DAN GLICKMAN
SECRETARY OF AGRICULTURE

BEFORE THE
COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY
UNITED STATES SENATE
 

FEBRUARY 24, 1999

 
 Mr. Chairman, Members of the Committee, I am pleased to appear before
you to discuss the 2000 budget for the Department of Agriculture.  In this context, I
will specifically address crop insurance reform, Russian food assistance, and
certain Y2K issues that are of interest to the Committee.

 Even though the Federal budget is now in surplus for the first time in
30 years, it is still governed by the constraints put in place by the Balanced Budget
Act of 1997.  For the second year in a row, President Clinton has submitted a
balanced budget to Congress.  Within the constraints of the balanced budget, the
Administration has proposed the necessary resources USDA needs to meet the
basic goals and objectives of its strategic plan as well as focus on some key
Presidential initiatives related to food safety, global climate change, open space
and the environment.  USDA will continue to meet its core commitments of helping
farmers manage risk, expanding economic opportunities for farmers and all rural
Americans, fighting hunger, improving food safety, protecting our natural
resources, investing in research, and preparing American agriculture for the 21st
century.

 I would now like to address the specifics of our budget for 2000 and its
relationship to the goals we have established for the Department.
              ENHANCE ECONOMIC AND TRADE OPPORTUNITY

 The 2000 budget reflects the Administration’s commitment to improving
economic opportunities for family farmers and rural Americans.  This goes for
minorities, small farmers, and others who have been traditionally underserved by
our farm and rural development programs.  Making USDA a fair and equitable
place for all Americans remains high on my list of priorities.

 Although a strong general economy with low unemployment and low inflation
has helped keep needs and outlays down in our food assistance and other non-
farm programs, the farm economy continues under substantial stress in 1999.
Farm program outlays will be up significantly in 1999 and are projected to be
moderately high in 2000 as the farm economy faces continued challenges.

 Depressed markets and natural disasters challenge our ability to respond to
the needs of our farm clientele.  Congress and the Administration worked together
last year to include in appropriations for 1999 nearly $6 billion in emergency
assistance to farmers.  Market loss and disaster payments, in combination with
marketing loan assistance, direct payments to pork producers, expanded export
and food aid activities, and other initiatives are making a difference, but we are
stretching the limits of our staff and field structure to deliver the needed assistance.

 The demands on our resources for assistance will remain heavy in 2000.  As
the President indicated in his State of the Union address, it is clear that we need to
work with the Congress to find a bipartisan way to improve the farm safety net
including crop insurance reform and farm income assistance.  From the day he
signed the 1996 Farm Bill, the President and I have continuously called for a
stronger safety net.  Last year’s emergency supplemental has allowed us to make
a $400 million down payment this year in helping farmers meet their crop insurance
needs.  These funds will be used to reduce 1999 insurance premiums by 30
percent.  I believe this is a strong first step in  improving and energizing the
program so that there is a preventive approach to farm risk management rather
than the uncertainty of ad hoc disaster assistance that is very costly to taxpayers.

Crop Insurance Reform
 We are continually working to improve the crop insurance program, because
we believe there is widespread support for the program.  We have some specific
proposals that we want to work on closely with the Congress.  We have issued a
white paper which spells out the Administration’s principles and preliminary
proposals for reforming crop insurance.  I want to emphasize that while crop
insurance is the centerpiece of the safety net, we also need to look at a broad
range of ideas to help farmers manage risk.  They include ideas on how to improve
crop insurance and the safety net -- from more crops covered to making crop
insurance affordable, to including multi-year policies to a new pilot revenue
insurance program for livestock, to non-insurance proposals like extending due
dates on commodity loans or subsidizing on-farm storage.

 I plan to hold at least 3 regional forums around the country to get input on
how we should go about improving the crop insurance program and the farm safety
net.

 Through these forums and discussions with Congress, the Administration
intends to build upon our proposals to forge a bipartisan agreement on crop
insurance reform.  A strong safety net will be costly.  But, I believe that if Congress
and the Administration work together, we will find the money, just as we have done
in the past.  Together we will make the tough choices necessary to ensure that our
farmers can continue to feed the Nation, and much of the world, knowing that some
of their downside risk is protected.

Credit
 Farmers and ranchers also need access to adequate credit if they are to
remain in business.  To supplement credit from private lenders, the budget
requests about $3 billion in farm loans and guarantees, up slightly from the 1999
level of $2.8 billion including loans provided through the 1999 emergency
supplemental, but with a subsidy cost of about $50 million less than last year due
to the lowest interest rates in a generation.  We also are reviewing the adequency
of funding for our farm credit programs in 1999.

 The settlement of the civil rights class action lawsuit represents a major step
in our efforts to address the past and to move forward with better service to
minority and small farmers, consistent with our commitment to enhance
opportunities for all vital segments of the rural community.  We are pleased that
Congress waived the statute of limitations and that we were able to reach a
settlement with African American farmers relating to their long-standing complaints
about discrimination in the Department’s handling of farm loans.

Exports
 Events of the past year have clearly demonstrated that strong export
markets are a critical component of the farm safety net, but they have also
demonstrated that exports are but only one dimension in providing a
comprehensive safety net.  Market disruptions in Asia, Latin America, Russia, and
elsewhere have had negative effects felt throughout the farm economy and rural
America.  We have responded to those challenges by utilizing our program
authorities aggressively to ensure the continued flow of U.S. agricultural exports.
We increased the programming of export credit guarantees to Asian markets.  As a
direct result, sales registrations under the programs were up 40 percent last year.

 We also continue our strong efforts to open new markets through trade
policy actions, including preparation for the new round of multilateral trade
negotiations set to begin later this year and through negotiations in the Asia Pacific
and Western Hemisphere regions.  The growing challenges posed by technical
barriers to trade, such as sanitary and phytosanitary barriers that are not
scientifically based, also continue to be addressed vigorously.

 For 2000, the budget provides a total program level of nearly $6.5 billion for
USDA’s international programs.  This includes $4.5 billion for the CCC export credit
guarantee programs, which will continue at last year’s expanded level.  I will not
hesitate to make more credit available if it is needed.

Foreign Food Assistance
 We have taken a number of important actions to assist countries meet their
food and agricultural import needs this year -- actions which also help maintain
agricultural export levels and support farm income.  Last July, the President
announced his Food Aid Initiative under which approximately 5 million metric tons
of wheat and wheat products are being made available for donation overseas
through foreign governments, private voluntary organizations, and the World Food
Program.   We expect to complete programming this wheat by the end of the fiscal
year and to complete shipments by the end of the calendar year.

 We have also developed and are implementing a major package of
assistance for Russia, which is intended to alleviate serious food and feed
shortages there.  The package includes over 3.1 million metric tons of commodity
assistance, including 1.5 million metric tons of wheat which is being made available
under the President’s Food Aid Initiative.  The total package is valued at $1.2
billion, including $880 million for the estimated value of the commodities and about
$300 million for associated transportation costs.

 This aid package has several objectives.  We want to increase food supplies
to vulnerable groups and regions, making sure the food reaches its intended
destinations.  We are also providing feed grains and oilseed products to help
bolster Russia’s ailing livestock sector, and we are looking at other ways to assist
agriculture.

 The first shipment of commodities, vegetable seeds, is scheduled to leave
Norfolk this week and is expected to arrive in St. Petersburg around March 10.
Shipments of wheat to Russia under the President’s Food Aid Initiative should
begin in about 2 weeks, and grain tenders under the P.L. 480 Title I credit
agreements are expected to begin shortly.

 We have concluded agreements with four of the five private voluntary
organizations that will be involved in the direct distribution of food.  Shipments
under the first of these agreements are expected to begin by mid-March or sooner.

 The U.S. and Russian governments have established an unprecedented
monitoring program to ensure that the food aid reaches the targeted populations
throughout Russia.  USDA is devoting substantial resources to monitor the delivery
and distribution of the assistance, including stationing additional USDA staff in
Russia to aid in this effort.  USDA is also working with other U.S. government
agencies at our Embassy and Consulates to expand the oversight effort, and we
will, if necessary, send additional staff.

 Our aid to Russia is a temporary measure.  As we look down the road, our
interest, along with that of the rest of the world, is in the recovery of the Russian
economy and its purchasing power, and the resumption of its role in global
commercial trade.  Russia has been an important market for U.S. agriculture,
especially our poultry industry, and it is in our best interests to see the Russian
economy improve.

Rural Development
 This Administration believes that rural Americans should be able to take
advantage of the same opportunities for economic growth that exist in urban areas
?? that goes for housing, running water, electricity, telecommunications, and job
opportunities.  Our rural development programs make a significant contribution to
the quality of life in rural areas, promote equal opportunity, and serve as a bridge to
the future.

 Overall, the 2000 rural development budget will support almost $11 billion in
loans, loan guarantees, grants, and technical assistance ?? $800 million more than
1999.  Yet again, because of the strong economy and low interest rates, the cost to
taxpayers to help rural America will be $400 million lower than last year.  We are
helping to create or protect over 100,000 jobs by providing over $1.1 billion in
guaranteed and direct loans to help rural businesses.  Our budget includes $4.3
billion in direct and guaranteed loans to bring single family housing to 50,000 rural
Americans adding to the highest home ownership rate in the Nation’s history.  And,
to meet the goals set in the President’s Water 2000 initiative, we’ve included a 12
percent increase in funding to help over
1 million rural Americans have safe, affordable drinking water.  The Administration
will also propose legislation to provide $15 million annually in mandatory funding to
fund grants to 5 new rural Empowerment Zones and
20 new rural Enterprise Communities.

Marketing
 Our marketing programs continue to be important to the economic health of
U.S. agriculture.  The budget requests increased funding for pest detection,
disease prevention, and border inspections.  We have several proposals that will
help farmers and ranchers stay competitive in an increasingly concentrated market,
especially the meat and poultry markets.  Our budget requests funds to implement
the organic certification program, address market concentration, and to broaden
the pesticide data program.

Research
 Research is critical to the future economic growth of agriculture and it
undergirds much of what we do in the Department.  Advances in research and
technology are the keys to many of the most challenging problems we face in
agriculture, and there are budget proposals that address these problems,
especially helping farmers increase their productivity to improve their
competitiveness, while providing a safe, nutritious food supply and preserving our
natural resources.  The 2000 budget proposes an increase of 8 percent for the
research mission areas of the Department from the comparable 1999 level. This is
the first substantial inflation-adjusted increase for these programs since 1992.

 The research budget reflects the priorities outlined in the Research Reform
Act of 1998.  Mandatory spending of $120 million in 2000 and $600 million over the
next 5 years is provided for the Initiative for Future Agriculture and Food Systems
under Section 401 of the Act, for competitive research, education, and extension
grants to address critical and emergency issues.  Mandatory funding is also
available under the Fund for Rural America, where between one-third and two-
thirds of the $60 million total is to be provided for a wide range of research and
education activities in 2000, based on decisions to be made after appropriations for
2000 are enacted.

              HEALTHY, SAFE, AFFORDABLE FOOD SUPPLY

 Our budget request also supports our continuing major commitment to
fighting hunger in America and ensuring consumer confidence in the safety of the
Nation’s food supply.

Food Safety
 The budget includes an additional $67 million, almost two-thirds of a
governmentwide increase of $107 million for food safety activities aimed at
reducing microbiological contamination of foods.  These increases will be directed
to the President’s Food Safety Initiative and inspection modernization activities of
the Food Safety and Inspection Service.

 USDA is well into the process of modernizing its 90-year-old meat and
poultry inspection system.  We are celebrating the first year anniversary of HACCP
implementation in large plants.  Recent results demonstrate that
90 percent of large HACCP establishments met the Government’s Salmonella
performance standards and that there was a significant reduction in the prevalence
of Salmonella due to the implementation of HACCP.  These data indicate that the
Administration’s science-based inspection system has already had a significant
effect on the safety of food American families eat.

 We are also working with the Environmental Protection Agency (EPA) at the
Vice President’s direction to ensure that producers will continue to have the means
necessary to provide a safe and affordable food supply, while meeting the goals
set out in the Food Quality Protection Act.  We owe it to our farmers to make every
effort to assist them in the transition to an agricultural system that addresses
environmental and public health risks associated with the use of pesticides.

Nutrition Assistance
 We have the most affordable, safest food supply in the world.  Yet, many
low-income people need nutrition assistance to take advantage of it.  The budget
reflects full funding for this effort ?? for Food Stamps, Child Nutrition, and the WIC
program.

 Over two-thirds of the $38 billion requested for the nutrition programs will
help low-income children receive the nutrition they need.  The programs also set a
good nutritional example by promoting a proper diet, so that recipients can learn
how to maintain good nutrition levels in the future.  We have also included funds to
jump start a plan to improve program integrity, to evaluate the effects of a universal
free school breakfast pilot project and to expand the WIC farmers’ market program.

 We are also taking another step toward fixing one of the wrongs of the
welfare reform bill by restoring food stamp eligibility to 15,000 elderly legal
immigrants as part of funding to support over 20 million food stamp participants.
 
 Strong Federal programs will always be the bedrock of America’s anti-
hunger effort, but I believe the Government should also assist community-led work.
Our budget includes a new $15.8 million gleaning and food recovery initiative to
provide community-based grants to help neighborhood organizations recover
edible food and use it to help alleviate hunger.  I believe there is the potential for far
more successful food recovery programs which this initiative will help us realize.
 

                 MANAGEMENT OF NATURAL RESOURCES

 In order to keep American agriculture competitive into the 21st century
without sacrificing our critical natural resources, farmers will need adequate levels
of financial and technical conservation assistance.

 USDA's conservation mission has dramatically expanded and become more
sharply focused during my tenure as Secretary.  The 1996 Farm Bill's conservation
programs have given USDA the best array of conservation tools that we've ever
had, and I would like to build on this success.  Thus, we are requesting the level of
funding that the Natural Resources Conservation Service (NRCS) will need to
protect and strengthen the core conservation technical assistance and watershed
work that it carries out.  The budget also supports implementation of the
Administration's Clean Water Action Plan and the Unified National Strategy for
Animal Feeding Operations to protect our rivers and streams.  To help implement
these plans, the budget includes legislation to increase funding for the
Environmental Quality Incentives Program (EQIP) to $300 million.

 Our other conservation and land retirement programs are also continuing to
have a positive impact on the environment.  We have just completed our 18th
Conservation Reserve Program (CRP) signup and based on the public's response,
all indications are that the new environmentally-focused CRP continues to be our
most effective conservation tool.  The Wetlands Reserve Program (WRP) will
reach a major milestone in 2000 as we enroll nearly 200,000 new acres to reach
the statutory enrollment level of
975,000 acres.  I am also proposing to reauthorize funding for the Wildlife Habitat
Incentives Program that provides cost sharing to landowners to help them install a
variety of practices to develop wildlife habitat.

 Last year Chief Dombeck, at my direction, developed a natural resources
agenda for the 21st Century for the Forest Service.  I strongly support its four
emphasis areas:  watershed health and restoration, sustainable forest
management, recreation, and forest roads.  For fiscal year 2000, we again are
using this agenda to establish spending, legislative, and regulatory priorities.

 The President's Lands Legacy initiative will help USDA address the serious
problem of prime farmland loss and to provide the tools for localities and States to
plan for smart growth and open space preservation.  Much of America's farmland is
near major cities and, as our cities continue to grow into neighboring rural areas,
our farms are in danger of becoming subdivisions or shopping malls.  We can no
longer take our prime farmland for granted.  The budget's proposal to reauthorize
CCC funding for the Farmland Protection Program, as well as financial support
from the Lands Legacy initiative, will help protect our best farms and the food they
supply for our families.  Forest Service land acquisition will continue to add land
valuable to recreation, wildlife habitat, and watershed protection to the national
forests.  Other Forest Service programs will provide financial assistance to States
that wish to preserve private woodlands threated by conversion to other uses.

 This budget also supports the Administration's Global Climate Change
initiative by providing a large increase in funding to develop more accurate
baseline data and to conduct demonstration and research pilot projects.

              CUSTOMER SERVICE AND PROGRAM DELIVERY

 I place a high priority on improving customer service and program delivery.
As part of the Department’s continuing reorganization, we are implementing a field
office streamlining plan which collocates the county-based agencies in one-stop
USDA Service Centers.  The plan will also consolidate administrative support
functions for the county-based agencies through the new Support Services Bureau
and modernize program delivery.  We are implementing a common computing
environment for these agencies to optimize the use of data and equipment and
improve our efficiencies across the agencies.  These efforts, combined with
program reductions and reforms taken in prior years, have made a significant
contribution to the current favorable Federal budget situation.

 I know that there is a great interest in the Department’s progress in
remediating our internal systems for the Year 2000 as well as our outreach efforts,
especially with respect to small businesses and rural utilities.

 As we noted in our most recent report to the Office of Management and
Budget, three-fourths of the mission critical systems we are tracking are now
compliant.  Agencies are conducting tests on many of our remaining systems prior
to certifying their compliance as well.  We expect to achieve near total compliance
by the March 31 government-wide deadline.

 This does not mean that our work will be done.  We will continue to work on
our non-mission critical systems, including the deployment of more than 22,000
personal computers.  We are redoubling our efforts to assure our facilities,
laboratories, and telecommunications equipment are functional.  And, we will
continue to test all of our systems to assure that the Department is fully prepared
well before January 1, 2000.  Recognizing that not everything is within our
immediate control, we will focus on business continuity requirements and continue
to make contingency plans so that all of our programs will be delivered even if
some glitches do occur.

 We are also taking seriously our responsibility to work with our partners, be
they States or private entities. We are continuing to work with the States to monitor
the status of food and nutrition programs which are vital to millions of Americans.

 We are giving special attention to the interests of rural America.  As part of
our work with the President’s Council on Year 2000 Conversion, we are joining with
the Small Business Administration and the Department of Commerce to fully
engage small businesses in meeting the Year 2000 challenge.  Our Cooperative
State Research, Education and Extension Service will focus on rural America by
helping to train core teams in each state who will provide direct assistance to small
businesses on remediation of Year 2000 problems.

 In conclusion, I want to point out that over the last few years, we have
tightened our belts to become more efficient in response to constrained or  reduced
funding.  USDA agencies, across-the-board, are carrying out a heavy workload and
at the same time we are expecting staff to provide a high level of customer service.
Our goal is to do a good job in delivering the programs the Congress has put in
place.  We are the “people’s department”, here to serve all Americans equally, with
fairness and respect for all.