Senate Ag Committee Hearing
Overview
For questions on the note below, please contact Scott Parsons or Edmund Perry at (202) 547-3035.
On May 26th, the Senate Agriculture Committee held a hearing entitled “Opportunities and Challenges Facing Farmers, and Rural Communities.” The sole witness in the hearing was U.S. Department of Agriculture (USDA) Secretary Tom Vilsack.
Below is a summary of the hearing prepared by Delta Strategy Group. It includes several high-level takeaways from both panels, followed by summaries of opening statements and witness testimonies and a summary of the Q&A portion of the hearing.
Key Takeaways
The following is a summary of the main topics explored in today’s hearing. Each is discussed in further detail in the Discussion section below.
- Committee Ranking Member John Boozman (R-AR) voiced his support for USDA’s recent flexibility surrounding removing land from the Conservation Reserve Program (CRP) without sizable penalties, but said that the agency should still do more.
- USDA Secretary Vilsack said he continues to believe that many if not most of the acres in CRP would not be fit for production at this time.
- Vilsack said that USDA is highly focused on helping relieve farmers dealing with spiking input costs, particularly high fertilizer costs. He said that the USDA is exploring several avenues for relief, including encouraging split application of nitrogen, expanding domestic fertilizer capacity, and offering assistance for productivity losses.
Summary
Opening Statement and Testimony
Chair Debbie Stabenow (D-MI)
We need to utilize the USDA to respond to the climate crisis and improve our supply chain resiliency. During the pandemic, we saw highly concentrated food supply chains leaving both farmers and consumers vulnerable. The previous administration mismanaged the USDA’s ability to address any of these crises. Under the current leadership, USDA has implemented historic investments in the American Rescue Plan to support local and regional businesses and move the supply chain again.
The climate crisis poses great risks to our ability to produce and distribute food. While farmers and foresters are directly affected by the climate crisis, they are also uniquely positioned to address it. Farmers are eager to partner with USDA in cutting-edge research and innovation to increase crop yields, participate in USDA conservation practices to protect the soil, and invest in climate-friendly practices that are both profitable and practical for farmers.
Ranking Member John Boozman (R-AR)
This is an unprecedented time for ag as we come out of a global pandemic. The war in Ukraine creates acute global food insecurity. While US producers are willing to help fill the gap in global production, farmers and ranchers face declining farm incomes and steep increases in input costs. The USDA plays helps American farmers and ranchers to meet those challenges both domestically and globally. The USDA must bring down food prices and enhance global food security. I appreciate the announcement from the USDA this morning that will not penalize farmers for taking farmland out of the Conservation Reserve Program (CRP). Producers enrolled in the CRP should be allowed to end their contracts early without penalty.
Tom Vilsack, Secretary, USDA
We filed today to create new for farmers for their packaging stock. We started with the poultry tournament rule. There are two components. We try to create greater transparency between integrators and producers by providing additional information to the producers before they enter into contracts. We are also announcing today a $200 million dollar effort to help existing meat and poultry facilities through an intermediary loan program that provides grants to co-ops, other non-profit organizations, and public agencies to create revolving loan funds to assist and help those facilities remain in business. We also see great interest in the climate-smart agriculture and forestry product partnership initiative.
Discussion
Crop Insurance
Hoeven (R-ND): What do you think about our proposal to help farmers who suffer discounts on crop insurance if they do not have their crops on the ground? Can you give us a recap on the emergency livestock relief program under Phase I of the Emergency Release Program (ERP) and when do you anticipate getting into Phase II? In the livestock indemnity program where smaller calves under 250 pounds suffer mortality due to blizzards, do you think about the current impractical alignment of categories? Vilsack: I have not had the chance to review it but part of the challenge that we face is making sure we do not compromise the relationship between the insurers and the producers in terms of the overall crop insurance program that we do not create a circumstance where the risk is too difficult for the crop insurance folks to calculate. On the crop side of ERP phase 1, there are roughly over 300,000 applications that are pre-filled and only require the farmer to check a few boxes. We would expect the second phase sometime this summer after we have gotten a better understanding of precisely who was not covered by crop insurance or other programs. I am certainly committed to taking a look at realigning the categories if it makes sense. I would like to add that in the notion of helping farmers through difficult times and disaster assistance because of climate-related circumstances, we need flexibility and the capacity to adjust depending on the conditions because we are facing a much different set of circumstances than we have in the past relative disaster. It is also important to understand the regional differences in the crop and the commodity.
Luján (D-NM): Has the Biden administration examined the Trump’s administration change to the prevented planting program? If so, why was the decision made to keep the change in place sooner? Vilsack: We have made changes in some areas for some commodities. Our review is not finished, and we need to continue to look for ways in which we can create flexibility. I suspect and anticipate that there will be additional changes forthcoming.
Climate Smart Agriculture
Stabenow: Can you talk about the climate-smart commodities pilot project? Vilsack: The project provides a vehicle to provide the level of technical assistance that farmers, producers, and ranchers need to understand climate-smart practices. We have also been providing technical assistance to both House and Senate Ag Committees and trying to find common ground. The initiative is designed to create opportunities for the marketing of climate-smart commodities, and we think that is an opportunity to expand income for farmers and qualify for ecosystem benefits. The pilot program will result in the adoption and acceleration of climate-smart practices and an opportunity to measure, verify and quantify the results from those practices that will allow us to better understand how to establish the standard for climate-smart commodities.
Input Costs
McConnell (R-KY) and Thune (R-SD): How is the USDA handling inflation? Vilsack: We are looking at ways in which we can increase productive land going into production. As Senator Boozman (R-AR) indicated, increased supply does tend to bring down costs. We are working with farmers to make sure they are applying fertilizers correctly. We are also providing a new risk management tool that encourages the split application of nitrogen to reduce the cost to farmers by picking up the loss of productivity that may occur if they cannot fertilize twice a year. We have allocated $500 million towards looking at a broad array of options to expand fertilizer capacity in this country. We are also looking at several strategies to better utilize precision agriculture to ensure we are using fertilizers appropriately in time and amount.
Ernst (R-IA): What actions have you taken to help lower the prices of inputs for farmers? Vilsack: We have been working with our ports to increase hours of operation. We are providing opportunities for pop-up facilities that take some of the pressure and congestion off the ports. The Department of Labor is working on expanding apprenticeships to put folks behind the wheel of trucks that are necessary. We have worked with the Surface Transportation Board to encourage our rail system to make the investment necessary to have a more resilient system.
Marshall (R-KS): Why are you not proactive to push back on the EPA policies on glyphosate? Have you talked to the President or ITC chair about lowering the tariffs on fertilizers? Vilsack: I will work with the EPA back about protective crop production and encourage the EPA to continue to follow the science. We have created alternative risk management tools for farmers to reduce the amount of nitrogen fertilizer that they need and to be compensated for the crops that they may not be able to produce.
Cover Crops
Tuberville (R-AL): Why does the USDA not treat weeds as cover crops? Vilsack: We have recently indicated that we try to expand production through our conservation agreements that we would essentially treat weeds as an appropriate cover crop.
Supply Chain
Klobuchar (D-MN): Can you talk about the impact of shipping container disruptions on particularly ag exports and whether cracking down on some of these international shipping conglomerates’ rates and practices would be helpful? Vilsack: I have talked to four of the major shippers about this issue and received commitments from all four of them to take a look at doing a better job. We have created a pop-up site in Oakland. We have also provided financial incentives to move empty containers and opportunities in Seattle. I think legislation that is going through the process is sending a strong message.
Fischer (R-NE): How is the administration working with Mexico to ensure continued market access in particular for white corn used in food products? Vilsack: I have talked to the president of Mexico, and I am confident that we will have very strong exports to Mexico.
Conservation Reserve Program
Boozman (R-AR): Can we allow CRP contract holders to leave the program early to open up more production acres? Vilsack: Many of the acres currently in the program are not very productive. We trust farmers to make the right decision for their operations and farmers have decided to take more than a million acres out of the program this year. We have not created additional incentives to encourage more sign-ups. We have two challenges: a global food security challenge today and a longer-term global food security challenge in terms of climate and the impact on long-term production internationally. We are paying attention to both of these, and I think we will provide additional flexibilities when and if it is necessary.
Biofuel
Klobuchar (D-MN): Can you talk about the biofuel infrastructure investments that USDA has made continuing to push on some of these issues? Vilsack: For the biofuel infrastructure, we anticipate very shortly announcing the availability of another $100 million to expand access to pumping systems and distribution systems.
Cattle Market
Booker (D-NJ): When are you expecting to act on the labeling of foreign beef as products of the USA? When will the USA release the new rule on organic livestock and poultry standards that will clarify outdoor access requirements for organic livestock? Vilsack: We are conducting an extensive survey and we will work from the result. We hope to release it sometime this summer. However, I do not remember the timeline in my mind.
Luján (D-NM): Can you explain how the USDA came to the decision associated with the timing of payments for cattle versus when these cows were determined to be contaminated, and why the cows shouldn’t be paid the rate the cows were deemed contaminated? Vilsack: We inherited the rule that does not allow for reimbursement for the value of the cow and was done by paying for the milk that was contaminated until we realized that we should pay for the count. We are using the livestock indemnity program structure which provides for how this valuation is calculated.
Hyde-Smith (R-MS): Is it possible that the poultry tournament system USDA proposing could push billions in additional costs on poultry companies at a time of record inflation in sky-high input costs which would further threaten food security and raise food cost? Vilsack: No, I do not think that is possible because we are only asking integrators to provide information to the producers before they sign a contract. We have conducted a thorough economic analysis of the poultry tournament rule system and believe that the benefits far outweigh the costs.
Smith (D-MN): What are the opportunities for the USDA to do better and more research on the impacts of market concentration? Vilsack: We announced as part of our package to provide assistance and help to expand processing capacity today, is a study that was required by the president’s competition order that speaks to the issue. Our chief economist office is engaged and involved in taking a look at the market and how concentration can potentially impact positively or negatively income. I am excited to use the resources under the American Rescue Plan to begin creating more capacity and more competition which we think ultimately will lead to better prices.