[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]
HELPING AGRICULTURAL PRODUCERS ``RE-GROW''
RURAL AMERICA: PROVIDING THE TOOLS
=======================================================================
HEARING
before the
COMMITTEE ON SMALL BUSINESS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
__________
WASHINGTON, DC, MARCH 15, 2000
__________
Serial No. 106-47
Printed for the use of the Committee on Small Business
U.S. GOVERNMENT PRINTING OFFICE
65-507 WASHINGTON : 2001
COMMITTEE ON SMALL BUSINESS
JAMES M. TALENT, Missouri, Chairman
LARRY COMBEST, Texas NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado JUANITA MILLENDER-McDONALD,
DONALD A. MANZULLO, Illinois California
ROSCOE G. BARTLETT, Maryland DANNY K. DAVIS, Illinois
FRANK A. LoBIONDO, New Jersey CAROLYN McCARTHY, New York
SUE W. KELLY, New York BILL PASCRELL, New Jersey
STEVEN J. CHABOT, Ohio RUBEN HINOJOSA, Texas
PHIL ENGLISH, Pennsylvania DONNA M. CHRISTIAN-CHRISTENSEN,
DAVID M. McINTOSH, Indiana Virgin Islands
RICK HILL, Montana ROBERT A. BRADY, Pennsylvania
JOSEPH R. PITTS, Pennsylvania TOM UDALL, New Mexico
JOHN E. SWEENEY, New York DENNIS MOORE, Kansas
PATRICK J. TOOMEY, Pennsylvania STEPHANIE TUBBS JONES, Ohio
JIM DeMINT, South Carolina CHARLES A. GONZALEZ, Texas
EDWARD PEASE, Indiana DAVID D. PHELPS, Illinois
JOHN THUNE, South Dakota GRACE F. NAPOLITANO, California
MARY BONO, California BRIAN BAIRD, Washington
MARK UDALL, Colorado
SHELLEY BERKLEY, Nevada
Harry Katrichis, Chief Counsel
Michael Day, Minority Staff Director
C O N T E N T S
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Page
Hearing held on March 15, 2000................................... 1
Witnesses
Kruse, Charles, President, Missouri Farm Bureau Federation....... 3
McDavid, J. Gary, Chair, Legal, Tax & Accounting Subcommittee on
Tax Legislation, National Council of Farmer Cooperatives....... 5
Vallery, Rick, Executive Director, South Dakota Wheat, Inc....... 8
Hurst, Brooks, Vice President, Missouri Soybean Association...... 9
Haverhals, John, Former President, South Dakota Cattlemen's
Association.................................................... 11
Tumbleson, Gerald, Past-President, Minnesota Corn Growers
Association.................................................... 12
Appendix
Opening statements:
Talent, Hon. James........................................... 21
Prepared statements:
Kruse, Charles............................................... 24
McDavid, J. Gary............................................. 27
Vallery, Rick................................................ 30
Hurst, Brooks................................................ 32
Haverhals, John.............................................. 35
Tumbleson, Gerald............................................ 39
HELPING AGRICULTURAL PRODUCERS ``RE-GROW'' RURAL AMERICA: PROVIDING THE
TOOLS
----------
WEDNESDAY, MARCH 15, 2000
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 2:20 p.m., in room
2360, Rayburn House Office Building, Hon. Jim Talent [chair of
the Committee] presiding.
Chairman Talent. Well, I want to open the hearing and
apologize to everybody for the delay. I was over in the House
handling a bill, and then we had this vote. The Ranking Member
told me that she needed to stop at her office very briefly, and
then she would be here. I am going to go ahead and open up the
hearing.
I want to welcome the participants here today for the House
Committee on Small Business hearing on helping agricultural
producers regrow rural America, providing the tools.
Last September, the Small Business Committee held the first
``helping agricultural producers regrow rural America'' hearing
which focused on the current crisis in the agricultural
community, what could be done to lift rural America out of
recession, and how agriculture could prepare itself to weather
any future downturn in prices and production and conditions.
The agricultural leaders at that hearing painted a clear
picture of the need and desire of producers to become the
vertical integrators, capturing more of the consumer dollar by
adding value to their commodities.
I continue to be impressed by those in the agricultural
community who during these darker times for producers are still
optimistic for the future. I am pleased their entrepreneurial
fire continues to burn.
Agricultural leaders at September's hearing described the
current value added movement in agriculture and described
various policy recommendations to the committee that could be
accomplished to help the hardworking visionary producers in
their efforts to build a stronger agricultural economy as well
as a stronger rural economic base.
Charlie Kruse who is back with us today suggested one-stop
shops be established to provide the necessary business,
marketing, engineering, and legal expertise to assist producers
as they move to establish their own processing and
manufacturing facilities. Every agricultural organization
presented at the hearing echoed Charlie's recommendations. I
assure you, Charlie, your voice was heard.
Mr. Thune and I with the help and expertise of the
agricultural community introduced the Value Added Agriculture
Development Act for American agriculture. This legislation
would create agriculture innovation centers that would provide
the business, marketing, engineering, and legal assistance
needed to begin a producer-driven value added revolution in
agriculture.
The Committee heard additional recommendations for specific
policy tools that could be provided to assist this movement.
Dale Ludwig, the executive director of the Missouri Soybean
Association, which Brooks Hurst is representing today--well, we
have a lot of great agricultural leaders from Missouri. Have
you ever noticed that coincidence, how many we have here. Mr.
Hurst advocated the creation of a producer-investment tax
credit for up to 50 percent of the producer investment. The tax
credit would help level the playing field for producers as they
compete in markets that have been traditionally consolidated
into a handful of multinational corporations. In my meetings
with agricultural leaders, I have shared this concept and the
idea has been received with great interest and support. Of
course, any attempt to work with tax code is always a
complicated process, and understanding on the ground
effectiveness of any tax incentive is crucial as legislation is
developed.
I encourage the witnesses to provide the committee with
their views on these and other legislative initiatives.
Over the last few months, I have had the opportunity to see
firsthand the innovative entrepreneurial spirit that America's
farmers and ranchers share. Their enthusiasm about the concept
of value-added agriculture is overwhelming. I have become more
convinced than ever that the future of rural America in our
agricultural system is bright.
Missouri Soybean Merchandising Council research committee
and soybean utilization researchers at the University of
Missouri at Rolla, the MSMC, the sister organization to Brooks'
group is the soybean checkoff board in Missouri. On behalf of
soybean producers, the MSMC has made a major commitment to
developing soy-based products to help increase the demand for
soybeans. The researchers at UMR demonstrated numerous
innovative technologies from which such products as plastics,
composites, lubricants, and solvents have been synthesized from
raw soybean materials.
Tom Green explained the vision of Missouri soybean farmers
and the MSMC and how these new technologies could be best
utilized by the producers of Missouri. You know, we are living
through a crisis right now which could have been substantially
alleviated had we been further along with these value-added
soybean products because we have the opportunity through that
kind of research, if applied properly, to create new kinds of
products that will enable us to move away from our dependence
on petroleum, which of course is hurting the country right now.
The opportunity I have had to work with the agricultural
community on this issue of value-added agriculture has
reaffirmed a core observation I made many years ago as I began
working with farm organizations at the State level. There is
great sense of pride and satisfaction shared by the hardworking
men and women who have chosen to provide the food and fiber for
our Nation. Often, especially in years such as the past 2,
these men and women work for the equivalent of less than $3 per
hour in wages. Yet they remain engaged by the fact that they
produce the safest, most abundant, and cheapest food supply our
world has ever known.
I am glad the group such as the Farm Bureau who have been
gracious enough to attend this hearing as part of the annual
president's D.C. Trip take the time to come to Washington to
remind me and my colleagues that the future of agriculture in
rural America is safely in the hands of the family farmers who
shed their blood, sweat, and tears in the pursuit of feeding
the world. I believe these family farmers who are often second,
third, fourth and even fifth generation on their farms deserve
the opportunity to build a stronger tomorrow for themselves.
These tools for the future of value-added agriculture I am
convinced are a positive step towards helping the family farmer
regrow rural America.
When the Ranking Member comes, we will defer to her for any
comments she may wish to put in the record, and I will without
objection keep the record open for any opening statements that
other Members may wish to submit. We will, however, go right to
the witness panel and Members will be coming in as you all are
testifying.
First, I would like to recognize for his testimony Charles
Kruse, the President of the Missouri Farm Bureau Federation,
and I am grateful to all the witnesses for being here today.
Charlie, please give us your testimony.
STATEMENT OF CHARLES KRUSE, PRESIDENT, MISSOURI FARM BUREAU
FEDERATION
Mr. Kruse. Thank you, Mr. Chairman. As you mentioned in
your comments, we have a large number of Missouri Farm Bureau
people here this week, about 115, and several of them are here
for the hearing today; and on behalf of all our Missouri Farm
Bureau people, I want to thank you for having this hearing. And
I also want to thank you for the emphasis you have placed as
chairman of the Small Business Committee on agriculture.
My name is Charles Kruse, and I am a fourth generation
farmer from Stoddard County. My wife Pam and I raise corn,
soybeans, and cotton on our farm. I also serve as President of
Missouri Farm Bureau, the State's largest general farm
organization.
It is indeed a pleasure to appear before this committee and
share the views of Missouri Farm Bureau members on
opportunities for adding value to U.S. agricultural products. I
commend you, Mr. Chairman, for your continued interest in this
issue and determination to address the hurdles farmers face as
they attempt to capture a larger percentage of the consumer's
food dollar. We appreciate your leadership and stand ready to
assist this committee in whatever way possible.
Last September, as you mentioned, I was invited to share
some general thoughts relative to value-added agriculture and
the outlook for new generation cooperatives. Today almost 6
months later, I am pleased to report both growing interest and
knowledge in value-added opportunities. Yet the problems
plaguing U.S. farmers and ranchers have changed very little.
In Missouri, spring crops have not even been planted, but
many economists project another year of commodity prices that
are far below the cost of production. Agricultural exports are
expected to grow only marginally this year, and now farmers
have to deal with skyrocketing fuel costs and rising interest
rates. These factors coupled with the growing regulatory burden
and continued consolidation pose serious threats to the future
of many family farms. According to the U.S. Department of
Agriculture, 14 percent of our Nation's farmers are expected to
experience debt repayment problems this year.
Enhanced demand for agricultural products is the key to our
future success. Overseas, it is important that Congress approve
permanent normal trade relations status for China and pave the
way for implementation of the U.S.-China bilateral trade
agreement. Also, we remain hopeful that agricultural
negotiations within the World Trade Organization will move
forward in upcoming months.
Domestically, while rising fuel costs are a tremendous
problem, they have also generated renewed interest in
alternative fuel sources. We welcome the interest in renewable
fuels such as ethanol and bio-diesel. Farmers and consumers
alike will benefit from a national commitment to expand the
research of development of bio-based fuel technologies. We are
pleased that the administration recognized the potential
benefits of bio-based fuels in its proposed FY 2001 budget.
Many farmers believe strongly in the concept of value-added
products but are unsure how to turn their interest into action.
The learning curve is steep but climbable.
It is the financial requirements that can be
insurmountable. For this reason, we support legislation
developed by Chairman Talent and Congressman Thune that would
authorize a Federal tax credit for producers investing in
value-added endeavors. A Federal tax credit would be an
important tool for farmers and their lenders. Given the
weakness of the U.S. farm economy, we have heard all too often
that a producer lacks the capital to join a cooperative and the
family's lender is wary of additional exposure. State and/or
Federal tax credits can help bridge this gap.
In addition, we support legislation introduced by you, Mr.
Chairman and Congressman Thune, that authorizes centers to
provide producers with much needed technical assistance related
to value-added ventures. Access to information relative to
engineering, legal services, business planning, and market
development via these one-stop shops is absolutely critical if
these cooperative ventures are to succeed. We applaud the
bill's focus on competitively awarded State projects and
believe the grants could be extremely helpful to farmers
throughout the United States.
Finally, we commend the sponsors for including a provision
authorizing $300,000 per year to develop the quantitative tools
necessary to evaluate the impact of these centers on local
economies.
Last year, Missouri Farm Bureau conducted a series of
regional meetings to ask our members what we should be doing to
help restore long-term profitability. More farm program
assistance was not the sole answer. We learned that farmers
want to learn more about forming cooperatives, becoming price
makers rather than price takers. Today, farmers are looking
beyond market trends and focusing instead on the creation of
entirely new markets for their processed products.
During the meetings, we surfaced a number of ideas that
warrant further consideration, including: The development of
educational programs for producers interested in forming new
generation cooperatives and directors of new generation
cooperatives; the ability for new generation cooperatives to
solicit outside equity from investors who are not required to
commit agricultural products and do not have voting privileges;
and also access to additional State or Federal funds for
initial marketing assistance; and finally reducing the
regulatory burden and expense associated with forming new
generation cooperatives, especially those that include more
than one State. For example, and Mr. Chairman, I think you are
aware of this, a newly formed pork processing cooperative in
Missouri has already spent $15,000 to comply with Securities
and Exchange Commission requirements.
In closing, let me just say it is important that you know
that Farm Bureau does not blame the woes of the U.S. farm
economy on the 1996 farm bill or any other single factor.
Likewise there is no simple solution to our problems. We now
have freedom to farm. We must focus on improving our ability to
have freedom to market.
Thank you, Mr. Chairman. I appreciate the opportunity to
testify.
Chairman Talent. Thank you, Charlie. I have a list of
value-added start-ups in Missouri, some of which have already
broken ground, others of which are in the exploratory stage,
and without objection I will have that put into the record.
[Mr. Kruse's statement may be found in appendix:]
Chairman Talent. Our next witness is J. Gary McDavid, and
Gary McDavid joins us today representing the National Council
of Farmer Cooperatives. Gary is the chair of the legal, tax and
accounting subcommittee on tax legislation of the NCFC.
STATEMENT OF J. GARY McDAVID, ESQ., CHAIR, LEGAL, TAX &
ACCOUNTING SUBCOMMITTEE ON TAX LEGISLATION, NATIONAL COUNCIL OF
FARMER COOPERATIVES
Mr. McDavid. Thank you, Mr. Chairman, other Members of the
Committee. On behalf of America's farmer cooperatives and their
nearly two million farmer owners, we want to take this
opportunity to express our appreciation for the steps you are
taking in bringing to the forefront the needs of rural America,
especially with regard to the availability of technical
assistance and tax incentives that will help farmers help
themselves and the communities in which they live.
Additionally, we recognize and appreciate the efforts over
the past 2 years by this Congress in approving much needed
economic and disaster assistance in response to low commodity
prices and adverse weather conditions in many parts of the
country. For many farmers and ranchers, the emergency
assistance has been the difference between survival and going
out of business. However, it appears that given the current
economic outlook, similar assistance may again be needed this
year. Accordingly, we strongly support such action as may be
necessary.
At the same time, we believe that it is critical that
action be taken that will lead to a sustained long term
economic recovery, improved farm income and risk management,
increased market opportunities and growth in exports for U.S.
agriculture. It is within this framework that current farm
policies and related programs should be reviewed and evaluated,
as well as strengthened.
Furthermore, we strongly recommend a number of additional
actions that can and should be taken to address not only the
near-term challenges facing U.S. agriculture, but also to
achieve the long-term objectives outlined above. Critically
important is strengthening the ability of farmers to join
together in cooperative self-help efforts to improve their
income, manage their risk, and compete more effectively in a
rapidly changing global economy. A high priority should be
given to ensuring that public policies and programs relating to
agriculture are directed toward achieving this goal.
Federal programs relating to farmer cooperatives should be
revitalized and funding for research, education, and technical
assistance similar to the legislation resubmitted yesterday by
Chairman Talent and Congressman John Thune from South Dakota.
Other actions are needed to help farmers through cooperative
efforts become more involved in value-added production,
processing and marketing activities beyond the farm gate and to
capitalize on new market opportunities. Not only would this
help farmers capture a larger share of the consumer dollar,
thereby strengthening their income and providing greater
economic stability in the communities in which the farmers and
cooperatives are located, it would also promote needed
competition.
To achieve this, farmers and their cooperatives must have
in place policies and programs, including adequate tax
incentives, to help attract needed capital and investment.
Equally important is the need to maintain access to a strong
and competitive cooperative farm credit system. Current loan
guarantee programs should be expanded to provide financing for
both new as well as existing farmer cooperatives seeking to
become more involved in value-added activities. Other
initiatives also should be considered to further meet capital
requirements.
On the issue of tax incentives that are very important to
us, the National Council of Farmer Cooperatives supports and is
working for the inclusion of H.R. 1914 into an upcoming tax
bill. H.R. 1914 was included last year in the Tax Refund and
Relief Act of 1999 that was vetoed by the President. H.R. 1914
would allow farmer cooperatives to bypass the dividend
allocation rule, a regulatory rule which negatively impacts the
amount of the patronage dividend deduction taken by a
cooperative.
As cooperatives look to the 21st century, it is important
for the industry to have the appropriate tools so it can
continue to give value to its farmer owners. In today's world,
businesses need to be adequately capitalized if they hope to
remain competitive. Farmer cooperatives have a difficult time
raising capital. The reason is that they generally only have
two sources of capital, their farmer owners and borrowing from
a lending institution. Farmer cooperatives do not raise capital
from financial markets by issuing voting common stock because
their members hold this stock.
However, farmer cooperatives are allowed to issue a class
of nonvoting preferred stock that can be used to raise equity
from sources other than farmer owners. When issuing a dividend-
bearing class of nonvoting preferred stock on which dividends
payment is made, a cooperative must now comply with the
dividend allocation rule which has adverse tax effects on the
cooperative and has been one reason why cooperatives today rely
heavily on debt financing.
The effect of the dividend allocation rule is a third tax
on this portion of the cooperative's income. The dividend
allocation rule is technical in nature and is explained in our
written testimony. NCFC has been working with Representative
Bill Thomas in attempting to change this regulation.
Congressman Thomas has introduced H.R. 1914 that, if enacted,
would modify the dividend allocation rule.
The benefits of this legislation for cooperatives could be
substantial. Among other things they could more easily raise
capital from outside investors without giving up any ownership
or control by the farmers who own the cooperative, could
increase the amount of patronage earnings paid to farmer
owners, create a class of nonvoting preferred stock that could
be traded on capital markets thereby providing liquidity to
cooperative interests, create a preferred-stock program for
management and employees that would improve incentive programs,
allow a cooperative to repurchase a departing member's interest
for dividend paying stock rather than through debt. In a
nutshell, this proposal would give farmers a useful tool when
attempting to raise capital for their cooperatives.
For this reason, the National Council of Farmer
Cooperatives supports and is working for the inclusion of H.R.
1914 into an upcoming tax bill, and we look forward to working
with this Subcommittee and the Ways and Means Committee on this
issue.
Mr. Chairman, we appreciate this opportunity to testify and
look forward to taking your questions. Thank you very much.
Chairman Talent. Thank you, Mr. McDavid. I guess that
dividend allocation rule is a kind of triple taxation; isn't it
when you work it all out?
Mr. McDavid. Yes, it is. It is very unfortunate.
[Mr. McDavid's statement may be found in appendix:]
Chairman Talent. I will recognize the gentleman from South
Dakota for the next introduction.
Mr. THune. Thank you, Mr. Chairman, for holding the hearing
in the first place because I think this is a very timely
hearing and for giving voice to this issue and shining a light
on this issue because this is something that I believe really
is about the future of agriculture, and we have had a good
amount of success already in our State in the area of value-
added enterprises. The legislation which you have taken
leadership on and helped move forward here is critical in terms
of what it can do to further bolster those efforts.
I am honored today to have a couple of gentlemen from my
home State, first of which I will introduce right now, to
testify on this issue. Rick Vallery is here today on behalf of
South Dakota Wheat, Inc. He has also formerly farmed with his
family in western South Dakota raising cattle and irrigated
corn and alfalfa and wheat. In 1984 he went to work for the
South Dakota Farm Bureau; and 3 years ago left the Farm Bureau
to go to work for South Dakota Inc. Rick is very knowledgeable
regarding value-added agriculture, and I believe his testimony
will be a great asset to the Committee as we begin to consider
how we might expand opportunities for value-added endeavors.
So, Rick, thanks for coming; and with that we are happy to
listen to what you have to say to us.
STATEMENT OF RICK VALLERY, EXECUTIVE DIRECTOR, SOUTH DAKOTA
WHEAT, INC.
Mr. Vallery. Thank you, Mr. Chairman and members of the
Committee. My name is Rick Vallery. I am the executive director
of the South Dakota Wheat, Incorporated which is a producer
group located in Pierre, South Dakota. Currently, South Dakota,
Incorporated is working on two valued-added projects, and we
have two value-added projects that are kind of waiting in the
wings. One project is a proposed flour mill that has a niche
market. It is a very specialty-type flour, and so we are
working on that.
Another project that we are just putting together and we
are not sure how far we are going to get with it, but it is a
Web site where you buy and sell commodities. We think we have
some potential for that, and we are very interested in seeing
how that may work out.
A year ago, the South Dakota legislature through the work
of us and some others established a value-added subfund account
of $3.4 million. This is a one-time fund. We only get it once.
This account is designed to handle feasibility studies and/or
marketing plans for value added, and that is all that it is to
do. To date, there have been five projects that have been
funded and approved for these moneys. Two of those studies are
nearing completion. If either one of these studies become
feasible or are proven to be feasible, then this legislation
that Congressman Talent and Congressman Thune have proposed
becomes very important.
Also around a year ago, South Dakota commodity
organizations and interested businesses such as the association
of co-ops and rural electric and rural water systems
established a nonprofit organization with a board of directors,
and this is their mission statement verbatim: To foster
creation of producer-owned, value-added agriculture by offering
technical and staff support and championing value-added
agriculture publicly by educating producers, lenders and the
public on value-added concepts.
So for the last couple of years, we have become very
serious about value-added agriculture in South Dakota. There
are two keys to a successful value-added project. One is
organizational and the second is financial, but the key that
brings it together, it is the finances during the
organizational phase of start up that is needed most, and that
is what the Talent-Thune bill does. It provides that
organizational assistance in the legal, in the research, in the
consulting, in the engineering, all areas that are extremely
important once the feasibility marketing plan has been proven
successful. It is the next step. It is a perfect fit.
During that organizational phase, you will have questions
or producers will have questions that are asked and answered
concerning about the legal structure of which entity should we
be making, should it be an association, should it be a
corporation, should it be a cooperative. If it is a
cooperative, what kind of cooperative? Should it be open,
should it be closed, should it be a 521? All those decisions
need to be done, and this allows for some financial assistance
in the legal side of that.
Another scenario is if it is a cooperative, is it going to
be in one more than one State. If it is in more than one State,
then we have the securities we need to go through which is
additional legal entity work which is important. It is very,
very important.
Questions will be asked concerning the markets. Questions
will be asked concerning the by-products of the entity that is
being focused or the value-added product. Questions will be
asked concerning real estate or building procedures or building
structures. Location, all those things are handled through the
engineering, through the infrastructure that is available in
whatever State, and those are things that are covered in the
proposed legislation.
The Talent-Thune bill offers you a niche in starting and
organizing value-added agriculture. It is an extremely
important opportunity to provide assistance in legal
engineering and consulting aspects of value-added projects
wherever they may be.
The second part of that, which is the tax credit portion,
is a concept that is needed in the agricultural industry and
would be welcome. We just view that from a producer's
standpoint as just a wonderful opportunity to take advantage to
provide that incentive to be a part of a value-added
agriculture, and so we think both bills have tremendous value.
With that, that closes my testimony. Thank you for the
opportunity and the time for allowing me to share my beliefs.
Chairman Talent. Thank you, Rick. When we complete the
testimony, we will have an opportunity for questions. I don't
want our witnesses to think we don't have questions, but by and
large, I restrain myself and wait until all the witnesses are
done.
[Mr. Vallery's statement may be found in appendix:]
Chairman Talent. Our next witness is Brooks Hurst. Brooks
farms with his father and brothers in Missouri, in the far
northwest corner of Missouri. So we have the southeast and the
northwest of Missouri represented today. Brooks is vice
president of the Missouri Soybean Association which has taken a
strong lead in value-added agricultural development; and I
should state, particularly given my comment before, that one of
the reasons Mr. Thune and I got into this is that our two
States, South Dakota and Missouri, while certainly not the only
States to be active in value added, are two of the leaders and
the ag leaders from our States really have probably as much
experience that exists in the country in applying this concept.
Mr. Hurst, please go ahead.
STATEMENT OF BROOKS HURST, VICE-PRESIDENT, MISSOURI SOYBEAN
ASSOCIATION
Mr. Hurst. Thank you, Chairman Talent. I would like to
thank you and your fellow Committee Members for the opportunity
to testify before you today. I would also like to thank you,
Mr. Talent and Mr. Thune, for the introduction of the Value-
Added Development Act.
My name is Brooks Hurst. I serve as vice president for the
Missouri Soybean Association and farm with my two brothers and
father in northwest Missouri raising soybeans and corn. Mr.
Chairman, I have written testimony; but for the sake of time, I
would just submit it for the official record.
You are all familiar with the tough times in the farm
economy today; but as a farmer, I am inherently optimistic as I
believe all farmers are. I believe the future of farming holds
great opportunities and the technical assistance provided for
in this act will allow farmers to capture these opportunities.
Some of the things, biotechnology will bring such as
nutraceuticals are truly exciting. Currently, Monsanto has
beta-carotene they can put into rice to provide vitamin A for
third-world countries, and this is just the first of many new
technologies that are going to allow niche marketing, and I
believe that farmers will be able to capture some of these
markets.
One of the future trends is identity preservation, and a
system is needed to keep track of these different technologies
and keep them in a separate pipeline. Northwest Missouri is
starting a soybean processing plant right now, and we have got
a farmer board that is just entering into discovery of business
plans, and a technical assistance center such as proposed in
this act would be very beneficial to building marketing plans,
help with legal assistance, an engineering assistance.
Soybeans are processed into meal and oil. Soybean meal is
primarily used for feed. The oil has many uses, such as bio-
diesel that has been mentioned several times here today. We
believe we have found a more efficient, smaller-scale process
for separating the meal from oil in this small added-value
processing plant that we are working on in northwest Missouri.
If we can find an efficient, environmentally-friendly way that
is just as cheap as the mass production processing plants that
the current processing corporations use, then we have an
opportunity to gain a huge market in identity-preserved
soybeans. We can clean out this plant in less than a day and
switch to a different variety of soybeans with different traits
for different customers.
AGP has talked about identity-preserved soybeans and they
said it would take them 2 days to shut down the plant and
totally clean it out to run a different type of soybeans
through. So we would have a great advantage as a small
processing plant in this market. If we had one place to go for
all the technical assistance, we would have an advantage in
marketing these soybeans and getting the production process
started.
We also need all kinds of technical assistance. For
instance, we can also make plastic out of soybeans and if we
can find a way to harden plastic in 2 hours instead of 3 days,
it makes it a lot more viable opportunity for us.
Continuing on in the identity-preserved focus of things,
there are several businesses in Missouri that sell directly to
Japan. One of the things that Japan is really interested in is
knowledge of where their food products come from. They like to
know where it was raised and who raised it, and if we have a
system set up providing information for these consumers, that
will be a great benefit to Missouri and American farmers.
You know, I feel I am an expert in farming, and I know how
to raise soybeans and corn, but I don't know how to set up a
business structure. I don't know how to engineer a soybean
processing plant, and this act would lend great benefit to
myself and fellow farmers when we start these value-added
businesses. My father was on the founding board of an ethanol
plant in northwest Missouri. He came home late many nights
frustrated because he didn't have the expertise to start a
business plan, and he didn't know where to go.
I don't know how many oil wells there are in Missouri, but
I don't think there are a whole lot. Processing corn into
ethanol is one way to get energy from a renewable,
environmentally-friendly source. Soy-diesel is another, and I
feel farmers will benefit greatly from these opportunities.
Touching on the tax credits, I think that that is a vital
instrument. Other businesses have received them, and it is a
vital interest and levels the playing field with large
corporations so the small farmer can capture these added values
and maintain a viable business.
I would like to thank you for the opportunity to testify
once again, and if there are any questions afterwards, I would
be happy to answer them.
Chairman Talent. Thank you, Brooks.
[Mr. Hurst's statement may be found in appendix:]
Chairman Talent. I will recognize again the gentleman from
South Dakota for another introduction.
Mr. Thune. Thank you, Mr. Chairman. The other witness from
South Dakota, another friend of mine, is John Haverhals; and I
want to thank him for appearing before the committee today as
well. John is the past-president of the South Dakota
Cattlemen's Association and is currently a director on the
South Dakota Beef Industry Council's board. John and his family
also run a cattle feedlot there in Hudson, South Dakota; and as
a cattle producer and partner in a value-added agricultural
business, John knows his subject inside and out. I very much
look forward to his testimony here today. So John please share
with us your thoughts on value-added agriculture.
STATEMENT OF JOHN HAVERHALS, FORMER PRESIDENT, SOUTH DAKOTA
CATTLEMEN'S ASSOCIATION
Mr. Haverhals. Thank you, Mr. Chairman, and thanks to the
Members of the Committee for the opportunity to testify.
My name is John Haverhals. I am from Hudson, South Dakota,
and we do have a cattle feedlot. So the entire time that I have
been in beef production, I guess I have always been involved
with value added as we took feed stuffs and processed them
through the live animals and created protein meats. So from the
day I started as a young child feeding cattle, I think I have
always been involved.
I want to relate a story that I have with starting our
business that we started 7 months ago. It is in Overland Park,
Kansas. It is a gourmet meat store where we sell some of our
meat through that process. The biggest opportunity that comes
along with that, instead of receiving a dollar eight or a
dollar fourteen that I would receive from a traditional
harvesting facility, I am now selling product at $19 a pound.
With that dramatizes the value that can be captured by creating
these entities. That also is a stimulus for others to want to
enter into these things.
As the testimony that was given prior to me, many things
have been said of what helps and doesn't and what is needed so
I am not going to reiterate that; but I can truly say as a
person who has just started this process 7 months ago, there
isn't a single item in your legislation that I couldn't have
used dramatically. And when it comes to the tax credit, that is
also a major part of not entering into these things. We had
several people that did not enter into our joint agreement
because of the capital outlay. Right now, the capital outlay I
have in our store, it is on our balance sheet; but it is a
nonrenewable asset because we won't receive a return on our
investment for 3 or 4 years. I can't use it as a tax break, and
it is not being used in my general business. So I have taken
capital from my general business and moved it over into this
new venture, which actually is a deterrent to my income in the
short term. Long term it will be of benefit.
In summary, these pieces of legislation are a win-win for
those involved. Farmers and ranchers will have the opportunity
to become more profitable through the development of new and
existing products. The communities in which they live will
benefit from their success. The economy will see enhanced
competition; and in the end, the consumer will enjoy a larger
variety of products from which to choose. For these reasons, I
ask you to continue to work on the legislation, and I thank you
for the opportunity to testify.
Chairman Talent. Thank you, John.
[Mr. Haverhals' statement may be found in appendix:]
Chairman Talent. It is a pleasure now to introduce Gerald
Tumbleson, who is the past president of the Minnesota Corn
Growers. And let me just say that I think we have on this panel
three States' representatives who have been the lead in value-
added enterprises. And not to spark a competition, but
Minnesota may be at the forefront. And I am a big believer that
when you have a working model some place you try and duplicate
it rather than reinvent the wheel. So Gerald, please tell us
how you are doing it in Minnesota and thank you for coming.
STATEMENT OF GERALD TUMBLESON, PAST-PRESIDENT, MINNESOTA CORN
GROWERS ASSOCIATION
Mr. Tumbleson. Thank you, Mr. Talent and also Mr. Thune for
inviting us here. It is quite an honor for us to come off the
farm out there and come in here and speak with you today. Not
only being with the Minnesota Corn Growers, I am on the board
of the National Corn Growers. And Minnesota does have a lot of
ethanol plants as we go through this; but as we see it
happening, you sometimes think of it as a farmer-owned thing
and farmer controlled.
I am going to not follow my script--you will be able to
read that--because some of the things have been repeated, and
we don't have to go through those again. But first of all, I
want to thank you for the foresight of coming along with this
bill and the bill for the tax credit at this time. It is so
amazing that it happens to be surfacing now.
I remember great grandfather who was a farmer, what he did
is he took horsepower which was four legged at that time. He
put a seed in the ground; he let it grow; he nourished it. And
he harvested it, and he sold it. You know what I am doing
today? I am putting a seed in the ground with horsepower. It
might be on rubber tires or something. I nourish it, and I sell
it.
And as I look across the United States and in the world, I
see every business has made a drastic change. And here I am
farming similar to what my great grandfather did. And I am
thinking, why are we doing that? Why hasn't agriculture today
taken the technology and the things and moved into a different
direction? If you think about the technology in agriculture
over the last 10 years, starting 10 years ago and where it is
today, we have started that. There is IP grains, the identity-
preserved grains. There is other forms of things that we are
putting together.
And as we do that in Minnesota, we have some 30 farmer-
owned cooperatives or venture-together cooperatives up there,
and we are working very hard on that. But it is amazing as you
get farmers together the way you have to do it; you need to
join in an alliance. Now there is a 21st century alliance that
many of you are familiar with from down in Kansas. There is an
alliance in Illinois. Minnesota has not had an organized
alliance in the past. We had farmers get together. Now we are
organizing an alliance called Farm Connect in Minnesota. We are
going in there where farmers can put in $500 to join this
alliance, and every year they add another hundred dollars for
membership.
What it does, it puts farmers together. If you get 1,000
farmers together and now you want to do some processing or
something, or value-added thing, you send a letter out to all
of them and say would you like to invest into this or would you
like to get more information. The ones that want it write back.
Now, you might only have a hundred of them or 200 of them, but
you have the organization that puts it together.
From then on what your bill does--and I commend you
wholeheartedly for this bill, like I say it is prime time, it
is perfect. What we can do is now we can get money to go out
and find out where we have to go. The feasibility studies, as
farmers, as was mentioned before, we don't have the expertise.
So why do we have to be stubborn farmers like we have been all
our life? Why can't we say let us hire that expertise? Let us
join together and do this, and that we can do in these
organizations that get together.
We have corn-processing plants in Minnesota. Somebody said,
well, why do you need more if you have the processing plant.
The processing plants today are basically working with starch.
We have protein; we have oil; we have fiber. We are going to
take that all out of the kernel before it goes into the starch
processing. Okay. Now, look at where we can go, where we can go
with those processing plants in the next step if we have the
Farm Connect working together so that we can go out and do
that.
And what happened is agriculture is really in a pretty
tough time. As you know, the prices are down; and we don't have
a lot of money. But there is other things going on here in
Congress, and I appreciate what you are doing. And like crop
insurance, income protection, it is not a profit thing out
there, but it is a protection. What that does is frees up a
little money. I don't have a reserve in a back pocket in a
savings account in case I have a bad year to keep farming. That
frees that up. Now, look at what the farmer can do with that
money. Now it opens up. He has a little cash. He joins--if he
has 50,000 or a hundred thousand, joins with a hundred other
farmers, then you are talking millions. Then you go to the
banker with three or four million and you leverage that three
to one, you are six to eight. Now we can move and with your
bill so that we can get the expertise and work in that
direction--besides your tax bill, that is gravy on top of this.
If you can get that done, invite me back; I will fight for you
on that one, too.
As you do this, think of where we can go out there. This is
not just farmers. I have implement dealers, I have hardware
store owners, I have grain builders in my area that are really
hurting because we don't make enough money. This opens it up
and makes rural United States prosperous. Now we are not here
just as farmers. I am not here just as farmers because those
friends go to church with me. They have kids in school with my
kids. That is very important, and what you are doing under this
thing is you are opening up rural development even though it
looks like it is farmer-owned value added. It is rural
development when you think about what it does, and I am going
to quit now because I think we have everything wide open for
us, but I am so excited that you have come with these pills at
this time. If you need help, call.
Thank you for this opportunity.
[Mr. Tumbleson's statement may be found in appendix:]
Chairman Talent. I appreciate that, Mr. Tumbleson, and you
said, I think, better than John and I have said it so far. And
I am grateful for your passion on behalf of this.
In fact, it leads into my first question because I was
going to ask Charlie, you were talking about the impact even
beyond producers. Charlie, I know that there are three value-
added enterprises under consideration just in southeast
Missouri, and maybe you would talk a little bit about them. And
I wanted to ask you the impact they would have on the economy
in general, in Stoddard County and in southeast Missouri if we
can get these up and running. Maybe you can follow up on what
Mr. Tumbleson was saying.
Mr. Kruse. Yes, sir. I think Brooks Hurst made a good point
a while ago when he said we know how to farm, but we don't
necessarily know all the things we need to know in order to get
involved in some of these value-added enterprises. I think one
of the most exciting things we have going on in southeast
Missouri is we have a group of rice farmers that have joined
together and they have found that there is a real demand from
the country of Turkey for a medium-grained rice.
We had never grown this rice. In fact, it has never been
grown anywhere in the United States until this past year. And
they sold every bit of the rice they produced, and the
government or the company in Turkey that they worked with has
come back to them and told them that they want to buy a whole
lot more rice next year than they had this year. And I think
this is exactly the kind of thing we are talking about. Farmers
coming together, finding a new market or finding a new niche,
if you will, for something that we produce, adding value to it,
and whether we are talking about livestock, whether we are
talking about any of the other issues that have been talked
about here today, I think it is absolutely essential that we do
this.
And then I think, Mr. Chairman, as you pointed out, not
only are we going to help farmers, we are going to help the
agricultural economy and we are going to help everybody from
implement dealers to automobile dealers to everybody on main
street in all the communities in rural America. When
agriculture is thriving, our economy thrives in rural America.
Chairman Talent. Thank you, Charlie. You talked about niche
marketing, and one of the reasons I wanted to do this and do
this in this committee is we have seen in this committee in
other contexts how this kind of technical assistance helps
people, entrepreneurs in particular get going. And for a very,
very small amount of money up front, you produce an awful lot
of economic activity.
Now you mentioned niche marketing, we have something in the
St. Louis area called produce row, which is a row of fruit
distributors, and I go down and talk to them. They are very in
touch with where consumers are coming from. People in terms of
the domestic market are more and more interested in certain
kinds, I don't want to call them exotics, but food-specialty
items; and it is the small producers who are in a position to
understand that market and react quickly to it and get way out
ahead.
John, you were mentioning the beef, what you are doing in
terms of gourmet beef, and you get $19 a pound for that as
opposed to a dollar a pound, right? It is really out there to
do and it is the small value-added enterprises who can react
quickly and create IPB products. It is a classic example of
that.
Let me see if I had any other questions. Okay. Rick, you
mentioned a $3 million program that South Dakota has for
feasibility studies. Is that a grant program?
Mr. Vallery. It can be a grant, or it can be a loan
program. It is based on the profitability of the project. If
the project goes through, it can be called in as a loan. If the
project does not go through, then it will be considered a
grant.
Chairman Talent. We may want to talk with you more about
that because we are pushing this tax credit legislation, and
the problem is complicated when you create tax credits. I mean,
can they be sold? Who exactly can qualify for them? You know,
all that sort of stuff and I think we will figure all that out,
but we have to be open to all different kinds of ways of
getting extra financing because the tax credit is complicated.
And believe me the Ways and Means people can come up with all
kinds of questions when you take a bill over to them.
Here is another example, if any of you want to comment on
this, in terms of applied research, as we develop for example
new value-added soybean products. I saw at University of
Missouri at Rolla, the kinds of products that are being
developed and a small-value added enterprise can take that and
market it much more quickly than a larger, huge corporate
outfit can.
Any of you want to comment on that? Brooks, you want to
make a comment on that?
Mr. Hurst. Sure. Yes, they can move into the market a lot
quicker; and I would just like to go back and address the
economic impact on the communities a little bit, too. The town
that the ethanol plant is going into is small. The plant is
going to hire 22 people and that is a 15 percent increase in
the population of the town, which is a big impact on the
economy. And the surrounding communities will be greatly
impacted, too; and so any of these small value-added processing
plants increase the tax base and the population--around the
turn of the century the population in our county was about
twice what it is now which is 7,000 people. So we need jobs in
rural America. The farm economy is the only economy in our
county, and so any value-added processing plant that we can
bring into that town would be a great benefit.
Dr. Virgil Flanagan in the University of Missouri at Rolla
has done a tremendous amount of work with soybean products and
processes. And the possibilities are limitless. Some of them
are, as you mentioned getting brought to market quicker, and
some of them are going to be very hot commodities and will be
produced rapidly and have a huge market in a short time.
Chairman Talent. The only other comment I want to make
before I recognize Mr. Thune is dealing with the issue of
costs, and we are talking about legislation which will cost in
the millions of dollars. Certainly our VETA bill costs that
much. We are fixing out the tax credit right now.
Well this year, we are considering another safety net bill
which I will fully support on the order of six or seven billion
dollars or more. When you consider that for an up-front
investment in the order of tens of millions of dollars, we may
empower producers to diversify and get into value added so the
next cycle of low-commodity prices--I mean if that cuts in
half, which is probably conservative, the amount of the safety
net bills we are going to have to pass then, you see the
difference in terms of savings for the tax payers. You all can
comment on this if you want to, but not doing this now would be
a classic case of being pennywise and pound foolish and we are
emphasizing that. And I would encourage you all and the other
commodity groups to emphasize that as you talk to your
congressmen about the bill.
I am happy now to recognize my friend and cosponsor of the
legislation Mr. Thune.
Mr. Thune. Thank you, Mr. Chairman. And if I might just
note a couple of observations. One being which I think some of
the panelists noted and that is a--I have a tendency and this
is kind of the crossroads of agriculture and small business,
and I appreciate again the leadership that you have taken. I
hope we can generate interest on the ag committee in this
because I have a tendency to look at a lot of these issues in
terms of the impact it will have on individual producers and
what a great benefit that will be. But the bigger picture is as
well is how do we preserve the rural economy.
In my State we are talking about a lot of small businesses,
a lot of small main streets and downtown areas that are dying
slowly and don't know what to do. And this is a perfect
opportunity not only to improve the bottom line for our
producers but also to provide some improvements in downtown
main streets, and like all the ancillary businesses that you
mentioned that also benefit from this. And I think that is
really important when we talk about it, that is--you know, I
think that is an aspect we need to keep in mind.
And the second observation would be as you just noted, it
is really important, I think, for the producer organizations
who are represented here today as well as others to get out and
do the grassroots and start, I think, raising this issue,
raising the awareness level, the education level that is out
there because it is going to be critical for us to move this
forward.
The Chairman mentioned, we are dealing with Ways and Means
on tax issues. There is no easy feat. We have got our work cut
out for us. I think this is the right approach in my opinion,
and I credit everybody at the table today for efforts that have
already been made that are underway and want to encourage you
to continue that, but I think we need to be looking at ways we
can partner and provide the incentives to take this further
down the track.
It seems to me that the operative state of agriculture
today, if you look at it at least in the last couple of years
is we lose a little bit on each sale, but we make up for it in
volume. You can only do that for so long before you end up in
the red, and part of the problem is--is again we have become
very efficient on the production side of it. We are producing
wonderfully. We have got great efficiencies and great
technology that is serving us extremely well, but the other
side of the issue is we have got to open markets.
I think part of the solution to the whole crisis we are
facing in agriculture today is markets, and it is trade. It is
risk management. It is crop insurance, and other things that we
are working on here. And as you mentioned, Mr. Chairman, the
House budget which we will adopt, hopefully, sometime next week
will include emergency provisions to provide again assistance
this year to address the ongoing cycle of low prices.
But this is such an important, I think, component part of
the solution; and I appreciate again those who have testified
today and think that it is important that we continue to
highlight not just the impact on individual producers as
important as that is but also how important this is to rural
economies. And our State is a perfect case in point.
A couple of questions I might ask, I guess; and Rick, you
had mentioned that South Dakota Wheat is working on two value-
added projects today and has two more in the wings. Could you
elaborate a little bit briefly on what those projects entail?
Mr. Vallery. Certainly. Project one is a $50,000
feasibility study for a specialty flour mill. We are also--I
call it specialty. Identity-preserved, it is the same type of
thing. Major problems that we are facing are infrastructure,
transportation to the markets. When you are working with value
added from South Dakota--and this is a South Dakota issue, we
know that, it has usually been told to the producers that it is
cheaper to ship the commodity than to ship the finished
product.
Well, how do we know that? We are being told that. How do
we know that? Part of the $50,000 was a $10,000 transportation
study which has not been completed but has found a couple of
switches, which is railway terms, where we basically can ship
the finished product cheaper than the raw product. But without
the $10,000, we would have never known that; and we still might
not be successful. But at least we have an opportunity to
continue to look into that area and maybe be successful.
The second project we have is an interesting concept. It is
basically putting together the commodity groups and selling
commodities via the Web site. The idea is to post on a Web site
a commodity that a farmer-producer has tested. For the
soybeans, it will be tested for certain oil; or for wheat, it
will be tested for protein or test weight of the wheat or
possibly flour millability characteristics or dough
characteristics for the bakers or ash content. For sunflower,
it will be oil. For corn, it will be starch or whatever. Those
will be tested--and might be a white corn let us put that in
there. Those will be tested by the producer themselves and then
will be put on a Web site for purchasers to surf.
If they find something they like, they can then go to that
purchaser. It is simply a clearinghouse idea. It is in the very
conceptional stages. We are not exactly sure where this is
going to go, but it is a good idea. It is something that has
not been done. I shouldn't say has not been done. I just read
just the other day there is a Web site that is trying to do
very similar to us called CyberCrop, but this is going to be
tried to be producer owned and producer driven.
Those are the two we are working on right now. We have had
some discussions about wheat straw boards. That has been
ongoing. We have had some things that haven't quite worked, and
so those are kind of waiting in the wings.
I would like to add one thing that is so important with the
assistance that this bill provides. For every co-op or
project--value-added project that fails, whether it is because
of funding or legal or market or whatever, you create yourself
a higher hill to sell the next project. And it is so important
to keep that hill low so that the next project has a good
opportunity as well, no matter what the commodity or what the
crop.
Mr. Thune. I guess I think the thing--you do have to keep
in mind is we are not going to hit pay dirt on every one of
these deals, but to me this is sort of--the legislation that we
have proposed in many respects is like a kind of R&D fund. You
know, if you don't do research and development you are not
going to find those little gems out there that are really going
to make it big, and I think that providing the technical
assistance and expertise that is necessary to at least get this
process underway and develop a system where you can gauge and
measure whether or not a project is going to be successful is
really important. And so I think this again is the right
approach.
I also believe that, you know, ultimately long term some
things that we did last week on the bill that we passed, the
tax relief deductibility of health insurance premiums, relief
on the death tax, expensing provisions increased. Farmers and
ranchers are small businesses. Those are things that are going
to be critical, I think, in terms of lessening the load that
you all carry; but I am delighted that we were able to at least
begin the process here in hopefully filling in the blanks in
terms of the value-added concept because the concept is one
that needs to be fleshed out. I think the timing is right.
And one of the other issues that I would say I know is a
concern in our State has to deal with the whole issue of
concentration. In fact, we are going to be introducing
legislation here soon. We are in the process of drafting a bill
which will address concentration in the ag industry, and I
would just direct this question to John--Mr. Haverhals.
You indicated at the end of your testimony that value-added
projects can enhance competition. And with the, you know,
stepped up level of concentration mergers and large agri-
business firms within the ag sector being a serious concern to
producers, do you think that development of value-added
endeavors can aid producers as they try to compete in what has
become an increasingly vertically-integrated industry?
Mr. Haverhals. Absolutely. As you have the more
opportunities to select where you are going to sell your
products, you can move away from your traditional three or four
markets as we have in beef today. So as I produce animals,
whether I buy them in South Dakota or Missouri, as I buy those
animals and feed them, I can target them to the different
markets. Some of them are now targeted to go to our own store.
But with that comes great rewards, and I wholeheartedly think
it would defer concentration.
One comment I would like to make, if I may, Congressman, is
as we go and build all these value-added processing for corn
and soybeans and wheat, and et cetera, never forget to create
co-companion products. And at our feedyard today, we feed--60
percent of our ration is coproducts for food processing,
ethanol plants, et cetera. One of the greatest harvesters of
those co-products is the ruminate animal which is a beef animal
or a sheep. So never forget about the beef animal and its
integral part of completing the cycle as we reprocess and
recycle those products back.
Mr. Thune. I have a feeling if I ever forget you will let
me know about it, John. So, Mr. Chairman, I can keep asking
questions but I yield back.
Chairman Talent. Your addressing the concentration issue
which was the only other point that I wanted to make; that this
was a way of dealing with the concentration of mergers of large
agri-business firms that I think concern all of us in the
agricultural sector and allows producers to participate and
concentrate upwards instead of having it always come back down
to them.
Mr. Tumbleson, I thought your comments were maybe an
appropriate way to conclude about how everything has changed
and agriculture needs to change as well. It isn't good enough
anymore just to be a better and better producer. You have to be
a better and better businessperson at the same time. Do you
want to comment on that?
Mr. Tumbleson. That is very true. Thank you, Chairman. The
thing I want to stress as we look into that is many people
don't realize that if you have to have vision, and farmers
sometimes get caught without vision because they aren't making
enough money, but we know the carbohydrate ion is going to
overtake the hydrocarbon ion in the future. The hydrocarbon ion
being the petroleum ion and the carbohydrate ion being the
renewable ion that is degradable. We know it is going to
happen, and with your concentration issue here, if we can get
ahead of that step in farmer owned, not totally owned, maybe
assisted owned into part of this, do you realize what--I am
going to die. You are going to die. Everybody is going to die,
but my love for agriculture is too great to have agriculture
die.
If we can get this value added bringing some of that profit
back to our future generations through that carbohydrate ion
which we can through value added, we will be in a position in
time, as it replaces the hydrocarbon ion, to have a solid
footing. And I am really excited that we can do it, and these
bills you have are going to push us toward that. And we in
Minnesota are working very hard at that, and there are other
States, you talk about Missourians and South Dakota. I have a
State right south of me in Iowa going strong at it, and we will
move across the country with this concept with your help. And I
want to thank you very much.
Mr. Thune. Would you move across the country and move to
South Dakota? We would like that, too.
Chairman Talent. I want to thank all the witnesses. Let me
close by saying that there is something here which I have heard
described as the 7-year rule which means that once a good idea
is introduced and floated, it takes 7 years for it to sink into
the consciousness of Congress enough to pass. And John and I
are hoping to shorten that to 1 year and get it done this year;
and in order to do that, we really need the help of producer
groups.
We have had very good conversations with some of John's
colleagues on the agriculture Committee, and we can catalyze
this whole process if when there are hearings there on the
general situation, make sure that your witnesses testify in
favor of these kinds of value-added ag innovation centers and
the tax credit and be sure and talk to your Members of Congress
about it. We are really counting on you. We will do our share
up here, but we need your help.
With that without objection I will leave the records open
for 5 days for any further questions that Members may wish to
submit; and with that, adjourn the hearing. Thank you all.
[Whereupon, at 3:25 p.m., the committee was adjourned.]
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