March 22, 2024

Subcommittee Chair Andy Harris (R-MD) expressed apprehension about the potential misuse of Commodity Credit Corporation (CCC) funds to advance political agendas not authorized by Congress. Harris said he is concerned that the CCC “continues to be treated like a slush fund to advance political priorities not directed by Congress.” He also noted that he has read Vilsack’s comments in news articles over the past few weeks “suggesting that you can use CCC funds to help farm safety net programs outside of the regular farm bill process,” adding he is “perplexed as to how USDA would be able to do this, as establishing reference prices and farm programs is done by Congress, the Legislative branch, not the Executive branch.” He said he hoped his colleagues at the House and Senate Ag Committees can complete a farm bill this year, “but if not, that does not give USDA the green light to start raiding the CCC to de facto set up new programs not authorized by Congress.”

Vilsack told Harris he wants “to make sure that you and I have a meeting of our minds on the utilization of CCC as it relates to the farm bill. I never suggested nor did I ever say that we would be using the CCC outside the scope of farm bill discussions and negotiations. What I did say was, in order for us to have a farm bill, it’s going to be necessary for members of the Ag Committee to be creative how they can use the resources within the CCC at their instruction and direction to be able to provide the relief and assistance they’re looking for to bolster our safety net. That’s what I said, that’s what I meant, and I just want to make sure the record is clear about that.”

Ranking Subcommittee member Sanford Bishop (D-Ga.) noted that in 2022 when net cash farm income reached a record high at over $200 billion, 13% of commercial farms, 50% of intermediate farms and 63% of resident farms had negative farm income. He that Vilsack’s prepared remarks mentioned several programs that help grow markets for American farmers that receive mandatory funding. Bishop asked: “How can we on the Appropriations Committee support and grow the farm economy on the discretionary side of the budget?” Vilsack quickly answered, “Continued support for local and regional food systems. The reason being that when farmers are operating under the normal food system, they get roughly anywhere from $0.15 to $0.20 of the food dollar. When they sell locally directly to their consumer, they get anywhere from $0.50 to $0.75 of the food dollar. So, to the degree to which you can continue to support local and regional food systems and the programs that are already in USDA, supporting our processing initiative, for example. Continuing to support renewable energy production. Why? Because it’s an opportunity for a new commodity, a new stream of income for producers.” Vilsack added are the transitioning to more renewable sources of energy. “Farmers have the ability to provide excess energy and therefore additional income. And finally, making sure that we continue to support the conversion of agricultural waste into a wide variety of bio-based products, everything from sustainable aviation fuel to bioplastics and everything in between.”

Rep. Bishop said that he is hearing from a lot of peanut and cotton growers from the southeast as well as agribusiness owners and bankers, that farmers are struggling financially. “Much of it is due to the dramatic increase in farm input costs, high interest rates, weak exports. And as you know, the financial situation on the farm impacts many aspects of the rural community. With the farm bill not yet in place for the 2024 crop year, would you support a one-time payment to peanut and cotton producers to help them until we can get the farm bill in place for the ‘25 crop year?” Vilsack said he would work with Bishop’s staff to see what might be possible. “I would say that we are continuing to get resources out under the emergency relief program. There are also additional programs and additional opportunities for additional assistance for your producers, in addition to or in lieu of a single payment,” Vilsack added. Bishop then noted that an aid payment was done “previously for rice producers, I think for the 2022 crop, through an appropriations bill.” Vilsack acknowledged that occurred but noted “we had to give up something in order to be able to finance the $250 million that went to rice producers. I’m not sure what you’re willing to give up or what members of this Committee are willing to give up or what I’m willing to give up.”

Rep. John Moolenaar (R-Mich.) expressed concerns about the challenges faced by small farms, particularly regarding the rising labor costs under the H-2A program. He highlighted the strain that this places on farmers in his district, many of whom are facing financial hardships and potential closure due to unsustainable wage rate increases. Moolenaar proposed the Supporting Farm Operations Act to pause these increases for two years and provide relief to struggling farmers. However, Vilsack emphasized the need for broader systemic reforms, suggesting that freezing wage increases alone may only delay inevitable problems. The discussion became contentious as Moolenaar pressed Vilsack on his actions to support American farmers and address the Department of Labor’s role in imposing escalating labor costs. Vilsack defended the use of data-driven decisions but faced criticism from Moolenaar, who argued that the current approach threatens the viability of American farms. Despite the heated exchange, Vilsack reiterated his commitment to advocating for farmers and farm workers, emphasizing the importance of finding solutions that benefit both parties. However, Moolenaar remained skeptical and urged Vilsack to take more decisive action to address the challenges faced by American farmers.

Highlighting the significant increase in funding for the Women, Infants, and Children (WIC) nutrition program, Subcommittee Chairman Andy Harris (R-Md.) emphasized the program’s bipartisan support and its importance in providing nutritious support to mothers, infants, and children. However, he raised concerns about the accuracy of USDA’s projections regarding WIC participation and food costs, particularly considering recent claims about decreased inflation and food prices. Harris questioned the necessity of the proposed funding increase for WIC, citing declining participation rates and conflicting data on food costs. He wants to understand the rationale behind the Biden administration’s budget requests.

Rep. Rosa DeLauro (D-Ct.) told Vilsack that she was “intrigued by the new proposal to backstop WIC funding so we do not face nutrition assistance cliffhanger like we just went through.”

Rep. Dan Newhouse (R-Wash.) raised the issue of shrinkflation, citing an example of reduced milk carton size impacting compliance with WIC rules. He asked whether the WIC food package provided flexibility to cover smaller containers. Vilsack indicated that there may be flexibility in certain circumstances and offered to look into the specific issue raised by Newhouse.

Harris stressed the importance of adhering to legislative directives and urged honest discussions on federal subsidies for “unhealthy food in the SNAP program.” He detailed that over the past 20 years, “multiple cities and states have asked USDA for the ability to restrict SNAP purchases of sugary drinks, but each time those requests have been denied. As we work through the FY ’25 process, it’s important that we look for ways to best return SNAP, the largest food assistance program in America, back to its original purpose of advancing the nutrition needs of participants, not providing empty calories, which in fact could be potentially harmful to long-term health.”

Harris noted that he is a strong supporter of establishing a SNAP pilot program that restricts unhealthy food or beverages from being purchased with SNAP benefits. He said he was disappointed the FY 2024 Appropriations bill did not include funding to implement a small voluntary pilot program to see how it might help with health outcomes and prevent chronic disease. He asked Vilsack if USDA has the authority to approve a demonstration project, which would be similar to a pilot, that allows states to restrict certain foods or beverages. Vilsack said, “We’d have the authority to work collaboratively with the state, assuming that the process contained proper evaluation. One of the big problems, Mr. Chairman, has been the lack of evaluation in what has been presented to us by states and cities in terms of the programs that they want to adopt. There’s a tendency to think this is a relatively simple process… But we would have the authority to do it. But we’d want to make sure, if we did it, that there would be a strong evaluation component to it.”

Harris said he was glad to hear that USDA has the authority to approve a pilot program, but told Vilsack that “since your first appointment as Secretary of Ag, the obesity rates among U.S. adults have increased by almost 9%, from 33.8% in 2007, 2008, to 42% of Americans in 2017, 2018. About half of all Americans now have one or more preventable chronic disease, most of them diet related or linked to diet in some cases. So, given this rise in obesity rates, is there any evidence that the SNAP-Ed and the Healthy Incentive programs have been effective in having reduced obesity among SNAP participants?” Vilsack said there is research to indicate that “the availability of SNAP does result in healthier choices being made by SNAP families.”

Harris also said that along similar lines is the Summer EBT program for children is now permanent. “States operating the Summer EBT run the SNAP model. So again, allowing access to sugary beverages, salty snacks, the whole deal, but interestingly, Indian tribal organizations operate the WIC model. So as I understand it, families receiving Summer EBT under the WIC model are purchasing WIC approved foods, which we both I think recognize are generally much more nutritious foods than the wide variety of foods available under SNAP. Do you think that recipients could benefit if states operate a WIC model under the Summer EBT program like tribal organizations do to ensure that we’re providing kids with healthy food during the summer? Just like USDA does for instance, during the school year and the national school lunch and school breakfast programs? Vilsack responded: “I think it’s more complicated than that.” Vilsack added: “There’s a fairness and a consistency issue. If indeed the goal here is for taxpayer dollars to be directly linked to more nutritious decisions, are you going to make that same decision for a farmer emergency relief? A farmer gets emergency check from the government, cashes it, goes to the grocery store. Are you going to restrict him from — why not? Fundamentally, that’s the issue. It’s absolutely the issue.” Harris countered: “Mr. Secretary, the difference is we’re not buying food for the middle-class people. We’re buying food…” Vilsack interrupted saying, “But you are, absolutely you are if you get any federal assistance.”

Rep. Newhouse expressed concerns about the challenges faced by rural communities and family farms, particularly in light of the rate at which farms are disappearing. He highlighted the adverse wage rate as one of the significant costs burdening farmers and emphasized the need for action to rein in labor costs. Vilsack acknowledged the long-standing issue of farm loss and land conversion. Vilsack detailed that “since 1981, the U.S. has lost 544,000 farms. That is the same number of farms that exist today in North Dakota, South Dakota, Minnesota, Wisconsin, Illinois, Iowa, Nebraska, Colorado, Missouri, and Oklahoma. We’ve lost 151 million acres of land that was in farming that’s no longer in farming. That’s the land mass of Florida, Georgia, South Carolina, North Carolina, Maryland, and most of Virginia. So, this is not a new issue.” Vilsack attributed this trend to a system focused on productivity rather than income sources, leading to income concentration among a small percentage of farms. Vilsack stressed the importance of creating additional revenue streams for farmers to improve their financial stability. Vilsack urged Congress to pass immigration reform, specifically the Farm Workforce Modernization Act, to address labor challenges in agriculture. He emphasized the need for bipartisan cooperation and criticized political obstacles hindering the passage of crucial legislation. Newhouse affirmed efforts to advance the Farm Workforce Modernization Act in both the House and Senate, acknowledging the difficulties in navigating the legislative process.

Rep. Hinson expressed concerns about the safety of the U.S. food supply in the face of potential threats from adversaries like the Chinese Communist Party (CCP). She highlighted the need for better coordination and updated procedures to monitor foreign agricultural land purchases, referencing a recent report from the Government Accountability Office (GAO). Vilsack acknowledged the progress made in implementing GAO recommendations, including improved coordination with the Committee on Foreign Investment in the United States (CFIUS) and efforts to update the Agriculture Foreign Investment Disclosure Act (AFIDA) handbook. He emphasized the challenges posed by the decentralized nature of real estate transactions across the country and the need for ongoing improvements.

Hinson also raised concerns about the heavy reliance on China for critical agricultural inputs such as vitamins B6 and C. Vilsack underscored the importance of reducing reliance on foreign adversaries for key inputs like fertilizer, while acknowledging the delicate balance required in maintaining trade relationships with countries like China, which are significant customers for American agricultural products.

In response to questions about preventing supply chain bottlenecks and incentivizing domestic production, Vilsack suggested leveraging tools like the tax code, rural development programs, and business incentives to encourage investment in domestic production facilities and enhance the business environment for new ventures.

Their discussion highlighted the complex interplay between national security concerns, trade relationships, and domestic production capabilities in ensuring the safety and resilience of the U.S. food supply chain.