[Senate Hearing 114-644]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 114-644

                            A REVIEW OF THE
                  U.S. LIVESTOCK AND POULTRY SECTORS:
                     MARKETPLACE OPPORTUNITIES AND
                               CHALLENGES

=======================================================================

                                HEARING

                               BEFORE THE

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE


                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION


                               __________

                              MAY 26, 2016

                               __________

                       Printed for the use of the
           Committee on Agriculture, Nutrition, and Forestry
           
           
 [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]          


  Available via the World Wide Web: http://www.agriculture.senate.gov
  
  
  
                                __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
23-592 PDF                  WASHINGTON : 2018                     
          
----------------------------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Publishing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, 
U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free). 
E-mail, [email protected].   


           COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY



                     PAT ROBERTS, Kansas, Chairman

THAD COCHRAN, Mississippi            DEBBIE STABENOW, Michigan
MITCH McCONNELL, Kentucky            PATRICK J. LEAHY, Vermont
JOHN BOOZMAN, Arkansas               SHERROD BROWN, Ohio
JOHN HOEVEN, North Dakota            AMY KLOBUCHAR, Minnesota
DAVID PERDUE, Georgia                MICHAEL BENNET, Colorado
JONI ERNST, Iowa                     KIRSTEN GILLIBRAND, New York
THOM TILLIS, North Carolina          JOE DONNELLY, Indiana
BEN SASSE, Nebraska                  HEIDI HEITKAMP, North Dakota
CHARLES GRASSLEY, Iowa               ROBERT P. CASEY, Jr., Pennsylvania
JOHN THUNE, South Dakota

               Joel T. Leftwich, Majority Staff Director

                Anne C. Hazlett, Majority Chief Counsel

                    Jessica L. Williams, Chief Clerk

               Joseph A. Shultz, Minority Staff Director

                                  (ii)

  
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing(s):

A Review of the U.S. Livestock and Poultry Sectors: Marketplace 
  Opportunities and Challenges...................................     1

                              ----------                              

                         Thursday, May 26, 2016
                    STATEMENTS PRESENTED BY SENATORS

Roberts, Hon. Pat, U.S. Senator from the State of Kansas, 
  Chairman, Committee on Agriculture, Nutrition, and Forestry....     1
Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan...     2
Klobuchar, Hon. Amy, U.S. Senator from the State of Minnesota....     4
Heitkamp, Hon. Heidi, U.S. Senator from the State of North Dakota     6
                              ----------                              

                               WITNESSES

Brunner, Tracy, President, National Cattlemen's Beef Association, 
  Cow Camp Feedyard, Inc., Ramona, KS............................     7
Truex, Ronald, Chairman, United Egg Producers, Creighton 
  Brothers, LLC, Atwood, IN......................................     8
Hill, Howard, Past President, National Pork Producers Council, 
  Breeze Hill Farms and H&K Enterprises, Cambridge, IA...........    10
Goggins, Joe, Producer, U.S. Cattlemen's Association, Vermilion 
  Ranch Co., Public Auction Yards, & Northern Livestock Video 
  Auction, Billings, MT..........................................    12
Zimmerman, John, Producer, National Turkey Federation/Minnesota 
  Turkey Growers Association, P&J Products, Northfield, MN.......    14
                              
                              ----------                              

                                APPENDIX

Prepared Statements:
    Leahy, Hon. Patrick J........................................    42
    Thune, Hon. John.............................................    45
    Tillis, Hon. Thom............................................    49
    Brunner, Tracy...............................................    50
    Goggins, Joe.................................................    57
    Hill, Howard.................................................    64
    Truex, Ronald................................................    77
    Zimmerman, John..............................................    81
Document(s) Submitted for the Record:
Roberts, Hon. Pat:
    Written letter to Hon. Tom Vilsack concerning rules proposed 
      by Grain Inspection, Packers and Stockyards Administration 
      (GIPSA), April 19, 2016....................................    88
    Written letter to Hon. Gene Dodaro concerning Foot-And-Mouth 
      Disease (FMD), April 28, 2016..............................    90
    ``A Review of the U.S. Livestock and Poultry Sectors: 
      Marketplace Opportunities and Challenges'', written 
      testimony of Livestock Marketing Association (LMA).........    92
Question and Answer:
Brunner, Tracy:
    Written response to questions from Hon. Pat Roberts..........   100
    Written response to questions from Hon. Joni Ernst...........   101
    Written response to questions from Hon. Thom Tillis..........   101
    Written response to questions from Hon. John Thune...........   103
    Written response to questions from Hon. Patrick J. Leahy.....   103
    Written response to questions from Hon. Robert Casey, Jr.....   107
Goggins, Joe:
    Written response to questions from Hon. Pat Roberts..........   108
    Written response to questions from Hon. Joni Ernst...........   108
    Written response to questions from Hon. John Thune...........   109
    Written response to questions from Hon. Patrick J. Leahy.....   111
    Written response to questions from Hon. Robert Casey, Jr.....   114
Hill, Howard:
    Written response to questions from Hon. Pat Roberts..........   116
    Written response to questions from Hon. Thom Tillis..........   116
    Written response to questions from Hon. John Thune...........   119
    Written response to questions from Hon. Patrick J. Leahy.....   120
    Written response to questions from Hon. Robert Casey, Jr.....   125
Truex, Ronald:
    Written response to questions from Hon. Pat Roberts..........   127
    Written response to questions from Hon. John Thune...........   128
    Written response to questions from Hon. Patrick J. Leahy.....   129
    Written response to questions from Hon. Robert Casey, Jr.....   132
Zimmerman, John:
    Written response to questions from Hon. Pat Roberts..........   135
    Written response to questions from Hon. Thom Tillis..........   136
    Written response to questions from Hon. John Thune...........   137
    Written response to questions from Hon. Patrick J. Leahy.....   138
    Written response to questions from Hon. Robert Casey, Jr.....   142


 
                            A REVIEW OF THE
                  U.S. LIVESTOCK AND POULTRY SECTORS:
                MARKETPLACE OPPORTUNITIES AND CHALLENGES

                              ----------                              


                         Thursday, May 26, 2016

                              United States Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                     Washington, DC
    The committee met, pursuant to notice, at 10:03 a.m., in 
room 216, Hart Senate Office Building, Hon. Pat Roberts, 
Chairman of the Committee, presiding.
    Present or submitting a statement: Senators Roberts, 
Boozman, Hoeven, Ernst, Tillis, Sasse, Grassley, Thune, 
Stabenow, Brown, Klobuchar, Bennet, Gillibrand, Donnelly, 
Heitkamp, and Casey.

 STATEMENT OF HON. PAT ROBERTS, U.S. SENATOR FROM THE STATE OF 
KANSAS, CHAIRMAN, U.S. COMMITTEE ON AGRICULTURE, NUTRITION, AND 
                            FORESTRY

    Chairman Roberts. Good morning. I call this meeting of the 
Senate Committee on Agriculture, Nutrition, and Forestry to 
order.
    We have a variety of farmers and ranchers from across the 
country here today to give us their perspectives on marketplace 
opportunities and challenges in the livestock and the poultry 
sectors. Who better to testify before this committee than 
producer leaders representing these industries that play such 
an important role in the economic stability of rural America 
and certainly in my home State of Kansas and in the state of 
every member that is privileged to serve on this committee.
    It has been five years since our last committee hearing on 
the state of the livestock and poultry sectors. Thank you to 
Senator Heitkamp for making this suggestion, and we agreed some 
time back that it was time. I know everyone is interested to 
hear about the many events that have taken place during this 
period that have impacted the economic standing of your 
industries as well as future opportunities and challenges for 
growth.
    Now, the livestock industry and the poultry sectors, 
weather ebbs and flows every day. One could argue that recent 
years have seen greater volatility and unpredictability than 
most. Today's livestock and poultry producers are operating in 
a highly cyclical marketplace. One year, they may receive 
record prices for their animals, and then the next see a 
dramatic drop in value, like we have seen recently in the beef 
sector. Other events, like the diseases that have ravaged the 
egg, pork, and turkey sectors, can leave our producers with 
little to no income for months on end.
    Unfortunately, we know there has been significant erosion 
in farm equity due to these disease outbreaks and marketplace 
volatility. Some producers were unable to weather that storm. 
Add into this equation the reality that this is an industry 
where the good times are typically composed of margins of just 
a few cents or a few dollars per animal and you begin to 
understand what a tough business animal agriculture is.
    This reality demonstrates just how savvy today's farmers 
and ranchers must be in order to make a living, and that this 
is a livelihood not for the risk averse or the faint of heart. 
Yet I am confident that even in the face of today's challenges, 
the industries represented here will continue to lead the world 
in delivering safe and affordable meat products to our 
consumers.
    The importance of this sector to my home State of Kansas is 
immense, not to mention the home states of everybody on the 
Committee. Eastern Kansas is known for its rolling Flint Hills, 
spotted with grazing cattle. Western Kansas is home to some of 
the country's largest and most modern beef feedlots. Kansas is 
the third largest beef producing state in the country, with 
deference to Texas and Nebraska. I hate to say that, really, 
but that is true.
    Senator Sasse. You are welcome.
    Senator Stabenow. Uh-oh.
    [Laughter.]
    Chairman Roberts. It is also experiencing growth in pork 
production, which is a boon to many of our small rural 
communities.
    These sectors present here today are a significant driver 
of our rural economies. In fact, according to the most recent 
USDA Agriculture Census, the beef, pork, and poultry sectors 
account for 36 percent of the total agriculture sales on an 
annual basis, and that number is only going up. Sales of 
cattle, hogs, poultry, and eggs also accounted for $141 billion 
annually. That is a billion with a ``B'', not an ``M.'' These 
are impressive numbers.
    Thank you for taking the time away from your farms and your 
ranches and your businesses to educate your elected officials 
about your industries.
    I ask unanimous consent to include in the record, testimony 
submitted by the Livestock Marketing Association.
    [The statement of the Livestock Marketing Association can 
be found on page 92 in the appendix.]
    Chairman Roberts. I now recognize the Ranking Member, the 
distinguished Ranking Member of our committee, Senator 
Stabenow.

STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR FROM THE STATE 
                          OF MICHIGAN

    Senator Stabenow. Well, thank you very much, Mr. Chairman. 
This is a very important hearing and we welcome all of our 
witnesses and appreciate the chance to highlight a very 
important part of the agricultural economy.
    As we know, the last several years have been challenging, 
as the Chairman said, for livestock producers, and it is one of 
the reasons why the 2014 Farm Bill made many of the important 
investments that help support and bolster this important 
segment of American agriculture. In fact, one of the first uses 
of the 2014 Farm Bill was the activation of the livestock 
disaster programs, which have paid out more than $5.8 billion 
to date and helped producers across the country when they faced 
extreme weather conditions, like droughs, blizzards, and 
wildfires.
    The Farm Bill also expanded the voluntary conservation 
programs that give our farmers and ranchers the tools they need 
to address issues on their own instead of regulation. USDA 
voluntary conservation programs make it easier for a rancher in 
Kansas or a turkey producer in Michigan to improve wildlife 
habitat, livestock forage, and water quality through programs 
like the Environmental Quality Incentive Program or the 
Agricultural Conservation Easement Program. In addition, the 
new Regional Conservation Program provides opportunities for 
locally led conservation solutions to issues like improving 
water quality in our Great Lakes and addressing endangered 
species issues like the sage-grouse in the West.
    However, for USDA conservation efforts to be successful, I 
would ask today for your continued help to encourage more 
producers to take advantage of these opportunities and tell 
their story about why voluntary conservation is the best way to 
address resource concerns.
    As we look to other issues impacting our livestock 
industry, we know how important it is to make investments in 
agriculture research. In fact, this need was underscored by 
last year's rapid emergence of highly pathogenic avian 
influenza, which affected more than 48 million birds in 15 
states, and we know what that meant. This type of animal health 
crisis has devastating economic impacts on our producers, 
drives up the cost of food for consumers, and threatens 
international trade. That is why the investments we made 
through the Farm Bill to establish the new Foundation for Food 
and Agriculture Research are so important, and I look forward 
to seeing the Foundation begin to roll out new programs shortly 
to support your efforts.
    Despite these challenges, however, there are also plenty of 
reasons for the livestock sector to be optimistic. As I look to 
my home State of Michigan, I see livestock producers breaking 
new ground on processing facilities, expanding into new value-
added markets like organics.
    Just last summer, the Clemens Food Group broke ground in 
Coldwater, Michigan, on one of the first new Michigan pork 
processing facilities in decades. They are expected to create 
800 jobs and will source from producers in Michigan and 
throughout the Midwest.
    Nationwide, the demand for organic eggs has more than 
doubled since 2012, and producers like the Herbruck's in 
Michigan have continued to step up to meet the need. Now is the 
critical time to ensure that we continue to support these 
organic producers so organic eggs can continue to be available 
and affordable for American families.
    Lastly, Mr. Chairman, I want to highlight action by this 
committee last year to unanimously pass and get signed into law 
a reauthorization of mandatory price reporting, which we did 
together. This authorization made important advances that were 
supported by producers to increase market transparency, and I 
am pleased we are able to do this in an overwhelmingly 
bipartisan way.
    Mr. Chairman, I appreciate you holding this hearing. Again, 
I stand ready to work with you and our colleagues on the 
Committee to ensure our farmers and ranchers have the tools 
they need to be successful. Thank you.
    Chairman Roberts. I thank the Senator.
    A study was just conducted a while back saying that members 
of the Senate are supposed to be in two or three places at the 
same time.
    [Laughter.]
    Chairman Roberts. That explains a lot.
    Senator Klobuchar is supposed to be at the Judiciary 
Committee. I note that Senator Grassley is supposed to be, as 
well. We have provided him a muffin and a cup of coffee, but he 
has not shown up----
    Senator Sasse. Can I have his muffin?
    Chairman Roberts. --demonstrated by the distinguished 
Senator from Nebraska, who took time from reading from the 
Constitution to demonstrate that. I am going to get in trouble 
for that.
    [Laughter.]
    Chairman Roberts. Senator Klobuchar, I know that you want 
to introduce John Zimmerman, who is a turkey grower, on behalf 
of the National Turkey Foundation from Northfield, Minnesota. 
Why don't you proceed with that?

STATEMENT OF HON. AMY KLOBUCHAR, U.S. SENATOR FROM THE STATE OF 
                           MINNESOTA

    Senator Klobuchar. All right. Well, thank you very much, 
Mr. Chairman and Ranking Member Stabenow, and also Senator 
Heitkamp for suggesting this hearing. I think it is so 
important, and the work that we have done in the Farm Bill on a 
bipartisan basis for our livestock and poultry industries has 
been key, but also there is a lot of work to be doing going 
forward and I am glad we are doing this.
    Minnesota is number one for turkeys. I just always like to 
say that. We are number one for turkeys, as Mr. Zimmerman 
knows, in the country, and number two for hogs, which sometimes 
surprises people. So, this is pretty important to us.
    John Zimmerman is a second generation Minnesota turkey 
farmer who also raises corn and soybeans on his farm with his 
wife, Cara, and son, Grant. He has previously served as 
President of the Minnesota Turkey Research and Promotion 
Council and he is a current board member of the National Turkey 
Federation. He is also the current Board Chair of the River 
Country Co-Op.
    He is a graduate of Iowa State University, which we will 
not hold against him, being from Minnesota, where he earned a 
Bachelor's Degree in animal science.
    Thank you for being here, John, and I know the Committee 
will benefit from the expertise that you will bring to a turkey 
farmer, and also as a turkey farmer, and also as an industry 
leader. We look forward to hearing from you.
    Chairman Roberts. I would like to now proceed with the 
introduction of the witnesses.
    I am very proud to introduce Mr. Tracy Brunner, President 
of the National Cattlemen's Beef Association. Mr. President, I 
am not going to go any farther with that.
    Tracy is a fourth generation rancher from Ramona, Kansas. 
He has served as President of his family corporation since its 
inception in 1988, where he manages the feed yard, the yearling 
grazing operation, cattle and grain marketing decisions, 
commodity risk management, and customer relations. He is a busy 
guy. Tracy's family also operates a seedstock enterprise, 
raising bulls and replacement heifers for many ranchers all 
throughout the United States.
    Tracy graduated from Kansas State University, home of the 
ever-optimistic Fighting Wildcats, with a degree in animal 
science and a Master's of agribusiness. He has held many 
leadership positions in the U.S. beef industry, including 
Executive Committee Member and President of the Kansas 
Livestock Association, a member of the Kansas Beef Council 
Executive Committee, a member of the Kansas Governor's 
Agriculture Advisory Board, as well as Policy Division Chair, 
Executive Committee Member, and Board member for the National 
Cattlemen's Beef Association for nearly 20 years.
    Tracy, you have been a true leader for our Kansas 
agriculture and the U.S. beef industry. I am very pleased, very 
proud to welcome you to the Committee today.
    [Pause.]
    Chairman Roberts. We will proceed with your statement in 
just a moment. We will introduce the rest of the witnesses.
    Ron Truex, who is Chairman of the United Egg Producers, 
Atwood, Indiana. Mr. Truex's career in the egg industry began 
over four decades ago when he joined Creighton Brothers, LLC, 
an egg production, processing, grading, and marketing company. 
Ron has held positions in sales and operations and has served 
as President and General Manager of Creighton Brothers since 
1998.
    Ron has held several leadership positions within state and 
national agriculture organizations, including President of the 
Indiana State Poultry Association, President of the Indiana Egg 
Board, past Chairman of the American Egg Board, and as chairman 
of several committees within the United Egg Producers.
    Thank you so much for being here today Ron, I look forward 
to hearing your views of the egg industry.
    Senator Grassley was supposed to be here to introduce Dr. 
Howard Hill. He is obviously over at the Senate Judiciary 
Committee. Dr. Hill is the Past President of the National Pork 
Producers Council from Cambridge, Iowa. Dr. Hill is a pork 
producer and a veterinarian from Cambridge, Iowa, where he runs 
a farrow to finish hog operation, raises Angus cattle, and 
grows 2,700 acres of corn, soybeans, and alfalfa.
    Dr. Hill earned his Bachelor's and Doctorate of Veterinary 
Medicine degrees from the University of California-Davis and a 
Master's and Doctorate degree from Iowa State University in 
veterinary microbiology and preventive medicine. He has worked 
as a veterinary practitioner, a fellow for the National 
Institutes of Health, head of the Microbiological Section of 
the Iowa State University Vet Diagnostic Lab, head of 
veterinary services for Murphy Family farms, and Director of 
Production and Chief Operating Officer for Iowa Select Farms.
    Dr. Hill is the Past President of the National Pork 
Producers Council and the American Association of Swine 
Veterinarians, a former Board member for the Iowa Pork 
Producers Association, and was recently appointed to serve on 
the U.S. Department of Agriculture's Advisory Committee on 
Animal Health.
    Dr. Hill, that is quite a distinguished career. I look 
forward to your testimony.
    Senator Heitkamp, I recognize you to introduce Joe Goggins, 
a producer on behalf of U.S. Cattlemen's Association from 
Billings, Montana.

 STATEMENT OF HON. HEIDI HEITKAMP, U.S. SENATOR FROM THE STATE 
                        OF NORTH DAKOTA

    Senator Heitkamp. Welcome, Joe. Joe is a rancher and 
auctioneer from Billings, Montana. He is a native Montanan who, 
in addition to working on his family's ranch, has auctioneered 
for some of the top purebred sales in America and remains 
directly involved in his family's livestock auction market. He 
is the owner of J&L Livestock, which merchandises from 3,000 to 
5,000 top bred commercial Angus females annually. His family's 
three livestock auction yards and Northern Livestock Video 
Auction is often cited as a primary influencer in the cash 
cattle market across the nation.
    We are proud to have him, because he is not only an active 
Montanan, he is also a regular at North Dakota's bull sales, 
most notably Ellingson Angus in St. Anthony, Frey Angus in 
Granville, Prairie Pride in Enderlin, Schaff Angus Valley at 
St. Anthony, and Stuber Ranch in Bowman, and we really 
appreciate your involvement in North Dakota, and I know that 
you know that we produce some of the best bulls in the world.
    His reach into the cattle industry extends nationwide with 
his family's widely subscribed publication The Western Ag 
Report. Continuing to be an active member in the livestock 
industry, he served one term as President of Montana's 
Livestock Marketing Association and two terms as President of 
Montana Angus Association. He is currently the Director of the 
Livestock Marketing Association and a member of the United 
States Cattlemen's Association.
    Joe remains very involved in the ebb and flow of the cattle 
market. With all of that on his plate, he and his family are 
still able to help market 600,000 head of cattle annually, 
along with his wife, Linda, and his three children and 250 
employees who help him through that process. Quite a record of 
achievement.
    Welcome to the Committee. We look forward to your 
testimony.
    Chairman Roberts. Thank you, Senator Heitkamp.
    We thank you all again for taking the time to join us 
today. We appreciate your sharing your expertise, firsthand 
experience as leaders of the livestock and poultry sectors.
    Mr. Brunner, Tracy, could you tell me in your perspective 
how we get past this recent downfall in the beef sector.

  STATEMENT OF TRACY BRUNNER, PRESIDENT, NATIONAL CATTLEMEN'S 
   BEEF ASSOCIATION, COW CAMP FEEDYARD, INC., RAMONA, KANSAS

    Mr. Brunner. Well, thank you, Mr. Chairman, members of the 
Committee. Good morning to everyone.
    Always at the mercy of Mother Nature, our industry is 
rapidly recovering from extensive drought. Herd rebuilding and 
expansion are taking place at a rate where U.S. cattle numbers 
will soon be equal to 2012. Additionally, American cattle 
producers continue to be more efficient in producing beef. 
Today, we can produce the same amount of beef that we produced 
in 1977 at one-third less cattle and land.
    The beef supply chain is always focused on the consumer. 
Our cow-calf ranchers tell their seedstock suppliers what they 
need and also ask their stocker and feeder calf buyers what 
they will pay the most for. Cattle feeders, likewise, look to 
packer processors for signs of greatest value, who in turn have 
an ear for retail and food service needs.
    Cattle prices have been a topic of focus for NCBA and our 
members. In early 2015, we saw record high cattle prices, but 
soon those started back down. One factor was the increase in 
overall protein supplies. Last year, U.S. per capita red meat 
and poultry supplies increased by nearly ten pounds per person. 
In addition, the strong U.S. dollar has impacted our ability to 
ship beef to our international customers.
    All of this additional supply puts downward pressure on our 
markets, but we are used to the ups and downs of the cattle 
cycle. In order to manage this cycle, we need risk management 
tools that work. We currently rely on market forums like CME 
Groups, cattle futures contracts, to add transparency to our 
price discovery process. Changing technologies and a transition 
to automated trading and commodity futures have increased 
market volatility, making interpretation of those price signals 
different than what we are accustomed to in the past. The 
integrity of our market forums is very important to us, for 
without futures contract integrity, our industry will abandon 
their use.
    We have recognized the volatility and are working directly 
with the CME Group to find ways to address it. We have a joint 
NCBA-CME working group which is analyzing potential changes, 
such as slowing down the market to help ensure a level playing 
field for producers who are using these tools to manage their 
price risk.
    Today, we ask for no direct action from our government in 
our cattle marketing systems and forums. In fact, I am 
concerned at some of the action that we have seen.
    Secretary Vilsack has announced he is going to dust off the 
proposed GIPSA marketing rule that resulted from language 
included in the 2008 Farm Bill. This is very concerning to us, 
because bipartisan efforts already resulted in appropriations 
language which defunded any additional work on or 
implementation of the ideas included in the draft rule. The 
proposed GIPSA rule would have made USDA the ultimate arbiter 
on how cattle are marketed. We urge USDA to enforce the Packers 
and Stockyards Act as it exists now. We do not need them 
dictating how we can or cannot market our cattle.
    We have worked for years to find ways, new and innovative 
ways to market cattle. Alternative marketing arrangements have 
been studied by USDA and independent groups and the results 
show that these alternative marketing arrangements benefit 
producers and consumers alike. Any Congressional or executive 
action to interfere will only add to our price problems, not 
solve them.
    Solving our price problems relies on addressing the true 
issues of consequence in our industry. We have capitalized on 
the growing demand for U.S. beef overseas, and Japan has become 
our leading export market. But Australia now has a ten percent 
tariff advantage over us, resulting in a loss of $300 million. 
The tariff advantage for Australia will continue to grow until 
we pass TPP.
    In closing, I would say you could also help our bottom line 
by easing the regulatory burden that our industry is under. 
Taking action to reform the Endangered Species Act and helping 
us keep the EPA at bay would go a long way in easing the 
pressures on our industry.
    Again, thank you very much for this opportunity to be with 
you.
    [The prepared statement of Mr. Brunner can be found on page 
50 in the appendix.]
    Chairman Roberts. Thank you, Tracy, for a very good 
statement.
    Mr. Truex.

STATEMENT OF RONALD TRUEX, CHAIRMAN, UNITED EGG PRODUCERS, AND 
      PRESIDENT, CREIGHTON BROTHERS, LLC, ATWOOD, INDIANA

    Mr. Truex. Thank you, Mr. Chairman. My name is Ron Truex 
and I am an egg producer from Atwood, Indiana. I am also 
Chairman of United Egg Producers and we appreciate being 
invited to this hearing.
    I would like to talk about two major events that have had a 
dramatic impact on our industry in the past year. Then I would 
like to mention two current issues where we could use the 
Committee's help.
    The first event was last year's devastating outbreak of 
highly pathogenic avian influenza. I have some statistics in my 
written testimony, but I am sure I do not need to tell anyone 
on this committee what a difficult experience that was. 
Thankfully, my farm was not directly involved, but every single 
egg producer was affected one way or another, from much more 
stringent biosecurity to a loss in demand for egg products, 
which we hope is temporary. We are still dealing with the 
aftermath of the HPAI crisis.
    This year has brought another challenge. Our customers in 
food service, food manufacturing, and retail grocery sales are 
announcing their decisions to source only cage-free eggs in the 
future. In most cases, they have specified a transition period, 
often as much as ten years.
    There are about 300 million hens in the U.S. egg laying 
flock. Today, about 30 million of those, just under ten 
percent, are cage-free housing. Of those 30 million hens, just 
under half of those are on organic farms, with the remainder in 
non-organic production. The remaining 90 percent of the U.S. 
flock is cared for in cages, the vast majority of which comply 
with our UEP Certified Program, which provides space 
requirements for each hen. A small but important portion are 
kept in enriched cages, where space allowances are greater and 
enrichments like perches and nest boxes are provided.
    According to the estimates by USDA, if you add up the 
current egg usage of all companies that have publicly made 
cage-free commitments, by 2030, 60 percent of the nation's egg 
laying flock, not the current ten percent, but 60 percent, or 
174 million birds, will need to be in cage-free housing. USDA 
also added up the number of egg producers that have publicly 
announced plans to convert some or all of their operations to 
cage-free status. However, those commitments only add up to 63 
million hens, about a third of the 174 million requested by our 
customers.
    Our industry is highly competitive and we will always try 
to produce what our customers want, but it will be extremely 
difficult for us to meet the cage-free demand. The new 
construction, capital investment, additional land acquisition, 
and higher production costs will all be daunting.
    UEP believes, and science shows, that hens can be humanely 
housed in a variety of ways, through conventional cages, 
enriched cages, and in cage-free environments. Good management, 
not production technique, is the most important variable in hen 
welfare.
    Now, in the time I have left, let me conclude with two 
recommendations for Congressional action. Like most other farm 
groups, we are hoping for a national standard on GMO labeling 
that will override state laws. We appreciate the hard work that 
the leaders of this committee are continuing to do and we fully 
understand it is not an easy task. We would simply like to 
point out that while most of our hens consume genetically 
engineered feed, the corn and the soybeans, neither the hens 
nor the eggs they lay are genetically engineered. Therefore, 
eggs should not have to be labeled as GE or GMO merely because 
they were laid by hens that consumed GE feed.
    A second way that we hope Congress will help us is by 
encouraging USDA to carry out a better economic analysis before 
finalizing a new proposed rule on organic livestock and poultry 
production. For the egg sector, USDA is proposing to ban 
production systems that have been approved by that Department 
since 2002. These so-called porch systems provide outdoor 
access to hens on solid floor structures that are open to the 
air and the sunlight on the sides, but have roofs in order to 
keep out predators and avoid contact with wild birds, which are 
carriers of avian influenza.
    Our farm is not organic, but a number of our UEP members 
have entered organic production in recent years and this is a 
major issue for them. They believe the economic impact of this 
proposed regulation will be well in excess of $100 million and 
perhaps more. Besides banning porches, the proposed rule has an 
outdoor space requirement that will be impossible for many 
producers to meet without expensive new land purchases. It also 
requires that outdoor areas be at least 50 percent soil, which 
increases the possibility of contact with salmonella as well as 
animals that carry it, like rodents.
    If this rule is finalized, the supply of organic eggs for 
consumers will fall substantially and many producers will exit 
organic production. This committee's Chair, Ranking Member, and 
other members have already been very helpful in questioning 
USDA's factual basis for this rule and we hope you will 
continue asking questions, filing comments, and asking USDA for 
an extension of the comment period for at least an additional 
60 days so the Department will have a better factual basis for 
the final rule.
    Egg producers appreciate this committee taking a strong 
interest in animal agriculture, and thank you for the 
opportunity to testify.
    [The prepared statement of Mr. Truex can be found on page 
77 in the appendix.]
    Chairman Roberts. Dr. Hill, you are recognized next, but I 
want to just say something on behalf of the Ranking Member and 
myself on this latest rule with regards to chickens and this 
whole exercise we are talking about, the big yard and sort of 
an over-leverage.
    Senator Stabenow. Perches.
    Chairman Roberts. We have been talking--I think we might 
include a requirement that we play Mozart to just sort of calm 
the chickens down. I do not know if that would be helpful or 
not.
    [Laughter.]
    Chairman Roberts. On this comment period, I sure hope you 
are standing up, and I know we are, to make sure that the 
Department hears that this is just--sometimes it is hard to 
understand what happens in our federal government. This is one 
of those cases. So, thank you for your comments on that, and 
all of us are working to solve the GMO problem. I did not mean 
to interrupt the flow of the witnesses here, but thank you for 
those comments.
    Dr. Hill.

STATEMENT OF HOWARD HILL, D.V.M., PAST PRESIDENT, NATIONAL PORK 
   PRODUCERS COUNCIL, BREEZE HILL FARMS AND H&K ENTERPRISES, 
                        CAMBRIDGE, IOWA

    Dr. Hill. Good morning, Chairman Roberts, Ranking Member 
Stabenow, and members of the Committee, and thank you for this 
opportunity to visit with you. I am Dr. Howard Hill, a 
veterinarian and pork producer from Cambridge, Iowa, and Past 
President of the National Pork Producers Council.
    The U.S. pork industry is in pretty good shape right now 
economically. In the past couple of years, it has overcome some 
disease issues and weather-related record-high feed grain 
prices and now appears to be moving into a period of cautious 
calculated expansion.
    Pork production is forecast by USDA to increase this year 
by two percent, to almost 25 billion pounds, and in 2017 by 2.6 
percent, to more than 25.5 billion pounds. Of course, 
producers' fortunes can be affected for good or bad by any 
number of factors, some controllable and some not so 
controllable, such as disease and weather.
    I am going to first address an opportunity that would be 
very positive for hog farmers like me and that Congress can 
control, the Trans-Pacific Partnership, or TPP. But another 
issue recently has come up that if not addressed would wipe out 
any of the benefits we gain from TPP.
    Pork producers are very concerned about the so-called GIPSA 
rule, which you have heard about from Mr. Brunner. As many of 
you know, the rule was borne out of the 2008 Farm Bill, which 
includes five specific issues, mostly related to the poultry 
industry, but Congress wanted USDA to address. But the Grain 
Inspection, Packers, and Stockyard Administration in 2010 
proposed an expansive rule that would have had a significant 
negative impact on the livestock industry.
    In November 2010, an Informa Economics study of the rule 
found it would have cost the pork industry more than $350 
million annually. Tens of thousands of comments, including 
16,000 from the pork producers, were filed in opposition to the 
rule, and Congress several times included riders in the USDA's 
annual appropriation bill to prevent it from finalizing the 
regulation. Such an amendment was not included in the USDA's 
fiscal year 2016 bill.
    Now, the agency is moving forward with the rule and we have 
grave concern it will mirror the 2010 proposal. If it does, the 
livestock industry would be fundamentally and negatively 
changed and the increased exports and jobs created from TPP 
will be negated.
    Additionally, the fact that we have to deal with the GIPSA 
rule issue is diverting valuable resources away from the pork 
industry's top priority, and that being the approval of TPP. 
TPP, the benefits of which will exceed all past Free Trade 
Agreements, represents a great opportunity for U.S. pork 
producers and for the entire U.S. economy. TPP includes the 
United States and 11 Pacific Rim countries, and those nations 
include nearly a half-a-billion consumers and represents 40 
percent of the world's GDP. The agreement has become the de 
facto global trade vehicle and other countries in the region 
already are lining up to be part of TPP. Because other Asia-
Pacific trade agreements are being negotiated, such as China-
led 16-nation regional comprehensive economic partnership, the 
United States cannot afford either to economically or 
geopolitically walk away from the fastest growing region in the 
world.
    To give you an idea of the importance of Free Trade 
Agreement to the U.S. pork producers, the United States now 
exports more pork to the 20 countries with which we have an FTA 
than it does to the rest of the world combined. Congress must 
pass TPA and it must do so soon.
    Finally, a challenge that would be out of everyone's 
control but that could be tempered through preparedness is a 
foreign animal disease outbreak, specifically an outbreak of 
Foot and Mouth Disease. A foot and mouth outbreak in this 
country would be economically devastating to the pork producers 
and other food producers. USDA and the livestock industry has 
been working on a plan to combat an outbreak, but the only 
practical way is through the use of vaccination. Unfortunately, 
we currently do not have the ability to produce the number of 
doses needed for an initial outbreak or the capacity to produce 
more vaccine.
    The U.S. pork industry believes, consistent with Homeland 
Security Presidential Directive 9, that an adequate Foot and 
Mouth Disease vaccine bank must be established. This would 
require, one, an offshore vendor maintained bank that would 
have available antigen concentrate to produce against all 23 of 
the most common Foot and Mouth Disease types currently 
circulating in the world. Two, a vendor managed inventory of 
ten million doses, which is the estimated need for the first 
two weeks of the outbreak. Third, a contract with an 
international manufacturer or manufacturers for the surge 
capacity to produce at least 40 million additional doses.
    Given the costs of dealing with a Foot and Mouth Disease 
outbreak and the economic impact on the livestock industry and, 
indeed, on the entire U.S. economy, Congress should appropriate 
enough money to set up such a vaccine bank.
    Those are a few of the opportunities and challenges pork 
producers face and I will be happy to answer any questions at 
the appropriate time. Thank you.
    [The prepared statement of Dr. Hill can be found on page 64 
in the appendix.]
    Chairman Roberts. Thank you, sir.
    Mr. Goggins.

     STATEMENT OF JOE GOGGINS, PRODUCER, U.S. CATTLEMEN'S 
  ASSOCIATION, AND VICE PRESIDENT, VERMILLION RANCH COMPANY, 
 PUBLIC AUCTION YARDS, BILLINGS LIVESTOCK COMMISSION COMPANY, 
    WESTERN LIVESTOCK AUCTION, AND NORTHERN LIVESTOCK VIDEO 
                   AUCTION, BILLINGS, MONTANA

    Mr. Goggins. Good morning. It is truly an honor to be here 
on behalf of the livestock industry addressing this 
distinguished committee and the great people you represent.
    In the next 15 to 20 years, when you look at the massive 
population growth not only in this country but worldwide, the 
deal maker for the United States of America when it comes to 
trade with our world partners will not be our technology or our 
energy, it will be our food.
    The American producer, feeder, and packer have the know-
how, work ethic, and pride to produce the highest quality, most 
affordable, and safest protein in the world. This is why we 
must demand that we in America do everything in our power to 
keep an open, fair, competitive marketplace for our producers 
and feeders of all sizes. Another key component is to assure 
our domestic livestock herd remains safe and free from both 
domestic and foreign diseases.
    There have been many success stories in the previous Farm 
Bill programs, for example, the voluntary conservation effort 
that kept the sage-grouse from being listed, the beginning 
farmers and ranchers program, the disaster funding program that 
aided the producers in the Dakotas after the Atlas blizzards of 
2013, just to name a few.
    In the years 2013 and 2014, we all saw our once-in-a-
lifetime up in the cattle market. Since then, in the last year, 
I hope we have seen our once-in-a-lifetime down. The last year 
represents the largest loss in equity in the history of the 
U.S. cattle industry.
    Following are some concerns and challenges that need to be 
looked at and addressed by this committee. We need to find a 
fairer and more competitive way of determining a weekly cash 
price on live fed cattle. There are many avenues by which to do 
this, but we undoubtedly need to create more transparency and 
competitiveness at the fed cattle level.
    Volatility in the marketplace is causing huge problems for 
everyone in the industry. The Futures Board has always been a 
very good tool for producers and feeders to manage risk. At the 
present time, it no longer can be used because of violent moves 
in the market, mostly due to, in my opinion, the expanded 
limits, and high frequency algorithmic trading. It is a 
speculator's market. For example, just two weeks ago, we sold 
fed cattle at a $134 to $136. The Board the same morning went 
near limit down on the front month June to $121-something. That 
is a $15 basis Now, that is proof fundamentals do not have much 
to do with this market.
    However, my biggest concern about the volatility in this 
market is how it affects the average producer and young 
producers that have to borrow most of their money from the bank 
to purchase and feed these cattle. The lenders, in turn, are 
almost 100 percent of the time requiring these people to hedge 
75 percent of those cattle they buy in order to acquire such a 
loan. These massive, violent moves on the Futures Board cause 
people to pay huge margin calls, which drains their available 
cash, forcing them to get out of the hedge at a very 
unfavorable position.
    I know in our own family feeding operation, currently, we 
background and feed near 50,000 head of calves a year. The 
Futures Board is no longer a viable tool for us due to the 
volatility of the market and the amount of money it takes to 
hold a position. This may allow us only to feed half as many 
cattle going forward.
    We need to modernize and update the Packers and Stockyards 
Act of 1921. This 95-year-old Act needs to be modernized.
    Another challenge I would encourage the Committee to be 
conscientious of is the concerns that come with over-
regulation. Too much government on the farm and ranch is a 
major concern in the country. One example is the uncertainty 
surrounding the EPA's Waters of the U.S. rule.
    I would also suggest caution on making too stringent 
requirements on the trucking and interstate movement of 
livestock. Livestock are a highly perishable commodity. If we 
hamper the ability to move livestock quickly and efficiently, 
we might actually limit opportunities for producers in parts of 
this country.
    In closing, as a producer of protein, I challenge this 
committee to address the concerns and issues I have just laid 
out. Restructure restrictive laws. Update outdated laws. Ensure 
that we have some transparency and competitiveness in our 
industry. Last but not least, put some sideboards on the 
futures market and the influence the Board has on the cattle 
market.
    Keep in mind, in the years to come, trade policies and 
currency values will heavily play on our markets and the 
nations with the capabilities to produce an abundant quality, 
high quality safe and affordable food supply will be the 
powerhouses in the global economy.
    [The prepared statement of Mr. Goggins can be found on page 
57 in the appendix.]
    Chairman Roberts. We thank you, Mr. Goggins. Thank you for 
the challenge. We accept it.
    I would just note that I have been to 18 Kansas counties 
here recently. I was way out there in Western Kansas, in St. 
Francis, and a good friend of mine who I have known a long time 
put on a cowboy hat like Tracy has there, pulled it down, and 
said, ``Pat, you have done a good job, but I have got news for 
you. I am done.'' He just said, ``I feel ruled. I do not feel 
governed.''
    I think that pretty well sums up some of the concerns that 
you raised. Those of us who serve on this committee in a 
bipartisan fashion want to address all of these concerns, and I 
thank you for pretty well summing them up.
    Mr. Zimmerman.

    STATEMENT OF JOHN ZIMMERMAN, PRODUCER, NATIONAL TURKEY 
FEDERATION/MINNESOTA TURKEY GROWERS ASSOCIATION, P&J PRODUCTS, 
                     NORTHFIELD, MINNESOTA

    Mr. Zimmerman. Good morning, Chairman Roberts, Ranking 
Member Stabenow, and members of the Committee. I appreciate the 
opportunity to testify on behalf of the 63,000 men and women 
who put their boots on every day to keep the turkey industry 
working. Our industry raises approximately 238 million pounds 
of turkey annually, and USDA's latest forecast puts 2016 turkey 
production at an all-time record of 6.4 billion pounds, 14 
percent above 2015.
    This year, the turkey industry has made significant strides 
and learned a lot in recovering from high path avian influenza 
after suffering through the worst animal disease outbreak in 
U.S. history last year. However, our preparation was tested 
earlier this year in Indiana when a small outbreak occurred in 
a commercial turkey flock. This outbreak was small precisely 
because of the lessons we have learned.
    The important lesson is that immediate action needs to be 
taken at the local level to limit virus spread. No matter how 
good the intentions are at the state and federal level, 
industry must be given clear permission to act within minutes, 
not hours or days, to protect other nearby farms from becoming 
infected. I must emphasize the need for rapid stamping out 
procedures and methods that ensure humane treatment while 
eliminating virus spread. Currently, there is no one method 
that achieves perfect results in all circumstances.
    NTF is deeply appreciative of the indemnification program 
implemented by USDA/APHIS, strongly supported by Congress, that 
helped us manage through this crisis, and I would be remiss if 
I did not take a moment to personally thank my fellow 
Minnesotan, Senator Klobuchar, on behalf of myself, the NTF, 
and the entire turkey industry for all you did to help us last 
year. Thank you.
    Finally, the billion dollars in losses are well documented. 
In order to prevent future outbreaks, the U.S. needs to adopt a 
forward looking mandatory animal pest and disease prevention 
program designed to limit the impacts of foreign zoonotic 
diseases on livestock and poultry producers, and we look 
forward to working with Congress to get this accomplished.
    All poultry exports were severely damaged by the trade 
restrictions that resulted from the 2015 outbreak. 
Specifically, last year's turkey exports declined 34 percent 
and over 33 countries enacted some form of ban on U.S. poultry. 
Without the hard work of APHIS, it could have been a lot worse. 
They reopened closed markets as well as continue to establish 
protocols that will limit bans to regional levels in the 
future.
    We also continue to see high path outbreaks in Europe, 
Asia, and South America, and now is the time to reengage with 
our trade partners to discuss how HPAI can be treated moving 
forward. This is a global disease, and working with the 
government, we can develop a plan that minimizes export 
disruptions now.
    With regard to non-scientific trade barriers, it is 
important that USDA's FAS continue to work with both APHIS and 
the turkey industry to fully understand how we differ from 
chicken and livestock production. For example, while never 
covered under U.S. COOL regulations, turkey has now been 
subjected to COOL-like regulations by both Korea and South 
Africa, who banned U.S. turkey raised and processed in the U.S. 
just because it was hatched in Canada. This is not science-
based and is a problem for many companies that hope to expand 
sales into these promising growth markets.
    Finally, we support TPP as an important step forward in 
reducing trade barriers and opening new markets for the turkey 
industry and we encourage Congress to approve this agreement as 
soon as possible.
    Recently, USDA proposed a rule to amend the organic 
livestock and poultry production requirements based on 
recommendations by the National Organic Standards Board. NTF is 
concerned about the potential disruption to existing organic 
producers and their supply chains as well as the impacts this 
proposed rule may have on ensuring animal health. Before moving 
forward with the rule, the turkey industry feels that USDA 
should conduct a thorough assessment of the costs of 
compliance, increased animal health and welfare risks, and 
alternatives for existing organic growers, producers, and 
supply chains to ensure minimal impact.
    Six years ago, USDA proposed sweeping rule changes on 
farmer contracting. With the expiration of a Congressional 
prohibition on implementing these changes, USDA is once again 
threatening to fundamentally change the rules by which our 
members operate. We believe that the changes would increase 
costs, reduce productivity, and possibly lead to increased live 
production ownership by integrated poultry companies to the 
detriment of independent farmers. We support the continued 
prohibition of USDA's implementation of these proposed changes.
    A recent report by the National Academy of Sciences found 
that foods made from genetically engineered crops are as safe 
to eat as those made from conventional crops. Regarding food 
labeling, NTF actively supports two critical components of any 
GMO bill. One, that the bill maintains federal preemption for 
meat and poultry labeling, which is already regulated by USDA/
FSIS, and two, that it ensures that animals fed GE feed should 
not have to be labeled GE. We look forward to a bill that 
prevents a patchwork of state rules that create a labeling 
nightmare for food producers, but these two conditions must be 
met.
    Finally, we have a worker shortage all across this country 
and meat and poultry producers are no different in feeling the 
pain of this shortage. The turkey industry supports immigration 
reform that addresses the needs of year-round meat and poultry 
producers and processors. Our members need access to a pool of 
legal general labor immigrant workers and a visa program that 
can address these needs. However politically difficult it 
seems, we must get this job done.
    Once again, thank you for the opportunity to testify today 
on behalf of the U.S. turkey industry and I would be happy to 
answer any questions.
    [The prepared statement of Mr. Zimmerman can be found on 
page 81 in the appendix.]
    Chairman Roberts. We thank you all for taking the time to 
join us today and appreciate your sharing your expertise, your 
first-hand experience as leaders within the livestock and 
poultry sectors.
    Tracy, tell me, in your perspective, what is the best thing 
we can do to get this recent downfall in the beef sector 
addressed?
    Mr. Brunner. Well, Mr. Chairman, the current situation, as 
I have said, is one of growing supplies and we need growing 
markets, growing market access for our beef to match. Trans-
Pacific Partnership is the trade agreement of the day. As was 
said earlier, 40 percent of the world's economy. It will level 
the playing field. Currently, we are paying 11 percent higher 
tariff going in to our best customer, Japan, $300 million loss 
already, and that is only going to continue to grow until we 
pass TPP.
    Then, very briefly, the increasing regulatory burden from 
EPA, Endangered Species Act, and other government agencies.
    Chairman Roberts. I would also like to hear your 
perspective on what you have already brought up, along with 
many of the witnesses here, on the real world impacts of the 
proposed GIPSA rule. I have sent a letter to the Secretary, I 
think it has been about a month ago. Maybe the letter was too, 
a little too much for him to take, but anyway, we have not 
gotten a reply back. In the House, they have taken action on 
the GIPSA rule and I would expect the same effort when we 
consider agriculture appropriations on this side.
    But, I have heard value-added programs stand to face a lot 
of legal threat due to the premiums they pay to producers 
potentially being considered as unfair. In your business, do 
you utilize any unique or niche marketing that you think could 
be jeopardized by the implementation of the GIPSA rule, or do 
you have other examples like this that you could share?
    Mr. Brunner. Mr. Chairman, the GIPSA rule as it was written 
into the 2008 Farm Bill would have severely restricted our 
ability to participate in alternative marketing arrangements. 
As I had said earlier, research has shown that those 
alternative marketing arrangements, value-based marketing, if 
you will, has encouraged our industry and allowed individual 
producers to meet and be rewarded for consumer demand.
    As a very brief example, our family actively participates 
in marketing most of our cattle through a value-based marketing 
system. Over time, this has allowed us to not only meet 
consumer demand by developing and producing products that 
consumers want and are willing to pay for, but also receive an 
average of $50 a head premium to the cash market.
    Chairman Roberts. Dr. Hill, can you describe in a little 
more detail some of the recent outbreaks of FMD that have 
occurred in other countries, how your industry and the 
Department came to the conclusion that the best way of 
addressing an FMD outbreak here in the United States is to 
vaccinate animals rather than trying to stamp out the disease.
    Dr. Hill. Two of the most notable outbreaks have been the 
recent outbreak in Korea and then several years ago the 
outbreak that was in Great Britain. In the past, APHIS has used 
the approach of destroying animals and disposing of the 
carcasses, and if you look at the recent outbreak of high path 
AI, that was one of the big challenges, was how they got rid of 
the carcasses. So, working with APHIS, the industry has come to 
the conclusion that slaughtering these animals, killing these 
animals and burying them or burning them or however you dispose 
of them is not practical.
    We have about a million pigs on the road in the United 
States every day and about 400,000 cattle. If we have an 
outbreak of Foot and Mouth Disease, we do not think it is going 
to be an isolated, small outbreak.
    Chairman Roberts. No, it will not.
    Dr. Hill. So, the only really practical way to try to 
control the disease is to have available vaccines. Fortunately, 
this is a disease that does not affect the humans, so the meat 
is usable, and if we had a vaccine bank available, we could 
have an aggressive vaccine program and try to limit the losses 
to producers and basically live for another day.
    Chairman Roberts. I thank you for that. I had a little 
experience with that as Chairman of the Intelligence Committee 
when we were discussing agroterrorism. Not many people wanted 
to hear about that. We had an exercise exactly as you have 
described. Acting as President at that particular time--there 
was not anybody else in town--but in doing that exercise, all 
hell broke loose and all of our exports stopped. Then we faced 
the dilemma of what to do with the diseased animals. I am not 
going to go into the rest of it. It just turned into an 
absolute disaster. But one thing happened. People discovered 
that their food did not come from grocery stores and there was 
panic everywhere. It shows you just how important this research 
is.
    I am over time here. I will get back to some of the rest of 
you later.
    Senator Stabenow.
    Senator Stabenow. Well, thank you very much, Mr. Chairman, 
and welcome again. We appreciate your testimony.
    Let me start with Mr. Truex. I wonder if you might speak a 
little bit more about what you talked about in your testimony 
in terms of the organic livestock standards rule, and if you 
could share some of the additional potential costs and impacts 
beyond purchasing additional land. When we look at those 
issues, I know that the producers most impacted are those that 
are actually producing 70, 80 percent of the organic eggs, and 
do you think there will be a sufficient number of new egg 
producers transitioning into organics to meet the rising 
demand?
    Mr. Truex. Thank you. I do not. What we are concerned about 
is that, as you said earlier, a large majority of the organic 
production is relatively new. The facilities are new because of 
the great increase in organic consumption in the past few 
years. So, the producers have a significant investment in 
relatively new facilities that was totally accepted by USDA 
until this proposed rule. So, they are going to be faced with a 
lot of changes.
    The other thing that we are concerned about is this rule 
that protects the birds from rodents and birds and all the 
other things, our current practice supports the FDA Egg Safety 
Rule, and we have concerns that if you put the birds out on the 
ground, let them out where they can get access to other birds 
and rodents, it is going to be a real challenge to protect 
those birds.
    In addition to that, you have the thought that, well, if 
there is an avian influenza problem, we will just put them back 
inside, but unfortunately, as we learned in Indiana this 
spring, sometimes you do not know you have avian influenza 
until the second day and then it is too late.
    So, if you take that in, all those things and add it 
together with the problems in local permitting and building and 
cost, our members are telling me, and, of course, I am not in 
organic production. In a commercial for your state, I buy my 
organic eggs from Herbrucks----
    Senator Stabenow. Great.
    Mr. Truex. But, the problem is, to maintain the production 
you have, will be impossible with the added space. So even the 
producers that are in organic are going to have to build 
additional buildings and get additional land, and I think it is 
going to be very challenging for the others that are not 
currently doing it to get the funding and the land purchases 
and the buildings and the permits to build that. So, I believe 
we would limit the amount of organic eggs for the consumer.
    Senator Stabenow. Thank you very much.
    Dr. Hill, the Iowa Pork Producers Association is a leading 
member, I know, of the Iowa Ag Water Alliance, and working with 
the Iowa Corn Growers and Soybean Association, you are working 
to improve farm conservation and water quality through the 
locally led efforts that we have put together. I wonder if you 
could explain how the Iowa Pork Producers and Iowa Ag Water 
Alliance have worked with other partners using the new Regional 
Conservation Partnership Program to further your water quality 
goals.
    Dr. Hill. Yes. Well, thank you. The Iowa Pork Producers, of 
course, have worked closely with that group and also with the 
Department of Agriculture. There are state funds that help 
producers with some technologies, like cover crops. In my area, 
five, six years ago, we saw very few farmers using cover crops. 
Today, it has just had an exponential growth. Some of that is 
partially supported by government funds, but most of it is, I 
believe, just producers trying to do the right thing, 
especially on highly sensitive soil.
    If there is an ask, I would say the ask would be for more 
funding for research to develop new technologies, different 
technologies, maybe things that we are not doing today that we 
had not thought about. I think there is a big need to--you are 
not going to solve the water quality thing with one technology. 
Cover crops is not going to do everything we want it to do. So, 
added funding for research, I think, is very, very important, 
and we appreciate the support you have given us so far.
    Senator Stabenow. Well, thank you, and I hope we are going 
to be able to see more producers get involved in these efforts. 
I think that is very, very important.
    Finally, let me ask, for everyone on the panel, and maybe I 
will start--Dr. Hill, you are a veterinarian, I understand----
    Dr. Hill. Yes.
    Senator Stabenow. --so let me start with you, as well, 
again. The FDA has taken several steps, as we know, like the 
Veterinary Feed Directive that goes into effect in December, to 
ensure that antibiotics are used judiciously and only when 
appropriate for animal health. This is going to require more 
regular relationships between veterinarians and producers and 
this is an area I have worked a lot in, supporting efforts to 
get more people into veterinary medicine.
    When you look at this, large producers may very well have 
veterinarians on their staff. I am concerned about smaller cow-
calf producers or people in remote areas and so on. So, when we 
look at--earlier this month, the USDA announced $2.4 million 
available through a new Veterinary Services Grant Program that 
I authored in the last Farm Bill to support veterinarians in 
underserved areas, and Senator Crapo and I have just introduced 
another bill, a Veterinary Medicine Loan Repayment Program, to 
provide even more incentives.
    But, I am wondering what you think. I mean, what is 
happening here? I continue to hear concerns about not enough 
veterinarians to serve the need, and what more should we be 
doing to help with that?
    Dr. Hill. Yes. Well, first of all, our industry has fully 
supported 209 and 213 and producers have already, for the most 
part, reduced or eliminated feed additives that are of medical 
importance from the diets.
    The concern you have is a real concern, not necessarily in 
Iowa, where I am, because we have a lot of veterinarians. Your 
concern is valid in more remote areas, particularly, I think, 
in the cattle industry out West. I think any support that you 
can give for veterinarians working in these under-supply areas 
would be very, very important.
    We work closely, though, to get some of the things with the 
Feed Directives in place, like electronic rather than hand-
written things. So, there are some ways that we have, working 
with the government officials, that we expedited the process 
that will make it easier. But I think there are still some 
challenges.
    The groups that are working on this on the pork side are 
the American Association of Swine Veterinarians, the National 
Pork Board and NPPC all working together to try to help 
producers. There is a lot of education going on right now about 
what to expect and be ready for January 2017.
    Senator Stabenow. I do not know, Mr. Chairman, if I might 
just ask--Mr. Brunner.
    Mr. Brunner. Yes. I just might briefly add, our 
organization worked hand-in-hand with FDA in the formulation of 
the Veterinary Feed Directive to try and make it as workable as 
possible for the cattle and beef industry. I would also like to 
point out that our even larger concern is with the jeopardy 
that is being placed on some very important technologies that 
are classified as antibiotics but are not--have no application 
in human medicine, specifically ionophores. Ionophores are very 
important to increasing the efficiency in beef production, but 
they have been classed as antibiotics. We are working with FDA 
to get clearer interpretation on that, as well.
    Then I might summarize by saying that it seems that over 
time, an increasingly higher share or percent of veterinarians 
seem to be going into companion animal practice versus large 
animal practice and a more robust and growing animal 
agriculture should show more opportunity for veterinarians 
there, as well.
    Senator Stabenow. Thank you.
    Thank you, Mr. Chairman.
    Chairman Roberts. Senator Grassley.
    Senator Grassley. Thank you, Mr. Chairman. It is very 
important that you have a hearing like this. A big industry, 
agriculture, it is very important.
    So, I would first welcome my fellow Iowan, Howard Hill. He 
has been involved with the pork industry probably most of your 
life.
    Dr. Hill, in your testimony, you mentioned the Waters of 
the U.S. rule, that is a major concern to the pork industry. It 
is also a major concern to most every agricultural group in 
Iowa and every agricultural organization. Could you share with 
the Committee a few examples of just common practice within 
your industry that you--where there is uncertainty regarding 
the Waters of the U.S. rule.
    Dr. Hill. Thank you, Senator Grassley. We do have a lot of 
concern about it. You know, the swine industry and the cattle 
industry is highly regulated with state requirements with 
manure application. The way we interpret what the EPA is 
proposing, it would impact severely how we would be applying 
manure. It, depending on how far they go, it could impact crop 
production just because of waterways that we use, setbacks. So, 
in our opinion, it is an overreach by EPA that we would 
strongly oppose.
    Senator Grassley. Mr. Brunner, I have a question for you, 
because I have heard from numerous Iowans about what has been 
going on in the beef market, and some of these people in Iowa 
would blame industry structure. Others would blame futures 
contracts. In your testimony, you state that only five or six 
percent of cattle are owned by packers. In addition, we know 
that nationally, only about 21.3 percent of the cattle are 
traded in the cash market, according to USDA data. The percent 
of cattle traded in the cash market has dropped significantly 
since 2005, when 52 percent were traded cash. While cash traded 
cattle have dropped 30 percent since that 2005, the formula 
based sales with packers are up 23 percent.
    Do you have any concern that the drop in the amount of cash 
traded cattle has contributed to that contract being more 
volatile, since it is less liquid and represents such a small 
percentage of the overall cattle market today?
    Mr. Brunner. Well, thank you, Senator. The increased 
volatility in the futures market, we believe, comes from the 
advent of and administration of new technology, high frequency 
trading. As I said before, our organization is working directly 
with the CME Group, trying to identify possibilities of 
dampening the effects of the high frequency trading on the 
cattle market. You know, you cannot deny the application of an 
emerging technology. Technology will go on regardless and 
practices will move beyond borders. So, we have to be cognizant 
that we cannot stop progress.
    What we do believe is that we need some data. We need to 
have information from CME. We have asked them to share data and 
information with us the effects of high frequency trading and 
are working to get that information so that we can better work 
with them on what changes might need to be made in the cattle 
contract.
    Senator Grassley. Okay. That is my last question, but I 
have a minute left. Let me take a couple seconds for summation.
    In the cattle market today, only 21 percent of the market 
is traded on the cash market, even though the price discovery 
from that 21 percent is utilized for nearly 60 percent of the 
cattle that are marketed through formulas. So, to me, it seems 
like the cattle market has experienced a structural change over 
the last decade where the tail wagging the dog situation has 
developed. So, I will continue, Mr. Chairman, to watch this 
situation. I have heard a great deal from cattle producers in 
Iowa about the current structure of the beef industry.
    Thank you, Mr. Chairman. I yield.
    Chairman Roberts. I thank the Senator.
    With apologies to Senator Klobuchar, it is your time----
    Senator Klobuchar. Okay.
    Chairman Roberts. --but on WOTUS, I think everywhere we go 
in farm country, whether it be Kansas or wherever we are, the 
number one issue that comes up, Waters of the U.S. I am talking 
about dry creek beds and farm ponds where no self-respecting 
duck would ever land, and it goes on and on.
    I remember the meeting that we had with the Administrator 
of EPA, Gina McCarthy. There were two pages in this bill where 
it said normal farming operations are exempt. Then it had 
parentheses and it said, see regs, and then there were 88 pages 
of regulations, probably eight-point. You can hardly read it 
without a magnifying glass. I defy anybody in this room, any of 
you, any of us, any farm organization and any commodity group, 
any CPA, any lawyer, to define what the heck was in those regs.
    We were not successful in the Senate with what we thought 
was an answer to it. We have not given up and we will continue 
that effort. It is before the courts. But, it is the number one 
issue that has been brought up all throughout farm country. We 
are very cognizant of this and we are trying very hard to find 
an answer.
    Senator Klobuchar.
    Senator Klobuchar. Thank you very much, Mr. Chairman.
    I was proud to introduce Mr. Zimmerman earlier, and I guess 
I will address my first questions to you and Dr. Hill, and it 
is about the importance of investment in animal health 
research. We have seen some issues with our turkeys. You 
brought up the scourge, the health scourge that we had where so 
many producers were hit.
    But, Mr. Hill, you spoke about the need for more investment 
in the vaccine bank. Can you elaborate on how the industry has 
worked with APHIS to address this need and how APHIS has--and 
if APHIS has engaged at all with the Department of Homeland 
Security, as you suggested in your testimony?
    Dr. Hill. Well, I believe APHIS has engaged. Right now, the 
amount of money that is in this bank is a drop in the bucket 
compared to what is really needed.
    Dr. Roth at Iowa State University has done extensive 
studies on what would happen in an outbreak and how much 
vaccine we would need. The current bank of, not vaccine, but of 
the virus that would make the vaccine, is held at Plum Island. 
There are 23 strains that circulate in the world, and I think 
Plum Island has about 14 of those available.
    What would happen is, because we cannot have a live virus 
in the United States, there is a contract to ship that to 
Europe. They would make the vaccine there and ship it back to 
the United States. The company that has that contract says that 
they can do that in a matter of four days. But we are talking 
about basically two million doses.
    Dr. Roth's study says we would need ten million doses in 
the first two weeks and we would need an expansion of that to 
40 million doses within the first month to try to control the 
disease. This is based off of studies that say that we are not 
going to probably have a small little outbreak.
    Senator Klobuchar. Okay. All right. Thank you.
    Mr. Zimmerman, could you just bring me up to speed quickly 
on what is happening with the flocks and the repopulation of 
flocks since last year.
    Mr. Zimmerman. We are almost approaching normal now. It 
took about a year to get our breeder flocks back online, and as 
of this spring, I would say we are back to close to 100 percent 
production in the turkey industry.
    Senator Klobuchar. Yes.
    Mr. Zimmerman. I would like to just take a moment to echo 
Mr. Truex's thoughts on the organic rule. We talk about avian 
influenza and all we did with APHIS to limit the possibility of 
introduction of this virus into our barns, and here AMS brings 
up a rule to increase the outdoor requirements of our birds, 
which flies in the face of everything we have been doing with 
APHIS to try to limit the exposure of our birds to waterfowl 
and other diseases, so it is----
    Senator Klobuchar. Right, which appeared to have been one 
of the factors. I was just going to ask you about that, so 
thank you.
    One last topic here, and I think I will put some questions 
about beginning farmers, which has been important, on the 
record. But Cuba, I am carrying the bill in the Senate, along 
with Senator Flake and many others, Senator Heitkamp has worked 
on this issue, lifting the embargo and ways to lift the embargo 
to Cuba. While Cuba is by no means our biggest export market, 
it is 11 million people 90 miles off our shore. Estimates are 
five million Americans a year would visit, and my fear is that 
if we do not lift this embargo, our five million Americans are 
not only going to be sleeping in Spanish hotels, but they are 
going to be eating food from China and Venezuela and other 
places.
    Could you comment about how--the beneficial effect lifting 
the embargo could have on the industry and poultry in general, 
as well as, I know, beef and other forms of food that we want 
to send over there.
    Mr. Zimmerman. To reiterate what you said, it is a very 
close market, and any time you can open up a new market to 
our--turkey is the perfect protein and we would be happy, more 
than happy to sell that product to a new market, such as Cuba. 
So, my understanding is there needs to be some infrastructure 
put into place and building their tourist industry would help 
tremendously to get more people to that country that would, 
therefore, eat our turkey.
    Senator Klobuchar. Yes. Does anyone else want to comment on 
Cuba?
    Dr. Hill. I recently visited Cuba, and the big--after the 
2004 hurricane, the government allowed food and medical 
supplies to be exported to Cuba. The big problem we have right 
now, we can export pork, we can export beef, but the problem is 
the credit, because our government does not let----
    Senator Klobuchar. That is part of the embargo, right?
    Dr. Hill. Yes. So, that is why we are not exporting pork 
there right now.
    Senator Klobuchar. Exactly, and Senator Heitkamp has a 
targeted focus on that, on the financing, and, obviously, the 
easiest way to do it overall would be to just lift the embargo, 
but we are looking at compromises to try to get some of our 
fellow Senators on board, although there is just growing 
support. Representative Emmer, who is a Republican over in the 
House from Minnesota, is carrying one of the bills in the 
House. So, we just see a lot of growing support for this effort 
and I want to thank you.
    Thanks.
    Chairman Roberts. Dr. Hill and Senator, I just want to say 
I have been to Cuba here recently and talked to the Ag Minister 
there, whose main concern was access to our export programs, 
which I would agree that if that would work, certainly it would 
work out very well. However, they are not receiving any help 
from Russia, and I do not think that is going to start any time 
soon. On Venezuela, my question to him is, will you pay it 
back, and that was never answered. So, that is one of the 
concerns that I have. I think we ought to proceed on the best 
way possible, but that is a worry that I have.
    Senator Tillis.
    Senator Tillis. Thank you, Mr. Chairman. Thank you for 
holding this important hearing. I know that committees 
pertaining to this subject matter are few and far between and I 
think it is very important. We can talk about trade 
opportunities, we can talk about a number of other things, but 
if we do not start lifting this regulatory burden and the 
additional barriers that we have, trade expansion will be a 
moot point because our farmers will not be able to produce 
protein and export it. We are reaching a very dangerous point. 
That is something I want to focus on.
    When I travel across North Carolina, back in the day, you 
would be talking about the cost of feed, you would be talking 
about the prices of beef and pork and poultry. Now you talk 
about EPA regulations. You talk about FDA regulations. You talk 
about USDA regulations and all the impediments that are making 
it virtually impossible for farmers to continue to do what they 
want to do, which is to produce the most abundant, safe food 
supply in the world.
    If I appear to be a little bit angry about it, I am. I 
mean, we have had a few committee hearings that almost focus on 
who is in Grant's tomb. We know who is in Grant's tomb. We know 
what regulations need to be changed. We know a number of things 
we have to get focused on and Congress has to act.
    Dr. Hill, I want to start with you on the GIPSA rule. I 
would like for you, if you could, to explain it in kitchen 
table terms, so people can understand how this rule affects 
farmers and potential consumers.
    After you do that, I would like for you to tell me whether 
or not the USDA has reached out to you and your organization 
about the latest livestock marketing practices and how the 2010 
rule, which we successfully pushed back, will be updated for 
2016 modern practices.
    Also, if you have an opportunity, give me an idea of 
whether or not USDA has indicated to you or your organization 
what will be included in the rule.
    Dr. Hill. Well, thank you. Anticipating this might be a 
question, I contacted the CEO of the National Pork Producers 
Council and asked him if USDA had contacted our organization or 
the National Pork Board, and to his knowledge, we have not had 
any direct contact with USDA----
    Senator Tillis. So we have a sweeping regulation, and have 
not consulted with major organizations to understand what the 
modern rule would need to look like to not be disruptive.
    Dr. Hill. Does that surprise you?
    Senator Tillis. Not at all.
    Dr. Hill. No.
    Senator Tillis. It angers me, but it does not surprise me. 
This is just another example of why these regulators need to 
get out. They need to go and talk to farmers and understand 
that this regulation is disruptive in a time when we have so 
many other disruptive forces. They need to actually go and talk 
to the people that are producing safe food and modernizing 
their practices because they cannot continue to disrupt what 
our farmers are doing.
    We will submit another question for the record for you to 
follow up.
    Mr. Brunner and Dr. Hill, I also want to talk about biotech 
with regards to the Vermont law and the patchwork of another 20 
or 30 states that could come into effect. I'm afraid that if 
proteins are not exempted from these labeling practices the 
food companies are going to reformulate. Can you give me some 
sense of what this is going to do to the industry in terms of 
reformulation practices? You know, we had to beat down the COOL 
regulations last year. This could be another mandatory product 
labeling initiative that will place another burden on our 
farmers. If we do not act, can you give me an idea of how this 
is going to affect your business operations and future prices?
    Mr. Brunner, we will start with you.
    Mr. Brunner. I think that is a very good example. The 
mandatory country of origin labeling, failed experiment, left 
us with increased industry costs and facing $1.1 billion in 
tariffs from our two best trading partners. I believe there is 
a huge lesson to be learned there, from trying to furnish 
something to consumers that they are not willing to pay for.
    Specifically to the beef industry, it takes somewhere in 
the neighborhood of 70 to 100 bushel of corn per animal to 
finish those animals----
    Senator Tillis. 90-plus percent of the corn produced in the 
United States is a product of biotech engineering, is that 
correct?
    Mr. Brunner. Exactly, sir.
    Senator Tillis. So you are not going to reformulate since 
there is not enough non AE corn grown to feed these cows.
    Mr. Brunner. There is no way to identify preserve without 
adding very significant cost. It would--it is just commercially 
impossible.
    Senator Tillis. Dr. Hill, do you have anything to add to 
that?
    Dr. Hill. Well, I would think it would have the opposite 
effect on what I think the USDA wants. It would cause--the 
packers would be so fearful of all these regulations, they 
would increase their own production. So, we have a lot of 
programs, as Mr. Brunner pointed out, that add value for the 
producer, antibiotic-free, ractopamine-free, housing, all 
different kinds of, like, genetics that we get premiums for, 
and if the GIPSA was--if they implemented what was in 2010, 
that would be a huge problem for those kind of programs and 
would be detrimental to the profitability of not only large 
producers, but small producers, because small producers are the 
ones that really take advantage of some of these niche markets.
    Senator Tillis. Well, thank you.
    Mr. Zimmerman, I am going to submit for the record some 
questions on HPAI for you. I know that my state's Agriculture 
Commissioner, Steve Troxler, sent officials to Minnesota, to 
learn from practices that were established up there during the 
outbreak. I have got a couple of questions that I will follow 
up on, but I want to personally thank you for your leadership 
and dedication in this area.
    Mr. Chairman, if I appear to be a little bit frustrated, it 
is because I think that time is running out. We have had enough 
discussions and we know what the issues are. We have got to 
solve the biotech labeling issue in the near future. We have 
got to beat back GIPSA again. All of these disruptive forces 
that do not add value, do not do one thing to accomplish any 
progress on food safety. Instead, it puts another burden on our 
farmers that they cannot possibly afford to have lopped on 
them. Thank you.
    Chairman Roberts. Senator Tillis, I have not noticed any 
change in your demeanor at all.
    [Laughter.]
    Chairman Roberts. Senator Stabenow has a brief question.
    Senator Stabenow. Mr. Chairman, I want to follow up on 
this----
    Chairman Roberts. Senator Heitkamp, you are next.
    Senator Stabenow. --if my colleagues would indulge me, 
because, obviously, the issue was raised and biotech is a very 
difficult issue for all of us who support biotechnology and 
production agriculture, and at the same time, through no 
creation of ours, there is a growing demand and actions coming 
from consumers.
    So, I just think it is important as we are wrestling with 
this to be clear, and Mr. Brunner, maybe you can tell us how 
you are affected by the Vermont law.
    Mr. Brunner. You know, I would not be expert on the Vermont 
law. We have not spent a lot of time studying it. I do know 
very----
    Senator Stabenow. It is my understanding you are exempt. 
Meat is exempt, correct?
    Mr. Brunner. That would be a very important aspect of any 
efforts into genetic labeling. You know, as I----
    Senator Stabenow. But I just think it is important to know 
that you are exempt, so there is a different kind of urgency 
around this because you guys are exempt from Vermont.
    Mr. Brunner. Well, we might also be concerned about what 
might follow, and the press----
    Senator Stabenow. No, I understand. I just think this 
complicates the issue for us as we are looking.
    But, I also wanted to just ask anyone who would want to 
respond, I think there is a general exemption around feed that 
is very important, the feed exemption, but the challenge that 
is being debated is from a consumer standpoint. If we have a 
can of soup that is vegetable soup or a can of soup with beef 
broth and meat in it, one would be labeled and one would not 
be, which I think is probably more of a challenge if we were 
following the Vermont labeling law, which from a consumer's 
standpoint or from a grocery manufacturer's standpoint is a 
different issue, when you are having to go through and sort of 
figure that out with two cans of soup and one is exempt and one 
is not exempt.
    So, I wonder if anybody would want to speak to how we deal 
with that or why that is a good idea.
    Mr. Brunner. Senator, very briefly, could not the voluntary 
labeling program that we already have serve that need and find 
out if there is a willingness for a significant enough portion 
of the market to pay for the cost?
    Senator Stabenow. Well, Mr. Chairman, I am not going to go 
on and debate this more at this point in terms of voluntary and 
mandatory. I think what we are trying to do is how to figure 
out at this point what is coming at us, which is something that 
is a requirement, and how do we put together a balanced 
coalition that is going to allow us to get something done in a 
reasonable way that addresses very different requests and very, 
very different needs, and this is a tough one. So, just wanted 
to get your perspective on this one issue that has been an 
issue of concern and trying to work through. Thank you.
    Mr. Goggins. Senator, if I may add----
    Senator Stabenow. Yes, sir.
    Mr. Goggins. I think, speaking in that regard, I think we 
should--I mean, something needs to be done to get some 
uniformity----
    Senator Stabenow. I agree.
    Mr. Goggins. --and less confusion for the consumer.
    I think as far as the beef goes, on probably a different 
note here, but I do think we have to remember that these cattle 
that do eat GMO feed are not genetically modified themselves by 
eating it.
    Senator Stabenow. I agree, and I think there is general 
agreement on that, so thank you.
    Chairman Roberts. Well, Tracy and Mr. Goggins, thank you so 
much for your commentary. It is exactly what I think is 
appropriate. If any of you are into wine production, maple 
syrup, ice cream, dairy, meat, you do not have to worry about 
it. So, that is an example of what happened in Vermont, which 
means every state could exempt their home products and have 
about 30 or 40 labels and the entire food industry would 
collapse. We are trying our very best to reach an accommodation 
and the Committee has already spoken to this and we have 
already had an attempt on the floor of the Senate. The House 
has already spoken. So, we hope that we can find an answer just 
as soon as we possibly can. Tempus is fugiting. Time is a 
factor. So, thank you for your commentary.
    Finally, Senator Heitkamp.
    [Laughter.]
    Senator Heitkamp. Thank you, Mr. Chairman and Ranking 
Member. It has been an interesting dialogue.
    I want to make maybe a couple points before I start getting 
into high frequency trading, and one of the reasons why I 
particularly was interested in this hearing, which is the 
cattle market.
    First off, a lot of the challenge here is your relationship 
to your consumers, whether we are talking about new regulations 
on organics, whether we are talking about antibiotic 
regulations, we have got to have more informed consumers and 
that has been one of our challenges, which is try and maintain 
a readily available, high quality food source in this country 
that people accept as high quality and accept as available to 
them.
    You know, I would challenge you that as we are dealing with 
these challenges, you need to deal directly with consumer 
challenges, because even if we eliminate the regulation, I have 
a feeling that consumers are going to continue to demand a 
label that then becomes voluntary and takes us to a place where 
we erode the availability of high quality food. I think there 
are some real challenges in all of this.
    But where everybody points a finger at government, I would 
suggest that this movement did not start at USDA. It did not 
start in this committee. This movement started as a consumer 
information movement. If your only response to this is, ``you 
do not need to know,'' I will tell you, as producers, you will 
lose. You know, if we said that to our constituents, well, you 
do not really need to know what our position is on that, we 
would probably lose, too.
    These are challenges. I have supported the Chairman and I 
have supported trying to get to some kind of preemption for a 
label. But, I remain frustrated that we have not been able to 
really drill down and do a better job involving consumers in 
this discussion.
    I also, Mr. Brunner, would tell you I held a hearing, or a 
meeting last week, and one of the answers to the concerns about 
the cattle market was reestablishing COOL. So, we know that is 
not a unanimous opinion within the cattle industry.
    But, my main focus, I hope, will be on how do we get trust 
back into the cattle market. I know you have just been--your 
organization, Mr. Brunner, has done yeoman's work with Chicago 
Mercantile. They are trying some things right now that they 
think may help kind of correct the market. I think, Mr. 
Goggins, you know what this has cost cattlemen in my country 
and in Montana. You understand what these fluctuations have 
meant.
    What else should we be doing with the cattle markets to 
bring people back into the markets and stop what I think is 
speculation and start getting to a real cash price that 
reflects fundamentals? I am going to start with you, Mr. 
Brunner.
    Mr. Brunner. Well, as I said in my opening comments, we are 
in the situation of growing cattle numbers, growing beef 
supplies, and not access, not competitive market access to the 
markets that we need. Trans-Pacific Partnership would increase 
our ability to compete on a competitive basis with Australia 
into Japan. We have already lost $300 million into that market 
and the disparity will continue to grow, because Japan and 
Australia have a bilateral agreement that grants them 
preferential treatment. So----
    Senator Heitkamp. I start every one of my discussions about 
trade saying 95 percent of all potential consumers in the world 
do not live in this country.
    Mr. Brunner. I believe that is very accurate.
    Senator Heitkamp. If you think we can continue to be a 
country that is a dominant economic power without accessing 
markets, we are wrong. If you do not think we need to lower 
trade barriers, you are wrong, especially for the products that 
we grow in North Dakota.
    Mr. Goggins, can you just offer some insights on the 
current problems that we have in the cattle market and what we 
should be doing to fix them.
    Mr. Goggins. I think there are quite a few things that are 
contributing to what we have gone through. I mean, I think the 
strength of the U.S. dollar right now has prohibited our 
ability to export our product, not just beef, but commodities 
in general. I think there is--a huge problem has been the 
volatility in the Futures Board market. I just----
    Senator Heitkamp. So, how do we fix that?
    Mr. Goggins. I am not really sure. I think we do things 
like NCBA and people within the industry are doing as far as 
working with CME and coming up with some way to slow the market 
down.
    Senator Heitkamp. So, would you not agree that it is a 
problem when--I think the number that was used was about a 
fourth of all cattle actually move through the market this way 
on a cash basis but yet establishes the price, and that is a--
when you have a thin market, there is always room for mischief 
in a thin market when you do not have enough participation. So 
my question is, how do we expand participation?
    Mr. Goggins. I think there are several things going on. 
Today, right now when we are having this hearing, they are 
having their first Internet sale. There are feedyards putting a 
certain percent of their show list on the sale today and they 
will be sold across that video auction, trying to get a truer, 
more immediate, more transparent way of seeing what these 
cattle are actually worth. Hopefully, we can get more cattle 
sold on a cash basis, because it is--the cash basis then 
forwards on to the Futures Bond and that is how we are supposed 
to make our market on the Futures Board.
    Right now, there is--the Futures Board just does not follow 
the fundamentals of what cash is bringing. It is really 
becoming a serious problem, I think, especially from a risk 
management side, because I think there has been--I do not think 
any of us know the amount of equity that is going to be lost 
and has been lost, but it is going to be unbelievable----
    Senator Heitkamp. Yes. When----
    Mr. Goggins. --what we see in this deal. These bankers, 
when I go in or a young person goes in and wants to get a loan, 
these bankers, the lenders are definitely going to make them 
get a hedge position on that Board. So we have to make it a 
more stable market.
    Senator Heitkamp. Well, I do not think there is any doubt 
about it, or people are going to move out of the cattle 
business, which is just going to compound this.
    Mr. Brunner, I will give you the last comment, but I do 
want to applaud your work and your Association's work with the 
market. You suggested in the beginning of your testimony that 
you were not interested in any changes. You guys are going to 
watch it. But I want you to know that we are watching it very 
closely. I associate myself with Senator Grassley's remarks. We 
want to know what more we can do to push for a fair and open 
market so that we do not lose equity and that we do not lose 
producers.
    This is a tough business. Anyone who thinks it is easy 
being a rancher in North Dakota, you are wrong. I mean, when 
you are pulling a calf at 2:00 in the morning and there is a 
snowstorm on the way, that is not an easy life, but it is a 
life they want to continue living. But if they cannot make a 
living, that is bad for all consumers, it is bad for America, 
so----
    Mr. Brunner. Senator, very quickly, I think one thing that 
we are discovering is high frequency trading is utilized 
throughout all financial markets and the CFTC has told us that 
they have been observing it, as well. I think in many other 
markets, it gets covered up, because cattle are a somewhat 
unique commodity. We are a perishable commodity. We cannot put 
the grain back in the bin and wait until the market stabilizes.
    I would also like to give due respect to Senator Grassley's 
figures, or information that he supplied. I would not directly 
contest any of those, but those are symptoms of an evolving 
industry that is trying to maintain and increase its 
competitiveness in the global economy. As we work to try and 
achieve efficiencies within our industry, relationships develop 
as we coordinate up and down the value chain. So those 
decreasing number of animals trading on a cash market or spot 
market is bound to diminish.
    But, it is an industry question. We are very concerned 
about it. I have been thinking about this, worrying about it. 
It has been going on for 20 years and we are going to continue 
to work on it and we will solve it.
    Chairman Roberts. Senator Hoeven.
    Senator Hoeven. Thank you, Mr. Chairman. I appreciate our 
witnesses being here today.
    First question, just--well, actually, the first one is for 
Mr. Brunner and Mr. Goggins. What is the number one thing we 
can do to help our cattle producers right now with low prices? 
What is the number one thing we can do to help them?
    Mr. Goggins. I think the number one thing would be, I 
really think, passing of the TPP will open up our trade with 
Japan and lower our tariffs. I really think that would be a 
huge thing.
    I also think helping us with stabilizing this market as far 
as the Futures Board would--some way or another, getting it to 
where it is a more viable risk management tool, I think would 
be huge for this industry and for the way we can go forward.
    Senator Hoeven. Meaning what when you say stabilize the 
futures market? That would mean doing what?
    Mr. Goggins. Well, I think maybe getting the limit--right 
now, the feeder cattle limits are four-and-a-half, and I 
personally, and a lot of us within the industry that trade it 
every day, believe that limit does not fit the industry. The 
algorithmic trading along with that, it causes huge violent 
moves and it--I mean, when feeder cattle move $13 in one week 
one way or the other, it might go $15 one way or the other, 
there is no way these feeder cattle move that much on a cash 
basis consistently the way it has done the last year.
    Senator Hoeven. Mr. Brunner.
    Mr. Brunner. What Mr. Goggins has proposed might help and 
it might not. Our organization believes that it would be 
fruitless and maybe foolish to try something without really 
studying what effect it might have, and that is why we need the 
data. We need data from the CME on what is going on in the 
futures market, what the high frequency trading is really doing 
to the market, how prevalent it is, and how it is moving the 
market on these large move days.
    So, in direct answer to your first question, though, I 
agree with Mr. Goggins. The one thing that you could do is help 
us pass TPP. We need expanded markets for the expanding 
supplies that we have in our industry.
    Senator Hoeven. So, my next question is for whoever wants 
to take a swing at it, but whether it is cattle or poultry or 
other livestock, we are seeing growing exports, but at the same 
time, we are seeing prices continuing to go down. So we have 
low inputs, so you have got low feed cost. You have got growing 
export. How come our price continues to go down? We are down 
about 15 percent, I think, since the start of 2015. But think 
about it. You have got cheap feed and you have got growing 
exports. Why is the price going down?
    Mr. Brunner. We do not have----
    Senator Hoeven. It is not just cattle now, you know.
    Mr. Brunner. I think I said earlier, we had ten pounds of 
total protein available to the domestic consumer last year than 
we had the year before, and this year it will be even an 
increase. We have growing supplies of all proteins, pork, 
poultry, as well as beef, and our export markets are not 
growing fast enough to take those up. Part of the reason, the 
value of the dollar has been cited. I cannot help but go back 
to TPP. We are on unlevel playing field. Australia has----
    Senator Hoeven. I think the value of the dollar is the 
biggest problem in terms of our--all exports, certainly ag 
exports, but all exports. The dollar being so strong is really 
tough on us.
    Mr. Goggins. Senator, may I add, according to the USDA, 
through 2015, as far as beef production goes, we had a 500 
million pound increase over 2015 in our imports. We had a 250 
million pound decrease in our exports. That is 750 million more 
pounds that is being put on the domestic----
    Senator Hoeven. So you are saying import volume is part of 
this price depression, import volume.
    Mr. Goggins. I really do.
    Senator Hoeven. Well, that is important.
    Mr. Goggins. I think that is about a three percent 
increase. So, it takes, according to the USDA, it takes--for 
every one percent sway one way or another in supply, it affects 
your price one-and-a-half to two percent. So, I really think 
that extra 750 million pounds of beef product that we had on 
the domestic, it is our trade deficit.
    Senator Hoeven. Let me--one final question. I am about out 
of time. WOTUS, Waters of the U.S., how does it affect your 
producers? I would like all of you to take a swing at that one.
    Mr. Brunner. It affects our producers' ability to enjoy 
their private property rights in the most efficient, economical 
manner for their operations. It is a massive federal government 
overreach. It goes far beyond clean water and navigable waters 
of the United States. It is an intrusion into private property 
rights.
    Mr. Truex. I agree with that. In our industry, it limits 
the amount of land we can apply manure on. It has all kinds of 
restrictions. There is a lot of overreaching burden that goes 
with the current regulations.
    Dr. Hill. Yes. The only thing I would add is that I think 
it will be a boom for environmental lawyers because we will be 
sued until who knows what happens.
    Senator Hoeven. Mr. Goggins.
    Mr. Goggins. It affects every sector of agriculture, the 
rule, and it is basically--it touches every state, every corner 
of this country, and I think it takes--it will take due 
consideration and time for the review. I mean, the voluntary 
conservation has been a really good success. I think the best 
stewards of the land are those of us on the land. I think it 
really affects our property rights, as well.
    Senator Hoeven. Mr. Zimmerman.
    Mr. Zimmerman. I would concur. Manure management plans will 
be much more difficult and still the unknowns. We really do not 
know how it is going to affect us. There is too much 
uncertainty there.
    Senator Hoeven. Thank you.
    Chairman Roberts. Senator Donnelly.
    Senator Donnelly. Thank you, Mr. Chairman.
    I would like to thank Mr. Truex for being here. He is a 
leader in Indiana agriculture. He is someone we are very, very 
proud of, and I will tell you, Mr. Truex, since you told the 
Ranking Member, Senator Stabenow, that you buy your organic 
eggs from Michigan, she has become a big fan of yours, as well.
    [Laughter.]
    Senator Stabenow. That is right.
    Senator Donnelly. I know you have had your hands full with 
the avian flu outbreak. I am very, very proud of how we 
responded in Indiana, how we have worked on this. Can you tell 
us some of the things that you think that were done right in 
responding to that.
    Mr. Truex. Yes. I think government, USDA, and the industry 
learned a lot of lessons from the Iowa situation, and as we 
were preparing for this, we had our state vet, Dr. Marsh, speak 
to the entire UEP organization in October of last year about 
how Indiana is prepared for this in our state. Then, 
unfortunately, as this spring, Indiana had its own high path AI 
outbreak in Southern Indiana, and I think it is a testimony to 
the lessons that USDA learned, that the states learned, that we 
were able to control that outbreak rapidly. It was put away.
    I think the lessons learned are there is a way to control 
it, and I think as Mr. Zimmerman said, the key is instant 
response. You have got to have a plan. You have got to know 
what you are doing. You have got to have it all prepared so you 
do not get the different agencies fighting with each other over 
what you can do in a state, what you can do in a county, and 
what needs to be done.
    So, I think the industry and USDA is much more prepared to 
deal with any future outbreaks and keep it contained in a much 
smaller area with fewer bird numbers.
    Senator Donnelly. So, do you think, and it sounds like this 
is one of the keys, that it is not the moment that you learn 
about the fact that avian flu has arrived as it is, in effect, 
almost preparing for the worst, hoping for the best, but having 
every single thing you can think of lined out and ready to go.
    Mr. Truex. Absolutely. Our state Poultry Association and 
our state vets' office have worked together very, very hard and 
they have really put the effort in and we are prepared in the 
State of Indiana too, when we find we have a problem, we will 
deal with it quickly, rapidly, and control it.
    Senator Donnelly. Let me ask you just to pick up on some of 
the other questions that have come before us so far. I was just 
wondering the difficulties that you will face and the industry 
will face logistically if we cannot find a federal solution to 
the labeling of GE materials as we move forward, if we are not 
able to get that done.
    Mr. Truex. Well, our industry is very concerned, and as the 
Ranking Member pointed out, thankfully, meat, milk, and eggs 
are exempt at this point in time and we hope it continues that 
way. A patchwork of different states would be a nightmare when 
it comes to--we sell our product in probably 40 or 50 different 
states, along with export. So, a standard has to be set. You 
cannot label your cartons on 30 or 40 different standards. So, 
a federal level that overrides all state regulations has to 
happen.
    Senator Donnelly. Thank you.
    Thank you, Mr. Chairman.
    Chairman Roberts. Senator Thune.
    Senator Thune. Thank you, Mr. Chairman.
    Thank you to the panel for being with us today. I 
appreciate your testimony and your responses to all the 
questions, and I am sure a lot of these issues have been 
probably beat to death by now, but I did want to just follow up 
a little bit on the labeling issue.
    As you know, and I am sure it has been discussed that the 
Senate is considering a path forward on biotech labeling, and 
the question I guess I have is does anyone on this panel 
believe that animal products should be included in mandatory 
labeling of biotech products, or should meat, dairy, and other 
animal products all be exempt from biotech labeling?
    Let me just say that I know that there has been this 
argument made that consumers really want meat to have mandatory 
biotech labeling, but I guess my question is, is that what they 
really want or is that what they are being told they want by 
labeling supporters, because that strikes me as that is not 
something that I certainly hear from my constituents out there.
    But, tell me what you all think about whether or not the 
labeling issue that we are having the discussion about here 
ought to apply to meat, dairy, and other animal products, or 
whether they ought to be exempt.
    Mr. Brunner. Well, very quickly, our organization does 
significant consumer market research and the consumers that we 
talk to, they are not telling us that, either.
    Senator Thune. Okay. Anybody else?
    Mr. Truex. We would just like to say that the science of 
the animals that eat genetically modified grains, there is no 
scientific evidence that passes through the meat or the 
product, the egg or the milk. So, we would like to stand behind 
that very firmly.
    Senator Thune. All right.
    Dr. Hill. Yes, and that is a view that the Europeans take, 
too. So, I think that tells us a lot right there----
    Senator Thune. Yes.
    Dr. Hill. --because they tend to be more reactive on these 
issues.
    The other thing is that, the more and more sorting that we 
ask the packing industry to do, the less efficient they become, 
and there is just so much sorting that they can do. If we had 
non-GE and GE meat, it would be a nightmare for them to try to 
track that product through the whole meat chain. That would be 
a disaster.
    Senator Thune. Well, it strikes me that, yes, I guess that 
pretty much answers the question. When we are getting to the 
left of Europe on some of these issues, we are probably out of 
the mainstream when it comes to this country.
    One of the things when I visit with cattle producers in 
South Dakota, one concern I hear quite often is regarding the 
consolidation across the beef industry. So, I guess I would 
direct this to Mr. Goggins. What role does consolidation play 
in the competition in the markets, and what trends and producer 
marketing strategies are you seeing in response to 
consolidation?
    Mr. Goggins. Well, I think as far as our organization, I 
mean, with our auction markets, with our video company, we are 
promoting the highest--and actually in this part of the world, 
the United States, we raise the highest quality, as good of 
beef cattle as there is in the world, and we are putting a 
pretty good show list up. I mean, I grew up in the auction 
business, not only the ranching business, but went to the 
stockyards every morning and kind of grew up there, and as my 
father always said, competition is good. We need competition in 
the marketplace. We promote it every day and we do the best we 
can to get competition and buyers in the seats every day. We 
work at it. I think we need to move that up the chain as we go, 
at the fed cattle level, as well. But, we do everything in our 
power to do that.
    Senator Thune. On a scale of one to ten, regulatory burden 
of government. I know it has all been talked about probably at 
some length today. In terms of the issues that you have to deal 
with or the issues that concern you with regard to the future 
of the livestock industry in this country, where would that 
rank?
    Mr. Goggins. Twelve.
    [Laughter.]
    Senator Thune. Okay.
    Mr. Brunner. Ten.
    Mr. Goggins. It is high. Since you brought that regulatory 
up, in the feeder cattle business, especially in your part of 
the world, South Dakota, Montana, you get especially our way 
West and South, you get further away from the corn belt. You 
get in the East Coast, Florida, where a lot of feeder cattle 
are, I think we need to be real conscious of--we have had the 
livestock haulers exempt, I mean, the movement of these--the 
interstate movement of these feeder cattle, livestock in 
general. If you load a set of cattle in Western Montana and go 
clear to Kansas with them, it takes more than ten hours----
    Senator Thune. Right.
    Mr. Goggins. --and I think if you get those cattle loaded 
up, you have got to unload them somewhere ten hours down the 
road and then let them stand in a dry old lot, not taken care 
of very well for another ten hours, load them back up. I mean, 
we always base our death loss as far as the feeder cattle that 
we buy from one to two percent. Now, we start unloading these 
things, because the trucker has got to have ten hours of sleep, 
I think it becomes a real animal welfare issue. I think these 
cattle are--instead of a one or two percent death loss, we are 
going to be looking at ten, 20, 30 percent death loss on these 
cattle, which, in turn, it is going to affect the value of 
these feeder cattle in those areas that are quite a way from 
the feed, and I think it is something that we really need to 
address.
    Senator Thune. You referenced, I think, in your testimony, 
the commercial livestock hauling, and I want to point out, 
because I serve as Chairman of the Commerce, Science, and 
Transportation Committee, that we were involved in leading the 
successful effort to make hours of service exemption from rest 
breaks permanent for those who are carrying livestock and bees 
and it--the provision takes into account the health of the 
livestock, which--and the practical reality that these animals 
should not be left on the roadside.
    So, the exemption was granted, I think, on multiple 
occasions by the FMCSA, the trucking agency, and we made it 
permanent to prevent the need for repeated consideration of 
these same facts. So, there is--it is in Section 5206 of the 
FAST Act and hopefully that will provide some relief on that 
front.
    But, I know that in terms of regulations, and I am sure it 
has been covered, as I said, at length, Mr. Chairman, but I 
just have to say that when you are trying to make a living in 
production agriculture these days and the government is 
constantly your biggest enemy, something is wrong. We just see 
it on every front, and I hope that changes. Obviously, we are 
going to do everything we can at this branch of the government 
to keep that from becoming the biggest liability to making a 
living in agriculture. But we could certainly use some help 
from a lot of the agencies who evidently have way too much time 
on their hands around here, because it just seems like every 
day, there is something new coming out that makes it more 
expensive and more difficult to do what you do and to help us 
feed the world. So, that has got to change.
    Thank you. Thank you, Mr. Chairman.
    Chairman Roberts. Senator Ernst.
    Senator Ernst. Thank you, Mr. Chairman.
    I would like to thank all of our witnesses today for being 
here, especially Dr. Hill. Thank you for coming out from Iowa. 
It is really good to see you again, so thank you. We have got a 
lot of important topics that have been discussed today and I 
want to thank all of you for your input.
    I am glad that you have highlighted the challenges that 
your sectors are facing right now, whether it is from market 
volatility, burdensome agency regulations--jeepers, how many 
times have we talked about WOTUS--foreign animal diseases, 
international trade barriers--I am going to come back to that--
or labeling requirements that would disparage our products. Let 
us talk a little bit about--I know everybody has wanted to talk 
about it, TPP.
    About a year ago, I was in Vietnam and Singapore and the 
topic of discussion there, of course--and this was a defense 
conference that I had traveled to in that region--but they 
wanted to talk about TPP, because a number of those world 
leaders, the military leaders, they really wanted to have the 
United States as a primary trade partner, and the push-back was 
that if you are not our primary trade partner, there is another 
country in the region that does want to be our trade partner, 
and that, of course, is China.
    So, I would like to hear your thoughts on that in relation 
to if we are not stepping up to the plate, what are the other 
players out there that might fill in the gaps if the United 
States is not involved in trade with these nations, or expanded 
trade with these nations. Mr. Brunner, if you could start, 
please.
    Mr. Brunner. Well, China has their own 16-nation potential 
trade agreement that they are actively promoting in the advent 
that the United States does not go forward with TPP. As has 
been said, TPP would include 40 percent of the world's 
economies. It is also based on ethical standards and sanitary 
standards that are dictated by the United States and I do not 
believe we want to abdicate our role in the global community 
and the Pacific Rim to China. You know, it has been pointed out 
to me, and I firmly agree, that we do not maintain world peace 
and competitive position in the world economy by shirking our 
responsibility. So, we firmly believe TPP now.
    Senator Ernst. Very good.
    Mr. Truex.
    Mr. Truex. I really do not have a comment on that because 
of our industry does not really play into that so much. Thank 
you.
    Senator Ernst. Wonderful.
    Dr. Hill, of course.
    Dr. Hill. Well, I would agree with what Mr. Brunner said. 
You know, it is obviously important from an economic 
standpoint, but I think it is equally important from a 
geopolitical standpoint. Countries that work together, trade 
together, are going to be able to sit down and talk and work 
out problems a lot better than if they are not trading. So, I 
think it--I do not know if you could say the economic impact or 
the geopolitical impact of TPP is more important, one than the 
other, but they are both very, very important, and----
    Senator Ernst. Very good.
    Dr. Hill. --we would encourage the Senate to work hard to 
get it passed as soon as possible.
    Senator Ernst. Absolutely.
    Mr. Goggins.
    Mr. Goggins. Yes. I think it is a very positive thing, if 
we do get it passed, for the U.S. cattle producers. I mean, I 
think it opens up the export market back to Japan and reduces 
our tariffs. I do think we need to--there need to be measures 
in place, though, to address the cyclical and the perishable 
nature of the cattle and beef in addition to protections 
against dumping.
    Senator Ernst. Very good.
    Mr. Zimmerman.
    Mr. Zimmerman. Well, I have a specific trade barrier 
example that we are dealing with currently and it involves 
Canada. A lot of our poultry, baby turkeys, come from Canada. 
They are hatched in Canada, but then they cross the border and 
are raised and processed in the United States. Currently, that 
poultry, when it comes in the United States, can no longer be 
exported to South Africa. But if that poult, baby turkey, stays 
in Canada and is raised and processed in Canada, it can be 
exported to South Africa.
    So, technically, it bans all U.S. turkey from the South 
African market and it is just an incredibly silly rule, and we 
mix our birds. One of my flocks may be ten percent Canadian and 
90 percent U.S. hatched, but they are all no longer eligible 
for South African use. So, it is an incredibly silly trade 
barrier that we would really appreciate your help in revisiting 
and removing.
    Senator Ernst. Absolutely. Thank you.
    I see that my time is expiring, but I do appreciate it. I 
think we do need to look very carefully at the TPP, not only as 
trade, but also as a way to leverage cooperation with other 
nations out there. So thank you very much, Mr. Chairman.
    Chairman Roberts. Thank you, Senator Tillis for another 
round.
    Senator Tillis. I am not going to ask any questions, just 
maybe a comment, and Mr. Chairman, I hope, without objection, I 
can submit my opening statement for the record.
    [The prepared statement of Senator Tillis can be found on 
page 49 in the appendix.]
    Chairman Roberts. Without objection.
    Senator Tillis. Thank you. I just want to go back and maybe 
lower the temperature a little bit, but maybe focus on the one 
theme that I hope comes out of this meeting.
    First, the TPP and trade with Europe and Africa is 
absolutely essential to our future in farming, and I completely 
get that. I voted for TPA. I hope that we can get the TPP to a 
point where we get support and I will be working to that end.
    Mr. Zimmerman, I will be submitting a question that touches 
on a comment or an answer that you gave to Senator Ernst on the 
sort of barriers to entry with South Africa. I think we have 
another issue with Korea, where the HPAI seems to be used as a 
pretext for them putting up protectionist measures. We will be 
submitting a question for you so that we can better educate our 
staff and other members on those challenges.
    But, I want to go back again to the biotech labeling and 
something Mr. Brunner said. Mr. Brunner, you said you have not 
had a chance to study the Vermont law in particular. It does 
turn out that in the Vermont law, beef, poultry, milk and eggs 
have been exempted. As a matter of fact, a piece of pizza that 
has meat on it is exempted, but its vegetarian equivalent is 
subjected to the rule.
    This is the sort of mentality that is being used by the 
states to create a patchwork of regulations that will be 
absolutely burdensome on food companies if Congress does not 
act. Back to the point that Senator Heitkamp made, regarding 
labeling but doing it in a consistent, high value way for the 
consumer, but with a low impact to the producer. That can only 
be done if Congress does its job and acts on preemption.
    On GIPSA, we need to work very hard to see if we can 
accomplish this Congress what was accomplished in 2010. Either 
get the regulations to a point that you think are fair and can 
be dealt with or do our very best to try and disallow them so 
that we are not adding just another burden on an industry that 
really cannot afford more burdens.
    Thank you, Mr. Chairman.
    Chairman Roberts. I thank the Senator.
    I think both the distinguished Ranking Member and myself 
have additional comments we would like to make with regards to 
the agriculture biotechnology situation. It is called ABT. It 
is not called a GMO.
    We had a hearing with the USDA. We had a hearing with FDA 
and the EPA, all three. I raised the question, is our food 
safe? Are GMOs safe? The answer was yes, yes, yes. This is not 
a human health problem. This is not a safety problem. This is a 
marketing challenge, and you all know what I am talking about. 
But, it has been very difficult to get this pulled together. We 
had over 800 organizations come to this committee and ask us to 
settle this.
    We passed a bill 14 to six in this committee. 
Unfortunately, we were not able to go to the bill. That takes 
60 votes in the Senate and that has posed--our Founding Fathers 
wanted us to go a little slow as opposed to those folks who 
were closest to the people, the House of Representatives. I 
understand that, and that is not going to change, I hope.
    So, we have 60 votes to overcome to at least go to the 
bill, which was the second bill that we introduced that we 
tried to draw some folks over. The distinguished Ranking Member 
and I have been meeting overtime on this issue. So, I want you 
to know that this committee wants to get an answer.
    I also want you to know that every person on this 
committee, I do not know of any exception, are standing behind 
efforts to get TPP done. Tough atmosphere. Every trade bill 
that I have ever been associated with has been over-criticized 
and it has been oversold, and it takes hard work.
    Senator Tillis and I were in Australia, Indonesia, 
Singapore, Japan, did not have time to get to South Korea 
before we could get back. That was the number one issue. By the 
way, the second issue was do you have our back, but that is 
another whole discussion.
    So, with regards to TPP, and now we call it agriculture 
biotechnology, or just biotech, we are determined to get an 
answer and we will keep working on it.
    I want to thank you all for sharing your experiences 
related to the opportunities and challenges that your 
industries face. You are all leaders of the livestock and 
poultry sectors and your testimony today has been invaluable to 
this committee.
    To my fellow members, we ask that any additional questions 
you may have for the record be submitted to the Committee Clerk 
five business days from today, or 5:00 p.m. next Friday, June 
3.
    This concludes our hearing----
    Senator Stabenow. Could I say something?
    Chairman Roberts. --except for the comments by the 
distinguished Ranking Member.
    Senator Stabenow. Well, thank you, Mr. Chairman.
    I just want to say thank you to everyone again and to the 
Chairman for the hearing and just indicate we are working very 
hard on a difficult issue that both Democrats and Republicans 
voted no on when it came to the floor. There was bipartisan 
support and bipartisan opposition. Because of the nature of the 
Senate, we are looking for that common ground and magic number 
to be able to get to 60, and I remain, as I have been saying 
now for I do not know how many years now, that from my 
perspective, this is about making sure that we stop a 50-state 
patchwork. We know biotechnology is safe. Thirdly, we have 
consumers that are moving at the state level and are asking for 
transparency and we have to find that, as well.
    This is not an easy issue, because, frankly, we have people 
coming from very different worlds. Depending on who you talk 
to, it is like a totally different issue, which is one of the 
challenges as we move through all of this. But in the interests 
of agriculture in our country and production agriculture, we 
need to find a way to come together and have common ground and, 
frankly, be willing to compromise in order to be able to get 
there, and that is what the Chairman and I are working on and 
we need everybody here being willing to do that, as well. 
Otherwise, it is going to be very difficult to get there.
    We are willing to do that and we are working hard and we 
are being asked to basically step up and take on the consumers 
on behalf of the industries involved and wrestle back and forth 
with this. I am hopeful that part of what happens long term is 
that we have an education effort I have been suggesting to 
folks for years, to be able to truly talk about what 
biotechnology is so that people understand that. Ignoring that 
discussion, or not having it in a way that addresses the world 
we live in, in terms of communicating with people, it is just 
not going to work.
    We have to engage people so we understand the positive 
side, what has happened in terms of moving agriculture forward 
and the positive benefits of biotechnology in that process. I 
would just encourage everybody to make a commitment to tell 
that story, because if that story is not told, this is going to 
be very difficult going forward, I think. So, thanks.
    Chairman Roberts. I thank the Senator for her comment. I 
would offer only one observation. The best, most effective form 
of communication from consumers is their pocketbook, perhaps 
not government mandates.
    Senator Stabenow. Sure.
    Chairman Roberts. That concludes our hearing. The Committee 
is adjourned.
    [Whereupon, at 12:10 p.m., the Committee was adjourned.]

      
=======================================================================


                            A P P E N D I X

                              MAY 26, 2016


      
=======================================================================

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

      
=======================================================================


                   DOCUMENTS SUBMITTED FOR THE RECORD

                              MAY 26, 2016


      
=======================================================================

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

      
=======================================================================


                         QUESTIONS AND ANSWERS

                              MAY 26, 2016


=======================================================================

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                                 [all]