ten of the eighteen district offices. Domestic inspectors in the remaining eight districts are scheduled to be automated in fiscal year 1999 and fiscal year 2000.


    Mr. WALSH. Do you require inspectors to demonstrate a certain level of job proficiency through some sort of testing or certification either before hiring or as part of a performance review?

    RESPONDENT. There are specific eligibility requirements associated with both veterinarians and food inspectors who are in the field performing ''inspection'' assignments. These basic eligibility requirements are established by the Office of Personnel Management (OPM).

    For veterinarians, a Doctorate of Veterinary Medicine is required in order for the individual to be employed. The advanced degree is then supplemented by Agency training and instruction once the new veterinarian reports for duty.

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    For full-time food inspectors, the basic eligibility requirement again established by OPM is one year of specialized work experience performing responsibly in the food handling, food preparation, or food processing industry or successful completion of a 4 year college degree with minimally 12 semester hours of science course work included. Beyond satisfying basic qualifications, the applicant must then take and pass an OPM validated and administered examination that includes a mathematics component. The individual must not only achieve a passing minimum score for the entire test but must achieve a passing score on the mathematics component as well. Failure to ''pass'' either results in the individual being ineligible for further consideration. As with veterinarians, Food Inspectors who are hired received technical instruction regarding their assigned duties and responsibilities at the Training Center in College Station, Texas.


    Mr. WALSH. How long would you estimate it takes to get a new rule or directive explained to your inspection work force?

    RESPONDENT. It depends on the complexity and scope of the change. The agency attempts to establish implementation dates that allow for sufficient front-end time to equip the work force to perform new and different inspection procedures.

    For instance, in the implementation of the Pathogen Reduction and HACCP rule, a special approach was used to equip the inspection and compliance field work force to carry out its new job requirements.

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    The training of the field inspection and compliance workforce is essential to effectively determine that meat and poultry plants are in compliance with the regulatory mandates contained in the Pathogen Reduction and HACCP (PR/HACCP) rule. Field inspection and compliance personnel will be required to perform new and different tasks and procedures in a HACCP-based inspection work environment.

    The PR/HACCP rule is being implemented in four separate phases, starting on January 27, 1997 and ending on January 25, 2000. This requires that affected inspection personnel be trained accordingly. FSIS developed the following training delivery strategy for use during the transitional period:

    1. Employees are trained as close to their work sites as possible.

    2. Use the ''just in time'' concept. This means training is provided immediately before an employee is required to apply the newly acquired knowledge and skills.

    3. Equip frontline supervisors to lead the program and culture changes.

    4. Use videotapes to convey all policy and procedural requirements to employees and supervisors to assure consistency of the message.

    5. Use facilitators to deliver the video-based training programs to the field inspection work force.

    The training requirements represent the most monumental training challenges in the history of meat and poultry inspection. Because of the rule's staggered implementation schedule, it was decided that applicable employees and supervisors would be trained during the three-month period just before the effective date of the new requirements. Further, it was decided that because the new requirements, when fully implemented, will change the way the agency does business compared to the past practices, that employees and would have to be exposed to a comprehensive culture change program.
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    In FY 97, the first phase of the implementation of the pathogen reduction and HACCP rule took place. It dealt with the Pre-HACCP requirements: These requirements primarily consisted of the Sanitation Standard Operating Procedures (SSOP), effective in all plants on January 27, 1997. Two separate training programs were delivered as follows:

    1. 4,400 employees (including supervisors) completed a 3-day training program which focused on how to (a) perform the inspection tasks for the regulatory oversight of the Pre-HACCP requirements; and (b) understand and appreciate the changes brought about by the new rule.

    2. 1,200 supervisors completed a 2-day training program to equip them to lead to the changes brought about by the pathogen reduction and HAACP rule.

    The implementation of the HACCP and Salmonella requirements for large plants took a place on January 26, 1998. Preparatory to the implementation, some 112 facilitators completed a 3-week Facilitator Training Program on the delivery of the HACCP Technical Training Program. In turn, they delivered the training program—7 to 8-day program depending upon class size—to more than 2,000 field inspection and compliance personnel during a six-week period in December 1997 and January 1998.

    On January 30, 1998, FSIS announced that Federally inspected meat and poultry plants may, upon request, implement and receive inspection under the pathogen reduction and HACCP rule. Plants are not permitted to begin operating under the rule until FSIS has trained the assigned inspector(s). Upon receipt of a request, the HACCP Training Facilitators will schedule and deliver the affected inspectors.
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    The training of inspection personnel assigned to plants implemented the HACCP and Salmonella requirements on January 25, 1999 and January 25, 2000, will be conducted in subsequent fiscal years.


    Mr. WALSH. Are there any other federal agencies whose employee training, communications or testing challenges are similar to FSIS's and if so, have you learned any management tips from them?

    RESPONDENT. FSIS has training and communication challenges that are unique to an agency that is required to provide continuous inspection on demand from industry. Our large, geographically dispersed workforce with anywhere from one to thirty inspectors at a given meat or poultry plant site reduces the opportunity for FSIS to use methods routinely used by some agencies such as training days and satellite downlink.

    FSIS has explored the process known as ''benchmarking'' with other agencies and organizations and has been actively building expertise in a variety of distance learning technologies based on consultation with APHIS, ARS and FDA.

    FSIS has joined forces with other USDA agencies to provide training in AIDS, Civil Rights, and Personnel Management and has used the satellite downlink capabilities of ARS and the Extension Service for FSIS-oriented programs.

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    FSIS has developed a modern computer network for inspectors through the FAIM Project with training as a major component. The use of computer based training programs has added a new dimension to getting current information to inspectors in a timely manner. During the FAIM pilots, FSIS interviewed several federal Agencies and private companies that had large field workforces. Based upon the results of those meetings, FAIM identified three factors that contributed to successful implementations: strict software configuration management, computer training in a dedicated computer laboratory, and centralized maintenance and support services. When completed the FAIM System will greatly enhance the FSIS communication links.

    "The Official Committee record contains additional material here."