[House Hearing, 106 Congress] [From the U.S. Government Publishing Office] AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND RELATED AGENCIES APPROPRIATIONS FOR 2000 _______________________________________________________________________ HEARINGS BEFORE A SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS HOUSE OF REPRESENTATIVES ONE HUNDRED SIXTH CONGRESS FIRST SESSION ________ SUBCOMMITTEE ON AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND RELATED AGENCIES JOE SKEEN, New Mexico, Chairman JAMES T. WALSH, New York MARCY KAPTUR, Ohio JAY DICKEY, Arkansas ROSA L. DeLAURO, Connecticut JACK KINGSTON, Georgia MAURICE D. HINCHEY, New York GEORGE R. NETHERCUTT, Jr., SAM FARR, California Washington ALLEN BOYD, Florida HENRY BONILLA, Texas TOM LATHAM, Iowa JO ANN EMERSON, Missouri NOTE: Under Committee Rules, Mr. Young, as Chairman of the Full Committee, and Mr. Obey, as Ranking Minority Member of the Full Committee, are authorized to sit as Members of all Subcommittees. Henry E. Moore, John J. Ziolkowski, Martin P. Delgado, and Joanne L. Orndorff, Staff Assistants ________ PART 1 Page Office of the Inspector General.................................. 1 Secretary of Agriculture......................................... 287 Office of the Chief Economist Office of Budget and Program Analysis Departmental Administration...................................... 649 Office of the Chief Financial Officer Office of the Chief Information Officer Office of Communications Office of the General Counsel National Appeals Division Support Services Bureau ________ Printed for the use of the Committee on Appropriations ________ U.S. GOVERNMENT PRINTING OFFICE 55-678 WASHINGTON : 1999 COMMITTEE ON APPROPRIATIONS C. W. BILL YOUNG, Florida, Chairman RALPH REGULA, Ohio DAVID R. OBEY, Wisconsin JERRY LEWIS, California JOHN P. MURTHA, Pennsylvania JOHN EDWARD PORTER, Illinois NORMAN D. DICKS, Washington HAROLD ROGERS, Kentucky MARTIN OLAV SABO, Minnesota JOE SKEEN, New Mexico JULIAN C. DIXON, California FRANK R. WOLF, Virginia STENY H. HOYER, Maryland TOM DeLAY, Texas ALAN B. MOLLOHAN, West Virginia JIM KOLBE, Arizona MARCY KAPTUR, Ohio RON PACKARD, California NANCY PELOSI, California SONNY CALLAHAN, Alabama PETER J. VISCLOSKY, Indiana JAMES T. WALSH, New York NITA M. LOWEY, New York CHARLES H. TAYLOR, North Carolina JOSE E. SERRANO, New York DAVID L. HOBSON, Ohio ROSA L. DeLAURO, Connecticut ERNEST J. ISTOOK, Jr., Oklahoma JAMES P. MORAN, Virginia HENRY BONILLA, Texas JOHN W. OLVER, Massachusetts JOE KNOLLENBERG, Michigan ED PASTOR, Arizona DAN MILLER, Florida CARRIE P. MEEK, Florida JAY DICKEY, Arkansas DAVID E. PRICE, North Carolina JACK KINGSTON, Georgia CHET EDWARDS, Texas RODNEY P. FRELINGHUYSEN, New Jersey ROBERT E. ``BUD'' CRAMER, Jr., ROGER F. WICKER, Mississippi Alabama MICHAEL P. FORBES, New York JAMES E. CLYBURN, South Carolina GEORGE R. NETHERCUTT, Jr., MAURICE D. HINCHEY, New York Washington LUCILLE ROYBAL-ALLARD, California RANDY ``DUKE'' CUNNINGHAM, SAM FARR, California California JESSE L. JACKSON, Jr., Illinois TODD TIAHRT, Kansas CAROLYN C. KILPATRICK, Michigan ZACH WAMP, Tennessee ALLEN BOYD, Florida TOM LATHAM, Iowa ANNE M. NORTHUP, Kentucky ROBERT B. ADERHOLT, Alabama JO ANN EMERSON, Missouri JOHN E. SUNUNU, New Hampshire KAY GRANGER, Texas JOHN E. PETERSON, Pennsylvania James W. Dyer, Clerk and Staff Director (ii) AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND RELATED AGENCIES APPROPRIATIONS FOR 2000 ---------- Thursday, February 11, 1999. OFFICE OF INSPECTOR GENERAL WITNESSES ROGER C. VIADERO, INSPECTOR GENERAL JAMES R. EBBITT, ASSISTANT INSPECTOR GENERAL FOR AUDIT GREGORY S. SEYBOLD, ASSISTANT INSPECTOR GENERAL FOR INVESTIGATIONS DELMAS R. THORNSBURY, DIRECTOR, RESOURCES MANAGEMENT DIVISION STEPHEN B. DEWHURST, BUDGET OFFICER opening remarks Mr. Skeen. Let's come to order. We are on the record. Today, we will hear from the USDA's Inspector General's office. We have read your written statement, and we appreciate the broad overview of the USDA programs, that your testimony provides for us, as we continue hearings on the President's fiscal year 2000 budget request. We have the authority on all that. Mr. Dewhurst is here again, and with that kind of help, we are going to expedite this thing. He is writing out the check already. [Laughter.] Mr. Skeen. Roger, your prepared statement will be printed in full for the record. We know you and we like you, and we would ask that you would be brief in your opening remarks so that we can get on with the questions. We had a 4-hour marathon session with Secretary Glickman yesterday. We would like to keep this focused today if we can, and so it is all yours. Mr. Viadero. Good afternoon, Chairman and Members of the Committee. I am pleased to have this opportunity to visit with you again today and discuss the activities of the Office of Inspector General. Before I begin, I want to introduce members of my staff who are with me here today. Mr. Chairman, Ms. Kaptur, we have Jim Ebbitt, of course, the Assistant Inspector General for Audit, and we have a new person, Mr. Greg Seybold, who is the Assistant Inspector General for Investigations who has joined us recently. Mr. Skeen. Welcome, Mr. Seybold. Mr. Viadero. We have Delmas Thornsbury, the Director of our Resources Management Division, and as you, Mr. Chairman, we feel blessed that we have the esteemed Steve Dewhurst, the Department of Agriculture's Budget Officer at the table with us here today. Mr. Skeen. Let's not overdo it. [Laughter.] Mr. Viadero. I want to thank the committee for its support during the nearly 4\1/2\ years since my appointment as Inspector General. We have tried to work closely with you, and I hope that you have been able to address some of the concerns you have toward us and gotten proper responses. OIG's mission is to perform audits and investigations of the Department's more than 300 programs and operations, recommend policies, and actions to promote economy and efficiency and prevent and detect waste, fraud, and mismanagement in these programs and operations. We keep you and the Secretary informed about problems and deficiencies, and report criminal violations to the United States Attorney General. We have a diverse staff of auditors, criminal investigators, and other personnel in offices throughout the Nation to carry out these activities. I am proud to say that in fiscal year 1998, we continued to more than pay our own way. In the audit arena, we issued 220 audit reports and obtained management agreement on 1,122 recommendations. Our audits resulted in questioned costs of over $112 million. Also, as a result of the audit work, management agreed to recover more than $39 million and put another $128 million into better use. Most importantly, implementation of our recommendations by USDA managers will result in more effective operations of USDA programs. Additionally, our investigative staff completed 815 investigations and obtained 777 indictments, 604 convictions, and in excess of 2,780 arrests. Our investigations also resulted in $81 million in fines, restitutions, other recoveries, and penalties during the year. We continued to work closely with agency officials during fiscal 1998 to address key issues and to expand our cooperation with other Federal, State, and local law enforcement and audit agencies to help us broaden the impact of our work. Working together, our staffs identified program weaknesses and program violators. Capitalizing on the staff's respective expertise, we created solutions for positive action. In 1999, we are focusing our efforts primarily on food safety and smuggling of uninspected, unapproved food products, carrying unwanted pests and diseases into the United States that affect the wholesomeness of the Nation's food supply. We are also focusing our audit efforts on the Department's financial accounting systems, Farm Credit programs, the Rural Rental Housing Program, the Food Stamp Program including its electronic benefits transfer efforts, and the Child and Adult Care Food Program. In addition to investigations and emergency responses to threats to the health and safety of food, our investigative priorities include investigations of sponsors abusing the child and adult care programs, employee integrity issues, and fraud in the Department's loan, regulatory and benefit programs. Mr. Chairman, at this time, I would particularly like to focus on our year 2000 law enforcement initiatives. The quality or wholesomeness of the Nation's food supply from production to consumer is of special concern to this office. Investigations of any criminal activity that pose a threat to the general health and safety of the public remain our highest priority. Criminal investigations have usually involved the processing and sale of adulterated meat or poultry and egg products, criminal tampering with food products consumed by the public and product substitution,adulteration or other misrepresentation of food products which are regulated or purchased by USDA. Recent and ongoing investigations involving real or alleged threats to food products intended for the public have necessitated the immediate--I say again, immediate deployment of OIG agents and auditors to several U.S. cities. These cases have involved real or threatened adulteration or contamination of meat with everything from E. coli bacteria or listeria to HIV-infected human blood. Some of these products were destined for or actually ended up in the National School Lunch program or on military bases. The increasing threat to the wholesomeness of domestic and exported food requires not only vigilance, but also advanced preparedness, including preemptive operations. Profit-motivated criminal activity that threatens the food industry can cause economic disruption, while victimizing innocent members of the community. Likewise, threats of criminal adulteration and biological contamination of food products from outside the food industry for extortion or ideological motives can victimize and disrupt the Nation's food production and distribution systems. These threats must be resolved through a vigilant and established emergency law enforcement and health and safety response. A threat in a Milwaukee, Wisconsin, meat plant is a good example of these types of dangers. This past December, December 19, 1998, a plant received a threat of biological contamination using HIV-infected human blood. We immediately deployed 30 special agents, including eight bilingual agents to converse with Spanish-speaking plant employees, and four auditors to the scene to determine the validity of the threat and to identify those responsible. Personnel from the Food Safety Inspection Service assisted in this investigation, with FSIS staff taking the lead role in ensuring that potential contaminants had not been introduced to the food chain. Our investigative efforts to resolve this bioterrorism threat continue. By the way, Mr. Chairman, we have a joint investigation ongoing with the FBI and several of the other large health agencies such as CDC on this issue, and it is a continuing operation. To date, approximately 580 interviews have been conducted, and I am pleased to be able to report that extensive testing of the samples taken from the plant has not indicated the presence of HIV-infected human blood. We are currently investigating a significant case involving another meat company alleged to have intentionally adulterated and misbranded beef and pork products, which have also tested positive for E. coli bacteria. Approximately, 4 million pounds of this company's meat product containing ground pork or ground beef are under voluntary hold at various school districts, prisons, military installations and the like. In addition, another 1,600,000 pounds of this product are being retained or detained at these facilities. We have also investigated other cases in which health and safety of the public were at serious risk. For example, in Buffalo, New York, three feed company employees recently pled guilty to Federal charges and are awaiting sentencing for their role in selling canned meat products to the public which were unfit for human consumption. This product was being shipped from a Canadian company to the feed company to be used exclusively as animal food, but was diverted by these individuals to be sold for human consumption. I have a picture of the deplorable and unsanitary conditions at the plant that I want to show you. This is a tub of unidentified waste and food product, if you will, found just sitting around outside the open site. The Office of Inspector General needs to be prepared to immediately respond to these emergency situations. To do so, we must be equipped with the specialized equipment, protective clothing, and supplies necessary to ensure the health and safety of our personnel responding to these crises. We also need to be mindful of the economic impact of closing a major food processing plant. To our knowledge, the Milwaukee plant I mentioned earlier had violated no laws and had been successfully implementing the new food safety procedures for inspecting meat and poultry plants. The Hazard Analysis Critical Control Point system, or HACCP as you know it, inspection procedures--yet, its production line was successfully halted by outside forces. Tons, actually millions of pounds, 15 million pounds of this product were put on hold, and the facility was temporarily shut down. Due to our rapid response and deployment of considerable staff resources, we not only helped protect the health and safety of the consumers, but also allowed the plant to reopen, reemploying approximately 1,500 people with a minimum disruption of production, lost profit, and impact on the local economy as opposed to an indefinite and costly closure. The costs of rapid response by OIG, such as this, are indeed great. In addition to the personnel time and the disruption of other critical OIG work, to date we have expended approximately $40,000 alone in unanticipated travel costs in the Wisconsin investigation. This figure will continue to rise until the matter is resolved. Another form of criminal enterprise that poses a significant threat to the Nation's food supply and its economic well-being is smuggling of uninspected, unapproved food products into the United States. A direct result and a byproduct of smuggling is the danger that comes from pestilents, whether insects, fungi, bacteria, or viruses not previously present in the United States, could be introduced here. As a result, entire crops of the United States agricultural industry, such as citrus, vegetables, trees, and other plants or beef, poultry, and pork products could be severely, severely damaged, devastating the economy of the local communities producing these products, as well as reducing both the quantity and quality of our Nation's food supply. OIG has begun an anti-smuggling campaign to interdict and suppress foreign contraband that is dangerous when consumed by the American population and potentially catastrophic to the economic stability of certain agricultural products. Ongoing criminal investigations are targeting smuggled fruits, vegetables, plants, and other commodities or animals that bring high dollars in underground black-market commerce. This initiative requires significant agent resources dedicated to intelligence collection, undercover operations, and foreign law enforcement cooperative efforts that cross the international boundaries. These activities normally require extensive surveillance utilizing high-tech investigative devices and equipment. The smuggling of infested fruits into the United Statesis indeed a serious law enforcement problem because of the criminal profit. It is tremendous while the deterrent is grossly inadequate at present. Animal pests and disease importation are a severe problem, for instance, in Florida, and due to the favorable climate in most of the Southeastern United States, the pests and diseases could easily spread throughout the area. The costs to protect the industry are staggering. Since 1980, over $256 million in California, State and Federal funds, have been spent to eradicate medfly infestations in quarantine areas. In the last 10 years, Florida has spent in excess of $150 million to eradicate such infestations. A risk to the agricultural industry including exports is clear. The State of California alone produces in excess of $25 billion in fruits, nuts, and vegetables annually, about 55 percent of the Nation's output. About $11.8 billion of these commodities is exported to other countries each year. In carrying out successful smuggling operations, OIG must perform extensive travel, procure and maintain the necessary specialized equipment needed to investigate these incidents, provide essential protective supplies and equipment to ensure the health and safety of our agents and auditors, and provide specialized training to our staff, to prepare them to cover various types of such emergencies. OIG must also provide state-of-the-art, Y2K-compliant automated data processing equipment and systems to track data, analyze intelligence-based information, and provide faster and more responsive information to better support this mission work. All of these items are essential to ensure that this office can adequately address this critical public health and safety issue concerning the quality and wholesomeness of the Nation's food supply. Just before I conclude, Mr. Chairman, I would like to show you and the committee another example of our work. This is a picture of a set of counterfeit plates we found being used by store owners and a wholesaler to relabel the illegally received WIC formula so that it could be resold to commercial sources, another large area for us to look at. Mr. Chairman, I am sure you are happy that this concludes my presentation, and I would be pleased to respond to any questions you or any of the members may have. Thank you. [The prepared statement and biographies of Roger C. Viadero and Gregory S. Seybold follow:] [The official Committee record contains additional information here.] operation talon Mr. Skeen. Thank you, Roger. We appreciate the effort to get on with this meeting. On page 86 of the explanatory notes, as I read it, that is part of your justification to increase your confidential fund authority from $100,000 to $125,000, and the special law enforcement initiative known as Operation Talon would involve extensive undercover-type operations and would be expanded nationwide. The Talon initiative was proposed last year. The best we can tell is that there are no funds requested in fiscal year 2000 for Operation Talon. Would you explain in more detail how the operation fits into the request for an increase to the confidential fund? Would you give me some idea of the other parts of the justification for the increase? The confidential fund states that current limitation is insufficient for all nationwide undercover investigative operation, and you might give us some specific examples. Mr. Viadero. Yes, sir. I think I have supplied every Member of the Committee with two reports. The first report is our Operation Talon report, and the second one is the Forest Service Timber Sale Environment Analysis. Regarding the reason why we did not ask for an increase as part of Talon, we now mold Talon in as we can pay for it, a pay-as-you-go operation across the country. Mr. Skeen. I see. Mr. Viadero. We are primarily concentrating on places that we have at least the suboffice at, and we do not have to incur as much in travel costs. So we have smartened our operation up for that. Last week, I met with the National Governors Association and the individual superintendents of State police or highway patrols across the country. In particular, three of our larger, more populated concentrated States want to resume an Operation Talon in their State. In particular, Mr. Hinchey, we met with Jim McMahon, a dear friend from New York State Police, and we are planning an operation across the southern tier from Buffalo right through Albany. That will be a joint operation between the Office of Inspector General and New York State Police, but using the resources of the violent fugitive warrant squads that Jim has in place up there. We can give absolution if you surrender today. Regarding the $3 million request, this is primarily due to us responding to this somewhat--I do not want to exaggerate it, but this issue was an exploding issue for us, being able to respond to these health emergencies. We presently have at a minimum six health cases ongoing, food safety cases. These are exceptionally costly, as I mentioned, just in the travel and per diem cost, much less removing personnel from routine operations such as Talon and taking them and moving them across the country. So, as far as the increase for the confidential fund, the current $100,000 amount is insufficient to provide the funds for all of the undercover operations that we have identified. Particularly, part of the $3 million includes the smuggling operation. The smuggling operation is envisioned, if I can give you a thumbnail sketch on it. We are finding--and let's take medfly as an example, when there are literally hundreds of other examples to use, and other types of pestilents and fungi coming in, but if we get a freighter full of, let's say, longans, which is an Asian fruit, which are known to carry medflies--and we know that they carry medflies because we have interdicted them--they are allowed lawfully to come into the United States. They are then transshipped to Canada. Canada does not really care because, as you well know, any frost will kill off a medfly. Once they hit Canada, they are transshipped illegally back into the United States. When they first enter, they are in sealed containers, which meets our APHIS and Customs requirements. They then get transshipped to Canada. They are not even unloaded. They are just off-loaded to another truck, and they are transshipped right back to the United States. These fruits and vegetables that we find coming in here from Canada, for the most part, as we found, our intelligence lets us know that they end up on the west coast. The initiative would include us training, and we have chatted with our APHIS counterparts--would let us use some APHIS dogs that would be trained specifically for this operation, and we would be working, for instance, in areas such as weight stations to ascertain and locate the vehicles and then from there normal investigative procedures in vouching and tracing through the books and records at the terminus of the fruit. This is really a big issue, and again, we would like to run a pilot project, particularly in Florida because in Florida, as I understand it, they have 20 international points of entry. So that is somewhat manageable, and it is a peninsula. So we can control the access, egress and exit routes out of the State a little bit better, and that is what the bulk of the money is for. When you look at agriculture as being 15 percent of the gross domestic product, or roughly $1 trillion, we look at this as sort of a minuscule amount to be invested into this great portion of the economy. confidential funds Mr. Skeen. Roger, can you give me some specific examples of where you are conducting an undercover investigation, and that the confidential fund limitation actually caused a problem for you? Mr. Viadero. Mr. Seybold, do you have anything? Mr. Seybold. Years past, in addition to the operations that we were conducting in smuggling, we had utilized the sting operations for the purpose of our Talon operation. This requires the leasing sometimes of facilities that will accommodate large numbers of fugitives that we are in the process of identifying and getting in, mainly for the purpose of being able to execute mass arrest with the least amount of concern for injury for our agents and for the arrestees. These operations can be extremely expensive, and depending upon what other investigations we have had ongoing during that year, it will and can create some shortages for us. Mr. Viadero. Mr. Chairman, the last page of the Talon report gives you some flavor for what we have been able to do. When you open the door for a fugitive operation, generally we are not talking about the creme de la creme of our society, needless to say, and to turn some people in, they want to be paid to let us know where they are. Mr. Skeen. So the limitation has a real effect on whether you can get information or not that you need? Mr. Viadero. Yes, sir. That is street information that we are purchasing here. I am very proud of this. We have gotten approximately two dozen people for murder, but, more importantly, I would like to draw attention to the 15 child molesters because, with those 15 child molesters, we have received 2 that have not registered, that have been found guilty under the State's Megan law statutes. That is just, gosh darn, great to participate in because these are the real lechers in society. They are the ones that are taking care of the future generation here, and I am very proud that we picked those up. Mr. Skeen. Thank you. I think we are going to have a recess so we can go vote. Mr. Viadero. Sure thing. Mr. Skeen. We will continue from that point on. That is the second bell. Mr. Viadero. Thank you, sir. [Recess.] Mr. Skeen. We will go back on the record. Ms. Kaptur. Marcy, it is yours. fines, restitution, other recoveries and penalties Ms. Kaptur. Thank you very much, Mr. Chairman, and we welcome you, Mr. Viadero. We are always so happy to have you before the committee, with all of your fine colleagues who do such a fine job. I have a few questions here. One relates to page 3 where you talk about the total of all investigations before your division of USDA resulting in $81 million in fines, restitutions, other recoveries and penalties during the year. This year, you are requesting an appropriation of $68 million. I guess my question really is, of the $81 million in fines, restitutions, et cetera, how much of those dollars actually come back to the Government of the United States, and in what form? Mr. Viadero. As I understand it, ma'am, the bulk of that $81 million does come back to the United States. Most of it goes to main Treasury. Ms. Kaptur. What would be the logic behind that? Mr. Viadero. That is the way the Department of Justice and the Treasury handle it. We get nothing back on it. It does not go back to the programs. It gets counted against the main U.S. budget. Ms. Kaptur. This is an area, I would have to express to the chairman, I have a personal interest in. I do not know if this is a governmentwide policy or not. Mr. Skeen. Well, let's make it policy. Ms. Kaptur. I just think that they do such a tremendous job that we ought to really look into why these dollars flow back to Treasury now, in spite of the fact that we appear to be running annual surpluses. Maybe now is a good time for us to look at the flow of these dollars and to what extent we might be able to redirect them back into USDA. I do not know whether that is even possible. Mr. Skeen. That is something that has a lot to do with the efficiency of operations. Ms. Kaptur. Yes. Is the IG aware of any other agency that receives fees that are reimbursed directly to the agency? Or, perhaps we could ask you to work with Mr. Dewhurst and get back to our committee, if we wanted to develop an argument to the executive branch that this is atypical. Do we have enough information, or are there other exceptions that were made if it truly is an exceptional way of handling these dollars? Are those dollars spent by Justice or strictly go into the general Treasury? Mr. Viadero. As I understand it, Ms. Kaptur, Justice actually is a conduit back to main Treasury. The Justice receives the funds for the Judiciary. The fines and most restitutions come in through the court system, Ms. Kaptur. Let me ask Mr. Dewhurst. What would be a good way for me to be thinking about this if my objective were to take the funds that had been received as a result of your investigations and direct them back to USDA? Mr. Dewhurst. Well, I am thinking about that. We have some user fee programs in the Department, for instance, where we grade meat, and we charge a fee for that service. There is a specific law that causes that money to come back into the Department and go back into the program which provides service. So the dedication of receipts to a certain purpose is not totally unusual in the Government. It happens, but I am not aware that it happens very often when you are talking about fines or criminal penalties or that sort of thing. Most all of those go back into the general Treasury, but, obviously, you can write a law that dedicates those receipts to a certain purpose. It would be a question of how you did that. I just do not know what the governmentwide situation is. My impression is most of those things go back in the general Treasury. Mr. Viadero. Yes, and they go to the general fund. However, Ms. Kaptur, what would be most helpful is, particularly on the audit side of the House--for instance, when Congress appropriates funds, such as the emergency appropriation, the disaster money, if USDA follows what AID does, when there is a program appropriated, either a certain dollar amount or a certain percentage of the program gets budgeted for the Office of Inspector General to do its review and oversight and report back to the Congress with. That would greatly help us. For instance--is it $6 billion, Steve? Mr. Dewhurst. Yes. Mr. Viadero. If we received even 1 percent of the $6 billion that is going for the emergency farm loans, that would greatly help us. It is either pay me now or pay me later. They are either going to be allowed to get out there and commit these egregious acts, and some of them do it unknowingly because there is no oversight out there, or we can get in and work with the States and the various USDA agencies up front and prevent the frauds from happening. So it is pay me now or pay me later. We would just as soon get the money and work with them and prevent it. I do not think you need any more papers and reports from us telling you that something is wrong out there. We would be happy to report that something is right when we find it. Ms. Kaptur. We appreciate your advice on that, and I think you more than pay for your presence. I guess the thought that runs through my mind is if we had twice as much money, would we recover even more? Mr. Viadero. Absolutely. I am constrained as the Inspector General, and this organization and these fine folks that are with me here today, we are constrained due to the limited resources. Mr. Chairman, before we left, I sort of fumbled over a question. I would be happy to respond to you with a detailed answer on the reason for the additional confidential funds and how exactly the breakdown of that $3,118,000 will be. Mr. Skeen. If you would do that, I would appreciate it. Mr. Viadero. Yes, sir. [The information follows:] The Office of Inspector General (OIG) has begun a long-term initiative to identify and prosecute organized transportation and distribution networks responsible for the smuggling of foreign animals and plant products contaminated with pests and disease into the United States. Smuggling or shipment through deceit of produce, plants, animals, and birds are an ever more serious problem to American agriculture because of the pests and diseases which can and are inadvertently brought into the United States via these products and animals. As part of this initiative, OIG has teamed up with APHIS and local agriculture officials to conduct surveys of markets to locate illegal produce. These surveys have shown that illegal Asian fruits are readily available in west coast markets from Los Angeles, California, to Seattle, Washington. Often, the fruit is not displayed in the store but is held in back rooms and provided to customers upon request. In Florida, USDA and OIG officials have conducted sweeps of stores in Miami, Tampa, and Orlando and again discovered smuggled fruits and vegetables from Asia and Central America. OIG and other law enforcement agencies do not have sufficient reliable contacts within the communities where OIG has found these illegal products; therefore, we must develop a network of informants. Confidential fund incentive payments to individuals within communities/businesses will allow OIG to develop intelligence to identify when and where these products are entering the United States. As OIG moves forward with this initiative, additional confidential fund expenditures for information will be necessary to allow OIG to intercept these contaminated products before they can enter the United States and cause disease or pest outbreaks. In addition to our smuggling initiative, we have increased our investigative workload in the area of public health and safety. These types of cases vary considerably and have been mentioned by the Inspector General in his testimony. They vary from meat packers who process and sell adulterated beef from sick and dying cattle, to companies which sell tainted products to school systems and other tainted food products to the public. Again, we need to use confidential funds to develop sources in these industries. A total of $2.6 million of the requested increase would be used to purchase supplies and protective clothing and surveillance equipment and travel expenses, training, vaccination and immunization shots, and expertise services. This would allow OIG to enhance and effectively apply its criminal investigative and law enforcement expertise in responding to emergency situations threatening the Nation's food supply. The remainder of these funds would be used to enhance OIG's computer hardware and software capabilities to support this investigative endeavor. Ms. Kaptur. I would like you to think on this line of questioning that I have pursued here, and if you have other recommendations you wish to make for us--and I am going to ask for Mr. Dewhurst to do me a favor and talk with some of your colleagues across the Government and see if all of these various funds go through Justice to Treasury, and now in a time of relative surplus annually, maybe we should be rethinking some of this to the agencies that are actually doing the work. Mr. Chairman, I have many other questions that I wanted to submit for the record, but I do want to ask a question on this Russia food aid because it is a significant amount of money, $1.7 billion, most of that, over a billion, going into the transportation costs, over 60 ocean freighters of various types of commodities. russia's food aid Ms. Kaptur. We have worked with the administration since October to beef up the investigatory and logistical support on the ground. I have to tell you, when the Secretary testified here yesterday, that my own view, the best thing in the agreement is if the first six freighters' cargo gets ripped off in some way, they will not send any more. They will figure out what went haywire, but I have two sets of concerns regarding what is happening. Number one, that the Commodity Credit Corporation, in spite of even past experience of some failures in this regard, are now prepared to double the amount that has been sent in past years with some greater oversight, but not the kind of certainty that I would want if I actually owned that cargo myself. So I had one set of concerns about logistical support, auditing support. It is not clear to me whether auditors are now serving on some of these working groups that have been set up. There are a couple of monitoring groups in the United States and in Russia. USDA will send four monitors and get another five from the embassy, from Treasury, from AID, from other personnel serving in Moscow. Most of the people will be based in Moscow, and less than 10 percent of what we are sending will be spot-checked, which means that 90 percent is out there somewhere. All of the proceeds from the sale of those donated commodities will be placed in what is called the Russian pension fund. Until we got involved, there was not a dime of this aid that was going to be directed toward the development of a privatized agriculture in Russia, which right now is breaking the back of the country. If you look at what is really going on there and in the adjoining Ukraine, the lack of reform there is quite troubling, and only with the seed, the 15,000 tons of seed, were we able to get a separate account set up to use to support the development of a privatized agriculture so we could actually relate to livestock growers in New Mexico or wheat growers in Missouri or hog producers in Ohio, our input people and so forth, and that is really a problem. I do not understand why the Commodity Credit Corporation at the same time as it is interested in sales cannot also be interested in the development of privatized agriculture in some of these other countries, and so my question to you really is, you did a report back early in the decade about what had gone wrong with prior shipments. However, part of that report really did not deal with privatization and the extent to which USDA dollars and USDA taxpayer dollars had helped to contribute to the privatization of agriculture. How are you involved in oversight on this shipment? Mr. Viadero. Once again, we have not been invited in to participate in this, and this is a perfect example, Ms. Kaptur, of you pay me now up front or pay me later at the back end. For instance, I will ask Mr. Ebbitt to jump in on this one because it was his folks that directly had impact and did those reviews. Mr. Ebbitt. Thank you, Ms. Kaptur. As Roger indicated, FAS did not come and say please come and join us. As we frequently do, we invited ourselves into the process early on from the standpoint of going over to Foreign Agricultural Service and saying what are you doing relative to monitoring plans. We found out that, much to your direct involvement, they were really trying to beef up the plan that they had, and so we have in effect reviewed the plan that they put out. We had a meeting with FAS staff and indicated to them that--I think you said it best. If it was your own truckload, your own shipload going over there--I told them. I said I did not feel very comfortable with what I saw down on a sheet of paper as far as their oversight efforts. Part of it is based on a promise from the embassies and consulates around Russia and the rest of the former Soviet Union countries to have staff available, but other than the promise, they do not have people identified. There is no schedule. Some of that is difficult from the standpoint that they do not know for sure yet where all of these shipments are going to be delivered, what ports they are going to go into. So it is somewhat difficult to develop a schedule, but right now, really, all they have is a promise from those folks. Our comment back to them was it surely would help if they had some kind of a schedule, some kind of a commitment, more than just this promise that they currently have. It is going to be a major effort. When we were there the last time, back in the early '90s time frame, most of their monitoring staff was located in Russia, but most of their monitoring staff was one person. They were monitoring in Moscow. They were looking at the paperwork flow that came in. They did not have people there to follow this stuff around, where was it going, what was happening to it. That just was not there. We talked about a shipment of butter, for example, that was going to be monetized. It was going to be sold on the local market and the local currency used, and part of it was supposed to be used for privatization and things of that nature. The controls were simply just lacking. The butter was sold at certainly less than the U.S. anticipated that it would be, and it was not easy to track the money as far as what happened to it. It was not easy to track the commodities. FAS has a massive job or task that they are faced with in this monitoring process, and I think given the amount of money that is going to be delivered, it is perhaps a bit foolish to expect that the complement of people that they have so far indicated will be involved will in fact be able to provide much in an oversight process. Ms. Kaptur. Well, I would very much appreciate your recommendations in this area and what we could do to tighten up the agreement. Do you have access to the agreement to read it? Mr. Ebbitt. Yes, we do. Ms. Kaptur. You do? Mr. Ebbitt. Yes. Ms. Kaptur. I would be very interested in your comments on where it is today. I know where we are compared to where we started with them in October, but I am also very interested in your recommendations. If we are to require a set-aside of dollars related to this shipment to increase the auditing staff associated with it, what would it require? We have 60 ocean freighters going over, starting later this month. As far as I am concerned, it is just a billiondollars being shipped there in the form of food, and from a foreign policy standpoint, just following the dollar flow would be an interesting one, but we are not properly equipped to do that, in my opinion, in spite of the ambassador's involvement over there and some of the little teams he is pulling together. This is a lot. The Europeans even admit they have got a similar shipment. They admit that they figure it is all going to be stolen. So what are we doing as a freedom-loving country to help to encourage the reforms that we have tried so hard to achieve inside that country? It seems to me, this is going to be-- especially with the presidential elections coming up there, there is just too much temptation to divert this for the money that it can be sold for and to do other things with it. So I really want your recommendation, and I will take that under consideration, both this committee, the full committee, and on the floor, how do we strengthen the agreement and what kinds of resources do we need for proper auditing at not just the Moscow level, but down into the regions. Mr. Viadero. Ms. Kaptur, when Jim came back and we met and we chatted about it, I asked for us to get ahead of the curve and develop a little plan. So far, it is approximately--the high end is just about $5 million, and that includes transportation, translators--and needless to say, transportation and drivers and translators in a foreign country are essential, and staff time. So it is about $5 million to do it, and that would be going to the individual ports, both domestic ports and foreign ports, and then monitoring distribution at various distribution points. Ms. Kaptur. Thank you very much. Mr. Chairman, I will wait for a second round and let other members question. Thank you very much. Mr. Skeen. Thank you. Mr. Kingston? americorp Mr. Kingston. Thank you, Mr. Chairman. Mr. Viadero, last year we had talked about Americorps owing the USDA $290,000, and I had asked you about it and you were going to look into it. To my knowledge, I never got a response. I could have, but I am not aware of it. Do you remember what happened? Did you get your money back? Mr. Ebbitt. To be honest with you, Mr. Kingston, I do not recall offhand. I know we did look into that, but I do not recall what the answer was. I would be happy to go back and check into that for you. [The information follows:] Since the release of the December 1996 audit report, we have worked closely with USDA agencies and obtained legal opinions from the Office of General Counsel (OGC) as to the best way to deal with questionable payments totaling $520,139 to the Greater Jackson Youth Service Corps (GJYSC). Our audit identified about $230,000 in unsupported or unallowable expenditures. A Bill for Collection has been issued, but we do not feel that recovery is likely. The money is owned by a small, non-profit organization and the bill issued over a year ago has not been paid. The storefront previously occupied by GJYSC is vacant and the telephone disconnected. Our audit also questioned an additional $290,000 based on GJYSC failure to meet the terms of the service agreements. Based on advice from OGC, the Department will not seek recovery of this amount. We concur in this decision, given the small chance of successful collection. Mr. Kingston. Since the President is proposing to increase Americorps 2\1/2\ times, it would be good to know. Also, there was a problem with some of the ex-employees misusing credit cards and I think current credit cards. I think you were moving in the right direction, clamping down on that. Are there any other misuses that you know of this year? Mr. Ebbitt. Not really. In fact, when we went back and put all the statistics together, the Department of Agriculture really had a good track record relative to credit card use. We had identified, as we talked last year, where a number of individuals that had in fact abused the card, but when you looked governmentwide, USDA was really at the top of the list as far as not misusing the card and also on having low delinquencies. So we were pretty satisfied that the Department was doing the right thing relative to that credit card. Mr. Kingston. I did get the impression that you were moving in the right direction. Please look into Americorps because it is a pretty big chunk of money to be owing another Federal agency. Mr. Ebbitt. We will be right back to you on that. Mr. Kingston. Thank you. Mr. Chairman. Mr. Skeen. Mr. Boyd. smuggling Mr. Boyd. Thank you, Mr. Chairman. Mr. Viadero, I have a couple of issues. You need to pardon me. As a new Member, I am still trying to understand exactly all the things that you do and how you do it, but the two issues I would like to discuss, number one, I was pleased to hear you talk about the efforts to try to detect or stop the illegal shipment of contraband which may introduce some sort of pest. We had a discussion here yesterday about a citrus canker outbreak in Florida that is currently going on. We do not think it came in under those conditions. We think it was probably an unintentional act of one plant somebody brought in as a gift, but we certainly would support and advocate a redoubling of efforts, particularly with Florida, as you said, with 17 international ports. If you might elaborate on that some? Mr. Viadero. Yes, sir. Mr. Boyd. I noticed that you did not in your Talon report have any instance in Florida. Mr. Viadero. There is an operation planned for the State of Florida. So far as the smuggling operation is concerned--and please understand there is no smuggling operation in Operation Talon. Operation Talon is totally based uponwelfare reform that you folks up here at the Congress passed, and this allows us to take the outstanding fugitive felons and compare them to food stamp recipient rolls, and then we take that match and we work with the State, county and local authority, together with my agents here, and we go out and apprehend these people. The smuggling initiative to me is just, if you pardon the expression, a no-brainer. We see States putting in hundreds of millions of dollars to eradicate, and we are asking for a couple of million dollars to prevent. So the scale so far as we have seen them are sort of weighted in our favor. Would I rather spend $150 million out of my State budget or see the Federal Government toss $2-or $3 million and prevent this thing from happening to begin with? We are more than pleased--I must say, we are very pleased with the results of previous operations that we have seen in the State of Texas and California, which involved Mexico because Mexico's economy is greatly dependent upon agriculture. So there are checks on both sides of the border there, particularly for pests because that would also devastate their economy as well. So far as we see it, needless to say, there are more than 100 types of pests and fungi and bacteria, but we can get in there and develop a plan, and that is all we are asking for. This is seed money, if you will. Develop a plan. Run a pilot project to see if we can get a handle on this, and then we will take it out to the other--needless to say, the next great State, which would be, so far as economy is concerned, California. If it gets into the fertile valleys, we have a real problem in the country. ebt fraud Mr. Boyd. Thank you very much. The second issue has to do with benefits fraud work. Mr. Viadero. Yes, sir. Mr. Boyd. Would you elaborate about the process you go through to determine the existence of fraud before you turn it over to--I believe you turn it over to the Justice Department for prosecution. If you would, please talk about that process a little bit. Mr. Viadero. Okay. Let's start with a program, food stamps, since most people know how the food stamp program works. Fortunately, the paper coupons are leaving us. They will be gone by 2002, and all States will be on electronic benefits transfer, the EBT card. It was this office that had the lead from the Government to establish the controls. People in Government were going to let this system roll out in all 50 States and it had no controls. Now, from this IG's point, I have a simple response to controls and auditing. I have two questions. Are there controls in place, yes or no? Next question, are they working, yes or no? Well, in this case, they were not working because we did not have any, and we are still working on developing the controls and particularly working with the vendors to develop the individual fraud profiles that will be in place. So now we are going to come up--and I am also happy to say that just within Philadelphia and New York, we developed 55 targets and had cases that are being litigated now totalling $99 million in benefits. That is an awful lot of money, $99 million in just two cities. To that end, though, we take the case. We develop it. We present it to the United States Attorney, who will give us a prosecutive opinion. From that stage, as a general rule, we will go to a grand jury and indictment, and then we are at a trial. Mr. Boyd. I am more particularly interested in the agricultural--and Mr. Seybold just handed you a note. I suspect he may even know where I am headed here--on the agricultural side, rather than the food stamp side. We recently had a case in Florida that was prosecuted and I believe ended up being thrown out, and some people were hurt pretty badly in the process. My question was directed at how far do you go and how sure are you that you got your ducks in a row before you turn it over to the Justice Department for prosecution. Mr. Viadero. Just understand, we are like any other Federal criminal investigative agency. I am a careerist from the FBI before I got this job. We take a case. We will present it to the United States Attorney who will give us a prosecutive opinion, and we then work with that office if it chooses to prosecute. The investigation is over once we get the prosecutive opinion for the most part. The people are indicted by a grand jury of their peers, and they are tried by a jury of their peers. Once that case goes to trial, the investigation is over. So it is left up to the individual United States Attorney. I have been in this business for 31 years. I have sort of become numb to if you lose a case, and you do not win every one. I am not trying to be trite with this, but some people will say their lawyer was better than our lawyer, and in many cases, that is why we do lose the case. Mr. Boyd. Thank you very much. Maybe Mr. Seybold and I can sit down and discuss some more specifics on that later on. Mr. Viadero. Sure thing, no problem. Thank you, sir. Mr. Boyd. Thank you, Mr. Chairman. Mr. Skeen. Mr. Dickey? Mr. Dickey. No questions. Mr. Skeen. Jo Ann? There she is. farm credit program Mrs. Emerson. Thanks, Mr. Chairman. I have three questions that are all on different subjects, but obviously all relate since you are the overseer of management here. The first has to do with the farm credit program and farm loans. I have a very, very intensive agriculture district, and I told the Secretary yesterday that with our emergency loans, only 15 percent have been given out and they are out of money already, just for example. There are lots of other problems. I noticed in your report here, you talk about the overall management of the farm credit program as being of concern to you, and I just wonder if you might elaborate on that somewhat for me, please. Mr. Viadero. Yes, ma'am, and I am going to ask Mr. Ebbitt to please step in. Mrs. Emerson. Great. Mr. Viadero. Please step in. Mr. Ebbitt. Thank you, Mrs. Emerson. In particular, you mentioned the emergency loan program, and Roger was talking about this earlier. The best place that the OIG can be effective is at the front end of the process. There is not a lot of value to come in after the fact and say you made the wrong payment or you made the wrong loan. So it is important for auditors particularly to be outthere when these program dollars are being awarded, be it an emergency loan, be it an emergency disaster payment of some sort or whatever. What we want to do, as sign-up is happening, we want to be there, be able to provide information back to managers who are running this program to say County X is being operated differently than County Y or State A versus State B. There are differences in how you are administering the program. You need to bring them into line. That is where we can be most effective and utilize the dollars appropriated to us most effectively in these kinds of loan areas. I think it is a given. In an emergency situation where loans are being made, program dollars, payments are being made, you have people that need money. They have real needs, and you have a lot of people, generally, in a lot of these emergency situations that show up at the door of the county office, all needing help at the same time. Everybody is rushed, and that is when mistakes happen. That is really what our concern stems from is that you have county offices frequently that are faced with a lot of people, all at the same time, all need help, all need assistance, and they are all making these decisions at the same time. So we want to be there at the front end to try and get a good look at it and be the eyes and ears, if you will, of management, give them feedback as they are running the program. That is where we can be most beneficial. Mrs. Emerson. But wouldn't you all say that the management of the farm credit program is of concern? Is that just based on investigations and seeing people who perhaps should not be getting loans, way-too-high-risk people? Mr. Ebbitt. Well, it is some of all of that. It is based on a long history of us seeing these kinds of programs occur over the years. Every time we look at these programs, you can rest assured we are going to find problems, and we do find problems. We give them to management quickly so that they can change. Mrs. Emerson. Do you make recommendations---- Mr. Ebbitt. Yes. Mrs. Emerson [continuing]. About how to change them as well? Mr. Ebbitt. Yes. Oh, absolutely. We make recommendations to management based on what we have seen and what we think they need to do to strengthen the program activity. Mrs. Emerson. That leads me to a question that I was not going to ask. In my particular congressional district, we have had a real problem with the LDPs for cotton producers, particularly because our State and local FSA offices have said mistakes were made based on dates of the 709's, but we are being stonewalled at USDA on it. So it presents somewhat of a dilemma, and I do not know if you all get involved in investigating those sorts of things or having to sort out those kinds of problems. Mr. Ebbitt. Well, on occasion, we do. In fact, last year, we talked to Mr. Nethercutt about the CRP program, and the exact same thing there. In the CRP bid process, we saw a lot of problems, a lot of differences in the awarding of points and deciding who was going to be accepted under the conservation reserve program. Primarily, again, County A was handling it one way, County B one way, and so on, and we said this is not making sense here. We immediately made some recommendations to NRCS and FSA management to try and fix that. We went in after the fact because we were asked to do that, to do exactly what you are talking about, to try and sort through some of that and figure out why these differences had occurred. LDPs are a real, real issue. You have LDPs and farmers are standing in line. They are knocking at the door of FSA county offices to make their applications, to sign up right now in large numbers, with frequently small county office staffs trying to handle all of this, and mistakes are going to happen when you have that kind of a situation. Mrs. Emerson. Yes. In our particular case, what happened was wrong dates were given for filing and that sort of thing, which has caused a huge or much lower payment to our cotton producers as opposed to, say, those in Arkansas. Mr. Ebbitt. I am not sure I understand the problem of---- Mr. Dickey. Wait a minute. What did you say about Arkansas? [Laughter.] Mrs. Emerson. Do you have cotton down there in your district? I am teasing you, Jay. Is that a request that we can make to you all to help us look into the situation? Mr. Ebbitt. Certainly. I mean, that is the kind of thing that we can try and do. We do have audit staff out around the country right now, as sign-up is occurring. I am not sure exactly which area you are talking about. federal crop insurance program Mrs. Emerson. Yes. Perhaps I will follow up with you, if that would be okay, because it is something that goes way back to September. We have been trying to get USDA to sort it out, and we have not been able to do that yet. Another question, and one which obviously is related because it deals with the fact that our farmers are in crisis right now, you all also mentioned that the Federal crop insurance program is plagued with abuse, conflict-of-interest problems. Tell us a little bit about that and suggestions that you perhaps have made because this is a huge problem. For example, in my district, our cotton producers, again, pay $4 for every $1 of coverage. Whereas, corn would be a 14- to-1 ratio. It is too expensive for a lot of our folks. What suggestions or what recommendations have you all made to fix the program? Mr. Ebbitt. Well, particularly when you get into the ratio area, I am not an expert in that field. I am not an insurance-- -- Mrs. Emerson. Actuary? Mr. Ebbitt [continuing]. Underwriter, actuary, but, in fact, we are working with the Risk Management Agency presently. I know you are thinking of some changes here in Congress on what you might want to do with the Risk Management Agency and the program, but we want to try and bring some suggestions to the table as you are having that debate in this next cycle. We are working on that right now. Specifically regarding claims and claims adjustors, we have had concerns. We mentioned conflict of interest. One of our concerns is that you have agents that sell insurance. You have the same agents in the same companies that then turn around and adjust any losses that occur. We have examples. We have investigations and cases that have been made where that has been a problem. You have got some inherent conflicts built into that kindof a process, and so it is in that area specifically, but we are also looking at broader areas where we are hoping to make some suggestions as we get into the springtime this year. Forest Service Mrs. Emerson. We desperately need it. My last question, and one that I normally would not bring up because our subcommittee does not have direct jurisdiction, but since you brought the Forest Service study that you did, as well as the fact that I have got four-fifths of the Mark Twain National Forest in my district, which is probably 90 percent of it, and over a million acres, I have been extraordinarily concerned about the management or mismanagement of funds within the Forest Service. Last year, in the House Ag Committee, we learned that overhead costs were totally out of sight, comprising, we were told, up to 40 percent of the budget. Just how bad is the problem over there, and what suggestions have you made as far as streamlining and perhaps helping to reduce the administrative overhead so that those monies can be used for the timber sale program and money actually can go to producers rather than bureaucrats? Mr. Ebbitt. The Forest Service has many challenges, believe me. I guess I would characterize them as ``challenges.'' They have major things they are trying to deal with. Financial management is one of their primary challenges. The IG, every year, we are required to audit the financial statements of the Department of Agriculture, including the Forest Service, and so far, we have not been able to attest to the numbers on their financial statement. In other words, in accounting parlance, we have had to give a disclaimer of opinion. We do not know what the right answer is, nor does the Forest Service, and that in and of itself, as you might expect, makes it almost impossible to have good numbers regarding overhead and how much is really in the pot and what should not have been there and what should have been there. Because their systems are in such a state of disrepair, the questions, you cannot answer them very well right now. Mrs. Emerson. Okay. Mr. Ebbitt. The Forest Service has a number of things that they are trying to do to fix that, and they are working hard at it, but they are not there yet. I would prefer that you ask the Forest Service when they are going to get that fixed. Mrs. Emerson. Oh, I understand that, but that is why I asked you because you all---- Mr. Viadero. Well, Mrs. Emerson, let me respond. As somebody said, Forest Service and financial management is like military and intelligence and jumbo shrimp. They just do not-- -- Mrs. Emerson. Oxymoron. Mr. Viadero. Yes, thank you. The other part--and one of the reasons we brought this to the attention of this body, a Forest Service report--is that when you folks appropriate funds for us, we get appropriated for the Department of Agriculture, and 10 percent of our work is spent annually on average in the Forest Service. Perhaps, Mr. Chairman, if you see fit, you and members of this body to perhaps call over to the Interior, Appropriations Committee and perhaps give us a hand and some relief and get-- we do a lot more work in the Forest Service, and we would like to see some appropriations. Since the Forest Service gets funded from the Interior appropriation and we are doing 10 percent of the work, it is sort of that this is a pro bono job that we end up doing for the Forest Service. Thank you for bringing that up. Mrs. Emerson. Well, I did just in a very selfish way, and I realize it, but it is important. I do want to say that where you say here that they actually took immediate action to correct something, that perhaps we could expand that to take immediate action on correcting things that impact people's lives, those who harvest the timber, et cetera. So, hopefully, we can figure out a way to help you do your jobs. Mr. Viadero. Again, ma'am, I am here 4\1/2\ years, and I think the Forest Service has come a long way in the time that I am here, especially under the leadership of the Chief, Mike Dombeck, who is very concerned with these issues and does in fact work with us to correct them. When the Forest Service initially started with the financial statements, they expensed everything. I do not know if you are familiar with the rules of accounting at all. They did not depreciate, amortize, or otherwise depreciate or deplete any of their assets. They just said, ``Oh, they are the largest bridge-builders and largest road-builders in the world, and they just took everything. Oh, okay, $9 billion. We will expense $9 billion this year instead of taking it over 30 and 50 years,'' just as a quick example. Mrs. Emerson. I appreciate your candor. Mr. Viadero. Yes, ma'am. Thank you. Mrs. Emerson. Thank you very much, Mr. Chairman. Thank you. Mr. Skeen. The message is received at Interior because I am on that committee as well. Mr. Viadero. Thank you very much, Mr. Chairman. Mr. Skeen. Mr. Hinchey. Mr. Hinchey. Thank you very much. Mr. Skeen. And another member also on the Interior Committee. Medflies Mr. Hinchey. Thank you very much, Mr. Chairman. I want to thank the gentlemen for the work that you do. I think it is very critically important in the food production and distribution system and making sure that the food supply is safe. I was intrigued by your story about the medflies coming in sealed containers on a particular fruit. I did not get the name of the fruit. Mr. Viadero. Well, one example that we used was a longan. It is an Asian fruit. It is prohibited to this country to begin with, but they smuggle them in, anyway. Mr. Hinchey. So it comes in here, in sealed containers. It is transhipped across the United States to Canada---- Mr. Viadero. Yes, sir. Mr. Hinchey [continuing]. Without being opened, just unloaded and reloaded, and then in some cases shipped back. Mr. Viadero. Yes, sir. Mr. Hinchey. And you have to be vigilant in those instances to make certain that any contaminated product in those shipments does not stay here or does not get into the United States. Mr. Viadero. Yes, sir. Mr. Hinchey. That sounds like a very tough job, especially if you are doing it in that way, on a kind of ad hoc basis. It seems to me that if we thought about it, we might be able to come up with a program that would deal with this in a broader way because I am struck by the almost Herculean task it must be for an agency like yours to deal with an issue like that ad hoc, given all of the products that are coming into the country. Mr. Viadero. Well, again, we have entered into an agreement, an arrangement if you will, with our friends and brethren at APHIS, the Animal Plant Health Inspection Service, who needless to say are responsible at points of entry. To put it the best way and in its most descriptive form, we work and play very well in the sandbox with APHIS. We support them because we have the powers of arrest that they do not have. So we work with these folks on a daily basis. We ran our ideas past them insofar as training the animals to detect these scents, and they said they can train the dogs to do this. Again, we are asking for these funds. It is a pilot project. I think if we can take the pilot project--and if you will, it will come right down the thruway, right across the southern tier coming in from Buffalo, right across the southern tier, down through 81. We are fortunate because, for instance, right here in Virginia, we have the weigh stations where every truck has to stop both on Route 81 and on 95 here. It would be our point to develop the interdiction if we do not get it at the border at one of these truck stops where it would not be out of the ordinary for somebody to be walking around with a dog and just follow that vehicle down to its terminus point and begin the investigation with books and records there. Contraband Mr. Hinchey. But you must have some kind of a suspicion or a lead that a particular truck might be carrying that kind of contraband? Mr. Viadero. Yes, sir, and that goes into our--that separate issue that I said to the chairman I would respond back to him on, on the additional confidential funds. You are only as good as your cheapest informant, if you will, and that is what the monies will go for. A large amount of the monies will go for the purchasing of that information. Mr. Hinchey. I am still curious about this issue because I think that in spite of the very good work that you are doing that there might be some programmatic way to deal with this, which would relieve us of the obligation to be paying such specific attention to individual trucks. Mr. Viadero. I think Mr. Seybold---- Mr. Hinchey. Seybold, yes. Mr. Seybold. Yes, Mr. Hinchey. What I was going to add to that is the two-pronged effort that we are embarking on as far as interdiction, the more complicated side of the effort is to identify, infiltrate, and then resolve the criminal enterprises that are responsible for the shipments. The interdiction of shipments is something that can be done certainly in an inspection mode. It is somewhat similar to the way APHIS is set up at our airports and ports. However, the infiltration of the actual criminal enterprise--because to get the individuals receiving the smuggled goods, the contraband, it is probably good from the standpoint of removing that contraband from the public. However, if we do not get the enterprise by the neck and get that strangled, then it is a constant process. So that is really the more complicated area that you are addressing, and it is one of our priorities at this point. Mr. Hinchey. I would imagine also in the case of these exotic fruits that they are targeted for a specific population. Mr. Viadero. They are generally ethnic-based. Mr. Hinchey. Ethnic-based. Mr. Viadero. Yes, sir. Mr. Hinchey. Right. Mr. Viadero. Yes, sir. In addition to that, I would also like to add that we also have an agent that is on staff at Interpol because we are participating, an actively participating agency, at Interpol, and we have run this by Interpol personnel both here and in Lyon, and they have no problem in cooperating with us because they also count on us to clean our products up. We have certain pests here that would be detrimental to their products, and again, we do put out some $25 million worth of products there. So they are equally as concerned. They have said they would help us out. Mr. Hinchey. Turning to the Food Safety issue of contaminants in the food supply, I think you pointed out in your testimony, E. coli, listeria, things of that nature, seem to be becoming more prevalent. In your experience, is that true? Have these instances become more prevalent over time, or are we seeing a flare-up of them recently? To what extent are these problems an example of faulty inspections and careless attitudes on the part of the meat processors as opposed to an actual criminal enterprise which is designed to bring about poor quality meats in the market in a concentrated way? Mr. Viadero. I would probably start off by saying yes, we do see a marked increase in these type cases, and here is the accountant coming out in me, the capitalist. It is because a lot of these plants are running at the margin. So the more they put out there, the better the margin. On the other side of it, though, we have three concerns. The first concern is the public safety overall. The second concern is the safety of the employees, both the plant employees and the auditors and agents that I send in, and that FSIS, the meat inspectors are there--necessarily do not have the proper equipment to go in there, just plain safety equipment. We cannot afford that. The third thing is the continued financial viability of the going concern of the plant itself. If we can use two examples, we have one place, one investigation ongoing now where--since it is at the grand jury, I will be careful how I put this, but let's put it like this, that we observe that certain compounds, cleaning compounds that we believe to be bleach, regular Chlorox, and sanitizer added to 1997 food product and reprocessed and dated into 1998 product, and people may have gotten sick on it. Now the Department through FSIS puts a hold on the product, but routinely, the company must pay for the recall. The company pays for the recall. However, the next day after the execution of a search warrant on his plant he shot and killed himself. He had a problem. As Jim said, we have challenges. He had a problem. Now we end up with this product, 1.6 million pounds of that product located in Miami storage facilities.No recall was issued by the Department because the product was already detained. Now, that is just a lousy excuse because sooner or later--and this has an economic impact, if you can bear with me on this. The meat locker--it is only a matter of time until somebody says, ``Oh, there is hamburger sitting there, and I am going to take some,'' okay? The second part of it is, that directly impacts on Food Nutrition Service's commodity program because some of these cities are saying you are going to get this commodity out of my lockers or I am not going to buy your commodities anymore, I will go out and put it on the street for bid. So that has a double-edged sword; number one, public safety; number two, the economic impact because it is always, it is not the money--it is the money. That is the bottom line. It has an economic impact, too. I would also like to say that this company put food into the school and the military program as well as prisons and jails, and the average fat content of this product was over 29 percent. How we got involved, one of the prisons called USDA and said this product is rancid. That is how we got involved, and we find that the overall food safety issues, we feel we are a little behind the curve in them. So far as the reporting, that is because of HACCP and the tests required by HACCP that the plants in many cases--not all cases, but many cases--are able to find this out in a much faster vein. Mr. Hinchey. Thank you very much. Mr. Viadero. Yes, sir. Mr. Skeen. Mr. Walsh. ebt Mr. Walsh. Thank you, Mr. Chairman. Mr. Inspector General, thank you for coming in today, and we welcome all your staff. It is good to see you. Just really one or two questions, on food stamps and electronic benefit transfer. EBT, we all felt, would deter and prevent fraud, waste, and mismanagement and abuse. It would prevent the use of food stamps from becoming black market money, and it would eliminate that problem. I just wonder what your experience has been with the EBT program so far, and what, if any, significant data you have on its successes or failures and what you are encountering in your investigation of this new program. Mr. Viadero. Well, first of all, we cannot speak too highly of EBT, not to be glib, but it is taking the fraud off the street and puts it in the store where it belongs. That is what it has done. It has eliminated--the bulk of it has eliminated street trafficking. We do not see people exchanging stamps for cash or stamps for drugs. We generally do not see the street operation going on. What we do see and what EBT enables us to do is to readily--I mean quickly, like overnight--identify through the development of a fraud profile, working with the vendors that are handling it for the States, the processing companies themselves, whether it be Deluxe or Citibank, one of the financial institutions such as that, that is handling it. It allows us to identify suspect retailers and recipients. For instance, if you were to take Greg, Roger, and Jim and let's say that we go to a 7-Eleven in Alexandria, Virginia, and that Greg shows up at 3:00 in the morning and buys $400 worth of food product, Roger shows up at 3:01 for $300, and Jim shows up at 3:02 for $400. That kicks out a bell to us because that does match the fraud profile. For instance, we have all been to 7-Elevens and WaWa's, and at 3:00 in the morning, they cannot ring up product worth large dollar amounts in a minute, much less $1,100 worth in 3 minutes. So that is one identifier. The other identifier that we have in there is, for instance, that Greg's profile would say he normally buys in a major food store between 4:00 in the afternoon and 9:00 at night, and that is pretty much the rule for the average person in the country. All of a sudden, what are we doing out of a major food store and what are we doing processing these types of purchases at 3:00 in the morning, basically the maxed-out amount on that card for that month. Additionally, the investigations that we have had have been astronomical as is usual in food stamp coupon cases. We currently have food stamp coupon cases in four locations involving 55 individuals and $99 million worth of product. Those cases are being identified. They are being tried as we speak. That is an example. Now, try this. Can you imagine how long it would take to go in and traffic in food stamps in individual stores? My agents do not like me because of this because now, instead of the work that used to take 6 months, it should take about an hour and a half with the machines, and you do not even have to put your cup of coffee down. We are getting these things in through printouts. The machines are doing the job for us. EBT has put integrity back in the program. It has helped put a lot of integrity back in the program. However, in one store just in New Jersey, we went in and found three cigar boxes. What happens is the people sell their EBT benefits. So we found cigar boxes filled with approximately 60 EBT cards in there. That translates, at max, at about $400 per card. CPA, cannot pass arithmetic. And we keep it simple, about $400 a month for those people. You know, we are talking in the area of $24,000 of benefit per month. EBT went in five northern counties in New Jersey during July of 1997. We did an operation involving 10 stores and roughly $9.5 million worth of food stamp benefits, including one individual. You folks will all get a kick out of this. This individual, based upon his food purchases that he stated to FNS--he did about $150,000 a year in food purchases or food sales, right? Now, he reports that part. He does not report the $1.6 million worth of food stamps. Now, hopefully, food stamps buy food purchases. So, again, CPA, cannot pass arithmetic. This is not rocket science for us to figure out here. Mr. Walsh. How does the scam work with the purchase of the cards? Mr. Viadero. Well, the cards are issued by the individual State. The State is still responsible for the issuance of the card and qualifying the recipients. Normally, what happened, let's say that---- Mr. Walsh. I mean, with the store owner buying the cards, how does that scam work? Mr. Viadero. Generally, they will buy them for about 50 to 70% of the food stamp benefit on the card. People really want cash. It might even be a stolen card and pin number that they are buying. Mr. Walsh. Not knowing what the total purchase-ability of that card is? Mr. Viadero. He knows very readily. The merchant can take it and run it through the EBT machine, and that puts out the maximum benefit that is on that card. Mr. Walsh. Okay. So then he buys it for $100. They get the cash so they can go buy whatever they are going to buy, and then how does he use that card? Mr. Viadero. He just runs the card through the machine as if that person is there and puts the benefit on there. Again, let's say a $400 benefit. He gets $400 a month every time he runs that. Mr. Walsh. Credited to his electronic account? Mr. Viadero. That is right, and it is deposited in his account that night. So we have even made it better for those folks because they do not even have the bother of filling out the forms and going to the bank. It is automatically wired to their account. However, EBT has really helped put integrity back in the program. Needless to say, on the investigative side, we only talk of the negativeness of the card, the crime, but on the audit side, on the financial management side, it has helped FNS control the costs. Mr. Walsh. While you still have fraud, it is concentrated now between the shopkeeper and the beneficiary, the recipient of the benefit. Mr. Viadero. Right. For the most part, we have taken the street person out. Mr. Walsh. It adequately reduces the points of contact with crime. Mr. Viadero. I will give you the glowing example of what this has enabled us to do. Nothing like talking to the cop on the street, and one of the police officers in New Jersey that worked with us said we knew EBT came in. I said to him, ``Yeah? How did you know?'' He said, ``Because all the small take-out places closed up that week,'' all the take-out food places that are not authorized to take food stamps. Well, what was the message there? People were going in and trafficking their food stamp benefit. They cannot do that because the take-out stores are not authorized establishments. So, in other words, those places went out of business. Mr. Walsh. Well, that is great. That is a great report. The problem is human beings are incredibly smart, and always, where there is a will, there is a way. So stay alert, because somebody else will figure out a way to beat you and you will just have to figure out a way to catch them. Mr. Viadero. It didn't take them much time in Texas to learn how to beat the system. I would also like to say, we have an outstanding relationship with both the Texas Department of Human Services and their Inspector General, who work closely with us. milk promotion Mr. Walsh. The best thing about EBT is not only the savings to the taxpayer, but also because it makes the temptation to engage in fraudulent activity go away. People are hopefully spending that money on their kids and keeping their families healthy, and the taxpayer and the farmer and everybody else who are involved in this are getting a boost in their bang for the buck that we are spending for poor people who need good nutrition. One other question, and that is on this milk promotion board. I notice in your testimony oversight problems that exist with ag marketing services and their relationship with the National Food Milk Board. I understand that there are a number of other promotional boards that have oversight problems. Can you comment on the problems that you found and how prevalent this is, this oversight problem with these promotion boards? Mr. Viadero. Well, I will address this. I will also ask Mr. Ebbitt, when I am finished, to give you the more macro view. What we have had in this specific board was $170 million collected in assessments to the processors. Of that, $127 million was spent without AMS approval. The advertising was let to a firm, 3 months before the board was seated and before the request for proposal. So we did have a problem with that because this money---- Mr. Walsh. Before the request for proposal? Mr. Viadero. Yes, sir, before. Again, the not-too-bright agent in me says there is a keen investigative clue. So we had $127 million of this money already encumbered or obligated prior AMS approval. That is number one. Number two, we had approximately $3 million on the ``Got Milk'' campaign those photographs cost this Government about $12,500 every time one is displayed again because AMS failed to oversee the contract. This is what we mean by giving it back to AMS. We have no problem with the photographer. I only wish I could get, since I am eligible to retire, the attorney that cut her contract to make me a similar contract. She has all of the rights, the copyrights to the property, the photographs. We end up paying every time we want to use those photographs. We end up paying for them, which we should have the right to that. That is another example. The bottom line is AMS did not perform its oversight function for 75 percent of the money. The Secretary is supposed to sign off on it, and AMS is supposed to sign off on it. AMS did not perform its oversight function. So far as the other programs are concerned, the honey board, the cotton board---- Mr. Walsh. Why don't we leave it at that. I do not want to monopolize the time. Mr. Viadero. Okay. Mr. Walsh. Thank you. Thank you, Mr. Chairman. Mr. Skeen. We have got a vote on, but, Mr. Latham, we will cut you off at the second bell. ldp Mr. Latham. All right. Thank you, sir. Welcome. I always appreciate your testimony very much. We have had some real problems in the discrepancy reported regarding the posted county prices in the Midwest. In my district, I border with Minnesota, South Dakota, and Nebraska, three States. We have a lot of people who are close to the border who will actually go, say, up to Minnesota or South Dakota to sell their grain there because there is such a huge discrepancy between the price, and the posted county price in Iowa. Have you looked into any of this? Mr. Ebbitt. No, Mr. Latham. We really have not gotten into that specific issue there. Mr. Latham. Do you have any plan to look at it? Mr. Ebbitt. We are spending a lot of time in the whole LDP area and all these payments that are being made. I am not real familiar with that particular problem. food safety and food imports Responsibilities Mr. Latham. There are huge discrepancies right across the State lines, and basically, what happens, they will deliver the grain, say, in South Dakota and then they will have to haul it back to Iowa for the delivery point. It is a mess. On page 3 of your written testimony, you stated that in fiscal year 1999, we are focussing our efforts primarily onfood safety and smuggling of uninspected, unapproved products carrying unwanted pests and diseases in the United States that affect the wholesomeness of the Nation's food supply. I would like to know what duties you are doing that is different, really, from the food safety and food imports responsibilities within like the FSIS, APHIS, and FDA. Is there a redundancy here, inspecting the inspectors or what? Mr. Viadero. No, sir. FSIS and APHIS, they are not criminal investigators. Mr. Latham. Right. Mr. Viadero. They have no authority to open up a criminal case. We are the enforcement arm for the Department. Each of our responses initially is to get there, number one, public safety, safety of employees, and the continuing financial viability of the going concern, keeping the plant open. So we initially go there to determine if in fact there is a criminal case, as there is out at EMPAK Foods in Milwaukee, Wisconsin--I am sorry--there is not. It was initially responded to both by the FBI and this office. The FBI had it open as an extortion case and a bioterrorism case, weapons of mass destruction, because it was alleged to be human HIV-contaminated blood product, and we responded the same way and we worked with them. We are monitoring at this time, for instance, as it appeared in the paper today, certain outbreaks of listeria and listeriosis. We are monitoring those. In certain cases--we have several cases. We have about six cases open right now in that arena that are criminal cases. So we are taking it one step beyond the review of FSIS. They are going to handle their meat and safety issues. We are going to handle the criminal side of this. We are going to find out who is doing this. Mr. Latham. Okay. Mr. Chairman? Mr. Skeen. That is the second bell. We can hold this longer, or do you want to come back? Does anybody else want to close it up now or hold it? Mr. Latham. Would I have a chance to ask one more question, and would we have time, do you think? Mr. Skeen. Well, when we come back? Well, we will just come back. Ms. Kaptur. I have a couple of questions. Mr. Latham. You do? Okay, then fine. Mr. Skeen. We will come back. [Recess.] Mr. Skeen. Let's go back on the record. Marcy, we will turn it over to you. commodity credit corporation agreement Ms. Kaptur. Thanks, Mr. Chairman, and thank you for doing a second round. This will not take long, I hope. I wanted to ask the Inspector General if you could comment for us and bring to the record the current Commodity Credit Corporation agreement that the administration is working on with Russia. I think we would like to place that in the full record for this hearing, but then also, would you be in a position to comment on it and how it might be strengthened? Mr. Ebbitt. In the record, Ms. Kaptur? Is that what you are asking? Ms. Kaptur. Yes. Mr. Ebbitt. Yes. [The information follows:] [Clerk's note.--The requested Commodity Credit Corporation Agreement is printed in response to Ms. Kaptur's question for the record beginning on page 104 of this Hearing record.] Ms. Kaptur. If that could be done in a timely way because the first sales are to occur late this month, if they have not already been negotiated and the shipments begun. Mr. Viadero. Yes, ma'am. Ms. Kaptur. I also wanted to ask you, have you ever done investigations of the Commodity Credit Corporation and its sales in foreign lands? Mr. Ebbitt. Well, I am thinking. I mean, we did the work in Russia, the last go-around. I know we have, Ms. Kaptur. I do not have recall right now, but, again, I can check the record on that. Ms. Kaptur. My concerns there really deal with diversion of product. As it was explained to me, I asked the question when do the commodities become the property of the country to which we are shipping, and I was told from the moment they leave our shores. I guess I had a question about that, especially when it is a humanitarian shipment being sent to a place where the rule of law is not the same as ours. I have a lot of questions about the way the CCC handles sales in countries that do not have the full--we do not have the same opportunities in the court system to recover a product if it is lost. I wonder if you have got any thought to that. Mr. Ebbitt. I guess I cannot really answer right now. I am going to have to go back and take a look at that. I think General Counsel will have to weigh in, too, as to when does it become the property of the foreign government. They are going to have to give the advice on that, and once it becomes the property of the foreign government, most probably-- and again, I am talking off the top of my head here--the agreement that FAS signs with the foreign government will dictate what they can do with the commodity or how they can handle it and program activity that they are to carry out with that. If they do not follow that agreement, if they do not carry out the agreement to the terms that the agreement calls for, I would expect that that would be the vehicle by which FAS could go back against the foreign government, if that were the case. In other words, it would not really matter who that commodity belonged to if it was not used in accordance with the agreement. FAS, I would think--but, again, I think General Counsel would have to weigh in on that. FAS would have a claim to go back against the foreign government because of the agreement. Ms. Kaptur. But as I read the prior report that you produced from the early 1990's, that was not done in the Russian situation, for example. Mr. Ebbitt. Yes. Mr. Viadero. Again, let us go back. We are going to have General Counsel--pull the agreement, and General Counsel will give us an opinion on it, and we will report back to you as to specifically the ownership of the property, when it becomes the property of another nation. Ms. Kaptur. All right. Mr. Viadero. This way, we will get it on the record with you and we will work with you and develop the proper response on this. Ms. Kaptur. I appreciate that, Mr. Viadero. We also would like to share with you privately some of the information we are receiving from organizations like the Center for the Study of Transnational Crime and Corruption and some of their observations about the nature of the current agreement and how it might be strengthened. Am I correct, you stated to the committee that you as an office have not yet been asked to partner with the Department and the Foreign Agricultural Service in auditing the shipment? Mr. Ebbitt. Well, I think the answer to that is yes. When I met with Foreign Agricultural staff, I asked them--I said what do you expect the OIG role to be, and at that point, they said, well, come on in. That was just about 2 weeks ago. Mr. Viadero. I have not received anything in writing or any phone calls from any of the sub-cabinet or other Secretary's office asking us to participate in this venture. So any negotiations that have gone on have been informal and probably at the staff level, the same way you guys are going to be in, anyway, but the initial response when we asked if we were going in, we were told no. That was the last official communication that I received was no. Ms. Kaptur. May I ask you this question? It is my understanding the Department is thinking about and reviewing the possible involvement of certain private sector organizations to be added to the monitoring efforts that they are considering. Why would they go to the private sector rather than involving the IG's office? Mr. Viadero. I have absolutely no idea, ma'am. It is my understanding that these other firms or other firm that would be considered, again, is after the product is shipped and distributed. So we get back to, okay, so now you are going to report on all that went wrong. Again, our thought was let's get in and do some up-front work and try to prevent anything from going wrong. child and adult food investigations Ms. Kaptur. I would just like to say for the record, the people of the United States are paying for the FBI to be located in Moscow, with a special office there relating to crime and corruption, and the diversion of dollars and product outside of that country--and it just seems to me, with your experience and with the types of skills that your people bring or that you could add to the organization you already have put together there--it just seems to me, it is a logical addition and a very important addition, and I really cannot understand why the Department of Agriculture has not formally requested-- it is troubling to me that the Department has not more fully involved you from the beginning. I wanted to just for a moment say that I read in your formal testimony the child and adult food investigations that have been going on there, and this was a very high priority of your office over the past year. I think you formally began those investigations within the last year. Mr. Viadero. Yes, ma'am. Ms. Kaptur. Are they yielding the types of results that you expected? I noticed there were some indictments. I cannot tell whether you have recovered anything yet from that or not, but is this an area that needs additional resources? Mr. Viadero. Yes, ma'am. This is a continuing problem, and again, we are working with Food and Nutrition Services under the special nutrition programs just to clean the program up. It is unfortunate. Again, as I say to the question from--I believe it was from Mr. Nethercutt--I'm sorry--Mr. Walsh--our work on the investigative side, we do not have a lot of resources. So it is basically targeted. This was a joint audit and investigative effort. So everybody or every organization we looked at has somewhat been targeted for matching a fraud profile that we developed, and we are almost at 100 percent of those sponsors that we find to be errant. To date, as of December 1998, or January 1st of this year, 54 sponsors in 23 States have been audited or investigated, and 14 so far have been terminated. Several others have been indicted and prosecuted. So far as the benefits are concerned, again, we have gone out and will share with you that picture last year that we showed of the vacant lot in the testimony. That was a sponsor that fraudulently received monies for the center that was located in that vacant lot that was out in Toledo. So we did get a successful prosecution on that. Ms. Kaptur. I hope you keep working in Toledo. Try harder. Mr. Viadero. Well, actually, you will be happy to know, it is not as bad as we thought. Ms. Kaptur. Other places? Mr. Viadero. Yes. It is not as bad as other places. That was the New Jerusalem issue, and seven persons including the sponsor and director entered guilty pleas. They had been doing this since 1995, and they set up more than 40 false providers, resulting in submission of false claims of more than $750,000. That is a lot of money. The investigation does continue, and we are in the process of restitution. Again, we do not get that restitution. Ms. Kaptur. Will you have a continuing emphasis on this particular set of investigations over this next year? Mr. Viadero. Yes, ma'am. There is more than enough open cases right now that we are carrying as open cases and auditing and investigating than our resources allow us to handle. That is fundamentally why we have had to back off. I am out of people. I am out of people. Some of them are beginning to look like--if you recall the movie, ``Gone With the Wind,'' some of them are looking like Rhett Butler coming back from the war. Q01 These people--auditors spend in excess of 70 percent of their time on the road. So that puts a lot of strain both on them professionally and on their personal lives as well. We are out of people. Ms. Kaptur. That is why I go back to my request of Mr. Dewhurst. If you could really look across the Government and give us some insight on this, maybe we can do something here to try to help and to augment the staff. There was quite a bit of excellent testimony presented on the tainted foreign imported food coming in here, and can you detect the most troubling entry points in the country? Are there certain areas that are more vulnerable than others? Mr. Viadero. Yes. We have had some smuggling investigations. The vast majority of our criminal cases have been on the West Coast. For instance, we worked with APHIS on a shipment containing dried snakes. Because they are used as Asian aphrodisiacs, they are all--viper snakes are all venomous. In another Conex, we had several thousand bear scrotums and testicles, which, again, are used as Asian aphrodisiacs. At the same point of entry, we also seized several thousand pounds of deer antlers and tendons. Just the tendons were taken off the hind quarter of the deer, which are used in Asian medicines. So, needless to say, we would have our large concentration or large effort at that port. So far as the East Coast ports, we have not seen direct importation of prohibited fruits and vegetables coming in from both South America and from Asian ports being transhipped into Canada and then back into the United States. We really do not have too--our borders are really, fairly open. Ms. Kaptur. Finally, for the verbal questioning, on the meat plants that you highlight in your testimony, you do not reference who they are. Are these vest-pocket plants, or are these major corporations whose names we would know? Mr. Viadero. They are large corporations within the meat business. And again, I am sure you know that many of these companies, their names are owned by several other companies, and the parent company, yes, would be most notable who owns them. Ms. Kaptur. With HACCP and other inspectors in there, why would this be happening, then? Mr. Viadero. Well, that is our question. That is our question. Again, the company in Wisconsin was victimized. They were a victim. The other companies--and again, I have to be careful, and you will bear with me, please, that a lot of these cases have been accepted for prosecution and are under grand jury review. So I am limited to what I can say here on the record. We just find that the response time--I mean, we have one question as to why FSIS pulled the stamp, if you will, removed the inspectors, which in essence shut a plant down on December 31st, yet did not have a recall of product until January 22nd. That is more than 3 weeks. So that sort of makes me wonder. If you are going to stop the inspection and pull the stamp, shut the plant down, why don't you recall the product if you had basis to shut the plant down. That is just an example, if you will, of one of the cases we have. Ms. Kaptur. All right. Thank you very much, and thank you, Mr. Chairman. Mr. Viadero. Thank you, ma'am. Mr. Skeen. Mr. Latham. Mr. Latham. Thank you, Mr. Chairman. I would like to know, have you done any work in seeing the effectiveness of these aphrodisiacs? I am kind of interested in those. Mr. Viadero. I have got more hair in my comb in the morning than I have on the top of my head. No, I have not seen the effects of that. Thank you. [Laughter.] Mr. Latham. Okay. This committee is just full of levity, right, Mr. Chairman? Mr. Skeen. It is full of something. [Laughter.] information technology Mr. Latham. Just one subject matter I would like to hear your response to, in the last 2 years, trying to get after somehow in the Department, the information technology systems and the authority given the information officer and the 29 different agencies, each with their own systems. Can you give me any insight? Are they doing anything over there? Is it business as usual? Mr. Ebbitt. Well, this is another challenge for the Department of Agriculture, and it is a huge challenge, Mr. Latham. One of the main areas--and they are moving ahead, particularly at the county office systems, our county offices throughout the United States. There is a major effort underway to bring all of those offices with the same kind of technology, same kind of telecommunications, same wiring, et cetera, huge costs involved, a lot of--just an awful lot of work just to get it all set up, but I think to that end, at least there--I mean, the Department now has a plan and they are working on that plan to move that effort forward, but it is certainly not all accomplished yet and there is a big challenge there to get that accomplished. Mr. Latham. Has Ms. Reed given the authority to actually make changes, or is it still dependent upon each of the agencies signing off, or can she actually make things happen? I mean, does she have that authority? Do you know? Mr. Viadero. Yes, sir. She has the authority under the Chief Information Officers Act. Mr. Latham. In reality? Mr. Viadero. Yes, sir. Mr. Latham. But that has been the problem before is the agencies basically have ignored guidelines set down from the Department. In the past, they have each gone ahead with their own systems and not worried about what the other agency next door is doing. It is just if she has got the authority, they are ignoring it. Can you give me any--okay. I think we are back to square one again. Kind of in the same area, do you have an update or anything on the Year 2000 compliance department? Do you look into that? Mr. Viadero. Yes. Yes, we do. Mr. Ebbitt. Yes. We have been spending a lot of time monitoring what the Department is doing, and I think in most areas, the Department, they have identified the systems that are critical and the kinds of fixes that need to be made. They have a plan to fix them. Their plan would indicate that in some areas, they are behind the time frames that have been set forth by OMB to make these fixes. They are telling the Department, they are telling the Secretary that they can have these things fixed by the Year 2000, the things that are critical. Some things will not make it, but they are not in the critical areas. Mr. Latham. Can you define the critical areas? Mr. Viadero. Well, throughout the Department, each particular agency has identified systems critical to their operations, and that will vary, of course, from agency to agency depending on the program that they are delivering. I have forgotten the example number. There are 4- or 500 different--it is right here--354. Steve had it right here, 354 critical systems in the Department. He has got a goodchart here. Maybe he can share that. Mr. Latham. It is probably here. Mr. Ebbitt. But, again, they are telling us that they are going to make it. Now, in our next phase, we are going to be looking at their testing processes to see if they are on target with our testing processes, what are the tests showing. Down at the National Finance Center, which is so important to USDA's operations, a lot of--first of all, employee salaries are paid out of National Finance Center, as well as about 40-- almost 50 other Government agencies are paid out of National Finance Center. We have been down there. That operation appears to be on target with identifying and fixing the problems, and the National Finance Center is reporting 100-percent compliant on that. Mr. Viadero. I would also like to add, Mr. Latham, we will know how well everything is working on April 1st because New York State is the first State to become Year 2000. So far as distribution of benefits, particularly from the large entitlement Departments, Agriculture, HHS, HUD, New York State, it will be online first. So our machines have to kick into a 2000 date to correspond to New York State. So we have worked very closely with John Ortego and the Chief Financial Officer, Sally Thompson, to ensure that the National Finance Center is up to par. We are, however--and it was reported by Ms. Thompson, the CFO there--I am sorry--by Ms. Watkins who is in charge of FNS-- the problem is that some of the States do not want to report back to the people whether or not they are Y2K-proof. Mr. Attmore who is the State auditor in New York--we share a committee together of--this is a real boring committee of auditors. You think this is a lap-slapping time, you ought to go to one of those meetings. He assures me that New York State is up and running, but we will know, again, on the 1st, and then, again, right here in Virginia because Virginia starts a May 1st fiscal year, 21 States are July 1st, and the rest are October 31st. So we will be challenged in the next 6 to 8 weeks here. Mr. Latham. I would just kind of go back to my first question. The ultimate test for the Department is to see if they are coordinating their efforts and cooperating and to see if they can now e-mail from the North Building to the South Building, and that which they have not been able to do before. I mean, that is the amount of cooperation the Chief Information Officer has. Hopefully, things have gotten better. I would question it. Thank you, Mr. Chairman. Mr. Skeen. I thank all of you, and I think that enough has been said. Roger, yours is always one of the most interesting groups that we visit with. You do your work, and you do it very well. You are well-accompanied, and I can assure you that we are going to try to help you get the compensation that you need to keep doing your work and expanding on it. I think you have been under-recognized, which is not an unusual thing around the Government. Mr. Viadero. Thank you, Mr. Chairman. Mr. Skeen. I think you have done well. Anyone else? Marcy? Ms. Kaptur. No, Mr. Chairman. Mr. Skeen. Thank you all, and we are adjourned. Mr. Viadero. Thank you. Mr. Skeen. We also would like to know if we have other questions that we can send to you-- Mr. Viadero. Absolutely. Mr. Skeen. We appreciate that. Mr. Viadero. Happy to have them. Mr. Skeen. Glad to have you. [The following questions were submitted for the record:] [The official Committee record contains additional information here.] Wednesday, February 10, 1999. SECRETARY OF AGRICULTURE WITNESSES HON. DAN GLICKMAN, SECRETARY OF AGRICULTURE RICHARD ROMINGER, DEPUTY SECRETARY KEITH COLLINS, CHIEF ECONOMIST STEPHEN DEWHURST, BUDGET OFFICER Opening Remarks Mr. Skeen. Well, good afternoon. I would like to welcome everyone to the first hearing on the Administration's Fiscal Year 2000 budget request for programs under the jurisdiction of the Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies. Today, we have with us the distinguished Secretary of Agriculture, the Honorable Dan Glickman. He's accompanied by the very able Deputy Secretary Rich Rominger. Also at the witness table today are two of the best career civil servants in the Government to listen to, that's Keith Collins, the chief economist at USDA, and Stephen Dewhurst, the chief budget officer. We couldn't run this business without Steve. He's been here and we're going to make a monument out of you. [Laughter.] Mr. Skeen. That's not a threat. Our new chairman, the distinguished gentleman from Florida, Mr. Young, won't be able to join us because he's got another commitment, but he sent his regards to the Secretary and the whole entourage. So, along with us, is the gentlelady from Missouri, Mrs. Emerson. Returning on the Republican side are: Jim Walsh, Jay Dickey, Jack Kingston, George Nethercutt, Henry Bonilla, and Tom Latham. On the Democrat side we have three new members: Maurice Hinchey of New York; Sam Farr of California; and Allen Boyd of Florida. And I'm pleased to welcome back our good friend and the ranking Democrat on the subcommittee, Marcy Kaptur. It's a pleasure, as always. The subcommittee is also fortunate to have back the gentlelady from Connecticut, Rosa DeLauro; and, of course, the man who needs no introduction, my good friend from Wisconsin and the ranking Democrat on the full committee, Dave Obey. I don't know who he is irritating, but he'll do a good job. One other introduction, Mr. Secretary, is Hank Moore, who has taken over as clerk of the subcommittee. Hank, we're sure glad to have you here, and you come with a lot of background and knowledge. Mr. Secretary, as you know, this subcommittee has a long tradition of working on a bipartisan basis because the programs that you operate benefit every American every day of their lives. And our chairman has made it clear he wants us to proceed as quickly as possible with this important legislation. I would like to turn to Ms. Kaptur for any words that she may have, and then turn the floor over to Secretary Glickman for his opening remarks. Ms. Kaptur. Mr. Secretary, we want to welcome you today for a reappearance before our committee. Also, all of your associates, Mr. Rominger, Mr. Collins, and certainly Mr. Dewhurst. I saw our dear colleague, Jay Johnson, former colleague, a little bit earlier, glad to see him. And we look forward to working with you. The only comment that I wish to place on the record at this point is to say that I think our membership is in unison in being extremely concerned about what is happening in rural America; with the level of prices; the continuing attrition of small farms in this country; what is happening in other places around the world that make it more difficult for us to expand exports. And we really look forward to your presentation because there are millions of people across this country in rural America who want to know if there is some way that we can be a full partner with them in trying to preserve the production levels and sophistication that this country has come to expect in the agricultural sector. So, Mr. Secretary, we welcome you and look forward to your words. Mr. Skeen. Thank you, Ms. Kaptur. Mr. Secretary, it's all yours. Statement of the Secretary Secretary Glickman. Thank you, Mr. Chairman, Marcy, Jo Ann. It's a real pleasure for me to be here. You already introduced my colleagues, my partner, Rich Rominger and the two finest career employees in Government---- Mr. Skeen. We're proud to have them. Secretary Glickman [continuing]. And I won't say that again, but I'm sure it's music to their ears. If I might, I've got a complete written statement, which I will include in the record. And I would like to make some oral remarks. First of all, we are in a strange situation. We have the strongest general economy this country has had in a generation, if not two generations. You look at the aggregate figures. I don't have to tell you this. You hear it all the time, low interest rates, the lowest unemployment, highest home ownership, lowest inflation, highest job creation, and it tends to be national. The fact is that it's not just in one State versus another. I mean there are pockets of problem areas, but overall this country is enjoying extraordinary prosperity. So we acknowledge that. Then we look at agriculture, the farm side of the picture. And it's not just agriculture. There are some sectors that are suffering: oil and gas, minerals, metals, a lot of things that come out of the ground are having problems. In your State, Mr. Chairman, like my State, the state of minerals is not good. Farm Economy But the fact is that the farm economy is under some stress. Exports are down over $9 billion from the '96 peak to $50.5 billion forecasted in this year. And that's largely due to weakness in Asia and the currency problems. Net cash farm income is down from $59 billion in 1998 to $55.5 billion in 1999. And it would be lower if it were not for the general assistance this Congress provided as part of the emergency aid package in our farm program. Many producers have faced both low prices and adverse weather, a double hit. We've had some of the strangest weather ever, whether you live in the northern plains or you live in the southwest. It has either been the wettest of the wet or the driest of the dry. And so it has made it almost impossible for a lot of folks. Today, we issued the crop report and commodity supply and demand estimates. We issue them once a month. Mr. Collins' shop heads this up. I would have to tell you I'm looking through the reports for wheat, rice, corn, soybeans, soybean related products, cotton, and quite frankly, there's large production, lower exports in many cases than projected, and so the price situation does not look the way I would like it to look. You know, the first few years I was Secretary, things were much better than they are now. There have been changes in meat production: hog, cattle, poultry, which largely indicate that things are on course. But change has not been as rapid as we would like to see, which means that price improvement may not be as fast as what we would hope to see. The irony is that even though the general economy is doing so extraordinarily well, the farm economy has got a lot of very serious problems. We need to be honest about that and then we need to look for ways to try to work on it, to fix it. Emergency Assistance Now, this Congress provided nearly $6 billion in emergency assistance in 1999 as part of the budget bill. You may recall there was some discussion. The President thought we needed more than an initial $4 billion. There was a veto of the bill, and we ended up with $6 billion. That has been a God-send to a lot of farmers out there. Half of that money is going out in what's called the extra AMTA payments, and the other half is going out to farmers who have suffered natural disasters all over the country. We have increased loan deficiency payments by $2 billion. These are payments that two or three years ago we never thought would be triggered at all. These were the bottom tier payments that were based upon prices falling rather significantly. Two years ago I think we had zero LDP. Last year we made 400,000 of these payments. This year we project 1.3 million Loan Deficiency Payments. These are individual payments. An individual farmer has to go in to an office or contact an office to get the payment. And, if prices continue flat, or in some cases lower, LDP's will continue. Thank goodness we have that particular program. We have also made direct payments to pork producers. It is a small program. It is basically all that I could do under the law in terms of making direct payments to pork producers, but we've also been buying a lot of pork for our commodity assistance programs. The President's food and initiative will provide over five million metric tons of food assistance, and the total level of farm assistance in 1999 from the United States Government is projected at about $18 billion. And without that assistance, I will have to tell you a lot of farmers and ranchers would not be able to make it. The stress out there will entail a very heavy workload effort by the department to deliver the assistance because what we're doing is providing emergency assistance on top of the normal servicing in our offices, which include the LDP's. A lot of folks, including some members of this committee have called me and said, ``There are lines around the offices. We've got LDP's that have to be serviced. We have disasters.'' And a variety of things over and above the normal workload that need to be taken care of. I've talked about the LDP volume being high, and we're looking at our salaries and expenses to see if there are better ways to handle this workload. The bottom line on all of this is if it hadn't been the work of this committee and this Congress, an awful lot of people would have faced even more catastrophic consequences. Farm Bill Shortcomings But I do believe the 1996 farm bill has serious shortcomings in dealing with low prices and disaster related events. When we passed this bill, prices were high and the world economy was in pretty good shape. Exports were strong. The economies of Asia and Latin America looked promising, but the fact of the matter is that the economic cycles are unstoppable. We are in a cycle of history when it comes to agriculture which is not so good, and the farm bill is not as suitable during those counter-cyclical times when things are bad. We're not trying to micro-manage farmers or to do the kinds of things that would make life impossible for producers or to go back to the way things were in the '30's or '40's or '50's. But we do have a role to help farmers weather tough times and adjust to adverse economics. Some of it you can do in this committee. Some of it has to be done by the authorizing committees in terms of looking at the 1996 farm bill and filling in the safety net where it is inadequate. And, again, I want to thank this committee for what you've done on the disaster side of the picture because without that, things would be very, very difficult. Crop insurance If I may talk about a few other things. One is crop insurance. The President said in his State of the Union address we need to find a bipartisan way to improve the farm safety net by reforming crop insurance. Last year's supplemental, $6 billion, indicates that we need a longer term fix. Ad hoc disaster assistance is undependable and too costly. And my belief is that the weather patterns of the next several years are going to be just as unpredictable as they have been in the past and we will have just as expensive disasters year after year after year. Maybe not every year, but they're going to be out there. We have to have a crop insurance system that can better protect people so that they don't have to come to the Congress or to the administration every year for a large ad hoc program. We don't have that now in many cases. We made a $400 million down payment as the first step to improving risk management by taking that out of the $6 billion appropriation. What we did is we have reduced the cost of crop insurance premiums by 30 percent for producers buying crop insurance this year. So out of the $6 billion we took a piece of it and reduced their premiums to try to get more farmers into the crop insurance program. We also issued a white paper on principles and proposals for crop insurance reform. It will be a very expensive undertaking. But either we do it this way or we do it with expensive emergency programs nearly every single year. We're going to hold three regional forums to discuss the issue. We want to try to achieve bipartisan agreement with Congress on crop insurance reform this year. This is a very high priority for us and hopefully working together we can try to deal with this problem. Farm Credit The second issue I would like to talk about is credit. The budget this year provides $3 billion in credit for farmloans and guarantees. But, I would add with a subsidy cost of $52 million less than last year due to the lowest interest rates in a generation. The low interest rates have actually allowed us to increase the amount of credit and doing it at a lower cost. However, because of a poor farm economy in many parts of the country, because of lower commodity prices, more and more USDA, as the lender of last resort, is being used as the prime lender for farmers. So our farm credit programs are facing an increased demand this year, and we will run out of money fairly soon for those programs. We are now in the process of looking at specifically what we're going to need for the purposes of a supplemental request. But the fact of the matter is we're not going to be able to continue to make loans too much longer because of the dramatically increasing demands on both direct and guarantee credit. I would also say on the credit area that the Department and the Justice Department settled a major civil rights class action case filed against USDA, hopefully putting to an end many, many years, if not decades, of problems that have existed dealing with civil rights and the Department of Agriculture. I would be glad to talk about that more if the members would like to ask about it. agricultural exports In the area of exports, we know that exports, strong export markets are a critical component of the farm safety net. Market disruptions, however, have occurred in Asia, Latin America, Russia, Eastern Europe and elsewhere. We increased the programming of export credit guarantees to Asian markets and sales registrations under our GSM-102 were up 40 percent last year over the previous year. Strong efforts are also being taken on a trade policy front, including preparations for the new round of multi- lateral trade negotiations. The budget provides $6.5 billion in total for our international programs this year, including $4.5 billion for our CCC export guarantee programs. But, we will use more than that, if necessary, to move the products overseas. Exports are a critical part of the safety net, but when times go bad in the world, they cannot be the only part of the safety net. They, along with domestic programs, have together be considered as part of the safety net. We've learned that not always is the world the way we want it to be. domestic marketing programs In the area of marketing, I would like to talk a little bit about our domestic marketing programs, which are also important to the economic health of U.S. agriculture. We have very serious continuing concerns about market concentration. Ms. Kaptur and I talked about that for a moment beforehand as well. We are strengthening enforcement against anti-competitive practices, particularly in livestock markets. We've asked for some increased funding for our enforcement of the Packers and Stockyards Act, our grain inspection, packers and stockyards administration. We are also conducting a lot of reviews and examinations on the hog price decline, and the Cargill- Continental merger. These issues of concentration in agriculture are ones that we tend to be confronted with when we're out in the countryside as much as any others, and I'm sure you're hit with the same ones. pest management We have asked for budget increases for pest detection, disease prevention and border inspections, given that fruits and vegetables are coming in from all parts of the world. We have to make sure that we have adequate resources to protect American producers. We are asking for budget increases for our organic certification program. The most comments this Department has had maybe since the Second World War on any issue was on organic agriculture. And, they all came from Sam Farr's district I think. But, we are in the process of coming up with some certification rules for standardizing and certifying organic agriculture. I'm hopeful we can get it done this year. We've moved on some meat products, but there are other areas. Also, budget increases are provided under the Pesticide Data Program in conjunction with the Food Quality Protection Act requirements. We need to have that as well. rural development In the area of rural development. The rural development budget will support about $11 billion in loans, loan guarantees, grants, and technical assistance. Here's an interesting fact, that's $800 million more than last year. But, due to low interest rates, the cost to taxpayers will be $400 million lower than last year. So we're able to get $800 million in authority for water, sewers, housing, electricity, telecommunications, and job opportunities, and the cost is $400 million less. We think that is remarkable. This will also include funds for the President's Water 2000 Initiative and single-family housing needs in rural America, as well. agricultural research In the area of research, this budget proposes an increase of nearly 10 percent for research from the comparable 1999 level. This is the first substantial inflation adjusted increase for these programs since 1992. Our research focuses on a broad variety of areas from preserving our natural resources, conservation research, food safety, as well as farm productivity. I think that this obviously is the seed corn for the future of American agriculture. food safety initiative I would like to talk for a moment about several other issues: one is food safety, one is nutrition, and one is conservation. In the area of food safety, we've asked for an additional $67 million, almost two-thirds of the Government- wide increase of $107 million for food safety activities aimed at reducing micro-biological contamination of foods. These increases are directed to the President's Food Safety Initiative and inspection modernization activities of FSIS. This is the first year anniversary of the Hazard Analysis Critical Control Point implementation in large meat and poultry plants. We go on line now with the smaller-size plants this year and the very small plants next year. Recent studies indicate that there has been a significant reduction in the prevalence of salmonella due to the implementation of HACCP. Some studies show it has been as much as a 50 percent reduction in salmonella in poultry plants as a result of those that have complied and are participating in the HACCP program. All I'm saying is there are no miracles to food safety, but the programs do seem to be working in terms of getting all the plants on line and doing what they ought to be doing to deal with these problems. We are also working to meet the goals of the Food Quality Protection Act in dealing with environmental and public health risks associated with pesticides. food assistance programs In the area of nutrition, the budget reflects full funding for food stamps, for child nutrition and the Women, Infant and Children program. The budget restores food stamp eligibility to 15,000 elderly legal immigrants. The funds are also provided to improve program integrity, evaluate the efforts of auniversal free school breakfast pilot project, which I personally believe can be instrumental in helping to improve the education of an awful lot of kids in this country, We also want to expand the WIC Farmer's Market program. gleaning and food recovery The budget includes a new $15.8 million gleaning and food recovery initiative. This is something I worked on with Bill Emerson. Through his efforts, we created the Bill Emerson Good Samaritan Act, which immunizes people from liability in most cases who donate food that would otherwise be thrown away. We throw away 99 billion pounds of food in the garbage every single year in this country. It is disgraceful. Much of that food can be eaten. Hospitals, hotels, cafeterias, you name it, throw food away. This program is to provide community-based grants to help neighborhood organizations recover edible food and use it to alleviate hunger. conservation programs In the area of conservation, this mission has dramatically expanded as a result of the '96 farm bill. The budget protects and strengthens the core conservation technical assistance and watershed work that NRCS carries out. It supports implementation of the administration's Clean Water Action Plan to protect rivers and streams. It increases funding for the EQIP Program, the Environmental Quality Incentives Program, to $300 million. The budget also funds the Lands Legacy Initiative which will help USDA address the serious problem of prime farmland loss. The Farmland Protection Program would be reauthorized for this purpose. There are also other initiatives: the CRP, the Wetlands Reserve Program, and the budget supports the administration's Global Climate Change Initiative. customer service and program delivery Let me just finally close with a point about customer service and program delivery. Improving customer service and program delivery are a high priority. And let me tell you it's tough with an agency that has 22,000 fewer employees today than we did in 1993. We also have significantly fewer offices. We have downsized to about 2,700 service center offices, and so with the increased workload, the Loan Deficiency Payments, the disaster programs, and a significant reduction in the numbers of people, I would have to tell you it is a challenge to provide that high priority service, and that particularly goes for smaller farmers, minority farmers who have been traditionally under-served by our farm and rural development activities. Streamlining and co-locating the county-based agencies in one-stop USDA service centers is a prime focus. We are also working to administratively converge the administrative support functions of county-based agencies and provide a common computing environment as well. I would have to tell you that our workload in customer service requirements, particularly in the farm program area right now, is quite high and there have been delays. A lot of it has to do with the fact that it is difficult to provide as timely a service as I would like given the enormous workload, particularly as a result of the Loan Deficiency Payments, which are coming in by the millions now. But we will continue to do our best. Mr. Chairman, that concludes a summary statement. And, again, I appreciate your thoughtfulness. [The prepared statement and biographies of Dan Glickman, Richard E. Rominger, Keith J. Collins, and Stephen B. Dewhurst follow:] [Clerk's note.--Mr. Collins' prepared statement appears on page 969 of this volume.] [The official Committee record contains additional information here.] Mr. Skeen. Well, thank you very much, Mr. Secretary. And let me say it's not a pretty picture out there, but what we've concentrated on and your report concentrates on are the things that we can do rather than what we can't do. And it's too late to assess where the problems started. We're going to have to deal with them because it is a tremendous problem. And we would like to share the effort of trying to get ourselves over this hump. And I think you've made a great outline of what kind of help is available to us, but we've got to put the wherewithal together to make it work. We appreciate that very much. I would like to say right now to Mr. Obey to recognize that we've not choked you down. We had ordered more room for the dais and it hasn't gotten here yet. So if you fall off the end over there, help is on the way. [Laughter.] Ms. Kaptur. Statement of Ms. Kaptur Ms. Kaptur. Thank you, Mr. Chairman. I just wanted to acknowledge now that our membership is here. I just have to say what a marvelous subcommittee this really is, and on both sides of the aisle, we have many new members joining us. And I wanted to say how thrilled we are that I think every one of our members now represents both production agriculture, as well as some metropolitan areas. This is just a marvelous, marvelous opportunity. And I want to welcome my new colleagues certainly on this side of the aisle but also on the other. And there will be no more harder working subcommittee in this Congress than this one. And, frankly, the country needs it right now in this arena. supplemental appropriations Mr. Secretary, I noted in your testimony that you were a bit unclear on your intention as to whether you would send a supplemental. Could you discuss that in a little more detail? We have information from a number of our members about the lack of operating loans, the Farm Service Agency backups across the country. We have severe problems in some of our industry, such as pork, cattle, and others. Could you clarify a bit what the administration's intention on a supplemental is this Spring please? Secretary Glickman. Well, we haven't made a formal request to OMB yet for a supplemental. However, it is my judgment that there are a couple of pressing needs that will require a supplemental. So my belief is one will be sent up, but I don't have anything formal to offer you right now except to tell you that there are several areas that we are looking at. The big one is in farm loans. While the funding for farm loans increased from $2 billion last fiscal year, or Fiscal Year '98 to $2.8 billion in '99, to $3 billion this year, the demand is just out-running it, largely because people are coming to us, particularly on the guarantee side because the banks want the guarantee because the farm economy is not quite as stable. On the direct side, because we are the lender of last resort, we're getting more attention than ever. My belief is we're going to need as much as about a billion dollars in additional loan authority. The budget cost for that would be about $100 million under standard practices. My belief is that a request at some point hopefully soon will be sent up along that line. We also have some needs in emergency conservation, watershed, and rural development work related to disasters, in Puerto Rico and elsewhere. But most of these are natural disaster related. They kind of follow previous supplementals. We are also reviewing the salaries and expense needs of both the Farm Service Agency and NRCS. You know, we're talking about well over a million, maybe getting close to two million LDP applications, projection of zero two, three years ago; and we also have technical assistance needs under the conservation reserve programs and conservation reserve enhancement programs. There may be a need for additional salaries and expenses. But that, again, I would say no final decisions have been made. Clearly, farm loans is the one area that would be the most immediate pressing need. emergency feeding programs Ms. Kaptur. Thank you for that clarification. Mr. Secretary, I would also encourage you I think your present budget request includes some additional funds for TEFAP foremergency feeding programs. And I would also in order to relieve some of the over-supply in the market, urge you to look closely at all of our feeding as well as our programs that deal with the export of our food to other countries. We have an incredible surplus. And I know that you have increased some of your purchases to school lunches and so forth for the pork industry I believe. It's a small amount in view of what's out there, but I think we could do better. I have a question I'll submit for the record if I don't have time to ask it on our Welfare to Work program and the backup at many of our domestic feeding kitchens, which is unbelievable. And so it seems to me that we can do a lot through this budget to both help our farmers and the current market situation, as well as meet social purposes. pork situation I wanted to concentrate for a moment, if I might, on the pork situation. I don't think I'm the only one xenophobic on this coming from Ohio. But without question people are producing below the cost of production, and they can't get their money out of this market. On the other hand, companies like IBP where many of our producers have to drive their products, drive their animals, reported that their fourth quarter earnings jumped to $92 million, more than four times the $22 million posted a year earlier. So at the same time hog prices were at depression levels, the retail prices remained level. And the processors, of which there are very, very few at this point, certainly in our part of the country, seem to be doing quite well. Mr. Secretary, I wanted to ask you what is the Department doing to assure that the retail prices more accurately reflect the prices paid to farmers, the production price? What has happened to the administration's initiatives on concentration in that particular industry? Secretary Glickman. Well, first of all I would say that when pork prices got as low as 8 or 9 cents a pound in December, and in real terms that put them below depression era prices, we did the things that we could do under the law. I bought a lot of pork for the school lunch program, for other commodity programs. We added pork to our export programs. I created a pork task force. We targeted USDA purchases to hogs slaughtered on weekends to increase the number of hogs slaughtered because the demand for pork was up. It's not as if there is lower demand either at home or on the export side. A lot of it has to do with a constriction because we did not have enough slaughter capacity. It has created a dislocation. We also accelerated the voluntary pseudo-rabies eradication program, which is a disease that hogs can get and it was going to take us several years to do it. Now, we're going to do it in six months to get rid of all of these hogs that might be infected with this disease which would also take hogs off the market and help us on our export side of the picture. I also I announced a $50 million program to aid hog producers by providing direct payments to hog producers targeted to small producers. The market for hogs is now up to 25, 30 cents a pound, roughly. It's still not at a break even point, but it's up. The market has gone from about 8 cents to about 30 cents a pound. The future's market looks better than that. But, that is still a long ways away. I continue to have great concerns about the structure of agriculture, particularly in the livestock industry, particularly poultry, hogs, and cattle. The cattle industry is little different than poultry and hogs in terms of the nature of marketing arrangements. We have asked for some additional money for us to do work under our Packers and Stockyards Act enforcement. There's a lot of interest for the Justice Department to become much more actively involved in terms of enforcing antitrust laws. But, clearly, this is an area where to date we have not, as a matter of Government policy, been able to stop the movement toward concentration and consolidation in all of agriculture, but particularly livestock agriculture. Now there are many reasons for this. It's a complicated situation. But I'm also very concerned about it because what I think happens is it increases volatility. So when markets move down, they move down much faster, and they don't tend to move up faster, but they do tend to move down faster. With respect to the retail price spread, I have met with the retailers. We've done some jawboning in this area. There have been some efforts, some successful efforts by some retailers, but the spread is not as great as one would like to see. All I can say is that in the Department this remains a very high priority for all of us, and we're still looking at it. I may have some announcements in the next few weeks on other things that we can do in this area. market concentration Ms. Kaptur. I want to give other members a chance to ask questions, but I did just want to comment, and then I'll let others ask. And I'll wait for a second round. In my part of the country, we have all the industries you've just ticked off. All the livestock, certainly the poultry. And what has tended to happen is the total disappearance of all slaughter facilities, other than the large ones, the really big ones, not even in our State any more. And then what appears to happen is with the retail stores, the disappearance on the shelves of any locally produced products, the latest being eggs. When AgriGeneral, Kroger Company stopped purchasing Hertsfeld eggs and Zwyer eggs, some of our local producers used to have those as well as the poultry that went on the shelves. I can understand the retail stores desire to have a uniform product, and the more they can purchase, you know if they can purchase a million eggs from a big industrial poultry company, they probably want to do that. But it seems to me that there ought to be concomitant efforts on the part of the Department to provide ways to help organize farmers institutionally. We've talked to Under Secretary Jill Long-Thompson about this, on the cooperative side, that if they're producing hogs and you've got a group of farmers that can bring 5,000 hogs in a given period of time to market, that there ought to be a way for them to have their own slaughter facility to pledge some of the assets that they have because it seems in a way you can't fight that battle. Hopefully the Justice Department will get into it, but what I don't sense is within the Department the same kind of attention and budgetary sense to help those that do want to work together to try to provide product who are literally being excluded from market having the kind of developmental assistance, the kind of business assistance that one really needs and it is desperately needed in our part of the country. So I just wanted to put that on the record, and I will pay particular attention to the Under Secretary's budget and to see what's there, there's greater sensitivity there. I see in the Farmer's Market here a proposal, a little bit extra attention so these people still have some place to bring product to market. And, again, Mr. Secretary, I would just encourage you in the nutrition programs, which consume 60 percent of your budget, to even increase your efforts to see how the purchasing practices, which are generally just given to the State to do whatever they wish with Federal dollars, to be more focused on purchasing product from those that produce, not just from those that supply product. And this has been a long-term struggle. Secretary Glickman. Actually, I would like to just tell you that we are encouraging our schools and our other programs to buy locally produced product. That's actually a fairly new program that is moving into much higher gear now than we've had for some time. Ms. Kaptur. I thank you very much. Mr. Skeen. Thank you. Mr. Secretary, I would also like to have you put on your list sheep, lambs, and wool. I don't know why I would ask you to do that, but we're having a terrible time with them. At this time, I would like to go out of the ordinary regimen that we use in recognition and recognize Mrs. Emerson, who is a new member of our panel. I have this extraordinary privilege of welcoming you here. You may ask your questions. Statement of Mrs. Emerson Mrs. Emerson. Thank you, Mr. Chairman. First of all, thank you very, very much for giving me the honor of serving on this subcommittee. I really look forward to working with you and Ms. Kaptur on issues that you have both done remarkably--have taken remarkably strong leadership roles on. And so I thank you very much for having me be here. And, Mr. Secretary, thank you for all that you do and all that we hope you will do, and for coming today. emergency loans at fsa office Mr. Secretary, this morning I learned that farmers in my district can no longer get EM loans at their FSA office. This loan account has been depleted. And according to my information, we've got about 222 loans in the pipeline. Only 35 of our EM loans have been funded, which I guess that means about 85 percent of the EM loans are going to go unfunded. Now, obviously, this is an emergency situation that absolutely needs to be tended to immediately. Will your supplemental request include more EM loan funding as well? Secretary Glickman. Yes. trade sanctions Mrs. Emerson. Okay. I appreciate that because it's really very important. I want to move on to the issue of trade just for a second, particularly with regard to trade sanctions. It's my understanding that we've got trade sanctions, agriculture food trade sanctions, on about 120 countries right now. In the past, I thought it was about 61, but we've been told by the Farm Bureau that it's about 120 trade sanctions, more than half of which have been implemented in the last four years. Do you know or do you have estimates as to how much these sanctions may cost our farmers in lost sales? Secretary Glickman. Well, first of all, I think the actual number is closer to about a half-dozen countries, including North Korea, Cuba, Libya. I am told by our people that it reduces our exports by about $500 million out of a number in excess of $50 billion. Now that doesn't mean that we shouldn't be evaluating our sanctions policy, and we did last year with respect to Pakistan and India. But the fact of the matter is that we are not prohibited from selling agricultural commodities except in about a half-dozen countries. Mrs. Emerson. Okay. Well, then the Farm Bureau must have its information wrong, but they do, in fact, suggest that there are about 120. Can you then, for those---- Secretary Glickman. By the way, some of that may be sanitary or phytosanitary measures. You know, there may be problems, for example, we can't get our wheat into China because of the TCK problem, which we think is wrong on their part. I don't know if they count that or not, but the sanctions affect about a half-dozen countries. Mrs. Emerson. Can we ask them, because it is, obviously, income--any lost income to our agricultural sector is terribly critical right now. I'd like to ask you to become an advocate on this issue to try to get these sanctions removed. Certainly, food has not proven to be a good foreign policy tool. We learned that from the Soviet grain embargo in 1980. Secretary Glickman. Generally speaking, I agree that food should not be used as a weapon. But with respect to a lot of these countries, like Cuba, Iraq, Iran, North Korea, these are political decisions made by administrations and Congresses as to who we want to sell food to and who should be barred from getting food. Some of these decisions are made beyond my pay grade. But, at the same time, I recognize that, as a general proposition, food is in the humanitarian category, and we ought to do what we can to see that food not be restricted. p.l. 480, title i Mrs. Emerson. Okay, just one other quick question about trade in general. I noticed that you all proposed to cut to some extent the EEP program, as well as P.L. 480, Title I, in the Fiscal Year 2000 budget, at least according to my review of it. Given the importance of trade, I wonder why those have been cut. Secretary Glickman. Perhaps Mr. Dewhurst may want to talk a little bit about it, and then I would mention it after he is finished. Mr. Dewhurst. Well, you are correct; the P.L. 480 budget and the section 416(b) budget are both down a bit in the year 2000. There are two reasons for that. One is because we are running very large programs in Fiscal Year 1999. The administration has added $850 million to the P.L. 480 program level because of our assistance for Russia. So it makes the 2000 cut look steeper. But the program does come down a bit in 2000, notwithstanding that factor. It's largely a question of what can we fit inside the discretionary budget target. Mrs. Emerson. Well, considering that you all are adding $268 million for the Land Legacy Initiative and another $100 million for the Global Climate Change Initiative, it seems to me our priorities ought to be our priorities, and that is to help our farmers' bottom line. Anyway, let me move on to something that is real specific to my district, and Dan and I have talked about this. Secretary Glickman. The one and a half million tons of wheat for Russia was in addition to all the P.L. 480 numbers that we talked about as well. That program is going ahead right now. It isnot reflected in those numbers that you have said. cotton loan deficiency payments Mrs. Emerson. Okay. Let me just ask you about a specific situation in my district, LDP's to cotton producers. At the local levels, I've mentioned to you, and at the State level, the FSA employees believe that mistakes were made and have made an official request to provide relief to our producers. I guess it is hard for me to understand how the Department can discount the recommendations of the State and local FSA offices as to why you wouldn't fulfill the request that we made with regard to LDP's. We have probably got several thousand appeals that are going to be made to the Department because of this, and I wondered if you could tell me if you know the status of those. Secretary Glickman. I don't have anything more to tell you other than to say that this was a new program that started two years ago that we expected nobody to take advantage of. We are mailing well over a million payments. So I can't tell you that it has been done absolutely perfectly and smoothly during this time period. We are looking at the Missouri problem, and I don't have any more to tell you about the matter. Mrs. Emerson. Okay. Mr. Skeen. I would like to call a halt right here. Let us recess. We had the second bell on the vote. Let's all go over and vote and come back as quickly as we possibly can. With your indulgence, Mr. Secretary, we would appreciate it very much. [Recess.] Mr. Skeen. Mr. Secretary, we were trying to stay with the five-minute rule, but in this case we are going to let Jo Ann ask one more question; then we are moving on. Mrs. Emerson. I believe I was in the middle of just simply asking you to have your office let me know about that. [The information follows:] Cotton Loan Deficiency Payments There seems to be a great deal of misunderstanding concerning those producers in MO who requested LDPs in advance based on the date that the cotton would be ginned. These producers signed form CCC-709 that clearly states that the LDP will be based on the date of ginning for cotton, and that producers may revise of terminate the agreement at any time before the subject cotton is ginned. Producers also have the option of designating a specific amount of cotton (or all production) to be covered by the agreement. Unlike other commodities, LDP's have been available for cotton since 1986, so LDP procedure is not new to cotton producers or to FSA county offices in cotton producing areas. We are currently working with the state and county office staff to get a clear understanding of this situation and are reviewing a request for relief from the Missouri FSA State Commmittee. We will give the request thorough consideration within our legal constraints. We expect to answer this request within three weeks. limited set aside program Mrs. Emerson. The last question I had was to ask if you might be willing to support a limited set aside for farm program commodities---- Secretary Glickman. For grain? Mrs. Emerson. Yes. Secretary Glickman. I do not have that authority under the current law. Mrs. Emerson. No, I understand, but would you be supportive of such an idea? Secretary Glickman. I would say this: I am not going to prejudge it, but that would be a monumental change from the 1996 farm bill; there is no question about it. We need to sit down and talk about ways that we can improve the safety net. For the United States to unilaterally reduce production, unless the rest of the world goes along with us, we may not be able to accomplish very much in that kind of scenario. I have been thinking about this. I am looking at the crop reports and the situation doesn't look very bright in terms of stocks-to- use ratios. In years past, we would have had a setaside under these circumstances, but we have, for example, in the area of corn, Argentina; China; and other countries coming into the market in a very, very big way. So if we set aside acreable and they don't, it doesn't affect the price, for all practical purposes. So I don't want to necessarily prejudge what we would do. We have kind of done it the other way, by trying to get more humanitarian assistance to the Russians, which we have done in the multimillion-ton area for needy countries. I do think there are some other things we can do. For example, I favor providing loans for on-farm storage. I don't think that farmers should be forced to market their crop just because they don't have any facilities to store their crop. I think we have encouraged farmers to dump their commodity because we no longer provide those kinds of resources. So I am willing to talk about a lot of different things, but just unilaterally setting up setaside programs, I don't think right now is a very good idea. Mrs. Emerson. Thank you. [The prepared statement of Congresswoman Emerson follows:] [The official Committee record contains additional information here.] Mr. Skeen. Thank you. Mrs. DeLauro. Statement of Ms. DeLauro Ms. DeLauro. Thank you, Mr. Chairman, and if you are responsible for the pistachios in my lunch, I say thank you very much. They are very good. Mr. Skeen. The tip was on me also. [Laughter.] Ms. DeLauro. Welcome. Welcome, Mr. Secretary. It is a delight to have you, all of you, with us today. Food Safety This is a food safety question I am going to ask in this area today, but a little bit more topical. On an NPR report that I listened to early this morning I heard about a listeria outbreak at Bilmar Foods in Zealand, Michigan. Listeria, as I understand it, causes meningitis, serious and sometimes fatal infections in people with weakened immune systems, such as children and the elderly, and miscarriages and still births among pregnant women. In December, Bilmar recalled many of its hot dogs and luncheon meat sold to institutions. A month later, FSIS announced that additional Bilmar brands had been added to the list of contaminated products because it had been discovered that Bilmar had sold its products to supermarkets and retail stores as well. A couple of questions with regard to this, and, again, in general, surrounding the whole food safety issue is, why the gap between the two recalls? What can be done to prevent such gaps in the process in the future? Why did it take so long to decide to close the Michigan plant? Secretary Glickman. I don't know the answers to the specifics. I do know that today FSIS is holding a hearing on listeria. We have had a lot of attention on E. coli and salmonella. Ms. DeLauro. This is worse, as I understand it. Secretary Glickman. Well, certainly, we are seeing a lot more outbreaks of it, and particularly in smoked meats and in cured meats, the things that you would not have thoughtwould be the case. So they are holding a public hearing today. I would note that I do not have mandatory recall authority. I have to rely on the voluntary compliance of the companies. In most cases they do it fine. In some cases they, I think, need prodding. After all, the government can recall toys or it can recall electronic devices that are dangerous, and I don't have that authority. I think that would probably help. But I do not know enough to tell you about that particular case. Ms. DeLauro. If you can, I would like to know about that because there, again, apparently, this has been ongoing for a while with this particular company, which is a subsidiary of Sara Lee. We all know that Sara Lee is a name that people do trust, et cetera. There are lots of pieces here which get at the very heart of how we are trying to protect people. I don't have to tell you; your kids are eating and you just feel safe and secure with what you are doing, and then, in fact, the company can continue on while it is being investigated, thereby putting people in jeopardy. Secretary Glickman. We will get you a report by the end of this week as to what happened with respect to those recalls, so you at least know the time sequence. Ms. DeLauro. Thank you. Thank you, Mr. Secretary. [The information follows:] Mulistate Listerioris Outbreak The Food Safety and Inspection Service (FSIS) pursued an aggressive approach to controlling the Bil-Mar listeriosis outbreak in order to contain foodborne illness. Working cooperatively with the Centers for Disease Control and Prevention (CDC), FSIS began its investigation on December 15, 1998, upon receipt of information from CDC. This action led to an early recall by Bil-Mar on December 22, 1998, 2 weeks before contamination was confirmed on January 5, 1999. FSIS continued its inquiry and, as indicated by its investigation of another product unrelated to the original recall, the Under Secretary for Food Safety met to discuss these matters with industry officials on Tuesday, February 9, 1999, and the public on Wednesday, February 10, 1999. The recent listeriosis outbreak is a case where a relatively small percentage of the population was vulnerable and product was distributed quite widely. A new technology supporting this outbreak investigation is the FoodNet active surveillance system for foodborne disease, which is a joint effort of CDC, FSIS, the Food and Drug Administration, and the States. Through the 1998 President's Food Safety Initiative, FoodNet was expanded and this system allows the agencies to detect and respond more quickly to outbreaks of foodborne illness, and better identify trends in foodborne disease. In addition to FoodNet, we now have PulseNet, a computer network linking Federal and State agencies, which captures the molecular fingerprints of pathogens in a national database. Molecular subtyping of pathogens isolated from both humans and foods is important in helping public health agencies link specific products to specific human illnesses. Throughout the listeriosis investigation, our reliance on FoodNet and PulseNet resulted in an effective response to the outbreak. Following is a detailed chronology of events concerning the outbreak. [The official Committee record contains additional information here.] Small and disadvantaged farmers Ms. DeLauro. Another area, in your testimony you talk about how the administration is, ``also working hard to expand opportunities for small farmers and others who have been traditionally underserved in our farm program.'' If you could just briefly describe some of the programs that are available for small farmers and the benefits and assistance that they provide? Secretary Glickman. Okay. Let me, first, say that we created a National Commission on Small Farms to try to deal with a whole assortment of areas, from marketing to production. After one year, they gave us what I would say, is a passing, but mediocre grade, based upon our work to date. But the truth of the matter is that we are increasing our loans to small farms, and our technical assistance. We have created an Office of Outreach that deals with small farms. Certain areas like farmers' markets, organic agriculture, are areas where we are requesting increased funding because they are particularly useful for direct marketing, which smaller farmers deal with. Our technical assistance and our conservation programs are becoming in many respects much more small and medium-sized farm operations-oriented. I would tell you that, with respect to the entire Department of Agriculture, we have tried to instill in all the mission area leadership that smaller and medium-sized agriculture has to be a priority to them. This Department does a million different things--from loans to grants, to everything else within our jurisdiction. So I think we are ahead of the game from where we were last year. Let me also say this: We settled a very large case involving minority farmers. Ms. DeLauro. Right. Secretary Glickman. That settlement was the culmination of many, many years of people who felt that the Department in some areas had engaged in insidious discrimination. We are also making, in this context, a significant effort to try to help minority farmers get back into agriculture as well. Ms. DeLauro. What kind of marketing within the small farming community or getting the word out on those programs is going on, so that they know they can avail themselves of these kinds of new efforts? Mr. Rominger. As part of following up on the recommendations of the Small Farms Commission, we have a Small Farms Council now within USDA which is composed from people from all the mission areas, and every mission area has designated a Small Farms Coordinator, so that we can coordinate the programs. Those coordinators are working with the programs that their mission area delivers to get the message out. So we are working with places like the Center for Rural Studies, which is involved in giving us our report card. But that has all been part of the process, because when the Secretary set up the Small Farms Commission, we invited our critics to be involved and we put them on that Commission, so that they could give us their ideas. That is what we are following up on. Ms. DeLauro. This may be good information that Members can take because everyone is dealing with getting the word out--you know, newsletters, whatever it is that they do, to be able to be specific to people about what is available to them and help to carry that word, so that we are, in fact, getting people to avail themselves of some new efforts as well. A final question, if I can--if I don't have time, you just tell me, Mr. Chairman. Mr. Skeen. A quick one? Ms. DeLauro. Yes, it is just a quick one. Okay, thank you. You are wonderful. Housing for migrant farm workers Migrant farm laborers often have inadequate health safety. We need to have clean housing, safe housing for folks. The statement was Rural Housing Service administers farm labor housing programs. Are we looking at really improving the housing provided to agricultural workers? Secretary Glickman. Actually, I took a trip withSecretary Herman to Florida, near Homestead, where USDA has built some migrant farm housing. It is some of the best in the country. Most of the migrant farm housing that is built is built by USDA, not by any other agency of government. I don't know what the dollar amounts we have asked for-- there is an increase, right? Mr. Dewhurst. Right. All of our farm labor housing loans and grants programs are increased under the budget for the Rural Housing Service. Ms. DeLauro. Okay, thank you very much. Thank you, Mr. Chairman. Secretary Glickman. And we have a coordinator of these programs within our Small Farms operation, Migrant Farm Worker Coordinator. Ms. DeLauro. Thank you very much. Mr. Skeen. And from the coordinator, we go to Mr. Walsh. Statement of Mr. Walsh Mr. Walsh. Thank you, Mr. Chairman. I look forward to serving with you for another two years on this subcommittee, and Ms. Kaptur I think is certainly one of my favorites. These are important issues that affect all Americans. It is a great committee. We have got some nice additions to the committee. I would like to welcome Sam Farr, another returned Peace Corps volunteer. We're now up to two on the subcommittee. Sam, it is great to have you. Mr. Skeen. We are saved. [Laughter.] Mr. Walsh. There we go; still doing the Lord's work, so to speak. Welcome, Mr. Secretary, and all your capable staff. It is good to see you again. Mr. Dewhurst I am sure will be here many, many times this year. We welcome him also. I would just like to ask a couple of questions on dairy, and depending on how quickly they go, I will try one more. federal milk marketing orders Last year, as you know, Mr. Secretary, the Congress extended the time for you to announce a reorganization of the Federal milk marketing orders. That decision is coming up pretty quick, between February and April. As you know, just to sort of frame the question, most of the Members of Congress, 41 States, were in favor of option 1, but we did get the feeling that that wasn't your favorite. The intelligence or the rumor mill, whichever you want to call it, says that we may not get either one, but it will probably be a lot closer to option 1(b) than 1(a). I would just like to get your feeling on that, knowing what you know, that most of the country would be harmed by the 1(b) sort of option. Secretary Glickman. Well, as you know, we are in the midst of this process, so I am somewhat restrained on what I can say publicly. We haven't made a decision yet. We will meet the statutory guideline, which is April 4th. We have received extensive comments on this issue, and, quite frankly, they go all the way from support for option 1(a) without change to option 1(b) without change, to a lot of things in between and things outside those options. I worry about the fact that this decision will have an economic impact on people around the country. So we are going to try to be as fair as we possibly can, but then Congress will have a fairly extensive period of time to take a look at it after we are done. I think you will find that we have been fair. Mr. Walsh. Well, I think that is the key. The hope is that no one loses in this deal. But the concern is that there is a lot more losers under option 1(b) than option 1(a), and so we would ask you to consider that in your calculus on this issue. northeast dairy compact Secondly, as you may know, New York State recently voted to enter the Northeast Dairy Compact. New York State is sort of a key State, in that a number of other States are then free to join, once New York does. As you also are aware, the South has voiced very strong support for a compact in that part of the country. So I would just like to get your thoughts on this new trend in dairy. Secretary Glickman. Well, of course, once the milk marketing order process is finished, the Northeast Dairy Compact terminates. Congress can decide to reauthorize the compact. All things being equal, I think we are better off having national policies involving dairy and wheat and corn, and everything else, rather than regional policies. I suppose one could also make the argument that milk marketing orders, in a sense, create a kind of minor compacts themselves, although the structure is not quite as rigid as a compact would be. I would hope that you would be satisfied, that people would be satisfied enough with what we have come up with, that you would not feel compelled to have to go to a whole series of national compacts, but that is an issue-- obviously. I approved the Northeast Dairy Compact as part of the 1996 farm bill on a trial basis, but the idea was that, hopefully, you will be satisfied enough with what we do in this milk marketing order reform, that you won't feel the need to do it again. We shall see. national dairy policy Mr. Walsh. Well, I have been working on agriculture issues now for 10 years--the first 4 on the Agriculture Committee and now on Appropriations. National dairy policy is elusive at best. I see a lot of heads shaking around the room. It is a tough nut to crack. In New York, we are losing 10 percent of our farmers every year. A lot of that is economics; some of it is lifestyle, but a lot of it is the pressures on the price and on the land, the inputs. It is a difficult business at best. So they are looking for ways, and as good legislators, we are trying to respond to their needs. One other question off dairy for a second, it is on food safety. Do I have time for another one, Mr. Chairman? Mr. Skeen. Go ahead. irradiated meat Mr. Walsh. The FDA passed judgment on irradiation of red meat over a year ago. We just talked about E. coli and salmonella and listeria. It seems to be in the news quite a lot. FSTS has not issued a rule defining labeling and operational requirements for irradiated meat. So question No. 1 is: When will that happen? And No. 2 question is: What, other than stating of a policy of zero tolerance and doing product recalls, are we doing about these outbreaks? Secretary Glickman. Well, okay, first of all, we are supposed to be publishing the rule in The Federal Register. I can't tell you exactly when it is going to be, but I would say within 30 days maximum, hopefully, sooner. Mr. Walsh. That is in the record now. Secretary Glickman. just as I have said. Mr. Walsh. Okay. Secretary Glickman. I can't tell you exactly what it says, but it will be in conformity with FDA's rules. As I said before, I don't think there is any one cure-all for food safety, but irradiation is one of many things that can help.So that rule will be published fairly soon. There is a whole bunch of things being done. One is using good science and genetic mapping to be able to track illnesses, so that we can pinpoint a food safety problem instantaneously, before it becomes a national outbreak by doing genetic fingerprinting and mapping of, let's say, E. coli or listeria or salmonella. That is now being done all over the country. It is very expensive to do. In fact, I was at the University of Washington, which is one of the leaders in the country in doing this, and there are several universities that are part of a network, along with the Centers for Disease Control and USDA laboratories--the kind of reporting mechanism, tracking mechanism, that's a big part of the President's food safety initiative. It has kept some of these outbreaks from spreading like wildfire, and allows us to be able to identify the problems very early on. Our research budget is growing in the food safety area. One of the things that our scientists discovered was a spray that was used on young baby chicks within three days of their birth that could provide a 98 percent protection against salmonella at later stages of their life, maybe even higher, 99 percent. I think it is going to work. I think it could be a monumental effort to deal with this problem. I mean, our whole HACCP proposal, while it has been controversial--we have talked about this many times in the past--we are doing our best to work with these plants, and it is beginning to work. We are seeing some quantifiable evidence that there is a reduction in pathogens occurring. haccp program Mr. Walsh. The irony is that there has been so much news about listeria, especially recently, at the same time that all the major plants are up online on HACCP now. Secretary Glickman. I have asked that question also: Why the increase in listeria? What is there with listeria that has created the increase? Because in listeria we are dealing with a lot of cooked products or precooked products, smoked products. As I said, FSIS today is having a public meeting on this subject. So, all I can tell you is that this is a broad governmentwide inquiry, but cooperative with industry. We are not fighting with industry as much as perhaps we did early on. I met recently with some of the major restaurant chains, and discussed how they are participating in the HACCP program. So I think it is a new day in terms of food safety. Mr. Walsh. Thank you, Mr. Secretary. Thank you, Mr. Chairman. Mr. Skeen. Thank you. Mr. Obey. Statement of Mr. Obey Mr. Obey. Thank you, Mr. Chairman. Mr. Secretary, I don't so much have a question as just a number of brief comments. Then if you want to respond when I am over, I would be happy to hear what you have to say. regional compacts Let me simply say, with respect to regional compacts, I was pleased to hear your comments. I find it ironic that some of the same forces in this country who tell us every day that we ought to be singing hosannas to the idea of open international markets are some of the same folks who are saying that within our country we ought to be erecting what, in essence, are trade barriers. I find that logic interesting and quaint, but not persuasive. I was happy to hear your comments on that. cost-of-production data I would also note, I would like to thank you for how rapidly you implemented the publishing of cost-of-production data. My farmers have been frustrated for years that everybody knows what farmers get every month, but they don't have any idea what it costs them to produce that same product. And I appreciate the fact that you were quick in getting that out, once we included that in the appropriations bill. milk marketing orders Thirdly, I would simply say, with respect to milk marketing orders, I have a great deal of respect for my friend from New York; he's a fine Member of Congress, but occasionally he is wrong on an issue. [Laughter.] I think he is on this one. Let me simply say, April 4, you mentioned that is the deadline for reporting the milk marketing orders. That happens to be the anniversary of my 30th year in Congress. So I hope you don't give me a lousy birthday present. [Laughter.] Secretary Glickman. Unfair. [Laughter.] We could do it the 3rd. [Laughter.] Mr. Obey. I guess what I would simply say is this: And I don't want you to comment on this because I know that you are in the middle of having to make these decisions, and it is not proper for you to comment. But we can, nonetheless, sound-off in public, I guess. I would simply say that in Wisconsin we could lose up to 40 percent of our farmers within the next decade, if we have to compete against a rigged market price. In the Freedom to Farm bill, the idea was we would all move to free markets. God bless them, I hope that works, but I have great fear of moving into an era with no safety net. But if we are going to move into a free market, I think dairy farmers feel that is one thing. But if my farmers move to what is called a free market, but is really a rigged market, that, to my mind, is not rational. I would simply note that, when you did issue your initial regs for comment, I would note that this committee first tried to dictate a legislative outcome--by ``this committee,'' I mean the Appropriations Committee--and then when that failed, they did pass the six- month provision, which, in essence, delayed your ability to act for six months. I believe that was a political act. The supporters of the status quo tried to send you a political message that, if you moved very much, they would shoot your tail feathers off and reverse you. I would simply say that I hope that the result of the rulemaking process will not demonstrate that they have totally won that ballgame. That is all I will say about it, given your situation. safety net for farmers I would like to talk just a moment about two other things. I see a lot of headlines and I see a lot of people talking about the need to restore some kind of safety net for farmers. I hope that, if that comes to pass, that dairy farmers will be included in that proposition. The reason I say that is because, as you know, dairy farmers have been for a few moments getting record price for their milk, but that is changing very fast. The cheese market has fallen substantially, and people are talking about seeing prices in my area, for instance, that could drop by as much as $5 or $6 a hundredweight over a two-to-three-month period. That would be about a $750 million pay cut for America's dairy farmers. I think that we need to remember that they have already, in real dollar terms, since 1980,lost about half of their income, between 40 and 50 percent, depending upon whose numbers you use. I would simply note that and ask that dairy be included in any repair job, if we come to our senses and recognize that there needs to be some effort to take volatility out of all of the farm markets. emergency funding for dairy farmers Then I would simply say, with respect to the $200 million that I was able to get in the budget last year for dairy farmers, I would hope that that money can be gotten out as quickly as possible, and that it will be targeted as much as possible to small- and middle-sized operators. I think the National Milk Producers made a good-faith effort to compromise with their suggestions, but, in my view, I would still prefer to see that targeting be somewhat more focused on low- and middle-income farmers and small farmers. That is about all I wanted to say. Feel free to comment on anything that you want to. I recognize you don't want to comment on the milk marketing order situation. Secretary Glickman. I would just make one quick comment on the $200 million program which you put in the appropriation. We are in the process of coming up with some solutions, and it needs to be done fairly soon, because prices are dropping. Mr. Obey. Right. Secretary Glickman. I think folks need to know those monies are going to be out there as quickly as possible. I would say that when we made the $50 million hog payment program, we did target that payment based upon size of operations. In fact, I was criticized because there were a lot of farmers outside of it, but we made the decision that we had a limited amount of money and it needed to go to small- and medium-sized operations. My belief is there is going to be some targeting in this program. Mr. Obey. I would hope so. I thank you, Mr. Secretary. I appreciate it. Thank you, Mr. Chairman. Mr. Skeen. Thank you, sir. Mr. Nethercutt. Statement of Mr. Nethercutt Mr. Nethercutt. Thank you, Mr. Chairman. Welcome, Mr. Secretary and gentlemen. export sanctions and free trade I want to follow up a little bit on your comments in your opening statement, Mr. Secretary, and also, Representative Emerson's comments about sanctions and free trade, and so on. I have a bill that I have introduced, H.R. 212, that lists sanctions for agriculture and medicine, subject to the imposition of a waiver or the imposition of the sanctions as designated by waiver by the President, if lifting those sanctions on agricultural products and medicine is a threat to national security. Whether it is 12 or 160, at least in my State, which exports 90 percent of our agricultural products. This bill would be a great assistance in attempting to get back the markets that we historically had an opportunity to access. Cuba, for example, we used to sell a lot of peas to Cuba, and Canada now does that. Iran is another country that we would sell wheat to in a minute. Again, I would hope that your Department would look carefully at that policy and be a champion for it, because I think, if you look at Freedom to Farm as I look at it, part of the structure of the Freedom to Farm approach to free market agriculture was that farmers would have markets to sell their products. I think this is a way to assist in that regard. The same with the TCK smut issue that you mentioned, I have been here for four years and I think I have asked you questions about this issue every single year. We don't seem to get any relief from China, either through our Trade Representative or because of their intransigence, probably a little of both, but I think your Department should take a lead to the extent that it can further push the opening of the China market at least on that issue. wheat deficiency payments The third thing I want to mention is certainly club wheat issue that Jo Ann mentioned for her commodities in her State. Our State kind of got the short end of the stick on the club wheat, loan Deficiency Payment issue. The policy changed in August of last year, and our farmers had already sold and they are entitled to get some relief. I have received a letter back from your legal department basically saying, legally, we can't do it. So I am putting in a bill to see if we can't give affected producers some relief, along with Jo Ann's farmers as well. agricultural research But I primarily want to mention to you, and get your response to, the issue of agricultural research, which is another killer of the success of the Freedom to Farm Act. I notice in the budget--and I haven't studied it extensively yet, but I have been studying it some--have seen that there seems to me a movement of agricultural research dollars to the nonproductive agriculture research as opposed to the production agriculture research sector. Some of the special grants that are criticized by some in my own party, who don't like that designation--I can justify it on the basis that Washington State is different than Iowa and they have different crop problems and disease problems. Therefore, special research grants, I think, are fully justified to meet the needs of the particular geographic areas of our country. Unless I am mistaken, $35 million has gone over to the national programs of significance, the global warming/carbon cycle studies, and that sort of thing. I would like your reaction to my argument, at least my premise under which I raised the question. Certainty of agricultural research for farmers and researchers is extremely important. I know it is a year-to-year budget that we go through, but there has got to be some certainty for the researchers to know that they are going to be in a location dealing with a five-year solution to an agricultural research problem. We fought the battle with you on the Prosser Research Station. The budget--and I don't blame necessarily all of you-- but the Office of Management and Budget knocked it out, and the same with Mandan, North Dakota, that affects Congressman Pomeroy. We put them back in. That allows some sustainability of research and attracts researchers in a day that we need experienced scientists to continue their research efforts to combat disease and improve yield. I don't know if it is your doing or if it is directed by the White House or the Vice President, or who ever it is, but $35 million of research for global warming, although it is important and there are other agencies of government that do that, takes away $35 million, as I see it, from the production agriculture side of research that really is felt by our farmers. So I would appreciate your comments. Secretary Glickman. Well, I think it is a good question. First of all, let's say we have an increase of about 8 to 10 percent this year. We have a real increase overall in agricultural research dollars for the first time in--I don't know how many years but we have a real increase. Ithas been nearly 10 years. Most of those monies do go in the basic research programs. I would say that I do agree with you; we have moved some money from the Formula programs into competitive grant type of programs. That is always a bit of controversy. I am sure you will fight that battle here. It is not just this administration; others have done it. I would also say this: There are priorities that every administration focuses on when they get a little extra money. This administration has some priorities in the area. You may have differences of opinion on some of those priorities. I know that there is a lot of discussion about global warming, for example, and what should be the role, of our soil conservation experts to try to do the kinds of things to prevent carbon emissions in the atmosphere, those kinds of things. The best I can tell you is that we were able to get a fairly healthy increase overall, and most of the funding is going to be in areas that you are going to support. I think that research has been underfunded for many years, as a general proposition. I mean, we have a lot of advocates. The Deputy has been pushing a lot of these programs. A lot of the research programs do have specialty natures: methyl bromide alternatives. There is Mr. Farr's panel. How to comply with the FQPA--some of this is regulatory; some of this is research. Human nutrition is somewhat controversial, but, by and large, it is something the public is very interested in us providing monies for research on how to make foods more nutritious, get more vitamin absorption in order to help hungry people. You are going to have different priorities from different people on what you should do, but, by and large, I am hopeful that our program is general enough to allow us to do the basic type of research that we have been doing over the years that makes us so productive. Mr. Nethercutt. Well, I hope so, too, because it sends a bad signal if the Department of Agriculture indicates that agricultural research is expendable. I don't think it is expendable in today's world of trying to have the farmer be more independent. food gleaning It gets to the food gleaning issue that you mentioned. I remember asking you the question a year ago on that subject, as to whether the development of this new program would be administration-heavy, and I remember your testimony was that ``it is grants. It is all grants'', I think was what you said; at least the record indicates that. Now I understand that you have had communication with our chairman that there will be some special administrative costs totaling $890,000. I am wondering if that--again, then, that sends a signal back out that we want to use this food, and not waste it, but, yet, that we are creating a new bureaucracy that some of us feared a year ago, when we were sitting here. I know $890,000 is not $16 million, which is the roughly program cost. Yet, we don't want to see the administrative coats get bigger and bigger and bigger. My sense was we were going to administrative costs within existing resources. Is that the case or has this changed? Secretary Glickman. The goal of that program is to create community food security, so that towns like Spokane or Wichita or others can have the kind of resources to use their hunger infrastructure more effectively, either through gleaning or dehydration of food or other kinds of things. I cannot speak specifically about the $890,000, what it is. Steve, can you talk about that? Mr. Dewhurst. Well, the funding for that organization is now in the Research and Extension part of the budget. In fact, there was a piece of it that was in the Food and Nutrition Service. It shifts from one part of the Department to another; it is not really an increase over what we had in the past. Secretary Glickman. Part of it, to be honest with you, is that we consider this an Extension function as much as we consider it a Food and Nutrition function. We have the finest Extension network in the world. What they do is to get information out to people, and that is one of the reasons why we put the funding there. Mr. Nethercutt. All right, my time, I am sure, has expired. I thank you for your testimony and for your work. Thank you very much. Mr. Skeen. Thank you. dairy assistance Mr. Secretary, on that $200 million you have in dairy assistance, I hope that it should be nondiscriminatory as far as size of operation. Is that pretty much the litany that we have been going by or not? Secretary Glickman. Well, that is part of the discussion, as to whether the $200 million applies to every animal produced everywhere in every part of the country on an absolutely equal basis, or whether we try to target those funds. The only thing I can tell you, Mr. Chairman, is when it came to the hog situation, we had about $50 million that, if we made it applicable to every hog in America, we would probably end up at 10 cents a hog. I mean, it wouldn't have made sense--I don't remember what the exact amounts would be. But, anyway, the amount of money probably means that we have got to at least try to do what we can for those farmers who seem to be the most vulnerable. Mr. Skeen. You have gotten to the point where you use good discretion in your judgment, and that is what you have to do. I understand that. Of course, also, we had a word with you on the dairy order reform, on the dairy program which is option 1(a). I think we sent that message to you. Secretary Glickman. Yes. Mr. Skeen. Yes, sir? Received? Secretary Glickman. Received. Mr. Skeen. Fine. Mr. Hinchey. Statement of Mr. Hinchey Mr. Hinchey. Thank you very much, Mr. Chairman. Secretary Glickman, it is a pleasure to see you. I want to join others who have congratulated you on the work that you have done during your tenure as Secretary. I think most of us admire it very greatly. Secretary Glickman. Thank you. global problems Mr. Hinchey. Your tenure has also coincided with two serious global problems: one, economic, and the other climatic or environmental. I think that these two circumstances impact directly on the future of American agriculture and make the agricultural industry, which is always fragile, even more so. Are there any long-term programs that the Department has engaged in, or any long-term recommendations that you are making to the Congress and this committee, with regard to the anticipated impacts of the continuing economic crisis, which has now touched this hemisphere? Similarly, how are you planning to address the environmental crisis, which is causingthe disruption in weather patterns which you spoke about in your opening statement? Is there anything that we can do, anticipating these quirky global weather changes brought on by global warming, over the course of the next several years? global change research Secretary Glickman. Well, there is an increase of about $35 million for global change research. I recognize that this is controversial in some sectors in agriculture, and there are some people who do not believe that this is a real problem. I disagree with them. I think it is a real problem. I think it is worth doing the research necessary to do the prediction and interpretation, to understand what changes in climate, if they are, in fact real, will cause with respect to drought, pest infestation, productivity of crop. Today there was a report which says that we may be seeing a situation fairly soon where yields will be moving up in the northern part of the United States and moving down in the southern part of the United States, because of just very, very minor temperature changes. Whether it is part of a big pattern of a thousand years or something shorter, whether it is something we caused because of too many cars, or whether it is just part of the natural order of things, we need to know about it. Agriculture is more affected by the changes in the climate than any other part of the American economy. This is like, frankly, a fairly small amount, when you consider the potential impact on the world. biotechnology Let me just mention another thing, and that has to do with biotechnology. A lot of our research is in the area of using biotechnology. By and large, I believe that biotechnology gives us a way to feed a hungry world using less pesticide, less insecticide, less water. It also involves technology that must be used very carefully; otherwise, we could get into a situation where, through patent rights, one person owns it all. We have to ensure that there is some equity of ownership in the process. But biotechnology offers another way for agriculture to cope in a world where there are major climate or ecological or environmental changes. We should not be shy to continue to do that kind of research as well. economic dislocations The third thing is the economic dislocations. You know, all I can tell you is that you have got to have farm programs that shield people during times of major economic dislocations. I think we thought the 1996 farm bill was written when we were going to be dealing with a world that would be growing forever, and it is growing, but there are some problems associated with it. Mr. Hinchey. I would agree with you. I think that these are probably the two largest problems faced by agriculture today, and both were unanticipated by the 1996 Farm Act, certainly. They are impacting our agricultural production system very heavily, and give every indication that they will continue to do so for the forseeable future. crop insurance Secretary Glickman. That is another reason why crop insurance is so critical. The Deputy just mentioned to me--and he is right--that agriculture is the most uninsured part of the American economy. Interestingly, livestock is the most uninsured part of agriculture. You really can't buy insurance for this area, for all practical purposes. How do you cope with changing weather problems on a year- to-year basis? Really, that is something that we have got to work together on to try to address, and it is going to be expensive. It cannot be done on the cheap, but I think it can be done cheaper than a $6-billion-a-year disaster program. Mr. Hinchey. Well, it certainly can be done cheaper if we move now to anticipate it and take actions to be ready for these things than if we just let events take their course and be caught unaware and off guard. I think that is the real danger, and therein lies the real expense as well. It is going to cost us a whole lot more in the long term if we don't take some prospective action now, anticipating these problems, because they are right in front of us. Ms. Kaptur. Will the gentleman yield? Mr. Hinchey. Yes, I will. Ms. Kaptur. I just want to apologize to my colleague, but I just wanted to add a little addendum here on the crop insurance issue or risk insurance. Probably one of the more interesting people I have talked to in my life on that question is the Chairman of the Federal Reserve, Mr. Greenspan, whom you would think would not have thought in his life at all about crop insurance, but began his career in the Chicago futures market. So I would just say to the Secretary, if you are looking for an interesting lunch sometime--[laughter]--why don't you call him up? Believe me, it will be worth your time. agricultural research Mr. Hinchey. The issue of research is one that I think is very important. I noted in your testimony, and in response to a number of questions, you said that you are asking for an 8 and 10 percent above last year's budget, but that, for some period of time in the past, there has been no increase in research. That area of the budget has been in suspended animation. First of all, I wonder if 8 to 10 percent is enough and if we ought to be doing more in that particular area. I can't think of any area that is more important, perhaps except for the ones we just mentioned, with regard to the future of agriculture. Secretary Glickman. I have to live by the budget we presented, and my own personal view is that we underfund research generally in this country, not simply agricultural research. Mr. Hinchey. But is it 8 or 10 percent that we are anticipating? Mr. Dewhurst. We have used both numbers. [Laughter.] It is 8 percent increase from Fiscal Year 1999. We got a one-time appropriation in Fiscal Year 1999 for some anti-drug work in the Agriculture Research, about $27 million. If you take that out of the equation, because it was a one-time appropriation, it increases about 10 percent in everything else. So in the real world it is a 10 percent increase in our ongoing research program. Mr. Hinchey. I hope that we can at least provide that amount in the budget for you. If I may, Mr. Chairman, just one other thing--the issue of food safety has been addressed. I am wondering to what extent the issue of food safety boils down to the question of visual and manual inspection on the line in theseagricultural production facilities. I am thinking particularly of meat production facilities. food safety My recollection is that we have been moving from a system where FDA inspectors were out there on the line to assist the processors, to one, where inspectors employed by the entity and conducting the operation are doing more and more of the inspection. My first question is: Is that true? And if it is, is that something we ought to be encouraging? Secretary Glickman. Okay, no, it is not actually true. First of all, the inspectors are part of FSIS, Food Safety Inspection Service. The FDA does not inspect meat and poultry; we do. Second, since the Federal Meat Act was enacted, we have done what is called carcass-by-carcass inspections. The product goes across the line and inspectors look at the product, make a visual inspection, and use their senses to make sure that the product looks okay. Mr. Hinchey. Are they government employees? Secretary Glickman. They are government employees. What we have found is that in some countries they do not use government employees. We do use government employees. We are not talking about using industry's, own employees do the inspection on the site. However, with the HACCP program, we are going to more of a science-based system, where they will do more testing. Some of that testing may be done by the companies with FSIS review of the test results, but we will still have our inspectors there doing the inspections, and much of that will still be carcass- by-carcass inspection. But some of these pathogens can't be seen by the naked eye. Some of them can be. Quite frankly, we have had some labor-management problems within the organization because of this, but I have tried to make it clear that this is not an effort to reduce the number of inspectors at all. We need everybody we have got in order to be there. They may be, in some cases, doing different things than they did before. Mr. Hinchey. Thank you, Mr. Chairman. Mr. Skeen. Thank you, sir. Mr. Bonilla. Statement of Mr. Bonilla Mr. Bonilla. Secretary, once again, welcome. It is as always been a pleasure to work with you over the years. We wonder sometimes, as I asked you earlier, if you miss us sometimes, but I doubt you do. [Laughter.] Secretary Glickman. The last three months I haven't missed it at all. [Laughter.] Mr. Bonilla. We have a lot of tough issues to deal with, and I just want to mention--I don't want to really get into crop insurance right now, but you alluded to it a minute ago. That is going to be a big problem we all have to deal with, and we will talk more about that later. livestock assistance program I wanted to start out asking about the Livestock Assistance Program. Last year, as you know, as we were getting an emergency bill together there wasn't a lot of money in that bill at first for livestock assistance. I worked very closely at the time with not only Joe Skeen, but Chairman Smith at the time, to get that number up to $200 million. We appreciate how the Department has streamlined and simplified this program to get people signed up. Of course, the problem is that the deadline for signup keeps getting extended over and over again, and those who signed up earlier are still waiting and wondering when the deadline is going to be a true deadline, and they can start getting some of the money, because these folks have been hurting for a long time now. So my question is: When will the deadline be a true deadline to sign up, so they can start seeing some of the money? Secretary Glickman. The signup started in November. I am not sure we have any plans to extend the signup. We have not cut it off, however. It is still going on. As you know, there is $200 million in funding for emergency feed assistance. The end of the signup has not been announced because the regulations are still in clearance. We think that we should have close to the amount needed to meet claims at traditional payment rates of between 25 and 50 percent. This is what we have done in this program before, but we have not announced the payment rate yet because we haven't seen what the total signup is. Mr. Bonilla. That is what I am referring to---- Secretary Glickman. Yes. Mr. Bonilla [continuing]. Because that cutoff deadline, apparently, you are waiting for that to be implemented. Secretary Glickman. I understand the Farm Service Agency reports that claims at the end of January totaled $437 million, with additional claims expected. The program covers 1998 calendar year losses, mostly for drought losses from the South. Texas accounts for $160 million so far of the gross claims. The best I can do is to try to get back to you and tell you when we think this will close. Mr. Bonilla. Can you get me the final dollar figure? Secretary Glickman. The final dollar figure. It may be that, if we have more in claims, then those allocations are going to have to come down some, in which case this is something you may want to consider in terms of---- Mr. Bonilla. A supplemental? Secretary Glickman [continuing]. A supplemental or something. Mr. Bonilla. We will be happy to do that, but at some point some of these folks---- Secretary Glickman. You need to have more information. Mr. Bonilla. We need money out there. Secretary Glickman. You need to know where you are. [The information follows:] Livestock Assistance Program Sign up for the Livestock Assistance Program opened November 23, 1998. The end of the signup period has been extended pending publication of regulations for the program. USDA expects to publish final rules early in March and close signup by the end of the month. The current estimate of loss claims totals about $800 million. Current funding of $200 million would be sufficient to reimburse producers with a 25 percent payment rate, less than the payment rate of 50 percent used in the Livestosk Feed Program until 1996, or the 30 percent factor generally used in livestock assistance programs since 1996. Based on the current estimate of loss claims, additional funding of $40 million would be needed to provide payments at the 30 percent factor. Wool and Mohair Producers Mr. Bonilla. Also, related to that, my wool and mohair people, I am glad Joe Skeen mentioned them earlier, because, along with the pork people, they are in bad shape. They haven't sold any product in three years now. We had the recourse loans that were extended to them last year in the Omnious Bill. We have been checking with your office regularly to find out when the folks can sign up for the loan. We understand that the pork prices took a lot of manpower out of USDA, but we feel that, if we could just give them a tenth of the attention that the pork producers have received, we could get these loans in their hands as well. To compound their problem out there--and I know this is a different area--the oil crisis in many of these areas in west Texas has pretty much broken a lot of the communities. So they could really use the help. Secretary Glickman. Actually, I am scheduled to meet with the American Sheep Industry Association this afternoon. I am sure this will be part of the discussion. Mr. Bonilla. Well, we don't want to hold you up, then. [Laughter.] Mr. Skeen. No, he can go now. [Laughter.] Secretary Glickman. My paper says our best guess is the rules are in simultaneous clearance, and they have been virtually cleared. OMB will have a month to clear the rules, but they have been provided with an advanced copy and will likely clear the package quickly. My best guess is that in the next two or three weeks these will go to The Federal Register. AGRICULTURAL EDUCATION Mr. Bonilla. Okay, and I am glad you are having that meeting today because they will probably be asking you some of the same things I am asking you right now. I want to move now to the area of education. The disaster package was passed to keep farmers farming and our ranchers ranching, it was an investment in the future of agriculture. I am interested in what kind of efforts and commitment USDA has put into the long-term future of agriculture, specifically education. We have about 800,000 students sitting down in classrooms across the country every day trying to get involved in this profession. Someday they may want to be working for USDA and pushing some of these initiatives. With all of the information and technology that you have, I want to know what you are doing to get this information in the hands of instructors out there. What contributions has USDA made to school-based agriculture education? I believe a report on this matter was requested in our last bill, and the Department of Education is waiting for some of this information to move into their hands. Secretary Glickman. Of course, it starts all the way from the bottom. We have an Ag in the Classroom Program, and the States have been involved in helping fund that particular effort. But, largely, this is done through the land grant schools and our Extension system. In addition, we have put some money in our rural development budget into distance learning, telecommunications, in order to allow rural areas to be served by the information superhighway and to be able to allow teleconferencing, distance learning, and telemedicine techniques to be done in rural areas, small towns, just as much as urban areas. Now I may not be quite answering your question. What other kinds of things are you talking about? Mr. Bonilla. We are talking more about at the high school level versus the college level. That is what the report language asked for, a little summary about any initiatives in this area. Mr. Dewhurst. What has happened is that the Department has been working with the Department of Education to create guidelines for high-school-level agricultural education grants. The work is about done. There is a request for proposals, which will invite proposals from schools and from teachers who engage in these activities. We expect to publish that request for proposals in the early spring; that is, in the next month or two, for implementation next year. So the activities that the report had in mind are happening, but I think what we need to do is provide you with a much more complete report on where all this stands. Mr. Bonilla. So can you do that fairly soon, do you think? Mr. Dewhurst. Yes, sir. [The information follows:] [The official Committee record contains additional information here.] FSA PAPERWORK PROBLEMS Mr. Bonilla. Okay, another question I have, Secretary, deals with FSA. Some of the ranchers have been calling, when they are applying for loans, and so forth, and talking about the paperwork and the requirements sometimes. They are asking for, for example, the birth weight, weaning weight, and selling weight of calves. I know they have to answer a lot of these questions, but, as you know, when a calf is born, they are not waiting there with a scale to see what it weighs, and sometimes, if they don't have this information, this can tie up the business they have with FSA. Have you heard about this? Secretary Glickman. I haven't heard about this particular issue. I have heard about other paperwork problems. Over the years, the Farm Service Agency and its predecessor, ASCS, has been a very top-down, paperwork-oriented type of agency, you know, proven yields, historical acreage requirements, etc. We are trying to get away from that the best way we can and give our county offices and our State offices a lot more flexibility in some of this. But I have not heard about that particular case. Mr. Bonilla. I would appreciate it if maybe we can communicate with you about that, to eliminate some of these silly things that might hold up some of the loans. Do I have remaining time, Chairman? Can I just make a closing statement? Mr. Skeen. Go ahead. AMERICAN HERITAGE RIVER INITIATIVE Mr. Bonilla. I am going to, I guess, put into writing some questions I have about the American Heritage River Initiative. We talked about that last time. I know it is not your idea, but I know that USDA has started to get involved in that. My questions will center on how much money is budgeted exactly, how much in last Fiscal Year, how much in the upcoming Fiscal Year, and things along that line, because I am really trying to track this. A lot of my farmers and ranchers are very concerned about whether or not this initiative might infringe on property rights, as you know. So we just want to keep an eye on that. Thank you, Secretary. Secretary Glickman. Thank you. Mr. Skeen. Mr. Farr. Statement of Mr. Farr Mr. Farr. Thank you, Mr. Chairman. I am really excited to be on this committee, and I want to thank you and Marcy Kaptur for your leadership. I moved over from the Agriculture Committee, and I learned there that agriculture is people, and that all agricultural politics is local politics, because everybody represents something different in agriculture around this great country. This budget, as I have been reading it--and I love having these explanations; we don't get that in the policy committees--I find it very exciting, it gives us an opportunity to really do a lot more with existing money. As I read it, I see from my experiences at the State and local level that there is a lot more coordination/collaboration that we could do, and I look forward to working. I have three questions really with the time that is allotted me: one on disaster, one on research, and one on rural housing. The disaster question--and I think we have got a really talented group here. It's rare that you have a former Member of Congress and a former Director of Agriculture of the biggest, most diverse agricultural State in the Union, as Rich Rominger. I think it is exciting to have them interact with us as we go through this exciting opportunity. DISASTER ASSISTANCE The disaster assistance is really--what is the status of the implementation of last year's disaster bill, and is there really enough money there to get to the farmers? Do you think it has responded to the needs which came about in this last disaster that we had? And while I am on that, there has been a question that, the disaster law relates to the day and moment of the disaster. That disaster happened in 1998, but the fruit that was on the tree, particularly for citrus, Valencia oranges, summer lemons, grapefruit, and so on, those trees will be harvested in 1999. Is there ability to provide assistance to those crops if we find that they are going to have a disaster at time of market? Secretary Glickman. Okay, well, first of all, I want to make the following comments: One is the appropriations bill had about $6 billion in budget authority for disaster. Out of that, the market loss payments, basically, what I call the supplemental payments, of $2.8 billion were distributed within three weeks after passage of the bill. So there were several hundred thousand payments that went out almost instantaneously. These were the people who were already getting payments, and they got about a 50 percent increase in their payments. That was done before Thanksgiving. The rest of it is about $2.4 billion, and the signup began on February 1 for the disaster program, and then, out of that $2.4 billion, $400 million is being reserved to reduce crop insurance premiums. So would that mean we would have about $2 billion for disaster payments? The assistance you mentioned would be handled within that figure. CROP INSURANCE Mr. Farr. What is your experience of the percentage of the industry that is in the crop insurance program? A lot of these specialty crops don't get into it. Secretary Glickman. More and more are getting into it. Perhaps the Deputy might know--one of the goals of our proposals is to try to get an additional group of people into crop insurance who were not otherwise there. Mr. Farr. And then the NAP Program, which allows for those who aren't in the program, there are caps on that that virtually exclude growers in California from being able to participate. Secretary Glickman. That is correct. Let me just say that in connection with the California crop, much of the California crop under the freeze is covered under that 1998 bill. Some of it is not; most is. The Deputy has been out there and is more familiar with that than I am. But we are operating within the guidelines that Congress provided when they passed the bill. Mr. Farr. Perhaps what, I guess, it gets down to--and my staff can work with you--we need to tell the citrus industry of 1999 what might be available, left over from 1998, that still applies to them, because these are usually measured, you know, like crop losses, what is your income from last year versus your income from this year, and market variation, and all that. METHYL BROMIDE RESEARCH The second question is a research one, and it goes to methyl bromide. An always controversial issue. We have been appropriating about $14-plus million a year for methyl bromide research. The farmers are more and more frustrated that they see that money or hear about the money, but never have it trickle down. I am going to really be watching closely how much the Department has been really working to get that into the field for pre-harvest and post-harvest, rather than, as I understand, a lot of it went to structural alternatives for fumigation of houses and things like that. That is not the direction Congress intended this move to be used. ORGANIC RESEARCH My third question is in regards to organic agriculture. You mentioned the number, the 285,000 comments that you received, but what I understand, you have got $131,000 in this budget for one staff year to continue to implement the proposed rule. It seems to me that that is a one-day job. You have the comments; you had all the rules; you knew which parts of the rules were controversial. Why don't you just eliminate the ones that were controversial, bring the whole package back, and get it done? Why is it going to take so much time to do it? And in the process of getting it done, then you have got to go through OMB again. Is there an ability to squeeze this? I mean, we have been there. We don't have to reinvent the wheel on this rule. Secretary Glickman. Well, the problem is that there were controversial parts of this rule: whether genetically- engineered organisms should be included, whether sludge should be in there--and other issues. There are dozens and dozens and dozens of conflicts that still remain on certification, who does it; who pays for it; what is the role of the States; what is the role of the Federal Government? I wish we could get this thing solved overnight. I think we are going to get it done. Mr. Farr. Well, if those rules had been adopted and the comments weren't there, those are the same issues you would have had to implement them. Secretary Glickman. We would have had them anyway, but they were, frankly, pushed in the background by some of these high- profile issues. Quite honestly, if I had it to do all over again, I wouldn't have put them in the rule; we asked for comments on them. The fact that we asked for comment on them led people tobelieve that they were going to be in the rule. But my belief is that we will have an organic rule out--I have told our folks--this year. At least we will have a rule proposed this year that will go to OMB, and hopefully, we will have something done this year. I can't guarantee you that, but that is my goal. Mr. Farr. Can you get OMB involved in this dialog ahead of time? They were part of the problem last time. Secretary Glickman. Yes. Mr. Farr. And it seems to me we just go back and reinvent the problem. You take another year; you edit it; then you go back to OMB, and then they come back to you, like they did last time--I mean, the law was adopted in 1990 and we are still waiting for implementation. Secretary Glickman. I voted for that act. Mr. Farr [continuing]. And we don't even have a rule yet. Secretary Glickman. I had hair when I voted for that. [Laughter.] Mr. Farr. This industry is growing. It is a $4 billion industry, and it is growing at 20 percent a year. I mean, this is just taking off, and we don't have any way of having a rule. It is ridiculous. Secretary Glickman. Hey, I just recorded your comments, and we are going to take them back to our people. I mean, the truth of the matter is that we ought to be able to get this rule out. I can't tell you it is going to be tomorrow, but we ought to be able to get this rule out this year. It can be done. Mr. Farr. Well, I am going to make sure that that $131,000 is really going to get that rule out, because that is a lot of money for something we have not been able to accomplish in the last nine years. Rural Housing The last question, rural housing: Would you please examine, have your staff examine, the law that puts the caps on this rural housing? It seems to me that there are caps saying that it can only go to what rural cities are. Rural cities are small cities, and right now what is happening, particularly in States like California, where you are trying to protect agricultural land, you are trying to encourage people to live in cities, and therefore, those cities are growing bigger, and some of them exceed the caps of, I think, 20,000 population for a rural city. We now have farming communities that are a hundred thousand people. Farm Worker Housing Also, examine--I think the regulations limit it to farm workers per se, and most of the specialty crops cannot get to market without going through canneries or processors. What you will find is that the same people who are harvesting the fields, there are thousands that are working in the canneries. They are still farm workers, but they are not called that in Federal law. Therefore, they are precluded from living in housing which is much needed. So I would ask your Department to look into the caps that are on this and see what kind of coordination you can also have with HUD. I think it is ridiculous that USDA goes out there and builds standalone housing. I don't think there is any other agency that does that anymore, except the military. All housing is being built with collaboratives, and you have HUD out there trying to do housing, except they don't do rural housing and they don't do agricultural housing. Yet, housing is housing is housing, and the people that live in it have to depend on all the other services that we provide. It seems to me, I think we can get a better bang for the buck if we could team up with HUD. They're putting these economic--you know, the same communities that would qualify for farm worker housing often qualify for Rural Economic Enterprise Zones. So there are other Federal dollars in there doing a lot of other things. This is an area, you heard Rosa DeLauro talk about it. I am very interested in it. I think most of the members of this committee have people who are in agriculture who need places to live, and the cost of living in these communities is too high for them to afford housing. So they are on the streets, sleeping in their cars. Secretary Glickman. Can I just ask you a question? Are you referring to farm worker housing? Or are you referring more generally to rural housing programs? Migrant Farm Worker Housing Mr. Farr. Well, I think, frankly, it is very difficult to just put people in a category, and we have done that, saying, your housing--as I understand it, for migrant--part of it is a migratory policy, and you only live in the housing so many months of the year and then you have got to leave, which is ridiculous. You shut down much-needed housing during the wintertime. So these people have to find someplace else to live. I just met a man who has triplets born in a labor camp in California, raised in a labor camp. They are all American citizens. They all got scholarships. He is a farm worker. He doesn't speak English. He had to go back to Mexico during the time that the labor camp was closed, and he had to leave his daughters, with relatives, so that they didn't have to go back. These are incredible, remarkable kids that have grown up their entire life in labor camps, beautiful people. But some of these policies we have developed just don't make sense for humanitarian and for economic reasons. So I am suggesting that, if we could look at farm labor housing, the housing that you are authorized to build, and look at some of the caps and restrictions on there, and see if we might be able to have this committee remove some of those, or give you more flexibility, so we can get a better bang for the limited buck-- -- Secretary Glickman. I think that is very appropriate. We will look at the issue of the caps, as well as on the farm worker housing issue. I did make a trip down to Homestead, Florida to visit a pretty good piece of housing that we built for migrants, but it is, frankly, disgraceful that so few have been built around the United States. And the regulatory requirement may be one of the reasons. Mr. Farr. Well, I think you could get more collaborative building, and you wouldn't have to just do it yourself. Thank you very much, Mr. Chairman. Mr. Skeen. Thank you. Mr. Kingston. Statement of Mr. Kingston Mr. Kingston. Thank you, Mr. Chairman. Mr. Secretary, you gave a speech to a group, January 12. I can't remember who it was, but I have read the speech three times and I think it was a good speech. So I commend you on that. Secretary Glickman. Do you know who it was to, Mr. Kingston? [Laughter.] Mr. Kingston. I think it was the Farm Bureau. In good congressional fashion, I cited you in the first speech; the second speech said ``someone,'' and the third speech I prefaced the remark with ``I've always said'' the following. [Laughter.] But it was a good speech. You touched base on a lot of topics. Long-term Financing I want to move to long-term financing. Monday I was with a mom and dad and a 30-year-old son who was hoping to inherit the farm, and they missed their E&M. I don't know why they did, but they missed it, the deadline, and if they don't get some long- term money, they are gone. They have been farming since 1959. Ironically, I got in my car after meeting with them and got on the phone to a large farmer who had called me, and he had the same story. What are we going to do about long-term financing for farmers? I realize it is nothing that you haven't done; it is something that we collectively haven't been able to figure out where we need to go. Secretary Glickman. Well, you're talking about farm ownership loans, farm operating loans? Mr. Kingston. Yes. Secretary Glickman. To be perfectly honest with you, Congress has been pretty responsive in providing us the dollars that we have requested over the years. The problem we have had is the agricultural economy has been shaky, and so the use of the traditional lending mechanisms have not been as effective, and so they have come to us to either guarantee these loans or to provide direct loans. It has exhausted our funds. One of the reasons probably that this particular family was late was because they just probably assumed that we would have the money, and we didn't. We ran out of money, and the deadline took place. So, in terms of financing in agriculture, it has got to be based on profitability. That is one of the reasons why we talked today about the farm safety net. For a lot of the people who have survived, it is important for them to have a lot more predictability of income than they have had before. The government can't guarantee that, but we can provide some options. Just for example--it is a little bit off your question--but farmers' markets, have grown exponentially in the last 25 years. We have found that farmers' markets can provide a powerful source of income for people who live reasonably close to suburban or urban areas, and are able to market their products directly. But they have to be encouraged. A lot of them need to know how to do it, and our Extension office has been involved in this kind of thing. We have had a lot of cases of people who have been on the verge of going out of business, who have been able to stay in business by direct marketing. You talked about use of cooperatives. We do have increased funding for that. Somehow we have to provide a higher base income level for producers in order, then, to justify the lending for long-term financing. Mr. Kingston. Well, you know, you already here have pointed out, when the price of a tractor has gone up from $20,000 to $90,000, and the corn has fallen, and soybeans have fallen, and, of course, hogs are at the lowest in three decades--you feel sorry for these guys, but you don't know where to turn, because it is not necessarily profitable. But I sure hate losing all the mom-and-dad farmers. Palmer Drought Index One thing that came up in Georgia during the drought was the Palmer drought index. It seems to be inconsistent and not adequate for the needs of our farmers. We had written a letter to Kenneth Ackerman at Risk Management about it. We need somebody to help us get some answers on that. Can I work with somebody in your office? Secretary Glickman. Yes. Did you not get a response yet? Mr. Kingston. We have not. December 17, and we are still waiting. There is a big problem---- Secretary Glickman. We will get you a response. I don't know enough about the details. [The information follows:] [The official Committee record contains additional information here.] Mr. Kingston. Yes, and we had areas that did not get any rain, but, according to the Palmer drought index, they did not have a problem. So it seemed to just be universal amongst our Georgia farmers that it is a huge problem; yet, in other States it wasn't. Crop Insurance Also, crop insurance, I know you touched on that. We are all united, I think, on some sort of crop insurance reform. In the past, the USDA, I believe, has had some tax credits for irrigation equipment. I think in the disaster bill we tried to put something in there. I don't know if anybody remembers that. Maybe we could look at that, plus, surface water assistance, so we could help with the construction of ponds. What is happening on that bill? Or what can we do, again, together, to make something happen? Secretary Glickman. Well, I don't know; the Deputy reminds me that the Energy Department had a program---- Mr. Kingston. To help with more efficient equipment? Secretary Glickman. More efficient irrigation equipment. The NRCS is involved in a variety of activities involing both capital construction and technical assistance on some of these areas. Perhaps we could send somebody over to your office to talk specifically about what we intend to do. Mr. Kingston. That would be great, because we would like to look at irrigation equipment, but we would also like to look at surface water retention, pond construction, and also farming equipment, because we think that that would help a lot. You also mentioned hogs. I appreciate the $50 million. It wasn't enough. We need, I guess, to all be aware of that. Surplus Food Recovery We passed the Emerson bill in 1996, which you supported, in terms of surplus food going to food shelters. Now I understand that we may need to go back to the Emerson bill and expand it, increase participation more. Have you heard from many of homeless shelters or food banks about that? Secretary Glickman. Well, I do know that the demands on food shelters are the highest they have ever been. Second Harvest, which is the largest, tells me that a lot of these places are running out of food. The Emerson bill has helped. There are other options. Some people have said that the tax laws don't encourage the donation of surplus food. We are trying to maybe examine other things that we can do to help people contribute surplus food. But it has done a remarkable amount of good, getting food banks food they wouldn't otherwise get. Mr. Kingston. Well, I think you guys have been proactive in it also. I have some other questions, but they may have already been asked. So I would like to submit them for the record. Thanks a lot. Secretary Glickman. I thought you would ask me about sugar. I didn't hear anything. Mr. Kingston. You know, I have been kicked and torn and ripped on sugar, and I am going to let it pass for right now. [Laughter.] Mr. Skeen. Safe on first. [Laughter.] Mr. Boyd. Statement of Mr. Boyd Mr. Boyd. Thank you very much, Mr. Chairman. I want to tell you how deeply honored I am to serve on your committee and with Ms. Kaptur and the other members. I guess one of the reasons I am honored is because I have spent all of my life, in agriculture. Mr. Secretary, I don't envy your job. I am very pleased that you all are here today. Mr. Rominger and I have had an opportunity to visit on my farm, and I am grateful for him coming out and listening to my constituents and their problems. Mr. Secretary, I know it is a very difficult time for you to preside over an agency that has jurisdiction over a sector of our economy which is in the tank, at a time when the rest of the economy is doing very well. That is why I don't envy your job and I know it is a difficult one. Having sat through my first meeting of this subcommittee, I recognize now even more how difficult your job must be. I feel kind of like a kid in a candy store right now, having this opportunity to ask you questions. So, Mr. Chairman, I have got four questions I want to ask. They will be very short questions that can be answered relatively quickly. citrus canker The first one, Mr. Secretary, has to do with the fact that you may know that we have an outbreak of citrus canker in Florida. I have a copy of a letter that I want to deliver to you. The majority and minority staff also have a copy of this letter. So I would like to make it part of the record. [The information follows:] [The official Committee record contains additional information here.] Mr. Boyd. It basically outlines our problem with canker and how it has spread significantly over the last few months. My question simply to you today is: Do we have the capacity within our supplemental appropriations bill to assist the State of Florida in stopping the spread of this canker before it totally destroys the citrus industry in Florida? Secretary Glickman. Well, let me just say that, obviously, if you put the money in here, we are going to work with you and cooperatively with States to deal with this infestation, which is potentially a catastrophic problem. We provided some money and technical assistance, and then the State had a lawsuit with the Department on a past cooperative program. But if you put the money in here, we are going to work with you cooperatively. By the way, I would also suggest that we get some participation from the private sector as well. I think they have an obligation to participate, too. Mr. Boyd. Those are good points. The State of Florida, as you know, has spent--we have spent $20 million in this Fiscal Year trying to prevent the spread of this disease. As you know, this evidence indicates canker was carried through a plant which was brought in from Central America. Of course, that came through our Customs inspectors or through our APHIS inspectors, and APHIS is the jurisdiction of your agency. So I think that is why it is appropriate that we would ask for the assistance of the Federal Government. tobacco issue The second question has to do with an issue that President Clinton addressed in his State of the Union, and that is the tobacco issue. He stated that the Justice Department would be going after the tobacco manufacturers, but the second part of his statement said he would assist the tobacco farmers. I have not read anywhere how he plans to assist farmers. I wonder if you might expand on what the Administrations plan for that is. Secretary Glickman. I don't have anything more, other than the President has always said that one of the foundations of any settlement with the tobacco industry would have to be a monetary settlement with tobacco farmers; that there would be no settlement of the either actual or potential litigation without providing a fund there. I also see that some of the States, of course, are working on a settlement situation right now with some of the tobacco farmers, but, yes, the President has repeatedly said that you have to get the farmers into the settlement or else it won't fly. So that is all I can tell you now. Mr. Boyd. Thank you very much. I know that Mr. Schumacher brought that message to us over a year ago in Florida, and the President has stated that again in his State of the Union, and we want to make sure that we know that you all will honor that. food safety The third question--and there has been a lot of discussion here today about food safety. So I won't rehash all that, but there is one thing that I would like to get your thoughts on, and that is the inspection service now is mostly done at the retail level, the way I understand it, for some of these---- Secretary Glickman. Not USDA. Our inspection is done primarily at the packer level and the plants. Mr. Boyd. Okay. Well, the listeria that was discovered, wasn't it found at the retail level? Secretary Glickman. The listeria may have been picked up at the retail level. We do do some sampling at the retail level, yes. Mr. Boyd. Well, maybe that is the specific area of your inspection service that we ought to talk about, because of its detection at the retail level. Secretary Glickman. But then we traced it back to the plant, and the plant was ultimately closed because we found it. Mr. Boyd. The issue that I believe we need to discuss--you are more of an expert on this than I am--is the issue of whether it better to conduct inspections at the wholesale level or retail level. Because once you inspect and find it at the retail level, it usually has been purchased by other consumers and often consumed. By then its too late. Secretary Glickman. It really takes what we call a farm-to- table approach. In fact, everybody has to be cooperative, from the producers all the way through the system. But what you often find is that when the animal comes into the actual packing facility, it comes in dirty and carries with it organic material; it has to be cleaned. That is where most of the disease comes from, is organic material. That is where you spend most of your resources, but it doesn't mean that you can't have problems all the way into somebody's house, where they don't wash their hands. After all, we estimate that about 50 percent of all food-borne illnesses can be solved by just people doing the necessary, effective, appropriate hygiene techniques. So it is an across-the-board problem. Mr. Boyd. Okay. Well, I will set up an appointment with some of your folks to talk more specifically about this, if that would be okay with you. Secretary Glickman. Sure. Mr. Boyd. Mr. Chairman, do I have time for one more? Mr. Skeen. Certainly. crop insurance Mr. Boyd. This has to do with a subject near and dear to my heart, and that is the 1996 farm bill. Prior to my coming to Congress, I traveled to Washington and talked to my delegation (Florida) about his legislation. I expressed to my delegation that I believed the 1996 farm bill was the wrong thing to do. Now many of the fears, many of the things that I feared would happen have happened. I notice that you stated in your opening remarks--and I will try to paraphrase--that when we passed the 1996 farm bill, the economy was good; world markets were good. You also said ad hoc disaster assistance is unworkable long term; and that we must develop an insurance program that addresses long-term stability. Again, that is a paraphrase, but I believe that is basically your statement. Exports cannot serve as the only safety net. Domestic Federal programs also have to be in place to serve as a safety net. I believed we had a Federal domestic ag policy which served this country well for many, many, years and was, within the big budget picture affordable. As a matter of fact, the new program cost more in the first two years than the old program would have cost under the existing scenario. We all recognize that we are going to have weather problems; we are going to have pest problems; we are going to have yield problems, and we have the technology skills and know we can survive and compete in the long term dealing with these factors. Where we can't compete is with a Federal policy, or a lack of a Federal policy, that puts us at a disadvantage in competing in the world market. I want to continue to have a dialog with you as we develop a crop insurance program, and encourage the solution not to be centered around insuring revenue or we insure yield. I mean, all of those things, our farmers can come up with innovative ways to deal with those factors. The financing, you know, that Mr. Kingston referred to is easy if we are making a profit. At that point, there will be lots of people that will want to lend us money. What we can't deal with is a world market that drops the price of a bushel of wheat to such a level that a Kansas wheat farmer makes a record crop and still loses $100 an acre. Those are the things that we can't insure against. Maybe if you would like to comment briefly, and then I would like to have a discuss with you at some future time. Secretary Glickman. Well, let me just say that the old farm bill also cost a lot of money in some years. When prices were down, it cost money, because it protected farmers for a drop in the price of wheat. I guess in the late 1980's, we spent $26 billion one year on the farm program. That is a lot of money, which is more than the $18 billion we expect to spend in 1999. But I do agree with you that the current scenario doesn't work very well when you do not have the kind of basic floor that protects the more vulnerable. The well-capitalized can survive a lot better than the more vulnerable, especially farmers who are heavily leveraged up. It is a problem that particularly affects small and medium-sized farmers who are going out of business at a far faster rate. Now the trick is to find something that is reasonably affordable. Americans have the best bargain in the world on food. We spend a pittance compared to what the rest of the world does. Also, how do you find something that doesn't unnecessarily interfere in the marketplace, because the natural forces of the markets are still going to determine prices, but what you want to do is to help people deal with the peaks and valleys. I just don't think that in the current situation, the farm bill works as well as it should. Maybe some sort of revenue insurance should be considered, I wouldn't discount that. If you can get somebody to go out and buy an insurance policy that protects their revenue based on what they made over the last five years. We are doing some pilots now out in Iowa and Illinois and Nebraska that may work pretty well. I don't think there is a remedy that is totally inexpensive, but I think there are some options out there; they can do a better job than what we are currently doing. Mr. Boyd. Mr. Chairman, that really is my last question, but, as a follow-up comment, you know, in the Southeast we are probably going to do all right, because we have got some specialty crops which are doing o.k. It's your Midwest farmers that are in trouble. I would submit to you that if you see corn stay at $1.75 for four or five years and wheat at $2.00 or $2.50, whatever it is, I don't care how well-capitalized you are; you are not going to be farming. I just think that over long term that our ag economy, is in deep trouble, if we continue to have a national ag policy that doesn't deal with this. Secretary Glickman. Let me just say that based on our latest crop report for this crop year we are projecting the 1998-1999 crop for corn at between $1.80 and $2.10 a bushel. That is the range. So the point estimate is $1.95. That is not very good. We are projecting wheat at about $2.70 a bushel, and rice at about $8.50 a hundredweight, and soybeans about $5.20 a bushel. These are tough prices. You are right; I don't want to preside over a Department in which farmers are being hit with prices like this. Then you look at the livestock side of the picture; it is going to get better, but, still, the livestock side is also not as strong as I would like it to be. That is why historically, since the 1930's, we have said to people in this country, you need a farm policy that helps when times are bad and prices are low, and then triggers out when times are good. That is what we really don't have right now, and I think that is what we have to really seriously talk about. Mr. Skeen. Thank you. Mr. Latham. Statement of Mr. Latham Mr. Latham. Thank you, Mr. Chairman, and I look forward another two glorious years on your committee, under your leadership. Welcome, Mr. Secretary. It is good to see you. Secretary Glickman. Thank you. Mr. Skeen. You have about two years' worth here already. [Laughter.] Mr. Latham. Apparently, we are not going to get a second round here. [Laughter.] Mr. Skeen. Well, we will try. embargoes Mr. Latham. Okay. Well, I am not going to get into a debate on the farm bill, but there was a commitment made to give support for exports to be against embargoes, and Ms. Emerson brought up that, to give tax relief, to give regulatory relief, and we applaud the administration on everyarea through this. It would be as if you set down a policy to try and fail, and if you go through support for exports, what we have done in our markets overseas, it is unbelievable. The Commission, the Glickman Commission, I just see this press release here. ``The Agriculture Department hasn't made enough progress in its efforts to help small farmers, say several members of the USDA-appointed Commission . . . agency rated a `D' for its efforts to ensure fair market access for those farmers.'' I think that is maybe somewhat indicative of some of the problems we have. I don't want to get into all that right now. livestock assistance But, as you know, Mr. Secretary, we have a real disaster going on in the livestock arena. I just find it absolutely incredible that the administration would go out, take $50 million out of the School Lunch Program, food for children; give it to farmers, and then come back with a budget that has $504 million of new taxes that is going to come right out of the hides of the livestock producers in the form of user fees. I mean, do you have any credibility when you come with a budget like that? It is simply beyond any kind of decency, as far as respect for the livestock producer out there today. I mean, these people are dying, and you are going to take another half billion dollars out of their hides out there. Secretary Glickman. Do you want me to respond? Mr. Latham. Yes. Secretary Glickman. Well, first of all, look, the problems of agriculture are worldwide, Tom. It is not just in the United States. Hog producers in Canada, beef producers in Argentina, grain and soybean producers in Australia--I mean, we have a worldwide problem in agriculture. So I think we need to be fair. I am sure that we in the administration have some responsibility for the problems in the world, and I accept it. But I don't think it is fair to characterize the world economic conditions as caused by me or President Clinton, or anybody else. These are tough problems. The world changed pretty quickly. I think that is important. Now on the pork program, these people are having tough times. Prices went from $60 a hundredweight to $10 a hundredweight in four months. I had to do something. I increased pork purchases significantly. I have a $100 million section 32 reserve fund. The section 32 statute also gives me authority to make direct payments to farmers for almost any reason. I don't think we have done it anytime in the last 30 or 40 years. I decided to take $50 million out of that $100 million to use it for this, when it was going to be in a reserve account anyway. I wish it could have been $500 million, but it is all the money that I had. I did it the best way that I possibly could. It may help a few people. It may not help a lot, but it is better than nothing. user fees On the user fees, that money has been in the budget since Ronald Reagan was President. It has been presented--Reagan, Bush; I don't know if Carter put it in there or not. Then in this year's budget Congress has--it does amount to about 1 cent a pound. We think you see those kinds of user fees with the FAA, the Securities and Exchange Commission, other kinds of industries. But I am not naive. I am probably going to probably believe that you all have different ideas than we do on that. [Laughter.] Mr. Latham. Did you even send up a bill last year? Secretary Glickman. Pardon? Mr. Latham. Did you even send up a bill for user fees last year? Secretary Glickman. Yes. Mr. Dewhurst. Yes, sir, we did, in July. Mr. Latham. Who? Who had it? Secretary Glickman. I don't know. It probably was the Agriculture Committee, I would guess, the authorizing committee. Mr. Latham. Okay. Secretary Glickman. I am going to guess. Mr. Latham. And you are going to send it up again this year? Mr. Dewhurst. Yes. We have been told that the administration will submit a single budget bill that has all these proposals in it, and the target date for that is by mid- March. supplemental livestock assistance Mr. Latham. You know, back in the worst of the hog crisis-- what?--$130 million, $150 million a week that producers were losing? In the supplemental you are talking about--do you have any kind of a cost estimate? I guess, in a followup, do you have a position as far as direct payments to livestock producers? Secretary Glickman. Well, of course, we open the door by providing $50 million in direct payments. I think this would ultimately be a congressional decision, whether you all would want to. Mr. Latham. Do you have a position? Secretary Glickman. I don't have a position on it. Mr. Latham. Okay. Secretary Glickman. The fact is that if Congress passed a program of providing direct payments, I am sure that we would probably support it. But we would like to have a role in structuring it with you. I don't know how much it would cost. I don't know how the livestock industry wouldrespond to it, because, in fact, a lot of the pork producers were not happy when we set up the program in the first place. Mr. Latham. That is because most of them couldn't qualify for it. You have got the accelerated pseudo-rabies eradication program. In light of the problems we have with the packer facilities running the full capacity and the rendering houses packed, how do you propose that you do all this in--what?--six months, you are talking about? How are you going to kill them and where are you going to put them? Secretary Glickman. I think they are going to rendering facilities, not to packing facilities. packer/rendering capacity Mr. Latham. Well, they have a backlog also. I don't know if you are going to build new ones or if you are going to put a bunch of new staff out there to kill hogs or what. I don't know how you are going to do that. Secretary Glickman. The best I can do is try to get back to you on that. We believe that there is capacity at some rendering facilities around the country, and that's one of the reasons why we decided to do it in this way, where there wasn't capacity at slaughter facilities. There may be some that goes to local community food banks as well for rendering. [The information follows:] Pseudorabies For each State, APHIS worked with the official State Pseudorabies epidemiologist, the State Veterinarian, and the State Pseudorabies Advisory committee to develop plans to euthanize and remove animals from premises. Pseudorabies infected herds are concentrated in some areas, with multiple farms and many hogs infected. In other locations, the herds are dispersed over a wide area. Due to this dichotomy, separate plans for euthanasia and disposal were considered because of the different needs and resources available. In areas with less than 100 infected small herds, the young and adult hogs are euthanized on the farm using cost effective, humane methods such as a penetrating captive bolt gun followed by pithing. Carbon dioxide is used for very small pigs and chemical euthansia for piglets. The euthanized hogs are then loaded into rendering trucks on the farm in most cases. Burial in some circumstances is considered. In areas where a large number of pigs from a large area are infected, a centrally located facility is organized for the humane euthanasia. In general, the site allows for easy access for several loading options, has limited access for safety and biosecurity reasons, is secluded because of the sensitivity of the activity, and has an office area with customary equipment. The site is near a rendering plant and the pseudorabies infected premises. In some areas, packing facilities are being used to humanely euthanize the pigs. After the animals are humanely euthanized, they are transported to a rendering facility. Some rendering firms have changed their position on payment for rendering the carcasses. As they have processed the carcasses, the prices of their products have declined and they now wish to charge USDA for the service. APHIS has considered incinerating or burying the carcasses in some cases rather than pay for this. Some packing facilities used for euthrnization and certain rendering firms are operating at full capacity. Services connected with the accelerated program at these firms are being performed during off-hours, at additional cost. Despite these obstacles, the accelerated program continues to reduce the number of known pseudorabies infected herds. Mr. Latham. But how are you going to--who is going to slaughter them? Secretary Glickman. The renderer would do the slaughtering, if it went to rendering facilities. That would be in most cases what would happen. Mr. Latham. You are going to send the hogs to the rendering service to have them slaughtered to go to the food---- Secretary Glickman. No, I am sorry; those are two separate things. In some cases they might go to a packing plant for slaughtering for food banks, but in most cases they would go to rendering facilities. Mr. Latham. But you understand the whole problem pricewise was that the packers have extra hogs out there right now. Secretary Glickman. I understand that, and that is why they are going to the rendering facilities. There are some packers who indicated there is a small amount of space available for local food bank type of operations. Mr. Collins wants to comment. Mr. Collins. One comment about the capacity of packing plants. In December we were slaughtering nearly 400,000 hogs a day and 200,000 on Saturdays. The most recent data showed that we are down to about 375,000 or so per day. We are down to about 375,000 per day during the week, and last Saturday we did about 80,000, which is well below what we were doing in December. So I think there is some capacity starting to emerge now. wetlands conservation Mr. Latham. As you are well aware, that is maybe one of the reasons why we are back up to $28 now, and if you dump a bunch of hogs in that system, you are probably going to take it back to $8 again. It could very well happen. One thing, we have a tremendous problem in Iowa, and it has come to my attention that the NRCS has doubled the required wetlands mitigation acreage for prior converted acres. As you are maybe aware, we have a tremendous problem with agricultural drainage wells in the center of my district. These are holes punched through the bedrock to go directly into the aquifer, back 90, 100 years ago. We are trying to cap them because this is in the center of a lot of these concentrated livestock facilities, so that we don't destroy the aquifer down there. The drainage districts say that, since they have made application, you have doubled the number of acres required for mitigation. I am just wondering how you can go---- Secretary Glickman. As far as you know, is this an Iowa- based requirement only? Mr. Latham. No, it is for NRCS. Secretary Glickman. But done by the Stateconservationists in Iowa? I wonder, is it a national rule? Because I am unfamiliar with it. Mr. Latham. I don't know. They are having to deal with this from the NRCS. Secretary Glickman. Okay, I will get to the bottom of this and give you an answer by the end of the week. [The information follows:] [The official Committee record contains additional information here.] Mr. Latham. We have a pending environmental disaster here with the Ogalala Aquifer if we don't do something---- Secretary Glickman. Do you have something to give me, or your staff can give me, so that I can take it back? Mr. Latham. Yes, sir, absolutely. If you could handle that, we will have Pocohontas here, Pocohontas County folks come and pay homage at your feet. They have been fighting this for three years with four different Federal agencies to try to get it accomplished. Now the rules have changed right at the moment of trying to do something about it. crop insurance I am very encouraged, I am, to see in the budget you talk about crop insurance, and this is going to be a big subject. I think we can let the market operate if we do have a viable crop insurance program available, and we need to work together with it. I mean, your statement here, if I can quote you, ``It can't be done on the cheap'' is very, very true. It is troubling there is no money in your budget for it. Secretary Glickman. Well, except the $400 million that we have for the buydown of this year's program. Mr. Latham. But there is no new money for a new program. Secretary Glickman. That is correct, and the fact is that to do it right will cost anywhere between a half billion dollars and maybe $3 or $4 billion. We were criticized for not putting a specific dollar amount in, and I just basically said I didn't know until we could work on a legislative package what it would cost. But, you know working together, we came up with several billion dollars in a disaster program last year, and I have to believe that, working together, we can find the money, if we are able to get a legislative package together. Mr. Latham. Well, we want to work very, very closely. I know we have the same goal on that, and I think that's the No. 1 thing we need to do this year, is to have that available and have it available to anyone, different crops throughout the country, and livestock. It certainly would be a great help. I think revenue insurance is the way to go because, then, at least you guarantee banker a level of income at least, and it has to be affordable and a consistent number of dollars available. I don't know; how are we doing on time, Mr. Chairman? Mr. Skeen. You are just about right. Mr. Latham. Thank you, sir. I appreciate it. I have been told that. basic research programs If I could just have--there is in your budget proposal to cut basic research programs by about $27 million to the land grant universities under the formula basically. This certainly would be a huge blow to them and really hurts them as far as maintaining, and I think George and several other people mentioned about this problem. There is $100 million going into new grants to nontraditional colleges. My question is: Is this additional new money, the $100 million, is that going to go to the priorities of the administration in the budget as far as climate change and sustainable ecosystems? I mean, the money, basically, you are taking out of the traditional research going into the new global warming initiative. Secretary Glickman. Perhaps Steve may add to that. Steve will answer the question better than I. Mr. Dewhurst. You're right, the money for formula funds is down and the money for competitive funds is up. Frankly, that is not totally unusual in the Executive Branch budget. When you look at the allocation of that money, it is for a variety of topics. There is money for the Small Farms Initiative. There is money for water quality, for food safety, for some work on food quality protection and pesticide impact assessments, which is part of our work with farmers. I have not quite totaled all the money up by these categories, but the money goes for a variety of purposes. It is competitive money. We would assume that the land grants would win the competition for a lot of that money. They traditionally get about two-thirds of our competitive money. Mr. Latham. But there are also major cuts as far as research stations, directly at those, and I am very, very concerned about it. Thank you, Mr. Chairman. Mr. Skeen. Thank you. Mr. Dickey, to wind up the first go- round, and then we will talk about the second. statement of mr. dickey Mr. Dickey. Mr. Secretary, glad to see you. I have had a visit with about seven farmers Monday. If I didn't see them grow up, they saw me grow up. These are people who I have lived with in my home town of Pine Bluff all my life and all their lives, basically, except for the ones who are older. We had a very frank conversation. It was devoid of any politics. It was devoid of any of the typical farmers' type of comments about, oh, woe is me, and everything else. They were very much open and honest with me. When we didn't know what was going on, we said that. We went through the whole process. What I want to do--and I know you have answered some of these questions, but I wasn't here, and I just want to ask some of these questions, and then I want to take the answers back to them, if I could. Before I do it, though, I want you to know that I feel very good about your being where you are. But I think it is going to be the most critical period in the time since I have observed farming. I just wish for you the clearest of minds and the most cooperation from everybody, because it is going to take that. I think it is that serious. improving export markets Some of these questions are going to seem frivolous, but I want to just pass them on. What can we do to improve our markets abroad specifically? Secretary Glickman. Well, Congress has given us a lot of authority to use. The main thing we need to do is to have markets in which people can be commercial customers. So we need to be energetic in engaging our current and future customers, whether that is Egypt or Indonesia--I just mention those two as a possibility--and to use all the credit programs that we have at our disposal in order to supply them the food products they need. They have also got to be economically sound enough to buy things from us, and that is why we have worked so hard for IMF assistance and other mechanisms to try to strengthen them. In addition to that, as you know, the President has dramatically increased food aid this year. We were going to provide to the Russians--Ms. Kaptur and I have talked a lot about this--a significant amount of food aid, over and above traditional food aid we have provided under other authorities. So we have a lot of product out there, and we need to sell as much as we can and we need to provide humanitarian assistance for those who need it. We have a foreign agriculture staff around the world; their job is to move product, help move product. Mr. Dickey. We have mentioned some of the nations that we don't sell to for political reasons---- Secretary Glickman. Right. Mr. Dickey [continuing]. Like North Korea and Iran and Iraq. Secretary Glickman. Well, actually, we have been shipping a little--we have been participating with the World Food Program in donations to North Korea and also we have been, I guess, in Iraq as well, right? Commercial sales under the U.N. program to Iraq. I mean, Iran, Libya, Cuba, Sudan, North Korea, basically--there are about a half-dozen countries that are affected. Mr. Dickey. But you testified that wouldn't help us that much. Secretary Glickman. Well, it would provide, we have said, about 1 percent--it will affect about 1 percent of our export sales. So it is helpful, but the big problems in export barriers are more in sanitary and phytosanitary battles we face with the Chinese, let's say, or the Japanese on occasion or Europeans certainly, with the beef hormone issue, which is a very, very big problem, and one that could result in a monumental blowup, if it is not resolved. Mr. Dickey. That would be through the WTO--it is just attacking the integrity of the WTO? Secretary Glickman. That is correct. I mean, we believethat the WTO processes have ruled in our favor, and we expect them to honor that. Mr. Dickey. Well, here is one of the things they said: They said, ``Are you in Congress doing anything to stop our markets from being developed?'' And embargo would be one, I guess, the embargoes; we would be participating in that. Are we doing anything else as a body to prevent markets from being available to agricultural products? Secretary Glickman. You know, Jay, I have to tell you, I really don't think so. I know there is a lot of rhetoric out there, but last year we approved 8 million tons in food aid. Our credit guarantee use was over $4 billion on sales of agricultural commodities in 1998. I have been to Japan and Korea and all over Europe, and the Deputy has been in Latin America and other parts of the world, trying to get these markets open. They are competitive. Other countries are producing a lot of food. We are in there working as much as possible to build these markets. We also have a market access program. We have foreign market development programs. Mr. Dickey. Are they all working? Secretary Glickman. I think so. Mr. Dickey. Are any of these things not working that we could improve? Secretary Glickman. Chris Goldthwait, who is generally responsible for export sales, just said our market share has maintained itself; it is just the value of the commodities has come way down---- Mr. Dickey. I see, I see. Secretary Glickman [continuing]. Because they are just not worth as much as they used to be. fast track authority Mr. Dickey. Okay, now tell me--I know you have probably done it, but Fast Track--I just went with Larry Combest to South America, and Fast Track is very important. Are we going to pass Fast Track this year? Secretary Glickman. All I can tell you is, based upon what I have heard the President say, he is going to push for Fast Track, but I don't have any current information on that. Mr. Dickey. But do you think it is important? Secretary Glickman. I do. freeze prices Mr. Dickey. Okay, I thought so. Now is there any way to freeze prices? You mentioned revenue assurances. Is there any way to freeze prices? I am not saying I would even vote for it, but I just wanted to know, can you say to the cotton farmer and to the grain farmer and soybeans, and so forth, and rice, ``This is how much you are going to make this year.''? Secretary Glickman. Well, I suppose you can, but I am not sure how practical it would be. I suppose you could have some emergency type of program to guarantee somebody a price for their product, but I think, unless you had massive supply management programs with it, what you would do is you would encourage massive production. I mean, we could raise the loan rates significantly for various products, which would guarantee a price. But I can't do that, I'm sorry. Mr. Collins. You could use CCC funds to buy commodities in surplus, but then you wouldn't be able to dispose of it. Mr. Dickey. I see; they would just be in storage? Mr. Collins. Right. Secretary Glickman. There is no magic answer to deal with this. That is why the insurance subject gets a lot of interest. If you could insure your revenue based on a prior year history and buy a policy, the government would probably be involved in sharing the premium costs; that might be a way to protect people against the vagaries of the marketplace. We do have a floor, LDP provides a floor for people right now. Mr. Dickey. And you are getting more demands now than we have money; is that right? Secretary Glickman. We will have the money to do it. Whatever the LDP Program needs, we will have the money. Mr. Dickey. Okay. Is there any way--and I know I would vote against this thing, but is there any way that you could freeze the prices of the equipment and the supplies and the fertilizers and the chemicals, and everything else? What they are seeing is that they are limited and their costs are going up. Now is there any way to do that? Has it ever been done, do you know? Secretary Glickman. Well, I think back in the 1970's President Nixon tried with wage and price controls; it gave lawyers a lot of work to do, but it didn't seem to work very well. People always found a way around it. Mr. Dickey. They want to know---- Secretary Glickman. I am getting lots of ideas behind me. [Laughter.] Mr. Dickey. And I am glad of that, that you are getting advice. Secretary Glickman. The advice back here is that you are getting fairly close to what they have had in Eastern Europe for a long time. [Laughter.] Mr. Dickey. Oh, all right. We don't want that. Mr. Kingston. Keep in mind, these are the kinds of people that Jay said he grew up with. [Laughter.] Mr. Dickey. I used to be a Democrat. [Laughter.] improved markets Dan, they are saying, all we are going to do is wait for a bailout at the end of this year, and if it doesn't come, we are going under. They have taken their money now, and they have gone back and paid back what they have owed--and I mean people who I thought were substantial farmers, and are tremendous farmers, and do everything right and work hard, and are not lazy. What criteria is going to--what is the scenario this coming fall if the markets don't come up? What is going to happen? Secretary Glickman. I would say one option is for you and I, together, to make some decisions on farm policy that will provide additional resources. I don't call it another ``bailout.'' I just say we provide additional resources through some form of emergency-type program. That is always a possibility. In the interim--and we also are working through our credit programs. During the hog crisis, for example, we changed the way we collateralized hogs, so we collateralized them on futures prices, rather than on current cash prices. We encouraged banks to do the same thing, and most of them began to do that. So that was also helpful. There are a lot of things that we can do like that. We are going to continue to explore our international programs aggressively, both the sales programs and the humanitarian programs, and if those need to be augmented, we are going to increase them, because there still is an awful lot of hungry people in the world as well. I wonder if our Chief Economist has any other ideas? Mr. Collins. One thing I would say, we do have the built-in stabilizer of the loan deficiency payments. Right now, we think that for the 1999 crops, the ones that are harvested next fall, we are talking about payments approaching $4 billion. So that is extraordinary. Mr. Dickey. In all the commodities? Mr. Collins. For the 1999 crops alone. Mr. Dickey. Have we got that budgeted? Mr. Collins. That will be CCC outlays. Secretary Glickman. It is mandatory spending. Mr. Collins. Yes. Mr. Dickey. And it is going directly to the farmers? Mr. Collins. It goes directly to the farmers. Mr. Dickey. Now this is an aside: One or two of them were talking, and the others were nodding along; they say it is awfully demoralizing to have to get your profit from the green checks, whatever they are talking about. I guess that means that they have worked this hard; they go to the market; they fail, and then someone comes in and pays it out. That is going to happen this next year; is that right? Secretary Glickman. There certainly are going to be additional checks coming from the government. The AMTA checks are going to come, and some disaster checks are going to be there, and some LDP checks. Listen, these things also turn around. We have more and more people; the population is going up; people are hungry. The economics of the world will change-- I am beginning to see some turn in Asia. Nobody hopes for bad weather, particularly in somebody else's back yard, but it happens on occasion, and weather can change the economics of world agriculture overnight. Mr. Dickey. Thank you for your answers. subsidizing foreign economies Now IMF funding, other than that, do we have any programs that go and subsidize the economies of buying countries or buying markets? Secretary Glickman. When we send food aid over to other countries, they will use that food and they will sell it and monetize it, then, to buy other things. That is fairly common. Mr. Dickey. Is that our money being used? Secretary Glickman. Well, it is funded through P.L. 480. Mr. Dickey. In addition to our product? Secretary Glickman. Basically, our product has been sold. Mr. Dickey. It is on consignment of some sort? Secretary Glickman. Well, it is monetized. Why don't you explain it? This is Chris Goldthwait. Mr. Goldthwait. Congressman, we donate the commodity to the foreign country. Oftentimes, it has been sold within that country, and either to the government or in some cases the private sector entities. They, then, have the use of that money. Mr. Dickey. That country does? Mr. Goldthwait [continuing]. For other needs, developmental purposes, buying additional food---- Mr. Dickey. So that subsidizing of that market doesn't help us directly. Is there any time that we guarantee the payments from other countries? Mr. Goldthwait. Yes, through our Credit Guarantee Program. That is our prime program. Mr. Dickey. Is that fully funded? And is that in place? Secretary Glickman. It is. It is a CCC program. It is a mandatory program. Last year we used about $4.5 billion--$4.2 billion worth of credit guarantees. congressional help Mr. Dickey. Dan, what can we do to help? If you just had a magic wand and you could say, okay, I want Congress to do this to help the farmers--all right, and then I have another question after that. Secretary Glickman. Well, I would want to work with you to develop a risk management program that provides protection against natural disasters and also to provide some protection against wild, volatile price fluctuations. I think we can do that. I think it is going to cost a lot of money. Of course, we are going to have to come up with the money, but I think we can do that. That would certainly be the No. 1 thing I would do. There are some changes I would make in the 1996 farm bill that are perhaps less fundamental, but changes that I think we can come up with. The third thing I would do is to make sure that we have the resources, we and the Justice Department, to enforce our antitrust and anti-concentration laws, to make sure that people are being treated fairly out there in the marketplace. And the fourth is to give us the resources we need to move our products overseas. Make sure that we have the dollars available in all of our credit programs and everything else, and you have done that. But I am just saying those are the kinds of things that we are going to need to do. Anybody here have any other ideas? Mr. Collins. Risk management education is needed, so that producers will take advantage of the risk management program that you design. Secretary Glickman. There are a lot of techniques out there that really benefit our farmers, through our Extension service--there are conservation techniques; there are risk management techniques that can reduce costs and provide help to people. We can also do a better job of getting that information out. family farm Mr. Dickey. Okay, this will be my last subject. This was awfully difficult to talk to them about, and they brought it up in a way. If the family farm doesn't make it, what is going to happen to the agricultural industry? Are we still going to produce the product? If so, who is going to do it? Do we have any plans for that eventuality? Secretary Glickman. First of all, we have seen the number of farms decline fairly steadily since 1900. Half of Americans lived on farms in 1900; today there are 1.9 million farms according to the census. I think we are still going to have family farms; they are just going to get larger and larger; and there will be fewer and fewer of them. I don't think there is one overwhelming, catastrophic result. I think the big impact is going to be on rural communities around this country. You will see an out- migration of people and you will see a decline in basic services. I don't thinkthat is, obviously, healthy for rural America. I think what we need to be doing is finding all sorts of alternatives and options to help people stay in business in nontraditional ways---- Mr. Dickey. Okay. Secretary Glickman [continuing). As well as doing our regular farm programs. Mr. Dickey. I think that would be drastic, particularly from my area. But, now, what I am saying, will we still have the same prices? Will we still be able to get the same prices at the grocery store? When we finally get where very few people are competing for the market share, let's say, 15 corporate farmers in America, what is the perception? Secretary Glickman. All I can tell you is fewer competitors generally mean less price competition. Mr. Dickey. Will we still be able to get the same prices at the grocery store? When we finally get where very few people are competing for the market share--let's say 15 corporate farmers in America--what is the perception? Secretary Glickman. All I can tell you is fewer competitors generally mean less price competition. Mr. Dickey. And higher prices. Secretary Glickman. It may mean higher prices. It certainly means more controlled prices. Now I don't know if in production agriculture we will ever get to a point where that will be a problem. Where it may become a problem is in the processing and marketing and transportation side of agriculture. It also depends on the structure of agriculture. The poultry industry has become a lot more integrated--the relationship has become a lot more employer-employee, so to speak. That is not yet true in the cattle industry per se. It is perhaps becoming more true in the hog industry. That may affect the price situation as well. Mr. Dickey. I know the answer to this, but is there a predisposition that you have against the family farmer--no, that USDA has against the family farmer? Secretary Glickman. Absolutely not. Mr. Dickey. Is it the other way around? Secretary Glickman. Absolutely. Mr. Dickey. Okay. And that is to preserve the rural way of life as an alternative? Secretary Glickman. It is for a rural way of life, for social structure, as well as I think it is healthy for the entire fabric of the country to have a healthy rural structure. supplemental appropriations Mr. Dickey. Do you have any estimate--and this is my last question--have any estimate of how much the supplemental would be or the emergency supplemental would be this year? Secretary Glickman. You mean from the agricultural side. Mr. Dickey. That is correct. Secretary Glickman. Well, the farm loan issue, if we asked for a billion dollars' worth of authority, would be about $100 million in costs. Then we have at least tentatively talked about some emergency program dealing with disasters. A lot of this has been watershed, conservation, rural development. A lot of this relates to Puerto Rico. That could be somewhere in the neighborhood of another $100 million or so. Mr. Dickey. So how much is the total? Secretary Glickman. It is somewhere in the neighborhood of a couple hundred million. Mr. Dickey. That is all? Secretary Glickman. Well, that is if we limit it to those things. Now if we decided to add a farm program component to it, then you are talking about much bigger money. Or if we added any salaries and expenses to it, it would add more money. Mr. Dewhurst. One thing to understand is, the way we do the budget, $100 million appropriated for farm credit programs generates a billion dollars in new loans. So the actual results of a $100 million appropriation would be a lot larger than it looks. Mr. Dickey. That is confusing to me. Mr. Dewhurst. Yes, it is the way that government does it. Mr. Dickey. Yes. Thank you. Mr. Skeen. There has been some question about a second round, and I say this with all sincerity: We have sat here now for about four hours, and at your pay grade that is a lot of time that you may not be getting paid for. Secretary Glickman. It is up to you, Mr. Chairman. Mr. Skeen. What we will do is initiate a second round that is very quick, and we will start with Ms. Kaptur. Ms. Kaptur. Thank you, Mr. Chairman, and, Mr. Secretary, for your forbearance. civil rights class action suit I just wanted to say on the record commendations to the Department for your leadership in trying to reach a resolution on the recent civil rights class action suit before the Department. Do you anticipate that we will be talking about this issue again next year. Secretary Glickman. Well, I hope not. The suit is over--we have reached a settlement. The judge actually has to finally rule on it, I think in March. There is what is called a fairness hearing there. But there are still pending claims against the Department, and we are working our best to resolve those. I will have to tell you that we have a first-class capable civil rights director at the Department, somebody with a tremendous amount of experience. We are in much better shape than we have ever been before in terms of handling the problems. farmers' markets Ms. Kaptur. I also want to thank you for the initiatives that you have taken on the farmers' markets. I referenced that a little bit earlier. I think it is making a difference. One has to keep persevering in that area, but that, along with your gleaning program, has been welcome from this particular Member, and I just want to urge you to continue. On the movement that is going to happen under WIC program, the administration of those dollars moving to another part of the agency, could someone perhaps explain to me how that is going to work? I think it is moving from $15 million to $20 million. Mr. Dewhurst. I think we are confusing two subjects. The WIC farmers' market program is being increased from $15 to $20 million, and it stays within the Food and Nutrition Service. Ms. Kaptur. It does? All right. Mr. Dewhurst. There is a separate gleaning program which happens also to be $15 million. It has been moved from the Food and Nutrition Service to the Extension Service, because the Secretary believes it is much more an Extension program. It involves outreach to these community groups, the kinds of things that Extension does very well. Ms. Kaptur. So what are you calling that program now? Mr. Dewhurst. Food recovery and gleaning. Secretary Glickman. Community food security basic program. Ms. Kaptur. Bear with me one second. Now what I have in my notes is that, under the WIC program, you have proposed to transfer the farmers' market program to the commodity assistance program. Is that correct? Mr. Dewhurst. Yes. I am sorry. I misunderstood your question. The Farmers' Market program is still within the Food and Nutrition Service, but it is reflected in a different appropriations account. We believe that the farmers' market program should be funded on a permanent basis within the commodity assistance program. In the past it was funded within the WIC program, and it was dependent on having leftover money in the WIC program. The administration doesn't think that is what should happen. We think we should have a specifically- budgeted farmers' market program, part of our overall commodity assistance program with the Food and Nutrition Service. I am sorry, I did not understand your question. Ms. Kaptur. All right. Maybe I didn't understand it either, but I just want to get these numbers straight, because this is a very important program to this Member. The gleaning program that you referenced, that is something else? Mr. Dewhurst. Yes. It is a food recovery and gleaning program. It involves grants to local sponsors to help encourage and develop gleaning programs throughout the country, not necessarily farmers' markets, but gleaning---- Ms. Kaptur. All right. So that has no relation directly to the farmers' market. Okay. All right, thank you for that clarification. I will have to study exactly what that means with the commodity assistance program, but so long as it strengthens the farmers' market program, but doesn't weaken it, it would be a welcome change to this Member. Risk Management Issue I just wanted to say, Mr. Secretary, on the risk management issue, it was sort of a joke before about talking to Alan Greenspan, but I don't think it is a joke. I think it is worth a lunch, because we talked at length about the issue of risk management and who assumes the risk. Generally, as you talk on this committee or the authorizing committee, it comes down to, well, the producer assumes the risk. Mr. Greenspan had a broader construct of how one assigns risk in any type of risk management system and which actors, apart from the Government of the United States, should be involved in the assumption of that risk. I would merely encourage that conversation. Perhaps it has happened on the authorizing committee. Not being on that committee, I am unaware of it. But it was probably one of the most constructive conversations I ever had on the risk assessment and risk management issue. I think he has something to say with a lot of experience in the agricultural futures markets. So I merely commend that to you, and you are welcome to use my name, if you want. I still remember that discussion. It was so impressive. Rural America The other thing I wanted to ask you, because you didn't say it--Jay Dickey was worried about what is going to happen to the small farmer, what is happening in rural America. One of the issues you didn't mention, if you look at what is happening to world markets, we have overcapacity of production in some places, with an inability for other places to purchase. When the overcapacity happens, we end up, because of the nature of our markets, being the place where product comes in. It has been happening fairly consistently, and it has had a detrimental effect on our own producers. Market Dislocations Within the structure of the World Trade Organization or other entities that might be out there, as you thought about this problem, it seems to me that we can take certain complaints to international forums. In agriculture or other trade areas, we seem to not have the ability to get beyond the duty tariff issue and to deal with the larger question of capacity and what is happening with dislocations in the market. If you had to place such an instrument somewhere in the world trading system, have you thought about where that might be located, so you could at least engage in the discussion? Secretary Glickman. Actually, we do it with some commodities. Sugar is perhaps one of the examples where we do actually have an international program that is, in a sense, regulated in terms of imports. But let me mention a couple of things. Ms. Kaptur. Are you saying that is because of legislation? Secretary Glickman. It is because it was agreed to in our last trade agreement. The largest problem we have in agriculture is the inequitable treatment on pest management, and scientific issues involving fruits and vegetables from the South or other products coming in. We need to get some international rules where everybody plays by a similar set of rules. It doesn't address your question directly, but the sanitary and phytosanitary differences that we have to deal with are perhaps the most difficult problem that we have to deal with. The other thing I would have to tell you is that we do have a lot of countries in the world that still have extensive export subsidies. It is difficult to compete in a world where some countries are maybe subsidizing half the value of their commodities and other countries are not. We tend not to subsidize our exports. We will provide credit guarantees, but these are commercial transactions. We tend not to subsidize exports. From the standpoint of agriculture, a most serious problem for the long term is what to do when we face, significant oversupplies, or undersupplies. Right now the Europeans are sitting on very significant carryover stocks. They are beginning to look at this export subsidy issue much more aggressively. It troubles us. If they engage in export subsidies, we will respond in kind, but you would like to have a world where that didn't happen. Now where do you handle these disputes usually? Well, that is what the WTO was set up to deal with. We won a couple cases. We won one on bananas. We won one on beef hormones. Now we are having trouble getting them implemented. We have lost some, too. We have lost on Canadian dairy and poultry, and I am not sure what else, but we just maybe won an initial decision on the Canadian dairy as well. I think the WTO can work pretty well, provided that the standards are clear, science-based, and people honor the rules. Still, not everybody is playing by the same set of rules. Agricultural Trade Ms. Kaptur. As I look at the trade figures over the last 25 years, if you look at the exports going out from this country elsewhere, we averaged about $23 billion out--and taking out the highs and lows--during the decade of the 1980's. On imports coming in, we were at about $6.6 billion overall during that decade. If you come up to the current decade, our level of exports out has somewhat diminished. There were high years and low years, but we are at about $21 billion out. But the level of imports continues to come--it is about $8 billion---- Secretary Glickman. Is this agriculture you are talking about? Ms. Kaptur. Yes. Agricultural products; the livestock is separately. I am going to deal with the livestock separately. What I am saying, on average, if you look at what has been happening, though some years we exported more in terms of agricultural products, overall in the last 25 years there has been a diminishment in the actual--I am talking about dollars. Now I think Chris may be talking about volume. Secretary Glickman. You are talking net. Twenty-one billion is a net. It is a net when you subtract exports and imports. Surplus is what you are talking about. It must be. It is down. And you are correct, but what I am saying, our exports are in the $50 billion range and our imports are in the $30 billion range. So you are talking about a net figure there. Ms. Kaptur. Yes. If you look at the difference, the balance. So I guess what I am saying, not dealing with livestock yet, what you see happening, though, is that the imports into our marketplace are becoming more significant overall, if you look at the actual balance compared to our exports out, and that is reflected in dislocations inside this market. For example, Sam mentioned to me the other day, Congressman Farr, that the tomato industry in his region was relocating to Mexico. If we look at livestock--and I have got those numbers-- it is absolutely painful, what has been happening over the last 20 years in this country. It hasn't been in one year, but successively we have moved from a position in the 1970's where, okay, we weren't necessarily in the black, every year we were in the red, but it has now gotten to a hemorrhage stage, where you almost have twice--you do have more than twice as many imports coming in here than exports going out--net. So at the same time as we have a problem here at home, and in global markets with overcapacity, you are getting more imports into this marketplace. So my question really is: It seems to me that we don't have the capability as a sovereign nation to help our own people as these dislocations occur. I would just ask you, for example, in hogs, in cattle, in dairy, it just seems to me that the Department of Agriculture has to work harder to have groups, working groups, inside this country that help inform the debate here and help us to respond more effectively to the sectors that are being hurt. We can't control the international market, but, by golly, we ought to be able to figure out some way to at least not have this kind of slow deaths occurring around our country. Agricultural Trade We seem to have a lot of rhetoric here in Washington, but it is extremely troubling to look at these numbers and realize the thousands and thousands and thousands of families that they represent. I wanted to put that on the record. I have plenty of charts, and so forth, I can share with you, at least from the data that I have. But I don't see us as--some sectors, some people in some sectors may be doing well, but overall there has been an enormous amount of hurt, that we are almost in a sense of denial about as a country, unless you are directly involved in that given industry, in that given farm or wherever. Mr. Dickey. Would you yield a minute? Ms. Kaptur. Yes. Mr. Dickey. This denial business, Mr. Secretary, I am talking to you. Secretary Glickman. I am sorry. Yes, sir? Mr. Dickey. Go ahead. Secretary Glickman. No, no, no. Mr. Dickey. I was just kidding you. Secretary Glickman. Okay, we are fine. I was just trying to figure out your numbers. Ms. Kaptur. It was from the U.S. Bureau of Census. Secretary Glickman. Okay. We need to make sure we are talking from a comparable set of numbers. Mr. Skeen. Mr. Secretary, would you entertain a motion for about a 10-minute recess? Secretary Glickman. I would be glad to, Mr. Chairman. Mr. Skeen. Then it is so done. We are going to recess. Secretary Glickman. Okay. Mr. Skeen. We are going to recess, I think, for about 10 minutes. Secretary Glickman. Okay. Mr. Skeen. Look at the numbers while we are gone. [Recess.] Mr. Skeen. I offer my apologies for cutting you off, Marcy, but I think maybe we were getting to a stretch point. [Laughter.] I understand the Secretary has a commitment at 5:00 and we need to get him out of here before that time. Go ahead. Ms. Kaptur. Thank you, Mr. Chairman. I just wanted to raise this trade issue with you, Mr. Secretary. We can share our numbers. We can discuss them. We can take a look at outflows and inflows, but I can tell you that there is plenty of information about where there have been dislocations inside this economy. USDA shouldn't always be following the curve; it should at least be at the curve, working with our producers when these dislocations are imminent. We would like to continue that conversation. Conservation Program I wanted to tell you, on the conservation program that you mentioned in your budget, for new environmental initiatives, including farmland protection, this Member has a very strong and positive interest. Secretary Glickman. Yes. Ms. Kaptur. And you will have my support in your efforts to try to move those initiatives forward. Welfare Reform Also, I was very happy to hear what you said about the impact of welfare reform, your knowledge of what is happening with our feeding kitchens across the country, and the relationship to our food donations. On the record, I did want to say something about the commodity sales to Russia. I want to thank the Secretary and members of your staff for working with us diligently on that. My concern continues to be the possibilities for graft, of which there have been other instances in past years. But, equally important, the issue of how our food aid is used to develop partners in other places that can ultimately be trading partners with us in the agricultural sector. To the extent that these aid programs can contribute to the development of a reformed, privatized agriculture, then that is absolutely the direction that we should be moving, not merely food donations. I continue to express my deepest concern about our own State Department not being able to spell the word ``agriculture.'' Even AID, having less than 100 personnel on its staff who know anything about rural development, when half of the people of the world live in rural communities on very small holder plots, and we have a lack of focus at the highest levels of our government on the situation that most people who are poor in this world live in. So I just wanted to thank you, Mr. Secretary. This is not a battle you can win alone, but, rather, we can help be voices on this committee for agricultural development where we form full partners, which will ultimately benefit the people of this country, our producers, our processing firms, et cetera. But, right now, we are not able to meet anyone halfway in most of these other places. So I just wanted to stress the importance of these shipments. We are going to be watching them very closely. I will be a voice in this committee this year for additional inspection, both here and abroad, particularly with regard to the Russian shipments. If the situation weren't so critical there now, I probably wouldn't favor the amount of aid that is going to be forthcoming from our country, because I continue to have the deepest concerns about how it is going to be distributed and in whose hands it is ultimately going to get into, and what they are going to do with it. I am pleased to see the fact that you have put your shipments in a schedule, so that if there is graft that is significant, the rest will not flow. So I think some of the checks that have been placed in this current proposal are most welcome, and we appreciate your cooperation on that. Secretary Glickman. The record should reflect that Congresswoman Kaptur has had a great deal to do with significant increased oversight on food aid to Russia. I was over there; her name is well-known. In some circles she is thought of with great fear. [Laughter.] Ms. Kaptur. Good, good. I hope it is the right one. [Laughter.] Secretary Glickman. But it has made a very big difference that there is congressional interest in this oversight. Ms. Kaptur. Thank you, Mr. Secretary. Contract Growing The final point is that, when Assistant Secretary Baker from GIPSA came out to Ohio almost a year ago, one of the issues he came out on had to do with contract growing. My only comment to you is that at that time we discussed with him the possibility of USDA having a website on which would be placed a uniform contract or contracting standards--whether it is poultry, whether it is hogs--so that our producers who are getting locked into these legal agreements, sometimes without the proper kind of advice prior to signing those agreements across this country, would have a source of information that local attorneys could use and others that are working with them. I don't know whether that has been set up by Mr. Baker. I am not saying you have to put the real contract on there, but attorneys could extract from that at the Department and provide very useful information to growers out there in a most complicated and concentrated industry now. I don't think that has been done yet, to my knowledge, and it was a very simple request and one that could at least provide information to farmers. So I just wanted to put that on the record. Secretary Glickman. We will follow up on that immediately. I am not aware of the specific request, but it is the kind of thing we can do. [The information follows:] The Grain Inspection, Packers and Stockyards Administration established a website on January 7, 1999 at the following address: http://www.usda.gov/gipsa/progser/p&s/ pltcontract.html. Ms. Kaptur. Right. It would be like uniform contracting standards--what to look for, what to ask. These are some of the experiences. Some of the farmers that are out there in the country may even be willing to put their contract up there on the website, but this kind of information could be very, very important, certainly in places like Ohio, but I have a hunch many other places in the country. Again, we will submit other questions for the record, and we thank you for your excellent testimony this afternoon. We look forward to working with you. Ms. Kaptur. Thank you, Mr. Chairman. Mr. Skeen. I thank the gentlelady. Mr. Boyd. Mr. Boyd. Thank you, Mr. Chairman. I want to thank my friend, Jay Dickey, for giving me his time. I heard him say earlier that he used to be a Democrat. I'm glad he found a group that he is comfortable with. [Laughter.] crop insurance program Mr. Secretary, there has been a lot of talk, as we look for new ways to solve some of the difficulties that we are in, about reforming crop insurance. My question is very simple and straightforward. I farmed for 30 years, and I can't remember a year where we weren't at least allowed to go the ASCS office to sign up for some sort of ad hoc disaster program. I can tell you, from my experience, that the money wasn't very well spent in many cases. We had some fraud problems and other kinds of problems. If we return to that kind of scenario with the crop insurance program, what kind of rules or safeguards do we put in place to make sure that the money is properly spent? Because you know that this Congress, nor the American people, will stand for a program that wastes money. Secretary Glickman. You are talking about if we go to a pooled crop insurance system. Mr. Boyd. Yes, a crop insurance system. Secretary Glickman. Yes. Well, as you know, the GAO and our own Inspector General have looked very closely at the operation of the crop insurance program. In fact, there was quite an expose about how much administrative costs crop insurance companies were taking and what they were using their administrative costs for. One of the concerns is to make sure that our USDA and our Farm Service Agency still has a major role in the sale of those crop insurance policies, so it is not run totally by the companies. I guarantee you that, if we go to a vastly expanded crop insurance scenario, it will require a great deal of oversight from us and the General Accounting Office and our Inspector General, because you have a third party involved there; you have got the company. Mr. Boyd. Right. The issue I want to address, though, and I will try to illustrate with an example. If we go to a full crop insurance program, where part of the formula that we are insuring is yield, how do we keep fraud out of the system in terms of insuring that yield? How do we keep people from farming the system, if you will? How do we keep people from just planting seed and then do nothing to make the crop productive and then coming along and saying, oh, you know, I have a disaster. And they do have a disaster, but much of it was their own creation. That is the kind of situation I am talking about. Secretary Glickman. Mr. Collins. Mr. Collins. I might say that people in the insurance business have a nice phrase for that kind of behavior. They call it ``moral hazard.'' People who design insurance policies, including USDA, spend a lot of time trying to figure out the right rate that we are going to set, so we don't encourage people in areas that maybe shouldn't be producing a certain kind of crop to get into that crop. Secondly, we have requirements that require people to perform in, what is called, a ``workman-like'' way. As you say, they can't go out and spread seed by airplane into the soil somewhere when there is zero prospect of it growing. So I think those are things that the people who are in the risk management agency try to focus on, and we talk a lot about things that might create moral hazards. So it is a good point. You can't necessarily insure 100 percent zero moral hazard, but you can certainly, in the design of the insurance policies, make it less likely that that kind of fraud will occur. Secretary Glickman. But this is also a reason why you have to have, I think, some government role, the Farm Service Agency, in management or oversight of this. If you leave this strictly between the policyholder and a company, then I think you do create an environment of greater potential fraud. Mr. Boyd. Thank you, Mr. Chairman. Mr. Skeen. Mr. Dickey. Mr. Dickey. I was going to mention something to you, Dan, about denial, and I think there is quite a bit of denial on the part of the farmers as far as the fact that things are going to get better and that they are not as bad as they appear. trade surplus But there is also a denial, I think, nationally in this way, and I don't know if it is a correct use of the word ``denial,'' but our farmers do not think that there is enough appreciation for the trade surplus that agriculture presents, or gives us year after year after year. And they felt a little frustrated in that that story isn't getting out. One person said, well, I guess the only way for it to get out is for the agricultural industry just to fail and for us to not have agricultural products in any one given year or lesser ones. Is there anything being done to explain that surplus? Is there any marketing of the value of agriculture to America that is being done? Secretary Glickman. Well, you have the Ag Council of America, and you have other private organizations that do this all the time. Of course, private companies like ADM that advertise ``supermarket to the world'' do it as well. Butthe fact of the matter is that agriculture is, if not the largest, almost the largest single contributor to our balance-of-payment surplus year after year after year. Most people in economic circles know that. I am sure Mr. Greenspan knows that for sure. A big part of our budget, concerns our effort to try to keep that going. Maybe we ought to be talking more about it. We have cooperator programs with, look, the wheat growers, rice growers, corn growers. And they are all out there--a lot of them, we helped finance their programs overseas to make sure that they continue to do the work that they are doing. So most of the farm organizations understand this. But it is just a constant battle. You know, if you don't repeat something over and over and over again, they will forget it. Mr. Dickey. Well, they were concerned about the urban Members of Congress who might hear it and it didn't register with them that we do have an effect. farm bill contribution to balancing budget Do we have any way of quantitating the part that Freedom to Farm has played in balancing the budget? Or has? Mr. Collins. Well, it has a role, in that our export programs are authorized under that Act. And to the extent that our export programs have been successful in promoting exports, then--pardon me; maybe I misunderstood you. You said balancing the budget or balancing the trade deficit? Mr. Dickey. Balancing the budget. Mr. Collins. Oh, balancing the budget. Well, to the extent that they generate economic activity in agriculture, people pay taxes. There was a time 10 years ago when the net taxes paid by agriculture as a whole was negative, but it is not the case anymore. Today farmers are positive contributors to taxes to the Federal treasury. To the extent that things like AMTA payments or loan deficiency payments keep production up and generate incomes for producers, and they pay taxes on that, then that contributes to balancing the Federal budget deficit. Mr. Dickey. You see, they were striving to find other ways that they were helping. I don't know whether that is a true picture of how the individual farmer thinks across America, but I know I got an honest picture, and it wasn't very funny. Secretary Glickman. Jay, if I may just say one other thing--I'm sorry for eating a pistachio. Mr. Dickey. I am doing the same thing. [Laughter.] Secretary Glickman. It is one of the reasons why it is so important that this committee has both urban and rural members on it. A lot of people make fun of some of these things, like farmland protection or even global climate change, but the truth of the matter is that 98 percent of the people don't live on farm country, and they do need to see a relationship between what we do and their lives. For example, 70 percent of the land in this country is in private hands; 30 percent is in public hands. Most people would think it would be the reverse. They think of all the signs of the Forest Service and the Park Service and other agencies. In truth, the quality of their lives in matters ranging from water quality to recreation is more influenced by what happens in that vast private lands area than it is in the public lands area. A lot of our programs are in things that some people may say sound a little fringey, but these programs may, in fact, protect the quality of life of people who live in urban areas. An example is the water supply of New York City. We went and did a conservation program up in New York to basically protect the streambeds of some of the feeder streams that feed the water supply up in the Catskills. That water supply in New York is the most pure of any major water supply serving any major city in the entire world, and it is virtually unfiltered except for natural phenomenon. Okay, how does that happen? That happens because we have conservation programs. Farmers do a good job of protecting their land base, and everything else, and it is just a remarkable type of phenomena. Here you have the city of New York that depends on basically unfiltered water from upstate New York? And one of the things that has always struck me is that sometimes we get into little arguments between urban and rural Congressmen and other people about, well, that is global climate change; that stuff is crazy. Well, you know what? A lot of folks who live in urban areas care about this. They want to make sure that their air is clean and their water is clean, and farmers do, too, you know. One of the things that strikes me is that it would help production agriculture to understand their role in making the whole country a better place. Mr. Dickey. I think they know. They don't believe other people know. Secretary Glickman. Yes. Well, when we were up in New York and we did that water system, they knew. We made a big deal. The people of New York--I mean, I don't know how much they think about it--that they got clean water because the farmers in upstate New York were doing their work---- Mr. Dickey. You mean, we don't need to try to trade Serrano off this--he is still on this--so we did it? [Laughter.] You know, I got to asking him how many crops were growing in his district. But he has cleaner water because of that. That is a crop because it lasts forever. Thank you. Thank you, Mr. Chairman. Mr. Skeen. Thank you. If you have any more questions, we will take them for the record. Adjournment Mr. Skeen. Mr. Secretary, it is right up there about two minutes to 5:00 and you need to get running. Secretary Glickman. Thank you. Mr. Skeen. We thank you so very much. Let me give you the whole answer to this agricultural problem. That is, any kind of business you are in, where everything you buy, you buy retail, and everything you sell, you sell wholesale, you are in very deep trouble, and that is agriculture. Secretary Glickman. Yes, I know. Mr. Skeen. And I have been in there all my life. I just worry about the future, who is going to take over one of these days, because a lot of these folks kind of figured out from the start, you can't make a living very easily in agriculture. It is very shaky. You hear that all the time. But thank you for your help and thank you for that great staff you have and the time that you have given us. We are adjourned. [The official Committee record contains additional information here.] Thursday, March 18, 1999. DEPARTMENTAL ADMINISTRATION WITNESSES SALLY THOMPSON, ACTING ASSISTANT SECRETARY FOR ADMINISTRATION AND CHIEF FINANCIAL OFFICER ANNE F. THOMSON REED, CHIEF INFORMATION OFFICER ROSALIND GRAY, DIRECTOR, OFFICE OF CIVIL RIGHTS CONSTANCE D. GILLAM, BUDGET OFFICER, OFFICE OF THE CHIEF FINANCIAL OFFICER STEPHEN B. DEWHURST, BUDGET OFFICER, DEPARTMENT OF AGRICULTURE Introduction of Witnesses Mr. Skeen [presiding]. I want to say good morning to you. Today we take up the Fiscal Year 2000 budget request for the Departmental Administration, the Chief Financial Officer, the Chief Information Officer, and the Office of Civil Rights. That is an awful lot of offices. Ms. Sally Thompson is here as both the Acting Assistant Secretary for Administration and Chief Financial Officer and Ms. Anne Reed is the Chief Information Officer and Ms. Rosalind Gray is the Director of the Office of Civil Rights. I understand that all three witnesses have separate summaries to present but before that, I will ask Ms. Kaptur if she has an opening statement. Ms. Kaptur. No, Mr. Chairman. I just want to welcome our witnesses today. This is our last panel from the Department and we have had quite a set of hearings this year. They have been very cordial and very informative and we look forward to---- Mr. Skeen. We are good listeners. Ms. Kaptur. We are. We are good questioners, too. And we look forward to your testimony today. Thank you for coming. Mr. Skeen. I think Ms. Thompson is going to lead off. Opening Remarks of the Acting ASA Ms. Thompson. Thank you, Mr. Chairman. Mr. Skeen. You are welcome, Ms. Thompson. Ms. Thompson. Thank you, Mr. Chairman. I have submitted for the record and for the Committee members my written testimony. I realize that this is your last of the hearings in this session and it has been six long weeks so I am going to be very brief. When I appeared before you last year, Mr. Chairman, I had been CFO for three days. So, I am back today to tell you what I have accomplished. Let me back up for just a minute and say that when I came here to Washington, I had been State Treasurer of Kansas for seven years, and before that I came out of the private sector-- banking executive and a CPA with two hats for many years. This is part of why I came into Government, to bring effectiveness and efficiency of sound business practices and principles into the Federal Government. And so, I would like to tell you today as CFO what I have accomplished and to request the tools I need to complete the job I need to get done and then secondly to discuss with you--or probably firstly--my new role as the Acting Assistant Secretary of Administration. As you probably know, the Department of Administration is kind of the centralized function for the Department. We have human resources there, government ethics, policies and procedures for procurement, property management, facilities construction and operation. In addition to that, we have the Small and Disadvantaged Business program. We have Program and Administration Outreach programs as well as administrative law and hazardous waste management. We also have the civil rights program but I brought with us today our Director of Civil Rights, and she is going to cover that area for you. CENTRALIZATION As the centralized administration function for the Department, we provide leadership, policy, oversight and operations. We appreciate this committee's support of all of the things that we have been able to accomplish this past year. We have implemented an Office of Ethics that is monitoring the ethics throughout the Department and putting integrity into that. We have had successes in Welfare To Work programs. We have set up a conflict prevention and resolution staff to try to prevent some of our equal employment opportunity issues that we have been addressing. This morning, I just came from the National Black Business Council in town of which we are providing one-on-one counselling to them through our Small and Disadvantaged Business Utilization Program. CONTINUITY OF OPERATIONS Now, we are working on some other things. We are working on our continuity of operations programs, which is an emergency preparedness program, both in looking at the front end on prevention and tightening up our security and at the back end on how we would be able to respond instantly ifa disaster hit the Department. RESOURCE REQUIREMENTS What I would like to talk to you today about is resource needs in four different areas in Departmental Administration. In the Departmental Administration, direct appropriations, we are requesting about $3.9 million--a million of that in mandatory pay increases. We have 650 employees in the offices that are managing all of the things that I just mentioned in the leadership policy role as well as oversight and operations. In that increase of $3.9 million, I will talk to you about a request for $900,000 in the administration of our outreach program and then Ms. Rosalind Gray will talk to you about $1.6 million in civil rights. OUTREACH EFFORTS As you probably know, the history of USDA has been a very decentralized organization. In this day and age, that just doesn't work and so the Secretary this past year has centralized the administration and the oversight of outreach programs. As you probably know, most other programs that the USDA provides serve the underprivileged and the underserved, whether it is in the food and nutrition area, in a rural development area, or in farm service areas and on down the line. But what we needed as a Department is an administration of pulling all this together--centralizing it--and then having a Department that would negotiate the cooperative agreements and then provide the compliance and oversight to make sure that these programs that are being carried out are reaching the people that they were intended to reach. Now, this was just a little different than the program itself. What it does is identify those people that are falling through the cracks in the way that we are administering the program and how we can do something about that. Of course, we have worked with a lot of that on a centralized basis but we have also worked on an individualized basis, where we have partnered with community-based organizations. The Secretary has given me the job as the new Acting Assistant Secretary to put together that Departmentwide plan, and I am asking today for additional resources of $900,000 for staff to be able to carry out that whole program. In addition to that, we are requesting $7 million in grant money that would go out throughout all of the States and counties. We have $3 million this year. We have been able to touch the lives of over 100,000 disadvantaged people, giving them technical assistance and training and it goes from very uniqueness of helping a 68-year-old farmer in Kentucky keep the land that had been in his family for generations down to helping young farmers in Florida test out their skills. We have also helped farmers find a market for the new seedless watermelon. And so, there are success stories all over about 347 counties, I believe, and 22 States that we have reached with the $3 million that you gave us last year. We certainly would like an additional $7 million to expand that program significantly. SOUTH BUILDING RENOVATION The other major area that I need to talk to you today about is the request for additional funding for a program, Mr. Chairman, that I believe you were involved with about four years ago when you approved the renovation of our South Building on Independence Avenue, about 2 million square feet that was built with WPA money in the 1930's. I probably don't need to tell you about the health and safety issues of that building, whether we are talking about the air quality, the heating, the lighting, the plumbing, or the electricity. It doesn't meet code, it is not accessible, and that project is a 10-year project. I am pleased to tell you in our list of accomplishments that, by the end of this fiscal year, we will have nearly completed phase one of an eight-phase project. In other words, we have broken down the building into eight phases which pretty much relate to the wings of the building, and we will have nearly completed one of those wings by this October. We had funds leftover from prior years that we have used this year to finish the construction of that first wing which is going to cost us about $26 million this year. What we are requesting for next year is an additional $21 million. You gave us $5 million for Fiscal Year 1999. We are requesting another $21 million because the planning is all done, and we would like to continue the construction on the next wing. Again, that will cost us about $26 million. As you know, with any kind of a construction project, if you stop in the middle of it, it costs you more money and so this is very important that the Department continue with this project. So, we would again request the additional monies to continue on that project, and we would love to have you come over and see the construction project, if you have time later on in the year when things slow down a little bit. HAZARDOUS WASTE MANAGEMENT In the fourth area, before I start to wrap up my remarks, we have the Hazardous Waste Management Program in Departmental Administration. We are requesting an additional $7 million in funding, bringing it up to $22.7 million in fiscal year 2000. We are under a statute, of course, to complete the cleanup, and we are subject to liability under the natural resource conservation and recovery laws. We have finished the inventory, and we are now ready to start into what is the more complex and more costly responsibility in the area of cleanup. This last year, we have been able to leverage funding from responsible parties to take the $15 million that you gave us this last year and leverage another $30 million out of responsible parties. Of course, as you would know, that would take additional legal resources to be able to go after the responsible parties and to make them also help pay for the cleanup. This is one of those ``you either pay now or you are going to pay more later'' situations. I would request the $7 million in additional funding for that. cfo remarks And with that, I am going to end my remarks on the Departmental Administration, but certainly would be available for any questions later. And I think my next remarks are as CFO, if I could next talk about the CFO. Is that on your schedule today? Mr. Skeen. Just go ahead and finish with the CFO. Ms. Thompson. Okay. Thank you very much. When I was here last year, as I said, I had been onboard for three days but I made some promises to you. Mr. Skeen. You are a very versatile woman. [Laughter.] y2k compliant Ms. Thompson. I can wear many hats, you know. Pink ones, purple ones, red ones, whatever. I told you, for one thing, that I would make sure that our National Finance Center--that is in New Orleans and has an employee base of about 1,800 employees, processes the payroll for a fifth of the Federal Government, and also processes the Thrift Savings Plan for 2.3 million Federal employees, as well as doing other services for 60 other Federal agencies--would be Y2K compliant. I am very pleased to be able to come back to you today to say that we have accomplished that. We set a self-imposed deadline of June 30 to have 23 million lines of code reviewed and make them compliant. We did that and then we set the next deadline of December 31 to make sure that we put all of those changes in those systems through a time machine that forced the dates forward to test out not only the year 2000 but 2001, 2002, 2003, and 2004. They are all compliant, they are all working, and we are ready for the next millennium. So, I am very pleased with the Center for having accomplished that. computer system implementation In addition to that, I promised you that I would also bring in an experienced project team to take over the computer system implementation to get us compliant with standard general ledger in the CFO Act. I did that. I brought in a team of five people that had not only the systems experience of having brought it up in another Federal agency just like our system but also had very strong skills in financial management as well. They are onboard, and have put a new project plan together. We are in the middle of the implementation, and it is working well. We will bring up the rest of the Forest Service--the other two-thirds--on October 1. We will also bring up another major agency--our Food Safety and Inspection Service. We have a 5-year plan to get everything done, and to get the old systems out of there. Everything is moving along very nicely, and I am very pleased with that. But, as we went through the plan, we found out that it isn't just bringing up a new system that solves the problem of data integrity and credibility of our financial information. It also involves changing the business processes within the agencies. And so, today, I am here to ask you for about $2 million of additional resources for CFO. We have not had an increase in the CFO's office since 1990 when it was first born. These resources are needed not to bring the new system up but, again, to provide that leadership, that policy, that oversight in the Department in working with all of the other program managers and the other agencies to review their business processes--to clean up their data--so that clean data in means clean data coming out of a system. In addition to that, I can promise you that that will move us along to getting a clean audit opinion for the Department which means more credibility and more reliance that you can have on the data that is coming out of the USDA and, probably most importantly, will give our program managers better information in which to make decisions and use the tax dollars that you allocate to us more efficiently and more effectively. We need that, as well, to help guide that project through the Department, as well as the accountability reports, as well as making sure that the data--that we are going to use to measure the performance goals and the results of what we are doing--is credible and that you can rely upon that. resources to provide leadership and oversight We have, as you know, $100 billion loan portfolio, which is the largest of all the Federal agencies put together. That is one that is mostly of use in rural America. People think a lot of it is the farm loans but we have housing loans--a bigger portfolio than HUD because they are direct loans--we have utility loans, and we have communication loans, community development loans, small business loans in that area. USDA is charged with the development of rural America. Again, we need the leadership and the resources to provide that leadership because that is one of the biggest issues, keeping the Department from getting a clean opinion. I have made a promise to the Vice President to whom I am giving quarterly reports through OMB on what we are going to do to assure that we can get a clean opinion on our loan portfolio because that issue of loans could keep the Federal Government from getting a clean opinion. closing remarks of the cfo So, there, again, it is my office that leads the charge, if you would, and provides the leadership, guidance, policies, and the oversight function to make sure that all of this gets done. And that is why I am requesting the funding for the CFO's office. I would certainly appreciate it, if I can thank you for all the help that you have given. I appreciate my five plus five minutes in the sun here. I made promises to you last year and I kept those promises. I can make this promise again this year--that if you give me the resources that I have asked for to be used for the good of the Department, I will come back and tell you next year, that I have again kept my promises. Thank you very much. [The prepared statements and biography of Sally Thompson follow:] [The official Committee record contains additional information here.] Mr. Skeen. I appreciate it. Ms. Reed. opening remarks of cio Ms. Reed. Thank you. And, with your permission, I also will submit remarks for the record but I do have a few comments that I would like to make here. Mr. Skeen. That is fine. You can just go right ahead. Ms. Reed. Good. Thank you. It is indeed an honor to serve as the Department's Chief Information Officer, to work with Secretary Dan Glickman and Deputy Secretary Richard Rominger--who continue to be extremely supportive of the work we are doing in the information management arena of the Department. year 2000 conversion As you know, our top priority for the last several years has been preparing ourselves for the Year 2000. We now have about 288 days left before January 1, and 13 days left before our compliance deadline set by the President for our mission critical systems. As of March 12 we were over 80 percent compliant. It is my expectation that we will be well over 90 percent compliant by the end of March. Most of those systems are well into testing now. We will, however, continue testing right up until January 1. We want to make sure that everything is connected and we will continue to be able to deliver programs. Whether or not our systems work, we know we have many partners that we have to work with. The Food and Nutrition Service is working with the States on food stamps, on women, infants and children, on child nutrition programs, and the Rural Utilities Service is working with the rural utilities to assure that there is a continuity of service there. So, we have extensive outreach. year 2000 impact on nation's food supply We have also begun to, over the last months, assess the impact of Year 2000 on the food supply. As part of the President's Council on Year 2000 Conversion, we established a committee to look at the Y2K impact on the food supply. We published a report fairly recently on that, and I believe we provided a copy to you. The bottom line is that all the information that we have today indicates that we should not expect any major disruption to the Nation's food supply as a result of the Year 2000. year 2000 awareness There are issues that we continue to watch very closely, most particularly small companies--this plays out, whether it is food sector or any other sector. Small organizations have been less engaged in Y2K preparedness than the large companies. So, we will be actively participating in a Y2K small business action week at the end of this month. The Department is playing a leadership role in drawing upon our resources in rural America to bring people to a satellite video conference where we can share with them tools and techniques, make sure that they understand what the issue is, and try to generally raise the level of awareness in small businesses in rural America. year 2000 international impact The other area that we will continue to watch very closely is in the international arena--what the impact is of other countries' preparedness on our abilities to import and export food. So, I assure you that those things will continue to command a significant amount of attention, not just from myself but from the entire leadership of the Department. farmer and low income safety net Turning to the information technology budget at the Department, the President's budget seeks to strengthen the safety net for farmers and low-income populations, to provide economic opportunities for rural Americans, and to protect our natural resources, and further improve the safety of the food supply. Our current farm prices have given us some significant challenges in this arena. I know that has been a subject of much conversation. But we are firmly of the belief that our information technology infrastructure is critical to our long- term ability to help serve the customer in a better way. We do believe that we have made progress. We know we have a significant way to go. internet program delivery In the last year, various parts of the Department have really begun to use the Internet in very wonderful ways to reach out--agricultural marketing service disseminates commodity information to markets within hours of collection via the Internet. The Farm Service Agency has a new electronic bid system so that $1.2 billion in purchases of food for humanitarian assistance can be opened and awarded in a matter of hours. So, there are areas where we have made progress. It gives us a glimpse of what we can do in the future. The Common Computing Environment for the farm service community is a critical initiative for us to help us to provide that service in the future. usda information technology budget Our overall budget request for information technology in the Department is just over $1.2 billion this year. We requested in the past year just a little less than $1.2 billion, but have received also almost $40 million in Y2K supplemental money to help that. About 30 percent of the resources that we are requesting across the Department for information technology is for modernization and enhancement initiatives. About 70 percent is for the operations and support of our existing ongoing systems. It also includes the salaries of employees that we have working on information technology. food and nutrition pass through I should point out, again, that of that $1.2 billion, about $280 million is money that is passed from Food and Nutrition Service to the States to support their efforts in the technical infrastructure for food stamps. So, that is part of our budget. common computing environment Again, probably the most significant increase that we are requesting within the total information technology budget is for the Common Computing Environment--an additional $40 million. The total program value that we are projecting is about $90 million but much of that is covered through reallocations that we have made internal to the Department, as well as some request of use of CCC funds. So, that leaves about a $40 million increase. role of cio As Chief Information Officer, my job is much like that of the Assistant Secretary's and the CFO's in that we assure that we are approaching our programs in a way that is most efficient and most effective. Information technology, as you can tell, is a very significant investment for the Department so it is important to me that we use that investment in the wisest way possible. ocio fy 2000 increase For my own office, I am requesting an increase of $2,447,000 over our Fiscal Year 1999 appropriation. The total request, just under $8 million, is really two-thirds of a percent of the Department's total IT budget. So, for really a fairly nominal sum compared to what our overall investment is, we believe that we can be far more effective and more efficient in using our information technology. common computing oversight We have made some real strides in the last year. A portion of my increase is requested to pursue my oversight responsibilities with respect to the Common Computing Environment. Over the last year, we have just about completed a nationwide telecommunications infrastructure forthe service center community and, within a matter of weeks, we will for the first time be deploying computers to the service centers which are common. They will have the same word processing packages. Each one will be loaded with core information that could be used for Rural Development, NRCS, and the Farm Service Agency. This is the first time that they will actually have equipment that is interchangeable, so that will improve their ability to deliver service. It also is more effective from a maintenance perspective. CLINGER-COHEN ACT IMPLEMENTATION To implement the Clinger-Cohen Act, also known as the Information Technology Management Reform Act, I have a number of requirements that are placed upon me. I am requesting from you some additional resources to help me in that effort: $500,000 to help develop our information technology capital investment planning process; $500,000 for our information technology architecture, which helps us to be able to share information across the agencies; $300,000 to improve our project management capacity. IT PROJECT MANAGEMENT So often when we make these investments, we forget that what is critical is the people who are managing the project, and it is absolutely imperative that they have appropriate skills. You heard earlier of our success in bringing in an experienced project management team for the financial system. We need to further develop that capability within the Department to avoid any likelihood that projects will be ill- managed because the people aren't well-trained. IT WORKFORCE PLANNING And, we have requested $200,000 to support our workforce planning. We in the Federal Government, are in a workforce crisis in information technology. We are competing with the private sector for talent. With just a little bit of resources I believe that we develop programs that will increase the likelihood that we can attract and retain talent within the Department. But it is a very, very competitive environment. NEW ASSOCIATE CIO FOR TELECOMMUNICATIONS Also, I am pleased to tell you we have recently hired a new Associate Chief Information Officer for Telecommunications Services and Operation. Keith Jackson will be focusing on an enterprise network for the entire Department. He also is playing a leadership role as we transition the Department to the FTS 2001 telecommunications contract. INFORMATION SECURITY I seek also your support in information security. It is no secret that, as we move more and more into an information society, we are increasingly vulnerable to the abuse and misuse of that information. We need to strengthen our security management within the Department. I have requested $500,000 to aid in that effort. One of my concerns is that when we look at how much we have invested in security across the Department in the past, it is less than one-half of one percent of our information technology investment. The industry standard now is five to eight percent. We desperately need to put more focus and attention on securing our information and assuring the privacy of that information. So that the people we serve are respected, and the information is managed in a way that we are cognizant of its security. CLOSING REMARKS OF CIO As you can tell, we have a very full plate. I want to close by just thanking you for the support that I have had from you and from your staff in the past and I look forward to working with you on accomplishing these important initiatives. Thank you. [The prepared statement and biography of Anne F. Thomson Reed follows:] [The official Committee record contains additional information here.] Mr. Skeen. Thank you, Ms. Reed. Ms. Gray. INTRODUCTORY STATEMENT OF THE DIRECTOR OF CIVIL RIGHTS Ms. Gray. Mr. Chairman, and members of the committee, I am pleased to appear before you today to report on the accomplishments of the Office of Civil Rights for Fiscal Year 1998 and to submit and present the 2000 budget request. I was appointed Director of the Office of Civil Rights in July 1998. Last year, the Acting Assistant Secretary for Administration reported on civil rights accomplishments since the CRAT report was issued. It is the Civil Rights Action Team's report on the conditions of civil rights at the Department, and was followed by the CRIT implementation report. CIVIL RIGHTS GOALS As you know, the Department's overall civil rights goal is to treat every customer and employee fairly and equitably, and with dignity and respect. To that end, the Department has developed and initiated more than two dozen policies and procedures over the last two years. Each year, we train each employee in the Department on civil rights--focusing on different issues in different years--and we train managers to ensure that they have the skills to develop a diverse workforce. We also are concentrating our efforts on increasing diversity at the Department. PROGRAM AND EMPLOYEE COMPLAINTS One of the major concerns of the CRAT reports certainly was that there were both program and employee complaints that had been delayed in processing at the Department. We would like to report to you today that last October--after having made some progress--the Secretary convened a task force for the program complaints. And, of the 1,088 backlogged program complaints, I would like to report today that only about 20 of those cases are unresolved. They are mostly food stamp cases that we will have completed by the end of March. BACKLOG COMPLAINTS Also as part of that backlog of complaints, there were approximately 164 African-American farmers' unresolved complaints which are part of the much-publicized consent decree in the Pigford v. Glickman litigation. Those cases will be processed pursuant to the terms of that decree. As you know, on January 5, 1999, the Department did enter into a consent decree that was negotiated by the Department of Justice that provides a process for resolving the complaints filed by African- American farmers. In the backlog process, we resolved cases that had been filed by persons other than African-American farmers. Out of that process, we closed the remaining cases and we made 53 offers of settlements. Forty-two of those offers were accepted. In some of the 11 that were not accepted, the person made counteroffers that we did not accept or they did not accept our offer. On the employment side in the backlog, there were more than 2,000 employee complaints backlogged. As of March 3, more than 1,500 of those employee complaints had been resolved. However, I must tell you that also during Fiscal Year 1998, more than 900 new employee complaints were filed so, while we made a lot of progress, we still have about 1,600 active employee complaints. On the program side, after the backlog process, we would have had approximately 240 remaining cases but, with the passage of the statute of limitations and the publicity surrounding the consent decree, more than 1,200 new program complaints have been filed. To resolve these cases requires a lot of work. In many instances, we find the Department does not have jurisdiction over these cases but to reach that point it requires review of the compliant, it requires processing, it requires appropriate and accurate determinations to be made. We are requesting additional assistance in this area. STATUTE OF LIMITATIONS ACT Last fall, Congress passed the Waiver of the Statute of Limitations Act. By December 5, 1998, we had published regulations to implement that waiver. We have now reviewed all of our cases to determine if statute of limitations issues were involved in those cases. We identified more than 170 cases in our active case load that had statute of limitations issues. We met the March 1 deadline of sending letters to each of those 170 persons. Forty of those persons have now asked for their cases to be processed under the statute of limitations waiver and 20 of those persons have requested hearing on the record. Our regular process for complaints do not provide for hearing on the record so we had to create arrangements to provide for those hearings. We have requested that administrative judges be provided through the Office of Personnel Management and that also has increased the need for additional resources. ACCOUNTABILITY SYSTEM One of the problems and one of the continuing concerns of the Department is that, along with educating employees and managers, we have to ensure that people are held accountable for their actions. To that end, the Department has implemented in headquarters an evaluation system where agency heads and managers are, as part of their annual performance evaluations, evaluated on their implementation of the civil rights plans that they developed for their agencies. We must work with each of the agencies, however, to ensure that not only managers in headquarters but employees and managers around the country are held accountable for their actions. We need additional resources to do compliance reviews, both program and employment, to make sure that our employees and our customers are treated fairly and to implement a disciplinary policy so that where there are infractions and where there are violations of individuals' civil rights, those employees and those managers are appropriately disciplined. Much of our focus in the next year in implementing the accountability system will be to ensure that employees are held accountable for their actions. To do that, we also have to assist the managers. Instead of just processing a complaint or doing a disciplinary action, we want to make sure that managers are aware of the appropriate standards. We have to do compliance reviews. We have to advise managers about appropriate procedures so that they have support to make sure that everyone is treated fairly. Within the amounts requested by the Departmental Administration for Fiscal Year 2000 is a budget request of $14 million for the Office of Civil Rights--$2,041,000 above the Fiscal Year 1999 level. It includes $802,000 to improve our employment complaint processing and compliance reviews and to enhance our tracking systems for employment complaints. It also includes $837,000 to prepare and process the additional cases under the statute of limitations waiver which will require providing administrative hearings and it includes mandatory pay cost increases of $402,000. CLOSING REMARKS We have made good progress, but we do have a lot of work to do so that we can ensure equitable treatment of all employees and customers. I appreciate the support of this committee and I welcome any questions that you might have. [The prepared statement and biography of Rosalind Gray follow:] [The official Committee record contains additional information here.] Mr. Skeen. Thank you, Ms. Gray. fy 2000 increase for ocfo Let us start with the Financial Officer. Ms. Thompson, you are requesting a $2 million increase in Fiscal Year 2000? Ms. Thompson. Yes. financial statements Mr. Skeen. As you are aware, the Inspector General has been unable to audit the working capital fund's financial statements due to lack of supporting documentation. Specifically, how would the additional funding you are seeking be used to address the outstanding concerns of the Inspector General of having an unauditable financial statement? Ms. Thompson. We are expecting to have an auditable financial statement this year. We have been providing and will apply additional resources of leadership and policy to the working capital fund. As you know, that is a fee for service fund and it also will be part of the new financial management system. And that is part of the problem with the whole Department getting a disclaimer. Our old accounting system is not compliant with the standard general ledger and doesn't have the audit trail that the Inspector General needs to be able to track the information through the system. And so, it is going to be a partnership, between the CFO's office providing the leadership and the staffing, the new project team providing the system capabilities that they are bringing up, and the Working Capital Fund staff changing their processes--again, those business reengineering processes--to meet the new system. availability of technology Mr. Skeen. I appreciate that answer. It has been apparent to me that when the technology was available that so many agencies throughout the Government have been lagging and being left behind because the technology has been evolving so fast. But, I want to tell you that I have visited the financial center in New Orleans. It is one of the most efficient centers. Also, in your testimony today, you hit on a nerve that has always jarred me because we have the technology but, a lot of times, these various agencies just let it go and don't use it to its fullest capacity. You certainly are doing it and you are doing it well. You are applying for additional help in that area because it is evolving so fast---- Ms. Thompson. So very quickly. y2k Mr. Skeen. You are one of the first to say ``Y2K, no big deal'' because you are going to take care of it. And it always amazes me when somebody says, ``Y2K is going to do this or do that or do the other.'' So, I want to commend you on that---- Ms. Thompson. Thank you, Mr. Skeen. Mr. Skeen [continuing]. And we will try to put the money together---- Ms. Thompson. I appreciate that. Mr. Skeen [continuing]. That you have asked for because I think that you certainly use it well. Ms. Thompson. Thank you. Mr. Skeen. And for the Chief Information Officer---- Ms. Reed. Yes, sir. status of y2k conversion Mr. Skeen. Ms. Reed, we're 288 days away from January 1, 2000 and I know that you mentioned something about this. Would you give us your assessment of USDA's Y2K readiness? Ms. Reed. Yes, sir. Mr. Skeen. Tell us why it's no big deal, that you're getting it done? We'll pass the information along to some of the other agencies. Ms. Reed. Well, I cannot tell you that it's not a big deal. It's a very big deal. Mr. Skeen. It is a big deal. Ms. Reed. I will say, however, that there are many, many employees across the Department of Agriculture who have been working very hard to make sure that they will be able to continue to deliver a program after January 1st. We've made significant investment in terms of dollars, in terms of talent, and in terms of leadership. As of last Friday, over 80 percent of our mission-critical systems are compliant. I expect we will be well over 90 percent by the end of this month, and see no problems whatsoever in being completely ready by January 1st. Having said that, given the extent and complexity of the issue, I shouldn't be surprised if there aren't minor glitches. And given that, we are investing significantly in contingency planning. We're trying to think through what all the things are that we don't have control over. For example, what might happen and what is it that we need to have in place to make sure that the people we serve continue to be served? So we're taking it very, very seriously. y2k readiness in rural america Mr. Skeen. Also, would you give us your assessment of USDA's readiness as it relates to the domestic and international food supply and how it relates to rural America? You mentioned it, I know, in your testimony. Ms. Reed. Yes, I think the concern that we have in rural America is predominately with the small and medium size organizations. That, by the way, is not unique to rural America. It's true in urban America as well. There is a lot of evidence that suggests that smaller organizations are not as well engaged, and what we are trying within the Department to do is use the outreach mechanisms that we have. Sally Thompson spoke earlier of the number of loans that we have with very small businesses or small communities. We're contacting them to make sure that they understand what needs to be done. So, we're using the resources at our disposal. food supply in y2k Food supply, generally the biggest area of concern that we have in this country is public panic. There is no indication that there will be any widespread, catastrophic disruption of food. It is possible that there will be intermittent kinds of disruptions unique to a particular product or a particular place. But there is no reason for panic. Our concern, as the media attention rises to this, is that people need to have more concrete evidence. We think at the Federal government level we're now able to provide the broad picture. We're hopeful that companies and local communities will now take the steps they need to take to be able to assure the population in their communities of their status of readiness. support services bureau Mr. Skeen. The administration is requesting $74 million in appropriated funds for a new function and service center modernization initiative. I think you mentioned that? Ms. Reed. Yes. Mr. Skeen. That is a lot of money in what probably will not be a very good budget environment. Will there be any savings associated with this initiative in Fiscal Year 2000? Ms. Reed. I don't think we can project immediate savings in Fiscal year 2000. We'll get whatever figures we have on that for the record. [The information follows:] [The official Committee record contains additional information here.] Mr. Skeen. We would appreciate having those. Ms. Reed. But let me just say we clearly anticipate that managing in a common administrative infrastructure across that community makes all kinds of sense. We will be able to manage more efficiently and more effectively. And over the long-term, we clearly do expect that there will be savings. Mr. Skeen. Well, I think also there's been a lack of being able to have real interchange or innovation. Ms. Reed. That's absolutely correct. Mr. Skeen. And that has irked me ever since I've been at this thing because the Government has been an isolated island, technologically---- Ms. Reed. Right. Mr. Skeen. We're in the age now where you've got to know what everybody else is doing and how well they're doing it. We also need to provide the technology--I think the finance center is a good example. Ms. Reed. Yes, I think this is--I'm a very, very strong proponent of the Service Center Bureau. I think it will bring the right kind of integrated management that we need in this area. Mr. Skeen. Well, if you are sure--then the harp that I've been playing over here, you have sure helped me find the strings. [Laughter.] Ms. Reed. Thank you. civil rights performance evaluations Mr. Skeen. Ms. Gray, your testimony says that you and the Assistant Secretary for Administration rated agencies and their administrators on their civil rights performance. Could we have a copy of that report for the record, and can you tell us some of the most important findings? Ms. Gray. The ratings were part of the evaluations for the agency heads and administrators for last fiscal year. And we certainly do have quarterly assessment reports for each of those agencies, including the annual one. We will provide you a copy of those reports. Mr. Skeen. That will include the civil rights---- Ms. Gray. That would include only the civil rights---- Mr. Skeen. Oh, only civil rights. Ms. Gray [continuing]. Initiative. Basically, what we found based on the development of policies and plans in the various agencies that most people met that criteria. There were certainly certain agencies where there were a large number of complaints filed, and there were also some agencies that engaged in early resolution for the employment complaints and they had a small number of complaints. So, generally, I would say that 80 percent of the agencies met most of their objectives. There certainly is room for improvement in the other 20 percent. For this Fiscal Year, they have changed their objectives and their plans, and we will evaluate them accordingly. But, yes, we will get you a copy of those reports. Mr. Skeen. Once again, I think that is your good leadership. That is what the problem is and you've got a solution for working on it. I certainly appreciate that. [The information follows:] [Clerk's note.--Subsequent to the hearing, the U.S. Department of Agriculture's Office of General Counsel determined that the information could not be provided because of privacy regulations.] investing management resources Mr. Skeen. Ms. Gray, this committee has put some additional money in civil rights over the past few years and you note some progress in your testimony. But GAO, the USDA's own inspector general, and the comments of minority farmers in the press indicate that there are many problems that remain. Is USDA investing the management resources as well as the money needed to address these problems? Ms. Gray. Yes, we are. One of the achievements since both of those reports were released is that the Department has issued Departmental Regulations for employment and program complaint processing. We are finalizing the operational procedures for those regulations. Both of those reports note that the Department had been without regulations for processing civil rights complaints for a number of years. We have developed those regulations. We are, with the new staff we're adding on, providing those processes. For those tasks where there was no staff to perform them, we will be covering them this fiscal year and will carry out additional aspects of the work that needs to be done in the next fiscal year. We're having to and will complete the implementation of a new tracking system for our program complaints so that we can have current up-to-date information on the status of every program complaint in the office. That new system for programs will be complete before the end of May. Later in the summer, we will start to develop a new tracking system for employment complaints. The tracking system that we have now for employment complaints is an EMOS system. It's outdated and it's overloaded. We will start the development of that new system and that will be finished next year which is one of the areas for which we requested additional funds. I cannot say that as of today, we respond to all of the complaints within 180 days, which is what EEOC and our own regulations require. We have reduced the amount of time that it requires to respond to and finalize complaints. Our conflict management resolution programs and our ADR programs help with the resolution of those cases because people are able to elect mediation if they choose not to go through the complaints process. We hope that next year we will report that, based on our new regulations and our new processes being in place, we will be resolving all of our program and employee complaints within 180 days which is the requirement. building renovation Mr. Skeen. That sounds good. That's a very good goal to be working on and we appreciate that. Let me ask you about building renovation. Ms. Thompson. Yes? Mr. Skeen. How many years have we been working on that project? Ms. Thompson. Well, I believe that you approved that in 1995. It took a while before we could start to do some planning on it. Mr. Skeen. We've gone Y2K backwards. [Laughter.] Ms. Thompson. Yes. Mr. Skeen. That's been a horrible situation to take care of. Ms. Thompson. It has but you know we've worked through all of the issues. This has been a good year. It's a good year for me to take over because I'm reaping the results of some successes there. We got tangled up with GSA, and then we got tangled up in the courts with a contractor because they weren't selected, but we got through all those issues this year. And, as I said, I am so delighted that phase one will be done next January. Mr. Skeen. Well, we're glad to hear that too. Ms. Thompson. So are our employees let me tell you. And one of the things I didn't mention, as a financial officer, I always look for return on investments, as you know. When you looked at this project in 1995, we no longer are paying GSA the $30 million worth of rent that we were paying on that building. Part of the thought was that most funds would go into our budget to provide for the construction. So, in a way, the project kind of pays for itself. Assuming, of course, that you allocated those resources to us. More importantly, when this project is finished, we are currently spending about $35 million in rent for the space---- Mr. Skeen. That's in the private sector? Ms. Thompson. Pardon me? Mr. Skeen. Are you renting from private individuals? Ms. Thompson. Yes. Mr. Skeen. Or are you not? Ms. Thompson. Yes, we are. It's a contract with GSA but they in turn are renting from private sources. We'll be able to release some of that space as we go along. That will then save another $35 million a year in rental costs. Mr. Skeen. Well, we might even have GSA get up-to-date on their process in time. Of course, that's out of our jurisdiction, but we can at least throw a snowball over the window. Ms. Thompson. There you go. Mr. Skeen. Ms. Kaptur? Thank you. food for farm aid Ms. Kaptur. Thank you, Mr. Chairman. This has been an extremely interesting panel this morning. And I just wanted to point out, I don't mean to pick on Ms. Reed, but in her testimony, she restates the goals of the Department of Agriculture. I've said this to many panels that have come up here this year, that really could be I suppose a mission goal for the Department of Commerce because the word farmer isn't in there. It was very surprising to me that the way in which we shape our thinking about programs in the Department of Agriculture doesn't include that particular focus. It tells me why we have some problems in the country today. The word ``agricultural producer'' is used. But I suppose you can say in a way I have an agricultural producer in my district that makes Cheerio's. They use an agricultural product and they process it. But I think if you went out to most farmers in my district, they wouldn't call themselves a producer. You can't do anything about that alone, but when you get in these inter-departmental meetings at USDA, you can certainly be a voice. I think the absence of that word has an impact on every single function the Department does, including the way you collect data. And who is able to access your information and who you pay attention to. I wanted to ask you, Ms. Reed, on page 3 of your testimony you talk about something I don't understand, where you say that one of the accomplishments of your efforts has been the Farm Service Agency electronic bid entry system so that bids for some $1.2 billion ``food for farm aid can be open.'' Now I don't quite understand what program that is? Ms. Reed. This is work of the Commodity Credit Corporation in Kansas City in sending food aid overseas; how we contract for and the distribution of that. It's that system that is referred to there. farmer access to computer Ms. Kaptur. All right. Well, one of the issues I want to point out to you I had GIPSA staff out in our district, a couple of weeks ago because we have a huge crisis, as you know, all across rural America, in our area particularly in hogs and low grain prices. And after the meeting, a farmer came up to me and would have been eligible for one of the USDA programs that dealt with a payment to those producers who owned under 1,000 or produced under a 1,000 head. This particular producer had buried his animals. And I said, ``Sir, you were exactly the kind of person that USDA was trying to reach.'' And he wrote me a letter after that. But I guess I just wanted to say I would bet that whoever is coming in on this electronic bid entry system are people who can afford the computer, follow it, et cetera. And a lot of these farmers, many, many, many of them, do not. Only about 2 percent of our farmers actually hedge in the markets in Chicago. So when you look at what is really going on down there, I think you ought to think very hard, seeing as how the word ``farmer'' is missing from much of the testimony that was presented today, for that very discreet group of Americans that we can identify, how you find them. And make some of this incredible information available to them. And I think it's a problem, It's a problem across this country. And there's nothing you can answer that except that maybe you'll be more thoughtful about ways in which your programs can be---- common computing equipment Ms. Reed. Well, I will share with you that I gave a presentation yesterday at a technology convention downtown, and I talked about the things that we were doing in the Department and things that we were trying to do. I spoke a lot about what we're trying to do with the Common Computing Environment. And, what I was speaking to was the plight of the farmers. And afterwards a woman came up to me, and I will tell you I was very pleasantly surprised to learn that she was a farmer. She has farms in several counties, and right now she has to go to several different county offices because of the way in which our information is collected and managed. You can't transact your business in one place if your farm is in a different place. The vision that we have is a technology environmentwhich will give her the capacity to do that. Just that simple step, which I say is a simple step, it's actually complex--given the scope of it. It takes a lot for us to be able to do that. But it resonated with her as a farmer. So I regret that there's any lack of sensitivity to this in my testimony today. It's very much a part of when I speak about what we're doing in the Department and how we're trying to help the people that we serve, farmers included. access to usda information Ms. Kaptur. Well, I'll tell you what. I've got 6,500 surplus hogs in my district right now in four different counties. Those farmers want to sell those hogs somewhere. And I would bet you a dime to a doughnut that when that electronic bid entry system is put up there by the Farm Service Agency, their stuff won't get bought. And so I just present that to you as the challenge across this country, particularly to independent farmers, to the co-ops that are out there trying to move product, that perhaps you really look at that subset of interests that access information in your Department as one group that by golly is going to be on the system. I was very surprised, I was up in Delmarva the other day because of the difficulties in the poultry industry. And talking to people who are organized, in much of the country they're disorganized, but there they were organized to try to make a difference. And I said, ``Have you looked at the new GIPSA website dealing with contract farming? Excellent information on there.'' They didn't. They had never seen it. And these are people who are involved in court cases. And I'm thinking, oh, my gosh. So I'm just telling you there's a problem out there. And maybe there's something you can think about over the next year that would make a difference for these folks. outreach to the underserved community As I read about the $7 million increase for socially- disadvantaged farmers, I'm interested in how those funds would be used? Ms. Thompson, could you? Ms. Thompson. Thank you because I wanted an opportunity to respond to the question that you were asking Ms. Reed about in how do you reach those farmers that don't have the technology that you were talking about? And that's exactly what that outreach program is to do. It provides the training, the technical assistance, the financial counseling, if you would, to help them get access. A lot of those funds are administered through the universities and through the agriculture departments, particularly the 1890 colleges and universities and the 1994 schools, which are the Native American colleges. The universities know where to reach the minority and other specially disadvantaged clientele. So often, a lot of the farmers that you're talking about are the minority or the socially-disadvantaged that don't have access to all of the modern technology. They aren't clued in to the system of all the technical literature that's out there like the websites and that sort of thing. The whole purpose of outreach is to reach out to identify the types of people that you're talking about that aren't being reached by the normal system. The program is set up to reach them and identify who they are and then set up a program or a process to be able to reach out to those farmers. That's exactly what the outreach program is all about. They do that through the community-based organizations that are out there as well as the university system. We also work with other types of organizations that are set up specifically to deal with this problem. For instance, this week I met with the NAACP. They've got a network of 22,000 offices out around the country. They met with us to get our literature, to understand our programs, and for us to train their people to be able to reach out to their constituency with all of the different programs that USDA has. This includes programs for development of rural America and all of our farm programs. hot-line system Ms. Kaptur. Well, I was sitting here thinking about all those records you have on file down there in New Orleans. I'm thinking there's got to be a website. There's got to be a way of having every farmer in our country on some kind of a hot- link system. If they don't have a computer, then they get a mailing. But when there is the opportunity to get an indemnity payment and they don't even know. And every single system we have in place, the Farm Service Agency, the co-op extension, the land grants, the minority outreach program there's got to be a direct link to the family farmer. I wouldn't depend on the States to do it. You've got the technology to do it. And you ought to get them up there. There's less than a million of them now, am I right? From when we had those people testify from the library--yes? Ms. Thompson. One of the things that we did was to publish an 800 number and then we had staff on the phone for 24 hours straight for days when we were trying to get some of that emergency funding out there. Again, however, you have to depend upon the individual either hearing it on the radio or in the newspaper or something like that. Ms. Kaptur. That's why I think if you had their names up there or their addresses or whatever, then that hot-link goes out, either on the computer or by letter or something so that they know what they're eligible for. One of the questions I had on the socially-disadvantaged program again is where we've been trying to build our farmers-- rebuild our farmers' markets around the country. Are you coordinating with other offices within USDA so that if you identify people, they can find a way to market? We're putting a lot more emphasis in our WIC program, in the regular programs of USDA, the commodity program, to try to increase the farmers' market access. Will you link to those? Ms. Thompson. Absolutely. Yes, we have done a lot of that. It's one of those programs that builds momentum and we're working very hard in that particular area of farmers' markets all over the country. We have a very successful one that goes on every Thursday right down at USDA. We clear out our parking lots. building modernization Ms. Kaptur. That brings me to my next question which has to do with your building modernization. Ms. Thompson. Yes? Ms. Kaptur. In thinking about the future of the mall in the next century, I know that you have to retro-fit your building internally and so forth, but if you think about agriculture in this society and whether we're going to have it in the 21st century or whether we're merely going to process food that is raised somewhere else and imported in here--and that is a legitimate question based on technology today--then it seems to me that we have a job to do to tell the story of agriculture when less than 2 percent of the population is engaged in an activity than anyone else understands, our young people, our tourists, everybody else, has to understand that this has a place in the U.S. economy and it shouldn't be taken for granted. I'm wondering as you look at your modernization plans and the monies that will bespent, not insignificant, a quarter of a billion dollars or more, have you given any thought to how you tell the story of agriculture to the general public at the same time as we house those in the employment of the Government of the United States who try to administer the various farm programs of this country? story of agriculture Ms. Thompson. That's a very, very good question. For those visitors to the mall, which is a very small part of the question you just asked, we've got a wonderful Visitor's Center right there on the main floor right off the mall that tells the story and has absolutely gorgeous brochures of agriculture in America. I guess I would say that the new building will house about 6,000-6,500 employees and probably every one of them is a voice in some way for agriculture and rural America. It's a combination of both. We always look at the Department of Agriculture as the Department of Agriculture ``and Farmers,'' and they are very, very important and a very big part of the mission of USDA even if the word isn't in there. Steve Dewhurst and I will certainly look at that. Since I am the CFO, I'm in charge of the strategic plan. You can bet we're going to see that that gets incorporated. The same thing applies whether we're talking about rural America, housing, water and sewers, communications, utilities, and that sort of thing. All of those people are involved in getting the program out to the people in rural America and all over the world now because our farmers are just as dependent upon our export market as they are in producing the product. I've got farmers calling me everyday from Kansas, for instance, and saying, ``We need to get this wheat out of these silos and get it shipped over there to Russia,'' or wherever we're trying to get it exported to. I think you're absolutely right. We need to continue to put a major focus on the communication, through outreach, as to what is available and what we're doing, and the coordination. Again, it comes back to that role that not only I, but the whole Department has to play in leadership, policy, and oversight to make sure that the funds that you appropriate actually obtain the results that you're looking for. Ms. Kaptur. Well, I appreciate your sensitivity on that. Let me just say that as the Department begins to expend almost a quarter of a billion plus on a building, you ought to think very hard about how you compete with NASA right up the street, with the Air and Space Museum, and the gift shop that is right next to it. I know you are an administrative building and they are not. However, in the way that that farmers' market is operated outside on your courtyard, some of the changes that are going to be made to internal space, the way you handle visuals, I really think you ought to give some thought to how you better tell the story with who you're competing against along that mall. And I personally do not think that agriculture in America tells its story here in Washington. We have been in touch with the Smithsonian because there is a wing in the Museum of American History, and I've talked again about this before with other--Mr. Dewhurst has heard this lecture, but if you were a young person in America today going to the Museum of American History, you would absolutely never go into agriculture. Number one, you wouldn't understand it after you looked at the exhibit. If you did look at it, you decide that isn't for you. And the exhibits that are there for computers and others will draw our children to what they think is interesting. Unfortunately, within the Smithsonian itself, the exhibit truly is not interesting to the majority of visitors who come in there, especially children. And so one of my questions again here to you, at the same time as you're pursuing this modernization, have you ever in your capacity, any of you, visited the Museum of American History and taken a good hard look at the agriculture exhibit? Ms. Thompson. I'll have to tell you I have not, but I can tell you I will. Ms. Kaptur. That's an honest answer. But now while you're doing this renovation, you might think about it. Ms. Thompson. We will. Ms. Kaptur. Because there is a connection and there is a movement of people along that mall. And so what story is it that we want to tell. There are ways of dealing with that in terms of your renovation. I will make you this promise, I will not support this money until the Department can tell me how you are going to better tell the story of the importance of agriculture in America as you begin to expend this significant amount of money and how you are going to cooperate with the Smithsonian in trying to upgrade those exhibits. Ms. Thompson. And, I can promise you that one of the first things I do next week is to go over there and see that exhibit. We've got some very creative people on our staff. I will see that they get over there too, and we will get right on that. volume of complaints Ms. Kaptur. I think you're on the right track with the farmer's market. It may not even be in the right location, but you're beginning to tell your story and really America's story. There is so much more to tell. Before I leave Washington, something is going to be done about that. So I know the chairman is kind enough to let me say these things without cutting me off. I wanted to just ask Ms. Gray one other question. In terms of the volume of complaints that you expect to receive as a result of extending--the statute of limitation was extended as a result of last year's appropriation, what type of volume increase do you expect as a result of that? Ms. Gray. We have since October, between October and the present day, received approximately 1,300 new filings. We did send out a number of brochures and we did do advertising relative to the statute of limitations because of the limited time frame. So far, we have about 300 to 400 new cases that we're processing. We only have accepted, as real statute of limitations cases, 40 cases. So we're getting a lot of new filings. What I can't say to you is that we have a lot of new statute of limitation cases. But, we do have to process the filings. A number of the letters that did come in came in because when we closed the cases in the backlog, if there was a finding of no discrimination, we told the people that if they had a statute of limitations issue, they had the opportunity to have that processed under the statute of limitations regulations. Right now it's very difficult to tell. March 1st was the deadline to send out the hundreds of letters that we did to people who had potential issues in their cases that we knew about. I would expect, just based on the activity to date, that we will have by the end of this fiscal year, 250 to 300 cases under the statute of limitations. And the majority of the people who file for processing under the statute of limitations will probably ask for a hearing on the record. turnover rate in the director of civil rights position Ms. Kaptur. Ms. Gray, we're very happy to see you in your position. There have been many predecessors in your position. Can you explain why the turnover has been so high? I know it's a hard job? Ms. Gray. That's a difficult question to answer, but it is a very difficult job. Beyond that, I don't know why the turnover rate has been what it has been, and I'm sure the reason might vary from individual to individual, but it is a very difficult job. Ms. Kaptur. Do you think that the addressing of the backlog may result in a greater tenure for an individual in your position? Ms. Gray. That's another difficult question to answer, but I'll ask the Secretary. Ms. Kaptur. Thank you. Thank you, Mr. Chairman. Mr. Skeen. Mr. Latham. Thank you, Ms. Kaptur. core business processes Mr. Latham. Thank you, Mr. Chairman. I welcome the panel here. And Anne probably knows where I'll go here, but we've been struggling for a long time to get the Department to develop an information and technology system that functions as one, obviously. And we've discussed this several times and I appreciate all your efforts. And I hope you're getting the authority to do things rather than as was the case in the past. It appears we're scratching the surface anyway, but we're still doing it in fragments in different agencies with their own systems. I understand there's the core business process program. Can you tell me about that and what the status is? Ms. Reed. One of the things that you do when you try and establish a common architecture across the Department, a common profile, is you look at what it is that your business is. And so one of the very first things that we did was to look and do a careful examination across each of the agencies. Asking what are the core business processes that that agency is engaged in to deliver its services? The next thing you begin to do is look for commonality in terms of the customer served, or in terms of the process in which you're engaged. And when you do that, you can then begin to look and see is there a new way to do business in that arena? We have identified the core business processes. We have taken action most aggressively in the service center environment where we have that common customer in the farmer and the producers and residents in rural America. So that has helped shape the business methodologies and the supporting technical infrastructure. The CFO and I are in discussions now about a common financial architecture across the Department, not just the administrative financial architecture, but as she mentioned earlier, we have a very significant role to play in loan making. Many agencies across the Department have a role to play in making loans, though sometimes with different types of customers. So part of our discussion now is how can we think about moving towards more common processes in loan management and servicing and what kind of a technical infrastructure would be most supportive. I'm giving you a long answer to your question about core business processes, but core business methodology is the starting point for building a more cohesive information environment. schedule for one system Mr. Latham. Is there any kind of schedule at all? You've got the common computing environment, which is three out of the what 29 agencies over there that are trying to get finally get on one system I guess? Are we ever going to get to the point where--or I should say, when are we going to get to the point where we have one system over there, that you're not agency by agency? Is there any benchmark or time set out to actually do this? Ms. Reed. Not in toto. But we're looking at the different processes. Clearly, the service center environment takes us a large step forward. It's actuallyfive to seven agencies depending on how you count, in that environment. So that is a significant part of the Department. Another key part of the Department, in terms of just sheer volume, is the Forest Service. And we have made great efforts to assure there's an appropriate integration in geo- spatial information technology, which cuts across those arenas that they're working together. Those are in more programmatic areas. In an administrative sense, I'm working with Ms. Thompson as the Acting Assistant Secretary for Administration on common administrative systems, particularly human resources management. We have a pilot project now that is underway in the service center arena that is being very carefully watched by the Office of Human Resources at the Department level and by the agencies to see if that is HR process that would be of value to the entire Department. In the financial system, of course, we're well underway to having a common core financial system. Sally, do you want to speak to that? common core financial system Ms. Thompson. Yes, if that's all right, I would like to do that. Almost all of the information over the next couple of years will feed through a financial system. If you think about looking at how we're going to measure the programs and tie those results to budgets and appropriations, we're going to have to be able to measure all of that. And putting in the new financial system is driving a lot of what you're trying to get to is that common technology and that architectural plan. While we've decided that one system to capture every program that we do and every piece of data that goes through there, whether it's human resources, is probably not the right answer. But, what is the right answer is a common technology and perhaps a warehouse technology or structure--architectural structure that all of the systems could talk to. And then you could sort the data to get whatever information you want out. So the first part is the financial system. The second part will be a consolidated financial statement that brings in say, for instance, the loan system. And then other pieces that will be driving the architectural structure over the next few years will be, again, the program data that has to come in that we're trying to measure that. And so we have put together the framework, if you would, of that architectural plan. We now have vendors helping us put the details behind that common technology. The other thing that that financial system is driving is the common telecommunications system. So that everybody can talk to each other through the PC. And, so as each agency comes up, they need, in this financial system, to upgrade the power of their PC to be able to talk with say the National Finance Center where the data is flowing through. And so we are then able to drive that common technology and common standards, if you would, of the architecture system that we're trying to implement. The pieces are there. We're working on them. Rather than trying to do everything at once, we've got it laid out that we're going to do this by October 1, 1999, this by October 1 of 2000, and it takes us out over October 1, 2003. And we will have that common architecture of technology that I think you're looking for. segmented approach Ms. Reed. So the bottom line answer is we're approaching this in segments. Each segment has a project plan with a time frame but there is no overall grand design. use of e-mail Mr. Latham. You're scaring me, Anne. It sounds hopeful though, at least now it sounds like maybe we'll be able--the north building will talk to the south building by e-mail? Ms. Reed. That's right. We can do that now. Mr. Latham. Right, right. Haven't other agencies done this? It seems like there's something just inherent in USDA that you just don't get the cooperation in agencies? Do you still have the turf wars and little dynasties? Ms. Reed. Any large organization has its challenges in that respect. I certainly don't think that we are very different from most other large Federal departments. Mr. Latham. That's encouraging. support of information community Ms. Reed. However, I think we have made some progress. And, in fact, over the last year or so, many of my colleagues have begun to come to talk to me to figure out: ``Okay, how did you get this far? And how can we model what we're doing after what you have managed to accomplish?'' I think there's no question but what the moratorium I put on acquisition for computers when I first came in had a huge impact in helping to just change the people's understanding of what we were driving for and how seriously we took it. I also will tell you that the information community, across the agencies, has been very supportive. They would like us to be able to move much faster because they recognize the needs for sharing information and their capacity to support the technical infrastructure is much better if we're better integrated. They understand that. It is resource intensive. And we do need to stay focused on how we allocate those resources to get the most bang for the buck. Mr. Latham. I'm surprised you have any hair left in your head. I would think you would pull out all your hair by now. Ms. Reed. It's quite a bit grayer. I'll tell you that. Mr. Latham. Thank you, Mr. Chairman. closing remarks Mr. Skeen. Thank you, Mr. Latham. And I want to say to you folks, these are trying times for Agriculture. There's no question about it, they represent 2 percent of our population and they feedeverybody in the world. Farmers and ranchers are living through a nightmare that's going on. Like Ted Turner says the whole world should limit itself to three children per family and things of that kind. He has a lot of operations going on. And I'm not using him as a bad example. But he's quit, no cattle or anything else, he's raising buffalo, so we're going to bring the buffalo back. I appreciate the work that you folks have done because it's not easy to get a communication system that covers all the problems. And we've had technology that we've depended on but there is a scarcity of it amongst some of the people that could use it the best. And, in many cases, they have it but they don't know how to use it. And I think Ms. Kaptur had a good round of questioning. And I'll yield to you. Ms. Kaptur. Thank you, Mr. Chairman. You know this marks the last hearing for us? Mr. Skeen. Yes, it does. Ms. Kaptur. At the subcommittee level. At least in terms of our witnesses this year. Mr. Skeen. I think we've worn them out. Ms. Kaptur. I think we have worn some of them out. And we wanted to express to the people who are here with us today, thank you so very much. I wanted to say, Mr. Chairman, thank you to you on behalf of all of the members of our committee, some of whom have come this morning, some of whom have participated in other hearings, because I want the people from the Department, I'm sure they already know this, we couldn't have a better subcommittee Chair on Appropriations than Joe Skeen of New Mexico. And it's kind of hard to know how to thank him for his leadership. He's a very peppery character, you know. [Laughter.] Mr. Skeen. I thought I was more salty. [Laughter.] Ms. Kaptur. A little salty, well, maybe a little bit of both, but he keeps us all going on both sides of the aisle. There couldn't be a better, better Chair anywhere in this Congress whose heart is with the people who are actually doing the work in the fields across this country. It has just been a joy to be a part of these hearings this year. Mr. Chairman, we have just a little way of saying ``Thank you,'' to kind of spice up this room like we hope we will be able to spice up the Department of Agriculture a bit. Mr. Skeen. Now you've got me worried. [Laughter.] Ms. Kaptur. So we would like to make a presentation from our side of the aisle to you, however, it is from your home State as a way of saying ``Thank you for 1999.'' Mr. Skeen. Well, thank you. Ms. Kaptur, thank you so very, very much because the chili growers in New Mexico are world- renowned. I'll eat half of one, if you'll eat half of one. [Laughter.] Thank you so much. Thank you to all of you. You're the kind of people we like to work with. And we will adjourn. [The following questions were received for the record:] [The official Committee record contains additional information here.] W I T N E S S E S ---------- Page Collins, Keith................................................... 287 Dewhurst, S. B..............................................1, 287, 649 Ebbitt, J. R..................................................... 1 Gillam, C. D..................................................... 649 Glickman, Hon. Dan............................................... 287 Gray, Rosalind................................................... 649 Reed, A. F. T.................................................... 649 Rominger, Richard................................................ 287 Seybold, G. S.................................................... 1 Thompson, Sally.................................................. 649 Thornsbury, D. R................................................. 1 Viadero, R. C.................................................... 1 I N D E X ---------- Office of Inspector General Page 1998 Audit and Investigations Results............................ 87 AARCC Evaluation................................................. 91 ADP Equipment and Software Increase.............................. 94 Advisory and Assistance Services................................. 96 Agriculture Marketing Transition Act Payments.................... 101 AMERICORP........................................................ 55 Asset Forfeiture: Department of the Treasury Forfeiture Fund................... 92 DOJ Assets Forfeiture Fund................................... 92 Forfeiture Proceedings....................................... 91 Petition for Remission or Mitigation......................... 92 Biographies: Roger C. Viadero............................................. 46 Gregory S. Seybold........................................... 47 Budget Request................................................... 88 Child and Adult Care Feeding Program--Unspent Funds.............. 99 Child and Adult Food Investigations.............................. 73 Commodity Credit Corporation: Agreement.................................................... 71 Financial Audits............................................. 83 Reimbursement Increase....................................... 94 Confidential Funds............................................... 49 Confidential Funds Operational Activities........................ 85 Contraband....................................................... 64 Electronic Benefits Transfer..................................... 66 Electronic Benefits Transfer: Fraud........................................................ 57 Processor Operations......................................... 79 Evaluation of the Office of Civil Rights' Efforts to Implement Civil Rights Settlements....................................... 247 Explanatory Notes................................................ 208 Farm Credit Program.............................................. 58 Federal Crop Insurance Program................................... 61 Federal Food Inspection Process--Streamlining.................... 206 Financial Statement Audits....................................... 81 Fines, Restitution, Other Recoveries and Penalties............... 50 Food Safety...................................................... 65 Food Safety: Food Imports Responsibilities................................ 70 Violations................................................... 101 Food Stamp Cases................................................. 79 Fraud and Abuse in USDA Programs................................. 205 Forest Service................................................... 61 Forest Service Opinions.......................................... 84 Hazard Analysis Critical Control Point (HACCP): Audits....................................................... 207 Program...................................................... 75 Hazardous Waste Management Program............................... 98 Hotline: Complaints................................................... 86 Responses.................................................... 86 Indictments, Convictions, and Suits.............................. 87 Information Technology........................................... 75 Law Enforcement Increase to Protect the Nation's Food Supply..... 92 Loan Deficiency Payments.........................................60, 69 Medflies......................................................... 63 Milk Promotion................................................... 68 Minority Enterprise Financial Acquisition Corporation............ 98 Object Class Increases: Equipment.................................................... 97 Medical Care................................................. 96 Specialized Training and ADP Contracts....................... 96 Supplies and Materials....................................... 96 Travel Costs................................................. 95 OCFO/NFC Reimbursement Increase.................................. 95 OIG: Field Auditors and Supervisors............................... 91 Firearms..................................................... 88 Opening Remarks.................................................. 1 Operation Talon.................................................. 48 Outside Public Accountants....................................... 85 Pay Raise Increase............................................... 100 Questions Submitted for the Record: Chairman Skeen............................................... 78 Ms. Kaptur................................................... 101 Ms. Delauro.................................................. 205 Reimbursements................................................... 83 Resources Used to Monitor the Food Stamp Program................. 78 Risk Management Agency: Recommendations.............................................. 102 Reimbursement Increase....................................... 95 Rural Utilities Service: Misused Funds................................................ 97 Reimbursement Increase....................................... 95 Russia: Agreement between the Government of the United States of America and the Government of the Russian Federation: Donation of Agricultural Commodities under Sec. 416(b)... 104 Monitoring Russian Compliance with Commitments Made Under the Fiscal Year 1999, P.L. 480, Title I and Sec. 416(b) 177 Sales of Agricultural Commodities........................ 148 Supply of Agricultural Commodities Under the Food for Progress Act........................................... 122 Food Aid..................................................... 53 Food Aid Agreement........................................... 103 Service Center Initiative Review................................. 78 Smuggling........................................................ 56 Specialized Equipment............................................ 94 State Mediation Program.......................................... 80 Status of Program................................................ 220 Use of Investigations and Audit Resources by Agency for Fiscal Year 1998...................................................... 881 Vehicles: Commercially Leased.......................................... 97 GSA Leased................................................... 97 Women, Infants, and Children (WIC) Program....................... 83 Written Statement of the Inspector General....................... 7 Year 2000: Conversion Funding........................................... 94 Update....................................................... 81 Secretary of Agriculture Adjournment...................................................... 439 Administrative Conversion........................................ 539 Advisory Committees.............................................. 467 Agricultural Education.........................................374, 376 Americorps....................................................... 454 American River Heritage Initiative............................... 377 Animal Feeding Operation Strategy................................ 537 Beginning and Socially Disadvantaged Farmers: Funding...................................................... 359 Farm Credit Loans............................................ 475 Biographies: Secretary Glickman........................................... 339 Mr. Rominger................................................. 341 Mr. Collins.................................................. 342 Mr. Dewhurst................................................. 343 Biodiesel........................................................ 580 Biotechnology.................................................... 370 Cattle Imports from Mexico and Canada............................ 579 Citrus Canker.............................................386, 387, 559 Civil Rights: Class Action Suit............................................ 429 Discrimination Case Backlog.................................. 557 OIG Evaluation Report........................................ 247 Settlement................................................... 557 Codex Alimentarius............................................... 479 Comments on 1999 Congressional Action............................ 488 Commodity Credit Corporation (CCC)............................... 302 Projections.................................................. 558 Proposed Legislation......................................... 549 Computers: Legislative Cap Impact on Service Center Initiatives......... 549 Proposed Funding Legislation...............................480, 549 Conservation: Grants to Local Groups....................................... 556 Programs...................................................294, 434 Conservation Reserve Program (CRP): Program Costs................................................ 471 Technical Assistance Costs................................... 560 Contract Growing................................................. 435 Contracting Out.................................................. 558 Cotton: Crop Insurance Coverage...................................... 576 Loan Deficiency Payments..............................349, 350, 573 Industry...................................................568, 570 Price Problems............................................... 568 Crop Insurance..............290, 370, 378, 385, 390, 421, 436, 550, 585 Customer Service and Program Delivery............................ 294 Dairy: Assistance................................................... 368 Cost-of-Production Data...................................... 363 Emergency Funding for Farmers................................ 365 Federal Milk Marketing Orders..............................361, 364 Options Pilot Program........................................ 475 Northeast Compact............................................ 361 National Policy.............................................. 362 Regional Compacts............................................ 363 Debt for Nature.................................................. 539 Departmental Management Activities............................... 325 Disaster Assistance.............................................. 378 Diversity: Employment................................................... 587 Procurement.................................................. 586 Domestic Marketing Programs...................................... 292 Economic Assumptions and Impacts................................. 483 Economic Dislocation............................................. 370 Embargoes........................................................ 392 Emergency: Assistance................................................... 289 Feeding Program.............................................. 345 Explanatory Notes................................................ 616 Export Enhancement Program....................................... 480 Exports: Agricultural................................................. 291 Sanctions and Free Trade..................................... 365 Subsidy Reduction Commitments................................ 475 Export Programs................................................306, 422 Improving Markets..........................................422, 425 Fast Track................................................... 424 Farmers Markets.................................................. 429 Family Farm...................................................... 427 Farm Bill: Contribution to Balancing the Budget......................... 438 Shortcomings................................................. 290 Farm Credit...................................................... 291 Farm Economy..................................................... 288 Farm and Foreign Agricultural Services........................... 394 Farmers: Emergency Funding for Dairy.................................. 365 Family Farms................................................. 427 Markets...................................................... 429 Safety Net................................................... 364 Small and Disadvantaged...................................... 357 Farm Loan Program: Delinquent Million Dollar Loans.............................. 449 For Beginning/Socially Disadvantaged Farmers................. 475 Farm Loans.................................................300, 449 Farm Ownership and Operating Loans.......................... 489 FR Final Rule on Streamlining Guaranteed Loans............... 556 Long-Term Financing.......................................... 382 Processing Applications...................................... 450 Farm Prices: Congressional Help........................................... 427 Freeze....................................................... 424 Impact of Decline............................................ 554 Posted County Prices (PCP's)................................. 573 Farm Service Agency: Funding Agency Staffing...................................... 479 Paperwork Problems........................................... 377 Salaries and Expenses Budget Projections..................... 557 Field Office Service Centers..................................... 478 Cap on Computer Purchases.................................... 549 Unspent SCI Funds............................................ 543 Streamlining Guaranteed Loan Program: Federal Register Publication of Final Rule................... 489 Florida: Citrus Canker.........................................386, 387, 559 Foreign Plant, Animal Pest and Disease Costs................. 647 Four-Year Impact............................................. 648 Food: Assistance................................................... 293 Gleaning...................................................293, 368 Recovery...................................................293, 385 Program Studies.............................................. 488 Quality Protection Act Implementation......................566, 574 Food Pyramid: Children..................................................... 572 Peer Review and Other Food Guides............................ 572 Food Safety: Initiative.............................293, 319, 355, 371, 389, 583 Hazard Analysis and Critical Control Point System (HACCPS).293, 363 Multistate Listerioris Outbreak.............................. 356 Multistate Listerioris Outbreak Timeline..................... 357 Food Nutrition and Consumer Services............................. 314 Food Stamp: Benefits Provided by EBT..................................... 463 Participation Growth in a Good Economy....................... 484 Fund For Rural America....................................472, 477, 619 Global Problems.................................................. 369 Housing: Farm Worker.................................................. 380 Migrant Farm Workers.......................................360, 381 Rural Rental................................................. 558 Independent Study: On FSA, NRCS, and RD County-Based Agencies................... 553 Copy and Cost of Study....................................... 554 International Trade and Export Programs........................306, 422 Irradiated Meat.................................................. 362 Karnal Bunt...................................................... 472 Legislative Proposals: Commodity Credit Corporation................................. 480 Budget Related............................................... 484 Limited Set Aside Program........................................ 350 Livestock Assistance Program...................................372, 373 Supplemental Request.......................................393, 394 Pseudorabies Eradication Program...........................394, 395 Packer/Rendering Capacity.................................... 394 Loan Deficiency Payments: Cotton................................................349, 350, 576 Club Wheat................................................... 366 Marketing and Regulatory Programs................................ 332 Market Concentration............................................. 346 Market Dislocations.............................................. 431 National Commission on Small Farms............................... 551 National Research Initiative...................................322, 573 Natural Resources Conservation Service: Monitoring Work Costs........................................ 556 Nutrition Education.............................................. 540 Office of the Inspector General.................................. 338 Opening Remarks.................................................. 287 Organic Standards................................................ 543 Packers and Stockyards Restructuring............................. 556 Palmer-Drought Index...........................................383, 384 Pest Management.................................................. 292 PL-480 Program.................................................349, 558 Pork Situation................................................... 345 Posted County Prices............................................. 573 Pseudorabies..................................................... 395 Questions Submitted for the Record: Chairman Skeen..............................................440-565 Mr. Dickey..................................................566-571 Mr. Bonilla.................................................. 572 Mr. Latham..................................................573-574 Mrs. Emerson................................................575-581 Ms. DeLauro.................................................582-583 Mr. Obey..................................................... 584 Mr. Gilman................................................... 585 Mrs. Roybal-Allard..........................................586-589 Research, Education and Economics................................ 325 Research: Agriculture......................................292, 366, 371, 421 Global Climate Change......................................369, 577 Methyl Bromide............................................... 379 Organic...................................................... 379 Proposed Project Terminations................................ 481 Risk Management Agency: Budget Amendment............................................. 480 Budget Increase, FY 2000..................................... 554 Education and Cotton Coverage................................ 576 Issues................................................304, 430, 480 Rural America.................................................... 431 Fund for..............................................472, 477, 619 Rural Business-Cooperative Service............................... 314 Rural Development: Closing the Stevens Point, WI Office......................... 580 Direct and Guaranteed Loans Program Summary.................. 482 FR Final Rule on Streamlining Guaranteed Loans............... 556 Programs...................................................292, 309 Rattlesnake Ridge, KY Project Update......................... 484 Rural Housing..................................................313, 380 Rural Utilities Service.......................................... 311 Safety Net for Farmers........................................... 364 Section 11: CCC Cap...................................................... 543 Expenditures by Agency....................................... 544 Funded Activities............................................ 565 Transfers and Reimbursements................................. 561 School Breakfast Pilot Study Costs............................... 555 Staffing: Congressional Relations...................................... 444 OSEC Staffing................................................ 455 Outside Legal Counsel Hired.................................. 469 Public Affairs Activities.................................... 440 Reductions................................................... 473 Statement of: Dan Glickman, Secretary of Agriculture.....................288, 295 Keith Collins, Chief Economist............................... 969 Subsidizing Foreign Economies.................................... 426 Supplemental Appropriations...............................344, 428, 479 Support Services Bureau........................................488, 565 Timber Sales on the Mark Twain National Forest................... 580 Trade: Agricultural...............................................432, 551 Embargoes.................................................... 392 Fast Track Authority......................................... 424 Sanctions.............................................348, 365, 575 Surplus...................................................... 437 Negotiations................................................. 574 Policy....................................................... 479 Tobacco: Issue........................................................ 389 Administrative Expenses...................................... 451 User Fees.................................................393, 537, 557 Welfare Reform................................................... 434 Wetlands Conservation Mitigation Requirements..................396, 397 Iowa Drainage District 176 Specifies......................... 397 Wool and Mohair Producers........................................ 373 Women, Infant, and Children (WIC): Dietary Habits............................................... 582 Eligibility and Participation Rates.......................... 463 Estimating Basis............................................. 487 Key Indicators of Success.................................... 582 Monthly Reporting Data....................................... 465 46 Percent of Infants Receive................................ 573 Year 2000 Conversion Costs....................................... 477 Office of the Chief Economist Activities in Stoneville, Mississippi............................ 598 Position Transfers........................................... 598 Asian and Russian Financial Situation............................ 599 Biofuels and New Uses............................................ 597 Biography of Keith Collins, Chief Economist...................... 342 Climate Issues--Responsibility................................... 597 Commission on 21st Century Production Agriculture: Commission................................................... 595 Object Class Table........................................... 595 Salary Costs................................................. 596 Explanatory Notes................................................ 624 Exports: Asia and Latin America....................................... 596 Southern Africa.............................................. 597 Food Safety Initiative........................................... 600 Hearings Participation........................................... 590 Impact of Welfare Reform on Farm Labor........................... 596 Milk Powder Availability......................................... 599 ORACBA Newsletter................................................ 600 Questions Submitted for the Record: Mr. Skeen...................................................590-600 Railcar Situation................................................ 599 Risk Assessment: Risk and Benefit-Cost Analyses Differences................... 595 Rule Making.................................................. 592 Statement of Keith Collins, Chief Economist...................... 969 Sustainable Agriculture.......................................... 590 Office of Budget and Program Analysis Biography of Stephen Dewhurst.................................... 343 Breakout of Resources of OBPA's Responsibility................... 601 Buyouts in 1998.................................................. 603 Code of Federal Regulations...................................... 603 Explanatory Notes..........................................603, 609-646 Information Technology........................................... 608 Internet Availability of Budget Materials........................ 608 Legislative: Proposals.................................................... 603 Report....................................................... 608 Organization...................................................601, 603 Question Submitted for the Record: Chairman Skeen..............................................601-608 Staff Year Reductions in the 1996 Farm Bill...................... 607 USDA Budget Summary.............................................. 603 Departmental Administration Advisory Committees: Funded From Other Accounts................................... 758 Staff Costs.................................................. 758 Commission on 21st Century Production Agriculture............ 760 Contingency Reserve.......................................... 760 Explanatory Notes.........................................1079-1096 Agriculture Acquisition Regulations.............................. 739 Agriculture Buildings and Facilities: Beltsville Office Facility................................... 755 Beltsville Occupancy........................................756-757 Building Renovation.........................................719-720 Building Modernization....................................... 724 Explanatory Notes.........................................1058-1068 Legal Challenges for South Building Construction............. 745 Strategic Space Plan........................................754-755 Biography of: Rosalind Gray, Director of Civil Rights...................... 712 Sally Thompson, Acting Assistant Secretary for Administration 670 Changing USDA Culture............................................ 743 Civil Rights: Accountability.............................................703, 718 Backlog...................................................... 702 Complaint Tracking System.................................... 744 Cost of: Resolving Program Discrimination Complaints.................. 731 Settlements.............................................. 731 Farm Service Agency Review................................... 731 Foreclosures................................................. 731 Investing Management Resources............................... 719 Number of Complaints.......................................725, 733 Equal Employment Opportunity (EEO).....................734, 744 On-site Reviews.............................................732-733 Opening Remarks.............................................702-704 Processing Complaints........................................ 734 Statute of Limitations................................... 703 Performance Evaluations...................................... 718 Turnover Rate in the Director of Civil Rights Position....... 726 Credit Cards: Number Issued................................................ 739 Savings....................................................739, 740 Explanatory Notes.............................................1029-1057 Hazardous Waste Management: Agency Support............................................... 767 CCC Grain Storage Site Status................................ 773 Compliance Docket...........................................773-776 Compliance with State Laws..................................764-765 Cost of Forest Service Site cleanup.........................778-779 Explanatory Notes.........................................1069-1078 Foreclosures Requiring cleanup..............................767-768 Forest Service Funding....................................... 779 Funding for CERCLA, RCRA, and Pollution Prevention........... 763 Performance Goals...........................................761-762 Salaries and Benefits.......................................765-766 Salaries/Benefits and Cleanup Costs.......................... 766 Sites to be Funded in Fiscal Years 1999-2000................. 778 Typical Cleanup Efforts.....................................776-778 USDA Site Cleanups..........................................768-776 Underground Storage Tanks.................................... 764 Modernization of Administrative Processes (MAP).................. 736 Office of Ethics................................................. 744 Opening Remarks of Sally Thompson...............................649-652 Personnel: Alternative Discipline Plan.................................. 735 Celebration of Excellence Ceremony Costs..................... 737 Conversion of Non-Federal to Federal Status.................. 743 Early Out and Buyout Options, Plans.........................738-739 Employees and Disabilities..................................740-741 Proposed Paperless Personnel Request System.................. 737 Summer Interns............................................... 742 Procurement Reform Status.......................................736-737 Questions Submitted for the Record..............................731-782 Rental Payments: GSA Bills vs. GSA Budget..................................... 745 $5 Million Reserve........................................... 745 Headquarters Complex Rental Charges.........................755-756 Rental Payments and GSA Repair Costs......................... 757 Section 933, FAIR Act Property Transfers......................... 743 Service Centers: Field Service Centers.......................................734-735 On Indian Tribal Lands....................................... 732 Modernization................................................ 735 Satellite Offices...........................................731-732 Status of Collocation of Kansas City and Davis............... 740 Socially Disadvantaged Farmers and Ranchers: Audits of 2501 Program....................................... 748 Award Process for Grants..................................... 748 Expenditures for the Outreach Program.......................746-747 Grants Award in Fiscal years 1996-1998......................748-753 Outreach to the Underserved Community.......................722-725 Story of Agriculture............................................724-725 Universities and Colleges: Competitive Grants Process..................................742-743 Historically Black Colleges and Universities................781-782 USDA/1890 National Scholars program.......................... 780 USDA Streamlining or Reorganization............................735, 738 Vehicles: Purchasing vs Leasing........................................ 741 Distribution of Motor Vehicles..............................741-742 Distribution of Aircraft..................................... 742 Witness Statements: Rosalind Gray, Director of Civil Rights.....................675-669 Sally Thompson, Acting Assistant Secretary for Administration, Office of the Chief Financial Officer.....655-661 Availability of Technology....................................... 713 CCC Reporting Process Improvements............................... 795 CFO Act of 1990: Cost to Implement............................................ 788 Requirements................................................788-791 Common Core Financial System..................................... 728 Segmented Approach........................................... 728 Explanatory Notes.............................................1097-1113 Financial Information System Vision and Strategy (FISVIS): Cost......................................................... 787 Status of Consolidation of Financial Information Systems in USDA....................................................... 787 Financial Statements, Audit Capabilities......................... 713 Foundation Financial Information System (FFIS): Agencies Now In Production Operation......................... 786 Costs....................................................... 798 Replacement of Systems....................................... 787 Target Dates and Status...................................... 797 GAO and OIG Audits..............................................795-797 National Finance Center: Benefits Providing Payroll Services to Non-Federal FSA County Office Employees........................................... 785 Costs of Contract with American Management Systems..........787-788 Cross Servicing.............................................792-794 Direct Deposit/Electronic Funds Transfer Participation......794-795 Payroll/Personnel System...............................799, 802-805 Products and Services Provided............................... 804 Staffing, Pay, and Non-Pay Costs............................799-802 Staff Year Utilization....................................... 791 Thrift Savings Plan.........................................797-798 Opening Remarks of Sally Thompson...............................652-654 Questions Submitted for the Record..............................783-805 Stove Piping Among USDA Agencies................................. 783 USDA Information: Access to USDA Information................................... 722 Hot-Line System.............................................. 723 USDA Travel Cost................................................. 786 Witness Statement of Sally Thompson, Chief Financial Officer....662-669 Working Capital Fund: Amounts Paid by Agency......................................783-784 Documentation to Support an OIG Audit........................ 906 Explanatory Notes.........................................1114-1139 Operating Costs.............................................. 785 Purchase of Computer Equipment and Services.................. 785 Y2K.............................................................. 713 Office of the Chief Information Officer A-11 IT Exhibit 42..............................................874-886 Action on OIG and GAO Audit Findings........................862-865 Additional Funds for Fiscal Year 2000........................ 899 Assessing the Costs and Benefits of Using the Internet....... 901 Biography of Anne F. Thomson Reed, CIO......................700-701 Capital Planning and Investment Control Guide................ 806 Clinger-Cohen Act Implementation................................. 673 Common Computing Environment: Equipment..............................................673, 721-722 Oversight.................................................... 673 Schedule for One System...................................... 727 Workstations................................................905-906 Contractor Support Services in FY 1998 and 1999.................820-830 Core Business Process: Status......................................................726-727 Schedule for One System.....................................727-728 Segmented Approach........................................... 728 CPIC Goals, Objectives, Results.................................. 889 Earned Value Management System................................... 865 Executive Information Technology Investment Review Board, FY 2000 Review......................................................... 806 Explanatory Notes.............................................1140-1159 Farmer Access to Computer and USDA Information.................721, 722 Fixed Asset Plan and Justification for FY 2000 Projects.......... 831 Food for Farm Aid...............................................720-721 GAO Recommendations: Hold CIO Accountable for SCMI................................ 894 Redundant and Unnecessary Telecommunications Services.......894-895 Information Technology (IT): Budget and Contractor Support................................ 889 FY 2000 Appropriated and CCC Funding Request................807-819 FNS Passthrough.......................................... 672 USDA Total Planned 2000 IT Expenditures.................. 888 Improving Network Security, Data Management.................891-892 Moratorium................................................... 839 Project Management........................................... 674 Total Cost of USDA Year 2000 Effort.......................... 899 Number and Costs by Agency FTE's........................888-889 Unified System of Management................................890-891 Workforce Planning........................................... 674 LAN/WAN/Voice: USDA Service Center LAN/WAN/VOICE Installations.............. 839 Installation Costs..........................................839-840 Installations................................................ 735 Latest CCC Quarterly Report (September 30, 1998)................831-838 Object Class 25.0, Other Services Breakdown.....................904-905 Object Class 31.0, Equipment Breakdown........................... 905 Opening Remarks of Anne Reed, CIO...............................671-674 Responsibility and Coordination of CIO..........................907-908 New Associate CIO for Telecommunications..................... 674 Return on Investment Methodology................................. 806 Security of E-Business Transactions and Mission Critical IT Systems........................................................ 901 Sharing Telecommunications Resources With Department of the Interior......................................................895-898 Strengthening the Knowledge, Skills, and Ability of USDA IT Staf806-807 Support of Information Community................................. 729 Support Services Bureau (SSB): Business Process Reengineering..............................841-859 Contractor Support and Job Elimination....................... 904 Employees Transferring to SSB................................ 904 Establishing the Office.....................................892-893 FY 2000 Service Center Modernization Initiative Funding.....902-904 Ongoing and Planned Activities by Agency..................... 903 Performance Measures......................................... 892 Planned Expenditures and FTE's..............................892-893 Savings from Service Center Implementation..................715-718 USDA Employees Working on the Service Center Implementation.860-861 FSIS and APHIS Employees Working in the SCI.............. 862 Timeframe and Milestones for USDA Capital Planning and IT Architecture..................................................889-890 USDA Cost Savings from Sharing Telecommunications with USDOI..... 898 USDA Plans to Develop or Support Electronic-Based Services and Program Delivery............................................... 902 USDA Programs Delivered Through the Internet....................899-901 USDA Request for CCC Increase.................................... 894 USDA Restructuring Progress...................................... 887 Use of E-Mail..................................................729, 901 Witness Statement of Anne Reed, CIO.............................675-699 Y2K: Additional Funds Needed in FY 2000..........................840-841 Agencies Not Y2K Compliant................................... 841 Food Supply in Y2K........................................... 715 Impact on USDA Programs...................................... 840 Increase in Y2K Repair costs................................898-899 International Impact......................................... 672 Status of Y2K Conversion..................................... 714 Total Cost................................................... 889 USDA Year 2000 Compliance Program...........................865-873 USDA Year 2000 Plan.......................................... 840 Readiness in Rural America............................... 714 Office of Communications Biography of Tom Amontree, Director.............................. 990 Budget Request..................................................916-917 Capability for Public Access Through the Internet................ 918 Computer Matching and Privacy Act of 1988........................ 916 Conversion of Photographic Library............................... 916 Cost to Produce Agriculture Fact Book............................ 917 Credit Alert Interactive Voice Response System................... 916 Explanatory Notes.............................................1160-1174 Media Services................................................... 914 Object Classes 25.2, Other Services, 26.0 Supplies and Materials and 31.0, Equipment...........................................917-918 Public Affairs Activity.........................................909-912 Reimbursements from Other USDA Agencies.........................914-915 Resources and Staff Levels....................................... 913 Survey of Knowledge of USDA Services............................. 917 USDA Visitor Center.............................................. 916 Waiver to Allow Field Offices to Procure Print Jobs.............. 918 Written Statement of Director of Communications.................986-989 Office of the General Counsel Amex International, Inc.......................................... 956 Attorney: Hours by Agency.............................................. 923 Hours Worked................................................. 921 Locations.................................................... 924 Benefits Former Personnel........................................ 957 Cases: Before EEO Commission........................................ 956 Civil and Criminal........................................... 925 Civil Rights Action Team......................................... 919 Equipment Procurement Plans...................................... 958 Examples of Recent Progress...................................... 937 Explanatory Notes............................................ 1175 FY 2000 Budget Request Breakout.................................. 936 Hazardous Waste Management....................................... 956 Law Library...................................................... 935 Loan Resolution Task Force....................................... 955 New Authorities.................................................. 926 Object Class Breakout............................................ 957 OGC Priorities................................................... 955 Private Counsel.................................................. 923 Regulations...................................................... 919 Staffing: Appropriated and Reimbursable................................ 921 Maintain Staff............................................... 958 Staff Requirements........................................... 958 Statement of the General Counsel................................. 991 User Fee: Hours by Agency.............................................. 920 Programs..................................................... 920 Year 2000 Compliance............................................. 959 National Appeals Division Appeals: Assistance in Process........................................ 968 Cost and Average Length...................................... 966 List of Appeals Pending Resolution..........................960-965 Number of: Active Appeals........................................... 966 Director Appeals......................................... 967 Biography of Norman G. Cooper, Director NAD...................... 1028 Cost of Phase II Tracking System................................. 967 Customer Survey.................................................. 967 Description of Hearing and Director Review....................... 967 Explanatory Notes.............................................1216-1222 Final Rules and Regulations...................................... 966 If You Disagree Brochure......................................1025-1027 Management and Financial Accountability Control Plan............967-968 NAD's Role in Discrimination Cases............................... 968 Questions Submitted for the Record............................... 960 Training: Costs........................................................ 960 Increase in Budget........................................... 968 List of Courses.............................................. 960 Waivers and Extensions........................................... 967 Witness Statement of Director, NAD............................1022-1024