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DAIRY BUDGET RECONCILIATION AND SELF-HELP INITIATIVE ACT OF 1993 y 4.AG 8/1; 103-27 lARING D.iri Budjiet Reconcilijtion md Sel... eforethe ON LIVESTOCK SUBCUiViiViii'TEE OF THE COMMITTEE ON AGRICULTURE HOUSE OF REPRESENTATIVES ONE HUNDRED THIRD CONGRESS FIRST SESSION ON H.R. 2664 JULY 21, 1993 Serial No. 103-27 DEC t 7 1993 Printed for the use of the Committee on Agriculture U.S. GOVEIWMENT PRINTING OFFICE 72-891 WASHINGTON : 1993 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-041785-6 DAIRY BUDGET RECONCILIATION AND SELF-HELP INITIATIVE ACT OF 1993 y 4. AG 8/1:103-27 lARING »>irj Dudjet RecccilUtion ..d Sel... eforethe SUB(JUMiviiTTEE ON LIVESTOCK OF THE COMMITTEE ON AGRICULTURE HOUSE OF REPRESENTATIVES ONE HUNDRED THIRD CONGRESS FIRST SESSION ON H.R. 2664 JULY 21, 1993 Serial No. 103-27 ..:.,. .. iUv DEC 1 7 1993 Printed for the use of the Committee on Agriculture U.S. GOVERNMENT PRINTING OFFICE 72-891 WASHINGTON : 1993 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments.CongressionalSalesOffice,Washington.DC 20402 ISBN 0-16-041785-6 COMMITTEE ON AGRICULTURE E (KIKA) DE LA GARZA, Texas, Chairman GEORGE E. BROWN, Jr., California, PAT ROBERTS, Kansas, Vice Chairman RankingMinority Member CHARLIE ROSE, North Carolina BILL EMERSON, Missouri GLENN ENGLISH, Oklahoma STEVE GUNDERSON, Wisconsin DAN GLICKMAN, Kansas TOM LEWIS, Florida CHARLES W. STENHOLM, Texas ROBERT F. (BOB) SMITH, Oregon HAROLD L. VOLKMER, Missouri LARRY COMBEST, Texas TIMOTHYJ. PENNY, Minnesota WAYNE ALLARD, Colorado TIM JOHNSON, South Dakota BILL BARRETT, Nebraska BILL SARPALIUS, Texas JIM NUSSLE, Iowa JILL L. LONG, Indiana JOHN A. BOEHNER, Ohio GARYA. CONDIT, California THOMAS W. EWING, Illinois COLLIN C. PETERSON, Minnesota JOHN T. DOOLITTLE, California CALVIN M. DOOLEY, California JACK KINGSTON, Georgia EVA M. CLAYTON, North Carolina BOB GOODLATTE, Virginia DAVID MINGE, Minnesota JAY DICKEY, Arkansas EARL P. HILLL\RD, Alabama RICHARD W. POMBO, California JAY INSLEE, Washington CHARLES T. CANADY, Florida THOMAS J. BARLOW III, Kentucky NICK SMITH, Michigan EARL POMEROY, North Dakota TERRYEVERETT, Alabama TIM HOLDEN, Pennsylvania CYNTHIAA. McKINNEY, Georgia SCOTTY BAESLER, Kentucky KAREN L. THURMAN, Florida SANFORD D. BISHOP, Jr., Georgia BENNIE G. THOMPSON, Mississippi SAM FARR, California PAT WILLIAMS, Montana BLANCHE M. LAMBERT, Arkansas Professional Staff DiANNE Powell, StaffDirector Vernie Hubert, ChiefCounsel and Legislative Director Gary R. Mitcheix, Minority StaffDirector James A. Davis, Press Secretary Subcommittee on Livestock HAROLD L. VOLKMER, Missouri, Chairman GARYA. CONDIT, CaUfbmia, STEVE GUNDERSON, Wisconsin Vice Chairman TOM LEWIS, Florida EARL F. HILLIARD, Alabama ROBERT F. (BOB) SMITH, Oregon CHARLES W. STENHOLM, Texas JOHN A. BOEHNER, Ohio Tm HOLDEN, Pennsylvania BOB GOODLATTE, Virginia JILL L. LONG, Indiana RICHARD W. POMBO. CaHfomia COLLIN C. PETERSON, Minnesota CHARLIE ROSE, North Carolina CALVIN M. DOOLEY, California BILL SARPALIUS, Texas (II) CONTENTS Page H.R. 2664, a bill to achieve needed savings in net Federal expenditures under the milk price support program through establishment of a milk epxrpoodrutcse,rasnedlf-shtealbpilpizreogtrhaemmtaorkdeitspofsoer omfilskurapnludsddaaiirryypprroodduuccttss,, aenxdpafnodr other purposes 86 Boehner, Hon. John A., a Representative in Congress from the State of Ohio, openingstatement 8 Prepared statement 9 Condit, Hon. Gary A., a Representative in Congress from the State ofCalifor- nia, prepared statement 4 Dooley, Hon. Calvin M., a Representative in Congress from the State of California, openingstatement 7 Gunderson, Hon. Steve, a Representative in Congress from the State ofWis- consin, openingstatement 2 Lewis, Hon. Tom, a Representative in Congress from the State of Florida, openingstatement 7 Peterson, Hon. Collin C, a Representative in Congress from the State of Minnesota, openingstatement 6 Sarpalius, Hon. Bill, a Representative in Congress from the State ofTexas, openingstatement 10 Smith, Hon. Robert F. (Bob), a Representative in Congress from the State ofOregon, prepared statement 11 Volkmer, Hon. Harold L., a Representative in Congress from the State of Missouri, openingstatement 1 Witnesses Barr, James C, chiefexecutive officer, National MilkProducers Federation .... 31 Prepared statement 58 Ozer, Kathy, director, NationalFamilyFarm Coalition 35 Prepared statement 75 Tillison, James E., executive director and chief executive officer, Alliance ofWestern MilkProducers 33 Prepared statement 68 Weber, Bruce R., Acting Administrator, Agricultural Stabilization and Con- servation Service, U.S. DepartmentofAgriculture 12 Prepared statement 52 Submitted Material Hauck, Dana, chairman, agriculture policy committee, National Cattlemen's Association, letterofJulv20, 1993 79 Huber, Stewart G., president, Farmers Union Milk Marketing Cooperative, letterofJuly 20, 1993 80 Rucks, T.T., president, Florida Daiiy Farmers Association, and John Hobbs, president, Tampa IndependentDairy FarmersAssociation, statement 82 Swenson, Leland, president. National Farmers Union, letterofJuly 21, 1993 . 84 (III) DAIRY BUDGET RECONCILIATION AND SELF- HELP INITIATIVE ACT OF 1993 WEDNESDAY, JULY 21, 1993 House of Representatives, Subcommittee on Livestock, Committee on Agriculture, Washington, DC. The subcommittee met, pursuant to call, at 2:20 p.m., in room 1302, Longworth House Office Building, Hon. Harold L. Volkmer (chairman ofthe subcommittee) presiding. Present: Representatives Condit, Hilliard, Stenholm, Holden, Pe- terson, Dooley, Sarpalius, Gunderson, Lewis, Smith of Oregon, Boehner, Goodlatte, and Pombo. Staff present: Andy Baker, assistant counsel; Glenda L. Temple, clerk; Timothy P. De Coster, Dan McGrath, James A. Davis, Perri D'Armond, John Riley, and John Frank. OPENING STATEMENT OF HON. HAROLD L. VOLKMER,AREP- RESENTATIVE IN CONGRESS FROMTHE STATE OF MISSOURI Mr. Volkmer. I first wish to apologize not only to my subcommittee members, but to the witnesses and the audience; but out in my district and in the Midwest, I think we all know that we have a flood going on. The Rules Committee started a rule on the disaster legislation earlier, and I thought I would have an oppor- timity to testify on it as to some provision that I thought may perhaps need to be improved. But I waited and waited, and they are still talking to the Appro- priations people, so Ijust left my amendments and came back over. SoWIedidn't get to do that. But I appreciate your waiting. are meeting today to review H.R. 2664, the Dairy Budget Reconcihation and Self-Help Initiative Act of 1993. [H.R. 2664 appears at the conclusion ofthe hearing.] Mr. Volkmer. This bill embodies a dairy program developed over the past several months by dairy producers, represented by the Na- tional Milk Producers Federation. Congressman Gunderson and I agreed to introduce this proposal in order to facilitate discussion of the measure, and we intend to explore this plan in some detail today. Consensus in the dairy industry is something that is very dif- ficult to achieve, but it appears that the federation has made the effort to do just that. We will begin to determine today whether they have succeeded. I will note that on one point that most dairy producers appear to agree is that the current program does not (1) adequately protect the livelihood of today's producers, particularly the small and midsized operations run primarily as family farms. During consideration of the 1990 farm bill, and again in 1991, I advocated a two-tier dairy program. I still believe in that approach, and I believe today's dairy producers would be in a better position today had that plan been adopted. However, as our distinguished committee chairman often states, legislation is the art ofthe possible. Based on my conversation with members and other interested parties, I am convinced that we do not have sufficient support for two-tier at this time, and—we need to concentrate our efforts on the best possible alternatives attain- able alternatives. The federation's self-help initiative represents one possible alter- native, which I for one am willing to consider. I am aware that members have questions about this plan, and I urge you to take your questions to the federation. I would like to say this, that as I have reviewed their proposal, I find, as I have found in my legislative experience, that something may not be what I would like to have, it may not be as good as I think it could be, but ifit is better than what we presently have, then I think we should approve it ifwe make it a little bit better. And I think that is what this proposal does. I yield to the gentleman from Wisconsin. OPENING STATEMENT OF HON. STEVE GUNDERSON, A REP- RESENTATIVE IN CONGRESS FROM THE STATE OF WISCON- SIN Mr. GUNDERSON. Thank you very much, Mr. Chairman. And let me begin by commending you for holding this hearing. I think, frankly, it is important that we begin this kind of discussion other than at a time ofa total crisis surrounding us. I think we have the right environment to look at where we go with the dairy industry and the dairy price support program. Let me also welcome our distinguished panel of guests who are about to testify. As we all know, this is the time in which we begin to turn to the dairy industry for their input and their discussions ofthe day-to-day operation ofa farm program and how to turn over to them the responsibility of the running that program. That is why I believe you and I have both introduced this legislation for consideration. A lot has happened to the dairy industry and the dairy price support program in the past decade. Indeed, spending has decreased from $2.4 billion in 1986 to a level of under $300 million in recent years. This is due in large part to the revenue from the budget reconciliation assessment collected from dairy producers which, when compared to the annual cost of the dairy price support program, offsets approximately 40 percent of the cost of the program each year. Accordingly, we have introduced this legislation fashioned by the executive board ofthe National Milk Producers Federation in a se- ries of meetings this spring as an important first step in creating a self-help program for America's dairy farmers. The importance of self-help to the dairy industry is underscored, by the changing times in which we live. With the demise ofthe So- viet Union, American dairy farmers now represent the single larg- est dairy industry in the world. We no longer produce for a market that ends at the boundaries of our country. Rather, we are active players in the world market. Indeed, exports of American dairy products in the first 4 months of 1993 are up 18 percent from the same periodjust 1 year before. It is, therefore, most appropriate that we begin our examination of dairy self-help legislation at this time and in this place. This proposal, of course, represents a major transition in the 45-year history of the dairy price support program. As such, it is essential we make a complete review of the legislation so that we fully re- spond to any questions or concerns that this transition might raise in the agricultural community or elsewhere. I, for one, am greatly concerned about ensuring that America's dairy industry becomes and remains competitive in a world dairy market now and throughout the 21st century. It is most important, then, that this legislation foster rather than inhibit, that particular goal. That is why I want this subcommittee to closely examine the targeted excess purchases reduction section of this legislation to make sure that it will not act as a disincentive to new dairy farmers or producers who want simply to modernize the multitude of aging facilities that we have in this country. In Wisconsin alone, the average bam or dairy facility today is over 40 years of age. If we have any hope of bringing a younger generation onto those dairy farms, we have to assure them the ability that they can modernize those facilities without penalty of Federal law. Likewise, while none of us likes assessments, I think we ought to take a good look during these discussions as to whether or not we want to make that 10-cent assessment for deficit reduction purposes permanent. Very frankly, I am not sure that we ought not look at giving the dairy industry the authority to do more than what this bill calls for today. Right now, the dairy industrj' pays a very heavy price ofGovernment regulations and control for the $250 million in revenue the price support program receives annually. Perhaps we are at the time where we ought to look at what the minimum Govern- ment purchases for nutrition, military, and other feeding programs ought to be, and then turn the rest ofthis over to the industry and give them the authority to move accordingly, Mr. Chairman, I look forward to working with you and the rest ofthis subcommittee and, obviously, our distinguished panelists to try to accomplish the goals ofthis dairy self-help legislation. I want to apologize in advance for being in and out of the room this afternoon. I am the Republican floor manager for the national service bill and I am going to have to float back and forth, and I ask your indulgence. Mr. VOLKMER. The gentleman from Pennsylvania, Mr. HOLDEN. No statement. Mr. VoLKMER. Any prepared statements received from the members will appear at this point in the record. The gentleman from Minnesota, [The prepared statement ofMr. Condit follows:] STATEMENT BY THE HONORABLE GARYA. CONDIT SUBCOMMITTEE ON LIVESTOCK H.R. 2664 DAIRY BUDGET RECONCILIATION AND SELF-HELP INITIATIVE ACT OF 1993 JULY 21, 1993 Mr. Chairman, I would like to take this opportunity to thank you for scheduling this important hearing to examine H.R. 2664, the "DairyBudget Reconciliation andSelf-Help InitiativeActof1993." As we all know, dairy farmers in recenttimes have experienced stable prices. However, as past history indicates, these prices could change drastically at any given moment because ofan array ofcircumstances. I am pleased thatthe Chairman has convened this hearing to look at H.R. 2664 and the impact itwill have on dairy farmers. While I believe thatwe need a thorough review and discussion on any majordairy policy shiftthatwill affectthe nation's dairy farmers, I wantto applaud the efforts ofall involve who have begun this process. We all acknowledge that our nation faces a severe budgetcrisis that demands fiscal responsibility by ourgovernment. However, in the coming weeks we mustjudge H.R. 2664 in relation to the problems we nowface in rural America and ourfarm sector. Today's hearing will begin the process too provide us with the direction thatwe need to design a.national dairy program