The Senate Appropriations Ag Subcommittee heard testimony on Tuesday from Secretary of Agriculture Tom Vilsack about the FY16 USDA budget request. During the discussion portion of hearing three key issues were discussed relating to Dietary Guidelines, Crop Insurance and Bird Flu.
Subcommittee Chairman Jerry Moran (R., Kan.) indicated in his opening statement yesterday that, “Agriculture remains one of the bright spots in our nation’s economy, supporting more than 16 million jobs nationwide and forming the backbone of our rural communities. American farmers and ranchers are the best at what they do when given the opportunity to compete on an even playing field.
“After a long, arduous process and a great deal of economic uncertainty, Congress enacted the Agricultural Act of 2014 one year ago. The Farm Bill authorized sweeping changes to commodity and crop insurance programs, consolidated and reinforced conservation efforts, and reauthorized vital research and rural development programs. Agriculture is Kansas’s #1 industry – directly responsible for 37% of the state’s economy. Enactment of a new Farm Bill was welcome news for producers, research institutions, and rural communities in my home state.”
Sec. Vilsack indicated that, “The Department has completed implementation of many new Farm Bill authorities. This includes major new safety net programs providing certainty to American agricultural producers going into the 2015 crop year. We have made available over $5 billion in critical assistance to producers across the country since sign-up for the disaster programs began on April 15, 2014. Significant new crop insurance protections were also made available. America’s new and beginning farmers and ranchers, veteran farmers and ranchers, and women and minority farmers and ranchers were given improved access to credit.”
Sec. Vislack pointed out that, “The Administration strongly supports the Supplemental Nutrition Assistance Program (SNAP) and other critical programs that reduce hunger and help families meet their nutritional needs. SNAP is the cornerstone of the Nation’s nutrition assistance safety net, touching the lives of millions of low-income Americans, the majority of whom are children, the elderly, or people with disabilities. SNAP kept over 5 million people, including nearly 2.2 million children, out of poverty in 2013. Recent research has shown that SNAP not only helps families put food on the table, but it has a positive long-term impact on children’s health and education outcomes. We also support the ongoing implementation of the Healthy, Hunger-Free Kids Act. Over 90 percent of schools report that they are successfully meeting the new nutrition standards, serving meals with more whole grains, fruits, vegetables, lean protein and low-fat dairy, and less sodium and fat.”
During the discussion portion of the hearing, Chairman Moran began by asking about the 2015 Dietary Guidelines Advisory Committee Report:
Sen. Moran: Let me start with one related to dietary guidelines, a question that you and I discussed in my office, and a question that you have not had to respond to previously. I was looking back at the history to find out what the purpose of the dietary guidelines, what’s the statutory authority, what are the criteria by which those dietary guidelines are to be determined. And I have now read that. And it talks about nutritional and dietary information.
“I’ve been most recently interested to see what Sen. Dole had to say in February, just a few days ago. He talked about being the coauthor of the dietary goals for the United States with Sen. McGovern, and indicated his concern about the direction that the advisory committee’s report is heading. These dietary guidelines, when you and I talked, you talked about how you are coloring within your lines, a phrase that I remember. And I am interested in knowing whether you have the ability to insist that others color within their lines—what conversations you’ve had with Sec. Burwell and what your expectation is for the next step in the dietary guideline process.
Sec. Vilsack: Mr. Chairman, we are in a comment period right now, so we’re soliciting comments from folks. I have talked briefly with Sec. Burwell, primarily about the request for an extension of time in terms of the comment period. We obviously are under a deadline to get this done before the end of the year, so we will be working with the folks at HHS to determine what’s best in terms of an extension, if one is granted.
I would say that we understand, or I understand my responsibility is to focus on dietary and nutrition, and well we should, given the challenges that we face with the obesity epidemic among our children and some of the concerns of chronic diseases. I have been interested in the testimony that Commissioner Hamburg has provided in which she has indicated a desire also to stay within the statutory guidelines, to color within the lines, as you say.
And I think we understand and appreciate that folks can have many recommendations and many opinions, but at the end of the day, our decision-making process has to be focused on dietary and nutrition so that we can give a general guideline to American families and that we can then inform our federal nutrition programs.
Sen. Moran: So it is your understanding that what the goal is is dietary and nutritionary [sic] guidelines, nothing more or broader?
Sec. Vilsack: That’s the direction that you have given us, and that’s the direction that I intend to follow.
Sen. Moran: Mr. Secretary, let me ask you then about the public comment. You mentioned that we’re in the process of public comment right now, granting 45 days for those public comments. The report is 571 pages long. That’s a lot of time for stakeholders and interested parties to digest that information. Are you considering an extension of that deadline?
Sec. Vilsack: I would point out, Mr. Chairman, that that is longer than the last guidelines. I think the last time we went 30 days. We’ve extended it to 45 days. And I recognize that there’s a lot of issues and controversy associated with this, so I would certainly be willing to consider lengthening that time. I’m not sure that we can afford to go as long as some have suggested, but it may very well be appropriate for us to extend the deadline a bit.
Later in his questioning, Chairman Moran asked Sec. Vilsack about crop insurance issues in the President’s budget proposal:
Sen. Moran: Let me ask about another President’s budget recommendation, this one related to crop insurance. I’m sure that you have heard, as I have, about the importance of crop insurance. When you have a conversation with a farmer, that’s generally the point they would highlight about the importance and value of crop insurance to them. We are seeing in the President’s budget recommendation a reduction in the support levels for farmers’ crop insurance premiums.
I’d like to have your response on that, and then I would like to tell you that in voting for the farm bill, one of the things I thought was most important for farmers, particularly Kansas farmers, was changes in crop insurance related to the ability to have separate enterprise units by practice, separate coverage levels by practice, and APH yield exclusion available for spring…available to take out a year of, in our case, drought.
What I discovered when I returned home after the farm bill, and people started looking at the farm bill and taking a look at their crop insurance for winter wheat, elimination of that year and the other two provisions that I thought were so valuable were not available for winter wheat because of timing. And my question is can you assure me, and I can assure my farmers, that the timing will not be a problem and that those provisions will be updated sufficient to be used as they make decisions and have the consequences of the new farm bill for winter wheat.
Sec. Vilsack: I believe so on the second question, Mr. Chairman. We are working very carefully to make sure that the 2016 crop year for winter wheat is covered under APH, and we are working diligently to get the irrigated enterprise issues resolved. As it relates to the budget, $8.2 billion, we believe, is adequate and sufficient to cover the $109 billion risk that is covered by crop insurance.
There are two issues that I would point out. One is on the prevented planting. The GAO and our own Inspector General have been critical of the way in which that program has been utilized. It is discouraging the planting of a second crop and it ends up essentially overcompensating folks. So in response to the GAO concerns and our own Inspector General’s concerns, we made adjustments, and that is part of the reason why you see a reduced amount.
The second area that I would point out, too, is on the harvest price loss aspect. Crop insurance is designed to protect against Mother Nature. The harvest price loss option basically provides coverage not just against Mother Nature, but also against market decisions that producers make. And so I think it is important to ask the question what is the nature of the partnership between the taxpayer, the federal government and the farmer as it relates to that.
When you see potential premium subsidies as high as 80% for some farmers and some crops, in that area, you have to ask yourself whether or not it’s appropriate to adjust that downward a bit, which is what is reflected in the budget. So I think there are justifications for what we are proposing, but understand and appreciate that we do understand fully the importance of crop insurance.
Sen. Moran also asked Sec. Vilsack about bird flu issues:
Sen. Jerry Moran: Let me ask a question related to the avian influenza. It has been detected. It is in several states, including some represented here on this panel today. I’d like to hear what the Department is doing to combat avian influenza and its spread. It appears to me that the only commercial detection has been in turkey flocks, but we have countries who are banning chicken…poultry…chicken products as well as turkey. And is there something that can be done to narrow the scope of any trade disruption?
And then Dr. Johansson might be able to answer this question in response. I wanted to give him a chance in case it’s important for you to be able to say that you actually testified before a Senate committee. But a K-State agriculture economist, Dr. Glynn Tonsor, indicated that this may have consequences for other livestock producers and pricing within the livestock sector. As people make decisions, exports decline, prices change, is there something for the beef side that has a consequence to avian flu as well?
Sec. Vilsack: Senator, this is a very complicated set of circumstances here. Fifty-eight incidences have occurred. I think it’s in 11 or 12 states and several of the [fly aways]. It is in both chicken and turkey. It is in both commercial enterprises and in sort of individual farming operations.
APHIS has a responsibility to work with states to identify, as quickly as possible, the fact that there is AI, and what type of AI it is. We’re seeing several different types. And then work with the states to impact and effect biological controls to try to contain the spread of this within a flock, within a particular area, and then to indemnify the producers for any loss that they have [incurred]. And that’s ongoing today. We are going to go through the resources that are budgeted for that, and if necessary, if we need additional resources, we have the CCC that we can trigger.
As far as it relates to exports, there are three classifications of countries. There are 11 or 12 countries, I think, that have basically banned all poultry, regardless of where it comes from in the U.S. There are somewhere in the neighborhood of 33, 34 countries that have essentially regionalized their bans based on where this has actually occurred, which is more consistent with OIE guidelines. And there are a variety of states and countries that don’t do a lot of business with us that have not instituted a ban of any kind.
We’ve focused our attention on those countries that have created an all ban, to try to encourage them to take a more reasoned approach and look at this from a regional perspective. That obviously requires them to be reasonable, which, in some cases, is not easy to attain. But we are educating them through communication with their embassies, communication with the ag secretaries and commissioners and my counterparts, if you will, letters, efforts at phone calls, some of which, frankly, have not…some phone calls have actually been refused, which is unfortunate. But we are trying to put folks on notice that the most appropriate way is to regionalize this.
This represents roughly 14% of so of exports at this point in time, but its impact on markets, I think Dr. Johansson can elaborate. But we are focused on this. There is no cure for this. It’s essentially identification, containment, indemnification and trying to limit the impact from an export [point of view].
Sen. Moran: Mr. Secretary, is it clear that those countries in the first category, the ones you’re now dealing with, is it clear that they’re violating the OIG standards?
Sec. Vilsack: It’s clear to us that that’s…that they…yes. It’s clear to us that they ought to be regionalizing their bans and not doing a blanket ban. But this is not unusual. This happens from time to time. We’ve been working with several of our trading partners for an extended period of time on bans that are still in place from incidents that occurred many, many, many years ago, and in some cases they ban states that aren’t even connected in any way, shape, or form to an AI incident.
Sen. Moran: Dr. Johansson, to my knowledge, the only time I’ve ever been rude—and this was unintentional—was to Joe Glauber, your predecessor, when he was a witness and I was a House member, and so I want to demonstrate that I can get along with the ag economist at USDA.
Dr. Johansson: Well, that’s very kind of you. I am sure that Dr. Glauber would remember that exchange fondly, as you do. Dr. Tonsor is, I think, referring to the fact that if we do see significant disruption in poultry trade that that would potentially lead to lower price poultry products in the United States, and perhaps consumer…which we have seen this trend occurring over time, the movement towards increasing consumption of poultry in the United States relative to beef, and that’s due to a number of factors.
Beef prices right now are extremely high. But as the Secretary pointed out, we’re working with our trading partners right now, and at this point in time that doesn’t seem to be an issue. We seem to be able to ensure access of our poultry products, turkey and chicken, to our external trading partners, for the most part. And if some countries do make that more difficult, then we have other outlets for those goods. So right now I wouldn’t expect there to be a significant impact on the beef sector from this current situation with the [high path] avian influenza.
Sen. Moran: That’s good to hear. And Mr. Secretary, please let us know how we can help—either resources or encouraging countries to comply with those OIG standards.