Madam Chairwoman and distinguished members of this Committee, I appreciate the opportunity to appear before you as Secretary of Agriculture to discuss the Administration's priorities for the Department of Agriculture (USDA). I would also like to take this opportunity to provide you an overview of the President's 2010 budget and update you on our efforts to implement the American Recovery and Reinvestment Act (ARRA) of 2009. I am joined today by Scott Steele, USDA'S Budget Officer.
It is a great honor and privilege to lead the Department of Agriculture at this crucial time. When I accepted this position, the President outlined three key goals for the Department of Agriculture. First, he is very concerned about the health and welfare of America's children and wants to make sure our children have access to nutritious food. Second, he wants to make sure we do everything we can to expand the capacity of our farms, ranches, and rural communities to produce alternative forms of energy. Third, he wants to make sure we aggressively pursue the research necessary to allow agriculture to transition away from its significant dependence on fossil fuels. Fulfilling these goals will be a great challenge, particularly in the context of meeting challenges in the Department's other responsibilities including food safety, conservation, trade, and administering the farm safety net. The current economic situation and difficulties of drought and other severe weather faced by large areas of farm country add another level of complexity to the work we have before us. As a sign of more difficult financial conditions, the index of prices received by farmers for all farm products was 13 percent lower in February 2009 compared to February 2008, according to the National Agricultural Statistics Service. Furthermore, the Economic Research Service forecasts that net farm income will drop 20 percent in 2009 from the record level set in 2008.
But, with these challenges come historic opportunities for agriculture and rural America. I look forward to working together with this Committee to fulfill the President's goals and our key responsibilities for the long term benefit of producers and all Americans. We intend to capitalize on these opportunities quickly through a much more effective effort to coordinate programs within the various parts of the Department and with other Federal, State, and local entities. I have also stressed three key goals for the Administration: 1) modernize the workforce, 2) have science guide policy making in the Department, and 3) approach issues with much greater transparency and involvement of the full diversity of stakeholders we serve.
Before I discuss my key priorities, I would like to update you on the steps we are taking to meet the President's commitments to implement ARRA in a manner that is transparent, effective, and efficient. Our economy is in the midst of a crisis unlike any we have seen in our lifetime. Through President Obama's leadership and implementation ARRA, we will create jobs, jump start growth and transform the economy to compete in the 21st century. USDA intersects the lives of every American, every day, and the funds Congress has provided to us will play a significant role in stimulating our Nation's economy. We have put in place management oversight throughout USDA to focus efforts on planning, awarding, managing, and overseeing contracts and grants in a way that meets the President's and taxpayers' expectations.
I have established the Department of Agriculture Recovery Team to oversee the implementation of the Act. This team is headed up by my office and includes representatives from all mission areas that received funding under the Act. The team meets three times each week and reports to me on a weekly basis. At this time the team is working to identify all actions that need to be taken to quickly and responsibly expend the money provided in ARRA, including identifying projects that can receive funds, and establishing accountability systems for mitigating potential implementation risks.
Following the guidance established by the Office of Management and Budget, we will be able to demonstrate to the public that their tax dollars are being invested in initiatives and strategies that make a difference in their communities and across the country. To facilitate transparency and accountability, we have established a webpage (http://www.usda.gov/recovery) dedicated to ARRA, which will provide specific information as our efforts to implement the Act proceed. We also want to ensure the Committee is fully informed of our progress and we will be providing regular reports to you on the actions we are taking.
I would now like to give you the highlights of my priorities, USDA's budget, and an overview of our efforts to implement USDA's provisions of ARRA.
Recent economic woes have caused a dramatic increase in the number of Americans needing support through the nutrition assistance programs operated by USDA; most notably participation in the Supplemental Nutrition Assistance Program (SNAP) has increased by 4.2 million in the last 12 months to a total of nearly 31.8 million participants monthly. We have taken the steps necessary to provide the 13.6 percent increase in all SNAP beneficiaries' monthly allotment included in ARRA by April 1. Not only will this funding provide a critically needed nutrition supplement for millions of Americans having trouble acquiring a nutritious diet, it will also have an immediate effect in stimulating the economy. According to a study by the Economic Research Service, for every $5 that is spent in SNAP, $9.20 of economic activity is generated. (ERS study "Food Stamp Benefits provide Fiscal Stimulus" http://www.ers.usda.gov/AmberWaves/April08/PDF/FoodAssistance.pdf. We have also made available half of the administrative funds for SNAP and The Emergency Food Assistance Program (TEFAP) provided in ARRA, with the remainder scheduled to be made available in 2010.
Participation in the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) has also continued to grow substantially this fiscal year, averaging nearly 9 million participants monthly through December 2008. Consistent with the President's commitment to present an honest, transparent budget, we are including sufficient resources to support estimated participation in all of the nutrition assistance programs, including an estimated average participation of 9.8 million in the WIC program in 2010, which will ensure that all eligible individuals seeking to participate will be served.
For 2008, the Department of Health and Human Services estimates that total health care spending represented nearly 17 percent of the gross domestic product (GDP). The healthcare crisis dictates the need to focus on prevention, including promoting improved nutrition. As reported by the Centers for Disease Control and Prevention (CDC), research shows that being obese during childhood and adolescence is associated with being overweight during adulthood. Approximately, 16 percent of children and adolescents are overweight in the U.S. today. Data from 1971 to 1974 compared to 2003 to 2006 show dramatic increases in obesity among all child age groups. Among preschool-aged children, aged 2-5 years, the prevalence of obesity increased from 5.0 percent to 12.4 percent. Among school-aged children, aged 6-11 years, the prevalence of obesity increased from 4.0 percent to 17.0 percent. And among school-aged adolescents, aged 12-19 years, the prevalence of obesity increased from 6.1 percent to 17.6 percent. Recent data indicates that mothers and caregivers know about healthy eating, yet struggle with turning that knowledge into healthy meals and snacks for their families. (CDC study entitled "Childhood Overweight and Obesity" http://www.cdc.gov/nccdphp/dnpa/obesity/index.htm.
Obesity is not the only challenge for children the President's Budget addresses. At the same time, childhood hunger remains a concern. Our latest information shows that 16 percent of households with children could not put adequate food on the table. In about one percent of American families with children, one or more children simply do not get enough to eat - they had to cut the size of their meals, skip meals, or even go whole days without food at some time during the year. Nearly 700,000 children face these hardships.
The Department can and will play a key role in addressing the dual issues of childhood obesity and alleviating hunger by improving program access and enhancing the nutritional quality of school meals. We have an enormous opportunity to take strides toward fulfilling the President's goal of eliminating childhood hunger and reducing obesity with the expiration of, and upcoming reauthorization of the Child Nutrition and WIC programs. As an indication of the Administration's commitment to this important issue, the President's budget proposes an additional $1 billion annually to improve the Child Nutrition Programs. I look forward to working with Congress on the Child Nutrition reauthorization bill to expand participation in these programs to ensure that children receive assistance when and where they need it; improve the quality and nutrition of meals served; expand nutrition research and promotion; and encourage greater consumption of healthy foods including fruits, vegetables, low-fat dairy products, and whole grains. Additionally, it is important to take steps to improve the nutritional quality of foods made available outside of the child nutrition programs through vending machines and the rest of the school environment.
Efforts in this area will also offer great opportunities for farmers, particularly specialty crop producers who will benefit from a greater emphasis on fruits, vegetables and nuts in the diets of American school children. Many of these producers are smaller-size farms and I believe we should create enhanced opportunities for these producers through promoting healthy eating and developing local food systems.
All of these efforts to improve school-focused nutrition will benefit from the updated Dietary Guidelines for Americans, which will be completed in 2010. The Dietary Guidelines for Americans update process is led by USDA in partnership with the Department of Health and Human Services. Both Departments speak with one nutrition voice. The Dietary Guidelines will convey nutrition, diet, and physical activity messages based on the most up-to-date evidence-based science supported by USDA's nutrition evidence analysis library and recommended by the Dietary Guidelines Advisory Committee's Report. Once completed, this Federal nutrition policy will be effectively communicated to nutrition educators, health professionals, and most importantly, consumers. This will require modifying the MyPyramid food guidance system and the nutrition education programs accordingly. Also, USDA will make appropriate changes to the meal patterns in the nutrition assistance programs, since they are based on the Dietary Guidelines.
RENEWABLE ENERGY AND THE ENVIRONMENT:
Agriculture has demonstrated a capacity to help meet America's energy needs with clean renewable fuels but much work remains to be done to achieve the full potential of agriculture's capacity to reduce our dependence on foreign oil. The Nation looks to the Department, working with the Department of Energy (DOE), to lead the way in promoting and developing policies that will lead to an increase in the production of renewable energy. We also must take steps to combat global climate change. The Department and DOE will expand energy opportunities and our capacity to produce alternative forms of energy and fuel from our farms, ranches, and rural communities. To that end, the Administration proposes increased funding in 2010 to enhance the development and commercialization of improved technologies for renewable energy production.
I look forward to working with the Committee on these efforts to promote renewable energy technologies, like biofuels, wind, solar and geothermal energy, and to help develop markets that reward producers for sequestering carbon and limiting greenhouse gas emissions. Through these policies, we will be able to deliver significant environmental benefits to all Americans, like clean air, water and improved fish and wildlife habitat. We will also need to work to help ensure the vitality of the nascent biofuels industry and to provide the research necessary to accelerate the development of next-generation biofuels that have the potential to significantly improve our energy independence.
On the conservation side, the budget proposal recognizes the importance of USDA's partnership with landowners to conserve land, protect wetlands, improve wildlife habitat, expand hunting and fishing opportunities, and promote other conservation initiatives. Hunters and fisherman are important stewards of our natural resources and we should support responsible access to the land for their use. The budget supports several conservation programs authorized in the 2008 Farm Bill, including the Conservation Stewardship Program, the Conservation Reserve Program, the Wetlands Reserve Program and the Environmental Quality Incentives Program.
FARM SAFETY NET:
One of my top priorities as Secretary is to provide American farmers with a robust safety net that provides protection from market disruptions, weather disasters, pests and disease that threaten the viability of American agriculture. The President's Budget proposes to maintain the three-legged stool of farm payments, crop insurance, and disaster assistance. In keeping with the President's pledge to target farm payments, the budget proposes a hard cap on all program payments at $250,000 and to phase out direct payments to the largest producers. Though controversial, we all need to pitch in to support the President's goal to cut the deficit in half. Our Nation depends on a safe and abundant food supply, and I will work diligently to promote policies that support the farmers and ranchers we all depend on.
The Department must also create real and meaningful opportunities for farmers and ranchers to succeed. We can do this through some of the actions I have already discussed and through other actions, including supporting independent producers and local and organic agriculture, and enforcing the Packers and Stockyards Act. At the same time, the budget recognizes that we can help transition farmers to earn income from market-based environmental services, such as carbon credits.
USDA believes that the agriculture and forestry sectors hold the potential to deliver substantial emissions reductions, including carbon sequestration, under a national climate change policy. As a result of this potential, new economic opportunities may be created for farmers and foresters. This vision is shared with a wide variety of renewable energy, conservation, and agricultural organizations.
At my direction, USDA will support developing markets that reward producers for sequestering carbon and limiting greenhouse gas emissions. Through the authority provided under the 2008 Farm Bill, USDA will develop the metrics and certifications associated with the environmental services of conservation and certain land management activities to facilitate the participation of farmers, ranchers, and forest landowners in the emerging environmental services markets. USDA will also increase its research and analytical capabilities and conduct Government-wide coordination activities to encourage the establishment of markets for these ecosystem services.
These ecosystem services markets, along with conservation and renewable energy programs, offer farmers and ranchers new sources of revenue that also create public benefits for all Americans, such as clean water, clean air, and wildlife habitat.
It is one of my top priorities to work to rebuild and revitalize rural communities in this country. Starting with the implementation of ARRA and continuing through implementation of the Farm Bill, USDA will expand broadband networks in rural communities, increase investment in rural infrastructure, and develop renewable energy. The budget puts a strong emphasis on rural economic development, providing more than $20 billion in loans, loan guarantees, and grants to support rural development activities. Of great importance to me, this budget proposal is consistent with the Administration's efforts to ensure that all of rural America will have access to quality broadband service, which is essential to keeping pace in a world that relies on rapid telecommunications.
Through ARRA, USDA has been provided billions of dollars for a major effort to expand broadband to unserved areas. Development of high speed communication capacity will create opportunities for businesses to prosper in rural communities and give them greater access to world-wide markets. It will also enhance health and educational services in rural areas and improve the competitiveness of rural communities. In the next several months, we will be soliciting applications for the Broadband Program under ARRA. We are working closely with the Department of Commerce to coordinate the allocation of these funds to the highest quality projects and I look forward to working with State and local governments and this Committee to ensure that we are supporting rural economic development.
The 2010 budget, combined with funding from ARRA, also provides strong support for homeownership in rural America by making mortgage credit available through direct loans and guarantees of loans made by private lenders. The combined level of funding in the budget and ARRA will provide over 165,000 homeownership opportunities for rural residents. In addition, the budget contains sufficient funding to assist 280,000 low-income tenants of USDA-financed rental housing.
ARRA has also provided some of the resources needed to rebuild the basic infrastructure of rural America, starting with wastewater treatment facilities. These essential community facilities address health hazards and improve the quality of life for rural residents while encouraging business and industrial development. ARRA also provides funding for other vital programs, including the Community Facility Program, Business and Industry Loan Program, Rural Business Enterprise Grants, farm loans, and the Forest Service maintenance program. On March 9, 2009, USDA announced $540 million of ARRA funding for rural water and waste disposal facilities. This funding will be used for shovel ready projects and includes both grants and direct loans. We anticipate that nearly 29,900 jobs will be created through this funding. As additional funding is made available, even more jobs will be created.
The 2010 Budget also includes additional funding for the Rural Microentrepreneur Assistance Program that was authorized by the 2008 Farm Bill. This program will provide loans and grants to nonprofit entities for training, technical assistance and making loans of up to $50,000 to small businesses in rural areas. It is part of a broader initiative within USDA that also includes rural cooperative development grants, value-added producer grants, grants to minority producers and cooperative research agreements, designed to support small business development and job creation in rural communities.
We are also proposing an innovative new initiative in the 2010 Budget to support rural revitalization through incentives for teachers working in rural areas and enhanced support for rural research and extension programs at the land grant and minority serving institutions. These efforts will greatly enhance the competitiveness of rural communities struggling to keep up. I look forward to working with the Committee on this important effort.
CREDIT SITUATION IN RURAL AREAS:
The Budget, coupled with ARRA, provides substantial assistance to address the tightening of credit in rural areas as a ripple effect of the Nation's overall credit crisis. Under ARRA, sufficient funding is provided for the Farm Service Agency to extend credit to over 2,200 family farmers that require credit assistance to begin spring planting.. In Rural Development, there is additional funding to support rural homeownership, rural business and industry development, and broadband access. While some of this funding is for direct loans financed by the Government, a substantial portion is for loans made by private sector lenders and guaranteed by the Government. This kind of partnership not only provides immediate assistance for the people who obtain such loans, but it also encourages private sector lenders and investors to extend their outreach to help rebuild rural America.
Soon after I became Secretary, we learned of food safety problems associated with peanut butter. Although not directly a USDA responsibility, the peanut butter recall did have implications for purchases we make for schools and more broadly raises the critical importance of food safety. Madam Chairwoman, I am aware of your deep interest in food safety. I share that interest and greatly look forward to working with you to ensure that we have the food safety system we need to protect consumers. At USDA, we must continue to improve our system by directing resources to the greatest risk of contamination. We must focus on eliminating hazards before they have an opportunity to make anyone sick, developing technologies that will help us discover risks and allocate resources to reduce this risk, and during outbreaks rapidly identify and respond to incidents of foodborne illness. To that end, you are going to see a very significant effort on our part to improve the safety and security of our food system. On March 14, the President kicked off that effort by establishing a new Food Safety Working Group of which I am a member. We will advise the President on how we can upgrade our food safety laws for the 21st century; foster coordination throughout government; and ensure that we are not just designing laws that will keep the American people safe, but enforcing them.
I am proud of the work that USDA does. We have thousands of dedicated workers in meat, poultry, and egg processing facilities all across this country making sure that the food that we consume is safe. But, we need to continue to work to do a better job. We are committed to modernizing the food system, focusing on preventing rather than mitigating the consequences of food-borne illness. Food-borne illness affects everyone from the consumer back down to the producer and taxes our health care system far more than it should. Our budget proposal for 2010 includes additional resources to improve food safety inspection and assessment and to enhance the ability to determine food safety risks. I am also proud to be a part of the Food Safety Working Group and look forward to meeting with you on ideas to improve the food safety system.
USDA also has an important role in working hard to expand exports of our agricultural products. It is significant that, while the country as a whole has a trade deficit, agriculture has a trade surplus. USDA estimates that the trade surplus for agricultural products will be $13 billion in FY 2009. The Foreign Agricultural Service does a tremendous job and we need to continue to work hard both in Washington and in our offices overseas, to encourage greater exports of American products. That requires us to focus on overseas market signals and adapt our practices and procedures to the demands of customers around the world. We must also continue our efforts to break down trade barriers that limit our capacity to export, such as the imposition of sanitary and phytosanitary barriers that are not in accord with international standards or science-based. As the world market conditions deteriorate under the current financial crisis, we must be especially vigilant to ensure that we keep markets open as we move forward.
In this regard, the Office of Inspector General issued a report in February that recommends the Department develop and implement a coordinated, comprehensive strategy for promoting the export of genetically engineered agricultural commodities. I believe the report has merit and have directed officials in the Research, Education, and Economics mission area to lead a Department-wide effort to develop such a comprehensive strategy. The framework for developing the strategy is to be completed within 6 months.
Another important focus of the Department's international work is providing foreign food assistance and promoting agricultural development overseas. The U.S. Government's international food aid programs, such as the McGovern-Dole International Food for Education and Child Nutrition and P.L. 480 Title II programs are critical to addressing food insecurity throughout the world and supporting development, health, and nutrition. In 2009, USDA expects to assist 4 million people through the McGovern-Dole Program. We must go beyond providing commodities, to supporting efforts to increase agricultural production and develop agricultural sectors in food-insecure regions. Economic development not only helps these countries but also helps farmers in the United States as developing economies grow and become more active trading partners.
Expanding our access to world markets continues to be a vital part of our strategy to improve the vitality of the farm sector and quality of life in rural areas. In this regard, we need to ensure that we have the capacity at the Federal level to deal with agricultural trade issues and the promotion of our products in a global economy. The Foreign Agricultural Service (FAS) leads our international efforts in the Department. Recently, the agency has faced a serious budget shortfall that raised questions about its continued ability to carry out its activities both here and overseas.
This shortfall arose due in large part to developments that occurred after the 2009 budget had been formulated and submitted to Congress, including an urgent need to rebuild components of the FAS IT infrastructure. We have worked hard to address the situation and I appreciate the Committee's support in providing additional resources in 2009. I am pleased to report that, with a great deal of effort and diligence on the part of many, we have identified and set in place a plan that addresses the shortfall and will ensure that FAS can continue to deliver its services in support of our farmers and ranchers. The plan will require cooperation from other agencies, such as the State Department, and we are now working with those agencies. I also want to provide assurances to the Committee that we have taken FAS' situation into account in developing our 2010 budget proposals for the agency.
IMPLEMENTING THE FARM BILL:
I am also committed to continue implementing the 2008 Farm Bill and to do so in a way that is consistent with Congressional intent. This is a tremendous undertaking for the Department, and I know that USDA employees share my commitment. We are appreciative of the funding included in ARRA that will facilitate the implementation of the Farm Bill. I want to thank the Committee for providing $50 million in ARRA funds for IT stabilization and modernization for the Farm Service Agency. We are currently developing a detailed plan that will clearly identify how this funding will be used. We will continue to work with the Committee to ensure we have the resources needed to make further modifications to these IT systems, which are critical assets needed to efficiently implement the Farm Bill and all of our programs. These IT modifications will create a modern web-based environment that will increase administrative efficiency, reduce improper payments, and improve customer service and information security.
We are moving aggressively to implement the provisions of the 2008 Farm Bill. In accordance with the memorandum issued by White House Chief of Staff Rahm Emanuel, we have reviewed the regulatory actions that have been taken to implement the Farm Bill and have taken immediate steps to provide a more transparent, inclusive, and collaborative process. Based on this review, we have reoriented our priorities and have established a timetable to ensure prompt implementation. Attached to this testimony is a list of the high priority actions that USDA needs to complete to finish implementing the Farm Bill.
As an example of the steps we are taking to accelerate the implementation of the 2008 Farm Bill, we are making funding available over the next several weeks to implement several energy provisions. We will issue notices announcing the availability of funding and begin soliciting applications as soon as possible. This approach will get funding out quicker so it can have a more immediate impact on the economy.
We are placing a high priority on implementing the Farm Bill's conservation provisions promptly. We are working diligently to complete an interim final rule to fully implement the Conservation Stewardship Program (CSP). I have made this a high priority and will be personally involved in facilitating the implementation of this program in a timely manner. We expect to complete this action in the next several months and publish the interim final rule in the Federal Register.
We are also working diligently to develop regulations to implement the Supplemental Revenue Assistance Program (SURE) and other disaster assistance programs. We are currently reassessing the regulatory and software development efforts in light of the changes enacted by ARRA. However, we are on track to issue regulations by November 2009, well ahead of the date when the data will be available to calculate payments.
In an era of market consolidation, the Administration will support policies to ensure that family and independent farmers have fair access to markets, control over their production decisions, and transparency in prices. This includes implementation of Farm Bill-related regulations to enhance enforcement of the Packers and Stockyards Act. Proper enforcement of the Packers and Stockyards Act will ensure a level playing field for farmers that fosters fair competition, provides payment protection, and guards against deceptive and fraudulent trade practices in the livestock and meat sectors.
President Obama is very clear that this budget will be transparent to the American people. It will account fully for the costs to operate the government. As I described earlier, our budget meets this test. As the President stressed in his Address to Congress, we're reviewing all of our operations for wasteful and inefficient spending. One of my first actions was to ask each acting member of the sub-cabinet and in turn each staff person at the Department of Agriculture, to seek out, execute and report on "savings" each week. We have saved hundreds of thousands of dollars by eliminating unnecessary travel and conferences, increasing administrative efficiency, and terminating contracts that are no longer needed. The savings generated by these actions are being put to better use on higher priority activities. The 2010 budget also reflects the elimination of earmarks and funding for programs that are not as high a priority or provide services that can be supported by other means.
Finally, I would like to address one area where the Department has a disturbing history. For too long, the image of USDA has been marred by discrimination in the delivery of its programs and through its employment practices. One of my first actions upon arriving at the Department was to issue a civil rights policy statement that clarified that discrimination will not be tolerated in USDA. To achieve this goal, we are dedicating the resources necessary to improve the civil rights process within the Department. Examples of recent progress include: establishing a working group to properly collect demographic information about USDA's constituents so that we can identify where discrimination may be occurring; instituting provisions of the 2008 Farm Bill, including the receipt for service, that help the Department focus on improving civil rights; and conducting an assessment of the Department's civil rights and outreach business processes to find ways to improve the efficiency and effectiveness of our programs.
On February 26, 2009, the President released an overview of the 2010 budget. The details of the budget proposal will be released later this spring. At this time, I can report that for USDA, the budget proposes nearly $26 billion in discretionary funding, or 12 percent above the $23.2 billion in the 2009 Omnibus spending bill. This excludes funding provided by ARRA.
We have begun the process of making tough decisions about where our priorities lie and have made some tough choices about where we spend our resources. These choices reflect the new direction the President wants to take the country at this historic time-- a track that takes the Nation on the path to recovery and provides the foundation and diverse opportunities for farmers and ranchers to succeed.