Skip to main content

Full text of "Agriculture, Rural Development, and Related Agencies appropriations for fiscal year 1994 : hearings before a subcommittee of the Committee on Appropriations, United States Senate, One Hundred Third Congress, first session on H.R. 2493 ..."

See other formats


S. Hrg. 103-281, Pt. 1 



Senate Hearings 

Before the Committee on Appropriations 



Y 4. AP 6/2: S. HRG. 103-281/ 
PT.l 

Agriculturei Rural Developnent/ and... 



.griculture, Rural 
Development, and Related 
Agencies Appropriations 



Fiscal Year 



1994 



103 



d CONGRESS, FIRST SESSION 



H.R. 2493 



PART 1 (Pages 1-941) 

COMMODITY FUTURES TRADING COMMISSION 
DEPARTMENT OF AGRICULTURE 
FARM CREDIT ADMINISTRATION 
FOOD AND DRUG ADMINISTRATION 



t m 



f.••^,■ 



S. Hrg. 103-281, Pt. 1 

AGRICULTURE, RURAL DEVELOPMENT, AND Rt 
LATED AGENCIES APPROPRIATIONS FOR HS- 
CAL YEAR 1994 



HEARINGS 

BEFORE A 

SUBCOMMITTEE OF THE 

COMMITTEE ON APPROPRIATIONS 
UNITED STATES SENATE 

ONE HUNDRED THIRD CONGRESS 

FIRST SESSION 
ON 

H.R. 2493 

AN ACT MAKING APPROPRLATIONS FOR AGRICULTURE, RURAL DEVEL- 
OPMENT, FOOD AND DRUG ADMINISTRATION, AND RELATED AGEN- 
CIES PROGRAMS FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 1994, 
AND FOR OTHER PURPOSES 



PART 1 (Pages 1-941) 

Commodity Futures Trading Commission 

Department of Agriculture 

Farm Credit Administration 

Food and Drug Administration 



Printed for the use of the Committee on Appropriations 




U.S. GOVERNMENT PRINTING OFFICE 
68-610 cc WASHINGTON : 1993 

For sale by the U.S. Government Printing Office 
Superintendent of Documents, Congressional Sales Office. Washington, DC 20402 
ISBN 0-16-0A1802-X 



COMMITTEE ON APPROPRIATIONS 

ROBERT C. BYRD, West Virginia, Chairman 
DANIEL K INOUYE, Hawaii MARK O. HATFIELD, Oregon 

ERNEST F HOLLINGS, South CaroUna TED STEVENS, Alaska 

J BENNETT JOHNSTON, Louisiana THAD COCHRAN, Mississippi 

PATRICK J. LEAHY, Vermont ALFONSE M. D'AMATO, New York 

JIM SASSER, Tennessee ARLEN SPECTER, Pennsylvania 

DENNIS DeCONCINI, Arizona PETE V. DOMENICI, New Mexico 

DALE BUMPERS, Arkansas DON NICKLES, Oklahoma 

FRANK R. LAUTENBERG, New Jersey PHIL GRAMM Texas 

TOM HARKIN. Iowa CHRISTOPHER S. BOND, Missouri 

BARBARA A. MIKULSKI. Maryland SLADE GORTON, Washington 

HARRY REID, Nevada MITCH McCONNELL, Kentucky 

J ROBERT KERREY, Nebraska CONNIE MACK, Florida 

HERB KOHL, Wisconsin CONRAD BURNS. Montana 

PATTY MURRAY, Washington 
DIANNE FEINSTEIN, California 

James H. English, Staff Director 

Mary S. Dewald, Chief Clerk 

J. Keith Kennedy, Minority Staff Director 



Subcommittee on Agriculture, Rural Development, and Related Agencies 

DALE BUMPERS, Arkansas, Chairman 

TOM HARKIN, Iowa THAD COCHRAN, Mississippi 

J. ROBERT KERREY, Nebraska ARLEN SPECTER, Pennsylvania 

J. BENNETT JOHNSTON, Louisiana CHRISTOPHER S. BOND, Missouri 

HERB KOHL, Wisconsin PHIL GRAMM, Texas 

DIANNE FEINSTEIN, California SLADE GORTON, Washington 

ROBERT C. BYRD, West Virginia MARK O. HATFIELD, Oregon 

ex officio ex officio 

Professional Staff 

Rocky L. Kuhn 

Daniel T. Dager 

Rebecca Davies (Minority) 

Administrative Support 
Carole Geagley 

(II) 



CONTENTS 



Tuesday, April 20, 1993 

Page 

Department of Agriculture: Office of the Secretary 1 

Tuesday, April 27, 1993 

Department of Agriculture: 

Agricultural Stabilization and Conservation Service 103 

Foreign Agricultural Service 103 

Office of tne General Sales Manager 103 

Soil Conservation Service 103 

Thursday, April 29, 1993 

Department of Agriculture: 

Food and Nutrition Service 303 

Human Nutrition Information Service 303 

Tuesday, May 11, 1993 

Department of Agriculture: 

Agricultural Research Service 413 

Cooperative State Research Service 413 

Extension Service 413 

Alternative Agricultural Research and Commercialization Center 413 

Tuesday, May 18, 1993 

Commodity Futures Trading Commission 579 

Food and Drug Administration 601 

Farm Credit Administration 653 

Thursday, May 20, 1993 

Department of Agriculture: 

Farmers Home Administration 693 

Federal Crop Insurance Corporation 693 

Rural Electrification Admimstration 693 

Rural Development Administration 693 

Monday, May 24, 1993 

Department of Agriculture: 

Animal and Plant Health Inspection Service 779 

Agricultural Marketing Service 779 

Food Safety and Inspection Service 779 

Material Submitted by Agencies Not Appearing for Formal Hearings 

Department of Agriculture: 

Agricultural Cooperative Service 895 

Economic Research Service 898 

Federal Grain Inspection Service 902 

National Agricultural Library 905 

National Agricultural Statistics Service 907 

Office of Inspector General 909 

(III) 



IV 

Page 

Department of Agriculture — Continued 

Office of International Cooperation and Development 920 

OfBce of Public Affairs 924 

Office of the General Counsel 925 

OfBce of the Secretary and Departmental Administration 930 

Packers and Stockyards Administration 934 

World Agricultural Outlook Board 938 



AGRICULTURE, RURAL DEVELOPMENT, AND 
RELATED AGENCIES APPROPRIATIONS FOR 
FISCAL YEAR 1994 



TUESDAY, APRIL 20, 1993 

U.S. Senate, 
Subcommittee of the Committee on Appropriations, 

Washington, DC. 
The subcommittee met at 2:32 p.m., in room SD-192, Dirksen 
Senate Office Building, Hon. Dale Bumpers (chairman) presiding. 
Present: Senators Bumpers, Harkin, Kerrey, Kohl, Feinstein, 
Cochran, Specter, Bond, and Gorton. 

DEPARTMENT OF AGRICULTURE 

Office of the Secretary 

statement of mike espy, secretary of agriculture 
accompanied by stephen b. dewhurst, budget officer 

opening remarks 

Senator Bumpers. Today we begin our hearings on the fiscal 
year 1994 budget for Agriculture, Rural Development, and Related 
Agencies. It is appropriate that our first meeting is with our new 
distinguished Secretary of Agriculture, our former colleague, Mike 
Espy, and I want to extend you a special welcome, Mr. Secretary. 

Secretary EsPY. Thank you, sir. 

Senator Bumpers. Accompanying the Secretary is Steve 
Dewhurst, the Budget Officer of the Department of Agriculture. 

In terms of budget authority, the President's request for USDA 
totaled $67.5 billion, which compares to $68.1 billion for 1993. Of 
this amount, $3.4 billion is for the Forest Service, which is not cov- 
ered under the jurisdiction of this subcommittee. 

The budget proposes major increases for several rural develop- 
ment programs, including water and sewer loans, grants, business 
and industry loans and grants, rural housing, WIC, the meat and 
poultry inspection program, as well as food stamps and child nutri- 
tion. I am pleased to see many of these increases, especially those 
that foster rural development. 

Mr. Secretary, you and I have been laboring in the rural develop- 
ment vineyards for a long time, and I am looking forward to work- 
ing with somebody in the Department who really understands the 
problem. 

The President's budget also contains some significant cuts in 
REA, crop insurance, and research grants and facilities. In addi- 

(1) 



tion, the budget proposes to save money by instituting user fees in 
several programs, the most significant of which is the Food, Safety, 
and Inspection Service; and, in addition, there are cuts to so-called 
mandatory programs, such as the Honey Program, the Wool and 
Mohair Program, food stamps and payment limitations under the 
farm bill. Those cuts do not properly lie under this committee's ju- 
risdiction either. But sometimes we wind up dealing with them. 

I am concerned by some of these cuts and changes, Mr. Sec- 
retary, both discretionary and mandatory. Again, I want to work 
with you in putting together a strong budget for the USDA, with 
the resources available to us. Now, other Senators as they arrive 
may insert records, but at this time, Mr. Secretary, please proceed 
with your statement. And, let me also say that your entire state- 
ment will be inserted in the record; we would be happy if you can 
summarize. Please proceed, and then we will take questions. 

STATEMENT OF MIKE ESPY 

Secretary EsPY. Thank you, Mr. Chairman. I am delighted to be 
here. It is indeed a privilege to appear before you, in my first ap- 
pearance here before your committee, as Secretary of the U.S. De- 
partment of Agriculture. I would appreciate, and I thank you for 
including my statement in the record. I will try to summarize, and 
will not go word by word. 

First of all, I would like to accept your offer. We are friends. We 
have labored in the rural development vineyards, and I really do 
look forward, Senator, to working with you, in improving and en- 
hancing the programs for rural development, food and farm pro- 
grams. I intend to work very hard at fostering a good working rela- 
tionship with you and this committee, and the Clinton administra- 
tion. 

president's economic plan 

Today, I would like to focus on the President's economic plan, 
and particularly, his fiscal year 1994 budget proposals, as they per- 
tain to the USDA. We think it is a good plan. It gives rural Amer- 
ica a very good shot in the arm, and a chance to share fully in the 
President's vision for the economic revitalization of our Nation. 

Mr. Chairman, the President's plan, as you well know, includes 
three basic components. 

First, there is a short-term economic stimulus package that will 
affect fiscal year 1993 funding. 

Second, there is a longer term investment program that will af- 
fect fiscal years 1994-97. 

And third, there is a serious credible plan for deficit reduction. 
Clearly, deficit reduction leading to lower-term interest rates will 
benefit all America, especially rural America; and, most particu- 
larly, America's farm producers. 

SHORT-TERM ECONOMIC STIMULUS PACKAGE 

I would like to focus first on the short-term economic stimulus 
package. The package is designed to produce more jobs, by invest- 
ing in the Nation's infrastructure. It also makes an initial added 



investment to human capital, by providing additional assistance to 
people who are, certainly, in need. 

The stimulus is also being proposed to provide insurance against 
a further lapse in the economic recovery; and, the stimulus package 
as it pertains to USDA includes additional funding for, First: Meat 
inspectors; we need more meat and poultry inspectors. We also pro- 
pose construction of water and waste disposal systems, construction 
of single-family homes and repair of low-income housing; and re- 
pair and construction of watersheds. 

Enhancing natural resource protection, environmental and rec- 
reational infrastructure in our national forests; modernizing and 
repairing Federal agricultural research facilities; expanding the 
women, infants and children [WIC] caseload; providing more com- 
modities for The Emergency Food Assistance Program [TEFAP]; 
and funding meals for children added to the Head Start Program 
are all priority proposals for additional funding under the stimulus. 

Second, as part of the longer-term investment program of the 
President, the budget includes program increases of about $3.3 bil- 
lion in 1994, and a cumulative program increase of $23 billion dur- 
ing the 1994 through 1997 period, for the U.S. Department of Agri- 
culture [USDA]. 

The Department, of course, plays a very vital role in the rural 
economy. The Secretary of Agriculture, under the law, is to provide 
leadership within the executive branch for rural development ef- 
forts. I intend to provide that leadership. Rural revitalization has 
been, and will be, one of my top priorities. 

As part of the rural development initiative in the Clinton eco- 
nomic plan, we are requesting significant increases in programs 
providing loans and grants for community facilities, and rural busi- 
nesses with an emphasis on small enterprises, to provide jobs and 
services for many families living in small towns. 

Water and wastewater loans and grants will be increased sub- 
stantially over the levels appropriated for fiscal year 1993. These 
increases, together with those increases included in the stimulus 
package, are necessary so that we can provide thousands of fami- 
lies here in America access to clean water and sanitary waste dis- 
posal. 

Further, about $800 million will be added to our rural housing 
program. In total these programs, Mr. Chairman, will provide 
about 108,000 housing units, a 27-percent increase over last year's 
level. 

We are also proposing to expand and build health care facilities 
and enhance fire and rescue services all across rural America. 

In the food safety area, there are a number of issues. First, we 
request that an additional 40 meat and poultry inspectors will be 
hired, in addition to the 160 hired in fiscal year 1993. 

And a major research initiative to reduce the level of foodbome 
pathogens will be initiated. Mr. Chairman, this was the first issue 
that I had a chance to deal with, after my confirmation. I am cer- 
tain that we simply must develop new scientific ways to inspect our 
meat supply, to ensure that our families can continue to benefit 
from the safest food supply in the world. 

In the food assistance area, we are proposing a $5.8 billion in- 
crease, over 4 years, in the Food Stamp Program. Food stamp in- 



creases will help offset the effects of the energy tax on low-income 
households. 

We are also proposing increased funding of about $2.7 billion for 
WIC, over 4 years, so all people eligible for the program are cov- 
ered by the end of fiscal year 1996. 

In order to pay for meals for preschool children under the Head 
Start Program, we propose additional funding for the Child and 
Adult Care Food Program during the 1994 through 1997 period. 
That would build on a similar increase in 1993. 

We also propose to increase competitive grants, under the Na- 
tional Research Initiative, by $480 million over 4 years, to support 
high priority agricultural, food, and environmental research. 

We also propose some discretionary reductions. There must be 
reductions both in the discretionary area as well as the mandatory 
area. The President's fiscal year 1994 budget will propose over 
$400 million in discretionary savings in 1994, and $3.1 billion in 
cumulative savings over 1994 through 1997. 

DISCRETIONARY SAVINGS 

An example of discretionary saving is we intend to create a one- 
stop shop for farmer services. We wish to call this the Farm Service 
Agency [FSA]. The agency will be created from current USDA 
agencies, serving farmers at the county and regional level. 

We will try to merge the Agricultural Stabilization and Con- 
servation Service [ASCS], the Soil Conservation Service [SCS], and 
the Farmers Home Administration [FmHA]. The proposal, we be- 
lieve, will improve service for farmers while reducing staff needs 
and administrative overhead at the USDA national. State, and 
local levels. 

I have said many times, Mr. Chairman, that my priority is to 
streamline, from top to bottom, starting with Washington first; and 
then restructuring the field offices. In setting up the new agency, 
we will be looking for ways to improve productivity, reduce regu- 
latory burdens, reduce paperwork requirements, and to make our 
operations more farmer- and user-friendly. 

We are also looking at restructuring other functions in USDA, to 
improve efficiency and to reduce costs. For example, we are reduc- 
ing our Office of Public Affairs. I was shocked, Mr. Chairman, 
frankly, to find that we have 1,000 staff individuals involved in the 
public information and public affairs categories. I think that is too 
many. 

Senator Bumpers. 1,000? 

Secretary Espy. 1,000, across the Nation. 

Senator Bumpers. I want to make sure I understand this. You 
are saying we have 1,000 people in the Department of Agriculture, 
Office of Public Affairs? 

Secretary EsPY. I am saying that to you, sir. 

Senator Bumpers. Are they all in Washington? 

Secretary ESPY. They are not all in Washington. I want to be 
fair. Thev are not all in Washington. They serve all across the Na- 
tion. And some serve as tour guides in our national forests. How- 
ever, in Washington, Senator, we have over 600. I still believe that 
is way too many. 

Senator Bumpers. No kidding? 



Secretary EsPY. So, we are creating a consolidated Office of Pub- 
lic Affairs. You see, the problem, frankly, is that in USDA we have 
42 agencies and offices, and each of these has an administrator. 
Each administrator has a spokesperson. Each spokesperson has a 
support staff, a graphic arts division; and we have unnecessary du- 
plication. 

So, we are far along in our effort to streamline divisions. I hope 
to be able to make certain announcements on these efforts very, 
very soon. 

In addition to these restructuring and streamlining efforts, the 
budget before this committee proposes a number of other discre- 
tionary program changes, including the following: 

Rural Electrification Administration [REA] loans, to be made at 
Treasury rates, while preserving loans for truly needy borrowers; 

Meat and poultry inspection fees would be charged to cover all 
overtime work by Federal inspectors beyond the first scheduled 
shift; 

Lower priority economic and agricultural research would be 
eliminated; 

Funding for foreign agricultural market development activities 
through the Foreign Agricultural Service [FAS] would be reduced, 
by targeting areas where trade prospects are most promising; 
while, the Market Promotion Program [MPP] in the mandatory 
area would be maintained at the current fiscal year 1993 level; 

In Farmers Home, direct farm credit would be reduced, but sub- 
sidized guarantees would be increased. 

MANDATORY SAVINGS 

We believe that we cannot reduce the deficit significantly, unless 
savings are achieved in the mandatory-entitlement area of the 
budget. Certainly, health care costs represent the most significant 
area in this regard, but USDA can make a contribution as well. 
Our farmers have already given quite a bit, and they should be 
proud of their contribution and what they do to produce the food 
and fiber has been recognized by this administration. 

But we must look for reductions in the mandatory area. I want 
to assure the committee that, aside from a modest targeting pro- 
posal, proposed changes to the major farm commodity programs 
would not take effect until 1996. We will take no unilateral action 
that will make our farmers weaker in international negotiations. 
We do not want to undermine our leverage in these negotiations 
with cuts in farm programs, at this time. 

However, beginning with the 1996 crops, we are proposing as 
part of the President's program to increase the noneligible payment 
acres of the triple base program, eliminate the 0/92 and 50/92 pro- 
grams, and increase assessments on nonprogram federally sub- 
sidized commodities that are currently being assessed under the 
1990 budget agreement. 

Beginning with the 1994 crops, income support payments would 
be limited to those farmers making less than $100,000 in off-farm 
income in an effort to better target these payments to smaller, fam- 
ily-sized operations. Also, wool and mohair direct support payments 
will be limited to $50,000 per person. 



And, as was discussed in the campaign, the honey program sub- 
sidies have been targeted for elimination, beginning in fiscal year 
1994. This, of course, is the only commodity program that we are 
proposing to terminate. 

In addition to these program proposals, the crop insurance pro- 
gram is also in need of substantial reform. We are proposing to 
phase in area-based insurance coverage. Under this approach, in- 
demnities would be based on an area or county yield, rather than 
on an individual farm yield. We would begin in crop year 1994, by 
offering such insurance in those counties with the worst loss expe- 
rience on an individual coverage basis. 

To the extent that commodity disaster payments are made in the 
future, the loss threshold would be increased from 35 to 40 percent 
for those producers with crop insurance, and from 40 to 50 percent 
for those producers without crop insurance. 

The President has also announced Govemmentwide reductions in 
employment, as well as a 14-percent reduction in administrative 
costs over 4 years. As it relates to the USDA, there would be a re- 
duction of 7,500 staff-years between 1993 and 1998, or a 6.7-per- 
cent reduction in staffing. 

The administrative savings as a result of cuts in travel, printing, 
consulting, and other contractual services would amount to well 
over $700 million over the fiscal year 1994 through 1997 period. 

These actions are, of course, designed to improve operations and 
the efficiency of the Grovemment's programs; and when these ac- 
tions are completed, the USDA will certainly not look like it looks 
currently. It will be a leaner, more effective organization. 

EFFECTIVENESS OF USDA 

Last, Mr. Chairman, and to this committee, there has recently 
been a lot of publicity about the effectiveness of the USDA. There 
is a perception in some quarters that the USDA has become an out- 
moded and unresponsive bureaucracy, that it is no longer client- 
friendly or farmer-friendly, and that it is disinterested in reaching 
out beyond the traditional farmer client base to others who have 
legitimate and viable concerns. 

I hear it. In many ways, this criticism has some validity and I 
promise to seriously and thoughtfully address the valid concerns 
and criticisms expressed, where appropriate, to make changes in 
USDA operations. 

That concludes the comments that I would like to make today. 
I look forward to working with you, and working with this commit- 
tee to make sure that our mutual interest in enhancing farm in- 
come and promoting the rural economy will be successful. Thank 
you. 

PREPARED STATEMENT 

Senator Bumpers. Mr. Secretary, thank you for a very good 
statement. We have your prepared statement and it will be made 
part of the record. 

[The statement follows:] 



Statement of Mike Espy 

Mr. Chairman, distinguished members of the Committee, it is indeed a privilege 
to appear before this Committee as the Secretary of Agriculture to discuss the pro- 
grams and budget for the U.S. Department of Agriculture. 

At the outset, Mr. Chairman, I would like to say that I look forward to working 
with the members of this Committee. Because of my previous association with the 
Congress and my experience with rural development, food and farm programs, I in- 
tend to work hard at fostering a good working relationship between the Clinton Ad- 
ministration and this Committee. As you well know, the Department's programs are 
extremely important to rural residents, consumers, low-income persons and farmers 
throughout the Nation. I am excited about heading a Department that can do so 
much good for so many people. In order to carry out my duties as Secretary of Agri- 
culture, I will need the help of the dedicated employees at the Department and also 
the help of this Committee and the other congressional committees with jurisdiction 
over the Department's programs. 

Today, I would like to focus on the President's economic plan and particularly his 
fiscal year 1994 budget proposals as they pertain to the Department of Agriculture. 
We think this plan represents real change. It gives rural America a real snot in the 
arm and a chance to snare fully in the President's vision for the economic revitaliza- 
tion of our Nation. 

CLINTON ECONOMIC PLAN 

President Clinton's economic plan includes three basic components: (1) a short- 
term economic stimulus package that will affect fiscal year 1993; (2) a longer term 
investment program that will affect fiscal years 1994-1997; and (3) a serious, credi- 
ble plan for deficit reduction. The deficit reduction part of the plan focuses on pro- 
posed discretionary program and entitlement savings for fiscal year 1994 through 
fiscal year 1997 as well as across-the-board reductions in overhead, personnel and 
administrative costs. 

Clearly, deficit reduction leading to lower long-term interest rates will benefit all 
America, especially rural America which needs capital for economic growth. In 1992, 
interest payments on the debt were $200 billion, over three times the total budget 
for the Department of Agriculture. These interest costs are eating up a larger and 
larger share of the budget, taking funds away that could be used for productive in- 
vestment. A sound deficit reduction plan must face up to the facts and provide the 
realistic funding levels for discretionary and entitlement programs that will bring 
the deficit down. It wUl also require us to look carefully at how we carry out and 
administer programs. 

SHORT-TERM ECONOMIC STIMULUS 

I would like to focus first on the short-term economic stimulus. The stimulus 
package is designed to produce more jobs by investing in the Nation's infi-astructure. 
It also makes an initial added investment to human capital by providing additional 
assistance to people who are in need. The economic stimulus is also being proposed 
to provide insurance against a further lapse in the economic recovery. The stimulus 
package as it pertains to the Department of Agriculture includes additional funding 
for: 

— increasing the number of meat inspectors 

— constructing water and waste disposal systems 

— constructing single family houses and repairing low-income housing 

— repairing and constructing watersheds 

— enhancing natural resource protection, environmental and recreational infra- 
structure on the National Forests 

— modernizing and repairing Federal agricultural research facilities 

— expanding the WIC caseload, providing more commodities for the Emergency 
Food Assistance Program and fiinding meals for children added to the Head 
Start Program. 

LONGER TERM INVESTMENTS 

As part of the longer term investment progrsun of the President's plan, the budget 
includes program increases of $3.3 billion in 1994 and a cumulative progrsun in- 
crease of $23 billion during the 1994-1997 period for the Department of Agriculture 
for high priority investments in both human and physical capital. 

The Department plays a vital role in the rural economy. The Secretary of Agri- 
culture, under the law, is to provide leadership within the executive branch for rural 



8 

development efforts. I intend to be a loud and persistent voice for rural America in 
this Administration. Rural revitalization will be one of my top priorities. USDA pro- 
grams can help lead in turning the country in a new direction. 

As part of the rural development initiative in the Clinton Economic Plan, we are 
requesting significant increases in programs providing loans and grants for commu- 
nity facilities and rural businesses with emphasis on small enterprises to provide 
jobs and services for many families living in small towns. Water and waste water 
loans and grants will be increased substantially over the levels appropriated for fis- 
cal year 1993. These increases together with those increases included in the eco- 
nomic stimulus package are necessary eo that we can provide thousands of families 
here in America access to clean water and sanitary waste disposal. Further, about 
$800 million will be added to our rural housing program. In total, these programs 
will provide 108,000 housing units, a 27-percent increase over last year's level. We 
also are proposing to expand and build health care facilities and enhance fire and 
rescue services all across rural America. 

In the food safety area, there are a number of initiatives. First, an additional 40 
meat and poultry inspectors will be hired in addition to the 160 hired in fiscal year 
1993 and a major research initiative to reduce the level of food-bome pathogens will 
be initiated. We simply must develop new scientific ways to inspect our meat supply 
to ensure that our families can continue to benefit fi"om the safest food supply in 
the world. In the food assistance area, we are proposing a $5.8 billion increase over 
4 years in the Food Stamp Program. Food Stamp increases will help offset the ef- 
fects of the energy tax on low-income households. We are also proposing increased 
funding of $2.7 billion for WIC over 4 years so that all people eligible for the pro- 
gram are covered by the end of fiscal year 1996. In order to pay for meals for pre- 
school children added to Head Start, we propose additional fiinding for the Child 
and Adult Care Food Program during fiscal year 1994 to fiscal year 1997 that would 
build on a similar increase for fiscal year 1993. 

We also will propose to increase competitive grants under the National Research 
Initiative by $480 milUon over 4 years to support high priority agriculturtil, food and 
environmental research. 

PROPOSED DISCRETIONARY REDUCTIONS 

In order to reduce the deficit, spending on discretionary programs will have to be 
reduced. The President's 1994 Budget will propose over $400 million in discre- 
tionary savings in 1994 and $3.1 billion in cumiilative savings over the fiscal year 
1994-1997 period. A number of programs will be targeted for reductions. 

A major proposal in the budget wall be the creation of a single Farm Service Agen- 
cy. This proposal is also known as one-stop shopping. The agency will be created 
from the current USDA agencies serving farmers at the county and regional level. 
These agencies include the Agricultural Stabilization and Conservation Service, the 
Soil Conservation Service, and the Farmers Home Administration. The proposal 
would improve service for farmers while reducing staff needs and administrative 
overhead at the USDA National, State and local levels. My priority is to streamline 
from top to bottom starting with the Washington bureaucracy first and then restruc- 
turing the field offices. In setting up the new agency we will be looking for ways 
to improve productivity, reduce regulatory burdens, reduce paperwork requirements, 
and make our operations more farmer and user fiiendly. 

We are also looking at restructuring other functions in USDA to improve effi- 
ciency and reduce costs. I will be working with the Congress to carry tJirough on 
these reorganization proposals. 

In addition to these restructuring and streamlining efforts, the budget before this 
Committee will propose a number of other discretionary program changes including 
the following: 

— REA loans would be made at Treasury rates while preserving loans for truly 
needy borrowers. 

— Meat and poultry inspection fees would be charged to cover all overtime work 
by Federal inspectors beyond the first scheduled shift. 

— Lower priority economic and agricultural research would be eliminated. 

— Funding for foreign agriculture market development activities through the For- 
eign Agricultural Service would be reduced by targeting areas where trade pros- 
pects are most promising, while the Market Promotion Program in the manda- 
tory area would be maintained at the current fiscal year 1993 level. 

— FmHA direct farm credit would be reduced but subsidized guarantees would be 
increased. 



MANDATORY PROGRAMS 

We cannot reduce the deficit significantly unless savings are achieved in the man- 
datory-entitlement area of the budget. While health care costs are the most signifi- 
cant area in this regard, USDA programs also must make a contribution, keeping 
in mind that these programs made a significant contribution in the 1990 Budget 
Agreement. Our farmers have already given a lot and they should be proud that 
their contribution and what they do to produce food and fiber in this country has 
been recognized by this Administration. 

The 1994 budget for USDA contains savings of $192 million in 1994 and $4.5 bil- 
lion in cumulative savings for fiscal years 1994-1997 for mandatory programs. How- 
ever, I want to assure the Committee that, aside from a modest targeting proposal, 
proposed changes to the major farm commodity programs would not take effect until 
1996. We will take no unilateral action that will make our farmers weaker in inter- 
national negotiations. I do not want to undermine our leverage in these negotiations 
with cuts in farm programs at this point in time. However, beginning with the 1996 
crops, we are proposing as part of the President's program increasing thfl noneligible 
payment acres oi the triple base program, eliminating the 0/92 and 50/92 programs 
and increasing assessments on "nonprogram" federally subsidized commodities that 
are currently being assessed under the 1990 Budget Agreement. 

Beginning with 1994 crops, income support payments would be limited to those 
farmers making less than $100,000 in off-farm income in an effort to better target 
these pa3Tnents to smaller, family-sized operations. Also, wool and mohair direct 
support payments would be limited to $50,000 per person. As was discussed in the 
campaign, honey program subsidies would be eliminated beginning in fiscal year 
1994. This is the only commodity program proposed for termination. 

In addition to these program proposals, the crop insurance program is also in 
need of reform. We are proposing to phase in area based insurance coverage. Under 
this approach indemnities would be based on an area (county) yield rather than on 
an individual farm yield. We would begin in crop year 1994 "by offering such insur- 
ance in those counties with the worst loss experience on individual coverage. To the 
extent that commodity disaster payments are made in the future, the loss threshold 
would be increased from 35 to 40 percent for those producers with crop insurance 
and from 40 to 50 percent for those producers without crop insurance. 

USDA and the Department of Health and Human Services have developed a joint 
legislative proposal which would provide for reimbursement of State administrative 
costs for food stamps, Aid for Dependent Children, and Medicaid with State and 
Federal governments sharing equally in the cost. This would amount to a reduction 
in Federal funding for State admimstration of about $20 million on a base of $1.5 
billion for 1994. 

ACROSS-THE-BOARD REDUCTIONS 

The President also announced govemmentwide reductions in employment and pay 
costs as well as a 14-percent reduction in administrative costs over 4 years. For the 
Department of Agriculture, there would be a reduction of 7,500 staff years between 
1993 and 1998 or a 6.7-percent reduction in staffing. The administrative savings as 
a result of cuts in travel, printing, consulting and other contractual services would 
amount to over $700 million over fiscal year 1994 to fiscal year 1997. These actions 
are designed to improve operations and efficiency of the Government's programs. 
When the actions are completed, the Department of Agriculture will be a leaner, 
more effective organization. 

Recently there has been publicity about the effectiveness of the Department of Ag- 
riculture. The perception in some quarters is that USDA has become an outmoded 
and unresponsive bureaucracy, no longer client friendly or interested in reaching 
out beyond the traditional farmer client base to others wno also have legitimate con- 
cerns. I promise to seriously and thoughtfully address the valid concerns and criti- 
cisms expressed and, where appropriate, make changes in USDA operations. 

The Department of Agriculture has long been known as the "People's Depart- 
ment." Based on congressional authorizing and appropriations legislation, the De- 
partment has been mandated to carry out a broad and diverse set of programs, with 
a broad constituency of people who are affected by its activity. As Secretary of Agri- 
culture, I want you, Mr. Cnairman, and each member of this Committee to know 
that I will dedicate myself and the Department to being a positive force in improv- 
ing the economic health of America, particularly rural America. I intend to work 
hard to ensure that people living in rural America have access to the basic services 
which other areas of the country take for granted — including them fully in President 
Clinton's strategy for economic revitalization. I will seek to reach out to all USDA 
constituents ana become an honest broker for their responsible concerns. 



10 

That concludes the comments I would like to make today. I look forward to work- 
ing closely with the Committee concerning our mutual interest in the well-being of 
rural America. I would be pleased to answer any questions you may have. 

MEANS-TESTING 

Senator Bumpers. Mr. Secretary, knowing you, completely aside 
from the statement, I know that your heart is in the right place 
and that you understand that, before we can reorganize agriculture 
across the country, it has to be reorganized here first. I know that 
you have a keen appreciation of that. 

Mr. Secretary, and let me say to the members of the committee, 
I am going to limit myself to 10 minutes, and limit each member 
to 10 minutes on the first round. 

Mr. Secretary, my guess is, and this is really a parochial view 
on my part, but I can tell you that in my State one of the things 
that is going to cause some difficulty — you are suggesting a $470 
million savings over the next 4 years, on the so-called means-test- 
ing farm programs. 

I think the rest of the members know it, but for the record, they 
are suggesting that if you have $100,000 a year in income from any 
other source, or all other sources other than agriculture, you would 
not be eligible, for example, for the $50,000 per person target pric- 
ing and agricultural program. 

That would mean, we will say, some guy who is lawfully poor but 
he is out there farming, maybe even a sharecropper — if he inherits 
money and draws $100,000 in interest, he still would not be eligible 
for anything under this program. Is that correct, for agricultural 
programs? 

Secretary EsPY. Well, the Senator is aware that we are targeting 
$100,000 in off-farm income; and if we stick to this as a classic def- 
inition, the Senator would be correct. 

Senator Bumpers. I used to be a drugstore cowboy, and practiced 
law, and farmed. I was a cattle farmer, so the programs were not 
all that important to me. But there were a lot of ASCS programs, 
for which I would not have qualified, I take it. Does this include 
ASCS, Soil Conservation Service, and so on? 

Secretary EsPY. Yes, sir. 

Senator Bumpers. That includes everything? 

Secretary EsPY. Yes; it currently does. 

Senator Bumpers. Who came up with that idea? 

Secretary EsPY. Well, I can tell the Senator that I do not know 
who came up with it, exactly, but I did not. 

Senator Bumpers. But you are on board with it? 

Secretary EsPY. Well, in my former life as a Member of Congress, 
I took a different view. This was not a new proposal, exactly. There 
are some changes in what has been proposed and we passed. But 
I am on record, as a former Member of Congress, to opposing this 
kind of effort. However, in my current life, I am a member of the 
team that will support it. 

Senator Bumpers. Would a person with an outside income of 
$100,000 qualify for a Wetlands Reserve Program, where we take 
an easement on their land for 10 years? 

Mr. Dewhurst. The $100,000 off-farm income limit would apply 
to farm price support pajnnents. 



11 

Senator Bumpers. Farm price supports? 

Mr. Dewhurst. Yes, sir. 

Senator Bumpers. So the answer to the preceding question was 
slightly misleading, was it not? For example, if I had Soil Con- 
servation come out and test the soil on my farm, which they used 
to do with some frequency at no charge, that would not qualify 
under this? In other words, if I had over $100,000 in outside in- 
come, Soil Conservation could still come to my farm and test my 
soil? 

Mr. Dewhurst. Yes, sir; the $100,000 applies to Commodity 
Credit Corporation [CCC] farm price support programs. The Wet- 
lands Reserve functions under its own rules: People submit bids, 
and decisions are made based on the conservation benefit, and so 
forth. 

Senator Bumpers. We need to nail this down. You are talking 
mostly about target pricings, the deficiency payments, is that what 
we are talking about? 

Mr. Dewhurst. Yes, sir. 

Secretary Espy. Yes. 

Senator Bumpers. Could you furnish this committee with a more 
detailed description? Maybe we have it. Do we? Could you furnish 
us with a more detailed description of how this would work? 

Mr. Dewhurst. Absolutely, yes, sir. 

[The information follows:] 

Off-Farm Income Eligibility Criterlv for Farm Programs 

The Administration's budget proposes that the Food Security Act of 1985 be 
amended to make persons with off-farm income in excess of $100,000 ineligible to 
receive aiw CCC income support payments, land diversion payments, or price sup- 
port benefits beginning with the 1994 crop year. This woula help target CCC price 
and income support benefits to family farmers rather than high income persons not 
dependent on farm income. The eligibility criteria applies only to the commodity 
price and income support program benefits of the CCC. These include such things 
as: price support loans, loan deficiency pajmients made under marketing loan pro- 
grams, deficiency payments determined by target prices, land diversion payments 
if they are utilized in the commodity production adjustment programs, and wool or 
mohair incentive payments. All other programs except for the CCC commodity pro- 

?ram payments and price support loans would not be affected by the proposal, 
herefore, such programs as the Conservation Reserve Program, Wetland Reserve 
Program, and otner conservation cost sharing and service programs would not be 
affected by the eligibility criteria. 

The eligibility criteria would be based on adjusted off-farm income which is de- 
fined as gross revenue from all sources except for farm income less business ex- 
penses incurred in producing revenue from nonfarm sources. Internal Revenue Code 
definitions would be utilized to determine business expenses (deductions) for pur- 
poses of computing adjusted off-farm income. 

MEAT INSPECTION PROGRAM 

Senator Bumpers. Mr. Secretary, in visiting with me earlier yes- 
terday, you said we had the Meat Inspection Program on the agen- 
da before the E. coli breakout in the western part of the country. 
Is that correct? 

Secretary EsPY. In my meeting with the Senator yesterday, we 
discussed my vision with respect to meat inspection. Based on my 
studies for my confirmation, it became very clear to me that we 
could not continue down the road that we are presently on. A meat 
inspection system, based on organoleptic standards which you can 
see, smell, feel and taste, seems to me to be fairly outdated. 



12 

And I intended to move forward soon after confirmation with a 
series of forums or hearings, to determine the best way to change 
this. And, of course, sometimes events in life will overtake the best 
designs of men, and we had E. coli, and we had a very serious 
health threat in the Pacific Northwest and Western United States. 

Since then, I have jumped into this with both feet. And we are 
far along the road, in coming up with a more science-based meat 
inspection standard, for the midterm and long term. However, be- 
fore we get there, we have to assure the American public that we 
are currently seeing everything that is seeable; which means, we 
must hire more meat inspectors to see what we can see. 

Senator Bumpers. Did you see the story in The Post yesterday, 
where 10 people have died in Florida in the past year, from eating 
oysters? 

Secretary Espy. I did not see that. 

AQUACULTURAL PRODUCTS 

Senator Bumpers. It is a naturally occurring bacteria that has 
always been there. When I was a child, we were taught not to eat 
oysters because of that. But in any event, we still do not inspect 
very many aquacultural products, do we? 

Secretary Espy. Yes, sir; we inspect beef and poultry. 

Senator Bumpers. No; I am talking about fish. 

Secretary Espy. No. 

Senator Bumpers. Fish, shellfish. 

Secretary Espy. No, no; we do not. We certainly do not, at USDA. 

Senator Bumpers. Why? Can you give me any rationalization for 
having a very scientifically developed and expensive food inspection 
process for pork and beef and poultry, and not aquaculture? 

Secretary Espy. I cannot, to be honest with you. I think that is 
certainly something that bears thought. I do not know how the bi- 
furcated approach was developed. The Food and Drug Administra- 
tion [FDA] inspects fish. Commerce inspects fish, and USDA in- 
spects meat and poultry. I do not know how that developed. 

Senator Bumpers. I wanted to say to you, Mr. Secretary, as a 
Senator from a State with by far the biggest poultry industry in 
the United States, 1 out of every 12 people in my State are directly 
or indirectly involved in the poultry industry, so it is very impor- 
tant. But I can tell you one thing: Nobody has a greater interest 
in a safe, edible product than the industry. 

Secretary EsPY. Yes. 

Senator BUMPERS. I do hope that you will keep this committee 
apprised, from time to time, on any additional steps you are taking 
on this, so we will be sort of in tune with you all along. 

Secretary Espy. I would like to compliment the industry. Sen- 
ator, on its efforts to work with us to develop this pathogen reduc- 
tion strategy. We have met with the industry on many occasions. 
We have also met with consumer groups. I have met with whistle- 
blowers, who have served on the frontlines of the meat inspection 
for many years, and they have given me several ideas that we have 
incorporated into our strategy. So, certainly, I will work with this 
subcommittee and you, Senator. 



13 

FOOD SAFETY CONSORTIA 

Senator Bumpers. Mr. Secretary, are you familiar with the food 
safety consortia that this dynamite Senator got passed about 3 
years ago, where Iowa and Kansas and Arkansas cooperated in a 
special grants program? We took poultry; Iowa took beef; and Kan- 
sas took pork. Are you familiar with that program? 

Secretary EsPY. Not in detail. 

Senator Bumpers. I am going to ask you, at some time, to visit 
with the head of that consortium; because thev have done some 
very, very scientific work in the past 3 years. Those universities — 
the University of Arkansas, the University of Kansas, the Univer- 
sity of Iowa — have been doing this; and it would be a real tragedy 
not to take advantage of a considerable amount of money that we 
have pumped into that consortium, to do precisely this. 

Secretary Espy. Certainly. We will work with them. 

NEW MEAT inspectors 

Senator Bumpers. Now, along the lines of dealing with inspec- 
tion. I must say, why did we hire 160 new meat inspectors? I mean, 
that is just a drop in the bucket, is it not? 

Secretary Espy. We want to hire, we intend to hire, 160 new 
meat inspectors, if the stimulus package passes in current form. I 
am not aware of the changes in the stimulus proposal. 

Senator Bumpers. I mean, that would not be one-tenth of one in- 
spector for each plant in the country, would it? How many meat, 
poultry, and pork plants — ^beef, poultry, and pork plants — do we in- 
spect? 

Mr. Dewhurst. We have got 7,000 inspectors. 

Senator Bumpers. 7,000? That is my point. What is 160 inspec- 
tors going to do? Oh, 7,000 inspectors? And how many plants? 

Mr. Dewhurst. I do not know how many plants. 

Secretary EsPY. I do not know how many plants, exactly. 

Mr. Dewhurst. We know that the agency, given the current pro- 
gram and its current rules, is understaffed by about 650 inspectors 
right now. The Secretary has put in place a program to fill those 
vacancies over time. The stimulus package is the first step. If the 
budget were carried through, the vacancies would be filled, and the 
agency would, in fact, get increased employment for the industry 
by 1996. It is a phased kind of program. So there is some logic to 
it, in the sense that it is the beginning of a process. But certainly, 
the 160 inspectors is not some magic number that is going to solve 
the problem overnight. 

Senator Bumpers. Mr. Secretary, do you anticipate, just based on 
what you know right now, using new scientific procedures for in- 
specting meat and poultry in this country, do you foresee that 
being a laborsaving device? 

Secretary EsPY. Yes, sir; we do. But I do not have any idea when 
we will be able to arrive at the point where we can see the real 
savings in the manpower part of it. We wish to develop a system 
based on microbiology. In many ways, we are almost there. But in 
my opinion, it is impractical to apply the current standard to in- 
specting beef. We have thousands and thousands of carcasses mov- 
ing at rapid rates, which is another problem, frankly. 



14 

In the last 10 or 12 years, we have seen a reduction in the man- 
power of the work force here, with an increase in the rate at which 
the meat would come up the line. So we are trying to move these 
into greater balance and into greater harmony. But, as always, it 
is a matter of money. 

Senator Bumpers. Senator Cochran. 

STATEMENT OF SENATOR COCHRAN 

Senator CoCHRAN. Mr. Chairman, thank you. 

Welcome, Mr. Secretary, to your first hearing before our Appro- 
priations Subcommittee. I want to commend you on your effort to 
concentrate attention on Washington bureaucracy first, rather than 
rushing out into the States and counties, closing offices that might 
or might not end up being a more efficient way to deliver services. 

USDA REORGANIZATION 

I do have some questions though, and you may be able to answer 
this, as to how the administration can expect to project a $61 mil- 
lion savings in this fiscal year by reorganizing the Department of 
Agriculture, when no specific plan has been developed or agreed 
upon to achieve reorganization. 

Secretary EsPY. Senator, I appreciate the question. We think we 
have a pretty reasonable guess out of the Office of Management 
and Budget [0MB], in consultation with USDA, to reduce between 
5 and 6 percent in work force over that period of time. It is mostly 
based on employment, reduction in employment levels. 

And we are not at the point where we can announce a plan; but 
I can certainly say to the Senator that we are very close to being 
able to do this, principally because of the good work done by Sec- 
retary Madigan. We have studies already done by 0MB, and oth- 
ers, all pointing us in the right direction. So I do not think we need 
a lot of new studies. I do not think we need very many hearings, 
to be honest with you. 

I think that we have to make certain fundamental decisions. I 
know how much we will save, if we streamline the Office of Public 
Affairs. I know how much we will save, if we consolidate the seven 
or eight personnel offices that we have; we have eight or nine dif- 
ferent personnel offices in USDA, and I think that we can certainly 
have significant savings, if we just tend to consolidate that. 

Then, together with integrated computer systems and manage- 
ment systems, paperwork, and then attacking travel and the rest 
of these assorted costs, I think that we are in the ballpark. I hope 
that we will be able to arrive at a savings of that level. 

Senator CoCHRAN. Well, I wish you well in being able to make 
the Department more efficient. I know you share the view with me 
that, in the process, we ought not to sacrifice services that are 
needed and that are important to production agriculture. 

PROPOSED FARM PROGRAM REDUCTION 

When you look at the proposals in the President's agriculture 
budget, it causes some concerns, because it seems that farm income 
might suffer if these proposals are adopted. The cuts in program 
payments and program spending would result in yet another de- 



15 

crease in farm income. I was looking at a study that had been done 
by Texas A&M for a research group, the Agricultural and Food Pol- 
icy Center, which projects that income on Kansas wheat farms, for 
example, could decline up to 360 percent under the Clinton rec- 
ommendations. 

Another concern is the increase in taxes, such as the Btu fuel 
tax, on agriculture. And the increase in the diesel fuel tax, and how 
it would affect agriculture, adding as much as 10 cents per bushel 
to the costs of transportation of agricultural commodities; feed 
grains and wheat, in particular. 

These are concerns that are not just criticisms, but are very real; 
and I wonder whether the effect of this budget and the proposals, 
all taken together — cutting back support programs, cutting back 
farm income supports, adding taxes that would be particularly 
hurtful to farmers and those in other production agriculture enter- 
prises — would really have a negative effect on job growth and eco- 
nomic health at a time when we are trjdng to stimulate economic 
growth, job production, and the other factors and elements in our 
economy that are of principal concern. 

Do you think there is a justification for cutting the farm pro- 
grams, as much as the budget is proposing that they be cut? Or do 
you think we will have an opportunity to negotiate some of these 
issues with the administration, as we proceed to develop the appro- 
priations bill? 

Secretary EsPY. Senator, I think that there is a very good chance 
that these proposals will not look the same coming out as they look 
going in. But, we must reduce the budget deficit, and we must get 
the debt down. And agriculture has to play a role. Frankly, I think 
that we played a great role in the past; because our portion of the 
budget, I believe, if my figures are correct, is less than 1 percent, 
so there is really not a lot there to cut. 

I am absolutely committed to improving farm income. That is 
why we made a decision to open up the Farmer Owned Reserve to 
the maximum allowable limit. We eliminated the double discount 
on low test weight com, so that our farmers receive more value for 
low test weight com placed under loan. 

We have taken steps to suspend Farmers Home foreclosures, to 
give the farmers the benefit of the doubt. The American taxpayer 
should not have to pay for a farm that cannot cash flow, but if it 
can, then we think the farmer deserves the benefit of the doubt. 

And when it comes to alternative uses of commodities like etha- 
nol, in our decision to exempt ethanol from the Btu tax, we have 
shown our commitment to improve farm income. However, we must 
cut the deficit. I am in support of the general Btu tax. As I said, 
there are exemptions that certainly must be seen; but I am in 
agreement with the general Btu tax, because the overall goal, 
above and beyond reducing this incredible debt and deficit, is cer- 
tainly reducing the interest rates on everyone, including the Amer- 
ican farmers. 

If we can just get the interest rates down as a result of a reduc- 
tion in the debt — a percent or 2 — that, more than anything else, 
Senator, will have a beneficial effect on overhead costs reduction 
and on the bottom line. So that is where we are focusing our atten- 
tion. 



16 

Also, I might say to you that all this must be taken in context. 
While we are floating these proposals, we have an eye toward what 
is happening in the General Agreement on Tariffs and Trade 
[GATTJ. I believe that the strength of agriculture and the strength 
of farm income, to a great degree, will depend on what we can do 
within the GATT and North American Free Trade Agreement 
[NAFTA]. If we have a good NAFTA agreement, then we think that 
will have a positive impact on agriculture of about $2 to $2.5 bil- 
lion, in particular for dairy, beef, and com. So all of it must be 
taken into context. 

DISASTER ASSISTANCE 

Senator CoCHRAN. One area that is of particular concern to many 
States right now is the disaster assistance that is needed to over- 
come the devastating effects of freezing rain and blizzardlike condi- 
tions in the South, particularly our State of Mississippi, and in 
Georgia and Florida, where tornadoes ripped through the States 
and damaged, in addition to the harsh, freezing weather, much of 
the fruit and vegetable crops there. Flooding in Arizona has left the 
vegetable crops as total losses in some areas. 

Earlier, Senator McCain and I, and Senator Coverdell of Georgia 
brought some of these problems to the attention of the Department; 
and suggested that it might be appropriate — if we had any unex- 
pended disaster assistance funds that have already been author- 
ized to be paid out for the 1990, 1991, and 1992 crop-years — that 
a program be developed to make these funds available to eligible 
disaster victims who suffered damage in this year's severe weather. 

Before getting a response to that, I notice that on April 9, you 
announced that disaster assistance would be made available to pro- 
ducers of com crops whose harvest was of low quality due to natu- 
ral disasters in 1992, even though the quantity harvested would 
not usually qualify them for disaster payments. 

My question is: Since you were able to develop some innovative 
approach to disaster assistance for those com farmers, would you 
be able to come up with some assistance for those in the State of 
Mississippi, for example, where at least 80 percent of our peach 
crop has been destroyed, and our entire blueberry crop is gone, and 
early season vegetables have been severely damaged; and other 
States who are similarly situated? 

Secretary ESPY. Senator Cochran, we would like to help. We will 
work with you, to help. And I think, just as we have been fairly 
imaginative and creative in developing solutions to farm disaster 
problems, we will certainly work toward doing the same thing with 
regards to Mississippi producers. 

Senator Cochran. Thank you very much. 

Senator Bumpers. Senator Cochran, if I may, and I will not 
charge you for the time. That is a very relevant question you 
asked, but I think you are asking about 1993 assistance, for exam- 
ple, for your blueberry farmers. There is no money authorized for 
1993 that I know an3dihing about. So the authorizing committee 
and this committee are both going to have to come up with some 
money. 

Senator Cochran. I wonder if anything was authorized for those 
com farmers? 



17 

Senator Bumpers. Yes; I do not like that, and I will come back 
to that. I am as upset as you are about that, Mr. Secretary. 

Senator CoCHRAN. We have got wheat farmers that had inad- 
equate yields, that would also qualify, but they are not included. 

Senator BUMPERS. Our wheat farmers were among them. But the 
point I want to make is: In 1990, when we authorized the $1.75 
billion, and then the additional $482 million, that was for 1991 and 
1992 only, was it not? 

Secretary ESPY. Yes. 

Senator Bumpers. And you are talking about corn, the quality of 
the corn crop of 1992? 

Secretary Espy. We are talking about 1992. 

Senator Bumpers. I can tell you, Mr. Secretary, that ain't gonna 
fly. When you consider my wheat farmers, and his wheat farmers, 
and everybody else. Patty Murray has a question here. The Senator 
from Washington asked about their wheat farmers, who had ter- 
rible quality crops. I just do not think it is wise to just pick out 
a particular crop for 1992, and say we are going to provide you as- 
sistance. 

CROP INSURANCE 

Senator Kerrey. Thank you, Mr. Chairman. I only have a couple 
of questions. I was actually going to do crop insurance last; but let 
me stick with it now, while we are on this question. 

Mr. Secretary, the crop insurance program in Nebraska is a pro- 
gram that works. Our loss ratio is under one. We have seen rather 
steady improvement in management in the last couple of years. In 
this particular disaster program here, I was pleased to see that 
there was a requirement, at least, to purchase crop insurance in 
subsequent years; although I think more emphasis needs to be 
given to it. 

I do not see how we can run a disaster program out of Washing- 
ton. You just heard just a small piece of the problem. If you give 
me something, then you have got to give something to somebody 
else. And who am I to decide, sitting here in Washington, DC, who 
is and who is not needy? If there is an expectation that every single 
time somebody is not insured, they can come to Washington and 
get bailed out, crop insurance is going to fail. It cannot possibly 
succeed. 

That has been the principal problem. Every single time we walk 
to the edge, there is always somebody that comes to Washington 
and says, "Well, I forgot to buy it. How about letting me have some 
disaster assistance? Next year, I promise, I will buy the insurance." 
It does not work, Mr. Secretary. The message is out there. They 
know they can come here and get bailed out, if they do not buy it. 

Furthermore, I must say that — and I am looking at the areawide 
proposal that is out there, just looking at the counties that are rec- 
ommended here — it is very much like saying to me you will sell me 
some house insurance, but it will not pay unless every house on the 
block burns down. That is, basically, what the areawide protection 
provides me. So they are not going to buy it. 

And particularly, given what they hear today, they are going to 
say, "Well, the heck with it. Congress will bail me out. I'll hit 'em 



18 

in an election year, and they'll bail me out. I just know it will hap- 
pen that way, so why buy the crop insurance?" 

Mr. Secretary, I think we either have to send a message out that 
says we are going to have crop insurance, or pull the plug on the 
whole darned thing and just admit that we are going to porkbarrel 
the assistance. I have written a letter to Leon Panetta about this, 
and I would just like to know if there is anything else I can do on 
this proposal, to make it clear that we are going to use crop insur- 
ance as the way to control risk. 

Secretary EsPY. Senator, the catch-22 aspects of the crop insur- 
ance program are quite evident, and I do not have any argument 
with what you said, at least within the context of what we have 
done with corn so far. We have required that, in order to get bene- 
fits, producers with severe crop losses will have to purchase the 
crop insurance for next year's crop. But that requirement is sort of 
after the fact. And I admit to that. 

We have to fundamentally reform crop insurance. Everything you 
have said, I agree with. We have to mandate the signup or scrap 
the whole thing, and then just go to annual appropriations for an- 
ticipated disasters. 

Senator Kerrey. I do not look forward to doing that, Mr. Sec- 
retary. I must say, an annual appropriation for a disaster program, 
I think, is going to be kind of difficult to get. It is going to look 
like a dogpile, and I do not think it is going to be anything that 
is very fun to do. But let me ask you about 

Secretary Espy. It is a very serious issue, and we are certainly 
dedicated to working with everybody who wants to resolve it. 

Senator Kerrey. It is serious, but it is not pretty to watch. That 
is the problem. 

Secretary Espy. No. 

TRANSPORTATION FREIGHT CAP ON RUSSIAN FOOD AID 

Senator Kerrey. Mr. Secretary, as to the problem we are having 
coming up with a means to provide assistance to the Russian peo- 
ple for food. There is, as you have commented on, some difficulty 
with direct humanitarian assistance, as a consequence of having a 
$30 million cap on transportation. 

My preference, personally, is to use the commercial credit guar- 
antees. I believe we made a mistake in 1990, and then did it again 
last fall, in tightening those creditworthiness requirements. And I 
would just like to know if the administration has considered asking 
Congress to change the creditworthiness test in the current law, 
which would give you more discretion in providing these export 
credit guarantees? 

Secretary EsPY. Thank you for the question. Senator. I am still 
thinking about it. But I have a slight problem with reducing the 
creditworthiness standard for one nation alone, when we operate 
this GSM 102 program this year to 42 other nations. So just like 
wheat, corn, whatever, if we do it for one, we will have to do it for 
the others. 

Senator Kerrey. But the whole basis of the President's approach 
to Congress in this regard is to say that Russia is unique. And our 
whole sale will not be easy, I must say, Mr. Secretary — polls show 
80 percent of the people are opposed to it anyway — unless I can 



19 

make the case that Russia is unique. It is going to be difficult for 
me to convince people to put money into it under any cir- 
cumstances. 

Secretary Espy. If you base it on uniqueness, a Russia-only strat- 
egy, then that is something that I am in favor of, frankly. We have 
got to do something quickly. 

Senator Kerrey. Yes, I know. 

Secretary Espy. Just like crop insurance, we have got to make 
up our mind if we are going to do it. If we are not going to do it, 
then there might be some administrative actions I can take with 
regard to freight. But I would like, first, to see if this Congress, if 
the Senate will do something with regard to lifting the freight cap. 

Senator Kerrey. It is going to be easier to relax the creditworthi- 
ness test. But let me go on to another question, Mr. Secretary. 

Secretary EsPY. Might I say, frankly, that I am very upset with 
what I have seen lately in the actions of our maritime industry. 

Senator Kerrey. I agree. 

Secretary ESPY. We all know what is happening, and we have 
seen tremendous increases in estimated freight charges over the 
last 2 or 3 days. 

Senator Kerrey. I agree with you. 

Secretary Espy. I think it is a travesty. 

triple-base legislation 

Senator Kerrey. You have a letter, Mr. Secretary, that was sent 
to you on April 16, signed by the Executive Director of the Natural 
Resources Defense Council, the President of the National Audubon 
Society, the President of the National Wildlife Federation, the Vice 
President for Policy, the Center for Resource Economics, the Execu- 
tive Director of the Sierra Club, the Executive Director of the Isaac 
Walton League of America, identifying a bill that I introduced as 
a dangerous piece of legislation. [Laughter.] 

And I would urge you, Mr. Secretary, to see this letter as the 
sound of six knees jerking. 

This is in response to my triple-base legislation. It simply says 
that if we are going to break the link between benefits and man- 
dates, we should clearly break the link. These six well-intended 
people misdescribed the legislation, and unquestionably 
misdescribed the impact. 

They argue that it is going to cost money. The Chairman of the 
Agriculture Committee requested a CBO estimate, and CBO has 
come back and said that it will save $270 million. If we are going 
to break the link, Mr. Secretary, and raise the triple-base to 25 
percent, we break the link. It seems to me that we ought to just 
come and say, we understand that we are not going to get con- 
servation on the cheap, and break the link as well on those compli- 
ance requirements. 

I hope that you will not overreact to this letter, and become fear- 
ful that these six organizations represent either, necessarily, their 
membership, or what this Congress thinks. 

Secretary EsPY. I will read that letter with interest, and look for- 
ward to participating in deliberations on the new farm bill. 



20 



USDA REORGANIZATION 



Senator Kerrey. One last thing, Mr. Secretary, on the USDA re- 
organization. My concern is not the consolidation of offices of ASCS 
and SCS and Farmers Home. That to me makes some sense, to 
have some colocation. 

I have got some concern about this cross-training proposal that 
I have heard, that somehow I am going to be able to cross-train a 
single individual to be able to do the work that is required for an 
ASCS person, and a Farmers Home person, and an SCS person. In 
fact, there has been some reference to what are essentially State 
employees, that the Extension Service is going to be picked up as 
well. 

Could you respond to that? I am just trying to respond to my own 
constituency, who are concerned about some of the things that they 
are hearing. Are we going to do cross-training, or is it just 
colocating that we are looking at? 

Secretary EsPY. Colocating is certainly the most significant ele- 
ment of it. And a reduction in work force would result. I would 
favor some form of cross-training, but to mandate that an employee 
could do every job is probably impractical. 

Senator Kerrey. Yes; I think it is very impractical. I agree, I 
think you csrtainly have assessed it the way I would. I think it 
would be, in some cases, advisable to have some cross-training; but 
to mandate it, I think, would be a big mistake. 

Secretary EsPY. I made a trip into Senator Glenn's area for a 
rural development conference last week, and I had a chance to tour 
a one-stop shop in Ohio on my way to the airport. I was very im- 
pressed that there in that office we had Farmers Home Adminis- 
tration, ASCS, Soil Conservation Service, and Extension Service 
from the university there as well. And I do not believe that those 
employees have been cross-trained. 

But there were several farmers there, working on their farm 
plans. All they had to do was walk several feet from one office to 
the other. And that is something that we would like to see. 

DEFICIT REDUCTION 

Senator Kerrey. Mr. Secretary, I think the farmers from Ne- 
braska — I speak for them — they are impressed with the President's 
commitment to deficit reduction. They do not want me to say, 
"Okay, I am going to do deficit reduction, except for agriculture, or 
except for Nebraska." 

I think we will have, unquestionably, a difficult time, and plenty 
of arguments about precisely where it is that we are going to get 
these cuts. But there is no question, in my judgment, that there is 
enthusiasm, great enthusiasm — probably stimulated even further 
by the President's remarkable State of the Union Address — to take 
spending down. 

Secretary Espy. Thank you, sir. 

Senator Bumpers. Senator Bond. 

Senator Bond. Thank you, Mr. Chairman. 

I would like to yield first, a minute, to my colleague from Penn- 
sylvania. 



21 



STATEMENT OF SENATOR SPECTER 



Senator Specter. I thank my colleague from Nebraska. From 
Missouri? 

Senator Bumpers. He will not yield to you again, if you say that. 

Senator SPECTER. I was about to say, Mr. Secretary, I join my 
colleagues in welcoming you here. That may be adverse, but I just 
wanted to interrupt for a moment, to submit some questions for the 
record. Regrettably, I cannot stay. But I thank the Chair, and I 
thank my colleague from Missouri. 

STATEMENT OF SENATOR BOND 

Senator BUMPERS. Senator Bond. 

Senator BOND. Thank you, Mr. Chairman. And I thank my col- 
league from New Jersey. [Laughter.] 
And I join in welcoming Secretary Espy to this committee. 

AGRICULTURAL RESEARCH 

Mr. Secretary, we have got a lot of things to talk about. We are 
very pleased to see you here, and some of the areas on which we 
agree. I am pleased that the President's 1994 proposal adds $30 
million in 1994 and $480 million over the 4-year period, to the Na- 
tional Research Initiative. I think this is the direction our research 
dollars should be going. 

I had, last Friday, a very exciting visit to the University of Mis- 
souri at Columbia, where the Food for the 21st Century Program 
is making some tremendous strides in agricultural research. They 
are ready, willing, and able to compete for competitive grants. And 
I think the research that is going on in agriculture across the coun- 
try is very valuable. 

On meat inspection — there has already been some discussion of 
that — the very first piece of legislation I introduced was with the 
chairman's colleague. Senator Pryor. We introduced the food safety 
research bill, which is a part of the research title of the 1990 farm 
bill. It was our view then, and still is, that by developing genetic 
engineering tests, microbiological and chemical contaminants can 
be identified in real time by monoclonal antibodies. 

And I think that, with as much concern as we have over food 
safety, that some of the dollars, in addition to hiring additional in- 
spectors, ought to go into getting the most out of this high-tech- 
nology, new-technology means of ensuring food safety. I think you 
touched on that research earlier. Any further thoughts on it? 

Secretary EsPY. Senator, I would agree with you. We have a 
short-term strategy, and a long-term strategy. The short-term 
strategy obviously includes hiring more people to man the lines, to 
see what can be seen. And that is pretty costly. 

The long-term strateg>' must be in microbiology and in sound 
sciences. So, we have embarked on this pathogen reduction strat- 
egy, based on highlighting the extent to which we can examine 
foodborne pathogens. And we are well on the way to doing it, inside 
the stimulus package and the long-term investment package. We 
have a significant increase in funds for both. 



22 

MASTER WATER-CONTROL MANUAL UPDATE 

Senator Bond. Another issue that is of vital importance through- 
out the central part of the United States, and I know from your 
previous service in the Congress, you are well aware of the impor- 
tance of the Mississippi and the Missouri rivers for agriculture. 
Have you been given an opportunity to participate through your 
Department in the study that the Corps of Engineers is doing, to 
update the master water-control manual for the Missouri River? 

Secretary Espy. I have not yet. But, President Clinton has di- 
rected Secretary of Defense Aspin to ensure our participation in re- 
viewing any action considered by the Corps of Engineers. 

Senator Bond. Well, a number of us have written to the Presi- 
dent, saying that when the Corps undertakes this study, it is vi- 
tally important that agriculture be included. Because agriculture is 
vitally dependent in my State, and some other States well-rep- 
resented at this table, on effective, efficient water transportation; 
both fertilizer going up, and food and food products coming down 
the river. And I have here a letter that I sent to the President, 
along with a number of other Senators, including a number on this 
committee; and his reply of March 25. Would you please consider 
the President's reply and review the process? 

I know the last thing you need is more work, but this is of vital 
importance to agriculture in the Midwest. 

conservation reserve program 

Another thing that I have been very much interested in, in my 
service here, is how we can enhance conservation through the agri- 
culture program. We have been hearing a lot about the Conserva- 
tion Reserve Program. It had some good benefits. It took land out 
of production. People are saying it is too expensive. There may be 
a freeze on CRP signups. 

First, what is your view of the CRP program? And second, and 
more important, where do you see us going when it comes time for 
land to come out of CRP? 

Secretary Espy. Senator, I stand in support of the CRP. An ex- 
amination of the benefits within this farm bill shows me that most 
farmers participate. That it is costly, but I think the cost is worth 
it. And I would like to see it continue. 

Now, whether it is increased, I think, is all a function of the 
budget; because the 1995 farm bill will certainly be budget-driven. 
But that is up to the Senate and the House of Representatives. One 
second. 

[Pause.] 

Secretary Espy [continuing]. I am told. Senator, we have money 
in the budget to sign up another 1 million acres into the CRP. 

wetland reserve program 

Senator Bond. Obviously, the Wetland Reserve Program is of 
great interest to us as well. I think the Wetland Reserve Program 
has a great potential. But we have got about $1 billion a year going 
into the program. Some of the land is going to start coming out in 
1996. Do you all have any thoughts yet on what you are going to 



23 

do with it? How are we going to keep from losing the benefits of 
it? 

Secretary EsPY. In the meantime, we certainly have a new farm 
bill, and a lot of questions will be answered in that debate. 

Senator Bond. One thing that I might suggest to you, as a very 
high priority: A week before last, I took a visit with some folks 
from Missouri to Booneville, AR, in the chairman's backyard, where 
we talked with people at the Agriculture Research Service, 
Booneville, AR, Station, where they have done some fantastic 
things in agro-forestry. 

ALLEY-CROPPING 

Alley-cropping is permitted under the 1990 farm bill, that was a 
provision we worked hard to get in. And I think, as vou look at 
some of the challenges in what to do with highly erodable land, get- 
ting people to plant it in trees, get the alley-cropping started, there 
are a number of ways you can do it, provides environmental bene- 
fits that are significant. 

And probably the best thing about it is, the work that Henry 
Pierson has done at Booneville and elsewhere shows that it can be 
a very valuable tool for additional income to the farmers. This is 
a way I think we can make significant gains for the environment, 
prevent some of the highly erodable land from coming back into 
production, and do so with market-driven forces. The revenue that 
can be earned from nut production and lumber on it, I think this 
is something I certainly want to look at, and I would urge you to 
do so as well. 

Secretary EsPY. We will. 

[The information follows:] 

The Department has offered alley cropping as a practice through the Conservation 
Reserve Program [CRP] since the 10th signup. Although this practice has some real 
potential for providing significant environment benefits, interest shown by produc- 
ers has not been as responsive as we would have liked as is evidenced by only 53 
acres being enrolled to date, it appears that producers are reluctant to enter into 
such a long term investment since it can take 10-15 years for a tree, such as a wal- 
nut or a pecan tree, to reach a commercially viable level of nut production and sev- 
eral more years before it can become marketable for lumber. Nevertheless, the De- 
partment will continue to promote this practice in hopes of generating some addi- 
tional interest should funding become available for future signups. 

Senator Bond. One final thing on conservation. Senator Cochran 
raised the question about some of the costs to farmers in this pro- 
posed Economic Plan, the cuts in farm payments, the increase in 
triple-basing, as well as the burdens of the Btu tax and the inland 
waterway fee. 

Our Food and Agricultural Policy Research Institute has indi- 
cated that that would take about $100 million a year out of net 
farm income in Missouri, with disastrous effects when it is fully 
phased in by 1996. 

I think we need to look at some of the other ramifications as 
well, because by 1996, with expanding the triple base, the dif- 
ference in return per acre for a wheatgrower, participating versus 
not participating, is less than $10. For a corn-producer, it is less 
than $20. 

My colleague from Nebraska has raised the specter that, if we 
are not going to keep them in the program, then we cannot expect 



24 

them to perform conservation services. And I think that there are 
some of us who have looked at it who feel that this was not thor- 
oughly thought through. That the prospect of making the farm pro- 
gram very unattractive, or much less attractive, economically, will 
drive people out; and we will have a loss of control of the environ- 
mental benefits that come about. 

You mentioned that you are going to be looking at that. I hope 
you will give that some serious consideration, because I think that 
we could be looking at some unintended consequences. First and 
foremost, on the farmers in the program who may be driven off the 
farm. But second, on the other benefits that have been an impor- 
tant part of the agricultural program. 

Secretary EsPY. Most of the program changes which you cite 
have been dedicated to the 1996 crops. And I would like to empha- 
size that when it comes to mandatory impacts, in fiscal year 1994 
we do not envision a lot of mandatory cuts. We will have a very 
vigorous farm bill debate, and the farm bill will develop out of a 
consensus, I am sure. These may continue, and they may not. 

But we need to get the deficit down. That is why within the 1994 
fiscal year, mostly we are looking at discretionary reductions. We 
are taking a tremendous hit in our administrative functions over 
at USDA. We want to do that because then we can save money in 
the farm programs. 

Senator Bond. I would agree with you on the need to cut the 
Washington bureaucracy, and I would like to privatize crop insur- 
ance, but we will discuss those later. And I thank the Chair for the 
time. And thank you, Mr. Secretary. 

Senator Bumpers. I want to publicly thank my colleagues and, 
for the record. Senator Bond, for coming down to see our Small 
Farm Research Center. That is a project that I got established 
there, simply because we used to have an old TB sanitarium and 
they had about 2,500 acres of land that they farmed, used the prod- 
ucts off the farm to feed the people there back in the days of sani- 
tariums. And we got that thing established there, and they are 
doing a really unbelievable job in agro-forestry research. 

But the main point I want to make is not only to thank Senator 
Bond for coming down and spending an afternoon with me at that 
facility in which I have a great deal of paternal interest, but to say 
that so many politicians say things and do things for public con- 
sumption back home. Senator Bond did not have to come down 
there. But he is interested in it, and is even planting walnut trees 
on his own land, and that is one of the things they are doing there. 

So it is a great conservationist interest to him, and he dem- 
onstrated it by that. And I hope to reciprocate. I will go and look 
at anything you want me to in Missouri. 

Senator Bond. We have got some good places for you. Thank you. 

Senator Bumpers. Senator Feinstein. 

Senator Feinstein, we take people on each side in order of their 
showing up here. 

STATEMENT OF SENATOR FEINSTEIN 

Senator Feinstein. Thank you very much, Mr. Chairman. 



25 

Mr. Secretary, I have three questions. The first is on the meat 
inspection, poultry inspection. The second is on some Federal clean- 
air standards. And the third is on methyl bromide. 

MEAT INSPECTION 

Let me ask the first. As a Senator from a western State, and I 
think I indicated this to you privately, I do not think this issue is 
to be underestimated in terms of its importance to people. And the 
more I talk to people about it, the more I come to the conclusion 
that we are in a loaded time-bomb situation; that our meat inspec- 
tion techniques may be archaic. 

You referred to the fact, in your answer to the question of the 
chairman, that you were looking at a more science-based meat in- 
spection program. I take it that means you are looking to update 
and modernize the methodology involved in meat inspection. 

I want to say to you, I think this is extraordinarily important. 
I gather there are countries that have meat inspection programs, 
that do it much better than we do. And one of them that has been 
suggested to me is France. 

Well, I would like to know if you would care to elucidate on what 
you are doing to improve the methodology of meat inspection. And 
I gather it is 160 meat inspectors, plus an additional 40 — or 200 
net — new meat inspectors. Is that correct? 

Secretary Espy. Yes, Senator; if you combine our proposal under 
the stimulus plan for 160, and the proposal under the investment 
plan for the additional 40, then we are talking about a net 200 ad- 
ditional meat inspectors. This, frankly, comes about as a result of 
my meeting with whistleblowers. 

I asked them, just about how many more do you think we need 
to have, to do the job adequately. This increase is based on, in 
many ways, their assurances; plus cost factors. 

But I do not want to fool the Senator, nor do I want to fool any 
other member of this committee. You cannot see germs. You cannot 
see them. These pathogens exist in red meat. They exist now, they 
always have. But we need to do a better job seeing the other things 
that can be detected by visual examination. 

Now, suffice it to say that we have to embark upon a longer-term 
strategy based on microbiology, being able to examine beef car- 
casses and poultry even, pork, for these germs, and we are trying 
to do that. I met with scientists from prominent universities all 
over the country, along with our microbiological advisory commit- 
tee, and we are presently funding research to do this. 

Also, we have — in layman's terms — a risk strategy from the farm 
to the table; being able to, hopefully, go back and examine livestock 
that would show the greatest likelihood of risk. We will trace it 
back to the farm and, through veterinary examination, we will be 
able to do that. 

And finally, two other things. I hope to be able to develop a 
standard in short order, to be able to test the cow or the cattle be- 
fore it is slaughtered, to see if that particular animal has any 
prominent degree of disease. 

And then last, we are looking at irradiation. Frankly, it has been 
proven to be a way to eliminate germs. I am not announcing it 



26 

today, I certainly am not doing that. And I do not want to risk 
frightening anyone. But we are looking at the idea of irradiation. 

Senator Feinstein. Well, of course, that is the French way. 

Secretary EsPY. Right. 

Senator Feinstein. But the point I wanted to make to you is that 
I believe this a priority. I mean, if it is true that a failure in the 
slaughtering system that perforates the intestine produces the E. 
coli bacteria in meat, then I think it is a real problem. And I think 
that I just want to indicate to you that it is a problem, and I would 
very much appreciate your giving it a high priority. 

Secretary EsPY. Irradiation has already been approved for poul- 
try, but it is not being used right now. But, not for beef it has not 
been approved yet. 

Senator Feinstein. The second thing is methyl bromide. As you 
know, the EPA has decided to phase out the use of methyl bromide 
by the year 2000. It is a v/idely used soil fumigant on crops, fruit, 
vegetable, tree nut crops, and so on. And it is the only one, I am 
told, in its category. 

In California, I am told that this phaseout can cost annual losses 
nationally of over $1 billion to the agriculture industry. There is a 
great deal of concern among the growers in California about this 
methyl bromide phaseout. 

Would you be willing to meet with representatives of producer 
groups, who would be adversely impacted by this decision, in order 
to discuss funding some producer-based research initiatives? 

Secretary Espy. Certainly, but we have done more than that al- 
ready. We met with the Director of the EPA, and we have met with 
representatives of the Vice President's office, and other responsible 
members of this administration, to tell them that what we would 
like to do and have it based on sound science. We believe that an 
examination of sound scientific principles will not reveal methyl 
bromide as an ozone depleter, or something that should be phased 
out. 

So we talked with them, shut the door and talked about it. And 
we reached a compromise. Basically, what we are saying is that 
USDA will allow EPA to classify this as a class 1. But, whereas the 
others must be phased out by 1996 or perhaps even earlier we 
would not touch methyl bromide, either the use or manufacture, 
until at least the year 2000. That will give us the time to do the 
work, to do the sound science, to see whether or not it should be 
phased out. 

And they agreed with this, and that is the approach we are tak- 
ing. 

Senator Feinstein. I think it would be very useful, then, for you 
to meet with many of the grower groups who are also concerned. 
Because one of the allegations against methyl bromide is that it 
impacts the ozone layer, and I do not think there is any direct evi- 
dence of that effect. But it is out there. So I think the degree to 
which the agricultural producers can be consulted, it would be very 
helpful. 

Secretary Espy. I would just like to highlight this, Senator, be- 
cause this is an approach. While a member of Congress, I would 
always hear that USDA could not work with EPA. EPA was an 



27 

enemy of USDA. And I would just like to tell this committee that 
we are working together. 

We do not currently have an alternative for methyl bromide. It 
is a very valuable tool used to fumigate soil. Also, it is often used 
as the last application for items of export, which we certainly need 
to increase and enhance. Therefore, since we do not have an alter- 
native, we did not wish to list it as a class 1 depleter that would 
be phased out in the near term. We do not have the time to develop 
an alternative for methyl bromide, so EPA heard our position, and 
we worked together on this in trying to arrive at some workable 
solution. 

FEDERAL CLEAN-AIR STANDARDS 

Senator Feinstein. The last question I have been asked to ask 
by a Congressman from the San Joaquin Valley. As you probably 
know, the Federal Clean Air Act requires that so-called nonattain- 
ment areas attain Federal particulate matter standards by Decem- 
ber 31, 2001. And the San Joaquin Valley, a large agricultural pro- 
ducer, is a nonattainment area. 

There was a research plan that was put in place jointly. State, 
local, Federal partnership, where each element would contribute to 
fund a research project, with funds from the State of California and 
the private sector. I am told that, to date, the USDA has not con- 
tributed to this project and that your fair share would be about $1 
million per year for 5 years. 

I would like to ask that you, and perhaps you might look at this 
at a later time, put forward in writing how you would meet your 
obligations for 1993, 1994, 1995, 1996, and 1997, under this cooper- 
ative agreement. 

Secretary Espy. Thank you. Senator. We will look into it. I am 
not aware of the specifics of this program. Steve, are you? 

Mr. Dewhurst. No. 

Senator Feinstein. The Congressman is Calvin Dooley, from 
California, and perhaps you would let both he and I know the re- 
sults of this. I would appreciate it very much. 

Secretary Espy. Yes; By the way. Senator, I would like to pub- 
licly apologize to you, as I have already done to the Governor of 
California, for our Medfly faux pas. 

Senator, we had a problem in the first month after confirmation. 
I guess you could say I was there "home alone," and there was a 
letter sent to the Governor of California, concerning the Medfly 
eradication project, and whether we could continue with our share 
of the cost-share program. 

And the letter, which I had not seen and did not sign, said to 
the Governor of California that the USDA would cease its partici- 
pation in the Medfly, and that the State would have to tell us very 
quickly how they would assume our share; or else we would quar- 
antine the entire State of California. Well, that is not something 
that we would do; and not something that we could do. 

I talked to the gentleman that wrote the letter, and I would like 
to assure you that that is not going to happen. The Senator is 
aware that we have come up with our part of this money, and we 
will continue to do it. 



28 

Senator Feinstein. Mr. Secretary, let me just thank you very 
much. You move very rapidly and I, for one, appreciate it. And I 
think it set aside a lot of fears of people in this State. And I might 
say, I was also very heartened to understand that you knew the 
impact that the Medfly is having, and the fact that it is probably 
endemic, and that it is a major thrust — along with other pests — 
that really endangers the industry. Thank you very much. 

Senator Bumpers. Senator Harkin. 

STATEMENT OF SENATOR HARKIN 

Senator Harkin. Thank you, Mr. Chairman. 

ALTERNATIVE AGRICULTURE RESEARCH AND COMMERCIALIZATION 

Mr. Secretary, first I was pleased that the President's budget re- 
quests a $20 million appropriation for the Alternative Agriculture 
Research and Commercialization Program. This is something I had 
worked on for several years, finally joined by Senator Conrad when 
he came to the Senate; and it was included as part of the 1990 
farm bill. The board has been set up, it is in place now, and they 
have been starting to move ahead on it. 

I have long believed that our research efforts at the Department 
of Agriculture, for too long, were focused on how to produce more. 
I have often had people say, "We have spent all this money on pro- 
duction, and then we turn right around and we pay farmers not to 
produce so much." And people kind of think this is kind of odd, that 
we ought to be focusing more of our research on how we take these 
crops and use them for alternative methods; alternative products, 
nonfood, nonfeed type uses. And that is the reason to set this up. 
Senator Conrad's thrust in that was more toward the commer- 
cialization aspect; I was looking at the research end of it. So we 
married the two together, and got it through. 

Right now, due to my experience on the House side, back in the 
1970's, we had a program with NASA where we put money into a 
new engine development program. And NASA was repaid back by 
the company that developed these quiet engines. And so the Gov- 
ernment actually made money on that investment. 

So we used that same concept with the ARC Board. They have 
a variety of means that they can take a position with one of these 
companies; for example, they can take an equity position, they can 
just have a simple payback provision, or one of the other provisions 
we have put in there is that they could use like a convertible de- 
benture process. I have found that to be the one that a lot of these 
companies are really interested in. And by using this, the Govern- 
ment's investments are fully protected, and the agricultural re- 
search acquires a chance to fully benefit from any major financial 
successes. 

So, I guess, two things: First of all, I appreciate your asking for 
that amount of money. I hope that you will take a personal look 
at this, and put it high on your scope. And also, would you take 
a look, again, at using the convertible debentures to get the Gov- 
ernment's position in with these companies in this process? 

Secretary Espy. Thank you, Senator. 



29 

We can appreciate this program. I think it is very viable. It is 
a good idea. That is why we have targeted increased funding for 
it. 

The future of agriculture, particularly improving farm income, 
ought to be in areas like GATT and NAFTA and exploring new 
markets. But it is certainly also in exploring new and alternative 
uses for what we grow, particularly in the nonfood context. And I 
think it is a great program. 

Senator Harkin. There are some exciting small companies that 
are doing interesting things on this, very exciting, very challenging. 

WASTEFUL SPENDING PRACTICES 

Mr. Secretary, more towards the questioning here: I wanted to 
mention an article that appeared in the Washington Post. It had 
to do with Vice President Gore's visit to the Department, and the 
problem of a Farmers Home Administration employee who brought 
to your attention and his attention massive wasteful practices, in- 
cluding $3.5 million in unnecessary furniture purchases during the 
last 2 months of the fiscal year. 

Evidently this employee, according to the article, had brought 
this to the attention of the Inspector General's Office; and when he 
did, he said the inspector general turned on him and then, rather 
than remedy the situation, senior managers instead turned the 
probe into an investigation of him, and impugned his character. 

Now, I do not know the facts of this case, I only know what I 
read in the paper. I just hope that you will look into this matter 
carefully, and take a look at that. 

We cannot have the kind of waste and abuse that we have had, 
and then have a whistleblower come forward, only to have the in- 
spector general's office turn against him, especially in the Farmers 
Home Administration, especially there. 

So again, I do not know the facts in the case. But I do hope that 
you would take a look at it, and the Inspector General's Office at 
the USDA. The inspector general is supposed to be independent. 
They are supposed to do their investigations, and I would hope that 
there would be some resolution of this case, so we can get some of 
the facts on it. 

Secretary EsPY. Senator, I agree with you. We encourage whistle- 
blowing. I have met with whistleblowers in the meat inspection 
context already. It was a private meeting, at their request; but I 
did meet with them. And I also met with several employees having 
gripes against the Department of Agriculture. Frankly, I have met 
with teems and teems of employees since I have been there. And 
I will continue to do that. 

Also, I have to say publicly that we will not tolerate any reprisals 
against anyone telling on others. We just cannot do that. There will 
be no cultural reprisals at the USDA. 

Senator Harkin. Mr. Chairman, I hope that we will also take a 
look at the effectiveness of the inspector general's office. I have 
been very pleased with some of the inspector general offices in 
some of the Departments, that have been very independent, that 
have really gone in and ferreted out some wasteful practices. And 
I hope that this is also the case at USDA, that we have a good, 
effective inspector general's office there. I do not know, I guess I 



68-610 0-93-2 



30 

only know what I have heard from the story. And I have had a lot 
of people ask me about it. 

Secretary EsPY. We can do it better. Frankly, we are waiting 
until we get some nominees confirmed, until we move on many 
fronts. 

USDA REORGANIZATION PLANS 

Senator Harkin. Let me just ask you about the reorganization 
plans. First of all, I just want to state for the record, I believe we 
can reorganize; and I believe that we can consolidate some of these 
offices, and still provide the same services to farmers. I believe 
that. I think there is too much wasteful practice out there in 
USDA. I believe a lot of these can be consolidated without losing 
the effectiveness. 

But, I wanted to sort of contrast the reorganization efforts at the 
county level with what is happening here. 

The budget indicates saving in staff-years through consolidating 
ASCS, SCS, and Farmers Home into one farm service agency, 
which is fine. I think we could probably do something like that. But 
it is a 23-percent reduction in staff-years, from 1993 to 1998; 28- 
percent reduction overall. 

But at the county level, the staff-years would fall from 15,000 to 
11,000; it is a 26-percent reduction. So a bigger reduction on the 
county level than overall. So it looks like the counties are taking 
a greater reduction than Washington, or some of the administrative 
offices. 

It seems even sharper when we compare next year, fiscal year 
1993, to 1994. The combined staff-years for ASCS, SCS, and Farm- 
ers Home in 1993 is 29,577; in fiscal year 1994, after consolidation, 
the total for this new farm service agency will be 28,181; that is 
a decline of 4.7 percent. 

In contrast, look at the county offices: The staff-years are ex- 
pected to decline 9.6 percent, twice as much as the overall. Again, 
I am not saying we cannot stand reductions to the county level; I 
have already stated I know we can. But it seems to me that these 
percentage reductions at the county level ought to be matched by 
percentage reductions also at the administrative level also. 

Secretary EsPY. Yes, sir; I will turn to Steve Dewhurst to answer 
that. 

Mr. Dewhurst. I think it is important to recognize that the 
county office employees in the numbers you have cited, of course, 
are the county office employees of the ASCS. We also have county 
office employees in the Soil Conservation Service, and in the Farm- 
ers Home Administration, who are included in the Federal num- 
bers that you see on some of those tables. 

Obviously, the intent over time is that there will be one Farm 
Service Agency. There will be reductions in manpower. There will 
be reductions in overhead manpower in Washington, or in adminis- 
trative functions that are at least equivalent to, or greater than, 
the cuts at the county level. 

The numbers that you are reading from in the book we produce. 
We tried to show the separate county office workers in ASCS, be- 
cause we did not know how they would be treated in the ultimate 
organization. They come out being cut a bit deeper, because of the 



31 

math of the budget, than some of the other functions. But that is 
a problem in the math of the budget, that was not the administra- 
tion's intention. The administration's intention is that cuts in head- 
quarters in Washington, staff and administrative functions, will be 
at least equivalent and probably greater than cuts in the local area. 

So, I guess that is a long way of telling you that on some of those 
numbers, we made a mistake in the book. And I apologize to you 
for that. 

Senator Harkin. I appreciate your candor very much. I appre- 
ciate that candor. So again, you are going to take a look at this? 

Mr. Dewhurst. Yes, sir. 

Senator Harkin. And try to get those equivalent? Well, I appre- 
ciate that very much. 

Secretary EsPY. Senator, within the next 18 months, I have been 
informed that we have a significant number of Executive Service 
individuals eligible for retirement, almost up to one-third of them. 
And that is a significant number, and most of that is going to be 
in Washington. 

ECONOMIC RESEARCH SERVICE 

Senator HARKIN. I also notice that the Economic Research Serv- 
ice is reduced by 14 percent, again compared to the 23 percent 
overall for the Farm Service Agency. Again, I do not think there 
is anyone on this committee, or on the Agriculture Committee, the 
authorizing committee, that just has not at some point — probably 
at least once a year, probably more than that — been simply as- 
tounded by some of the findings of the Economic Research Service. 

In fact, I think I dare say that in the past we have gotten better 
information from outside sources. We have a small agency called 
FAPRI, the Food and Agricultural Policy Research Institute, lo- 
cated in the University of Missouri. I think they get about $400,000 
a year— $500,000, 8—1 do not know; $750,000 a year. And what 
they are tapped into is, they are tapped into a lot of universities. 

I know Iowa State is involved, but they tap into the University 
of Nebraska and all these other universities around, the land-grant 
colleges; and they tap into their economics departments and their 
agriculture departments, and they get the information. And they 
seem to do it in a very efficient manner. And that is only costing 
$750,000 a year. I think that is down from what it used to be in 
the past. 

So again, you might look at some of these outside sources which 
take a little bit of funding, which do a lot of work and give us a 
lot of information. And you might find that we could save a few 
bucks and a few personnel there, too. 

I just offer that, because I think FAPRI has done a great job in 
the past. They have done some really good work for a mere pit- 
tance, $750,000. 

Secretary EsPY. Senator, just a word. I have not yet offered any- 
one's name to our President for the positions of Assistant Secretary 
for Economics and Assistant Secretary for Science and Education, 
because I have some plans for those, if I am able to do it. And it 
will include the Research Service. 



32 

Senator Harkin. I appreciate that very much. Thank you very 
much, especially for your candor on that one answer. I appreciate 
that. Thank you. 

Senator Bumpers. Senator Gorton. 

STATEMENT OF SENATOR GORTON 

Senator GrORTON. Thank you, Mr. Chairman. 

Just a brief opening statement, Mr. Secretary, partly at least to 
thank you for your prompt action, along with that of U.S. Trade 
Representative Kantor, with respect to the continuing apple boycott 
which Japan has imposed on the United States, and most particu- 
larly from my own State. I appreciate that considerably. 

I also need to say, as a matter of an opening statement, that 
much of this budget presentation is vague, particularly many of 
those items which deal, peculiarly, with Western States — more spe- 
cifically grazing fees, and the position of the Federal Government 
on below-cost timber sales. There is not enough in this budget to 
tell precisely what the policies are that you wish to follow, and the 
sooner that that can be rectified, I think, the better off we are 
going to be. 

But I guess my first question relates to the macro budget, the 
overall direction of it. As I figure it, you have adopted the tech- 
nique of offering a page of investments without offsets — a page of 
investments which puts the overall spending on the programs in- 
cluded within the USDA budget above the budget caps. And as a 
result, either we as a subcommittee, or you as Secretary of Agri- 
culture, is going to have to come up with more than 1 billion dol- 
lars' worth of offsets in order to fund your proposed investments. 

ADDITIONAL USDA BUDGET SPENDING OFFSETS 

My first question of you is whether or not the Department itself 
is going to come up with a proposal to offset the requested addi- 
tional expenditures and investments, or however they are titled? 

Secretary EsPY. You mean offsets from 

Senator Gorton. Spending offsets. 

Secretary EsPY. Yes, sir; offsets based on spending increases con- 
templated in the stimulus package? Or offsets in the investment 
package? 

Senator Gorton. Offsets in this investment package, and what 
you have here as a budget for a supplemental for this year and for 
the succeeding year. 

Secretary EsPY. But, it is in three parts. I am just interested in 
targeting the question. 

Senator Gorton. Well I think, to be perfectly honest with you, 
Mr. Secretary, the question with relation to the present stimulus 
package on the floor of the Senate is very likely to be academic. So, 
why do we not take up the other two? 

Secretary EsPY. Well, I hope not. Because we have done much 
with regard to meat inspection in the Senator's home State, and I 
would sure hate to see that hurt because we do not have enough 
people to do the job. But that is another question. 

I think that the offsets are there, when you look at what we plan 
to do in discretionary reductions, what we plan to do in mandatory 



33 

reductions; and, to be honest with you, Senator, I think that we 
have treated this very gingerly. Because, in my opinion, we have 
cut agriculture a heck of a lot over the last 10, 12 years, we really 
have. So, when you reach in to try to reduce the fundamental as- 
pects of the farm program, that is something that I certainly disfa- 
vor. And I am proud that we really have not done that. 

When we start touching the fundamental farm program aspects, 
we did not even propose that until the 1996 crop year, and the Sen- 
ator knows, as well as I do that much will take place before we get 
to that point. We have got a NAFTA agreement, hopefully. We may 
have a GATT agreement. We certainly have a farm bill to nego- 
tiate. And so, a lot of this will change. 

But, in our 1994 budget submission, we think that we have 
taken the hit in offsets, mostly in administration; and then some 
discretionary savings elsewhere, as we have presented today. 

Senator Gorton. Do you think you are within the caps, with this 
budget? 

Secretary Espy. Let me turn to Steve. 

Mr. Dewhurst. Well, I am not sure. The Secretary's budget has 
about $1.2 billion in increases in it, in investments and outlay 
terms, and it has about $1 billion in reductions. So it does not quite 
balance. 

But that is a matter of Governmentwide priorities, over which he 
has no control. We support the President's budget. So we are not 
in a position of coming up with another $200 million in reductions. 

Senator Gorton. OK, then you have answered my question. If 
we are going to stay within the budget resolution that was passed 
by the House and the Senate, we are going to have to find those 
offsets. 

BACKHAULING BILL 

At the time of our first meeting, Mr. Secretary, when we were 
speaking about the E. coli epidemic in my State, I asked you a 
question about backhauling and the backhauling bill which was 
passed. You said that you thought you would speak very, very 
promptly with Secretary Pena on that. 

We have not heard anj1:hing on that. Have you spoken to the 
Secretary? Do you know anything about when and how that 
backhauling set of regulations is going to be signed and imple- 
mented? 

Secretary Espy. Senator, I remember that conversation and I 
have to admit to you that I have not talked to Secretary Pena di- 
rectly. However, the Acting Assistant Secretary for Marketing and 
Inspection, Mr. Kenneth Clayton, has talked to his counterparts 
over there. I cannot tell you whether anything is going to be signed 
because that is up to the Secretary of Transportation to do. 

But we have talked to him. My position is rather similar to your 
position, in that it all comes within the entire context of food safety 
and we need to assure the American consumers that we are not 
transferring agricultural commodities in the same type of trucks 
that just offloaded rubbish. 

So we made our position known, and I will provide the committee 
the status of this action for the record. 

[The information follows:] 



34 

Backhauling 

The Agricultural Marketing Service met with the Department of Transportation 
on a number of occasions during the development of regulations for implementation 
of the Sanitary Food Transportation Act of 1990. The proposed rule will include an 
exemption for farm vehicles that should significantly reduce the regulatory impact 
of the proposed regulations on farmers, while not putting consumers at greater risk. 
The regulations do not propose any additional regulatory functions for any agency 
of the Department of Agriculture. The proposed rule is expected to be published on 
May 21, 1993. However, a final rule is not expected to be published until late 1994. 

Senator Gorton. Good enough. Under those circumstances, you 
have kept your commitment to me and we will have to pursue him 
on the rest of it. 

JAPANESE BOYCOTT OF U.S. APPLE IMPORTS 

Let me go back to the question of apples. You have done a good 
job in signing the letter to the Japanese Agriculture Minister with 
Ambassador Kantor. Do you know what follow-ups are taking 
place? Do you know, for example, whether or not the President 
brought this specific subject up with the Prime Minister of Japan 
at the time of their conversation? 

Secretary Espy. Senator, I do not know if the President did, but 
I know that I did. When I met with the Ambassador to Japan in 
a personal meeting in my office, I raised this issue very vigorously 
and I told the Ambassador that it is rather disingenuous on their 
part to continue to disallow apples, American apples, into their 
markets based on some phj^osanitary standards that really to me 
constitute a facade. 

The Senator is aware that the apple industry along with the 
USDA, have gone above and beyond the call of duty in trying to 
comply with the Japanese standards. We have. We spent a lot of 
money on it. We have complied with it to every degree. 

To continue to disallow our apples into their market is just be- 
yond me, and I talked to him in these type terms. And he answered 
very promptly, basically saying that they would continue, and that 
is what they have done. 

I met yesterday with members of the media, Japanese media, 
and I reiterated this. I hope that they would review their position. 

Senator GoRTON. Well, again I want to thank you. I have had 
similar conversations with the Ambassador, and we get fair words, 
but so far we have not gotten much of the way of action. 

I do want to say, however, that I can compliment you, and Am- 
bassador Kantor through you, for bringing this to a higher level 
than the previous administration did and for, as far as this Senator 
is concerned, working diligently on behalf of opening markets in 
that field and in a number of other fields as well. I can tell you 
I appreciate it and the people whom I represent in the State of 
Washington appreciate it. 

Secretary Espy. Thank you. Senator. That is why we do not be- 
lieve that the Blair House has been completed, and that is why we 
do not think, as much as we want a GATT, that is why we do not 
think that we were able to sign one now, because of actions such 
as this one on the part of Japan on the questions of market access. 

I favor the current GATT trend when it comes to export subsidy 
reductions and internal reductions, but the market access question 



35 

is one that we must reach some satisfaction on before we are able 
to sign anything. 
Senator Gorton. Thank you. 

BELOW-COST TIMBER SALES 

On a different subject, in which I am not sure we see quite so 
eye to eye, you propose to eliminate below-cost Forest Service sales, 
timber sales, during the course of the next 3 years. Can you tell 
me at this point, given your formula, which national forests will 
face a closure or a near-closure of timber sales as a result of those 
changes of policy during the course of the next 2 or 3 years? 

Secretary EsPY. Senator, I am not able to at this time, but I as- 
sure the Senator that out of the timber conference or the forest 
conference which we recently held in Portland there will be a plan 
with some specificity. 

Senator Gorton. This question is broader than the forest con- 
ference in Portland. I am speaking of all the forests in the United 
States now. 

Secretary EsPY. Well, I am not able to answer. Senator, at this 
moment. 

Senator Gorton. Is that because you have not come up with a 
specific formula yet by which you determine what the cost is, and 
what goes into those costs? And if so are you not giving us a gen- 
eral goal without providing specific details? 

Secretary EsPY. I am not expressing any goal now. I am just say- 
ing I will tell the Senator as the information becomes available. 

Senator Gorton. No; I understand. But you have expressed the 
goal that you are going to phase out below-cost sales, but I take 
it you have not yet made a determination of what constitutes costs 
for the determination of what is below cost. Am I accurate, or have 
you done so? 

Secretary Espy. I have not had these type of discussions, so per- 
sonally I am not able to answer. 

Senator Gorton. Thank you very much. I thank you, Mr. Chair- 
man. 

Senator Bumpers. Thank you, Senator Gorton. 

Senator Kohl. 

statement of senator kohl 

Senator Kohl. Thank you very much, Mr. Chairman. 

Secretary Espy, as you know, we have discussed my concerns 
about the current structure of the milk marketing order system. 
Now, I appreciate your difficult position in trying to make needed 
reforms in this system. Even though the current system for pricing 
fluid milk, which is based on the distance from Eau Claire, WI, is 
widely agreed by agricultural economists and others to be out- 
moded and categorically unfair to the Upper Midwest, nevertheless 
many other dairy producing regions of the country have benefited 
from this system and so it continues. 

Mr. Secretary, the Congressional Budget Office has estimated 
that the milk marketing order system costs the Federal Govern- 
ment about $1 billion over a 5-year period, mainly through the arti- 
ficial increases in dairy production that the current system encour- 



36 

ages. The extra milk produced ultimately ends up adding to the 
surplus in dairy products and results in higher CCC purchases 
than necessary. 

In the current budget climate, would it not make more sense to 
move toward elimination of the outmoded milk marketing system 
in order to save taxpayers money and to more fairly reflect the 
changes in dairy production since the system was established now 
many, many years ago? 

MILK MARKETING ORDERS 

Secretary EsPY. Senator, thank you for the question. I would 
hesitate to change the milk marketing structure presently, know- 
ing that we have problems. We do have problems, but I would just 
say to the Senator that that is an element within the farm bill and 
the farm bill will be coming up for discussions next year. I am cer- 
tain that this will be a significant part of that discussion. 

In anticipation of that, I announced yesterday that we would be 
having a series of forums to discuss the threshold issues in agri- 
culture over the next decade or two, and part of that will certainly 
be discussing the farm program, the changes in it, the convoluted 
aspects of some programs, the geographic discrimination within the 
farm bill programs, and how we can change them. 

I would certainly be willing to include discussion of milk pricing 
structures and marketing structures within our forum, and I would 
invite the Senator's participation. 

Senator Kohl. You will have it. 

Did I hear you to suggest that you are aware, and at least to 
some extent sympathetic, to concerns about the current milk mar- 
keting system, in the sense that it discriminates against a State 
like Wisconsin? 

Secretary Espy. I did use that word. I am aware of the feeling 
among many that there is a differential which is tantamount to a 
discriminating factor in pricing based on region, yes, I am. I am 
aware of it. 

Senator Kohl. Well, aware of the fact that it exists, yes. I mean, 
that is what we are discussing, I would like to come away from this 
with some understanding of your position. I would like to come 
away with some sense that you are sympathetic to this discrep- 
ancy, and to the fact that the justification for it which used to exist 
many vears ago is not nearly as defensible today. 

While I do not want to put words in your mouth, is that some- 
where close to a fair statement of how you may feel? 

Secretary Espy. I would say to the Senator that there are many, 
many commodities presently targeted within the farm bill that 
must be reviewed in light of present circumstances. In our manda- 
tory cuts or those that we suggest to be cut, we talk about wool 
and mohair, we talk about the honey program, and clearly there 
are some programs that must be held to the light of scrutiny under 
the fiscal urgency standard that we have. 

I would say to the Senator that there are others beyond honey 
and wool and mohair that must be reviewed and I hope to review 
them. But it is a part of the farm bill. The Secretary of Agriculture 
has very little discretionary authority within the current farm bill, 
about 30 percent. The rest of it lies within the House and Senate. 



37 



BST 



Senator KOHL. All right, Mr. Secretary. I would like to move on 
to BST. As you know, I have shared my concerns with you regard- 
ing BST and the potential negative economic effects on dairy pro- 
ducers that it may have. 

I also have concerns about the potential negative effects of BST 
on United States dairy product exports to countries that currently 
ban the use of BST. I believe that the administration and Congress 
ought to be working together with dairy representatives to address 
these economic issues surrounding the use of BST before it is very 
possibly approved for commercial use by the FDA. 

Secretary EsPY. Yes, sir. 

Senator Kohl. On the question of labeling, some dairy processors 
have signaled their intent to voluntarily label their product as 
BST-free, and there are other efforts to require labeling across the 
board. 

Next month FDA will be holding a hearing to discuss the label- 
ing issue with regard to BST. Will you be testifying at that hearing 
and/or will the USDA be taking a formal position on this issue of 
labeling? 

Secretary Espy. Senator, I do not believe that I was asked to tes- 
tify at that hearing. I can check the request, but I believe I would 
know had I been asked. 

I do not know if I would or not, to be honest with you. This is, 
the release of BST, is within the province of the Food and Drug Ad- 
ministration [FDA], and I have not talked to Mr. Kessler about it 
at all, but I will tell you, I am concerned, just as I am concerned 
with irradiation and the chilling effect that that might have on 
consumer preferences. 

I am concerned about the consumer perception with regard to 
BST and I want to do all I can do to assure the American consum- 
ing public that what we market is safe. If I have any problem with 
their perception, we will either embark upon a strenuous education 
program or we will attempt to persuade others to resist the mar- 
keting of it until that perception has been changed. 

Senator Kohl. OK, but I just want to call to your attention that, 
next month, FDA will be holding a hearing on the issue of labeling. 
And although you can and do contend with some justification that 
it is not within your jurisdiction, that it is an FDA issue, neverthe- 
less it certainly does have an enormous impact on the Dairy Pro- 
gram in this country, which is something of great concern to you, 
I know. 

Secretary Espy. Yes, sir. 

Senator KOHL. I know you are aware of it, but I call it to your 
attention because maybe you ought to consider, even if you were 
not invited, at least sending somebody who could take an official 
position on behalf of USDA. 

It would be of great interest to my State, of course, and I am 
sure other States as well. 

Secretary Espy. Right. We have not taken, as you know, an offi- 
cial position at USDA and in all honesty once more I am not sure 
that we would have developed one by next week. But we have 
briefing papers being written on BST as we sit, and once these pa- 



38 

pers have been presented I will review them and I will make a de- 
cision. 

I will discuss it within an interagency context. As the Senator 
knows, the Dairy Program is within the province of USDA, but 
there are other aspects of Government also involved in this issue 
and we have to discuss it with them in order to come up with a 
USDA position. 

I will not hold out any hope that we will have a position formally 
developed by next week. But we are moving on it. 

PRIME TIME LIVE TELECAST 

Senator KoHL. The hearing is next month. 

One more question, Mr. Secretary. Several months ago, the tele- 
vision show "Prime Time Live" highlighted USDA's efforts to study 
ketchup flow and pickle stems as examples of Government waste. 
Do you believe that these programs are justified and, if they are 
not, do you plan to eliminate them? 

Furthermore, do you think that there are other programs such 
as these programs which could be discontinued? 

Secretary EsPY. Senator, this is also something that I was really 
unaware of until it was brought to light by that program, and 
while I think that flow-rate measurement is a little bit ridiculous, 
there are some grading standards that are absolutely valid. 

We have talked to the employee with regard to the flow-rate mat- 
ter and he says also that he does other things. He also examines 
the stems of pickles, which to me, again in the context of this fiscal 
urgency we have, seems to be a little bit much. 

That is why in this budget we talk here about user fees for grad- 
ing purposes; however, to me there are some programs that are a 
little bit ridiculous and should be phased out. 

Senator KOHL. Thank you very much. Secretary Espy, and thank 
you very much, Mr. Chairman. 

Senator Bumpers. Senator Kohl, if I ever become chairman of 
the powerful and prestigious Senate Restaurant Committee, I can 
tell you that every salt and pepper shaker in all those restaurants 
is going out in the Chesapeake Bay. They are designed to make 
sure you do not get any salt and pepper out of them. So maybe the 
ketchup flow issue is bigger than we think. [Laughter.] 

Senator KoHL. That is right. 

DISASTER ASSISTANCE FOR LOW-QUALITY WHEAT 

Senator Bumpers. Now, Mr. Secretary, I wanted to ask you a 
question on behalf of Senator Murray of Washington and myself 
and Senator Cochran. Why is wheat any less eligible for assistance 
for the lowered quality of the product than corn for 1992? 

My wheat farmers had a much diminished test weight, just as 
they had in Washington. Why com? 

Secretary ESPY. Senator, I do not believe that we have had a dis- 
tress petition on wheat so far as I know. We have not had anyone 
formally request that we review wheat for disaster assistance be- 
cause of a quality problem. In fact, I have been reading — and 
again, it is just what I have read — that the wheat crop was pretty 
good insofar as the moisture damage aspect. 



39 

I may be wrong, but we have had such a presentation for com 
and we have also had one for potatoes. We try to do this on a case- 
by-case basis. 

Senator Bumpers. Well, I can tell you when this bill comes to the 
floor you are going to have some amendments to equalize that. You 
have the administrative authority to do that, there is not any ques- 
tion about that. But in any event, let me move on to another ques- 
tion. 

You are asking this committee to institute user fees in a lot of 
agencies, to change the REA program, to reform the crop insurance 
program. And all those things are problematic for us because they 
probably involve testimony to be provided to the authorizing com- 
mittee, but the savings to be generated are being attributed to the 
Appropriations Committee. 

Now, what I want you to do, Mr. Secretary, is to provide this 
committee with a list of what you think this committee's respon- 
sibility is in generating the savings in both budget authority and 
outlays, and we need a breakdown of which proposals are re- 
quested to be enacted through both the appropriations bill and the 
authorizing committee, so that we know what is expected of us. 

[The information follows:] 

DEPARTMENT OF AGRICULTURE 1994 SAVINGS PROPOSALS THAT REQUIRE A CHANGE 

IN LEGISLATION 

[Dollars in millions] 



Program 



1994 budget 



Budget authority Outlays 



Legislative Changes to Appropriations Committees 
New user fees: 

Food Safety and Inspection Service 

Agricultural Marketing Service 

Federal Gram Inspection Service 

Agricultural Cooperative Service 

Rural Electrification Administration: fi^ake loans at Treasury rates 
Reform the Crop Insurance Program 



4.0 


- 104.0 


6.2 


-62 


6.9 


-6.9 


0.4 


-0.4 


4.0 


-27.0 


5.0 


- 105.0 



Total, Appropriations Committees savings -299.0 -132.0 



Authorizing Committees 
Commodity Credit Corporation: 

Farm payments limited to those m[h less than $100,000 in off- 
farm income -75.0 -75.0 

Limit wo\ and mohair direct support payments to $50,000 per per- 
son - 10.0 - 10.0 

Honey subsidies would be eliminated in 1994 -12.0 -12.0 

"Triple base" acres would be increased from 15 to 25 percent 

Increase assessments on nonprogram crops 

Eliminate 0/92 and 50/92 programs 

Market Promotion Program continued at current level -52.3 -52.3 

Reform the Crop Insurance Program 

New user fees for marketing agreements and orders - 10.7 - 10.7 

Food and Nutrition Service: Reduce Food Stamp program administrative 
expenses 



-20.0 -20.0 



Total, authorizing committees savings -180.0 ~ ^80.0 



40 

Senator Bumpers. It seems to me that on the Federal crop insur- 
ance program you are suggesting that we make changes through 
both committees, so we need to get that resolved. 

Secretary EsPY. We will do it. 

WETLANDS RESERVE PROGRAM 

Senator Bumpers. Now, on the Wetlands Reserve Program, we 
are spending — ^you know, so far as I am concerned it is a fine pro- 
gram, but it was politically administered. The reason I know it is 
because Arkansas was No. 2 or 3 on the list of States who had the 
most wetlands to be preserved and we did not make the cut. Only 
about 10 States are involved in that now as a pilot program. 

Now, we did not put any additional money in that program this 
year, as you know, in 1993. But if we are going to put money in 
that for 1994, do you intend to continue it as a pilot program or 
are you going to go to all 50 States? If we are not going to go to 
all 50 States, I can tell you there ain't going to be any money out 
of this committee. 

Secretary Espy. Nationwide. 

Senator Bumpers. Pardon? You are my kind of Secretary. 

Secretary Espy. Nationwide, sir. 

Senator Bumpers. Well now, let me also say: Does the price of 
$923 an acre seem a little excessive to you for this program? I have 
got a nice pastureland farm I would sure like to get in at that 
price. 

Secretary Espy. Senator, I would like to ask Steve to assist me 
on this one. 

Senator Bumpers. That is $742 for easement — now, this is a 10- 
year program, but I mean you are effectively buying land. I know 
it is a permanent easement, but they can use it as long as they do 
not interfere with the uses that are prescribed in the easements. 
I mean, easements in my State — oh, I do not want to get into that. 

But in any event, we are talking about $742 an acre for the ease- 
ment, $52 for restoration cost share, $134 for technical assistance, 
and $4 for settlement and appraisal fees. That all comes to $923 
an acre. That is awfully expensive. 

It seems to me that maybe you just picked out the most valuable 
wetlands in the area and are having to pay more for them. But 
when you just take a wetlands easement and paying what you can 
buy, I promise you — while this is an easement, you are paying $923 
for it — I promise you you can buy the best rice and cotton land in 
Arkansas for $1,000 an acre. There is something seriously amiss 
there. 

The Conservation Reserve Program, the cost of that program was 
about — well, actually we pay that on an annual basis, do we not? 
But does that not come over a 10-year period to close to $500 an 
acre, does it not? 

Mr. Dewhurst. Yes; actually, I think it is more than that. I am 
trying to calculate it in my mind. 

OK, you are right. Yes, sir, about $500, $600 an acre. 

Senator Bumpers. Senator Bond I think raised the question a 
moment ago. We are paying all this money for the Conservation 
Reserve Program and when the farmer gets the land back he can 
do what he wants to with it, can he not? 



41 

Mr. Dewhurst. Yes, sir; but he will be subject to the conserva- 
tion compliance requirements of the farm bill. If he puts the land 
back into production and he wants to remain eligible for USDA 
farm program benefits, he is going to have to farm according to a 
conservation plan developed by SCS. 

Senator Bumpers. At the expiration of the 10-year period? 

Mr. Dewhurst. Yes, sir. 

Senator BUMPERS. Well, are they very stringent? What are those 
requirements? You are talking about sodbuster and swampbuster? 

Mr. Dewhurst. Yes, sir; including basic conservation compliance. 
If he wants to receive USDA farm program benefits, he has to have 
an approved conservation plan that protects his highly erodable 
land. 

He would simply be subject to the same requirements every other 
participating farmer is subject to if he chooses to farm on that 
land. 

Senator Bumpers. I was going to say, he is not subject to any 
additional requirements than he would be if he had never been in 
the Conservation Reserve Program, though, is he? 

Mr. Dewhurst. No. 

Senator Bumpers. Everybody has to comply with the swamp plan 
and sodbuster if they are going to get farm assistance, do they not? 

Mr. Dewhurst. Yes, sir. 

Senator BUMPERS. So he is no worse off than any other farmer 
and he has gotten 500 bucks or more for setting his land aside. 

FOOD STAMP PROGRAM 

Well, I will tell you something that is really alarming. Since Oc- 
tober we are adding 200,000 people a month to the Food Stamp 
Program. If the unemployment rate is staying constant, as it seems 
to be, in the 7-, 7.1-percent area, how do you explain that? What 
is causing that? 

Secretary EsPY. What is causing the increase in the Food Stamp 
Program? 

Senator Bumpers. Yes; 200,000 people a month. Ten percent of 
the people in this country now are drawing food stamps, and you 
know what the cost of that is. That is a big, big segment of this 
committee's budget; $67.5 billion and a lot of that is food stamps, 
about $27 billion. 

Do you know? 

Secretary EsPY. Senator, all I can say to you, sir, is that I will 
admit the fact that we are having that much of an increase simply 
because most Americans do not want to go into the program. They 
are proud. They want to be able to buy their food out of pocket and 
they do not want to receive this type of subsidy. But most people 
do not have any choice. 

Senator Bumpers. Your answer should be, Mr. Secretary, that if 
we pass the President's jobs bill we could start going the other di- 
rection. 

Secretary EsPY. I did not know it was a tossup like that. Senator, 
I was getting around to it maybe in a way that is longer winded 
than necessary. 

The fact is that we have people who are hurting. This recovery 
that we have been in is rather toothless and it is not accompanied 



42 

by a material increase in jobs, and people must eat. So that is why 
we now have the highest food stamp participation in recorded his- 
tory. 

Of our $62 billion, it is an incredible amount of money out of the 
budget. It is a mandatory program and, due to the increase in pro- 
gram participation these people must be fed. 

AQUACULTURE 

Senator BUMPERS. Mr. Secretary, your State and my State are 
the two biggest States, and you are much bigger than we are, in 
the catfish raising business. But it seems to me that that is one 
place, even though over a period of time — on another subcommittee 
I was able to get this new state-of-the-art bench laboratory for 
Stutgart, AR, in catfish farming, where we have raised production 
of catfish from roughly 600 pounds per acre over the last 30 years 
to 6,000 pounds per acre. 

But I must say, there are other States that raise trout. But aqua- 
culture is a very fast-growing industry in this country, and most 
people feel that the Department of Agriculture gives them pretty 
short shrift. 

Do you think we ought to do anything to strengthen aquaculture 
in the Department of Agriculture? 

Secretary Espy. Senator, I have been there 3 months. 

Senator Bumpers. You want to beg off? 

Secretary Espy. And a lot of what you ask, perhaps it is out of 
frustration based on policies implemented by our predecessors. I 
can say to the Senator that I hail from the Mississippi Delta and 
I am proud of it, and that industry constitutes about a $300 million 
boost to our economy. I have been there from basically the incep- 
tion of the industry. 

It is basically a 10-year-old industry and I have seen it grow, and 
I like what I see. I think that certainly catfish can be grown in 
other States and aquaculture is an industry that is ripe for trans- 
port to other areas. I will do everything within my power as USDA 
Secretary to see that we can improve and enhance and assist the 
aquaculture industry. 

Senator Bumpers. Mr. Secretary, I am not suggesting another 
bureaucracy in the Department and I am not sure that we need 
anything. That was just an honest open question. 

Steve, do you want to comment on it? 

Mr. Dewhurst. Mr. Chairman, I might just remark that for the 
first time in my memory we do have some money in the Coopera- 
tive State Research Service budget for aquaculture research. I have 
not been in the position for a long time of having money for that 
effort. 

Senator Bumpers. Senator Cochran, with your indulgence I have 
one final question. I will submit the rest of my questions in writing 
to the Secretary. 

MARKET PROMOTION PROGRAM 

One of the programs that continues to disturb me a little bit, 
particularly in light of the budget constraints and the fact that we 
are trying to find money everywhere we can find, we are trying to 



43 

streamline, cut, eliminate waste, and all that sort of thing, but let 
me ask you for your comments. 

Are you familiar with the MPP program, the Market Promotion 
Program? 

Secretary EsPY. Yes, sir; I am. 

Senator Bumpers. You have asked for $140 million again in 1994 
for that program. Do you think that is justified? 

Secretary Espy. Yes, sir; I do. I am aware of the abuses in the 
program and I do not think that those abuses can be tolerated. The 
abuses I am speaking of are related to branded industries. 

Senator Bumpers. Incidentally, that is another program that 
"Prime Time Live" or "60 Minutes" or some of those programs have 
sort of exposed. 

Secretary EsPY. Yes, sir; I think, though, honestly. Senator, that 
it can be explained and even encouraged in the context of our com- 
petition. The desire here is to improve our market share and to de- 
velop new markets, and our European Community [EC] friends are 
zealous at subsidizing their products way beyond what we do and 
even in the value-added categories. 

So that is why we froze the MPP at the present level. We did 
not propose an increase, but nor did we propose a decrease. I really 
hope, though, that the kick in the efficiency and effectiveness of the 
MPP can come in weeding out the abuse. But I think it is nec- 
essary. Until we get a good GATT agreement, I think we need to 
keep it there as a tool. 

RUSSIAN FOOD ASSISTANCE 

Senator BUMPERS. Do you realize the Russians, out of this $700 
million loan and credit program, they are saying they do not want 
any meat and poultry that has been exposed to pesticides and so 
on? 

Secretary EsPY. I think we have taken care of that. 

Senator Bumpers. Have they agreed to an extension on that? 

Secretary ESPY. Yes, sir; I believe so. Are you referring to the 
present FSIS export certificate of wholesomeness? 

Senator Bumpers. Pardon? 

Secretary Espy. The food safety issue? Yes, sir; they have agreed 
to an extension on our present FSIS export certificate. 

Senator Bumpers. Good. 

NATIONAL ECONOMIC SUMMIT ON AGRICULTURE 

Well, on a macro point, I want to make this point before I close 
out my part. I have talked to you about a national economic sum- 
mit on agriculture similar to the one the President had in Little 
Rock. And the reason for that is not just to allow a carping session 
for farmers, but to address some really serious agricultural ques- 
tions in this country. 

Now, here we have a budget, and in my opinion agriculture, Sen- 
ator Cochran, is being asked to take just about the biggest hit of 
anybody. Defense and agriculture are the two that are getting hit 
hard on this. 

Now, the European Community, with whom we have to compete, 
has increased their subsidies by 100 percent since 1986. Since 



44 

1982-83, in that timeframe we have cut agriculture by two-thirds 
in this country. They subsidize wheat and cotton, for example, 
twice the level we do. And you watch "Prime Time Live" and some 
of those programs and you would think the farmers are trying to 
run off with the U.S. Treasury. 

I am just simply saying when you have got an industry that con- 
tributes $16 billion to the trade deficit — that is right, the trade bal- 
ance would be $16 billion higher if it were not for agriculture, and 
we are asking our farmers — and you know, I am trying to be a 
player. God knows, I am on the President's team. I want to get 
spending down, I want to get the deficit under control, and I am 
going to help. 

But when you consider that we are having to compete with some- 
body who is subsidizing their crops at twice the level we do, and 
yet we are still able to make a $16 billion contribution to the trade 
deficit, but come back and say, well, we are going to cut you some 
more. 

As you know, agriculture has taken a big hit in this budget. So 
I just want that on the record to show the disadvantage that agri- 
culture is actually under under this budget, and trying to compete 
with the Europeans. 

Secretary EsPY. Senator, you make the case very well and I real- 
ly cannot dispute anything that you said, except to say to you, sir, 
that we should keep this all in context. Agriculture has had an in- 
credible burden over the past few years, there is no doubt about 
that. That is why, in my opinion, the proposals currently are some- 
what more sensitive to the agricultural position than in years past. 

So I guess I offer the excuse of comparison. Second, sir, we real- 
ize that the cuts in farm programs that we envision will only come 
in 1996, from the 1996 crop year. So we are saying that many 
things will happen before that time. Hopefully, we will have a 
GATT agreement. Hopefully, that GATT agreement will encourage 
our EC competitors to substantially reduce their subsidies and 
equalize the plajang field. 

We hope that will happen. If that does not happen, then I cer- 
tainly think that the left hand must react to what the right has 
not done and that we will come back and revisit these proposals. 

Senator Bumpers. Thank you, Mr. Secretary. I am going to turn 
you over to the tender mercies of the ranking member. Senator 
Cochran. He will ask you a few questions and then close the hear- 
ing. I am going to have to run to the floor. 

FISCAL YEAR 1994 SUPPLEMENTAL APPROPRIATION 

Senator Cochran [presiding]. Mr. Secretary, Senator Gorton 
from Washington brought up an issue which is one that I think is 
very important and we need to think about a little bit. It is in the 
context of the President's proposed investment program that in- 
cludes a request of this committee to provide funds in fiscal year 
1994 through a supplemental appropriations bill for programs and 
activities under the Department of Agriculture's jurisdiction of al- 
most $2 billion, but carries a general language provision that the 
funds cannot be spent until they are fully offset by savings through 
an enacted reconciliation bill. 



45 

Senator Grorton asked if the Department was going to submit an 
indication to the committee on what savings could be made or what 
requests for offsets we should consider. And as I understood the re- 
sponse that Mr. Dewhurst gave, there is not going to be any sug- 
gestion of offsets by the administration or the Department, that 
that is up to this committee. 

That is almost fraudulent in my judgment. And I am not criticiz- 



ing you. This is obviously a scheme that has been developed that 
affects not just this subcommittee, but the entire Federal Govem- 
ment, because the President's budget asks the Congress to appro- 
priate investments which exceed the current law's legally binding 
outlay caps on discretionary spending by nearly $18 billion in both 
fiscal years 1994 and 1995. 

So the whole point is that in this budget for the next fiscal year, 
there are requests which ask appropriations subcommittees to ap- 
propriate money in excess of what they are authorized to do and 
Congress I suppose is to find its own offsetting savings in other 
programs. The administration does not make any suggestions 
about where those savings should be made to fund the investments 
proposed. 

It is like pulling the pin out of a handgrenade and rolling it up 
here to us at this committee and walking out of the room, going 
outside, and saying: We have submitted a request for many more 
funds than this committee is able to provide unless they cut some 
other programs, but we are not going to be a part of the program 
cutting; we are just going to be a part of the add-ons, the so-called 
investment program of the President. 

That is disturbing. 

Secretary EsPY. Senator, could I get Mr. Dewhurst to respond to 
a bit of that? 

Mr. Dewhurst. Senator, I think all I can tell you is what I know, 
which is a couple of things. One of course is that we are well aware 
that we have a budget here that has some investments in it and 
that the investments involve more money to some extent than the 
savings that are suggested in fiscal year 1994. 

We assume that that matter is a matter of Govemmentwide 
budget priorities and that the President's budget stands as a pack- 
age Grovemmentwide. 

The other thing is that this budget is an accurate reflection, of 
course, of the plan the President sent to the Congress February 17 
and does not take into account any of the discussions that have 
taken place since that time. So we are not in the position to tell 
you that there are changes in the budget due to the budget resolu- 
tion or debates about the stimulus package. Those things are all 
there, but they are not reflected in any of these numbers. 

So without knowing the context, I cannot tell you what the Budg- 
et Director was really saying. All I can tell you is that the budget 
we have before you is the one we have been told to defend and it 
is part of a Govemmentwide set of proposals. 

RUSSIAN AID PACKAGE 

Senator CoCHRAN. The only final question that I will ask, then 
I will submit others on other subjects, has to do with the Russian 
aid package. I understand that 2 weeks ago we were notified by 



46 

Russia that it would not accept export certificates for any United 
States meat or poultry product that did not meet certain require- 
ments, and as a result of that virtually all United States meat ex- 
ports are not allowed to enter Russia. 

Is this an accurate description of the notification that USDA re- 
ceived from Russia and, if so, do you think it will be possible to ne- 
gotiate some kind of resolution of that problem so we could see 
meat exports going to Russia? 

Secretary EsPY. Yes, sir; it is an accurate description of what 
happened 2 weeks ago, but it no longer is true. We have worked 
with them and they have agreed to waive that objection, and so 
now there is a free flow of products into Russia. We are undertak- 
ing to change our export certificates. 

Senator Cochran. I appreciate that. In addition to that question, 
I have some other questions in connection with the Russian aid 
proposal, some relating to the matter you brought up, which was 
the expense of shipment and the problems that have come to light 
in the last few days on that issue. 

Secretary Espy. Yes, sir. 

Senator Cochran. Another on the Food Safety and Inspection 
Service, trying to get at what the primary approved shift means 
and how much that is going to cost poultry processors if they have 
to pay this overtime that is being suggested in this budget; and an- 
other on the alternative agricultural research and commercializa- 
tion program and what the outlook is for that. 

I am also submitting questions on the Federal Crop Insurance 
Corporation and the Farmers Home housing rental assistance pro- 
gram, where we have a fiscal year 1993 lunding shortfall, I am 
told, that needs our attention. 

SUBMITTED QUESTIONS 

The chairman has asked me to advise that additional questions 
will be submitted in writing by other Senators and we ask that you 
respond to them within 5 days. 

[The following questions were not asked at the hearing, but were 
submitted to the Department for response subsequent to the hear- 
ing:] 



47 



QUESTIONS SUBMITTED BY SENATOR BUMPERS 



• USDA REORGANIZATION 

Question: Mr. Secretary, When you were confirmed, you expressed a 
commitment to reorganizing USDA but stated that your first priority was to 
reorganize in Washington at the headquarters before going into the field. Does 
this budget reflect that position? 

Answer: My priority is still to reorganize the headquarters first although the 
budget does not reflect all of those plans. The budget does reflect the proposal to 
form the Farm Service Agency (FSA) at headquarters and in the field from 
consolidation of the Agricultural Stabilization and Conservation Service, the 
commodity price and income support programs funded by the Commodity Credit 
Corporation, the Soil Conservation Service and the Farmers Home Administration. 
Planning for the FSA is currently underway. Also, the budget does include a 
request to combine the appropriations for the various offices of the Secretary. 
This combination would provide me and future Secretaries with more flexibility in 
structuring and managing the top level staff. 

Question: Do your reorganization plans assume more than the 
establishment of the Farm Service Agency? If so what are they? 

Answer: I have not finalized my plans yet, but I am looking at the total 
headquarters structure and the field structure of all USDA agencies. Once a 
number of appointees for the Department are confirmed, I will enlist their 
assistance in designing a final plan. 

Question: What is your timetable for this reorganization? 

Answer: I expect to have a plan in place by fall for the headquarters 
reorganization. 

Question: I understand a pilot program is now underway in a few select 
counties. What are the details of this pilot, how long will it last, and what have you 
learned? 

Answer: I believe you may be referring to the Easy Access pilot projects 
initiated by former Secretary Madigan. As I understand, projects were set up in 
three counties to test the concept of USDA agencies working together and using 
new technology to provide better, more efficient services to producers served by 
these county offices. These projects in Sherman County, Kansas, Bolivar County, 
Mississippi, and Rockingham County, Virginia are now being expanded under the 



new Info Share Program to test the systems being designed for the Farm Service 
Agency. Info Share is a partnership among the farm service agencies, the 
Departmental Offices of Information Resources Management and Operations to 
coordinate the development, acquisition, implementation and management of 
information resources which support farm service and rural development missions. 
We want to better serve our customers through this project. 



48 



Question: Will you consult fully with Congress and the Appropriations 
Committee before Instituting any reorganization? 

Answer: I will consult with Congress before I make major changes in the 
Department. I will need your support if changes are to be made. 

MEAT AND POULTRY INSPECTION SYSTEM 

Question: Mr. Secretary, following the food-borne disease outbreak in the 
Northwest, you stated that improvements must be made in the way we inspect 
meat and poultry for harmful bacteria and pathogens. You outlined a number of 
short-term measures, including the hiring of additional meat inspectors, and 
moving forward on developing a new inspection system. How are you progressing 
on developing a new Inspection system? 

Answer: We are now developing a strategic plan which will be submitted 
for public comment before being put in final form. I have recently announced a 
pathogen reduction program which we have designed to ensure that we begin 
immediately reducing the likelihood of further outbreaks. An increase of $8 million 
has been included in the 1994 budget request for this effort. 

Question: What specific steps could you share with this subcommittee? 

Answer: We are using a two pronged attack to deal with modernizing the 
present inspection system. We are strengthening our present program to make it 
as effective as is possible with current methods and technology. We will also be 
seeking public input through regional hearings that will be held throughout the 
country this year. The Department is now in the process of developing a future 
inspection system, based on Hazard Analysis and Critical Control Point (HACCP) 
principles and essential elements of a pathogen reduction program. These 
activities will include examination of pre-harvest meat and poultry production, 
research on methods for rapid detection of pathogens, post harvest research on 
handling of product in slaughter plants, processing plants, and food service 
operations, and increased consumer education. 

Question: Funding for the hiring of additional inspectors was included in 
the President's stimulus package. What would be the impact on your efforts 
without this funding? 

Answer: Without the $4 million, the Department will be unable to maintain 
an increased level of inspection in meat and poultry plants. The 160 inspectors 
which would have been funded by the $4 million were to be a significant step in 
fully staffing this program and permit in-plant inspectors to perform all their 
assigned responsibilities. Under staffing results in certain inspection tasks not 
being completed. This increases the threat of product contamination due to 
improper handling or processing procedures. 

WETLANDS RESERVE PROGRAM 

Question: Mr. Secretary, the report on the Wetlands Reserve pilot program 
indicates that the cost per acre is $923. The per acre costs include $742 for the 
easement, $52 for restoration cost-share, $134 for technical assistance and 
administrative costs, and $4 for settlement and appraisal fees. 



49 



Does this atTioutU of riioney soein high to you for tlio per acre costs of tlie 
program? 

Answer: The $923 rate per acre is based on a pilot program of selected 
States However, Hie $742/acre easement payment rate is not substantially 
different than the national average per acre value of nonirrigated cropland which 
was $678/acre in 1990. Mucti of tlie eligible wetland acreage is liighly productive 
wlien properly drained and cropped. 

The technical assistance rate of $124 per acre is substantially higher than 
that provided under other programs, However, this program is tnore complex than 
other programs and this amount only reflects the average amount paid for tlie 49.9 
thousand acres approved. In order to provide landowners with thorough details 
about easement obligations, property rights and other costs before ttiey bid, SCS 
developed very intensive wetland restoration plans for all acreage that landowners 
expressed an interest in bidditig into the program. Since bids were received on 
249,059 acres, this amounts to about five times as much acreage as was 
accepted into the program. 

The $52 per acre restoration cost, even though it reflects a 75% cost-share 
level which is much higlier than CRP's 50%, is also low because many of the 
wetland restoration practices will require exacting agronomic and structural 
measures that we had anticipated would cost substantially more. 

Question: Are there any assurances that we are not paying more than tlie 
market value of the land for the easements? If so, what are they, and are they in 
law, by regulation, or otherwise? 

Answer: The WRP bid selection process is designed to ensure that USDA 
meets the requirements of tlie Food, Agriculture, Conservation, and Trade Act of 
1990 (1990 FACT Act) which mandates that WRP payment rales do not exceed 
the fair market value of the land less the fair market value of the land encumbered 
by the easement. To accomplish this, USDA calculates a unique bid cap for each 
bid based on fair market value data and other information. The exact bid cap 
formula and variables used have not been released to the public to help ensure 
that USDA pays "the minimum amount the landowner is willing to accept, rather 
than the maximum amount the Department is willing to pay". The bid cap formula 
will be reviewed periodically to ensure bids accepted meet guidelines set by 
ASCS. 

Question: Isn't it true that with the Conservation Reserve Program, the 
costs per acre increased as more and more acres were entered because the value 
of the land increased? Do you expect a similar pattern to occur with the Wetlands 
Reserve Program? Why or why not? 

Answer: The cost per acre of the CRP remained generally constant until 
1990 when the geographic mix of acres enrolled shifted tieavily into the Corn Belt 
and Eastern States where rents are higher. This change took place in part 
because the CRP expanded its criteria for selecting lands in order to enroll acres 
yielding the greatest environmental benefit per Federal dollar spent. In contrast, 
the WRP has adopted a similar targeting formula from its inception. Therefore, the 
per acre payment rales that would be anticipated for future WRP enrollment are 
not expected to be significantly higher or lower than that for the first signup. WRP 
costs would be reflective of price fluctuation in the land market. 



50 



FOOD STAMP PROGRAM 

Question: The committee lias noted the increasing participation levels for 
llie food stamp program in recent years, from 22. G million in fiscal year 1991 to a 
record 26.8 million in January of this year. More than one in every ten Americans 
is a recipient of food stamps, and the number of participants has been growing by 
about 200,000 a month since October. Why do you think we are seeing such 
rapid growth in this program? 

Answer: The primary factor behind the increase in participation since 1991 
has been the economic recession and the increases in utiemployment and 
underemployment that it has caused. Additional factors contiibuting to the 
increase include the raising of Medicaid income eligibility standards; an increase in 
the number of legalized iriimigrants eligible for the program; and additional 
governmental efforts in the areas of outreach and of simplification and consistency 
of application procedures among all welfare programs. 

Question: What impact would the President's stimulus program have on this 
program? 

Answer: No specific analysis has been done to estimate the impact of the 
President's stimulus program on food stamp participation. To the extent that jobs 
created through the stimulus program are filled by current or potential food stamp 
participants, the stimulus program would reduce food stamp participation and 
costs. The multiplier effect, that is the indirect effect on the communities of newly 
eirrployed persons spending more money in their communities would also tend to 
increase employment and incomes and reduce program participation. 

Question: Are the estimates in your budget request for fiscal years 1993 
arid 1994 based upon an assumption that the President's plan would be enacted? 

Answer: Since we are into the second half of 1993, no significant changes 
in (ood stamp participation and costs are anticipated to result from congressional 
action on the President's plan. Participation and cost estimates for 1994 are 
influenced by economic assumptions developed by the Office of Marragemenl and 
Budget including forecasts of unemployment and changes in the cost of food. 
These assumptions encompass all a.spects of the President's program along with 
factors not directly influenced by government policy, so it would be difficult to 
separately identify the impact of the President's stimulus program on 1994 food 
stamp participation and costs. 

Question: Do you think the benefit reserve is sufficient to cover the 
increased participation, or do you expect to request a supplemental appropriation? 

Answer: Since our current economic forecasts assume a slight drop in 
participation and a modest two percent increase in food costs, the benefit reserve 
of $5 billion should be sufficient to cover any unforeseen changes in economic 
conditions alfecling participation and costs. 



51 



MARKET PROMOTION PROGRAM 

QuRSlion: Mr. Secretary, last year we asked for a report on the Market 
Promotion Program evaluating it over the last five years. That report has not been 
received yet even though it was due February 1, 1993. You are faniiiiar with the 
controversy surrounding MPP. What are you thoughts on this program? 

Answer: The Market Promotion Program - MPP - is an innovative 
approach to promoting U.S. agricultural commodities and products overseas. It 
can be particularly effective for promoting value added products, which have 
received approximately 80 percent of total MPP funding. At the same time, 
liowever, it is critical that the program be administered and carried out effectively 
and efficiently. I am very aware of tlie negative publicity which has recently 
surrounded the program, and we will be reviewing liie program to determine what 
changes may be needed to improve its effectiveness. 

Question: When will liie report be received? 

Answer: Various options were considered to comply with this request, and 
the decision was made for the Department to conduct a survey of the non-profit 
participan's and private firms participating in the MPP. The Foreign Agricultural 
Service, which will be conducting the survey, will need to clear the survey with the 
Office of Management and Budget as it is subject to the provisions of the 
Paperwork Reduction Act. Once the survey is cleared and sent out, it will take 
some time to receive, compile, and assess ttie results. While FAS had originally 
expected to be able to respond to the Committee's request this summer, it now 
appears that additional time may be required. 

ASCS SALARIES AND EXPENSES 

Question: It lias come to my attention lliat a shortfall in the operating 
budget for ASCS could result in a furlough of as many as 500 employees for as 
many as six weeks. 

Is this true? If so, what is the reason for the sliortfall given that we 
provided the same amount of funds that were requested for tliis year? 

Answer: No. It is not true that ASCS will be furloughing 500 employees 
for as many as six weeks. However, it is true that ASCS is operating with less 
appropriated funding for administrative expenses in FY 1993 compared to 
FY 1992. As a result, many States are having to monitor more closely their 
spending in order to keep within their administrative allocations. Moreover, the 
tight funding situation for ASCS is the result of no additional appropriations 
provided for performing workload related to Phase II and III of the disaster 
program. 

Currently, ASCS is in the process of throughly analyzing the available 
funding resources, existing and projected workload needs, and estimated 
expenditures through the fiscal year. Based on preliminary analysis results which 
include a summary of State reports on expenditure needs, it appears that ttiere is 
sufficient funding in reserve at the national level to support agency operations. 
Ttiis assumes that all ASCS offices will continue monitoring more closely 
expenditures and use sound Judgement when incurring costs. As a result, ASCS 
anticipates issuing allocation adjustments to States which have justified the need. 



52 



However, ASCS is able to keep within the overall funding availability only 
by postponing non-essential workload, reducing the use of temporary employees, 
reducing travel and all other expenditures whicli can be postponed. 

Question: Will you request a supplemental appropriation? 

Answer: As a result of the actions taken by the agency to maximize the 
use of available funding resources, no supplemental appropriation will be 
requested for FY 1993. 

RURAL ELECTRIFICATION ADf^lNISTRATION 

Question: You propose to significantly change the rural electrification 
program which, as you know, is being resisted by the rural electric and telephone 
borrowers. I know that these borrowers are very interested in participating in rural 
development in more than just providing electric and telephone service. 

What rural development roles do you foresee for these groups and how do 
you intend to achieve them? 

Answer: l^r. Chairman, the only change proposed for the electric and 
telephone programs in the FY 1994 budget is the increase in the interest rate for 
direct loans and the Administration does not consider this a significant change. 
The interest rate will increase from 5 percent to the Treasury cost of borrowing 
which is presently 6.75 percent. 

Regarding the borrower's role in rural development activities, we foresee 
that the borrowers will increase their activities in financing economic and 
community efforts. The borrowers have been increasingly active in the past few 
years in their participation in the zero interest economic development loan progratn 
available through REA. During 1992 RE A made 96 of these loans totaling $8.4 
million to borrowers in 24 states. The 96 loans were made for the purposes of 
financing business startup and expansion and community economic development 
projects. Although the average size of these loans is relatively small, $87,500 in 
1992, one of REA's criteria in making the loans is the amount ol funds leveraged 
ftom other sources. The 1992 loans were supplemented with funds from a variety 
of sources including private financial institutions, state and local governments, 
regional development organizations, other Federal agencies, REA borrowers and 
owner equity. We expect this activity to increase now that REA has increased the 
maximum loan amount from $100,000 to $400,000. 

We also anticipate that borrowers will begin to use more of their own 
capital in financing economic and community projects. As you know, REA 
borrowers are permitted to use up to 15% of their total plant value to invest in 
such endeavors without REA"s permission. Some borrowers have taken 
advantage of this authority and we anticipate more will do so in the future. In 
addition, the FACT Act of 1990 authorized the deferment of principal and interest 
payments on REA loans to encourage investment in rural development activities. 
REA estimates that a total of $36 million could be deferred in 1993. Deferred 
payments must be repaid over 5 to ten years depending on the nature of the 
investment. The final regulations implementing this program were published on 
April 23. 1993. 



53 



RUSSIAN AID 

Question: ! understand that under the $1.6 billion in Russian aid 
annouficed recently by tl)e President, the transportation costs of the Food for 
Progress portion cannot be covered because of a limitation on tlie use of 
Commodity Credit Corporation funds for this purpose. I furtlier understand tliat the 
Administration has been pursuing other possibilities for covering these 
transportation costs. What is the current status of ttiis dilemma? How will the 
transportation costs be covered? 

Answer: We are actively exploring various options and authorities available 
to the Department to pay for the transportation costs associated with the Food for 
Progress credit program for Russia which President Clinton announced during the 
Vancouver Summit. We hope that in the very near future we will be able to advise 
you how we intend to resolve this issue. Our preference is to identify an 
administrative solution to the problem, rather than seek a legislative remedy. 

Question: Please provide a summary of USDA's share of the Russian aid 
package - what programs will be used and to what extent. 

Answer: The Department's portion of the total $1 .6 billion package is $894 
million. This includes the $700 million Food for Progress credit program and 
another $194 million of food donations. The donations will be carried out through 
programs of U.S. private voluntary organizations or bilateral agreements with the 
Russian Government. The donated commodities will be made available under the 
authorities of Food for Progress and section 416(b) of the Agricultural Act of 
1949. 

Question: Also, provide information by type and amount showing total 
Russian aid for 1992 and to date for 1993. 

Answer: We will provide tables which provide information of food 
assistance programmed in 1992 and planned for 1993 for Russia, including the 
types of commodities, dollar values, and tonnages. 

[The information follows.] 



54 



88 



O -o ^ 

UL ro O -, 

. 0) O I 

=j ™ CD 

5 -o w 

< t cc 

en E 

CD O 

O o 

CC 

ex. 






v(.JV«^MV«CrlV> 



1 2 
Pg 



IS 









(1 



■3 



m. 



i !: 






3 3 1 1 3 } 9 a 3 1 3 



^1 



{n 



I 'I 

I I 



|!| 



i'h 



55 



»- c 

U. »- V. 

ill 

Q « O 

O o O 

O - >- 
U. ™ CO 

(0 >.^ 

_• ."= CO 
^ -0 CO 
Q O 3 

HI E oc 
z E 
Z o 
<o 



■ 


'3 
§1 


M 

§ 


sss5S^gB§isiiiii?iii |ji 


y 


i 


- 1"? 


a 

D 
• 

x 

Q 


U 


s 


i83-ii'i!8iliijiili if 


s 




5 




1 t 1 1 1 I ! ! ! 1 ! 1 ! I ! ! ! ! ■ > : 1 > 

i ' r 


§ 


! ! ! ! ! ! ! ! I I 1 1 ! ! 1 ; ! ! ! ! || 1 

1 1 




•• 

§ 


I I ! ! 1 ! ! ! 1 ! ! 1 I ! ! 1 ! ! ' ' ; " ■ 
5 ■ 5 

:: ■'■-- 

i i 






•• 
Z 

o 

e 


1 

e 
1 




1 1 1 1 1 1 !!!!!!!'!'' ' -■ > ■ 
■ • ' • ■ t 1 1 1 1 1 1 1 1 1 5 ,| 


5 


-'■'■■'■■'"■ II 


'a 
r 

at 


•• 

§ 


' • '3S'8s! 1 ! ! ! ! ! ! I ! 1! m 


§ 


'•'sslss!!!!!!!!!!!! 131 

PI 


1 

i 

u 

3 
a. 


1= 


s 


1 1 1 1 1 1 I 1 I !! 1 !!'*''' * "^ * -^ 

• 1 1 • 1 1 1 1 1 1 1 1 1 1 t 1 1 ;| 1 : 

;;3 > 


i 


! ! ! ! 1 ! i ! ! ! ! ! 1 ! ! ! 1 ! 1 ! 4\k 


a 
^ 


§ 




§ 


1 1 I I I I I I I I I I I !'•''' * ; 1 it- 

■ * • • • I 1 t 1 i 1 1 1 1 1 1 1 1 t t ? 1 f 




•• 

1 


; I [ ; 1 ! j 1 ; I 1 1 ; j f 

i'l 


s 


■ III!!!!!!!!!!!!'!'' ' J 

■>■>■■ 1 1 1 I 1 I 1 11 1 ■ 1 1 J , : 


a 



z 
z 

8 


:■; : 
^ :: 

-■: \: 

ijilllsjillllijlllll H 


>■ 
8 


i 

iiiiiiiiiiiiiiiiijii ; I 



R 



t 
o 

HI 

t 

i 
5 



56 



Question: In 1991, we made $1,750,000,000 available for disaster 
payments to farmers for crop years 1990, 1991, and 1992. The first $995,000,000 
was made available immediately for 1990 and 1991 crop losses and the remainer 
was made subject to a presidential request and emergency designation. Last 
year, we made an additional $482,000,000 available of which $100,000,000 was 
not available until requested by the President and declared emergency funding. 
What is the current status of these funds? 

Answer: As you indicated, the first disaster supplemental last year 
authorized a total of $1.75 billion for disaster payments on crop losses in 1990, 
1991, and 1992 under terms and conditions specified in the Food, Agriculture, 
Conservation, and Trade Act of 1990. 

Of the total, $995 million was made available early in 1992 for losses in 
either 1990 or 1991. Claims totaled about $2 billion, and payments for 1990 and 
1991 losses in Phase I of the disaster program were based on a prorate factor of 
50.04 percent. The additional $755 million was made available upon request by 
the President on September 2, 1992. Of the $755 million, $100 million was set 
aside for payments under Phase II of the program to producers with losses on 
program crops planted in 1991 for harvest in 1992. The remaining $655 million 
was made available under Phase III of the program to producers with unclaimed 
losses in either 1990, 1991, or 1992. 

Following Hurricane Andrew, the second disaster supplemental of 1992 
authorized an additional $482 million for Phase III of the program. Of the $482 
million, $100 million was made available only upon request by the President. The 
supplemental also authorized additional borrowing if needed to pay producers for 
losses at the same prorate factor used in Phase I of the program. 

In summary, the first and second disaster supplemenlals made available a 
total of $2,132 million for payments on crops losses in 1990, 1991, and 1992. 
After adjustment for a transfer of about $1 1 million to FmHA for migrant labor 
housing, funds available for disaster payments totaled $2,121 million. 

To date, payments at the 50.04 percent factor total about $1,616 million. 
Including $963 million for Phase I, $97 million for Phase II, and $556 million for 
Phase III. An additional $60 million in payments on Phase HI applications already 
on hand is expected. Current funding for Phases I, II, and III totals $2,121 million. 
Thus, a total of about $445 million would remain for payments at the 50.04 percent 
factor after processing applications on hand. 

On April 9, 1993 we announced that producers could apply for quality 
losses on the 1992 corn crop. The application period for payments on corn quality 
losses closes May 7, 1993. ASCS has estimated these additional payments at the 
50.04 percent factor could total about $150 million. Payments of $150 million on 
quality losses would reduce the estimate of remaining funds from $445 million to 
$295 million. 

Question: Will you be releasing the extra $100,000,000? 

Answer: A decision on a request for the additional $100 million, which is 
not included In the Budget, will be made at a later date. 



57 



Question: What is your current estimate of the ainount you will be able to 
pay fanners on each dollar for which he is eligible? 

Answer: We will not be able to announce a change in the final pro rate 
factor, if any, until after the application period for corn quality losses closes and 
processing of claims is completed. We would estimate, based on anticipated 
claims, that the additiortal payment would be less than 10 percent of the initial 
claim. 

Question: Should there be funds left over, will you go back and pay a 
latger pro rale share to each eligible farmer? 

Answer: We would expect to be able to pay a larger pro rate share if the 
funds lemaining allow for more than a negligible supplemental paytnenl. As 
indicated earlier, we would estimate, based on anticipated claims, that 
supplemental payments, if any, would amount to less than 10 percent of the initial 
claim. 

Question: Please provide a report on the disposition of these funds 
showing geographical distribution, the crop years for which the payments are 
made, and the type of crops and disasters involved. If the final information is not 
currently available, please provide an interim report showitig the disposition and 
distribution of funds. 

Answer: An interim report showitig distribution of payments by state for 
Phase I, II, and III follows: 



58 



stains ol Dif^aslpr Funds 
As ol Scplomber 30, 1 992 



Pliase i 



Slale 



Alalinnin 

Alaska 

Atizotia 

Arkansas 

California 

Colorado 

Conneclicul 

Delaware 

rioritla 

Goorgia 

Guam 

Hawaii 

Idaho 

Illinois 

Indiana 

Iowa 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland 

Massacl)iisGlts 

Michigan 

Minnesota 

Mississippi 

Missouri 

Monlaria 

Nebraska 

Nevada 

New I larnpsliire 

New Jersey 

New Mexico 

New York 

Noilh Carolina 

North Dakota 

Ohio 

Oklahoma 

Oregon 

Ponrrsylvania 

Puorlo nico 

Rhode Island 

South Carolina 

Soulh Dakota 

TonnosseG 

Texas 

Utah 

VRrrnonI 

Virginia 

Washingtori 

West Virginia 

Wisconsin 

Wyoming 

American Samoa 

N Mariana Is 
_Undjstributed 

Total Fur)ds Experided 
Source: bU -^-iTH Hepori 



Cro() Dinastcr CurnuJaiivo Aciivily 
Nni Expmditures 

$25,092,203 00 

234.559 00 

2,766.30-1 00 

29.368.0')3 51 

54.956,176 -11 

9,074, -I'll 00 

942.177 00 

279. 4G2 00 

23.901.513 00 

64,490,146 00 

238.155 00 

536.436 00 

12.GG7.242 00 

42.712,200 00 

22,819.569 00 

31.128.479 00 

28.756.553 00 

6,136,673 00 

44,044.239 00 

2.640.817 00 

2.440.002 00 

3.224.714 00 

23.150.790 00 

27.729.430 11 

26.962.698 00 

25,341,172 00 

18,268,760 00 

17,207,270 00 

2,067.212 00 

246.94 7 00 
7.555.137 00 
6.761.113 00 
6.551.720 00 

14,255.599 00 

32.120.319 00 

16.090,720 00 

22.900.700 00 

10.039.276 00 

12.057.2 10 00 

I ,407.043 00 

100.155 00 

13.795.828 71 

21.146,569 00 

17.034,537 00 

145.526.530 00 

4.310.793 00 

667.493 00 

5.103.770 15 

24.692.670 00 

1,526.437 00 

9.221.432 00 

1.267.414 00 

499.095 00 
190.670 00 

36.415,409 17 

$962,542,105 05 



59 



Status of Disaster Funds 
As of April 21. 1993 







Phaso II 






Funds Availablo 










$100,000,000 


Crop Disaster Weekly Activity | 


Crop Disaster Cumulative Activ 


ity 


. 


Disbursement 


Refund 


Disbursement 


Refund 


Net 
Expenditures 


Alabama 


$0.00 


$0.00 


$69,939.00 


$553.00 




Arizona 


0.00 


0.00 


8.541.00 


0.00 




Arkansas 


1.362.00 


4,016.00 


2,486.962.00 


6.388.00 




California 


(4.460.00) 


0.00 


596.345.00 


9.172.00 




Colorado 


11,524.00 


23.196.00 


5.439.695.00 


38.768.00 


!:■•■ -..^ 


Delaware 


0.00 


0.00 


67.00 


0.00 




Florida 


0.00 


0.00 


3.270.00 


0.00 




Georgia 


575.00 


0.00 


85,144.00 


0.00 




Idaho 


0.00 


0.00 


902,201.00 


3,454.00 




Illinois 


505.00 


0.00 


4,565,579.00 


2.652.00 




Indiana 


0.00 


0.00 


3,456.258.00 


14.232.00 




Iowa 


(305.00) 


0.00 


112.303.00 


86.00 




Kansas 


16.493.00 


275.00 


24,436.853.00 


98.724.00 




Keniucky 


0.00 


0.00 


18,985.00 


0.00 




Louisiana 


0.00 


0.00 


442.916.00 


0.00 




Maryland 


0.00 


0.00 


1.762.00 


0.00 




MIclilgan 


3.565.00 


263.00 


267.554.00 


4.751.00 




Minnesota 


0.00 


0.00 


31,559.00 


169.00 




Mississippi 


136.00 


0.00 


206.503.00 


0.00 




Missouri 


195.00 


0.00 


1.860.237.00 


5,013.00 




Montana 


32.594.00 


152.00 


10.660,288.00 


19.959.00 




Nebraska 


0.00 


0.00 


10,679,801.00 


6,895.00 




f^levada 


0.00 


0.00 


229.182.00 


80,903.00 




|New Mexico 


0.00 


0.00 


479.772.00 


1.306.00 




New York 


0.00 


0.00 


27.863.00 


85.00 




Norlfi Carolina 


0.00 


0.00 


18.966.00 


37.00 




Noriti Dakota 


0.00 


0.00 


24.727.00 


0.00 




Ohio 


1.163.00 


0.00 


1.297.449.00 


3.818.00 




Oklahoma 


35,440.00 


37.00 


7.320,282.00 


9.734.00 




Oregon 


0.00 


0.00 


1.366.488.00 


984.00 


'i ' 


Pennsylvania 


0.00 


0.00 


3.908.00 


0.00 




South Carolina 


0.00 


0.00 


31.89900 


266.00 




South Dakota 


0.00 


2.407.40 


5.926.488.00 


6.432.40 




Tennessee 


0.00 


0.00 


168,664 00 


24.00 




Texas 


354.00 


200.00 


8.873.203.00 


13.835.00 




Utah 


0.00 


0.00 


285.718.00 


0.00 


, . . ' ■ 


|Virglnia 


0.00 


0.00 


10,077.00 


0.00 




Iwashinqton 


0.00 


0.00 


2.638.203.00 


6.743.00 


■ , 1 '. 


West Virginia 


0.00 


0.00 


1,060.00 


0.00 


■ ■■ ■'■; 


Wisconsin 


387.00 


0.00 


1.576,433.00 


8.256.00 


■ ■ ' : 'i'v- ■ ■-■ 


Wyoming 


0.00 


0.00 


427.515.00 


367.00 














■ '' 


Totals 


S99. 528.00 


$30,546.40 


$97,040,659.00 


$343,606.40 


$96,697,052.60 


Phase II Balance 










$3,302,947 



60 



■o 
c n 



2 eg 
° o 

V) 





8 




n 






























































§ 




o 






























































o 




5 






























































g 

CM 




u =5 






























































«o' 




a 






























































CM 
O 




i3 






























































^' 
































































6 

E § 
2 o- 




o 


O 


O 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


O 


o 


o 


o 


o 


o 


o 


o 


o 








■o 


o 


O 


o 


o 


o 


o 


o 


o 


o 


p 


p 


p 


o 


o 


o 


o 


o 


p 


o 


p 


o 


o 


o 


p 


o 


o 


o 


o 








c 

3 


CJ 


d 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 








o c 


u 
































































o n 


cc 
































































Q. UJ 






























































H 


o" 


o^ 


o 


o 


o 


o 


o 


o^ 


o^ 


o" 


8 


o 


o 


o 


o 


o^ 


o^ 


o^ 


o^ 


o^ 


o 


o^ 


H 


o 


o 


o 


o 








stanci 
ought 


«d 


o 


o 


p 


o 


o 


o 


o 


o 


o 


o 


o 


p 


o 


o 


o 


o 


o 


o 


o 


o 


o 


p 


o 


p 


o 


o 


o 








c 


d 


b 


b 


CO 


CM 


b 


b 


b 


b 


b 


b 


■«■ 


b 


b 


b 


b 


b 


b 


b 


b 


b 


^« 


b 


r~ 


b 


b 


b 


b 








V 


v> 






<Tt 


CO 














CD 


^- 


CO 


CO 














(D 




o 


00 














E 










CM 














ID 


•^ 


<T> 


r-». 














CO_ 




CD 


CO 














55 


*» 










-* 














m" 

ID 


•«•" 


f~-" 


^-' 














■<r' 




















< _- 


3 


































































O 

y) 
































































U o 


































































^ 2 


5 
































































u. 
































































o 
in 


o 
p 


o 


o 
o 


8 


8 


o 

o 


o 
o 


o 
o 


8 


o 
o 


8 


o 
p 


8 


o 
o 


o 
o 


o 
o 


o 
p 


o 
o 


o 
o 


o 
o 


o 
p 


in 


8 


s 


8 


8 


§ 


1 








■a 


<b 


b 


ui 


ui 


r^ 


ri 


b 


b 


b 


b 


b 


b 


•* 


b 


b 


CO 


b 


r>^ 


b 


r-- 


b 


■«• 


r^ 


^. 


b 


,_ 


CM 


b 


1 








c 


in 




00 


o 


en 


o 






CO 


f^ 




CO 


•— 


CD 


o 


o 




r-- 




(D 




in 


oo 


CM 


m 


V— 


CO 


TT 


1 








3 


■<r 




CO 


f 


r~ 


■<r 






in 


to 




CD 


m 


o 


<D 


in 




i-~ 




TT 




en 


en 


cn 


■«• 


oo 


OO 




1 








CJ 


o 




b 


b 


cm' 


o 








cm" 




Ol 


b 


r>' 


^ 


r-" 




cm" 




cm' 




cm" 


^ 


rvT 


d 


b 


r~" 










w 


cc 


l/> 


















o 








CO 
















^ 


CO 




CM 


CO 


CO 








>■ 
































































~a 


o 


00 


o 


o^ 


o^ 


o 


O) 


^ 


■«- 


o 


O^ 


o^ 


o^ 


o" 


To 


o 


Z^ 


o 


o 


o" 


CO 


■»r 


In 


u7 


cn 


■>T 


o^ 


1 






c 
u 

E 


o 


p 


^~ 


IT) 


p 


p 


o 


TT 


p 


CM 


p 


cn 


p 


o 


o 


o 


p 


o 


o 


o 


o 


IT 


CD 


m 


r~ 


cn 


m 


o 


1 




o 


O 


CD 


r-' 


b 


b 


b 


r^ 


csi 


b 


b 


r^ 


b 


b 


f'-i 


csi 


CM 


cm' 


•^ 


U5 


b 


(D 


csi 


b 


b 


^ 


b 


^ 


CM 


csi 


] 




< 


TT 


r> 


o 


r) 


s 

00 


00 


00 


r^ 


Cvl 


b 


CO 


b 


ID 


00 


U3 


CM 


in 




1 — 


ir 


ro 


■a- 


b 


CT) 


m 


V— 


CO 








> 


a 
o 




in 
vn 


CM 

co' 


00 


CD 
CO 


in 


in 

CM 


cm' 


CO 

cm' 


b 


cm' 




cm' 


cm' 


m 

b 


b 


p 
b 


r-' 


b 


CO 

b 




m 
b 


Tf" 


In 

b 








in 


CO 


r~. 


o 




en 


r- 


05 


f^ 


o 


ID 


CO 


CT) 


r^ 


O) 


CO 


CM 


o 


CD 


m 


m 


(75 


ir 


•<r 


ID 


T 


CO 


O) 


CO 






{0 


O 


5 


n 


r) 


•^ 


r-. 


f^ 


CM 


(D 




CO 




ID 


m 


f 


in 


CM 


m 


r^ 


m 


oi 


r^ 


CO 






T 




p^ 


p^ 


m 






3 




o 


T— 




b 


r^ 


v-T 


b 






b 


cm" 




b 


■<t 


V 


•^ 


b 




cm" 


■» 




r^ 


b 


b 


eo" 


^ 


■<T 


b 


cm' 








VI 


r— 






1 — 


rj 










CM 
























CO 


CM 
















E 

3 






V* 
























































C; 






o 


























































O 

in 

Q- 




O 
































































W 
^ 




o 


o 


o^ 


o 


O^ 


o 


o^ 


^ 


'o' 


^ 


O 


o 


O 


o 


o 


O 


o 


o^ 


o 


o 


o 


o 


o 


O 


o 


o^ 


o^ 


o 






1 3 

2 □■ 


c 

3 


o 
d 


p 
b 


p 
b 


o 
b 


O 
b 


o 

b 


o 
b 


o 
b 


o 
b 


o 
b 


o 
b 


o 
b 


o 
b 


o 

b 


o 
b 


o 

b 


o 

b 


o 
b 


o 
b 


o 
b 


o 
b 


o 

b 


a 
b 


O 

b 


o 
b 


o 
b 


o 
b 


o 
b 








O x: 


X 
































































o n 


cc 
































































Q. Ill 






























































o 


o 


o 


o 


O 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o" 


o 


o 


o 


o 


o 


o 


o 


o 








if 


c 

V 

E 


o 


o 


p 


o 


o 


p 


a 


o 


o 


p 


p 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 










b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


o 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 








w O 


























































j 






S5 


n 
































































< - 


3 
































































« S 


a 
































































u e 


J_ 
































































K 2 


o 
































































u. 
































































o 


o 


o 


o 


o 


o^ 


o 


o^ 


^ 


o 


o 


o 


o 


o 


o 


o^ 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 










c 

3 


o 


o 


o 


o 


p 


o 


o 


o 


o 


o 


p 


o 


p 


p 


o 


o 


a 


o 


o 


o 


o 


o 


p 


p 


o 


o 


o 


o 










CO 


o 


b 


b 


^ 


b 


b 


b 


b 


o 


b 


cm 


b 


b 


b 


CM 


b 


o 


b 


b 


b 


b 


^ 


b 


b 


o 


IT 


b 










(O 








CM 














■<r 






CM 


O 












in 


CO 






r* 


CO 












4) 


v> 








•«• 










r~ 




o 






Cvl 


p 












en 


CO 






m 


CO 












CC 










iW 










b 




■*' 








f 












*" 








b 


t-' 




c 
u 
E 


o 
o 


o 


o 
o 


8 


p 


8 


o 


o 
o 


o 

p 


o 
o 


p 


o 

p 


8 


8 


8 


(D 


8 


o 


o 


o 
o 


8 


o 


8 


o 
o 


8 


o 
p 


8 


o 
p 








5 


ID 


b 


tT 


■t 


b 


b 


o 


csi 


b 


■<>• 


b 


^- 


b 


b 


«— 


b 


CM 


b 


in 


o 


b 


b 


r-^ 


b 


r- 


f' 


b 


CO 








m 




y~ 


o 


CM 


00 




en 


o 


1 — 




in 


in 


o 


r^ 


CO 


T~ 


in 


CO 


CM 


tT 


CO 


CO 


CT) 


o 


r~ 


in 


* — 








vi 


TT 




CO 


CO 


00 


oo 






ID 


o^ 




o 


CM 


CD 


(D 


r^ 


o 


r^ 




CO 


»— 


00 


o 


o 


CO 


r*. 


■^ 


IT 








RI 


u 


S" 




iW 


b 


•<»^ 


h* 




cm" 


cm' 


h--" 




•<f 


b 


55 


b 


b 


b 


cm' 


ir 


h-' 


K.' 


CJ 


^ 


r»' 


■«■" 


cm' 


b 


^ 








w 


« 




o 


CM 


<7> 


in 






en 


to 




rr 


■V 


•T 


CO 


CM 


•a- 






CO 


o 


CO 


eo 


1 — 


00 


■T 










Q 


3 


VO 








CM 








o 


ID 
















in 


»— 






o 




IT 
















a 
o 




















' 


























cm' 






















o 




























































u 


>■ 


O 
























































































































o 


































































n 


> 














































tn 


































































a3 


















re 


u 


















3 




























irt 






__ 












> 


< 


















u 




























3 




n 


Q. 












< 








(13 






in 


m 


O 




o 


















> 


ro 




■D 


C 


c 


o 

en 

4) 

c 
c 


a 


._ 


(fl 


(0 






C 


>■ 

0) 






s 


nj 
« 


o 


c 


c 
5 


5 


o 
1) 

c 
c 


(5 




ro 
o 


ro 


E 


o 


c 

c^ 


ro 




« 
D 

^ 


c 
ro 

3 

Q 


2^ 


C 

ro 


o 
Irt 


ro 

c 


55 

V) 


5 
o 

(0 


c 

CO 


1 


n 

> 




3 


9 






TO 


TO ^ 


^ 


75 


O 


O UJ 


o 


<S) 


ro 


a 


g 


u 


J 


t^ 


Q 


CB 


ro 


CO 


_IJ 


1/1 


1/1 


o 


to 


u 


L 


M£ 


! 




< 


< < 


< 


O 


O 


O Q 


u. 


B 


X 


p 


£ 


c 


£ 


iC 


:»: 


_l 


2 


5 


5 


2 


2 


2 


5 


5 


z 


2 



61 





§ 






•) 


























~ 


™" 


^^ 


^^ 


^^ 


^" 








^" 


^" 






^ 




~ 


3> 

<0 




s 

o 






s 

5 






























































g 




Z 


c 

9 
























































§ 

CO 


s 




<o 






Q. 
























































to" 






eg 






7 
























































m 


o> 




o_ 






lD 
























































» 


!? 







































































1 


ft 

■it 

§ 


T 


O 

o 


o 
o 


o 
o 


§ 


o 
o 


o 
o 


8 


o 
o 


o 

C3 


o 
o 


8 


8 


8 


o 
o 


8 


8 


o 
o 


o 
o 


o 


o 
o 


8 


o 
o 


o 
o 


8 


8 




8 








C 
3 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 




S 










CTx: 


*i 
































































o 


c 


CC 
































































a. 

«> 
u 


3 

o 




























































I 


g 


i 


o 

o 


o 
o 


o 
o 


o 
o 


i 


8 


§ 


o 

o 


8 


I 


o 
o 


o 

o 


o 


8 


8 


i 


o 

o 


o 
o 


o 
o 


8 


8 


8 




8 








c 
3 


C 
V 

E 


b 


b 


b 


b 


b 


b 


CO 

g 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


iri 

CM 

en 


b 


b 


b 




CT> 

q 




































































O) 










< 
W 


N 
9 


3 






















































» 










H 


9 
w 


5 
































































§ 


o 
o 


U5 


8 


o 
p 


8 


8 


8 


o 
o 


o 
o 


8 


o 
q 


8 


8 


8 


00 


8 


8 


o 
q 


8 


o 
o 


en 
1^ 


8 


8 


o 
q 




p 












■o 


b 


oi 


CM 


<b 


in 


ri 


O) 


b 


b 


O) 


b 


b 


^. 


r>: 


m 


b 


CO 


CM 




to 


b 


nI 


^ 


b 


b 


















c 




OT 


00 


in 




o 




■>T 


o 


f>- 






r~ 




m 


lo 






o 


CO 




o 


CM 








5 














3 




tn 


>n 


»n 


m 


m 


CO 


oo_ 


•<r 


CM 






f^ 


cm 


r^ 


CO 


5. 


T— 


CT) 


to 




CO 


r^ 




















« 






•<r 


r-' 


(C 


in 




r^' 


in 








b 


V 


■* 


b 


V 




■»" 


b 




co" 










oo' 














CC 












*" 




CO 










CO 


^ 




o 












CM 










m 












^ 
























































^ 








> 




9 




o 




















































♦* 




o^ 


O^ 


p7 


o' 


oo 


rT 


CM 


^ 


To 


o 


o 


o^ 


"o 


Ti 


"^ 


o 


o 


CO 


o 


o 


O 


o 


o 


o 




^7 










10 


c 


o 


o 


n 


CO 


o 


*" 


m 


CM 


m 


•«■ 


q 


o 


q 


o 


to 


•9 


q 


o 


CM 


o 


q 


CO 


m 


o 


o 




•V 








u 




Q 


^ 


ob 


in 


csi 


<n 


^- 


s 


fd 


r^' 


b 


in 


■«■ 


CO 


rvi 


^ 


(b 


^ 


to 


CM 


csi 


CM 


CO 


b 


in 


CO 


b 




od 








< 




E 


o 


oo 


o 


C^J 


o 


m 


o 


CO 


m 


(£> 


Ol 


oo' 


m 


r^ 


•V 




to 


in 


o 


cm" 




o 


oo 




s 

r>." 








« 
> 




a. 
o 








oo 
cm' 




cm' 


oo' 


o 


in 
o' 


in 


to 


oo' 


co" 


cm" 


oo 

oo" 


VO 


5 

co' 


to 
b 


q 


CM 

b 


o. 


CO 
cm" 


CM 

in 










•^ 




w 


oo 


»~ 


s 


o 


tn 


T 


^— 


»— 


^- 


■<r 




00 


tT> 


lO 


o 


o 


CO 


m 






m 


«■ 


o 


R 




^ 








5 




o 


3 


OJ 


CM 


Ol 


to 


<T> 


CO 


en 


o 


o 


CO 


•«r 




t^ 


OO 


m 


in 


o 


CM 


in 


CT) 


CM 


to 


CM_ 


■«r 




en 








3 






a 




cm" 


o' 


■*' 


co" 


<D 


•<r 


OI 


in 


cm" 






<T> 


r-' 


co' 


to 


cm" 




cm" 


en" 




oo' 


cm' 


^ 






to" 








E 

3 






« 








• — 




^ — 
















T— 




m 












CM 










in 




— 








o 






















































« 




9 
V) 

to 




o 




































































J( 


■a 
c 

3 


o 


s 


o^ 


o 


o 


o 


o^ 


o^ 


o 


o^ 




o 


O 


o 


o 


o 


o 


O 


o 


o 


o 


~io 


O 


o 


o 




o^ 








E 


(0 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 




q 


q 


o 


o 


o 


o 


O 


q 


q 


q 


o 


q 


o 


q 




o 




0. 






3 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 




b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 




s 










o-c 


« 
























































11 








o 


C 


CC 
























































11 








u 

c 
2 


03 
lU 






























































o 


o 


8 


o" 


8 


o 


o 


o 


o 


o" 




o" 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o^ 


^ 


o 


^ 




o^ 








H 


c 


o 


o 


o 


o 


o 


C3 


q 


o 




o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 




o 


II 








CT 

3 


E 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 




b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 


b 




s 










« 


O 
























































[1 










w 


u 
























































II 








a 


n 
































































< 


> 


3 
































































V 


N 


a 
































































u 


« 


































































t- 


« 

w 
U. 


5 






























































■a 
c 

3 


o 


o 


o 


2 


o^ 


8 


o^ 


o^ 


o^ 


o^ 


o 


o 


o 


o 


o^ 


o 


o 


o 


o 


o" 


o 


o 


o" 


o 


o 




o 












o 


o 


o 


o 


o 


o 


q 


o 


o 


o 


o 


o 


o 


o 


q 


q 


q 


q 


o 


q 


o 


q 


q 


o 




o 














b 


b 


b 


'C 


b 


t^ 


b 


r>i 


b 


b 


b 


b 


CM 


00 


b 


nI 


b 


b 


b 


en 


b 


CM 


^ 


b 


b 




b 




















•* 




(O 




o 










00 


00 




oo 












to 


oo 








o> 














« 








■<r 




r) 




CD 












T 




q 












CM 










r-. 














CC 








'" 














































b 




c 

4) 


o 


o 
o 


8 


8 


o 


8 


o 
o 


8 


o 
q 


8 


8 


q 


8 


8 


o 
o 


°P 


8 


o 
q 


q 


o 
q 


q 


8 


o 
q 


8 


o' 
q 




r~ 










w 
9 


b 


CO 


d 


a> 


00 


R 


CM 


CM 


h- 


T— 


b 


b 


CM 


CO 


b 


r- 


r- 


in 


to 


CO 


b 


CO 


r^ 


CO 


b 




CM 














E 




*" 


o 


^ 


»~ 


00 


» — 


^— 


r~ 


•»• 




CI 


OO 


CO 


CT) 


oo 


<£> 


in 


V 




to 


o 


CO 






s 












10 




^ 


in 


CM 


oi 


o 


in 


in 


m 


(O 


en 




■ — 


CM 


o 


CO 


q 


■* 


r^ 


r~- 




r- 


•«»■ 


r>. 
















re 


«i 




00 


ri 


^ 


^' 


in" 


r^' 


^' 


oi 


b 


en 




cm" 


b 


cm' 


CT) 


co' 




h-T 


^ 




CO 


oo' 


to 






en" 












tn 




s 


*~ 


o 


CO 


▼- 


R 


m 


CO 


CO 


r^ 




r* 


CO 


oo 


TT 








■«r 




to 




to 


















O 


3 




CM 




*" 


CM 






*— 












•«■ 


CO 
















CM 






r- 












a 


X3 






















































oo" 












o 




































































w 


5 


































































o 


























































V 




























































t) 
































































u 




a 
n 


> 








o 








re 
















re 






























c 
re 














E 








c 


re 








re 




•o 


,c 


re 














03 






re 


«■ 






re 




n 

> 
< 

M 

c 

3 


< 
> 

o 








w 

a 
E 

X 


>■ 


o 


o 

>- 

I 


o 

i5 
O 

c 
c 
o 


o 

i§ 

Q 

b 


o 


E 


c 
o 


r 

m 

Z 
>- 
to 

E 


O 
o 

be 
o 
o 


c: 

— 

■u 
o 

c 


o 
o 

O 


o 

Q 

c 
5 
o 


<D 
V) 
V) 
9 

C 

c 


V) 
(0 

M 
9 




c 
o 
E 

Q 


CB 

c 


c 
O 

Bi 
E 
£: 
w 
ro 


> 


c 
(7) 

c 
o 


C 

1 

>■ 


o 
E 
o 
<n 

w 

E 


re 

c 
re 

15 

2 




m 

nj 
O 


m 

t) 

») 
n 

c 


^ 


u. 




„_ 




2 


Z 


z 


2 


2 


2 


O 


o 


O 


Q. 


Q. 


a. 


to 


v> 


t— 


1— 


D 


> 


5 


5^ 


$ 


£ 


£ 


< 


2 




h- 


a. 



62 



CURRENT DISASTERS 

Question: Mr. Secretary, disasters have already occurred tiiis year. We 
have had flooding, tornadoes, and other storms. I understand that there is 
currently no disaster assistance available for this year's crops? Is that correct? 

Answer: Disaster assistance remains available to producers of 1993 crops 
from a variety of USDA programs, including emergency conservation and livestock 
programs of the Agricultural Stabilization and Conservation Service, emergency 
lending programs of Ihe Farmers Home Administration, and indemnity payments 
for crops covered by insurance from the Federal Crop Insurance Corporation. 
However, funding provided last year by the dire emergency supplemental 
appropriations is available only for losses on 1990, 1991, or 1992 crops. 

Question: What about disaster assistance for otiier than crops? Do you 
have sufficient funds in llie Emergency Watershed Program (EWP) and the 
Emergency Conservation Program (ECP) to meet the need? 

Answer: An unusual demand was placed on the EWP and ECP as a result 
of Hurricanes Andrew and Iniki and Typhoon Omar. The need for funds to provide 
emergency assistance to repair damage caused by these natural disasters was far 
greater than was initially made available. In response, a supplemental 
appropriation was signed on September 23. 1992 which provided $62 million for 
the EWP and $27 million for the ECP. But, even willi the supplemental funds, the 
funding is far short of wliat is needed to satisfy all of the requests for assistance. 

Question: If not, how much money is estimated to be required for the 
remainder of 1993? 

Answer: Current estimates indicate a need for an additional $3.6 million for 
the EWP, and an additional $31.4 million for the ECP to fund all requests for 
assistance resulting from damage caused by the hurricanes and typhoons in 1992. 
Also, funds available for the regular ECP are critically short, and based on current 
estimates an additional $8 million is likely to be needed if tlie level of disasters in 
1993 is close to the average level experienced in recent years. Therefore, we 
estimate that a total of $39.4 million will be needed in additional funds for FY 1993 
to address all requests to repair damage caused by natural disasters. 

RURAL DEVELOPIVIENT ADMINISTRATION 

Question: It is my understanding that currently many states have no state 
contact lor Rural Development Administration programs. Rather, there are 
regional directors, some Members of Congress find this disconcerting not to be 
able to deal with someone in their state for these programs. 

What is the current situation in terms of state RDA contacts? 

Answer: Mr. Chairman, the current situation is very confusing for all 
involved in these programs and the confusion is a result of factors not controllable 
by RDA. First, let me state that Members of Congress and State officials should 
continue to contact ttie Farmers Home Administration (FmHA) State Office 
regarding RDA programs. There are personnel within the State Offices familiar 
with these programs. These are the same FmHA personnel that administered the 



63 



programs prior to RDA and they are continuing to perlorm these functions. 

Question: What are the plans for establishing an RDA state presence in 
every state and what will be the cost? 

Answer: RDA had planned to establish area offices in each state and one 
of these offices was to have been located at or near the State Capitol. The 
personnel in these offices would have had the responsibility of working with State 
officials and others regarding RDA programs. However, the FY 1992 
Appropriations Act did not provide funds to open these offices and the Conference 
Report recommended that RDA not open the offices until the Department-wide 
reorganization plans were complete. Plans to open the Area Offices are still on 
hold and in the interim RDA will continue to administer its programs with the 
assistance of FmHA Stale, and district offices. 

Question: Regarding the cost of opening these offices, RDA had planned 
to collocate these offices with FmHA or other USDA field offices which would have 
meant, in many cases, a simple transfer of office space, equipment and personnel. 
This would have resulted in very minor costs and RDA was planning to accomplish 
the transfers within existing resources. 

How does this fit in with restructuring the field offices and forming the Farm 
Service Agency? 

Answer: There is no doubt that the plans for restructuring the Department, 
Including the field office stricture, will have an impact on RDA's plans to complete 
Its field structure. As you know, we have not yet completed planning for the Farm 
Service Agency, but I assure you and other Members of Congress that our intent 
in the reorganization is to make the entire organization user friendly, as well as a 
more efficient vehicle for delivering program assistance. 

RENTAL ASSISTANCE 

Question: It has come to my attention that the rental assistance funds are 
insufficient for renewing existing contracts not to mention servicing any additional 
units. 

How much funding will be needed in 1993 to renew all existing contracts? 

Answer: Current estimates show that an additional $68 million is needed in 
1993 to renew existing rental assistance contracts. A shortfall of $68 million 
equates to about 5,500 families currently receiving rental assistance losing this 
assistance. Without this level of assistance FmHA estimates that 200 Rural 
Rental Housing projects will be placed in financial jeopardy and could face default 
on FmHA loans. 

Question: How much funding will be needed to meet servicing 
requirements? 

Answer: FmHA estimates $7 million is needed to meet emergency 
servicing needs for financially marginal 515 projects involving about 560 units. 
FmHA has also received requests from its field offices for about 5,900 additional 
rental assistance units to address essential servicing needs. $73 million would be 
needed to fund all these requests. 



64 



Question: Is it true that in some cases we are building new units when 
liiere are vacancies In existing 515 units? If so, should something be done about 
that and what do you propose? 

Answer: Mr. Chairman, FmHA is continuing to build new units and there 
are projects with vacant units. However, the construction of new units in the same 
community or area in which there is a significant number of vacant 515 units will 
not inccur. As part of the application process, FmHA requires the completion of a 
professional market survey to ensure sufficient demand for the project. 

The vacancy rate for all 515 units in the Nation in 1992 was 6.1 percent. 
In most rental markets this is a very acceptable vacancy rate and usually is 
Indicative of the need for additional rental units. In addition, vacancies in many 
situations are due, in part, to the lack of rental assistance. Families that meet the 
eligibility criteria for occupying a 515 unit, in many cases cannot afford the unit 
without rental assistance and are placed in the position of having to wait for a 
rental assistance unit to become available. At present, there does not appear to 
be a problem with the construction of new units while there are vacancies in 
existing projects. 

Question: Please provide information on the rental assistance cost per unit 
for new construction, renewing existing contracts, and servicing. Also show the 
existing demand for each of these categories, what is estimated for 1994 in terms 
of demand, and how much of that demand your budget will cover. 

Answer: I will be happy to provide that inforfnation for the record.l 

(The information follows.) 

FY1994 Estimate of Demand and Cost 





Units 


Cost per 


Total 


Purpose 


Required 


Unit 


Cost 
($000) 


Renewals 


22,870 


12,617 


$288,550 


New Construction 


11,380 


11,529 


131,201 


Servicing 


5,000 


12,617 


63,085 


Debt Forgiveness 


925 


12,119 


1 1 .206 


Total 


38.161 




$494,042 




FY 1994 Budget Request 






Units 


Cost per 


Total 


Purpose 


Requested 


Unit 


Cost 

($000) 


Renewals. New 








Construction, and 








Servicing 


33,811 


12,301 


415,837 


Debt Forgiveness 


487 


12.115 


5.900 


Total 


34,298 




$421,837 y 



y This difference of $74 million could be met through use of the funds requested 
in the proposed voucher program. 



65 



TRADE 

Question: Farmers are being told constantly that prosperity in agriculture is 
directly tied to trade opportunities. However, regardless of ongoing negotiations at 
GATT and debate over NAFTA, American farmers are still faced witti ttie reality of 
European soybean subsidy problems, Canadian pork policies, and resistance by 
the Japanese to open their rice markets. In addition, there are countless other 
trade glitches such as the CARICOfy/l duly I raised at last year's hearing and 
intend to raise again when the Under Secretary for International Affairs and 
Commodity Programs comes before this committee. In fact, Mr. Secretary, you 
have recently received a letter from me and others on this specific problem. Could 
you please provide me some insight into your view of the role of U.S. agriculture in 
world trade and the prospects for farm income that might result? 

Answer: U.S. agriculture is the world's leader in providing high-quality 
products at competitive prices. However, trade barriers, including the ones 
mentioned in your question, are widespread and represent the greatest constraint 
to our exporters reaching their full potential in global trade. Therefore, we feel that 
American farmers stand to gain much from trade reforms proposed through 
NAFTA and the Uruguay Round of multilateral trade negotiations. 

The agreements would greatly improve foreign market access for U.S. 
agricultural products by ending or reducing tariff and nontarilf barriers and other 
trade distorting practices. USDA analysts have estimated that, once a Uruguay 
Round agreement is fully implemented, annual export gains would be about $4 
billion and farm income would be about $1 billion larger. Exports under NAFTA, 
once the agreement is fully implemented, are estimated to be $2 billion to $2.5 
billion higher than would otherwise be the case. We will continue to seek trade 
liberalization through these and other negotiations to achieve greater overseas 
market opportunities for our farmers and ranchers. 

SOAP and COAP 

Question: Please provide a summary of activity for the SOAP and COAP 
activities for fiscal years 1991, 1992, and to date for 1993. For each commodity, 
and by country, provide the volume of exports, the value, as well as the cost. 

Answer: We will provide that information for the record. 

[The information follows.] 



Sunflowerseed Assistance Program (SOAP) 







Sales 




Fiscal Year/Country 


Quantity 


Value a/ 


Bonus Value b/ 




(MT) 


(Mll.$) 


(Mll.$) 


FY 1991 








Algeria 


48.000 


NA 


6.1 


Egypt 


33.000 


NA 


4.1 


Total 


81,000 




10.2 



66 



FY 1992 






Algeria 


100.000 


48.8 


Egypt 


25,000 


11.0 


Former Soviet 






Union 


55.000 


26.4 


Mexico 


58,760 


26.0 


Total 


238,760 


112.2 


FY 1993 






(As of April 1993) 






Algeria 


36,000 


17.0 


Guatemala 


17,850 


8.1 


Mexico 


9<»,920 


42.8 


Venezuela 


10.000 


4.5 


Total 


158,770 


72.4 



8.2 
2.4 

5.3 

5.0 
20.9 



5.3 
2.8 

12.1 
1.5 

21.7 



a/ Sales value may Include shipping costs depending upon export pricing 

arrangement (e.g., C&F, GIF or other terms) 
b/ Total bonus values are exclusive of allowed shipping tolerances. 



Cottonseed Assistance Program (COAP) 

Sales 
Fiscal Year/Gountry Quantity Value a/ Bonus Value b/ 

(MT) (HH.$) (Mll.$) 



NA 4.4 

NA .5 

NA _^ 

5.2 



FY 1991 




Egypt 


28,000 


Turkey 


4.000 


Venezuela 


3,500 


Total 


35,500 


FY 1992 




Dominican Republic 


1.000 


Egypt 


8,000 


El Salvador 


27,900 


Turkey 


3.000 


Venezuela 


2,700 


Total 


42,600 


FY 1993 




(As of April 1993) 




El Salvador 


22,175 


Guatemala 


2.000 


Mexico 


3.752 


Nicaragua 


5,200 


Turkey 


500 


Venezuela 


1.500 


Total 


35.127 



.5 .1 

3.9 .5 

13.3 1.7 

1.4 .2 

1.2 .2 

20.3 2.7 



11.4 3.8 

.9 .4 

1.8 .5 

2.8 .9 

.3 .1 

.7 .3 



17.9 6.0 



a/ Sales value may Include shipping costs depending upon export pricing 

arrangement (e.g., C&F. GIF or other terms) 
b/ Total bonus values are exclusive of allowed shipping tolerances. 



67 



EXPIRING AUTHORIZATIONS 

Question: Please list programs for wfiich authorizations are expiring before 
the end ol fiscal year 1993. 

Answer: The following list reflects expiring legislation by agency, and 
shows the actual date of expiration. 



Food and Nutrition Service 

Law and Program Description 

The Food Stamp Act of 1977, as amended: 

Section 3(o)((11), 7 U.S.C. 2012(o)(1 1),prohibits the 
Secretary from reducing the cost of the Thrifty Food 
Plan on October 1, 1992 (P.L. 102-351, §1, 
106 Stat. 937). 

The Agriculture and Food Act of 1981, as amended: 

The Food, Agriculture, Conservation, and Trade Act 
of 1990 in section 1779(a), 42 U.S.C. 1951note, 
authorizes appropriations for and requires the Secretary 
to conduct studies into various aspects of the National 
School Lunch Program (P.L.I 01 -624. §1 779(a), 
104 Stat. 3816). 

The Farm Credit Banks and Associations Safety and 
Soundness Act of 1992 in section 515, requires the 
Secretary to use funds appropriated under section 214 
of the Emergency Food Assistance Act of 1983 
(P.L. 98-8; 7 U.S.C. 612c note) to purchase, process 
and distribute additional commodities for the Emergency 
Food Assistance Program (P.L. 102-552, §515, 
106 Stat. 4136). 

Federal Grain Inspection Service 

Law and Program Description 

The United Stales Grain Standards Act Amendments 
contained in section 155 of the Omnibus Budget 
Reconciliation Act of 1981 and Public Law 100-518 
provide the authority to charge and collect 
inspection and weighing fees (102 Stat. 2584). 



Expiration Date 



9/30/93 



9/30/93 



9/30/93 



9/30/93 



Farmers Home Administration 
Law and Program Description 



Expiration Date 



68 



The Housing Act of 1949, as amended: 

Section 535(b), as amended, provides thai issuance 
by the Administrator of Veterans'Affairs of a certificate 
of reasonable value in a sutxiivision is administrative 
approval for the entire housing subdivision. 

Extension Service 



6/15/93 



Law and Program Description 

Section 1416(b) of the Food Security Act of 1985, as 
amended by §1601(d)(1) of P.L. 101-624 (7 U.S.C. 3224(b) 
authorization of appropriations for grants to upgrade 1 890 
land-grant college extension facilities. 

Foreign Agricultural Service 

Law and Program Description 

Food for Progress Act, 1985 (§1 1 10 of the Food Security 
Act of 1985). Waiver of annual 500,000 metric ton limitation 
for commodities furnished to independent stales of the 
former Soviet Union provided by §701(2) of the Freedom 
Support Act. 



9/30/93 



9/30/93 



ALTERNATIVE AGRICULTURAL RESEARCH AND COMMERCIALIZATION 

Question: Have you established the Alternative Agricultural Research and 
Commercialization Center as provided under the authorization? If so, how many, 
and where are they? 

Answer: The Department of Agriculture established the Alternative 
Agricultural Research and Commercialization -AARC- Center in Washington, D.C. 
on March 18, 1992. A Request For Proposals for regional centers was published 
in the Federal Register on December 23, 1992. Applications to host regional 
centers were due February 19, 1993, and 14 applications were received. The 
Board of Directors Initiated discussion of regional centers at its meeting March 2 
and 3, 1993. We anticipate that the Board will decide where the first two regional 
centers will be located at its meeting scheduled for May 18 and 19, 1993. 

Question: Please provide a list of the members of the AARC board and 
their term expirations. 

Atiswer: Board members are appointed for four year terms, except that the 
legislation requires the initial Board shall be appointed to serve staggered terms. 
The initial Board members were appointed on March 6, 1992, for the following 
terms. 



Mark Dungan 
Roger Porter 
Lee Reeve 
Phil Gross 
John Fuji! 



2 years 

3 years 

4 years 
4 years 
2 years 



69 



Ralph Hardy 


4 years 


Jerry Caulder 


2 years 


Martin Andreas 


3 years 


Del Schneider 


3 years 



Currently the position on the Board which represents USDA and was held 
by Mark Dungan is vacant but will be filled soon. In addition, Dr. Caulder's and 
Dr. Fujii's terms expire in March of 1994, at which time two new Board members 
will be appointed. 

FARM SERVICE AGENCY 

Question. Mr. Secretary, your budget proposes to save $61 million by 
combining several agencies into the Farm Service Agency. I really question how 
you can generate those savings so quickly in the short term. 

If your plans include consolidating offices and relocating employees, does 
that not generate costs rather than savings in the short term? 



Answer. Yes, there undoubtedly will be some short term costs generated 
as part of the Department's efforts to consolidate offices and combine services into 
a Farm Service Agency. These costs, however, are expected to be more than 
offset by savings resulting from staff reductions and reductions in cost related to 
space, equipment, administrative costs and other expenses. Clearly, the operation 
and maintenance cost for one agency will be considerably less than operation and 
maintenance cost for three agencies. 

GOVERNMENT EFFICIENCIES 

Question. The President's budget proposes to save $112 million in outlays 
in 1994 through "streamlining government" and "technical adjustments." 

Please provide information on how these savings will be generated 
showing the amounts by agency in both budget authority and outlays for both 
streamlining government and technical adjustments. 

Answer. I will provide a table showing budget authority and outlays for the 
Department's streamlining proposals and technical adjustments. The savings from 
streamlining reflect the straight lining of several grant programs at the 1993 
appropriated level. All of the technical adjustments except tor $1 1 million of the 
ASCS-Emergency Conservation Program (ECP) funds are due to expected 
savings in long distance telephone changes due to FTS 2000. The ECP savings 
are due to a technical adjustment to the baseline because of the way the 1992 
disaster supplemental was scored by 0MB. 
(The information follows:) 

Question. How much of this amount is due to the formation of the Farm 
Service Agency? 

Answer. None of the savings were due to the formation of the Farm 
Service Agency? 



70 



QUESTION SUBMITTED BY SENATOR HARKIN 

LOCAL FREIGHT ASSISTANCE PROGRAM 

Ouestion: The Local Freight Assistance Program administered by the 
Federal Railroad Administration has been very helpful in providing needed funding 
for the repair of rural branch railroad lines that often are needed for grain and 
forestry products. I would appreciate your providing me with your views 
concerning the benefits of the Local Rail Freight Assistance Program to the 
agricultural sector. 

Answer: Although it is difficult to quantify the benefit to agriculture, it is 
safe to say that the agricultural sector is a major beneficiary of the Local Rail 
Freight Assistance Program. The object of the program is to retain rail service to 
local and rural areas, many of which serve agricultural shippers. 



QUESTIONS SUBMITTED BY SENATOR JOHNSTON 

HUMAN NUTRITION RESEARCH 

Question: Section 1610 of the 1990 Farm bill authorized the Secretary of 
Agriculture to designate a Human Nutrition Research Center for the southeastern 
region. This language was intended to give the Department the authority to 
provide research funds through a cooperative agreement and to the same extent 
as provided to the other 5 Federal centers which currently operate under the aegis 
of ARS, and to provide USDA scientists with access to a $100 million state of the 
art facility in Baton Rouge. 

None of the current Federal facilities currently undertake research on 
obesity, one of the leading causes of poor health and deaths in this country, 
especially among the economically and socially disadvantaged. Obesity is 
particularly a problem in the Mississippi Delta region, the poorest region in this 
nation, and an area which has long been neglected in health and nutrition 
research. 

It is my belief that using this authority, and designating the Pennington 
Center in Baton Rouge as a Human Nutrition Research Center, would enable the 
Department to develop important projects on obesity and in human nutrition needs 
of the Delta community on a scale commensurate with the problem, rather than at 
a lesser level through CSRS. Such projects could involve existing institutions like 
Southern University in Baton Rouge, the largest HBCU in the country, which have 
extensive outreach networks to those communities at risk and in addition have 
tremendous resources such as nursing and medical schools which can and are 
willing to participate in such efforts. See e.g., letter from Chancellor Spikes from 
Southern, attached. 

To my disappointment, this authority has never been exercised, even 
though the Department has repeatedly been requested to use it. Attached are 
copies of recent letters from the Pennington Center and from me requesting the 
Department to exercise this authority, or any other existing authority the 
Department may have, to move forward with such a designation. 



71 



What is required for you to use thiis authority or any other authority which you 
possess, to designate the Pennington Center as a Human Nutrition Research 
Center? 

Answer: In response to inquiries from members of Congress and Louisiana 
Slate University over a number of years, officials of the Department have 
concluded that use of the USDA name is appropriate only for Federal facilities. 
There is nothing in the Food, Agriculture, Conservation, and Trade Act of 1990 
that requires a different conclusion. Section 1610 of that Act does authorize the 
Secretary to "award a grant to a research facility described in subsection (b) to 
establish not less than one food science and nutrition research center for the 
Southeast Region of the United States." Subsection (b) describes LSU and 
Pennington. 

Question: Urider what authority or directive were each of the other 5 existing 
Human Nutrition Research Centers established and when? 

Answer: Authority for nutrition research was derived originally from the general 
mission mandated by Congress when the Department was established on May 15, 
1862. The Organic Act of 1862 was amended in 1977 to specifically include 
human nutrition. Numerous authorizations by Congress since the original Act 
have charged USDA with conducting research in a broad array of subjects related 
to nutrition within the framework of the "food and agricultural sciences." USDA 
was given explicit authority to conduct human nutrition research in Section 1 of the 
Bankhead Jones Act of 1935, as amended in 1946 (7 U.S.C. 427). This 
legislation directed USDA to conduct and to stimulate research into the laws and 
principles underlying the basic problems of agriculture in its broadest aspects, 
including research into the problems of human nutrition and the nutritive value of 
agricultural commodities, with particular reference to their content of vitamins, 
minerals, amino and fatty acids, and all other constituents that may be found 
necessary for the health of the consumer. The Act made further reference to 
investigation of the problems of gains or losses in nutritive value that may take 
place at any stage in food production, distribution, processing, and preparation by 
the consumer. 

I The National Agricultural Research, Extension, and Teaching Policy Act of 

1977 (7 U.S.C. 3101 et seg.) established USDA as the lead agency of the Federal 
Government for research, extension, and teaching in the food and agricultural 
sciences, and directed that research into food and human nutrition be established 
as a separate and distinct mission of the Department. 

; With this legislation Congress supported USDA's traditional emphasis on 

the nutritional needs of normal, healthy individuals rather than the needs of 
individuals requiring clinical or therapeutic dietary support. Congress recognized, 
however, that nutrition research necessarily addresses the issues of maintenance 
of health and the prevention of disease and disorders associated with nutrient 
deficiencies or excesses, and expressed the need for coordination between HHS 
and USDA. The Food Security Act of 1985 reiterates those mandates. 

Separate congressional action occurred for each of the five Federally 
owned Human Nutrition Research Centers. 



72 



Beltsville Human Nutrition Researcti Center, Beltsville, MD. Thie tiistory of 
tlie Beltsville Human Nutrition Researcti Center can be traced to 1894, wtien 
Congress authorized ttie Office of Experimental Stations with headquarters at 
Wesleyan University in Middletown, CT, to carry out human nutrition investigations. 
The headquarters was moved to Washington, D.C., in 1906. and to Beltsville, MD, 
in 1941. 

Grand Forks Human Nutrition Research Center, Grand Forks, ND. The 
Conference Reports (H. Rpt. No. 1186, accompanying the 1966 Appropriation Act 
and H. Rpt. No. 1867, accompanying the 1967 Appropration Act) provided the 
initial funding for a Human Nutrition Laboratory in Grand Forks, North Dakota. 

Children's Nutrition Research Center at Baylor College of f^edicine, 
Houston, TX. The Conference Report (H. Rpt. No. 98-450, accompanying the 
1984 Appropriations Act) provided planning funds for a Children's Nutrition 
Research Center at Houston. The Second Supplemental Approprations Act of 
1984 provided the funding for construction. Congressional report language (H. 
Rpt. No. 98-916) stated the facility would be used for research on the nutrient 
needs and nutritional status of mothers, infants, and children. 

Human Nutrition Research Center on Aging at Tufts University, Boston, 
MA. The Conference Report (H. Rpt. No. 95-520, accompanying the 1978 
Appropriations Act) provided funding for the planning of an "adult human nutrition 
research facility"; the 1979 Appropriations Act provided construction funds. Its 
mission is to determine the nutrient needs of the elderly and the relationship of 
dietary factors to the aging process. 

Western Human Nutrition Research Center, the Presidio of San Francisco, 
CA. The Western Human Nutrition Research Center was established on April 6, 
1980, when Congress ordered (S. Rpt. No. 96-393, accompanying 1980 DOD 
Approprations Act) the transfer of the nutrition research program of the Army, 
located at Letterman Army Institute of Research, Presidio of San Francisco, to the 
USDA. 

Question: On what basis were the areas of expertise for each of these 
existing Centers established? 

Answer: The programs of research conducted at Houston and Boston are 
based on congressional language. The research carried out at the other Centers 
is prescribed by national nutritional problems within the mission of the Agency. 

Question: Do any of these Centers operate through a cooperative agreement 
with any non-Federal institution? 

Answer: The Children's Nutrition Research Center in Houston, TX, operates 
under a general cooperative agreement with the Baylor College of fy/Iedicine and 
the Texas Children's Hospital. In addition, all of the Centers have cooperative 
agreements with non-Federal institutions for specific purposes. 

Question: Please provide for the record the total research budget for each of 
these Centers in FY 92, FY 93 and the FY 94 budget request. Please also 
provide for the record the total Federal construction dollars spent on each of these 
Centers, as well as any construction dollars requested for FY 1994. 



78 



Answer: Total research budgets for human nutrition research in ARS are: 

Agricultural Research Service 

Human Nutrition Research 

($ in Millions) 

FY 1992 FY 1993 FY 1994 

Center 

Beitsville Human 9.2 9.2 9.4 

Nutrition Research Ctr. 
Beitsville, MD 

Grand Forks Human 8.1 8.1 8.2 

Nutrition Research Ctr. 
Grand Forks, ND 

Human Nutrition 4.6 14.6 14.6 

Research Ctr. on 
Aging at Tufts Univ. 
Boston, I^A 

Children's Nutrition 10.7 10.3 10.3 

Research Ctr. at 

Baylor College of 

l^edicine 

Houston, TX 

Western Human 5,1 5.1 5.2 

Nutrition Research Ctr. 
San Francisco, CA 

No federal construction dollars were requested for the ARS nutrition 
centers in FY 1994. Total construction funding for the Grand Forks Human 
Nutrition Research Center, acquired from FY 1967 through FY 1982 budget 
allocations, was $6.8 million. Construction funding for the Human Nutrition 
Research Center on Aging at Boston, totalling $31.2 million, was provided in ttie 
ARS budgets from FY 1979 through 1982. Funding for the construction of the 
Children's Nutrition Research Center at Houston was provided in FY 1984 and 
totaled $54.5 million. The Beitsville Human Nutrition Research Center structure 
was constructed by the Department of Defense (DOD) in 1939 and transferred to 
ARS. About $0.5 million has been expended on subsequent renovations. The 
Western Human Nutrition Research Center resides in facilities currently owned by 
DOD. About $1.7 million has been expended in modification and renovation. 

Question: Despite the popular image of the Mississippi Delta, as filled with 
large mansions and people living a gentrified life, this region-which includes 
almost halt of my state-is the poorest in the country as documented in 1991 by 
the Lower Mississippi Delta Development Commission. I know, Mr. Secretary, that 
you as the chief House sponsor of legislation which created this Commission, are 
very familiar with the Delta Initiatives Report, issued by the Comission, which 



74 



delineated the economic problems of the predominantly rural counties comprising 
the lower Delta Region and documented ftie associated barriers to optimizing 
health education and quality of life for the people of this region. 

How can the research programs, and particularly nutrition researcli programs, 
of USDA-ARS address the problems of poverty and apathy in tlie Mississippi River 
Delta Parishes and Counties? 

Answer: The ARS human nutrition research program does not conduct social 
science research. Some research on determinants of dietary intake is conducted 
by the Family Economics Research Group. Ongoing nutrition research is not 
region-specific but is broadly applicable nationwide. 

Question: What are the current USDA-ARS human nutrition projects in 
Arkansas-Louisiana-Mississippi that might improve this region's economic 
potential? 

Answer: ARS does not conduct human nutrition research in those states. 
Results of nutrition research are broadly applicable and are applied through 
education and food assistance programs, f^or example, the Extension Service 
uses results of ARS research to develop meaningful education programs tailored 
to tHe^uliural needs of the recipient population. Improved nutritional status 
increases human performance and thus may contribute to improving economics. 

Question: Are there any coordinated projects among the tliree states to 
address the human nutrition aspects of the region comprehensively? 

Answer: The results of research in human nutrition are used in all areas of the 
United Slates. The Extension Service and the programs of the Food and Nutrition 
Service (FNS) use research results to focus their activities. 

Question: What percent of human nutrition funds from USDA-ARS is spent on 
nutrition problems in this area? 

Answer: All of USDA-ARS funds are allocated to nutritional problems of 
importance to all components of the general population, the results of which 
should be applicable to this region. 

Question: Are there any nutrition research projects that utilize the 1862 land 
grant universities cooperatively in the Arkansas-Louisiana-Mississippi Delta region 
sponsored by ARS? By CSRS? By any other division of USDA? 

Answer: ARS does not have any human nutrition research projects in 
cooperation with the Arkansas-Louisiana-Mississippi Delta region. 

The CSRS has formula funding for the 1890 and 1862 land grant 
universities in the stales. Those same universities have Extension Service 
Programs in the area. These funds are available to support a wide range of 
research, including human nutrition, at the discretion of the institution. The CSRS 
also administers the National Research Initiative Competitive Grants Program that 
has a nutrition component (NRICGP). 



75 



The Food and Nutrition Service administers food assistance programs in 
tlie area. The FNSs National Food Service Management Institute at the 
University of fvlississippi (in conjunction with the University of Southern Mississippi) 
provides training and technical assistance for educators and food service 
personnel on food service management, including menu planning and related 
nutrition activities. 

The Extension Service uses research to develop curricula for the Expanded 
Food and Nutrition Education Program (EFNEP). 

Question: Intervention in early childhood, through improved nutrition, can 
maximize human learning and development potential. What USDA-ARS projects 
address early childhood nutritional intervention research in the 
Arkansas-Louisiana-fvlississippi Delta? 

Answer: ARS does not conduct field studies of nutritional intervention in early 
childhood. Nutritional needs of infants and children are studied at the ARS 
Children's Nutrition Research Center. The results are used to improve infant 
feeding and guide in the development of educational materials. The FNS has 
conducted studies of the efficacy of the Women, Infants, and Children (WIC) 
program. The CSRS, particularly through the NRICGP, has such research within 
its mission. The Extension Service addresses these concerns with the EFNEP 
program. 

Question: Intervention In health promotion and wellness can maximize human 
potential by reducing obesity, hypertension, diabetes and the resulting diseases: 
stroke, heart disease and cancer, all problems effecting the Delta population 
disproportionately. What USDA-ARS research projects address these problems in 
the Arkansas-Louisiana-Mississippi Delta? 

Answer: All the ARS Human Nutrition Research Centers conduct research on 
the functions of nutrients and diets in resistance to disease. All of the results are 
interpretable for the U.S. population. The FNS and the Extension Service use the 
research information in planning the WIC, EFNEP, and Nutrition Education and 
Training (NET) Programs. 

LOSS OF COSTAL WETLANDS AND THE GOLDEN MEADOW 
PLANT MATERIALS CENTER 

Question: Mr. Secretary, do you agree that the loss of coastal wetlands is 
a national problem and that the Department should participate in our search to 
stem these losses and restore this fragile resource? 

Answer: We agree that coastal wetlands are an important natural resource 
that should be protected. The Department is currently participating with 
individuals, units of governments and others to help preserve these fragile 
wetlands. 

Most of our effort has been concentrated in Louisiana because the Slate 
contains 40 percent of the Nation's conterminous wetlands and experiences nearly 
80 percent of the annual costal wetland loss. Coastal Louisiana has nearly 3 
million acres of wetlands and about 650 thousand acres of forested wetlands. 
Over 80 percent of these lands are privately owned. These coastal wetlands are a 



76 



major part of a tremendously productive ecosystem that is being lost to open water 
at a rate of about 20,000 acres per year, or 52 acres per day. We believe it is 
important that we continue to work with others to stem this loss for several 
renewable resources with an estimated value exceeding $1 million annually. 
These wetlands contribute over one billion pounds annually to the Nation's fish 
and shellfish harvest. They support about 175 nesting colonies of wading birds, 
seabirds and waterfowl that use the Mississippi Flyway. The coastal wetlands 
provide a critically important buffer zone from surges caused by hurricanes and 
other storms for the 2.7 million people who live and work in coastal Louisiana. 

Question: Mr. Secretary, what is the Department, through SCS or other 
divisions, currently spending on the problem of coastal wetlands? 

Answer: In 1993, the Soil Conservation Service is spending about 
$379,000 to operate the Golden Meadow Plant Materials Center in Louisiana. 
Ongoing operations will cost $214,000, and $125,000 will be used for capital 
improvements. This Center is the most active USDA unit directly involved in 
developing and providing vegetative materials needed to preserve coastal 
wetlands. However, other research, technical assistance, and cost sharing 
activities carried out by the Agricultural Research Service, the Cooperative 
Research Service, the Extension Service, Agricultural Stabilization and 
Conservation Service, and the Soil Conservation Service operating in coastal 
areas and inland watersheds contribute to stemming the loss of our Nation's 
coastal wetlands. 

Question: Mr. Secretary, how much would it cost to construct another 
greenhouse at this facility? 

Answer: It would cost about $175,000 to add a second greenhouse and 
the lath house, head house and other apparatus needed to support another 
greenhouse. 

Question: Mr. Secretary, how much could be used by this center for 
research if the center were provided sufficient resources to step up their efforts 
and undertake and aggressive research program? 

Answer: Efforts are being stepped up each year to provide additional 
vegetative materials needed to replenish the coastal wetlands at the Golden 
Meadow Plant Materials Center. In addition to funding basic program operations 
at the Center, funds are provided as part of the Plant Materials Centers upgrade 
and renovation initiative. Since 1990, about $1.0 million have been expended on 
capital improvements at the Golden Meadow Plant Materials Center as part of this 
Initiative. It is estimated that it would cost as much as an additional $720,000 for 
six more staff, architectural and engineering contracts, a contract with the Crowley 
Rich Experiment Station for biotechnology, a second greenhouse, a seed 
processing facility, a seed harvesting facility, and other supporting costs to 
Undertake an aggressive research program in a single year. 

I LOUISIANA FEASIBILITY STUDIES 

Question: Another recommendation of the Delta Initiatives report was the 
heed to promote value added processing in the Delta area to increase economic 
development In this depressed area. 



77 



As part of last year's Agriculture appropriations act {PL 102-341) lann.ianp 

He'asiSl. d! o^?iT'""r' ^^"^^^" ''^'"'^ "- DUrtmertl^unSe 
N.thi o h^ . ^ ^^ providing assistance to Northwestern State University in 
Natchitoches to make needed repairs to an existing red meat processing acnitv in 
Central Lou.s^na and (2) establishing a further food processing SrinCentm 
Louisiana. These new opportunities are desperately needed in Cen ra, LouSa 
which has a significant agricultural base but lacks the value-added crmponTnUo 
expand economic opportunity. Such expansion is critically important to Central 
Louisiana given the closure of England Air Base, and thelss of l^nd^eS of jobs 
ast year. What is the status of these two feasibility studies and wircop.es be 
transmitted to my office when they are completed? ^ 

;, .i.« . r",?T' ^ •^" ^'°"' ""^ Cooperative State Research Service have planned 
a ste visit to Louisiana for f^ay 18 and 19. 1993. Upon completion of the s.le 

Zn.f T'' ""' ""' P^"P^^"^- ^°P'^^ °' '^« ^«P°^» ^'" be fon^^arded to the 
ReSd Agencies Subcommittee on Agriculture. Rural Development and 

containS'rn'lhr n^[' ^^■^.'^}^'^' ^^^^ ^'^ '^^"^^ "^^"y "'^^^^ '^P°rtant initiatives 
contained in the Delta Initiative report which have, to my knowledge, not been 

thoroughly analyzed by USD A. Nor has USDA come up with a comprehensive 
UnUZy'^ to 'mplement those initiatives and recommendations falling under the 
jurisdiction of the Department. 

Have you considered appointing a task force within the Department to 
analyze these initiatives and develop a plan to implement them? 

Dpif. r^T^^'\ ^^J°" ''"°''' ^^"^'°' Johnston, the recommendations in the 
uepartment as well as involving some other Federal Departments As soon a^ 

e appropriate Under and Assistant Secretaries are conn^m^d they will assisTme 
^implementing the recommendations. For you information, we have^eque^^^^^^ 
$10 million ,n grant funds in the FY 1994 budget to implement the 
recommendation that the Department increase its outreach and technical 
the Delta Comm"'"' disadvantaged farmers. We have also provided a copy of 
ZT.gZTZZ'"'''''' '° Vice-President Gore's Task Force on Re- 

fo Ho,o°''^^'i?"' ' ""^^""s'^nd that requests have been made to the Department 
to de^rmine how many funds are still available under the disaste assistancr 
ZZtlcZ"'" T'" ^'^'^ '''' supplemental appropriations blTnd^^^ 

po^t out th.^m^n'^'^ r' w'"^ '"""'"^ '^°^ "^♦"^^' ^'^^^»«^ this Winter. I wc 
.Zl y^f^'y '^"'t and vegetable farmers su^ered heavy damages in the 

yea S7lT' '" '-°"'?"" ""' '^'^^'^^'PP'' ^' ^ ^«^"'' oi Ireeze earlier this 
assistance ,n,hr"" '" '? '""°""'' """ ''^^^ ^^'^^^' ^'^^ be eligible for 
farmers? ' "^""^ "'*""* ^"^ ""^^^ '^^ ^^^« ^°"ditions as the midwest 



I would 



I Answer: Disaster assistance for crop losses in 1990. 1991 and 1992 have 

An iXp' r"'"' r'" ''^ '''""' ^"^ ^°"^'«'°"^ specified in the Food 
exTent oroJidpr'^'f '°" '?^ ^'"^" ^'' °' ^^^°- "^hese authorities to sor;e 
DrodurP r^^nH T^^^' assistance for quality losses to fruit and vegetable 
producers and other nonprogram crop farmers than to program crop producers 



78 



Under lliese crop loss authorities for nonprogram crops, tlie harvested quantity 
which is unmarketable because of quality problems is excluded from the calculated 
disaster year production. IVIany fruit and vegetable crops have greater alternative 
marketing uses as well. For example, fruits usually sold to the fresh market may, 
because of quality problems, still have a processed market. Although disaster 
payments are adjusted to reflect receipts from the secondary market, the returns 
to the producer are in many cases still more favorable than the returns to program 
crop producers who may have harvested enough of the crop to be ineligible for 
assistance although the value of the crop may be negligible because of quality 
problems. 

Question: I further understand that the Secretary of HUD has been 
appointed as the informal chairman of an Administration Task Force on Disaster 
Assistance and Is looking at ways to improve delivery of disaster assistance. 

I have received many complaints over the years about the current 
program's guidelines. For one, only if half the county is impacted is assistance 
made available under the disaster aid program as a practical matter. So even if a 
hurricane, for example, devastates one small area, no funds are available unless 
virtually 26 states suffer damage from other disasters. Second, current rules set 
the loss trigger too high in many cases for farmers to qualify. IVIany sugar farmers 
in southern Louisiana parishes were damaged severely, for the third year in a row, 
last fall as a result of Hurricane Andrew. Yet, few could qualify because of the 
high trigger and county average rules. 

Will you review the current program guidelines to determine whether those 
really needing assistance are able to receive it and make recommendations for 
improving ttie current program? 

Answer: Secretary Cisneros has coordinated an interagency task force to 
develop administrative and legislative changes needed to facilitate the delivery of 
disaster assistance in South Florida. Findings and recommendations of the task 
force are under review, and should be of significant benefit in improving delivery of 
programs In Florida as well as our response to natural disasters in the future. 

I would like to add several points. First, with regard to high trigger and 
county average rules, we would need legislation to change loss thresholds and the 
use of average county yields mandated In the Food, Agriculture, Conservation and 
Trade Act of 1990 for determining eligibility of sugarcane producers for disaster 
payments on crop losses in 1990, 1991, and 1992. 

Second, although eligibility for the disaster loan program administered by 
FmHA and for payments under livestock feed programs administered by ASCS is 
contingent on a county designation, based on a certain level of county-wide loss, 
eligibility for disaster payments under the crop loss disaster program administered 
by ASCS does not require county designation and is not contingent on a county- 
wide loss trigger. Any farmer with a qualifying crop loss is eligible for disaster 
payments, regardless of the experience of ottier farmers in the county. Cost share 
assistance to farmers under the Emergency Conservation Program administered 
by ASCS is also available to farmers on an individual basis. Finally, we consider 
the Federal Crop Insurance Program, rather than ad hoc disaster programs, offers 
farmers the most reliable protection against natural disasters on an individual yield 
basis. 



79 



Question. Wil you participate in tlie HUD-sponsored Task Force and make 
ecommendaf.ons for improving the delivery of disaster aid to farmers wlio suffer 
from natural disaster as part of this Task Force s report? 

Answer: USDA agencies have participated fully in inter-agency efforts to 
review and recommend improvements in disaster assistance programs As 
indicated earlier, recommendations of the task force are currently under review 



QUESTIONS SUBMITTED BY SENATOR BYRD 

AQUACULTURE 

Question: The Committee directed that, from within available funds, program 
and site plans be established for the development of a national center for fresh 
water aquaculture research. What has been the progress to date with respect to 
this directive? 

Answer: ARS has identified the following criteria as program requirements for 
a site suitable for a National Center for Fresh Water Aquaculture Research. 

a. A continuous water supply with a flow rate of 1000 gallons per minute during 
minimum flow periods. 

b. The water must have a purity that would support rainbow trout culture. 

c. There must be sufficient land (estimated 50+ acres) at the site for a research 
laboratory/office building and fish culture facilities. 

d. The site should be reasonably close to a population center and to major 
highways to provide access and suitable living conditions for the Center personnel. 

e. To assist in the Department of Agriculture's rural development initiative, the 
Center should be located in an area that does not already have a large Federal 
presence, and outside of a major metropolitan area. 

ARS has used public sources of information to identify springs that could provide 
water for such an aquaculture research center. In addition, we have contacted 
Slate and Federal agencies for information on potential water sources. Potential 
sources without sufficient developable land were excluded. In addition, sources 
where the water resources already were committed were excluded. 

We have identified 16 springs that potentially could support an aquaculture 
research center. In addition, we have identified 5 worked-out coal mines that 
appear to be producing suitable water supplies. Almost all of these sites are on 
private land. 

We are now in the process of collecting water samples and water flow rates from 
these sources to determine if they produce sufficient high quality water to support 
aquaculture research. During the sample collection process, the sites also are 
examined to determine If sufficient developable land is available for the research 
center. 



80 



After the results of thiese analyses are available about the end of May, we will 
narrow the list of sites to no more than 5, and do an in-depth analysis of each site. 
We expect that this site analysis screening process will be completed by the end 
of this fiscal year. 

APPALACHIAN SOIL AND WATER CONSERVATION LABORATORY 

Question: List any projects that have terminated or are planned for 
termination in FY 1993 and FY 1994. 

Answer: The following CRIS projects are planned for termination in FY 
1 993. None are planned for termination in FY 1 994. 

o Evaluate and Optimize Agricultural Utilization of Coal Fired Plant 
By-Products. 

o Impact of Hilly Topography on Forage Production Efficiency in the 
Appalachian Region. 

o Alleviate Acid Soil Toxicities and Nutrient Deficiencies to Improve Forage 
Production. 

o Optimize Performance of Forage Legumes and l\/licrobial Associations for 
Acidic Soils. 

Low Impact Forage Production Systems for IVIarginally Productive Soils in 
the Appalachian Region. 

Forage/Livestock Production Research. 

These CRIS projects will be replaced by the following: 

o Alleviation of acid soil constraints to plant growth, with the objective of 
developing criteria to optimize utilization of natural deposits and industrial 
by-products as resource materials for improving plant growth in acid soils. 

o Selection and improvement of plants for infertile acid soils with the 

objective of making available forage and crop plants which are genetically 
adapted to overcoming growth limiting properties of acid soils. 

(Management and ecology of pastures in the appalachian region, with the 
objective of developing knowledge of plant adaptation, species 
composition, and productivity in pasture and silvi-pastoral environments to 
establish criteria for management practices to meet the nutritional 
requirements of livestock. 

o Livestock grazing systems and water quality in appalachian pastures, with 
the objective of developing strategies for enhancing livestock production, 
profitability, and water quality on pastures under the diverse physiographic 
conditions of the Appalachian hill-lands. 

Question: What are the research results related to those projects? 



81 



Answer: I understand that scientists liave made significant progress In 
dealing with Identified problems faced by produceis in the Appalachian region. 
Research already completed addresses problems related to acidic soils and hilly 
conditions faced by many producers in this region. Scientists have determined 
that certain power plant wastes can be used to improve plant growth under acidic 
soil conditions and have determined a number of other factors that will be 
important In developing specific management practices for forage-livestock 
systems in this region. 

Question: What are the FY 1992. and FY 1993 funding levels for the 
Appalachian Soil and Water Conservation Laboratory? 

Answer: The funding levels for the Appalachian Soil and Water 
Conservation Laboratory for FY 1992 and FY 1993 are $3,421,771 and 
$3,489,100, respectively. 

Question: What is requested in the FY 1994 budget? 

Answer: The agency is requesting $3,534,400 for FY 1994 for support of 
this laboratory. 

Question: Also provide the number of people on board and FTE's at the 
facility for FY 1992, FY 1993, and those same numbers that are budgeted for FY 
1994 as in FY 1993. 

Answer: This laboratory employs 66 people which involve 53 FTE's in FY 
1992 and 52 FTE's in FY 1993. The same number of people and FTE's will be 
employed in FY 1994. 

APPALACHIAN FRUIT RESEARCH LABORATORY 

Question: Research conducted at the Appalachian Fruit Research 
Laboratory over the past 10 years has demonstrated that biological control agents 
can effectively replace chemical pesticides in many post-harvest situations. What 
needs to be done to link the biological control technology with the commercial 
packing line operation? 

Answer: Significant progress has been made, through research at the 
Appalachian Fruit Research Laboratory in the past 10 years, to reduce the need 
for or reliance on chemical pesticides to control postharvest diseases through the 
use of microbial biological control agents. At the present time, none of these 
biological agents can effectively replace chemical pesticides in commercial 
postharvest disease control situations. The initial impact of microbial biological 
control agents in commercial situations will likely be to supplement the use of 
chemical pesticides so as to reduce amounts needed to be applied. 

So far, results with microbial biological agents to control postharvest diseases 
have been obtained only in the laboratory. In order to link this teclmology to 
commercial packing line operations, a pilot test demonstration of the practicality of 
this approach on a large scale is needed. In addition, there is a need to develop 
effective formulations of microbial bioconlrol agents, as well as application 
methodology, for use in commercial packing line operations. Finally, there is a 
need to incorporate or integrate this technology with other fruit production and 
postharvest practices or technologies. 



82 



Question: List any projects that have terminated or are planned for 
termination at the Appalachian Fruit Research Station in FYs 1993 and 1994. 

Answer: There are 8 in-house CRIS projects at the Appalachian Fruit 
Research Station. Of these, 4 projects terminated in FY 1 993. ARS expects to 
extend all 4 projects until FY 1995. No projects will terminate in FY 1994. The 4 
projects that terminated In FY 1993 are: 

Molecular biology and genetic engineering of fruit trees; 

Host resistance and stress adaptation in fruit crops; 

Breeding and cullivar development of pear and peach; and 

Biological management of deciduous tree fruit insect and disease pests. 

Question: What are the research results related to those projects? 

Answer: Producers of fruit crops in the Appalachian and mid-Atlantic region 
face various problems from diseases and postharvest quality deterioration. 
Completed research has identified some of the specific mechanisms at work in 
genetic resistance to viral and bacterial diseases that will lead to the development 
of new, resistant cultivars. Scientists have also made progress in determining the 
factors responsible for postharvest damage of fruits. Improved pest control 
strategies have also been developed which rely on biological agents or highly 
selective pesticides and natural compounds that will help reduce the use of 
synthetic pesticides on fruit trees. 

Question: Please provide the number of people on board and FTE's at the 
Appalachian Fruit Research Laboratory for FY 1992, FY 1993 and the FTE and 
onboard personnel budgeted for FY 1994. 

Answer: In FY 1992, there were a total of 83 employees at the Appalachian 
Fruit Research Laboratory; in FY 1993 there were 83 employees; and 83 
employees are budgeted for FY 1994. The FTE for FY 1992 was 63 and 61 for 
FY 1993 and FY 1994. We project that about the same number of employees and 
FTE's will be on board in FY 1994 as in FY 1993. 

WATERSHED OPERATIONS 

Question: Mr. Secretary, what funding has been provided to West Virginia, 
by project, for P. L. 566 and P. L. 534 watershed projects in FY 1992 and FY 
1993? Please provide the dollar amounts and projects to be funded out of your 
FY 1994 budget request. 

Answer: The information for FY's 1992 and 1993 follows. However, we 
cannot provide this information for FY 1994 as we are just beginning the allocation 
process. The Soil Conservation Service will soon be contacting States to 
determine what their budget needs will be for 1994. SCS will then analyze this 
data and make an initial State-by-State allocation, probably in August. 



83 



WEST VIRGINIA 

PUBLIC LAW 83-566 

FISCAL YEAR 1992 ALLOWANCES 



Project or Activity Amount 

Ongoing Project Support 
State Office Support 
Upper Mud 
Howard Creek 
Wheeling Creek 

Total 



1.200.000 

500.000 

5,050.000 

4,250.000 

7.668.000 
18.668,000 



WEST VIRGINIA 

PUBLIC LAW 83-566 

FISCAL YEAR 1992 ALLOWANCES 



Project or Activity 

Lost River 

Ongoing Projects Support & Contracts 

State Office Support 

Repairs 

North and South Mill Creek 

Total 



Amount 

100.000 
997,883 
450,000 
300,000 
4.250.000 

6,097,883 



WEST VIRGINIA 

PUBLIC LAW 83-566 

FISCAL YEAR 1993 ALLOWANCES 



Project or Activity 

Ongoing Project Support 

State Office Support 

Cranberry Channel 

Howard Creek 

Mill Creek 

Contract Modifications 

Geologist Trainee 



Amount 

1,100,000 

572,000 

2.200,000 

5,450,000 

9.000,000 

700,000 

10.000 



Total 



19,032,000 



84 



. WEST VIRGINIA 
PUBLIC LAW 78-534 
FISCAL YEAR 1993 ALLOWANCES 

Project or Activity Amount 

Ongoing Project Support 1,049,000 

State Office Support 500,000 

Lost River 10.300,000 

North and Soutfi Mill Creek 3,646,000 

Contract Modifications 500.000 

Total , 15,995.000 



CONSOLIDATION OF OFFICES 

Question: Mr. Secretary, you will recall that when we met in February, we 
discussed the recommendations of the previous Administration with regard to 
reorganization of the field structure of the Department. At that lime, I expressed 
serious concerns over some of the proposals being put forth, and appreciated your 
assurance that you would be looking at staff reductions at the central office first 
instead of looking to reduce staff in the field. I note from you budget submission 
that your are proposing a new Farm Service Agency. 

How does this proposal relate to the recently established Rural 
Development Administration? 

Answer: The Farm Service Agency, called the FSA, included in the budget 
is based on combining the programs of the Agricultural Stabilization and 
Conservation Service, the commodity price and income support programs funded 
by the Commodity Credit Corporation, the Soil Conservation Service, and the 
Farmers Home Administration. The programs of the Rural Development 
Administration are separate. Planning for the FSA is still underway and some 
modifications may be appropriate. We are looking at the mission of the RDA to 
determine if certain programs proposed for inclusion in the FSA would be more 
appropriately administered by the RDA. 

Question: In West Virginia, the majority of the services provided by the 
Soil Conservation Service are non-farm related. Services provided now relate to 
flood control and prevention, water quality and improvement, soil surveys and 
maintaining the land and water resource base. Obviously, given West Virginia's 
topography, soil erosion is a major concern. 

Do you plan to factor these services into the criteria when making 
recommendations for office consolidations? 

Answer: Yes, we will consider factors such as those you describe which 
may not have been adequately portrayed in the data that was available. The 
State Food and Agriculture Councils have been involved in this process and will 
continue to advise us. since they know the local conditions best. 

Question: Please provide the criteria that you will use for reorganization. 



85 



Answer. I have not made a final decision on the criteria thai will be used 
for reorganization of the field offices. 

Question: Will we have an opportunity to review your recommendations in 
draft form, prior to final submission? 

Answer: I have solicited suggestions from Congress and plan to continue 
to involve you in the reorganization process. I will need your assistance and 
support, if we are to make meaningful changes in the Department. 



QUESTIONS SUBMITTED BY SENATOR DeCONCINI 

Question: Mr. Secretary, in September 1992 President Bush announced 
that $755 million from the Dire Emergency Act of 1992 (PL 102-229) was being 
made for agricultural disasters. The Supplemental Appropriations, Transfers and 
Rescissions Bill of 1992 included an additional $320 million for the Commodity 
Credit Corporation for additional disaster assistance as authorized by the 1990 
farm bill and PL 102-229. 

What is the current balance of unexpended CCC funds available for disaster 
assistance? 

Answer: A total of $2,121 million has been made available for disaster 
payments on crop losses in 1990, 1991, and 1992. 

The total funding includes: (1) $995 million provided in the first emergency 
supplemental of 1992 for Phase I of the disaster payment program covering crop 
losses in either 1990 or 1991, (2) $100 million provided for Phase II of the 
program covering crop losses on program crops planted in 1991 for harvest in 
1992, (3) $655 million provided for Phase III of the program covering unclaimed 
losses in any one of the three years 1990, 1991, or 1992, and (4) $382 million 
provided in the second emergency supplemental of 1992 to supplement funding 
available for payments under Phase III of the program, less about $1 1 million in 
funding transferred to FmHA for migrant labor housing assistance. 

To date, disaster payments at the prorata factor of 50.04 percent total 
about $1,616 million. The total includes: (1) $963 million for Phase I, (2) $97 
million for Phase II, and (3) $556 million for Phase III. An additional $210 million 
in payments is anticipated, including $60 million in payments on applications on 
hand and $150 million in payments on corn quality losses. With funding of $2,121 
million and payments of $1,826 million, the balance of funding after payments for 
corn quality losses would total $295 million. 

Question: f^r. Secretary, the Department of Agriculture recently announced 
that a special sign-up would be held to allow corn producers to apply for disaster 
assistance based on quality losses. Why was the eligibility limited to corn? 

Answer: Prior procedures have provided for contaminated corn to be 
excluded from the amount of production used to determine eligibility for disaster 
payments. The similar exclusion of corn with severe quality problems we believe 
was warranted for many producers who would otherwise be ineligible for 



86 



assistance because the quantity harvested was above tlie threshold for payment 
eligibility. We are currently reviewing requests to extend these quality adjustments 
to other program crops. 

Question: I believe there is a definitive, though complex, relationship 
between the outbreaks of whitefly and unusual weather patterns in Arizona for the 
past several years. As you know, the whitefly has resulted in severe crop losses 
for cotton growers and other producers in Arizona and elsewhere. 

The report language which accompanied the 1992 supplemental 
appropriations bill (Senate Report 102-395) urged that cotton producers 
experiencing losses associated with whitefly be made eligible for benefits. The 
report noted specifically that the economic losses suffered by cotton producers 
include total yield losses as well as low, sometimes unsalable, quality of fiber. 

Is the Department actively considering making producers with certifiable 
quality losses in other crops eligible for disaster assistance? 

Answer: Yes, as indicated earlier, the extension to other program crops of 
quality adjustment procedures announced recently for the 1992 corn crop is under 
consideration. 

Question: Is sufficient data available to the Department to make 
assistance available to producers who suffered quality losses due to whitefly 
damage? 

Answer: We are unable at this time to judge the adequacy of data for 
determining quantity and quality losses due to whitefly infestation. As you know, 
we have considered losses due to whitefly infestation ineligible for disaster 
payments under definitions in the authorizing legislation of "damaging weather and 
related conditions". Our understanding has been that the cause of whitefly 
infestation cannot be conclusively Isolated, and that a variety of factors working in 
concert may have been the catalyst for the increase in whitefly populations, e.g., 
the lack of chemical controls and a decline in natural predators. However, 
"damaging weather" is not one of those factors. 

Question: My home state of Arizona has experienced severe flooding 
since January 1993. Agricultural producers lost millions of dollars in crops which 
were in the ground at the time of the flooding, suffered damage to their land, 
homes and other property in the floods and will be prevented from spring and 
further plantings until their lands can be restored. 

Will you provide me a list of programs which may be available to assist 
producers experiencing losses as a result of the flooding? 

Answer: USDA agencies can provide the following kinds of assistance to 
help producers recover from flooding damages: (1) livestock feed assistance from 
the Commodity Credit Corporation, (2) help in restoring damaged eligible land, 
through the Agricultural Stabilization and Conservation Service and the Soil 
Conservation Service, (3) low interest loans to farmers, through the Farmers Home 
Administration, (4) indemnity payments to farmers for crop losses covered by 
insurance, through the Federal Crop Insurance Corporation, and (5) technical 
infonnation and assistance in developing plans to reduce disaster effects and 



87 



return to normal after a disaster, through the Extension Service, in cooperation 
with the State Cooperative Extension System (CES) and State land-grant 
universities. 

Question: Will you provide me a list of programs which have already been 
made available to growers in Arizona In response to the flooding disaster? 

Answer: All of these programs are available to Arizona producers with 
production and property losses. Probably the primary emergency program 
currently assisting producers in Arizona with flood losses is the Emergency 
Conservation Program (ECP) administered by the Agricultural Stabilization and 
Conservation Service. The ECP provides emergency funds for sharing with 
farmers and ranchers the cost of removing debris and rehabilitating eligible 
farmlands damaged by natural disaster. Much of the ECP work in Arizona has 
focused on repair of irrigation canals and other facilities damaged or destroyed by 
the flooding. 

Question: Can any of these programs be funded from the unspent 
emergency appropriations disaster assistance associated with legislation and 
declarations made in 1992? 

Answer: The 1994 budget does not propose additional funding for the 
disaster payment program. Full funding is requested for the Federal Crop 
Insurance Corporation, and we consider the crop insurance program to be primary 
disaster assistance program available to farmers for protection against losses from 
natural disasters. The budget also proposes to maintain funding for the 
emergency conservation and livestock feeding programs administered by the 
Agricultural Stabilization and Conservation Service and the farm lending programs 
of the Farmers Home Administration. 

Question: What funds are included in the Department's FY94 budget 
proposal to provide assistance to producers with losses due to this flooding? 

Answer: The 1994 budget does not propose additional funding for the 
disaster payment program. 

FRESH ORANGE EXPORTS TO JAPAN 

Question: International trade is extremely important to American 
agriculture and especially to citrus growers in Arizona and other producing areas. 
The visit of the Japanese Prime Minister with President Clinton and current efforts 
to further open the Japanese market to American products presents a question of 
interest to growers in my state. What efforts are being made by this 
Administration to reduce the duty in Japan on fresh oranges exported from the 
United States? 

Answer: The U.S. -Japan Beef and Citrus Agreement, signed on July 5, 
1988, eliminated quotas on fresh oranges imported into Japan as of April 1, 1991. 
Orange exports to Japan are still restricted by the current tariff which is bound at 
40 percent in-season and 20 percent off-season. This Administration will continue 
I to raise the issue of high, restrictive tariffs on oranges with Japanese officials in all 
appropriate bilateral consultations such as the annual U.S.-Japan Trade 
Committee meetings. 



88 



Negotiated reductions in tariff rates on oranges are also being addressed in 
the Uruguay Round of multilateral trade negotiations. President Clinton 
announced in early April a plan to extend ttie fast-track authority for the Uruguay 
Round negotiations. It is expected that tariff rales on oranges will be reduced by 
15 percent over a six-year period as part of a successful Uruguay Round 
agreement. U.S. orange exports to Japan in 1992 reached 165,000 metric tons, 
an increase of 32 percent over the average annual exports during the period 1988 
through 1990 when quotas were In effect. 

[MARKET PROf^OTION PROGRAfVl 

Question: The Market Promotion Program -- fy/IPP -- has been a very 
important means to assist American farmers in operating in foreign markets. Do 
you support continued funding for this program? 

Answer: Yes, I support continued funding for IVIPP at the $148 million level 
as provided in the 1994 President's budget. Our proposal continues the program 
at this year's level, which we believe is adequate for meeting our market 
promotion objectives. 

Question: The Animal and Plant Health Inspection service (APHIS) has an 
essential role In protecting the public by ensuring the safety of the nation's food 
and fiber supply. I commend your attention to problems in this area, particularly 
with respect to meat Inspections. Can citrus growers expect continued attention 
to their inspection needs as well? 

Answer: Yes, USDA will continue in efforts to protect citrus as well as 
other U.S. fruit and vegetable crops from pests and diseases. Survey, control, 
and regulatory activities are maintained through APHIS' fvlediterranean and 
(viexican fruit fly programs which were started during the Depression. Detection 
surveys are carried out in Alabama, Arizona, California, Florida, Georgia, 
Louisiana, fy/lississippi, New f^exico. South Carolina, Texas, Puerto Rico, and the 
U.S. Virgin Islands. Plant materials coming from outside the United States are 
Inspected at ports of entry under the Agriculture Quarantine Inspection program. 
Program methods Include Inspection and regulation of garbage from carriers, 
detector dogs at airports and post offices, and passenger Inspection. APHIS also 
continues to support the Cartobean fruit fly protocol for exports to Japan. 

With respect to meat inspections, the Food Safety Inspection Service 
(FSIS) is the agency responsible for that service. FSIS submits samples from 
slaughter plants to APHIS' National Veterinary Services Laboratory for tuberculosis 
identification as part of a surveillance system. Positive results for tuberculosis will 
lead to a follow-up Investigation by APf-IIS to traceback the animal to its herd of 
origin. In addition, APHIS provides FSIS with informational materials related to 
sample submissions and Includes FSIS personnel in their national training 
courses. 

Question: As you know, Mediterranean, Mexican and other flies pose a 
hazard to the U.S. citrus industry. Do you support additional funds for these 
eradication programs? 



89 



Answer: I supporl providing sufficient funding in order to protect tlie U.S. 
fruit and vegetable industry from ttie threat of exotic fruit flies. We provide funding 
annually for regular survey, control, and regulatory activities, through the 
Mediterranean and [Mexican fruit fly programs. We also have provided funding to 
combat exotic fruit fly outbreaks in Florida. California, and Texas. Since 1981, the 
Department has spent approximately $105 million for this purpose. For Fiscal 
Year 1993 I have made available $25.9 million in emergency funds to finance the 
Federal share of the fruit fly eradication activities in California. 



QUESTIONS SUBMITTED BY SENATOR COCHRAN 

CROP INSURANCE 

Question: The budget indicates that the proposed reform of the Federal 
Crop Insurance Program will be phased-in, l^eginning with the 1994 crop. Over 
what period of years would this proposal be phased in? 

Answer: The proposal calls for a phase-in of area yield coverage to be 
completed in 1998. 

Question: How many counties would be offered area-yield rather than 
individual coverage the first year? 

Answer: We expect to extend the new area-yield coverage to about 700 
counties in crop year 1994. However, individual coverage will be continued in 
each of these counties for at least the flrst year. In those counties with the most 
adverse loss ratio experience over the past ten years, individual coverage will be 
modified to make the program more actuarially sound. 

Question: Would all crops in these counties be covered? 

Answer: For crop year 1994, we plan to extend the pilot area-yield 
program for soybeans to additional counties, and to offer such coverage for the 
first time for corn, wheal, and grain sorghum. If feasible, we would also offer it to 
a limited extent for cotton, peanuts, and sunflowers. 

Question: How do you calculate that this proposal to reform the federal 
crop insurance program would result in savings of $105 million in delivery costs in 
fiscal year 1994? 

Answer: About $18.2 million of the $105 million in total savings would be 
achieved through reductions in FCIC's overhead expenditures. Continuation of the 
long term decline in business done under agency sales and contracts is would 
account for about $6.8 million of the total saving. The rest of the savings be 
achieved by reductions in payments to reinsured companies. We expect that the 
book of business done by these companies will decline slightly as we phase-in the 
area-yield coverage and modify individual coverage. 

Question: If this proposal is approved, do you foresee any problems where 
crops in counties for which individual coverage is now provided would not be 
covered under the area-yield insurance? 



90 



Answer: Currently, we are proposing to continue individual coverage for all 
crop counties where it is now provided. About 5,100 crop county programs would 
be modified, primarily by reducing yield guarantees, to make them more actuarially 
sound. For crop year 1994, area-yield coverage for soybeans, corn, wheat and 
grain sorghum would also be offered in about 700 counties. If feasible, it would 
also be offered in a limited number of counties for cotton, peanuts, and 
sunflowers. By 1998, the phase-in of area coverage would be complete, and 
individual coverage would no longer be offered. The phase-in period will allow 
time for resolving certain data and other technical problems relating to area-yield 
coverage. 

Question: In the fall of last year, a 2-year pilot test was approved offering 
insurance to soybean farmers based on county rather than individual yields. 
Wouldn't it be better to conclude and evaluate that pilot test before extending the 
program to other areas and crops as the fiscal year 1994 budget proposes? 

Answer: We think the phase-in of area-yield coverage, as proposed in the 
1994 budget, is a prudent course of action. There will be time to develop area- 
yield coverage on a crop by crop basis and to evaluate the new coverage before 
individual coverage is actually phased-out. We have given considerable thought to 
the need for such a phase-in period which is why we modified the initial proposal 
that was made for switching to such coverage all in the first year. 

FARMERS HOME RENTAL ASSIATANCE 

Question: I have been informed that there is a critical need for additional 
rental assistance units for servicing purposes in Mississippi to assist very low and 
low income tenants living in Farmers Home Administration financed complexes. 

I am informed by the Mississippi Farmers Home State Office that of the 
15,643 apartment units financed in the State, there are presently 4,697 families 
living in these apartments paying over 30% of their income for housing and 
utilities. In addition, there are presently 716 apartments vacant, mostly due to the 
fact that very low and low income tenants cannot afford to pay the rents required 
without rental assistance. Also, most of the complexes that do not have full rental 
assistance are in financial trouble because of the high vacancy rates they are 
experiencing. I understand there is a need for approximately 5,400 rental 
assistance units in Mississippi to assist tenants now paying rent overburden, and 
to enable families to move into vacant units ar rents they can afford to pay. 

How many other states are sharing these problems and what is the 
Department doing to address these critical needs? 

Answer: According to a recent survey, conducted by FmHA, there are over 
80,000 families and Individual tenants residing in FmHA financed projects in what 
we call rent overburden, that is to say they are paying in excess of 30 percent of 
their income for rent and utilities. Further, there are 20,000 vacancies existing in 
FmHA projects, and to a large extent this is due to the lack of income to pay the 
required rent. Over $1 billion in additional funding would be required to assist all 
tenants paying in excess of 30 percent of income for rent and to provide rental 
assistance lor vacant units in order to make them affordable for families in the 
area. We are exploring other remedies to address the most critical needs, but as 
of yet, no final solution has been reached. 



91 



Question: As I understand ttie situation, the fiscal year 1993 appropriation 
for rental assistance is now stiort of tfie amount required to renew existing 
contracts, leaving no funds available for servicing. At the time we enacted the 
appropriations bill, it was our understanding lliat the amount provided would be 
sufficient both to fund renewals and servicing. 

What is the extent of the fiscal year 1993 shortfall required to meet both 
renewal and servicing requirements? A supplemental appropriation is not 
requested in the President's Budget for rental assistance, why? 

Answer: In total a shortfall of $68 million exists in order to renew existing 
contracts and $7 million Is needed for emergency servicing needs. We are 
exploring a funding alternative to meet these needs. 

Question: What will be the impact of not providing the additional funds 
required? 

Answer; Without the additional funding, FmHA estimates that about 5,500 
families currently receiving rental assistance would lose this assistance in 1993, 
and over 200 section 515 projects could face default as a result. FmHA and the 
Department have been considering several options for meeting the shortfall, and a 
supplemental appropriations was one of the options considered. 

Question: Another problem which has been brought to my attention is the 
fact that new projects are sometimes built with rental assistance in markets where 
vacant units exists without access to rental assistance. 

Building new projects where there is available existing does not appear to 
make a great deal of sense from a cost standpoint. How extensive is this problem 
and what, if anything, is done to prevent this situation? 

Answer: I would agree that it would not make sense to build new rental 
housing projects in areas where vacant units exist in FmHA financed projects. 
FmHA's regulations require the completion of a market study to assess the 
availability and characteristics of existing housing resources in the market area of 
a proposed project. The regulations also require coordination of the market study 
with HUD to Insure that another Government financed project is not be considered 
for the area. The construction of new units in the same community or are in which 
there is a significant number of vacant units would not be expected because of 
these requirements. 

Question: I have heard it said that the earmarks on rental assistance 
funding contained in the appropriations act contribute to the problem. 

For fiscal year 1993, for example, a floor of $122,522 thousand is provided 
for new construction. Is this a problem? Would the Department be spending less 
than the floor for new construction and applying these funds for other purposes if 
the earmark did not exist? What is the new construction funding requirement for 
fiscal year 1 994? 

Answer: FmHA has proposed in the FY 1994 budget, as in past years, to 
delete the appropriation language setting limits for the various categorical uses of 
rental assistance, i,e., renewals, new construction, and servicing. FmHA is of the 



92 



opinion that this would provide the programmatic flexibility needed to address 
growing rental assistance needs. For example, one suggestion that has been 
made is that FmHA should allocate additional rental assistance to existing units to 
assist tenants paying in excess of thirty percent of their income for rent rather than 
providing rental assistance for newly constructed units. While this suggestion 
may have some merit, considering the existing budgetary constraints, FmHA has 
been restricted by the language in the Appropriations Acts. I should also point 
out that while new construction is definitely needed to meet critical housing needs 
in some areas, each unit constructed adds to the long-term problem of finding the 
funds to meet the demand for renewals. The 1994 estimate for new construction 
is approximately $113 million. 

Question: The fiscal year 1994 budget requests an increase of $84 million 
for rental assistance payments to cover the costs of expiring contracts, and 
proposes $75 million to fund a rural housing voucher program. 

How will the fiscal year 1994 funding proposals meet the needs of very low 
income and low income families for safe, decent, and sanitary housing at 
affordable levels? 

Answer: The increase of $84 million requested in the FY 1994 budget for 
the renewal of expiring rental assistance agreements will meet the anticipated 
demand. However, it will not permit extending rental assistance to any of the 
approximately 80,000 families and individuals paying in excess of 30 percent of 
income for rent. The $75 million requested for the voucher program will make 
available similar rental assistance to families in areas in which there is sufficient 
existing rental housing available, but is not affordable to low and very low income 
families without the availability of rental assistance. 

FOOD SAFETY AND INSPECTION SERVICE 

Question: The Administration proposes increased funding of $4 million in 
its economic stimulus proposal and $10 million in fiscal year 1994 to hire and train 
an additional 200 inspectors; in addition, an increase of $8 million is proposed for 
fiscal year 1994 for a major research initiative to investigate foodborne pathogens. 
As you are aware, questions were raised about the adequacy of the U.S. 
inspection system when contaminated ground beef caused extensive illness and 
two deaths earlier this year. 

While hiring inspectors is a good first step, you have indicated that visual 
inspection cannot detect pathogenic bacteria. Can you please tell us more about 
the $8 million research initiative proposed and what the Department's long-term 
goals are for revamping the meal and poultry inspection system to assure the 
safety of our food supply? 

Answer: In developing the future inspection program we will be focusing 
on enhanced public health protection at critical points from the farm to the dinner 
table. Microbiological monitoring programs will be developed employing Hazard 
Analysis and Critical Control Point (HACCP) principles in beef slaughter plants and 
ground beef processing plants. The Department Is proposing to develop an on- 
farm investigation program and epidemiological studies of foodborne enteric 
pathogens, beginning with E. coli 0157:H7. We are also considering legislative 
changes to mandate animal identification and traceback to determine the herd of 
origin of infected animals. 



93 



We will be speeding the development of tests that can be used by In-plant 
inspectors to identify infected product, and will also be proposing to expand our 
microbiological baseline studies to include all beef, poultry, and swine. We 
propose to conduct a baseline study for ground beef. Stricter requirements for 
boneless beef reinspection are planned and we are proposing to publish a 
regulation on cooking times for hamburger patties. 

Finally, we propose to strengthen food safety education for food service 
establishments and consumers. We propose to mandate the use of safe-handling 
labels on raw meat products sold at the food service and retail level. In 
accomplishing these goals we will be working closely with the Food and Drug 
Administration and other agencies that share a role in food safety. 

Some of these improvements will be difficult to achieve. However, the $8 
million included in the Department's 1994 budget request will be a step in the right 
direction for providing the people of this country with an up-to-date inspection 
system that is focused on foodborne disease. 

Question: The fiscal year 1994 budget proposes to collect $104 million 
from new user fees on meat and poultry inspection services beyond a single eight- 
hour primary approved shift. Industry now pays overtime costs for services 
beyond any eight hour shift. What is the definition of a "primary approved shift" for 
purposes of the new user fee proposed? 

Answer: Current law authorizes the Department to recover the full cost of 
inspection services performed when the inspector is in an overtime pay status, and 
the plant is operating beyond an approved first or second shift. Plants receive 
inspection at no cost to them when it is performed on an approved regularly 
scheduled first or second shift. 

The proposal included in the 1994 budget request would provide one shift 
of inspection per day at no cost to the plant. The criteria for determining which 
shift of a mullishift operation is first or primary will be established through 
implementing regulations that will be proposed and subject to comments from all 
interested parties. 

ALTERNATIVE AGRICULTURAL RESEARCH AND COMMERCIALIZATION 

Question: The fiscal year 1994 budget requests a $12.75 million increase 
above the $7.25 million current level for Alternative Agricultural Research and 
Commercialization. Would you please give us an update on the status of fiscal 
year 1993 funding for this program. 

Answer: On August 17, 1992, a Request for Proposals was published in 
the Federal Register . The requests for assistance from the Alternative Agricultural 
Research and Commercialization 

--AARC- Center totaled $175,000,000 in the 407 pre-proposals received; total 
project budgets were $448 million so the applicants were willing to commit $1.50 
for every $1.00 requested. Following review by the Board of Directors, 48 
applicants were requested to submit full proposals asking for about $30,000,000. 
Currently, final negotiaions are underway with 22 firms requesting the roughly $10 
million of available funds. The AARC Board of Directors plans to use at least 85 
percent of the 1993 funds as well as funds carried over from 1992 for support of 
22 projects. 



94 



Question: Have regional centers been selected? If so, how many are 
being established and where will they be located? 

Answer: Request For Proposals for regional centers was published in the 
Federal Register on December 23, 1992. Applications were due February 19, 
1993. The AARC Center received 14 applications. The Board of Directors 
initiated discussion of regional centers at its meeting March 2 and 3, 1993. We 
anticipate the Board will decide on the first two regional centers at its meeting 
scheduled for May 18 and 19, 1993. 

Question: What Is the status^ proposals for grants? 

Answer: The AARC Board of Directors plans to invest the approximately 
$10 million of available funds in 22 projects. Negotiations with successful 
applicants are now in their final stages. Cooperative agreements will serve as the 
legal mechanism for projects rather than grants. 

Question: Which proposals have been selected for funding? 

Answer: Once the AARC Board of Directors completes final negotiations 
on the 22 projects selected for funding the Board will announce the recipients, 
probably by June 1 . These 22 projects range from small start-up operations to 
large impact technologies and involve 14 different plant and animal materials. 

RUSSIAN AID PACKAGE 

Question: President Clinton's Russian aid proposal includes an $894 
million food aid package, $700 million in low-interest, long-term credit and $194 
million in food donations. The $700 million in grain sales is being provided under 
the Food for Progress program which requires that 75 percent of the commodities 
move on U.S. vessels. I understand that there is now a problem with the $30 
million cap on the amount of transportation costs that USDA can pay under that 
program. Will the Administration seek legislation to increase that cap? 

Answer: At this time, the Administration is seeking to identify options and 
authorities which are available for funding the transportation costs of the Food for 
Progress credit program. We are focusing on administrative solutions to the 
transportation funding issue rather than a legislative solution such as seeking an 
increase in the $30 funding limitation. 

Question: What Is the estimated amount that will be spent on 
transportation costs out of the $700 million in food aid proposed? 

Answer: The amount will vary according to the commodity mix that is still 
to be negotiated. Based on the assumption that the program will consist primarily 
of bulk commodities, we have been estimating ocean freight costs in the range of 
$200 million to $250 million. 

Question: What will be the repayment terms on the direct food aid being 
provided? 

Answer: The $194 million component of the food aid will be provided on a 
grant basis. The $700 million Food for Progress credit agreement must still be 
negotiated, so the final terms have not yet been determined. However, we are 



95 



proposing repayment terms in Ifie range of 15 years, including a 7-year grace 
period during whicti principal payments will be deferred. The interest rates will be 
concessional -- ttiat is, lower than commercial rates. 

Question: Would you please give us an update on Russia's defaults under 
the USDA credit guarantee program. What is the total amount now owed by 
Russia? How much of this debt will be rescheduled? How many claims have 
been filed with the Department by lenders and how much has the Department paid 
to these banks? 

Answer: In total, Russia's current exposure to CCC is approximately $4 
billion; this covers CCC-guaranteed debt for both the former Soviet Union -- 
FSU -- and Russia itself. Of this, $1.1 billion of FSU debt would be rescheduled 
under the agreement signed in Paris on April 2. As of April 19, Russia had 
defaulted on $741 million in principal and interest payments coming due to U.S. 
banks. As of that date, CCC had received 555 claims totaling $565 million, of 
which $382 million had been paid. 



QUESTIONS SUBMITTED BY SENATOR SPECTER 

USDA REORGANIZATION 

Question: Mr. Secretary, I understand that the Department is considering 
proposals for reorganization. While I support efforts to make the Department of 
Agriculture more efficient, Pennsylvania farmers have expressed concern that 
reorganization could reduce services to farmers. According to information 
provided to me, the methodology used to propose closure of Agricultural 
Stabilization and Conservation Service (ASCS) can be considered biased against 
agricultural states in the northeast. 

I understand that when considering to close an office, tlie Department 
considered the dollar volume of program payments as an indicator. Since it was a 
disaster year for Pennsylvania and farm program payments were low, it is believed 
that the use of dollar volume of program payments would not be accurate. Would 
it not be more accurate to use the average of payments for several years to 
determine the volume of program payments? 

Answer: The study methodology of the USDA - OMB review team used 
many elements to evaluate the efficiency of an ASCS office, not just the dollar 
value of the program benefits delivered to ASCS clients. 

i There were six basic criteria used to evaluate offices. They were the 

program delivery cost you mentioned, which reflected a cost benefit computation 
of administrative cost versus dollar value delivered; the service group which 
included measurements for both actual clients served and number of potential 
clients the office could serve; a complexity factor for the type and number 
programs administered by the office; a geographic service area measurement; a 
factor for the workload intensity of the office which reflected the amount of time the 
office spent working on program related workload versus purely administrative 
work such as writing payroll checks and keeping the computer system available for 
client services; and finally, offices were evaluated in regards to their collocation 



96 



status with other USDA agencies reflecting the value to the producer of having 
one-stop USDA services. 

Using several years of data is always more meaningful to the validity of a 
study. The USDA - OMB review for all the agencies studied had only 1991 data 
available. However, ASCS had several years of data-1988 through 1992--and 
performed numerous analyses. It was determined that using the six basic criteria 
still provided a valid ranking of offices, from the most to least efficient offices. 

Question: I understand that USDA used the number of producers who 
received farm program payments as an indicator of the need for a county ASCS 
office. This formula, as I understand it, did not take into account the number of 
programs in which the farmer participated even though each program requires 
sen/ice by the county ASCS office. Because of the nature of farmers in 
Pennsylvania, a single farmer may participate in many programs. Would it be 
more accurate of an ASCS office to consider the number of programs 
administered in addition to the number of farmers served? 

Answer: By using the six criteria method, Pennsylvania ASCS county 
offices received consideration for the number of programs a Pennsylvania farmer 
participated in four of the six criteria described above. They were: program 
delivery cost, service group, complexity and workload intensity. These four criteria 
reflected 85 percent of the evaluative score computed for ASCS county offices. 

Question: I understand that the original USDA recommendations to close 
ASCS offices were not altered to take into consideration the geography and road 
systems of a state or county. In Pennsylvania, mountains, rivers and roads make 
it difficult to travel between counties for service even though they seem relatively 
close. Will the Department consider geographical boundaries when proposing 
ASCS office closures? 

Answer: In November 1992 State Food and Agricultural Councils--FAC-- 
with representatives from ASCS, SCS, FmHA and Extension Service were asked 
to review the analysis completed by ttie USDA - OMB review team. They were 
asked to apply their knowledge of the geographic barriers to the study results. 

' However, for those counties and Stales which may have been overiooked 

somehow, I postponed closing any offices until I had an opportunity to reorganize 
Washington and closely review the study which led up to the closure list. I asked 
State FACs to submit implementation plans by April 19, which include information 
on closing impacts to agency f>ersonnel, leases, services and communities. These 
plans will be thoroughly analyzed before any office is dosed. 

DAIRY 

Question: Mr. Secretary, recently a group of dairy farmers of Pennsylvania 
and other states made a trip to Russia to deliver 20 tons of U.S. -produced dairy 
products and to discuss trade potential writh Russia. It was concluded from these 
meetings that Russia is very interested in future trade for U.S. dairy products and 
had particular interest in obtaining U.S. dairy products as part of any U.S. aid 
package proposed by the Administration. I understand that there exists some 450 
million pounds of surplus butter currently in storage by USDA's Commodity Credit 
Corporation which could be made part of the proposed aid package. 



97 



Has the Department of Agriculture considered making dairy products part of 
the Export Credit Guarantees aid package proposed by the Administration? 

Answer: The credit package which the Department intends to make 
available to Russia will be carried out under the authority of the Food for Progress 
Act of 1985; these will not be CCC export credit guarantees which have been 
made available to Russia in the past. With respect to the Food for Progress credit 
program, the commodity mix has not yet been determined. We will need to 
discuss the commodity mix with representatives of the Russian Federation before 
we can be certain what commodities may be included. 

However, we can report that we are using the authority of section 416(b) of 

the Agricultural Act of 1949 to donate considerable quantities CCC-owned butter 
for use overseas. Between programs for Russia, both those being carried out 
through private voluntary organizations and bilateral agreements, and similar 
arrangements being negotiated with countries of Eastern Europe and the former 
Soviet Union, we have plans to donate half of the total butter in CCC inventory. 
And new proposals for use of the butter continue to be received by the 
Department. 

PESTICIDE USE 

Question: Mr. Secretary, pesticide issues have been a major concern for 
growers in Pennsylvania and the public. In the next couple of months, concerns of 
the Delaney Clause, pending food safety and minor use pesticide legislation, and 
the release of the National Academy of Sciences study on children's exposure to 
pesticides in food will make pesticide issues even more contentious and 
controversial. How does the Department intend to coordinate policy and programs 
Internally, with Congress, and with other federal agencies to deal effectively with 
Important pesticide issues? 

• Answer: Internally, the Department has taken a number of actions to 

Improve and coordinate food safety and pesticide policy by strengthening existing 
programs. We are developing updated, scientifically-based information regarding 
the safe and effective use of pesticides. We are also continuing to improve the 
coordination among agencies with the Department. USDA agencies are 
committed to communicating more effectively about pesticide and food safety 
Issues, particularly in urgent situations that require coordinated responses from 
USDA. 

At the Federal level, we are working closely with the Environmental Protection 
Agency, and the Food and Drug Administration to address problems in pesticide 
and food safety regulations. These agencies have undertaken a joint effort to 
eliminate longstanding inconsistencies in the Federal Food, Drug, and Cosmetic 
Act. We are also addressing the need to establish a "negligible risk" standard for 
pesticide residues in foods. This cooperation and exchange of information is 
outlined in a number of Memoranda of Understanding. We are prepared to 
address the various pesticide issues with Congress. 

Question: Mr. Secretary, Integrated Pest Management (IPM) has enabled 
growers in Pennsylvania to raise crops in an economical and environmentally 
sound manner. USDA officials have asserted that thirteen different USDA 
agencies are working on 1PM. Given the importance of IPM programs to 



98 



agriculture, what can the Department do to coordinate IPM activities and make 
them a priority? 

Answer: We definitely consider IPM to be a priority. Our 1994 budget 
proposes increases for research in IPM and biological control through the National 
Research Initiative and the special grants program. Pest suppression programs 
conducted by USDA agencies will use these techniques where applicable and 
Extension Service will continue to provide education to encourage the adoption of 
improved IPM practices. A working group has been established to assure 
coordination of IPM activities within the Department and with EPA. Regular 
meetings of the working group provide a forum to exchange information, 
coordinate budget and program plans and respond to current issues. A wide 
range of agencies are represented in the working group, including research, 
education, technical and financial assistance and land management agencies. I 
understand tliat the group has prepared a description of USDA programs in this 
area that will be published soon. 



QUESTIONS SUBMITTED BY SENATOR GORTON 

FOOD SAFETY 

Question: Mr. Secretary, when you testified before tlie Senate Agriculture 
Committee last February, I asked you if you were familiar with a piece of 
legislation I introduced on food safety -- better known as "backhauling" - and was 
subsequently signed into law. At the time of that hearing tlie regulations for the 
law are still pending signature by you and the Secretary of Transportation. 
Although you told me at the hearing that you were not familiar with this law, you 
did say that you would give Secretary Pena a call and see to it that the regulation 
was signed. Have you spoken with Secretary Pena and has the backliauling 
regulation been signed? 

Answer: USDA has been working with the Department of Transportation to 
ensure that USDA's interests are reflected in the regulations they will be 
promulgating. The Department of Transportation has informed USDA that the 
rules for implementing "backhauling" are under the Administration's review. 

Question: After learning that you intended to conduct a series of 
nationwide public hearings on food safely reform, I wrote to you and asked that 
you hold one of these hearings in my state of Washington, in part because I think 
its important that you hear from families of E. coli victims. Will you be scheduling 
one of your food safety reform hearings in Washington state? 

Answer: Yes, we are planning to hold a public hearing in Seattle, 
Washington, this summer. 

GRAZING AND RECREATIONAL USER FEES 

Question: The President's original economic plan called for drastic 
increases in fees to be collected from the use of Western public lands for grazing, 
mining, timber harvest, etc. In the view of public land users and many of us in the 
Senate, these increases would have lieen devastating to vital rural economies 



99 



throughout the West. Since then, the President has agreed to work with Congress 
to draft a more reasonable fee schedule. 

The table on page 95 of the Department's budget briefing bool< includes 
$12 million in FY 94 savings from increased grazing and recreation fees on Forest 
Service lands. Judging from the text on page 56, it appears that $10 million of 
these savings are to come from recreation fees and $2 million from grazing fees. 

While this committee does not appropriate for the Forest Service can you 
tell me how these figures were determined, and whether they correlate to specific 
increases in grazing fees and recreation fees? 

Answer: The $2 million increase in grazing receipts is based on a fee two 
and one-half times the current rate implemented over a 4-year period. The $10 
million increase in recreation receipts was based on updated field information from 
each of the nine Regions showing estimated additional collections for these new 
recreation sites and nationally designated special areas. The increase was based 
on additional sites only, not on increased charges at sites where fees are already 
charged. 

Question: Were these figures determined before tlie President agreed to 
reevaluate his proposed fee increase? 

Answer: These figures were included in the data incorporated in the 
document A Vision of Change for America which was released on February 17, 
1993. While the Administration has indicated that it would be flexible in the way 
that these increases are adopted, the policy of increasing fees by the amounts 
indicated has not been changed. 

APPLES 

Question: Mr. Secretary, one of Washington state's most important and 
successful export commodities is apples. Last year, our state's growers sold 
some $300 million in appjes abroad. For eighteen years, however, our apple 
growers have undertaken the frustrating task of trying to gain access to the 
protected Japanese market, which could offer another $35 million in annual 
exports - although, because the market has always been closed, it's hard to tell 
how much our growers could sell. Finally, after eight years of intensive efforts, the 
apple industry and the Japanese Government have resolved all the major 
technical issues. As you know, however, the Japanese Government has recently 
stalled on the remaining minor issues, apparently with the hope of keeping its 
market closed until January 1995. 

Last month, I wrote letters to you and Ambassador Kantor asking that 
USDA and USTR consider these remaining issues to be political trade barriers. I 
was happy to see that the following week you mentioned this issue with Japanese 
Ambassador Kuriyama and that last week you and Ambassador Kantor wrote to 
the Japanese Agriculture Minister. These technical issues must be resolved within 
the next two months if our apple growers are to win access by January 1994 -- the 
date on which the Japanese previously agreed. What is the Department of 
Agriculture doing to open the Japanese market to apples? 



100 



Answer: We have worked closely with Japanese plant quarantine officials 
for more than 10 years to develop a comprehensive, scientific procedure for the 
export of U.S. apples to the Japanese market. We are now at the point where we 
have technically proven the safety of U.S. apples and satisfied all of Japan's major 
plant protection concerns. Unfortunately, Japan has refused to complete the 
review process or to formalize the import approval. 

Japan's actions have moved this issue from a technical to a trade policy 
problem. As you know, in our letters and meetings with Japanese officials, both 
U.S. Trade Representative Kantor and I informed the Japanese government that 
we consider their import ban to be an unjustifiable trade barrier motivated by 
protectionism. The U.S. food exhibition In Osaka on April 16 allowed us to 
publicize our position. We also instructed the U.S. Ambassador to carry this 
message to the various Japanese ministries, and our Embassy filed a formal 
complaint with Japan's Office of the Trade Ombudsman, an agency empowered to 
review import access problems under the U.S. -Japan Structural Impediments 
Initiative. We will continue to press hard on this issue with the intention of gaining 
approval for imports of U.S. apples in time for entry of the 1993 crop. 

BELOW-COST TIMBER SALES 

Question; The Administration is proposing to eliminate the below-cost 
sales over the next three years. While this committee does not appropriate funds 
for the Forest Service does the Administration know what forests face closure in 
each of the next three years? 

Answer: Data from the Timber Sales Information Reporting System 
(TSPIRS) Statement of Timber Sale Revenues and Expenses for the average of 
the three-year 

Question: In general putting government programs on a pay-as-you-go 
basis Is something of which I approve. The moving of this program to a pay-go 
approach however is extremely short-sighted and could have a disastrous effect 
on federal timber dependent communities throughout the country, especially in 
Eastern Washington. If the administration's proposal is enacted, counties around 
the country will lose some $14 million in revenues and some 17,000 people may 
lose their jobs. Has the Administration considered the economic dislocation 
inherent in its below cost sales proposal? 

Answer: The Administration has considered the matter of economic 
dislocation, and, for that reason, has proposed to phase in the adjustment over a 
four-year period and to pursue cost efficiencies to move forests to "above cost" 
status where possible. This will provide some opportunity for adjustment. 
Furthermore, many below-cost forests are located in areas where much of the 
local timber supply comes from private lands. In such situations, we would not 
expect the effects to be so significant. 

Question: The "true" cost of a timber sale is difficult to calculate. The 
proposal suggests eliminating all sales where the cost to the Forest Service is 
outweighed by the revenue generated by the sale. Will the Forest Service be 
required to include in its calculation of "costs" 1) the value of the sale to Forest 
Service overall plan for managing the specific forest, i.e. salvage sales; 2) the cost 
to the Forest Service of legal appeals to a sale; 3) the cost to the Forest Service 



101 



of enhancing non-timber resources such as enhancement of wildlife, soil, and 
water resources? If not, why? 

Answer: Tlie TSPIRS calculation of costs and revenues includes salvage 
sale costs and revenues, the costs of appeals and litigation, and the costs of 
preparing a timber sale that will enhance other resources. The economic benefits 
to other resources are included in the TSPIRS Economic Report, but not in the 
TSPIRS Statement of Timber Sale Revenues and Expenses. The Statement of 
Revenues and Expenses was used to Identify below-cost forests. However, the 
Administration is still reviewing how this report will be utilized in the 
implementation of the below-cost policy. 

Question: I am told by the Washington Association of Wheat Growers that 
due to dry weather last year, test weights in Washington state wheat crops were 
well below normal. In fact, very little wheat graded number one in the Northwest 
due to poor test weights. 

I am told that past disaster eligibility has been based upon the quantity of 
the comtnodity harvested. Wheat producers affected by low test weights and/or 
sprout problems were subject to a substantial penalty but were not eligible for 
relief under disaster assistance if they had a near normal crop yield. It has come 
to my attention, however, that USDA made an exception to the "quality issue" for 
corn producers in the state of Michigan. 

In light of this, does USDA plan to give Washington state wheat producers 
who experienced quality problems an exception? 

Answer: You are correct that eligibility for disaster payments is generally 
based on the quantity of the commodity harvested. However, because of 
unusually severe quality losses in the northern corn belt states, we recently 
announced that quality losses would be taken into account for the 1992 corn crop 
when determining eligibility for disaster assistance. Under the new procedures, 
which are similar to the prior exclusion from production of contaminated corn, 
ASCS shall exclude low quality production from calculated disaster year production 
when determining crop loss disaster benefits for the 1992 corn crop. The 
extension of such adjustments for quality losses to wheat and other program crops 
is currently under consideration. 

Question: If not, why has USDA granted IVIichigan corn farmers an 
exception and not Washington wheat growers? 

Answer: Our response regarding the 1992 corn crop, an extension of prior 
procedures used to exclude contaminated corn from disaster year production, 
reflects the severity of quality losses and the fact that for many corn producers in 
fy/lichigan and adjacent states, the quantity harvested made then ineligible tor 
assistance although the value of their crop, because of low quality, was practically 
worthless. As indicated, the further extension of quality adjustment procedures to 
wheat and other program crops is under review. 

It should be noted, however, that to some extent procedures for determining 
benefits under the disaster program already take into account quality problems for 
other program and nonprogram crops. For example, standard test weight, instead 
of the actual test weight, is used to calculate disaster yields. Other adjustments 



102 



include the exclusion from calculated production of cotton modules left in ttie field, 
exclusion of aflatoxin contaminated corn, and, for nonprogram crops, ttie exclusion 
of hiarvested quantities whicfi because of quality problems are unmarketable. 



QUESTIONS SUBMITTED BY SENATOR HATFIELD 

Question: Mr. Espy, in 1992, wheat producers in the Pacific Northwest 
were particularly hard hit by wet weather at or near harvest which resulted in loss 
to wheat quality due to low test-weight and sprout damage. When these same 
farmers applied for disaster relief, they found that losses due to low test weight 
and/or sprout damage were not covered by USDA's interpretation of disaster relief. 

As an example, a typical Oregon wheat producer in Umatilla County with 
1 ,105 acres of wheat last year suffered sprout damage on 62 percent of his crop 
(689 acres). That sprout damage resulted in a 28 cent/bushel price discount for a 
total loss of $9,640 from sprout alone. In addition, his quality deduction for low 
test weight came to a total of $4,188. 

Mr. Espy, I understand that you recently decided to expand the disaster 
coverage for 1993 to corn producers suffering quality losses. Have you 
considered making such quality loss payments for wheat producers? 

Answer: Quality loss payments to producers of wheat and other program 
crops is under consideration. 

Question: Please elaborate on your rationale for distinguishing between 
the commodities that should receive quality loss payments and those that should 
not? 

Answer: We believe a prompt response was needed to assist producers 
across the northern corn belt with significant losses due to severe quality losses 
who, because of the quantity of corn harvested, may not have been eligible for 
disaster payments. As indicated, the possibility of extending additional assistance 
for quality losses on wheat and other program crops is currently under 
consideration. 

SUBCOMMITTEE RECESS 

Senator Cochran. We appreciate very much your being here and 
appearing before the committee. I think you have done an excellent 
job in handling the questions that were put to you by the Senators. 

Our next hearing will be held Tuesday, April 27, at 10 a.m., in 
room SD-138 of the Dirksen Building. We will hear from the Agri- 
cultural Stabilization and Conservation Service, the Foreign Agri- 
cultural Service, the General Sales Manager, and the Soil Con- 
servation Service. 

The subcommittee stands in recess. 

Secretary EsPY. Thank you, sir. 

[Whereupon, at 4:46 p.m., Tuesday, April 20, the subcommittee 
was recessed, to reconvene at 10:05 a.m., Tuesday, April 27.] 



AGRICULTURE, RURAL DEVELOPMENT, AND 
RELATED AGENCIES APPROPRIATIONS FOR 
FISCAL YEAR 1994 



TUESDAY, APRIL 27, 1993 

U.S. Senate, 
Subcommittee of the Committee on Appropriations, 

Washington, DC. 

The subcommittee met at 10:05 a.m., in room SD-138, Dirksen 

Senate Office Building, Hon. Dale Bumpers (chairman) presiding. 

Present: Senators Bumpers, Kohl, Feinstein, Specter, and Bond. 

DEPARTMENT OF AGRICULTURE 

statement of charles j. cmara, acting under secretary for 
international affairs and commodity programs 

accompanied by stephen b. dewhurst, budget officer 

Agricultural Stabilization and Conservation Service 
statement of bruce r. weber, acting administrator 

Foreign Agricultural Service 
statement of richard b. schroeter, acting administrator 

Office of the General Sales Manager 

statement of christopher goldthwait, acting general 
sales manager 

Soil Conservation Service 
statement of galen s. bridge, acting chief 

opening remarks 

Senator Bumpers. Today, we will continue our hearings on the 
fiscal year 1994 budget for Agriculture, Rural Development, and 
Related Agencies. We will review the budget for the Agricultural 
Stabilization and Conservation Service, the Foreign Agricultural 
Service, the General Sales Manager, and the Soil Conservation 
Service. 

Our witnesses are Charles O'Mara, Acting Under Secretary for 
International Affairs and Commodity Programs; Bruce Weber, Act- 
ing Administrator, ASCS; Richard Schroeter, Acting Administrator, 
Foreign Agricultural Service; Christopher Goldthwait, Acting Gen- 

(103) 



104 

eral Sales Manager; Galen Bridge, Acting Chief, Soil Conservation 
Service; and Stephen Dewhurst, Budget Officer, USDA. 

Grentlemen, we welcome you all here. 

We will cover a wide range of issues today because these agen- 
cies represent all the conservation programs, the foreign export 
programs, as well as the domestic farm programs. Of particular 
note, the budget proposes to consolidate several of these functions 
into one agency, the Farm Service Agency. 

Gentlemen, we have statements from each of you which will be 
made a part of the record in full. 

Mr. O'Mara, I will ask you to make your oral statement summa- 
rizing the budget for each of the agencies, after which we will en- 
tertain questions from the subcommittee for each of the agencies. 
So please proceed. 

Mr. O'Mara. Thank you, Mr. Chairman, and good morning. I am 
pleased to appear before you this morning and to have the oppor- 
tunity to discuss the fiscal year 1994 budget and program proposals 
for the International Affairs and Commodity Programs area, along 
with the conservation programs of the Department. 

With me today, and I will introduce them again, sir, is Randy 
Weber to my right, the Acting Administrator, ASCS; Richard 
Schroeter to my left. Acting Administrator of the Foreign Agricul- 
tural Service; Christopher Goldthwait to his immediate left, who is 
the Acting CJeneral Sales Manager; Galen Bridge to his immediate 
left, who is the Acting Chief of the Soil Conservation Service; and 
the only one at this table who is not acting, Mr. Chairman, Mr. 
Dewhurst, who is the budget officer. 

Senator BUMPERS. He is real, he is not just acting? [Laughter.] 

Mr. O'Mara, let me ask this question since we have got all these 
actors on our hands this morning, are all of you nominees for the 
positions which you are holding right now, or not? 

Mr. O'Mara. No, sir; none of us are. 

Senator Bumpers. Are you waiting for somebody to take these 
positions? What is the deal? 

Mr. O'Mara. Well, in fact, tomorrow there will be a hearing on 
I think five new subcabinet members of the Department, and the 
rest of the group, I understand, will be 2 to 3 weeks away from 
being confirmed. 

We may not be Oscar type actors, but we will do the best we can 
this morning, Mr. Chairman. 

Senator Bumpers. You know, we postponed these hearings, No. 
1, waiting for the President's budget because we did not have any- 
thing to hold a hearing on. And what happens to you people 2, 3 
weeks hence? Are you out on the streets? 

Mr. O'Mara. No, sir; all of us are career people. And we will con- 
tinue. 

Senator Bumpers. None of you are political appointees? 

Mr. O'Mara. No, sir. 

Senator Bumpers. Well, that is very comforting. Now, proceed, 
Mr. O'Mara. [Laughter.] 

I just wondered if I was going to waste the whole morning on ac- 
tors. [Laughter.] 



105 

STATEMENT OF CHARLES J. O'MARA 

Mr. O'Mara. Thank you, Mr. Chairman. As you have already 
stated, the statements by each of the administrators providing de- 
tails on their agency's budget and program proposals for 1994 have 
already been submitted to the Committee. My statement will brief- 
ly summarize the proposals, beginning with proposed farm service 
agencies, which will include ASCS and SCS and their programs, to 
be followed by a short discussion of the budget proposals for the 
international programs of the Department. 

Turning to the Farm Service Agency, the President's budget for 
1994 proposes the formation of a new FSA or Farm Service Agency 
to carry out the farm and conservation programs of ASCS and SCS 
as well as farm and housing programs of the FmHA. The proposal 
will provide for one-stop shopping by creating a single agency from 
the current agencies serving farmers at the county and regional 
level. 

The budget requests $2.3 billion for administrative expenses for 
the FSA to support approximately 28,000 Federal staff-years and 
nearly 14,000 county staff-years to carry out all FSA programs. 
This request consolidates the salaries and administrative expenses 
of ASCS and FmHA, with additional administrative expenses pre- 
viously funded through the Commodity Credit Corporation con- 
servation accounts and the FmHA farm and housing programs. The 
budget proposal reflects savings of $61 million in 1994 and $730 
million through 1997 due to consolidation of these three agencies 
into one. 

I want to emphasize that while planning for the Farm Service 
Agency is underway, a detailed structure for the new agency has 
not yet been formulated. The Department under Secretary Esp/s 
leadership will work with the Congress, including this committee, 
to determine its ultimate structure. The intent of the proposal was 
to provide for a streamlined field structure which will improve 
service to farmers and other clientele, with long-term savings to 
taxpayers from a more cost-efficient delivery system. 

The proposed FSA would assume ASCS's responsibilities for ad- 
ministration of the farm price and income support programs funded 
by CCC. These programs represent about one-fifth of USDA budget 
activity. Net outlays for price support related activities for fiscal 
year 1992 totaled some $9.7 billion. Outlays for fiscal year 1993 are 
estimated to increase to $17.1 billion, reflecting record yields in 
1992 for com and other crops. Higher costs for the cotton program, 
for export programs, and for advance deficiency payments also con- 
tribute to the increase in estimated outlays. Under current legisla- 
tion, outlays for fiscal year 1994 are projected to decline to $12.1 
billion, reflecting a return to more normal weather and yields for 
the 1993 crop. 

The administration is proposing reductions in CCC spending in 
fiscal year 1994. Savings from targeting farm program benefits to 
producers with off-farm incomes less than $100,000, termination of 
the honey program, tightening pajrment limits for wool and mohair 
producers, and a proposed reduction in the market promotion pro- 
gram, are estimated to reduce CCC net outlays about $149 million 
in 1994. 



106 

Aside from the targeting proposal described above, proposed re- 
ductions in the major farm commodity programs would not take ef- 
fect until the 1996 crop year. The changes proposed beginning with 
the 1996 crop include a reduction in payment acreage, termination 
of income support payments on idled acres, and an increase in the 
assessments and fees levied on so-called nonprogram commod- 
ities — that is dairy, oilseeds, tobacco, sugar, peanuts, wool, and mo- 
hair. 

The FSA would also incorporate the conservation programs of 
both ASCS and SCS. It would provide technical assistance to land 
users, communities, watershed groups. Federal and State agencies, 
and other cooperators with erosion control and water management 
problems. It will also administer conservation cost sharing and 
other programs and continue to work with local conservation dis- 
tricts. 

We are requesting $1.8 billion in 1994 for the Conservation Re- 
serve Program to support the 36.5 million acres already enrolled 
and the 1 million acres signed up in 1994. This would leave an- 
other 1.5 million acres to be enrolled in 1995 to meet the 39-mil- 
lion-acre goal set by the Food, Agriculture, Conservation and Trade 
Act of 1990. 

The 1994 budget also supports the FACT Act's goal of enrolling 
1 million acres into the Wetland Reserve Program by the end of 
1995. A total of $370 million is requested for 1994 to fund enroll- 
ment of 450,000 acres on a nationwide basis. 

The 1994 budget also includes over $200 million for traditional 
conservation cost-sharing programs, including the Agricultural 
Conservation Program, Water Bank Program, the Forestry Incen- 
tives Program, the Colorado River Basin Salinity Control Program, 
and the Great Plains Conservation Program. Additional amounts 
for technical assistance components of these programs are re- 
quested in the FSA salaries and expenses account. 

Now turning to the international programs, the Department's 
budget proposals for fiscal year 1994 are designed to continue most 
of our international programs and activities near current levels, al- 
though some reductions are proposed in keeping with the Presi- 
dent's goals of achieving a significant reduction in the Federal defi- 
cit. Even with the proposed reductions, the budget provides a total 
program level of nearly $8.8 billion for international programs in 
fiscal 1994. 

For the CCC Export Credit Guarantee Programs, the budget pro- 
vides a total program level of $5.7 billion, which is unchanged from 
this year. For the Export Enhancement Program the budget as- 
sumes a program level of $1 billion for EEP in fiscal 1994, and in 
addition to EEP the budget also assumes that the Department's 
other export subsidy programs, that is, the Dairy Export Incentive 
Program and the Sunflower Seed and Cottonseed Oil Assistance 
Programs, will continue near current levels. 

As one of the President's deficit reduction proposals the budget 
recommends that annual funding for the Market Promotion Pro- 
gram be continued at this year's program level of $148 million. 
This is a reduction of $52 million from the current baseline level, 
and will result in savings of over $200 million by the end of fiscal 
year 1997. 



107 

For Public Law 480 food assistance, the budget provides a total 
program level of just over $1.6 billion in fiscal 1994, which is ex- 
pected to provide for total commodity shipments of approximately 
6.3 million metric tons. In addition, we expect that our foreign food 
assistance efforts in 1994 will again be supplemented by overseas 
donations of CCC-owned commodities under the authority of sec- 
tion 416(b) of the Agricultural Act of 1949, as well as food assist- 
ance made available under the Food for Progress Act of 1985. 

For the Foreign Agricultural Service and the Office of the Gen- 
eral Sales Manager, the budget requests a combined program level 
of $118 million for 1994. The budget proposes two major changes 
in agency funding. First, the budget includes funding of $8.2 mil- 
lion for the cost of ADP equipment and maintaining the CCC com- 
puter facility which, in the past, has been operated jointly by the 
Foreign Agricultural Service and ASCS and funded by CCC. 

Second, the budget proposes that funding for FAS's contribution 
to the Foreign Market Development Cooperator Program be re- 
duced by $10 million or approximately one-third from its current 
level. Under this proposal, one of the President's deficit reduction 
recommendations, financial support for the overseas expenses of 
participating organizations will be scaled back in established mar- 
kets and program resources will increasingly be focused on partici- 
pant expansion into areas of the world where market development 
prospects are most promising. 

For the Office of International Cooperation and Development, the 
budget provides a total program level of $45.8 million. The budget 
requests direct appropriated funding of $7.3 million, while an addi- 
tional $38.5 million in funding is expected to be made available 
through trust funds and reimbursable agreements. 

Mr. Chairman, this concludes my statement. We would be happy 
to listen to your comments from members of the subcommittee and 
will respond to any questions that you or your colleagues may 
have. 

PREPAHED STATEMENTS 

Senator BUMPERS. Thank you very much, Mr. O'Mara. Your bio- 
graphical information and prepared statement will be made part of 
the record along with those of Mr. Weber, Mr. Schroeter, and Mr. 
Bridge, and the prepared statements of Mr. Goldthwait and Mr. 
Miranda. 

[The statements follow:] 

Statement of Charles J. O'Mara 

Mr. Chairman, Members of the Committee, I am pleased to appear before you this 
morning and to have the opportunity to discuss the fiscal year 1994 budget and pro- 
gram proposals for the international affairs and commodity programs area, mong 
with the conservation programs of the Department. Accompanying me today are 
Randv Weber, Acting Administrator of the Agricultural Stabilization and Conserva- 
tion Service (ASCS); Richard Schroeter, Acting Administrator of the Foreign Agri- 
cultural Service (FAS); Christopher Goldthwait, the Acting General Sales Manager; 
Galen Bridge, Acting Chief of the Soil Conservation Service (SCS); and Steve 
Dewhurst, of th'^ Office of Budget and Program Analysis (OBPA). 

Statements by each of these Administrators, providing details on their agencies' 
budget and program proposals for 1994, have already been submitted to the Com- 
mittee. My statement will summarize the proposals beginning with the proposed 
Farm Service Agency (FSA) which will include ASCS and SCS and their programs. 



108 

The FSA will also include Farmers Home Administration (FmHA) programs which 
we will not cover. My statement will conclude with a discussion of the budget pro- 
posals for the international programs of the Department. We will be pleased to re- 
spond to your questions at the conclusion of my statement. 

FARM SERVICE AGENCY 

The President's budget for 1994 proposes the formation of a new FSA to carry out 
the farm and conservation programs of ASCS and SCS, as well as farm and housing 
programs of FmHA. The proposal will provide for "one-stop shopping" by creating 
a single agency from the current agencies serving farmers at tne county and re- 
gional level. The budget requests $2.3 billion for administrative expenses for the 
FSA to support 28,181 Federal staff years and 13,988 county (non-Federal) staff 
years to carry out all the FSA programs. This request consolidates the salaries and 
administrative expenses of ASCS and FmHA, with additional administrative ex- 
penses previously funded through the Commodity Credit Corporation (CCC), con- 
servation accounts, and FmHA farm and housing programs. The 1994 budget re- 
flects savings of $61 million in 1994 and $735 million through 1997 due to consoli- 
dation of three agencies into one. 

I want to emphasize that, while planning for the FSA is underway, a detailed 
structure for the new agency has not yet been formulated. The Department, under 
Secretary Esp^s leadership, would like to work with the Congress, including this 
Committee, in determining the ultimate structure for the FSA. The intent of the 
proposal is to provide for a streamlined field structure which can improve service 
to farmers and other clientele with long-term savings to taxpayers from a more cost- 
efBcient delivery system. 

While the process of designing and implementing a plan to streamline the field 
based farm agencies into a new Farm Service Agency will be challenging, we believe 
the long-term potentied for improved service as well as cost savings will make it 
worthwhile. 

PRICE AND INCOME SUPPORT PROGRAMS FOR FARMERS 

The proposed FSA would assume ASCS's responsibilities for administration of the 
farm price and income support programs funded by CCC. These programs represent 
about one-fiflh of USDA budget activity. Net outlays for price support and related 
activities for fiscal year 1992 totaled $9.7 billion. Outlays for fiscal year 1993 are 
estimated to increase to $17.1 billion, reflecting record yields in 1992 for com and 
other crops. Higher costs for the cotton program, for export programs, and for ad- 
vance deficiency pavments also contribute to the increase in estimated outlays. 
Under current legislation, outlays for fiscal year 1994 are projected to decline to 
$12.1 billion, reflecting a return to more normal weather and jaelds for the 1993 
crop. 

The Administration is proposing reductions in CCC spending starting in fiscal 
year 1994. Savings from targeting farm program benefits to producers with off-farm 
incomes less than $100,000, termination of the honey program, tightening payment 
limits for wool and mohair producers, combined with a proposed $52 million reduc- 
tion in the Market Promotion Program, are estimated to reduce CCC net outlays 
about $149 million in fiscal year 1994. 

Aside from the targeting proposal described above, proposed reductions in the 
major farm commodity programs would not take effect until the 1996 crop year. The 
changes proposed to begin with the 1996 crop include a reduction in payment acre- 
age (triple base), termination of income support payments on idled acres (0/50/92), 
and an increase in the assessments and fees levied on "nonprogram" commodities 
(dairy, oilseeds, tobacco, sugar, peanuts, wool and mohair). 

With regard to 1993 crop programs, signup will close on April 30. Signup for the 
disaster payment program closed February 12, although producers with quality 
losses on the 1992 com crop have until May 7 to apply for disaster payment assist- 
ance. 

CONSERVATION PROGRAMS 

The FSA would also incorporate the conservation programs of both ASCS and 
SCS. It will provide technical assistance to land users, communities, watershed 
groups. Federal and State agencies and other cooperators with erosion control and 
water management problems. It will also administer conservation cost-sharing and 
other programs and continue to work with local conservation districts. 

The Department has historically encouraged voluntary conservation measures by 
farmers. The last two farm bills strengthened our approaches in dealing with crop- 



109 

land erosion, wetland conservation and water quality improvement. We expect to 
continue making progress in these areas. 

Currently, the Department is devoting considerable resources towards helping 
farmers implement conservation compliance plans on highly erodible cropland. The 
conservation programs of the Food Security Act of 1985 (the 1985 Act) were enacted 
to provide consistency between conservation programs and other farm programs by 
maiung eligibility for program benefits contingent upon the implementation of a con- 
servation compliance plan on highly erodible cropland. To continue receiving these 
benefits, producers must fully implement their plan by December 31, 1994, accord- 
ing to a schedule, i.e., "actively appljring" the plan each year until it is fiiUy imple- 
mented. To date, SCS has assisted in developing 1.6 million plans covering 140 mil- 
lion acres of highly erodible cropland, or about one-third of the total cropland in the 
country. About 58 percent of the planned acreage is now protected with fully imple- 
mented conservation practices. Additional plans are partially implemented and 
progress is on schedule. Current projections are that fiillv implemented compliance 
plans, combined with the grass and trees planted on land enrolled in the Conserva- 
tion Reserve F*rogram (CRP), will reduce soil erosion on highly erodible cropland in 
the United States by about 65 percent from pre-compliance levels. 

As you know, SCS has responsibility for identifying and delineating wetlands on 
agricultural lands to support the administration of tne swampbuster provisions of 
the 1985 Act. Prior to May 1991, about 65 percent of the necessary wetland deter- 
minations had been made. This has involved about 16.2 million acres of wetlands. 
Because of the uncertainty about Federal wetland delineation criteria, the wetland 
determination activity has been suspended since 1991. 

We are reauesting $1.8 billion in 1994 for CRP to support the 36.5 million acres 
already enrolled and a one million acre signup in 1994. This would leave anotiher 
1.5 million acres to be enrolled in 1995 to meet the 39 million acre goal set by the 
Food, Agriculture, Conservation, and Trade Act of 1990 (FACT Act). The 1994 budg- 
et also supports the FACT Act's goal of enrolling one million acres into the Wetlands 
Reserve Program by the end of 1995. A total of $370 million is requested for 1994 
to fiind enrollment of 450,000 acres on a nationwide basis. 

The 1994 budget includes over $200 million for traditional conservation cost-share 
programs inclumng the Agricultural Conservation Program (ACP), Water Bank Pro- 
gram, Forestry Incentive Program, Colorado River Salinity Control Program, and 
the Great Plains Conservation Program. Additional amounts for the technical assist- 
ance components of these programs are requested in the FSA salaries and expenses 
account. 

We will now turn to the international programs which are administered by FAS 
and OICD. These programs are not proposed to come under the jurisdiction of the 
Farm Service Agency. 

INTERNATIONAL PROGRAMS 

Mr. Chairman, the Department continues its long-term commitment to export ex- 
pansion and the pursuit of global market opportunities for America's farmers and 
ranchers — and we believe our efforts are providing dividends. U.S. agricultural ex- 
ports have increased in 5 of the last 6 years. During fiscal year 1992, we achieved 
the second highest annual level on record for exports of our agricultural commod- 
ities and products — supported by the Department s approximately $9.0 billion of ex- 
port promotion, market development, and food assistance programs. For fiscal year 
1993, the Department's current estimate is that U.S. agricultural exports will reach 
$42.5 billion, just above last year's level. 

Despite these positive developments, U.S. agriculture continues to face a number 
of serious challenges on the international front. For example, our exporters continue 
to face protectionist trade barriers, unfair trade practices, and self-sufficiency poli- 
cies around the world. Under Secretary Espy's direction, we intend to move force- 
fully to counter unfair competition and to convince our trading partners to reform 
their policies. In this regard, we continue to work towards an agreement in the Uru- 
guay Round of multilateral trade negotiations which will provide expanded export 
opportunities for our farmers and ranchers through reduced barriers to trade and 
greater disciplines in the use of subsidies. 

We have also been actively involved in negotiating the agricultural provisions of 
the North American Free Trade Agreement, including the current negotiations with 
Mexico and Canada of supplemental side agreements on labor, the environment, and 
import surges. Implementation of this agreement will provide si^ficant new export 
opportunities for U.S. agriculture, particularly with Mexico which is now our third 
largest single country export market, by eliminating all tariffs, quotas, and licenses 
that are barriers to trade between our two countries. 



110 

Another challenge we face is the import pxirchasing problems of Russia and other 
states of the former Soviet Union which have impeded U.S. agricultural exports to 
these important markets. Two recent developments are important in this regard. 
The first was the announcement at the Vancouver Summit of a proposed $700 mil- 
lion Food for Progress credit agreement with the Government of Russia to assist 
with its commodity import needs through the remainder of this fiscal year. 

The second is the rescheduling agreement signed in Paris in advance of the Sum- 
mit between the Russian Federation and 19 creditor countries to reschedule a sig- 
nificant portion of the foreign debt of the former Soviet Union. This agreement will 
provide much needed relief to Russia in meeting is severe economic and foreign ex- 
change difficulties while also boosting its economic reform measures. While these 
are important first steps, we expect these issues will continue to require a signifi- 
cant amount of our attention ana efforts during the next fiscal year as well. 

The Department's budget proposals for fiscS year 1994 are designed to continue 
most of our international programs and activities near current levels, although some 
reductions are proposed in keeping with the President's goal of achieving a signifi- 
cant reduction in the Federal deficit. Even with the proposed reductions, the budget 
provides a total program level of nearly $8.8 billion for international programs in 
fiscal year 1994. 

For the CCC export credit guarantee programs, the budget provides a total pro- 
gram level of $5.7 billion, which is unchanged from this year. These programs are 
designed to expand overseas sales of U.S. agricultural commodities and products by 
facilitating the extension of commercial export financing. Their importance for U.S. 
agriculture was demonstrated in fiscal year 1992, when a record of nearly $5.7 bil- 
lion of export sales were registered under the programs; this represented over 13 
percent of total U.S. agricultural exports that year. 

The Export Enhancement Program (EEP) has made an important contribution to 
our trade negotiating strategy and objectives by challenging the unfair trading prac- 
tices of competitor countries and by encouraging other countries to negotiate seri- 
ouslv on international agricultural trade reform. The budget assumes a program 
level of $1.0 billion for EEP in fiscal year 1994. While this is somewhat lower than 
this year's level, it is consistent with the level of EEP bonuses awarded in fiscal 
year 1992 and prior years. In addition to EEP, the budget also assumes that the 
Department's other export subsidy programs — the Dairy Export Incentive Program 
and the Sunflowerseed and Cottonseed Oil Assistance Programs — will continue near 
current levels. 

As one of the President's deficit reduction proposals, the budget recommends that 
annual funding for the Market Promotion Program be continued at this year's pro- 
gram level of $148 million. This is a reduction of $52 million from the current base- 
line level and will result in savings of over $200 million by the end of fiscal year 
1997. The proposal will contribute not only to reducing the Federal deficit but is 
also intended to ensure the most effective use of available program resources. 

For Public Law 480 food assistance, the budget provides a total program level of 
just over $1.6 billion in fiscal year 1994, which is expected to provide for total com- 
modity shipments of approximately 6.3 million metric tons. While the projected ton- 
nage level is somewhat lower than the current estimated level for this year, it is 
consistent with the average annual level of Public Law 480 commodity assistance 
of the past 5 years. In addition, we expect that our food assistance efforts in fiscal 
year 1994 will again be supplemented by overseas donations of CCC-owned commod- 
ities under the authority of section 416(b) of the Agricultural Act of 1949, as well 
as food assistance made available under the Food for Progress Act of 1985. 

For the Foreign Agricultural Service (FAS) and the Office of the General Sales 
Manager, the budget requests a combined program level of $118.2 million for fiscal 
vear 1994. The budget proposes two m^or changes in agency funding. First, the 
budget includes funding of $8.2 million for the costs of ADP equipment and mainte- 
nance the CCC Computer Facility, which in the past has been operated jointly by 
FAS and ASCS and funded by CCC. FAS will assume responsibility for operation 
of the facility in 1994, and funding for its annual operating costs will now be in- 
cluded in the FAS appropriations request. 

Second, the budget proposes that funding for FAS's contribution to the Foreign 
Market Development Cooperator Program oe reduced by $10 million or approxi- 
mately one-third from its current level. Under this proposal, which is one of the 
President's deficit reduction recommendations, financial support for the overseas ex- 
penses of participating organizations will be scaled back in established markets, and 
program resources will increasingly be focused on participant expansion into areas 
of the world where market development prospects are most promising. 

For the Office of International Cooperation and Development (OICD), the budget 
provides a total program level of $45.8 million. The budget requests direct appro- 



Ill 

priated funding of $7.3 million, while an additional $38.5 million in funding is ex- 

Eected to be made available through trust funds and reimbursable agreements. 
Fnder these agreements, OICD carries out technical assistance, training, and re- 
search activities overseas on behalf of the Agency for Internationed Development, 
foreign governments, and international organizations. In addition, OICD assures in- 
creasing links between the U.S. scientific community and similar communities in 
other countries. These efTorts focus on joint work in areas such as biological and 
pest control and natural resource management. 

This concludes my statement, Mr. Chairman. We would now be pleased to answer 
the Subcommittee members' questions regarding our programs and budget requests. 



Statement of Bruce R. Weber 

Mr. Chairman and Members of the Subcommittee, I am pleased to be here today 
to discuss the Agricultural Stabilization and Conservation Service. I will begin by 
providing a brief overview of the agency and will then address administrative sup- 
port, the conservation programs, and the Commodity Credit Corporation. 

ASCS OVERVIEW 

The Agricultural Stabilization and Conservation Service — ^ASCS — was established 
in June 1961 by the Secretary of Agriculture under the authority of the Reorganiza- 
tion Act of 1949, as amended. It is the successor to prior agencies that had adminis- 
tered farm programs since the 1930's. 

MISSION 

ASCS provides service to American producers and the American public through 
the administration of farm commodity, conservation, emergency, and domestic and 
international food assistance programs. 

As the agency name implies, our objectives are twofold: stabilization and con- 
servation. In its stabilization role, ASCS administers Commodity Credit Corpora- 
tion — CCC — programs, including production adjustment programs, which provide 
producers income support, and which protect against extreme fluctuations in the 
marketplace. In its conservation role, ASCS carries out a variety of programs to as- 
sist producers in applying conservation measures needed to preserve the long-range 
{>roductive capacity of ovu- soil and water resources, and to protect highly erodible 
and, wetlands, and other environmentally sensitive lands. The stabSization and 
conservation objectives are united in serving the public interest by helping to pro- 
tect this Nation's ability to produce food and fiber at reasonable prices for current 
and future generations while protecting the environment. 

ORGANIZATIONAL STRUCTURE 

As you know, ASCS is one of the three agencies that is to be merged into the new 
Farm Service Agency under the proposed reorganization of the Department of Agri- 
culture. Details of iJiat merger are in the planning stage. As it currently stands, 
however, ASCS delivers its programs nationwide through a system of State and 
county offices, in addition to a number of field offices and the Washington head- 
quarters. 

State and county ASC committees make decisions on the local administration of 
the various programs entrusted to ASCS that deal directly with the farmer. The 
county committees, whose members are elected by local farmers, also provide advice 
and recommendations regarding program plans and policies. There are currently 50 
State committees, one Caribbean Area committee, and 3,053 county committees. 
Day-to-day program operations such as signups are conducted by the employees of 
the 2,775 ASCS county offices. State offices provide guidance and management over- 
sight of their respective county offices. 

Additional ASCS field offices are located in Salt Lake City, Utah, and Kansas 
City, Missouri. The Aerial Photography Field OfBce in Salt Lake City provides aer- 
ial photography products for ASCTS, other agencies within and outside of USD A, and 
the public. The Kansas City Commodity Office is responsible for the acquisition, 
handling, storage, processing, and disposal of commodities to fulfill CCC program 
commitments, and the examination of farm commodity warehouses. The Kansas 
City Management Office is the focaJ point for agency computer system applications 
development and programming, as well as records management and other functions, 
while the Kansas City Financial Management Office handles centralized ASCS and 



112 

CCC program accounting, debt management, commodity program claims, and relat- 
ed responsibilities. 

ASCS is headed by an Administrator, Associate Administrator, and four Deputy 
Administrators — who are located in Washington headquarters and are supported by 
a number of divisions and staffs which provide overall program administration and 
oversight, as well as personnel, property, financial, and other support services. 

ADMINISTRATIVE SUPPORT 

Expenses for administering ASCS and CCC programs and other functions as- 
signed to the Agency are currently funded by a consolidated Salaries and Expenses 
Account, which was established by the Agricultural Appropriations Act of 1963 to 
simplify the budgetary and accounting requirements and recordkeeping of the agen- 
cy. This account is financed largely through direct appropriation, user fees, and var- 
ious transfers, advances, and reimbursements from other sources, which would be 
incorporated witiiin the FSA. For fiscal year 1994, the consolidated administrative 
expense account of the FSA is $2.3 billion and woiild support a total of 28,181 Fed- 
eral staff years and 13,988 county (non-Federal) staff years needed to carry out all 
FSA programs. 

The direct appropriation for ASCS Salaries and Expenses for fiscal year 1993 is 
$712.7 million. Our current estimate of staff years that will be used in fiscal year 
1993 in carrying out our direct responsibilities and in servicing other Agencies of 
the Department, is 3,349 Federal office staff years and 15,476 county office staff 
years, for an agency total of 18,825 staff years. 

CONSERVATION 

The 1994 President's Budget continues under the Farm Service Agency all the 
conservation programs currently administered by ASCS. Technical assistance fund- 
ing for these programs is proposed to be funded through the consolidated Salaries 
and Expenses account of the FSA. Thus, the request for the conservation program 
accounts reflects primarily cost-sharing assistance only. 

CONSERVATION RESERVE PROGRAM 

The Conservation Reserve Program — CRP — was mandated by the Food Security 
Act of 1985 and was extended and modified by the Food, Agriculture, Conservation, 
and Trade Act of 1990 (FACT Act). Its primary objective is to help farmers achieve 
the environmental benefits of reduced erosion and improved water quality by estab- 
lishing permanent cover on highly erodible or environmentally sensitive cropland. 

Participants enter into a contract with ASCS in which they agree to take land 
out of production for 10 to 15 years and install permanent cover. In return, USDA 
provides annual rental payments, one-time payments for half the cost of the cover, 
and technical assistance. 

The FACT Act combined the CRP along with the newly authorized Wetlands Re- 
serve Program into the Environmental Conservation Acreage Reserve Program — 
ECARP — with an overall participation goal of 40-45 niillion acres, including those 
already enrolled in the CRP. The law specifies that to the extent practicable, the 
ECABP enrollment should include 1 million acres under the Wetlands Reserve Pro- 
gram, leaving a minimum of 39 million acres under the CRP. 

At the present time, total CRP enrollment is about 36.5 million acres, including 
1.1 million acres enrolled in 1992 during the twelfth signup. No signup is being held 
in 1993 since the 1993 Appropriations Act prohibits it. However, we are making 
pajonents due on the previously enrolled acres — $1.7 billion for rental payments, 
$33.8 million for vegetative cover costs, and $6.4 million for technical assistance. 

The requested 1994 program level of $1.83 billion would provide $1.81 billion for 
rental pajonents and $15.6 million for cover costs. The Budget proposes to enroll 1 
million acres in fiscal year 1994, on which rental payments would begin to come due 
in fiscal year 1996. 

WETLANDS RESERVE PROGRAM 

As I mentioned, the Wetlands Reserve Program — WRP — was authorized by the 
FACT Act as a component of the ECARP. The primary objectives are to preserve 
and restore wetlands, improve wildlife habitat, and protect migratory waterfowl. 
Program participants receive payments in exchange for granting a conservation 
easement on eligible acres. The WRP also shares with landowners the cost of res- 
toration measures. 



113 

In fiscal year 1992, funds were provided to operate a pilot program of up to 50,000 
acres. The program was implemented in nine pilot States, and 49,888 acres have 
been tentatively accepted for enrollment. During the June 1992 signup, landowners 
demonstrated substantial interest in the restoration and protection of agricultural 
wetlands through permanent easements by submitting bids for about 249,000 acres. 
In February of this year, as directed, the Department submitted to Congress a re- 
port on the pilot program. 

Congress prohibited additional signups in 1993 and provided no funding for 1993. 
However, program activity is taking place in 1993 as ASCS works with applicants 
to complete the lengthy process involved in establishing easements on acres accept- 
ed in the 1992 pilot program. 

The 1994 Budget woiud put the program on track for meeting its million-acre goal 
by enrolling 450,000 acres nationwide during 1994. The requested funding of $370.3 
milhon would provide $334.3 million for easement payments, $29.3 million for res- 
toration costs, and $6.8 million for easement overhead costs. 

AGMCULTURAL CONSERVATION PROGRAM 

The Agricultviral Conservation Program — ^ACP — shares with producers the cost of 
carrying out soil and water conservation and water quality measures on agricultural 
land. Nationwide in scope, the program is available to all farmers and ranchers who 
establish the need for cost-share assistance in solving a resource conservation prob- 
lem. The program may pav up to 75 percent of the cost of eligible practices. Tech- 
nical assistance is provided by the Soil Conservation Service and the Forest Service. 

Fiscal year 1993 funding is $194.4 million, which includes allocations to States 
of $153 million for annual-tvpe conservation practices, $20 million for long-term 
agreements, $15 million for Water Quality Incentive Projects of tiie type authorized 
under section 1439 of the FACT Act, and $5 million for other high priority water 
quality activities. 

The fiscal year 1994 request of $150.4 million would provide $117.4 million for 
annual agreements, $14 million for long-term agreements, and $19 million for Water 
Quality Incentive Projects. Technical assistance funding is included in the request 
for the consolidated Salaries and Expenses account of the Farm Service Agency. 

EMERGENCY CONSERVATION PROGRAM 

The Emergency Conservation Program — ECP — assists producers in rehabilitating 
farmland damaged by natural disaster and in carrying out emergency water con- 
servation measures during periods of severe drought. The program shares the cost 
of practices to restore the land to its productive capacity as it existed prior to the 
disaster and does not address pre-existing conservation problems. 

As might be expected, funding needs for this program vary widely fi-om year to 
year, depending upon the occurrence of natural disasters, which cannot be predicted 
with any accuracy. The fiscal year 1993 appropriation provided $3 million for the 
regular, or ongoing program. So far this fiscal year, about $9 million, including re- 
coveries of pnor year funds, has been allocated to States to repair damage from 
drought, flood, tornadoes, and wildfires. However, as you know, special supple- 
mental funding of $27 million was appropriated to help producers recover from the 
devastation caused by Hurricanes Andrew and Iniki ana Typhoon Omar last fiscal 
year. The supplemental appropriation made $16.5 milhon immediately available and 
the remaining $10.5 milhon in contingency funding was released December 30, 
1992. The full $27 million has been allocated to the four affected States and Guam. 

The 1994 Budget requests $2.8 million for this program. 

WATER BANK PROGRAM 

The purposes of the Water Bank Program — ^WBP — are to conserve water and pre- 
serve and improve habitat for migratory waterfowl and other wildlife through long- 
term agreements with landowners for the protection of wetlands. The program pro- 
vides additional environmental benefits such as reducing runoff, contributing to 
flood control, improving water quaUty, improving subsurface moisture, and enhanc- 
ing the natural beauty of the landscape. 

Under the program, the Secretary enters into renewable 10-year agreements with 
owners or operators of eligible wetlands in authorized States. The participants agree 
not to drain, bum, fill, or otherwise destroy the enrolled wetlands, and in exchange 
receive annual rental payments. Funding of $18.6 million in fiscal year 1993 will 
bring about 109,000 acres under agreement. 

The $17.1 milhon requested for fiscal year 1994 would provide for agreements on 
about 106,000 acres. 



114 

COLORADO RIVER BASIN SALINITY CONTROL PROGRAM 

The Colorado River Basin Salinity Control Program is designed to reduce irri- 
gated agriculture's contribution to the salt loading of the upper Colorado River and 
thus to support the nation's commitment to the 1973 International Boundary and 
Water Commission Agreement concerning the quality of water delivered down- 
stream to users in the U.S. and Mexico. The program is authorized in the seven 
Basin States Arizona, California, Colorado, Nevada, New Mexico, Utah, and Wyo- 
ming. 

The progrfim is a coordinated effort among USDA agencies. SCS provides partici- 
pants with technical assistance to identify salt source areas, develop conservation 
plans, and monitor and evaluate the results. ASCS provides cost-sharing assistance 
for installation of conservation practices. The Extension Service collaborates with 
the Agricultural Research Service and Cooperative State Research Service on re- 
search, education, and demonstration activities. 

In fiscal year 1993, funding of $13.8 million is being used to support ongoing 
projects in Colorado, Utah, and Wyoming, and a new proiect in Nevada. In fiscal 
year 1994, the request of $8.5 million would provide cost-sharing for these projects. 

FORESTRY INCENTIVES PROGRAM 

The purpose of the Forestry Incentives Program — FIP — is to encourage the devel- 
opment, management, and protection of nonindustrial, private forest lands to in- 
crease the production of timber and enhance other forest resources. The program 
provides annual and long-term cost-sharing agreements with landowners in 47 
States as well as technical assistance for planting trees on eligible land or improv- 
ing a stand of trees. 

The fiscal year 1993 funding level of $12.4 million will assist in planting an esti- 
mated 106.5 million trees as well as providing timberstand improvement on about 
32,000 acres. The 1994 Budget proposes $11.5 million for cost-sharing of a com- 
parable amount of tree planting and timberstand improvement. 

DAIRY INDEMNITY PROGRAM 

Under the Dairy Indemnity Program, ASCS compensates dairy fanners and man- 
ufacturers who, through no lault of their own, suffer income losses on milk or milk 
products removed from commercial markets due to residues of certain chemicals or 
other toxic substances. Payees are required to reimburse the Government if they re- 
cover their losses through other sources such as litigation. To date, claims totahng 
approximately $85,000 nave been authorized for payment during fiscal year 1993. 
Tne 1994 Budget requests $5,000 for this program. 

COMMODITY CREDIT CORPORATION 

GENERAL 

Farm commodity programs and selected export programs such as the CCC Export 
Guarantee program are financed through the Commodity Credit Corporation, a gov- 
ernment entity for which ASCS provides operating personnel. The Corporation is 
managed by a Board of Directors, subject to the general supervision and direction 
of the Secretary of Agriculture. The Board consists of seven members, in addition 
to the Secretary, who are appointed by the President of the United States by and 
with the advice and consent of the Senate. The members of the Board and the Cor- 
poration's officers all are officials of the U.S. Department of Agriculture. Funds are 
borrowed by the Corporation from the Treasury to finance CCC programs, and the 
Corporation has the authority to have outstanding Treasury borrowings of up to $30 
billion at any one time. Commodity support operations, handled primarily through 
loan, purchase and payment programs, include tliose for wheat, com, soybeans, 
minor oilseed crops, cotton (upland and extra long staple), rice, tobacco, milk and 
milk products, wool, mohair, barley, oats, sorghum, rye, honey, peanuts, and sugar. 

COMMODITY PROGRAM OUTLAYS 

CCC total net outlays in fiscal year 1992 were $9.7 billion, a decrease of $0.4 bil- 
lion from fiscal year 1991 outlays of $10.1 billion. Fiscal year 1993 outlays generally 
relate to the 1992 crops. Net outlays for fiscal year 1993 are projected at $17.1 bil- 
lion, an increase of $7.4 billion over fiscal year 1992 outlays. Due to large 1992 crop 
year supplies, expenditures for feedgrains, wheat and upland cotton are consider- 
ably higher in fiscal year 1993. Higher export guarantee claims paid also contribute 
to the increase in estimated fiscal year 1993 outlays. For fiscal year 1994, outlays 



115 

are expected to decline to $12.1 billion, assuming more normal weather and yields 
for the 1993 crop. 

REIMBURSEMENT FOR REALIZED LOSSES 

The 1994 budget for the Commodity Credit Corporation reflects an estimated need 
for $20.9 billion to reimburse the Commodity Credit Corporation for its losses. This 
is an increase of $11.7 billion from the fiscal year 1993 reimbursement to the Cor- 
poration. This increase is necessary in order to address the growing balance of unre- 
imbursed CCC losses, and includes $2.9 billion for payment to Treasury due to a 
retroactive GAO determination regarding the fiscal year 1988 "Operating Expenses" 
appropriation to CCC. 

We are again proposing that CCC be reimbursed for its losses through the current 
indefinite appropriation authority authorized by existing law, but without any cap. 
CCC shoulcl nave the flexibility to request funds as needed from Treasury in order 
to avoid operating disruptions in the future. 

In the 1994 Budget, we are proposing to fund certain administrative ejcpenses, 
largely for computer equipment, in the FSA appropriation, rather than the CuC. 

APPROPRL\TION LANGUAGE CHANGES 

Several other CCC appropriation language changes are proposed in the budget: 

— We are proposing tne deletion of existing appropriation language pertaining to 
floors on export program levels. Minimum export credit program levels are spec- 
ified in the FACT Act. 

— For fiscal year 1994, we are proposing to increase the spending cap for hazard- 
ous waste management costs from $3,000,000 to $4,000,000, based on a pro- 
jected change in the operations and maintenance phase of CCC's hazardous 
waste management program. All other CCC-related hazardous waste manage- 
ment costs are included in the USDA Hazardous Waste Management appropria- 
tion. 

Mr. Chairman, this concludes my prepared statement. I will be happy to answer 
your questions and those of the other Subcommittee Members. 



Statement of Richard B. Schroeter 

Mr. Chairman, members of the Subcommittee, I appreciate this opportunity to 
meet with you today to discuss the work of the Foreign Agricultural Service (FAS). 

Our basic mission, to put it very simply, is EXPANDING EXPORTS. We serve 
to advance and reinforce the efforts of the private sector to sell U.S. food and agri- 
cultvu-al products overseas. In so serving, we directly support the mission of Sec- 
retary Espy for the U.S. Department of Agriculture: To enhance the income of U.S. 
farmers at minimum cost to taxpayers, and to promote the economic health of rural 
America. 

Exports generate one dollar in every five earned by U.S. farmers from the market- 
place. And each dollar in export earnings generates another $1.40 in business off 
the farm. From an employment perspective, an estimated 860,000 fiill-time jobs — 
including nearly 545,000 jobs off the farm — ^hinge on the health of U.S. agricultural 
exports each year. In other words, a vibrant export sector is crucial not only to the 
health of U.S. agriculture, but to the health of the entire U.S. economy. 

U.S. agriculture also continues to consistently to show a trade surplus. Net agri- 
cultural exports of $18 billion in 1992 helped to partially offset a $94 billion deficit 
in nonfarm trade. 

In my testimony today, I will devote some time to discussing FAS program accom- 
plishments. However, I want to focus most of my attention on the changing prior- 
ities for the agency and particularly on the challenges we face in the future. 

The Acting General Sales Manager, who is also here today, will discuss the specif- 
ics of the export programs he administers, which include the foreign food aid, export 
credit guarantee, and export enhancement programs. 

MARKET development 

FAS' market development programs include the Market Promotion Program 
(MPP), the Cooperator Market Development Program, the Export Enhancement Pro- 
m-am (EEP), Sunflower Oil Assistance Program (SOAP), Cottonseed Oil Assistance 
Program (SOAP), Dairy Export Incentive Program (DEIP), Public Law 480 Title I 
Concessional Credit Program, and the CCC Export Credit Guarantee Programs. 



116 

These programs affect the hvelihood of virtually every U.S. farmer, since part of 
practically every crop grown in the United States is exported. FAS uses all of its 
export programs aggressively to ensure U.S. farmers and exporters are able not only 
to maintain a high level of sales in established markets, but also to capitalize on' 
emerging market opportunities. 

Some of these progi;ams— such as the MPP, EEP, DEIP, SOAP, and COAP— are 
relatively new. Tney were implemented in the mid-1980's in response to changing 
trade conditions and a mandate from the Congress. Other efforts, such as the Co- 
operator and Public Law 480 programs, have evolved over the past 40 years. 

Taking on these new, multi-million dollar programs has dramatically changed the 
nature of the agency in recent years. In essence, we have shifted far more in the 
direction of a program implementation agency, and this shift has not been without 
its problems. 

For example, the combined export program portfolio of FAS and the Office of the 
General Sales Manager was approximately $9 billion in fiscal year 1992, almost 
twice the program size prior to implementation of the Food Security Act of 1985. 
The consequences of trying to do too much, too quickly, with too few resources to 
maintain effective proCTam controls were a number of problems which have been ad- 
dressed in various GAO and OIG audits and reviews. 

I will not attempt to minimize those ^oblems. No one in the agency is impressed 
that in the past tour years USDA's Office of the Inspector General made 92 rec- 
ommendations to the agency on ways to strengthen program management. The 
agency has since successfully implemented 90 of those recommendations, and we 
have also implemented a number of other management improvements recommended 
by the General Accounting Office. 

However, we are working to ensure there will be a need for far fewer GAO and 
OIG audits and investigations in the future because of increased confidence in our 
management controls and anticipatory actions. I can, with certainty, assure you that 
FAS will continue to make sound, effective management of USDA's export programs 
our highest priority. 

I would like now to shift to some discussion of the programs themselves, and how 
they help to fulfill the FAS export mission. I will limit mv remarks to the Coopera- 
tor Program and MPP program. The other programs will be discussed in detail in 
the General Sales Managers statement. 

MARKET PROMOTION PROGRAM 

The MPP was mandated by the FACT Act of 1990 to replace the Targeted Export 
Assistance (TEA) program. The TEA program, and now the MPP, work to expand 
outreach of our market development activities, especially for high-value products. 

The MPP encourages the development, maintenance, and expansion oi commercial 
export markets for agricultural commodities. Under MPP, we use funds from the 
Commodity Credit Corporation to partialW reimburse program participants for mar- 
ket development projects that meet specific program criteria. 

For fiscal 1993, USDA has allocated over $147 million under the MPP to private 
sector organizations to conduct promotions for a wide variety of products in more 
than 100 countries. We have also allocated $1 million for program evaluation — to 
make sure that we are getting "the most bang for our bucks.' 

We do know that the program has helped to more than double U.S. exports of 
consumer-ready products from $5.2 billion in 1985, the year before the program 
started, to $13.5 billion in fiscal 1992. 

The program has been used, for example, to promote sales of pistachios and beef 
to Japan; salmon, cranberries and peanuts to the United Kingdom; grape juice to 
Taiwan; canned com to Korea; peacnes to Singapore; wood products to Mexico; rice 
to the former Soviet Union; and the list goes on and on. 

Overall, the MPP and the TEA program before it have been extremely useful tools 
in fulfilling our mandate to help boost U.S. agricultural exports. 

COOPERATOR PROGRAM 

The MPP has built on the success of our long-standing market development activi- 
ties with the private sector. The Cooperator Market Development Program has been 
the backbone of FAS' efforts in this area almost since the agency came into exist- 
ence in 1953. Its successes are the result of a unique partnersnip between U.S. a^- 
cultural organizations and USDA. We have combined forces and pooled our techmcal 
and financial resources to carry out a wide variety of foreign market development 
projects. 

In new markets, activities include market research, product demonstrations, 
buyer educational activities, working with government and trade officials to solicit 



117 

business, and pressing on market access issues. In more developed markets, activi- 
ties include technical trade servicing to help buyers choose the right U.S. product 
and use it efficiently, joint promotions with Foreign customers, media contacts, pub- 
lic relations, and educational activities. 

For example, in 1992, cooperators held seminars in Mexico on the quality and 
wholesomeness of U.S. poultry and on U.S. peanut quality-control issues. Both ac- 
tivities led to significant increases in exports tor U.S. producers in the Mexican mar- 
ket. 

In the United Kingdom, three years of trade servicing by another cooperator 
group culminated in me opening of the U.K. market to imports of standard Amer- 
ican lumber sizes for use in roofing systems. 

MARKET INFORMATION 

Let me turn to another vital aspect of the FAS mission: our job of collecting, ana- 
lyzing, and disseminating information that will alert U.S. farmers to the needs of 
consumers overseas, will point U.S. exporters towards emerging market opportuni- 
ties, and will enable FAS and other USDA analysts to assess and project trade flows 
and economic trends. 

In 1992, our overseas staff submitted nearly 5,000 reports to help USDA keep the 
U.S. agricultural sector posted on global supply, demand, and product movement. 
FAS also published over 200 reports during tne year to help provide U.S. farmers, 
processors, and exporters with tne kinds of information they need to be competitive 
in the world market. 

Beyond reporting on individual countries, FAS uses state-of-the-art remote sens- 
ing technology to assess global crop conditions. The timely analjrtical support pro- 
vided by the remote sensing unit is the only operational program of its tjrpe in the 
world. That system proved a critical early warning about the effects of the 1992 
drought on wheat production in the New South Wales and Queensland areas of Aus- 
tralia. 

As a result, U.S. farmers had the benefit of timely information about Australia's 
crop prospects at a crucial period during the marketing of the U.S. wheat crop. 

We are continually working to improve our data processing, data gathering, trans- 
mission, and dissemination capabilities to provide better and more timely informa- 
tion to U.S. farmers and exporters. 

MARKET ACCESS 

Another crucial activity in the accomplishment of FAS' mission is to seek im- 
proved market access for U.S. farm products in markets worldwide Without access, 
our most innovative market development strategies would be futile. That is why 
FAS personnel, in concert with the Office of the U.S. Trade Representative (USTR), 
work to foster multilateral and bilateral agreements on trade issues. 

A major effort for us during the past year was the negotiation of the proposed 
North American Free Trade .^reement (NAFTA). Agency personnel played promi- 
nent roles in the agriculture negotiations and participated in a number of negotiat- 
ing areas related to agriculture. FAS also plays a similar role in the Uruguay Round 
of multilateral trade negotiations under the GATT for global reform of agricultural 
trade. On April 16, 1993, the Administration announced its intention to request an 
extension of its fast track negotiating authority. We remain committed to achieving 
a good agreement for U.S. agriculture in the Round. 

FAS staff also work aggressively and continuously in a number of bilateral nego- 
tiations, including access for U.S. beef into Korea, EC oilseed subsidies, Japanese 
dairy restrictions, wheat imports fi-om Canada, and phytosanitary issues witn Mex- 
ico. 

FAS' OPERATIONS OVERSEAS 

No place is FAS' responsibility to represent the interests of U.S. farmers more in- 
tegrated and focused than in itis offices overseas. Our staff overseas work to fight 
unfair trade practices, to improve market access for U.S. agricultural exports, to 
provide market information and analysis, and to carry out market development ac- 
tivities covering more than 130 countries. 

To give you just one example on the market development side, our Agricultural 
Trade Office (ATO) in Tokyo, Japan, has sponsored USA Food Pavilions at 
FOODEX, Japan's leading international food show, every year during 1982-91. In 
addition, in 1987 and 1992, we sponsored our own USA food shows. The 1992 Great 
American Food Show was the largest food show ever conducted by FAS, attended 
by more than 12,000 Japanese trade visitors. It generated nearly $2 million in on- 



118 

site sales and exhibitors expected their annual sales as a result of the show to total 
$21 million. The Tokyo trade office also has sponsored numerous shows in other 
Japanese cities to promote U.S. products to local wholesalers and retailers and pro- 
vides facilities for U.S. exporters and services such as market research, product 
demonstrations, a newsletter, and public relations events throughout the year. 

The story is much the same in all our ATO's. FAS has taken steps in the last 
year to strengthen its ATO operations and as we look to meeting future export 
needs, we are updating the criteria for evaluating both current and proposed Agri- 
cultural Trade Offices. 

There is a constant need to re-evaluate our overseas representation to make sure 
we are in the best position to help U.S. farmers take advantage of emerging market 
opportunities. In all, one-third of the FAS budget covers the costs required in rep- 
resenting U.S. farmers' interests abroad. As we have increased representation for 
U.S. farmers in such key areas as Eastern Evirope, western Japan, and Mexico, 
budget constraints have required us to eliminate overseas positions elsewhere. We 
will continue to carry out our overseas staffing evaluation process in a systematic 
way, with the basic criteria being the continued enhancement of U.S. exports. 

FAS BUDGET SITUATION 

Before I discuss the fiscal year 1994 Budget proposal for FAS, I would like to com- 
ment briefly on our current situation. 

Because the fiscal year 1993 FAS appropriation was continued at the fiscal year 
1992 level, the agency has had to absorb a total of $5 milUon in non-discretionary 
cost growth resulting fi"om overseas wage and price increases and costs associated 
with the fiscal year 1993 pay increase. 

Absorbing these increases has not been easy, but has been accomplished through 
the following actions: 

— implementing a hiring freeze to eliminate 25 U.S. positions; 

— closing 5 overseas offices and downsizing 6 others; and 

— reducing Washington administrative support costs by 20 percent. 

BUDGET REQUEST 

For fiscal year 1994, the budget recommends a funding level of $109.1 million for 
FAS, a net reduction of $8.8 million from the fiscal year 1993 level on a comparabil- 
ity basis. The budget proposed two significant changes for fiscal year 1994. 

First, the budget proposes a reduction of $10 million in the level of the FAS con- 
tribution to the Foreign Market Development Cooperator Program. This proposal, 
which is one of the President's deficit reduction initiatives, represents a reduction 
of approximately one-third from the contribution levels of recent years. 

Second, funding for the support of the CCC Computer Facility, previously in- 
cluded in the CCC estimates, is now included in the fiscal year 1994 FAS appropria- 
tions request. Previously, the CCC Computer Facility was jointly operated oy FAS 
and ASCS; however, FAS will assume full responsibility for the facility in fiscal year 
1994. For comparability purposes, the budget justification materials reflect this ad- 
justment in fiscal year 1993. 

The budget proposed several other adjustments for fiscal year 1994 including: 

— an increase of $1.2 million for annualization of the fiscal year 1993 pay in- 
crease; 

— an increase of $1.6 million to help offset unavoidable increases in overseas 
wages and prices; and, 

— a decrease of $1.9 million associated with a three percent reduction in adminis- 
trative overhead costs. This reflects the first year of a five year initiative to re- 
duce administrative overhead costs by fourteen percent by fiscal year 1998. 

THE CHALLENGE OF THE FUTURE 

Mr. Chairman, I'd like to end with some remarks about the challenges FAS is fac- 
ing. The world is in the midst of a vast geopolitical and economic upheaval. It is 
a time when we can build on the past, but we cannot cling to it. We welcome the 
challenge. 

Traditionally, the United States has been a bulk commodity exporter; however, 
this is changing. High-value exports — such as meats, vegetables, and processed 
products — now represent 55 percent of U.S. agricultural trade and these exports are 
expected to increase for the eighth consecutive year in fiscal 1993. In fact, overall, 
consumer-oriented, high-value exports are the fastest growing sector of the global 
market — and we are increasing our world market share in this sector. But to assure 
further growth we need to be creative and flexible in our use of programs, adding 



119 

new ones, modifying old, to make sure that we are positioned to help U.S. farmers 
move into new markets. 

Despite our successes in the trade policy area, tremendous challenges still lie be- 
fore us. Our work in the Uruguay Round continues; the EC still maintains many 
restrictions that impede importe of a wide variety of U.S. products; Korea and Japan 
have not opened their markets to the extent that they should; and new problems 
continually crop up regarding unfair phytosanitary requirements, illogical tariffs, 
outright import bans, and a variety of other roadblocks to the free flow of agricul- 
tural trade. 

We recognize that there is a limit to the resources that can be committed to our 
agency and our export mission, crucial though it is. This means that FAS must work 
"leaner and meaner." We must improve our services and outreach to U.S. farmers 
and exporters and we must assure U.S. taxpayers that they are getting all the 
"bang" possible for their bucks. I personally want to see this agency has the com- 
plete confidence of Congress and the public that we 6U"e wise and prudent managers 
of the programs we adrninister. 

Developing new export markets is not something that is accomplished in a single 
year. We must have faith and patience with programs that may not pay off for a 
number of years down the road. 

That's not going to be easy in a time when there are going to be lots of other in- 
terests vying for support ana where the payoff might be much more immediate. But 
it is vital that we make a long-term commitment to export expansion. 

At stake is nothing less than the United States' position in the 21st century as 
the world's No. 1 exporter of agricultural products — and by extension, the U.S. farm- 
er's ability to earn nis livelihood via the marketplace rather than through govern- 
ment programs. 

Mr. Chairman, that concludes my statement. I would be glad to respond to your 
questions and to those of the other Subcommittee members. 



Statement of Christopher Goldthwatt 

Mr. Chairman, members of the Subcommittee, I appreciate the opportunity to dis- 
cuss the programs of the General Sales Manager. 

The Office of the General Sales Manager oversees the U.S. Department of Agri- 
culture's export, food aid and foreign direct technical assistance programs. These 
{)rograms touch virtually every comer of the globe to serve both the immediate and 
onger term interests of U.S. agricultvu-e. We look forward to using these programs 
in an innovative, coordinated way in fiscal year 1994 to meet the rapidly changing 
export situation. Some of these tools have been available to us for more than four 
decades; others have been developed more recently, in response to specific needs to 
facilitate exports, promote market development, or counter the trade practices of 
some competitors. 

The 1990 Farm Bill provides a wide range of export promotion programs to accom- 
modate any stage oi a customer country's development — food aid and other 
concessional programs for developing countries, export credit guarantee programs 
for markets that depend on credit, and programs to promote commercial sales to re- 
gain, maintain, or increase the U.S. market share. To keep pace with a dynamic 
world marketplace, we will shift among programs, using them singly or in combina- 
tion as necessary to maximize sales opportunities for U.S. agricultural producers. 

FORMER SOVIET UNION 

Before I report on the status of our various export programs, let me begin by ad- 
dressing a subject which has been much reported in the news — the former Soviet 
Union and our efforts there. We have used a variety of programs to assist the 
former Soviet Union — export credit guarantees, humanitarian food aid, and tech- 
nical assistance. 

Since January 1991, USDA has made available over $5 billion in export credit 
guarantees to the former Soviet Union, Russia and Ukraine. These guarantees were 
used to facilitate the purchase by these countries of different U.S. agricultural com- 
modities, including a variety of processed products and over 30 million tons of U.S. 
grains. 

Repayments on guaranteed export credit have reached nearly $900 million, and 
another $4.2 billion in credit is outstanding. Since late November 1992, Russia has 
defaulted on all its repayments for guaranteed export credits which were entered 
into by the Former Soviet Union and Russia, and program sales to Russia have been 
suspended since that time. As of April 15, repayments in default totaled $737 mil- 
lion. Eleven banks have filed claims for repayment and USDA has paid $379 million 



120 

in claims as of April 15. Generally our policy is that after we review the claim for 
accuracy, CCC pays the claim within 24 hours. 

Under the terms of a rescheduling agreement signed in Paris on April 2 by Russia 
and its 19 m^or creditor countries, Russia will be able to reschedule a portion of 
these arrears in addition to a portion of its future repajonents coming due during 
the rest of calendar year 1993. In tottd, the rescheduling agreement would allow 
Russia to reschedule a total of approximately $1.1 billion, repayable between Janu- 
ary 1, 1995 and July 1, 2000. Under the terms of the agreement Russia would also 
be required to repay all arrears to date which were not covered under the reschedul- 
ing agreement as soon as possible, but no later than June 30, 1993. As of April 2, 
arrears not rescheduled totaled $287 million. These would have to be repaid before 
the June 30 deadline. In addition, pa5Tnent8 coming due between April 2 and June 
30 not rescheduled total approximately $193 million, and between July 1 and De- 
cember 31 approximately $212 million. These amounts have to be repaid as they be- 
come due. 

The Department is working closely with the Department of State and the Treas- 
ury in developing the necessary Bilateral Agreement documenting the terms of the 
rescheduling agreement and negotiating it with the Russian Federation. Once the 
bilateral is signed, CCC will negotiate an implementing agreement to put the terms 
fully into force. We hope to have everything in place no later than early-to-mid- 
June. 

Secretary of Agriculture Espy has stressed that this Administration places top pri- 
ority on resolving the purchasing problems of Russia and Ukraine. Over the past 
5 years, the former Soviet Union has accounted for about 20 percent of U.S. grain 
exports as well as smaller percentages of other commodities; it is not a market we 
want to lose. 

As it became clear that the export credit guarantee program was not appropriate 
for many countries of the former Soviet Union, or capable of meeting the full de- 
mand 01 Russia and Ukraine, we began to look for other ways to maintain exports 
outside the GSM-102 progretm. Let me first discuss how we adapted our export sub- 
sidy programs to accommodate compensatoiy forms of trade — ^barter, countertrade, 
offset arrangements, and escrow accounts. Under these arrangements, a party in a 
third country which has established trade relationships within the FSU often con- 
trols the hard currency proceeds resulting from FSU exports. The third country 
party frequently functions as a bujdng agent, purchasing goods desired in the FSU 
and making payment from the generated hard currency. The resources to finance 
the trade are in the third countries, not in the countries of the former Soviet Union 
that are the ultimate destinations. 

To facilitate U.S. agricultural exports through these non-traditional trading chan- 
nels, we have modified our Export Enhancement, Dairy Export Incentive, and the 
Sunflowerseed Oil Assistance Programs to allow sales to third-country buyers for 
commodities destined for the former Soviet Union. This change allows additional 
marketing opportunities for U.S. exporters on cash terms. U.S. exporters of wheat, 
wheat flour, barley, barley malt, rice, vegetable oil, frozen pork, milk powder and 
butterfat may take part in these transactions. 

Since August, U.S. exporters have sold over 2.0 million metric tons of wheat to 
the former Soviet Union through third country buyers. This is equal to nearly 20 
percent of all U.S. wheat exports to the former Soviet Union in fiscal 1992. Export- 
ers have also sold 20,000 metric tons of barley and 37 metric tons of milk powder. 
I would stress that this business is ongoing, albeit on a smaller scale, even while 
our export credit guarantee program remains suspended. 

Secondly, we have made special efforts to move U.S. agricultural commodities 
through our food aid efforts in the former Soviet Union. The Freedom Support Act 
of 1992 gives us added flexibility in this area. The Act eliminated the limitation on 
programming of 500,000 metric tons under the Food for Progress Program for fiscal 
year 1993 under section 416(b) of the Agricultural Act of 1949 for commodities fur- 
nished to the former Soviet Union. This provision allows us to meet humanitarian 
food needs in the former Soviet Union during this critical period of transition with- 
out limiting the size of Food for Progress programs carried out elsewhere. And it 
maintains exports of U.S. agricultural commodities. 

Thus far in fiscal 1993, the United States has committed over 2.3 million tons of 
assistance to the republics of the former Soviet Union. This aid, valued at nearly 
$575 million, will be handled through govemment-to-govemment agreements and 
agreements with U.S. private voluntary organizations. In addition, the President an- 
nounced at Vancouver our intention to provide an additional $700 million in Food 
for Progress assistance for Russia. Depending on the commodity mix and transpor- 
tation costs, that will add between 3 to 4 million metric tons more. 



121 

Another way we are providing aid to the former Soviet Union is through technical 
assistance programs. USDA and the U.S. Agency for International Development 
AID have several programs underway to help develop the agricultural and agri- 
business sectors.of the former Soviet Union. Projects include the development of a 
model farm community to demonstrate various aspects of U.S. farm management 
and marketing practices; development and expansion of wholesale markets in the 
former Soviet Union; and creation of an extension service. These are just three of 
our nine technical assistance activities which are underway. 

All of these programs give us the tools to provide needed humanitarian and tech- 
nical assistance, and at the same time help maintain U.S. agriculture's presence in 
this important market. 

I'd now like to provide a broader overview of the programs that are the respon- 
sibility of the General Sales Manager. 

PUBLIC LAW 480 

Market development in many countries, especially the low-income developing 
countries, begins with food aid. The Public Law 480 program focuses on the needs 
of developing countries and emerging market economies. Its goals are to help meet 
humanitarian needs, provide calories and nutrients that can increase human pro- 
ductivity, and establisn a U.S. presence in the market, particularly for those com- 
modities that a country will need to import on a long-term basis. As countries de- 
velop, our expectation — ^based on many years of experience — is that they will even- 
tually become commercial customers. 

Provisions of the 1990 FACT Act made major changes in the program authorities 
and management responsibilities for Public Law 480. The 1990 Act assigns specific 
responsibilities for the various titles directly to either the Secretary of Agriculture 
or the Administrator of AID. 

The General Sales Manager in USDA is responsible for policy formulation and 
program administration in carrying out Public Law 480, Title I, sales activities. AID 
has similsu* responsibilities for the Title II donation and Title III govemment-to-gov- 
emment grant programs. USDA provides operational support to AID for commodity 
purchases under Titles II and III. 

Title I, which is our primary responsibility, provides concessional, long-term credit 
financing for the sale of U.S. amcultural commodities to developing countries. 

During fiscal year 1992, USDA signed Title I concessional credit agreements with 
30 countries; 16 of these, or over half, were first-time participants in the program. 
Agreements with the countries covered nearly $500 million in sales of U.S. wheat, 
wheat flour, feed grains, rice, vegetable oil and meal, cotton, and tallow. So far in 
fiscal year 1993, we have signed new Title I agreements with 14 countries — Belarus, 
Costa Rica, Cote d'lvoire, El Salvador, Egypt, Jamaica, Jordan, Lithuania, Moldova, 
Morocco, Sri Lanka, Suriname, Turkmemstan and Zimbabwe — and we expect to con- 
clude several more agreements in the near future. 

For fiscal year 1994, the budget proposes a total program level of $1.6 billion for 
Public Law 480 food assistance which is expected to provide for total commodity 
shipment of anproximately 6.3 million metric tons. While the fiscal year 1994 ton- 
nage level is slightly below the fiscal year 1993 current tonnage estimate, it is con- 
sistent with the average annual level of Public Law 480 commodity assistance over 
the past five years. 

The proposed program level includes $502.6 million for Title I long-term credit 
sales administered by the Department of Agriculture. For programs administered bv 
the Agency for International Development, $831.9 million is proposed for Title II 
food donations and $283.6 million for Title III govemment-to-govemment grants. 

Looking ahead to 1994, we expect to continue to provide Title I credit to countries 
that are important markets for U.S. farmers, such as Egypt, the Philippines and 
Morocco. We also plan to continue our emphasis on using concessional sales pro- 
grams to establish marketing relationships in Eastern Europe and with individual 
republics of the former Soviet Union, where commodity needs exist and financial 
conditions may justify concessional financing. 

OTHER FOOD AID AUTHORITIES 

Section 416(b) of the Agricultural Act of 1949 authorizes donations of uncommit- 
ted Commodity Credit Corporation (CCC) stocks to assist needy people overseas. So 
far in fiscal year 1993, we have signed agreements to donate more than 1.7 million 
metric tons of grain and butter and butteroil to various countries, including six re- 
publics of the former USSR, Tunisia, and, for the first time, Mongolia. 

Food for Progress is another well-established food aid program extended by the 
FACT Act. The program provides commodities to developing countries and emerging 



122 

democracies to encourage democracy and private enterprise, including agricultural 
reform. The program is carried out using funds or commodities made available 
through Public Law 480 Title I or Section 416(b). In the current year, we have 
signed agreements with Albania and Armenia and are developing programs with 
Georgia and Kyrgyzstan using funding from Public Law 480, Title I. Food for 
Progress agreements using Section 416(b) authority have been signed with Armenia, 
Belarus, Georgia, Kazakhstan, Latvia, Poland, Russia and Ukraine. 

EXPORT CREDIT GUARANTEE PROGRAMS 

Financing is an essential part of every export transaction. The export credit guar- 
antee programs administered by the Genered Sales Manager help assure the avail- 
ability of credit to finance commercial U.S. agricultural exports. Under both GSM- 
102 and GSM- 103, the U.S. government guarantees payment to U.S. exporters and 
their financial institutions if the foreign banks fail to pay. The guarantees encour- 
age U.S. lenders to extend credit which is used by overseas customers to pay U.S. 
exporters. 

The credit guarantee programs operate within a relatively narrow range of credit 
risk. The purpose is to underwrite export credit that would not otherwise be made 
by the commercial sector, but to avoid assuming so much risk as to compromise our 
reasonable expectation of repayment. Since these programs have been in existence, 
USDA has had to make payment on about 10 percent of the over $40 billion in 
short-term export credit that we have guaranteed. However, a good portion of these 
costs will eventually be recovered as CCC receives payments on export credit debt 
which has been rescheduled under the auspices of the Paris Club. 

The GSM-102 program covers export credit with repayment terms up to 3 years 
and is our largest single export promotion program. The Agricultural Trade Act of 
1978, as amended, requires that not less than $5.0 billion in GSM-102 guarantees 
be made available annually. The GSM-103 Intermediate Credit Guarantee Program 
facilitates sales that require a longer payback period, typically covering export credit 
of 3 to 7 years. This program, authorized at not less than $500 million in guarantees 
per year through 1995, is designed to help developing nations make the transition 
from concessional credit to cash sales. 

In fiscal year 1992, $6.1 billion in GSM-102 export credit guarantees were an- 
nounced for use in 35 countries, and U.S. exporters registered a record $5.6 billion 
in actual sales. This represents the largest amount of sales ever registered under 
the program. Under GSM-103, $229 million in guarantees were announced for use 
in 10 countries, and U.S. exporters registered $88 million in actual sales. GSM-102 
and 103 helped U.S. exporters maintain or increase their market share in a number 
of countries around the world, despite strong competition. 

Although we are not yet halfway through the current fiscal year, we have already 
announced allocations of $4.2 billion of GSM-102 guarantees to 31 countries. For 
GSM-103, credit guarantee announcements to date total $318 million to eight coun- 
tries. 

The 1990 FACT Act provides additioned statutory authorities to promote the ex- 
port of U.S. agricultural products to emerging democracies through export credit 
guarantees and the sharing of U.S. agricultural expertise. We are working on 
emerging democracies programs with the republics of the former Soviet Union, the 
Baltic States, countries in Eastern Europe, and two countries in Latin America. We 
continue to follow events in these areas closely and to analyze their impact on coun- 
try creditworthiness. We expect these authorities to help us establish long-term 
markets for U.S. agricultural products in these regions. 

As part of the emerging democracies program, the 1990 FACT Act also authorizes, 
for the first time, the use of credit guarantees for financing the establishment or 
improvement of facilities to improve the handling, processing, storage, or distribu- 
tion of agricultural products. We have discussed similar programs with the Export- 
Import Bank, the Overseas Private Investment Corporation, and other agencies, and 
we are now working on operational details for iinplementation of this program. We 
hope to be able to use the program in the former Soviet Union to improve food proc- 
essing and distribution facilities, and at the same time to increase U.S. export op- 
portunities. 

For fiscal year 1994, a total program level of $5.7 billion has been established for 
the CCC export credit guarantee program. This includes $5.0 billion to be made 
available under the GSM-102 program for short-term credit guarantees and $500 
million for intermediate-term credit guarantees under the GSM-103 program. An 
additional $200 million of credit guarantees are expected to be made available by 
CCC during fiscal year 1994 to promote the export of U.S. agricultural products to 
emerging democracies. 



123 



EXPORT ENHANCEMENT PROGRAM 



The Export Enhancement Program helps the United States meet subsidized com- 
petition in targeted markets — particularly competition from the European Commu- 
nity. It operates under a bid-bonus system, in which U.S. exporters submit bids for 
bonus levels that would allow them to sell eligible commodities at competitive 
prices. In a world market distorted by export subsidies, the EEP is an essential tool 
for regaining and maintaining the U.S. market share and for pursuing trade policy 
objectives. 

This program has in many cases, increased or prevented further declines in U.S. 
exports; it has challenged unfair trade practices by others; and it has pressured ovu- 
trading partners to engage in serious negotiations on bilateral and multilateral agri- 
cultural trade issues. 

Since the EEP began in 1985, nearly $5.4 billion in bonuses have been awarded, 
supporting $18 billion in U.S. agricultural exports to 101 countries. 

In fiscal year 1992, $968 million in EEP bonuses were awarded to U.S. exporters. 
The $3.0 billion in sales made under the program that year accounted for an esti- 
mated 74 percent of total U.S. barley exports, almost 60 percent of U.S. wheat ex- 
ports, and around one-third of U.S. exports of wheat flour, vegetable oil, and eggs. 

As of April 15, fiscal year 1993 EEP bonuses of more than $597 million had been 
awarded to exporters to assist in sales of over $2.0 billion in U.S. agricultural com- 
modities. 

In fiscal 1992, we made a major change in the operation of the program by an- 
nouncing all EEP initiatives for a specific commodity in a package. Prior to that, 
we announced each new initiative or allocation on a country -by-country basis. This 
package approach offers several advantages: 

It gives farmers, exporters and foreign buyers greater certainty about market op- 
portunities, making the United States a more reliable supplier; 

It helps avoid sales disruptions that sometimes occur when initiatives expire; and 

While negotiations under the Uruguay Round of trade negotiations continue, our 
announcements signaled to the European Community the scope of the United 
States' resolve to reform intemationfil agricultural trade. 

Future use of the EEP depends, in large part, on progress in the current Uruguay 
Round trade negotiations. Until we have effective GATT disciplines governing inter- 
national agricultural trade, we plan to continue to use the EEP in a responsible but 
forceful way to defend U.S. agricultural trade interests in world markets. 

DIRECT SALES, DEIP, SOAP, AND COAP 

The General Sales Manager continues to use the authority contained in the CCC 
Charter Act and Section 407 of the Agricultural Act of 1949 to sell CCC-owned com- 
modities for export. Our efforts in this area have concentrated on CCC stocks of 
dairy products because of minimum annual sales levels required by statute and the 
large supplies of uncommitted CCC inventory. 

Fiscal year 1992 direct export sales of CCC-owned dairy products totaled 82,575 
metric tons, up from 31,000 metric tons in 1991. Major customers included Mexico 
and Russia. In the current fiscal year, direct export sales of CCC dairy products to 
date are around 7,991 metric tons, of dairy products valued at $11.22 million. 

The Dairy Export Incentive Program (DEIP), Sunflowerseed Oil Assistance Pro- 
gram (SOAP), and Cottonseed Oil Assistance Program (COAP) were all reauthorized 
by the 1990 FACT Act. They operate much like the EEP, with bonuses to U.S. ex- 
porters to support sales of dairy products, sunflowerseed oil, and cottonseed oil. 
These programs help U.S. farmers gain access to markets that would otherwise be 
closed to them because of subsidized prices offered by otiier suppliers. 

In fiscal year 1992, DEIP bonuses to U.S. exporters supported commercial sales 
of more than 82,253 metric tons of dairy products. The SOAP and COAP programs 
supported the sale of 281,000 tons of sunflowerseed and cottonseed oils. 

As of April 21, the fiscal year 1993 SOAP and COAP programs have supported 
the sale of nearly 178,197 tons of sunflowerseed and cottonseed oils. In addition, we 
have announced the DEIP for 98 countries covering 204,020 tons of milk powder, 
76 countries for 48,415 tons of butterfat, and 13 countries for 5,800 tons of Cheddar, 
mozzarella, cream, Gouda, feta and processed American cheese. As of April 12, sales 
under the fiscal year 1993 DEIP program total 98,921 metric tons. 

We plan to continue to use these programs in fiscal vear 1994 to help U.S. export- 
ers of these products maintain their position in markets that are targeted by our 
subsidizing competitors. 



124 

LONG-TERM TRADE STRATEGY 

We recently compjeted a long-term agricultural trade strategy that outlines our 
goals for the last decade of the 20th century. The strategy that we have developed 
directly from the 1985 and 1990 Farm Bills involves three basic tenets that have 
guided us for several years and will continue to do so: (1) maximize the benefits of 
a market-oriented domestic farm policy; (2) pursue the goals Mr. Schroeter has de- 
scribed through an aggressive international negotiating posture, and (3) continue to 
use all our export tools responsibly and aggressively, to create an environment 
where the natural comparative advantage of U.S. agriculture can prevail. While our 
goal is unchanged, the programs we use have been revised and refined to meet the 
array of challenges facing U.S. agricultural products. 

They give us Qie tools to: 

— defend our overseas markets against unfair trade practices; 

— establish new trading relationships in emerging markets; 

— create an appetite for U.S. products in the restricted markets of developed coun- 
triesj and 

— provide near-term food assistance and work toward long-term development of 
commercial markets in countries that now depend on concessional programs. 

More than ever, we need to keep our export programs flexible enough to deal with 
the ever-changing dynamics of the world marketplace. Today, we are using the pro- 
grams to respond to the dramatic changes in Eastern Europe and the former Soviet 
Union. We are targeting newly emer^ng markets in Africa, Latin America and else- 
where. We are establishing links with developing private sectors as countries in 
many regions recognize the benefits of market economies. And we are prepared to 
adjust to changes, positive or negative, in bilateral trade relationships and in the 
multilateral trading system. 

We have made many improvements in management and accountability, and I can 
assure you that these are responsibilities we will continue to take most seriously. 
We have worked to ensure that our programs are carefully planned, efficiently man- 
aged, and aggressively used to achieve our goals. 

OFFICE OF THE GENERAL SALES MANAGER 

Finally, for the Office of the General Sales Manager, our fiscal year 1994 budget 
proposes a funding level of $9.1 million, an increase of $0.2 million over the fiscal 
year 1993 level. This increase is needed to offset the annualized effects of the fiscal 
year 1993 pay increase. 

Mr. Chairman, while many other U.S. export sectors have faltered, agriculture re- 
mains this country's leading export earner. The export programs continue to play 
an important role in helping U.S. agriculture succeed in a complex and competitive 
trade environment. 

That concludes my formal statement. I will be glad to respond to any questions 
or concerns of this Subcommittee. 



Statement of John A. Miranda 

Mr. Chairman, members of the Subcommittee, thank vou for the opportunity to 
share wth you the work of USDA's Office of International Cooperation and Develop- 
ment. I'll begin with a brief overview of OICD's mission, provide you with back- 
ground on our budget, and then tell you about the kind of work we do. 

OICD's programs are aimed at strengthening U.S. agriculture's global competi- 
tiveness and leadership while, at the same time, supporting economic growth in the 
developing countries oi Asia, Africa, and Latin America, and in the emerging democ- 
racies of Eastern Europe and the former Soviet Union. 

These international efforts lead to medium and long-term trade benefits for the 
United States as we help these countries stabilize, reform, and strengthen their ag- 
ricultural sectors. As we know from historical perspective, growing incomes in devel- 
oping countries permit people to increase their imports to help meet expanding de- 
mands for a larger and more diverse market basket of goods, including food, fiber, 
and other products. Again, past experience demonstrates this can lead to a stronger 
U.S. agricultural community through increased exports of U.S. agricultural and 
other goods and services to fill the needs of our neighbors around the world. 

OICD was established in 1978, and was given responsibility for the Department's 
programs related to international scientific and technical exchanges, liaison with 
international organizations, international technical assistance and training, and 
international collaborative research. OICD's establishment was designed to increase 
efficiency and improve communication within the Department regarding inter- 



125 

national development activities. It also provided a much needed central point of con- 
tact for people in USDA, other federal agencies, the university community, and the 
private sector who needed information or assistance related to the international de- 
velopment activities of the Department. 

In fiscal year 1992, OICD carried out its work with a budget of $38.8 million. Less 
than 20 percent of this, only $7.2 million, came fi-om direct appropriations. The ap- 
propriated funds serve primarily to operate the agency's research and scientific ex- 
change programs, liaison with international organizations, the Cochran Fellowship 
Program, and the Agribusiness Promotion Program. 

The largest part of the agency's budget — $28.4 million — came from the reimburs- 
able technical assistance, research, ana training programs which OICD manages. Of 
the reimbursable program funds, 60 percent came from our work with the Agency 
for International Development on more than 80 project agreements. The balance 
comes from the Support for East European Democracy, or SEED Act, and non-AID 
sources, including other USDA agencies, international organizations, and univer- 
sities. An additional $3.2 million was expended in 1992 for technical assistance ac- 
tivities managed by OICD on behalf of the World Bank and countries such as Spain 
and Saudi Arabia. 

OICD has approximately 200 employees, about 135 of whom are permanent staff. 
The remainder hold various kinds of non-permanent positions related to specific 
fixed-term contracts which the agency manages. Roughly 190 OICD employees are 
located in the Washington metropolitan area; the rest are stationed overseas on 
long-term assignments. 

Throughout the year, in addition to our regular staff of about 200, we usually 
have as many as 400 to 500 additional individuals working on projects involving 
more than 70 countries. To fill these jobs, we tap the resources of the many USDA 
agencies, other federal government agencies, the U.S. university system, and the 
private sector for the particular expertise required for a project — anything from bio- 
technology to nutrition to the environment. Our job is to manage USDA's inter- 
national programs, maximizing the benefits to both the United States and other 
countries. We do this by reacning out, identifjdng, and using the vast resources 
available in the U.S. agricultural and scientific communities to meet needs identi- 
fied by the various organizations who call on us. 

Now I'd like to tell you a little about each of our four program divisions, and give 
you a very brief overview of the work they do. 

Activities in our Research and Scientific Exchange Division are funded through 
a combination of all three sources of our funding — appropriated, reimbursable, and 
trust funds. There are three major components of the division's work. The first is 
the administration of collaborative research. Through long-term research projects, 
U.S. researchers collaborate with their international counterparts on high priority 
problems for the U.S. agricultural community, such as citrus canker or the 
Africanized honeybee. Research is carried out both here and overseas and is funded 
either by U.S. dollars or by foreign currencies made available from expired Public 
Law 480 agreements or other sources. The research conducted overseas often cannot 
be conducted in the United States due to quarantine considerations or the need to 
study a particular organism or disease in its natural habitat. 

There is also the added benefit that such research is usually done at significantly 
lower cost than is possible in the United States. In fiscal year 1992, this division 
managed 53 collaborative research projects in 15 different countries, and an addi- 
tional 164 projects were ongoing in six countries using foreign currencies. 

The second component is our scientific exchange program, where U.S. and foreign 
scientists make short-term visits to each other's country to exchange information of 
mutual benefit as well as technology, germplasm, and biological materials. In fiscal 
year 1992, we managed 111 exchanges involving 25 countries and 216 participants. 
These exchanges have proved invaluable over the years in improving U.S. crops, for- 
estry, and livestock. 

Under the auspices of this program, OICD manages a major long-term scientific 
exchange program with China, a country with a vast reservoir of germplasm re- 
sources important for the improvement, protection, and continued diversity of U.S. 
crops. This past year, 21 teams of U.S. and Chinese scientists visited each other's 
countries to exchange information on topics of importance to agriculture. Just to 
mention a few, scientists exchanged plant germplasm resources and biological con- 
trol agents to protect citrus fruits ana stored grains, and a team of U.S. plant quar- 
antine officials visited China to discuss U.S. medfly quarantine practices — an obsta- 
cle to U.S. fruit exports to China. 

Our reimbursable research programs, the third component, operate mainly in 
Egypt, India, Thailand, Eastern Europe, and the newly independent states of the 
former Soviet Union. 



126 

For example, the National Agricultural Research Project in Egypt, a far-reaching 
AID-funded project involving the cooperation of OICD and USDA's Agricultural Re- 
search Service, is supporting 28 collaborative research projects. These projects will 
improve the agricultural research system in Egypt, providing Egyptian farmers with 
appropriate technology and a supportive policy environment in which to apply that 
technolog>'. 

Our Food Industries Division's emphasis is on agribusiness and is also funded 
from all three sources — ^appropriated, reimbursable, and tnist funds. This division's 
Trade and Investment Program helps promote U.S. exports while supporting the de- 
velopment of a healthy, vital, private sector in other countries through marketing 
workshops, in-country technical team visits, and trade missions. They are involved 
with the Caribbean Basin Initiative and run an Agribusiness Information Center 
that pi-ON-ides information regarding export/import regulations and other information 
needed by U.S. investors and exporters. 

The program's scope of work has grown and diversified recently, in both content 
and geographical breadth. We are now working in the Caribbean, Central American 
and Andean countries. Central Europe, Sub-Saharan Africa, and the Near East. 

In 1992. we sponsored agribusiness opportunity missions for U.S. business men 
and women to Guatemala, die Dominican Repubhc, and Jamaica, and advance mis- 
sions to Belize, Honduras, Hungary, and Nicaragua. Through these missions, U.S. 
entrepreneurs gain the opportunity to meet and develop joint partnerships with 
their counterparts in countries to which they may not otherwise be exposed. Devel- 
oping joint ventures and other business linkages puts American companies in a 
stronger position to gain access to markets for U.S. agricultural and other products. 

The diN-ision's Professional Development Program provides career-related training 
for foreign agriculturists. This training takes place in U.S. universities and institu- 
tions an5 is runded by an international organization or a foreign government. In fis- 
cal year 1992. over 200 participants from 56 countries were placed with U.S. institu- 
tions, fostering long-term relationships and fixture collaboration when the partici- 
pants return home. 

The Cochran Fellowship Program trains young professionals fix)m middle-income 
countries and emerging democracies and exposes them to U.S. sj'stems, goods, and 
services to foster mutual trade and promote development. In fiscal year 1992, 472 
Cochran Fellows from the public and private sectors of 21 countries received train- 
ing in the United States, and the program has been a resounding success according 
to resident USDA agricultural counselors. The Cochran Program has played an es- 
pecially important role in USDA's efforts to assist Russia and other new republics 
in the former So\'iet Union. 

The Development Resources DiNdsion, our largest, is funded completely through 
reimbursable projects and trust funds. This unit coordinates and proNides technical 
assistance to developing countries, using the expertise of its own personnel, other 
agencies of the Department, and the university community. Its management and 
training unit conducts short-term technical training in the United States for foreign 
agriculturists. More recently, the unit is also conducting specially designed in-coun- 
tr>' training overseas. We anticipate the demand for this training will grow. 

The diN-ision's major areas of focus are forestr>' and natural resources, soil and 
water management, plant protection and animal health, information management, 
and business management and administration. 

In a major undertaking, we are working closely with other USDA agencies to pro- 
side technical assistance to the Agency for International Development's natural re- 
source projects worldwide, and policy development and implementation regarding 
en%ironment and energ>- concerns here in Washington. Growing pressure on the 
world's natural resources has heightened the importance of efforts such as these. 

\Miile the goal of this di\ision is to build sound institutions and to develop indige- 
nous technical expertise in developing countries over the medium-to-long term, our 
famine mitigation unit is presently involved in the U.S. response to the emergency 
situation in Somalia. Cxurently, we has-e a famine mitigation specialist on a 3- 
month detail to the Horn of Africa assisting AID's Office of Foreign Disaster Assist- 
ance Somalia Response Team. This specialist re\iews and selects AID-funded agri- 
cultural projects that will be implemented to help alle\iate the suffering in Somalia 
and throughout the region. 

Our fourth di%ision is the International Organizations Division, which has a small 
staff, funded entirely through appropriations. This di\ision acts as USDA's liaison 
with international organizations concerned with agriculture. These organizations in- 
clude the Organization for Economic Cooperation and Development, the Food and 
Agriculture Organization of the UN, the World Food Program, and the Inter-Amer- 
ican Institute for Cooperation in Agriculture. All told, we are actively involved with 



127 

about 30 different international organizations whose agendas can have an impact 
on U.S. agriculture. 

Last year's United Nations Conference on the Environment and Development 
highlighted the increasing interrelationships between agricultural, environmental, 
and trade issues. Decisions in any one of these areas affect all of them. The Organi- 
zation for Economic Cooperation and Development has become one of the significant 
fora for reviewing the impact of policies in these areas. As the work of OECD is 
expanding, it is affecting more USDA agencies and OICD is expanding its coordinat- 
ing role vis a vis OECD. At the same time, we are also designating staff to be re- 
sponsible for follow up to UNCED in the U.S. government as well as in inter- 
national organizations. 

While USDA has a long history of active interaction with the Food and Agri- 
culture Organization of the United Nations, this working relationship will also grow 
as FAO responds to the agenda set by UNCED. Many USDA agencies, such as the 
Forest Service, the Animal and Plant Health Inspection Service, and the Agricul- 
tural Research Service, work very closely with FAO on matters of concern to U.S. 
agriculture. OICD places high priority on maintaining this productive relationship, 
especially in such programs as the Tropical Forestry Action Program, in the Work- 
ing Group on Plant Genetic Resources, and in the activities of Codex Alimentarius. 

OICD also helps promote U.S. candidates for posts in international organizations 
through the Associate Professional Officers Program, which provides international 
work experience for junior professionals from the United States. The first seven As- 
sociate Professional Officers who had been placed with the Food and Agriculture Or- 
ganization and the International Fund for Agricultural Development had all com- 
pleted their tours of duty by the summer of 1991. Two new APO's were appointed 
and left for their assignments during 1992. Both will be working with FAO, one in 
Quito, Ecuador, and the second in Jakarta, Indonesia. In fiscal year 1993, APO's 
will work in the areas of agricultural marketing, natural resources, forestry, nutri- 
tion, and pest management. 

In addition to our ongoing activity with the international organizations, this year 
the international community must elect new leadership for the Food and Agriculture 
Organization and the Inter-American Institute for Cooperation in A^culture. OICD 
works with the Department of State to establish criteria used to identify the best 
candidates for the U.S. Government to support in the elections. 

I would now like to briefly turn again to the budget situation for OICD. For fiscal 
year 1993 OICD's appropriated budget is again $7.2 million. This is a small but very 
important component to our total budget, which is projected for this year at $45.7 
million. This represents a 22 percent increase in the reimbursable and trust fiind 
portion of our budget over fiscal year 1992. 

For fiscal year 1994, we are requesting $7.3 milUon for our appropriated pro- 
grams. This increase of $96 thousand is the net of an increase commensurate with 
a current services level, and a 3 percent cut in administrative costs. We expect our 
reimbursable and trust fund programs to operate at roughly the same level in fiscal 
year 1994 as in 1993. 

As I mentioned earlier, in all of its activities, OICD draws upon the resources of 
other USDA agencies, the U.S. land-grant university system, other federal agencies, 
the private sector, and in-house expertise. We are actually, in many cases, an agen- 
cy that showcases and provides to governments and institutions abroad the signifi- 
cant talent and expertise encompassed in these institutions. In fact, we operate 
much like a private sector entity within government rules and regulations. We do 
not have time to "rest on our laurels" because such a large part of our budget comes 
from reimbursable and trust funds — funds we must obtain and maintain through 
proven successes. 

Mr. Chairman, in closing, I would like to highlight the fact that a major propor- 
tion of the world's population — four billion people — live in developing countries. The 
majority earn their living through agriculture, the number one occupation in most 
of these countries. Of those 4 billion people, 2.5 billion live in rural areas, and half 
of those live below the poverty line. A recently released study by the International 
Fund for Agricultural Development on results of foreign aid program in developing 
countries says that well intentioned donors have missed the point of development 
assistance. That is, the rural poor are not an obstacle to economic recovery but the 
very key to producing it. To quote from the report, "Poverty is less of a failure of 
the poor, than a failure of policy makers to grasp their potential." 

We at OICD do understand that potential. We well recognize that the world is 
a "global village" whether viewed from the perspective of trade, nutrition and 
health, or the environment. OICD is proud of the role it plays in helping both U.S. 
agriculture and the global village preserve and strengthen a vital agricultural sec- 



128 

tor. We continue to be USDA's window to the world and provide a unique service 
in the Department for U.S. farmers and their neighbors worldwide. 



Statement of Galen S. Bridge 

Mr. Chairman and members of the Committee, I appreciate the opportunity to be 
here today to discuss the programs and activities of the Soil Conservation Service 
(SCS). 

agriculture and the environment 

The mission of SCS is to provide leadership and administer programs to help peo- 
ple conserve, improve, and sustain our natxiral resources and environment. SCS pro- 
vides a major component of the Department of Agriculture's conservation assistance, 
working with farmers, ranchers, and other land users and rural communities to bal- 
ance sound environmental management of soil, water, and related resources with 
sustainable production. 

There is no question that agriculture is facing greater challenges than ever when 
it comes to meeting public demands for environmental protection. Agricvilture has 
been identified as a msgor contributor to nonpoint source water pollution. It is con- 
sidered one of the predominant sources of impairment for 60 percent of the Nation's 
impaired rivers and lakes. In fact, water quality is the most rapidly emerging issue 
impacting agriculture today, from the standpoint of both environmental concerns 
and public health concerns. Over three-fourths of our remaining wetiands are in pri- 
vate ownership, much of it in agriculture. The land use and management decisions 
made on this land will largely determine the fate of our remaining wetlands and 
the success of creating new ones. Protection and restoration of habitat for threat- 
ened and endangered species is another related issue. Obviously, agriculture has a 
major role to play in achieving progress towards solving these and other environ- 
mental problems for the benefit of all citizens. Conservation and environmental pro- 
tection will, therefore, continue to be a strong focus of the Department. 

USDA has historically encouraged voluntary conservation measures by farmers. 
Through its vast network of county ofBces, USDA has the institutional framework 
in place to deliver education, techmcal and financial assistance to farmers, ranchers, 
and landowners and has been doing so for more than 50 years. The last two farm 
bills strengthened our approaches in dealing with cropland erosion, wetland con- 
servation and water quality improvement. In addition, the Agricultural Research 
Service and the Cooperative State Research Service conduct a wide variety' of re- 
search activities to develop and improve conservation technology. USDA believes 
that the use of research, aemonstrations, information and education, technical as- 
sistance, and incentive programs that encourage farmers to try new ideas, is a pri- 
mary reason American agriculture has become the most productive in the world. 
These approaches are helping us meet current environmental challenges as well. 

There are several examples of ongoing activities that illustrate agriculture's in- 
volvement in these issues. 
— In the Pacific Northwest, there is a m^or regional effort underway for the re- 
covery of declining stocks of salmon and steemead. Part of that project is focus- 
sing on habitat restoration and development of hatcheries. Approximately 40 
percent of the remaining salmon habitat is bordered by private land, much of 
which is cropland, pastureland, and rangeland. Consequentiy, habitat restora- 
tion will depend heavily on landowners' acceptance of and participation in the 
program. In the fiscal year 1993 Appropriations Act, Congress directed SCS "to 
provide assistance to private landowners in improving and maintaining riparian 
zones in the upper watershed area of the Columbia River tributaries." 

USDA brings two major components to salmon recovery efforts. These are (1) 
technical expertise and a planning process tiiat has credibility with agricultural 
producers and operators; and (2) nnancial assistance to encourage farmers to 
install conservation practices through cost sharing assistance. In meeting other 
regulatory requirements for the protection of endangered species, agriculture 
will be required to place increased emphasis on habitat protection and pesticide 
management, actions which have major potential impacts on agricultural pro- 
duction. 
— The Environmental Protection Agency (EPA) and the National Oceanic and At- 
mospheric Administration (NOAA) recentiy announced final guidance to the 
states for implementing coastal zone nonpoint source pollution control pro- 
grams. Again, agriculture is identified as one of the leading contributors to 
water qu^ity problems in coastal areas. SCS worked with NOAA and EPA to 
develop technical guidance in the form of management measures to control 



129 

nonpoint pollution from agriculture. Some of these measures include sedimenf 
erosion control, nutrient and pesticide management, irrigation water manage- 
ment, and animal waste management. SCS practice standards and specifica- 
tions are the basis for these measures. 
— The Safe Drinking Water Act is being implemented across the country with no- 
ticeable impacts on a^culture. One example is additional monitoring costs for 
small rural communities and potential changes to agricultural practices to pro- 
tect drinking water supplies. Another example is the new drinking water supply 
standards that would require the citizens of New York City to spend from $6 
to $8 billion in water treatment upgrades to supply 9.5 million people with 
clean water. The annual operating budget would add about $300 million per 
year to their cost. The principal source ot water quality concern is from agricul- 
tural operations in a 1.2 million acre watershed area of the Catskill Mountains 
and lower Hudson Valley. As an alternative to the expensive upgrades, the agri- 
cultural community and New York City are working together to resolve the 
water quality concern. New York will be investing about $3.4 million initially 
to fund the installation of on-farm water quality improvement practices. If these 
practices are successful in improving water quality, the need for the more ex- 
pensive treatment will be alleviated. 

CONSERVATION ASSISTANCE AND PARTNERSHIPS 

As I mentioned earlier, USDA has a long history of working with agricultural pro- 
ducers and rural communities to conserve and protect natural resources and the en- 
vironment. We serve a broad range of customers including farmers, ranchers, other 
Federal agencies, state and local government, and other land owners and users 
through our locally-based delivery system. Our assistance is technology-based, 
translating research results and practical experience into on-the-ground solutions 
through the expertise of a trained, professional work force. USDA technical staff, 
primarily located at SCS state and county ofBces, includes a range of specialists 
such as soil science, economics, engineering, agronomy, biology, range management, 
geology, and others. This provides an interdisciplinary approach to identifying and 
solving resource problems and insures full consideration of alternative conservation 
treatments, impacts, and benefits. 

In addition, SCS maintains extensive natural resource data bases. A National Re- 
sources Inventory is conducted every 5 years and includes data on the status, condi- 
tion, and trends of the soil and water resources on the nonfederal lands of the Unit- 
ed States. Detailed soil surveys, conducted in cooperation with other Federal, state, 
and local agencies, provide basic data on soil characteristics and are available, gen- 
erally on a county basis, for 1.7 billion acres or about 73 percent of U.S. land area. 
About 35 million acres of soil surveys are mapped each year. These data bases are 
used by USDA, and other Federal, state, and local agencies to support conservation 
and natural resources program planning and implementation. 

USDA delivers most of its technical assistance to land users through a network 
of over 2,900 SCS county ofBces. These offices are located within local conservation 
districts that cover about 98 percent of the Nation's non-federal lands. These con- 
servation districts are units of state government, operated by boards of locally elect- 
ed officials who serve without salary, and organized to develop and carry out local 
conservation programs. USDA has a Memorandum of Understanding with each of 
these districts which sets forth working arrangements between the Department and 
the district. This Federal-state-local and private sector partnership provides an ef- 
fective and proven delivery mechanism for leveraging our combined resources to- 
wards solving natural resource and environmental problems. It enables us to ad- 
dress national priorities within the context of local needs, a grassroots approach to 
identifying and solving problems. SCS provides technical assistance to more than 
one million producers and other land users each year on about 60 million acres of 
agricultural lands including cropland, rangeland, pastureland, woodland, and other 
lands. Some of the long-term pulblic and pnvate benefits resulting fix)m conservation 
planning and applicauon assistance include reduced erosion and sedimentation, 
cleaner water, reauction of health hazards, improved fish and wildlife habitat, pro- 
tection of wetlands, and flood prevention. 

ORGANIZATION 

As an organization, SCS employs about 13,800 people and has a current appro- 
priation of $885.4 million. About 80 percent of our budget goes for technical assist- 
ance and 20 percent for cost-sharing and financial assistance provided both to indi- 
vidual land users and units of state and local government. SCS also provides the 
technical assistance required to carry out conservation cost sharing programs ad- 



130 

ministered by ASCS including the Conservation and Wetland Reserve Programs and 
the Agricultural Conservation Program. About 50 percent of our work force, or 6,800 
staff years are at the field or county ofiBce level which is the primary service deliv- 
ery point. Other program services as well as technical, managerial, and administra- 
tive support are provided through area and state offices which include about 42 per- 
cent of the total work force, or about 5,800 staff years. Four regional centers located 
in Portland, Oregon, Lincoln, Nebraska, Fort Worth, Texas, and Chester, Pennsylva- 
nia provide leadership for technical quality assurance and technology transfer to 
SCS program activities at all levels. The information resources management and 
software development functions of the agency are carried out at Fort Collins, Colo- 
rado, and headquarters activities are located in Washington, D.C. 

CURRENT ACTIVITIES 

Currently, SCS is devoting a considerable portion of available resources towards 
helping farmers implement conservation compliance plans on highly erodible crop- 
land as required by the Food Security Act of 1985 (FSA). The conservation provi- 
sions of FSA were enacted to provide consistency between USDA conservation pro- 
grams and other Department farm programs by making eligibihty for USDA pro- 
gram benefits contingent upon the implementation of a conservation compliance 
plan on highly erodible cropland. To continue receiving these benefits, producers 
must fully implement their plan by December 31, 1994, according to a schedule, i.e., 
"actively applying" the plan each year until it is fully implemented. Conservation 
practices must be maintained after the initial deadline is met and as long as produc- 
ers wish to participate in any USDA farm or conservation program. To date, SCS 
has assisted in developing 1.6 milUon plans covering 140 million acres of highly 
erodible cropland, or about one-third of the total cropland in the country. About 58 
percent of the planned acreage is now fully implemented with conservation prac- 
tices. Additional plans are partially implemented and progress is on schedule. Cur- 
rent projections are that fullv implemented compliance plans, combined with the 
grass and trees planted on land enrolled in the Conservation Reserve Program 
(CRP), will reduce soil erosion on highly erodible cropland in the United States by 
about 65 percent from pre-compUance levels. 

As with any effort of this magnitude, a number of concerns have surfaced. There 
have been questions about our quality control processes and overall consistency 
which we have worked to correct with a major quality assurance effort tiiis year. 
A significant part of the work to complete the implementation of the plans remains 
to be done bv farmers during calendar years 1993 and 1994 in order to remain in 
compliance. We will be prioritizing our resources toward those states where this 
workload is heaviest. We do not want any farmer or rancher to have their USDA 
program benefits jeopardized because our assistance was not available. 

Another ongoing activity has to do with wetlands. As you know, SCS has respon- 
sibility for identifying and delineating wetlands on agricultural lands to support the 
administration of the swampbuster provisions of the farm bill. Prior to May, 1991, 
about 65 percent of the necessary wetland determinations had been made. This in- 
volved about 2.5 million determinations covering 16.2 million acres of wetlands. Be- 
cause of the uncertainty about Federal wetland delineation criteria, we suspended 
our wetland inventories at that time. These determinations are currently being 
made only upon request by a producer or another USDA agency. Until criteria are 
clarified, we are continuing to delay the certification, publication, and periodic re- 
view and update of wetland determinations as required by the 1990 farm bill. When 
these issues are resolved, we will be able to resume our work on wetland inventories 
and establish the required procedures to periodically review and update these deter- 
minations. 

The ongoing USDA water quality initiative is another SCS priority activity. Under 
this initiative, the Department has implemented a cooperative and coordinated ef- 
fort with private sector agriculture; with other Federal, state and local agencies; 
with diverse conservation and farm organizations; and with urban communities to 
identify problem areas and to design and encourage adoption of environmentally 
sensitive farming systems. SCS, ASCS, and the Extension Service are providing 
leadership for implementing projects which include educational, technical, and fi- 
nancial assistance to producers to improve water quality. Activities are coordinated 
with local soil conservation districts, state water quality agencies, EPA, and others. 
Work is underway in 16 demonstration areas where agricultural chemicals are a 
water Quality concern. The intent of these projects is to increase the adoption of eco- 
nomically sound, on-farm management practices that protect surface and ground 
water quality through the use of new and innovative practices, and the transfer of 
information to other areas with similar problems. In acidition, the initiative includes 



131 

74 hydrologic unit areas with specific agriculturally related nonpoint source water 
quality proolems. Most of these projects are coordinated in with EPA's program 
under Section 319 of the Clean Water Act. 

In 1992, farmers installed water quality practices on 2,155,938 acres of cropland 
in the USDA project areas. These practices reduce soil erosion and sedimentation, 
improve the handling of animal waste, and reduce the application and improve the 
management of nutrients and pesticides. Most of these projects, which oegan in 
1990 and 1991, are expected to run for about five years. Progress is being monitored 
and an evaluation plan is in effect so we will be able to learn from our experiences 
and improve our overall strategies and techniques in future efforts. In addition, SCS 
provides technical assistance to regional water quality programs such as the Chesa- 
peake Bay, Great Lakes, Gulf of Mexico, Puget Sound, Land and Water 201, Long 
Island Sound, Lake Champlain, and EPA's National Estuaries Program. Altogether, 
SCS is investing about $45 million and 700 staff years annually in this initiative. 
It is important to note that the future direction in water quality as it relates to agri- 
culture will be set through reauthorization of the Clean Water Act. 

FISCAL YEAR 1994 BUDGET REQUEST 

As you know, the President's budget request for fiscal year 1994 proposes the es- 
tablishment of a Farm Service Agency which consolidates the functions of SCS, 
ASCS and the Farmers Home Administration. One appropriation account is re- 
quested which provides funding for the salaries and expenses of all three agencies 
including all technical assistance program activities currently performed by SCS as 
follows: 
— Technical assistance provided to producers for implementing the highly erodible 

land and wetland provisions of FSA; 
— Technical assistance to carry out CRP, the Wetland Reserve Program, the Agri- 
cultural Conservation Program, and other conservation cost sharing programs 
currently administered by ASCS; 
— Other conservation technical assistance provided under Memoranda of Under- 
standing with conservation districts; 
— Support for the ongoing USDA water quality initiative; 
— SoU surveys and National Resources Inventories; 
— Operation of 26 Plant Materials Centers which test, evaluate, and encourage 

the use of plant species for treatment of conservation problem areas; 
— Snow surveys and water supply forecasting in the western states and Alaska; 
— River Basin and flood plain management studies done in cooperation with state 

and local units of government and other Federal agencies; 
— Technical assistance for planning and constructing watershed projects author- 
ized by Public Law 78-534 and Public Law 83-566, and for emergency water- 
shed protection activities to repair damages to watersheds resulting from natu- 
ral disasters; 
— Technical assistance to support the planning and application of conservation 
practices under long-term contracts with farmers and ranchers in the 10 Great 
Plains states; and 
— Technical assistance to support ongoing activities in 246 authorized Resource 

Conservation and Development (RC&D) areas. 
This proposal reflects the Administration's commitment to streamline agency op- 
erations, reduce administrative and overhead costs, reduce the number of federal 
employees, and improve USDA services to farmers. Savings would result from a 
streamlined county office structure and from efficiencies at the National and state 
office levels as the agencies are consolidated. An overall savings of $61 million is 
reflected for 1994, and cumulative savings of $735 million over four years are esti- 
mated to result from this consolidation. Fiscal year 1994 employment levels are re- 
duced by about 5 percent from the 1993 level. 
Cost sharing and financial assistance is proposed to continue at about the level 

Provided for fiscal year 1993 for all SCS programs that provide such assistance. 
Tnder the Great Plains Conservation Program, $16.3 million would be available to 
sign an estimated 1,150 contracts to install conservation practices on 3.5 million 
acres of land. A total of $149,953,000 is requested for Watershed and Flood Preven- 
tion Operations to fund construction and land treatment costs on 314 subwatershed 
projects authorized under Public Law 534 and 610 small watershed projects under 
Public Law 566, including 29 new projects. This amount also includes $20,853,000 
for emergency watershed protection activities to provide an immediate response to 
reduce hazards to life and property in watersheds damaged by natural disasters. Fi- 
nally, $5.8 million is recjuested for financial assistance available to local RC&D 
£u*eas as seed money to install measures planned by RC&D councils for the con- 



132 

servation and development of natural resources, and the enhancement of social, eco- 
nomic, and environmental conditions in rural areas. 

I will provide for the record a table showing the fiscal year 1993 funds appro- 
priated by state anrf local governments for conservation programs. We will be happy 
to respond to questions. 

FUNDS APPROPRIATED BY STATE AND LOCAL GOVERNMENTS FOR CONSERVATION PROGRAMS 

FISCAL YEAR 1993 

state State government Local government Total 

Alabama 

Alaska 

Arizona 

Arkansas 

California 

Colorado 

Connecticut 

Delaware 

Florida 

Georgia 

Hawaii 

Idaho 

Illinois 

Indiana 

Iowa 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland 

Massachusetts 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada 

New Hampshire 

New Jersey 

New Mexico 

New York 

North Carolina 

North Dakota 

Ohio 

Oklahoma 

Oregon 

Pacific Basin 

Pennsylvania 

Puerto Rico 

Rhode Island 

South Carolina 

South Dakota 

Tennessee 

Texas 

Utah 

Vermont 

Virginia 

Washington 

West Virginia 



$3,847,862 


$1,004,422 


$4,852,284 


205,000 


3,500 


208,500 


8,787,465 


1,176,163 


9.963,628 


1,356,156 


1,805,334 


3,161.490 


78,284,606 


8.955,187 


87,239.793 


945,084 


769,911 


1.714.995 


2,219,989 


915,673 


3.135.662 


7,320,000 


815,000 


8,135.000 


1,819,812 


2,872,636 


4,692,448 


4,518,000 


3,616,500 


8,134,500 


750,800 


140,130 


890,930 


5,433,782 


161,000 


5,594,782 


5,050,100 


1,393,479 


6,443,579 


6,122,392 


3,570,921 


9,693,313 


15,033,431 


845,088 


15,878,519 


16,087,152 


10,279,882 


26,367.034 


3,600,200 


3,011,100 


6.611.300 


3,538,164 


701,000 


4,239.164 


332,250 


445,378 


777,628 


18,740,915 


6,287.458 


25.028,373 


1,201,555 


404.300 


1,605,855 


5,497,848 


1,957,833 


7,455,681 


26,663,000 


24,490,300 


51,153,300 


370,884 


2,986,841 


3,357.725 


31,741,168 


235,000 


31.976.168 


2,454,060 


1,345,000 


3.799,060 


7,231,174 


32,971,312 


40.202,486 


14,500 


138,192 


152,692 


185,000 


283,746 


468,746 


1,079,000 


2.525.400 


3,604,400 


533,090 


908,128 


1,441.218 


1.662,125 


6.507,004 


8,169,129 


9,342,491 


6.763,904 


16.106,395 


7,291,600 


1,146.469 


8.438,069 


8,969,659 


5,585.202 


14,554,861 


5,333,510 


500 


5,334,010 


328,013 


1.188.862 


1,516,875 


922,193 





922,193 


2,565,000 


4.167,490 


6,732,490 


8,002,873 


683,100 


8,685,973 


53,800 


106,135 


159,935 


3,633,945 


1,922,202 


5,556,147 


2,178,000 


919,510 


3,097,510 


1,664,593 


1,855,630 


3,520,223 


3,324,880 


2,013,422 


5,338.302 


25,091,930 


206,050 


25,297,980 


535,000 


96,864 


631,864 


6,683,128 


2,407.236 


9,090,364 


7,078,400 


3.365.300 


10,443,700 


8.550,700 


523,500 


9.074.200 



133 

FUNDS APPROPRIATED BY STATE AND LOCAL GOVERNMENTS FOR CONSERVATION PROGRAMS 

FISCAL YEAR 1993— Continued 





State 


State government 


Local government 


Total 


Wisconsin 

Wyoming 




5,116,085 

520,355 


7,062,383 
1,595,254 


12,178,468 
2,115,609 










Total 


369,812,719 


165,131,831 


534,944,550 



Biographical Sketches 

charles j. o'mara 

Charles J. (Joe) O'Mara holds the rank of Minister Counselor in the Department 
of Agriculture's Foreign Agricultural Service. In January 1990, U.S. Trade Rep- 
resentative Carta Hilis and former Secretary of Agriculture Cla5rton Yeutter ap- 
pointed Mr. O'Mara as their negotiator for agriculture in the Uruguay Round of 
multilateral trade negotiations. In August 1991, he was named Special 'Trade Nego- 
tiator in the Department's International Affairs and Commodity Programs Office, 
where he has maintained his responsibilities for the Uruguay Round and spear- 
headed negotiations on agriculture in the North American Free Trade Agreement 
(NAFTA). He is currently serving as Acting Under Secretary for International Af- 
fairs and Commodity Programs. 

From 1984 through 1989, Mr. O'Mara was Assistant Administrator for trade pol- 
icy in the Foreign Agricultural Service where he directed the formulation and imple- 
mentation of U.S. agricultural trade policy. Prior to that, he served as Deputy As- 
sistant Administrator for Trade Policy (1982-1984), Director of the Western Europe- 
Inter America Division (1981-1982) and Deputy Director for Analysis of the Oil- 
seeds and Product Division (1980-1981). Mr. O'Mara has also served as Agricultural 
Minister-Counselor in Geneva, Switzerland and Agriculture Attache in Brfizil and 
Argentina. 

Mr. O'Mara was bom in Baltimore, Maryland. He is a 1967 graduate of the Uni- 
versity of Maryland with a Bachelor of Science degree in Business Administration. 

He and his wife Susan have one daughter, EUie, and two sons, Stephen and Mat- 
thew. They reside in Silver Spring, Maryland. 



BRUCE R. "RANDY" WEBER 

Bruce R. Weber is Acting Administrator of the Agricultural Stabilization and Con- 
servation Service (ASCS). As Acting Administrator, he is responsible for the plan- 
ning, development, formulation, and evaluation of overall ASCS policies, programs 
and related activities. In addition, he also serves as Acting Executive Vice President 
of the Commodity Credit Corporation (CCC), a $30 billion government-owned and 
operated corporation instrumentality charged with implementing the commodity 
stabilization functions of the U.S. Department of Agriculture. 

Prior to his present assignment. Randy served as the Director of the Cotton, 
Grain and Rice Price Support Division (CGRD). As Director, he was responsible for 
the development of policy and the administration of nationwide programs for wheat, 
feed grains, cotton, oilseeds, rice, sugar, honey and peanuts. He also served as Act- 
ing Assistant Deputy Administrator for Policy Analysis (DAPA), where he partici- 
pated with USDA policymaking officials in the analysis and development of national 
program policies for farm price support, supply adjustment, and related programs. 
Previously, he has also served as Director, Commodity Analysis Division (CAD), of 
the U.S. Department of Agriculture's Agricultural Stabilization and Conservation 
Service. This Division served as the centralized analytical resource in ASCS/USDA 
for the development, formulation and evaluation of multi-billion dollar national com- 
modity program policies. 

Randy began his ASCS career in 1960 working as a Program Assistant in the De- 
catur County ASCS office. He worked 14 years in four different Kansas county of- 
fices in various positions including Chief Program Assistant and County Executive 
Director. He transferred to Washington, D.C. in 1974 and worked principally as a 
grain analyst and policy adviser responsible for formulation, development, analysis, 
and evaluation of price support and related programs for grains, fibers, dairy, sugar. 



134 

peanuts and tobacco. Randy was raised on a dairy, irrigated grain and hay farm 
in Decatur County, Kansas. 
Randy is married and has two children. 



RICHARD B. SCHROETER 

Mr. Schroeter is a native of Reedley, California, and a graduate of the University 
of California in Los Angeles, California. He received his B.S. and M.S. in Economics. 

Mr. Schroeter began his career with the Foreign Agricultural Service in 1966 as 
an International Economist and served as Assistant Agricultural Attache in the U.S. 
Mission to the EC from 1970 to 1975. In 1978, he became Director of the Market 
Economics Division, ITP. Mr. Schroeter moved to the Horticultural and Tropical 
Products Division, Commoditv and Marketing Programs, in 1979 as Deputy Director 
of Marketing. Mr. Schroeter became the Deputy Assistant Administrator, Trade Ne- 
gotiations, International Trade Policy, in 1987 and later in May 1991 became the 
Assistant Administrator of International Trade Policy. 

Mr. Schroeter assumed his present position of Acting Administrator of the Foreign 
Amcultursd Service in January 1993. 

He is married, has 2 children and lives in McLean, Virginia. 



GALEN S. BRIDGE 

Native of Maine. 

Education: BS Degree in Agricultural Engineering, University of Maine, 1957. 
Masters Degree in Public Administration, University of Virginia, 1966. 

Career: Present Position: Actine Chief, Soil Conservation Service, and Associate 
Chief, Soil Conservation Service, USDA, Washington, D.C. 

Former Positions: Deputy Chief for Programs, Soil Conservation Service, USDA, 
Washington, D.C; Deputy Chief for Administration, Soil Conservation Service, 
USDA, Washington, D.C; Assistant Chief, Northwest, Soil Conservation Service, 
USDA, Washington, D.C; Director, Conservation Operations, Soil Conservation 
Service, USDA, Washington, D.C; State Conservationist, Soil Conservation Service, 
USDA, Spokane, Washington; Deputy State Conservationist, Soil Conservation Serv- 
ice, USDA, Denver, Colorado; Assistant State Conservationist, Soil Conservation 
Service, USDA, Portland, Oregon; and Agricultural Engineer, Soil Conservation 
Service, USDA, Orono, Maine. 

Memberships: Soil Conservation Society of America, American Society of Public 
Administration, Fellow-National Institute of Public Affairs. 

Awards: Presidential Meritorious Rank Award, U.S. Department of Agriculture 
Superior Service Award, Washington State Professional Service Award. 

COOPERATOR PROGRAM 

Senator Bumpers. Mr. O'Mara, going to the last page of your 
statement on the $10 million proposed cut for the Foreign Market 
Development Cooperator Program, describe that program for me? 

Mr. O'Mara. The Cooperator Program has been in place in the 
Department for a number of years. I do not know precisely how 
long, but it involves commodity groups cooperating with the For- 
eign Agricultural Service to improve our sales of exports overseas. 
The program is primarily focused on bulk commodities. 

Senator Bumpers. How does it differ from an MPP Program, for 
example? 

Mr. O'Mara. The MPP centers on shorter-term promotion of 
products in targeted markets. Under the Cooperative Program, the 
efforts are focused on developing and expanding markets for soy- 
beans or wheat or cotton or other bulk commodities. 

Senator Bumpers. Why are you cutting it? Do you feel it is not 
a successful program? 

Mr. O'Mara. No; we think this program has been quite success- 
ful over time. As part of the President's budget deficit recommenda- 
tions, this program is being subjected to a $10 million cut. What 



135 

we intend to do is to refocus the program in areas of the world 
where market potential is perhaps greater than in others. That is, 
there will be more effort made to promote bulk commodities in 
areas of the world such as India, for example, and less so in West- 
ern Europe. 

There will be more of an effort to focus on what you might call 
less sophisticated economies, and the Market Promotion Program 
will focus more on more sophisticated markets where we have 
greater market potential for consumer ready type products. 

STATE DEPARTMENT ADMINISTRATIVE COSTS 

Senator Bumpers. Mr. O'Mara, this is on the slightly unrelated 
subject, but I was just trying to figure out other places you might 
cut. I understand that you share — ^the Department of Agriculture 
shares with the State Department — cost of embassies, based on 
your personnel in those embassies, is that correct? 

Mr. O'Mara. Yes, sir; we do cost share. 

Senator Bumpers. WTiat is the total cost to USDA for all the em- 
bassies in the country where we share cost? In the world, rather, 
not in the country. 

Mr. O'Mara. Let me just check. The total is $6 million. 

Senator Bumpers. How much? 

Mr. O'Mara. It is $6 million. 

Senator Bumpers. How current is that practice? We have not al- 
ways done that, have we? 

Mr. O'Mara. There has always been cost sharing to some degree. 
I think what has happened in more recent years is that our partici- 
pation in the cost sharing effort that the State Department re- 
quires of all agencies, not just FAS, has increased. 

Senator Bumpers. I wonder if they charged the CIA. 

Mr. O'Mara. I do not know, sir. 

Senator Bumpers. That is not a fair question. That is more a 
comment than a question. 

USDA RESTRUCTURING 

Now, going back to the consolidation of these agencies in the 
Farm Service Agency, you mentioned here that the farm programs 
of Farmers Home Administration is going to be a part of this. How 
about the remaining programs? As a matter of tact, I think you 
mentioned farm programs in housing, is that correct? 

Mr. O'Mara. Yes, sir. 

Senator Bumpers. Now, what happens to the water treatment, 
the Business Development Program, all of that? 

Mr. O'Mara. If I might, I would let Randy Weber respond to that 
question. 

Senator BtnviPERS. Mr. Weber? 

Mr. Weber. I think it is generally presumed that those functions 
of FmHA would go to RDA or the Under Secretary for Rural Devel- 
opment. 

Senator Bumpers. So the short answer is you have not decided 
yet? 

Mr. Weber. It really has not been decided. They are still working 
on what avenue it would take. But generally the thinking is that 



136 

it would go over to the small communities and rural development 
side. 

Senator Bumpers. I do not have any strong objection to these 
consolidations or any other savings you are trying to accomplish as 
long as they are done in a fair manner. And one of the things, of 
course, that every Member of Congress is going to hear about is 
how many jobs are going to be lost, are we going to be laying off 
career personnel, are we going to do it through attrition, or how 
are we going to accomplish it with the least disruption to both 
farmers and employees? 

Mr. O'Mara. Well, Mr. Rominger, who will I think shortly be in 
place as Deputy Secretary, has been and will be given the charge 
of directing the creation of this Farm Service Agency, Mr. Bump- 
ers, and he intends to hold discussions with Members of Congress, 
the career service in these agencies, and the farmers, the end-users 
of these services, before there is a final plan put in place so that 
fairness is achieved. 

Senator Bumpers. Well, do you have any idea when this plan is 
going to be forthcoming? 

Mr. O'Mara. I think it will be sometime this fall, but Mr. 
Rominger, of course, has not been confirmed yet, but he indeed will 
take on this charge as one of his major responsibilities. And I think 
he is first concerned with getting an assessment of all those who 
are interested in the creation of this agency as to the most prac- 
tical way to proceed. But generally speaking, I think he is looking 
to some time this fall. 

Senator Bumpers. If I were President Clinton and I were going 
to sign off on this, I would want to get that done as quickly as pos- 
sible because I have a feeling it is not going to initially be very pop- 
ular, just because people resist change, not because it is not a good 
idea. And I would hope that you a\\ would get cracking on that 
right away and come back to Congress with something that we can 
approve without blood being all over the floor. 

CORN DISASTER PAYMENTS 

Now, Mr. Weber, I guess I ought to ask you this question because 
this is really an important question. Who made the decision and 
when was the decision made to provide 1992 disaster relief to 
corngrowers based on the quality of their crop? You have the au- 
thority to do it. I am not questioning that. I am just sa3dng who 
made the decision and when was it made? 

Mr. Weber. The decision was made by the Secretary just prior 
to the announcement, and that has been approximately 2 weeks 
ago that the announcement was made. The reasoning for announc- 
ing com only was the determination that the situation in corn ap- 
peared to be much more severe than for other commodities. 

I might say that since that announcement there have been con- 
siderable concerns expressed about other crops. 

Senator Bumpers. Call it an uproar, if you will. 

Mr. Weber. And that is currently under review. 

Senator Bumpers. Well, now, let me just say this, Mr. Weber. In 
my opinion and based on the makeup of this subcommittee as well 
as the full Agriculture, either you are going to have to rescind that 



137 

or you are going to have to include other crops, because I can tell 
you the wheat farmers suffered a lot, too, in 1992. 

DISASTER PROGRAM FUNDING 

And while I am on that, how much disaster money do you have 
available to you right now for 1990, 1991, and 1992? 

Mr. Weber. The initial appropriation was a little over $1 bil- 
lion — $755 million in the first appropriation 

Senator Bumpers. Right. 

Mr. Weber. Plus $382 million, and there is another 

Senator Bumpers. But it is $482? 

Mr. Weber. There is another $100 million the President could 
request. We are currently estimating that under phase II and 
phase III we will be paying out approximately $700 million, $700 
to $720 million, in addition to the $150 million estimated with the 
com announcement. So there would be around $850 to $870 mil- 
lion. We would have a balance of around $275 to $375 million. 

Senator Bumpers. Have you made a calculation on that including 
the com crop for disaster in 1992 would cost? 

Mr. Weber. I am sorry? 

Senator BUMPERS. Well, when you declare corn eligible for disas- 
ter assistance for 1992, did you also make a calculation as to what 
the cost of that might be? 

Mr. Weber. $150 million. 

Senator BUMPERS. $150 million? 

Mr. Weber. Yes. 

Senator Bumpers. Was this problem with com, what shall I say, 
more pervasive or worse in certain areas of the country than in 
others? 

Mr. Weber. This particular problem was worst in the Northern 
States where they had cool, wet weather last year. The biggest 
share of it occurred in the 11 Northern States, principally Wiscon- 
sin, Michigan, Minnesota, and South Dakota. 

They had weather that provided the prospects for a good crop, 
but they wound up with a harvest that in many cases was high 
enough in quantity to make them ineligible for our disaster pro- 
gram even though it had a low test weight and high moisture, so 
that when they marketed the crop it that was worth essentially 
nothing. 

Senator Bumpers. What was the com crop in 1992? Was it 8.5 
billion bushels? 

Mr. Weber. I believe that is correct, yes. 

Senator BUMPERS. Is that more or less than we harvested in 
1991 on the same acreage on a per-acre basis? 

Mr. Weber. It was more. 

Senator Bumpers. It was more? That does not sound much like 
a disaster does it? 

Mr. Weber. It certainly does not sound like a disaster from a 
quantity standpoint. 

Senator Bumpers. You say you have this under review? 

Mr. Weber. We have it under review, yes. 

Senator Bumpers. And as chairman of this committee, and I 
know I speak for the other members of the committee — ^we have 
one Senator from Nebraska on the full Agriculture Committee, and 



138 

we have a Senator from Nebraska on this subcommittee. And I 
know that all of us who are concerned about wheat, for example, 
if you are going to go forward with the com disaster we would like 
to know what your decision is as soon as possible because if we 
cannot do it administratively, then we will try to do legislatively 
an addition to this. 

Mr. Weber. Mr. Chairman, I can assure you we will keep you 
informed, and as soon as a decision is made we will let you know. 

OFF-FARM mCOME LIMIT 

Senator Bumpers. Thank you very much, Mr. Weber. Now, Mr. 
O'Mara, this is a policy decision which you probably had very little 
to do with. And I assume that this is an initiative of the new ad- 
ministration, at least by 0MB. I have always said I would rather 
be head of 0MB than President any time. 

But the decision, of course, to say that you are not going to be 
eligible for these farm programs if you have $100,000 in outside in- 
come, I really have mixed emotions about that. My Ozark Moun- 
tain populous spirit says, that is a good idea. And on the other 
hand, I know that a lot of people will have no choice but to sell 
their land or to do something else. And I can think of all kinds of 
isolated, or maybe not so isolated, or individual cases where people 
have a $100,000 income because somebody discovered oil on their 
land. It has nothing to do with inheriting money or anything else. 

Is the thrust of this that if you have $100,000 of income the Gov- 
ernment has no business paying you any kind of a subsidy on your 
land? And if that is the rationale, whv pay anybody? 

Mr. O'Mara. Well I think, Mr. Chairman, the concept— as you 
say — has a lot of appeal. And you mention that part of you sees 
some appeal in this. I think that is a strongly held view by many 
people, and it certainly is the reason why the budget proposal re- 
flects the $100,000 payment limitation. 

I think in practice that it is a difficult concept to carry out, and 
I expect that there will be some further discussion of that up here 
as well as within in the administration as the process ensues. 

Senator BUMPERS. Mr. O'Mara, here is what I believe. I do not 
believe today that a cotton, or a wheat, or a com farmer can stay 
in business 10 minutes without Govemment help. Oh, I know how 
popular it is to go out here and say we can balance the budget if 
we just cut all those farm subsidies and so on. And, you know, we 
are always willing to look at that. We are always willing to look 
at what is fair. 

But when you consider the fact, for example, that the European 
Community subsidized com and wheat both, and cotton, at twice 
the level of ours. And while during the past 6 or 7 years we have 
cut agricultural programs by two-thirds while the European Com- 
munity has increased theirs by 100 percent, and we sit around 
moaning about how we cannot compete. Well, of course we cannot 
compete when we are at that sort of a disadvantage. 

So, I am just simply saying that I know a lot of farmers in my 
State, and I expect I speak for Senator Bond in Missouri, that if 
you say you have over |l00,000 in outside income you cannot par- 
ticipate, you are effectively saying you cannot farm. If you are in 
the cattle business, OK, because there is not enough there to 



139 

amount to anything. But if you are a wheat farmer or a corngrower 
and you have $100,000 outside income you are out of business. 

You cannot farm today without Government programs. Do you 
agree with that? And cotton and rice. 

Mr. O'Mara. Well, I cannot say that I understand the situation 
in your State, Senator. What I do understand is that there is a 
strong sentiment to limit the amount of subsidies going to the farm 
sector, and this is one approach that is obviously part of the Presi- 
dent's budget. 

Senator Bumpers. I am not asking you to confront the President, 
or 0MB, or anything. 

Mr. O'Mara.. Thank you, sir. 

Senator Bumpers. I am just asking you, as a clinical question, 
do you not pretty much agree with me that nobody can farm wheat, 
cotton, rice, or com today unless they get these up to $50,000 defi- 
ciency payments? 

Mr. O'Mara. I do not know where the number stands across the 
country. What does seem to be clear to me is that if farm income 
is going to be sustained in the out years with budgetary pressure 
that forces reduced Federal spending in the farm sector, there has 
got to be some way to improve that situation. And it seems to me 
that the reality is that whether it is through payment limitation 
or some other approach that budgetary restraint is going to con- 
tinue to force this to happen. 

The only alternative we have is to improve our market situation 
overseas, and to get better access and improve our ability to sell 
out of this country. For example, we export nearly 60 percent of our 
wheat, obviously a large share. 

Senator Bumpers. What percent? 

Mr. O'Mara. Sixty percent of the wheat we produce is exported. 

Senator Bumpers. And what percentage of our rice crop do we 
export? 

Mr. O'Mara. I am so glad you asked that. That is the next one 
on my chart here. That is nearly 45 percent. 

Senator Bumpers. It has been higher than that in the past, has 
it not? 

CONTRIBUTION OF AGRICULTURE TO TRADE BALANCE 

Mr. O'Mara. It has been higher than that. This year it is a little 
lower, as a matter of fact. 

Senator Bumpers. And incidentally, while we are on that subject, 
Mr. O'Mara, you said in your statement that we exported 42 billion 
dollars' worth of agricultural products last year. Now, what amount 
of that was a contribution to the balance of trade, do you know, our 
trade deficits? 

Mr. O'Mara. The net of that would have been $18 billion. 

Senator Bumpers. $18 billion? 

Mr. O'Mara. Yes, sir. 

Senator BUMPERS. There is a little contribution that very few 
people ever talk about around here. 

Mr. O'Mara. That is correct. 

Senator Bumpers. I interrupted you. I apologize. Go ahead. 

Mr. O'Mara. Well, the point I was making is the one that you 
are making too, I think. Senator, that the role of agriculture in ex- 



140 

ports is already substantial, and the income benefits from exports 
are very substantial. This is a key issue as we face budgetary re- 
straints in the years to come. 

And I think we have to come back to the point that we have to 
improve the situation overseas for our farmers if, indeed, more of 
their income is going to be coming from the market rather than 
from the Treasury. 

CONSERVATION RESERVE PROGRAM 

Senator Bumpers. I have a host of other questions, but I want 
to yield to Senator Bond. But let me ask you about the Conserva- 
tion Reserve Program. How much money did you say is in the 1994 
budget for that? 

Mr. O'Mara. May I turn you over to Mr. Bridge, sir, to answer 
that question. 

Senator Bumpers. Mr. Bridge. I thought that was in the state- 
ment. I have just forgotten what it was. 

Mr. Bridge. $1.8 billion. 

Senator Bumpers. $1.8 billion? 

Mr. O'Mara. That is correct. 

Senator Bumpers. For the record, the Conservation Reserve Pro- 
gram is taking of the easement on land for a 10-year period, cor- 
rect? 

Mr. Bridge. That is correct. 

Senator BUMPERS. And can you tell me — I asked the Secretary 
the other day, but I did not get a very definitive answer. How much 
are we paying per acre on average for that program? 

Mr. Bridge. Randy, I believe the annual costs are about $45 per 
acre? 

Mr. Weber. They are in the neighborhood of $45 an acre, yes. 

Senator Bumpers. So, you are talking about $450 for a 10-year 
period, correct? Now, I have got a good patch of land of farm. I 
would sure love to get in that, $526. Is that correct, $526? 

Mr. Weber. For the 12th signup the rental payments average 
about $630 an acre for the full 10-year period. You add to that the 
cost-share payments of $33 an acre, and technical assistance. The 
bottom line is a total cost of around $382 per acre for the full 10- 
year period. 

Senator Bumpers. Now, the Wetlands Reserve Program only 
costs $900 and something an acre, does it not? 

Mr. Weber. Yes; for the 50,000 acres that we took in under the 
pilot program. 

Senator Bumpers. And we keep that forever. 

Mr. Weber. That is correct. 

Senator Bumpers. That is a permanent easement. 

Mr. Weber. That is a permanent easement. 

Senator Bumpers. For $900 and something, and we are paying 
for a 10-year easement with no constraints on the future use of the 
lands at the end of the 10-year period. We are paying $682. 

Mr. Weber. That is correct. 

Senator Bumpers. Does that sound like a bargain to you? 

Mr. Weber. Well, certainly some people have raised the question. 

Senator Bumpers. I am raising it right now. 



141 

Mr. Weber. With regard to the CRP, when the contracts expire, 
if the land does come back into production it will be under the con- 
servation compliance rules. There will have to be a plan in place, 
or if there is not, the producer would be subject to loss of other pro- 
gram payments. 

Senator BUMPERS. He is going to be in Argentina by then. What 
is the requirement on the plan? I mean, what are the limitations 
on the use of that land at the expiration of 10 years? 

Mr. Weber. At the end of 10 years, if it is left in its 
vegetative 

Senator BUMPERS. I understand the sodbuster and swampbuster, 
for example. Is there anything else? 

Mr. Weber. The producer could bring it back into production 
then. If it is brought back into production under a plan, he would 
then be eligible for program pajonents. 

The issue of what will be done at the end of the 10 years is some- 
thing the Department is currently studying. We will likely be com- 
ing to the Congress with recommendations as to what we might do. 
Certainly there are some that would like to see an extension of 
these payments. 

Senator Bumpers. Mr. Weber, how much land do we have in that 
program now? 

Mr. Weber. We currently have 36 V2 million acres, and we have 
a goal, a statutory goal of 39 million acres. 

Senator Bumpers. Will this $1.8 billion help you get there? 

Mr. Weber. That will help us get 1 million acres next year to- 
ward reaching that goal. 

Senator Bumpers. Is that what you are trying to do, get another 
1 million acres next year? 

Mr. Weber. That is what we are trying to do. 

Senator Bumpers. By 1995 or 1996, this program ends and land 
starts coming out of the program, right? 

Mr. Weber. That is correct. 

Senator Bumpers. You know, I applaud and was a chief cospon- 
sor of swampbuster and sodbuster both, and of course this serves 
two purposes. No. 1, land ought to be rested periodically. I think 
we would all agree with that. It serves that purpose. 

Another purpose it serves, of course, is when you consider how 
much we are paying in subsidies for crops, it takes a lot of cropland 
out of production, reduces price pressure, and so on. 

But boy, that is an expensive program. What do you have to do 
to get into it? 

Mr. Weber. You would have to come into the county office and 
submit an application when we have a signup, and your land would 
have to be determined to be highly erodible or meet specific cri- 
teria. Then you would file a bid, and we would go through a proc- 
ess to determine whether that bid was acceptable based on the en- 
vironmental benefits, the dollar amount of the bid, and how it com- 
pares to other bids. 

Senator Bumpers. Let me ask you this question. Iowa has al- 
ways held the dubious distinction of losing more topsoil off its 
farmland than any State in the Nation. My father-in-law used to 
spend a lot of time there, and he used to tell me about how you 



142 

could get stuck on a highway after a rain because so much of the 
topsoil had washed out on the road. 

And today, even today, with Iowa's really valiant efforts to stop 
the erosion, their success has been limited in one sense, I think, 
because I think at one time they were losing something like 16 tons 
of topsoil per acre per year on their mostly com land. 

And today I think they have reduced that somewhat but they 
still, as I say, hold the distinction of losing more topsoil per acre 
than any State in the Nation. 

Now, is land like that just because of a fairly indigenous prob- 
lem, is that land eligible? 

Mr. Weber. If it is considered highly erodible it would be eligi- 
ble, and if it meets other criteria such as contributing to certain 
kinds of water quality problems, it would qualify under this pro- 
gram. 

Senator Bumpers. Let me yield to Senator Bond. 

Senator Bond, Thank you very much, Mr. Chairman. I want to 
follow up. Obviously, we both have great interest in the soil con- 
servation and erosion prevention area. A few years ago, Missouri 
was a nice strong second to Iowa in the loss of soil. We have tried 
many things. We have worked hard at it both at the State level as 
well as here. 

But let me ask a basic question, and maybe Mr. O'Mara is the 
one to ask it of. We see these budget cuts as they impact farming 
having a tremendous blow to the farmers. A lot of analysis has 
been done. Back in the heartland, you do not have to look too far. 
Most farmers in Missouri have their own PC, and they can tell you 
pretty quickly what it is going to do. 

And when you combine the slashes in farm programs such as 0/ 
92, 50/92, expanding the triple base program, it looks to me like 
somebody has assumed that we are going to get a GATT negotia- 
tion and wipe out the competition of the European Community and 
others who are dumping the subsidized crops on the world market. 

Has there been a study done within USDA or 0MB as to the im- 
pact of these cuts on American farmers? 

Mr. O'Mara. With respect, Mr. Bond, to whether or not there is 
a GATT negotiation or just generally speaking? 

Senator Bond. I am sa5dng you have assumed the GATT, and we 
read in the paper today that the Budget Director does not think 
there is going to be GATT. But we have a situation now where we 
are fighting the subsidized competition of the European common 
agricultural program. 

With all these cuts, 0/92, 50/92, triple base, what studies have 
been done as the basis of the 0MB recommendations that you 
slash support programs? 

Mr. O Mara. Yes, sir; there has been a study completed and we 
can make that available to you. 

Senator Bond. Who did it and when? 

Mr. O'Mara. It was done by the Economic Research Service re- 
cently. I do not know precisely when. 

Senator Bond. After the proposals went up? 

Mr. O'Mara. As far as I know that is true, sir, yes. 

Senator Bond. I would want to see a copy of that study because 
I can tell you that the people in academia in my State who studied 



143 

it can only conclude that nobody had thought this out before they 
proposed it, because if we want to keep people in the program we 
cannot continue to cut the program. 

One of two things are going to happen. People are either going 
to quit farming or they are going to get out of the program. If they 
get out of the program, we are not going to have any of the envi- 
ronmental controls and the other things we need on it. And I think 
this is going to be a very serious problem that we are going to have 
to address when the proposal for slashing these programs comes 
before the Congress. 

Mr. O'Mara. We will get that to you, sir. 

[The information follows:] 

Statement of Keith Collins, Acting Assistant Secretary for Economics, U.S. 

Department of Agriculture 

Mr. Chairman and members of the Subcommittee, I welcome the opportunity to 
discuss the economic effects on farmers of the President's economic proposals. Mr. 
Chairman, your invitation requested that several specific issues be covered, includ- 
ing the outlook for major U.S. crops, the commodity contribution to deficit reduction 
from the farm and budget legislation enacted in 1990, the farm and market effiects 
of the President's proposals and the energy BTU tax. I will address each issue, be- 
ginning with the crop outlook. 

OUTLOOK overview 

The economic outlook for U.S. agriculture is generally similar to the situation pre- 
vailing during the past couple of years. Indicators of economic performance and 
farm household financial stress greatly improved between the mid-1980's and 1990, 
but the farm economy has moved sideways since 1990. One potential bright spot is 
the overall economy, with real Gross Domestic Product (GDP) expected to grow 3.1 
percent this year and 3.3 percent next year under the President's economic package, 
compared with the anemic 0.6 percent during 1990-92. Over the next several years, 
moderate income growth will strengthen farm product demand and low inflation and 
interest rates will help control farm production expenses. 

The President's economic stimulus package will help boost investment and 
consumer confidence, contributing to job growth in rural America. Rural economic 
activity is iniportant to the majority of U.S. farm households. In 1991, only 20 per- 
cent of U.S. farm households received more income from farming than from off-the- 
farm activities. 

U.S. agriculture is expected to continue benefiting from growth in international 
markets over the next several years. For 1992/93, U.S. agricultural exports are ex- 
pected to be $42.5 billion, slightly above last year's $42.3 billion, and the second 
highest ever. Bulk exports will likely drop in value, more than offset by high value 
and processed product exports. U.S. export growth is restrained by slow economic 
growth in Japan and Western Europe and negative growth in Eastern Europe and 
the Newly Independent States of the Former Soviet TJnion (FSU). 

In contrast, the developing economies are expected to grow 5-6 percent in 1993 
and 1994, up from 1992*8 estimated 4.3 percent. Pacific Kim countries, the Middle 
East, and Latin America, particularly Mexico, are expected to gain. 

Net cash farm income has plateaued since 1988 at $58-61 billion. Net cash in- 
come for 1993 is projected again to be at about this level, as larger crop and live- 
stock receipts ana larger government payments offset a moderate increase in cash 
production expenses. Our longer term Ibaseline income projections are for generally 
rising cash receipts offsetting lower government pa)mients and higher production ex- 
penses. Consequently, nominal farm income rises 5 to 10 percent during 1994-1998, 
although not as fast as the rate of inflation. 

Total farm asset values and farm debt have changed little since 1990, but remain 
much improved fi-om the mid-1980's. No change is anticipated in the debt-asset ratio 
in 1993, which has been stable in the range of 16-17 percent since 1989. The ratio 
is expected to decline modestly during the remainder of the 1990's as farmers re- 
strain the use of debt while asset values slowly increase. 

In the mid-1980's, USDA estimated that over 10 percent of all farm businesses 
were vulnerable to bankruptcy, their incomes were below expenses and their debt- 
asset ratios exceeded 40 percent. Recent estimates show less tnan 5 percent of farms 
are now vulnerable, half the level of the mid-1980's. However, the percentage of 



144 

marginsil income farms — those with negative cash incomes but debt-asset ratios 
below 40 percent — account for 17 percent of commercial farms, those having gross 
annual sales equal to or greater than $40,000. 

The Subcommittee has specifically reauested an assessment of the outlook for 
major program crops, and I will turn briefly to that. 

Wheat Outlook. — In the 1992/93 marketing year which will be completed in a little 
more than a month, world wheat production is up 3 percent, total use is down, and 
global wheat stocks are expected to rise. With more production and weaker use, 
world wheat exports are forecast down 5 percent in 1992/93, but U.S. exports are 
expected to rise 3 percent. 

Larger U.S. exports to India, North Afi-ica, and other countries are offsetting 
lower exports to China and the FSU. With strong exports, U.S. ending stocks are 
expected to rise slightly to 520 million bushels, a below-average level relative to use. 
Reflecting this, farm wheat prices are expected to average 25 cents per bushel above 
a year earlier. 

For 1993/94, the wheat Acreage Reduction Program (ARP) is percent, down fi-om 
5 percent this season. Based on winter wheat plantings and farmers' spring wheat 
intentions. 1993-crop seedings are forecast at 72.3 million acres, unchanged from 
1992. Production may be close to this year's level, and with more intense global com- 
petition expected and uncertainty over exports to the FSU, lower exports are in 
prospect, leading to higher carryover stocks and lower average wheat prices. 

Feed Grain Outlook. — Global coarse grain production rose over 5 percent in 1992/ 
93 on the strength of the record U.S. com crop. World use is increasing thds season 
but only by about half as much as the increase in production, leading to higher 
stocks, with U.S. stocks accounting for all of the increase. 

Although world coarse grain trade will be down, U.S. exports will be up 2 percent. 
Despite larger exports and a projected 12-million-ton increase in domestic feed use, 
U.S. feed grain stocks will nearly double in 1992/93. Ending stocks of com are pro- 
jected at 2.2 billion bushels, double the carryin level, which means about a 15 per- 
cent lower annual average com price and sharply higher feed grain program costs. 

For 1993/94, the com ARP is 10 percent, up from 5 percent last year. During 
March, farmers indicated plans to seed 76.5 million acres to com, down 2.8 million 
or 4 percent from 1992; With trend 3delds, production would fall about 10 percent. 
Prices may average slightly higher than prices for the 1992/93 crop year. 

Rice Outlook.— GlobeA use is forecast to exceed production in 1992/93 for the sec- 
ond consecutive year. However, large exportable supplies among the major export- 
ers, including the United States, have reduced prices oelow a year ago. 

Large U.S. supplies and lower prices are expected to keep U.S. rice more competi- 
tive in global markets, with U.S. rice exports forecast to increase bv 14 percent. The 
U.S. season-average price is expected to oe nearly one-fiflJi below the $7.58 per hun- 
dredweight average of 1991/92. 

For 1993, the nee ARP is 5 percent, up from percent in 1992. Farmers indicated 
plans to plant 3.13 million acres, nearly the same as in 1992. Production is expected 
to be lower in 1993 with moderately higher prices. 

Oilseed Outlook. — EWorld oilseed production is record high in 1992/93 due to the 
near-record U.S. soybean crop and larger South American soybean production. EC 
oilseed production is down about 1 million tons. In the United States, soybean pro- 
duction was the second highest ever but production of cottonseed and peanuts de- 
creased, and except for sanlower, production of minor oilseeds was lower. 

Little change is expected in global use of protein meals and vegetable oils in 1992/ 
93, slowed by consumption declines in Eastern Europe and the FSU. However, U.S. 
soybean exports are forecast up 11 percent, spurred by reduced world supplies of 
other oilseeds and higher EC imports. Despite the large crop and higher stocks, 
strong soybean use is expected to keep the season-average soybean price close to the 
$5.58 per bushel average of 1991/92. 

In 1993, farmers expressed intentions to plant 59.3 million acres to soybeans, un- 
changed from 1992. A return to trend yields would mean lower production and 
stocks and higher season-average prices. 

Cotton Outlook. — World cotton use at 85 million bales will exceed production in 
1992/93. But, global stocks remain relatively high at 39 million bales, putting down- 
ward pressure on prices. Despite a smaller crop in 1992/93, U.S. cotton stocks are 
expected to increase by 16 percent. Total U.S. use is down as higher exports from 
the FSU and China reduce U.S. exports. Domestic mill use is at its highest level 
since the 1950's. 

Even though projected U.S. stocks are below the statutory target level of 30 per- 
cent of use, larm-level U.S. prices for February averaged only 52.9 cents per pound, 
about equal to the loan rate. The low prices are generating record high deficiency 
and marketing loan benefits for cotton producers. 



145 

In 1993/94, both production and use are expected to be larger. The ARP for up- 
land cotton is down slightly from 10 percent to 7.5 percent. Farmers plan to plant 
13.4 million acres to cotton in 1993 about the same as 1992. Domestic use is likely 
to grow and exports increase as economies improve in Eastern Europe and the FSU 
and production problems in China continue. However, U.S. cotton stocks are ex- 
pected to increase again in 1993/94. 

Farm Program Spending. — Very large 1992 harvests are expected to increase CCC 
spending for farm programs from about $10 billion in fiscal years 1991-92 to an es- 
timated $17 billion in fiscal year 1993. Outlays for all program crops are expected 
to increase in fiscal year 1993, led by feed grains estimated to increase by $3.4 bil- 
lion, wheat by $0.6 billion, rice by $0.2 billion, and cotton by $1.0 billion. Spending 
on soybeans and minor oilseeds is projected to rise by less than $50 million in fiscal 
year 1993 despite a near record soybean crop. 

In the years ahead, we expect higher world and domestic prices and, as a con- 
sequence, lower farm program spending. Our current forecast is for CCC outlays to 
fall to about $12 billion in fiscal year 1994 and remain in the $10-$ 11 billion range 
in fiscal years 1995^98. These estimates do not include the President's proposed re- 
ductions in farm program spending. 

THE 1990 BUDGET REDUCTIONS 

Mr. Chairman, you asked how the Food, Agriculture, Conservation, and Trade Act 
of 1990 and the Agricultural Reconciliation Act of 1990 (1990 Acts) affected outlays 
for farm price and income support programs for the 1991-95 period. The bipartisan 
Budget Summit A^ement in the tall of 1990 set an outlay reduction target of over 
$13 billion for agricultural programs. The 1990 Acts were projected to achieve that 
mark in part with $11.2 billion in reductions in farm price and income support pro- 
grams. Tnis was an estimated 21 percent reduction from projected baseline outlays 
of $54.4 billion dviring fiscal year 1991-95, which assumea an extension of the Food 
Security Act of 1985 (1985 Act). The reductions were achieved with reduced pay- 
ment acres, marketing assessments and loan origination fees, changes in ARP's and 
changes in the method of computing deficiency pajonent rates. 

Our analysis indicates that the outlay reduction projected in 1990 continues to 
hold. Our current baseline projects that commodity program spending will total 
$59.9 billion during fiscal years 1991-95, up $5.5 billion from the 1990 Farm Bill 
baseline due in part to lower-than-expected prices for com and cotton and in part 
to disaster payments and higher export program costs than anticipated in 1990. 

Spending during fiscal years 1991-95 would be about $72 billion without the pro- 
visions of uie 1990 Acts. The 1990 Acts reduced farm program costs by an estimated 
$2.7 billion during fiscal year 1991 and fiscal year 1992 compared with an extension 
of the 1985 Act. Tnese realized savings plus outlay reductions we now project during 
fiscal years 1993-95 total about $12 oillion for the 5-year period, fiscal years 1991- 
95, slightly above the 1990 target of $11.2 billion. For fiscal years 1991-95, outlays 
for feed grains are projected to be down about $7.4 billion, wheat $2.8 billion, up- 
land cotton $1.0 billion, and rice $0.3 billion. Outlays for soybeans and minor oil- 
seeds will be down by about $50 million. 

Beginning with the 1994 crops, deficiency payments for grains will be based on 
the lesser of the season-average price and the 5-month price plus 10 cents for wheat 
and 7 cents for feed grains. Seventy-five percent of the projected deficiency payment 
rate for com and sorghum and 100 percent of the projected rate for barley, oats, 
and wheat must be made as soon as practicable after the end of the first 5 months 
of the marketing year. These provisions will reduce outlays by an estimated $3.0 
billion for feed grains and $0.8 billion for wheat during fiscal years 1994-98. 

The budget resolution period for the President's proposal is the 1994-98 fiscal 
years. During this period, the provisions of the 1990 Acts would account for about 
$15 billion in reduced outlays for the target price commodities, compared with an 
extension of the 1985 Act. 

The appendix to this testimony contains charts showing the projected reductions 
by commodity. 

THE administration's AGRICULTURAL PROPOSALS 

The Administration presented its proposed economic program on April 8, which 
deteiled and updated the proposals presented by the President on February 17, 
1993. The proposed economic package would reduce the Federal budget deficit and 
stimulate the economy. The proposed economic program includes reductions in farm 
program and other government program spending, increases in government reve- 
nues, an expansion in programs to aid low income households, and programs to in- 
crease economic growth and emplo5mient. 



146 

The President proposed reducing farm program spending by increasing the so- 
called "normal (unpaid) flex acreage" to 25 percent, eliminating the 50/92 and 0/92 
programs, targeting deficiency payments ana other program benefits to farmers with 
off-farm incomes below $100,000, limiting annual payments to wool and mohair pro- 
ducers to $50,000, eliminating the honey program, increasing assessments and loan 
origination fees on nonprogram crops and milk, and extending the current level of 
spending for the Market Promotion Program (MPP). The increase in normal flex 
acres, efimination of the 50/92 and 0/92 programs, and the increase in assessments 
would begin with the 1996 marketing year or calendar year for milk. The remaining 
proposals would become effective in nscal year 1994. 

Tne Administration estimates that these proposals would reduce farm program 
spending by $5.5 billion during fiscal years 1994-98 with $5.1 billion being saved 
in fiscal years 1996-98. The increase in unpaid flexible acreage to 25 percent and 
eliminating the 50/92 and 0/92 program account for two-thirds of the estimated re- 
duction in farm program spending. Increased assessments and loan origination fees 
account for about a tenth and targeting deficiency payments account for slightly 
more than a tenth. The President's farm program proposals to increase normal flex 
acres to 25 percent, eliminate 50/92 and 0/92 and target payments to farmers with 
off-farm incomes below $100,000 would reduce Commodity Credit Corporation (CCC) 
outlays for feed grains by an estimated $2.3 billion, wheat by $1.3 oillion, upland 
cotton by $0.4 billion, and rice by $0.4 billion. Outlays for oilseeds would be reduced 
by about $40 million because of nigher loan origination fees. 

The Administration's proposals for outlay reductions should be useful to the Sub- 
committee in achieving the House Budget Resolution goals. Therefore, I will discuss 
the Administration's major proposals and their expected effects. 

Eliminate 0/92 and 50/92. — ^At their inception, the 0/92 and 50/92 provisions 
were projected to be outlay neutral. Farmers that were planting just to receive a 
deficiency payment could instead idle acreage under the provision and receive the 
same payment. To avoid increased outlays, no payments were to be made on 8 per- 
cent of payment acres, which was the estimate of average underplantings on which 
payments were not received prior to the introduction of 0/92 and 50/92. Program ex- 
perience indicates that use of these provisions has been higher than first antici- 
pated, resulting in an increase in paia idle acreage in place of unpaid idle acreage. 

In 1992, farmers placed 11.2 million acres in 0/92 and 50/92 of which 0.3 million 
acres were planted to minor oilseeds. About 7 percent of the feed grain base, 6 per- 
cent of the wheat base, 3 percent of the upland cotton base, and 11 percent of the 
rice base on all farms in compliance with ARP requirements were in 0/92 and 50/ 
92 in 1992. Payments to producers, who participated in 0/92 and 50/92 in 1992, 
were $209 million for feed grains, $91 million for wheat, $41 million for upland cot- 
ton, and $72 million for rice. Participation in 0/92 and 50/92 is expected to increase 
as CRP contracts expire beginning in 1996. 

Eliminating the 0/92 and 50/92 options would cause many farmers to increase 
plantings in order to receive deficiency payments on acres they formerly idled. High- 
er plantings would lower prices and raise deficiency payments. Higher ARP's would 
have to be used to make elimination of this provision production neutral and to re- 
duce outlays, thereby replacing the formerly paid idled acreage with acres idled 
under the ARP. For most crops, ARP increases of 5-10 percent would leave produc- 
tion about unchanged if 0/92 and 50/92 were eliminated. Eliminating 0/92 and 50/ 
92 beginning with the 1996 crops would reduce CCC outlays by between $1.1-1.8 
billion, with the lower savings associated with normal flex acres of 25 percent and 
the upper savings associated with 15 percent. Producers would still be permitted to 
place land in conserving use and protect their crop acreage base. 

Increase Normal Flexible Acres to 25 Percent of Crop Acreage Base. — Increasing 
normal flex acres provides a direct reduction in deficiency payments by reducing 
pa3mient acres. Because this option reduces the attractiveness of farm programs, 
there is also a decline in participation, which also reduces outlays. This option for 
reducing payments is probably tne most efficient and effective way to reduce defi- 
ciency payments. It is effective because changes in the market or actions by the pro- 
ducer are not likely to reduce the savings. Regardless of where the market price 
moves in future years, the percentage reduction in payments is maintained unless 
there is base acreage expansion or increased participation, both of which are un- 
likely. 

Increasing normal flex acres is efficient because this option opens up more of the 
producer's permitted acres to planting decisions that are primarily determined by 
market fundamentals. And, farmers use this flexibility. Normal flex acres accounted 
for 84 percent of all acres flexed in 1992. In 1992, farmers flexed 4.9 million acres- 
to nonprogram crops. An additional 3 million acres were flexed from one program 
crop to another. The end result has been that consumers benefited from greater pro- 



147 

duction of crops that farm programs have made scarcer than otherwise, and pro- 
gram crop farmers benefited from being able to plant higher return alternative crops 
and offset some of the reduction in deficiency payments. 
The Administration estimates that increasing normal flex acres to 25 percent be- 

f inning with the 1996 crops would reduce CCC outlays during fiscal vears 1994- 
8 by $2.3 billion, but the savings could be as high as $2.8 bilfion, with about half 
of that coming from feed grains. 

Tareeting Deficiency Payments and Other Program Benefits to Farmers with Off- 
farm Income Less Than $100,000. — This option is similar to payment limitation pro- 
visions in that it is an option for reducing spending by changing the distribution 
of payments to producers. This version of targeting excludes only those who do not 
principally earn their living from farming and have very high off-farm incomes. If 
the proposal begins with the 1994 crops, the Administration estimates it would re- 
duce farm program spending by $610 million during fiscal years 1994-98. 

Admittealy, targeting is difficult to administer and outlay reductions are difficult 
to achieve, and therefore, to estimate. The large difference in estimated savings be- 
tween USDA and the Congressional Budget Office stems from different assumptions 
of how effective those witii high off-farm incomes would be in restructuring their 
farm enterprise to avoid a loss of benefits. 

As proposed, this option would apply to producers. The most relevant database 
for estimating the effects is to use Schedule F filings with the IRS. Recent data sug- 
gest that less than 2 percent of all Schedule F filers have off-farm income in excess 
of $100,000 per year. 

Assessments. — ^The FVesident proposed increasing assessments and loan origina- 
tion fees on nonprogram crops and milk by 67 percent beginning in 1996. This 
would reduce support to nonprogram commodities similar to that proposed for target 
price crops. These higher assessments and loan origination fees would reduce CCC 
net outlays by an estimated $540 million during fiscal years 1994-98 with all of the 
savings occurring in fiscal years 1996-98. 

The loan origination fee on CCC oilseed price support loans would increase from 
2 to 3.33 percent or from $0.10 per bushel for soybeans to $0.17 per bushel. The 
Administration estimates this would reduce CCC outlays for oilseeds by about $40 
million during fiscal year 1994-98. 

EFFECTS OF PROPOSED BUDGET REDUCTIONS ON FARM INCOME 

The Subcommittee requested an appraisal of the effects of outlay reduction and 
other proposals on farm income. While the Administration has proposed reductions 
in CCC farm program spending of $5.5 billion over the fiscal years 1994-98 period, 
the Congressional Budget Resolution has set a target of about half that size. Using 
the Congressional budget resolution target for farm program spending cuts, we have 
estimated aggregate U.S. farm income during 1994-98 taking into account the ef- 
fects of both the agricultural and the major nonagricultural proposals on agri- 
culture. The estimated effects on farm income are based on President Clinton's Eco- 
nomic Plan and will change depending on the mix of programs Congress adopts. The 
estimated changes in farm income exclude the effects of the proposed increase in 
the Earned Income Tax Credit (EITC) and the Investment Tax Credit. 

We estimate net farm income declines modestly during 1994 and 1995. The reduc- 
tions increase over the next several years, peaking in 1997 and 1998 when the com- 
modity program proposals and the energy tax are fully implemented. The annual 
reductions oegin to decline thereafter. During the 1994-98 period, our projections 
show net farm income averages about $1.5 billion per year lower compared with our 
current baseline. This would leave farm income aoout equal to recent levees. One- 
third of the reduction is due to lower government payments and two-thirds due to 
higher farm production expenses. Alternative private sector estimates of interest 
rates would lead to smaller reductions in farm income. 

Several factors combine to increase total farm production expenses. The energy 
tax raises fuel costs directly and other input costs indirectly, based on their em- 
bodied energy component. At 1991 farm production levels and energy use rates, an- 
nual production expenses due to the energy tax when fully phased in could be as 
much as $900 million higher. However, substitution of more energy efficient prac- 
tices and equipment over time would reduce this estimate. Also, feedstock energy 
prices may be lower than otherwise to the extent that the energy tax leads to overeul 
energy conservation in the U.S. economy. This would help offset higher fuel costs 
in agriculturtd chemical production. 

Interest and inflation rates are other cost factors. The Administration's proposals 
are expected to raise overall economic growth, which will slightly raise inflation 
rates and interest rates. This will increase the costs of farm inputs tiiat are inflation 



148 

sensitive and raise overall interest expenses slightly, mainly for short-term nonreal 
estate debt. 

Several private forecasting firms project annual average interest rate reductions 
of 0.5 to 1.25 percentage points due to deficit reduction. Such rate changes would 
reduce farm interest expenses by $0.75 to $1.5 billion annually, rather than the in- 
crease we project. 

Net farm income is a measure of economic activity. It is not a measure of house- 
hold farm income. The projected decline in net farm income will translate into a re- 
duction in household net farm income for many producers. However, some farm 
households will have offsetting reductions in tax liabilities due to the Administra- 
tion's proposed increase in the EITC and the Investment Tax Credit. Changes in 
tax liaoilities are not accounted for in net farm income. 

Another point is that the initial income reductions due to lower income support 
will not persist for all time. Lower support reduces the return to farming compared 
with other industries. That ultimately means reduced investment in agriculture and 
reduced asset values. Farmers will also adjust production practices and reduce out- 
put. These changes will eventually result in returns on farm assets that are about 
the same as before the income support reductions and are comparable to similarly 
risky nonfarm investments. 

The Chairman asked which farms would face the greatest financial stress under 
the budget reduction proposals. This is a very difficult question because a producer's 
financial condition depends on a wide variety of factors. The greatest stress probably 
would be faced by those producers that are already in financial stress and incur the 
highest production cost increases combined with the greatest reduction in program 
benefits. 

Our financial stress data indicate that farm operator households having negative 
farm incomes and high debt-to-asset ratios account for about 5 percent of all opera- 
tor households. Many of the households with very low or even negative farm in- 
comes earn considerable income fi-om off-farm emplojmient. Therefore, considering 
only the farm operator households with annual sales above $40,000, the wilnerable 
farms currently are most prevalent in the Southeast, Delta, and Southern Plains re- 
gions, followed by the Northern Plains. Vulnerability is greatest for livestock and 
poultry producers. For crops, vulnerability rates are slightly above average for grain 
producers and higher still for cotton producers. 

It is difficult to draw a conclusion on vulnerability rates alone as a measure of 
overall financial stress for a class of commodity proaucers. For example, while cot- 
ton and poultry show higher than average vulnerability rates, the median net farm 
income per farm operator household is somewhat above the U.S. average for poultry 
producers and nearly double the U.S. average for cotton producers. Also, if interest 
rates decline under the deficit reduction proposals, the vulnerable farm households 
will be substantial beneficiaries. Although vulnerable households account for a small 
percentage of farms, they hold more than 20 percent of farm debt. Vulnerable farms 
are also likely to qualify for the EITC. 

The target price crops are likely to face the largest reductions in support and 
these crops have some of the highest rates of energy use in production. As a percent 
of variable production expenses, energy costs are greatest for rice followed by sor- 

fhum, cotton, and peanuts, then wheat, com, the other feed grains and soybeans, 
'or livestock, energy intensity is about half to three quarters the rate of the major 
field crops. 

Considering all the above factors, it seems likely that farm operators producing 
target price commodities, particularly cotton and rice, that are located in the South 
and Southern Plains, and that irrigate a high portion of their crops, and that have 
high debt levels are likely to face the greatest impact of the deficit reduction propos- 
als. However, many low income farms are likely to face Uttle change in the house- 
hold incomes and may even benefit due to the proposed expansion in the EITC. 

OTHER ADMINISTRATION PROPOSALS THAT WILL AFFECT AGRICULTURE 

Several of the Administration's nonagricultural proposals affect agriculture and 
should be mentioned to provide a context in which the commodity proposals are 
evaluated. Let me stress none of these proposals are directly targeted at farmers. 
They affect all sectors of the economy. 

Energy Tax. — The energy tax discussed above with production expenses is an im- 
portant revenue proposal of the Administration. U.S. agriculture is slightly more en- 
ergy intensive than nonagricultural industries and consumes about 2 percent of the 
Nation's energy. Farmers used about 1.4 billion gallons of gasoline in 1991, mainly 
in farm trucks and older equipment. Gasoline is a princip^ fuel on smaller farms. 
About 2.8 billion gallons of diesel fuel was used in 1991, the major fuel on large 



149 

and mid-size farms for field operations. LP gas, natural gas and electricity are also 
used for drying, irrigating and heating structures. 

When fully phased in, the energy tax would increase farm expenses on fuels and 
oils by $400 million per year or about 8 percent at current rates of use. Electricity 
costs would rise by $100 million per yesir or about 4 percent and most other inputs 
would rise in cost as they involve energy in their production and distribution. Based 
on current input use, tiiese indirect costs could be as high as $400 milUon, bringing 
direct and inoirect costs to as much as $900 million. The actual increase would Rke- 
ly be less than this for two reasons. First, farmers will use energy more efficiently 
over time, including changes in equipment, crops planted, cultural practices and 
fuels used. Second, feedstock costs important for agricultural chemicals, may decline 
as less energy is used nationally. 

Inland Waterway User Fee. — ^The user fee will add $1.00 per gallon to the tax on 
fuel used by barge operators who transport 23 percent of all grain and 48 percent 
of grain exports. When fully phased in, the proposed inland waterway user fee is 
expected to produce revenues sufficient to cover all the costs of operating and main- 
taining the system, which is now heavily subsidized by the taxpayers. 

Com, soybeans, and wheat are the primary agricultural commodities transported 
on the inland waterway system. We estimate mat the waterway fee will increase 
the average cost of shipping a bushel of com to the Gulf by 6.3 cents. Estimated 
tax receipts from agricultural commodities moving on the water system are about 
$140 million. 

Although the proposed increase in the fuel tax will be collected fi-om barge opera- 
tors, at least some of the increased costs of operation will be passed back to fanners 
in the form of lower prices received for commodities shipped on barges. The user 
fee will not be fully passed back as shippers switch to alternative modes of trans- 
port, elevator and large operators absorb part of the cost increase, and end users 
pay more for the product. 

The waterway tax would likely lead to higher deficiency payment outlays which 
would offset some of the farm price decrease. On balance, the fee is ejqjected to gen- 
erate more revenues fi"om agriculture shipment than the increase in deficiency pay- 
ments. 

Income Tax Provisions. — ^The Administration's tax proposals will benefit farmers. 
Most farmers will be eligible for the permanent investment tax credit for small busi- 
nesses. This will reduce the cost of capital and lower Federal income tax liability 
for farmers and rural nonfarm businesses. Farmers spend $12-14 billion annually 
on new equipment. Because the percentage rates of the tsix credit decline in 1995, 
the biggest spur to investment will be in 1993 and 1994. Based on recent farm 
equipment purchases, the tax credit would potentially total about $750 million in 
1993. Potential benefits are smaller after 1994. During 1994 and 1995, these bene- 
fits are likely to offset the costs imposed on producers by the energy tax and the 
farm program proposals, which have their largest impacts in 1996 and beyond. 

Farmers will benefit from extension of the 25 percent deduction for health insur- 
ance costs and changes to the EITC. The proposal to simplify and expand the EITC 
would benefit low-income workers and self-employed individuals in rural areas, in- 
cluding farmers. This proposal would mean more disposable income and a better 
quality of life for qualifying low-income farm and nonfarm households. The high in- 
cidence of working poor in rural areas makes this proposal especially important for 
rural America. Since farm household poverty rates are nearly twice the national av- 
erage, this provision will be important for helping to relieve farm financisd stress. 

As an example, a farm household with two children and an earned income of 
$11,000 in 1995 would have an EITC of $3,375, $1,865 more than the 1993 credit. 
This benefit would likely ofiset the proposed energy tax and farm program effects 
on income. 

Rural Development. — ^The economic stimulus package includes specific rural devel- 
opment initiatives that provide needed assistance for the special concerns of rural 
areas. For example, the Administration proposes fiscal year 1993 supplemental 
spending authority for an additional $470 million in loans and $280 million in 
grants for the Rural Development Administration to help rural communities obtain 
water and waste disposal systems and comply with clean water standards. In fiscal 
year 1994, the budget recommends loan increases of $280 million and grant in- 
creases of $150 mUuon over fiscal year 1993 appropriations. When this money is 
spent on constructing water and waste systems, the community infrastructure is im- 
proved, rural communities become better places to live, and jobs are created. Em- 
ployment impacts will vary by project but tjrpically, 17 direct and indirect jobs are 
created for each $1 million in construction outlays. The fiscal year 1993 proposal 
alone would create nearly 13,000 jobs for rural farm and nonfarm residents over a 
5-year period. 



150 

Other proposals will increase community facility and business and industry loans, 
increase loans and ^ants to help repair or rehabilitate rural low income housing 
and to foster rural single family home ownership. Still other proposals focus on pro- 
tecting people and the environment. Stimulus spending of $85 million is proposed 
for protective watershed projects and hazardous waste clean-up at aging Federal ag- 
ricultural research sites. 

CONCLUSION 

The Subcommittee has a difficult task ahead. Deficit reduction and economic 
growth will benefit Americans. Farmers that can adjust and those that will benefit 
from income tax provisions or stronger rural economic growth may incur minimal 
income loss or even gain, particularly small, low-income households. Also, if deficit 
reduction leads to lower interest rates and lower exchange rates, these develop- 
ments would benefit many farmers. 

Finally, the effects of deficit reduction proposals highlight the need for demand 
expansion. A stronger U.S. economy can promote faster global economic growth. 
NAFTA and the Uruguay Round negotiations under the auspices of the GATT also 
offer opportunities for expanded trade. Achieving these agreements would go far in 
increasing farm income. 

Mr. Chairman, that completes my testimony and I will respond to any questions 
you or other members may have. 

TABLE 1. COMPARISON OF FISCAL YEARS 1994-98 BUDGET SAVINGS ESTIMATES UNDER 
THE ADMINISTRATION'S PROPOSALS FOR PRICE AND INCOME SUPPORT PROGRAMS 

[In millions of dollars] 

Proposal ADMIN CBO FAPRI H. RES 

Increase unpaid flexible acres to 25 percent in 
1996 

Eliminate 0/92 and 50/92 programs starting in 
1996 

Increase assessments on nonprogram crops in 
1996 

Extend Market Promotion Program cut 

Target payments to farmers with off-farm in- 
comes below $100,000 

Limit payments on wool and mohair to $50,000 
per person 

Eliminate honey subsidies 



2,300 


2,047 ... 




1,460 


1,037 


3,046 


540 
260 


644 
234 

262 


494 

100 


610 


'262 


278 


129 
61 


56 


35 


76 







Subtotal 5,483 4,414 4,034 2,700 

' CBO estimate. 

Source: CBO and FAPRI testimony before the House Agriculture Subcommittee on General Farm Commodities, March 23, 
1993. 

CBO=Congressional Budget Office. 

FAPRI=Food and Agricultural Policy Research Institute, University of Missouri and Iowa State University. 



151 



TOTAL CCC OUTLAYS & REDUCTIONS. igg-l-QS 

Target price commodites & oilseeds 



Bil. $ 



60- 



50- 



40- 



30- 



20- 



10- 



Spendinq before 1990 and 



Administration 



jroposed cuts 




% Change 



PROJECTED CCC OUTLAY CHANGES, FY1994-98 
Annual average change from 1985 Act Baseline 



40- 
30- 
20- 
10- 



Wheait" 



Feedgrains Up. cotton Rice 




152 



WHEAT PROGRAM OUTLAY CHANGES 




91 92 93 94 95 96 97 98 
Fiscal Year 



Admin, prop. 
12-month paymnt 
Other 1990 Act 



FEED GRAIN PROGRAM OUTLAY CHANGES 




Admin, prop. 
12-month paymnt 
Other 1990 Act 



Fiscal Year 



153 



% change 
100 



UPLAND COTTON PROGRAM OUTLAY CHANGES 



80 

60 -f1 

40 

20 

-20 
-40 
-60 
-80 
-100 



m 






i" / 



^ / 



^ 



91 92 93 94 95 96 97 98 
Fiscal Year 



Admin, prop. 



1990 Act 



% change 

100 

80 

60 

40 

20 



-20 

-40 

-60 

-80 

-100 



RICE PROGRAM OUTLAY CHANGES 




=?= 



^ / 



/ / 



=?= 



91 92 93 94 95 96 97 98 
Fiscal Year 



Admin, prop. 



1990 Act 



154 

USDA REORGANIZATION 

Senator BOND. Now, another item on terms of planning and reor- 
ganization, and I would like to address this to Mr. Bridge and Mr. 
Weber. The Secretary has talked about streamlining USDA to cre- 
ate a single farm service, and I would like each of you to address 
the question. 

First, were you involved in the planning of the reorganization ef- 
fort? And No. 2, do you believe your employees are qualified to han- 
dle another agency's technical questions? I might ask Mr. Bridge 
first. 

Mr. Bridge. To date we have not been significantly involved in 
the Secretary's planning arrangements. At this very moment he is 
holding a meeting with agency heads downtown, and I suspect that 
when Mr. Rominger and others get confirmed we will be involved 
in developing those plans. 

I think there is some level of cross training that can take place 
among and between the agencies that can be helpful in terms of 
improving our service, for instance, at the county level when pro- 
ducers come in to sign up for various programs and assistance. 

Of course, the Soil Conservation Service is a professional agency 
with a lot of soil scientists, engineers, agronomist, and biologist 
types. I do not see those functions easily taken over by our sister 
agencies. Now, much more coordination and data sharing obviously 
is a possibility. 

Senator Bond. Well, that is my main concern because, frankly, 
I am a great fan of SCS. Some of my friends who work in the Soil 
Conservation Service, when you ask them what they do they say, 
I do dirt. But that is a humorous way of understating the tremen- 
dous training and background that goes into being in the Soil Con- 
servation Service. And I have grave doubts as to whether somebody 
else can come in and do those jobs. On the other hand, how are 
your people qualified to do the ASCS work? 

Mr. Bridge. I would contend that many of the things that ASCS 
does are very complex. I moved into some of that myself and tried 
to understand the various programs. But I do think that the bot- 
tom line is there are some real opportunities here to do some inte- 
gration, and we will obviously be interested in helping the Sec- 
retary figure out those things that can be logically linked together. 

Senator Bond. I hope there will be a great deal of input from 
your agency. Mr. Weber, how would your people do dealing with 
dirt? 

Mr. Weber. I would agree with Mr. Bridge that we are not going 
to be able to do the technical things that they do with the dirt. 
Likewise, as he said, they would have some problems handling our 
programs. I think there are some efficiencies to be achieved in sup- 
port services by bringing the agencies together. 

Certainly, there are functions which ASCS can best perform just 
as SCS can best carry out functions with regard to the dirt. But 
it still seems as though it could be done under one agency. It is just 
that there would be functions that would continue to operate as 
they operate today. 

Senator Bond. I think we are going to find a great deal of that. 
I think it is probably a very low stump to jump, but if you meas- 



155 

ured how long and how many resources it would take to train the 
average U.S. Senator to do the work of the ASCS, I think you 
would find it would not be economical. 

Now, I trust that the other Agriculture Department employees 
would have a higher level of skill. But I do not see that that would 
be a particularly fruitful undertaking. 

CONSERVATION RESERVE PROGRAM STUDY 

Let me move now to the area that the chairman brought up, be- 
cause we are very interested in the Conservation Reserve Program 
and conservation generally. Mention was made, I guess you did, 
Mr. Weber, of I believe we mandated in 1990 farm bill a study of 
what happens after CRP. 

Where is that study? What is the progress on it and where are 
we going? When is it going to come out? 

Mr. Weber. The task force is meeting and making that study 
right now. Mr. Bridge may be able to speak more specifically to it. 

Mr. Bridge. All I can tell you is that there is a task force under- 
way, and it involves a number of agencies within the Department. 
I do not have a date in terms of when we will complete that study, 
however we could try to get it to you. 

Senator Bond. We are sitting here in 1993, and land is going to 
start coming out in 1995 and 1996, and we do not know which way 
we are going? 

I suggest it is time to get a little more enthusiastic and commit- 
ted to that study because we have made a tremendous investment, 
as the chairman pointed out. And if this land goes back into row 
crops, we have not made a great deal of progress. And I hope that 
you would keep this committee, and the chairman, and the ranking 
member, and particularly my staff advised as to what you are 
doing, because I really think we made too much of an investment 
to let it go. 

ALLEY CROPPING 

One of the things that we added in the 1990 farm bill was to 
allow an extension of the contract for 5 years if you plant hardwood 
trees and alley cropping. With the money frozen, are there dollars 
available if somebody wants to extend the contract and go into 
alley cropping this year? 

Mr. O'Mara. I am sorry, Senator Bond? 

Senator Bond. Are there dollars available if somebody wants to 
go into alley cropping? Can vou sign up? 

Mr. Weber. Senator Bona, I do not have an answer for you right 
now, but we will get back to you on that. 

Senator BOND. Would you tell me how many acres are in alley 
cropping? Do you know, Mr. Bridge? 

Mr. Bridge. No, I do not. 

Mr. Weber. Senator Bond, currently about 6.8 percent of the 
acreage is in trees, under a 15-year contract. 

Senator Bond. That is 6 percent in a 15-year contract? 

Mr. Weber. About 7 percent. 

Senator Bond. What is the total acreage in CRP? 

Mr. Weber. 36 y2 million acres. 



156 

Senator Bond. But I mean in trees? 

Mr. Weber. That would be a little over 2 million acres of trees. 

Senator Boi^D. But that's the total amount in trees. I mean, how 
much is under the alley cropping position, because the 6 percent 
sounds like the total acres planted. 

Mr. Weber. That is the total acreage in trees. 

Senator Bond. But what I am asking is the specific provision 
where they are allowed to alley crop and extend. Why do you not 
get back to me on that because this is one of the things. The chair- 
man and I have made some visits with ARS in Booneville, AR, and 
we have got some expertise in Columbia, MO. And if you want an 
effective way to move highly erodible land out of row crops over 
time, alley cropping and establishing hardwood, knot wood, and 
other trees in it seems to me to be so obvious that we cannot figure 
out why nobody has told us about it. 

Has anybody got any plans? Has there been any effort to tell 
farmers about the opportunities? 

Mr. Weber. Certainly there has been. 

Senator Bond. Who is doing it? 

Mr. Weber. ASCS has been advising producers of this oppor- 
tunity. 

Senator Bond. Could you share with us what you are doing be- 
cause still a lot of farmers in my State do not know anything about 
it. We would like to see what you are doing. 

Mr. Weber. At this moment I cannot tell you exactly what we 
are doing, but we will certainly furnish that information to you. 

Senator Bond. I understand this is a special little area, but right 
now it is one of the few things that I see that is coming down the 
pike. 

ACP assistance on crp land 

Let me ask another question. Can a landowner, if say that land- 
owner wanted to move highly erodible cropland that has been in 
the CRP ultimately into combination grazing and forestry produc- 
tion options — one of the things that we need in many parts of our 
State would be adequate water. Can a landowner now build ponds, 
or is it impossible to get through the permits and all that, and the 
restrictions in the law that would enable that landowner to bring 
the land out of CRP and put it into pasture? Mr. Bridge? 

Mr. Bridge. Randy, you may have to help me on this, but I be- 
lieve that currently the land under contract with CRP is not eligi- 
ble for ACP cost sharing, et cetera. I think this is an issue that we 
have to look at in terms of the last year or 2, as land begins to 
move out of CRP. We need to get the conservation practices estab- 
lished on that land, be they terracing, water distribution systems, 
or other approaches that bring it back into economic use and per- 
haps keep it out of row crops, which we intend to do. I do not think 
there are big problems related to permits and 404 activities. 

Senator Bond. But do we need to make changes in the law to 
enable it? 

Mr. Weber. We currently have that kind of practice available 
through the Agricultural Conservation Program. It is available only 
to livestock producers, and if a producer is going to start a livestock 



157 

operation coming out of CRP, we have a little bit of a problem, 
something we need to work on and see if we cannot work it out. 
Senator Bond. I think these are some areas we need to be ac- 
tively exploring. We will be looking forward to working with you 
on them. Let me ask just one last question, if I can impose on the 
chairman for one more question. 

WETLANDS RESERVE PROGRAM 

Wetlands Reserve Program — ^what have you found as a result of 
the pilot program? Any problems with it? And do you have ade- 
quate funds for technical assistance in the wetlands reserve? 

Mr. Bridge. A general observation is that the Wetlands Reserve 
Program has been extremely popular. We had signups and bids 
come in that far exceeded the available signup capacity or the 
funding. We have worked out adequate arrangements with ASCS 
in terms of funding for our technical services. 

Senator Bond. You do have adequate services, and in terms of 
achieving its goals are you satisfied with the way the program is 
working? 

Mr. Bridge. My evaluation would be yes, we are getting the 
right kinds of lands into reserve. 

Senator Bond. Thank you, gentlemen. Thank you, Mr. Chair- 
man. 

Senator Bumpers. Senator Kohl. 

REDUCTION IN ADMINISTRATIVE EXPENSES 

Senator Kohl. Thank you very much, Mr. Chairman. I have a 
couple of questions for you, Mr. O'Mara. 

Mr. O'Mara, do you believe the programs within the jurisdiction 
of the Under Secretary of International Affairs and Commodity 
Programs could withstand further reductions in administrative 
overhead? And will administrative overhead be cut as a result of 
the reorganization that Secretary Espy has proposed? 

Mr. O'Mara. I think it is a reality. Senator Kohl, that further ad- 
ministrative overhead reductions will have to take place. Over 
what time period and in what way is still not decided. Part of the 
approach will come with the development of the Farm Service 
Agency and the combination of ASCS, the SCS, and some parts of 
the Farmers Home Administration to achieve the savings. 

As I said before you arrived, Mr. Rominger, who will be con- 
firmed shortly I think, will be given charge of the reorganization 
project and the creation of this Farm Service Agency in particular. 
And as part of his deliberations, he is going to obviously look into 
the effect of administrative savings as this idea develops. 

Senator Kohl. You do not know how much money we are going 
to cut and how? 

Mr. O'Mara. How much money we are going to cut in overhead 
and administrative expenses? I would ask Mr. Schroeter to respond 
for the Foreign Agricultural Service and Mr. Weber, if you do not 
mind, on ASCS. 

Senator Kohl. That is all right. 



158 

Mr. SCHROETER. On the FAS side, Senator, the budget proposes 
a decrease of $1.9 million for fiscal year 1994, which equates to a 
3-percent reduction in administrative costs. 

Senator KOHL. All right. 

Mr. Weber. In ASCS, we are also making the 3-percent reduc- 
tion in certain administrative expenses, in accordance with the 
President's initiative. For fiscal year 1994, our regular salaries and 
expenses account would be declining over the amount appropriated 
for fiscal year 1993 by around $6 million. 

Senator Kohl. $6 million? 

Mr. Weber. Yes. 

USDA STAFFING LEVELS 

Senator Kohl. All right. Thank you very much. Mr. O'Mara, we 
have heard a lot of criticism in the media recently about the num- 
ber of USDA employees increasing as the total number of farmers 
in our Nation decreases. For example, in 1960 there were about 
100,000 USDA employees, and 6.6 million farms. But by 1990 the 
number of USDA employees had increased to 129,000 from 
100,000, while the number of farms had decreased from 6.6 million 
to 2.1 million. 

So, could you explain to the American people, if they were listen- 
ing here today, how it is possible for the number of farms to have 
gone down by so many and yet the number of USDA employees to 
have gone up from 100,000 to 129,000? 

Mr. O'Mara. Well, I will do my best, Mr. Kohl. I only have re- 
sponsibility for one part of the Department. Grenerally speaking, 
since the earlier period that you mentioned, there has oeen a con- 
siderable increase in the food assistance programs in the Depart- 
ment which has increased the number of necessary personnel. 

There has been an increase, and in fact the Secretary has al- 
ready requested additional people yet this year, to work in FSIS to 
improve meat inspection. There, I presume, has been expansion in 
other areas of the Department that relate to activities which deal 
with research 

In the area of ASCS and FAS and OICD, I do not think there 
has been any substantial expansion. There has been, more or less, 
the maintenance of levels over the last some years. 

But certainly the growth in personnel has come in areas of the 
feeding programs and perhaps even the Forest Service. 

Senator Kohl. Would it be possible to estimate, if the number of 
employees were to be reducea to 115,000 or 117,000, what would 
happen to the level of services USDA provides to this country? Do 
you think it would be seriously impaired? 

Mr. O'Mara. I do not even know how to surmise an answer to 
that question, sir. I can certainly provide to vou the comparison 
with specific numbers and where agencies in the department have 
grown over that time period if you would like. 

Senator Kohl. If you could give me some information. 

[The information follows:] 



159 



§ 



s 



C=> U3 oo S 

— . evj — < CM 




oo oo 

OO CM 


CO 
CM 


oo" 






^ i 


O O O 9> 

ir> CO oo ^ 

^M CSI ^H CSI 




CO ir> 

<T> CM 


oo — < 



ir> cNj ^ 
est ^ m 

CM ^> t/) 



u-> 
oo 



iO 

oo 



en CD 



9> ^ 



<^ ^ r^ <yt o '^^ 
Kn r^ r^ i^ ^ o> 
p»». ^ oo *o -H 



^ ^ ^ CT» en -^ 
to CO CD <aD r*««. CT» 
r** u^ CO csj •— • 



csi oo 


^ CO 


er> oo 


r-* 


r*. ^ 


CO -^ 


o -^ 


u^ o> 


oo 


CSi CSI 


ro CSJ 


Csl CSI 


CO oo 


•— < 


^r ir> 



— o o> 
to «ir c3 
CM -M ir> 



(O 
CM 

oo 



CM CO 
VO C3 

en -^ 



C3 «<r CM < 
oo ^r ^ 

VO CM (O 
03 CT* 



g; 



r^- CT> ^^ CT> 
ca C7> CT> C3 

-H ^^ ^H CM 



oo ro ^ 

^- i-~ oo 

CM oo *— t 



CO 

cm" 



C3 CT> 

0> 



^- ^^ CO a> CO ^ 

CO O^ CO *0 to CT> 

r- oo i/? CM — < 



r-* ^ CM 



r- oo 

CM — 


to CM 
— CVJ 


r-* IT) CM 
CT> U^ CTl 
CM_00 — . 


^r — ^ 
CO ir> 


oo 




CO 


cm" co" 



<o 

CM 

in 



^• 


— ■ <T> 


eg iTj CM r^ ^ r*^ 


•«■ en r- 


ir> 


CO oo 


C3 --■ CO <0 O oo 


oo TT CM 


oo 


CT> 


oo oo ^r .— 1 -^ 


I-. <s 



^ f^ — 


CM 


lO — < 


l~- 


CO 


^• 


o «o r~ 


^ 


o> UO 


OO 




ir> 


CM — ^ -^ 


CM 


CM OO 


«— ' 


CT> 


o> 



I 



s 



9! 



CO ^ 
t^ .2. 



oo" 


CO 


2 


CM 
CO 


CM 


2 


co" co" 

CO — < 


CM 5? 

oo" 


S 


S 


CO 
CO 


s 

oo 


oo 

CSI 


5 en 
r^ CO 


r- oo 
oo" 






CM 


i 


•—1 

CM 


36.918 
12.894 


CM lO 
— • CO 




s 


to 

CO 


CM 
CO 


C3 
O 
CM 


ID CM 
CO — 

-H tO_ 


oo" 






cm" 






o> CO 
CO — < 


ss 


CM 


PO 




CM 
OO 







cm" 



CO 

CM 



CO 

CM 



CO 
CO 



CM 


1^ a 


«o CO r-* lo ^ CO 


CM CT> oo 


<o 


es o> 


— ^ CO CO lO CO oo 

oo CO CO — . — . 


c» ir> CM 


eo 


en 


r- o 



s 


oo oo 


oo oo CSJ fO CSI o> 

r^ ^f ** -^ — ^ 


a> S «si 




^^ 


ir> o^ ^ 


^^ 




OO 


(A O i/> io O) oo 

r-. csi^ CO o^ — « 


CO 0> CO 

-^ ir> CSJ 
oo o 




w^ 


irT CTi" CO 


^ 



CO 


: to yn in 


m CO 


CO 


: CO (7> 


o> oo 




: ir> C3 


CT> 



CT> <o CSI ro ir> CO 
r-. CO O) CO o> oo 

P«». ^ CSJ ~ 



2 s; 



oo CO CO 
O^ CSJ CT> 



-^ CSJ 



s 



ir> ^ CO ^^ 
PO CO r»». r^ 
CO --^ ^^ ^^ 



CSJ oo u^ 
1^ -^ o 

r*^ oo CSJ 



CO 

cm" 


626 

31 

1.314 


CM 

cm" 


2 


CO ^ eo 
l« CO -^ 
CO ^- 


m CO 
CO r~ 



CO CSJ o^ irj p*^ r-* 

S-^ ^^ CO CO oo 
oo r-^ -^ -^ 



SCO ^D O) O) ^f 
CO OO CO 'H Ol 

OO r*._ lO ^ ^^ 



a^ ^ CSJ CO -H CO 

CO ir> ^H r*. — ^ oo 

O^ OO CO CSJ ^^ 



CO uo o^ 
JO rsi CSI 



CO ^ o> 

r*-. lo CSJ 

OO -H 



CO CSJ oo 

CD ^^ CSJ 




160 



II 



g 



g 



9 



S 



S 



s 



ri 






o 



i 



8! 



Sn -4 eo ^ 



r^ i» oo «o <o Q O 

0> CM r> lA lA CM 



s 



CM m ^ er> <o CM 

^ r» CO r» ^ 
CO — oo ^^ 



Si 



» 



$ 



ir> •« en t^ c^ 
^ 1^ ^' -4 oo 
c>4 — oo CO 



a> 4' oo V (Q 
m r^ 9' m (O 
^-1 >H oe en 



^4 «r •« o q> 

B -^ 2 S « 

of 



e> ^ 9> lA CM 

SB "^ ^ sa S 

o> ^^ oo CO 



eo oo ^^ oe r> 
^ S m •-' CM 

0> ^« oo CO 



CO '^ «C o ti 
.M r» in CM «' 
CT» ^^ oo CO 



<o ir> '^ « 

r^ to t/> r^ 

>^ oo CO 



at 

s 



lA : r^ OO r« ot r«- 
a> : • ^ «o r» ^» 
- oo ^^ OO ro 



CO o> ^^ 
CM r». r~. 



s 



CM 
lA 
lA 



at 

lA 



cm" 



lA 

8 



s 



to 

.a 






CO 

■5 

C 



= s e 

o'S'g^'S'So'S 
!oSE<oS888 

iil.tiiii 



E 

3 



161 



COMPLEXITY OF ASCS PROGRAMS 



Mr. O'Mara. I could have Mr. Weber talk specifically to ASCS. 

Mr. Weber. Senator Kohl, with regard to ASCS, one of the 
things that has happened over the last several years is the com- 
plexity of the programs has increased considerably. The level of 
participation in our programs has also increased. For instance, 
prior to 1980, average annual program costs were about $3 billion. 
During the 1980's, that increased to some $16 billion annually. 

We have also had the implementation of the payment limitation 
and all of the additional activity under the law, which has resulted 
in a substantial increase in workload in the ASCS. Certainly ASCS 
will be involved in the President's initiative to cut Federal employ- 
ment over the next several years by 100,000 people, and we will 
work to achieve our share of the reduction through the reorganiza- 
tion and through streamlining our rules and regulations and trying 
to reduce paperwork. 

We are hopeful we can get the job done with fewer people and 
still service the farmers as we have serviced them in the past. 

WETLANDS RESERVE PROGRAM 

Senator KoHL. All right. Mr. Weber, the President's budget re- 
quests about $370 million for the Wetlands Reserve Program for 
fiscal year 1994. We appreciate that request and the President's ob- 
vious dedication to meeting the nationwide goals of this program. 
I believe the program provides an excellent opportunity for farmers 
to voluntarily restore and protect valuable wetlands and to receive 
pa5mient at the same time for doing so. 

Last year, during the appropriations process, there were concerns 
raised about the ability of USDA to spend the full amount re- 
quested for the program. I believe that the interest in the program 
shown by farmers in the pilot States should help alleviate many of 
those concerns this year. I believe it is time that this program be 
expanded nationwide as envisioned in the 1990 farm bill. 

The success of the Wetlands Reserve Program depends in part on 
the promotion of it. I have seen many times in my experience that 
new products fail because they have not been adequately promoted 
or explained to the intended clientele, and I believe this is also par- 
tially true for Government programs. Despite the success of the 
pilot program in Wisconsin, for example, I have been concerned to 
find the general lack of awareness of the Wetlands Reserve Pro- 
gram among farmers in Wisconsin. 

As this program expands nationally, I would like to know what 
efforts USDA has in mind to promote or otherwise raise the aware- 
ness of this program and its benefits among the intended clientele, 
our farmers. 

Mr. Weber. I certainly agree with you that it has been a very 
successful program. In the rather limited pilot program we had, we 
certainly received applications on considerably more acreage than 
we were able to approve. And I can assure you that as we expand 
into a national program next year, if the $370 million is approved, 
we will make every effort, through our process and I assume 
through SCS, to make farmers and the public aware of the at- 



162 

tributes of this program. And we would expect a response similar 
to what we had in the pilot program this last year. 

We will make every effort to make certain that everyone is aware 
of the program. 

Senator Kohl. I appreciate that very much. Thank you very 
much, Mr. Chairman. 

CONSERVATION RESERVE PROGRAM 

Senator Bumpers. Thank you, Senator Kohl. 

Back to the Conservation Reserve Program. Here is the GAO re- 
port that went to my counterpart over on the House, Congressman 
Dick Durbin. 

"Dear Mr. Chairman: The Conservation Reserve Program author- 
ized by the Food Safety Act of 1985 is costly." I am not going to 
read all of that. 

The total cost, $19.2 billion between 1987 and 2003, to tempo- 
rarily remove 36.5 million acres of cropland from production. We 
previously reported that, although CRP was achieving substantial 
reductions in soil erosion, it could be less costly and more effective. 
We also found that in managing the program, the USDA was focus- 
ing primarily on meeting and mandating acreage enrollment re- 
quirements, and only secondarily on fulfilling the Conservation Re- 
serve Program's environmental objectives. 

Do you think that is a fair — is that a fair statement, Mr. Bridge? 

Mr. Bridge. I think I would take issue with that a bit. 

There are a couple of things that came into play here. One was 
the fact that there were significant offsettings, in terms of commod- 
ity pa5nnents, associated with those lands. Early in the program, 
we made some decisions that we would take only highly erodible 
land, with cropping history. About 3 years into the program, we 
stepped back and fine-tuned it. We began to deal with the water 
quality issues, wellhead protection areas, areas adjacent to 
streams, areas that the State water quality agencies had identified 
as having high levels of nonpoint source pollution abatement prob- 
lems, and areas with high nitrogen application. 

I think, given the basis of the law itself, we have been as envi- 
ronmentally responsible as we could be. 

Senator Bumpers. Are you getting any static from the environ- 
mentalists about the way you are operating this program? 

Mr. Bridge. I think the environmental groups have been very 
supportive. 

Senator Bumpers. Conceptually, I know they are. I am talking 
about the administration of the program. 

Mr. Bridge. We have not received a lot of criticism on it and I 
do not think ASCS has either, 

I think we can all sit here and wonder, what if? What would we 
have achieved, had we made the same kinds of investment in the 
lands that we are using to produce, as opposed to land retirement 
schemes or systems. 

Those are tough issues in terms of the tradeoffs. I sometimes feel 
that, had we really made that kind of a capital investment in per- 
manent conservation practices on the land that we are using every 
day for production, we might have achieved more. But a lot of that 



163 

is now occurring under conservation compliance, through the sod- 
buster arrangements. 

Senator Bumpers. That brings me to my next question, Mr. 
Bridge. 

SODBUSTER AND SWAMPBUSTER 

Let us talk about the sodbuster and swampbuster provisions on 
the books now. 

If I owned land that has been classified as fragile, or highly erod- 
ible, and I have never row-cropped that land; I have just, we will 
say, grazed it. Right now I am prohibited from doing anything with 
that land, completely aside from the Conservation Reserve Pro- 
gram, I am prohibited from doing anything with that land, if I 
want to participate in agricultural programs. Is that not correct? 

Mr. Bridge. Not from a conservation compliance standpoint. 

Senator Bumpers. That is what I am talking about. I want to 
make sure we are talking about the same thing on this, because 
this is important. 

Mr. Bridge. If you did not have a cropping history on that par- 
ticular piece of land from 1980 to 1985, you can bring that land 
into production, but you need to have installed on the land at the 
time you make that first planting, the full conservation system 
needed to meet the compliance requirements. 

Senator Bumpers. Even though that land has been classified as 
fragile? 

Mr. Bridge. That is right. 

Senator Bumpers. If I submit a plan that you approve, I can still 
row-crop it? 

Mr. Bridge. That is exactly right. But you do have to have the 
plan installed on the land, at the time you produce on it. 

Senator Bumpers. All right. Now, if I can convince you that this 
land ought to be put in the Conservation Reserve Program, then 
you are going to pay me $681 an acre over the next 10 years for 
it, is that correct? 

Mr. Bridge. It also has to have a cropping history in order to be 
eligible for the Conservation Reserve Program. 

Senator Bumpers. Well, that is true. That is the distinction that 
I want to be sure we understand. This is land that has been row- 
cropped before. And we are saying to you, this land is highly erod- 
ible; we would like to take it out of production, and we will give 
you X amount of dollars to take it out. Right? 

Mr. Bridge. That is right. 

Senator Bumpers. Wnereas, the person who has never row- 
cropped the same kind of land is simple, he has to submit a plan 
if he wants to row-crop it. But if he is not in the mood to row-crop 
it — he may be an environmentalist, a conservationist — if he is not 
in the mood to do that, he gets nothing? Unless he can talk you 
into putting it in the Conservation Reserve? No; you would not put 
that land in Conservation Reserve, would you? 

Mr. Bridge. No; you see, it does penalize, to some extent. 

Senator Bumpers. It seems to me like this guy is kind of taking 
a hit, and that is the reason I am asking. 

Mr. Bridge. Yes; there are some concerns here, because it does 
penalize those that have been, historically, good conservation farm- 



164 

ers. Because their erosion rates were low enough so they could not 
qualify for the Conservation Reserve Program on some of those 
lands. 

CONSERVATION RESERVE PROGRAM 

Senator Bumpers. The thing, I guess, that worries me more than 
anything else: In this GAO report, they are assuming that we are 
going to run this plan right on up to 2003; is that what the legisla- 
tion calls for? The Conservation Reserve Program? This says, $19.2 
billion between 1987 and the year 2003. 

Mr. Bridge. Yes; those contracts would have been signed up 10 
years earlier, so 

Mr. Weber. There are some 15-year contracts involved as well. 

Senator Bumpers. I take it, it is your present intention to con- 
tinue asking for money for this program every year, continuing the 
program? 

Mr. Weber. Yes; to achieve the goal of 40 million acres by 1995 
and to make payments on existing contracts. 

Senator Bumpers. A total of 40 million over the period, not at 
any one time? 

Mr. Weber. No; we have 36.5 million now, so there would be an- 
other 2.5 million acres to achieve by the 1995 crop year. 

wetlands reserve program 

Senator Bumpers. Are you counting Wetlands Reserve in that? 

Mr. Weber. No; 1 million acres of the total enrollment goal are 
set aside for the Wetlands Reserve, so there would be 39 million 
under the CRP. 

Senator Bumpers. How much are you asking for Wetlands Re- 
serve, for 1994? 

Mr. Weber. We are asking for $370 million, and hoping to enroll 
450,000 acres. 

Senator Bumpers. 450,000 acres? 

Mr. Weber. Right. 

Senator Bumpers. Are you planning to continue a pilot program 
in about 10 or 12 States, or are you going to go nationwide? 

Mr. Weber. We would go nationwide. 

Senator BUMPERS. I can tell you, that is the only way you are 
going to get the money. [Laughter.] 

EXPORT ENHANCEMENT PROGRAM 

What percentage of our exports, Mr. O'Mara, do you consider to 
be a result of EEP? Do you have a statistic on that? 

Mr. O'Mara. I do not have one, offhand; perhaps Mr. Groldthwait 
does. 

Senator Bumpers. Mr. Goldthwait. 

Mr. GrOLDTHWAlT. I cannot give you an overall statistic. But, for 
example, in fiscal year 1992 we exported close to 20 million tons 
of wheat with the assistance of the EEP, and that was roughly 60 
percent — mavbe a little more than 60 percent — of our wheat ex- 
ports. For other commodities 

Senator Bumpers. How much was that in dollars, Mr. 
Goldthwait? 



165 

Mr. GOLDTHWAIT. In terms of dollars? 

Senator Bumpers. Yes; 20 million tons. 

Mr. GOLDTHWAIT. I cannot give you a dollar figure, right off, 
given the fluctuation of prices through the marketing year. But for 
some other commodities, for example, barley and barley malt, the 
EEP supports nearly all of our export of those commodities. For 
some other commodities, it is much smaller. But it is quite signifi- 
cant, over all. 

Senator Bumpers. Mr. Goldthwait, it would be helpful to me, and 
I think it would be to the committee, if we had a list of both the 
commodity, the amount of the commodities, and the dollar value 
that was exported, that received some sort of an export enhance- 
ment subsidy. 

Mr. GrOLDTHWAiT. The total sales value for EEP commodities in 
fiscal year 1992 was around $3.6 billion. And if you add the similar 
programs, the SOAP, COAP and DEIP Programs, you add roughly 
an additional $300 million to that. 

Senator Bumpers. So, you are talking about, roughly, $4 billion? 

Mr. Goldthwait. So, just about 10 percent of the sales value of 
agricultural exports is supported by one or another of the export 
subsidy programs. 

Senator Bumpers. And what did that cost the taxpayers, under 
the EEP Program? 

Mr. Goldthwait. The total expenditure in bonuses in fiscal year 
1992 was, roughly, a little less than $1 billion in total. 

Senator Bumpers. So, the subsidies represented, roughly, 25 per- 
cent of the total sales price? 

Mr. Goldthwait. A little less than that. 

Senator Bumpers. Do you consider that pretty heavy? Or light? 
Or where it ought to be? 

Mr. GrOLDTHWAiT. I think if you look the subsidies that are being 
granted by our competition, chiefly the European Community, you 
will find that, on a per-tonnage basis, they run roughly three times 
ours. I think, given the competition that we are facing in world 
markets, this is reasonable. Now, as market conditions change, our 
bonus levels for particular sales go up and down. We saw bonus 
levels, for example, for wheat last year, in some cases, of nearly 
$40 a ton; and in a few cases, a little over that. We also saw bonus 
levels of less than $20 a ton. It varies a great deal from market 
to market, depending largely on what the competition is that we 
face from other subsidizers in that msirket. 

Senator Bumpers. How much rice did you export under the EEP 
Program? 

Mr. Goldthwait. Rice exports in fiscal year 1992 totaled roughly 
$130 million in vsdue. 

Senator Bumpers. Only $130 million, out of $4 billion? 

Mr. Goldthwait. That is correct. The reason for that is because, 
in point of fact, the European Community — which we chiefly target 
through the EEP — does not subsidize its rice exports in most of the 
markets that we are active in selling to. We face their subsidized 
competition in a handful of markets, largely in the Middle East. 



166 



MARKET PROMOTION PROGRAM 



Senator Bumpers. Mr. Schroeter, do you administer the MPP 
Program? 

Mr. Schroeter. Yes, we do, sir. 

Senator Bumpers. Could you furnish this committee, and you 
maybe already have it, but I would like to see a list of the compa- 
nies who participated in this last year? 

Mr. Schroeter. Absolutely. 

Senator Bumpers. You could supply that to us, for 1992? 

Mr. Schroeter. We can get that to you right away, sir. 

Senator Bumpers. Please. That will be very helpful. 

[The information follows:] 



167 



Q 

So 

^ Q 
CO 



o 
p 
d 



o 
p 
o 



o 
p 
d 



o 
p 
d 

b9 



O 
O 

d 
o 
o. 



v> 



o 
o 

d 
o 
o 



o 
q 

d 
o 
p. 
in" 



< 


< 


f- 


1- 


o 


O 


1- 


1- 


m 


00 


z) 


ZD 


w 


CO 





Q 




Ul 




Q 




^ 


—1 


cc 


^ 


m 


o 


-1 


1— 


< 


m 


1- 


ID 


o 


UJ 


1- 



CO 
UJ 

z 
< 

Q. 

O 
O 

o 

a 

z 

m 







CO 




CO 




UJ 




lU 




nr 




1 




Q 




s 




CO 
CD 




o 




3 




o 


(» 


CO 


0) 


CO 


c 
o 


CO 


c 
o 


=3 


z 


Z) 


z 



CO 
Q 

z 
< 
cr 

CO 

z 
g 

UJ 

en 
o 



c 

c 
o 

X 



>- 
Z> 

o 
o 

I 

CO 



< 

a. 
< 



o. 

Q. 

CM 
O) 
C» 



o 

Z) 
Q 
O 
CC 
0. 

Q 

z 
< 

CO 
Q 

UJ 
UJ 

o 



o 

o 
o 

(0 

cr 

UJ 

$ 

s 

u. 

z 

Z) 
CO 



O 
P 
< 

z 



168 



o 
tu 

'- Q 
03 



o o o o 
q p q o 

dodo 
o o o o 
o o^ o. q. 
o in in o 
o n o> in 
CM «» v> «» 



o 
q 

d 
o 
q. 

o" 

00 



o o o o 
o q q q 
d d d d 
o o o o 
o q. q. q. 
d o" o" in 
o o in t^ 
n n »* v> 



o 
q 

d 
o 
q. 
in 
w 
r>- 



o o o o o g 
o o q q q q 

d d d d dd 
o o o o o o 
q. o. q. o. o. q. 
d in in" o" in o 
csi t^ o •- in 
v»«» '- w w 



»: 



o o o o o o o 
o o o q q q q 

d d d d d d d 
o o o o o o o 
q. q. P. o. P. Q. Q. 
d^ d in d d in in 
o in CM in o CM d 
CM «/> w «/> »- v» w 



O 
to 



< 

CO 



CO 

tu 

< 
a. 

o 
o 

a 
III 
a 

z 

^ 
m 



CO 

lu 



a. 

o 
o 

(O 



c 
o 
«l 
<o 
o> 

" - s = 

OL O ™ 3 

U CO a. X 



CO 

tu 

< 

o 

CO 

ffi 

CO 
CO 



o a> 

i; •= 0> C3) 

™ TO CO (0 

CO CO m LU 

M M (0 M 
3 3 3 3 

o o m CD 



CO 

o 

z 
< 

CO 

z 
o 

Q 

o 



o 

1" 

OL 

■r s 

>< c CD 
2. * - I 






OT 
T3 

CO 



I c E c ~ x: w is 



III? 



iJ^ 525cDCQlJ-CD0QCDU.t-O5 



O 

i 



1 



T3 



Irs 



HI b. (O 

O » C C 

CO a> 4> a 



^ Q. 
C3 CO 




O 

z 

O 

o 



S5 



o 

z 



169 



D 
UJ 

So 

'- o 
m 



o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


q 


o 


o 


o 


o 


6 


6 


6 


d 


o 


d 


d 


d 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


q 


q 


q 


q 


d 


d 


in 


d 


in 


d 


d 


in 


in 


lO 


r^ 


o 


r- 


in 


o 


o 


Vi 


t^ </) 


C\J 


(M 


C\J 


OJ 


q^ 








i/> v> v> 




r) 














w 


w 



o o o o o o o 
o o o o o o o 



o o o o o o 
o o o o o o 



o o o o o o o 

o o o o o o o 

q o. in q q o. q 

in o ^ o in c\j in 

in "- -^ m r\J in CM 



o o o o o o 

o o o o o o 

q q in q^ q^ q^ 

cm" oJ »-" c\j c\j in 

in ■* in in lo c\j 





Q 




lU 




O 




^ 


—I 


QC 


^ 


m 


o 


— 1 


h- 


< 


m 


1- 


3 


O 


CO 


H 



UJ 

z 
< 
a. 

o 
o 

o 
uu 
o 

z 

CO 



>- 
cc 



o 
o 

< 
»- 



0) 

c 

■o 

o 

cr 

I 

x: 



o * 

V) 0} 

Q-Z 

§ ^^ 
(9 o 0) « > 

U) Q. is ■= C 
to c <" fc D 

m ^ m (/} CO 



w 2 



n 

'3 
n 

< 



E E E 

o o o 

T3 TD -Q 
0> O) O) 

_c c c 

c ^ i<: 2 

« X) TD T3 

V 0) a) Q) 



3 10 5 .^ = — 
CO Q- 5 c c c 
V) W W 3 =3 3 



Z 

o 
o 



o 

z 

o 
o 

H 

Z 
< 

UJ 

a. 



O 

z 



w 

ULI 
O 

□c 

UJ 

w 

I- 

QC 
O 
CL 
X 

UJ 

o 
< 



O 

z 

o 
o 

H- 

o 

GL 

Q 
Z 
< 

o 
o 
o 



< 
ir 

u 

o 

s 
o 

< 

CO 

Z) 

z 

QC 
UJ 

I- 

UJ 



to 

UJ 



CL 

O 
O 

CO 

ri 



(0 

o 





a> 






J£ 




s? 


CO 

CO 




CO 


"ni 






^ 




^ 


Z 




n 


o 




>. 


g 


la 




O) 


> 


c 

UJ 




c 
en 


3 
fO 


55 


? 




a> 


a> 


a! 


Q Z 


-3 



ID 

a 



01 

a. 

CO 



0) 

.y 

QC 

.2 i 

CO CO 



in 

Q.T3 
3 O 
O O 

0) CO U. 

O _ ^ 

(0 TT (O 

-• S^ 

o. Jg CL 
< O (J 



(0 



'C 
0) 






03 10 

Si E 
CO -tr 



QC I = CL 



t- H < < I 



iiz2i2i2i2i 



170 



o o o o 
o o o o 



o o o o o o 
o o o o o o 



OOOOOOOOOO 
OOOOOCDOOOO 



o 
ai 

^ o 

ID 

m 



o o o o 

o o o o 

o o. o o 

«n 1-" co" in 

CM »- >- CM 



o o o o o o 

o o o o o o 

o. o_ O O. Ul o. 

o" o o <o CM in" 

CM -^ m CM pj in 



0000000P300 

ooooooo^oin 
oinoooo oooinin 
in CM «n 00 in f^J o ^ N." cm" 

CMCOCMCMCMCMCMfAV>V» 
<A <o V> <^ «I9 «> «» 



O 
O 

cj 

°> 
in 

a> 
«» 



o 
p 
d 



o 
o 
d 



< 

I- 
O 
I- 
m 



< 

to 



CO 
UJ 

2 

< 

Q. 

o 
o 

o 

Ul 

o 

z 

m 




CO 
UJ 

cr 
< 
9 

CO 
00 

CO 
CO 



e 

c 
o 



> 
cc 

o 
o 

I 



,>->->>-v>>->>>>-<<<<<i-i-t- 

:ZZ22ZZ2ZZZ2CLQ.Cl.Q.Q.i>b>> 



o 
o 

Ul 



CO 

ZJ 
UJ 



171 



CNJ 

cn 
en 





o 


o 


o 




p 


p 


o 




d 


d 


CO 


Q 


«/> 


*9 


CJ) 
00 


LU 






in 

3 


D 








Z) 








CO 









o o o o o o 
o o o o o o 



o o 
o o 



o o 
o o 



o o 
o o 



OOP 

o o o 



o p o o o o o 
o o o o o o o 



o o o o o o 
o o o o o o 
p in p o. p o_ 

in N-' cvi cn d a> 

03 V> V> t^ C\l t~- 

v» to iO v> 



o o 
o o 
Q. CJ 
in cJ 
v> og 



o o 
o o 
P. Q. 
00 en 
in r^ 



o o o o o 
o o o o o 
o. o. o. o_ p 

cn cn cn in o 
K »- cn «o n 
v> v> v> vt 



o o o o o o o 
o in o o o o o 
o_ CH p o. o_ o. o. 

t-~" r-- CO in 00 co ■<- 
>- CM »- t^ CO •* T- 
vi v> vy *o v> vt V* 



a 
ui 
a 



< 

o 

l- 
m 

Z3 
CO 



cc 

CD 

—I 
< 

o 



tn 

z 
< 

Q. 

O 
O 

o 



03 



Q 

z 
< 
cc 

CO 

z 

m 

(T 

o 



0) 

c 
o 



CO 
UJ 



o 
o 

to 



n) 

I- 

0) 

c 

0) o 
II 



M 
"D 
O 
O 
U. 

to 

C OT 
3 <0 

< m 



u 

3 
T3 
O 



d 

o 

O) 

c 

00 



c 



Q. 

ilj *** TO 

2 D) ~ 

fl) 2 c 

> 0) s 

O CD j]t w 

55 >. " » XI 
« (0 is 5 o 

CO CD 00 CD CD 



a 

CO 

z 



co = 










V) 




^ 


V) 


m 










■a 





13 


0) 

■c: 




a> 













2 





0) 


a. 




o 

c 

CO 

i 

0) 


§ 
■5 




(0 


« 

0) 
CO 
(0 
Q> 

to 

0) 


<u 
U 



s. 

to 

0) 

c 
n 
E 


(0 
CO 

lie 


0) 

tu 

c 


«0 

X> 


U- 




B 


CJ" 


3 








3 





3 





JZ 


!c 


SZ 
















CO 


OOOUOOOO 


Q- 



cc 



3 
O 
o 

UJ 

to 



O 
f= 
< 

o 
o 

< 

UJ 

5 



<<a:<<<fsjS< 
§§OOUU<ZO 



;<<<a:<<<OOt-M^ 



< 
cc 

3 



ID 
O 
CC 

< 

to 

Z3 

Z 
CC 
UJ 

(/i 

UJ 

$ 



172 



o o o o o o o 
o o o o o o o 



ooooooooooooooooooo 
ooooooooooooooooooo 



oooooooo 
oooooooo 



o 

LU 

h- 

ULI 

o 
o 

Z) 

ffi 



o o o o o o o 
o o o o o o o 
Q. Q Q Q o Q. p. 
»- o" O) in o" o)" O) 
•- 1- o) in CM (D h- 



ooooooooooooooooooo 
ooooooooooooooooooo 
o o o_ o. o o_ o_ o. o in o_ o o. o o_ o_ o_ o. o. 

at o tn o" o" ri ai oi o> »- in «n o" <o o> m tn oo in 
r-McncM'-totncnca'— «»cM»-cgo)t^t^toin 
lA iA vt «* v* V* y* vn» i» «> v> vn» v> tA *» V* 



oooooooo 
oooooooo 
o. o. o. o. o. o. o_ o, 
CO CM o> r^ o h- »— o> 

</»</></> </> ta </> v» 



CO 
UJ 

Z 
< 
0. 

O 

o 
o 

UJ 

o 

z 

m 



M 
0) c 



I 

o 

a> 
o 



o 
O 



3 XJ 



It <u 

<i> (3 
Q.E 

0) o 
Q Q 



<i> ra 0) 

^ f- -^ 



o «> ^ 



d> 

M 

o> o 
c o 

•go 

S I 

s S-, 



a Q m u. 



EOS i 

w ^- H c 
il: CD O O 



o 
O 
a> 
oi 
a 

« 

> 

CO (D £ 

0)g| 
= 25 

0) o t: 



o 
en 

(D 



5J? 



u « c 



c 



g 



. M 
O T3 

o)CO t: li^ 
m c o >'™ 
c S Q. " S c 

C $ C3> O O >._ _ 

tofOOOOO>'ai 






o 
o 
°s 

. « 

^ S O 
CO £ — C 

— ' o *; . 

0) X £ <D 

oO ^5 
o 



i 



13 



ra 






Jj:3 13 3 



a> 



o -o 
E^ 

O 3 "^ C 

(0 ra ra o 



(/) 
■D 
o 
o 
in u. 

^c 
Sim 
ra .i2 
z z 



cc 



Z) 

o 



n2<0<<<<<<„<0<<_<<ocgc<<<m<<<^_<<!=< 
<Izoooooooo9oooo5c§§oo§oo<o§oex§oS§ 



z 
o 
o 



< 

V) 



173 



o o o o o 
o o o o o 



o o o o o o o 
o o o o o o o 



o o o o o o 
o o o o o o 



ooooooooooooo 
ooooooooooooo 



o 

UJ 



UJ 



Si 
So 

•^ D 

Z3 

m 



o o o o o 
o o o o o 
p. o o. o. p. 

CO 'f O) '- o 

<o <A r^ n c\j 
v> v> vy v> 



o o o o o o o 
o o o o o o o 
p o_ p^ p p^ p^ p. 

O) O) f^ 0> CO o> o 

o> r^ c\j o) »- o) lo 



inoooooooooooooooooo 
r~ooooogoooooooooooo 
oo p^ p^ o. p^ p. o_ p p^ p^ p o_ o. o p in p^ p^ p^ 

oo CO CD Tt to o CO CM en" t^ o oi" »-' in o c\i n o" o" 
v»'-«/>o>jinr2'T_'-'-cnrgcj)CM«*^r^v>««c\j'- 



o 
o 
iri 
r>i 

(D 

n" 
in 

00 

8 



J* 
o 

CO 



CO 
UJ 

z 
< 

Q. 

O 

o 

Q 
UJ 
O 

z 

CD 



0) 

o 
O 



c 



b £ ,. a) 



0) 

^< 

c o 

o ~ 



Q. O) 



«0 



3 
O 

■e 

Q.— 
Q.— - 



Q. 



ra 



0) _ 

o .S w c c p u. 

c c » o « a — 

a> a -5 o) ~ 0) 

o Q.J2 c E o 



u 

to 

0. 




in 



ZO Oo. 



0) a> x: o 
Q. a. a. Q. 



28 



® 

Q.. 
to t3 

-c '53 



X TO 2 



"1 CO u- 2 .5 .; 

0) u- § 

O* o CO 



5- 

c 



a> 



CO CO O £ 

ir cc cc CO 



ni CO d) a> ^ 



3 

c o 

o s: 

U) 0) 



o ^ w 



(0 



>1.&^^-" 



c 



o 
o 



O) CO 
CO OT 



CO w 



■mm 

CO CO CO CO ^- 1— 



CO 



;^ •- >• 



-c Q 



-^ *^ -*- is 

£-c3.£;«5J€i "> 



cc 2 



0) 



cc 



Z3 

o 
o 



< 

I- 
co 



gca:<<<s<oco_<<<<^oc<i-<„<<<<cna:< o<< 
ooo§oz$oo9§oo59o§5§9§oo5oo§9ooo 



z 
o 

i 

5 



174 



o 

go 
^ o 

00 



o 
p 
d 

*7 



o 
o 
d 



o 
o 


o 
o 


o 
o 


o 


s 


rj 
in 
oo 



o o o o o o 
o o o o o o 



ooooooooo 
ooooooooo 



u 



o o o o o o 

o o o o o o 

o o. p. p o_ p 

o o d d o lo 

ui in in in 05 «> 

vi v> vt *n vt 



ooooooooo 
ooooooooo 
o_ o. o. o_ o. o. o. o_ o, 
r-" h- o o o o o o' o' 
</></>ininininoor3f^ 
«/> w i« «/»«/></» «/» 



Q 
O 



O 



< 

o 

CO 



cr 
m 
_i 
< 

O 



to 






m 






z 
< 

Q. 


CO 




■? 


cc 




o 


< 




o 


o 




n 


CO 




UJ 


03 




n 


r) 




z 


CO 


a> 


^ 


CO 


c 
o 



m 



CO 
Q 

z 
< 
cc 
m 

z 
o 

UJ 

cc 
O 



0) 

c 
o 

z 



CO 
UJ 



o 
o 

CO 



V) 
■D 

O O 
O O 



(0 

T3 

O T3 

° m O 
CO U. i2 O 



Ll_ ^ 0) 



-O c « 



4S CO >- c 
_ 0) — I <i> S 



Q) JJ 



CO (/) 

CQ <2 
^ <t 

(0 3 



0. E 



V) 



& 



c;i o o 

CO o 2 

M Q. 2_ 

w <o a> Q) 

•K £ 2 s; 

Q. C P <0 

S "u a a> 



0Qi^_j:3Oac£rcococoh-3>cn5 



cc 



3 
O 
(J 

I 

CO 



_j_j_j_j_J_i— iZZ 



Q 



175 



o o o o 
o o o o 



Q 

LU 

So 

*- Q 

Z3 
CD 



o o o 

1/5 O O O 

01 o o o 
'-' o" o o 
^ en CM in 
</» «» w T- 



o o o o o o 

p o p o p o 

d d o o c\i d 

o o o o m o 

p p p^ p "-, p 

a d in o ai m 

in o) Tt in w ^ 



o o o o o o o 
o o o o o p p 

d o d d d c) d 
o o o o o o o 
P. Q p o. p. o. o. 

in in »- o d^ o o 
•— T- (D oj in in lo 
«/>«/»«/>«/»'-«/»*'> 



o oo o o o 
p p o o o o 



o o o o o o o 
o o o o o o o 



2 2 o o o o 
2 2 o o o o 
Q Q p p p p 

o o d d d CO 
in in in CM tt «o 



o o o o o o o 
o o o o o o o 
p p p p p p p 

CO d d d d d o 

«/> in in r^ h- >- in 

»-'-«/»«««/»»- 



o o o o o 
o p p p p 

d d d d d 
o o o o o 
p^ p p p p 
in d ^ (DP) 

Tt t^ »- CNi •- 

iA V* i/> v> v* 



CO 
UJ 

z 
< 

Q. 

5 
O 

o 

Q 
lU 

a 

CO 



E 
o 
o 
a. 
o 
a. 



O 
< 



c 


(0 


, . 


ni 


n 


0) 


CJ 


0» 


Q. 


(U 


i— 


w 


1 


1 


if 






x: 
u 

i2 
E ^ 

O (U 

o <u 

Q.O 



c a> 



^ w 2 

« "O CO 

0) O T^ 

CD O ^ 

4> ^ O O 

C c O) (0 

O 3 CL C 

X Q- CO < 



(0 

c 
o 



5C3< «2 « E 

•O — -X = ^ S 

~ 6)-E c 2 i aJ 

3 5 O <U O O c 

< OQ C: C3 O I Zi 



■D 
O 
O 



m 

a> 
•c 

3 
■D 

c 

— 3 

E 2 

O 0) 



0) 



u 
a> 



a> u. 
Q 



V) 

c - 2 S t5 
o a> 0) 2 "JB 



— S 
^wd59^a!cLQlcro6Sz 













T3 












O 






w 






E 


n 




i 






^ 


n 


u. 


w 






o 


n 


u. 


u. 


V> 




._ c 


u. 
2 


2 

(0 


c 
o 
(/) 
r: 


(0 
Q 




cc o 


r/> 




w- 






CO 


o 


o 


LU (O 


S .9' 



CO 



>- 
oc 



3 
O 

o 

UJ 

I— 

< 

I- 
co 



<<< ^ 



cow zzzzz 



ZZZZZZOOOOOOOOmuJlUUJUJDO 
52525S22S2SS222ZZZZZZ 



t- 

z 
o 
o 

o 
o 



176 



o o o o 
o o o o 



ooooooooooooo 
ooooooooooooo 



Q 



LU 



CM 

go 

■^ D 

m 



ooooooooooooomooo 
oinoooooooooooh-ooo 
Q. c4 o. o. o. p. o. o. Q. p. o. p. p. CO. p^ o. p. 

o vn o in' o" o" o o' in o' o' o' <o" co w" o '- 
in^mto)ooinmcMo>i^h~'-'*''*u>»- 



o 
o 

h^ 
CM 
tv._ 

in 

CO 
CD 

CO 



o 
p 
d 



o 
o 
d 



o 
o 


o 
o 


o 
o 


o 


g 


f2 



s 



o 

UJ 

Q 



O 
CO 



< 

»- 
o 

3 
CO 



< 

o 

I- 

CD 
CO 



cc 

03 
< 

o 



CO 








UJ 








z 








< 








a. 








S 






a 


O 

o 

D 


0) 

n 

i3 




3 
O « 


UJ 




2J »- 


o 


0) 


c 

0) 


D.C 


z 


c 


T3 


c 2 



£ CO 00 O UJ X ™ < -i > O < 



w E 
a> o 

-iC o 

o a 

? ° 
E Q- 

C3) 
O 
> 



o 

a> 

I- 
I 

< 



0) 



-(3 " $ - 



CD O 



X3) 

o 

CL 
■D 

C 

m 

E 

3 
(J ^ 



^ SCO ■" -5 



C3> 

c 
m 

3 
I 





CO 






tJU 






£ 




£- 


< 




(3 


Q 




Q 


CO 




V 


QQ 




E 


3 




o 
o 


CO 
CO 


0) 

s 


§ 


3 


z 



CO 




Q 




z 




< 




tr 




CO 




2 




CD 




UJ 


(l> 


cc 


c 


o 


o 



>- 



3 
o 
o 

< 

y- 
co 



oxxxixxxxa 

ZOOOOOOOOco 



5i 



z 
o 
9. 

o 
u 

s 



177 



o 

UJ 

So 

Zi 

m 



o o o o 
poop 
d d d d 
o o o o 
o. p o. o 
in o" r^" in 

0(0 

v» S S ^- 



o 


o 


o 


o 


o 


o 


o 


o 


O 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


p 


p 


p 


O 


o 


p 


p 


o 


o 


d 


o' 


d 


d 


d 


d 


d 


d 


d 


o 


d 


d 


d 


d 


V* 


o 


o 


o 


o 


o 


o 


o 


o 


v> 


«/> 


w 


vy 


o 




p 


o 


o 


p 


o 


o 


o 


o 










o 




o 


u> 


o 


m 


d 


r-' 


to" 


? 










§ 




c^ 


f 


r} 


OJ 


<n 


^- 


▼— 












oj 


r— 


r- 


w 


s 


C\j 


6^ 


(O 










<o 




v» v* 


M 




w 
































s 










s 



Q 
O 



o 

CO 



J* 

o 

CO 



< 
1- 
o 
y- 
m 

3 



m 

< 

I- 
O 



CO 
UJ 

z 
< 

Q. 

5 
O 
O 

o 

ID 

a 

z 

m 



CO 

UJ 



a. 

o 
o 

CO 
3 



— on 

»z a I 5 
S.3 E 11 

< < T CD O 



= CO 

■■" -« 



O 
O 

c 

01 



^i 



11 



A ^ Ol N 



1 1 



"(3 § 

-c u 
CO (0 

E » 

£ CO 



M 

c 
o 

CO 

13 ofl 

■o S 

EO) 
(0 OT 

» SJ-o 

O o "I 
CO -» CD 



CO 
UJ 

£ 
< 
9 

CO 
CO 

3 
CO 

CO 

3 



c 
o 

z 



CO 
Q 

z 
< 

DC 
CD 

Z 

o 

CD 

OC 

o 



c 
o 

z 



>- 
cr 



3 
O 
U 
UJ 

< 

t— 

CO 



Z 
O 

o 

CO 



^^z^^^^si^^^d 



178 



o o o o o o 
o o o o o o 



o o o o 
o o o o 



o o o o o o 
o o o o o o 



o o o o 
o o o o 



o o o o o o 
o o o o o o 



o o 
o o 



o o 
o o 



o 

UJ 



UJ 



CM 

go 

'- o 
m 



o o o o o o 
o o o o o o 
o. o. in o. o. o. 
in in >- in en" o" 

CO ■<!■ OJ -^ •- C5 

V* v> i/> tfi vy '- 



o o o o 
o o o o 
o. p. o o 
CO Tt in o 
</> «^ in o 



o o o o o o 

o o o o o o 

o o. o o. o. in 

tn CO o o" in oj 

in CD CO in «/> c\j 

«/>'-'-«/> «■!> 



o o o o 
o o o o 
p. p. Q. P. 
cj m in CD 
>- </» lo »- 
«/» to »- 



o o o o o o 

in o o o o o 

r~ p. o o. o. o. 

P5 in o CO CO r- 

co en in c\j «/» CM 

V> Vi Vt V* t/> 



o o 
o o 
Q. P 
o in 
CO en 
<o vt 



o o 
o o 
P P 
in o" 

CM CO 



vy 

UJ 

< 

OL 

o 
o 
o 

o 

z 

m 



CO 

ui 



2 


o 


o 




O 


c 

0) 


OT 


E 


3 


< 



£ 

g-a: 

c £ 
E« 

< CQ 



0) 

•c 

0) 

lis 

._ <^ CO = 

0) 



y y ~ c 



0) 0) .^ 



,2>=£ S 



3 
O 

w 
■53 



u 
01 
to 
« 



in 
-O 
O 
o 
u. 

_ c to 






Q.— ■- 

E ffS 
fo (0 to 



I o 

;3£ 



5 15 

0) £ 



u 

3 

tl T3 o 

c 13 "^ o) o 

5 ■55 ™ o " 

2 S-oi l;^ s 



c 

(0 

a 
ts o 
(0 5 

£ w 
^- I 
« « 

■O -D 



° o S 



cDmmtnmcna3CDmOOOOOOOOODLuu.tj-u.ij- 



u 

c 



o 
O 

*- -= c 

V (0 V 
■O J3 TJ 

5 o o 
000 



cc 

D 
O 

o 

i 



z 
o 

o 
o 

(O 
UJ 

5 



^Si$S^^^^^5^^5^£^^^335£5u^uf£^i£ 



(0 

I) 
z 

o 

OT 



179 





o o o 


o o 




o o o 


o o 




o o o 


o o 


o 


o o o 


o o 


o o o 


o o 




in n o 


r^ 00 


f/» OJ OJ 


</> </r 


o> O 


M 




'- Q 






ZD 






m 







o o o o o o 

o o o o o o 

o o o o o o 

o o o o o o 

in o. o (o o. o. 

h~ in in m in o 

O) »— m »- »— ^ 



o o o o 
o o o o 



o o o o o o 
o o o o o o 



o o o o o o o 
o o o o o o o 



o o o o o o 
o o o o o o 



o o o o 
o o o o 
p. o o_ o_ 

o in in in 
CNj in to to 

«/> V9 </» «/> 



o o o o o o 

o o o in o o 

o o o r~-. o o 

in o r^ op" o" N-' 

m »- »- oj in «/> 



o o o o o o o 

o o o o o o o 

o o o. o o_ o_ o_ 

in o m o in h- o 

in r- tD c\j r^ <^ h- 



o o o o o o 
o o o o o o 
p. o_ p. o_ o. o. 

in »- o in o cm' 

«/> T- Tj- in ^ T- 

vy i/> i/> v> <A 



UJ 

Z 
< 
Q. 

o 
o 
o 

UJ 

o 

2 




>- 
oc 



13 

o 
u 

< 

I- 
cn 



_, X ° < o gc 

u. (- S O Z Q. 



o_jOQ_|Q_j<<;OQx<-<;QiOa:<xxx<;QxUOx 
5u.a)Su.Su.>_lz2P_l_)52za.C3f-i-i--J2(-ZZi- 



O 

g 

CO 



180 



o 
ai 

So 

"- D 
CD 



o o o o o o o 

o o o p p p o 

d o o d o ci o 

o o o o o o o 

o_ p. p. p. p. o. p. 

in o> CO o o qj o 

c-. r) «/> •- lo </> CO 



o 
o 
d 
o 

<D 

d" 

O) 
CO 



o 
o 



o 

o 

o d 



o 
o 


o 
o 


s 


o 


o 


o 
o 

d 

5 



o 


o 


o 


o 


o 


o 


o 


p 


o 


o 


o 


p 


o 


p 


r^ 


in 


d 


d 


d 


^ 


d 


r^ 


»— 


o 


o 


o 


O) 


o 


in 


^~ 


in 


in 


o 




o 


ci 


in 


N." 


in 


o 


cm" 


d 


C\J 


00 


CO 


in 


in 


o 


m 


1- 


r^ 


«/» «/> 


*— 


C\J 


to 


</» <<9 






to 


«o 





< 

o 

I- 
m 

CO 



O 





Q 




lU 




a 


_J 




< 


cc 


1- 


m 


o 


_i 


1- 


< 


co 


1- 


D 


O 


CO 


h- 



CO 
UJ 

z 
< 

CL 

O 

a 

Q 
LU 

o 

z 

CO 



E 

0) 
V> (A 

o -a 



c 

n 

o 

- t. a> 

oc (0 ci. 

2 CD 

c 






00 -9 ^ S 2 2 5 
I- h- f- 5 > > >- 



liJ 
£ 
< 

CO 

CO 

13 
CO 

CO 



0) 

c 
o 

z 



to 
a 

z 
< 
oc 

CD 

z 
o 

03 
CC 

O 



a> 

c 
o 



CO 



CL 

2 
O 
O 

CO 

Z) 




oc 



3 

o 
o 



< 

I- 

(O 



Qc > X X <; cc o 
< :t: h- I- _i 0. CO 



CO 
UJ 

cc 

§ 

u. 



o 
o. 

CO 
CO 



lU 



O 
O 
O 

X 

o 



181 



oooooooo 
oooooooo 



o 
o 



CM 

So 

*- Q 

m 



UJ ^ 



OTOOOOCMOO r^ 

•-ooooTroo Tf 

■<r o. o in in in C4 oo_ co 

cocotncoO'-'CNjo <o 

v* v> vy ■^ «/) o 



o 
p 
d 



o 
p 
d 



o 
o 
d 



o 
p 

d 



o 
o 
r- 
•<»■ 

00 

to 
o 



o 
o 


o o 
o o 


s 

o 


o o 


CO 
00 


CO 






< 
O 



m 

CO 



< 
I- 
o 
h- 
ca 
rj 

(O 



< 

I- 
o 
\- 
m 

CO 



a 

Ul 

D 



CC 

00 

_J 

< 

I- 
o 



UJ 

z 
< 

a. 

O 

o 

Q 
LU 
Q 



m 



.5 

S - 2 

■?S 5 

■S ■— -^ 

<q <o (0 

c o >> 

o ^ "= -s 

o > o 5 

HO S tr 



§2 



o 
r) E 

I 



U) < 

li 

m ^ 
O 0) 

15 



cn 

UJ 

< 

9 

w 
m 

W 

3 



0) 

c 
o 

z 



CO 
O 

z 
< 

CO 

z 

CD 

UJ 
CC 

o 



0) 

c 
o 



CO 
Ul 



D. 

o 
o 

CO 



= s « 



>- 



3 
o 
o 

UJ 

h- 
< 

1- 



CC 

o 



o 

o 
o 

en 

Q. 

-J 
< 
o 

Cl 

o 

cr 

H 
O 

z 
< 

< 

CC 

3 



Q. 
UJ 

z 

QC 

o 
o 

Q 
UJ 

to 

CO 
UJ 
O 

o 

CC 
Q. 



o 

P 

CC 

O 

X 



182 



O) 
CT) 

'- D 
m 





o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 




q 


q 


q 


q 


q 


q 


q 


q 


o 


q 


q 


o 


q 


o 




o 


o 


o 


c> 


o 


d 


C) 


o 


d 


d 


d 


o 


d 


d 




o 


o 


o 


o 


o 


o 


«/» 


V* 


o 


</> 


</» 


«/» 


«^ 


o 
in 


D 


p. 


in 


o 


q 


q 


o 






in 










UJ 


en 


to' 


in 


in 


in 


o" 






ay 










en 


H 


o 


O) 


C\J 


«NJ 


CD 


1- 






CO 










00 


ai 




C\J 


v> </> 


CM 


vt 






r-- 










r-~. 


O 


w w 






y> 








cm' 










CM 


o 


















09 










«/> 



o 
o 



o 
o 



o o 

o o 

q q. 

in lo" 



w 



Q 
LU 
O 



o 



i 

to 



CD 
CO 



CO 



o 

I— 



i 

(O 



a 
o 
O 



CO 
UJ 

z 
< 

a. 

O 

o 

Q 
ID 

Q 

2 

CQ 



0) 

o. 

3 
CO 

c 

CO 

o 

c 

(U 



T3 
O 
O 

li. 

a> 

c 



0) 

a < li. £ 



■a 
— o 

(0 o 

2 1^ 
<i> 3; 

^o8 



CO < u- 



3" 


to 




o 


LU 




O 


m 




O) 


< 




c 






c 


Q 




^ 


to 

CD 




(J 


3 




>> 
(0 


CO 


0) 


■a 

LL. 


to 





CO 
Q 

z 
< 

GO 

z 

(3 

UJ 

cc 
o 



0) 

c 
o 



CO 




lU 




i 




CL 




US 


■o 


o 


c 


o 


o 


to 


g 


ZJ 


b 



> 

DC 



O 
O 



< 

t- 

to 



Q 

«=; 
CC 

O 

$oc < 
§ O O 



oc 
o 

^, 

5 



< 
o 



z 
o 

(O 

to 

o 
o 



i 

< 



oc 
o 

u. 



183 





o 


o 


o 


o 


o 


o 


o 




o 


p 


o 


o 


p 


p 


p 




S 


d 


d 


d 


d 


d 


d 


Q 


Vi 


V* 


o 


Vi 


v> 


o 


o 


UJ 






o 






p. 


p. 


rvi ►- 






in 






lo" 


o' 


S UJ 






III 






m 


r>. 


go 






8 






CO 


O) 


D 
















CO 

















o 


o 


o 


o 


o 


o 


o 


o 


p 


o 


o 


p 


o 


p 


p 


p 


d 


d 


d 


in 


ui 


d 


d 


d 


o 


o 


o 


C\J 


r^ 


o 


v> 


v> 


p 


m 


o 




". 


o 






d 


S 


d^ 


d 


o 


to 






t^ 


CO 


^ 


en 


o 






w 




v> 


v> 


C\J 


(O 







o 

LU 
O 



o 
m 

Z3 



< 

I- 

o 

I- 



m 

—I 
< 
I- 
O 



< 

I- 

o 

\- 
m 

w 



O 



CO 






UJ 






z 
< 

Q. 


UJ 




o 


ac 
< 




u 


Q 




Q 


W 




UJ 


CO 




Q 


3 


0) 


^ 


vi 


c 
o 


m 


ZJ 


H 


>- 






tr 






^ 






rj 






o 






o 












UJ 






K 






< 






1— 






w 







OT 

O 

z 
< 

m 

2 

cc 
o 

u. 





o 






M 






« 






£ 






o 






o 






■^^ 






o 






u 




OT 


ni 




0) 


tr 




o> 


o 


2 


o 


Q. 

E 


Q> 


m 


tr 



CO 

lU 



o 
o 

to 

Z) 



c u o 

W Ql O 

— o ^ ^ I 

0) W D O c 

Q UJ X Z I- 



c 
o 



to 

LU 

< 

9 

CO 

CO 

Z3 
CO 

CO 

=)■ 



0) 

c 
o 



CO S (3 

Q. Q. Q. 
CO CO CO 



< < < < < 

o o o § o 



Q. 
UJ 



< 

O 



o 
at 

CO 
CO 
UJ 

O 
O 

CC 
Q. 



184 



Q 
UJ 

Sit 

go 

" o 
m 



o 
p 

d 



o 
p 

d 



o 
p 

d 
o 
p. 

(D 

O 
(O 



o 


o 


o 


o 


o 


o 


o 


o 


o 


p 


p 


o 


o 


o 


d 


d 


d 


d 


d 


o 


d 


o 


o 


w 


v> 


Vi 


«^ 


o 


o 


o 










p. 


•* 


•<t 










•<t 


00 


CO 










CO 


h- 


t^ 










h- 


V* 


w 










«» 



Q 
UJ 
O 



Q 
UJ 
O 



< 



CD 



m 



O 

I- 



§ 

CO 



< 

I- 
o 
t- 
m 

CO 



< 

I- 
O 
1- 
m 

C/3 



a: 

CD 

< 

v- 
O 



CO 




UJ 




2 




^ 


CO 


n 


Q 


2 


z 


O 

o 


CD 


o 

UJ 
D 


Z 


z 


CD 


^ 


O 


m 


u. 


>- 




CC 




g 




3 




o 




o 








^ 




< 





o 

c 
o 

z 







CO 




CO 


CO 




UJ 




Q 


UJ 




£ 




z 


Q. 


CO 


< 

Q 

CO 
CD 




< 

CC 
CD 

z 
o 


o 


i 


CO 


0) 


m 


CO 


0) 

o 


CO 


c 
o 


CC 

o 


■=> 


O 


3 


z 


u. 



« 

c 
o 

z 



CO 



la. 

QC 
UJ 
CD 

z 



185 





O 


o 


o 


o 


o 


o 


o 




o 


o 


o 


o 


o 


p 


o 




d 


d 


o 


d 


d 


d 


d 


a 


o 


o 


«> 


M 


v> 


</> 


o 


u 

Sfuj 
So 


in 


in" 










in 

s 


"-O 


*— 


*— 












Z) 


«» 


«* 










M 


CD 

















oooooooo 
ooooooop 

(ba>c\iinc\i^(\ir^ 

o. o_ oi ^_ "-^ "-^ a> *_ 

* 2" *" t-" "> ■* t^" <"' 



a 

lU 
O 






i 

CO 



o 

m 



m 

-I 

o 



CO 
UJ 

2 
< 
Q. 

2 
O 
O 

' Q 
UJ 
Q 

r 
m 



CO 




tu 




i 




a. 




2 







W) 





x: 




u 


CO 


0) 


d 


5 



m 
< 
s 

CO 

m 

CO 
CO 



o 
c 
o 

z 



CO 

a 

z 
< 

m 

z 
o 
m 

oc 
o 



o 

c 
o 

z 



CO 
UJ 



o 
o 

CO 

Z) 



•d 2 



c 
■E 



_ C u, 

« ~ -^ § S 5 .-i fi 
ococoi-§co< 



>- 



3 
O 

o 

< 

I- 

(O 



I 



CO 

Z) 
(E 

»- 

O 



UJ 

I 

Gi 

O 
< 

o 

s 

Q 



186 






UJ 



go 

'- o 
m 



o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


q 


o 


o 


o 


o 


q 


o 


o 


q 


q 


q 


q 


o 


q 


o 


q 


o 


»— 


CO 


in 


CO 


rJ 


h~' 


^ 


^ 


O) 


CO 


OJ 


CO 


CO 


*-^ 


Cvj 


■* 


C\j 


O) 


O) 


■T 


(O 




00 


Tf 


P5 


o 


ID 


o 


in 


CJ) 


■* 


CO 


o 


in 


^. 


<H 


in 


«>- 


'D 


<n 


™ 


•* 


CO 


in 


in 


O- 


«3 


•o 


CO 


® 


<". 


y— 


r^ 


1A 


r-- 


h-.' 


^.' 


in 


oo" 


r>-" 


V 


o" 


T— 


T— 


to 


•* 


^— 


o" 


to 


v» 




1-^ 


CM 


^- 


in 




in 


T— 


n 


▼- 


^— 


v> 


<A 


V* 


CM 


v> 






</> 


*» V* »> 


V^ V* V* 




«/> t» 








00 






















^ 












w 



o 
q 
to 



o 
q 



o 
o 


o 
o 


o 
o 


o 

V* 


g 


cvi 
tn 



o 
til 
o 



< 

o 

(- 
o 

3 

to 



o 

I- 

to 



< 

O 

to 



m 
< 

O 



to 
m 



< 

CL 

o 
o 

Q 
Ol 
Q 

Z 

CD 



0) 
13 

O 

O 
U. 

._ O 



S 0} 

"I 

0) c 
O ■D 



I o 

CO. 

(5 .2 



•a 

c 
o 

to 

E 

0) 

c 



O 



>. tu i5 
(0 <u c 



M 
tt 

to 

CO 

O 



^- 52 -E 

c: tu n 

_j3^<j(i).T:^.ue:^.2a) 

QQ^OcoOOOu-Q-crQ 



0) 



CO 




(0 




UJ 




O 




g 








^ 




^ 




5 




CO 




to 

CD 




z 




3 




O 




to 


a> 


U] 


0) 


to 


c 


cr 


c 


o 


o 


o 


Z) 


2 


u. 


z 






o 
y 

I- 
< 
I— 
to 



u. a. u. u. u. u. u. 



Z 

o 

(0 

oc 



Q 
Q 



187 



o 

\^ 

So 

^ Q 
CD 



o 


o 


o 


o 


o 


o 


o 


O 


o 


o 


o 


o 


o 


q 


q 


o 


o 


o 


q 


o 


q 


q 


q 


o 


o 


o 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


lO 


o 


o 


o 


o 


o 


in 


o 


«/> 


«/> 


«» 


t/> 


o 


q 


o 


o 


o. 


o 


o 


en 


q 










q^ 


in 


d 


o' 


in' 


d 


d 


en 


d 










q" 


CM 


»o 


o> 


O) 


<o 


CO 


O) 


o 










^3 


</> 


«« 


w 


v> 




O) 


N._ 


^H 










(» 










w 


«rt 


t^" 


o> 






















«/» 


i/> 










•» 



o 
o 



< 
I- 
o 

CO 



O 

h- 
o 



< 

(- 
O 
t- 
m 
r) 
en 



to 

—I 
< 

I- 
O 



m 
ui 

Z 

< 

Q. 
S 

o 
o 
a 

o 

z 

m 



CO 



O 

o 
to 

3 



n> r- o •» 

£ « o o > .a 

5 CD CT C c ^ C 
Q _l (O X CO C3 CO 



CO 
LU 

£ 

< 

9 

CO 
CD 

CO 

CO 

=) 



« 

c 
o 

z 



CO 

o 

z 
< 
cc 

CD 

z 

Qj 
cc 
O 



o 

c 
o 

2 



>- 

u 
o 
u 



g 



<<<<<<< 

OOO OOCJO 



a. 

CO 
(C 



188 



So 

03 



o 


O 


o 


o 


o 


o 


o 


o 


o 


o 


o 


q 


q 


q 


o 


q 


o 


o 


o 


o 


o 


o 


d 


d 


d 


d 


d 


d 


d 


d 


s 


s 


d 


o 


o 


o 


o 


o 


o 


«> 


w 


</> 


<» 


o 


o 


o 


q^ 


q^ 


o 


q. 










q^ 


in 


OJ 


nT 


d^ 


<D 


d 










o" 




to 


o 


o 


o 












^" 


CO 


o 


■<t 


CO 


s 


T^ 










h- 


V>VHA 


s" 


S 










$ 



a 

HI 

o 



< 

I- 
o 
»- 
m 



O 

h- 
CQ 

ID 



00 

3 
CO 



cc 
m 

< 

I- 
O 



CO 
UJ 

z 
< 

IE 
O 
O 

Q 
UJ 
O 

z 







(O 




CO 




UJ 




UJ 




QC 








o 




Q. 


i 


55 




2 


al Paine 
ole 
ariani 
jnsweel 
alley Vie 


CD 




O 


3 




O 
CO 


CO 
CO 


c 
o 


z5 


O Q 2 CO > 


3 


z 



CO 

o 

z 
< 
cc 

CD 

z 
o 
m 

tr 
O 



c 
o 



>- 
cc 

O 

u 

I 

I- 

CO 



< < < < < 

o o o o o 



Q 
CC 
< 

o 

CD 
UJ 

z 

Z) 

cc 
a. 

< 

z 
cc 
O 
u. 

< 



189 





oooooooo 


o 


o 


o 




pppqoqoq 


o 


p 


o 


o 

LU 


doddoo'od 


d 


d 


d 


ininooininoo 


o 


</> 


«o 


cj rj c\( o_ CM U5_ o. in 


CM 






f^ uj 


00 CO c\i in" c\j" d CO ai 


d 






So 


o<M'-<orrnr--r- 








a}(D-*v>v*-^v*v> 


T— 






"B 


V> f^V> w 


Tf 






t» 


<^ 






m 











o o o o o o o 
o o o o o o o 



o o o o o 
o o o o o 



o o o o o o o 
in in in o in o o 
eg c\( CM. in c\ p p 

d en d d CO c\i d 
eg c\j '-'-«/> in •- 
*9 «/>«/» «/> «/»«/> 



o o o o o 

o o o o o 

p p p p. p. 

d d d d d 

<- »- CM CM •- 



i 

CO 



O 

I- 
m 

CO 



t/5 



< 

o 

o 

Q 
UJ 
D 

Z 

CO 



to 




UJ 




^ 




Q. 




:s 


■o 2 


o 


ffi -a >- « 


o 


2 c w £ £ w 


CO 


-.•fotrocpo 


13 


qcozqujJjO> 



to 

UJ 

cc 
< 

Q 

to 

00 
CO 

CO 

3 



0) 

c 
o 



CO 

o 

z 
< 

GC 
OQ 

2 
O 
[D 
CC 

O 



ra 
o 



o 



o>oo cnrv) 
O u. Q 2 



CO 

< 
=« = « 



■c 
o 
To 

c 



Z < 3 Q y 2 Nl 



>- 
DC 



Z3 

o 

< 

to 



o 

cc 
< 
o 

m 

>• 
oc 
o 

CO 

o 

< 

z 

CO 

cc 



<<<<<<<< 

oooooooo 



t3S-0-0-D§S>-ggg-= 

oou:LLU.(i}ozcococoz 



cc 
o 

u. 

< 
o 



190 





o o o 


oooooooo 


o 


o 




o q q 


qqqqqqqq 


o 


o 




d o o 


dddddtadd 


d 


d 




o o in 


otnininominm 


to 


in 


o 


q Q. •*. 


int^'T^'rciir^oi 


r^. 


o> 


LU 


CVJ o "- 


oi ai ^ ^" h-" to ctT «J 


oo" 


r~-" 


~. 1- 


lO to CnJ 


'-«/»cgcsiv>'-wa3 


m 


h- 


^ ^ 


</> CM </) 


«» <» «» w »- 


00 


at 


go 


W 


«» 


«/» 


^ 


'- o 








«/> 


13 










m 











o 


o 


o 


o 


o 


o 


o 


o 


o 


q 


q 


q 


o 


o 


d 


d 


d 


d 


d 


d 


C2 


o 


o 


o 


o 


o 


v> 


</> 


m 


o 


q 


in 


q. 






CO 


d^ 


d 


^ 


eo' 






U3 


O) 
CO 


in 


«/» 


o 

CO 







< 

o 

CO 



Q 
UJ 
O 



GC 

m 
< 

o 



<! 

CO 



< 

I- 

o 

CO 



CO 
UJ 

z 
< 
a. 

O 

o 
o 

UJ 

o 

z 

00 



■o 
>> ? >. ° c 

;^0(U(OW(««00)0 03 

C3cQi-<Oc/>t0Q.O2u. 



to 

UJ 



o 
o 

to 

3 



Q 



o 

o 
en 

c 

5 
ca 

"I 
Q. a 

CO 



» o c ® 
O UJ £ to 



in 

UJ 

< 
9 
to 

CD 

to 
to 

13 



0) 

c 
o 

z 



GC 



o 
o 

I 

I- 
co 



in 



0) c 5 

£ (3 % 

(1) Q.'S^-^-^'^'^'^-^-^fi 
Zto:33333333K 



z 
o 

o 
o 

CO 

5 



o 

z 



191 



o 

UJ 



o 
o 
d 



o 
o 



lU 



CO 

go 

CD 



O 

q 

d 
o 
o. 

eo' 

o 

s 



o 


o 


o 


o 


o 


o 


o 


o 


o 


O 


o 


o 


p 


p 


o 


p 


o 


P 


P 


p 


o 


o 


pj 


d 


c\i 


CO 


d 


00 


o 


o 


d 


s 


00 


<o 


o 


oo 


CO 


o 


h- 


v> 


w 


M 


t; 


h~ 


o 


o 


•^ 


p 


eg 










eg 


C\j 


d^ 


CO 


s" 


o 


o 










d 


(O 


00 


(O 


o 


Tt 










TT 


•* 

5 


s 


v> w 


vt 


p 
in 










o 

8 



Q 
lU 
O 



a 

lU 

a 



< 

I- 
o 
h- 
m 

3 



cc 
m 

< 

t- 
O 



< 

CO 



(0 



o 

(O 



oc 
m 



CO 

UJ 

z 
< 

Q. 

o 
o 
o 

UJ 

o 

z 

m 



(0 

o 
z 
< 
a. 
m 

z 
o 

UJ 

oc 
O 



e 

c 
o 



CO 
lU 



o 
o 

CO 



S "= 3 

° o z 

5 " c 

.5 Q- o 

o w «» 

CD X X h- a 



to 

UJ 
(£ 

< 

a 

(O 
CD 

CO 

CO 



c 
o 



CO 

o 

z 
< 
oc 

CD 

z 
o 
m 

o 



» 

c 
o 

z 



oc 



3 

o 
o 

I- 
co 



_ _ < < < 
< < o o o 



o 

z 
o 



192 



So 

■^ Q 

m 



§§ 


§ 


3 


o 
o 


pS 


o 
o 


o 
o 


b in 
o r^ 
in p> 


12 


s 


8 


,125 
.000 


in 

CVI 


3 

Q. 


sa 








SiS 


n 


i 



Q 
111 
O 



< 

»- 
ffi 

to 



O 
CO 



cc 

03 



CO 



(O 

ai 



a. 

:g 
o 
o 

(O 



o c 
c o 

El 
£ 8 

fl 

2 ST 

•8 C 

« X 

■5.5 

V) to 



to 

UJ 

< 
9 
to 

CO 

3 

to 
to 

3 



0) 

c 
o 

z 



to 
o 
z 
< 

CO 

z 

(3 
Cj 
cc 
O 



u 

3 
TJ 
O 

Is 
ll 

iZO 



DC 



3 
O 
U 



CO 



s< 



TO 4> 

.5 $ 

U. CO 



Q 
OC 

< 
O 

(O 

> 

Ui 

z 
O 

X 



o 

5 



193 



o o o o 
o o o o 



So 



o o o o 
o o o o 
o Q o Q 
o «n o «n 
o »- O) O) 
CM M «« M 



o o o o o o 

o o o p o p 

d d d d o o 

o o o o o o 

»n »n_ p p u> in 

CNj cm" d in o t«- 

v» v» M ^ 4A <« 



o 

p 

d 
o 
p 

00 
o 



o 
p 
d 



o 
o 

3 



o 
o 



o 
o 



s s 



o 
p 

d 
o 
o 

eo 

o 









o 








lU 








o 


_1 


_J 


_l 


J< 


< 


< 


GC 


H 


1- 


CD 


b 


o 


o 


_l 


§ 


h- 


t; 


< 


ffi 


CD 


h- 


3 


3 


3 


P 


CO 


CO 


C/) 


»- 



cn 

2 

< 

CL 

o 
o 
o 

o 



CO 








UJ 






O O >. OT 


CL 
5 


o 

■a 






O 


E 


<> 


o 


CO 


m 

& 
o 


u^^-^ 


CO 


cc 


53 IS" 5^ 


z> 


-J 


Z CD _J 2 Q. 



n 


» 


c 


•c 


o 


ex 






<0 


0) 


F 


c 


0) 


UJ 


c 


fl 


>. 


(D 


^ 


CO- 


CO 


CO 



c 
« 

-a O 
™ C!J 

It 

c 5 

3 > 



CO 

UJ 

< 
a 

CO 
CD 

CO 

CO 

Z) 



o 

c 
o 

z 



(0 

o 

z 
< 
ac 

09 

z 
o 
m 

cr 
O 



0) 

s 

z 



oc 

3 

o 
o 

CO 



o 
oc 
< 
o 
to 



cEcc cc ococcrococ 
oo o ooooo 

II I Hill 



o 

p 
o 

o 
oc 

CL 

§ 

►- 
o 

CL 



o 

z 



194 



a 

glo 

•- Q 

Z3 

m 



o 
o 

6 

o 
o 
o 

s 



oooooooooooo 
oooooooooooo 

inoooootnoodirio 

■<»-OOOmOCNJOOOOO 
""^ O. O O. C\J O. N.. Q. lO. 0_ U1 N-. 

in o o ri to o" 'f t^' rr JH' r: si 



o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


q 


q 


o 


ui 


d 


d 


d 


00 


d 


d 


d 


d 


d 


d 


OJ 


o 




o 


to 


o 


o 


in 


o 


o 


o 


<o 


o 


t^ 


in 


t-~. 


o. 


to 


M. 


o 


q 


o 


o>' 


d 


C\j' 


eg 


en 


in 


d 


o 


o 


in 


d 


</> 


<A 


t^ 




CO 


«/» 


(O 




CO 


»— 


o 






</> 


</> 


(O 




M 


CO 


*» Vi 


in 










vt 






«/» 









o o o o o o o 

o q q q q q q 

d d a c6 d CD d 

o o o o o o o 

q. q. in o. <Ji q. f. 

in d to in in" co" o" 

c\< c\j w to Tf n >- 

T- *» «> w v> «/> 
to 



UJ 

Z 
< 
D. 

o 
o 
o 

UJ 

o 

z 

CQ 



to 
m 



a. 

o 
o 

CO 




iT u. O 



u c A 

^ 3 0) m o 

CD O I -J -J 



0) 

O 
. CD 

' c 

(Q 



2 ^ 



o 
oi 

c 
•c 

0) 

o>£<uco)£oa>tn^59- 




c o 
I 5) w 



_ _ 0) 
^ _ w to JS 

2 CL CO W c/3 



— i_ — > 

<" ir- »J tj 3 ^ 
W CO O U. 



^|§|55-"-5° 



S 2 
li: o 






3 
O 

o 

I 



oooooooooooouooooooooooooooouoo 



tu 

(0 



z 



195 



UJ 



CM 

^ D 

ID 
CD 



O O O O O 

O O O p O 

o o d d o 

o o in o o 

o. tD r^_ to o 

CO f>. in *" o 

CM r\j <- CO 



o o o o o o 

o o o o o o 

o d d d d d 

o o o o o o 

o. o o_ o o_ o 

■* lo to CO o in 

w m v> «/» in o) 



o o o o o o o 
p o o o o p o 

o d d o d o d 
o o o o o in o 
in p^ p p p. h-. p 
T- 00 d^ o r- o in 
t^ t<> o) c\j to "- r^ 
V) CO «/» w </> 



s 



oooooooooo 
pppooooooo 

ooodddddod 
oooooooooo 
p o. o to_ in o o. in in o_ 

in CO ro »- in in in to to to 

CO«>t'»W</>CM C\J</>V></) 



o o o o o o o 

o o o o o o o 

d d d d d d d 

in o o in o m o 

p p in r^_ in h-. oo. 

in to" c\j »-" in ^' >- 

•- «» t»» </» c\j »- T- 



(0 
UJ 

Z 
< 
0. 

2 
O 

o 

Q 

ID 
D 

Z 

m 



if ? 
o " 

r= is XI 
O CC CO 



c 
o 

P 

U> C 
0) <l> 



c: 
o 

< "S 

S o 



CO 



o 
to 

o 

1 2 

2 .9 



> 
c 
(9 

3 
O 



c 
o 



E 

UJ 



0) 



"S 

> 



c 2"^ 



s 

(0 



■^ o o 



< 

CO -^ ° — £ a) 

■S;*^C.tO„2-T:C(0?-^i-toSQ)OOT 



o 
— 0) o> o 
^ - i2 $ 

to 



0) 



0) (1) 
U. O 



« 

O 

■D O 

to eg (A 

a> xj to _ 

fe 2 N ^ 

'^*w.= aj^njL--'c;a'— W»wi-a)(not0t0t0t09? 

sm>u.Sa:QCJu.Q<mo02^u.^DC(JX2cL 



to 

3 6c 



2 o X) o) o S 

^ ^ fli i: ^ •Ij 



to .5 «) 



§1 



£• 3 a) a) tt) 



c E W it c 

O (0 .C 01 (0 o 



c 
o 

V) 



S 1 

£ "to 

CO ^ 



a> 






3 

o 
o 

UJ 

< 

to 



OOOOOOUOOOOOOOOOSOOOOOOOO OOOOOOOOOO 



o 
o 

UJ 

F 
to 

z 

UJ 

z 



196 



a 

UJ 



Ol 



Si' 
So 

'- a 

Z3 

m 



ooooooooooooooooooooo 
ooooopooooooooooooooo 

ooooooooooooodooooooo 
oooooooooooooooooootoo 
o o p. o. IT) o, o, p. oo o. o, in in p. p^ c\i p^ p^ o. '-. in 
o" ^ cm' o' »- o' CO «o' '- oo" rj c\j in oo' oo" »- m' to" in ci t" 
»-»-wo«/»in«»*'»<««/»<«'-«^CMv>v>nv>(/»«/»w 
v> *» CM o «> </» «» 



CM 



C7 



o 
o 

CO 
00 

cm" 

p. 

en 



o 
p 
d 



o 
p 
d 



< 

I- 
O 
I- 
m 

ID 



O 

03 



m 

UJ 

z 
< 

Q. 

o 
o 
o 

o 

z 

m 




15 






3 

n 



3 « 



So OT H- U 



5se 



« OT Q. 

C3) C3) £" 

^ a c (o 

C (0 c o 

o 0) a-2. 
,- <" 

5 "^ 



0) 



•2 o 5 5 -c -■ 



CO 




UJ 




cc 




< 




Q 




OT 




CD 




Z2 




<n 


« 


CO 


g 


D 


z 



cc 



3 
O 

o 
to 



<<<<<<<<<<<<<<<<<<<<< 

ooooooooooooooooooooo 



z 
o 
o 

LU 



z 

UJ 

z 



197 





o 


o 


o 




o 


o 


o 




b 


d 


00 


o 


t* 


v> 


CO 


LU 






5 


So 






<n 






s" 


3 








CO 









ooooooooooooooooooo 
Ppppoopppoooooppoop 

doddddddddbdbbddodb 
o</»v»moo</></></><^<^mio<A<^<Aoov> 
cy in p oi rt p. p, 

d^ UJ C\J t^ »-" (£)' N.' 



lO 



«> 



t^ lO w 



V* 



ss 



Q 
D 



< 

I- 
o 

I- 

OD 

ID 
CO 



cc 
m 

_i 
< 

I- 
O 



CO 




UJ 




z 
< 


CO 

Q 


2 


z 


o 
o 


< 

CO 


D 


z 


UJ 
Q 




^ 


oc 
o 


CD 


li. 


> 




CE 




^ 




3 




O 




o 








Qj 




t- 




< 




»- 




CO 





« 

c 
o 

z 



to 



o 
o 

vi 



m 

OT 0) (0 

ill 
liss 



« 5 

O (A 

^ < 

0) j; 






<*< < < 




a>a>()>°ccn)n)a)OOooraoQ. 

CQCQODCnCDOOOOOOOQDQ 



osi: 



:^^^< 



O 



I < Z , 



: UJ X v; < 

: z P Po 



>- 
oc 

3 
O 

a. 

o 



o 

g 

lU 

> 

> 

OC 

1 



z 
o 

F 

ID 
O 
UJ 
U. 

I- 

cc 
O 

CL 

I- 
< 

UJ 



(O 

Z) 



198 



So 

m 



oooooooooooooooooooooooooooooooooo 
oppoooopppopoppoopopopppopppoopopp 

O O O O O O O O O O O O O O O O O O O O O O O O p o o o o d o o o d 
o«^oir>ooo«/>«/»oo«/>«>'>«/»oinot'»v»t/>«/>«/>o</>«/>ti9ot<»v>v>io«/»«/>o 
p. p. oo_ p^ p^ p^ p. p. in, r^. ui p^ p^ o{ p^ 

d in" o) cm" ■'-" to" d^ in" eo" t" co '-" o in oo" 

c\J^»-<«c\j'- rjcNj ^i-** CO CO ••- c\i 

«^<A««i/>'- «/»«/» «/»«» w «> </> «/> 



OT 
UJ 

Z 
< 

a. 

o 
(J 

a 
uu 

o 

z 

m 



UJ 111 tu 



S|55 

" 2 • 
u. u. O 



M 

J£ C CO 

I S i ^ £ 

O S 5 S:^ 

O CO o X X 



aElo^Jg-iS 
Et£i^lsz|||S 

XX ■!;s°°it:i222 



0) 



Rl 



O 

M 
0) 



C 

t: a 
£ c 

C 3 
O O 



M 

•o 
o 
o 



to 



C 



II ._ 1 s I 

u >r S £ -h W 

« .£ 2 (0 .y o 
CL Q. a. IT oc a: 



o 



s 




a 




0) 




S 




c . 




S «" 








5 ° 


c 


X iS 


Si 


r- <" 


c 


E m 


0) 


03 w 


OT 






o 
o 

UJ 



OT 



5 2 



W)0-j00x<<^ 
^siozh^oloo 






9§ 



§§oo<oo<§o 



uj2 
z z 



I X "^ *^ 

Poo 



o 

lb 

s 

(0 

3 



199 



o 

UJ 



- D 
m 



OOOOOOOOOOOoOOOO 
OpoppOOppQOOOOpO 

oopoppoooodooooo 
*". in »- o 



O 
p 

d 
o 
in 

<o 

00 



o 


O 


o 


o 


o 


o 


o 


p 


p 


p 


H 


d 


d 


d 


d 


4» 


«9 


*» 


v» 





o 

CO 



< 

I- 
o 

to 





a 




lU 




o 


_l 


5 


< 


(T 


1- 


m 


o 


_i 


1- 


< 


m 


(- 


3 


O 


to 


t- 



CO 
lU 

2 

< 
a. 

O 

o 

i o 

i UJ 

' o 

' z 



M 

O) := ^ 

c no 
IS u o 

^ E oiS 3S« = 1S.2 2555>' 
totoco<o(o>-»-i->>>>$$5§ 



c 
o 

_^ ^ C O 
O to = 00 



» 

CO CO 

o 2 ® - 

.£ c -5 i 



« 5 <» 2 E 2r" c Z g -S E 



CO 

£ 
< 
o 
to 

CO 

to 
to 



c 
o 



CO 

o 
z 
< 

cc 

CO 

z 

C3 
CD 
oc 
o 



oc 



3 

o 
o 



CO 



lU >- < < < ^ _ < < < UJ < 5^ 
Z200§<2$>OdZ$0 



O 



z 
o 
o 



UJ 

s 

CO 

3 



200 



o 
o 
d 



o 
o 



O 

SJuJ 

•" /I 
03 



O 

o 
d 



o 
p 

d 



o o o o o o o 


o 


o 


p p p p p p p 


p 


o 


o d d d d d d 


d 


d 


o o o o o o o 


o 


o 


p p. <n CH p. CO h-.. 


»— 


1— 


(^ r-. .- 00 in »- oo" 


o>" 


oT 


O •- to ■* CV C\J Ci 




r- 


CP 


^ 


«« V* 


% 


<4 



Q 
O 



i 

CO 



o 

I- 
m 



O 

to 



CD 

_l 

o 



to 

UJ 

z 
< 

Q. 

o 
o 
o 

UJ 

o 

z 

m 







CO 


CO 




tu 


UJ 




ie 


1 




< 
s 






CO 


o 




3 


(J 


O 


to 


to 


§ 


CO 


3 


z 


=) 



o 
c 
o 

z 



to 

Q 

z 
< 
oc 

CD 

z 
o 

O 



in 

-I 



t.^^^£ 
i i g ° o 

O to CD O 2 



>- 
CC 



3 
O 

o 

I 

to 



lU 

I- 

F 
to 

z 

z 









m vt 








•a -a 








gi 






T3 


x: -c 






c 


0) 0) 






« 


£ £ 


■^^•^■^•^ 


0) 


a> 0) 


3 


3 3 3 




z z 



cc 

< 

o 
o 
o 

S 

CO 

< 



201 



a 

UJ 

So 

Z3 

to 



ooooooooooo 
ppooqoooqoq 

doodoodoodd 
ooooooooooo 
in o. o. o. o, «o o. p. in oq r»-. 
cm" {vj d t' »-" r>." in '- h«.' «o cm" 
«»wr5»-cM«*'-»-«»«*in 
iA V* V* t» «» «» 



o 
o 


o 
o 


o 
o 


o 
o 


o 
o 


s 


d 
o 
o. 


s 


o 


s 


s 


s 

o 


o 
r>- 










R 



vt 



a 

lU 

o 



o 

CD 

to 



O 

3 
(0 



< 

o 

t- 

CD 



CD 

_l 

I* 

O 



(0 
lU 

2 

< 
o. 
Z 

o 
o 
o 

UJ 

o 

z 





O 




c 




•6 S 




S 5 


CO 
Ul 


ipot LJm 
itional 
ders Se 
etics 
etics 

ders 
enetics 
es Inc. 


a. 


ccSa>a> ta in 


CO 

3 


American 
Semkin In 
American 
Federated 
Landmark 
NOBA 
Select Sir< 
Sire Powe 
Tri -State 
21stCenti 
Wortd Wid 



CO 
Ul 

S 

< 

m 

m 

CO 

CO 

Z) 



0> 

g 

z 



CO 

o 

z 
< 
oc 

CD 

z 
o 

(D 
oc 
o 



c 
o 



>• 
a. 

o 
o 

I 

CO 



CO 

oc 

UJ 

a 

UJ 
Ul 

oc 

-I 
< 

2 
< 
u. 
O 

z 
o 

o 

o 
n 



ZN^<<^^<^c< 

►=5<la:ooo2§5o 



o 

Z 



202 



Q 

So 

"- D 
m 



o o O 
pop 
odd 
o o o 
P. P. P. 
o" o" o" 
'T t o 
«> r^ oi 
** ^- 



o 
o 

d 
o 
o_ 

o" 

00 

at 



o 
p 
d 



o 
p 

d 



o 
p 
d 



o 
p 

d 
to 



o 
o 
d 
o 
p 

d 

00 



o o o o o o o 

o o o o o o o 

d d d oj rr d d 

O O CO »- CM o o 

in o. in CO to, in o. 

r^" o" to t^ ai cm" in 

«/> to O eg 00 00 »- 

«/> CM ■^ «/» v» «» 



Q 
lU 

a 



O 

m 



< 
o 

tn 



< 
o 

CD 

cn 



GC 

m 
< 

O 



CO 

tu 

< 
a. 

o 
o 
o 

Ul 

a 

z 



CO 
UJ 


Ik 

erican Fu 
Legend 


^ 


2|§ 


o 


» r- C 
OOP 

2Z <! 



CO 
Ul 

< 
o 

CO 
CD 

CO 

CO 



c 

O 



CO 

a 

z 
< 
oc 

CD 

z 
o 
m 
oc 
o 



c 
o 



a. 

:e 
o 
o 

CO 

Z) 



■a 

c 
o 

:s 
(0 

E 

0) 

c 

3 «" S O 

5°.|gi 



§ u. o B S o 2 

isiilli 



M 

0) 

•o 

CJ 



■ ■= S. 
\ CO a. 



o • « o 

_j CD U. O 



>- 
oc 



Z3 

o 
o 

UJ 

y- 
co 



O 

z 

O 

o 

\- 
z 

lU 

tu 
o 

Ul 

z 

s 

(0 



O 

z 

3 

o 
o 

I- 
oc 
o 

UJ 

o 

C3 

Ul 

C3 



^ 



3 

o 

a. 

Z3 



203 



lU 



CM 

So 

- D 
CQ 



2 ° 

o O 

(O og 

o> ■■-_ 
in rJ 



Si- 



oooooooo 
oooooooo 



U3O00CDOOOO 
'-0000000 

p. Q OR 00 '^. "1 in o 
CM in 00 00 r» nT h»" o 
'-tO'-'-rjcjinrj 

CM'-C\JC\JW«»»-V» 

^- «/» i» t* w v> 



o 
o 
c\i 

CJ) 

oo" 

CD 



s 



o 


o 


o 


o 


q 


q 


q 


o 


OC) 


C3 


d 


CO 


o 


o 


o 


o 


00 


"7. 


o 


n 


oo" 


1^ 


d 


CD 


»— 


in 


m 


CM 


eg 






in 


w v> «» 


*o 



o 
o 


o 
o 


o 
o 


d 


d 


d 
o 
q 

in 

CM 

r^ 

CO 



Q 
UJ 

o 



CO 



o 



CO 

Z3 

to 



CO 

—I 

< 
o 



V) 
lU 



< 

Q. 

o 
o 
o 

UJ 

o 

z 

CO 



ra 



10 <- M S'^ 

■a C P « CJ> 0) 

o S E s UJ « 

O t "• > >- CD 

f- . C "^f m 



c t s 5 «) » 

p -J^ 5 -D " ■= 



o 

o S o «^ 



O 
CJ 



_ >, O o •— ® w 
OC I- QC U. I O U. 



OT U 

o c 
£ UJ 
E i 

UJ CO 



0) 

X) 

o 
o 
u. 

» 
u 



CO 

UJ 

cc 

< 
a 

CO 
CO 

CO 

(O 

Z) 



i<: z 

I CO 

« p <fl 

■D .5 "D 
75^15 
c i- c 
0)0 
Q ffO 

O 3 O 

:s CD s 



CO 

o 

z 
< 
cc 

CO 

z 

UJ 

cc 
o 

u. 



0) 

c 
o 



>• 
cc 



3 
O 
U 



CO 



204 



Q 

So 
-o 

Z) 

m 



o 


o 


o 


O 


o 


o 


o 


o 


o 


o 


O 


o 


O 


o 


o 


o 


o 


o 


O 


o 


o 


o 


o 


o 


o 


q 


o 


p 


q 


q 


o 


q 


q 


o 


q 


q 


o 


q 


q 


q 


o 


b 


Q 


o 


N^ 


o> 


O) 


r^ 


^ 


00 


d 


^ 


CJ> 


en 


ob 


O) 


y^ 


d 


(b 


h-^ 


«> 


«/> 


«» 


«/> 


•t 


00 


00 


to 


n 


r^ 


h- 


CM 


00 


CO 


1^ 


CO 


n 


T 


o 


en 










"". 


rv._ 


t^. 


(O 


(O 


•n 


■<r 


■*. 


r-» 


h-. 


in 


h-._ 


•o. 


>n 




■>r 










00 


in 


in 


cvj 


c\J 


T— 


o> 


00 


in 


in 


T— 


in 


CM 


Tj-' 


CM 


r^ 










t- 


<o 


lO 


in 


in 


n 


CO 




(O 


(O 


CO 


to 


in 


«/> 




w 






1 




«/> 


<A 


«/> 


«/» 


«/> 


M 


w 


W 


»^ 


«(7 


^ 


v> 


«> 




^ 





o 

I- 
m 

CO 



O 

CO 



(0 
Ui 

2 

< 

Q. 

O 
O 
O 

lU 

o 

z 

m 







OT 




01 




UJ 




lU 




Pp 




5 




o 




a. 




m 

3 




o 


o 


CO 


a> 


CO 


c 
o 


CO 


8 


Z) 


2 


=j 


2 



(0 
Q 

Z 
< 
cr 
ca 

z 
a 

Gj 

GC 

o 




(OS: o 

CL J O 

lilt || 

0(l)J3nJ(3£"TD.yt.5>-3 >-0 
OC0<C0mi— LU><COCDXCOQ 



a 

o 
oO 
O a) 



d 0)'r= 



C 

o x: 

5^ 



>- 



Z3 

o 
o 



CO 



tOn3n3(T](T](T3n)(n(0(T3(0(T3(T3n3(T)(T3 

oooooooooooooooo 



< 
z 
o 

z 
cc 

LU 



(0 
Q 



UI 
(O 



z 
o 

o 
o 

d 

i 

p 



3 

o 
o 

z 

o 
o 



205 



o 

LU 



oooooooooooooooooooooo 

*— lO ln*~CO'— CO*— »— COOOO)COOCO(OtOO(OOCO 

TT ui 00 (o_ a> o_ to CO cvj oo_ in in oi CO o to »- (o in ID ro CO 
2 ■* 12 i£ ^ S! i^ JR^ 2t S o ^ '~ '"J i" '" <" •o cm' ^' oo' m" 



LU 



CV 

So 
^ o 

Z) 

m 



«/»'-«/»</»t»v»iocMC7CMc^coTt-inKT»-CNJco»--'<rinT»- 



m 



w 



w 



o o o o o o o 
p a c) a o C3 o 

r^ r-- CO h- fvi 00 CO 

(O CO CO CO (O o <o 
»-_ ■^_ CO. CO. «j c>t •-_ 

en en co" r- CO r^ oj" 
"- c\j 00 en (D in CO 
<A </></> v> c/> c\j <<^ 



o 


o 


o 


o 


o 


C3 


p 


p 


CO 


<b 


in 


C3 


CO 


CO 


C\J 


o 


^ 


*"". 


1^ 


\n 


Tt 


h-" 


C\J 


h-' 


en 


o 


CO 


r- 


* — 


CO 


N. 




vt v> 


«/> 


v> 



/ 





O 


<n 


U 


ai 


o» 


z 


c 


< 


c 
c 


CL 

o 


5. a 


o 


,9 g c ^ 


o 


^= § E 


LU 


CT o) a = 


Q 

z 


§ic? 


m 


2sil, 



a 
o 
o 
O 

O) 

c 
c o) 

C C 
Q. c 
to c 
R) 'a. 

X := 

® i 

re re 



« 02 

JS CO O 
X U. t/3 



c 5 ~ 
-> I- m 



a 

>- 

Jj E i: ? o 



■ o -5 



2 o S "« o 

SiuRwgoLo ? EconO:2 

ililp-Mtlcoillli 

0L-jCL^2q.OT311.S<OQ|-0QIJ. 






o 
o 

UJ 

^- 
< 

h- 



!S!SSS!!JS2S25s"'™^^™™5roS55reTOTO§5cccccc 



505^55000^^^^^^^^^^^^^ 



S-a a a -a Q. Q. Q. Q. a. Q. 
re re re re re m re re re re 



Z 

o 
o 

_l 

< 

z 
o 
? 

z 

UJ 



o 

z 
u 
o 
u 

z 
o 

o 
o 



206 





o o o 




pop 




00 00 CO 




o o o 


o 


n CH h-._ 




o in cvj 


<0 CM CO 


So 


«<»</» t^ 


■^ a 




:d 




m 





oooooooooooooooooooooo 
oooopooooooooopppppppp 
dodc)uS.r^t^oJ^cMrJa30Jt--ic)c\ih-'c\Jcbro2r; 
o r-. p p fo o i-: <o p CO in. p p n in ch t^. '". in w p •* 
cJ cJ '-' ■<- in jo" •-" cJ in ci tc" t-' cj lo c\f r^ t" Ti r: TI ri 

VtVt V* V* vt w 



o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


p 


o 


p 


o 


p 


o 


p 


^ 


d 


CO 


t--^ 


r^ 


d 


d 


d 


d 


in 


o 


CO 


(D 


r— 


o 


o 


o 


o 




m. 


t~-._ 




1^ 


o 


o 


p 


p. 


to' 


h-" 


co" 


in 


co' 


in 


o 


t>- 


^- 


</» 


CJ) 


t^ 






00 


in 


o 


Tf 




in 


</> 


^— 


^- 


Vi 


CM 


CM 


Y— 




w 




«/> w 




i/></>»> 



CO 
UJ 

z 
< 

Q. 

o 
o 
o 

a 

. z 

m 




o 



o 9 

2 Q O n S 



o) o 



o 

X o 



c 

O ."^ *v 
^ < D 



5J 'S 



o 

O) o 

«2 ® 

C V) 

c « 
CO I 



0) 


o 






1 


J3 
C3) 

c 


ra 
1 


3 > 


i^ >- z 



c Km 

-? i =1 

^ 5 iQ c: 
CO UJ S c/} 






CO u. 



>- 



o 
o 

< 

V) 



^ -J-3-5->-3->->->-)-J-3-J-J-J-3-J-3-5-5~'~'^^^^^^^^ 

o 



< 
z 
o 

z 
oc 

UJ 



o 
o 



o 
o 



207 



o o 
o o 



oooooooooooo 
oooooooooooo 



o 

UJ 

So 

'- o 

Z) 

m 



o o 
o o 
Q P. 
o" o" 
o m 

CM CM 



o o o o o o 

o o o o o o 

o. o o o. o_ o 

o o 00 cm" in" oo" 

UJ o »- ♦- t^ O) 

W CM Tf »- •- T- 

V* v* V* V* tn 



o o o 
o o o 
o o o 



o o o 

o o o 

O O o 

O •- O O «D fi 

o •* in o o o 

CM CM t^ n CM ,- 



oooooooo 
oocaooooo 

O O O O O O O «3 

oooooooo 
o. o_ o_ o_ o_ o_ o_ o 

O TT O CM t" o' o" o" 

goopjcjooin 

CM'-CM'-«»T-T-«/> 

»> V* *n fA «/> v» 



o 
o 


o 
o 


00 
CM 


CO 


CO 


1^ 



V* 



a 

UJ 

o 



< 

I- 
o 

3 
CO 



cc 

CO 



Ul 



< 

a. 

o 
o 

Q 
UJ 
O 

z 
m 



•c 
J c « c 

0) 0) 3 J= 



^ C ® 

a> o £ 

5 1 a 2 



S 



a> 

c 3 = 

01 <U 0) 

e s 3 = 



o 
a. 



Q] 



ZcntnocoOu-mujeKrcrcDoQCOwiQlZOTir 



°8 
o>.y _ 

n SI is 



® S c ® 

S „ $1 85- 

® -2 oS OJ-55 

S g^ii: $ 5 g? 

•^ ■' 9> is 3 



■c -) 



cc 



13 

o 
o 

UJ 



V) 



>.>.>.>.>.>.>N>. 

a>4>a>(3(a(acac3(0(9i3 

"""iiiiiiii 



o 
o 



CC5EEEEEEEE>.>.>,>.>.>, 



< 

z 
o 

< 
z 
cc 

UJ 



c 

z 

o 

o 

z 

o 
o 



208 



o 
o 

m 



o o o o o 

q p o q o 

d o o o d 

O O I/) o o 

o o eo o o 



o o o 
° o. P 


o 
q 


d d d 
o o o 
o q in 


d 

o 


•«r o CNI 





o o 
o o 

d d 

s§ 

«^ CM 



oooooooo 
ooooqqqq 
ddddh-ooo 

0000«5000 

ooo'*<DOoq. 
?9 



m 00 rj CM o o 
v» «» ^ «» v» rj 



iA 



CO 



CO 



CO 
UJ 

2 
< 
a. 

O 

o 
o 

UJ 

o 
z 



CO 




Ul 


1 

Q 


^ 


11. 


2 


•O T3 T3 


o 


S S 5 


, 


« « « 


CO 


us »S » 


=> 


oc < cc < oc 



CO 
lU 

i 

o 
Ui 

CD 



CO 



woo 

£ E E 

2 UJ lU 



CO 

o 



CD 

z 
o 
m 

o 






S 

^82 



« t 



■o 
o 



T3 

C 



o 
o 



« 5 o E c -3; « 
55^oo:dS§w 

OaiSwwaJCDC 



c 
« 2 

.Uit 
oc w 



oc 



3 
o 
p 



CO 



MM ^ 

< ^ w o 
— s O U 

11 ly « s 

S n < «^ 
(0 CO => Z 2 






$ «0 < 
CO (O 3 



(7) d> o> 
c c c 

E E b E » * • = .^ t: 
OC3OOC0C0C03I33 



z 
o 

cS 

Q 
o 

UJ 
UJ 



O 

z 

o 
o 

Ul 

o 

IT 

< 
CO 

3 






209 



o 

w 



UJ 



CM 

So 

'- o 
ffi 



92SOOOOOOOO 
ppoooqqppoo 

SSSciodbddod 
222OOOOOOO10 

P. P Q. p^ O. P p^ p p^ p <D 

cj o in d^ o" o' o d ui d »- 



o 
p 



o 
•A 



o 

o 

(O 

o 

c> 
e\j 

o 



»- CM 



O 
O 

«n 
en 
oo 




o 
o 

Q 
UJ 
O 

z 
< 

ffl 



o 

o 

z 



m 

UI 

2 

< 
o. 
S 

o 
u 

Q 
UJ 
O 

z 
m 



c 
% 

O 

to 

o8 

0) 

C 



2 5 
oif 
O) o 

^ V) 

(0 



01 



■o 

s 






•J «i go o 

« I 2^38=8 

<=}|-uj=}iiiOiD 



> 



o 
o 

I 

m 



d> 


di 


(0 


c 


c 


u 

•c 


S 


2 


< 


"O 


■o 


£ 


£ 


0) 






3 


c 


c 


O 


3 


Z) to 



m a 

22 
ra eg 

» 0) 0) a> q> ^ ^ 
■£-£-S-£-S33iy 

3333355S 
H-Hh-HI-tOtOZ) 



o 
9. 

_i 
o 

z 

3 
O 

o 

UI 

o 
£ 

< 

(0 

D 






0> 

CC 

cc 
so 

UJ 



5 



UJ 

oc 

(E 

o 

i 



210 

SUPPORT OF MARKET PROMOTION PROGRAM 

Senator Bumpers. I must say, there are a lot of people in my 
State, in the poultry and rice industry, who like this program a lot. 
I am not sure I like it as much as they do. But you are asking for 
what, $148 million for 1994? 

Mr. SCHROETER. That is correct, which is the same level as this 
year. 

Senator Bumpers. That is what you plan to spend in 1993? 

Mr. SCHROETER. That is right. 

Senator Bumpers. That is a program that is always controver- 
sial, because one of these 30-minute television shows are always 
showing what a scam it is. And then my phones go on overload, 
and I guess I have been influenced to some extent by that. 

Mr. SCHROETER. It has attracted a lot of attention. I guess one 
reason was the small amount of money that went to McDonsdd's 1 
year, through the Poultry and Egg Institute. 

Senator Bumpers. Are all those products further processed, that 
you export under that program? 

Mr. SCHROETER. About 80 percent of the funds go to what we call 
high-value products. 

Senator Bumpers. Eighty percent? 

Mr. SCHROETER. Eighty percent. It is basically a high-value prod- 
uct program, and we think it has been a very successful program. 

Senator Bumpers. The Russians resist that, do they not? Buying 
what we call further-processed, or you call high quality? 

Mr. SCHROETER. You say the Russians resist it? 

Senator Bumpers. Yes; do they not? 

Mr. SCHROETER. Well, we have a problem with the Russians now 
on some inspection requirements that they are trying to impose; 
but hopefully we can get that resolved this week, and see that 
product move again. But we have had some problems there. 

EXPORT CREDIT PROGRAMS 

Senator Bumpers. Back to you, Mr. Goldthwait. 

Russia is now behind on their loan payments; so they are not eli- 
gible for GSM, are they? 

Mr. Goldthwait. You are correct. 

Senator Bumpers. Is there any suggestion by the administration, 
that you know of, to waive that in the case of Russia, and to go 
ahead and lend them favorable credit terms? 

Mr. Goldthwait. Not to my knowledge, under the GSM Pro- 
gram. 

Senator Bumpers. This $1.6 billion, how much of that is agricul- 
tural? 

Mr. Goldthwait. About $900 million. 

Senator Bumpers. Do you know what the mix of that is? 

Mr. Goldthwait. The $700 million will be a credit under the 
Food for Progress Program and $194 million will be additional 
donational assistance under different programs. 

Senator Bumpers. Do you consider — this is sort of getting off our 
jurisdiction here — ^but do you consider Russian farming practices 
anything like a level with us? Do they fertilize their crops? Do they 
use as much fertilizer per acre, for example, as we do? 



211 

Mr. GrOLDTHWATT. In some parts of Russia, they actually do. They 
have undertaken a campaign to increase the intensity of cultivation 
over the past 10 years or so. And, with respect to production, they 
have been relatively successful. The major problem is that, when 
the harvest begins, they begin to lose the harvest. That is, starting 
with the actual harvest process, and at every step in the chain of 
processing and distribution, increasing portions of the commodity 
that has been grown are simply lost, wasted, and spoiled. 

Senator Bumpers. Is it lost in the field during production? 

Mr. GrOLDTHWAlT. A lot does not actually leave the field, because 
of poor harvesting techniques; and because the commodity is not 
really owned by anyone, or at least did not used to be, until the 
past year or two. The incentive to preserve it, to protect it, to add 
value to it, simply was not present in the former system. 

We are beginning to see signs that some of the new private farm- 
ers in Russia are, indeed, doing much better. For example, with po- 
tatoes — which is a staple crop— where production increased tnis 
past growing season. 

But their problem really has been in preserving and improving, 
adding value, to what they have produced. 

Senator Bumpers. Do you know what the condition, as far as 
planting this spring, is? Do they have adequate seed? Adequate 
fuel for their tractors, and so on, to get their crop in this year? 

Mr. GOLDTHWAIT. The impression I have is that seed is in rel- 
atively good supply. Fuel is expensive for farmers, particularly the 
new private farmers; and there are probably going to be some 
shortages or some inability to afford fuel for planting. Overall, the 
overall outlook as we see it is for a fairly good level of planting; 
but because growing and harvesting conditions were excellent in a 
few parts of Russia and some of the other republics last year, like 
KEizakhstan, we would expect perhaps a slightly smaller total har- 
vest, come this fall. 

Senator BUMPERS. Well, that is rather encouraging because I 
think, you know, food is always the uppermost thing in people's 
minds, in countries like Russia. And I tmnk that it would enhance 
Yeltsin's chances of getting his reforms through, more than any- 
thing else, if there is an adequate food supply. Nobody is going 
hungry in Russia right now though, are they? 

Mr. GOLDTHWAIT. There are pockets, isolated areas, where people 
probably are going hungry. Indeed, we are targeting, through 
American private voluntary organizations, some of those areas with 
our food aid programs. 

NORTH AMERICAN FREE TRADE AGREEMENT 

Senator Bumpers. I do not know whether you are the right per- 
son, Mr. Goldthwait, to ask this question; but in my State, for ex- 
ample, I have a conflict between food processors and farmers, on 
the NAFTA Trade Agreement. The farmers do not want it; the 
processors do. Campbell Food has a big presence in my State, and 
thev feel like they are terriblv put upon oecause of Mexican tariffs, 
and so on. But the farmers feel that one thing that might happen 
under the NAFTA Agreement, for example, Mexico does not grow 
any rice, does it? 

Mr. Goldthwait. Very little. 



212 

Senator Bumpers. Virtually none. And people are afraid, for ex- 
ample, under the agreement, as I understand it, they can export 
rice. And I do not know why an agreement like that, or why a pro- 
vision like that would be put inj for a country that does not have 
any rice, unless they were going to buy it from somebody else and 
try to reexport it, in competition with that wonderful long-grain 
rice grown in Arkansas. 

Mr. GOLDTHWAIT. I would ask Mr. O'Mara or Mr. Schroeter, who 
are much closer to the NAFTA negotiations than I, to comment. 
Senator. 

Mr. O'Mara. They do have a higher duty. Mexico has a higher 
duty on milled rice than they do on the paddy rice; they import the 
paddy rice. 

Senator Bumpers. Can you tell me what I am supposed to tell 
the farmers of my State, to placate them if I decide to vote for 
NAFTA? 

Mr. O'Mara. Well, I would think that the farmers in your State, 
to go back to a point you were making earlier, Mr. Chairman, 
would be encouraged by any agreement that expands their ability 
to do more business, in any overseas market. We expect the analy- 
sis that we have done, and we would be happy to provide that to 
you, sir, and other members of the subcommittee, that at the end 
of the implementation period, net farm exports to Mexico will be, 
I think, $2 to $2.5 billion more than in the absence of an agree- 
ment. And certainly, we will do very well on many processed prod- 
ucts, as you are hearing from some of your constituents. We are 
going to do very well in the com, sorghum, dry bean area. We are 
looking toward considerable growth in the soybean market there. 
All these specifics I can provide you, in this analysis. 

Mr. Schroeter. If I could just add one thing, Mr, Chairman. 
Poultry is the biggest place where I think we are going to see some 
real gains in l^AFTA. Mexico now has a licensing system on poul- 
try. 

Senator Bumpers. Mexico has what? 

Mr. Schroeter. They have a licensing system on poultry that is 
being eliminated. So within 10 years, we will have a completely 
free trade with poultry with Mexico, and that is going to be a big 
and growing market. 

Senator Bumpers. Mr. Schroeter, politicians tend to be a little 
myopic and they think in short-term solutions. I know everything 
is going to be hunky-dory at the end of 10 years, but most farmers 
are afraid they are not going to be around in 10 years, and it is 
the same way in the industrial sector. That is not our jurisdiction. 

Labor, for example, says, well, you are going to have — as I under- 
stand the whole theory of NAFTA, which I note in the paper this 
morning is dead — ^nobody asked me how I was going to vote, but 
we are supposed to provide Mexico with all kinds of, what shall I 
say, methods of enriching themselves over the next 10 years. 

Once we make them wealthy they are going to buy a lot more 
of our products, but during the period we are making them wealthy 
enough to buy our products, we are going to lose a lot of jobs. 

Mr. Schroeter. I do not think so in the agricultural area, be- 
cause we were a bit myopic as we were negotiating this agreement, 



213 

for example, on poultry, the initial tariff quota was 95,000 tons. 
That is going to increase regularly over the coming years. 

So we are going to sell more poultry in year 1 of the agreement, 
and that is going to expand over the 10 years. At the end of 10 
years it is completely free trade, and the same on com, rice, and 
so forth, so it is not gains after 10 years, it is gains every year over 
the 10-year period. 

Senator Bumpers. As I understand, Campbell's Soup, for exam- 
ple, we will charge them a 10-percent tariff on soups coming into 
this country, they charge us 40 percent. Under the agreement it 
goes down to 35 to 30 to 25, and at the end of a certain period of 
time we are all on a level playing field, and incidentally, they 
favor — strongly favor the agreement. 

Mr. Goldthwait, before I forget it, of the $700 million in agricul- 
tural products going to Russia under this program of the Presi- 
dent's, how much of that is poultry? 

Mr. Goldthwait. We have not finalized the commodity mix for 
that. Under our donational programs, however, within the $194 
million our current planning is that about $28 million will be poul- 
try. 

Senator Bumpers. $28 million. 

Mr. Goldthwait. Yes; out of the $194 million. 

Senator Bumpers. Will that mostly be chicken legs? 

Mr. Goldthwait. I do not know. It could well be, but other poul- 
try products could also be included. 

Senator Bumpers. You know, we almost give those things away. 
I mean, it is a perfectly good product and it has a lot of protein 
value and so on, but the American taste buds prefer white meat, 
and it is very difficult for the poultry industry to get rid of that. 

Mr. Goldthwait. The Russians are very fond of the poultry legs 
and in fact I recall seeing the famous nesting dolls they make with 
Mr. Yeltsin on one of the furthest outside holding a poultry leg that 
says, U.S. 

market promotion program evaluation 

Senator Bumpers. Mr. Schroeter, we asked you or we asked the 
people who run the MPP Program, the Market Promotion Program, 
to give us an evaluation for the last 5 years, and that was due here 
February 1. We still have not received it. 

Mr. Schroeter. That is correct. We are still working on it. We 
have had to send a survey out to the participants, Mr. Chairman, 
to get about roughly one-half of the information that is required, 
so that is the reason for the delay. We could have given you an in- 
terim report. We decided instead to wait until we got all the infor- 
mation. 

Senator Bumpers. When can we expect the report now? 

Mr. Schroeter. We hope to have this information in June. 

Senator Bumpers. By when? 

Mr. Schroeter. By June, however, some additional time will be 
required to consolidate and analyze the responses and to prepare 
the final report. 

Senator BUMPERS. OK. 



214 

FOOD FOR PROGRESS ASSISTANCE TO RUSSIA 

Another question for you, Mr. Goldthwait, and that is, appar- 
ently the President's proposal for assistance to Russia does not in- 
clude transportation cost. Is that correct? 

Mr. Goldthwait. No; the figures that I gave earlier do include 
transportation costs. 

Senator Bumpers. Staff tells me that the transportation cost of 
the Food for Progress portion cannot be covered because of the limi- 
tation on the use of CCC funds for that purpose. 

Mr. Goldthwait. There is currently a cap of $30 million on the 
use of CCC funds for direct transportation costs under the Food for 
Progress Program. We are reviewing a possible administrative rem- 
edy that might enable us to use additional funds for providing 
transportation costs. We are working on a solution to that problem 
at present. 

Mr. O'Mara. Mr. Chairman, could I add a point to that question 
you raised? The Department is actively working with other parts 
of the administration to find a way to implement the President's 
commitment at Vancouver as quicldy as possible, and that is why 
the Secretary has been looking at administrative actions rather 
than a legislative one to take account of the $30 million limit that 
Mr. Goldthwait spoke to. As soon as he has completed his internal 
discussions with the administration he will be in consultation with 
you with respect to the approach that is decided, and I expect that 
will take place quite soon. 

Senator Bumpers. Let me just make a suggestion that is prob- 
ably redundant, but the sooner you do that the better, because if 
you should happen to have asked for some additionsd money, we 
have probably got a supplemental coming through here very short- 
ly. I am not encouraging you to ask for additional money. If you 
can work it out internally that will be fine. 

Mr. O'Mara. Our desire is at this stage to find a way to avoid 
that, and again I think the Secretary will be in touch with you very 
quickly on that subject. 

Ascs administrative expenses 

Senator Bumpers. Thank you. Mr. Weber, are you looking at a 
shortfall in your operating budget? 

Mr. Weber. There have been news stories claiming that in fiscal 
year 1993 we will be closing offices and that type thing. That is not 
true. We certainly are having our county ana State offices look at 
what they can do to minimize costs. Temporary employees have 
been laid off, but for our full-time employees we do not expect any 
layoffs for fiscal year 1993, furloughs or otherwise. 

Senator Bumpers. I did not understand the last part of your an- 
swer. 

Mr. Weber. For the balance of this fiscal year we do not expect 
to have anyone on furlough as has been suggested by some news 
accounts. 

EMERGENCY CONSERVATION PROGRAM 

Senator Bumpers. OK 



215 

Now, here is a small question dealing with the emergency con- 
servation. You requested $2,760,000 for the Emergency Conserva- 
tion Program, and do you not have an awful lot more requests than 
that right now? 

Mr. Weber. For fiscal year 1993 we started out with $3 million 
for the regular program, in addition to a 1992 supplemental of $27 
million that was provided late in the fiscal year for hurricane dam- 
age. It has become apparent that those funds were not sufficient, 
and we are working on a process now to try to get approval to 
transfer an additional $31 million to fully cover the cost-shares 
that producers are eligible for in southern Florida. 

We also are expecting that as a result of other disasters that 
have occurred this year, the funds we have available for the regu- 
lar 1993 program are not going to be sufficient, and that we think 
there will be a need for additional funds in the neighborhood of $8 
million. 

Senator Bumpers. Where are you going to transfer $31 million 
from? 

Mr. Weber. We are looking to transfer it from the unobligated 
balance in the Conservation Reserve Program account over to the 
ECP. We believe there are sufficient funds there. 

cottonseed and sunflower oil programs 

Senator Bumpers. Mr. Goldthwait, this question should go to 
you. The 1993 appropriations bill, in conjunction with the 1990 
farm bill, requires you to spend $50 million on the cottonseed oil 
and sunflower oil export programs for 1991 through 1995. Are you 
prepared to spend that amount of money this year? 

Mr. GtoLDTHWATT. We are going to try to spend that amount of 
money. 

Senator BUMPERS. How much have you spent so far? 

Mr. GrOLDTHWATT. So far this year we have spent under the two 
programs approximately $26 million. 

Senator BUMPERS. You are well on your way, are you not? That 
is a very important program to a lot of States, including my own. 

Mr. Goldthwait. We recognize that, and while in the early years 
we did not spend close to the $50 million, if you look at the recent 
history of the program you will see that we are doing a better job 
of finding opportunities for the use of these programs. We have 
greatly increased the list of countries where we are introducing the 
program, and I think the $26 million shows the results of that ef- 
fort. 

ENTERPRISE FOR THE AMERICAS INITIATIVE 

Senator Bumpers. Here is a program that staff gave me a ques- 
tion on that I do not know anything about, I have never heard of. 
It is called, Enterprise for the Americas Initiative. Do you admin- 
ister that also? 

Mr. GtoLDTHWAlT. We do not administer it. It is run largely out 
of the Treasury Department. The fact, however, is that in last 
year's budget and again in this year's budget there is a very small 
provision for some debt forgiveness of Public Law 480, title I debt 
from loans that were incurred a number of years ago by various 



216 

Latin American countries, and that is the connection of the pro- 
gram to our work, and so we follow that very closely. 

Senator Bumpers. Could you provide the committee with a sum- 
mary of your activities to date by country? Can you do that? 

Mr. GOLDTHWAIT. Yes. 

[The information follows:] 

Enterprise for the Americas agreements were signed by the United States Govern- 
ment with five countries to reduce Title I, Public Law 480 debt. In fiscal year 1991, 
agreements were signed with Chile for a reduction of 40 percent or $16 million; Bo- 
livia for a reduction of 80 percent or $30 million; and Jamaica for a reduction of 
80 percent or $217 million. Congress did not appropriate fiindin^ for EAI in fiscal 
year 1992. Thus far in fiscal year 1993, agreements have been signed with El Sal- 
vador for a reduction of 80 percent or $270 million; and Uruguay for a reduction 
of 40 percent or $400,000. Environmental Framework Agreements were signed with 
Bolivia and Jamaica on November 26, 1991, and February 27, 1992. 

BOVINE GROWTH HORMONE 

Senator BUMPERS. Some of my dairy farmers, and I come from 
a dairy farmer section in my State, have expressed concerns about 
the use of bovine growth hormone on the dairy program. Who has 
charge of this? 

Mr. 0*Mara. This is AMS, Mr. Chairman. None of us are rep- 
resenting AMS, and I was just asking Mr. Weber if there has been 
any analysis that he is aware of on that subject and its impact. 

Mr. Weber. I think there is some work being done on that right 
now, and we certainly would be glad to furnish the committee 
whatever is available on that subject. 

Mr. 0*Mara. We will provide you, sir, what has been done. 

Senator Bumpers. I would like that just so I can answer my 
mail, because I am not a technician on that, and I do not know 
really what is involved. 

Mr. O'Mara. We will do that. 

[The information follows:] 

The Food and Drug Administration [FDA] has responsibility for the scientific 
evaluation and aoproval process for the bovine growth hormone. USDA is monitor- 
ing that approval process. To date, no approval or announcement has been made 
by FDA. USDA will continue to monitor the process. 

WATER BANK PROGRAM 

Senator Bumpers. One final question, gentlemen, and this deals 
with the Water Bank Program. If you were to spend through Sep- 
tember 30, 1992, $9,874,000, and you have an appropriation of $18 
million for 1993, how much of that money have you spent and how 
much do you have left, and this is just a low-grade conservation or 
wetlands reserve program, is it not? 

Mr. Weber. Yes, it is. 

Senator Bumpers. To tell you the truth, I am wondering why we 
have this program. Why do we have this, when the same thing is 
being accomplished, or essentially the same thing is being accom- 
plished with the Wetlands Reserve Program? 

Mr. Weber. I think the difference between the two programs is 
that the Water Bank Program maintains wetlands by providing 
farmers an incentive to keep them out of production, whereas the 
Wetlands Reserve Program enhances the wetlands by encouraging 



217 

farmers to remove cropped wetlands from production and restore 
them. I believe that is the difference. 

Senator Bumpers. I think that is a distinction without a dif- 
ference, Mr. Weber. 

Mr. Weber. It may be something we need to look at. 

Senator Bumpers. We are going to look at that, because either 
it needs to be torpedoed or it needs to be merged into the Wetlands 
Reserve Program, because really the administrative cost of a pro- 
gram that small would be probaJbly too great, and I would suggest 
those two programs do not need to both exist. 

Gentlemen, I thank you very much. Your answers have been 
helpful. 

We are joined by the former mayor of San Francisco, my distin- 
guished colleague. Senator Feinstein. Senator Feinstein, you just 
got under the wire. We were about to shut this operation down. 

Senator Feinstein. I am sorry to be late. I was at the Foreign 
Operations Subcommittee. That makes three committee hearings in 
the same day. 

Senator Bumpers. Everybody is in Foreign Operations. Why is 
that so much more important than this? 

Senator Feinstein. The Secretary of the Treasury is there. That 
is probably why, not that you gentlemen are not as important. 

Senator Bumpers. Do you have any questions? 

Senator Feinstein. No, thank you. 

submitted questions 

Senator BUMPERS. Well, in that case, we are honored by your 
presence, and we thank all of you gentlemen. Additional questions 
will be submitted for written responses and we ask you to respond 
to them within 5 days. 

[The following questions were not asked at the hearing, but were 
submitted to the Department for response subsequent to the hear- 
ing:] 



218 



AGRICULTURAL STABILIZATION AND CONSERVATION 

SERVICE 

QUESTIONS SUBMITTED BY SENATOR BUMPERS 

DISASTER ASSISTANCE 

Question. In 1991, we made $1,750,000,000 available for disaster 
payments to farmers for crop years 1990, 1991, and 1992. The first 
$995,000,000 was made available immediately for 1990 and 1991 crop 
losses and the remainder was made subject to a presidential request and 
emergency designation. Last year, we made an additional $482,000,000 
available of which $100,000,000 was not available until requested by the 
President and declared emergency funding. What is the current status of 
these funds? 

Answer. As you indicated, the first disaster supplemental last year 
authorized a total of $1.75 billion for disaster payments on crop losses in 
1990, 1991, and 1992 under terms and conditions specified in the Food, 
Agriculture, Conservation, and Trade Act of 1990. 

Of the total, $995 million was made available early in 1992 for losses 
in either 1990 or 1991. Claims totaled about $2 billion, and payments for 
1990 and 1991 losses in Phase I of the disaster program were based on 
a prorate factor of 50.04 percent. The additional $755 million was made 
available upon request by the President on September 2, 1992. Of the 
$755 million, $100 million was set aside for payments under Phase II of the 
program to producers with losses on program crops planted in 1991 for 
harvest in 1992. The remaining $655 million was made available under 
Phase III of the program to producers with unclaimed losses in either 

1990, 1991, or 1992. 

Following Hurricane Andrew, the second disaster supplemental of 
1992 authorized an additional $482 million for Phase III of the program. 
Of the $482 million, $100 million was made available only upon request by 
the President. The supplemental also authorized additional borrowing if 
needed to pay producers for losses at the same prorate factor used in 
Phase I of the program. 

In summary, the first and second disaster supplemental made 
available a total of $2,132 million for payments on crops losses in 1990, 

1991, and 1992. After adjustment for a transfer of about $11 million to 
FmHA for migrant labor housing, funds available for disaster payments 
totaled $2,121 million. 

To date, payments at the 50.04 percent factor total about 
$1,616 million, including $963 million for Phase I, $97 million for Phase II, 
and $556 million for Phase III. An additional $60 million in payments on 
Phase III applications already on hand is expected. Current funding for 



219 



Phases I, II, and III totals $2,121 million. Thus, a total of about 

$445 million would remain for payments at the 50.04 percent factor after 

processing applications on hand. 

On April 9, 1993 we announced that producers could apply for 
quality losses on the 1992 corn crop. The application period for 
payments on corn quality losses closes May 7, 1993. ASCS has estimated 
these additional payments at the 50.04 percent factor could total about 
$150 million. Payments of $150 million on quality losses would reduce 
the estimate of remaining funds from $445 million to $295 million. 

Question. Will you be releasing the extra $100,000,000? 

Answer. A decision on a request for the additional $100 million, 
which Is not included in the Budget, will be made at a later date. 

Question. What is your current estimate of the amount you will be 
able to pay farmers on each dollar for which he is eligible? 

Answer. We will not be able to announce a change in the final pro 
rate factor, if any, until after the application period for corn quality losses 
closes and processing of claims is completed. We would estimate, based 
on anticipated claims, that the additional payment would be less than 
10 percent of the initial claim. 

Question. Should there be funds left over, will you go back and pay 
a larger pro rata share to each eligible farmer? 

Answer. We would expect to be able to pay a larger pro rate share 
if the funds remaining allow for more than a negligible supplemental 
payment. As indicated earlier, we would estimate, based on anticipated 
claims, that supplemental payments, if any, would amount to less than 
10 percent of the initial claim. 

Question. Please provide a report on the disposition of these funds 
showing geographical distribution, the crop years for which the payments 
are made, and the type of crops and disasters involved. If the final 
information is not currently available, please provide an interim report 
showing the disposition and distribution of funds to date. 

Answer. An interim report showing distribution of payments by state 
for Phase I, II and III follows: 



220 



status of Disaster Finds 
As of September 30, 1992 



r>hase 1 II 


State 


Crop Disaster Cumulative Activity 


Net Expenditures 


Alabama 


$25,092,203.00 


Alaska 


234,559.00 


Arizona 


2,766,304.00 


Arkansas 


29,368,043.51 


Callfomla 


54,956,176.41 


Colorado 


9,874,441.00 


Connecticut 


942.177.00 


Delaware 


279.462.00 


Florida 


23,981,513.00 


Georgia 


64,490,146.00 


Guam 


238,155.00 


Hawaii 


536,436.00 


Idaho 


12.667,242.00 


Illinois 


42,712.200.00 


Indiana 


22.819.569.00 


Iowa 


31.128,479.00 


Kansas 


28,756,553.00 


Kentucky 


6,136,673.00 


Louisiana 


44,044,239.00 


Maine 


2,640,817.00 


Maryland 


2.440.002.00 


Massactiusetls 


3,224,714.00 


Michigan 


23,158,798.00 


Minnesota 


27,729,430.11 


Mississippi 


26,96^698.00 


Missouri 


25,341,172.00 


Montana 


18,268,768.00 


Netxaska 


17,207,270.00 


Nevada 


2,067,212.00 


New Hampshire 


246,947.00 


New Jersey 


7.555,137.00 


New Mexico 


6,761,113.00 


New York 


6,551,728.00 


North Carolina 


14,255,599.00 


North Dakota 


32,128,319.00 


Ohio 


16,090,728.00 


Oklahoma 


22,988,700.00 


Oregon 


10,039,276.00 


Pennsylvania 


12,857,248.00 


Puerto Rico 


1,407,043.00 


Rhode Island 


108,155.00 


South Carolina 


13,795,828.71 


South Dakota 


21,146.569.00 


Tennessee 


17,034,537.00 


Texas 


145,526,538.00 


Utah 


4,318,793.00 


Vermont 


667,493.00 


Virginia 


5,183,778.15 


Washington 


24,692,678.00 


West Virginia 


1,526.437.00 


Wisconsin 


9,221,432.00 


Wyoming 


1.267.414.00 


American Samoa 


499.095.00 


N. Mariana Is. 


190.678.00 


Undistributed 


36,415,469.17 


Total Funds Expended 


$962,542,185.06 


Source: BU-641R Report 





\^ ^ 



-^ 



221 



Status of Disaster Funds 
As o( April 21, 1993 







'Phase II 






Funds Available 










$100,000,000 


Crop Disaster Weekly Activity | 


Crop Disaster Cumulative Activity | 




Disbursement 


Refund 


Disbursement 


Refund 


Net 
Expenditures 


Alabama 


so.oo 


$0.00 


$69,939.00 


$553.00 




Arizona 


0.00 


0.00 


8,541.00 


0.00 




Arkansas 


1,362.00 


4,016.00 


2,486,962.00 


6,388.00 




California 


(4,460.00) 


0.00 


596,345.00 


9,172.00 




Colorado 


11,524.00 


23,196.00 


5,439,695.00 


38,768.00 




Delaware 


0.00 


0.00 


67.00 


0.00 


:, 


Florida 


0.00 


0.00 


3,270.00 


0.00 




Georgia 


575.00 


0.00 


85,144.00 


0.00 




Idaho 


0.00 


0.00 


902,201.00 


3,454.00 




Illinois 


505.00 


0.00 


4,565,579.00 


2,652.00 




Indiana 


0.00 


0.00 


3,456,258.00 


14,232.00 




Iowa 


(305.00) 


0.00 


112.303.00 


86.00 




Kansas 


16,493.00 


275.00 


24,436,853.00 


98,724.00 




Kentucky 


0.00 


0.00 


18,985.00 


0.00 




Louisiana 


0.00 


0.00 


442.916.00 


0.00 




Maryland 


0.00 


0.00 


1,762.00 


0.00 




Michigan 


3,565.00 


263.00 


267,554.00 


4,751.00 




Minnesota 


0.00 


0.00 


31.559.00 


169.00 




Mississippi 


136.00 


0.00 


206.503.00 


0.00 




Missouri 


195.00 


0.00 


1.860,237.00 


5,013.00 




Montana 


32,594.00 


152.00 


10,660.288.00 


19,959.00 




Nebraska 


0.00 


0.00 


10,679.801.00 


6,895.00 




Nevada 


0.00 


0.00 


229,182.00 


80,903.00 




New Mexico 


0.00 


0.00 


479,772.00 


1,306.00 




New York 


0.00 


0.00 


27,863.00 


85.00 




North Carolina 


0.00 


0.00 


18,966.00 


37.00 




North Dakota 


0.00 


0.00 


24.727.00 


0.00 


>'; 


Ohio 


1.163.00 


0.00 


1.297.449.00 


3.818.00 




Oklahoma 


35,440.00 


37.00 


7,320,282.00 


9,734.00 




Oregon 


0.00 


0.00 


1,366.488.00 


984.00 




Pennsylvania 


0.00 


0.00 


3.908.00 


0.00 




South Carolina 


0.00 


0.00 


31.899.00 


266.00 




South Dakota 


0.00 


2,407.40 


5,926.488.00 


6,432.40 




Tennessee 


0.00 


0.00 


168.664.00 


24.00 




Texas 


354.00 


200.00 


8,873,203,00 


13,835.00 




Utah 


0.00 


0.00 


285,718.00 


0.00 


. ■ 


Virginia 


0.00 


0.00 


10,077.00 


0.00 




Washington 


0.00 


0.00 


2.638,203.00 


6,743.00 




|West Virginia 


0.00 


0.00 


1,060.00 


0.00 




Iwisconsln 


387.00 


0.00 


1,576,433.00 


8,256.00 




|wyoming 


0.00 


0.00 


427.515.00 


367.00 


-■^ -■; . . 


1 










:, f.^ :, ;i-i^,viii-;y. 


iTotals 


$99,528.00 


$30,546.40 


$97,040,659.00 


$343,606.40 


$96,697,052.60 


pPhase II Balance 










$3,302,947 



222 



M 

■a 
c n 

U. Ol 



2 w 



2< 

^5 



M 



o 












^" 


^^ 


s 


«■ ': 












y 


o 


2 ■■■ 












'? 


i 


<3 TO ■ 

=^ 5 . 












•■a 

1' 


to 


a ;; 












^ 




J3 












^~ 


















* ooooooooo 


OOOOOOOOOOOO 


o 


o a 


o o 


o a 


o 




jt^ooooooqoo 


o p p p o o p p p o p a 


p 


o c 


o o 


o o 


o 




E 3 cQoooodddo 

2 0-5 ** 


ddddddddddda 


d 


d c 


d o 


d a 


d 




Of M 
















O C CC 
















uLiu 








.J- 









t) . ooooooooo 

5— 4,000000000 


oooooooooooc 
p p p p p p p o p p p c 


o 


o o o c 


o c 


o 




p 


pope 


o o o 




C'ECo'dddcJo'dbd 


dd'^ddaidddddc 


▼- 


d r>^ lO c 


d d d 




S ? « ** m n 


0> »- C7 CO 


(0 


O CO 








5 g E JH 


<o — o> r«._ 

lo •♦' r«." f».' 
u> 


CO 
■«■" 


u 


) o 








» S^ 
















V 9 S 
















H £ ° 
















)X 














ooooooooo 
(no»-oOOooo 


oooooooooooc 
ooSoooopoppc 


) o 
) o 


SS 


3SS 


58g 


5§ 




■utoovixtif^riooin 


CO d d -T CO d to d h.: d t^ c 


> ■>»■' 


1^" »- 


- CO »■ 


- CM a 


1 d 




C (O CO O 0> O CO 


r» to^cnoo h- <o 
oo OTinotom K •» 


m 


00 c 


J m - 


- CO •» 






5 •» «o ■» '^. "■- "^ 


Ol 


Ol o 


1 -^ a 


3 00 •- 






■J d o <o cm" o" 


cm" 01 in co" ^ t^ cm" cm" 
eo •- CO 


cm" 


•-" h 

CO -r 


■SJJ 


)' r>." 
> u> 






CC j; '" ^ '" 




" 










livity 


o 














2 oo«oooooo>o 
JX — p p «-. <n p o p T. p 


'»-00000<00— ooc 


) CO 


T U 


1 in 


1 ■<»■ c 


; o 


CM p o) o p p n p p p p c 


> "T 


oo u 


T r-. o 


1 vn c 


5 O 


u 


— ,, cor^odrit^c^oiri 


is^dif>r~cMCMCM'<j-<r>>o'xic" 


si CO 


CO »■ 


-' d T- 


- CM c 


g 00 


< 


Ogireoocj'icooor^cM 
„ E « <n tM f" P. <o f^ "^ ". 
5' w <o lo' oo' co" eo" oo" \n cm cm 

y 5 "7 '^ ■*■. '^, '^. ^. '^ •" n. 

n T- CO ▼- *— CI 0> 
M •- "-CM 


mcototoootocMin — ■^■"fc 
CO CO o ♦— _ TT ri ^_ tn vn ^_ o_ c 


1 V 


!?? 


n in - 
T in u 


- 00 ■- 


- CO 
1 •» 


« 


o>" cm" oo' to cm' r-' cm' cm' o o)' \n ^ 


-' \n 


ro" C 


3' r^" c 


j" If" u 


i 2i 


_> 


totooir~o>oocMoooiomo 


1 f 


■«r <i 


T r 


1 O) c 


? 00 


3 


^ <o lO •» ui CM >o (-. m o> r- c 
cm' co' ■* ■«• V i/>" cm" ■*" 


-" lO" 


co" 


r T- c 
o' r-" T 


sou 
t in c 


1 CM 


3 


CM — >- 


CO 


cm 




- ^* 




E 


— v» 














— 3 


Q 
































Jooooooooo 
P^^poooppopp 


oooooooooooc 


' 9 


o c 


3 o c 


? 9 ? 


3 O 


CQ 
EX. 


o p p o o p o p pope 


3 O 


o c 


3 o c 


3 O C 


3 O 


5 3 ^ddddodddo 
2 0-2 •♦ 


dddddddddddc 


3 d 


d c 


3 d e 


3 d e 


3 d 




ax: u 
















o C oc 
















XT " 
a> 111 














V . ooooooooo 


oooooooooooc 


3 O 


o c 


= s s 


3 O C 


3 O 




O^'SOOOOOOOOO 

S oi^^dddddddd 

™ 3 c ** 
M o C 


oooooooooooc 


3 O 


o c 


3 O C 


sac 


3 O 




ddddddddddda 


3 O 


d c 


3 d c 


3 d c 


3 d 




M '- *» 
















S Q 2 
















< -,- 3 
















f ss 
















u o JZ 
















H 2° 
















u. 














OOOOOOOOO 


oooooooooooc 


3 O 


o « 


3 O < 


3 O C 


? 9 




^ooooopppp 


ooooooooo opt 


3 O 


p « 


3 o e 


3 O < 


3 O 




Zaiddd'-^dddd 


ddcMdddcviddddc 


3 in 


»— c 


3 d c 


3 ■«»■ C 


3 d 




3 to CM 


— * CM o 


in 


CO 


r 


•- CO 






X •^ ■» 


^ o OJ o_ 


o> 


CO 


i 


O CO 






CC m" 


10 -r" •♦" 


^~ 




1. 


o" (>." 




ooooooooo 
•soooOopooo 


OO0QQQU30OOOS 

oooooaoppop< 


5 o 


s; 


B8J 


i8? 


= 9 

3 O 




m ritbd^VcbddcNi<o 


ifd'-cntb'-dCMiniooi 


d (O 


r-i I 


n <- • 


* <0 c 


o d 




Szm »-ocMoo 0)0 


»- mmor^cO'-i/irjCM 


<r CO 


(O < 


7) o r 


•~ m . 


— 




VlE"*- COCOOOOO .-(O 


o o CM to to r^ o r-^ '— _ co_ 


- 00 


O V 


D CO r 


-^ TT •■ 


<t_ 




S 2 p in tf) *■ r-' cm' w 
I2P^ OCMmui O) 

Q 3 *♦ - ^ O 


»«.' V o Ol CO o> <o cm' ■» r~" ( 

CO •»'«rCM'<fcoCM'«--- < 


■~' cm' 


if 1 


■^" t" < 


m" (o' ' 


— 




'' 9 


CO < 


o >- < 


o ■v 






(o •— »— vn *- 


o 
cm' 




T 








25 














i! > 


o 


























9 


a - 
2 * 






a 








w 




p 




V 








V) 


n t 


3 




VI 








a 


i< 


< <|< < O O O Q d 


> « T3 


3 
C C 


a 
o 

S 

c 
c 

2|_ 


o 

Q — 




E 


Funds i 
Waeklv 


— — " •> iS 10 5 


O 10 

2|S 


n 3 

a o 

s|s| 


^ !3 


* S 

D I 

z z 



223 





o 




^m 










i- 




~ 


~ 












^^ 


*""" 


^ 




" 






~ 






^^ 




~° 




^M 


O) 






o 


















--■;■* 










































^- 


oo 






8 






t) 

2 
























































o 






o 






3 






















































l>. 










^ 


♦* 






















































00 








8 

<M 




z 


C 
« 






















































CO 


0> 
CO 






(0* 






a 






















































■n 


0) 






CM 






a 






















































» 








■^ 




































































s 




o 


o 


o 


o 


o 


o 


o 


cp 


o 


o 


8 


o 


o 


o 


o 


o 


o 


o 


o^ 


o 


o 


o 


o 


o^ 




8 










§ 


4tf 


•o 


o 


o 


o 


C3 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


q 


o 


o 


o 


o 


o 


o 














1 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 




S 












oc 


V 
































































o 


c 


cc 
































































a. 


lU 


































































f) 




o^ 


o 


o^ 


H 


o 


o" 


o 


o 


o 


o^ 


o 


o 


o^ 


I 


o^ 


o 


^ 


H 


o^ 


o 


o 


"o 


o 


o 




8 












u 


♦^ 


, f 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 














c 


(31 


c 


d 


d 


d 


d 


d 


CO 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


in 


d 


d 


d 




CM 












n 


tl 












o 






























CM 










o> 












M 


3 

o 


E 












lO 






























o> 










p 














w 


« 




















































o>" 












M 

< 


o 


M 

3 




















































a 












« 


n 

H 


O 

yf 
































































V 


9 




































































Jit 


5 
































































o 
o 


s 


8 


§ 


8 


o 
o 


8 


o 
o 


o 
o 


o 
o 


o 
o 


8 


8 


o 
p 


en 

CO 


o 
p 


o 
o 


o 
o 


8 


8 


en 


o 
o 


o 
p 


o 
p 




CO 














•a 


o> 


00 


CD 


lO 


CO 


ai 


d 


(fi 


<n 


d 


d 


r- 


r-i 


in 


d 


CO 


CM 


^ 


CO 


d 


s. 


^ 


d 


d 




00 
















c 


in 


VO 


o 




■^ 


o 


r~ 






r^ 


T— 


in 


to 






o 


CO 




o 


CM 








9 
















3 


in 


CO 


00 


T 


CM 






r^ 


eg 


r~~ 


CO 


5 


r— 


en 


CO 




CO 


r-~ 






















4) 




•>»■" 


r-' 


<o" 


«n' 




r»" 


in 








o" 


■v" 


■<r" 


d 


■t' 




■*" 


o" 




eo" 










oo" 




















*" 




» — 




CO 










CO 


<» 




o 












CM 










in 












































■^ 
































> 




2 
CO 


— 




















































M 








o 

o 


^ 


CM 


o 


00 


CO 


cJ 


CM 


^ 


o 


o 


o 


o 


e\j 


^ 


o 


o 


CO 


o 


o 


o 


o 


o 


o 




CM 












Vl 


c 
E 


C5 


CO 


o 


^~ 


in 


CM 


m 


■^ 


p 


o 


o 


o 


CO 


■<»; 


o 


o 


CM 


o 


p 


00 


m 


p 


p 




■9- 










o 






vri 


(\i 


ui 


*— 


d 


R 


r-. 


cri 


in 


■<r 


(O 


r-^ 


^ 


(d 


^ 


(d 


CM 


CM 


CM 


eo 


d 


ih 


CO 


d 




00 










< 




O 


00 


CO 


CM 


o 


CM 


in 


o 


n 


in 


ID 


en 


s 


in 


r~ 


■«• 




CO 


in 


o 


s 




o 


00 




s 










9 
■ i 




a 
o 


r^ 


r^ 


CD 


»/) 


CD 


in 


o 


in 


r>._ 


CO 


r-_ 


T 


r- 


00 


in 


o_ 


to 


p 


CM 


p 


CO 


CM 














t) 


r> 


Tf 


cm' 


r«.' 


cm" 


co" 


T-' 


ai 


m' 


a 


eo" 


co" 


oo" 


cm' 


oo" 


r~" 


co" 


d 


■»" 


d 


cm" 


■<t' 


cm" 


in" 




r~" 












^. 


M 


oJ 


o 


s 


(O 


•* 


»— 


^— 




■* 




oo 


CJ> 


(O 


o 


o 


CO 


in 






m 


•<r 


o 


CO 




■» 










3 

3 




o 


3 


O) 


(O 


O) 


CO 


en 


o 


o 


CO 


•>r 




r^ 


oo 


m 


in 


o 


CM 


in 


o> 


CM 


to 


CM_ 


TT 


CM 




en 












OJ 


r) 


■M-" 


oo' 


co" 


■*' 


en 


in 


cm" 






o>" 


r-" 


eo" 


co" 


cm" 




cm" 


ai 




oo' 


cm" 


^ 






co" 














M 






^~ 




»— 




















in 












CM 










in 










E 


























































m 






~ 




3 






O 




















































v> 






9 




o 

































































(0 

£1 






Jf 




o 


o 


o 


o 


o 


o 


o 


o 


o 




o 


o 


o 


o 


o 


o 


O 


o 


o 


o 


o^ 


o 


o 


o 




o 








^ 


n 


■o 


o 


o 


o 


o 


o 


o 


o 


o 


o 




o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 




9 






Q^ 






5 


3 


c 


d 


d 


d 


d 


d 


d 


d 


d 


d 




d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 




o 












w 


CT 


3 




















































w» 












o 


C 


U 
































































o 


C 


ec 


































































re 
UJ 






























































g 


o 


o 


o 


o 


o 


o 


o 


o 




o 


o^ 


o 


o 


o" 


o 


o^ 


o 


o 


o 


o 


o 


o 


o^ 




o" 










o 

c 
a 
»! 


£ 


c 

V 

E 


o 


o 


o 


o 


o 


o 


o 


o 


o 




o 


o 


o 


o 


o 


o 


o 


p 


p 


p 


p 


p 


p 


p 




o 












Ol 
3 
O 


d 


d 


d 


d 


d 


d 


d 


d 


d 




d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 


d 




s 












■= 


w 


t) 


































































Q 


































































< 


. 


3 
































































V 


a 

N 


a 
































































V 


9 


w 


































































9 
w 
11. 


O 

































































o 


o 


o 


o 


o 


o" 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o^ 


o 


o^ 


o 


o 


o^ 


o 


o 




o 














■o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


p 


q 


o 


p 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 


o 




o 
















c 

3 


d 


d 


■* 


d 


r>-' 


d 


r-. 


d 


d 


d 


d 


CM 


00 


d 


r-^ 


d 


d 


d 


en 


d 


CM 


^ 


d 


d 




d 




















■» 




(O 




o 










oo 


IS 




oo 












to 


CO 








en 
















« 






•* 




CO 




CO 












■* 




p 












eg 










1^ 
















OC 






" 
























*" 






















d 






c 
« 
E 


o 
o 


8 


§ 


1 


8 


o 
o 


8 


8 


8 


8 


o 
o 


8 


8 


o 
o 


^ 


8 


8 


o 
o 


8 


o 
p 


8 


8 


o 
o 


o 




r«. 














rj 


o 


oi 


CC) 


s 


CM 


CM 


r^ 


r- 


d 


d 


csi 


CO 


en 


r^ 


r-' 


in 


CO 


CO 


d 


CO 


r>. 


CO 


d 




CM 
















o 


•^ 




00 






r~ 


ir 




en 


00 


eo 


o> 


CO 


CO 


in 


•^ 




to 


o 


CO 






$ 














w 


■<r 


\n 


0{ 


o> 


o 


m 


\n 


in 


<o 


m 






CM 


o 


eo 


o 


■<»• 


r-- 


r*. 




I-- 


■«r 


r-_ 


















n 


V 


oo 


ri 


^- 


V- 


>n 


r~" 


y-^ 


<n 


d 


o> 




cm' 


o" 


cm" 


O) 


co' 




r~." 


•*" 




CO" 


oo" 


co" 






O) 














v> 


M 


o 


• — 


o 


CO 


^— 


S 


>o 


CO 


CO 


r~ 




r». 


CO 


00 


■» 








■<r 




CO 




CO 




















a 


3 


<N( 




*— 


CM 


















■«• 


eo 
















CM 






?I 














a 






















































s 














o 




































































w 


5 


































































o 
























































V 






























































V 






























































o 








> 




























































c 






a 
5 
a 

M 

■o 
c 

3 

u. 


1 
5 








>• 
«> 
n 

I 

z 


O 
u 

e 
2 

a 
Z 


■K 
o 

1 

z 


C 

a 
<3 

z 


ra 
O 

IS 
O 

f 
o 

z 


O 


E 
o 


8 
o 


Cfl 

r 
>- 

V 

Q. 


O 
u 
OC 

o 

t: 

9 
3 

a. 


T3 

c 

eg 

« 

tl 

a 


la 

c 

g 

o 

c 
5 
o 

(0 


to 

O 

a 

3 

o 

V) 


« 

9 
01 
V) 

o 
c 
c 
« 

h- 


in 

(0 
X 

o 


5 


1 

E 

1 


3 

£ 

1 


c 
o 

at 
£ 
c 
<n 
a 

5 


Cfl 

c 

1 

•> 
« 


c 
g 


CJl 

c 
E 

5 


O 

E 
o 
in 

1 


n 

a 

c 
w 
(5 

3 

Z 




«> 

(0 

o 


« 

n 

e 
C 
0. 





224 



DISASTER PAYMENTS 

Question. Last week several Senators complained to Secretary Espy 
that crops other than corn should be able to receive disaster payments 
based on a reduce quality harvest. The Secretary was unaware of 
petitions from other crop producers. By now I assume that has changed. 
What other crops are you considering making eligible for disaster 
payments based on low quality? 

Answer. We are attempting to be as responsive as possible to the 
legitimate needs of producers while keeping a watchful eye on budgetary 
costs. Our response regarding the 1992 corn crop, an extension of prior 
procedures used to exclude contaminated corn from disaster production, 
reflects the severity of quality losses and the fact that for many corn 
producers in the northern corn belt states, the quantity harvested made 
them ineligible for assistance although the value of their crop, because of 
low quality, was practically worthless. The further extension of quality 
adjustment procedures to wheat and other program crops is under review. 

It should be noted that to some extent procedures for determining 
benefits under the disaster program already take into account quality 
problems for other program and nonprogram crops. For example, 
standard test weights, instead of actual test weight, is used to calculate 
disaster yields. Other adjustments include the exclusion from calculated 
production of cotton modules left in the field, exclusion of aflatoxin- 
contaminated corn, and, for nonprogram crops, the exclusion of harvested 
quantities which because of quality problems are unmarketable. 

Question. I understand that the sign up for disaster assistance for 
1992 crops ended in mid-February. When do you expect to issue checks 
for those applicants? 

Answer. We have already begun to issue checks. Checks are sent 
to producers as soon as the necessary production data and other 
information are submitted to the county office. 

Question. Do you know yet what the amount of legitimate claims 
totals? 

Answer. As of April 21, approximately $653 million in payments had 
been made to producers with losses on program crops planted in 1991 for 
harvest in 1992 or to producers with unclaimed losses in either 1990, 1991 
or 1992. 

Question. How much will you be able to pay on each claim? 

Answer. All crop loss payments are being issued at 50.04 percent 
of the computed eligible assistance amount. 



225 



FEDERAL CROP INSURANCE 

Question. What resources is ASCS allocating in 1993, and what do 
you propose for 1 994, for the sales and loss adjustment of federal crop 
insurance policies? 

Answer. FCIC provided training to two ASCS State office employees 
in each State for 1993 sales and service of Federal crop insurance 
policies; however, there has been very minimal activity so far in 1993. Due 
to the inactivity related to crop insurance policies in 1993, it is estimated 
that ASCS will again have minimal crop insurance workload in 1994. 

Question. Explain how you are fitting crop insurance activities into 
your operation. 

Answer. Crop insurance participation through ASCS State offices 
has been so minimal that the workload is being absorbed by current 
employees who are assigned to other program areas. There has been no 
increase in State office staffing as a result of crop insurance activities. 

CONSERVATION RESERVE PROGRAM 

Question. A recent GAO report on the Conservation Reserve 
Program is somewhat critical. It states that the program is expensive, the 
protection is temporary, and that a precise dollar value of CRP's 
environmental benefits cannot be determined. How do you respond? 

Answer. Although not all environmental benefits can be quantified, 
the primary objective of the CRP can be quantified. The CRP is costing 
less than $50.00 per acre per year and is saving over 1 9 tons of soil per 
acre annually. The cost per ton of soil saved under the CRP is, therefore, 
approximately $2.50. In addition, the CRP has reduced excess crop 
production, improved the nation's water quality, and enhanced wildlife 
habitat throughout the country on approximately 36 million acres. Several 
State and local wildlife and environmental groups have been studying the 
effects of the CRP and preliminary reports are positive and favorable 
regarding the results of improved ecosystems and the multiple benefits 
derived through the CRP. 

Question. Some have criticized USDA because recent acres entered 
into the CRP were taken because of their crop production history rather 
than their environmental contribution. How do you respond? 

Answer. Beginning with the tenth CRP signup, USDA accepted bids 
based on an index of environmental benefits per dollar expended. Only 
those bids that were at or below the prevailing local rental rate for the area 
offered and that provided the highest level of environmental benefits per 
CRP dollar expended have been accepted. 



226 



The crop production history does not have any bearing upon the 
selection process other than to establish basic eligibility under the Food 
Security Act of 1985 and to help determine the prevailing local rental rate. 

Question. With contracts beginning to expire in 1996, I understand 
that 75 percent of the land in CRP must have a USDA-approved 
conservation plan to participate in farm programs. What about the other 
25 percent? 

Answer. The other acres represent certain types of land that will not 
need to be under a plan. First, 6.8 percent of the acreage enrolled into 
the CRP has been planted to trees. Based on the retention of trees under 
other programs, we believe these acres will not soon be broken out for 
annual cultivation. Second, the acres enrolled in CRP had only to be 
"predominately" highly erodible. USDA defined "predominately" to mean 
that at least two-thirds of the offered acres had to meet the eligibility 
criteria. Although we do not know precisely the number of non-highly 
erodible land (HEL) acres included under contract as a part of a whole 
field or to square a field off for ease of farming, we believe it is 10-15 
percent. Finally, during the eighth and ninth signups USDA enrolled as 
many as 400,000 wetland acres under the CRP nationwide. These acres 
are not likely to be broken out if wetland restoration has been performed, 
and are of such land class that even if broken out, an HEL plan will not be 
required. Taken together, these three categories of land that do not need 
plans are estimated to account about 25 percent of enrolled acres. 

BST 

Question. Concern has been expressed about the effects of the use 
of a bovine growth hormone on the dairy program. Have you analyzed 
the effect of the use of BST on the cost of the program? If so, what have 
you learned? If not, do you plan to do so? 

Answer. As you know, the Food and Drug Administration has 
responsibility for the approval of bovine Somatotropin (BST). USDA, 
however, is continuing to monitor the process. In the ongoing work by 
USDA analysts on the supply-demand conditions for dairy, the approval 
and adoption of BST Is assumed by late 1993. Therefore, its usage 
already is included in dairy program budget estimates. No attempt has 
been made to isolate the effects of BST from other ongoing management 
practices used by dairy farmers. 

FARM SERVICE AGENCY 

Question. Please provide a crosswalk showing all accounts which 
will be part of the proposed Farm Service Agency. For each account, 
show what the 1993 funding level is and what the budget includes for the 
same activities in 1994 under the FSA. 



227 



Answer. All ASCS accounts are proposed for inclusion under the 
Farm Service Agency. The program accounts continue to appear 
individually in the FSA budget but beginning in 1994 exclude technical 
assistance funding, which is requested within the FSA Salaries and 
Expenses account. Also beginning in 1994, the ASCS Salaries and 
Expenses account is no longer separately identified but is consolidated 
into FSA Salaries and Expenses. 

The following table compares 1993 and 1994 funding for these 
accounts: 



228 



Chang*."l99ia::l 

Appropriation va; I 

1994 Roquaat i 




10 

S 

i 

1 


o 

s 

n 


lO 

1 


N 

s 

1 


s 

*- 

1 


o 
o* 

T 


e 




-6.181 

212 

90,379 

84,410 


FY 1994 

Praaidant'a 

Budgat 


M 
10* 

to 


e 
o 


e 

o* 
« 


s 

B* 


s 




e 

«M* 


lO 


a> 

o 

»* 
n 

N* 


■51 

in o 0) o|« 

CO* O* N 
O 0> 0) 


e 
»| 

< 


in 

CD 

in 


10 

n 

V 


o 


s 


«D 
N* 


i 

CO* 


g 

m 
«" 


in 


CO 

o 
« 

n 
co^ 


CO M o el« 
w* 1 cm" 


c 
•- a 

< 




to 
w 


n 

»* 


n 

CO 


«0 

•r 


<D 

CO* 


•a 
S 

in 

N* 


in 


CO 
N 

o* 


0) CO o <Min 
CO a e in 

CM 1 ^ « 


3 


o 

o 

< 


OL 

o 


0. 


a. 

EC 


c 

CO 


IL. 


a. 
o 


0. 

u 


>« 
« 
c 
E 

a 
■o 
c 

C 

-i 
o 


o 

1- 


a 
a 
■ 
c 

s 

.s 

■o 
e 
a 

• 
a 

'C 

a 
-i 

(0 


a 

£ a 

Q- a 

°1 
1 11 

pills 

o 1- uj a. 



? 5 

E 



CO 

£ 
CI 
3 

2 S 

£ • 

— -o 



"a 
i 

c 

-a 

E 



It 



5 • « 
a -c *- 



c >. 



! 
CM 

O 

_l 



E « • 
$ • - 

•- 3 • 

" o eo" 

c" 

Is 

3 "" 

i) c a. 

■o " 

> • • 

2 ■« i 
If' 
c • • 

3 2 ° 



• i" 



0- S 

< c 

I' 

eS 

a • 

•I 

^ CO 

o ^ 
O CO 

o u. 

O) s 

M a 

'^ -c 
O Q. 

c 2 
-g °- 

o--a 
I.? 

a. 



c 
o 

1 

I 
o 
o 



O 
O 

E 
E 
o 
O 



c 
o 

If 

a >, 
o ^ 



c i c 



o§ 



« X " 

= UJ £ 



a 

■ a 

n • 

2S 

E • 

• ■ 
E. >• 

• c 
CO o 

3 • 
o «= 

^ • 



-m 

3 

o 
S o 

i! 

j> in 

• - 

? • 



■») S| ol 



229 



WATER BANK PROGRAM 

Question. A recent report on the Water Bank Program shows a 
national annual payment through September 30, 1992 of $9,874,241. 
Given a 1993 appropriation of $18,620,000, for what is the remainder of 
the money being used? 

Answer. Under the Water Bank Program, USDA enters into 10-year 
agreements with landowners and operators, and obligates the full cost of 
the 10-year agreement at the time the agreement is approved but makes 
annual payments over the 10-year period. The $9,874,241 is the total 
payment in 1992 for the 1983 through 1992 WBP agreements. 

The FY 1993 appropriation of $18,620,000 will be used to renew 
selected expired 1983 agreements, sign new 1993 agreements, adjust 
payment rates for 1989 agreements, and fund related technical assistance 
necessary to service WBP agreements. 

The amount of the annual payment in 1992 is much lower than the 
amount appropriated in 1993 because the amount appropriated for WBP 
during 1982 through 1992 ranged from $8.4 million to $13.6 million. 

CHESAPEAKE BAY 

Question. What amount of funding is in the budget for Chesapeake 
Bay work, and what are the corresponding FTE's? 

Answer. ASCS does not specifically earmark funds in the budget for 
Chesapeake Bay conservation work. However, our existing conservation 
programs such as ACP and CRP have historically provided a great deal 
of financial assistance on conservation work within the Chesapeake Bay 
watershed. In R' 1992, approximately $4.8 million was paid to producers 
to install conservation practices within the watershed. Another $9.5 million 
of annual rental payments were made in FY 1992 to retire highly erodible 
or environmentally sensitive cropland under the CRP. 

There are no corresponding FTE's that relate directly to the financial 
cost-share assistance and rental payments to producers in the watershed. 
Certainly, ASCS has administrative costs associated with its conservation 
payments in the watershed area but has no specific FTE data available. 
SCS may have such data available, since SCS' technical assistance work 
is all personnel related. 

EMERGENCY USE OF CCC FUNDS 

Question. Please submit a list for the last 10 years showing the 
occasions when emergency CCC authority was invoked. Provide the 
emergency, the amount of funds used, and the manner in which they were 
used. 



230 



Answer. Section 1 of the Act of September 25, 1981 (7 U.S.C. 147) 
authorizes the Secretary of Agriculture, in connection with emergencies 
which threaten any segment of the agricultural production industry of this 
country, to transfer from other appropriations or funds available to the 
agencies or corporations of the Department of Agriculture such sums as 
the Secretary may deem necessary, to be available only in such 
emergencies for the arrest and eradication of plant pests or contagious or 
infectious diseases of animals or poultry, and for expenses in accordance 
with 7 U.S.C. 147b and 21 U.S.C. 114b. 

Under this authority, the Secretary had declared various emergencies 
with respect to plants or animals since fiscal year 1982 and funds have 
been transferred from the Commodity Credit Corporation to the Animal 
and Plant Health Inspection Service (APHIS) to fund portions of these 
animal and plant disease emergency eradication programs. We will 
provide for the record a table showing the purpose and amount of funds 
transferred from CCC to APHIS during each fiscal year since fiscal year 
1983. 

[The information follows:] 



231 



u 

o 

CO 



^ 



a. 
CO 


CM 




c 


C7) 






O) 




r: 












1 


JO 




I 


p 


^ 


c 


JT 


u 


m 




«^ 


Q. 


CO 


o 


oa 


Iro 


■^ 




T— 


c: 


E 


<0 3 


d 


o 


o 


< >- 


x: 








© 


nf 






» 




o 


U- 




m 












o 






m 












CD 












»- 






o 






o 






o 







CM 
0) 
0> 



0) 



O 
O) 



CO 
0) 



CO 
CO 
0) 



co 






s 



o 






"^S 8 

o) r^ 

O)* -"t 

I 



cvi 

CO 

oo 



o 



(O 

CO 
0) 



LO 
CO 
0> 



CO 



s 



o 
o 

CO 
<D 



CO 

o 
cm" 



o 
o 



00 

CO 
Oi 

N." 



(O 



co" 



o 

CM 



(O 

in 

CM 

oo' 

CO 



i 

to 



o 
o 
o 

(o" 



o 
o 
in 

N." 



o 
o 

CO 
(0~ 



L.. 1 


cf w 

8| 




.2 




u- 




II -^^ 


S? 




•5 
c 


n, Me^ 
1 Fruit 


5 
<1> 

u. 


<0 


(0 i9 


<D 


a> 


<D c 


C 


c 
2 


5 a> 


CO 




©<-> 




Q> 


c 


■O 


ta c 


(0 

o 


(D 


O (Q 


•c 


i :^ 


2 


5 



c 

(0 

< 



o 

'■0 



42 

a> 

Q. 

c^ 
o 

sz 



c 

(0 

o 

(0 

3 



2 ■{= 



(0 



(0 



•5 

(D 

I 
O 

m 



X 



c 

(0 

o 



00 
CO 
CD 



O 
O 



o 
o 

(O 



O 
O 
00 

co" 



(0 

■8 

•■^ 
•c 
ffl 

c 

UJ 

J5 
"aJ 
c 
o 
E 
■<3 
CO 



P 



>. 
o 
c 
a> 
o> 

0) 

E 

UJ 

o 

c 
o 

••^ 
(0 

(0 

■o 

<D 
O 

x: 
o 



sT 



CD 

a> 

x: 

■D 

c 

3 

CM 
CJ) 

cn 



<D 

o 

(D 
CO 

to 

0) 



a> 

x: 



•D 
O 

k— 
k. 
0) 
"5 

c 
2 

M 

i 
O 

o 
o 

8 

00 

cm' 



232 

QUESTION SUBMITTED BY SENATOR KERREY 

CCC HAZARDOUS WASTE MANAGEMENT 

Question. CCC was provided up to $3 million in FY 93 for operation 
and maintenance costs associated with the management of CCC 
hazardous waste sites. Approximately $16 million in additional funds were 
provided to the Department's Hazardous Waste Management account for 
actual containment, cleanup, monitoring, and inspection costs related to 
the sites. 

What is the Administration's FY 1994 request for CCC Hazardous 
Waste Management activities and the Department's Hazardous Waste 
Management program? Please provide the location of each site for which 
FY 94 funds are being requested, the amount of funds likely to be 
allocated to each site, the expected additional cost of completing work at 
those sites, and the location of additional sites for which CCC anticipates 
requesting cleanup funds in the future. 

Answer. The fiscal year 1994 request for CCC Hazardous Waste 
Management activities is $4 million for operation and maintenance costs 
associated with the management of CCC hazardous waste sites. The 
fiscal year 1994 request for the Department's Hazardous Waste 
Management program is $16 million of which $3 million is for site 
investigation and cleanup costs at CCC related sites. The attached chart 
provides the location of each site for which FY 1994 funds are requested, 
the amount of funds allocated for each site, the anticipated future funding 
needs of these sites, and the location of additional sites for which funding 
will be needed in future years. 
[The information follows:] 



233 



'I 

ta Q. 

C (0 

If 






■a 
5: 

5 



? 



im 



■o 

,05 



I 

-n 

■a 

1 
c 



5£ 



o 

c 

c 

3 






O 



>- 




o 

8 

o 

& 



(0 

? 

IS 



S. 



R^ 



i 



h 



a 3 
Q. F u. 









^ 




ggoogooggogg 
o o o o o o o 
o p o o o o o 

8 8 8 r> 8 8 <o 



s s 



8S8888888 



8d88dooS>ou>ddd 



o . a o 2 &'*:. ^. £* c o fc ^ 
B8S>-|Epxei§f<i> 



6 

m 



c 

a 



b. 
a. 
a 

B 

& 

o 3 



Pi 

c 

13 

C 

lb. 



1^ 

°0)t3 



^ 

A 





fllll 



^ 88888888 

oooooooo 
5 g- g 5 9 p o 



a» in o o < 
^' oi n" 



8 



^888 

O 6 Q 



8888888 

y- o A lo T- n lo 








8 

o. 



8 

o 



234 

QUESTIONS SUBMITTED BY SENATOR KOHL 

INTEGRATED FARM MANAGEMENT PROGRAM 

Question. It has come to my attention that the commodity program 
flexibility option known as the Integrated Farm Management (IFM) program 
has been mired in implementation problems, including program rules that 
do not fully match the intent of Congress as expressed in the statute and 
legislative history, and a lack of information and training on the program 
option at the State and county level. In the first two years, less than 
100,000 acres have been enrolled, and some of these farmers now 
enrolled are having their payments reduced based on what appears to be 
faulty interpretations of the "traditionally underplanted acreage" provision. 

I would like to know whether any review of the rules or the program 
handbook provisions on IFM is currently taking place. Is the program 
being administered in the most farmer-friendly manner possible and are 
the concerns of the sustainable agriculture farmer networks being 
addressed? 

Answer. ASCS has administered IFM with careful regard to making 
the program as farmer-friendly as possible within the statute. Sustainable 
agriculture groups have sent several letters expressing concerns about the 
provisions of IFM. These concerns have been addressed by 
representatives of ASCS and many of the concerns have brought about 
changes in policy. 

Question. Also, how many farms and how many acres were enrolled 
in the most recent signup period? 

Answer. This information is not available at this time. Total crop 
acreage base acres enrolled for 1991 and 1992 are 96,039.5. A State 
summary of IFM acreage enrollment is provided. 

[The information follows:] 



235 



STATE SUMMARY OF IFM CONTRACT ACREAGE ENROLLMENT 
FOR 1 991 and 1 992 PROGRAM YEARS 





1991 IFM 




ENROLLMENT 


ALABAMA 


1,284.4 


ALASKA 


0.0 


ARIZONA 


0.0 


ARKANSAS 


0.0 


CALIFORNIA 


00 


COLORADO 


180.6 


CONNECTICUT 


0.0 


DELAWARE 


0.0 


FLORIDA 


0.0 


GEORGIA 


62.0 


IDAHO 


8132 


ILLINOIS 


1 .435.4 


INDIANA 


237.2 


IOWA 


1 ,728.2 


KANSAS 


10,117.0 


KENTUCKY 


0.0 


LOUISIANA 


50.2 


MAINE 


287.7 


MARYLAND 


0.0 


MASSACHUSbl IS 


0.0 


MICHIGAN 


1,495.9 


MINNESOTA 


5,181.4 


MISSISSIPPI 


607.8 


MISSOURI 


477.0 


MONTANA 


5,6262 


NEBRASKA 


897.8 


NEVADA 


758.2 


NEW HAMPSHIRE 


0.0 


NEW JERSEY 


0.0 


NEW MEXICO 


613.4 


NEW YORK 


0.0 


NORTH CAROLINA 


157.2 


NORTH DAKOTA 


8,053.5 


OHIO 


171.6 


OKLAHOMA 


0.0 


OREGON 


6,372.7 


PENNSYLVANIA 


384 7 


RHODE ISLAND 


0.0 


SOUTH CAROLINA 


882.7 


SOUTH DAKOTA 


3,567.6 


TENNESSEE 


464.0 


TEXAS 


2.930.9 


UTAH 


0.0 


VERMONT 


00 


VIRGINIA 


0.0 


WASHINGTON 


0.0 


WEST VIRGINIA 


107.4 


WISCONSIN 


820.1 


WYOMING 


0.0 



1 992 IFM 


ENROLLMENT 


366.1 


0.0 


0.0 


6,037.4 


00 


0.0 





0.0 


0.0 


0.0 


1 ,936.4 


1,664.7 


407.2 


3,897.4 


1,429.0 


0.0 


696.3 


287.7 


128.2 


00 


269.9 


6,970.0 


5860 


229 8 


1,930.4 


3,1769 


0.0 


0.0 


0.0 


0.0 


00 


0.0 


3929 


7680 


138.8 


2,755.3 


0.0 


0.0 


00 


1,594.8 


4286 


3,912.8 


0.0 


0.0 


00 


0.0 


00 


268 9 


0.0 



TOTAL 
IFM ACRES 

1 ,650.5 

0.0 

0.0 

6.037.4 

0.0 

180.6 

0.0 

0.0 

0.0 

62.0 

2,749.6 

3,100.1 

644.4 

5,625.6 

11,546.0 

0.0 

746.5 

575.4 

128 2 

00 

1,765.8 

12.151.4 

1193.8 

706.8 

7,556.6 

4,074.7 

7582 

0.0 

0.0 

6134 

0.0 

157.2 

8,446.4 

939.6 

138.8 

9,1280 

384.7 

0.0 

882.7 

5,162.4 

892.6 

6,843.7 

0.0 

0.0 

0.0 

0.0 

107 4 

1,089.0 

0.0 



TOTALS 



55,766.0 



40,273.5 



96,039.5 



NOTE: 

-IFM contracts are for a minimum of ttree years, but at producer's 

option may be extended anottier two years. 
-Farm IFM re source -consen/tng crop (RCC) acreage must be at least 
20 percent of participating program crop CAB'S. 



236 



Question. Finally, what plans have been made to more thoroughly 
train State and local personnel on the intricacies and opportunities 
presented by the IFM program? When and how will the training take 
place? 

Answer. National training was provided for all programs in 1991, 
including IFM. There are no plans to provide additional training at this 
time. 

INTEGRATED CROP MANAGEMENT 

Question. The Integrated Crop Management (ICM) cost-share 
practice under the Agriculture Conservation Program (ACP) incorporates 
pest and nutrient management, crop selection and rotation, and other 
measures to reduce the use of agrichemicals and prevent pollution. 
Payments are made for 3 years while the management practices are being 
implemented. Basic pesticide and nutrient recordkeeping is required. The 
program appears to be highly successful. However, it has been limited to 
5 counties per State and 20 farms per designated county. 

If the ICM program is as successful as it appears, why does it 
continue to be limited? 

Answer. The integrated Crop Management or SP-53 practice was 
generally limited to 20 producers per county and 5 counties per State at 
the time the practice was implemented. This policy provided the 
Agricultural Stabilization and Conservation Service time to evaluate the 
effectiveness of ICM before it was expanded to other counties. In the 
Water Quality Demonstration Project in Wisconsin, the use of the ICM 
practice has resulted in over a 60 pound per acre reduction of purchased 
nitrogen inputs. In a recent study in West Virginia, the ICM practice 
resulted in an average reduction of 19 pounds per acre of nitrogen and 19 
pounds per acre of phosphorus along with significant reductions in 
pesticides. In view of these results, ASCS is considering the National 
Conservation Review Group recommendation to expand ICM nationwide. 

Question. What actions would be necessary for it to become an 
available option in all counties? 

Answer. USDA can administratively expand the availability of ICM. 

Question. How much money has been spent on ICM in each year 
that it has been available? 



237 

Answer. Funding for the ICM has been as follows: 
Fiscal Year \CM Fundinc 

1990 $213,000 

1991 1.123,000 

1992 1.675.252 
TOTAL $3,011,252 

Question. How many producers, if any, have had applications for 
funding turned down, and for what reasons? 

Answer. ASCS has not collected any data on the applications that 
were denied funding. 

Question. Have any lessons been learned from the ICM experience 
to date that could be applied to the rest of ACP? 

Answer. The ICM practice has promoted a more holistic approach 
to resource management. By assisting producers in implementing a total 
crop management system, ICM provides the opportunity to more efficiently 
use both natural resources and purchased inputs to produce a crop in an 
environmentally sound manner. By giving producers an incentive payment 
along with additional technical assistance, producers can achieve 
significant pollution reduction while increasing farm profitability. The ICM 
demonstrates the importance of soil testing, scouting, sprayer calibration, 
and other crop management techniques so that they may farm more 
efficiently while protecting the environment. Many of the concepts used 
under ICM have been incorporated into the requirements for the Water 
Quality Incentive Projects which are also operated under the Agricultural 
Conservation Program. 

Question. What recommendations concerning ICM would you make 
to this Subcommittee as we take up this year's bill? 

Answer. The ICM practice is a labor intensive practice requiring high 
levels of management and is dependent on technology transfer from 
universities and research institutions through crop consultants and 
extension agents to producers. ICM is dependent on the availability of 
crop consultants and extension agents that have the long-term 
commitment to work with the producers. Currently, there are many areas 
of the country that do not have sufficient numbers of trained crop 
consultants to implement ICM on a wide scale. The use of ICM would be 
facilitated if seed money was made available for training crop consultants 
and extension agents in ICM techniques. Incentives for establishing crop 
management associations and delivery of educational programs would 
further the use of ICM. 



238 

QUESTIONS SUBMITTED BY SENATOR COCHRAN 

ASCS AUTOMATED DATA PROCESSING CAPABILITIES 

Question. ASCS State and county offices now utilize computer- 
based procedures to conduct day-to-day support to producers. The 
budget justification indicates that the current system in reaching the end 
of its life and that the agency is in the process of identifying technologies 
to extend this system until it can be replaced. 

What funding is included in the fiscal year 1994 budget to extend the 
life of the current system? What are the long-term plans for replacement 
of this system and what investment will be required? 

Answer: Funding of $14.1 million is included in the FY 1994 budget 
to extend the system life of the current computer system used by ASCS 
State and county offices. ASCS has initiated a System Technology and 
Telecommunications Enhancement Program (STEP) as a means of 
obtaining a replacement system for our State nd county offices beginning 
in fiscal year 1995. The Department is coordinating this effort under an 
initiative called the USDA info Share Program. This initiative will have to 
be integrated into the framework of the Department's streamlining and 
Farm Service Agency reorganization. However, the Budget currently 
includes no funding in future years for STEP or the USDA Info Share 
Program. 

Question. For many years, the ASCS has reported the need to gain 
the capabilities to manage its programs through the electronic transfer of 
information between ASCS and other USDA agencies, such as the 
Agricultural Marketing Service (AMS). Current capabilities are limited in 
terms of transferring data electronically between ASCS county offices and 
the Agricultural Marketing Service relating to cotton classing and marketing 
Information. Limiting factors such as this cause farmers to utilize other 
methods for transferring data from one USDA agency to another which are 
more costly and less timely, in terms of accomplishing important savings 
in farm marketing and management. I would hope that ASCS and AMS 
will coordinate to fully accomplish the capability of transferring data that 
allow producers to make CCC loan entries at the ASCS office electronically 
this year. 

Could you please give the Committee a status report on your efforts 
to accomplish these objectives and please present us with any explanation 
of problems that might hinder efforts to reach this goal such as inadequate 
equipment, software, etc.? 

Answer. Recognizing the need to better serve cotton producers, we 
have developed, in cooperation with the Agricultural Marketing Service 
(AMS), a process to electronically obtain AMS's classing data which is 
necessary to process producers' CCC price support loans. Unfortunately, 



239 



we cannot effectively use our existing county office computer systems to 
obtain this data. However, the data can be obtained using personal 
computers (PC). We currently have personal computers in 35 county 
offices. These PC's will be used for the 1993 crop year to obtain this data. 
The number of county offices in which these PC's are located by State 
are: Alabama, 2; Arkansas, 5; Arizona, 2; Louisiana, 5; Missouri, 2; 
Mississippi, 7; Tennessee, 4; and Texas, 8. 

DISASTER ASSISTANCE 

Question. Total funding of $2,232 billion was made available in two 
emergency supplemental appropriations measures (P.L 102-229 and P.L 
102-368) for CCC disaster payments for 1990, 1991 and 1992 crop losses. 
Of the total funding provided, how much has been released and what 
amount is currently unallocated, assuming that those receiving assistance 
receive only the initial 50 percent prorated payment? 

Answer. Of the $2,232 million provided by the two disaster 
supplemental, $2,132 million has been made available for payments on 
crops losses in 1990, 1991, and 1992. An additional $100 million is 
available only upon request by the President. After adjustment for a 
transfer of about $11 million to FmHA for migrant labor housing, funds 
provided for disaster payments totaled $2,121 million. 

To date, payments at the 50.04 percent factor total about 
$1,616 million including $963 million for Phase I, $97 million for Phase II, 
and $556 million for Phase III. An additional $60 million in payments on 
Phase III applications already on hand is expected. Current funding for 
Phases I, II, and III totals $2,121 million. Thus, a total of about 
$445 million would remain for payments at the 50.04 percent factor after 
processing applications on hand. 

Question. On April 9, the Secretary announced that disaster 
assistance would be made available to corn producers with low-quality 
harvests due to 1992 natural disasters. What is the Department's estimate 
of the total funding which will be required to make payments to producers 
with quality losses on 1992 corn crops? 

Answer. On April 9, we announced that producers could apply for 
quality losses on the 1992 corn crop. The application period for payments 
on corn quality losses closes May 7, 1993. ASCS has estimated these 
additional payments at the 50.04 percent factor could total about 
$150 million. Payments of $150 million on quality losses would reduce the 
estimate of remaining funds from $445 million to $295 million. 



240 



Question. While the 1990 Farm Bill provides the Secretary of 
Agriculture the discretionary authority to provide disaster payments for 
losses associated with quality, it requires the producer to first qualify for 
quantity-related losses. In making corn producers suffering low-quality 
harvests eligible for disaster payments, can you please explain how the 
statutory requirement that such producers first qualify for quantity-related 
losses is being met? 

Answer. The farm's actual production or quantity is reduced based 
on the grade of the commodity. Grade 4 corn production is reduced by 
twenty percent, grade 5 is reduced by fifty percent, and sample grade is 
reduced by eighty five percent. There are no adjustments for other 
grades. If, after the adjustment, the farm has a qualifying loss, it is eligible 
for disaster assistance. 

PROPOSED OFF-FARM INCOME MEANS TEST 

Question. According to the President's budget proposal, 
$26 million would be saved in fiscal year 1994 by implementing a $100,000 
off-farm means test. Could you please tell this Committee exactly what is 
the Administration's definition of "off-farm" income. For example, would 
the selling of land or equipment be considered as "off-farm" income? 
What about rental income? What about property inheritance in a given 
year? 

Answer. Under the President's budget proposal, any person 
receiving $100,000 or more in off-farm adjusted gross income during the 
calendar year in which benefits are requested would not be eligible for 
crop support loans or deficiency payments for that marketing year. The 
exact definition of "off-farm adjusted gross income" has not been finalized. 
However, for analytical purposes, we have defined it as gross revenue 
from all sources, minus non-farm business expenses (including the cost 
basis of assets sold in the calendar year), minus farm income during that 
calendar year. "Farm income" means revenue received from the sale of 
agricultural commodities including but not limited to grains, fibers, fruits, 
vegetables, milk and products, livestock, fish, poultry and forestry products 
(including forfeitures of loan collateral to the CCC); revenue from the sale 
of farm assets; and revenue received from the performance of farm 
services, including custom work, machine hire, contract production, 
custom feeding and grazing. Farm income also includes all payments 
received in a calendar year by a person under various Government 
support programs for commodities, conservation, crop insurance or 
disaster assistance. 

According to this definition, farm income would include the proceeds 
from the sale of land or equipment, rental income of assets, and the 
inheritance of property, if each were associated with the farm enterprise. 



241 



A number of issues are yet to be resolved regarding the exact 
definition of off-farm adjusted gross income. However, we would expect 
these issues to be resolved in the final legislative language and through 
the rulemaking process. 

ELECTRONIC WAREHOUSE RECEIPTS 

Question. What is the status of the electronic warehouse receipt 
regulations? 

Answer. A Proposed Rule was submitted to the Office of 
Management and Budget (0MB) on February 9, 1993. We are currently 
working with 0MB regarding the clearance of this Proposed Rule. 

Question. Have there been objections or questions about the 
content, intent or scope of proposed regulations by any agency of the 
government? If so, what objections/questions have been raised and what 
has been the response of the ASCS or Office of the General Counsel to 
them? 

Answer. OMB recently sent a memorandum to USDA indicating that 
they could not clear the Proposed Rule at this time. OMB indicated that 
their general concern with the proposal is that it simply automates the 
existing system rather than applies information technology to improve the 
utility of the information to USDA and the industry. OMB also requested 
more study of the effect of automation in general on the cotton industry 
and in particular in reducing ASCS and industry costs before ASCS will be 
in a position to promulgate regulations regarding electronic cotton 
warehouse receipts. USDA has not yet responded specifically to the OMB 
comments. 

Question. Will completion of the regulatory process allow for a final 
rule to be issued in time to allow full utilization of electronic receipts for the 
1993 crop? 

Answer. It is unlikely that the regulatory process will be completed 
in time to allow full utilization of electronic receipts for the 1 993 crop. 

Question. ASCS is currently operating pilot programs to determine 
the viability of an electronic receipt program. Have the pilot programs 
operated satisfactorily? Based on experience to date, is it the opinion of 
ASCS that the electronic system can increase efficiency and ultimately 
reduce ASCS costs, as well as industry costs? 

Answer. Yes, based on the pilot program, use of an electronic 
system can increase efficiency. Presently, ASCS is not aware of any 
known occurrences of error, fraud, misuse, or complaint about the 
electronic warehouse receipt pilot programs. Participants of the project 
have been reported as feeling that electronic warehouse receipts are more 
efficient than conventional paper receipts. 



242 



Question. If regulations are not issued in time for full implementation 
for the 1993 season, is ASCS prepared to expand the pilot program to 
areas which have requested participation? 

Answer. No, the Department's Office of the General Counsel has 
advised ASCS not to expand the pilot program at this time. 

CCC: REIMBURSEMENT FOR NET REALIZED LOSSES 

Question. The fiscal year 1994 budget estimates that $20.9 billion will 
be needed to reimburse the Commodity Credit Corporation for net realized 
losses, an increase of $11.7 billion above the fiscal year 1993 
reimbursement to the Corporation. What is the reason for this substantial 
increase above the fiscal year 1993 reimbursement level? 

Answer. As you know, appropriations to CCC for its losses not only 
restore the capital impairment of the Corporation, but also serve to restore 
encumbered borrowing authority because the entire appropriation for 
restoration of losses is used to repay a portion of CCC's outstanding 
Treasury borrowings. These outstanding Treasury borrowings by CCC 
financed the program losses our budget request now seeks to restore. 
Given these facts, the FY 1994 CCC appropriation request was determined 
after carefully considering five factors: our estimate of available CCC 
borrowing authority at the beginning of FY 1994, projected FY 1994 net 
expenditures that must be financed by the borrowing authority, the need 
to maintain a reasonable CCC operating margin, a need to accelerate the 
reimbursement of prior CCC realized losses, and a one-time need to 
reimburse Treasury based on a GAO audit report. We determined that a 
CCC appropriation of $20.9 billion was needed in FY 1994 in order to meet 
these objectives. In FY 1994, the available CCC borrowing authority at the 
beginning of the year is estimated at $3.8 billion, less than 40 percent of 
the actual $10.0 billion CCC borrowing authority available at the beginning 
of FY 1993. Cumulative unreimbursed realized losses are estimated to 
increase to $29.7 billion by the end of FY 1993, and the increased 
appropriation request will reduce these unreimbursed losses at the end of 
FY 1994 to about $22.7 billion. This is the major reason for the increased 
appropriation request, because without an increased appropriation at 
some point, the Corporation's unreimbursed losses will grow to 
unreasonable levels. The $20.9 billion request includes $18.0 billion for 
reimbursement of CCC losses and $2.9 billion for payment to Treasury 
due to a retroactive GAO determination regarding the FY 1988 Operating 
Expenses appropriation to CCC. A full explanation of this additional 
one-time need for $2.9 billion is found on page 26-7 of the USDA 
Explanatory Notes. 



243 



FORM 1099-G 

Question. The Commodity Credit Corporation (CCC) is including 
"marketing loan gains" on Form 1099-G issued to producers. Since 
producers can elect to report CCC loans as income or bona fide loans for 
tax purposes, the "marketing loan gains" included on Form 1099-G may 
or may not need to be reported as additional income. Why did CCC 
recently begin reporting "marketing loan gains" on Form 1099-G? 

Answer. After discussions with the Department of Treasury, it was 
determined that by not reporting marketing loan gains on the Form 1099- 
G, we may not be reporting all possible income benefits received by 
producers. Thus, based on these discussions, CCC began including 
marketing loan gains on the Form 1099-Gs. 

Question. Are there instructions on the 1099-G or in the IRS's 
instructions accompanying tax returns to provide information to producers 
about how to properly include "marketing loan gains" on their tax returns? 

Answer. We do not presently include any instructions accompanying 

1099-Gs informing producers about how to properly include marketing 
loan gains on their tax returns nor are we aware of any special instructions 
accompanying tax returns that inform producers on how to include 
marketing loan gains on their tax returns. 

Question. Are USDA and IRS officials working to develop a method 
to provide the correct information to producers? What are the options 
being evaluated? When is a final decision expected? When will 
producers receive the information? 

Answer. The tax information we provide to producers is correct. 
However, we are currently working on a proposal to send to the Internal 
Revenue Service proposing that CCC send producers a set of special 
instructions on how to properly include marketing loan gains on their tax 
returns. We intend to send this proposal to the Internal Revenue Service 
within the next several weeks. 



244 

FOREIGN AGRICULTURAL SERVICE 
QUESTIONS SUBMITTED BY SENATOR BUMPERS 

RUSSIAN AID 

Question. I understand that under the $1.6 billion in 
Russian aid cinnounced recently by the President, the transportation 
costs of the Food for Progress portion cannot be covered because of 
a limitation on the use of Commodity Credit Corporation funds for 
this purpose. I further understaind that the Administration has 
been pursuing other possibilities for covering these transportation 
costs . 

What is the current status of this dilemma? How will the 
transportation costs be covered? 

Answer. We are actively exploring all available authority to 
use funds through other channels to pay for the transportation 
costs. We hope to be able to advise you by next month that we have 
been cible to fund them through Administration action. 

Question. Please provide a summary of USDA' s share of the 
Russieui aid package- -what programs will be used and to what extent. 

Answer. USDA' s portion of the program is $894 million. That 
consists of the new $700 million Food for Progress progreun the 
President announced in Vancouver, together with $194 million in 
programs to be operated by U.S. private voluntary organizations, 
and bilateral programs with the Russian federation. The $194 
million was divided about evenly between Food for Progress and 
section 416(b) authorities. 

Question. Also provide information by type and amount 
showing total Russian aid for 1992 and to date for 1993. 

Answer. We can summarize commodity values for prograuns in 
fiscal 1992 euid program plcms for fiscal 1993 fairly quickly. 
(The information follows:) 



245 



8 
I 

I 
8 




S 



< Bq 
9s9 



I" 

>« 

■5 ^ 
805 






O 

P 

(0 



0(S 

o 



3 

o 
o 
o 



9 
O 

Q. 
O 



O 






2 
o 

8 



o 

8 



a 
O 

2 
O 
O 



^ 



3 
O 
O 



ooonoino)<-o<DO 



n Q <e 



a-i 



T^p(DN;O(ein«r<.(0in 
irf >-' * d r^ w V o) fJ V «g 



(O o 
In in 



t^ o 



o o 
oi d 
8 in 



O (D 



0> •-; p <p p 

n « « CO in 



in « (^ (o in 
^ o) cvi ■♦ iri 

»- CM 



3 

E 



1 



3 3 u- 



i||l|o8 8u:l| 



(S 



cDffiiij£za.if(o>$ 



occccccTECcircriEira: 





246 



I' 

" O 

O -o 
M 1^ a 



='2>< 



£Eo< 



« 



o 

p 
u 

(0 




3 
Q. 

o 
o 
o 



« 

? 

a. 
o 



o 



3 

o 

IT 



o 

s 



2 
o 

8 



2 
o 

8 



o 

8 



o o in o m u) r- o in <r (o 1-; o o o V o o o p 
oJeoVteNNNinQioiddQNibtdinooiT^ 

88SJ5SS8J^.8S5l8 83i8288?3 

«e T-" uj" 1^ •" «o CO ■r^ ^ rt p" ♦" <e co" n 



(0 ^ in 1^ S (0 



S N 



niniDrvinnooin(Oh-innior<.a)c\jq^^ 
otnO(poddiri«^^'dci'4'Vo(\Ieddnv 



o o in I I in •-_ 
N 00 « I I c\i oi 

^8» ' SS 



r^ CO 

CM 



(O in (o I {(Op 
o ih d I I d d 



I- 
2 
o 

8 



o 

8 



2 
o 

8 



o 
o 

2 
2 
O 
U 



I I I I I I 
I I I I I I 



lo^to — oooTrpoop 

§'(Dindd(vi<D<cin6g>'-' 
SS888SS?2 8S?2 

CO T- >- CO p' 'T <D CO" CO 



AOi 



^tM^ 



in<or-in(o<or^<ocMoi;'>: 



I I I I I I I I I I I 
I I I I I I I I I I I 



I I I I I I I I I I 
I I I I I I I I I I 



P P I I I I I 



2 gj ' <D CM 

♦-'in d CO 
in rt w »- 



I I I 



f^ "^ I P P I I I I I 

88 I 28 I I I I I 



I I I I I 
I I I I I 



I I I I I 
I I I I I 



I I I I I 
I I I I I 



i I 



M <t) I 



SN| 



1^1 



• 



>> >■ c 



• E 



>- 
a 



3 
O 

o 



ii ill" E-glfO S 
mmmmmooti..E3za.Q.tt.g</)>?>> 



o 

• • o . 



6 |5 

• • o £■ 
g2 CO 



• O is 



o • 



■«» • •> S B ■«) « '5 '«» '5 • ■«• '5 • • 5 5 S S S 

crocQCEcttocococccttocococirocccococ PC cc 



S! 

I 



o 
6 

< 

< 

O 

<n 

3 



3 
O 



247 



GSM DEBT 

Question. Please provide for the record a list of 
outstanding GSM debt by country, its status with regard to being 
current, and the adjustments that have been made to initial 
guaremtee contracts . 

Answer. I'll submit details of countries for the record. 
(The information follows:) 



ESTIMATED CCC EXPORT CREDIT GUARAKfTEES OUTSTANDING 

As of March 31 . 1 993 

(dollars h millions) 





EsUmaW 






— ESTIMATED 




Coutiy 


ConUngenI 


ReschedLled 


Claims 


TOTAL 


STATUS 




Liability 


Oulslandlnj 


Outstanding 


OUTSTANDING 




Algeria 


$1,143.5 






$1,143.5 


C 


Anaota 


4.6 






4.6 


C 


Afoenllna 


0.2 




0.1 


0.3 


D 


Bangladesh 


122 






122 


C 


Brazil 




114.7 




114.7 


C 


CMIe 


0.9 


11.5 




12.4 





Colombia 


13.8 






13.8 





Cole dtvolre 


0.8 






0.8 


C 


Czech Republic 


0.0 






0.0 




Czedioslavla 


1.3 






1.3 


C 


Dominican Republic 




119.4 


32.1 


151.5 


R 


Ecuador 


49.1 






49.1 





Egypi 


27.9 


230.9 


0.0 


258.8 


C 


El Satvador 


11.2 


20.2 




31.4 


C 


Ghana 


0.3 






0.3 


C 


Guatemala 


17.7 






17.7 





Honduras 




26.2 


2.0 


28.2 


D.A 


Hingary 


2.7 






2.7 


C 


Indonesia 


23.3 






23.3 


C 


Iraq 


77.1 




1.593.6 


1.670.7 


D 


Jamaica 




502 




50.2 


A 


Jordan 


1360 


88 




144.8 


A 


Kenya 


10.5 






10.5 


C 


Korea 


381.4 






381.4 


C 


Mexico 


2.241.3 


268.8 




2.510.1 


C 


Morocco 


213.0 


151.0 




364.0 


A 


Nigeria 






0.1 


0.1 


D 


Pakistan 


391.0 






391.0 


C 


Panama 


4.3 


1.9 




6.2 


C 


Peru 




520.1 




520.1 


C 


Phlllpphes 




406 




40.6 


A 


Poland 




1,735.7 


0.0 


1,735.7 


A 


Romania 


483 






48.3 





Russia 


817.1 






817.1 


C 


Senegal 


12.2 






12.2 


C 


Soviet Union 


2.412.0 




263.6 


2,675.6 


R 


SrlLarka 


94.2 






94.2 


C 


Sudan 




61.2 




61.2 


A 


Suilname 


4.4 




8.4 


128 


D 


Trinidad & Tobago 


81.9 






81.9 


C 


TiJiisia 


107.2 






107.2 


C 


Tukey 


50.5 






50.5 


C 


Ukraine 


1859 






185.9 


C 


Venezuela 


148.7 






148.7 


C 


Yemen 


65.5 






655 


C 


Yugoslavia 


0.0 




3.7 


3.7 


D 


Zlrrt>abvve 


20.6 






20.6 


C 


Taruania (Zanzbai) 
Total 






4.0 


4.0 


D 


$8,812.6 


$3,361.3 


$1,907.7 


$14,081.6 


LEGEND: 


A Rescheduled payments 1 


1 arrears. 






C - Curent. 










D - Defaulted claims paid, nc 


reschedultig re« 


luesled. 






R - Reschedulkig requested. 

















248 



Question. What has been the annual CCC exposure or loss for 
the last three years : 

Answer. I'll submit the details of CCC's contingent 
liability of principal and interest as of fiscal year end for 1990, 
1991, and 1992 for the record. 
(The information follows:) 

CCC Export Credit Guareuitees Contingent Licibility 
(In Millions of Dollars) 

GSM Contingent 
As of Liability 

September 30, 1990 $8,891 
September 30, 1991 $8,971 
September 30, 1992 $9,556 

Question. For the last three years, what amount of GSM debt, 
by country, has been forgiven or restructured? For any 
restructuring, explain the restructure agreement. 

Answer. I'll submit the details of the amount of GSM debt, 
by country that has been forgiven or restructured over the last 
three years for the record 
(The information follows:) 

GSM Rescheduled Debt(s) by Fiscal Years 
(In thousouids of dollars) 

Fiscal Year 1990 Fiscal Year 1991 Fiscal Year 1992 

Amount Amount Amount Amount Amount Amount 
Country Resch. Forgiven Resch. Forgiven Resch. Forgiven 



Brazil 
















114,116 





Egypt 








241,600 













El Salvador 








20,153 













Honduras 








26,847 













Jamaica 








14,944 







14,218 





Jordan 


6,504 



















Morocco 








57,479 













Pauiama 


318 





1,426 













Philippines 
















11,516 





Poland 


608,055 





3,105,095 


1,328 


,082 








Zaire 


2.078 
616,955 




















Total 


3,467,544 


1,328 


,082 


139,850 






VALUE ADDED EXPORTS 

Question. You have been urged through the Market Promotion 
Program amd the FAS cooperator program to put increased emphasis on 
the export of value added or further processed agricultural 
products. Have you accomplished this goal? If so, how and how 
have you measured the increase? 



249 



Answer. The predecessor to the Market Promotion Program, 
called the Targeted Export Assistance Program, began in 1986. The 
Market Promotion Program was estsiblished as the successor to the 
Targeted Export Assistance Program in 1990. The emphasis in these 
programs has been on the export of value added or processed 
agricultural products, and that emphasis has increased over time. 
On the other hand, the focus of the Foreign Agricultural Service's 
cooperator program has been on support of exports of bulk 
commodities (since 1987, essentially constamt support at 70 percent 
of program funding) . 

In 1986, the Foreign Agricultural Service provided funding of 
$110 million to 118 orgeuiizations and companies, of which 111 
promoted value added or processed agricultural products. At that 
time, these groups received $74.3 million, or 67 percent of total 
progreun funding. By 1992, the number of groups promoting these 
products amd receiving progreim funding increased to 541, and they 
received 79 percent of program funding, or $158 million. While the 
level of program funding was reduced in 1993, the percentage of 
funding used for promoting value added or processed agricultural 
products increased to 82 percent. 

COOPERATOR PROGRAM 

Question. I am concerned about the more them 17 percent cut 
to the FAS Foreign Market Development progrcim which reflects a 
one-third cut ($10,000,000 reduction) in the cooperator program. 

Given that agricultural trade is one of the bright spots in 
our balance of trade, why are we cutting this program? 

Answer. Although motivated by the Administration's plein to 
reduce government spending, the underlying philosophy behind the 
$10 million reduction is to stimulate the private sector to 
increase its share of the cost of the Cooperator program. The 
concept, therefore, is not that the program is reduced but rather 
the private sector will shift a greater portion of their resources 
into export -related activities. 

Question. Cannot the participating Cooperators document how 
these funds have been successful in establishing emd developing 
markets in order to promote the export of U.S. agricultural 
products? 

Answer. Yes, the Cooperators cam document the value of the 
program. We believe there is a relationship between the program 
funds and the level of U.S. agricultural exports. One need only 
compare the markets targeted under the Cooperator program when it 
began in the 1950' s to the current top U.S. export markets as 
evidence that the program plays am importamt and supportive role in 
export expansion. 

The program is based on the premise that foreign market 
development is a long term investment which encourages foreign 
consumption of U.S. agricultural products through such activities 
as trade servicing and technical assistance. The program 
activities are intended to change the consumption patterns favoring 
U.S. agricultural commodities and products. 



250 



Question. Could you provide a breakdown of how these 
Cooperator funds were allocated in 1992 euid 1993? 

Answer. I will provide for the record a table which reflects 
the cooperator funds allocated in 1992 amd 1993. 
(The information follows:) 



FY 1992 AND FY 1993 FOREIGN MARKET DEVELOPMENT BUDGETS 



DAIRY, LIVESTOCK AND POULTRY DIVlStON 

American Embryo Transfer 

American Sheep Induslry Assoclatlcn 

American QLiarter Horse Association 

Appaloosa Horse Club 

Catfish Institute 

Leather Industries of America 

Livestock Exporters Association 

Mohair Council of America 

National Association of Animal Breeders 

National Association of Swine Records 

National Dairy Research and Promotion Board 

National Renderers Assoctalion 

USA Poultry and Egg Export Council, inc. 

US Beet Breeds Council 

U.S. Dairy Genetics Council 

US. Hides. Skin and Leather Association 

U.S. Meat Export Federation 



FY 1992 FMD 


FY 1993 FMD 


BASE BUDGET 


BASE BUDGET 


$25.000 00 


$25,000 00 


$167.100 00 


$167.100 00 


$25,45000 


$26,450.00 


$0 00 


$9,951 00 


$54.818 00 


$0 00 


$175,000.00 


$175,000.00 


$18,500.00 


$18.50000 


$21,000.00 


$21,000.00 


$90.000 00 


$90.000 00 


0.00 


55150 00 


$400,000.00 


$400.000 00 


$1,048.000 00 


$1,048,000.00 


$1,720.54500 


$1,720,545.00 


$116,830.00 


$116,830.00 


$525,000.00 


$525,000.00 


$46.000 00 


$46.000 00 


$1,971,625.00 


$1,971,625.00 



COMMODITY DIVISION TOTAL 



$6,404,668.00 



$6,415,151 00 



TOBACCO, COTTON AND SEEDS DIVISION 

American Seed Trade Association 
Cotton CoLTicll international 
Tobacco Associates 



$235,600.00 

$2,000.000 00 

$199,000.00 



$235.600 00 

$2,000,000.00 

$199,000.00 



COMMODITY DMSiON TOTAL 



$2,434,600.00 



$2,434,600.00 



OILSEEDS AND PRODUCTS DIVISION 

American Soybean Association 
relational Cottonseed Products Association 
National Peanut Council 
Nattonal Sunflower Associallon 



$7,413,528 00 
$180,060.00 
$479,500.00 
$301,150.00 



$7,413.528 00 
$155,000.00 
$479.500 00 
$301,150.00 



COMMODITY DIVISION TOTAL 



$8,374,238 00 



$8,349,178.00 



AGEXPORT SERVICES DIVISION 

Eastern US Agricultural and Food Ej^ort Council 
Mid-America International Agri-Trade Council 
National Association of State Departments of Agrteuiture 
Southern U.S. Trade Assocbtion 
Westan U.S. Agricultiral Trade Assoclatton 



$100.000 00 
$100.000 00 
$366,272.00 
$100.000 00 
$140,000.00 



$100.000 00 
$100,000.00 
$204.955 00 
$100,000.00 
$140,000.00 



coMMOomr division total 



$806,272.00 



$644,955.00 



FOREST PROOUCTS DIVISION 
National Forest Products Association 



$2,840,964 00 



$2,840,964.00 



COMMODfTY DIVISION TOTAL 



$2,840,964.00 



$2,840,964.00 



251 



PAHTiaPAffr 



FY 1992 FMD 
BASE BUDGET 



t^Y 1993 FMO 
BASE BUDGET 



GRAIN AND FEED DIVISION 

Millers National Federallon 

National Dry Bean Council 

National Hay Association 

Protein Grain Roducts Intonatlonal 

USA Dry Pea and Lentil Council 

USA Rice Council 

US. Feed Grains Council 

U.S. Wheat Associates 



$21,400.00 


$21,400.00 


$107,610.00 


$107,610.00 


$67.876 00 


$67.87600 


$68,290 00 


$68.290 00 


$176,700.00 


$176.700 00 


$1,921,735.00 


$1,921.735 00 


$6,442,663.00 


$6,442.663 00 


$7,381,322.00 


$7,381,322.00 



COMMODITY DIVISION TOTAL 



$16,187,596.00 



$16,187,596.00 



HORrnCULTURAL AND TROPICAL PROJUCTS DIVISICN 

American Hortlciitual Marketing Courcll $245,000.00 

California Tree Frvilt Agreement $0.00 

Papaya Administrative Committee $18,290.00 

Western Growls AssociallGn $0.00 



$245.000 00 

$445,919.00 

$63,360.00 

$0.00 



coMMODrrc division total 

TOTAL COOPERATOR/PARTiaPANT 



$263,290.00 
$37,311,828.00 



$754,279.00 
$37,626,723.00 



Question. Have you looked at any alternative funding 
reductions such as reducing the number of Americans it assigns to 
Western Europe? 

Answer. Yes, we frequently evaluate our overseas office 
configuration to adapt to changing market opportunities, 
international priorities and shrinking budgetary resources. For 
example, last summer we completed a global review of all our 
overseas offices that resulted in the closure of three offices and 
downsizing eight others. Two of offices that will be closed and 
four of the office to be downsized are in Western Europe with the 
combined annual savings exceeding $500,000. 

Question. Have you tried to reduce the shared administrative 
cost that the State Department charges in overseas embassies . 
Please provide a breeUcdown of these costs. 

Answer. We work to minimize the costs of shared 
administrative costs on an ongoing basis both at post and here in 
Washington. At post, FAS officers request only those 
administrative services that are essential to meeting the agency 
mission and insure those services are rendered in a satisfactory 
manner and within the budgeted amount. In Washington, FAS 
represents USDA on the Foreign Affairs Administrative Support 
Council which is comprised of other Federal agencies receiving 
overseas administrative support from the Department of State. A 
primary responsibility of the Council is the annual review of the 
shared administrative support budget. Generally, only those 
changes approved by the Council can be incorporated into the shared 
administrative support budget. I will provide a breakdown of these 
costs for the record. 
(The information follows:) 



252 



FOREIGN AFFAIRS ADMINISTRATIVE SUPPORT 

POSTS 3,4 62,427 

ATOS 1,9 62,000 

PROGRAM LOCALS 358,573 

SUPPLEMENTAL ANNUITY PAYMENTS 1,000 

FAMILY LIAISON OFFICE 10,000 

RETIREMENT/JOB SETU^CH PROGRAM 11,000 

SECURITY GUARD PROGRAM 313. 000 

TOTAL FY 1993 FAAS 6,118,000 

Question. What is the total cost for an assigned attache or 
counselor in a major Western European city, including salary, 
benefits, housing, education allowauices, post differentials, shared 
administrative costs and euiy other overhead? 

Answer. I will provide that information for the record using 
our Counselor's office in London as an exaunple . 
(The information follows:) 

LONDON 
(Recurring Annual Cost of American Counselor Position) * 

AMERICAN SALARIES 107,000 

AMERICAN BENEFITS 21,000 
ALLOWANCES : 

POST 5,000 

EDUCATIONAL (1 CHILD) 13,000 

COUNTRY ASSIGNED TRAVEL 10,000 

RESIDENTIAL LEASE 50,500 

RESIDENTIAL UTILITIES 5,000 

SUPPLIES/EQUIPMENT (Office & Residential) 8,000 

MAINTENANCE AND REPAIR 5,000 
DEPARTMENT OF STATE ADMINISTRATIVE 

SUPPORT CHARGES 40.000 

TOTAL 264,500 

* Excludes non-recurring costs associated with 
rotation assignments to and from post. 

ENTERPRISE FOR THE AMERICAS INITIATIVE (EAI) 

Question. What amount of debt, for what programs, and for 
what countrieB, has been or is being proposed under the EAI in 
1993? 

Answer. In December 1992, the U.S. Government signed EAI 
agreements with two countries forgiving P.L. 480 debt: El Salvador 



253 

for 80 percent, or $270 million and Uruguay for 40 percent, or 
$400,000. 

Question. Please provide the same information for 1994. 

Answer. For fiscal year 1994, Congress appropriated $32.6 
million for P.L. 480 Title I EAI debt reduction. Congress has 
delegated to the Treasury Department responsibility for selecting 
the countries. However, we continue to encourage those countries 
in Latin America and the Caribbean with P.L. 4 80 debt which has not 
yet been accepted under EAI to work toward becoming eligible for 
debt reduction under the program. 

Question. What are the budgetary ramifications of this 
proposal both in the short and long term? 

Answer. The budget authority requested to implement EAI debt 
reduction is part of the international affairs account for the 
budget, not the agriculture account. The budget authority request 
is based on the subsidy cost of the debt reduction or sale, which 
in turn reflects the net present value (NPV) of foregone receipts 
over the remaining life of the credit obligations. For fiscal year 
1994, a budget allocation of $32.6 million has been requested for 
debt reduction of $63.2 million in existing P.L. 480 Title I debt. 

Question. Please provide a summary of EAI activity to date 
including the country, program under which debt was restructured, 
the amount of debt involved, and the date of the activity. 

Answer. The United States Government has signed five EAI 
agreements to reduce Title I, P.L. 480 debt. In fiscal year 1991, 
agreements were signed with Chile for a reduction of 40 percent or 
$16 million; Bolivia for a reduction of 80 percent or $30 million; 
and Jamaica for a reduction of 80 percent or $217 million. 
Congress did not appropriate funding for EAI in fiscal year 1992. 
Thus far in fiscal year 1993, agreements have been signed with 
El Salvador for a reduction of 80 percent or $270 million; and 
Uruguay for a reduction of 40 percent or $400,000. Environmental 
Framework Agreements were signed with Bolivia euid Jamaica on 
November 26, 1991 and with Chile on February 27, 1992. 

EXPORT ENHANCEMENT PROGRAM (EEP) 

Question. What is the current spending under EEP, as of 
today, for fiscal year 1993? 

Answer. EEP bonuses for fiscal year 1993 have reached about 
$600 million at this time. 

Question. Please provide for the record the type, amount and 
value of exports under EEP for fiscal year 1992 cind so far for 
fiscal year 1993. 

Answer. We will provide that information for the record. 
(The information follows:) 



254 



Export Enhancement Program 



Commodity- 


Fiscal Year 


1992 


Fiscal 


Year 


1993 








(As of May 


4, 


, 1993) 




Quantity 


Sales Value a/ 


Quantity 


Sales Value 




(1000 MT) 


(Million$) 


(1000 MT) 




(Million 


Bulk 














Wheat 


19,767 


2,989 


13,395 






2,006 


Barley b/ 


1,542 


167 


826 






90 


Rice 


358 


131 


186 






58 




21,667 


3,287 


14,407 






2,154 


Value Added 














Flour 


253 


59 


654 






156 


Barley Malt 


32 


9 


53 






15 


Vegetable Oil 457 


206 


248 






121 


Frozen Poultry 26 


34 


4 






5 


Pork 


-- 


-- 


-- 






-- 


Table Eggs 


19 


17 


16 






42 


Cauined Peaches 2 


—2 


c/ 






P/ 


Total Value 














Added 


789 


327 


975 






339 


Total EEP 


22,456 


3,614 


15,382 






2,493 



a/ Commodities are valued using average FOB Gulf prices for the 

week of the sale, 
b/ Includes malting barley. 
£/ Less than 1000 MT' s or one million dollars. 

Question. For what percentage of total U.S. agricultural 
exports would you say EEP is responsible? 

Answer. The following table shows EEP sales as a percentage 
of total ejq>ortB on a volume basis for fiscal year 1992 . 

Fiscal Year 1992 EEP Sales as a Percentage 
of Total Exports (Volume) 

Commodity Percentage 

Wheat 

Flour 

Barley 

Rice 

Vegetable oil 

Frozen broilers 

Table eggs 

MARKET PROMOTION PROGRAM 

Question. Please provide the following information for the 
Market Promotion Program: 

1. The participants amd amounts received for 1992. 



58 


31 


74 


16 


30 


59 


46 



255 



2. The participants and amount allocated for 1993. Please 
show the total for each participant with separate amounts for 
generic and breuided allocations 1992 carryover, smd any allocation 
to be made on or after September 30, 1993. 

Answer. I have provided for the record the 1992 MPP 
allocations by participant and the 1993 allocation, including the 
generic and branded breakout auid the 1992 carryover by participant. 
This information is not availeUble for the 1994 year. 
(The information follows:) 



256 



S u. 


8§§§g8§§§888g8§88§88§ 




obc>66b'-oc>r?f»^air>c>d>n'-62od 
0'>»*»*»*»«»:-*»vivrto>o-<rooo0'-v>oov» 
>- f^ o a CM CO m o O, oo <ir «»> o 


T^ <j> cm' d cm' is o> •- «' *" d <o d 
oieo ■>»• CM'-rjcMcoo.-'* too 
CMOT cm ^CMMv»a>cocM«r ■•- n 

*» ^- ^- ♦» •» M fg- V> M M M 



§00000000000000 
opppppOoooopoo 

pbddodr^bdtridc6a>dd 

SopOmooPMCMMr- <r> vt ' 
_ o p o ^_ O «> o_ m ui r* 

d cm" in d CO d cm' <d' 

OOt^CM<DOn« 

f,- *» v» ^- «» vt 



in r-._ 

00 ui 
00 o 
CM to 
** cm' 



0(/1 


w 


1- 

u 




c 


1 


c 
5 


i 


c 


C5 


< 


O) 


a 


o> 


a 



0000 



8 

d 

o 



oi 

o 



OOOOOOOOOOOOOOOQOOOOQODOQOOO 

ppoooooooppooppoppopOpoppppp 
doodeidddoddddoooodo' 

M«>Q«*M%t»»QOM«*V>MOMQV>ep< 



sss 



O O 

8S 






vn 











«»■ m 




r> 


CM 


u> 


P 


CM to 




en 


CO 


in 


f» 


r» O) 


r-' 


cm' 


V> 


co~ 


«« 


3" 


v> 


«» 




M 





00 (O 

O CM 

in t^ 



o t 

CO n 
O) 7 

? u. 
c 



O O 

o o 



8 



2 o 
o o 



8 90QDOQOOOQOQQOQOgQ 
OOOOOPOOpOpOPpopPP 



o o 
_ «<» o 
o o 
d in 

CM r^ 



O '- 

o >- 

O CO 
O' CM 



§§ 

o o 

d ■•-' 

S CM 



«oi^O)coooin>-oeooo 
inoio-^OOoD^oooo 
10 N CO in o O CO 4- o en O o 

d f^' eo' o) ^ 00' >» o' d <o m' 0" 
comcMcootcow^oOx- 
in O) uj o CO "- in O) »- in 10 CM 

*^ T— " T— CM uV ^ CM ^ ^ ^ '^ 
Vt M «A M *» «* 



000 

MOO 

O O 

cm' o' 

CO y- 



0000 

o p o p 

d CO d d 

M in «9 o 

■■- o 

eo' co' 

■* o 

* in 

CO ^ 



S8888 
^§ 

o 

■•- d 

t«. T- 

CO " 



888 



8^ 



in 




§ 




8 


§ 


g 


88 









SI 


d 


d 



SI 


1 




d d 

>- CO 


d 

CM 



2c 



8 


8 


8 


8 


8 


I 


d 



8 


d 


8 




d 

CO 




0" 

CO 




in 



888 

d d d 

POO 

pop 

d o" d 
. •» o •* 

•» CM «0 CO 



88° 



o 

d d d 
000 
000 

d d d 

CO ■* CM 

eo <« CO 



8 



OQOQQOQOQOOOOOOQQQOOOOOO 

ppppppopopppppppoppppppp 



000000 

^88 



<1 V» *» 



O 

d o' o' 
o> "- m 
* eo o> 
•» ^'*' 



888 



000000000000000000000 

ppoogogv»o«8gooogg«ooo 

§' d d d d d d d 0" o" 
r-^r-»-r^CM t-coco 
CM'-cO'-o»'*'«r "-cocM 



0080 

' o d d 0" d d 
1 ^ n 00 T- CO CO r^ 



000 

cor»in^„ — . .,w.- 

i-com^cor--CMf-coin 

■<»•' ** cm' ** " «r" ** IT ** cm' 



? 5U 



'SS 



0- 21 



t. 



o o 
o o 



8888 



8 



00000 
00000 

d d d d 



88888888888888888 




5 

CM 

o> 

C» 



a 
C 

I- 

5 

a. 






■D a < 01 CO 

5 :« S 5 

d w i> 1b 
OL If c/) I- I- 
re CO CO ra CO 

c c c c ^ 

B 6 B 6^ 

T6 TB TO "R 7B — -» -- -* 

000000000 



257 



8S§§88§88§8S888§88888S8§88gS888g8§g88 

OQriouir^QtDQQCNioOOOciorOOQOQpOQQr-OQOOOQcioOO 
t- n n o CO rt o o ■<f585d>05 ■«■ --Oio S o Oo 



m 


t>- 


** ■* 


oo 


CO 


m 


OJ lO 


in 


m 


v» 


m >o 




<o 




*» *♦ 


M 



— •"I- <o o p 
•» -r- •» * 5 


<n 


o> 9 <n 
■9 o \r) 


8 




O) 


T- n <o 


CO 


-■ "^ c^— 


M 


««•♦ 


M 



o rj 
CO o 
>- CO 



8 



O O O Q O Q O 

" - o o o o 



OOOOOOOOPQ 

ooooooo 



ooooopocSoo 
booooooopoooooooQco 

o O o o ■* 

oi >o o o CO 

O CO <o ^ « 

v» ^- * v» 



o o 



o o o o o o 

**88a*'*' 

»- o> o 



PpooOooooo 
6 6 b b 



CO 
(O 



o •<»■ 

CO CM 

c\j to 



§o o o o 
_ V» V» CO g 



CM CO 

5 CO 



00 

o> 

oo 

b^ 
a> 
cm' 

3 



8SS8SS8SS888888S88888S88S8S888§8S88S§ 
88SSS;o8^S83S88S88888S8SSSi:;88iS888?8S 

oof^coooorloocooop oo oo 0_oootO'-_ooooooocmo_ 

b o o in oi ^ b oo' o b <o b cm b b g' •>-" in b b r>- co b oj" o in b o b b ■« r-' u) 
cococom^-cocoSN-oco^inO coo ^-i- *cMino>in<Ot-eOT-»-'<rcO"**r3 
CMOr~.»-r>.t>-»-h»v»*toc2»-»- Si2 »-r» *r~»-t^»-CM'»»-T-oo«<»'-»»CMr» 



8 

cm' 
w' 



8 00O00QOQQQQ0OOQQ0QOO0Q0OQ0O0Q0Q0OOOP O 

popppoppoooppoOoOoopoOppoooooooopopp p 

bpbpppppbbbbppbbbbpppbbppbpbpbbppbbPP o 

O p o o p 



p 

b p' 
oo CO 
CM ' 



p b b 



§pppppppppopooppp 
gPPPPOQMOPPPQOMP 
pOoooppo pppppS p 



p b b b b p b p b m' 2 

— — - — "■^-pCM'VOpP 



I p p b 



w pCOKOOCM'-pCM'^obO 

P CM CO CO »- <0 T- tT lO JO i» »-. 
^ *^ CM CM *^ *" *^ *^ ^^ CM 



. p O 5 
b b b b p b p" p b V p b ' 



pppppo pgpppppoppP'^ppp « 

coS'-f^cM eMPcoinMh-p»-'-co'-toor~p co 

MincM»-o>co «^eoT-^co»-T-PCMO)*»cocop r- 

*******'•*'■'-' <* rC V ** T-" p' •r-' ** CO ** CO T-' co" »-" r-" 



SPPOPPPOPPPPPQPQQQPPPPpPPPpPPPPPOPPp O 
pppppppppppppppopppppppppopppopoopp P 



P P P 
V» O p _ 
P P O 



SPPPPOPPPPP 
PQCAPMPP4APP 
oOS P PP. PS 

p" p" k" 

00 « CO 



00 CO P P 
CO CO *♦ '- CO 



p 
ai 

s 



P O) 
CM CM 
P »- 



ii 



OOP 

8*'8 



p p 
•'8 



p p 

p rt 



CO in P 
r^ O) CO 



p 
m 

CO 



' ■»- CM CO •- r» in 

M t* «» «A M M 



go P I 
— OR' 
P p °. ' 
p co" b b ' 
f- M ,- f- < 
't v» CO r- ' 
V V •*" 



8 

CM 



8 
m 

S g 

•8 - < 

c« C o O " 
Q O u. I Q- 



9 9 9 9^99 

ooooooo 

■a -& '0 .? 2 .s s 
^ ^ J9 9 fl) (d 
Z Z 2 Z Z 2 Z 




:= O 

a ^ Lu 







» 5 






c _ 

o "^ '^ f <» 

i5 ^ 8QQ.0: 
« 0) " < < < 

D J O W W W 
W W P 3 Z) Z) 






•-5 



en CO c/) (O (o 




< 



O 



iy 



258 



CARICOM DUTY ON RICE 

Question. I understand the Jamaican rice market has been 
virtually cut off because of the CARICOM duty on rice. 

What is the current status of this problem? 

Answer. The CARICOM countries began implementing a common 
external tariff (CET) for all products in February 1991. The rate 
varies from 5-45 percent. At that time, Jamaica, Antigua and 
Barbuda, and Dcaninica received a one year suspension from applying 
the 30 percent conmon external tariff for rice. In February 1992, 
the suspension lapsed suid they began applying the 30 percent rate 
for white rice, semi-milled white rice, wholly milled white rice, 
wholly milled parboiled rice, amd broken rice. The CARICOM 
countries apply a 15 percent common external tariff to rice in the 
husk, parboiled rice, and semi-milled parboiled rice, which are 
types of rice not traded within the CARICOM countries . After the 
suspension lapsed, Jamaica decided to continue to apply a 15 
percent tariff to the remaining 1992 P.L. 480 Title I rice imports. 

Question. Are there ongoing discussion? 

Answer. In October 1992, CARICOM restructured the tariff 
schedule. It took effect in Jeimaica on ;^ril 1, 1993, the start of 
the Jamaican fiscal year. Under the restructured CET, the rate for 
rice was kept at 30%, but will be reduced to 25% on 
January 1, 1994. The CARICOM Secretariat is also mandated to 
review the rate treatment in October 1993. 

Question. If so, with whom amd what are the results? 

Answer. USDA auid the U.S. Trade Representative have been in 
continuous contact with our embassies located in the CARICOM 
nations, expressing our dissatisfaction with the increased common 
external tariff rate. In addition, we have continued to raise this 
issue at the annual Trade and Investment Council meetings. 
Although the GOJ understands U.S. opposition to the high CET, it 
must act jointly with its regional trading members and not 
unilaterally. 

Question. Will the U.S. retaliate in amy way? 

Answer. It is doubtful that the U.S. will retaliate on the 
high tariff for commercial rice. Although we strongly oppose the 
high common external tariff rate for rice, the CARICOM countries 
have not violated their GATT obligations. As far as concessional 
rice, the U.S. is considering whether or not to include rice in 
future P.L. 4 80 Title I agreements if it cam not enter duty free. 

Question. How much of our rice export market is at risk as a 
result of this duty? 

Answer. Total U.S. rice exports in 1992 were 2,350,000 
metric tons. The Caribbean consisted of roughly 9.4 percent of 
total U.S. rice exports in 1992, with exports totaling 220,000 
metric tons. U.S. rice exports to the Caribbeaui were 268,000 
metric tons in 1991 and 295,000 metric ton in 1990. 



259 



QUESTIONS SUBMITTED BY SENATOR JOHNSTON 

WORLD RICE SITUATION AND OUTLOOK 

Question. As I am sure you are aware, rice prices are at 

their lowest point in nearly six years. The development of foreign 

markets and movement of U.S. rice stocks is critical for price 
stabilization and maintenance of the U.S. rice industry. 

Is the considerable drop in the world market price indicative 
of a rice surplus in the far East? In particular, what is the 
competitive outlook with respect to Thailand cind Vietnam? 

Answer. The steady decline in world rice prices over the 
past 10 months is indicative of the record level exportable 
supplies of rice in Southeast Asia's rice exporting countries. 
Also, no unusually large production shortfall or other demand 
boosting circumstance has developed in any major rice importing 
country so far in 1993. Without any major import destination 
emerging to support prices, competition for traditional markets 
has intensified. Fierce competition between Thailand and Vietnam 
is expected to continue throughout the remainder of 1993. 

Question. How much rice does USDA estimate emerging markets 
such as Russia will import this year? Are there currently adequate 
stocks of U.S. rice to meet such demands? 

Answer. Russia smd the other Republics of the former Soviet 
Union (FSU) are expected to import 825,000 tons of rice in calendar 
year 1993, up 25,000 tons from 1992. The FSU imported 67,000 tons 
of U.S. rice in 1992 and will import 87,000 tons of U.S. rice in 
1993 through the Food for Progress progreim. Additional commercial 
purchases in 1993 will depend upon availability of credit 
assistemce from the United States, Thailand, amd other competitors. 
In 1993, U.S. rice stocks are expected to reach 1.2 million tons, 
the highest stock level since 1988 and 400,000 tons higher thein 
1991. Clearly, the United States has adequate rice supplies to 
pursue the emerging markets of the former Soviet Union. 

Question. Is the U.S. currently providing rice as food aid 
to Russia? If so, what is the quantity being provided amd what 
percentage of total import needs is the queintity being provided? 
Also, is there a time table for such purchases? 

Answer. Yes, so far the Department of Agriculture has agreed 
to provide about 90,000 metric tons of rice under various bilateral 
and private voluntary organization programs. Following the 
Vancouver summit we also expect to conclude a new bilateral 
agreement which will provide long term credit finauicing for an 
additional quantity of rice, but the final quantity is yet to 
be determined. Depending on that queintity the U.S. contribution to 
import needs could be close to 20 percent of the total. As to a 
time tcUsle, we hope to have purchased 57,000 metric tons by 
mid-May, with other quantities remaining under agreements to be 
scheduled shortly thereafter. 



260 



Question. During the recent Vancouver summit. President 
Clinton announced am ad/3itional $894 million in" long term credits" 
and direct food aid would be made available to Russia. Does the 
USDA consider amy portion of this package to be concessional food 
aid? 

Answer. It is all concessional aid, in that it will all 
either be donated, or sold on concessional credit terms which 
include below-market interest rates. 

Question. Have representatives from the U.S. and from Russia 
been appointed to conduct negotiations on the commodity mix for the 
$894 million allocation announced at the Vamcouver summit? If so, 
who is representing the United States? 

Answer. U.S. and Russiam teams have been established to 
negotiate the question of commodity mix under the Vancouver summit 
announcement. The U.S. side is being led by Christopher 
Goldthwait, the Foreign Agricultural Service's Acting General Sales 
Manager. 

Question. What is the position of the Administration with 
respect to the Japanese bam on U.S. rice imports? 

Answer. The issue of Japam's rice imports is a central focus 
of our efforts to conclude the Uruguay Round agriculture 
negotiations. We have made it aJaundamtly clear to Japam that we 
view their rice program to be indefensible under the GATT. As the 
negotiations did not conclude as scheduled, U.S. officials have 
warned Japam that if import access for rice in Japan is not 
achieved in the Uruguay Round, then the U.S. rice industry cam be 
expected to initiate amother Section 301 complaint. 

We believe that Japan has developed the political consensus 
to allow imports of rice. Although the agricultural sector is 
predictably opposed to rice imports, many top officials, including 
the Prime Minister smd the Foreign Minister, have indicated that 
Japan would not stamd in the way of am agricultural agreement if 
other parties (i.e., the EC and the United States) come to a 
consensus. Polls of the Japanese public and orgamized efforts by 
prominent figures also indicate that Japan will not allow the 
Uruguay Round to fail over this issue. While a general consensus 
on disciplines for export subsidies and internal support has been 
reached in the Uruguay Round, there are still serious 
deficiencies in the market access portion. It is now time for 
Japan to show the political leadership to make a solid offer on 
rice amd to move the negotiations to a conclusion. 

Under the minimum access requirement of the Uruguay Round's 
Draft Final Act, we expect Japam to import at least 300,000 - 
500,000 metric tons of rice per year initially. Also, decreasing 
tariffs in future years provide opportunities for additional sales. 
We will have to compete with other rice exporting nations in 
this market, but some varieties of American rice, particularly 
medium amd short grain rice, are expected to sell very well in 
Japan. 



261 

QUESTIONS SUBMITTED BY SENATOR KOHL 



MARKET PROMOTION PROGR7\M 

Question. The Market Program Program has come under a lot of 
criticism in recent years for not having clear goals and for 
needing greater mcinagement controls. 

As Congress looks at ways to reform agricultural export 
promotion prograuns, to address these criticisms and to find the 
most cost-effective ways to expand international markets, I believe 
that we should be looking more closely at opportunities to achieve 
these international goals, while investing teix dollars in the U.S. 
economy. 

For example, for the past 25 years, Dane County, Wisconsin 
has hosted the World Dairy Expo, the world's largest international 
trade show. Last year, 2,800 foreign visitors from 75 countries 
attended the World Dairy Expo. A recent survey of companies 
exhibiting their products at the Expo indicated that the cuinual 
value of new business generated at World Dairy Expo was 
approximately $25 million. As a result of the Expo, one firm 
secured a contract worth $1.5 million annually to market wood 
shavings to Japam. Another established a Koream market worth 
$250,000 annually, and a third reported a new international sales 
of $750,000. There are many other international marketing success 
stories resulting from the World Dairy Expo, as well. 

I believe that this is just one example of domestic 
activities which reap impressive benefits in international markets, 
and that there are many other examples like in other states. 

Given the great potential for increasing international trade 
opportunities through domestic projects, I would like to know if 
USDA has the authority to commit funds, through the Market 
Promotion Program or any other existing USDA program, toward 
domestic trade promotion projects. 

What cheuiges in current law, if euiy, would be required to 
give USDA that authority? 

Answer. For both the Market Promotion Program cuid the 
Cooperator program, the Department currently has the authority to 
incur costs in the United States if it is for the purpose of 
encouraging the development, maintenance, auid expansion of 
commercial export markets for agricultural commodities. We agree 
that there are domestic activities which provide benefits to the 
international marketing efforts. 

As a rule, most of the MPP funds are expended in foreign 
markets. However, there are activities conducted in the United 
States for the purpose of foreign market development similar to the 
World Dairy Expo in Wisconsin. Such international trade shows and 
educational seminars are eligible expenses providing the activity 
is 1) export -oriented and 2) described and approved in an activity 
pleui. 



262 



QUESTIONS SUBMITTED BY SENATOR COCHRAN 

MARKET PROMOTION PROGRAM 

Question. The prepared testimony indicates that despite 
increases in U.S. agricultural exports, U.S. agriculture continues 
to face protectionist trade barriers, unfair trade practices, euid 
self-sufficiency policies around the world. Given this, I would 
think that the Department would give high priority to its export 
promotion, market development and food assistance programs. The FY 
1994 budget proposes a $52 million reduction in the authorized 
spending level for the Market Promotion Program, a $10 million 
reduction in the Foreign Market Development Cooperator Program, a 
reduction in funding for the Eaqjort Enhancement Program (-$200 
million) , emd maintenance of current levels for other export credit 
guarantee and subsidy programs . 

I am curious why deficit reduction initiatives are proposed 
in this area. Won't these proposed reductions have am impact on 
the U.S. agricultural export effort? If not, why? 

Answer. The Department continues to place a high priority on 
U.S. agricultural export programs, however, these programs are not 
immune to the Administration's commitment to better target amd 
reduce government spending. As a result, programs such as the 
Cooperator suid Market Promotion Programs have been earmarked for 
reduced spending authority. 

With the reduction in the discretionary market development 
funds, FAS will reduce the financial support for participating 
Cooperator orgsuiizations in established markets. Program resources 
will be focused on expamsion into areas of the world where market 
development prospects for U.S. agricultural commodities auid 
products are most promising. Funding also will be targeted to 
compensate for actual market and promotion related activities 
rather thaui overhead expenses . 

The use of MPP funds should result in as great an increase in 
U.S. exports as a consequence of that expenditure as possible. FAS 
is committed to getting the greatest bauig- for -buck with the funds 
available. Therefore, MPP funds will be targeted toward those 
firms and organizations that would otherwise be unable or less 
likely to promote and successfully export their products overseas. 
FAS will seek the most "additionality" for MPP expenditures; i.e. 
an increase in exports as a result of the MPP. The criteria for 
allocating MPP funds will reflect this goal. To compensate for the 
reduction in funding, FAS will consider seeking higher cost-share 
amounts from participants, up from the current minimum level of 5%. 

Question. The budget justification indicates that to achieve 
the proposed $10 million savings in the Cooperator Program, the 
government's cost-share will be reduced from 50 to 33 percent and 
the program will be targeted to participant expansion in less 
developed areas of the world where the greatest market development 
potential exists. 

A. Will the government's cost-share be reduced from 50 to 
33% for all participants or only to those in established markets? 



263 



B. The budget proposes to target this program on less 
developed areas of the world with the greatest market development 
potential. Which markets will be targeted? 

Answer. Based on the Senator's statement, it appears that 
some clarification is needed concerning the $10 million Cooperator 
program reduction and its operation. I would like to take this 
opportunity to address a few points. 

Although motivated in part by the Administration's plan to 
reduce government spending, the underlying philosophy behind the 
$10 million reduction is to stimulate the private sector to 
increase its share of the Cooperator Program, shifting a greater 
portion of their resources into export -related activities. 
However, at this time, we have not established the specific program 
elements of a reduced cooperator program, addressing such issues as 
cost -share requirements euid program priorities under a reduced 
government contribution. 

Under the current operation of the Cooperator Program, 
cost -share is defined as a combination of the following resources: 
cooperator (nonprofit organization), related U.S. industry and 
foreign third party contributions. The program requires that the 
cooperator "endeavor" to match the government share of the program. 
The cooperator match is the total of cooperator, U.S. industry and 
foreign third party contributions. The Department is on record to 
increase the private sector's share of the program while decreasing 
the government's share, but we have not stated it specifically in 
terms of a cost -share amount of 50 to 33 percent. 

With the reduction of the cooperator program funding by 
one -third, the Department recognizes that the current program must 
be re -designed. We are in the process of evaluating options that 
would be formalized when the cooperation marketing plans for FY 
1994 are reviewed and approved. 

LONG-TERM BUDGET SAVINGS 

Question. The fiscal year 1994 budget proposes a $50 million 
reduction in P.L. 480 Title III grants and a $6 million reduction 
for debt reduction and restructuring under the Enterprise for the 
Americas Initiative. 

Would you please explain more fully the changes being 
proposed in each of these programs to achieve long-term budget 
savings . 

Answer. The President's Budget proposes a $50 million 
reduction in P.L. 480 Title III program level for 1994. In terms 
of outlays the Budget proposes a $30 million discretionary savings 
from the baseline in 1994 and a $246 million discretionary savings 
during the 1994 through 1997 period by maintaining the program at 
the same level through 1998. 

The President's Budget also proposes a $6 million 
discretionary savings from the baseline in 1994 and a $79 million 
discretionary savings during the 1994 through 1997 period by 
reducing the amount available to meet the cost of reducing and 



264 



restructuring P.L. 480 Title I debt under the Enterprise for the 
Americas Initiative. 

U.S. EXPORTS 

Question. The Foreign Agricultural Service has played a key 
role in helping U.S. producers market their products overseas. 
Where have we been most successful in increasing market access for 
U.S. farm products and which countries represent our greatest 
potential for market access and development? 

Answer. During the past several years, FAS has kept markets 
open and further expanded access to overseas markets primarily 
through bilateral trade negotiations. The successful 
implementation of the U.S.-Cauiada Free Trade Agreement is a clear 
case in point where existing barriers are being progressively 
reduced and U.S. exports are on the rise. In addition to Canada, 
most of our recent success has occurred in East Asia. These 
heavily protected markets are now opening in response to trade 
negotiations spearheaded mainly by the United States. With trade 
barriers lowered, FAS market development programs (such as the MPP) 
are being successfully used to boost the sales of U.S. products in 
previously restricted markets. 

U.S. exports to Japem rose over 60 percent since 1986. These 
tsuigible sales gains are now benefiting a large portion of the U.S. 
agricultural community. The U.S.-Japein Beef and Citrus Agreement 
of 1988 progressively eliminated Japanese quotas on beef, fresh 
orauiges, and orsmge juice. As market access improved amd large MPP 
funding got under way, U.S. beef exports rose from $558 million in 
1987 to $1.1 billion in 1992. Fresh orange and juice sales have 
also grown rapidly reaching over $100 million in 1992. 

In addition to Japan, the "Four Tigers of Asia" 2uid the ASEAN 
countries offer considerable opportunities for increased sales. 
Since 1986, U.S. exports to South Korea and Taiwan are up GO to 70 
percent, while shipments to the other countries are up over 100 
percent. Trade negotiations aimed at expanding market access are 
expected to remain arduous. Nonetheless, successes are evident. 
An exeunple is the D.S.-Koream Beef Agreement of 1990 which created 
new export opportunities for the U.S. beef industry. During the 
past two years, annual sales have nearly doubled reaching just over 
$200 million. 

Closer to home, sales to Mexico during the past few years 
have shown dramatic gains. In response to Mexico's trade and 
economic liberalization efforts, sales of U.S. high- value products 
have surged to record highs. In fact, Mexico is our third largest 
market. The North TUnerican Free Trade Agreement (NAFTA) would 
further expamd these gains across the entire spectrum of 
agricultural products. The NAFTA is fully implemented, USDA 
estimates it will result in annual sales gains of $1.5 billion to 
$2 billion. On a global scale, a successfully completed Uruguay 
Round still clearly holds the most promise for greater market 
access suid increased sales. USDA estimates annual sales gains from 
a successful outcome could reach as high as $5 billion to $7 
billion. 



265 



TRAINING FOR EMERGING DEMOCRACIES 

Question. The fiscal year 1994 request proposes to continue 
the current appropriations level to provide training for middle 
income countries auid emerging democracies . 

In fiscal year 1992, this program received additional funding 
from U.S. Department of Agriculture's Emerging Democracies Program 
to implement training in 12 new independent states of the former 
Soviet Union. Do you expect additional fiscal year 1994 funding to 
be provided under the Emerging Democracies Progreun for this 
purpose? 

Answer. Yes, we anticipate that training for middle income 
countries and emerging democracies will be funded through the 
Cochram Fellowship program as well as the Emerging Democracies 
Program. At this time, we have not determined how much additional 
funding for training will come from the Emerging Democracies 
Program. I will provide additional information on these programs 
for the record. 
(The information follows:) 

The Emerging Democracies technical assistcince program, under 
Section 1542 of the Food, Agriculture and Conservation Trade Act of 
1990, provides $10 million per year for technical assistance in 
Emerging Democracies. This progreun has focused on imparting 
American management techniques suid adaptation to a market economy, 
with areas of focus ranging from livestock breeding, to fruit and 
vegetable marketing, to commodity trading and logistics, to 
marketing of grocery products. Training is a common element of all 
of these programs. The Office of International Cooperation jind 
Development personnel implementing the Cochran Fellowship program 
have e^q^erience and procedures in interviewing and arranging public 
and private sector programs for individuals needing training in a 
wide variety of areas such as agribusiness management and 
agricultural policies to encourage private agribusiness. The 
trainees have been identified by our technical experts and overseas 
attaches for programs designed euid proposed by the Foreign 
Agricultural Service. Cochrsui Fellowship Program personnel were 
provided funding to extend to the Emerging Democracies Program the 
skills they had developed for the general Cochrsui Fellowship 
Program. This seemed to be the cheapest, fastest and most 
effective way to provide support for U.S. Department of Agriculture 
technical assistemce efforts. 

FAS provided a total of $3.2 million to the Office for 
International Cooperation and Development for Emerging Democracies 
training during Fiscal Year 1992 and Fiscal Year 1993. Two 
projects - one in Bulgaria to support technical assistsuice in the 
fruit and vegetable sector ($250,000) and the other for grain 
trader training ($500,000) in the former Soviet Union provided a 
series of group training programs, with the activities planned by 
the Foreign Agricultural Service, in cooperation with industry 
contacts. This approach is unlike the normal Cochran Fellowship 
Program where the training, which is always within a broad 
framework of U.S. agricultural objectives is typically tailored to 
the interests expressed by the trainee, based on the interview. In 
fact, most of the training funded by the Emerging Democracies 



266 



program was in support of more intensive U.S. Department of 
Agriculture technical assistsuice activities targeted to development 
of segments of the marketing systems. Given that costs for each 
trainee tends to be roughly $10,000, only a h6uidful of people can 
be selected from each country. 

Not counting activities under the Cochraui Fellowship Program, 
which is being extended to 11 of the 12 former Soviet Union 
countries this year, the Emerging Democracies program now is 
undertaking technical assistance programs in Russia, Kazakhstein, 
Ukraine, Lithuamia, Latvia, Estonia, Polamd, Bulgaria, Czech 
Republic, Slovakia, Hungary, Nicaragua, El Salvador, and 
Argentina. These activities and follow-up on initial activities 
will stretch the $10 million budget very tightly even if no new 
countries are added. 

Question. Do you plan to expand this training program to any 
other countries during fiscal year 1994? 

TVnswer. At present, there are no plams to provide fiscal 
year 1994 Emerging Democracies money for training outside of 
Eastern Europe or the former Soviet Union. 

COMMODITY CREDIT CORPORATION 

Question. The USDA budget summary indicates that the fiscal 
year 1994 request provides for the costs which will result in 
fiscal years 1993 and 1994 once an agreement to reschedule former 
Soviet Union amd Russian debt owed to the CCC is implemented. What 
are the costs assumed auid where are they reflected in the 
President's fiscal year 1994 budget? 

Answer. On J^ril 2, 1993, the Government of the Russian 
Federation signed an agreement with creditors of the former Soviet 
Union to reschedule the former Soviet Union debt due emd unpaid as 
of December 31, 1992. No Russian debt is included in this 
agreement. The costs assumed in the President's fiscal year 1994 
budget are included in the CCC Export Credit Guarantee Losui Program 
Account and the CCC Export Credit Guarantee Loein Liquidating 
Account, and are displayed by fund in the Budget Appendix on pages 
382-384. Estimated costs for the former Soviet Union rescheduling 
were incorporated within the Program Account in the technical 
reestimate for cohort /progrcim year 1992, amd the additional subsidy 
amount of $363,894 million will be made availaible in fiscal year 
1993 for disbursement in fiscal years 1993 amd 1994 according to 
the Federal Credit Reform Act of 1990. The Liquidating fund costs 
will be disbursed in fiscal years 1993 and 1994 using permanent 
indefinite authority availaUDle according to the Federal Credit 
Reform Act of 1990. 

U.S. MEAT 

Question. It is my luiderstamding that Russia is currently 
importing U.S. meat. However, there is some question as to whether 
the U.S. will be able to continue to ship meat to Russia. Could 
you please give this Committee an update on this situation both in 
the short amd long-term? 



267 



Answer. The recent difficulties involving exports of U.S. 
meat to Russia were largely resolved at meetings with Russian 
authorities in Moscow in ;^ril 1993. The remaining issues 
involving pork, will be addressed when the Russiam officials review 
U.S. pork production, disease auid residue control, and meat 
inspection systems in May 1993. If the Russian authorities agree 
that the U.S. systems yield safe cind wholesome products, the import 
ban on U.S. pork now scheduled for June 1, 1993 may not take 
effect. 

GATT 

Question. Taiwan has applied to GATT for membership. Since 
current GATT rules euid regulations do not provide for a ban on 
imports euid realizing Taiwan maintains a ban on rice imports, what 
is USDA doing to solicit concessions on this policy? 

Answer. In the context of its accession to the General 
Agreement, Taiwan must commit to bring all its trade practices into 
conformity with GATT provisions. This includes elimination of all 
import prohibitions not specifically provided for in GATT articles 
(e.g.. Articles XX emd XXI), including the import ban on rice. 

The United States delegation and other Contracting Parties to 
the April 15 euid 16 Working Party meeting reviewing Taiwain's GATT 
application made it clear to Taiwan that GATT inconsistent measures 
could not remain in place after Taiwcin accedes to the GATT. We 
expect Taiwein to fully comply with the requirements of all 
developed economies acceding to the GATT. 

U.S. RICE TO THE EC 

Question. The EC has been one of the largest and most stable 
cash markets for U.S. rice. However, U.S. exports to the EC have 
dropped from 451,000 tons in 1989 to 318,000 tons in 1990 to 
271,000 tons in 1991 euid to about 240,000 tons in 1992. I 
understaund the EC has reversed a commitment to the U.S. and 
extended a production subsidy program beyond its initial life. 

Are your aware of this cind the impact it has along with other 
provisions of the EC's common Agricultural Policy on the U.S. rice 
industry? 

Answer. The EC Commission's proposal to extend the 
production subsidy for long-grain rice was announced in February as 
part of the EC's annual price package. The subsidy was to be for 
half of the previous amount. The price package (including the 
subsidy) has not yet been approved. It is scheduled to be 
discussed in the EC Agriculture Council on May 24. 

Question. What is the USDA doing to help the U.S. rice 
industry combat the EC's unfair trade policy? 

Answer. In February, USDA representatives immediately 
protested vigorously to officials in Brussels as well as in the 
Member States, citing the numerous assurances we and the U.S. rice 
industry had received that this 5 -year subsidy would end last year. 



268 



In response, Director-General Guy Legras committed in 
writing that the extension of the subsidy would be for one year 
only. We have continued to protest this subsidy at high levels 
when the opportunity has arisen. 

Question. What prospects do you see for the U.S. rice 
industry to regain its former share of the EC rice market? Can a 
successful Uruguay Round agreement help? What provisions or 
conditions must be included in the Uruguay Round agreement to help 
the U.S. rice industry regain its former share of the EC rice 
market? 

Answer. The United States believes it is critical that 
existing trading opportunities in Europe and elsewhere not be 
diminished as a result of the Uruguay Round. Our position with 
respect to the EC rice imports, consistent with our general 
position on current access in the Uruguay Round, is that 
quantif ioJDle commitments should be made which ensure existing 
trading opportunities. 

U.S. RICE EXPORTS 

Question. A number of the Caribbean nations have entered 
into a common market agreement generally referred to as CARICOM. 
Under that agreement, a common external tariff has been imposed on 
imports of rice from the United States at 30 percent ad valorem 
and, additionally, Jamaica imposes a 15 percent ad valorem tariff 
on imports of rice under the P.L. 480 food assistance program. 
Implementation of these tariffs subject the U.S. rice industry to 
the very real possibility of completely losing roughly a 120,000 
ton market in these Caribbean countries . 

What is your assessment of the impact of these tariffs on 
U.S. rice exports to the CARICOM countries? 

Answer. Guyana has been able to capture a significamt 
portion of the market once supplied primarily by the United States. 
Guyanese rice is cost competitive as long as exports from outside 
the CARICOM region are assessed a 30 percent CET rate. It appears 
that Guycuia was not cost competitive when the market operated under 
normal conditions and the duty rate on rice from outside the 
CARICOM region was 15 percent. 

Question. What is the potential for CARICOM members to 
supply, now or in the future, the requirements of the CARICOM 
market? Are they doing so today? 

Answer. Guyama is the only CARICOM country that has the 
potential for exporting rice. It is estimated that Guyana has the 
potential to meet over 75 percent of the region's 
demaund/consumption . 

Question. What are the CARICOM requirements regarding 
internal supply emd application of the tariffs? Are CARICOM 
members meeting these requirements currently? If CARICOM members 
are not satisfying the supply requirements of their rice markets, 
what action cam and will USDA take to help the U.S. rice industry- 
maintain these inportant markets? 



269 



Answer. The CBT assesses duties on trade of commodities 
originating outside of the CARICOM Common Market. The level of 
duty assessed is dependent uipon the classification of the 
commodity. Commodities are first defined as being either 
"competing" or "nonconpeting. " A competing commodity is one where 
"regional production or immediate production potential from 
existing capacity amounts to over 75% of regional 

demand/consumption." The second classification divides commodities 
into "inputs" and "final goods." In general, competing goods and 
final goods attract a higher duty rate them inputs and noncompeting 
goods. Rice is classified as a competing commodity due to Guyauia's 
alleged potential to meet over 75V of the region's 
demamd/ con sumption . 

The CET provides for Conditional Duty Exemptions on a number 
of items. These include items imported on a concessional basis to 
assist economic development. The Government of Jamaica (GOJ) may 
grant such imports total or partial duty exemption. As a result of 
the increase in tariff to 30%, DSDA suspended rice exports under 
the fiscal year 1992 Title I program. In response, the GOJ opted 
to have the duty on PL 480 rice remain at its previous level of 
15%. At present, the duty on commercial rice imports is 30%, but 
will be reduced to 25% on January 1, 1994. The CARICOM Secretariat 
is also mandated to review the rate treatment in October 1993. 

Question. Is it U.S. policy to allow a coxantry to impose 
import tariffs on PL 480 food shipments? What are the advauitages 
cuid disadvantages of allowing a country to impose tariffs on PL 480 
food shipments, both from the DS Government's perspective and the 
recipient government's perspective? 

Answer. The U.S. Government believes that countries should 
not charge duties on PL 480 food shipments. The imposition of 
tariffs on PL 4 80 commodities only recently became an issue in 
February 1992 after the CARICOM Common External Tariff (CET) was 
applied to Jamaica's Title I rice imports, raising the duty from 15 
to 30 percent. However, the USDA allowed Jamaica to charge only a 
15 percent duty on rice, a move supported at that time by 
the rice industry. We will chcuige that policy next year (fiscal 
1994) emd require all Title I imports to be duty-free. 

Question. Why is Jamaica imposing a tariff on PL 480 
shipments of US rice? Is the imposition of this tariff affecting 
US competitiveness in the Jamaiceui rice mar)cet? If this tariff is 
adversely affecting US rice e3q)orts to Jamaica, what cam and will 
USDA do to get Jamaica to change its policy? 

Answer. CARICOM governments imposed the CET in order to 
protect the CARICOM rice market from extra- regional suppliers and 
to provide an incentive for regional rice production. Since 1990, 
Guyanese rice production has increased substantially, from 120,000 
metric tons (MT) to an anticipated 170,000 MT this year. Jamaica 
purchased its entire PL 480 rice allocation of $11.0 million 
(44,000 MT) in fiscal 1991, and $10.0 million (34,600 MT) in fiscal 
1992. On December 2, 1992, Jamaica purchased $3.8 million (17,000 
MT) of its $18.0 million fiscal 1993 Title I allocation for rice. 
We have told the Government of Jamaica that we expect them to 



270 



purchase their total rice allocation under the fiscal 1993 Title I 
agreement . 

RUSSIA 

Question. Russia and other former Soviet Union republics are 
significcuit rice markets. Because domestic production does not 
usually satisfy demajid, rice is imported. As income increases, it 
is estimated that rice consumption will increase. Some estimates 
suggest that Russia alone could import as much as two million tons 
instead of current imports of edDout 700,000 tons. 

What is USDA doing to help the U.S. rice industry secure a 
share of this important market? 

Answer. In fiscal year 1992, the U.S. Department of 
Agriculture announced GSM- 102 credit guarantees for rice sales to 
the former Soviet Union totaling $13 million. In addition, 22,000 
metric tons of rice with a value of $8 million was provided to 
three states of the former Soviet Union under food aid programs.. 

During fiscal year 1993 the announced GSM- 102 credit 
guaramtee programs were reduced from the fiscal year 1992 level euid 
rice was not requested by Russia or Ukraine within the allocations. 
The pleuined rice allocations under food aid programs now total 
cibout 130,000 metric tons with ein estimated value of 33 million for 
five states of the former Soviet Union. 

Question. Will the food assistcuice package euinounced in 
Vancouver include rice? 

Answer. The commodity mix for the $700 million food 
assisteince package for Russia has not been determined at this time, 
however, we anticipate that rice will be one of the commodities 
considered for inclusion in the progreun. 

Question. What percentage of U.S. food credits cind other 
forms of food assistance for Russia and other former Soviet Union 
republics has been allocated to rice? 

Answer. Considering all the programs, the percentage of rice 
allocations have totaled less thein one percent. As is the case 
with credit guarantee and food aid programs, the U.S. Department of 
Agriculture Ceui encourage the country to request certain 
commodities, but ultimately the importing country decides what type 
and grade of commodity to purchase. 

MARKET PROMOTION PROGRAM (MPP) 

Question. Is the Market Promotion Progreun meeting its 
objectives? How successful has this program been in developing and 
increasing exports of U.S. agricultural products. 

Answer. Yes, we believe the Market Promotion Progreim (MPP) 
is meeting its objective as outlined in the legislation to 
encourage the development, maintenauice, and expfinsion for U.S. 
agricultural commodities. We believe there is evidence that MPP 
plays a supportive role in this export expzmsion. 



271 



In general terms, 80 percent of MPP funding for high-value 
products helped generate a record level ($23 billion) of such 
exports in FY 1992 --up a substantial 14 percent from 1991 and 42 
percent from 1988. 

There are also specific commodity examples. For example, 
fresh winter pears have seen tremendous export increases, from just 
under $10 million in 1986 to nearly $26 million in markets targeted 
for use of MPP funds. Overall winter pear exports increased from 
just under $21 million to more than $58 million in the same time 
period. Exports of shelled and in-shell U.S. walnuts have grown 
from $72 million in 1986 to more than $120 million estimated in 
1991 in MPP- targeted markets. 

U.S. red meat is another example. In 1986, U.S. red meat 
exports were close to one billion dollars. In 1992, red meat 
export values reached an all-time high of $2.8 billion. MPP 
provided resources, enabling the industry to tap the potential in 
the export markets. Similarly, beef exports in 1991 were 
equivalent to 1.7 million cattle slaughtered during the year and 
5.2 percent of domestic beef production. The estimated impact of 
beef exports on cattle prices in 1991 was $5.65 per cwt for fed 
cattle, $8.46 per cwt for yearling feeder cattle and $12.16 per cwt 
for calves. Average cattle prices declined in 1991, but the value 
of exports amd their intact on cattle prices increased. 

In addition, MPP, through the efforts of the Alaska Seafood 
Marketing Institute (ASMI) , assisted the U.S. salmon industry to 
nearly double the volume of canned salmon exports to the United 
Kingdom from 1987 to 1991. This is particularly noteworthy because 
during the 1980' s world supplies of salmon nearly doubled due to 
the advent of subsidized fairm- raised salmon production. 

Question: What has been the return on the taocpayers 
investment in the Market ProoKjtion Program in terms of the export 
increases and economic benefits it has generated directly for every 
dollar spent? 

Answer. We do not have a definitive answer. Even the 
Government Accounting Office admits that this is difficult to 
determine. However, the Department believes that there is a direct 
relationship between program funding levels «uid the level of U.S. 
agricultural exports. We can say that MPP plays a supportive role 
in export expansion. 

In broad terms, economic amalyses conducted by the Foreign 
Agricultural Service indicate that the increase in U.S. 
agricultural exports that likely could be attributed to export 
promotion under the MPP's predecessor, the Targeted Export 
Assistance Program, from 1986 was several times program 
expenditures. Specifically, the analyses indicated that 
agricultural exports attributable to targeted promotion during the 
1986-88 period ranged from $2 to $7 for each $1 of program funding. 
That is, assuming both that no MPP funds displace any commercial 
funds that would have been committed, and, that the experience of 
the first two years of the TEA program are representative of the 
extended experience of the MPP. 



272 



Question. Ib the FAS performing evaluations of participant 
programs funded under the Market Promotion Program? How often are 
the evaluations done and what criteria/standards are used to 
determine whether these programs are meeting their objectives? 

Answer. Yes, the Foreign Agricultural Service (FAS) is 
performing evaluation of participeint programs funded under the 
Market Promotion Program. The Department applies evaluation 
throughout the program in various forms addressing both short eind 
long term program perspective from day to day activity reviews to 
the Long Term Agricultural Trade Strategy (LATS) . 

Many steps have been taken to strengthen the evaluation 
process. The Department is committed to further enhancing the 
evaluation process suid to improve the application of these results. 

The evaluation process requires assessment on several 
different levels. The participant. Foreign Agricultural 
Service /Washington euid foreign staff, auid technical experts are 
involved in these assessments. 

-Activity Evaluation: Each activity is evaluated 90 days 
after completion based on sm activity- specific goal which must be 
stated in queuitified terms. 

-Periodic reports and consultations: This type of evaluation 
is ongoing, reviewing process and adjusting the program based on 
feedback from formal ein informal evaluations. The information is 
provided in a variety of forms including participeint trip and 
activity reports, periodic status reviews, travel, and 
FAS/Participamt meetings. 

-Annual Reviews : There are two scheduled reviews that occur 
for all program participants: the MPP annual 

application/allocation process eind the MPP activity plem approval . 
These are extensive reviews of the Participant's overall program, 
assessing program effectiveness eind actual export performance as 
related to stated export goals. Information drawn from the 
activity evaluations and the periodic reports emd consultations are 
also critical in the emalysis. This type of evaluation provides 
the bases for annual program budget levels along with any 
conditions related to the operation of the Participant's program. 

-Progrsun Evaluation: Evaluation also occurs when potential 
program problems surface. Taking a broader perspective, these 
program evaluations are initiated to make a more in-depth review. 
Program evaluations may take one of three forms : an independent 
third party, a Foreign Agricultural Service -generated evaluation, 
or a Participamt- generated study. The evaluation results generally 
lead to significant progrjim changes as in the case of a meat and 
poultry program evaluation in the Middle East. 

-MPP Evaluation: Provisions of the 1990 legislation required 
the Department to evaluate the effectiveness of funding under the 
Market Promotion Program within 15 months of the initial provision 
of MPP. A methodology was developed to identify potentially 
ineffective MPP funding for particular commodities in particular 



273 



country markets. These markets were identified using a 
quantitative methodology. This evaluation methodology was used in 
the 1993 MPP allocation to indicate those markets which appeared to 
be falling short of their goal, especially in relation to dollars 
expended. 

-Long Term Agricultural Trade Strategy: The Department 
recently completed the Long Term Agricultural Trade Strategy (LATS) 
which we refer to as an "umbrella" strategy --it provides the 
guiding principles for assuring that mamagement of Department 
programs will be directed in a coordinated fashion to efficiently 
and effectively assist the private sector in increasing U.S. 
agricultural exports. This exercise identifies both country euid 
product priorities, establishing the framework for evaluation 
Participants' programs. 

Question. Concerns have been raised aibout the Market 
Promotion Program in terms of its general administration, amd the 
amount of funds allocated to promote brand-name products smd to 
promote products of private for-profit companies overseas. 

Are these valid concerns in the Department's view? If so, 
what actions have been taken or what program reforms would you 
recommend to overcome these criticisms of the programs? 

Answer. Concerning the administration of the program, this 
is not a valid criticism based on the program cheinges initiated in 
the past 2 years. We believe that the program as it is currently 
structured provides sufficient controls auid oversight. 

Admittedly, during the start up phase of the Targeted Export 
Assistance program, there were areas within the program that needed 
strengthening. Changes were initiated as a result of 
recommendations from the Department and the Government Accounting 
Office. 

The Department recognizes the need to be accountable to the 
taxpayer. The Department has taken several initiatives to 
strengthen amd improve the effectiveness and integrity of the MPP. 
One of the most significant changes was the development and 
publication of regulations in the fall of 1991. The most notable 
provisions under the Interim Rule include: 

-enhamced application requirements 

-a cost -share obligation with a minimum level of 

contribution of no less tham 5 percent 
-a minimum of 50 per cent U.S. origin content for 

eligibility 
-limitations on salary auid allowance expenses for overseas 

employees and consultamts 
-limitations on demonstration aind training activities 
-a new reimbursement rule for brauided promotion 
-tighter administrative controls 

Additional measures have been taken to strengthen program 
management : 



274 



-esteJjlished internal procedures for the 1993 MPP 
allocation which resulted in announcing the program 3 weeks 
earlier than 1992 

-enhemced the MPP application analysis by including a 
cross -commodity evaluation process that provided indicators 
when country programs were falling short export performance 
in relation to dollars spent 

-instituted a policy requiring FAS to approve activity 
pleuis, or portions thereof, within 30 -business days of 
receipt from the participemts. 

-Expanded the MPP allocation formula to address the concerns 
raised by the Congress on percent of U.S. origin content and 
the degrees of product processing in the United States 

-Improved turnaround of the MPP reimbursement claims 

Concerning criticisms regarding participation of private 
firms in the MPP program, we do not believe they are warranted. 
One of the most effective means for accomplishing this goal is 
through brand products sourced from U.S. commodities. Most 
consximer- ready products are sold on the basis of bramd. To 
maximize returns in the program, we believe participation by 
private for-profit firms is essential. 

As stated in our June 1991 Regulatory Impact Analysis, U.S. 
exporters, particularly those selling brsmded products likely have 
an incentive to invest in overseas market development without the 
assistance of U.S. Government programs. However, the private 
sector's incentive is too often offset by uncertainties and risk 
and is not simply based on meeting quality and price competition. 
These uncertainties include: 1) insufficient knowledge of foreign 
consumer preferences; 2) language barriers; 3) inexperience in 
operating in an international environment; euid, 4) obstructionist 
foreign government involvement in trade, i.e. what may be 
considered as unfair trading practices. The MPP will utilize 
USDA' 8 international infrastructure and knowledge base to help U.S. 
exporters gain knowledge and skills necessary to compete in foreign 
markets and, improved access to foreign markets. 

Because the knowledge and skills necessary to compete in 
international markets is, along with combating unfair trading 
practices, one of the key benefits that the MPP can offer 
exporters, FAS will work to ensure that funding goes to firms with 
less knowledge and experience in international marketing. These 
firms probably will be primarily small and medium size firms. It 
is with these firms where the export information gained is critical 
and where MPP's role sharing the risk of a new venture between a 
firm and the Government is most valuable. 

Concerning the issue of providing promotional assistance to 
foreign firms, first and foremost, the Department is committed to 
promoting the U.S. contents of the product. The brand, whether it 
be U.S. or foreign, only serves as the vehicle for accomplishing 
this objective. We have, however, incorporated a factor in the 
Market Promotion Program allocation process which gives priority 
consideration to those organizations who administer brand progreuns 
solely with U.S. companies. For example, the amount of funding 
allocated to foreign firms was only 7.2 percent of the total 



275 



funding in 1991. Generally, that approach is taken when it is not 
economical or feasible because of a foreign country's tariff 
structure to promote the U.S. product. Therefore, FAS does try to 
ensure that funding given to foreign firms does not put it in 
competition with a U.S. firm in the same market. 

About 40 percent of the funding is allocated to private firms 
with about 80 percent of the program directed to high-valued 
products . 

Question. It has been suggested that the MPP support should 
be phased-out to a participeuit once trade barriers have been 
overcome and a market established. Do you agree that such a 
phase-out provision is needed? 

Answer. Although standardized criterion have not been set 
for phasing out activities, the decision to withdraw financial 
support is 2U1 essential part of the Market Promotion Program (MPP) 
analyses. The status of activities and programs are determined 
based on the review of the MPP application and activity plan 
reviews, taking into account factors as past activity and program 
evaluation results, trade performamce, and chamged behavior in the 
market place. Each activity is approached on a unique auid 
individual basis in determining at what point a particip2mt should 
phase -out of the market. 

However, as previously discussed, the MPP serves to overcome 
the transaction costs of entering a new market where language, 
customs and consumer preferences, and government policies auid 
procedures are all new to a firm and so the costs higher auid risk 
greater. With the Federal Government sharing these costs 
initially, firms are better prepared to operate in the 
international environment. Because the greatest benefits of the 
MPP, «uid Cooperator Program, as well, comes from the introduction 
of firms to exporting, FAS periodically adjusts programs, cuts back 
funding levels and redirects activities when the returns from MPP 
assistance diminish. We support a "graduate" process in this 
sense . 

Question. How is funding under the MPP progreun being 
allocated? What percentage of funds is allocated to promote 
generic or brand-name products? What is the division of funds 
between new market development versus established markets? What 
enphasis is being placed on high-value versus bulk commodities? 
What is the level of participation between small auid large private 
firms under the program? 

Answer. The allocations are determined using the following 
procedure: The commodity Credit Corporation publishes a notice in 
the Federal Register in accordance with 7 CFR Part 1485. 
Initially, a Committee of senior marketing specialists conduct an 
application sufficiency check to ensure compliance with the program 
announcement auid the regulations. Based on the criteria for 
allocating of CCC resources as set forth in 7 CFR 14 85, the 
Commodity Divisions then critically analyze the accepted 
applications, taking into account the participant ' s administrative 
capaibility; strategic pleui; program scope; program effectiveness; 



276 



and the likelihood for future success. Division budget 
recommendations are made on a country and activity- type 
(generic/bramd) basis. 

A second committee, chaired by the Assisteuit Administrator, 
Commodity and Marketing Programs, reviews all application analyses. 
Adjustments made to the Divisions' recommendations are based on the 
following factors: presence of sui unfair trade practice; 
contribution (cost-share) level; budget size in relation to export 
level 2uid to expected change in exports; market share goals; export 
[Bperformance compared to export goals/forecasts; percent of U.S. 
origin content; euid the degree of processing the United States. 
Until now, double weights were assigned to the size of budget 
compared to the value of exports, the size of the budget compared 
to the change in value of exports Jind last year's exports compared 
to previous year's projections. 

Approximately 40 percent of the program funds are allocated 
to brand promotion with the balance supporting generic promotion. 
Since the inception of MPP, 80 percent of the funding has supported 
high- value products. On average, c±)out 85 percent of the MPP funds 
target developed markets; the markets that have the greatest 
potential for high-value product imports. 

In addition to providing promotional assistance, we opened a 
new Agricultural Trade Office (ATO) in Mexico, our fastest growing 
market for consumer-oriented products, suid also opened a second ATO 
in Japeui, our largest market for consiomer- oriented products. FAS 
also continues to offer an active trade show program to establish a 
high quality image for U.S. foods in key markets. 

Concerning the level of MPP participation between small and 
large firms, we cam not, at this time, quamtify the number of small 
and large firms for the entire program. We are in the process of 
surveying the private compcinies to attempt to obtain that 
information. However, there has been greater participation of 
firms under the State Regional Trade Groups (SRTG's) as 375 
companies applied for participation in the 1993 brand promotion 
program compared with 269 participcints in 1992. Nearly 80 percent 
of these companies reportedly have fewer them 500 employees. 

Concerning compeiny size, it has been FAS policy to focus on 
what is in the package, not who produces the final product. As 
such, we administer the program on a size neutral basis. However, 
as firm size correlates with export experience auid international 
skills, in order to generate the greatest additionality from MPP 
expenditures, FAS will take the factor into consideration. 



277 
QUESTIONS SUBMITTED BY SENATOR SPECTER 

DAIRY EXPORTS 

QueBtion. Mr. O'Mara, recently a group of dairy fanners from 
the United States made a trip to Russia to discuss trade potential 
with Russia. Upon their return, they reported to my office that 
Russia is very interested in future trade with the U.S. for dairy 
products, with particular interest in obtaining U.S. dairy products 
as part of the recently ainnounced aid package to Russia as a result 
of the meetings in Vancouver between President Clinton and 
President Yeltsin. 1 further understand that there exists some 450 
million pounds of surplus butter in storage by USDA' s Commodity 
Credit Corporation which could be made part of the aid package 
proposed. 

Would the Department consider making dairy products part of 
the $700 million in agriculture credit sales under the Food for 
Progress program proposed under the Russian Aid Package? 

Answer. Yes, substantial quantities of butter are being held 
in CCC inventories euid this butter will be availedjle for 
consideration in the Russiaui Food Aid Package. 

Question. What steps must be taken to ensure that U.S. dairy 
products are included as part of the Russiain Aid Package? 

Answer. When we meet with the Russi2ui Delegation to discuss 
the commodity mix for this progrcun we will certainly make the case 
for including butter in the progreun. 

Question. Mr. O'Mara, the Market Promotion Program has been 
scrutinized over the past several years in an effort to ensure that 
funds under the program are used in the promotion of commodities 
that will develop markets overseas for U.S. producers. The 
Administration has proposed a cut in the program's funding level 
with an intention that reduced funds will ensure the most effective 
use of available resources. 

Is the Department proposing auiy type of legislative reform of 
the program? 

Answer. No, the Department is not considering amy type of 
legislative reform. 

Question. Are there any attempts at the Department to work 
within the existing authorization to ensure that the program is 
developing markets without restricting the benefits of the prograun 
to the U.S. producers or mauiufacturer? 

Answer. Yes, the Department attempts to maximize the 
development of foreign markets, taking into account the effect on 
U.S. producers auid manufacturers. The program is open for 
application to any nonprofit or private firm that satisfies the MPP 
criterion as described in the interim regulations. 



278 
QUESTIONS SUBMITTED BY SENATOR GORTON 

MARKET PROMOTION PROGRAM 

Question. In the past, much discussion has been given to the 
problems which plague the MPP program. In fact both House euid 
Senate ^propriations reports for this subcommittee last year 
dedicated a good portion of discussion to these problems. Although 
there are undoubtedly other MPP success stories to be told 
around this table, I wonder if you know how much Washington state 
apples have benefited from the small amount of money it receives 
from this program. 

With the assistance of MPP funds, U.S. apple exports have 
skyrocketed in value from just $130 million in fiscal year 1988 to 
$344 million last year. Last year the Washington Apple Commission 
received $4.41 million in MPP funds -- funds which were matched 
with $1,412 million by the apple industry for promotional 
activities in 20 countries. Are you familiar with the outstanding 
benefits which the MPP program provides for Washington apple 
growers? 

Answer. Washington apple growers have indeed benefited from 
the Market Promotion Program (MPP) . Not only do Washington apple 
growers reap the benefits of the MPP, but also all U.S. apple 
growers benefit from increased exports when production is diverted 
from the domestic market. 

Exports in general, and exports to new markets, have continued 
to grow since the Washington Apple Commission (WAC) began its 
participation in MPP. Washington State exports, as a percentage of 
its fresh apple sales, have grown from a low of less thein 10 
percent in 1986/87 to over 27 percent last season. Shipments to 
Mexico (a new market last year), have shot up to almost 3.2 million 
boxes this season to-date. This represents close to $42 million in 
sales. Mexico's shipments this season have already surpassed 
WAC's traditional number one export market -- Taiwan. 

Furthermore, the WAC has calculated that for every MPP dollar 
spent in 1991/92, $88 of income was generated in the Washington 
State economy. This translated to close to $400 million of income 
for Washington State residents. Wages and profits for growers, 
packers, and their employees; and payments to apple industry and 
consumer suppliers and related services are included in this total. 



279 



OFFICE OF INTERNATIONAL COOPERATION AND 

DEVELOPMENT 

QUESTIONS SUBMITTED BY SENATOR BUMPERS 

Foreign Currency Research Program 

Question. It is my understanding that the 1990 farm bill changed 
the foreign currency research program so that no appropriations are 
required. Rather, research is to be funded with foreign currencies 
which are received as payments under the Public Law 480 title I 
concessional sales program. What is the status of this program? Are 
you conducting research in 1993? 

Answer. No research grants were awarded by USDA under this 
program in fiscal year 1992 or 1993. You are correct that, in former 
years, OICD had an annual appropriation for "Scientific Activities 
Overseas -- Foreign Currency Program". The last year in which we 
received this funding was FY 1991. In Section 1512 of the 1990 FACT 
Act, the Congress amended the Agricultural Trade Development and 
Assistance Act of 1954 to authorize several uses for foreign currencies 
received as payments under the P.L. 480 Title I concessional sales 
program, including agricultural, forestry and aquaculture research. 
Any such local currency sales are considered a grant and, therefore, 
a 100 percent credit subsidy for purposes of Title I programming under 
the Credit Reform Act. This makes sales for foreign currencies more 
expensive, in terms of allocating credit budget authority, than sales 
for dollars. USDA has not signed any FY 1993 Title I programs with 
local currency components, so no funds are available for this program. 

Question. How much money has been generated for this account, 
from what countries, and for what is it being used? 

Answer. As no agreements have been signed with local currency 
components, no funds have been generated under this mechanism. 

Question. What are your projections for 1994 in terms of the 
amount of funds available for the program? 

Answer. Under current policy, no agreements with local currency 
components are planned for FY 1994, and so we do not project any funds 
being available at this time. 



280 



SOIL CONSERVATION SERVICE 
QUESTIONS SUBMITTED BY SENATOR BUMPERS 

ENVIRONMENTAL PROTECTION 

Question. Previously the Soil Conservation Service was seen as 
the agency at USDA for environmental protection. Now SCS is proposed 
to be folded into the Farm Service Agency. How do you perceive the 
environmental community will look upon the agricultural industry if 
there is no identifiable agency within USDA whose mission is 
specifically natural resource protection? 

Answer. We believe, regardless of reorganization, that there 
will be an agency within USDA whose mission will include natural 
resource protection. USDA will increasingly function as a mediator 
between environmental and agricultural interests to integrate 
environmental policy into workable, economically viable solutions to 
natural resource problems. USDA will play a leadership role in 
enabling landowners and others to successfully manage and improve 
their ecosystem, ensuring both resource protection and economic 
viability. 

WATERSHED AND FLOOD PREVENTION OPERATIONS 



Question. Please provide a list of projects and amounts funded 
in 1993 under all three segments of the watershed and flood 
prevention operations program. 



Answer, 
record 



We will provide the requested information for the 



FLOOD PREVENTION PROGRAM PUBLIC LAW 78-534 
FISCAL YEAR 1993 ALLOWANCES 



STATE 
CALIFORNIA 
CALIFORNIA 
GEORGIA 
IOWA 

MISSISSIPPI 
MISSISSIPPI 
NEW YORK 
OKLAHOMA 
TEXAS 
TEXAS 
VIRGINIA 
WEST VIRGINIA 

TOTAL TO STATES 
PROGRAM SUPPORT 
NATIONAL TECHNICAL CENTERS 
TRAINEE RESERVES 
UNDISTRIBUTED CONTRACT MODIFICATION RESERVE 

Subtotal 
FOREST SERVICE work in Los Angeles 
FOREST SERVICE work in Santa Ynez 
FOREST SERVICE work in other projects 

Subtotal FOREST SERVICE 
FARMERS HOME ADMINISTRATION 

GRAND TOTAL 



PROJECT NAME 

LOS ANGELES 

SANTA YNEZ 

COOSA 

LITTLE SIOUX 

LITTLE TALLAHATCHIE 

YAZOO 

BUFFALO 

WASHITA 

MIDDLE COLORADO 

TRINITY 

POTOMAC 

POTOMAC 



AMOUNT 

$200,000 





3,022,000 

3,073,000 

11,601,000 

215,000 

3,245,000 

4,013,000 

3,487,000 

1,330,000 

15.995.000 

46,181,000 

1,889,800 

389,000 

45,000 

124.692 

2,448,492 

1,216,000 

616,000 

188.000 

2,020,000 

80.000 

S50. 729.492 



281 



STATE 

Alabama 

Arizona 

Arizona 

Arizona 

Arizona 

Arkansas 

Cal ifornia 

Cal ifornia 

Cal ifornia 

Colorado 

Connecticut 

Florida 

Indiana 

Kentucky 

Kentucky 

Louisiana 

Louisiana 

Maine 

Mississippi 

Mississippi 

Mississippi 

Mississippi 

Montana 

New Jersey 

New Mexico 

North Carolina 

Ohio 

Ohio 

Oklahoma 

Oklahoma 

Oklahoma 

Oklahoma 

South Carolina 

South Carolina 

Texas 

Utah 

Vermont 

Virginia 

Virginia 

Washington 

West Virginia 

West Virginia 

West Virginia 

Subtotal to states 



EMERGENCY WATERSHED PROTECTION PROJECTS FY 1993 
COUNTY/ACTIVITY 



DOLLARS 



Monroe County 
Navajo County 
Hurricane Lester 
Pima County 
Jan. 93 Storm 
Stone, Columbia Ctys. 
Shasta, Trinity Ctys 
Hesperia Channel 
Riverside County 
Archuleta County 
June 92 Storm 
Walton County 
Porter County 
Breathitt County 
Carroll, Gallatin Ctys. 
11 projects 
Hurricane Andrew 
Cumberland, York Ctys. 
17 Counties 

Adams, Jones, Simpson, 
Hinds, Prentiss Ctys. 
13 Counties 

Delta, Bienville Ctys. 
Lincoln County 
Morris County 
San Francisco River 
Madison County 
Lorain County 
Jefferson County • 
Stephens County 
Pontotoc County 
Spring Brook 
Seminole County 
Hess Creek 
Saluda County 
15 Counties 
EWP Information 
Montpelier 
Tyre River 
Nelson County . 
EWP Information 
Mason County 
Potomac Basin 
Randolph County 



Program Support 
Undistributed for contingency 
TOTAL 



and contract modification 



$38 


,000 


78 


,000 


70 


,000 


65 


,000 


2,150 


,000 


20 


,000 


185 


,000 


60 


,000 


150 


,000 


7 


,000 


130 


,000 


30 


,000 


17 


,000 


1 


,200 


240 


,000 


1,175 


,000 


300 


,000 


1 


,000 


6,732 


000 


2,842 


000 


9,900 


000 


135 


000 


4 


000 


483 


000 


35 


000 


6 


000 


63 


500 


5 


000 


100 


000 


25 


000 


44 


000 


195 


000 


60, 


000 


93, 


750 


819, 


000 


10. 


000 


10. 


000 


37, 


000 


16, 


400 


12, 


500 


1,131, 


000 


1,300, 


800 


104. 


800 


$28,881. 


950 


1.495, 


300 


259. 


262 


$30.636. 


512 



282 



DIRE EMERGENCY SUPPLEMENTAL APPROPRIATION FY 1993 



STATE 



COUNTY /ACTIVITY 



DOLLARS 



Alaska 




Ft. Yukon 


$2,134,000 


Arizona 




Navajo County 


42,000 


Arizona 




Hurricane Lester 


9,400 


Arizona 




Havasupai Canyon 


29,000 


Arizona 




Jan 93 Rains 


5,016,000 


California 




Ventura County 


360,000 


California 




Riverside, 
San Bernadino Ctys. 


790,000 


Florida 




Hurricane Andres 


14,000,000 


Florida 




Dixie, Taylor Ctys. 


3,500,000 


Hawaii 




Hurricane Iniki 


998,000 


Idaho 




Blaine County 


100,000 


Idaho 




Elmore County 


730,000 


Idaho 




Boise County 


151,000 


Indiana 




Stuckr Fork 


30,000 


Iowa 




Lake Ellis 


30,000 


Kentucky 




Boyd, Henry, Trimble 
Clay Counties 


905,000 


Kentucky 




Trimble, Henry Ctys. 


500,000 


Louisiana 




Hurricane Andrew 


10,000,000 


Mississippi 




6 projects 


1,060,000 


Nevada 




Washoe County 


115,000 


New Jersey 




Lambertville 


136,000 


New Mexico 




Gila River 


625,000 


New York 




St. Lawrence, 
Oneida Ctys. 


150,000 


North Carolina 




Swain County 


1,925,000 


Ohio 




Lorain, Erie, 
Jefferson Ctys. 


15,300 


Pacific Basin 




Typhoon Omar 


23,000 


Puerto Rico 




Jan 93 Storms 


5,000,000 


South Carolina 




Hampton, Colleton 
Allendale, Bamberg Ctys. 


625,000 


South Carolina 




Pickens County 


250,000 


Tennessee 




Sequatchie County 


300,000 


Texas 




77 Counties 


7,500,000 


Utah 




Wanship County 


115,000 


Virginia 




9 Counties 


320,000 


Subtotal to 


states 




$57,483,700 


Forest Service 






2,644,000 


Undistributed for coni 


tingency 




and contract 


modifii 


:ation 


1.872.300 


TOTAL 






$62,000,000 



283 



WATERSHED PROTECTION AND FLOOD PREVENTION 

PUBLIC LAW 83-566 

FISCAL YEAR 1993 ALLOWANCES AS OF MAY 3, 1993 

STATE AMOUNT 

ALABAMA 
ARIZONA 
ARKANSAS 
CALIFORNIA 
COLORADO 
CONNECTICUT 
DELAWARE 
FLORIDA 
GEORGIA 
HAWAII 
IDAHO 
ILLINOIS 
INDIANA 
IOWA 
KANSAS 
KENTUCKY 
LOUISIANA 
MAINE 
MARYLAND 
MASSACHUSETTS 
MICHIGAN 
MINNESOTA 
MISSISSIPPI 
MISSOURI 
MONTANA 
NEBRASKA 
NEVADA 

NEW HAMPSHIRE 
NEW JERSEY 
NEW MEXICO 
NEW YORK 
NORTH CAROLINA 
NORTH DAKOTA 
OHIO 

OKLAHOMA 
OREGON 

PACIFIC BASIN AREA 
PENNSYLVANIA 
PUERTO RICO 
RHODE ISLAND 
SOUTH CAROLINA 
SOUTH DAKOTA 
TENNESSEE 
TEXAS 
UTAH 
VERMONT 
VIRGINIA 
WASHINGTON 
WEST VIRGINIA 
WISCONSIN 
WYOMING 

TOTAL TO STATES 
PROGRAM SUPPORT 



$2,220 


,000 


3,400 


,000 


4,300 


,000 


4,770 


,000 


2,891 


,000 


1,241 


,700 


805 


,000 


830 


,000 


3,457 


,000 


5,442 


,000 


653 


,100 


2,910 


,000 


1,110 


,000 


4,273 


,100 


5,344 


,000 


1,796 


,000 


4,519 


,000 


670 


,000 


405 


,000 


965 


,000 


1,592 


,000 


3,029 


,000 


7,333 


,000 


5,827 


,000 


1,160 


.000 


2,852 


,000 


520 


,000 


392 


,300 


712 


,000 


13,771 


,000 


2,275 


,000 


2,965 


,000 


593 


,000 


3,450 


,000 


5,606 


,800 


1,615 


,000 


572 


,000 


6,133 


500 


2,200 


,000 


105 


000 


1,655 


000 


116 


,000 


3,905 


208 


8,635 


000 


1,900 


000 


1,018 


000 


5,224 


000 


2,385 


000 


19,032 


000 


4,988, 


100 


650. 


000 


164,213, 


808 


8,501, 


800 



284 



NATIONAL TECHNICAL CENTERS 5,694,200 

FOREST SERVICE 410,000 

FARMERS HOME ADMINISTRATION 172,500 

UNDISTRIBUTED. CONTRACT MOD. RESERVE 3.654.446 

GRAND TOTAL $182.646.754 

Allowances to States Include technical and financial assistance 
funds. The allowances support work on 597 active watershed projects. 

Allowances are not kept at the national level on a project by 
project basis for the current year. Historical obligations are 
project by project (with technical and financial assistance 
combined) . 

Question. Please provide the same information proposed for FY 
1994. 

Answer. Allowances for fiscal year 1994 will be made based on 
1994 appropriations and on the states' requests and priorities. 
These decisions will not be made until later this fiscal year. 

RESOURCE CONSERVATION AND DEVELOPMENT 

Question. Please provide a list of projects and the amounts 
funded in 1993 under the Resource Conservation and Development 
program. 

Answer. Each year approximately 1400 projects are completed by 
RC&D Councils around the country. RC&D funding is limited to 25 
percent of the total cost not to exceeded $50,000. Costs per measure 
are not available, but in the past RC&D funds have attracted $7 
dollars of other federal money and $20 in state and local funds for 
every RC&D dollar contributed by the SCS. 

Question. What new areas were funded in 1993? 

Answer. The following is a listing of the new areas funded in 
1993. 

NEW RC&D AREAS FUNDED IN 1993 

State Area Name 

Alabama Gulf Coast RC&D Area 

Georgia Seven Rivers RC&D Area 

Missouri Prairie Rose RC&D Area 

Missouri Osage Valley RC&D Area 

Montana Northwest Montana RC&D Area 

Nebraska Northeast Nebraska RC&D Area 

Nebraska Loup Basin RC&D Area 

North Dakota Upper Dakota RC&D Area 

North Dakota Williston Basin RC&D Area 

Puerto Rico El Atlantico 

Question. Please provide the same information proposed for 
1994. 



285 



Answer. This information is unavailable at this time. The 
selection of new area proposals is up to each RC&D council and agreed 
to by the State Conservationist. 

Question. What new areas are proposed for 1994? 

Answer. At this time, we do not anticipate adding to the number 
of authorized RC&D areas in 1994, However, we may consider expanding 
the size of some of the currently authorized areas as long as no 
additional resources are needed to service them. 

PRIVATE GRAZING LANDS 

Question. Please describe the private grazing lands 
conservation initiative. 

Answer. The Grazing Lands Conservation Initiative (GLCI) was 
developed by a confederation of national organizations focused on 
enhancing privately owned grazing lands. Some of the 634 million 
acres of privately owned grazing lands in the U.S. are found in every 
state. When properly managed, these lands contribute to a healthy 
environment and economy. Private grazing land owners are eager to 
voluntarily improve their lands; however, they recognize they need 
technical assistance to help them use current science and technology 
to make sound grazing land management decisions. 

Existing technical assistance is very limited for grazing land 
owners in most states and almost non-existent in others. 
Professionals, trained in the management of pasturelands, grazeable 
woodlands and rangelands, are needed to provide assistance to 
landowners who desire to voluntarily sustain and improve their 
grazing lands so the many values these lands provide can be realized 
across the country. 

Question. What will it do? 

Answer. The major focus of the GLCI is to enhance privately 
owned grazing lands through the reestablishment of direct 
conservation technical assistance to the farmers and ranchers who own 
these lands. This technical assistance program will be carried out 
using a total resource management approach with private grazing land 
owners who voluntarily request assistance. Some of the benefits the 
American public would receive through the proper management of 
grazing lands by their owners are: 

- Improved water quality and quantity to urban, rural, 
domestic, industrial, and agricultural users. 

- Reduced soil erosion resulting in less sedimentation of 
streams and reservoirs and improved air quality. 

- Enhancement of rural social stability and economic vigor. 

- Improved aquatic systems and fisheries. 

- Improved wildlife habitat and population balance. 

- Increased opportunities for high quality recreational 
experiences. 



286 



Question. How much will it cost? 

Answer. The Soil Conservation Service spends between $20 
million and $30 million annually to help grazing land owners treat 
about 30 million acres of range, pastureland and grazed forest lands. 
At this rate, it will take from 15 to 20 years to treat the remaining 
private grazing lands currently in less than good condition. The 
total cost to treat these grazing lands would be $400 million to $600 
million plus any future increased operating costs. 

Question. Is this a new program? If so, was there a similar 
activity through SCS in the past? 

Answer. The SCS currently provides technical assistance on 
private grazing lands. For example, 24.8 million acres of non- 
federal rangeland and 4.5 million acres of pastureland were treated 
with SCS assistance during fiscal year 1992. Since the 1985 and 1990 
Farm Bills, the major focus of the SCS has been re-directed to 
compliance planning on highly erodible cropland and other issues, 
while still providing about 60 to 70 percent of the traditional level 
of technical assistance to grazing land owners. 



QUESTIONS SUBMITTED BY SENATOR JOHNSTON 

WETLANDS DELINEATIONS 

Question. Many farmers from Louisiana continue to contact me 
about the difficult problems they face with respect to wetlands 
delineation on agricultural lands. 

Farmers and ranchers must deal with the Soil Conservation 
Service when determining which lands are wetlands for the purpose of 
complying with the swampbuster provisions of the 1990 Farm Bill. 

Farmers and ranchers must also deal with the Army Corps of 
Engineers and the Environmental Protection Agency when determining 
which lands are wetlands for the purpose of complying with dredge 
and fill rules of section 404 of the Clean Water Act. 

As I understand it, SCS and the U.S. Fish and Wildlife Service 
use the definition of a wetland contained in the 1990 Farm Bill in 
making determinations while the Corps and EPA rely on the 1987 
Delineation Manual in making such determinations. 

I am told that farmers face determinations on wetlands under 2 
different definitions, 2 separate sets of regulations and by as many 
as 4 different agencies. This is confusing, burdensome and costly 
for farmers. 

What is the precise definition SCS uses in making 
determinations and how does this differ from the 1987 Delineation 
Manual 's definition? 

Answer. The term "wetland", as used by SCS and defined in 7 
CFR Part 12.2, means land that has a predominance of hydric soils 



287 



and that is inundated or saturated by surface or ground water at a 
frequency and duration sufficient to support, and that under normal 
circumstances does support, a prevalence of hydrophytic vegetation 
typically adapted for life in saturated soil conditions, except that 
this term does not include lands in Alaska identified as having a 
high potential for agricultural development and a predominance of 
permafrost soils. 

This wetland definition is virtually identical to that 
contained in the 1987 COE Delineation Manual, which is found in 40 
CFR Part 230. 3(t) and 33 CFR Part 328.3(b), and reads: Those areas 
that are inundated or saturated by surface or ground water at a 
frequency and duration to support, and under normal circumstances do 
support, a prevalence of hydrophytic vegetation typically adapted 
for life in saturated soil conditions. Wetlands generally include 
swamps, marshes, bogs, and similar areas. 

Question. I am also told that producers receive conflicting 
responses from SCS and the Corps or EPA on whether lands are 
wetlands. 

In your opinion, is this a significant problem? In how many 
instances do or could conflicting answers occur? 

Has SCS attempted to persuade the Corps and EPA to revise their 
definition and make it consistent with that used by SCS? Would SCS 
support such a revision? 

Answer. While the SCS, COE and EPA have a common definition of 
wetlands, the current criteria, indicators and methodologies 
utilized by these agencies to identify and delineate wetlands are 
slightly different. The COE and EPA use the 1987 COE wetland 
delineation manual to identify and delineate wetlands, while SCS 
uses the criteria and methodologies found in 7 CFR Part 12.31 and 
the National Food Security Act Manual (FSAM). 

Because of subtle differences in the vegetation and hydrology 
criteria, it is possible for variable wetland delineations between 
the SCS and the COE or EPA to occur. In addition, the majority of 
original SCS wetland determinations are performed using off-site 
techniques, and are not intended for use as precise wetland boundary 
delineations as are the COE on-site wetland delineations. 

SCS recognizes the technical and public concerns caused by 
these inconsistencies in wetland identification methods. Thus, SCS 
is currently working closely with the COE and EPA to revise the 
criteria and methodologies for wetland identification and 
delineation to be as consistent as possible with the 1987 COE 
manual. For example, the COE and EPA have already adopted the SCS 
policy concerning the delineation and regulation of prior converted 
cropland and farmed wetlands. Other revisions to clarify federal 
wetland delineations among the various agencies will be guided by 
the President's office of environmental policies. 

Question. I am also told that different mitigation 
requirements are placed on the same piece of land because the 
mitigation requirements under section 404 of the Clean Water Act and 



288 



the swampbuster provisions of the 1990 Farm Bill are inconsistent. 
What are the two requirements and how do they differ? 

In your opinion, is this a significant problem? 

In how many instances do or could conflicting requirements 
occur? 

Has the SCS recommended to the Corps and EPA that mitigation 
requirements for agricultural wetlands under section 404 be revised 
to be consistent with swampbuster provisions for these lands? Would 
SCS support such a revision? 

Answer. SCS uses mitigation for wetland losses under 
restrictive, prescribed circumstances in recognition of the purpose 
of FSA to limit the conversion of wetlands to agricultural uses so 
that environmental values in rural agricultural areas are maintained 
and enhanced. The two instances in which SCS contemplates 
mitigation are as follows: 

a. Mitigation for lost wetland values, acreage and function on 
frequently cropped wetlands converted for future crop 
production or past conversions between December 23, 1985 
and November 28, 1990. The mitigation requirements 
specify, for example, the preparation of a wetland 
mitigation plan; the type of wetland to be used for 
mitigation; the location of the mitigation; the placement 
of an easement of the mitigation site; and the level of 
functional value to be mitigated. 

b. Replacement of lost wetland values for non-frequently 
cropped wetlands, so long as the permitting requirements of 
Section 404 of the Clean Water Act and other applicable 
federal and state laws have been met; the purpose of the 
conversion is not solely the increase of production of an 
agricultural commodity; wetland functions and values must 
be replaced on the same farm; an easement on the 
replacement wetlands is taken, and an approved mitigation 
plan is in effect prior to the conversion. 

The goal of the Clean Water Act and the Section 404(b)(1) 
Guidelines is, in brief, to restore and maintain existing aquatic 
resources; to this end, the COE and EPA strive to avoid and minimize 
adverse impacts, and offset unavoidable impacts, to these aquatic 
resources. With specific regard to wetlands, it is the policy of 
the COE and EPA to strive to achieve a goal of no overall net loss 
of wetland function. In the instance of unavoidable wetland losses, 
appropriate compensatory mitigation is required. The determination 
of what level of mitigation constitutes "appropriate mitigation" is 
based solely on the values and functions of the wetlands resources 
that will be impacted. Mitigation plans that the COE determines to 
be in compliance with the 404(b)(1) Guidelines of the Clean Water 
Act typically include detailed specifications for the restoration of 
wetland hydrology and vegetation; monitoring schedules and success 
criteria by which the function of the mitigation is determined; 
contingency plans in case of mitigation failure; and, in certain 
instances, the placement of restrictive covenants on the mitigation 
site to protect it from future impacts. 



289 



The technical distinctions between the types of acceptable 
mitigation required by SCS, COE and EPA are minimal. Because of 
this, SCS does not believe that mitigation conflicts between the COE 
and SCS are a significant problem. Furthermore, the FSAM requires 
that a landowner obtain a 404 permit and any other federal or state 
approval prior to the approval of the mitigation plan by SCS. 

However, the circumstances and processes through which the 
mitigation plans are developed and approved are different, which can 
lead to seemingly duplicative agency review of the proposed 
mitigation plan. To rectify this administrative problem, SCS is 
committed to working with the COE, EPA and FWS to develop joint 
review processes for mitigation plans where there is overlapping 
jurisdiction. Discussions with these agencies has been initiated 
with an emphasis on national mitigation guidance and improved 
coordination between SCS, COE, EPA and FWS field personnel involved 
in the day-to-day development and approval of mitigation plans. 

Question. The 1990 Farm Bill directs SCS to identify and 
certify wetlands. Has the process of delineating wetland on maps 
begun? What is the status of this requirement? 

Answer. The Soil Conservation Service (SCS) started to 
delineate wetlands in 1986. We are currently using the delineation 
procedures equivalent to the criteria and procedures contained in 
the 1989 Federal Manual to identify and delineate wetlands on 
agricultural lands and lands which have potential for conversion to 
agricultural uses. By May of 1991 approximately 55 to 60 percent of 
the determinations had been completed. During this same period SCS 
stopped determinations, except by request, because conflicts with 
the update of the 1989 Delineation Manual were unresolved. The SCS 
is working with both the COE and EPA, but has not yet adopted an 
approach it considers satisfactory. In November of 1992 this issue 
was passed to the National Academy Of Science (NAS) for study. 

Question. How much would be required for SCS to complete the 
inventory and mapping process required by the Farm Bill? Are any 
funds requested for this purpose in the FY 1994 budget? 

Answer. The SCS has estimated that it will take approximately 
$90 million to complete one million wetland determinations. The 
major portion of this cost represents SCS field office staff time. 
There will also be a need to revise 500,000 old determinations at a 
cost of $15 million. No specific funding request was made in the 
1994 budget for wetland determinations; however, funding for this 
activity would be carried out within the amount requested for the 
FSA. 

SCS encourages the use of a standard photo-image base map and 
standard wetland mapping conventional for all agencies in order to 
provide an accurate and common geographic location of the wetlands 
to landowners. SCS also encourages the use of satellite imagery and 
other remote sensing technology to help in wetland determinations 
and recertification. SCS is supporting a cooperative national 
digital orthophotography program initiative to supply this base map 
requirement. 



290 



Question. How much could the SCS obligate in FY 1994 for this 
purpose? 

Answer. Of the $90 million estimated for the wetland 
determination process, $49.4 million would be obligated in FY 1994 
with the balance obligated in FY 1995. 

Question. Has the process of recertifying previous 
determinations (as required by the 1990 Farm Bill) begun and if so, 
what is the status of this requirement? 

Answer. SCS has not recertified any wetland determinations as 
required by the Food, Agriculture, Conservation, and Trade Act of 
1990. SCS has placed a higher priority on completing remaining 
wetland determinations. Progress on recertification has also been 
put on hold pending the discussions within the Administration. 

Question. Are any funds for this process requested in the FY 
1994 budget? How much could the SCS obligate in FY 1994 for this 
purpose? 

Answer. There is no specific 1994 budget request for wetland 
recertifications. This activity would be carried out within the 
amount requested for the FSA. 

GOLDEN MEADOW, LOUISIANA PLANT MATERIALS CENTER 

In 1989 funds were added to USDA's budget to construct a Plant 
Materials Center at Golden Meadow, LA to undertake important work on 
plants suitable to coastal areas to try to find natural ways to 
stabilize these fragile and endangered areas. Louisiana contains 
some 40 percent of the lower 48 states' wetlands, and is losing an 
average over 35 square miles of land each year. So we in Louisiana 
see as a very high priority research efforts such as those underway 
at Golden Meadow. 

Question. How much has been budgeted for research programs at 
Golden Meadow in FY 1994? 

Answer. We anticipate spending about $217,000 for Center 
operations and $55,000 for capital improvements at the Golden Meadow 
Plant Materials Center in 1994 assuming that the total budgetary 
resources available for this budget activity are about the same as 
in FY 1993. 

Question. How does this compare to FY 1993 and to prior years 
since the inception of this program? 

Answer. The funds for Center operations are about the same. 
The funds for capital improvement are down significantly. During 
the past three years, over $1,000,000 has been provided Golden 
Meadow for capital improvements. Most of their initial development 
needs have been met, commensurate with the Center's operational 
budget. 

Question. How does this compare to other plant materials 
centers around the nation? 



291 



Answer. The operations budget of Golden Meadow is similar to 
other centers. The initial appropriations by Congress for the 
operations of Golden Meadow was $150,000 in FY 1989, increased by 
$50,000 to $200,000 in FY 1990. Because the total plant materials 
center budget funding has not increased, the operating funds for all 
centers has remained near the FY 1990-93 average. 

Question. Do you agree that the work the Golden Meadow 
facility is undertaking is important and can play a positive role in 
restoring fragile marshland? 

Answer. Yes, Louisiana is facing a continuing, catastrophic 
deterioration of its coastal wetlands. This deterioration is most 
evident in the loss of vegetated wetlands. Approximately 20,000 
acres of Louisiana's valuable coastal wetlands are vanishing each 
year. Approximately 52 acres of land are lost to open water every 
day. Coastal Louisiana contains nearly 3 million acres of wetlands 
and about 650,000 acres of forested wetlands. Over 80 percent of 
these lands are privately owned. Wetlands border the Gulf of Mexico 
along the entire Louisiana shoreline and extend inland more than 60 
miles at some locations. Salt marshes occur nearest the Gulf of 
Mexico and grade into brackish, intermediate, and fresh marshes as 
you move inland. Forested wetlands occur inland from the fresh 
marshes. Louisiana's coastal wetlands are part of a tremendously 
productive ecosystem. 

The state of Louisiana contains 40 percent of the nation's 
conterminous coastal wetlands; however, Louisiana is experiencing 
nearly 80 percent of the nation's annual loss of coastal wetlands. 

Louisiana's wetlands contribute over one billion pounds 
annually to the nation's commercial fish and shellfish harvest. 
Louisiana wetlands support some 175 nesting colonies of wading 
birds, seabirds, and shorebirds, and provide a wintering habitat for 
66 percent of the waterfowl that use the Mississippi Flyway. 
Louisiana's wetlands support a bountiful harvest of renewable 
natural resources with an estimated value exceeding $1 billion per 
year. The continued loss of these wetlands will have significant 
adverse impacts on the nation's economy. 

Each year Louisiana's coastal wetlands account for: 

- Commercial fish and shellfish benefits with an estimated 
worth of $790 million. 

- 40 percent of the nation's wild fur and hide harvest worth 
$18 million. 

- 66 percent of migratory birds using the Mississippi Flyway 
(4.5 million ducks and 420,000 geese) utilize Louisiana's 
coast for winter habitat, providing waterfowl hunting valued 
at $58 million. 

- Habitat for the endangered brown pelican, bald eagle, and an 
additional 6 million wetland dependent birds. 

- Recreational fishing revenues exceeding $337 million. 



292 



Louisiana coastal wetlands provide a critically important 
buffer to coastal communities and inland Louisiana from surges 
caused by hurricanes and other storms. It is estimated that a storm 
surge reduction of one foot is achieved for each three miles of 
vegetated wetlands. This is an extremely important factor to the 
2.7 million people who live and work in the coastal zone of 
Louisiana. 

The Golden Meadow Plant Material Center has a positive and 
significant impact on the restoration on these wetlands. The 
Center's Long Range Plan identifies five categories and activities 
within each category where acceleration is needed. They are: 

Plant Materials for Revegetation: 

- Plant Species for Species for shallow Open Water 

- Plant Species for Shorelines 

- Plant Species for Barrier Islands 

- Plant Species for Dredge and Spoil Materials 

- Plant Species for Floating Marsh 

- Plant Species for Freshwater Swamps 

Seed Technology (for Selected Wetland Species): 

- Seed Propagation, Harvesting, Processing (Cleaning), 
Storage. 

Plant Establishment Techniques: 

- Studies Using Containerized Plants for Revegetation 

- Wave Stilling Device Studies 

- Herbivory Studies 

- Vegetative Establishment in High Organic Soils 

- Mechanized Planting Studies 

Technology Development and Transfer: 

- Plant Species Standards and Specifications 

- Plant Species Salinity Tolerances and Ranges 

- Plant Species Water Tolerances and Ranges 

- Plant Species Unattractive to Nutria 

Special Projects: 

- Floating Marsh Establishment Techniques 

- Water Quality Studies 

- Bioengineering 

- Workshops and Field Days 

Question. One project which would be possible with additional 
funds and is critically necessary to restoring these areas is a 
major effort to find a nutria-resistant plant for these areas. What 
would be required to undertake a concerted effort to test and 
develop such a plant? 

Answer. This project is identified in the Golden Meadow Center 
Long Range Plan. If initiated, it would be a long term effort, 
involving input from others such as the biotechnology assistance 



293 



from the Crowley Rice Experiment Station. Activities relating to 
the development of nutria-resistant plants is a part of the 
additional $720,000 cost of undertaking an aggressive research 
program at Golden Meadow. 

Question. Have any funds and additional funds been budgeted 
for this facility in FY 1994, and in particular to design and 
construct a second greenhouse so the facility can be used to the 
maximum extent possible? 

Answer. $272,000 are budgeted for Golden Meadow operations and 
capital improvements. 

Question. If not, why not? 

Answer. Current budget plans are based on FY 1993 funding for 
plant materials centers nationally. The total funds available to 
operate the program will not permit increases for Golden Meadow or 
any other center in FY 1994. 

Question. What would be required in FY 1994 to construct a 
second greenhouse? 

Answer. The estimated cost is $175,000. 

Question. Have any funds and additional FTEs been budgeted for 
this facility, so that the space provided can be used to the maximum 
extent possible? If not, why not? 

Answer. As previously mentioned, no additional funds are 
budgeted for Golden Meadow operations in FY 1994, because the 
anticipated plant materials centers funding will not permit such 
increases for any plant materials center in FY 1994. 

Question. How many more personnel could be accommodated at the 
existing facility? 

Answer. Six or seven. 

Question. Much of the Work undertaken at the facility is 
manpower-intensive. Have you considered allocating funds to the 
facility to institute a summer jobs program for youth in Terrebonne 
Parish, which has one of the highest unemployment rates in 
Louisiana? Would this be worthwhile from the aspect of creating 
jobs in the area? What about employing trappers — many of whom are 
out of work now — to help with the planting program? Why was a 
program along these lines not considered as part of the President's 
Economic Stimulus Package? 

Answer. Although a good idea, consideration has not been given 
to summer jobs program, or employing trappers. It may be possible 
to garner local or state funding to leverage the Federal funds 
available for this project. Current federal funds do not permit 
this. 



294 



QUESTIONS SUBMITTED BY SENATOR KOHL 

NONPOINT SOURCE POLLUTION 

Question. In regard to Milwaukee's recent problem with 
Cryptosporidium in the water supply, there have been suggestions 
that one possible source of the pollution could be runoff from 
livestock farms in the Milwaukee River Watershed. While the state 
of Wisconsin is recognized as a leader in addressing nonpoint source 
pollution however still more needs to be done. What is the Soil 
Conservation Service doing to address agricultural runoff problems? 

Answer. The Soil Conservation Service (SCS) works 
cooperatively with the Wisconsin Department of Natural Resource 
(DNR) in implementing USDA and DNR conservation and pollution 
abatement programs. The SCS provides direct technical assistance in 
the design of animal waste systems and hands-on assistance to 
private landowners with the installation of these systems. USDA 
also provides financial assistance to cooperators through the 
Agricultural Conservation Program, the Water Quality Incentives 
Program, and SCS Small Watersheds Program. 

The Soil Conservation Service also provides job approval 
authority for state DNR personnel which means that SCS certifies the 
design for systems installed under the State program. Recently, 
state legislation, recognizing the magnitude of the animal waste 
problem, authorized the hiring of seven engineers to work directly 
with SCS in expediting the implementation of animal waste systems. 

The USDA Water Quality Initiative also has one Hydrologic Unit 
area and one Demonstration Project in Wisconsin, and we provide 
direct financial and technical assistance to the Farm*A*Syst effort, 
a computer program being developed by the University of Wisconsin. 
In fiscal year 1993, $887,000 has been provided to these activities 
by SCS. 



QUESTIONS SUBMITTED BY SENATOR COCHRAN 

MISSISSIPPI DELTA WATER SUPPLY STUDY 

Question. Last year, SCS initiated the first step in a multi- 
year feasibility study called the Mississippi Delta Study. It is my 
understanding that this study is aimed at evaluating and surveying 
water quality alternatives that can be important to the future of 
water resource plans for this area and other similar intense 
agricultural production regions throughout the country. 

Do you plan to continue the Mississippi Delta Study and will there be 
adequate funds available to fully implement Year II of this study at 
the level outlined in the request from the Mississippi offices of 
SCS? How much is included in the fiscal year 1994 request for this 
study? 



295 



Answer. The Mississippi Delta Water Supply Study has been 
approved and would be continued during fiscal year 1994 at 
approximately the same level as 1993 with funds appropriated for 
Salaries and Expenses for the Farm Service Agency. The budget 
estimate for this account, however, does not specifically provide for 
the increase that would be required to fully fund the second year of 
the study at the level estimated by the state office. 



QUESTIONS SUBMITTED BY SENATOR SPECTER 

USE OF GIS IN SCS 

Mr. O'Mara, the National Center for Resource Innovations (NCRI) 
is a Congressionally established, private, non-profit organization 
which has developed a Geographic Information System (GIS) with the 
help of the federal government through the Soil Conservation 
Service. This GIS has proved to assist communities and farmers in 
assessing the impact farms and urban development can have on the 
environment. Specifically, the SCS office in Chester, Pennsylvania, 
is designed to assist farmers and urban planners to better 
understand the impacts of runoff and efforts to control pollution in 
the Chesapeake Bay. 

Question. What is the Department's understanding of the value 
these GIS systems and how a GIS System contributes to the goals of 
the Soil Conservation Service? 

Answer. The Soil Conservation Service (SCS) has been one of 
the agencies pioneering the development and use of GIS technology 
and digital soil maps. Much of this technology has been developed 
in partnership with other federal agencies, industry and non-profit 
companies such as NCRI. We have approximately 250 office locations 
using the public domain GRASS-GIS. GIS is being used at our state, 
regional, soil survey and about 125 county field offices. 

GIS technology is a valuable planning and analysis tool for 
natural resource managers, planners, and policy and decision makers. 
GIS provides an improved visual understanding of resource management 
alternatives and USDA program benefits. In the past, most of USDA's 
automation efforts were limited to the use of tabular data or non- 
geographic information, but most of the information actually managed 
by SCS and many other land management agencies is geographic natural 
resource information such as soils, wetlands, land use, highly 
erodible lands, conservation reserve program lands and many others. 
Today, SCS field offices still handle most geographic information 
manually. GIS will give our natural resource specialists the 
capability to make land management decisions in real time using 
automated GIS tools to analyze and display multiple geographic 
resource relationships. 

At the field office level, SCS can use GIS to help determine 
which lands are highly erodible or eligible for the conservation 
reserve program, identify land areas vulnerable to delivering 
sediments and pesticides to streams and rivers, deliver more useful 
soil information to the public and landowners, identify and 



296 



prioritize workload, compute soil loss and assist landusers to 
design environmentally sound conservation treatment systems. 

Question. How can the GIS be used to assist the Soil 
Conservation Service and other agencies at USDA to understand areas 
of the country where there are problems with ground water 
protection. 

Answer. There are many examples where this technology will 
significantly change the way we do business. At the state and 
national level, SCS can use GIS to address ground water protection 
issues by identifying areas vulnerable to contamination, identify 
areas which receive heavy pesticide and nutrient loading and 
identify alternative strategies for protecting sensitive areas. 

In 1991-92, SCS led a GIS project as part of a USDA initiative 
called "Easy Access" to improve USDA services to its customers by 
making services easier and more accessible to the public and to 
improve internal efficiencies at the county field office. 
Participating agencies included SCS, ASCS, FmHA and FCIC. The 
project demonstrated how these agencies can use GIS to efficiently 
manage and track producer records, perform instantaneous acreage 
calculations and farm field reconstitutions, develop computer-based 
conservation plans and maps for farmers and share resources and 
client data between agencies for faster and improved program 
delivery without duplication of database development. The potential 
exists for expanded use of a GIS system in county offices through 
implementation of the proposed Farm Service Agency. 



QUESTIONS SUBMITTED BY SENATOR GORTON 

WATER QUALITY TECHNICAL ASSISTANCE 

Question. Within your testimony you state that you provide 
technical assistance to water quality authorities in the Puget Sound 
- a part of the National Estuary Program. To whom do you provide 
this technical assistance? How much money is spent providing this 
assistance? 

Answer. We are providing staff assistance to an interagency 
task force to assist the local units of Government in developing 
their nonpoint source watershed plans to reduce nutrient, sediment, 
and pesticide loadings to the estuary. 

We are providing additional resources for the SCS State Office 
to increase technical assistance at the local level in assisting 
landowners with implementing systems that improve water quality. 

Last year we provided an additional $650,000 to support 
assistance in the 12 county watershed area. 

Question. Within your testimony you provide an example of how 
SCS is providing assistance to a rural New York community in 
complying with the Safe Drinking Water Act (SDWA). What water 
quality improvements do you hope to make by using SCS funds? 



297 



You state that SDWA standards would require this community to 
spend $6-8 billion in upgrades in order to provide water to 9.5 
million people, this would in turn add $300 million per year to the 
community's cost of compliance with the act. Who brought this 
situation to your attention? What made SCS decide to assist this 
community in complying with the SDWA? Did the outrageous cost of 
compliance factor at all into SCS's decision to provide assistance 
to the community? 

Answer. SCS is using its funds to provide technical assistance 
to agriculture land users in the New York City Water Supply 
Watershed. This assistance is in the form of conservation planning 
and the application of conservation practices. 

The water quality benefits that will be attained as a result of 
the application of conservation practices will be the reduction of 
pathogens, nutrients (nitrogen, phosphorus, and potassium), 
sediments, pesticides, and herbicides in the water supply 
reservoirs. The reduction of these pollutants will assist the city 
of New York in meeting the Safe Drinking Water Act standards. 

SCS was aware of the need to provide accelerated technical 
assistance to the land users in the Watershed before EPA and the 
State Health Department determined that New York City would have to 
install a filtration system. In late 197fl, SCS prepared a remedial 
action plan that led to the developing of a model implementation 
program for the Cannonsville Reservoir which ties into the New York 
City Water Supply System in Delaware County. The SCS spent 
approximately $2,000,000 providing technical assistance in the 
Cannonsville Reservoir Watershed. 

In addition, the SCS knew that there were some problems in the 
watershed that we had expertise in solving. SCS was in a position 
to evaluate the watershed and provide alternatives when the City of 
New York was looking into other options. Compliance costs for the 
states were not a major factor in SCS's decision to provide 
assistance to the community. This agency is committed to providing 
assistance for improving water quality. Most of our technical 
assistance in this watershed is going to the farmers, however. New 
York City residents are the recipients of clean water. 

Question. You state within your testimony that "USDA believes 
the use of research, demonstrations, information and education, 
technical assistance... is a primary reason American agriculture has 
become the most productive in the world. These approaches are 
helping us meet current environmental challenges as well." 

In my state SCS research is poised to assist Eastern Washington 
communities in complying with the Clean Air Act. In particular, the 
problems which Spokane and the Tri-Cities are currently facing in 
achieving attainment for PM-10 (dust) standards. Are you familiar 
with the work which SCS in Washington state has done on PM-10 
research? 

Answer. SCS in Washington state is wery much aware of the wind 
erosion and associated PM-10 emission problems in the drier 
precipitation zone of the Palouse region. Some 2.7 million acres of 
nonirrigated cropland are involved. 



298 



They have undertaken two major activities related to these 
issues. The first is the development of a strategic plan to assess 
the resource base problems, identify possible solutions, evaluate 
ongoing activities designed to implement solutions, and identify 
resources required to implement solutions. 

The second is specifically directed toward PM-10 issues through 
SCS participation in the development and implementation of the 
"Northwest Tri-State Columbia Basin Wind Erosion/PM-10 Project". 
Groups cooperating on this effort include the Agricultural Research 
Service, Washington State University, Department of Energy, and 
Environmental Protection Agency. 

The eight objectives of the project will build a database from 
which the problem can be quantified, and solutions designed. Among 
the project's objectives and goals are research activities aimed at 
determining the quantity of PM-10 emissions from both agricultural 
and nonagricultural sources, and a knowledge of emission transport 
and deposition. 

Of critical significance is the fact that conservation systems 
designed to meet 1985-90 farm bill erosion control requirements may 
not be adequate to meet PM-10 emission standards. Such systems are 
designed to assure long term productivity of the land resource. 
They were not designed with any particular air quality goal in mind. 
Also, such systems are mandated on highly erodible land (HEL). Much 
of the problem includes land that is non-HEL. It will be necessary 
to modify such systems as well as design new systems for air quality 
(PM-10) purposes. 

Question. I understand Senator Feinstein asked Secretary Espy 
last week if USDA intended to participate in funding an on-going 
study on PM-10 (or dust) in Central Valley, California. Although 
our states have distinct differences, it appears as if we have PM-10 
non-attainment in common. In my state Region 10 EPA has begun 
working with Soil Conservation Service officials to try and help out 
two Eastern Washington communities — Spokane and the Tri-Cities — 
which are having difficulty reaching attainment for PM-10. It is 
believed that much of the dust, or PM-10, stems from agricultural 
lands and agricultural practices. 

Are you aware of the research which has been done at Washington 
State University as part of the Solutions to Environmental and 
Economic Problems (STEEP II) program, which has provided useful data 
and information on erosion which could assist the aforementioned 
communities in determining the origins of their PM-10 problems? 

Answer. The STEEP II project includes an effort titled 
"Conservation Technology for Wind Erosion and Air Quality Prediction 
and Management. 

Concerning wind erosion and PM-10 emissions, the study has the 
following three objectives: 

1. Calibrate and verify predictive methods through a series of 
complete wind erosion measurements for well documented 
conditions within the Northwest U.S. 



299 



2. Develop data and relationships between agricultural wind 
erosion and airborne PM-IO particulates measured at off- 
site downwind locations. 

3. Develop and evaluate new conservation tillage and residue 
management technologies and equipment to reduce 
agricultural wind erosion and off-site air quality impacts. 

The knowledge gained as a result of this research is vital to 
our ability to understand and quantify the relationship between 
agricultural field operations, conservation tillage and residue 
management, the wind erosion process, and PM-10 emissions. We need 
a good understanding of these relationships to adequately address 
air quality and PM-10 emissions as they relate to typical 
agricultural production practices. 

Question. I understand an ongoing study on PM-10 in Central 
Valley, California is scheduled to receive funds from USDA. Are you 
aware that California and Washington share similar PM-10 problems as 
they both impact agricultural soils and agricultural practices? 

Answer. SCS is aware that both California and Washington have 
agricultural related PM-10 emission problems. However, the problems 
are not always similar in source or control. While there is no 
funding in the current USDA budget to fund the California study you 
refer to, we have taken steps to refocus some existing resources on 
this problem. 

In both locations the wind erosion process may be a factor in 
producing PM-10 emissions. The tilling of agricultural land for the 
production of crops may compound the problem in both locations. To 
date, neither we nor the Agricultural Research Service (ARS) have 
identified soil properties that may contribute to PM-10 emissions. 
SCS in California is working with the ARS wind erosion research 
facility at Big Spring, Texas to identify such soil properties for 
two major agricultural soils in the San Joaquin Valley of 
California. 

In the San Joaquin Valley much of the PM-10 problem from 
agriculture is not directly related to tillage. Dust from farm 
roads, from a variety of harvest operations (e.g. harvest of nut 
crops), and various processing operations contribute to the problem. 
At this time, emission monitoring cannot distinguish between the 
various sources of emissions. 

In Washington, much of the agricultural related problems is on 
non-highly erodible (NHEL) land and from other sandy soils. PM-10 
emissions occur in small grain-fallow rotations during the fall of 
the fallow year when residue cover may not be adequate to provide 
protection. Emissions may also occur in the spring of the crop year 
before small grain has developed sufficient canopy cover. 

The SCS Washington State Office indicates that they have some 
2.7 million acres of land with silt loam or very fine sandy loam 
textures, subject to blowing and the production of PM-10 emissions. 
Since much of this is NHEL land, it does not fall under the erosion 
control provisions of the 1985-90 farm bills. Conservation systems 



300 



are needed on this land, just as they are on highly erodible land, 
to protect the resource base and meet air quality standards. 

SALMON AND STEELHEAD FISHERY STOCKS 

Question. Within your testimony you state that SCS is 
participating in an effort to assist in the recovery of declining 
salmon and steel head stocks. What has this money been spent upon? 
How much money was appropriated for this program last year: What, 
in your assessment of this program, has SCS and the program 
accomplished with these funds? Is funding for this program included 
within the FY 1994 budget request? If so, how much? 

Answer. The Soil Conservation Service has been participating 
in the salmon recovery activities in the Pacific Northwest and 
California. In the Pacific Northwest, SCS is part of the Northwest 
Power Planning Council regional strategy for salmon in the Columbia 
River Basin. These activities have required approximately two 
person years each in Oregon, Washington, and Idaho and a full time 
salmon facilitator position at the West National Technical Center 
(WNTC) located in Portland, Oregon. 

SCS activities at the states and the WNTC include coordination 
with other agencies and groups; input, review, and comments on 
various reports and EIS's; and attending and presenting material at 
various public meetings and hearings. The states and the WNTC also 
have prepared an assessment and problem statement report on the 
habitat conditions for Columbia Basin salmonides. 

Two new full time positions have been established in each state 
to work specifically on salmon habitat restoration. These positions 
include the following: 

Idaho — an engineer and engineering technician have been hired 
to plan and install fish screens and irrigation diversions in 
the Lemhi model watershed. 

Oregon — a conservationist is to be hired to coordinate planning 
between the Oregon Conservation Commission and the Grande Ronde 
model watershed. A resource planner is to be hired to plan and 
apply habitat improvements in the John Day Basin. 

Washington — a conservationist is to be hired to coordinate SCS 
activities in the Asolton Model watershed. A biologist will be 
obtained on an IPA to assist with the restoration efforts in 
the model watershed. 

One other salmon related activity is a River Basin study to 
assess resource needs in the Grande Ronde Model watershed in Oregon. 

SCS has redirected $300,000 during FY 1993 to participate in 
the salmon recovery activities. SCS is currently considering 
additional funding for this work within the amount requested for the 
Farm Service Agency in the President's budget. 

SCS can represent private land owner interests when dealing 
with other agencies and groups, and in conjunction with other USDA 
programs may contribute to salmon habitat improvements. 



301 



In California, SCS participates in six multi-agency efforts, 
working through watershed districts, to provide watershed protection 
and improve habitat and restore native salmon and steelhead 
populations. These six efforts are located on the Trinity, Eel, 
Klamath, North Sacramento, and Tomki Rivers and the Salt and Eel 
River Delta. SCS work includes erosion control, riparian 
revegetation, habitat improvement, wetland restoration, technical 
assistance, and education and information. This work is conducted 
on a reimbursable basis with funds from the Bureau of Reclamation. 
In FY 1993, SCS received more than $1.5 million for this work. 

SUBCOMMITTEE RECESS 

Senator Bumpers. This concludes today's hearing. The next hear- 
ing is going to be held on Thursday, April 29, in this room. At that 
time, the subcommittee will hear testimony from the Food and Nu- 
trition Service and the Human Nutrition Information Service. We 
will stand in recess until that date. 

[Whereupon, at 11:50 a.m., Tuesday, April 27, the subcommittee 
was recessed, to reconvene at 10:10 a.m., Thursday, April 29.] 



AGRICULTURE, RURAL DEVELOPMENT, AND 
RELATED AGENCIES APPROPRIATIONS FOR 
FISCAL YEAR 1994 



THURSDAY, APRIL 29, 1993 

U.S. Senate, 
Subcommittee of the Committee on Appropriations, 

Washington, DC. 

The subcommittee met at 10:10 a.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Dale Bumpers (chairman) presiding. 
Present: Senators Bumpers and Gk)rton. 

DEPARTMENT OF AGRICULTURE 

statement of george braley, acting assistant secretary, 
food and consumer services 

accompanied by stephen b. dewhurst, budget officer 

Food and Nutrition Service 
statement of andrew p. hornsby, jr., acting administrator 

Human Nutrition Information Service 

statement of DAVID RUST, ACTING ADMINISTRATOR 

OPENING REMARKS 

Senator Bumpers. Good morning, today we continue our hear- 
ings on the fiscal year 1994 budget for A^culture, Rural Develop- 
ment and Related Agencies. 

Today we will review the budgets for the Food and Nutrition 
Service, and the Human Nutrition Information Service. 

Our witnesses are George Braley, is that correct? 

Mr. Braley. That is correct, sir. 

Senator Bumpers. Acting Assistant Secretsuy, Food and 
Consumer Services; Andrew Homsby, Jr., Acting Administrator, 
Food and Nutrition Service; David Rust, Acting Administrator, 
Human Nutrition Information Service; and Stephen Dewhurst, 
budget officer, U.S. Department of Agriculture. 

As a broad overview, when you include the President's invest- 
ment proposals, the budget for the Food and Nutrition Service is 
up by $4.3 billion. Of that increase, $3.1 billion is for the Food 
Stamp Program, some $132 million for child nutrition, and $427 
million is for the Women, Infants and Children Program. 

The Human Nutrition Information Service is requesting an in- 
crease of $2.4 million or a 22-percent increase. 

(303) 



304 

We have statements from each of you that will be made a part 
of the record in full. 

Mr. Braley, I will ask you to make your oral statement, summa- 
rizing the budgets for each of the agencies, after which we will en- 
tertain questions from the subcommittee for each of the agencies. 

Senator Gorton, do you have an opening statement? 

Senator Gk)RTON. I have no opening statement, Mr. Chairman. 

Senator Bumpers. Mr. Braley, please proceed. 

STATEMENT OF GEORGE BRALEY 

Mr. Braley. Thank you, Mr, Chairman, It is my pleasure to ap- 
pear before the subcommittee today to discuss the President's 
budget for food assistance programs of the U,S, Department of Ag- 
riculture, 

Senator Bumpers. Excuse me. Would you pull that microphone 
a little closer to you? All of these microphones, you have to get very 
close to. 

Mr. Braley. OK. 

Senator Bumpers. Thank you. 

Mr. Braley. Thank you. David Rust, the Acting Administrator 
for Human Nutrition Information Service, is with me today, as is 
Andrew Homsby, the Acting Administrator of FNS. 

The total appropriation request for fiscal year 1994 exceeds $42,7 
billion, including the reserve for the Food Stamp Program, The 
Human Nutrition Information Service is requesting $13.1 million, 
and the Food and Nutrition Service is requesting the balance. 

HUMAN NUTRITION INFORMATION SERVICE MISSION 

The Human Nutrition Information Service conducts applied re- 
search in support of USDA's mission to promote the health and 
well-being of Americans through improved nutrition. HNIS contrib- 
utes to this mission through national food consumption surveys, 
food consumption research, and nutrition education programs. 

HNIS accomplishes these tasks by conducting national food in- 
take and food consumption surveys, gathering data on the nutri- 
tional composition of foods which it maintains for all to use in the 
National Nutrient Data Bank, and by providing information about 
a wide range of nutrition issues. 

The work of HNIS assumes new importance in the light of the 
general public's increasing concern about nutrition, pesticide resi- 
dues, and the safety of food additives. 

The agency provides leadership for USDA in the National Nutri- 
tion Monitoring and Related Research Program and in the develop- 
ment and promotion of Dietary Guidelines for Americans, The food 
guide pyramid visually portrays HNIS' Food Guide, which is de- 
signed to help people implement the Dietary Guidelines for Ameri- 
cans in their daily food cnoices. 

The current appropriation supports the Continuing Survey of 
Food Intakes by Individuals, which is a major national survey de- 
signed to track changes in food consumption patterns of individ- 
uals, the redesign and maintenance of the National Nutrient Data 
Bank, the updating of the Dietary Guidelines for Americans, and 
a wide range of activities authorized under Public Law 101-445, 



305 

the National Nutrition Monitoring and Related Research Act of 
1990. 

FOOD AND NUTRITION SERVICE MISSION 

The Food and Nutrition Service provides food assistance to low- 
income people, helping them to achieve adequate and nutritious 
diets. We estimate that one out every six Americans is served 
through the 14 programs managed by the Food and Nutrition Serv- 
ice. 

The Food Stamp Program is our largest program. It is available 
to all low-income, low-resource households. In addition, agency pro- 
grams such as School Lunch and Breakfast and WIC, among many 
others, target special population groups, such as pregnant and post 
partum women, infants and school children, native Americans and 
the elderly, recognizing that these groups are at an especially high 
nutritional risk. 

I note, with a good deal of satisfaction, that the President's budg- 
et recommends a funding level for the WTC Program that will gdlow 
us to move quickly toward full funding for that vital program by 
the end of fiscal year 1996. 

In addition, as part of his 1994 budget request. President Clinton 
has proposed to increase the budget authority for the Food Stamp 
Program by $603 million in benefit payments. 

MICKEY LELAND CHILDHOOD HUNGER RELIEF ACT 

These proposals are similar to legislation to improve and refine 
the food stamp benefit structure that received strong, bipartisan 
support in the last Congress. Legislation was submitted earlier this 
week to implement most of the major provisions of the Mickey Le- 
land Childhood Hunger Relief Act and to implement several pro- 
posals to improve conformity of the Food Stamp Program with the 
Aid to Families With Dependent Children [AFDC] Program. 

All of this legislation, which is called the Mickey Leland Hunger 
Prevention Act, addresses four general themes: Ensuring adequate 
food assistance, promoting self-sufficiency, simplifying the provision 
of food assistance, and improving program integrity. 

That legislation also proposes to set Food Stamp Program admin- 
istrative cost matching rates at 50 percent, which would save $20 
million in fiscal year 1994 and approximately $40 million per year 
in each of the fiscal years after that. 

PREPARED STATEMENTS 

With your permission, Mr. Rust, Mr. Homsby, and I will submit 
additional statements for the record. We are prepared, at this 
point, to answer any questions that you and the other committee 
members may have, Mr. Chairman. 

[The statements follow:] 

STATEMENT OF GEORGE BRALEY 

Thank you, Mr. chairman. It is my pleasure to appear before this subcommittee 
to discuss the President's Budget for food assistance programs of the United States 
Department of Agriculture (USDA). David Rust, Acting Administrator for the 
Himian Nutrition Information Service, and Andrew Homsoy, Acting Administrator 
for the Food and Nutrition Service, are here with me today. 



306 

The total appropriations request for fiscal year 1994 exceeds $42.7 billion, includ- 
ing the reserve for the Food Stamp Program. The Human Nutrition Information 
Service requests $13.1 million and the Food and Nutrition Service requests the bal- 
ance. 

HUMAN NUTRITION INFORMATION SERVICE 

The Human Nutrition Information Service (HNIS) conducts applied research in 
support of the USDA's mission to promote the health and well-being of Americans 
through improved nutrition. HNIS contributes to this mission through national food 
consumption surveys, food composition research, and nutritional education pro- 
grams. HNIS accomplishes these tasks by conducting the national food intake and 
food consumption surveys, gathering data on the nutrition composition of food which 
it maintains for all to use in the National Nutrient Data Bank, and by providing 
information about a wide range of nutrition issues. The work of HNIS assumes new 
importance in light of the general public's increasing concern about nutrition, pes- 
ticide residues, and the safety of food additives. The Agency provides leadership for 
USDA in the National Nutrition Monitoring and Related Research Program and in 
the development and promotion of the Dietary Guidelines for Americans. The food 
guide pjramid visually portrays HNIS' "Food Guide" which is designed to help peo- 
ple implement the "Dietary Guidelines for Americans" in their daily food choices. 

Current appropriations support the Continuing Survey of Food Intakes by Individ- 
uals, a major national survey designed to track changes in food consumption pat- 
terns of individuals, the redesign and maintenance of the National Nutrient Data 
Bank, the updating of the Dietary Guidelines for Americans, and a wide range of 
activities authorized by Public Law 101-445, the National Nutrition Monitoring and 
Related Research Act of 1990. 

FOOD AND NUTRITION SERVICE 

The Food and Nutrition Service provides food assistance to low-income people, 
helping them to achieve adequate and nutritious diets. We estimate that one out 
of every six Americans is served through the fourteen progrtims managed by the 
Food and Nutrition Service. The Food Stamp Program is, of course, our largest pro- 
gram — one which is available to all low-income, low-resource households. In addi- 
tion. Agency programs such as school lunch and breakfast and WIC among other, 
target special groups, such as pregnant and post-partum women, infants, school 
children. Native Americans and the elderly, recognizing that these groups are at 
high nutritional risk. 

I note with great satisfaction that the President recommends a funding level for 
the WIC program that will allow us to move qviickly toward full funding by the end 
of fiscal year 1996. 

In addition, as part of his 1994 budget request. President Clinton has proposed 
an increase in budget authority of $603 million in Food Stamp Program benefit pay- 
ments. These proposals are similar to earlier legislation to improve and refine the 
food stamp benefit structure that received strong bipartisan support in the last Con- 
gress. Legislation will be introduced to implement most of the m^jor provisions of 
the Mickey Leland Childhood Hunger Relief Act and to implement several proposals 
to improve conformity of the Food Stamp Program with the Aid to Families with 
Dependent Children Program. The legislation will address four general themes: en- 
suring adequate food assistance, promoting self-sufficiency, simplifying the provision 
of food assistance and improving program integrity. 

Legislation will also be proposed to set Food Stamp Program administrative cost 
matching rates at 50 percent, saving $20 million in fiscal year 1994. 

The 1994 Budget also includes an additional $40 million for the Emergency Food 
Assistance Program, and would allow distribution of these benefits through Decem- 
ber of 1994. 

With your permission, Mr. Rust and Mr. Homsby will submit statements for the 
record which provide a more detailed overview of the budget request of these agen- 
cies and a review of current operations in the Department's food assistance pro- 
grams. They will also note issues which we believe to be of interest to this commit- 
tee, and of course we will be happy to answer your questions about these matters. 
Thank you. 



307 

Statement of Andrew P. Hornsby 

Thank you Mr. Chairman. It is a pleasure to appear before this subcommittee to 
discuss the fiscal year 1994 budget for food and consumer services administered by 
the United States Department of Agriculture (USDA). 

THE MISSION OF THE FOOD AND NUTRITION SERVICE 

The mission of the Food and Nutrition Service is to alleviate hunger and to safe- 
guard the health and well-being of the Nation through the administration of nutri- 
tion education and domestic food assistance programs. The Food and Nutrition Serv- 
ice is the Federal Government's fi-ont-line agency providing food assistance to the 
most needy and vulnerable of our citizens. Established in 1969 to administer the 
domestic food assistance and nutrition education programs of the USDA, FNS works 
in partnership with State and local governments to perform its mission. 

THE BUDGET OVERVIEW 

For fiscal vear 1994, the Food and Nutrition Service requests appropriations of 
about $42.7 billion, including Food Stamp Program reserves. This is an increase of 
about $4.1 billion above the fiscal year 1993 appropriated level. 

FULL FUNDING FOR WIC 

The fiscal year 1994 appropriation request totals $3,287 billion compared to a 
base appropriation of $2.86 billion for fiscal year 1993. This request includes $350 
million as part of the President's investment plan to expand WIC) service to all eligi- 
ble persons by the end of fiscal year 1996. With this funding, WIC's average monSi- 
ly participation will increase to about 6.4 million, an increase of about 400,000 fi"om 
the expected fiscal year 1993 average. 

According to the Congressional Budget Office (CBO), the cost of fully funding the 
program in fiscal year 1994 would be $1 billion over current services. CBO has esti- 
mated that at that time 9.6 million persons would be eligible in 1994 and that 7.6 
million would apply. 

Proposed appropriations language for fiscal year 1994 would allow the Secretary 
to waive regulations governing the funding allocation formula to ensure that these 
funds can be used most effectively. 

WIC INFANT FORMULA REBATES 

Infant formula rebates negotiated by States and manufacturers are a critical com- 
ponent of the cost effectiveness of the WIC Program. WIC Infant formula rebate rev- 
enues for fiscal year 1993 are projected to be over $800 million and will support 
nearly 1.3 million participants, about one-fifth of projected WIC participation. Public 
Law 102-512, the Infant Formula Procurement Act, requires the USDA to conduct 
bid solicitations for infant formula rebates on behalf of a group of States, if re- 
quested to do so. Through expanded multi-State bidding it is expected that addi- 
tional savings would accrue to the WIC Program. The new law will be implemented 
as required by April 1993. 

BREASTFEEDING PROMOTION 

USDA has traditionally played a significant role in promoting and supporting 
breastfeeding among WIC participants. Also, in recent years USDA has actively un- 
dertaken a number of new initiatives in fiirther support of this important health 
practice, including sponsorship of a Breastfeeding Promotion Consortium (BPC) of 
nealth professional, government and advocacy organizations mutually interested in 
breastfeeding. At the Consortium's recommendation, USDA has developed a na- 
tional campaign to promote breastfeeding among the general public and others who 
influence a woman's decision on how to feed her infant. In addition, FNS has intro- 
duced a new WIC food package for women who elect to breastfeed their infants and 
receive no formula through the program. 

IMMUNIZATION PROMOTION 

For the last two years, USDA has worked very closely with the Centers for Dis- 
ease Control and Prevention (CDC) to increase immunization rates among pre- 
school-age WIC participants. Numerous activities are occurring at all levels of pro- 
gram operation to promote timely immunization. These various strategies seem to 
be having a positive effect. 



308 

WIC VENDOR MANAGEMENT 

During fiscal year 1988, the Office of the Inspector General (01 G) performed a na- 
tional audit of WIG State agency vendor monitoring systems. The major findings of 
the audit dealt with the inadequacy of State agency Automated Data Processing sys- 
tems to detect and analyze vendor redemption data for probable abuse; weak State 
agency vendor selection practices; limited Federal staff resources to oversee State 
agency operations; the need to standardize vendor sanctions nationwide; and the 
need for improved information sharing on vendor abuse between the Food Stamp 
and WIC Programs. 

In response to these findings, FNS proposed new more clearly defined and strin- 
gent regulations. These regulations define State responsibility in the area of vendor 
selection, training, monitoring, investigative reviews, and vendor sanctions. Over 
1,000 comments were received on the proposal. Due to significant public and politi- 
cal reaction to the proposed rulemaking, a new proposal was developed. As WIC 
moves toward full funing, maintaining high standards for program integrity will 
become even more important. Therefore, we intend to issue the new, tougher regula- 
tions in the Spring of 1993. 

FOOD STAMP PROGRAM 

The President's Budget requests a current services appropriation of $29.5 billion, 
including reserve funding, to ensure that funds are available to meet increases in 
program needs. Our projections suggest that: The rate of unemployment will aver- 
age 6.7 percent in 1994; average monthly program participation will be about 27.2 
million in 1994; and the average monthly benefit for 1994 will be $69.62 per person. 

As part of his 1994 budget request. President Clinton has proposed an additional 
increase of $603 million in benefit payments. These proposals are similar to earlier 
legislation to improve and refine the food stamp benefit structure that received 
strong bipartisan support in the last Congress. Legislation will be introduced to im- 
plement most of the major provisions of the Mickey Leland Childhood Hunger Relief 
Act and to implement several proposals to improve conformity of the Food Stamp 
Program with the Aid to Families with Dependent Children Pro-am. The legisla- 
tion will address fovu* general themes: ensuring adequate food assistance, promoting 
self-sufficiency, simplifying the provision of food assistance and improving program 
integrity. In addition, the legislation will propose to set administrative cost match- 
ing rates at 50 percent, beginning April 1, 1994. The elimination of enhanced federal 
matching for State anti-fraud, ADP development and Systematic Alien Verification 
of Eligibility activities will save $20 million in fiscal year 1994. 

FOOD STAMP PROGRAM ERROR REDUCTION 

Last year about 7 percent of food stamps were erroneously issued. We must con- 
tinue to pursue improved payment accuracy rates as a high priority activity. In fis- 
cal years 1992 and 1993, increased participation has increased the workload while 
some States are reducing fiscal and personnel resources. In an attempt to assist 
State efforts to improve payment accuracy, FNS has expanded its program efforts 
in several significant ways. For example, in fiscal year 1993, FNS will be awarding 
over $300,000 in grants to two State agencies to test effective and replicable error 
reduction procedures. Projects chosen for funding will demonstrate innovative as 
well as cost effective methods which can be implemented immediately with minimal 
expense. In addition, as a result of our emphasis on payment accuracy, each of our 
regional offices is conducting Error Reduction Conferences for the States which pro- 
vide a forum for the exchange of effective ideas and methods. Finally, through the 
use of our State Exchange project, FNS supports the interchange between State and 
local agencies of proven methods to reduce certification and issuance errors. 

SETTLEMENT OF FOOD STAMP LIABILITIES 

FNS recently agreed with 26 State agencies to settle $300 million in outstanding 
food stamp error rate liabilities for fiscal years 1986-1991. States agreed to invest 
almost $45 million in payment accuracy improvements over the next five years. 
FNS' offer of resolution of these liabilities was made so that Federal and State at- 
tention could remain focused on program management rather than on a lengthy 
court appeals process dealing with 8 to 10 year old claims. 

Most of the States affected submitted acceptable investment plans reflecting a 
broad spectrum of corrective action activities, such as increased client contact in the 
form of front-end verification, quality assurance reviews, enhanced automation, ex- 



309 

?anded stafl/client training, and targeting of cases with high error probabilities, 
wo States chose to pay settlement claims rather than investing. 
The settlement of these older claims will not compromise future action by FNS 
to aggressively pursue collection of quality control sanctions. 

FOOD STAMP TAX OFFSET EXPANSION 

We are working now to strengthen the agency's debt collection methods. One 
method being tested collects the amount of overissued food stamp benefits fi*om Fed- 
eral income tax refunds of individuals who received such excess benefits because of 
fraud or providing erroneous information. These individuals are no longer partici- 
pating in the program. In fiscal year 1992, the first year of the test, we collected 
more than $3 million in offsets in the two States involved. Voluntary payments pro- 
vided an additional $400,000. Within our current fiinding we have added seven 
States for 1993, end collections, both offsets and voluntary payments, are higher 
than expected. We plan to add another 12 States in 1994, which would bring in a 
total of 21 States. While the amount of collections to the Federal government are 
substantial in relation to the cost of the effort, starting up the program is resource 
intensive. We plan to expand the program to the maximum extent that resources 
permit. We estimate that program-wide use of tax offset would result in at least $25 
million worth of collections per year. There is currently more than $600 million in 
debt for overissued food stamp benefits due to firaud and erroneous information, and 
a significant portion of this could be collected through Federal income tax offset. 

FOOD STAMP TRAFFICKING 

FNS investigators have focused their efforts on retailers who purchase food 
stamps for cash at a discount. Additional fiinding permitted us to increase the num- 
ber of investigators on board at the beginning of this year fi-om 42 to 50. Therefore, 
an increase in trafficking investigations is expected. An initiative begun last year 
to promote the civil prosecution of trafficking retailers by U.S. Attorneys resulted 
in settlements for over $250,000 in fines. We have already exceeded this level so 
far this year and expect this activity to result in over $1 million in settlements in 
fiscal year 1993. FNS is also taking actions to expand the activity of States, pri- 
marily State and locfil law enforcement units, against trafficking between recipients 
and buyers in the streets. We are planning a limited number of pUot projects for 
fiscal year 1994 to identify effective detection, investigation and sanctioning tech- 
niques against street trafficking. FNS carefully coordinates its efforts with uie Of- 
fice of the Inspector General to ensure that trafficking investigations are effectively 
conducted. 

RETAILER REAUTHORIZATION 

FNS began a major initiative in fiscal year 1992 to collect current information and 
reauthorize the 213,000 retailers which support the Food Stamp Program. Resources 
had not been available and data on these stores had not been updated since the 
early 1980's, resulting in a deterioration of our ability to monitor store compliance. 
Funding in fiscal years 1992 and 1993 has enabled the Agency to remove stores 
which had closed or were no longer eligible, collect information on new store owners 
and obtain current sales information, which is the key to monitoring program com- 
pliance. By maintaining current data on stores, limited resources can be targeted 
to follow up on those wluch present the greatest threat to program integrity. 

ELECTRONIC BENEFIT TRANSFER 

Electronic Benefit Transfer (EBT) has the potential to reduce benefit diversions, 
including trafficking. Selling or trading benefits through a third party is expected 
to be more difficult with EBT because of the need for a system access terminal, the 
recipient's EBT card and personal identification number to determine the amount 
of benefits to sell. EBT also enhances control of trafficking by providing an audit 
trail that supports both detection and prosecution of benefit diversions. 

Today, there are approximately 200,000 food stamp households and 3,750 retailers 
using EBT. Over $400 million in program benefits will be provided through EBT in 
fiscal vear 1993. Maryland is operating a Statewide EBT system as of April 1993, 
and there are also EBT systems currently operating in Reading, Pennsylvania, 
Bernalillo County, New Mexico, Ramsey County, Minnesota, and Dayton, Ohio. An 
additional 25 States have expressed interest in EBT and are in the process of plan- 
ning or developing their systems. Federal staff continue to work with States by pro- 
viding technical assistance and review of system documentation. We are also pursu- 



310 

ing a standard system for settlement and reconciliation of EBT payments with the 
Department of Treasury and the Federal Reserve. A standard settlement system, as 
currently operated by the Federal Reserve for the food coupon redemption system, 
would be necessary for large-scale inter-State EBT operations. The President's 1994 
Budget requests $10 million to establish this system. 

FOOD STAMP PROGRAM INTEGRITY THROUGH INFORMATION MANAGEMENT 

The Agency is implementing new automated systems in fiscal year 1993 which are 
critically important to program and financial integrity. The Store Tracking, Author- 
ization and Redemption Subsystem (STARS) is the automated system wluch stores 
all data on retailers and records their redemptions of food stamps through the bank- 
ing and Federal Reserve systems. The Disqualified Recipient System (DRS) will give 
States access to a nationwide list of persons who have defrauded the Food Stionp 
Program. It will help keep these persons off the program for the proper disqualifica- 
tion period, even if tney move to a different State. 

PROGRAM CONFORMITY AND SIMPUFICATION 

We are active on a number of fix)nts to achieve greater conformity among federal 
public assistance programs and the Food Stamp Program, as well as to simplify ad- 
ministrative requirements. For example, FNS is providing staff support to the Wel- 
fare Simplification and Coordination Advisory Committee. The eleven member Com- 
mittee has met four times to discuss how interactions between Food Stamps, Aid 
to Families with Dependent Children (AFDC), Medicaid and public housing pro- 
grams can be streamlined. A report to Congress and the Federal agencies containing 
recommendations for change will be released on July 1 of this year. 

In addition, FNS has been actively working with the Administration for Children 
and Families to assist the American Public Welfare Association task force on pro- 
gram coordination in developing recommendations for areas in which consistency in 
requirements for the AFDC and Food Stamp F*rograms could be achieved through 
regulations or legislation. 

EMPLOYMENT AND TRAINING DEMONSTRATIONS 

Demonstration projects testing improved conformity between the Food Stamp Em- 
ployment and Training Program (E&T) and the Job Opportunities and Basic Skills 
Program (JOBS) of AFDC are being conducted in 49 project areas. Beginning this 
year and lasting up to four years, the projects allow States to waive the food stamp 
E&T regulations and substitute JOBS regulations in their place. Demonstration 
sites are in the States of Missouri, Georgia, South Dakota, Texas and Hawaii. 

NUTRITION ASSISTANCE FOR PUERTO RICO 

An appropriation of $1,091 billion is requested for Nutrition Assistance for Puerto 
Rico, the full amount authorized by the Food, Agriculture, Conservation, and Trade 
(FACT) Act of 1990. The Program provides cash benefits and administrative funds 
for a food assistance program tailored to the needs of low-income households in 
F*uerto Rico. 

CHILD NUTRITION PROGRAMS 

For the Child Nutrition Programs, we request an appropriation of $7.6 billion for 
fiscal year 1994. These fiinds are reauired to meet the payments authorized under 
current law for subsidies to all children and for provimng free and reduced price 
lunches, breakfasts and snacks to eligible children in schools, child and adult care 
centers and through Food Service Programs. 

HEAD START EXPANSION 

As part of his proposal to expand Head Start, the President has requested an ad- 
ditional $115 million for the Cnild and Adult Care Food Program. The request will 
cover the increased meals and snacks that will be served to the participants of the 
proposed new Head Start summer program. 

IMPACT OF MILK BID-RIGGING ON PROGRAM OPERATIONS 

We have been quite concerned about bid-rigging of milk supplies to local schools 
operating our feeding programs. According to the Department of Justice's (DOJ) 
Antitrust Division, as of February 1, 1993, 79 criminal cases involving school milk 



311 

bid-rigging had been filed against 43 corporations and 55 individuals in the south- 
east, midwest, and Texas. To date, 37 corporations and 41 individuals have been 
convicted, and fines imposed total approximately $35 million. Twenty-three individ- 
uals have been sentenced to serve time in iail. Federal civil damages in excess of 
$7 million have also been imposed. Thirty-tour grand juries in 23 States continue 
to investigate the milk industry. FNS has worked witii DOJ since 1989 on these 
cases. 

However, the actual direct damages resulting from milk bid-rigging fall on local 
schools. The recovery of these damages and their return to the local schools has 
been our primary concern in the resolution of these cases. FNS has worked closely 
with the UOJ to insure that proposed settlement actions presented to us for concur- 
rence take into consideration the recovery of local school milk damages either 
through separate State action or through the Federal legal actions. Since the return 
to local schools of those damages only occurs when recovery is through State action, 
FNS has concurred with a strategy for these cases which reserves the recovery of 
direct damages to the States and ^uses DOJ's efforts on criminal and civil penalty 
actions. To date, we are aware of State civil actions which have recovered over $50 
million in local school damages from over 20 corporations. State civil actions are 
also pending against at least 4 other corporations. 

PT^S will continue to make determinations regarding the necessity for debarment 
or suspension action against dairies convicted of bid-rigging. In making these deter- 
minations, we will consider the present responsibility of the companies and individ- 
uals involved, the potential impact of such actions on local program operations, and 
any other information that may be pertinent to the determination. 

SCHOOL BREAKFAST PROGRAM START-UP GRANTS 

As you know, the Agency has been actively pursuing expansion of the School 
Breakfast Program through the use of special start-up grants. As one means of en- 
couraging schools to operate breakfast programs, Puolic Law 101-147 established 
a five-year series of competitive grants to help defi-ay start-up costs. As envisioned 
in the statute, these grants cover nonrecurring costs and are targeted to schools at- 
tended by a significant number of low income students. In the &rBt four years, $18 
million in grants were awarded for over 2,800 schools with nearly 580,000 needy 
students in 38 different States. For the fiscal year 1994 grants totalling $5 million, 
38 States submitted proposals totalling over $7.1 million. We are in the process of 
evaluating these proposals and expect to make awards later this Spring. 

HOMELESS DEMONSTRATION PROJECTS 

The Homeless Demonstration Project, authorized by Public Law 101-147 to deter- 
mine the best means for providing food service to homeless children under the age 
of 6 in emergency shelters, is now in its third year of operation. Since the beginning 
of the Project, we have solicited sponsors on three sepeirate occasions and now have 
37 participating sponsors serving 60 homeless shelters. We are continuing to accept 
applications and anticipate adding additional shelters to the Project. 

COMMODITY SUPPLEMENTAL FOOD PROGRAM 

For fiscal year 1994, the appropriation request is $94.5 million. This amount sup- 
ports caseload allocations of about 373,000 women, infants, children and elderly. For 
fiscal year 1994, USDA will donate 4 million pounds of nonfat dry milk and 9 mil- 
lion pounds of cheese, as required by the FACT Act of 1990, to supplement food pur- 
chased with funds directly appropriated to the progrtun. 

FOOD DONATIONS PROGRAMS FOR SELECTED GROUPS 

An appropriation request of $244.4 million supports the programs for the Food 
Distribution Program on Indian Reservations (FDPIR), Nutrition Program for the 
Elderly (NPE), Commodities for Soup Kitchens, the remaining support for the nu- 
clear affected islands as well as Palau and disaster assistance. 

THE EMERGENCY FOOD ASSISTANCE PROGRAM 

The appropriation request for this program is $209,455 million, which includes 
$163.24 inillion for the purchase of commodities authorized by law, and $46,215 mil- 
lion to assist States witn administrative expenses. 

Appropriations language for the 1994 request will permit USDA to deliver these 
commodities to States through December oi the following fiscal year, thus eliminat- 



312 

ing a service gap caused by the need to wait each year for annual appropriations 
before beginning the purchase cycle. 

SPECIAL MILK PROGRAM 

The President's Budget requests $20,277 million to continue current law oper- 
ations of this program in fiscal year 1994. 

FOOD PROGRAM ADMINISTRATION 

Critical to achievement of sound program management are the administrative 
funds of the Agency. For fiscal year 1994, appropriations of $105.2 million are re- 
quested. 

The Food and Nutrition Service's eight appropriations account for over half of the 
budget authority of the USDA. Over 99 percent of the total appropriations are used 
for recipient benefit payments or grants to States for their administration of the 
programs. Food Program Administration represents less than one percent of the 
total. This appropriation pays for direct federal administrative expenses, including 
salaries and benefits, travel and information technology. The Food and Nutrition 
Service employs less than two percent of the people who work for the USDA. 

About one-third of FNS employees are stationed at the headquarters office in Al- 
exandria, Virginia. These staff are engaged primarily in program policy and regu- 
latory development, program research and evaluation. Food Stamp Program compli- 
ance activity, information resources management, financial management and certain 
other centralized administrative support fiinctions. The other two-thirds of the staff 
are located at seven regional offices and 81 field offices nationwide. These personnel 
work closely with State and local cooperators to implement and monitor the pro- 
grams, as well as working with retailers to seek authorization to redeem food 
stamps. 

We recognize that all government agencies must take aggressive action to improve 
management and administrative practices in order to reduce unnecessary spending. 
We are working very hard to aclueve this goal without jeopardizing our mission to 
safeguard the interests of ovir program recipients and the taxpayers who pay the 
bUls. 

FINANCIAL MANAGEMENT INITIATIVES 

As you know, the Chief Financial Officers (CFO) Act of 1990 requires federal 
agencies to perform a number of actions, including: creating integrated financial sys- 
tems over a five year period; producing annual audited financial statements; devel- 
oping systematic performance measurement; and improving management reporting. 
FNS has made significant progress in all of these areas. 

In October 1992 we implemented the first phase of a new financial management 
system which, when completed, will provide a single, integrated data base and ac- 
counting system for all FNS accounting and financial reporting operations. This sys- 
tems development effort, which was begun five years ago, is one of the few in ^e 
federal government which has come in on time and on budget. This effort has re- 
quired — and will require for the next several years — significant resources from our 
salary and expenses budget, in order to ensure the data integrity, accountability, 
and reporting capabilities required for major federal programs like the Food Stamp 
Program and WIC. When compared with the size of the annual, and growing, budg- 
et authority for which FNS is responsible, the amount of resources expended and 
needed in the future for our integrated financial management system represents a 
very large benefit with an immediate payback. 

FNS has produced financial statements for the past six years. FNS issued its first 
Annual Report for fiscal year 1991 that included the most recent Financial State- 
ments and our first publication of program performance measures as required by 
the CFO Act. These statements were audited by the General Accounting Office 
(GAO) in fiscal years 1987 and 1988 and by the USDA in fiscal years 1991 and 
1992. We have also improved our financial management operations in a wide num- 
ber of areas in response both to GAO and OIG audits and to our internal manage- 
ment controls and CFO Act 5-year plan action items. These actions include im- 
proved training programs for our financial management personnel, the systems de- 
velopment effort which has resulted so far in implementation of the first phase of 
our new integrated financial management system, and in improved internal controls 
and data integrity throughout the agency. 



313 



RESEARCH AND EVALUATION 



Dxiring fiscal year 1993, FNS expects to spend slightly over $19 million on pro- 
gram research, demonstrations and evaluation studies. These funds will support ten 
Congressionally-mandated or requested projects including Competitive Nutrition 
Education Grants, Resource Tests for Lacensed Vehicles, Food Stamp Outreach 
Grants, WIC Participant and Program Characteristics, a School Breakfast and 
Lunch Meal Cost Study, a National School Lunch Program (NSLP) School Drop Out 
Study, a State Administrative Cost Study, Paperwork Reduction Pilot Projects, 
School Lunch Eligible Nonparticipants, and a Universal Free Lunch Study. 

Additional areas of research include EBT, control of food stamp trafficking, reduc- 
ing barriers to good nutrition among food stamp program participants, use of nutri- 
ent standards in the National School Lunch Program (NSLP), assessment of nutri- 
tional content of meals in the Child and Adult Care Food Program (CACFP), and 
the Infant Feeding Project. 

We have several significant reports coming out over the next few months. As I 
mentioned earlier, this year marks the culmination of our research on demonstra- 
tions of cash-out of the Food Stamp Program. We released results from the San 
Diego and Alabama "pure" demonstrations on January 19, 1993. We expect reports 
very soon fi"om the Washington State Family Independence Program and Alabama 
ASSETS demonstrations. A report on administrative costs and retailer impacts in 
San Diego will also be available shortly. In other areas, we expect to release a re- 
port on the impacts of EBT in New Mexico and Minnesota in the next few months. 
Also, we expect to release the results of a study on the nutrient content and dietary 
impact of the NSLP, as well as a national study on the adult day care component 
of CACFP. 

The fiscal year 1994 budget requests include $19.8 million, spread among the 
Food Stamp, Child Nutrition and WIC accounts, to continue program research and 
evaluation activities for the agency. 

That summarizes the fiscal year 1994 budget of the Food and Nutrition Service. 
I will be happy to answer the Committee's questions. 



Statement of David A. Rust 

Mr. Chairman and Members of the Committee: I am David A. Rust, Acting Ad- 
ministrator for the Human Nutrition Information Service (HNIS). I am pleased to 
be here today to discuss the Human Nutrition Information Service's current activi- 
ties and our plans for fiscal year 1994. HNIS is part of the Office of Food and 
Consvmier Services. 

THE MISSION OF THE HUMAN NUTRITION INFORMATION SERVICE 

HNIS is, as its name implies, an information service organization responsible for 
conducting applied research in three broad areas: (1) Food Consumption — what 
Americans buy and eat (2) Food Composition — the nutrient content of foods and (3) 
Nutrition Education — helping Americans make informed food choices. These activi- 
ties enable HNIS to make a direct and ongoing contribution to USDA's overarching 
mission of ensuring the health and well-being of all Americans through improved 
nutrition. 

In carrying out its mission, HNIS is the lead USDA agency in two critical areas. 
First the agency, in coryunction with the Department of Health and Human Serv- 
ices (DHHS), is responsible for updating and promoting the Dietary Guidelines for 
Americans, the most authoritative dietary guidance given by the Federal Govern- 
ment to the American people. By law, the next update of the Dietary Guidelines for 
Americans will be released in 1995. Second, HNIS coordinates USDA activities 
under the National Nutrition Monitoring and Related Research Program 
(NNMRRP), a comprehensive effort spanning all of the nutrition monitoring activi- 
ties of 22 Federal Departments and Agencies. This wide-ranging activity mandated 
by P.L. 101-445, The National Nutrition Monitoring and Related Research Act of 
1990, is also coordinated with the Department of Heedth and Himian Services. 

The information HNIS collects, analyzes and disseminates helps to support the 
development of sound public policies by other agencies across the Department and 
the Federal Government. The policy formulation process for food assistance; food la- 
beling; food safety; food formulation, production and marketing; and nutrition edu- 
cation and health promotion programs all benefit from the work done by HNIS. 



314 

HOW THE AGENCY IS DOING WITH 1993 FUNDS 

After completing the second quarter, HNIS is operating well within its fiscal year 
1993 appropriation. There are two 1993 issues that I would like to bring to the sub- 
committee's attention: 

1. When HNIS formulated its 1993 budget request we expected to spend between 
$2.8 and $3.0 million on the Continuing Survey of Food Intakes by Individuals 
(CSFII) contract. In September 1992, we entered into a fixed price contract with 
Westat, Incorporated in Rockville, Maryland to conduct the CSFII 1994-1996. The 
developmental phase of this survey extends fi-om September 1992 to December 1993. 
$1.1 million of fiscal year 1992 funds were used to fiind this developmental work. 
The Office of the General Counsel determined that we could not expend fiscal year 
1993 dollars for this contract. The basis of their decision was that nscal year 1993 
dollars were not needed to support this contract (bonafide need). We are therefore 
asking, as part of the President's budget request for permission to use these funds 
for the Continviing Svuvey in fiscal year 1994. 

2. In its 1993 budget request, HNIS asked this subcommittee for $455,000 to 
cover the cost of moving the agency to a new location. The lease at its current loca- 
tion in Hyattsville, Maryland expires in July 1993 and we now expect to move into 
new offices in the District of Columbia at about that time. We estimate that no more 
than $750,000 will be needed to cover the non-GSA moving expenses. We have 1993 
funds sufficient to cover this expense. 

CURRENT ACTIVITIES 

Nutrition Monitoring. — ^The agency monitors food intake and the nutrient content 
of the diets of the American population, and collects and publishes the most com- 
prehensive data on the nutrient composition of foods. Major activities in progress 
include: 

1. Implementing the requirements mandated in Public Law 101-445, the National 
Nutrition Monitoring and Related Research Act of 1990. The Department of Agri- 
culture is committed to fulfilling the requirements of this legislation. We are work- 
ing jointly with the Department of Health and Human Services (DHHS), which 
shares joint responsibility for the National Nutrition Monitoring and Related Re- 
search Program. In accordance with Public Law 101-445, Federal coordination of 
monitoring activities is carried out under the auspices of the Interagency Board for 
Nutrition Monitoring and Related Research, co-chaired by the USDA Assistant Sec- 
retary for Food and Consumer Services and the DHHS Assistant Secretary for 
Health. The Board consists of 22 Federal agencies that conduct surveys or other re- 
search activities or are major users of nutrition monitoring data. One recent accom- 
plishment was the completion of the Ten-Year Comprehensive Plan for Nutrition 
Monitoring and Related Research. The Ten- Year Plan was formally transmitted to 
Congress in January 1993 and it addresses the objectives and activities needed over 
the next decade to meet the goal of a coordinated and comprehensive National Nu- 
trition Monitoring Program. Another requirement of Public Law 101—445 is the es- 
tablishment of the nine-member National Nutrition Monitoring Advisory Council. 
The Council was established and held its first meeting in late February, 1992, with 
two subsequent meetings later in the year. The Council issued its first report to the 
Secretaries of USDA and DHHS in December 1992. The Council's next meeting is 
scheduled for May 18-19, 1993. 

2. Analyzing and releasing the data from the Continuing Survey of Food Intakes 
by Individuals (CSFII 198&-1991) including the telephone follow-up Diet and Health 
Knowledge Survey (DHKS) that assesses consumer perceptions on diet/health and 
food safety issues. Data tapes from the 1989 survey phase were released in Novem- 
ber 1992. The 1990 data are scheduled to be released in May 1993 with the final 
phase (1991) completed by the end of this calendar year. I would note, Mr. Chair- 
man, that the data collection phase for CSFII 1991 was completed in May 1992. The 
agency has set a goal of releasing survey data in a more timely manner. You can 
see a steady improvement in the release of data from CSFII 1989, 1990, 1991 and 
we are determined to release the data obtained in CSFII 1994-1996 even more effi- 
ciently after the completion of each yearly wave of data collection. In addition, HNIS 
is developing an automated database management and an on-line coding system to 
be used Dy future survey contractors to further improve data handling and timeli- 
ness. 

3. Providing annual estimates of the nutrient content of the total U.S. food supply. 
This series of publications provides the only source of data on trends, since 1909, 
of the foods ana nutrients available for consumption. 

4. Continuing support to the Department's Pesticide Data Program. As one of four 
USDA agencies working on this program, HNIS is responsible for providing data on 



315 

food consumption in a form that will allow the Federal government to assess more 
accurately the population's exposure to certain pesticide residues. HNIS, with the 
cooperation of the Environmental Protection Agency and the Food and Drug Admin- 
istration, is developing a Food Grouping System (FGS). When fully operational the 
FGS will enable us to convert more than 5,000 mixed food items consumed by indi- 
viduals back into their basic agricultural components in a form that can be used 
to determine potential exposure to pesticide residue. 

5. Maintaining and continually updating the National Nutrient Data Bank 
(NNDB) and the Survey Nutrient Data Base. The NNDB is the most comprehensive 
resource for nutrient composition of foods in the world. Current analytical research 
on foods is focusing on the major contributors of fat, fatty acids, cholesterol and die- 
tary fiber and for 26 nutrients in the most frequently consumed foods as reported 
in USDA's food consumption surveys. NHIS also maintains the Survey Nutrient 
Data Base which is used in the Continuing Survey and also by the National Center 
for Health Statistics (NCHS), DHHS, for their National Health and Nutrition Exam- 
ination Survey (NHANES). An HNIS-NCHS interagency work group decides when 
food items should be added to the Survey Nutrient Data Base or when existing food 
descriptions should be updated. 

6. Expanding our Nutrient Data Bank Electronic Bulletin Board to maintain and 
improve communications between HNIS and our data users. It is accessed by per- 
sonal computer and provides up-to-date information about HNIS nutrient data and 
survey data releases and other relevant topics. The data bank can also be accessed 
by way of the Internet System, run bv the National Science Foundation, which 
makes the bulletin board available worldwide. 

7. Publishing Agriculture Handbook No. 8 Composition of Foods, Raw, Processed, 
Prepared. Handbook eight is made up of 21 sections to expedite the release of data 
to the public. Each section contains a table of nutrient data for a major food group. 
The entire handbook covers a wide range of food products. Ongoing revision is being 
done either by entire section, or individual food items and the changes are published 
in annual supplements. 

8. Planning for the 1996-1997 Household Food Consumption Survey (HFCS). 
Early planning and development work with the Bureau of the Census is proceeding 
on schedule. The process involves input from the users so that the HFCS will be 
of use to agencies across the government. 

Nutrition Education. — ^The agency conducts an ongoing research program to deter- 
mine the basis for dietary guidance policy and the most effective methods and strat- 
egies for improving the dietary status of Americans. Major activities include: 

1. Conducting ongoing research to assess the dietary status of the population. The 
results of this work along with methodological studies have been used to answer in- 
quiries, have been presented at professional meetings and published, and have been 
used to develop our own educational material. Over the past year, we have con- 
ducted studies on problem nutrients, food sources of nutrients, trends in the use of 
animal and vegetable products, food sufficiency, and food safety issues. Our research 
helps us and others in the nutrition/health community develop appropriately tar- 
geted programs and materials that will help Americans achieve a diet that main- 
tains and even improves their health. A new focus of this work will be on the new 
food label as a tool for nutrition educators. 

2. Establishing the research base for dietary guidance policy. The content of die- 
tary guidance materials is based on research on bridging the gap between current 
American diets and dietary recommendations. For extimple, last year we published 
three reports on the research basis for the Food Guide Pyramid snowing that estab- 
lished nutritional goals for vitamins, minerals, fats, calories and other food compo- 
nents could be achieved by following our Food Guide. Menus and recipes, which are 
used in educational materials to show consumers practical ways of putting dietary 
guidance into practice, are developed smd tested in our foods laboratory. 

3. Conducting ongoing research to support development and updating of USDA's 
four family food plans — ^thrifly, low-cost, moderate-cost, and liberal. The cost of 
these food plans is released monthly, and the cost of the thrifty food plan for June 
of each year is used as the basis for benefits in the Food Stamp Program for the 
following fiscal year. 

4. Conducting research on the most effective methods of communicating dietary 
guidance to target audiences. To improve dietary behavior, we must give consumers 
information that is meaningful ana useful to them. Various research techniques 
such as focus groups and in-depth interviews have been used to develop nutrition 
education materials for older adults, teenagers and adults with low literacy skills. 
The reactions of certain segments of the population to various graphic illustrations 
of our Food Guide have been presented and published. Work is ongoing on how best 
to communicate nutrition education to pregnant teenagers. 



316 

5. Developing dietary guidance materials designed to provide consumers with the 

f>ractical information needed to improve their diets. Examples of publications re- 
eased or soon to be released by the Agency are as follows: 

—"The Food Guide Pyramid", Home & Garden Bulletin No. 252, 1992— a 32-page 
booklet for consiuners that explains the pyramid. 

— "Dietary Guidelines and Your Health: Health Educator's Teaching Kit," MP- 
1490, 1992 — a curriculum guide with lesson plans and learning activities on 
healtiiy diets for health educators to use in teaching junior and high school stu- 
dents. 

—"Making Healthv Food Choices", Home and Garden Bulletin No. 250,"— a 17- 
page booklet on healthful diets for adults with low literacy skills. 

— Tood Facts for Older Adults: Information on How to Use the Dietary Guide- 
lines", Home and Garden Bulletin No. 251, (to be released in May, 1993) — a 68- 
page booklet on healthful diets for older adults. 

ESSENTIAL FISCAL YEAR 1994 PRIORITIES 

HNIS has identified the following six priority activities which we are currently 
planning to pursue in fiscal year 1994: 

(1) Continuing Survey of Food Intakes by Individuals (CSFII) 1994-1996— In Sep- 
tember 1992, HNIS entered into a complex fixed-price contract with Westat, Incor- 
porated of Rockville, Maryland, to conduct the nejct three year cycle of the Continu- 
ing Survey. The total projected cost of the contract for the work currently planned 
is foxirteen million dollars over four fiscal years. We are currently in the devel- 
opmental phase of the contract and pilot study activities will begin soon at ten loca- 
tions across the country. We expect to begin the first fiall year of data collection in 
the second quarter of fiscal year 1994. The projected cost of the work to be ftinded 
in fiscal year 1994 is $4.2 million. 

As stated earlier, Mr. Chairman, HNIS had planned to commit between 2.8 and 
3.0 million dollars to the Continuing Survey in fiscal year 1993. The Office of the 
General Counsel (OGC) advised us uiat there was no bonafide need for 1993 funds 
to be used for this contract. We are, therefore, asking the Congress to authorize the 
Department to carry over unexpended 1993 ftinds into the next fiscal year specifi- 
cally to support the CSFII. Our 1994 budget request is predicated on your granting 
the Department authority to carry these funds forward. 

(2) Planning the Household Food Consumption Survey 1996-1997 (HFCS) (for- 
merly the Nationwide Food Consumption Survey (NFCS)). Every decade since 1936, 
the U.S. Department of Agriculture has conducted a major NFCS. In previous years, 
the NFCS gathered data on both household and individual consumption patterns. 
Now that individual food intake is measured by the Continuing Survey, the HFCS 
1996-1997 will focus exclusively on collecting household data. 

(3) Continuing support for activities contained in the Ten-Year Comprehensive 
Plan for Nutrition Monitoring. HNIS is responsible for 41 activities (31 of those are 
shared responsibilities with another agency) and serves as a contributing or collabo- 
rating organization for 15 activities. 

(4) Supporting, jointly with DHHS, the updating of the Dietary Guidelines for 
Americans, due to be completed in 1995. 

(5) Using survey data and the developing Food Grouping System to better ascer- 
tain levels of exposure to pesticide residues. 

(6) Modernizing the Nutrient Data Bank system and expanding food composition 
research. 

FISCAL YEAR 1994 BUDGET REQUEST 

The HNIS budget request for fiscal year 1994 is $13,142,000, an increase of 
$2,354,000 over the fiscal year 1993 estimate of $10,788,000. The budget submission 
includes a request to carry over unexpended 1993 funds into 1994 specifically for 
the purpose of funding the CSFII 1994-1996. 

In fiscal year 1992, with a total budget of $10.8 million, HNIS was able to fiind 
the developmental phase of CSFII at $1.1 milUon. In fiscal year 1994, HNIS, with- 
out carryover authority, would have to fund the first full year of data collection ($4.2 
million) from a $10.9 million budget. The size of the fixed-price contract obligation 
in fiscal year 1994 highlights the critical need for the Congress to grant us the au- 
thority to retain the unused fiscal year 1993 funds for use in fiscal year 1994. 

In closing, Mr. Chairman, let me stress once again that HNIS plays an essential 
role in helping USDA meet its responsibility to promote the health and well-being 
of all Americans through improved nutrition. It is a small agency with an important 
mission. Fiscal year 1994 will be a very productive year for the agency ana HNIS 



317 

is determined to delivery quality work in a timely manner to our customers at 
USDA, other federal agencies, private sector organizations, and the general public. 
Mr. Chairman, I will be happy to answer any questions you or other Committee 
members may have. 



Biographical Sketches 



GEORGE A. BRALEY 



George A. Braley has been serving as Acting Assistant Secretary for Food and 
Consumer Services, U.S. Department of Agriculture since January 1993. He is re- 
sponsible for the development of national nutrition and consumer policies. Mr. 
Braley manages the Food and Nutrition Service which administers the domestic 
food assistance programs, including the Food Stamp, National School Lunch, Com- 
modity Supplemental Food, and Women, Infants and Children (WIC) Programs. He 
is also responsible for the Human Nutrition Information Service and the Office of 
the Consumer Advisor. 

From June 1990 to January 1993, Mr. Braley served as Associate Administrator 
of the Food and Nutrition Service where he helped manage the Nation's food assist- 
ance programs. 

From 1982 to 1990, Mr. Braley served as Deputy Administrator for Special Nutri- 
tion Programs where he had responsibility for managing the Child Nutrition, Food 
Distribution and WIC programs. 

From 1978 to 1982, Mr. Braley worked in the Office of Policy Planning and Eval- 
uation, and from 1972 to 1978 in the Agency's Child Nutrition Division. 

Bom in Riverdale, Maryland, Mr. Braley currently resides in Oakton, Virginia. He 
holds a B.A. in Economics from the University of Maryland and a Master's degree 
in Public Administration from Pennsylvania State University. 



ANDREW P. HORNSBY, JR. 

Andy Homsby has served his entire Federal career with the U.S. Department of 
Agriculture's Food and Nutrition Service in a variety of settings that include the 
field, two regional offices and FNS' national office. In September 1991, he was ap- 
pointed Deputy Administrator of the Food Stamp Program after returning from Ala- 
bama where he served a 4-plus-year stint as the State's welfare commissioner. He 
has been serving as Acting Administrator since January 1993. 

Homsby began his career in the Southeast Region where he gained field office ex- 
perience in Birmingham and Montgomery, Alabama, and also worked as a member 
of the Atlanta Regional Office food stamp staff. 

During his FNS tenure, he has held several key posts involving the Food Stamp 
Program. He was Director of the Federal Operations Division, wnich was charged 
with the responsibility of supervising 240,000 grocery stores authorized to accept 
food stamps. In 1976, he became chief of the newly organized Compliance Branch, 
which conducts investigations of stores involved in food stamp violations. Homsby 
received the USDA Superior Service Award in 1977 for his outstanding leadership 
and management of the food stamp Compliance Branch. 

In 1980, Homsby was appointed Deputy Administrator for Regional Operations, 
which provided liaison between FNS' national office and its seven regional offices. 
He later became Administrator of the Mid-Atlantic Regional Office in New Jersey, 
which is responsible for administering FNS programs in States along the Atlantic 
seaboard and in Puerto Rico. He left the Mid-Atlantic post in 1987 on a temporary 
intergovernmental personnel assignment to become Alabama's welfare commis- 
sioner. During his tenure the State launched a highly regarded welfare cashout pilot 
project. 

Homsby is a graduate of Auburn University where he majored in business admin- 
istration. 



DAVID A. RUST 

David A. Rust, has served as the Associate Administrator of the Human Nutrition 
Information Service (HNIS) since April 1992. 

The Department of Agriculture promotes the health and well-being of Americans 
through improved nutrition. The Human Nutrition Information Service contributes 
to this mission through the conduct of national food consumption surveys, food com- 
position research, and nutrition education programs. The Agency plays a primary 



318 

role in the National Nutrition Monitoring and Related Research Program and in the 
development and promotion of the Dietary Guidelines for Americans. 

roJIS serves the American public by conducting applied research in food and nu- 
trition — what foods we consume and what nutrients are in those foods, the factors 
that influence what we eat and how to make informed food choices. 

Before coming to USDA, Mr. Rust held a number of positions in the U.S. Depart- 
ment of Health and Human Services, most recentiy serving in severed key positions 
at the Social Security Administration. 

Mr. Rust is a graduate of the Catonsville Community College and Frostburg State 
University, Maryland, and has done graduate work at Towson State University, 
Mauyland, and at the American University, Washington, D.C. He lives in Rockville, 
Maryland with his wife and two children. 

MICKEY LELAND CHILDHOOD HUNGER RELIEF ACT 

Senator Bumpers. Mr. Braley, what is the Mickey Leland Child- 
hood Hunger ReUef Act? What does it do? 

Mr. Braley. That is a piece of legislation that has been worked 
on in the Agriculture Committees of both the House and Senate 
over the last 2 years. 

The day before yesterday, Secretary Espy signed and sent for- 
ward the administration's legislative proposal, which builds on the 
earlier Mickey Leland legislation. Our bill is called the Mickey Le- 
land Hunger Prevention Act. It takes a number of areas in the 
Food Stamp Program where we have problems such as benefit im- 
balances among various target populations. 

It really attempts to deal with three major areas of food stamp 
law right now, to ensure adequate assistance for people by raising 
the overall benefit structure. It eliminates the shelter cap. That is 
the cap on shelter deductions that people can have. 

It promotes self-sufficiency in the program by allowing partici- 
pants to accumulate assets at a higher rate than previously, so 
that they can save money to educate themselves to gain employ- 
ment. 

There is a major integrity section in the bill that deals with im- 
proving integrity by tackling such issues as over-issuance of food 
stamps and trafficlang, to shore up the integrity of the program as 
well. 

I would be happy to provide a copy of some materials that go into 
detail, a section-by-section analysis of the bill, if you would be in- 
terested, Mr. Chairman. 

[The information follows:] 



319 



Direct Spending Provisions of Mickey Leiand Hunger Prerention Act 



April 26. 1993 



SectioQ 



Provisioa 



1994 1995 



1996 



1997 



1998 Total 



Ensuring Adequate Food Assistance 

101 Increase basic benefits to 104 290 300 305 310 320 1,525 
percent of the TET in 1994 

102 Exclude the earnings of individuals 2 10 10 10 15 47 
age 18-21 who are elementary or 

secondary students and who live with 
their parents (implement 7/94) 

103 Raise the shelter deduction cap to 125 570 590 605 620 2.510 
$225 in 1994 and remove in 1995 



104 Exclude earned income tax credits 
from resources for current participants 
for one year 

105 Exclude entire amount of vendor 
payments for transitional housing 
for the homeless (implement 7/94) 

106 Exclude GA vendor payments for 
certain energy or utility expenses 
(implement 7/94) 

107 Eliminate proration of benefits for 
households off the FSP < 1 month 
(implement 7/94) 

108 Increase NAP funding above baseline 



20 



25 



25 



25 



25 



25 



25 



5 21 



5 21 



30 110 



25 120 



Promoting Self-Sufriciencv 



201 Exclude non-Tille IV educational 

assistance 



5 25 



202 Exclude child support payments to 45 190 205 220 
non-household members from income 

(implement 7/94) 

203 Exclude up to $50 in child support for 50 205 215 225 
all FSP households (implement 7/94) 



240 900 



235 930 



204 Increase E&T dependent care reim- 
bursements to $200 for children under 
age 2 and $175 for all other children 

Increase dependent care deduction 
to $200 for children under age 2 and 
$175 for all other dependents 

Allow States the option to increase 
the E^ScT participant reimbursement cap 
for expenses other than dependent care 
above a minimum of $25 

205 Increase the FMV for automobiles to 
$5,500 in 1994 and mdex thereafter 



45 



105 



120 



135 



4 20 



150 555 



320 



Section Provision 1994 1995 1996 1997 1998 ToUd 

206 Exclude from countable resources ■ « ■ ■ ■ ■ 
vehicles necessary to carry fuel or 

water (implement 7/94) 

207 Demonstrate allowing participating a 2 5 5 5 17 
households to accumulate up to 

$10,000 in assets 

Simplifying the Provision of Food Assistance 

301 Simplify household definition 15 65 80 85 85 330 
(implement 7/94) 

302 Increase the resource limit for HHs 2 10 10 10 10 42 
with disabled members to $3,000 

(implement 7/94) 

303 Assure adequate funding for the FSP 
ImoroTing Program Integrity 

401 Expand the use and disclosure of 
information provided by retailers 

402 Use Federal salary offsets for -5 -5 -5 -2 -2 -19 
claims collection 

Allow recoupment for State agency -10 -10 -10 -10 -10 -50 

error claims 



4dj 
4€^ 



Permanently authorize use of Federal 
tax offsets for all claims 

Allow the use and disclosure of 
taxpayer identification numbers 
provided by retailers 

Authorize street trafficking 
demonstrations 



Improving Food Stamp Program Management 

501 Clarify categorical eligibility 

502 Amend provision concerning intentional 
program violations to apply to EBT users 

503 Uncap civil money penalties for •«>•<■ 
retailer trafficking in food stamps 

504 Permanently disqualify retailers 
that sell drugs and firearms 

Federal Funding of Administrative Costs 

601 Reduce enhanced match rates for -20 ^0 -40 -40 -40 -180 

ADP development, anti-fraud 
activities, and SAVE 



321 



Section Provision 1994 1995 1996 1997 1998 Total 

Other 

Interaction among provisions 2 10 15 15 15 57 

Printing and processing coupons 2 5 5 5 5 22 

Total Cost 

Budget Authority 580 1,487 1,575 1,643 1,723 7,008 

Outlays 563 1,457 1,573 1.641 1,721 6,955 

Note: Based on January 27, 1993 economic assumptions. 
• Coft II leu thin SI million 



LETTER FROM MIKE ESPY, SECRETARY OF AGRICULTURE 



Honorable Thomas S. Foley o 7 iqm 

Speaker of the House WK H CXU 

of Representatives 
H 204 Capitol 
Washington. D.C. 20510 

Dear Mr. Speaker: 

Enclosed for the consideration of the Congress is a bill to amend the Food Stamp 
Act of 1977, as amended. This bill is entitled the Mickey Leland Hunger Prevention 
Act. Also enclosed is a section-by-section analysis explaining the provisions of the bill. 

The bill contains provisions to support the President's Fiscal Year 1994 Budget. 
The President's Budget includes significant increases in benefits provided by the Food 
Stamp Program. This bill would reduce hunger among poor children, simplify and 
improve program administration, help assure the integrity of the Food Stamp Program, 
and help offset the effect of the proposed energy tax on low income households. Most of 
the benefits provided by this bill would go to low-income families with children. 

The cost estimates include costs of interaction among the individual provisions of 
the bill of $2 million in Fiscal Year 1994. $10 million in Fiscal Year 1995. and $15 
million annually in Fiscal Years 1996-1998. The cost estimates also include projected 
costs for printing and processing the additional quantities of food stamps that would be 
issued as a result of enactment of the proposals included in the bill. These costs are 
estimated to be $2 million in Fiscal Year 1994 and $5 million annually in Fiscal Years 
1995-1998. 

Finally, the cost estimates include $20 million savings for Fiscal Year 1994 and 
$40 million savings annually in Fiscal Years 1995-1998 which could be achieved from 
implementation of the provisions in Title VI of the bill. These provisions would 
normalize Federal funding at 50 percent for most costs of State agencies' administration 
of the Food Stamp Program. They will also be included in an Administration bill to 
eliminate most enhanced Federal funding of Slates' costs of administering several other 
programs (e.g.. Aid to Families with Dependent Children and Medicaid), where the same 



322 



cost savings will be reported. The provisions are also included in this bill to reflect the 
Depanment's complete set of proposed changes to the Food Stamp Program as well as 
its commitment to reduce costs where it is possible to do so without affecting the ability 
of the Food Stamp Program to meet the food assistance needs of low-income Americans. 

The Department has developed this bill in part in the context of many bills ' 
introduced in the Senate and House of Representatives in the past few years. Among 
these bills are S. 2310, introduced by Senators Sasser and Domenici and many others in 
1990, and S. 757, introduced by Senator Leahy in 1991. All of these bills and the debate 
surrounding their consideration culminated this year in the introduction of H.R. 529, the 
Mickey Leland Childhood Hunger Relief Act. H.R. 529 is intended to ensure adequate 
food assistance, promote self sufficiency, simplify administration of the Food Stamp 
Program, and improve program integrity. All of these goals have been pursued by the 
Depanment in drafting this legislation; thus, this bill makes use of many of the 
provisions of H.R. 529. 

The enclosed bill includes over one third of the provisions of H.R. 529 without 
change other than for format. They include an income exclusion for transitional housing 
vendor payments for homeless people, elimination of proration for former food stamp 
households that have a break in panicipation of 30 days or less, increased funding for 
Pueno Rico's Nutrition Assistance Program, increases in the dependent care deduction 
cap and the resource limits for households containing disabled members, and a resource 
exclusion for vehicles necessary to transport fuel and water for households. 

Three other provisions drawn from H.R. 529 have been redrafted for reasons of 
clarity. They are the income exclusions for the energy/utility cost portion of general 
assistance vendor payments and for up to $50 in child support received by households, 
and reimbursements to participants in the Food Stamp Employment and Training 
Program. 

Four other provisions of H.R. 529 have been somewhat revised. The provision of 
H.R. 529 that would simplify the household definition has been revised to raise the age 
of children who live with their parents and must be considered members of their parents' 
households and to clarify the status of minor children who are under the parental control 
of household members. The provision of H.R. 529 that would exclude legally-obligated 
child suppon paid to nonhousehold members has been revised to provide the 
Depanment authority to establish the mcthod(s) of determining the amount of the 
exclusion. The provision of H.R. 529 that v/ould exclude the earnings of high-school 
smdents' has been revised to limit the exclusion to high-school students twenty one yean 
old or younger. The provision of H.R. 529 that would eliminate procedures for reducing 
allotments when there is inadequate funding available for the Food Stamp Program has 
been revised to eliminate an additional requirement that also became superfluous with 
open-ended appropriation authority. 

The enclosed bill contains three provisions which are similar to provisions in 
H.R. 529 and the Childhood Hunger Prevention Act introduced by Senators Sasser and 
Domenici. The provision on increasing maximum benefit levels has been revised so that 
maximum benefits would rise to 104 percent of the cost of the Thrifty Food Plan on 
October 1, 1993, and remain at that level. The enclosed bill would remove the cap on 
the excess shelter expense deduction in Fiscal Year 1995. The enclosed bill would also 
raise the limit on the fair market value of vehicles that is excluded in determining 
households' resources to $5,500 in Fiscal Year 1994. The $5,500 limit was recommended 
by President Reagan's Task Force on Food Assistance in 1984. 

While the Department shares the goals embodied in H.R. 529 and other bills 
proposed to improve the Food Stamp Program and better serve the needs of low-income 



323 



families with children, and has included provisions in this bill to attain those goals, there 
are other goals that would be met by provisions of the enclosed legislation. 

First, the enclosed bill contains several provisions that would bring the Food 
Stamp Program into closer conformity with the Aid to Families with Dependent Children 
program. Increasing conformity between these programs that serve many of the same 
clients and are administered by the same State agencies, with eligibility and benefit 
determinations often being made by the same caseworkers, would simplify the 
application process for both program applicants and State agency employees. Simplifying 
the application process results in easing access to the program, expediting eligibility 
determinations, and reducing errors. 

Another goal in proposing this legislation is my fervent belief that food stamp 
recipients must be empowered to better their own lives and, thus, escape their reliance 
on Federal assistance. Accordingly the enclosed bill includes three provisions that are 
not included in H.R. 529. First, earned income tax credits (EITCs) would be excluded 
from the calculation of resources for one year after their receipt by current food stamp 
recipients; EITCs are currently excluded as income and as resources in the month 
received and the next month. The current treatment may cause currently participating 
households to spend their EITCs quickly in order to avoid losing food stamp benefits--a 
result contrary to prudent public policy. Second, a provision has been added to provide 
the Department authority to conduct demonstration projects to test permitting 
participating households to accumulate up lo S 10.000 in resources in order to improve 
the education, training, or employability of household members or to purchase or repair 
a house for the household's use or to enable the household to relocate. Third, the 
educational income received by students that enables them to funher their education or 
otherwise become more self-reliant would be excluded for food stamp purposes. 

Finally, because improving the integrity and management of the Food Stamp 
Program are always important goals of the Department, the enclosed bill includes two 
full titles containing integrity and management proposals. These proposals contain 
several key provisions of S. 505, the Food Stamp Anti-Fraud Act of 1993, introduced by 
Senators McConnell, Dole, and Lugar. Enactment of the Administration's proposals 
would result in more severe penalties on stores that sell drugs and firearms; would 
increase the maximum penalty that a retailer could receive if found guilty of multiple 
instances of trafficking; and, would add to the Department's ability to collect claims from 
households that had overpayments. These proposals coincide with the Department's 
ongoing efforts in the areas of expanding electronic benefit transfer as an issuance 
alternative and retaining a strong quality control system. 

The effect of this draft bill on the deficit is: 

Fiscal Years 
(in millions of dollars) 

1994 1995 1996 1997 1998 1994-1998 

Outlays 563 1,457 1,573 1,641 1,721 6,955 

The Omnibus Budget Reconciliation Act of 1990 (OBRA) requires that all 
revenue and direct spending legislation meet a pay-as-you-go requirement. That is, no 
such bill should result in an increase in the deficit; and if it does, it will trigger a 
sequester if not fully offset. Since the Mickey Leland Hunger Prevention Act would 
increase direct spending, it must be offset. 

The President's Fiscal Year 1994 Budget includes several proposals that are 
subject to the pay-as-you-go requirement. Considered individually, the proposals that 
increase direct spending or decrease receipts would fail to meet the OBRA requirement. 



324 



However, the sum of all of the spending and revenue proposals in the President's Budget 
would reduce the deficit. Therefore, this proposal should be considered in conjunction 
with the other proposals in the Fiscal Year 1994 Budget that together meet the OBRA 
pay-as-you-go requirement. 

A similar letter is being sent to 'he President of the Senate. 

The Office of Management and Budget advises that the enactment of this 
proposed legislation would be in accord with the program of the President. 

Sincerely, 




MIKE ESPY 
Secretary 



Enclosures 



A BILL 

To better ensure the adequacy of food assistance for low- 
income Americans, pzirticularly working families with children; to 
promote self sufficiency among food stamp recipients; to improve 
the integrity and management of the Food Stamp Progrzun; and to 
achieve more consistent cost-sharing arrangements; and for other 
purposes. 

Be it enacted bv the Senate and House of Representatives of 
the United States of America in Congress assembled . That this Act 
may be cited as the "Mickey Leland Hunger Prevention Act". 

TITLE I - ENSURING ADEQUATE FOOD ASSISTANCE 

MAXIMUM BENEFIT LEVEL 
SEC. 101. Section 3(o) of the Food Stamp Act of 1977 

(7 U.S.C. 2012(0)) is amended by striking "(4) through" and all 

that follows through the end of the subsection, and inserting in 

lieu thereof the following — 

"and (4) on October 1, 1993, and each October 1 thereafter, 

adjust the cost of such diet to reflect 104 percent of the cost 



325 



of the thrifty food plan in the preceding June (without regard to 
adjustments made to such costs in any previous year) , as 

4 

determined by the Secretary, and round the result to the nearest 
lower dollar increment for each household size.". 

HELPING LOW-INCOME HIGH SCHOOL STUDENTS 

SEC. 102. Section 5(d)(7) of the Food Stamp Act of 1977 
(7 U.S.C. 2014(d)(7)) is amended by striking "who is a student, 
and who has not attained his eighteenth birthday" and inserting 
in lieu thereof "who is an elementary or secondary student, and 
who is twenty one years of age or younger" . 

FAMILIES WITH HIGH SHELTER EXPENSES 

SEC. 103. (a)(1) The fourth sentence of section 5(e) of the 
Food Stamp Act of 1977 (7 U.S.C. 2014(e)) is eunended by striking 
": Provided. That the amount" and all that follows through "June 
30". 

(2) The fifth sentence of section 5(e) of the Food Stamp Act 
of 1977 (7 U.S.C. 2014(e)) is amended by striking "under clause 
(2) of the preceding sentence". 

(b) (1) Effective on the date of enactment of this Act, 
section 5(e) of the Food Stamp Act of 1977 is amended by 
inserting after the fourth sentence the following — 

"In the 12-month period ending September 30, 1994, such 
excess shelter expense deduction shall not exceed $225 a month in 
the forty-eight contiguous States and the District of Columbia, 
and shall not exceed, in Alaska, Hawaii, Guam, and the Virgin 
Islands of the United States, $391, S321, S273, and $166 a month, 
respectively. 

(2) Effective October 1, 1994, section 5(e) of the Food 
Stamp Act of 1977 (7 U.S.C. 2014(e)), as amended by this Act, is 
amended by striking the fifth sentence. 



326 



RESOURCE EXCLUSION FOR EARNED INCOME TAX CREDITS 

SEC. 104. Section 5(g)(3) of the Food Stamp Act of 1977 
(7 U.S.C. 2014(g)(3)) is amended by adding at the end the 
following — 

"The Secretary shall also exclude from financial resources 
any earned income tax credits received by any member of the 
household for a period of twelve months from receipt: Provided. 
That the individual who receives such credits was participating 
in the food stamp program at the time the credits were received 
and that the individual participates continuously during the 
twelve-month period.". 

HOMELESS FAMILIES IN TRANSITIONAL HOUSING 

SEC. 105. Section 5()c)(2)(F) of the Food Stamp Act of 1977 
(7 U.S.C. 2014 (k) (2) (F) ) is amended to read as follows — 

"(F) housing assistance payments made to a third party on 
behalf of the household residing in transitional housing for the 
homeless;". 

HOUSEHOLDS BENEFITING FROM GENERAL ASSISTANCE VENDOR PAYMENTS 

SEC. 106. Section 5(k) of the Food Stamp Act of 1977 
(7 U.S.C. 2014 (k)) is amended by — 

(1) striking in paragraph (1) (B) "living expenses" and 
inserting in lieu thereof tne following — 

"housing expenses, not including energy or utility-cost 
assistance, " ; 

(2) striking paragraph (2)(C); and 

(3) relettering paragraphs (2) (D) , (E) , (F) , (G) , and (H) as 
(C), (D) , (E), (F), and (G) , respectively. 

CONTINUING BENEFITS TO ELIGIBLE HOUSEHOLDS 
SEC. 107. Section 8(c) (2) (B) of the Food Stamp Act of 1977 
(7 U.S.C. 2017(c)(2)(B)) is amended by inserting "of more than 
one month in" after "following any period". 

IMPROVING THE NUTRITIONAL STATUS OF CHILDREN IN PUERTO RICO 
SEC. 108. Section 19(a)(1)(A) of the Food St2unp Act of 1977 
(7 U.S.C. 2028(a)(1)(A)) is amended by — 



327 



(1) striking "$1,091,000,000" and inserting in lieu thereof 
"$1,111,000,000"; and 

(2) striking "$1,133,000,000" and inserting in lieu thereof 
"$1,158,000,000". 

TITLE II - PROMOTING SELF SUFFICIENCY 

INCOME EXCLUSION FOR EDUCATIONAL INCOME 
SEC. 201. Section 5 of the Food Stamp Act of 1977 (7 U.S.C. 
2014) is amended by — 

(1) amending subsection (d) (3) to read as follows — 
"(3) all educational loans on which payment is deferred 

(including any loan origination fees or insurance premiums 
associated with such loans) , grants, scholarships, fellowships, 
veterans' educational benefits, and the like awarded to a 
household member enrolled at a recognized institution of post- 
secondary education, at a school for the handicapped, in a 
vocational education program, or in a program that provides for 
completion of a secondary school diploma or obtaining the 
equivalent thereof,"; 

(2) striking in subsection (d)(5) ", and no portion" and all 
that follows through "for living expenses,"; and 

(3) striking subsection (k)(3). 

CHILD SUPPORT PAYMENTS TO NON-HOUSEHOLD MEMBERS 
SEC. 202. Section 5(d)(6) of the Food Stamp Act of 1977 
(7 U.S.C. 2014(d) 6)) is amended by striking the comma at the end 
and inserting the following — 

": Provided, That child support payments made by a household 
member to or for a person who is not a member of the household 
shall be excluded from the income of the household of the person 
making such payments if such household member was legally 
obligated to make such payments: Provided further. That the 
Secretary is authorized to prescribe by regulation the method(s). 



328 



which may include calculation on a retrospective basis, that 
State agencies nay use to determine the amount of this 
exclusion, ". 

CHILD SUPPORT EXCLUSION 

SEC. 203. Section 5 of the Food Stamp Act of 1977 (7 U.S.C. 
2014) is amended by — 

<1) in clause (13) of subsection (d) — 

(A) striJcing "at the option" and all that follows through 
"subsection (n)," and inserting "(A)"; and 

(B) adding at the end the following — 

"or (B) the first $50 of any child support payment in the 
month received if such payment was made by the absent parent in 
the month when due , " ; and 

(2) stri)cing subsection (m) . 

IMPROVING ACCESS TO EMPLOYMENT AND TRAINING ACTIVITIES 
SEC. 204. (a) Section 5(e) of the Food Stamp Act of 1977 
(7 U.S.C. 2014(e)) is amended in clause (1) of the fourth 
sentence by — 

(1) striking "$160 a month for each dependent" and inserting 
in lieu thereof the following — 

"$200 a month for a dependent child under age 2 and $175 a 
month for any other dependent"; and 

(2) striking ", regardless of the dependent's age,". 
(b)(1) Section 6(d) (4) (I) (i) (I) of the Food Stamp Act of 

1977 (7 U.S.C. 2015(d) (4) (I) (i) (I)) is amended by striking ", 
except that" and all that follows through "per month" and 
inserting in lieu thereof the following — 

" (which may include any supportive services provided or 
reimbursed under the State's plan under subtitle F of title IV of 
the Social Security Act (42 U.S.C. 681 et seq.)), except that 
State agencies may establish limits on reimbursements to 
participants for such costs, which limits may not be less than 
$25 per month". 



329 



(2) Section 6(d) (4) (I) (i) (II) of the Food Stamp Act of 1977 
(7 U.S.C. 2015(d) (4) (I) (i) (II) ) is amended to read as follows — 

"(II) the actual costs of such dependent care expenses that 
are determined by the State agency to be necessary for the 
participation of an individual in the program (other than an 
individual who is the caretaker relative of a dependent in a 
feunily receiving benefits under part A of title IV of the Social 
Security Act (42 U.S.C. 601 et seq.) in a local area where an 
employment, training, or education program under title IV of such 
Act is in operation, or was in operation, on the date of 
enactment of the Hunger Prevention Act of 1988) up to any limit 
set by the State agency (which limit shall not be less than the 
limit for the dependent care deduction under section 5(e)), but 
in no event shall such payment or reimbursements exceed the 
applicable local market rate as determined by procedures 
consistent with any such determination under the Social Security 
Act. Individuals subject to the program under this paragraph may 
not be required to participate if dependent costs exceed the 
limit established by the State agency under this subclause or 
other actual costs exceed any limit established under subclause 

(I).". 

(c) Section 16(h)(3) of the Food Stamp Act of 1977 (7 U.S.C. 

2025(h)(3)) is amended by — 

(1) striking "$25" and all that follows through "dependent 
care costs)" and inserting in lieu thereof the following — 

"the payment made under section 6 (d) (4) (I) (i) (I) and subject 
to any limits the state has established under that section"; and 

(2) striking "representing $160 per month per dependent" and 
inserting in lieu thereof the following — 

"equal to the payment made under section 6 (d) (4) (I) (i) (11) 
but not more than the applicable local market rate". 



330 



VEHICLES NEEDED TO SEEK AND CONTINUE EMPLOYMENT AND FOR 
HOUSEHOLD TRANSPORTATION 

SEC. 205. Section 5(g)(2) of the Food Stamp Act of 1977 
(7 U.S.C. 2014(9) (2)) is amended by striking "$4,500" and 
inserting in lieu thereof the following — 

"a level set by the Secret£u:y, which shall be $5,500 through 
September 30, 1994, and which shall be adjusted from $5,500 on 
October 1, 1994, and on each October 1 thereafter, to reflect 
changes in the Consximer Price Index for All Urban Consumers 
published by the Bureau of Labor Statistics, for new cars, for 
the 12 -month period ending the preceding June 30, and rounded to 
the nearest $50". 

VEHICLES NECESSARY TO CARRY FUEL OR WATER 

SEC. 206. Section 5(g)(2) of the Food Stamp Act of 1977 
(7 U.S.C. 2014(g)(2)) is amended by adding at the end the 
following — 

"The Secretary shall exclude from financial resources the 
value of a vehicle that a household depends upon to carry fuel 
for heating or water for home use when such transported fuel or 
water is the primary source of fuel or water for the household.". 
DEMONSTRATION PROJECTS TESTING RESOURCE ACCUMULATION 

SEC. 207. Section 17 of the Food Stamp Act of 1977 
(7 U.S.C. 2026) is amended by adding at the end the following new 
subsection — 

"(k) The Secretary may conduct, under such terms and 
conditions as the Secretary may prescribe, for a period not to 
exceed four years, demonstration projects to test allowing 
eligible households to accumulate resources up to $10,000 for 
later expenditure for a purpose directly related to improving the 
education, training, or employability (including self employment) 
of household members, for the purchase of a home for the 
household, for a change of the household's residence, or for 
miUcing major repairs to the household's home. The Secretary is 
authorized to pay up to $100 million in food stamp benefits to 



331 



households participating in such demonstration projects during 
the period in which such projects are in operation.". 

TITLE III - SIMPLIFYING THE PROVISION OF FOOD ASSISTANCE 

SIMPLIFYING THE HOUSEHOLD DEFINITION FOR HOUSEHOLDS WITH 

CHILDREN AND OTHERS 
SEC. 301. The first sentence of section 3(i) of the Food 
Stamp Act of 1977 (7 U.S.C. 2012 (i)) is amended by — 

(1) striking "(2)" and inserting "or (2)"; 

(2) striking ", or (3) a parent of minor children and that 
parent's children" and all that follows through "parents and 
children, or siblings, who live together" and inserting in lieu 
thereof the following — 

". Spouses who live together, parents and their children 21 
years of age or younger (who are not themselves parents living 
with their children or married living with their spouses) who 
live together, and children under the age of eighteen who live 
with and are under the parental control of a person other than 
their parent, with the exception of foster children, together 
with the person exercising parental control"; and 

(3) striking ", unless one of " and all that follows through 
"disabled member". 

RESOURCES OF HOUSEHOLDS WITH DISABLED MEMBERS 
SEC. 302. Section 5(g)(1) of the Food Stamp Act of 1977 
(7 U.S.C. 2014(g)(1)} is amended by striking "a member who is 60 
years of age or older," and inserting in lieu thereof "an elderly 
or disabled member,". 

ASSURING ADEQUATE FUNDING FOR THE FOOD STAMP PROGRAM 
SEC. 303. Section 18 of the Food Stamp Act of 1977 
(7 U.S.C. 2027) is amended by striking the third and fourth 
sentences of subsection (a)(1) and subsections (b) , (c) , and (d) 
and redesignating subsections (e) and (f) as subsections (b) and 
(c) , respectively. 



332 



TITLE IV - IMPROVING PROGRAM INTEGRITY 

USE AND DISCLOSURE OF INFORMATION PROVIDED BY RETAIL FOOD STORES 

AND WHOLESALE FOOD CONCERNS 

SEC. 401. Section 9(c) of the Food Stamp Act of 1977 
(7 U.S.C. 2018(c)) is amended by inserting in the second sentence 
after "disclosed to and used by" the following — 

"State and Federal law enforcement and investigative 
agencies and". 

ADDITIONAL MEANS OF CLAIMS COLLECTION 

SEC, 402. (a) Section 11(e)(8) of the Food Stamp Act of 
1977 (7 U.S.C. 2020(e)(8)) is amended by — 

(1) stri)cing "and" at the end of clause (A) ; 

(2) striking the semi-colon at the end of clause (B) and 
inserting in lieu thereof ", and"; and 

(3) inserting a new clause (C) as follows — 

" (C) such safeguards shall not prevent the use by or 
disclosure of such information to agencies of the Federal 
government or the United States Postal Service for purposes of 
collecting the amount of an overissuance of coupons, as 
determined under section 13(b) of this Act, that has not been 
recovered pursuant to section 13(b) of this Act, by offset 
against refunds of Federal taxes as authorized pursuant to 31 
U.S.C. 3720A, or by offset against Federal pay, including but not 
limited to salaries and pensions, as authorized pursuant to 5 
U.S.C. 5514;". 

(b) Section 13 of the Food Stamp Act of 1977 (7 U.S.C. 2022) 
is amended by — 

(1) stri)cing in subsection (b)(2)(A) "and claims arising 
from an error of the State agency"; and 

(2) adding the following new subsection at the end thereof — 
"(d) The amount of an overissuance of coupons, as determined 

under subsection (b) , that has not been recovered pursuant to 



333 



subsection (b) may be offset against refunds of Federal taxes, as 
authorized pursuant to 31 U.S.C. 3720A, or by offset against 
Federal pay, including but not limited to salaries and pensions, 
as authorized by 5 U.S.C. 55K.". 

DEMONSTRATION PROJECTS TESTING ACTIVITIES DIRECTED AT 
STREET TRAFFICKING IN FOOD STAMPS 
SEC. 403. Section 17 of the Food Stamp Act of 1977 
(7 U.S.C. 2026) is amended by adding a new subsection (1) at the 
end thereof — 

(1) The Secretary nay use up to $4 Dillion of funds provided 
in advance in appropriations Acts for projects authorized by this 
section in Fiscal Year 1994 to conduct projects in which State or 
local food stamp agencies test innovative ideas for working with 
State or local law enforcement agencies to investigate and 
prosecute street trafficking by recipients, buyers, and 
authorized retail stores. 

USE AND DISCLOSURE OF TAXPAYER IDENTIFICATION NUMBERS PROVIDED BY 
RETAIL FOOD STORES AND WHOLESALE FOOD CONCERNS 
SEC. 404. (a) Section 205(c) (2) (C) of the Social Security 
Act (42 U.S.C. 405(c)(2)(C)) is amended by — 

(1) striking the second sentence of the second clause (iii) ; 

(2) Inserting immediately before the period at the end of 
the third sentence of such clause (iii) the following — 

", or other officers and employees of the United States 
with law enforcement or investigative responsibilities, or State 
government officers and employees with law enforcement or 
investigative responsibilities, or State agencies that have the 
responsibility for administering the Special Supplemental Food 
Program for Women, Infants and Children"; and 

(3) inserting immediately before the period at the end of 
clause (vii) (I) the following — 

", except as provided in the second clause (iii)". 



334 



(b) The second subsection (f) of section 6109 of the 
internal Revenue Code of 1986 (26 U.S.C. 6109(f)) is amended by-- 

(1) striking the second sentence of paragraph (1) ; 

(2) inserting immediately before the period at the end of 
the first sentence of paragraph (2) the following— 

", or other officers and employees of the United States 
with law enforcement or investigative responsibilities, or State 
government officers and employees with law enforcement or 
investigative responsibilities, or State agencies that have the 
responsibility for administering the Special Supplemental Food 
Program for Women, Infants and Children"; and 

(3) inserting immediately before the period at the end of 
the first sentence of paragraph (3) the following— 

", other than as provided in the first sentence of paragraph 

(2)". 

TITLE V - IMPROVING FOOD STAMP PROGRAM MANAGEMENT 

CLARIFICATION OF CATEGORICAL ELIGIBILITY 
SEC. 501. Effective on the date of enactment of this Act, 
section 5 of the Food Stamp Act of 1977 (7 U.S.C. 2014) is 

amended by — 

(1) stri)cing in subsection (a) "and the third sentence of 
section 3(i)" both times that it appears and inserting in lieu 
thereof the following — 

", the third sentence of section 3(i), and section 20(f)"; 

and 

(2) stri)cing "II," in subsection (j). 

TECHNICAL AMENDMENTS RELATED TO ELECTRONIC BENEFIT TRANSFER 
SEC. 502. (a) Section 6(b)(1)(B) of the Food Stamp Act of 
1977 (7 U.S.C. 2015(b)(1)(B)) is amended by striking "or 
authorization cards" and inserting in lieu thereof ", 
authorization cards, or access devices". 



335 



(b) Saction 12(b)(3)(B) of the Food Stamp Act of 1977 
(7 U.S.C. 2021(b)(3)(B)) is amended by — 

(1) striking "or authorization cards" and inserting in lieu 
thereof ", authorization cards, or access devices"; and 

(2) striking "or cards" and inserting in lieu thereof 
", cards, or devices". 

UNCAPPED CIVIL MONEY PENALTY FOR TRAFFICKING IN FOOD STAMPS 
SEC. 503. Effective on the date of enactment of this Act, 
section 12(b)(3)(B) of the Food Stamp Act of 1977 (7 U.S.C. 
2021(b)(3)(B)) is 2unended by striking the parenthetical material 
immediately following "for each violation". 

PERMANENT DISQUALIFICATION FOR SELLING FIREARMS, AMMUNITION, 
EXPLOSIVES, OR CONTROLLED SUBSTANCES FOR FOOD STAMPS 
SEC. 504. Effective on the date of enactment of this Act, 
section 12(b)(3)(C) of the Food Stamp Act of 1977 (7 U.S.C. 
2021(b)(3)(C)) is amended by striking ", except that the 
Secretary" and all that follows up to the period at the end 
thereof. 

TITLE VI - UNIFORM REIMBURSEMENT RATES 

SEC. 601. (a) Section 16 of the Food Stamp Act of 1977 
(7 U.S.C. 2025) is amended by — 
(1) in subsection (a) — 

(A) striking "and (5)" and inserting in lieu thereof "(5)"; 

(B) inserting immediately preceding ": Provided . " the 
following — 

", (6) automated data processing and information retrieval 
systems subject to the conditions set forth in subsection (g) of 
this section, (7) food stamp program investigations and 
prosecutions, and (8) implementing and operating the immigration 
status verification system under section 1137(d) of the Social 
Security Act (42 U.S.C. 1320b-7 (d) ) "; and 



336 



(C) striking in the proviso the following language — 
"authorized to pay each State agency an amount not less than 
75 per centum of the costs of State food stamp progriun 
investigations and prosecutions, and is further"; 

(2) in subsection (g) — 

(A) striking "an amount equal to 63 percent effective on 
October 1, 1991, of" and inserting in lieu thereof "the amount 
specified in subsection (a)(6) of this section for"; and 

(B) striking "automatic" and inserting in lieu thereof 
"automated"; and 

(3) repealing subsection (j)-". 

(b) (1) Except as provided in paragraph (2) of this 
subsection, the amendments made by this section shall be 
effective with respect to calendar quarters beginning on or after 
April 1, 1994. 

(2) In the case of a State whose legislature meets 
biennially, and does not have a regular session scheduled in 
calendar year 1994, and that demonstrates to the Secretary's 
satisfaction that there is no mechanism, under its constitution 
and laws, for appropriating the additional funds required by the 
amendments made by this section before the next such regular 
legislative session, the Secretary may delay the effective date 
of any or all of the paragraphs of subsection (a) until the 
beginning date of a calendar quarter not later than the first 
calendar quarter beginning after the close of the first regular 
session of the State legislature after enactment of this section. 

TITLE VII - IMPLEMENTATION AND EFFECTIVE DATES 

SEC. 701. (a) Except as otherwise provided in this Act, the 
provisions of this Act shall become effective and be implemented 
on October 1, 199 3. 

(b) Sections 102, 105, 106, 107, 202, 203, 206, 301, and 302 
of this Act shall become effective and be implemented on July 1, 
1994. 



337 



SECTION-BY-SECTION SDMHARY 
MICKEY LELAND HUNGER PREVENTION ACT 

Title I - Enaurina Adequate Food Assistance 

Maximum Benefit Level 

Section 101 would amend Section 3(o) of the Food Stamp Act to 
raise maximum food stamp benefits. Maximum benefits would be 
raised from the current 103 percent of the cost of the TFP to 104 
percent beginning with Fiscal Year 1994. The new percentage 
would be applied to the cost of the TFP in the preceding June, 
without regard to previous adjustments, and rounded to the 
nearest lower dollar amount for each household size. The cost of 
the provision is estimated to be $290 million in Fiscal Year 

1994, $300 million in Fiscal Year 1995, $305 million in Fiscal 
Year 1996, $310 million in Fiscal Year 1997, and $320 million in 
Fiscal Year 1998. 

Helping Low-Income High School Students 

Section 102 would amend Section 5(d) (7) of the Food Stamp Act to 
exclude the earnings of elementary and high school students up 
through age 21 who are members of larger households when 
calculating households' food stamp eligibility and benefit 
levels. Currently, the earnings of students are excluded only if 
they are under 16 years old, but without regard to whether they 
are enrolled in high school or college. The proposal would 
eliminate any exclusion for college students' earnings while 
assuring that older high school students who live at home could 
benefit from the exclusion. The provision would be effective 
July 1, 1994. The cost of the provision is estimated to be $2 
million in Fiscal Year 1994; $10 million annually in Fiscal Years 

1995, 1996, and 1997; and $15 million in Fiscal Year 1998. 

Families with High Shelter Expenses 

Section 103 would amend Section S(e) of the Food Stamp Act to 
increase the cap on the excess shelter deduction to $225 in 
Fiscal Year 1994 and to eliminate the cap in Fiscal Year 1995. 
The cap for Fiscal Year 1994 would be S391 for Alaska, $321 for 
Hawaii, $273 for Guam, and S166 for the Virgin Islands; the cap 
would be removed in Fiscal Year 1995 for these entities also. 
Thus, after Fiscal Year 1994, the shelter deduction of all 
households would be calculated on the same basis; i.e., 
households that have no elderly or disabled members would have 
their shelter deduction calculated in the same manner as the 
shelter deduction for households with elderly/disabled members is 
currently calculated. The provision is estimated to cost $125 
million in Fiscal Year 1994, $570 million in Fiscal Year 1995, 
$590 million in Fiscal Year 1996, $605 million in Fiscal Year 
1997, and $620 million in Fiscal Year 1998. 

Resource Exclusion for Earned Income Tax rT-i.rt<<-ys 

Section 104 would junend Section 5 (g) . of the Food Stamp Act to 
exclude all earned income tax credits (ElTCs) received by 
households from consideration as resources for one year following 
their receipt. The exclusion would apply if the households were 
participating in the Food Stamp Program when they received the 
EITCs and do not have a break in participation during the one- 
year period. If a break in a household's participation occurs, 
any amount of an EITC remaining would be counted as a resource 
upon reapplication. For all other households, the current 
arrangement would apply — EITCs are excluded in the month received 
and the next month, but if households have retained them after 



338 



the second month, they are counted as resources. It is unwise 
public policy to induce food stamp families to spend their EITCs 
quickly, rather than to encourage their efforts to save the 
payments for worthwhile purposes that can lead to eventual self 
sufficiency. The provision would be effective October 1, 1993, 
and is estimated to cost less than $1 million annually. 

Homeless Families in Transitional Housing 

Section 105 would amend Section 5(k) of the Food Stamp Act to 
exclude as income the full amount of vendor payments for 
transitional housing for homeless households. Currently, a 
portion of such payments equivalent to 50 percent of the State's 
maximum shelter allowance for its Aid to Families with Dependent 
Children (AFDC) program is included as income in those States 
that calculate shelter allowances for AFDC. The provision would 
be effective July 1, 1994, and is estimated to cost $1 million in 
Fiscal Year 1994 and S5 million annually in Fiscal Years 1995- 
1998. 

Households Benefiting from General Assistance Ven dor Payments 

Section 106 would amend Section 5()c) of the Food Stamp Act to 
amend the treatment as income of certain general assistance (GA) 
and comparable basic assistance payments provided in the fonn of 
vendor payments. Under the proposal, such assistance would be 
included when calculating income if the assistance was provided 
for housing expenses, but portions of the assistance provided for 
energy or utility costs would be excluded. Currently, GA and 
comparable assistance is included if provided in the form of 
vendor payments and intended for living expenses. The provision 
would be effective on July 1, 1994, and is estimated to cost $1 
million in Fiscal Year 1994 and $5 million annually in Fiscal 
Years 1995-1998. 

Continuing Benefits to Eligible Households 

Section 107 would amend Section 8(c) of the Food Stamp Act to 
aunend the definition of "initial month" so that former food stamp 
households would not be subject to prorating unless the break in 
their food stamp participation is for more than one month. The 
provision would be effective July 1, 1994, and is estimated to 
cost $5 million in Fiscal Year 1994, $25 million annually in 
Fiscal Years 1995-1997, and $30 million in Fiscal Year 1998. 

Improving the Nutritional Status of Children in Puer to Rico 

Section 108 would amend Section 19(a) of the Food Stamp Act to 
increase funding for the Nutrition Assistance Program in Puerto 
Rico above the baseline by $20 million in Fiscal Year 1994 and 
$25 million for Fiscal Year 1995. This would increase the 
baseline for Fiscal Years 1996-1998 by $25 million. 

Title II - Promoting Self Sufficiency 

Income Exclusio n for Educational Income 

Section 201 would amend Section 5(d)(3), (d)(5), and (k) of the 
Food Stamp Act to amend the existing exclusion for educational 
income to make its treatment consistent within the Food Stamp 
Program. Currently, much educational income (loans, grants, 
scholarships, fellowships, veterans educational benefits, etc.) 
is excluded. Frequently, the income exclusions for educational 
income have been dictated by amendments to statutes other than 
the Food Stamp Act; e.g., P.L. 102-325, the Higher Education 
Amendments of 1992. However, there are some instances where 
educational income is counted as available to food stamp 



339 



participants when detennining their eligibility and amount of 
benefits. Whether educational income is included or excluded 
depends on a variety of factors such as the source of the income, 
the use to which it is put, the type of institution the student 
attends, and whether or not it is earmarked by the educational 
institution for specified purposes. 

The proposal would simplify the Food Stamp Prograun's overly 
complex treatment of educational income. This complexity is 
particularly frustrating in that the Food Stamp Program's 
treatment of educational income affects less than 6 percent of 
food stamp households. The proposal would end the complexity as 
well as provide increased conformity with the Aid to Families 
with Dependent Children (AFDC) program at an estimated cost of S5 
million annually in Fiscal Years 1994-98. The proposal would 
retain current provisions restricting the eligibility of post- 
secondary students. The amendment to Section 5(k) of the Act is 
a conforming amendment to delete a provision including as income 
certain educational assistance provided in the form of vendor 
payments. 

Child Support Payments to Non-Household Members 

Section 202 would amend Section 5(d)(6) of the Food Stamp Act to 
provide an income exclusion for payments household members make 
to support children outside their households. The exclusion 
would be limited to child support payments that are legally 
obligated. The proposal authorizes the Department to promulgate 
regulations prescribing appropriate methods for State agencies to 
determine the amount of the exclusion; one method could be 
averaging the amounts of child support payments made in several 
prior months in which income was similar. The provision would be 
effective July 1, 1994, and is estimated to cost $45 million in 
Fiscal Year 1994, $190 million in Fiscal Yeaur 1995, $205 million 
in Fiscal Year 1996, $220 million in Fiscal Year 1997, and $240 
million in Fiscal Year 1998. 

Child Support Exclusion 

Section 203 would amend Section 5(d) (13) and (m) to provide an 
income exclusion for certain child support payments received by 
households. First, AFDC households would have the same child 
support excluded for food stamp purposes that they have excluded 
for the AFDC program. Second, other households would have up to 
$50 received each month excluded and if payments made on a timely 
basis are received in a subsequent month, up to $50 of those 
payments would also be excluded. The proposal would also delete 
the current provision which permits State agencies to exclude up 
to $50 in child support monthly only if the State agency pays the 
Federal Government the cost of resulting increased benefits. The 
provision would be effective July 1, 1994, and is estimated to 
cost $50 million in Fiscal Year 1994, $205 million in Fiscal Year 
1995, $215 million in Fiscal Year 1996, $225 million in Fiscal 
Year 1997, and $235 million in Fiscal Year 1998. 

Improving Access to Employment and Trainin g Activities 

Section 204 would amend Sections 5(e), 6(d), and 16(h) of the 
Food Stamp Act to make several changes in the dependent care 
deduction cap for all households and reimbursements to 
participants in food stamp employment and training (E&T) 
programs. First, the proposal would raise the cap on the 
dependent care deduction from $160 a month for each dependent to 
$200 a month for children under 2 years old and $175 a month for 
other dependents. These limits correspond to those of the AFDC 
program. State agencies could retain the $200 dependent care cap 



340 



until recertif ication for children who reach their second 
birthdays during certification periods. The proposal would also 
raise the limit on reimbursements to E&T participants for 
dependent care from S160 to the applicable local market rate 
determined using AFDC's procedures, but no less than the cap on 
the dependent care deduction (S200 for children under 2 years old 
and $175 for other dependents) . 

The proposal would make two clarifications related to State 
agencies' reimbursements to EiT participants for work-related 
costs, other than dependent care. First, the proposal would 
clarify that State agencies can reimburse any work-related, non- 
dependent care costs for EiT participants that they reimburse for 
AFDC's Job Opportunities and Basic Skills Training Program 
(JOBS). Second, the proposal would clarify that State agencies 
can set the reimbursement limit for work-related, non-dependent 
care costs at any level, but not less than $25 per month. While 
this is current policy. State agencies have been reluctant to set 
a reimburseoent limit higher than $25 since the Federal payment 
to them is capped at $12.50. Thus, the proposal would also 
remove the cap on Federal funding of State agencies' costs for 
reimbursing participants for work-related, non-dependent care 
expenses. The combination of the two provisions would permit 
State agencies to set the szune reimbursement limit for E&T work- 
related, non-dependent care costs that they have for their JOBS 
participants and receive 50 percent Federal funding of their 
costs. The proposal also contains a technical change which would 
exempt from participation in E&T activities individuals whose 
work-related costs exceed reimbursements. This is current 
regulatory policy; however, the Food Stamp Act only exempts 
individuals whose dependent care costs exceed reimbursements for 
dependent care. 

Finally, the proposal would revise the Department's funding of 
State agencies' costs of E&T reimbursements. First, the 
Department would pay 50 percent of State agencies' costs of 
reimbursing E&T participants for their dependent care costs as 
revised by the proposal. Second, as previously described, the 
cap on Federal funding of State agencies' costs of reimbursing 
E&T participants' work-related, non-dependent care expenses would 
be removed. The cap is currently 50 percent of actual 
reimbursements that do not exceed $25 a month. With the removal 
of this cap. State agencies that invest their own funds to 
provide more realistic reimbursements for such costs can be 
assured of Federal funding at the 50 percent level. 

The provisions would be effective October 1, 1993, and are 
estimated to cost $5 million annually in Fiscal Years 1994-1998. 

Vehicles Needed to Seek and Continue Emplo vrnent and for Household 
Transportation 

Section 205 would amend Section 5(g) of the Food Stamp Act to 
revise the threshold for the fair market value of vehicles owned 
by households that is excluded in calculating households' total 
resources. The proposal would revise the threshold to $5,500 for 
Fiscal Year 1994. Beginning in Fiscal Year 1995, the $5,500 
threshold would be indexed annually on October 1 to reflect 
changes in the Consumer Price Index for all Urban Consumers 
published by the Bureau of Labor Statistics, for new cars, for 
the 12-month period ending the preceding June 30, and rounded to 
the nearest $50. The current threshold, which was set in 1977, 
is $4,500. The provision is estimated to cost $45 million in 
Fiscal Year 1994, $105 million in Fiscal Year 1995, $120 million 
in Fiscal Year 1996, $135 million in Fiscal Year 1997, and $150 
million in Fiscal Year 1998. 



341 



v^hieles Necessary to Carry Fuel or Water 

Seetion 206 would amend Section 5(g) of the Food Stamp Act to 
exclude fron financial resources the value of vehicles used by 
households to transport fuel for heating or water when that fuel 
or water is the primary source for households. The provision 
would be effective July 1, 1994, and is estimated to cost less 
than $1 million annually in Fiscal Years 1994-1998. 

Demonstration Projects Te sting Resource Accumulation 

Section 207 would amend Section 17 of the Food Stamp Act to 
authorize the Department to conduct, under terms and conditions 
prescribed by the Department, demonstration projects allowing 
eligible households to accumulate up to $10,000 in resources and 
remain eligible to receive food stamps. The households that 
could accumulate resources under the demonstration projects would 
have to establish separate accounts designated for the 
accumulation of resources for a specific goal that could provide 
self-sufficiency. Such goals would be limited to improving the 
education, training, or employability of household members; 
buying a house for the household's use; changing the household's 
residence; or making major household repairs. The proposal would 
limit to $100 million the amount that the Department could expend 
on benefits in the demonstration projects during the four years 
they would operate. The provision is estimated to cost $2 
million in Fiscal Year 1995, and $5 million annually in Fiscal 
Years 1996-1998. 

Title III - Simp lifying t he Provision of Food Assistance 

Simplifying the Household Definition for Households with Children 

and Pttigrs 

Section 301 would amend Section 3(i) of the Food Stamp Act to 
delete from the household definition the requirements that 
siblings who live together and parents who live with their adult 
children must be considered as one household even if they do not 
purchase and prepare meals together. The proposal would replace 
these requirements with similar requirements related to spouses 
who live together; parents who live with their own children who 
are 21 years old or younger and who do not live with their own 
spouses or children; and minors, excluding foster children, who 
live under the parental control of household members. These 
requirements are intended to simplify the task of eligibility 
workers in determining household composition. The provision 
would be effective July 1, 1994, and is estimated to cost $15 
million in Fiscal Year 1994, $65 million in Fiscal Year 1995, $80 
million in Fiscal Year 1996, and $85 million annually in Fiscal 
Years 1997 and 1998. 

Resources of Households with Disabled Members 

Section 302 would amend Section 5(g) of the Food Stamp Act to 
increase the resource limit for households containing disabled 
persons. Currently, such households have the same resource limit 
as most other households — $2,000. The proposal would place 
households with disabled members in the higher resource category 
— $3,000 — along with households containing at least one elderly 
person per household. The provision would be effective July 1, 
1994, and is estimated to cost $2 million in Fiscal Year 1994 and 
$10 million annually in Fiscal Years 1995-1998. 

Assuring Adequate Funding for the Food Stamp Program 

Section 3 03 would amend Section 18 of the Food Stamp Act to 
delete the provisions that authorize the reduction of benefits to 



342 



households, prescribe the means of doing so, and require monthly 
reports from the Department to Congressional Committees about 
monthly and cumulative expenditures and notification to the 
committees if it is determined that food stamp funding is 
insufficient. These provisions are no longer necessary since 
P.L. 101-624, the Food, Agriculture, Conservation, and Trade Act 
of 1990, provided Congress authority to appropriate sufficient 
funds for the Food Stamp Program. 

Title IV - Improving Program Integrity 

Use and Disclosure of Information Provided bv Retail Food Stores 
and Wholesale Food Concerns 

Section 401 would amend Section 9(c) of the Food Stamp Act to 
expand the use and disclosure of information provided by retail 
food stores and wholesale food concerns, including sales and food 
stamp redemption information, to State and Federal lav 
enforcement and investigative agencies. Use and disclosure of 
this information is currently restricted to persons directly 
connected with the administration and enforcement of the Food 
Stamp Program, as well as State agencies that administer the 
Special Supplemental Food Program for Women, Infants and Children 
(WIC) . 

The expanded use and disclosure of such information would enhance 
the Department's own enforcement and investigative activity by 
allowing the Department to match and verify information in its 
files with information in the files of other lav enforcement and 
investigative agencies that may provide evidence of violations of 
programs administered by the Food and Nutrition Service (FNS) . 
The Department also would be able to provide information to other 
agencies that might reveal vital leads and evidence that would 
enhance the outcome of their investigations and subsequent 
prosecutions. For example, the Department could provide the 
Internal Revenue Service (IRS) and State taxing authorities 
reported sales and food stamp redemption data for firms that are 
suspected of tax fraud. The Department could also share its 
information with investigative agencies, such as the Federal 
Bureau of Investigation (FBI) , the Secret Service, the Drug 
Enforcement Administration (DEA) , and the Financial crimes 
Enforcement Netvor)c (FinCEN) of the Department of the Treasury. 

Additional Means of Claims Collection 

Section 402 vould amend Sections 11(e) (8) and 13 of the Food 
Stamp Act to expand alternatives for collecting claims against 
households for overissued food stamp benefits. The proposal 
would clarify existing law and establish permanent authority 
relating to Federal income tax refund offsets and establish 
permanent authority to collect food stamp claims by offsetting 
Federal salaries and other Federal payments. 

The amendment to Section 11(e) (8) would meOce an exception to the 
current disclosure restrictions so that information obtained from 
former food stamp recipients could be provided to certain Federal 
agencies for specific purposes. The purpose of providing the 
information to Federal agencies is to collect overpayments from 
Federal income tax refunds. Federal salaries, and other Federal 
payments. The Federal agencies involved are the IRS, the United 
States Postal Service, and the Department of Defense. 

Section 13 would be amended to expand claims collection 
alternatives. First, State agencies would be required to collect 
claims arising from State agency errors from participating 
households through allotment reduction unless the household 



343 



elects other means of repayment. Allotment reductions would be 
limited to 10 percent of the monthly allotment or $10 a month if 
that would result in more rapid collection. Second, the proposal 
would authorize collection by Federal salary offset for all types 
of claims due from former recipients. Collection of these debts 
from Federal tax refunds due individuals no longer participating 
in the Food Stamp Program has been started under the authority of 
Section 17(b) of the Food Stamp Act. The IRS requires that debts 
referred for collection from tax refunds do not include any debts 
which could be collected from Federal salaries. To comply with 
this requirement, the Department also plans to test salary 
offset. The proposal would enable the Department to make these 
collection methods permanent for food stamp claims. The 
Department estimates that the total impact of these changes would 
be savings of $15 million annually during Fiscal Years 1994-1996 
and $12 million annually in Fiscal years 1997 and 1998. 

Demonstration Projects Testing Activities Directed at Street 
Trafficking in Food Stamps 

Section 403 would amend Section 17 of the Food Stamp Act to 
authorize the Department to conduct several demonstration 
projects related to the serious problem of street trafficking, 
particularly the sale of food stamps by recipients for cash at a 
discount in the street. Because both the Department's and State 
agencies' investigative resources are insufficient to pursue 
street trafficking, it is essential to enlist State and local lav 
enforceoent agencies In this struggle. Therefore, the Departaent 
will seek several State or local food stzunp agencies who have 
innovative Ideas for working with State or local lav enforcement 
agencies to investigate street trafficking at issuance sites or 
other high trafficking areas and address (through prosecution or 
disqualification) trafficking by recipients, buyers, and 
authorized retail food stores. Conducting these projects is 
essential if the Depeirtment is to begin making headway against 
street trafficking, especially the sale of food stamps for cash 
outside issuance offices which is becoming Increasingly more 
blatant and drawing more public attention and criticism. This 
activity is extremely damaging, diverting large amounts of food 
stamp benefits from their Intended purpose, affecting the 
nutritional well being of recipients, and eroding public support 
for the Food Stamp Program. 

The Department would be authorized to spend up to $4 million of 
funds provided in advance in appropriations Acts for 
demonstration projects conducted under Section 17 of the Food 
Stamp Act for these street trafficking demonstration projects. 
The projects are to be funded at 100 percent from October 1, 
199 3 -September 30, 1994 — with any subsequent period necessary 
funded at the level generally available for anti-fraud 
activities. 

Use and Disclosure of Taxpaver Identification Numbers Provided bv 
Retail Food Stores and Wholesale Food Concerns 

Section 404 would amend Section 205(c) of the Social Security Act 
and Section 6109(f) of the Internal Revenue Code of 1986 to 
expand the use and disclosure of taxpayer identification numbers 
(Social Security Numbers and Employer Identification Numbers) 
collected from retail food stores and wholesale food concerns 
that are authorized to accept and redeem food stamps. Use of 
these numbers is currently restricted to the maintenance of a 
list of names of individuals and firms sanctioned or convicted of 
program violations under Sections 12 and 15 of the Food Stamp 
Act. 



344 



The expanded use and disclosure of such identifying numbers would 
enhance the Department's own enforcement and investigative 
activity by allowing the Department to match and verify 
information in its files with information in the files of other 
law enforcement and investigative agencies that may provide 
evidence of violations of programs administered by the FNS. The 
Department would also be able to provide such identifying numbers 
to other law enforcement and investigative agencies to facilitate 
their ability to cross-check or match data and increase the 
likelihood of their detecting criminal or other illegal activity. 
Identification numbers offer much stronger confirmation of 
identity than do nzunes and addresses alone. Other agencies with 
which identifying numbers could be shared include State agencies 
administering the WIC Program, State taxing authorities. State 
lav enforcement agencies, the IRS, the FBI, the Secret Service, 
FinCEN, and the DEA. Verification of the authenticity of 
identifying numbers may also be required with agencies such as 
the Social Security Administration. 

Title V - Imnrovino Food Stamp Program Management 

Clarification of Categorical Eliaibilitv 

Section 501 would amend Sections 5(a) and (j) of the Food Stamp 
Act to correct and improve the provisions on categorical 
eligibility for the Food Stamp Program for recipients of AFDC; 
Supplemental Security Income (SSI) ; benefits under the SSI 
substitute program in the Territories (under Titles I, X, XIV, 
and XVI of the Social Security Act) ; and certain general 
assistance. 

First, the proposal would add to the exceptions for categorical 
eligibility households disqualified from the Food Stamp Program 
for failing to comply with the requirements of a food stamp 
workfare program. This is the only program disqualification 
provision that has not been listed as an exception from 
categorical eligibility for participants in any of the other 
assistance programs. There is no logical reason for this 
omission. It is not equitable for households disqualified for 
failing to meet workfare requirements to be permitted to 
participate under a categorical eligibility provision while all 
other disqualified individuals/households, including those 
disqualified for noncompliance with other work requirements, are 
not categorically eligible. 

Second, the proposal would correct a description of the SSI- 
substitute program in the Territories by removing a reference to 
Title II of the Social Security Act in Section 5(j). The 
reference to Title II was inadvertently added by Section 905 of 
the Food, Agriculture, Conservation, and Trade Act Amendments of 
1991. 

Technical Amendm ents Rela ted to Electronic Benefit Transfer 

Section 502 would amend Sections 6(b) and 12(b) of the Food Stamp 
Act to make technical corrections. Most Food Stamp Act 
references to food coupons and authorization cards have 
previously been amended to include references to the access 
devices used for electronic benefit transfer. This proposal 
would make similar amendments to provisions concerning 
disqualifications of individuals for intentional program 
violations and disqualifications of /imposition of civil money 
penalties (CHPs) against retail food stores for trafficking. 



345 



Dncapped Civil Mon^y Penalty for Trafficlcing in Food Stamps 

Section 503 would anand Section 12(b) of the Food Staap Act to 
renove tbe provision which caps a trafficking CMP at $40,000 in a 
2-year period. The cap was included in a P.L. 101-624 provision 
that peraitted CMPs in lieu of pemanent disqualification in 
certain limited circimstances . The statutory limit on monetary 
penalties for trafficking is currently $20,000 per trafficking 
violation; thus, it is highly likely that a firm would reach the 
$40,000 cap on the first offense. The ciirrent cap is flawed 
since, hypothetically , after a firm paid $40,000 for the first 
offense, further trafficking could occur without any additional 
sanction for trafficking during the next 2 years. Removing the 
$40,000 cap would make the trafficking CMP more equitable and 
consistent with the CMP for recipient hardship, which has a 
$10,000 per violation statutory limit with no cap, and which is 
assessed for much less serious offenses than trafficking. The 
provision would also provide a more effective incentive for 
owners and managers of authorized firms to institute programs 
that deter their employees from committing trafficking 
violations. The provision is estimated to cost less than $1 
million annually in Fiscal Years 1994-1998. 

Permanent Disoualif ieation for Selling FireaQiTf, ftinn^pition. 
Explosives, or Controlled Substances for Food Stamps 

Section 504 would amend Section 12 (b) of the Food Stamp Act to 
disallow a CMP in lieu of disqualification for selling firearms, 
ammunition, explosives, or controlled substances in exchange for 
food stamps. The sale of such items for food stamps is among the 
most serious violations possible and the penalty for such 
violations should act as a strong deterrent. To allow retailers 
who have been found selling fireazms, ammunition, explosives, or 
controlled substances for food stamps to pay a CMP and continue o 
participate in the program would send a strong signal to other 
potential violators that the Food Stamp Program is an easy target 
for abuse. The provision would call for permanent 
disqualification of the retailer for the first offense with no 
possibility of ever being reauthorized to accept and redeem food 
stamps. 

Title VI - Uniform Reimb ursement Rates 

Section 601 would amend Section 16(a), (g) , and (j) of the Food 
Stamp Act to revise the authority under which Federal funding is 
provided by the Department for certain costs State agencies incur 
in their administration of the Food Stamp Program. While the 
Department normally funds 50 percent of a State agency's food 
stamp administrative costs, there are several areas where 
enhanced Federal funding is provided. The proposal would make 
uniform Federal funding for most food steunp administrative costs. 
Enhanced funding would remain available for czurrying out the 
employment and training program, administering the Food Stamp 
Program on Indian reservations, and as an incentive for improving 
payment accuracy by State agencies. Eliminating other instances 
of enhanced Federal funding is estimated to save approximately 
$20 million in Fiscal Year 1994, when it would be in effect for 
six months, and $40 million annually thereafter. 

Enhanced fxinding for planning, designing, developing, or 
installing automated data processing and information retrieval 
systems would be reduced from the current level of 63 percent to 
50 percent. The proposal would also reduce Federal funding for 
State agencies' costs of investigating and prosecuting food stamp 
fraud from the current 75 percent to 50 percent. There are other 
incentives in the Food Stamp Act to encourage State agencies' 



346 



anti-fraud activities. For exanple. State agencies retain 25 
percent of any amounts successfully recovered from fraud losses. 
Finally, the proposal would reduce Federal funding for State 
agencies' use of the Systematic Allen Verification for 
Entitlement progrzun administered by the Immigration and 
Naturalization Service from 100 percent to the normal 50 percent. 

Finally, the proposal would authorize the Secretary to grant 
"hardship waivers" delaying the April 1, 1994, effective date for 
State agencies whose legislatures are not scheduled to meet in 
Calendar Year 1994 and that demonstrate that their Constitutions 
and laws do not provide a mechanism for raising the additional 
State funds that this bill would require before the next regular 
legislative session. 

ImDlementation and Effective Dates 

Section 701 would provide that, except as otherwise specified, 
the provisions of the bill would become effective on October 1, 
1993. Provisions whose implementation would require more 
significant adjustments for State agencies would not be effective 
until July 1, 1994. 

FUNDING THE LELAND RELIEF ACT 

Senator Bumpers. Has that bill been passed? Is it on the books 
now? 

Mr. Braley. It is not on the books. It was planned for inclusion 
in the President's budget. It was submitted to the Congress 2 days 
ago. There was a hearing yesterday in the House Agriculture Com- 
mittee to begin their process for considering this bill as part of the 
reconciliation process. 

Senator Bumpers. Has the President asked for money for that 
bill this year? 

Mr. Braley. Yes, he has, Mr. Chairman. 

Senator Bumpers. How much did he ask for? 

Mr. Braley. $603 million in funding above the baseline for the 
program. 

Senator Bumpers. Above the baseline for which program? 

Mr. Braley. For the Food Stamp Program, Mr. Chairman. 

Senator Bumpers. You know, this food pyramid may be a good 
idea. I am not sure this legislation is. I still do not quite under- 
stand what it does that we are not already doing. We do our best 
now to make sure children and people do not fall through the 
cracks, do we not, when it comes to hunger? 

Mr. Braley. We certainly do a lot, but there are areas that have 
been identified, again, through the hearing process and through 
input from a lot of interest groups and so on who monitor hunger. 
I will let Mr. Homsby comment a little bit further on some of the 
specific provisions of that bill, if I may, Mr. Chairman. 

Mr. HORNSBY. Mr. Chairman, as Mr. Braley has said, we propose 
to increase the basic benefits from 103 to 104 percent of the Thrifty 
Food Plan. That is one of the big cost items. 

One other particular item that States have lobbied us for years 
to do something about is the vehicle limit. Right now, if a family 
has a vehicle that is worth more than $4,500, that portion which 
is worth over $4,500, is counted against the resource limit. We 



347 

have been told by State and local agencies that this limit inhibits 
participation. 

The vehicle limit was set back in the late seventies. 

Senator Bumpers. Does that relate to that song called "Welfare 
Cadillac"? 

Mr. HORNSBY. Yes, sir; that was the old Welfare Cadillac Amend- 
ment back in the late seventies. The limit never has gone up. There 
are probably some legitimate cases where a vehicle has kept work- 
ing, needy families off the program. As you know, working people 
do need transportation. 

Mr. Braley. I would mention, too, in that vein, that as far back 
as 1984, a task force of the Reagan administration, established to 
study the Food Stamp Program and all of the food assistance pro- 

frams, recommended raising that vehicle limit from $4,500 to 
5,500, because it was keeping people out of the program who could 
really benefit, and who really were not driving around in Cadillacs. 

FOOD STAMP ELIGIBILITY 

Senator Bumpers. What is the criteria for food stamps? Is it a 
percentage of poverty level? 

Mr. HORNSBY. Yes, sir; it is based on family income and the 
number of people in the family. There is a cutoff level for different 
family sizes, based on income that is available to the family to buy 
food. 

Senator BUMPERS. Is it universal? It is nationally applied? 

Mr. HORNSBY. Yes, sir. 

Senator Bumpers. The States do not have anything to do with 
setting that, do they? 

Mr. HoRNSBY. No, sir. 

Senator Bumpers. What is that level right now? 

Mr. HoRNSBY. It is at 130 percent of the poverty level. 

Senator Bumpers. Do you normally use a family of four as the 
criteria? 

Mr. HORNSBY. Yes, sir; a family of four. 

Senator Bumpers. Right. 

Mr. HORNSBY. So the gross monthly income limit for a family of 
four is $1,512. 

Senator Bumpers. How much? 

Mr. Hornsby. $1,512. The net monthly income limit is $1,163 for 
a family of four. There are some deductions that are allowed. 

Senator Bumpers. Is this escalating? In other words, if you have 
more income than that, you just get fewer food stamps? 

Mr. Hornsby. No; you would get cut off if you exceed the income 
limit. 

Senator Bumpers. But you get a full allotment, if you are below 
that. 

Mr. Hornsby. No, sir; you can get an allotment, depending upon 
your income. If you have no income, you get the full allotment of 
food stamps. The amount of food stamps you get depends on your 
income or the amount of money you have available for food. 

Senator Bumpers. So, if I made $1,200 a month — now, when you 
talk about gross and net, how do you distinguish between those 
two? 

Mr. Hornsby. The gross is your total income before deductions. 



348 

Senator Bumpers. What is th^ net? 

Mr. HORNSBY. For a family of four, the net is $1,163 a month. 

Senator Bumpers. But my question is: What is the definition of 
net? 

Mr. Braley. That is your income after all of the deductions for 
which you qualify have been taken. For example, if you have excess 
shelter costs, those can be deducted. There are a series of deduc- 
tions that are allowed for food stamp households. 

Senator Bumpers. If your automobile is over $4,500, that goes 
into it. 

Mr. Braley. Well, that, actually, is another test. That counts 
against your asset limit. You currently cannot have liquid assets of 
more than $2,000 for most households, $3,000 for households that 
contain an elderly member. 

One of the things we are proposing in the legislation we were 
talking about earlier, would be to raise that $3,000 limit also for 
households with a disabled member. 

FOOD STAMP PARTICIPATION INCREASE 

Senator BUMPERS. Mr. Homsby, what do you think the cause is 
for an increase of 200,000 people a month on the food stamp rolls? 

Mr. HoRNSBY. We have looked at that and studied it carefully. 
I do not know that we have a real definitive answer at the present 
time. The economy, we think, is the primary reason, although we 
see other evidence that the increase is the heaviest in some of the 
large States with immigrant populations — Texas, California, New 
York, Florida. We have had heavy increases in those States, but by 
and large, it seems to be driven by the economy. We think that is 
the primary reason. 

Senator Bumpers. Have you ever done a study on the disparity 
of wealth in this country, of the poor getting poorer, and more peo- 
ple falling into the poor category? 

We know that the number of the children in this country in pov- 
erty continues to increase. And that went on even during the lush 
eighties. 

Mr. Braley. Mr. Chairman, I am not aware of any studies on 
this that we have done in the Food and Nutrition Service. I am fa- 
miliar, too, with some of the poverty statistics, as you indicate, that 
show that the rate of childhood poverty in this country has contin- 
ued to grow. 

That is one of the reasons we want to pass a new food stamp bill 
that would really target a lot of the benefits to households with 
children to try to deal with some of those issues. 

FOOD stamp error RATE 

Senator Bumpers. What is your so-called error rate right now in 
food stamps? 

Mr. HORNSBY. The overpayment error rate for 1991 is a little 
under 7 percent. That is one of our great concerns, Mr. Chairman. 
Despite having 10 years of drop in the error rate, we see the total 
amount of food stamps overissued is increasing. 

We have, on the other hand, an underpajrment rate of 2.35 per- 
cent to families that are eligible for food stamps. So it made a com- 



349 

bination of 9.3 percent error rate, but with the increases in issu- 
ance, of course, the dollar volume is substantial. 

FOOD STAMP ADMINISTRATIVE COSTS 

Senator Bumpers. What are the administrative costs of the Food 
Stamp Program? 

Mr. Braley. There are two categories of administrative costs: 
Some fairly moderate amount of Federal dollars are spent on food 
stamp administration by the Food and Nutrition Service and then 
a larger amount is spent for State and local level administration. 

The cost of State administration is shared between the Federal 
Government and State governments. 

Mr. HORNSBY. The Federal share of State administrative ex- 
penses is $1.6 billion per year. 

Senator Bumpers. How much? 

Mr. HoRNSBY. $1.6 billion. 

Senator Bumpers. What percentage is that, just roughly? 

Mr. HoRNSBY. Then what percentage would that be of the total 
Food Stamp Program? 

Senator Bumpers. Let us see, if your budget is, what, $27 bil- 
lion? 

Mr. HoRNSBY. All right. Ten percent would be $2.7 billion, so it 
would be about 

Mr. Braley. Six percent. 

Mr. HORNSBY. Five to six percent. 

Senator Bumpers. That is not bad. 

Mr. HoRNSBY. Now, that is the Federal share of administrative 
costs. As George Braley said, there is the State share of costs on 
top of that. 

Senator Bumpers. Is the administration of the Food Stamp Pro- 
gram — that is done usually by the State social services divisions, 
is it not? 

Mr. HoRNSBY. State welfare agencies, or human service agencies 
in every State administer the program. 

Senator Bumpers. And that is a mix of State and Federal con- 
tributions to that 

Mr. HORNSBY. The benefits are 100 percent Federal, Mr. Chair- 
man. 

Senator Bumpers. But the administration is shared by the Fed- 
eral and the State, is it not? 

Mr. HoRNSBY. Yes, sir. 

Senator Bumpers. On what basis? 

Mr. HoRNSBY. About 50-50. There are some provisions for which 
we pay a little greater than 50 percent, but, for example, staffing, 
which is the primary cost of administering the Food Stamp Pro- 
gram, personnel costs are reimbursed by us at 50 percent. 

WIC COVERAGE 

Senator Bumpers. What percentage of the pregnant women in 
this country are going to be served in 1994 under the WIC Pro- 
gram, if we gave you everjrthing you are asking for? 



350 

Mr. Braley. Mr. Chairman, we have been reaching a high per- 
centage of eligible pregnant women. And we can do better than 
that with the funding requested in 1994 — upward of 90 percent. 

The challenge at this point is to try to reach those women earlier 
in their pregnancies. One of the things that we have found is that 
many women do not find their way into the WIC Program until the 
second trimester. Roughly, about one-half of them come in during 
their second trimester, and about one-quarter not until the last 3 
months of their pregnancy. 

So we are doing a fairly good job, although we can do better, at 
getting the percentage of women actually in WIC at some time dur- 
ing their pregnancy. We really need to make special efforts, and 
States should be making them also, to locate those women and get 
them into the WIC Program earlier, when the food assistance and 
nutrition education can do the most good. 

Senator Bumpers. You do not turn anybody down, do you? Do 
you turn down women who come in for assistance? 

Mr. Braley, Each State really receives a grant to operate their 
WIC Program. I do not think there are many circumstances where 
pregnant women would be turned away if they qualified for the 
program based on income and nutritional risk. 

Certainly, older children and some of the lower priority cat- 
egories are currently being turned away, because resources are not 
adequate to serve that entire population, but I think it would be 
a very rare case that a pregnant woman who would qualify would 
be turned away. 

Senator BUMPERS. So our problem in not covering everybody is 
that a lot of women do not seek assistance and a lot of people do 
not know about it, is that it? 

Mr. Braley. I think that is really it. It is a matter of finding a 
way to reach these women early on and bring them into the pro- 
gram. 

WIC results 

I think it is important, too, for us to try to keep older children 
on the program. The benefits of the program have probably been 
most dramatic in terms of pregnancy outcome with regard to high- 
er birth weight and infant mortality rate decreases and lower hos- 
pitalization costs associated with higher birth weight babies, but 
we have also had some pretty positive results on early childhood 
development, in terms of cognitive development and those types of 
things. 

We are certainly eager to move toward full funding, so that all 
of the eligible participants, including the children up to their fifth 
birthday, can be served throughout the country. 

Senator Bumpers. The evidence is overwhelming, is it not, that 
women who get this prenatal care, their children — the chances of 
a defective baby are greatly reduced, are they not? 

Mr. Braley. That is absolutely right, Mr. Chairman. It not only 
is good policy from a humanitarian and caring standpoint, it is a 
good investment as well. It avoids hospitalization costs, Medicaid 
costs. 



351 

Study after study, in a number of States, have shown that three 
or four to one benefit cost ratios result from participation in the 
WIC Program by pregnant women. 

IMMUNIZATION 

Senator Bumpers. Let me ask you one other Une of questions 
here, and then I will defer to Senator Gorton. You mention in your 
testimony that USDA has been working with the Centers for Dis- 
ease Control to increase immunization rates among preschool chil- 
dren. 

And as you know, there are a lot of ongoing programs to try to 
get all of the children in this country immunized by the age of 2. 
What are you doing to promote immunizations? 

Mr. Braley. Mr. Chairman, the WIC Program really is probably 
the best program available, in terms of getting young women in 
when they are pregnant and keeping their children in the health 
care system. 

We have often referred to it as a gateway program. The food ben- 
efit that is available is really a carrot that brings people into the 
health care system. 

We have worked closely with the Centers for Disease Control and 
Prevention to try to make WIC a part of the immunization effort. 

There are many WIC clinics throughout the country, where you 
come in for WIC services and your child can be immunized right 
at the WIC clinic. At other places that do not have the facilities to 
manage that, there is a referral mechanism in place. 

We have been a part of CDC's task force and work effort to try 
to improve immunization rates from the outset. We think WIC can 
perform an important role, primarily, of getting people into the 
health care system and referred for immunizations. 

Senator Bumpers. Mr. Braley, you are probably not the right 
person to ask. I am also on the Labor, Health and Human Services 
Subcommittee of Appropriations, where we will hold a hearing on 
immunizations very shortly. 

And of course, the Centers for Disease Control people will be 
there to testify, but something that they have — what shall I say — 
sort of tentatively propose is — and let me just give you an illustra- 
tion before I tell you what it is. 

Last Saturday or Saturday before last, there were 6,000 volun- 
teers in Atlanta who spread all over that city, knocking on doors, 
trying to locate children who were not immunized. They got the 
door slammed in their face a lot of times. 

You probably saw that story in the Post or maybe you did not, 
but anjrway, the story was about this youngster who came to the 
door. He went back and his mother said she would not come to the 
door and so on. In the inner cities of this country, that is a very 
common occurrence. 

As you perhaps know, my wife has been boldly engaged in this. 
She and Rosalyn Carter really are the ones that started this track- 
ing system. I think she still is. I have not seen her in a month. 
This is Childhood Immunization Month. 

And she is — just got in last night. It is the first time I have seen 
her in 3 weeks, but anyway, she gives me all of this information. 
And she and I clash occasionally. 



352 

I am not sure — ^you know, she agrees with the President, the 
Government buying all of the vaccine and giving shots free. I am 
not sure I agree with that, not because of the money, but because 
I think it is highly, marginally efficient. But an3rway, we argue 
about those things, but my question is this — and this is one place 
where she and I really clash. 

Normally, I defer to her, because she has been in this now for 
20 years. What is wrong with saying to some of these women who 
get food stamps or are on the WIC Program, "We are going to give 
you 30 days to immunize your child and if you do not, you are 
going to get cut off 7 

If they do not do it, maybe you give them another 30 days. And 
at the end of that time, you really fulfill the threat. 

Now, that drives people like Marian Wright-Adelman right up 
the wall, when you suggest things like that. But, you know — I do 
not intend to be harsh about this, but you see, one of the reasons 
that it is important that all children are immunized is because all 
you have to have is a small pool of susceptibles and you have got 
an epidemic on your hands. 

So when people deliberately do not have their children immu- 
nized, it is one thing for them — ^to threaten — ^you know, bother 
their own children, but they are also threatening the community. 

So why should we not use that stick approach? To, obviously, the 
people who are not immunizing their children, who would become — 
it would become a ritual with them, once we got that program in 
place, I believe. 

Mr. Braley. The pros and cons of that have been discussed to 
some extent. In prior years, I know we have been involved in dis- 
cussions of whether we ought to make childhood immunization a 
criterion for a child being eligible in the WIC Program. 

One of the issues is that the WIC Program itself provides impor- 
tant benefits to those children. If their parents are being irrespon- 
sible with regard to immunizations, should you deny that child food 
that is important to their growth and development? 

It really is a difficult moral question. And I think it is an open 
one that can be debated some more. 

So far, we have taken the position that benefits will not be de- 
nied on the basis of a child not being immunized, because the WIC 
benefit itself is very important. 

Senator Bumpers. Well, I will tell you one thing, I do not think 
just furnishing free vaccines is a solution. Betty and Tipper Gore 
were in Boston yesterday with the mayor. And they go to the clin- 
ics. And the television cameras were all there. And that would have 
been on the evening news in Boston last evening. And that is the 
end of it. 

I mean, I think the visibility and the publicity is good. It sort of 
makes a few people aware that — maybe their children are immu- 
nized, but the people who are not immunizing their children last 
night — I do not want to suggest that what they are doing is not 
meaningful; it is. It keeps the thing visual. And it keeps it on the 
front burner, but there is a hardcore out there that you are just 
simply not going to get in that way. 

Mr. Braley. Mr. Chairman, I think the WIC Program can help 
get those people into the system, so that they, at least, get re- 



353 

minded or told of the consequences of not having their children im- 
munized, since we do have such a high rate of coverage among 
pregnant women and infants who are from low-income families and 
they are probably some of the hardest families to reach. 

I think we are doing a good job of getting them into the system, 
so they can be informed about this issue, but that is as far as our 
role has gone. 

SUMMER FOOD SERVICE PROGRAM 

Senator Bumpers. Senator Grorton. 

Senator Gorton. Thank you very much, Mr. Chairman. And I 
am not sure which of you will have the answer to this question, so 
perhaps all of you can listen. The Washington State Food Policy 
Action Center helps administer summer food programs in my 
State. 

And, obviously, there are similar groups in each of the other 
States. And I asked them to tell me whetner or not they had any 
particular difficulties in meeting Federal requirements in admin- 
istering the program. And they came up with two concerns that I 
would like to share with you and get your comments on. 

I am told that the Summer Food Service Program regulations 
prevent food from being removed from the site of an individual pro- 
gram. Many of the people who administer these programs con- 
stantly witness food going to waste, obviously, because of these reg- 
ulations. And they find it frustrating when, of course, they are 
there to feed hungry kids. 

In light of the recent E-coli outbreak in my State and renewed 
attention to food safety, perhaps there are some rationale and some 
good reasons for these regulations, and as a consequence it may re- 
sult in an even stricter enforcement of the laws. The people who 
are working in this program, and who obviously do not want to un- 
dercut the well-being of the children in the program, ask the ques- 
tion as to why nonperishable or only semiperishable food, like cook- 
ies and apples and things of that sort, should not be allowed out 
of the site oy kids. Because I think each of us is familiar with the 
way kids operate — putting something in their pocket to eat it later 
and the like. 

Can any of you comment on the reason for that regulation and 
whether there is a consideration of any change? 

Mr. Braley. I will comment on that. Senator. I might want to 
expand a little bit in the record, after I have had some additional 
information from the people at the Food and Nutrition Service. 

Some of the concern about offsite consumption of food in the 
Summer Food Service Program goes back to some health and safety 
issues, as you mentioned, concerning food that could spoil being 
taken away and consumed later, and someone becoming ill from 
that. 

But a second concern goes back to some abuses that were noted 
in the program in the seventies. Meals were taken home by the 
children for consumption by their family members. 

The meals are intended for children. We want the eligible chil- 
dren to consume the meals and not have the meals become a carry- 
out for the whole family. There were some fairly significant abuses 
in the early days of the program. 



354 

I believe that requirement came about for those two reasons: 
Health and safety concerns, and the issue of people for whom the 
program was not intended actually consuming the food. 

Senator GrORTON. That is a logical answer to the question. I do 
not know whether there is a way to let kids be kids without allow- 
ing that kind of misuse of the program. We will pass that answer 
back. And if you all think about it and perhaps ask for some advice 
from the people who are in the field running the programs, maybe 
we could come up with a more flexible answer. 

Mr. Braley. We will do that, Senator. 

SUMMER FOOD SERVICE — SITE ELIGIBILITY 

Senator GORTON. The second one is this: I understand that in 
order for a Summer Food Service site to qualify as an open site, 
50 percent or more of the children must be from low-income fami- 
lies. 

There are a number of sites in Washington State, and I am sure 
elsewhere, that are being denied eligibility because they only get 
to a 48-percent threshold. 

I understand that the National School Breakfast Program has a 
40-percent eligibility requirement. 

Is there any reason for that difference? It is possible or would it 
be prohibitively expensive to change the open site requirement 
from 50 to 45 or even to 40? Whv are there two different numbers? 

Mr. Braley. Senator, one of the things that you need to keep in 
mind in looking at this issue is that in a summer program situa- 
tion, you are usually talking about a walk-in program, where kids 
from the community come and have recreational or other activities, 
and then receive meals as part of that program. 

There is not an individual means test or anything like that. No- 
body takes an application from that child's parents in order to 
qualify them for the meals. That is in contrast with a school situa- 
tion or a day care situation, where applications are actually taken 
and if a child's family has too high an income, the meal receives 
a much lower subsidy than one served to a child from a lower in- 
come family which gets a much higher subsidy. 

In the Summer Food Service Program, we found that we cannot 
make that work very well, because it is a less controlled environ- 
ment. So, in law, the 50-percent limit was set. You base it on free 
and reduced price meal applications from schools in that commu- 
nity. If over 50 percent of the children are eligible, then you can 
have a site in that community. 

There have been discussions about lowering that threshold which 
would make more areas eligible. It would also increase the costs of 
the program. 

We are going to be, over the next year, reauthorizing all of the 
child nutrition programs. I expect that the people you talk to in 
your State, as well as other people involved with this program, will 
raise that issue. 

Changing the limit will be discussed and debated, in terms of 
whether it would be an appropriate way to spend additional funds 
in the program but the 50-percent limit is not magic. It is just a 
number that was arrived at, at onetime and put in the statute. It 
is a reasonable number, but other numbers could be talked about. 



355 

Senator GrORTON. What you are saying is — I take it that, if, in 
fact, we did lower the Summer Food Service Program to 40, does 
that raise the number of people who do not really need it and 
therefore taking some portion of the program and these funds 
would be better utilized elsewhere. 

Mr. Braley. That is the issue, Senator. If you have a community 
that is not predominantly low-income and you are providing free 
meals that are receiving subsidies of close to $2 per meal, is it ap- 
propriate for children from higher income families, large numbers 
of them, to receive that type of subsidy? And that is really the 
tradeoff. 

Senator Gorton. Well, this, obviously, will be examined again. 
And I thank you for two very thoughtful answers. 

Mr. Braley. Thank you. 

Senator GrORTON. Thank you, Mr. Chairman. 

HUNGER IN AMERICA 

Senator Bumpers. Thank you. Senator Gorton. Mr. Braley, a re- 
cent Associated Press article cited a report on hunger that says 
that nearly 30 million Americans do not get enough to eat. And 
that the biggest increase has been in the Midwest, including rural 
areas. 

Statistics cited include a Missouri rural crisis center that oper- 
ates 10 food pantries, served 25,000 people in 1992, nearly twice 
the number as 2 years earlier. Indiana experienced a 59-percent in- 
crease, and Missouri a 44-percent increase in food stamp recipients. 

Now, do you think that — the real core of the question is: Do we 
have 30 million people in this country that are not getting enough 
to eat? 

Mr. Braley. The poverty numbers, you know, are in that range, 
but the food stamp participation, the people who are receiving food 
stamps, is very close to that figure now. We have about 26.9 mil- 
lion people. We set another record in February for food stamp par- 
ticipation. 

I think the programs we have are responsive to most of the iden- 
tified need, in terms of people being able to avail themselves of food 
assistance programs. 

We are proposing the legislation we talked about a little bit ear- 
lier to try to improve the adequacy of the benefits in the Food 
Stamp Program, so that the people that receive it actually are get- 
ting enough to eat, in terms of food assistance. That is the reason 
for the increased request in food stamps. 

The Food Stamp Program is the major way that we reach low- 
income people in this country with food assistance. The other pro- 
grams reach specifically targeted populations. 

Senator Bumpers. There may not be anything new about that. 
I do not know. It just shocked me when I saw it. And I think some- 
body may have just put together the number of food stamp recipi- 
ents and suggested that those people are not getting enough to eat. 
Of course, that is the whole purpose of the Food Stamp Program. 

Mr. Braley. The purpose of the program is to help them get an 
adequate diet. 



356 

ADEQUACY OF FOOD STAMP BENEFITS 

Senator Bumpers. If I were eligible for the maximum — if I had 
a wife and two children and I were eligible for the maximum num- 
ber of food stamps, is it your belief that my family would be reason- 
ably well-fed? 

Mr. Braley. Let me comment and then maybe Mr. Homsby 
would want to elaborate a little bit. I think it is fair to say that 
you could be well-fed, if you were educated and knew how to shop 
wisely. 

Senator Bumpers. Let us assume I know a little about dietary 
habits and how to prepare food and that is — ^you know, how to 
spend money on food and so on. Would that be enough to make 
sure I was fed — ^my children were fed adequately? 

Mr. Braley. If you had the knowledge and the time to shop and 
prepare food according to the Thrifty Food Plan, in general, you 
should be able to. 

One of the provisions of the bill that we are offering recognizes 
the fact that during the course of the year, due to food price infla- 
tion, the benefit that you have at the beginning of the year is erod- 
ed. The benefit is enough to buy the Thrifty Food Plan, which is 
the conceptual basis for the Food Stamp Program, at the beginning 
of the year but due to inflation during the course of the year, that 
benefit tends to erode. 

Over the last 10 or 15 years, the purchasing power of the Thrifty 
Food Plan has declined by about 4 percent during the course of the 
year. We are proposing to raise the basic benefit level from 103 
percent of the Thrifty Food Plan to 104 percent. 

Another issue I think that is important to note is if you had no 
income and got the entire benefit in the form of food stamps, you 
could shop wisely and get an adequate diet. Many people, of course, 
if they have some source of income, receive a smaller amount of 
food stamp coupons. In order for them to have an adequate diet, 
they have to supplement their food stamps with some of their cash 
income. 

A lot of families have other pressures on their resources. They 
cannot devote the full amount to their food. That creates some of 
the situations that you alluded to, where people run out of food 
stamps before the end of the month and rely on food pantries and 
food banks and other organizations like that to tide them over. 

Trjdng to shore-up some of the benefits in the Food Stamp Pro- 
gram, we think, can help alleviate that. 

Senator Bumpers. What is the maximum dollar amount that 
anybody is entitled to in food stamps? 

Mr. HoRNSBY. $370, Mr. Chairman, for a family of four. And, of 
course, it goes up as your family size increases. 

Senator Bumpers. How much income would I be allowed to have 
and still get that maximum? 

Mr. Braley. You would have to be at zero net income. 

Senator Bumpers. So you would not have any income 

Mr. Braley. That is correct. 

Senator Bumpers. In order to get that number of food stamps. 

Mr. HORNSBY. Yes, sir. 



357 

Senator Bumpers. And then it goes down from there as your in- 
come goes up. 

Mr. HORNSBY. Yes, sir. 

Senator Bumpers. As your income goes up, food stamps go down. 

Mr. HORNSBY. Right. 

Senator Bumpers. From $300-and-what? 

Mr. HORNSBY. $370 for a family of four. 

Senator Bumpers. Now, in 1993, the average monthly benefit in 
food stamps was $68.24. 

Mr. HORNSBY. Yes, sir. 

Senator Bumpers. How much income could I have and get 68 
dollars' worth of food stamps? 

Mr. HoRNSBY. Well, that is $280 a month. I would have to put 
that on the chart. I do not really know. 

Mr. Braley. Mr. Chairman, the figure that Mr. Homsby gave 
earlier was the maximum income you can have. It was $l,100-and- 
something per month. At that level, you would get the minimum 
benefit in food stamps. 

Senator Bumpers. I understand. 

Mr. Braley. $10 is the minimum. 

Senator Bumpers. Is that the minimum? 

Mr. Braley. The minimum benefit. Yes, sir. Between zero in- 
come and that income, it is a sliding scale. And for every dollar you 
make 

Senator BUMPERS. I understand, Mr. Braley. 

Mr. Braley. You lose about 30 cents in food stamps. 

Senator Bumpers. But my question is: Since the average dollar 
value of food stamps in 1993 was $68.24, I am just trving to figure 
what was the average income of these people who got those 
stamps? 

Mr. Hornsby. Now, that is the per person number, Mr. Chair- 
man. 

Senator Bumpers. Is that per person? 

Mr. Hornsby. Yes, sir; that average, per person 

Senator Bumpers. So for a family of four, that would be about 
$250 a month, is that right? 

Mr. Hornsby. Around $200, a little over that, I think. 

Senator Bumpers. Well $70 times four would be $280 a month. 

Mr. Hornsby. That would be right. 

Senator BUMPERS. OK. So I misread that. $280 is the average. 

Mr. Hornsby. Yes, sir; for a family of four. 

FOOD stamp participation 

Senator Bumpers. OK Let me shift a little bit here. 

In 1993, we will have 27,300,000, average, on food stamps. That 
is an increase of almost 2 million people — 1,900,000 to be precise — 
from 1992. Now, you show that in 1994, the average is going to be 
27,240,000, which is lower than 1993. If we have had an increase 
of 2 million since 1992, why do you think it is going to decline in 
1994? 

Mr. Hornsby. We have seen the rate of increase, Mr. Chairman, 
level off some. I know you mentioned earlier we had an increase 
of 200,000 people 

Senator Bumpers. Does that level off? 



358 

Mr. HORNSBY. Well, over the last 6 or 7 months, the rate of in- 
creas