Mr.
Chairman and Members of the Committee,
I am
Barbara Determan, a hog producer and grain farmer from Early,
Iowa. I am also the President of the National Pork Producers
Council (NPPC). Pork producers are pleased to testify today on
the draft farm bill concept paper and want to expressly thank
this Committee for moving forward expeditiously toward the
development and passage of the next farm bill.
The U.S.
pork industry represents a major value-added activity in the
agricultural economy and a major contributor to the overall
U.S. economy. The $8.7 billion of gross receipts from hog
marketings in 1999 represent only a portion of the economic
activity supported by the industry. Although the U.S. hog
industry has undergone changes in recent years, over 575,595
US residents are involved in various aspects of the industry
ranging from input suppliers to producers, to processors and
handlers as well as mainstreet businesses that benefit from
purchases by people in these industries. Overall, the U.S. hog
industry uses fully 16 percent of the soybeans and 12 percent
of the corn raised in America.
Changing Pork Industry Trends
Global
competition, new technologies, and consumer demands are but a
few of the factors that are rapidly changing the U.S. pork
industry. Hogs are raised differently today than even just 20
years ago. Hog farms are managed in new and innovative ways.
Hogs are marketed on a carcass weight-carcass merit basis
verses the traditional live weight selling in the past. Both
producers and the packing industry are vastly more efficient
but much less flexible than in the past.
Consumer
attitudes will determine the future face of the U.S. pork
industry. Consumers are generally more demanding about what
they eat, its nutritional content and taste. They are more
cognizant of and more accepting of familiar brands than ever
before which is leading producers into new and exciting
marketing and production alliance opportunities and market
segmentation and differentiation. Coordination of the
production and processing chain with consumer demands is more
and more critical to the success of all industry participants,
but perhaps most critical to the future of
producers.
The pork
industry is becoming increasingly global and more competitive
than ever before. Because of the internet and the nature of
global communications, information and technology are
extremely mobile and instantaneous. Canada, the EU, Brazil and
Argentina are becoming worldwide competitors as their
industries grow and mature.
Food
Safety and environmental protection will play an ever-greater
role in the decisions made on the farm. Consumers expect meat
to have zero risk of food borne pathogens, while also
demanding a reduction in the amount of antibiotics involved in
livestock production. Environmentally, agriculture is moving
inexorably from an unregulated to a regulated industry, driven
again by consumer desire for food produced with little adverse
environmental impact. Nutrients in rivers and streams caused
by farm runoff will no longer be an acceptable byproduct of
productive modern American agriculture in the
future.
Conservation Provisions
Mr.
Chairman, the $15.05 billion increase you have proposed for
conservation spending over 10 years has the potential to make
your farm bill one of the important milestones in federal
conservation policy. You are to be commended for your
proposal, and we welcome and appreciate this opportunity to
provide you with our views and observations as you craft the
details of these provisions for your farm bill package. We
would also like to commend Subcommittee Chairman Lucas for the
conservation bill he submitted last week, which makes a
tremendous, similar commitment to meeting agriculture's
conservation needs. Both your efforts have given great impetus
to the goal of keeping producers working their lands
profitably, while elevating every farmer’s commitment to
preserving our natural resources.
Your draft
concept will be particularly helpful to our efforts. A $1.2
billion a year increase for the Environmental Quality
Incentives Program (EQIP), 50 percent of which would go to
livestock and poultry producers, will help us meet our ongoing
livestock nutrient management goals.
Unfortunately, we know that the needs of the livestock
sector far exceed these planned increases. For example, since
1997, EQIP has not been able to fund 196,000 contract
applications for $1.4 billion in environmental practices. Of
that, $800 million came from livestock producers alone. As we
have stated in previous testimony on this topic, livestock and
poultry producers face, or will soon face, costly
environmental regulations as a result of state or federal law
designed to protect water and air quality. In addition to
state requirements, the regulations will come from the Clean
Water Act TMDL program, the proposed CAFO permit requirements,
and the Clean Air Act.
The
following table summarizes the conservation funding needs of
livestock operations with 50 animal units or more.
10 Year Costs, By Category and Species for
operations with more than 50 animal units (in million
dollars) |
|
|
|
|
|
|
|
|
|
Fed
Cattle |
Dairy
Cattle |
Other
Cattle |
Swine |
Poultry |
Total |
Structural
Measures |
$346
|
$3,492
|
$1,321
|
$1,402
|
$813
|
$7,375
|
Structural
Measures, Technical Assistance |
$87
|
$873
|
$330
|
$351
|
$203
|
$1,844
|
CNMP
Preparation |
$42
|
$221
|
$142
|
$104
|
$84
|
$593
|
Ongoing
Nutrient Mgmt, Soil and Manure Tests, etc.
|
$254
|
$297
|
$97
|
$306
|
$505
|
$1,459
|
Ongoing
Nutrient Mgmt, Tech Assistance |
$169
|
$172
|
$58
|
$184
|
$301
|
$884
|
Securing
Additional Land for Spreading Manure |
$8
|
$2
|
$0
|
$3
|
$33
|
$46
|
Total
Cost |
$906
|
$5,057
|
$1,948
|
$2,350
|
$1,939
|
$12,200
|
We commend
you for the increases you have proposed to help meet these
needs. The above analysis leads us to respectfully request
that the committee take full advantage of any opportunity that
may exist to expand EQIP funding further in order to come as
close as possible to the $1.2 billion a year level of
assistance needed by the livestock and poultry
sectors.
There are
several specific issues that we would like to address as you
know prepare final legislative language for the conservation
title of your farm bill. We have stated many of the following
comments and positions in previous testimony before this
Committee, but they bear repeating and need to be placed in
the context of the existing statute.
We feel
very strongly that livestock and poultry producers must be
eligible for conservation cost share or incentives assistance
regardless of the size of their operations. We understand that
the legislation to be drafted from your farm bill concept
paper will not exclude any operation, based on size, from
receiving EQIP assistance and we thank you for
that.
The public
clearly wants improved environmental performance and greater
environmental benefits from our operations, large and small,
and we are anxious to meet these goals. The environmental
regulations and expectations we face do not distinguish among
operations on the basis of size and we see no reason why
assistance to livestock operations to meet these environmental
objectives should discriminate on that basis. Family owned or
operated livestock operations come in all sizes, and all of
these will need cost share assistance if they are to remain
economically viable while providing the public with the
environmental benefits they obviously seek.
It is our
view that a payment limitation schedule comparable in overall
size to that used in row crops is far more appropriate, except
that payments should not be limited by year but by the needs
of the overall EQIP contract. We believe a minimum of $200,000
per contract is needed for this work, and even that will be
too low in many cases. We welcome the opportunity to work
cooperatively with you as you finalize this provision in your
bill.
We feel
that protecting water and air quality as it relates to
livestock and poultry manure management must be national
priorities for EQIP. We encourage your final bill to ensure
the program has both of these among its top priorities. We
also believe that while the installation of EQIP conservation
practices can and will provide benefits to wildlife, the goal
of wildlife habitat preservation should not be a purpose of
EQIP. In our view, the Wildlife Habitat Incentives Program
(WHIP) is the best programmatic home for helping producers
practice wildlife conservation on working agricultural lands.
We encourage you to remove wildlife as an explicit purpose of
EQIP, and support your effort to substantially increase funds
for WHIP to meet the worthy goals of protecting
habitat.
Explicit
provisions must be enacted that structure and support the
joint effort that will be needed from federal and non-federal
technical assistance providers to ensure that EQIP financial
assistance will achieve it intended purpose. We commend you
for the $850 million over 10 years that your concept paper has
proposed for federal and non-federal technical assistance, and
support inclusion of these funds in the final bill. We note
that in addition to these funds, we continue to support the
use of EQIP funds for the provision of technical assistance,
as under current law.
Our cost
analysis referenced above incorporates technical assistance
costs explicitly. We believe it is very important that this
bill not adopt any limitation on the amount of technical
assistance to be provided under EQIP that is arbitrary and
otherwise not based on what it really costs to help producers
design, install and manage conservation practices.
Financial
assistance is essential, but without full and qualified
technical support, the financial assistance will fail. We want
EQIP to succeed, and feel the old adage, "penny wise and pound
foolish" definitely applies to this situation.
We feel
that particular attention must be paid in the legislative
language to ensuring that the program allows for the
participation of third party private sector experts to
supplement the technical assistance to be provided by USDA. A
voucher system is one way that could be used to meet this
need, but there are several others, and we are prepared to
offer, immediately, detailed suggestions regarding how this
can be accomplished.
We request
that your bill address the issue of how EQIP will meet many of
the nation's top conservation priorities that are not properly
delineated on the basis of small geographic areas, like a
watershed. The ability of the program to place emphasis on
watershed-based assistance must be retained. But there is a
substantial number of critical, high value, high priority
conservation practices providing valuable environmental
benefits that producers across broad parts of the country need
assistance to implement. EQIP must place considerable and
major emphasis on helping producers adopt these latter
conservation practices that are not defined on the basis of a
geographic area.
We also
ask that your bill examine certain existing provisions of EQIP
that add considerable administrative burden with little
associated environmental benefit. In particular, we believe
EQIP must retain its emphasis on producing significant and
valuable environmental benefits, but that it should do so
without the impractical and impossible condition of truly
"maximizing" such benefits. The term maximization implies
being able to compare accurately and equitably tens of
thousands of EQIP conservation practices being implemented
under entirely different field conditions and often for very
different conservation purposes. Maximization under these
conditions is unfeasible and not an appropriate objective.
Instead, the program should emphasize securing substantial
environmental benefits per dollar expended.
We also
believe that changes are needed to clarify that an EQIP plan,
while necessary to secure a contract for EQIP payments, is not
needed to apply for be accepted into the program. The program
should have proper procedures to govern application and
acceptance into the program, but an EQIP plan is far too
detailed and costly a requirement for this purpose. We also
believe that the legislation must make clear that an EQIP plan
can be designed to address only one conservation objective and
involve only one eligible practice, and that contracts can be
for one year to 10 years, depending on the conservation
practices involved.
Mr.
Chairman, we also note that your proposal would increase the
acreage cap of the Conservation Reserve Program (CRP) to 40
million acres. We can support this increase as long as the
final legislative language makes it clear that enrollment of
these new acres is to be guided by the goal of keeping
productive working lands working. When an entire farm field is
enrolled into the CRP, agricultural use of the field is lost
for the term of the contract. In our view, this means that
that emphasis must be placed on enrolling buffers and portions
of field. The number of whole fields enrolled in the CRP
program should be substantially limited. We are prepared to
work with you to define the appropriate purposes for these new
acres.
Research
In
previous testimony, NPPC urged the Committee to double
agriculture research funding over the next five years. Funding
in agriculture research has remained flat for the last 15
years while other federal research has significantly
increased. This trend is no longer acceptable. Additional
money is needed to enable producers to continue to produce
safe and better food. While this goal is not reflected in the
draft bill concept paper, we would hope that the Committee can
revisit this issue.
NPPC
believes that future animal research should be built around
the goals of the Food Animal Integrated Research (FAIR) 2002.
Those goals are:
- Strengthen Global Competitiveness
- Enhance
Human Nutrition
- Protect
Animal Health
- Improve
Food Safety and Public Health
- Ensure
Environmental Quality
- Promote
Animal Well-Being
Trade
Issues
Market
Access Program (MAP) Authorization
NPPC has
long supported increasing the authorization of the Market
Access Program (MAP) and thanks the Committee for doubling its
authorization level from $90 to $180 million per year. MAP and
the Cooperator Program, which is also reauthorized in this
draft concept paper, has been instrumental in helping boost
U.S. pork exports.
Unlike
other sectors of the global economy, the agricultural sector
is still rife with subsidized exports. While programs such as
MAP have been reduced in recent years, our foreign competitors
have continued to heavily subsidize and aggressively promote
their products in an effort to capture an increasing share of
the world market at the expense of U.S. producers. In fact, a
recent USDA study shows foreign competitor nations outspending
the U.S. by as much as 20 to 1. These nations are spending
over $100 million just to promote their products into the
United States – more than what the U.S. currently spends under
MAP to help promote exports of all American grown and produced
commodities world-wide.
The MAP is
a cost-share program through which farmers and other
participants are required to contribute as much as 50 percent
of their own resources to be eligible. Indeed, funding for
pork export initiatives and foreign market development are
largely supplied by the pork checkoff, which represents a
percentage of the hog price received by the producer. The USDA
Market Access Program and Foreign Market Development Program
funds complement the pork checkoff expenditures in markets
around the world. It has been and continues to be an excellent
example of an effective public-private partnership.
Global
Food Assistance
NPPC
continues to support the creation of a new international
school lunch program designed to help feed hungry children,
improve nutritional standards and provide an outlet for
surplus U.S. agricultural products. We feel that this program,
the Global Food for Education and Child Nutrition Act,
presents a promising opportunity for American producers to
assist children in struggling areas of the world. NPPC
cautions, however, that it is important for meat and dairy
products to be fully represented to the greatest extent
possible as this program goes forward.
Trade
Promotion Authority Should Be Renewed
U.S. pork
producers are major beneficiaries of the Uruguay Round
Agreement and NAFTA. While a few bilateral trade agreements
are theoretically possible without the passage of Trade
Promotion Authority (TPA), the greatest benefits to American
agriculture will come from the launch of a new multilateral
round of negotiations, and that cannot happen without TPA. It
is vitally important, both substantively, and symbolically,
for the president to have TPA when ministers gather in
November in Qatar in an attempt to launch a new
round.
Since
1995, when the Uruguay Round Agreement went into effect, U.S.
pork exports to the world have increased 55 percent in volume
terms and 40 percent in value terms. In 2000 the U.S. exported
a record 566,900 metric tons of pork valued at $1.316 billion.
Pork exports from the U.S. to Mexico exploded in 1994 when
NAFTA went into effect. Even with the devaluation of the peso
U.S. pork increased market share in Mexico -- this never would
have happened without NAFTA. Mexico is now the pork industry's
second most important market behind Japan.
The United
States is uniquely positioned to reap the benefits of
liberalized world pork trade. U.S. pork producers are the
lowest cost producers of the safest, highest quality pork in
the world. But without the renewal of trade negotiating
authority for the Executive branch by Congress, U.S. pork
producers and the rest of U.S. agriculture will be forced to
remain on the sidelines while other countries continue to
negotiate new trade agreements at a staggering
pace.
The
rapidly expanding Brazilian pork industry -- a key competitor
to the U.S. industry -- now has preferential access into many
markets to the detriment of U.S. producers. Canada, another
significant competitor, has gained preferential access into
Chile and other Western Hemisphere nations through free trade
agreements. While the United States sits idly by, Chile,
Mexico, and Canada have wrestled away from the United States
the mantle of the Western Hemisphere’s trade leader. These
countries along with the European Union are gaining the
benefits of trade for their citizens while the U.S. engages in
an over-hyped dialogue about the benefits of trade.
Rural
Development
Finally,
Mr. Chairman, NPPC commends your efforts to add significantly
to a modest program begun a few years ago to provide grants
for start-up farmer-owned value added processing facilities.
During the past few years, economists of all stripes have
pointed to the need for farmers to become more than commodity
producers and to find ways to capture more of the consumer
food dollar. Value added enterprises are the wave of the
future and we commend your commitment toward expanding this
opportunity by increasing funding to $370 million over 10
years.