Examining Opportunities for Growth and Investment in Rural America — House Hearing, Serial No. 117-8
Summary
Printed record of a June 15, 2021 hearing of the Subcommittee on Commodity Exchanges, Energy, and Credit of the Committee on Agriculture, House of Representatives, on opportunities for growth and investment in rural America, Serial No. 117-8. Opening statements are by Representatives Antonio Delgado, the subcommittee chairman, and Michelle Fischbach. Witnesses include the chief executive officer of Communities Unlimited, Inc., the founder of Exela Holdings, Inc., a Renville County commissioner for the National Association of Counties and the executive director of Hudson Valley AgriBusiness Development Corporation. Representative Randy Feenstra submitted a report and Representative Bobby L. Rush an article. The record ends with lists of facilitators and panel participants for North Carolina peanut farms from a Texas A&M AgriLife document.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
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“Examining Opportunities for Growth and Investment in Rural America — House Hearing, Serial No. 117-8.”
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[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
EXAMINING OPPORTUNITIES FOR GROWTH
AND INVESTMENT IN RURAL AMERICA
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COMMODITY EXCHANGES, ENERGY, AND CREDIT
OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
JUNE 15, 2021
__________
Serial No. 117-8
Printed for the use of the Committee on Agriculture
agriculture.house.gov
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
__________
U.S. GOVERNMENT PUBLISHING OFFICE
47-085 PDF WASHINGTON : 2022
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COMMITTEE ON AGRICULTURE
DAVID SCOTT, Georgia, Chairman
JIM COSTA, California GLENN THOMPSON, Pennsylvania,
JAMES P. McGOVERN, Massachusetts Ranking Minority Member
FILEMON VELA, Texas AUSTIN SCOTT, Georgia
ALMA S. ADAMS, North Carolina, Vice ERIC A. ``RICK'' CRAWFORD,
Chair Arkansas
ABIGAIL DAVIS SPANBERGER, Virginia SCOTT DesJARLAIS, Tennessee
JAHANA HAYES, Connecticut VICKY HARTZLER, Missouri
ANTONIO DELGADO, New York DOUG LaMALFA, California
BOBBY L. RUSH, Illinois RODNEY DAVIS, Illinois
CHELLIE PINGREE, Maine RICK W. ALLEN, Georgia
GREGORIO KILILI CAMACHO SABLAN, DAVID ROUZER, North Carolina
Northern Mariana Islands TRENT KELLY, Mississippi
ANN M. KUSTER, New Hampshire DON BACON, Nebraska
CHERI BUSTOS, Illinois DUSTY JOHNSON, South Dakota
SEAN PATRICK MALONEY, New York JAMES R. BAIRD, Indiana
STACEY E. PLASKETT, Virgin Islands JIM HAGEDORN, Minnesota
TOM O'HALLERAN, Arizona CHRIS JACOBS, New York
SALUD O. CARBAJAL, California TROY BALDERSON, Ohio
RO KHANNA, California MICHAEL CLOUD, Texas
AL LAWSON, Jr., Florida TRACEY MANN, Kansas
J. LUIS CORREA, California RANDY FEENSTRA, Iowa
ANGIE CRAIG, Minnesota MARY E. MILLER, Illinois
JOSH HARDER, California BARRY MOORE, Alabama
CYNTHIA AXNE, Iowa KAT CAMMACK, Florida
KIM SCHRIER, Washington MICHELLE FISCHBACH, Minnesota
JIMMY PANETTA, California JULIA LETLOW, Louisiana
ANN KIRKPATRICK, Arizona
SANFORD D. BISHOP, Jr., Georgia
______
Anne Simmons, Staff Director
Parish Braden, Minority Staff Director
______
Subcommittee on Commodity Exchanges, Energy, and Credit
ANTONIO DELGADO, New York, Chairman
SEAN PATRICK MALONEY, New York MICHELLE FISCHBACH, Minnesota,
STACEY E. PLASKETT, Virgin Islands Ranking Minority Member
RO KHANNA, California AUSTIN SCOTT, Georgia
CYNTHIA AXNE, Iowa DOUG LaMALFA, California
BOBBY L. RUSH, Illinois RODNEY DAVIS, Illinois
ANGIE CRAIG, Minnesota CHRIS JACOBS, New York
ANN M. KUSTER, New Hampshire TROY BALDERSON, Ohio
CHERI BUSTOS, Illinois MICHAEL CLOUD, Texas
------ RANDY FEENSTRA, Iowa
KAT CAMMACK, Florida
Emily German, Subcommittee Staff Director
(ii)
C O N T E N T S
----------
Page
Delgado, Hon. Antonio, a Representative in Congress from New
York, opening statement........................................ 1
Prepared statement........................................... 2
Feenstra, Hon. Randy, a Representative in Congress from Iowa,
submitted report............................................... 55
Fischbach, Hon. Michelle, a Representative in Congress from
Minnesota, opening statement................................... 3
Rush, Hon. Bobby L., a Representative in Congress from Illinois,
submitted article.............................................. 53
Witnesses
Polonius, Ines, Chief Executive Officer, Communities Unlimited,
Inc.; Vice-Chair, Board of Directors, Rural Community
Assistance Partnership, Fayetteville, AR....................... 5
Prepared statement........................................... 7
Koneru, Ph.D., J.D., LL.M., Phanesh, Founder, President, and
Chief Executive Officer, Exela Holdings, Inc., Exela Pharma
Sciences, LLC, Lenoir, NC...................................... 12
Prepared statement........................................... 13
Fox, Hon. Bob, District 2 Commissioner, Board of Commissioners,
Renville County, MN; Vice Chair, Agriculture and Rural Affairs
Steering Committee, National Association of Counties, Franklin,
MN............................................................. 15
Prepared statement........................................... 17
Erling, Todd M., Executive Director, Hudson Valley AgriBusiness
Development Corporation; President and Chief Executive Officer,
Farm and Food Growth Fund Inc., Hudson, NY..................... 20
Prepared statement........................................... 21
Mattson, J.D., Kent D., Chief Executive Officer, Lake Region
Healthcare, Fergus Falls, MN; on behalf of Minnesota Hospital
Association.................................................... 24
Prepared statement........................................... 26
EXAMINING OPPORTUNITIES FOR GROWTH AND INVESTMENT IN RURAL AMERICA
----------
TUESDAY, JUNE 15, 2021
House of Representatives,
Subcommittee on Commodity Exchanges, Energy, and Credit,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 11:03 a.m., via
Zoom, Hon. Antonio Delgado [Chairman of the Subcommittee]
presiding.
Members present: Representatives Delgado, Plaskett, Axne,
Rush, Craig, Kuster, Bustos, Fischbach, LaMalfa, Jacobs,
Balderson, Cloud, Feenstra, and Cammack.
Staff present: Lyron Blum-Evitts, Emily German, Ross
Hettervig, Chu-Yuan Hwang, Anne Simmons, Ashley Smith, Paul
Balzano, Caleb Crosswhite, Erin Wilson, John Konya, and Dana
Sandman.
OPENING STATEMENT OF HON. ANTONIO DELGADO, A REPRESENTATIVE IN
CONGRESS FROM NEW YORK
The Chairman. This hearing of the Subcommittee on Commodity
Exchanges, Energy, and Credit entitled, Examining Opportunities
for Growth and Investment in Rural America, will come to order.
Welcome, and thank you all for joining today's hearing. After
brief opening remarks, Members will receive testimony from our
witnesses today, and then the hearing will be open to
questions. Members will be recognized in order of seniority,
alternating between Majority and Minority Members, and in order
of arrival for those Members who have joined us after the
hearing was called to order. When you are recognized, you will
be asked to unmute your microphone and will have 5 minutes to
ask your questions or make a comment. If you are not speaking,
I ask that you remain muted in order to minimize background
noise. In order to get to as many questions as possible, the
timer will stay consistently visible on your screen.
And with that, welcome and good morning to everyone. I
appreciate you all being here for this first hearing of the
Subcommittee on Commodity Exchanges, Energy, and Credit for the
117th Congress.
I would also like to welcome the Members of this
Subcommittee as my first hearing as Chairman in what I aim to
be a productive and bipartisan tenure.
Today's hearing will examine a topic many of us know
intimately, the critical need and importance of investment in
rural America.
USDA analyses tell us that between 2010 and 2018,
population growth in rural America has lagged behind the growth
in our urban areas. Additionally, job growth in rural
communities increased at just half of the rate it did in urban
areas. I could go on with facts and figures about how many
schools, hospitals, grocery stores, small businesses, and farms
have closed in our rural communities in the last decade, but if
you live in a rural community like I do, you already know that.
This hearing is also not just about the typical economic
drivers in rural communities, but about the infrastructure that
is needed to serve those communities and support the critical
role they play in the agricultural production and manufacturing
industries. Our nation's aging infrastructure problem is
exacerbated in rural communities.
Inadequate access to high-speed internet impacts every
level of a community, from students being able to do homework,
farmers and ranchers utilizing precision agriculture
technologies on their operations, all the way to how quickly a
grocery store can process a transaction at their checkout.
Our goal cannot just be to keep rural communities alive. We
need to do the work to ensure that those communities are
thriving and can succeed in a 21st century economy, and that is
what I hope to get out of this hearing today.
Our witnesses are working every single day to build
thriving rural communities, including a witness from my own
district in upstate New York. Their testimony today will help
inform us on how we can strengthen rural development in the
next farm bill and how we work with our partners at the USDA
Rural Development as they continue to implement the 2018 Farm
Bill.
The daily lives and well-being of over 46 million people in
rural counties across America are directly impacted by the kind
of work we will do here today, and I want to ensure that every
single one of those 46 million people can choose to stay in
their rural communities for years and decades to come.
[The prepared statement of Mr. Delgado follows:]
Prepared Statement of Hon. Antonio Delgado, a Representative in
Congress from New York
Good morning, and welcome to this first hearing of the Subcommittee
on Commodity Exchanges, Energy, and Credit for the 117th Congress.
I would also like to welcome the Members of this Subcommittee as my
first hearing as Chairman in what I aim to be a productive and
bipartisan tenure.
Today's hearing will examine a topic many of us know intimately--
the critical need and importance of investment in rural America.
USDA analyses tell us that between 2010 and 2018, population growth
in rural America has lagged behind the growth in our urban areas.
Additionally, job growth in rural communities increased at just half of
the rate it did in urban areas.
I could go on with facts and figures about how many schools,
hospitals, grocery stores, or small businesses have closed in our rural
communities in the last decade, but if you live in a rural community
like I do--you already know that.
This hearing is also not just about the typical economic drivers in
rural communities, but about the infrastructure that's needed to serve
those communities and support the critical role they play in the
agricultural production and manufacturing industries. Our nation's
aging infrastructure problem is exacerbated in rural communities.
Inadequate access to high-speed internet impacts every level of a
community, from students being able to do homework, farmers and
ranchers utilizing precision agriculture technologies on their
operations, all the way to how quickly a grocery store can process a
transaction at their checkout.
Our goal cannot just be to keep rural communities alive--we need to
do the work to ensure that those communities are thriving and can
succeed in a 21st century economy, and that's what I hope to get out of
this hearing today.
Our witnesses are working every single day to build thriving rural
communities, including a witness from my district in upstate New York.
Their testimony today will help inform us on how we can strengthen
rural development in the next farm bill and how we work with our
partners at USDA Rural Development as they continue to implement the
2018 Farm Bill.
The daily lives and well-being of over 46 million people in rural
counties across America are directly impacted by the kind of work we'll
do here today, and I want to ensure that every single one of those 46
million people can choose to stay in their rural communities for years
and decades to come.
The Chairman. I now would like to welcome the distinguished
Ranking Member, the gentlewoman from Minnesota, Mrs. Fischbach,
for any opening remarks she would like to give.
OPENING STATEMENT OF HON. MICHELLE FISCHBACH, A REPRESENTATIVE
IN CONGRESS FROM MINNESOTA
Mrs. Fischbach. Thank you, Mr. Chairman, and hello to my
colleagues here in the room and on the Zoom, and welcome to all
of our witnesses. It really is nice to be here for the first
meeting of our Subcommittee.
Like many of you, I represent a rural district. We are
among the top ag-producing districts in the nation, and we are
responsible for nearly half of Minnesota's agricultural sales.
My district plays an important role in our country's ag
economy, and there is real value in making sure that those
rural communities have the tools that they need to grow and
thrive. That is why I am so pleased to be here today discussing
how USDA Rural Development can aid us in that pursuit.
Over the past couple of months, I have spent a lot of time
traveling in my district. I have met with local officials,
business owners, farmers, and families, and many others, and
one thing I can tell you is that rural America is facing many
challenges right now, made all the more evident by COVID-19.
The stark reality is that many rural communities are being left
behind. The Agriculture Committee has talked frequently and
forcefully about the importance of broadband connectivity
shortfalls in our rural communities, but there are other
challenges facing our constituents, including limited access to
capital, worker shortages, aging infrastructure, and diminished
access to healthcare services.
If we can help meet those needs, it is all of our
constituents who will reap the benefits. Not only do thriving
rural communities benefit the ag economy, they benefit our
entire country. Strong rural communities start with strong
connectivity, but the needs of our rural communities do not end
with broadband access, and I am grateful for the opportunity to
explore ways by which we can support rural America.
Over the past year, my Republican colleagues and I have
offered many proposals, including several with bipartisan
support, to bolster Rural Utilities Services, expand high-speed
broadband programs, rebuild health education and public safety
infrastructure, and more. We think that infrastructure can and
should be a bipartisan success story, but we share Chairman
Scott's deep concern and skepticism about plans to marry
bipartisan infrastructure priorities to tax policies which will
harm rural communities.
USDA Rural Development plays an important role in growing
rural communities and attracting new investment, whether it is
supporting economic development, assisting with loans and
grants for economic development, healthcare, and
infrastructure, or assisting ag producers with their own
operations. USDA Rural Development is well-positioned to make a
difference for citizens, the citizens each of us represent.
I join Chairman Delgado in welcoming all of our witnesses.
The health of rural America can be found in hard work,
innovative thinking, and strong partnerships that each of you
bring to your communities, and I am looking forward to today's
discussion.
Thank you, Mr. Chairman. I yield back.
The Chairman. Thank you, Ranking Member Fischbach, and I do
look forward to working alongside of you.
The chair would request that other Members submit their
opening statements for the record so witnesses may begin their
testimony, and to ensure that there is ample time for
questions.
I am pleased to welcome such a distinguished panel of
witnesses to our hearing today. Our witnesses bring to our
hearing a wide range of experience and expertise, and I want to
thank each and every one of you for joining us.
Our first witness today is Dr. Phanesh Koneru. Dr. Koneru
is the founder, President, and CEO of Exela Pharma Sciences in
Lenoir, North Carolina. Founded by Dr. Koneru in 2005, Exela is
a vertically integrated and fast-growing pharmaceutical
manufacturer, marketer, and developer that today employs 380
individuals from the Caldwell County area in Lenoir. Dr.
Phanesh, thank you for joining us. I appreciate and look
forward to your testimony.
Our next witness is Ms. Ines Polonius. Ms. Polonius is CEO
of Communities Unlimited, a community development financial
institution and rural development hub serving rural communities
in the southern United States. Communities Unlimited works with
local leaders to create fair access to resources needed to
sustain healthy communities, businesses, and families.
Communities Unlimited provides direct assistance and capital to
communities, small businesses, micro enterprises, as well as
water and wastewater systems. Ms. Polonius, thank you for
joining us this morning.
Our third witness today is Mr. Bob Fox. Mr. Fox has served
on the Board of County Commissioners for Renville County since
2002. He also serves on the National Association of Counties,
Agriculture, and Rural Affairs Steering Committee as Vice
Chair, and is a member of the National Counties Association
Board of Directors. Thank you, Mr. Fox, for joining us.
Our fourth and--no, not final. Our fourth witness is Mr.
Todd Erling, Executive Director from Hudson Valley AgriBusiness
Development Corporation, and from my own congressional
district. Hudson Valley AgriBusiness Development Corporation is
the only economic development agency in the Hudson Valley with
a specific focus on the viability of the agricultural economy.
Hudson Valley AgriBusiness Development Corporation has also
established the Farm and Food Funding Accelerator and the
Incubator Without Walls to mentor over 260 businesses and 30
technical assistance service providers. Mr. Erling is someone
who also serves on my bipartisan locally-based agriculture
advisory committee, and plays a critical, vital role in our
community, helping rural and agricultural business access to
tools they need to succeed. Mr. Erling, thank you. It is good
to have you here.
And last, but not least, to introduce our fifth and final
witness today, I am pleased to yield to the gentlewoman from
Minnesota, the distinguished Ranking Member of the
Subcommittee, Mrs. Fischbach.
Mrs. Fischbach. Thank you, Mr. Chairman.
It is my pleasure to introduce Mr. Ken Mattson, the CEO of
Lake Region Healthcare. Lake Region Healthcare is a rural, not-
for-profit provider that operates three hospitals, 11 clinics,
an assisted living facility, and three surgery centers. Mr.
Mattson holds a J.D. from the University of Minnesota Duluth,
and has more than 2 decades in institutional knowledge and
healthcare experience. He is testifying today on behalf of the
Minnesota Hospital Association. Welcome, Mr. Mattson, and thank
you so much for being here today.
I would also like to give my personal welcome to
Commissioner Bob Fox. Commissioner Fox and his wife live on a
fourth-generation farm in rural Renville County in my district,
and it is my pleasure to welcome him to the Committee today,
too.
Thank you. I yield back.
The Chairman. I thank the gentlewoman for her remarks, and
again, welcome to all of our witnesses today.
We will now proceed to hearing from your testimony. you
will each have 5 minutes. The timer should be visible to you on
your screen, and will count down to 0, at which time, your time
has expired.
Dr. Koneru, please begin.
Dr. Koneru. Good morning, Chairman Delgado and Ranking
Member Fischbach. It is my pleasure and privilege----
The Chairman. You need to unmute yourself. It looks like
you might be frozen, Dr. Koneru.
Dr. Koneru. Oh, yes.
The Chairman. Are you still there?
Dr. Koneru. Yes, I can hear you now. Hello? Can you hear
me?
The Chairman. We will come back to you, Doctor.
In the interest of time, we are going to move on to Ms.
Polonius. You can begin your testimony when ready.
STATEMENT OF INES POLONIUS, CHIEF EXECUTIVE OFFICER,
COMMUNITIES UNLIMITED, INC.; VICE-CHAIR, BOARD OF
DIRECTORS, RURAL COMMUNITY ASSISTANCE
PARTNERSHIP, FAYETTEVILLE, AR
Ms. Polonius. Good morning. Thank you, Chairman Delgado,
Ranking Member Fischbach, and Members of the Subcommittee for
inviting me to testify about the opportunities for growth and
investment in rural America, and there are many. Thank you to
each of you for caring about people just like me who live in
rural Arkansas and rural places throughout this country.
My name is Ines Polonius, and I am the CEO of Communities
Unlimited, the southern partner of the Rural Community
Assistance Partnership.
Communities Unlimited has been a certified community
development financial institution since 2002, and functions as
a rural development hub with 70 full-time staff serving seven
states in the South, from Texas to Tennessee, a footprint that
comprises 45 percent of America's persistent poverty counties.
Sixty percent of people living in these persistent poverty
places are people of color, and represent an important focus of
our work. Communities Unlimited takes a holistic approach by
integrating capacity building and capital products to ensure:
targeting water and wastewater systems, and small businesses,
local leadership teams, as well as small scale farmers.
We are the southern representative of the Rural Community
Assistance Partnership, a national network of nonprofit
organizations with 300 on-the-ground technical assistance
providers, helping to solve real problems to benefit more than
3.4 million people in rural and Tribal communities in every
state and territory each year. During 2020, RCAP leveraged more
than $427 million in infrastructure funding, mostly in USDA
infrastructure loans.
Opportunities for investment are many. In the U.S., there
are 140,000 active public water systems serving communities of
less than 10,000 people. COVID-19 has exacerbated the
challenges these systems face. A survey conducted by RCAP in
May of 2020 indicated an estimated revenue loss of between $3.6
to $5.5 billion for small rural systems across the country. A
year later, we know that most systems expended all of their
reserves and many are no longer financially able to keep up
with the needed maintenance, nor loan payments.
The Rural Equity Act, House Resolution 498, seeks to
provide debt relief to borrowers of several Rural Development
loan programs, including the Intermediary Relending Program,
IRP. CU currently has an active IRP portfolio of about $1
million to rural water and wastewater utilities. Six months of
debt relief would provide over $75,000 to help systems rebuild
their reserves and address immediate maintenance needs.
Currently, Federal funding for USDA Rural Development
programs makes up less than eight percent of the agency's
annual discretionary budget, yet it is exactly these programs
that are the lifeline right now to rural communities as they
struggle to recover from the impacts of COVID-19. We need
greater investment in rural water and waste disposal
infrastructure through RD in the form of both loans, and more
importantly, grants, as many systems can no longer afford to
take on more debt. Existing water systems in financial
difficulty need grant assistance, debt forgiveness, and loan
restructuring included in the American Jobs Plan.
There are many growth opportunities. Infrastructure is a
driving factor for economic growth. As a nation, we are lucky
to be a country of entrepreneurs. Rural America is no
exception, where people start businesses every day to meet
basic needs in our community, as well as turning great ideas
into products.
Today, we work with a young man in Pine Bluff, Arkansas,
who launched an internet service provider to bring reliable
broadband services to all communities in the Arkansas Delta. I
know this Committee has previously analyzed the need for robust
and affordable broadband in rural places. I can't overemphasize
the importance of broadband for economic growth.
We need strategic investments in the Rural Business
Development Plan in the Rural Microenterprise Assistance
Program to support entrepreneurs in creating locally-led
ventures that will keep wealth local in the hands of rural
people.
Technical assistance is the connective tissue between USDA
RD and rural beneficiaries in the community. Capacity building
is needed at three levels. One, leadership teams are an
important success factor to community resilience, especially in
places with a part-time mayor and little staff. They need
support and skill-building. Two, water and wastewater system
boards of directors are elected volunteers, requiring training
on regulations, financial management, and board management.
Many entrepreneurs need skill building in areas like financial
management and digital marketing to be competitive.
Solving the challenges facing rural communities today,
especially in persistent poverty areas in the South, requires
adequate funding, a strong USDA RD, along with the capacity
building to access that funding and then utilize it
effectively. These are the building blocks of an economic
recovery for rural America.
I thank the Committee for inviting me to testify today, and
look forward to answering any questions you may have. Thank
you.
[The prepared statement of Ms. Polonius follows:]
Prepared Statement of Ines Polonius, Chief Executive Officer,
Communities Unlimited, Inc.; Vice-Chair, Board of Directors, Rural
Community
Assistance Partnership, Fayetteville, AR
Thank you, Chairman Delgado, Ranking Member Fischbach, and Members
of the Subcommittee, for this opportunity to testify at this hearing
entitled: ``Opportunities for Growth and Investment in Rural America.''
My name is Ines Polonius, and I am the CEO of Communities
Unlimited, the southern partner of the Rural Community Assistance
Partnership (RCAP), a national network of nonprofit organizations
working to provide technical assistance, training, capital and
resources to rural and tribal communities in every state, territory and
on tribal lands.
About Communities Unlimited
For Reference: www.CommunitiesU.org
Annual Report: AR2020--Communities Unlimited *
---------------------------------------------------------------------------
* http://communitiesu.org/AR2020/.
Communities Unlimited (CU) has been a Certified Community
Development Financial Institution since 2002 and functions as a Rural
Development Hub serving Texas, Oklahoma, Arkansas, Louisiana,
Mississippi, Tennessee and Alabama, a foot print that comprises 45% of
America's Persistent Poverty Counties. 60% of people living in
persistent poverty counties are people of color and represent an
important focus of our work. Communities Unlimited takes a holistic
approach in its work with rural communities by integrating capacity
---------------------------------------------------------------------------
building and capital products to ensure:
Water and waste water systems are maintained and in
compliance.
Strong local economies by starting and growing small
businesses.
Diverse, local leadership teams that design community-based
strategies which we help them implement.
Access to healthy foods by supporting small scale fruit and
vegetable growers and creating markets through local farmers[']
markets, access to urban markets and rebuilding local grocery
stores.
Building regional partnerships to leverage additional
resources that CU alone cannot provide with a special focus on
broadband access.
In March 2020, Communities Unlimited pivoted quickly to support
rural communities and rural businesses navigate [COVID-19] by:
Creating and deploying a disaster loan product for water and
waste water systems.
Creating and deploying two disaster loan products to help
existing businesses pivot their operations and restart their
businesses after they had been forced to close.
Purchasing $160,000 in produce from mostly Black-farmers who
had lost access to their restaurant, school and farmers market
customers to providing the vegetables to over 26 food pantries
in the Mississippi Delta that had run out of food for needy
families.
Teaching leadership teams to effectively utilize Zoom for
their meetings while navigating issues caused by unreliable
broadband.
As a Microlender and CDFI, CU was finally able to get
certified to make Payroll Protection Loans in February of 2021.
In a matter of 12 weeks, CU made 302 PPP loans for $4.3 million
across nine states in the rural South. Fifty-one nonprofit,
rural water and waste water systems benefited from PPP funds.
Of the 251 small businesses who received PPP loans, 12 were
Black farmers, 14 were day care centers. 67% of loans went
entrepreneurs of color. All of these beneficiaries had been
left out of the PPP rounds until CU and its partners reached
out to their community leaders.
Communities Unlimited relied in part on RBDG funding in
Arkansas, Texas and Mississippi to help 165 small businesses,
85% of which were entrepreneurs of color, to navigate the
economic fallout of lockdowns and new health regulations. Only
3% of its entrepreneurs of color were forced to close their
businesses compared to national statistics that put that number
as high as 41% \1\ of Black-owned businesses forced to close
during the first wave of COVID alone.
---------------------------------------------------------------------------
\1\ Fairlie, Robert W. ``The Impact of COVID-19 on Small Business
Owners: Evidence of Early-Stage Losses from the April 2020 Current
Population Survey.'' National Bureau of Economic Research, Working
Paper 27309, June 2020, p. 2. See https://www.nber.org/papers/w27309.
---------------------------------------------------------------------------
About RCAP
For Reference: www.rcap.org
Annual Report: Rural Community Assistance Partnership (RCAP)
2020 Annual Report **
---------------------------------------------------------------------------
** https://2020report.rcap.org/
?mc_cid=c40cc3aaac&mc_eid=5fada9af09.
Through RCAP's regional partners, more than 300 on-the-ground
technical assistance providers build capacity that leads to sustainable
and resilient infrastructure and strengthens rural economies. Our
approach is grounded in long-term, trusted relationships with thousands
of rural and tribal communities across the country.
For over 40 years, the RCAP network has partnered with USDA to
serve as the connective tissue between Rural Development staff and the
communities they serve. RCAP assists rural communities with funding
applications and supports every phase of the project planning and
development process. We deliver training and technical assistance after
construction is complete to help communities understand how to properly
manage and operate their infrastructure in a fiscally sustainable
manner. We work to ensure that RD borrowers are able to meet the terms
of their Letters of Condition and that they are able to stay current on
their loan payments.
Last year, RCAP served more than 3.4 million rural and tribal
residents in more than 2,000 of the smallest, most distressed
communities. On average, the communities we served had fewer than 1,500
residents, with a Median Household Income at 50% of the national
average. We served more than 40 percent of America's persistent poverty
counties, and almost 300,000 individuals from indigenous communities.
In 2020 alone, the RCAP network through our technical assistance
helped rural communities across the country leverage approximately $427
million in infrastructure funding, most of which came in the form of
USDA infrastructure loans.
[COVID-19] and Climate Change Impacts on Rural Communities:
The talent, innovation, and resiliency of America's rural areas
will play a central role in the future of the U.S. economy as we
recover from the COVID-19 Pandemic.
COVID-19 has further exacerbated the challenges rural communities
already faced, as they had not yet fully recovered from the 2008
recession and as of 2019, employment in non-metro counties had not yet
returned to 2008 levels. Rural communities also lag other areas on
indicators of poverty, health, and education. This is especially true
in America's persistently poor counties where more than 20% of the
population has lived in poverty for over 30 years. We cannot allow more
rural counties to slip into persistent poverty because the current
economic recovery leaves them behind once again. Many distressed rural
communities are those where racial inequities dominate. Rural areas
have always served as the backbone of this country and will continue to
be a core measure of the success as the country seeks to rebuild after
COVID-19.
Since the beginning of [COVID-19], thousands of rural places not
only struggled with the impact of the disease and its economic fall-out
but at the same time were impacted by hurricanes, flooding, tornados
and the polar vortex which devastated hundreds of water and waste water
systems in the South. We learned that communities where we had built
strong leadership teams to support elected officials proved more
resilient by accessing Federal and state resources to move more quickly
from crisis to recovery.
To better understand the pandemic's impact on rural and Tribal
communities, RCAP conducted a survey in May 2020. The responses we
received were startling. More than 31 percent of communities estimated
they would not be able to continue to cover all water utility costs for
more than 6 months, due to an estimated revenue loss of between $3.6-
$5.5 billion for small systems. A year later, we know that most systems
expended all of their reserves and are no longer financially able to
keep up with needed maintenance nor improvements.
Perhaps even more alarming, more than 43 percent of communities
surveyed said they rely on one full-time staffer or less, leaving many
communities at risk if that staffer fell ill.
Infrastructure is a driving factor for economic growth and USDA
Rural Development features a portfolio of infrastructure and small
business programs tailor made to rural businesses and communities.
Given that businesses in rural communities are essential to the success
of rebuilding the economy, and that the USDA Rural Development programs
are the programs most specifically tailored to the capacity and reality
of rural places, we urge you to focus more resources on the Rural
Development programs, especially grant programs, that ensure that the
smallest and lowest resourced communities do not bear the burden of
debt financing for their recovery.
Success in RD Water Infrastructure Programs--More Investment Needed
RD's water and wastewater programs are a key component of economic
development in rural America. The lack of reliable infrastructure,
funded by RD, that delivers clean drinking water for household needs,
sufficient quantities of water to support local industry and small
businesses, and sanitary sewers to remove sewage and industrial
[byproducts] to protect public health, forces local employers to
relocate and close factories and prevents small businesses from
starting. The entrepreneurs and small business owners who are the
engines of our economy cannot open new businesses, shops or restaurants
on Main Street without basic services.
Example: City of Charleston, Mississippi. In 2014, the local Sonic
in Charleston, an important contributor to local sales taxes and jobs,
closed temporarily as sewer regularly backed up on the restaurant's
property due to city's much needed sewer collection system
improvements. The Mama Lou Diner on main street received many
complaints of the smell of the sewer that was often visible on their
property. No one wanted to open a new business in downtown Charleston
for the same reason. The city needed $450,000 to make necessary
improvements. With a population of 1867 people with a median income of
$25,395, the city could not take on debt to solve the problem. They
applied for a grant in 2015 but were not able to secure the funds until
2018 and have since addressed the problem.
Infrastructure is the foundation of economic development, and to
promote economic growth in rural America, we need to be able to ensure
that the basic needs of businesses and residents including safe
drinking water and sewer services are met. Currently, Federal funding
for rural development programs makes up less than 8% of USDA's annual
discretionary budget yet it is exactly these programs that are a
lifeline to rural businesses, rural water and waste water systems--
rural communities as a whole--as they struggle to recover from the
impacts of [COVID-19].
Opportunities for continued economic growth in rural communities
are substantial. [COVID-19] taught us all how to work virtually. Young
people from rural communities want to take their jobs and lives back to
their hometowns in Rural America. They need access to reliable and fast
broadband. Agricultural production, energy development and operations,
alternative energy pursuits, and tourism are all vibrant economic
sectors that depend on rural communities; rural communities that need
water and wastewater utilities, essential community facilities,
affordable housing, and broadband availability that are in part made
available through RD programs.
The Water and Environment Programs at RD have enjoyed tremendous
success over the past few decades. The agency boasts a portfolio of
more than 13,000 active water/sewer loans, more than 19 million rural
residents served, and a delinquency rate of just 0.10% in 2020. This
success is partly attributable to the field presence RD has
historically maintained in rural areas. With staff in field offices
throughout the country, RD is uniquely positioned to evaluate the
credit-worthiness of small utilities and is able to distribute Federal
funds quickly and efficiently to areas of great need. Staff reductions
in RD offices across every state have started to hinder the ability of
RD to serve rural communities with critical services. In drought years,
or after natural disasters, community leaders benefit from being able
to turn to a local RD staffer that they know and trust and who is
familiar with their system and its needs.
To build on these successes, Congress should include additional
infrastructure dollars toward the water and wastewater loan and grant
programs, the technical assistance and training grant program, and the
water infrastructure revolving loan fund program.
Technical Assistance is Key to Ensuring RD's and Rural Communities'
Success
Despite RD's many successes, a substantial number of small, low-
income towns, counties, and rural small businesses have difficulty
accessing RD programs. The application process and eligibility
requirements for each program are slightly different, and each pose
unique challenges. Local leaders are most often volunteers who lack
professional staff and the resources to find out what funding sources
are available or the requirements for funding eligibility. Their first
look at the Letter of Conditions on an RD loan or grant can seem
overwhelming and discourage worthy applications. With help from an
experienced technical assistance provider, however, even communities
with no staff and limited planning resources can develop the local
leadership capacity to manage needed infrastructure and community
projects. Technical assistance plays a vital role in ensuring that the
programs serve the communities they were designed to benefit in a cost-
effective manner.
As a nation we are lucky to be a country of entrepreneurs. Rural
America is no exception where people start businesses every day to meet
basic needs in their communities as well turning great ideas into
products. They start day care centers to take care of kids and allow
parents to get to their jobs, often in the next micropolitan or
metropolitan area. Communities Unlimited is fortunate to work with a
young man in the persistently poor community of Pine Bluff, Arkansas
who acquired the technology skills to launch an Internet Service
Provider (ISP) with a vision of bringing reliable broadband services to
all of the communities in the Arkansas Delta.
Example: Communities Unlimited provided both intensive technical
assistance and a small working capital loan to a nurse practitioner who
started an urgent care facility in Clarksdale, Mississippi in the heart
of persistent poverty in the Mississippi Delta. The Black, female nurse
practitioner has a deep understanding for the health care needs of
children and families in the Delta. In addition to creating eight
needed job, she has become a critical lifeline for hundreds of families
since the beginning of COVID19. Today, she is working with Communities
Unlimited on a ``prescription food program'' that provides food
insecure children with a ``prescription'' to a box of fresh produce for
the whole family that they can pick up from a local farmer who brings
his farm stand right to her parking lot. These are the innovative
business owners who improve the quality of life for others while
creating needed jobs.
Additionally, rural disadvantaged entrepreneurs and small
businesses supported by affordable, local technical/managerial
assistance are more likely to launch businesses. Technical assistance
is the best loan risk mitigation tool and characteristics of sound
Technical Assistance include:
One-on-one assistance, not classroom training.
Problem solving, not generic tools.
Longer-term engagement, not single counseling session.
Accountability partner, not just a list of recommendations.
Last, I want to emphasize the opportunity to target resources in
ways that will optimize the best long-term outcomes, especially for
distressed rural places, including technical assistance, capacity
building, and evaluation. Many disadvantaged rural entrepreneurs do not
have strong financial management skills. You can't learn financial
analysis and cash-flow management until you are in business school.
This is geographically and financially out of reach for many motivated
entrepreneurs. Strong financial management mitigates the risk for
capital investments and technical assistance is key. We urge the
Committee to focus investments that will support local-ownership and
control. Only with these types of strategic investments in RD programs
like the Rural Business Development Grant and the Rural Microenterprise
Assistance Program will people in rural communities be able to access
and create locally-led strategies that will keep wealth in the hands of
rural people.
Key Infrastructure Investment Priorities for Rural Communities:
We urge the Committee to prioritize investments for rural
underserved communities in infrastructure related legislation through
USDA-Rural Development. We know that tough decisions will need to be
made throughout this process, and RCAP urges you to ensure that rural
and tribal areas are prioritized through robust investment in USDA
Rural Development programs.
Specifically, we urge you to consider increasing infrastructure
funding for the following programs, all of which serve as crucially
important support for rural communities and help leverage critical
Federal infrastructure dollars for rural communities:
Invest in Rural Water and Waste Disposal Infrastructure
through USDA-Rural Development: Include $10 billion for water
and sewer systems as outlined in the American Jobs Plan (AJP).
Provide at least $3 billion in loans and $2 billion in grants
to USDA's Water Environment Programs per year.
Support Existing Water Systems in Financial Difficulty to
Due COVID-19: Provide grant assistance, debt forgiveness, and
loan restructuring included in the American Jobs Plan.
Support Technical Assistance Funding to Leverage
Infrastructure Dollars in Rural America: Increase funding for
Rural Water Technical Assistance Resources available to RCAP
and other organizations at USDA-Rural Development
USDA: $50 million for the overall Rural Utility
Service Technical Assistance and Training Grant account,
and specifically $25 million for the set aside within this
account reserved for multi-state regional technical
assistance serving populations of 3300 or below.
Invest in Community Facility Grants at USDA-Rural
Development, include $30 million for Community Facilities
Technical Assistance and Training. With the additional funding,
waive funding caps for national applications in scope.
Enhance the Rural Community Development Initiative program
(RCDI), waive funding caps for applications national in scope
and reduce matching requirements for projects in persistent
poverty counties where private sector dollars are unavailable.
Support USDA's Rural Business Development Grants (RBDG),
waive funding caps for national applications in scope.
Conclusion
In closing, CU and RCAP work with rural communities and partners
across the country to advocate for and generate economic opportunities
for rural areas. The services provided through these programs deliver
critical assistance in the small and disadvantaged communities where it
is most needed. Solving the challenges facing rural communities
requires a multi-pronged approach that includes adequate funding, along
with steps to ensure that funding is available to all communities that
truly need it, and a comprehensive approach to technical assistance to
maximize the efficiency and effectiveness of RD's programs. It also
includes an emphasis on community economic development and cost-
effective investments in infrastructure that provide maximum return on
Federal investments.
The services provided through USDA-Rural Development programs will
deliver critical assistance in the small and disadvantaged communities
where it is most needed, especially as our country continues to respond
to the COVID-19 Pandemic.
I thank the Committee for inviting me to testify today, and I look
forward to working with you and happy to answer any questions you may
have.
The Chairman. Thank you, Ms. Polonius for your testimony.
Now we are going to try to see if we can connect with Dr.
Koneru. Please begin when you are ready.
STATEMENT OF PHANESH KONERU, Ph.D., J.D., LL.M.,
FOUNDER, PRESIDENT, AND CHIEF EXECUTIVE OFFICER, EXELA
HOLDINGS, INC., EXELA PHARMA SCIENCES, LLC, LENOIR, NC
Dr. Koneru. Good morning, Chairman Delgado and Ranking
Member Fischbach. It my pleasure and privilege to be here
[inaudible] of Exela. I have founded Exela back in 2005 and now
we are almost 16 years in the company. And since 2008, we have
been in Lenoir, North Carolina, and we have been manufacturing
pharmaceuticals since 2010.
Exela is a specialty pharmaceutical company that
manufacturers injectable pharmaceuticals. Pharmaceutical
manufacturing, injectables are probably one of the most complex
pharmaceutical products to manufacture: a lot of high-
technology and a lot of contamination controls, so it requires
high technology investments, and also equipment and training of
the people.
We have today about close to 500,000\2\ of operating space
at Exela, and we started with a small 20,000\2\ building back
in 2008 in Lenoir. Since then, we have been building, and a lot
of that was made possible by the investments that we made
through private sources, personal funds, as well as a
significant portion coming from USDA loans. USDA B&I loans have
helped us tremendously at the right time to actually take the
next step and go further. Today, we have almost 400 employees
and with high-paying jobs. Our average salary today is roughly
about $59,000, which is pretty high for any community, except
on the coastal sides. But, we are willing to actually increase
our salaries more to make sure that we get the right talent,
and also incentivize people to join our company.
Today, we have made a lot of investments in the company,
and we are invested in close to $400 million so far in the
company. We have invested and reinvested every dollar we made
in the company, and we borrowed a significant portion of it.
And with all that investment, we built a significant
infrastructure in the manufacturing. We are recognizing the
manufacturing infrastructure as crucial for the national
strategic purposes, as well as making sure that our patients
are taken care of with their needed medicines.
Because of all of that investment today, we are in a
position to actually help the COVID vaccine fighting. We are
about 2 weeks away from manufacturing commercial production of
COVID vaccine from our place, which is a significant
achievement. We cannot name the partner because we don't have
the authority to name the partner publicly, but we are very
close to actually commercializing the product. All of that has
been made possible by the investments and the commitments we
have made to the infrastructure building.
We have--even the story is successful, but we have a lot of
uphill battles that we had to fight. There are two major
battles we are still fighting today. One of them is the
funding. We couldn't get investments in significant amounts
from any banks. We can't even get a bank loan today in a
traditional sense because our company is growing--fast growing,
and we don't have the traditional, steady revenues that banks
would like to see. So, we have relied on USDA support, and also
private lending. And of course, private lending costs a lot of
money, and investments and millions of dollars we pay in
interest. And that can be helped by raising the limits at the
USDA loans. As a minimum today it is $25 million. We would like
to see that minimum to be raised to at least $50 million, if
not $100 million. That would help really fast-growing, small
companies like ours that require a lot of infrastructure
investments.
The second struggle we have is with the manpower. Today, it
is very hard to find people in the rural communities. As some
of you know, we need to really incentive people to come to
rural areas or remain in the rural areas. That can start with
the college students where students go to college in other
states and other towns, but they should be incentivized to come
back and build families and work in the rural areas. That is
the only way we can solve this problem, and a strong rural
economy is significant for the country's growth.
Thank you very much. My time is up. I appreciate it.
[The prepared statement of Dr. Koneru follows:]
Prepared Statement of Phanesh Koneru, Ph.D., J.D., LL.M., Founder,
President, and Chief Executive Officer, Exela Holdings, Inc., Exela
Pharma Sciences, LLC, Lenoir, NC
Respected Chairman Delgado and Ranking Member [Fischbach],
My name is Phanesh Koneru. I am the founder, President & CEO of
Exela Pharma Sciences. I was a pharmacist by training. I have a PhD in
Biomedicinal Chemistry from the University of Southern California, a J.
D., from the University of San Diego, and an LL.M. from Columbia
University School of Law. It is my privilege and honor to present my
testimony here today.
Exela is a fast growing pharmaceutical manufacturer of sterile
injectable products. We have now almost 400 employees. We began
building our manufacturing in Lenoir, Caldwell County, North Carolina,
in 2008. The unemployment rate was about 17%, many jobs were lost to
outsourcing of the furniture industry to China. The average wage in the
county was around $28,000 per year.
Exela is a fine example of how a USDA B&I loan program can help a
small company to build advanced pharmaceutical manufacturing facilities
of national strategic importance in a rural community and create
hundreds of high paying jobs. We started with the purchase of a small
moth-balled building. We converted that into an FDA cGMP building in 2
years initially with personal funds, local/state grants and private
equity investment. Since then our growth was funded primarily by
private lenders (about $150 million), and several USDA B&I guaranteed
loans (about $90 million). Exela may be the largest borrower under the
USDA B&I loan program.
Over the years, Exela has become a strong contributor to the local
economy. We are a pride to the City of Lenoir and the Caldwell County.
Exela has won awards from our customers, the local city, county, and
the state governments. I have listed them in my resume which is
attached.* The county unemployment prior to COVID-19 was around 4.5%.
Exela played a significant role in that turnaround. The average wage in
the county today is around $41,000, that is almost a 50% increase in
about 13 years. The average salary at Exela is about $59,000, which is
very competitive in most markets. Based on the strength of our
employment base, several nationally known companies moved into Lenoir
in the past few years--Chick-fil-A, Hampton Inn, Starbucks, MDI
Trucking, etc. Today, Lenoir and Caldwell County are thriving.
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* Editor's note: Dr. Koneru's resume is retained in Committee file.
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We realized long ago that large scale modern pharmaceutical
manufacturing infrastructure within the United States is of national
strategic importance. That was the impetus for us to begin building
such infrastructure at Exela since 2008. We invested over $400 million
since we started--every dollar borrowed and/or earned was invested and
reinvested in the company. Because of the investments, Exela is now in
a position to make an impact in the nations' fight against the COVID-
19. Exela is collaborating with a leading COVID-19 vaccine manufacturer
and is just a few weeks away from producing first commercial batches of
the vaccine. Exela expects to manufacture anywhere between 100 to 300
million doses in the next 12 months for both the U.S. and international
markets. I strongly believe that at least some of the vaccine Exela
manufactures will be used to fulfil President Biden's pledge, announced
on June 10, 2021, to donate several hundred millions of doses to lower
income countries. This remarkable feat has been achieved with
practically no government grants or loans designated to combat the
pandemic.
While Exela thus far has been successful, its journey has been
anything but easy. There was practically no pharmaceutical cGMP
manufacturing talent available in Lenoir. Even today, we are struggling
to find talent. We are willing to hire with no experience and train
them. We factor in the first 6 months of a new employee as all
training, with no meaningful returns to Exela. Still, it is a struggle.
Often we are using headhunters and paying above-the-norm salaries and
incentives to relocate talent. This is a significant issue for Exela's
growth.
One recommendation I would like to make is that the USDA
aggressively create a college and high-school scholarship program to
encourage students to remain in or come-back to the rural area upon
graduation. Such scholarship program may entail cancellation of a
certain portion (10-25%) of their student loans if the students work in
a rural area for 5 years after graduation. These savings will allow
students to start their careers and families with lower debt burden and
hopefully enable them to settle down and raise families, thereby
raising the overall standard of living for the entire community.
Pharmaceutical industry offers some of the highest value long-term
manufacturing jobs. As the recent pandemic events made it evident, such
manufacturing is of national strategic importance. To attract such jobs
to the rural communities, aggressive investment by the USDA is
essential. Pharmaceutical manufacturing is a capital-intensive industry
with investments typically range into tens if not hundreds of millions
of dollars. The returns are not immediate--typical lag time from
breaking ground to commercialization is about 4-5 years due to the long
lead times for the equipment and FDA approval requirements. Private
equity or private lending are the only realistic vehicles because
traditional bank loans are impossible to get during the startup through
growth phase. Even today, Exela cannot obtain traditional bank loans.
The current limitation of USDA B&I guaranteed loans is $25 million.
While this amount will benefit smaller companies, a fast-growing mid-
size company would need a larger loan. In our case, we have to invest
in modern high-speed equipment, modern manufacturing clean rooms, and
hire and train hundreds of employees. It could not be done with smaller
loans. We had to get private loans with very high interest rate to
support the growth. It would be extremely beneficial and most
immediately impactful to raise the loan amount for the Fiscal Year 2022
to at least $50 million and even to $100 million. At minimum, this
would help save millions of dollars in interest alone that is otherwise
paid to private lenders at rates as high as 15%.
During the recent pandemic hundreds of billions of tax payers'
money was provided to many companies. However, other than the PPP loan
through the CARES Act, which Exela used in its entirety to cover
payroll expenses only, Exela was unable to obtain any funding from
governmental sources. It could not even refinance its current millions
of dollars of private loans with high-interest (almost 15%) rate due to
the rigid, unrealistic lending rules as existed in the Main Street
Lending Programs. The specific needs of high growth-phase businesses in
general and those in the rural areas in particular, were ignored by
Congress. In addition, COVID-19 did impact Exela's and other rural
businesses, in a disproportionate way. For example, due to the rapidly
expanding lead times and increasing costs, Exela has to invest in
holding more inventory (almost double the usual) and purchase the
inventory at almost twice the cost in some cases. Yet, Exela was unable
to receive any governmental relief. This was disappointing. Exela hopes
sincerely that this Committee will take notice and persuade Congress to
make changes.
In summary, the USDA should invest more aggressively in rural
communities to bring high-paying sustainable high-quality manufacturing
jobs such as pharmaceutical manufacturing. Such investment should
include incentives to high-school and/or college students to find
employment in the rural communities for a certain time. Additionally,
the USDA should invest with small companies to fuel their growth with
less debt burden by way of low interest loans with less restrictive
underwriting criteria. USDA should increase the B&I loan limit to at
least $50 million or even to $100 million effective with the Fiscal
Year 2022 plan. Exela's success story proves that a lot more success is
achievable if these changes are made. We at Exela are willing to do
more.
Thank you for listening to my testimony.
The Chairman. Thank you, Dr. Koneru, for your testimony. It
is very much appreciated.
Next up, Mr. Fox. Please begin when you are ready.
STATEMENT OF HON. BOB FOX, DISTRICT 2 COMMISSIONER, BOARD OF
COMMISSIONERS, RENVILLE COUNTY, MN; VICE CHAIR, AGRICULTURE AND
RURAL AFFAIRS STEERING
COMMITTEE, NATIONAL ASSOCIATION OF COUNTIES, FRANKLIN, MN
Mr. Fox. Chairman Delgado, Ranking Member Fischbach,
Members of the Committee, my name is Bob Fox and I serve as
Commissioner for Renville County, Minnesota, and Vice Chair of
NACo's Ag and Rural Affairs Steering Committee. It is an honor
to participate in today's hearing.
For today's purposes, it is important to understand some of
the historical challenges facing rural communities. Ongoing
population losses are reducing the rural tax base, which has a
direct effect on our ability to provide core services.
Additionally, 43 states are imposing significant limitations on
county's abilities to increase local taxes.
The Great Recession also continues to plague rural
counties. In 2016, nearly \1/2\ of our nation's 3,069 counties
were still struggling to recover. As COVID-19 hit, over 800
counties had yet to return to pre-recession general revenue
levels, most of which had a population of less than 50,000.
General revenues are the backbone of our county funding
because they are not restricted to a particular activity. Most
state and Federal funding is becoming insufficient and too
restricted to help cover mandated county services. Roughly 93
percent of state and Federal funding used by counties are
restricted to a specific function. Between 2007 and 2013, 59
percent of the counties reported that these grants are covering
a smaller percent of county expenses.
Matching requirements place many Federal resources just out
of reach. Counties are increasingly forced to fund mandated
services with general revenue dollars.
For FY 2021, Renville County's budget centered around main
street businesses and our agricultural community. We provided a
budget increase of only three percent through a local levy. The
flexibility of that local levy helped us meet the
infrastructure needs not being met by state and Federal
programs.
While we applaud the American Rescue Plan Act for including
$61.5 billion in direct Federal aid to the county governments,
it is important to remember the U.S. Treasury currently
prevents local governments from using these lost revenue funds
as a non-Federal match. As rural counties look for ways to
leverage our dollars, many of the USDA grant and loan programs
mentioned today will remain out of reach.
Counties are the front line in our nation's defense against
COVID-19. Counties we own or operate more than 4,000 public
hospitals, public health departments, or essential health and
emergency centers. Renville County opened a new hospital in
September of 2015 made possible by $19 million USDA Rural
Development Community Facilities direct loan, and a $4.75
million loan guarantee. By March 2020, Renville County Public
Health opened our emergency operations center in partnership
with emergency management and the county hospital. Major
priorities for our county include community mental health,
continued daycare support, and a reliable nutritional support
for residents. That same year, our hospital partnered with a
larger health system, which helped us provide drive-through
COVID-19 testing.
Counties are also fighting a war against crumbling
infrastructure. Each year, counties invest more than $100
billion in our nation's roads, bridges, transit, and water
systems.
Prevention, mitigation, and vaccination expenses have far
exceeded the revenue for the vast majority of counties. Making
matters worse, long-term unemployment levels topped four
million in January 2021, thus increasing demand for local
public services. Local governments are now forced to respond to
these needs with one million fewer workers than a year before.
Counties continue to deliver critical investments despite
inadequate and restrictive Federal resources. We desperately
depend on a number of programs at the USDA Rural Development.
Roughly 98 percent of rural Americans receive their drinking
water from a small system and depend on USDA Rural Water and
Wastewater Program. Meanwhile, USDA Electric Loan Program
helped provide safe, reliable, electric infrastructure to more
than 90 percent of the nation's counties suffering from
persistent poverty or upped migration. Broadband also proved to
be a critical utility through the pandemic. Roughly, 77 percent
of small counties are experiencing the internet below the FCC's
minimum standards, according to a 2020 NACo study. In 2011,
Renville County, as part of a regional effort, began working
with providers that helped serve portions of McLeod, Nicollet,
Renville, and Sibley Counties. We also secured a grant only
covering about 40 percent of the total project cost to extend
middle mile fiber through Renville County. Using CARES funds,
we were then able to extend service to our weakest areas and
help residents forced to learn and work from home.
At least 18 states imposed strict restrictions preventing
local governments from making similar investments and
partnerships in local broadband infrastructure. Many of these
restrictions prevent local government from providing affordable
alternatives, or creating a public-private partnership. USDA's
ReConnect Program is critical for rural counties seeking to
expand and improve connectivity. The steep 25 percent non-
Federal match makes the resource difficult for many rural
counties.
Slow economic recovery and the Treasury's rulings on
matching requirements will encumber our ability to bridge the
rural digital divide.
In closing, local government needs a strong Federal partner
that can provide reliable, direct, and flexible funding. If
local governments cannot meet the steep fiscal or operational
requirements to leverage USDA programs, our collective efforts
to address rural America's challenges are done in vain.
Thank you for the opportunity today, and I look forward to
your questions.
[The prepared statement of Mr. Fox follows:]
Prepared Statement of Hon. Bob Fox, District 2 Commissioner, Board of
Commissioners, Renville County, MN; Vice Chair, Agriculture and Rural
Affairs Steering Committee, National Association of Counties, Franklin,
MN
Welcome and Introduction
Chairman Delgado, Ranking Member Fischbach, and Members of the
Committee, my name is Bob Fox and I serve as Commissioner for Renville
County, Minnesota and Vice Chair of the Agriculture and Rural Affairs
Steering Committee for the National Association of Counties (NACo). It
is an honor to participate in today's hearing on behalf of Renville
County, NACo and our local intergovernmental partners across rural
America.
Renville County is 982\2\ miles of some of the finest agricultural
land that sets above the Minnesota River Valley. We hope to be one of
the top producing counties in Minnesota of sugar beets and corn,
depending on how Mother Nature treats us with warm sunshine and
adequate moisture. Our eastern border sets 80 miles from the Twin
Cities metro, while our western border is less than an hour drive to
South Dakota.
While Renville County's story is unique, the overall challenges we
face--which I will outline in my remarks today--are shared by rural
counties everywhere.
State of Rural America
As our nation transitions to a post-COVID economy, it is important
to understand the historical challenges facing rural counties preceding
the COVID-19 pandemic.
Many rural counties continue to struggle with population retention.
Ongoing population losses reduce our tax base, which has a direct
effect on our ability to provide core services and fund infrastructure
projects. Local property taxes are also the major source of revenue for
counties so adverse trends in property values are significantly
impacting county revenues and expenditures. And even when local
governments need to raise revenue, 43 states impose some type of
limitation on counties' ability to increase local taxes.
As COVID-19 hit, many rural counties continued to struggle from the
2008 Recession. In 2016, NACo reported on the Recession recovery of
county governments and found nearly half of our nation's 3,069 counties
had yet to fully recover from the Great Recession. By 2020, over 800
counties entered the COVID-19 pandemic without returning to Pre-
Recession general revenue levels--most of which (79 percent) had a
population of less than 50,000.
General revenues are the backbone of county funding because they
are not restricted to a particular activity and provide flexibility to
county boards in allocating funds to needed services. Unfortunately,
state and Federal funding is increasingly insufficient to help cover
mandated county services. Most often, about 93 percent of the state and
Federal funding used by a county is restricted to a specific function
(capital and operational grants and contributions, called ``dedicated
grants''). Fifty-nine (59) percent of counties recorded dedicated
grants covering a smaller percent of county expenses between 2007 and
2013.\1\
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\1\ https://www.naco.org/articles/counties-still-challenged-
recession%E2%80%99s-recovery.
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Matching requirements also place many Federal grant and loan
programs just out of reach for rural counties. Despite significant and
historic appropriations to critical programs, matching requirements
make leveraging Federal resources impossible for many rural counties.
Subsequently, counties are increasingly forced to fund mandated
services with general revenues and charges.
In Renville County, our 2021 budget concerns centered around main
street businesses and the agricultural community. We provided our
residents with a budget increase of only 2% through a local levy. The
flexibility of local levy dollars helped Renville County meet the
infrastructure needs that were not being met by state and Federal
programs.
We applaud the American Rescue Plan (ARP) Act for including $61.5
billion in direct Federal aid to county governments in recognition of
revenue losses due to the pandemic. However, throughout my remarks
today, it is important to remember the U.S. Treasury is preventing
local governments from using our ARP lost-revenue funds as a non-
Federal match. As rural counties look for ways to leverage this
critical assistance--many of the USDA grant and loan programs mentioned
today will remain out of reach.
County Role and the COVID-19 Pandemic
Counties are responsible for delivering a broad array of programs
and services that provide a foundation for strong and stable economies.
To achieve this outcome, counties make significant investments in our
nation's essential infrastructure; maintain our nation's justice and
public safety system; and support public health through funding for
hospitals and mental health programs.
Collectively, counties own or operate over 1,000 public hospitals,
1,900 local public health departments, more than 800 long-term care
facilities, and 750 behavioral health departments. Additionally, we are
responsible for other essential functions including emergency
operations centers, human services, jail management, 911 services,
veterans' services, coroners, and medical examiners.
Renville County opened a new hospital in September 2015. The RC
Hospital and Clinic was made possible by a $19 million USDA Rural
Development Community Facilities direct loan, and a $4.75 million
Community Facilities loan guaranteed through a partnership with AgStar
Financial Services.
By mid-March of 2020, Renville County had opened our emergency
operation center. County Public Health took over as the lead public
health responder in partnership with Emergency Management. The
Emergency Operation Center operates on a ``worst-case-scenario'' plan
and can accommodate 30 in-patients by diverting other spaces for
patient care. Public Health's major priorities for the hospital
included: community mental health, continue daycare information and
support, as well as assuring safe and adequate food supply for
residents of the county.
In May 2020, our hospital moved forward with a new partnership with
a larger health system which helped us offer drive-through testing for
COVID-19 at our hospital and two satellite clinics.
While serving as our nation's front-line defense against the COVID-
19 pandemic, counties are also fighting a war against crumbling
infrastructure. Collectively, counties invest more than $100 billion
each year in our nation's roads, bridges, transit, water systems and
other public facilities to help facilitate commuters and shipping goods
around the globe.
Unfortunately, the costs incurred by local governments in response
to the COVID-19 pandemic vastly outpaced revenues. In a recent survey
on the fiscal health of counties, NACo found that 74 percent of county
respondents faced significant challenges in providing core services to
residents due to increased expenses from combating the public health
crisis. Prevention, mitigation, and vaccination expenses far exceeded
the declining revenues for the vast majority of counties.
Additionally, long-term unemployment levels topped four million in
January 2021--representing roughly 40 percent of the ten million
unemployed Americans. Long-term unemployed individuals have
exponentially increased the demand for local public services throughout
the pandemic while local governments seek to respond to these needs
with one million fewer workers than the year before.\2\
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\2\ https://www.naco.org/sites/default/files/documents/
COVID%20Financial%20and%20Eco
nomic%20Impacts.pdf.
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County COVID-19 Recovery
As I mentioned earlier, many counties that were experiencing
economic hardship pre-coronavirus, appear to have experienced
exacerbated economic impacts during the coronavirus recession.
Specifically, rural America's recovery from the 2008 recession was
woefully incomplete as COVID-19 hit in 2020 with unemployment in non-
metro counties far below 2007 levels.
In August 2020, eighty-one (81) percent of counties reported
unemployment levels above a healthy level of unemployment (defined by
the Federal Reserve to be about 4.5 percent). This amount includes 19
percent of counties reporting local area unemployment rates far above
the national average of 8.4 percent.\3\
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\3\ https://www.naco.org/resources/featured/local-area-
unemployment-statistics-economic-analysis-covid-19.
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In July 2020, NACo estimated counties would experience a $202
billion budget impact due to COVID-19 through FY 2021, derived by
increased expenditures and losses within tax and non-tax revenue
streams.\4\
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\4\ https://www.naco.org/articles/county-budgets-see-202-billion-
covid-19-impact.
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While the financial impact has varied by county, most counties have
incurred unforeseen expenditures brought on by the pandemic. As such,
stabilization of county budgets will be key in county economic
recovery.
Infrastructure/Resource Needs in Post-COVID Economy
As owners of 45 percent of public roads and almost 40 percent of
the National Bridge Inventory who also directly support 78 percent of
the nation's public transit systems and 34 percent of public airports,
counties are stepping up at the local levels to deliver critical
projects for our residents despite a lack of Federal investment and
many state laws that prevent us from raising local taxes to support
these efforts.
More than 98 percent of rural Americans receive their drinking
water from small systems, the cost of which to operate and maintain is
significantly higher than urban areas. The U.S. Department of
Agriculture (USDA)--Rural Development's Water and Wastewater Program is
critical to helping small communities improve existing infrastructure,
protect their drinking water resources, and comply with Federal
drinking water regulations. Counties urge you to increase funding for
this program to assure that the highest quality drinking water and
sanitation services are available to rural America during the pandemic.
USDA-Rural Development's Electric Loan Program is a $46 billion
portfolio that helps nearly 700 borrowers in 46 states finance safe,
modern, and efficient infrastructure. USDA-Rural Development's financed
electrical systems provide service to more than 90 percent of the
nation's counties that are identified as suffering from persistent
poverty, out-migration, or other economic hardships. The program also
provides financial assistance through High Energy Cost Grants to rural
communities with extremely high energy costs to acquire, construct,
extend, upgrade and otherwise improve energy generation, transmission
or distribution facilities. Counties urge you to fully fund these
programs that are critical to maintaining services to millions of rural
Americans during the crisis.\5\
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\5\ [https://www.naco.org/sites/default/files/documents/
NACo%20leadership%20letter_
4.6.pdf].
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Last, the COVID-19 pandemic underscored the true utility of
broadband service. As the pandemic increased demands in teleworking,
virtual learning and telemedicine, counties turned to public hotspots
to meet the needs of residents. Although a concern for many years, when
the COVID-19 pandemic sent everyone home to work and learn online, a
rapidly growing number of people learned what many already knew--the
nation's information technology infrastructure was insufficient. In
both rural and urban counties, residents do not have the level of
access needed to run businesses, take classes, operate machinery, and
practice medicine.
While the digital divide exists in communities of all sizes, rural
counties were disproportionally impacted by the lack of connectivity
throughout the pandemic. In a 2020 study entitled ``Understanding the
True State of Connectivity,'' NACo reported that roughly 77 percent of
small counties (0-50k in population) were--on average--experiencing the
internet below the FCC's definition of a minimum standard for broadband
service (25Mbps/3Mbps).\6\
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\6\ https://www.naco.org/resources/page/understanding-true-state-
connectivity-america.
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In 2011, Renville County started conversations with neighboring
Sibley County on how to bring internet to residents with speeds capable
of meeting the demands of the 21st century. We worked with two local
phone companies to improve their services and secured a new provider to
work on a joint project that touched portions of McLeod, Nicollet,
Renville, and Sibley Counties.
Additionally, we secured a state grant--covering roughly 40% of
total project costs--to extend middle mile fiber through Renville
County. With the middle mile secured, we used COVID-19 funds to partner
with two providers to extend service to our weakest areas. The expanded
footprint provided service to children and parents forced to learn and
work from home due to the COVID-19 pandemic.
Understandably, the industry--beholden to shareholders and profit--
must direct their attention to markets that can maximize their return
on investment. Fortunately, our public-private partnership was able to
help attract the industry to markets that would have otherwise remained
underserved or overlooked.
Not all counties, however, have the ability to leverage
partnerships like ours. Currently, over 18 states impose strict
restrictions preventing local governments from making much-needed
investments in local broadband infrastructure and services. By
restricting local governments from making the initial investments in
broadband networks, we are effectively preventing local governments
from providing an affordable alternative to service or partnering with
ISPs that could lease networks in otherwise cost-prohibitive
communities.
Programs like USDA's ReConnect Program are critical for rural
counties seeking to expand and improve connectivity. In FY 2020, USDA
awarded 87 individual grant awards totaling over $673 million under the
ReConnect Program. However, with an average award of $6.04 million for
fully funded projects, the 25 percent non-Federal match would require
roughly $1.5 million before a rural county could leverage ReConnect
resources. You can see how slower economic recovery coupled with
Treasury's ruling on non-Federal matching eligibility will further
prevent rural counties from addressing the digital divide.
Closing
In closing, local governments need a strong Federal partner that
recognizes our unique roles and responsibilities. This requires
reliable, direct, and flexible funding and financing that can be
adapted to meet the needs and challenges facing our rural counties.
The host of USDA Rural Development grant and loan programs are
critical to rural counties across the country and demand significant
attention and appropriation. However, if local governments cannot meet
the steep fiscal or operational requirements to leverage these
programs--our collective efforts to address the challenges facing rural
America are done in vain.
Thank you for the opportunity today and I look forward to your
questions.
The Chairman. Thank you, Mr. Fox. I appreciate your
testimony. Okay. Are we back? We good? All right.
Next up, our friend and constituent, Mr. Erling, please
begin when you are ready.
STATEMENT OF TODD M. ERLING, EXECUTIVE DIRECTOR, HUDSON VALLEY
AgriBusiness DEVELOPMENT
CORPORATION; PRESIDENT AND CHIEF EXECUTIVE
OFFICER, FARM AND FOOD GROWTH FUND INC., HUDSON, NY
Mr. Erling. Thank you, Congressman. Mr. Chairman, Ranking
Member Fischbach, and Members of the Subcommittee, thank you
for holding this hearing on examining opportunities for growth
and investment in rural America. I also want to thank the staff
that supports this Committee and the staff that supports each
and every one of you as Members. They are invaluable teammates
with us out here in the rural economy and rural communities,
and I don't want to go on without the opportunity to recognize
the role they have played supporting this organization and the
communities that we are responsible for.
But most importantly, I really want to thank you for the
opportunity to testify. As the Chairman mentioned, I am the
Executive Director of a regional nonprofit that focuses on
agriculture, local food systems, ag-related and ag-dependent
businesses as economic development, and with community
development tools and programs.
Sitting here today listening to my fellow witnesses, it is
interesting to see the legacy and the hierarchy. We have
counties represented, we have regions represented, we have
individual entrepreneurs represented. And when I began in this
position, I was actually a deputy director of an individual
county economic development office. I was fortunate enough to
have the background in community and affordable housing
development prior to moving into that position, and since then,
have carried those perspectives and that holistic systems
approach into looking at agriculture and rural development, and
identifying the needs and creating solutions with partners not
only from the county level, county economic development
offices, industrial development agencies, but also state and
Federal. And you hear the alphabet soups that we all work in. I
really appreciate the CDFI opportunity. Another opportunity I
want to talk about is not only SBA, but EDA, Economic
Development Administration, but we really need all the arrows
in the quiver, all the tools in the toolbox to address not only
our rural but also our urban challenges. Because many of them
are overlapping, and many of them have similar common
denominators. However, some of them don't have tools to address
the challenges.
When we look at rural economic development, when we look at
rural community development, we are really talking about rural
urban relationships, and the flow between capital and the flow
between people, goods, and services from our urban areas into
our rural areas, and vice versa. That actually has been
recognized through several of the witnesses' testimony we have
had so far.
At Hudson Valley AgriBusiness, I have been lucky enough to
be part of a founding group of pure organizations that
represent upstate New York and New England, and the
Agricultural Viability Alliance. And some of the common
denominators and challenges that this Subcommittee as well as
USDA Rural Development can help us with are one-on-one business
technical assistance. Helping our rural entrepreneurs have the
same tools that urban and suburban entrepreneurs have through
small business development centers, through some of the other
best practices that we have seen with strategic planning,
access to accounting, access to human resources, and the
ability then to take and implement not only the expertise, but
marrying that to capital sources and capital programs like
CDFIs, like EDA rural development programs, like USDA B&I
programs.
And so, I really just want to highlight the fact that the
CARES Act, the Rebuild America efforts through the ARPA, our
annual budgets as well as our farm bills, have a hole. We
really do not have a square peg for a square hole or a round
peg for a round hole for BTA, business technical assistance.
And many of us make it work through LFPP and other programs,
but if we could establish some standalone business technical
assistance programs that not only support best practices and
developing a Rolodex of service providers and agencies, but
also have year over year funding opportunities that we can
count on, similar to block grant funding for urban areas.
And with that, I just want to wrap up by talking about the
Rebuild Rural America Act (H.R. 2361) that has been introduced.
This would be a real opportunity for our rural communities to
have similar tools and strategies of year over year funding to
implement strategy that was created by the rural communities,
knowing that there is multi-year opportunity and flexibility
not only for the hard infrastructure, but the soft
infrastructure. Business technical assistance at the core is
about humans, their expertise, and the relationships that
happen year over year to implement the strategies and to tackle
the challenges that happen in an entrepreneur or business or
community's lifespan.
So, with that, I just want to say I am open for any and all
questioning. I really can't wait to connect with some of our
other witnesses offline, and thank you again for this
opportunity.
[The prepared statement of Mr. Erling follows:]
Prepared Statement of Todd M. Erling, Executive Director, Hudson Valley
AgriBusiness Development Corporation; President and Chief Executive
Officer, Farm and Food Growth Fund Inc., Hudson, NY
Mr. Chairman, Ranking Member Fischbach, and Members of the
Subcommittee, thank you for holding this hearing on examining
opportunities for growth and investment in rural America and for
allowing me to testify. My name is Todd Erling and I serve as Executive
Director of Hudson Valley AgriBusiness Development Corporation located
in Hudson, New York.
Hudson Valley AgriBusiness Development Corporation is dedicated to
promoting balanced, market-based solutions that lead to enhanced
agricultural entrepreneurship, rural economic growth, and community
enhancement throughout our Hudson Valley communities. We are the only
economic development agency in the Hudson Valley with a specific focus
on the viability of the agricultural economy in the region and assist
eight rural counties in their efforts to provide economic and community
development opportunities for their residents. Our charge is to enhance
the agricultural sector in the region by assisting both new and
existing agribusinesses and supporting policies and regulations that
recognize and support New York State's agricultural and rural economy.
Our services are carefully designed to support the Hudson Valley as
an attractive, viable region for agriculture and to foster growth and
development of the agricultural sector through a creative program of
business technical assistance (BTA) that may include strategic
planning, business planning, land access, marketing, promotion and the
provision and coordination of financial and other resources. Since our
inception, we have assisted over 260 businesses with a wide range of
individualized services such as access to capital, business
development, financial planning, and market readiness preparation, and
have expanded our network of farms, restaurants, and producers to over
600 businesses and counting.
Hudson Valley AgriBusiness Development Corporation is also a
founding member of the Agricultural Viability Alliance. The Alliance is
a multi-state regional coalition focused on increasing the number and
economic viability of farm and food businesses in rural communities
throughout New England and the Hudson Valley by bringing together
providers and to address shared challenges, facilitate more uniform
high-quality coverage, and more effectively share and expand limited
resources.
Working together with the Alliance and our partners at American
Farmland Trust, Hudson Valley AgriBusiness Development Corporation has
been at the center of an effort to mobilize Federal resources in
support of rural communities, agriculture and food businesses' recovery
efforts following the unprecedented economic challenges faced during
the COVID-19 pandemic. Our rural communities are economically
vulnerable on our best days, facing challenges ranging from underfunded
schools, lack of access to capital, diminished business and financial
planning capabilities and insufficient infrastructure--including access
to high-speed broadband. The strain of the economy ravaged by a global
pandemic brought agriculture and food businesses, which often serve as
the anchor for rural communities, to the brink of collapse. In New York
alone, 43% of farms report to have lost substantial sales during the
pandemic. More than \1/3\ of farms and agribusinesses (37%) are
experiencing severe cash flow issues and almost \1/2\ (47%) say they
have significantly reduced spending to local vendors and suppliers or
will do so in the future. A combination of Federal investment in the
areas noted above combined with a commitment to business development
could not only assist rural areas in recovering economically from
COVID-19, but lay the foundation for sustained economic growth into the
future.
COVID-19 has impacted farm and food businesses unevenly: some had
their markets disappear overnight, like farms and food hubs that supply
restaurants and schools, while others have seen demand skyrocket, such
as those with on-site or online retail operations. Yet all farmers have
had to adjust to fundamentally changed market conditions, and even
businesses with increased demand have dealt with processing disruptions
and labor shortages, requiring significant and sometimes complex
workarounds that impact profitability. Although state and Federal
support such as the Payment Protection Program (PPP) and the
Coronavirus Food Assistance Program (CFAP) have been helpful, aid has
still failed to reach everyone, leaving many entrepreneurs in a deep
financial hole with no increased resilience to future disruptions.
Business planning and financial literacy skills are more important
than ever as farm and food entrepreneurs are forced to adapt. While
producers excel at the production side of their business, many--
especially mid-sized and smaller operators--lack the training and
knowledge to assess their finances, pivot their business strategy, or
even access government funding. Indeed, many farmers were unable to
receive Coronavirus relief because of inadequate recordkeeping. One-on-
one BTA is a proven way to develop these skills and improve long-term
business viability. Across the country, agricultural service
providers--including nonprofits, private consultants, state agencies,
and extension eervices--are playing pivotal roles in providing the
individualized assistance needed to build and sustain profitable
enterprises.
BTA typically consists of financial literacy coaching, including
the skills and recordkeeping needed to successfully access capital;
management skills, such as strategic planning and human resources; new
enterprise development; marketing and sales; succession planning; and
even IT issues like accessing high-speed internet. Some organizations
provide a range of services, while others specialize in an area such as
land transfer and succession--but all forms of BTA give the recipient
the skills, knowledge, and confidence to help their business succeed
long-term. All businesses are unique, and thus require support tailored
to their specific needs, including their scale, stage of business, and
markets. To be effective, this support needs to be sustained over time.
The Alliance has a large and growing pool of data showing BTA's lasting
impacts on business viability and the broader economy. Vermont's Farm &
Forest Viability Program found that 2 years of business planning
support can generate a 62% increase in net income, significant
improvements in business skills, and marked annual growth in full-time
employees. The Carrot Project's research shows similar results, with 2
years of business advising increasing net income by more than 50% for
start-up and early-stage farms, and increased confidence in financial
management. At Hudson Valley AgriBusiness Development Corporation, we
also demonstrated its positive impacts on rural communities, with 19
graduates of our Farm and Food Funding Accelerator program creating 206
jobs and making purchases from 125 other regional farms--all barely a
year after completing the program. Sixteen of these businesses secured
over $1.1M in capital leveraging a $200,000 Federal investment in BTA
by more than five-fold.
The value of BTA goes beyond a pandemic recovery strategy, offering
an opportunity to directly support BIPOC (Black, Indigenous, and People
of Color), women, and LGBTQI+ farm and food entrepreneurs--many of whom
face systemic barriers to entry, discrimination, and other challenges,
especially in rural areas. There is an acute need for culturally
informed, highly-tailored BTA that is ideally provided by members of a
specific disadvantaged community to help address this long history of
exclusionary practices and agricultural land loss. There is also demand
for this type of assistance from veterans, who represent a growing
cohort of entry-level producers.
BTA also offers a tool for increasing resilience at the individual
and community levels. The pandemic exposed the fragility of a highly
centralized national food system and its reliance on a shrinking number
of processing and distribution facilities. Providing customized support
to these businesses in the middle of the supply chain supports job and
wealth creation across America, while making supply chains more
resilient to disruption.
Farm and food businesses also need increased resilience to
withstand the impacts of climate change. A recent USDA survey showed
that ``the majority of growers believe that they do not have the
financial capacity, knowledge or technical skills to deal fully with
the threat extreme weather presents to the viability of their farm,'' a
gap which can be addressed through BTA. Conservation practices improve
soil health, mitigating against climate change impacts like erosion
from heavy rains and drought while also sequestering carbon and
improving air and water quality. Farmers and ranchers with stronger
business skills are more likely to have the capital and the long-term
planning abilities needed to invest in on-farm conservation and will be
better able to respond to changing markets, growing conditions, and
more.
BTA has also proven effective in addressing the transfer of
agricultural land, both through succession planning for exiting farmers
and landowners and through mentoring and land access support for
beginners. With as much as 40% of American farmland likely to change
hands in the next 20 years, BTA is a vital tool to keep land in farming
and expand opportunities for a more diverse next generation.
Beyond assistance to individual businesses, the Federal Government
must commit to the mobilization and coordination of resources for rural
America in a similar manner we see our national government deliver
support for our urban communities. Indeed, while the specific
challenges faced in rural and urban communities may differ, the effects
they have on their populations are the same. Institutional poverty,
failing infrastructure and a lack of sustainable growth cripple
neighborhoods, urban and rural alike. Agencies like the Department of
Housing and Urban Development administer billions of dollars in Federal
assistance to help urban communities develop and overcome such
challenges. COVID-19 has shown us that now is the time for a similar
effort aimed at our rural communities.
The Rebuild Rural America Act was introduced in both Houses of
Congress earlier this year and provides a roadmap for sustained
strategic investment in our rural communities that are modeled after
successful programs aimed at urban areas. The legislation would create
a dedicated stream of Federal funding for rural communities and would
provide guaranteed block grants to create a predicable, locally-
controlled planning process, enabling multi-year programs to confront
the institutional economic challenges faced in rural America. This
combination of planning and training incentives and a predictable
stream of Federal funds creates a path for sustainable development that
will insulate rural communities from extreme impacts of economic
fluctuation and chip away at the institutional challenges that limit
their growth and opportunity.
Our experience in BTA has shown us that developed ``soft
infrastructure'' (business development, financial literacy, job
training) effectively positions businesses to access additional state
and Federal resources. Indeed, we've seen clients who receive BTA
services go on to access USDA Value-Added Producer Grants, which could
then be leveraged to secure NYS Empire State Development grants. The
investment in soft infrastructure through BTA and other Rural
Development programs is a start. But linking Rural Development efforts
to other existing Federal efforts, such as U.S. Department of Treasury
Community Development Financial Institution and U.S. Department of
Commerce Economic Development Administration programs, will deliver a
sustainable benefit and prove to be cost-efficient over time.
And coordinated with state resources, the programs of the Rebuild
Rural America Act and other Federal initiatives, can be leveraged to
expand the impact on our rural communities. As we see in the operations
of our existing Rural Development programs, effective collaboration
with state rural and agriculture offices can be a winning combination.
Whether its infrastructure funding, business development programs or
broadband deployment models, when our state and Federal programs
complement each other, we all get more bang for our buck.
Thank you for this opportunity to share thoughts with you on
strategies for advancing economic opportunity in our nation's rural
communities. I look forward to continuing to work with this Committee
and with our Federal leaders to ensure that we are providing the
necessary resources to our rural communities and their agriculture and
food related businesses so they can remain a viable part of our
country's diverse fabric.
The Chairman. Thank you, Mr. Erling, for your testimony.
Next, we have Mr. Mattson. Please begin when you are ready.
STATEMENT OF KENT D. MATTSON, J.D., CHIEF EXECUTIVE OFFICER,
LAKE REGION HEALTHCARE, FERGUS FALLS, MN; ON BEHALF OF
MINNESOTA HOSPITAL ASSOCIATION
Mr. Mattson. Good morning, Mr. Chairman, Ranking Member
Fischbach, and Members of the Subcommittee. Thank you for
providing the opportunity to speak on this important topic
today.
I am the CEO of Lake Region Healthcare. We are a not-for-
profit private healthcare organization located in west central
Minnesota. I am testifying today on behalf of the Minnesota
Hospital Association. I am not a clinical individual. I am an
attorney by training, but I have been in the healthcare
industry for over 20 years. I am, though, the son of a nurse
who worked for decades at our organization as a nurse leader. I
have a deep passion and commitment to rural Minnesota and rural
healthcare. I am blessed to lead an organization that has been
one of the many healthcare organizations that has been
continuing on the frontline of this pandemic, taking the lead
in responding to COVID-19 for over 17 months now. We partnered
through that, though, with public agencies, both for our
services and funding, and we are proud and pleased to continue
in this effort for the foreseeable future.
As I mentioned, we are a nonprofit healthcare organization.
We are made up of three hospitals. One is a larger community-
based not-for-profit hospital located in Fergus Falls,
Minnesota, and the second is a critical access hospital located
in Elbow Lake, Minnesota. We have 11 clinic locations in
communities across west central Minnesota, as well as an
assisted living facility and three surgery centers, one in
Fergus Falls, and another in Morris, Minnesota. Together, our
enterprise has about 1,100 staff members and about 110 primary
physicians and providers.
I believe that hospitals are one of the basic physical and
organizational facilities needed for communities to thrive, no
matter the size, location, or demographics. Hospitals and
health systems are the cornerstones of communities in our
country, including in particular in rural Minnesota.
This is especially true that we have seen over the last 17
months. Not only do hospitals and health systems provide
accessible and high-quality care in our remote areas, but
through the pandemic, we have responded to a healthcare crisis
that nobody in our generation has seen. In addition, we are
major employers in our regions that provide reliable, good-
paying jobs, but we also serve low population areas that have a
disproportionately aging population with increased medical
needs and limited mobility. We have growth in our core county
over the upcoming years, but that growth is primarily an aging
population, which is going to put additional demands on our
systems.
Over the past year, rural hospitals answered the call to
service during the COVID-19 pandemic. We have been on the
frontlines not only taking care of patients that have come to
our facilities, but also to try to control the spread of the
virus through testing, contact tracing, and vaccine deployment.
In addition, we have been a trusted resource for public health
information for our neighbors and in our communities.
We know that rural hospitals and health systems face
enormous challenges. This includes declining reimbursements,
increased costs, difficulties recruiting and retaining our
healthcare workforce, and limited access to capital. In fact,
the Minnesota Hospital Association reported that 31 of the
Minnesota hospitals, which is about 41 percent of all Minnesota
hospitals, had negative operating margins, and all but three of
those were in rural areas.
Over the years and today, rural hospitals continue to face
the need to update and replace outdated facilities. These large
expenses can be a huge burden, given our lack of access to
capital. We have limited size. We have a limited population
base, and we have razor-thin margins. So, oftentimes we are
unable to access capital through traditional methods. So, this
makes investments from Congress that create loan and grant
opportunities for rural healthcare systems critically important
to our future. At a critical access hospital in Elbow Lake, we
were the thankful beneficiary of a USDA Community Facilities
Direct Loan and Grant Program. In 2013, we finished
construction of the Prairie Ridge Healthcare Facility in Elbow
Lake. It is a 53,000\2\ state-of-the-art hospital, which
replaced an aging 1960s facility that had long ago outlived its
useful life. The upgrade was a complete game changer for us. It
enhanced patient safety and accessibility, expanded services
such as general surgery, orthopedics, and obstetrics, and
upgraded technology to better serve our patients in those local
communities.
Before our facility was constructed, we had about 11
providers. Since then, we have been able to recruit and retain
37 new providers. In addition, we staff about 120 nursing
operations, facilities, and administration staff, and Prairie
Ridge provides outreach to other communities adjacent to us. We
are not a large facility, but we do take care of a large
population base, so we are thankful for the program.
I am, again, happy to answer any additional questions that
may come up from Members of the Subcommittee today.
[The prepared statement of Mr. Mattson follows:]
Prepared Statement of Kent D. Mattson, J.D., Chief Executive Officer,
Lake Region Healthcare, Fergus Falls, MN; on Behalf of Minnesota
Hospital Association
Chairman Delgado, Ranking Member Fischbach, and Members of the
Committee, thank you for providing me the opportunity to speak on this
important topic. My name is Kent Mattson and I am the CEO of Lake
Region Healthcare, a rural healthcare organization located in West
Central Minnesota. I will be testifying on behalf of the Minnesota
Hospital Association.
I have been the Lake Region Healthcare Enterprise CEO since May of
2020 and have worked within the organization for over 20 years. Lake
Region Healthcare is made up of two hospitals, a PPS community-based
not-for-profit hospital in Fergus Falls and a critical access hospital
located Elbow Lake. We have eleven clinic locations in communities
across west central Minnesota as well as an assisted living facility
and two surgery centers, one in Fergus Falls and another in Morris. Our
team is made up of over approximately 1,100 staff members and roughly
110 physicians and providers.
I believe that hospitals are one of the basic physical and
organizational facilities needed for communities to thrive. No matter
the size, location, or demographics, hospitals and health systems are
the cornerstone of communities across our country.
This is especially true in rural areas. Hospitals and health
systems provide accessible and high-quality care in remote areas, we
are major employers that provide good paying jobs, and we serve low
population areas that have a disproportionally aging population with
increased medical needs and limited mobility.
This past year, our rural hospitals answered the call to service
during the COVID-19 pandemic. We have been on the front lines helping
to control the spread of the virus through testing, contact tracing,
and vaccine deployment and treating those patients who got COVID-19. We
have also been a trusted source of public health information for our
neighbors in our communities.
We know that rural hospitals and health systems face enormous
challenges. This includes declining reimbursements and increased costs,
difficulties recruiting and retaining our health care workforce, and
limited access to capital. In fact, the Minnesota Hospital Association
reported that of the 31 Minnesota hospitals with negative operating
margins, all but two were in rural areas.
Rural hospitals also face the need to update or replace outdated
facilities. These large expenses can be a huge burden given our lack of
access to capital. With our limited size and razor thin margins, we are
often unable to access the needed funding through traditional methods.
This makes investments from Congress that create loan and grant
opportunities for rural health care systems critically important. At
our critical-access hospital in Elbow Lake, we were the thankful
beneficiary of a USDA Community Facilities Direct Loan and Grant
Program.
In 2013, we finished construction on the Prairie Ridge Healthcare
Facility. This 53,000\2\ state-of-the-art hospital replaced an aging
and deficient facility that was built in the 1960's, and which had long
ago outlived its useful life. This upgrade was a complete game changer
that vastly enhanced patient safety and accessibility, expanded
services such as general surgery, orthopedics, and obstetrics, and
upgraded technology to better serve patients in our local communities.
Prairie Ridge is now serviced by 49 onsite physicians, advanced
practice providers, and certified registered nurse anesthetists. We
have been able to recruit and retain 37 new providers since we
announced the new facility. In addition to a strong provider team,
Prairie Ridge also employs an additional 120 nursing, operations,
facilities, and administrative staff. And Prairie Ridge provides
outreach to other surrounding rural communities.
Per year, Prairie Ridge averages roughly 190 ambulance runs, 660
surgeries scopes, 25,000 lab tests, and 18,000 provider visits. And I
am proud to say, the Prairie Ridge Clinic has administered over 3,000
COVID Vaccinations.
The positive impact this facility upgrade has had on the community
cannot be overstated. In addition to the expanded health care services
and good paying jobs, the Prairie Ridge facility has become a major
source of pride and a community hub. For example, it hosts the Grant
County Veterans Memorial, there is a community room open for public
use, and there is even a dining cafe.
None of this would have been possible without a $16 million loan
from the USDA Community Facilities Direct Loan and Grant Program. That
money gave us the financial viability to make this incredible project
come to life. We truly are a success story that should be replicated in
communities across the country.
Beyond the physical infrastructure needs of hospitals, I also would
encourage the Committee to consider strong investments in broadband
that will ensure all people have access to telehealth services
regardless of their [Zip C]ode. This pandemic has illustrated the
importance of telehealth services particularly around mental health and
specialty care.
Without high-quality facilities and a strong infrastructure system,
our rural hospitals will not be able to carry out our mission to serve
our communities and patients. We stood up an responded to the call to
action from the [COVID] crisis, and must be able to stand ready to
respond to the next public health crisis, in addition to serving our
populations, day in and out. In closing, I want to thank the Committee
Members for your service to our country and for your support to rural
hospitals and health systems. I look forward to answering your
questions.
Appendix A
Prairie Ridge Healthcare Facility Information
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Location: Elbow Lake, MN
Built: 2013 (Photo above)
Size: 53,000,\2\
Replaced aging and deficient 26,000\2\ facility (photo below).
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Improved Patient Safety, Privacy, and Accessibility
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Safety and accessibility took a high priority in the design of the
new facility. Corridors, doorways, and bathrooms give easy wheelchair
access throughout the building while advanced medical equipment is
integrated with safety features. All ten hospital rooms are equipped
with Medcare ceiling lifts; making it easier to move patients
throughout the room. This same lift system is also implemented in the
Rehabilitation Department providing valuable aid to physical therapists
in enabling patients to restore their strength. The layout of the new
facility also allows for different areas to be locked down after hours
or in case of an emergency. The drive-through Emergency entrance
enclosed within the building serves for convenience, safety, and
privacy for ambulance and emergency drop off. Prairie Ridge's
technology within the new hospital provides a safer environment for
staff, patients, and visitors giving peace of mind to families.
Expanded Services
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
It is important to Prairie Ridge that we offer services close to
home while also promoting jobs to families in our rural community. The
new facility has aided in the ability to add several Family Practice
providers and expanded services in the areas of General Surgery,
Orthopedic Surgery, and Obstetrics.
Upgraded Technology
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
State-of-the-art technology results in quicker test results and
more efficient use of our patients' time. Electronic exam tables and
patient lift systems increase comfort and safety. New microscope
technology, incubators, and automated analyzers produce consistent
results while lab technicians are free to perform other tasks.
Ultrasound, Dexascan, MRI, and mammogram technologies will continue to
be utilized in addition to a new CT Scanner, Digital X-Ray, and a
mobile X-Ray Unit to scan patients at bedside. This technology lets our
patients have a shorter visit with faster, more detailed results.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Wireless and Mobile Health access allows our providers to practice
untethered; providing portable access to patient electronic medical
records. The use of iPads, flatscreen monitors, and other devices
change the way they collect, examine, and deliver healthcare
information. Multiple areas within the hospital offer a full suite of
audio, video and web conferencing designed to meet the needs of our
ever-changing healthcare arena. The Nurse Call System not only connects
patient to nurse but also networks emergency response communication
throughout the building. Prairie Ridge recognizes that our patients are
entitled to the benefits of cutting-edge technology; giving assurance
of quality and confidence in our rural community.
Community Impact
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
In addition to bringing healthcare close to home for this rural
community, the Prairie Ridge Campus has become a point of community
pride. It hosts the Grant County Veterans Memorial, a community meeting
room, and an open dining cafe.
Key Statistics
Prairie Ridge is serviced by a total of 49 onsite Physicians,
Advanced Practice Providers, and CRNAs. Since opening the new facility
in 2013, Prairie Ridge has been able to recruit and retain 37 new
providers to continue to provide and/or expand services for family
practice/primary care, surgical services, and other specialty care
services. In addition to a strong provider team, Prairie Ridge employs
an additional 120+ nursing, operations, facilities, and administrative
staff.
In addition to serving the Elbow Lake community, Prairie Ridge
provides outreach to Morris, Evansville, Hoffman, Herman, and other
surrounding rural communities such as Wendell, Hancock, Ashby, and
Barrett. Annually, Prairie Ridge Averages * 189 Ambulance Runs, 663
Surgeries/Scopes, 25,547 Lab tests, and 18,423 Provider Visits. To
date, the Prairie Ridge Clinic has administered 3,092 COVID
Vaccinations.
---------------------------------------------------------------------------
* Average over the last 4 years.
Service Lines Offered
Allergy/Immunology
Asthma and allergic condition Allergy testing for medications
clinic consults for pediatrics and Allergy shots
adults
Skin scratch testing for 64 food/
environmental antigens
Ambulance Services
Cardiology
Clinic Consults (A-fib, Syncope, Cardiac rehabilitation
Cardiomyopathy)
Cardioversions Cardiology clinics
Cardiac stress tests Pacemakers--dual and single chamber
Treadmill Stress Tests ICDs--dual and single chamber
Nuclear Med Stress Tests--Standard Cardiac resynchronization therapy
treadmill device implants
Cardiolyte treadmill Implanted Cardiac Loop Recorders
Chemical stressing stress tests Cardiomem implants
(LEXI SCAN)
EKG stress tests Synchronized cardioversion
Pacemaker insertions and Interpretation of echocardiogram
programming and stress tests
Pacemaker clinic Tilt Table Testing
Carotid massage Teleheart Consults
Colonoscopy and Endoscopy
EGD--diagnostic, screening, Bronchoscopy--diagnostic with
rescreening, ph testing, brushings, washing, and biopsies
esophageal manometry Flex sig
Diabetes Management (Group and Individual Sessions Available)
Dietitian (Elbow Lake)
Weight Loss Diabetes
Heart disease Cholesterol
Renal disease
Emergency Department (Level 4 Trauma Center)
Inpatient Services
Interventional Radiology
Clinic consults for pain disorders/ SI joint, shoulders, hips
vascular interventions (trochanteric, intraarticular),
Radiology consultations provider- knee, wrist, etc.
provider
Vascular follow up after vascular Trigger point injections
interventions.
Soft tissue biopsies Radio frequency ablations
US guided Fine needle thyroid Cervical, thoracic, and lumbar
biopsies spine
US guided fine needle breast Associated median branch blocks of
biopsies with and without axillary cervical, thoracic, and lumbar
lesions. spine
Bone marrow biopsies Genicular RFA for knee pain
PICC Placement Thoracentesis
Port Placement Paracentesis
Blood patch Tunneled drainage catheter
Epidural steroid injections placement for chronic ascites or
pleural fluid accumulation
Cervical,thoracic, and lumbar Chest Tube Placement
Loop recorder placement Pacemaker implant: single and dual
chamber
Joint injections
Laboratory Services
Observation Stay
Occupational Therapy
Certified lymphedema especially Cognitive testing with follow up
post-surgical meeting for education/strategies/
Hand therapy recommendations
Pediatrics for feeding, LSVT BIG for Parkinson's
neurological disorder, weakness, Concussion management
behavior modification, tone
reduction, post-surgical upper
body
Orthopedicsand Sports Medicine
Outpatient Services
Radiofrequency ablation Infusions
Blood transfusions Radiologically guided injections
Epidurals General injections
IV therapy Protime clinic
IV antibiotics Medication administration with
monitoring
Telepsychiatry
Physical Therapy
Pre-Post-surgical conditions
(Joint replacement, back and neck surgery, Knee scope, ACL, ankle,
rotator cuff repair, shoulder replacement.)
Injury related conditions
Back, Neck, Hip, Knee, shoulder, Hand therapy
elbow, foot/ankle
Neurological Conditions
Parkinson's BIG program, traumatic brain injury, spinal cord injury,
stroke, multiple sclerosis, ALS, imbalance, ataxic gait
Geriatric Conditions
Fall prevention, home safety, Vertigo/Dizziness/Vestibular Rehab/
osteoarthritis BPPV Rehab
Sacroiliac dysfunction: pregnancy, injury
Pediatric conditions: developmental delay, torticollis
TMJ Dysfunction Myofascial Release
Ergonomic Work Station Evaluation Kiniesotaping/Athletic Taping/
bracing
Primary Care and Internal Medicine
Child and teen checkups DOT collections
Well-baby exams Skilled nursing home visits
Chronic Care Management/Care Assisted living visits
Coordination Services
Immunizations FAA physicals
Sports physicals Special issuance exams
ICC/DOT physicals
Women's Health
Family planning. Prenatal care and OB exams.
Breast and cervical cancer program. Well-women physicals.
Menopausal counseling and services.
Internal Medicine Clinic Consults
Complex medical issues such as but no limited to cardiac disorders,
diabetes with pump adjustments, thyroid disorders, pulmonary issues,
renal, and liver disease.
Diagnostic Imaging
General Mammography
Dexascan Nuclear Medicine
CT Scan Ultrasound
MRI
Surgical Services
General Surgery Orthopedic Surgery
Podiatry Surgery
Speech Therapy
Cognitive testing Swallowing
LSVT Parkinson's BIG and LOUD Language Comprehension
Pediatrics with SOS Feeding Vital Stimulation Adults and
Children
Voice Production Communication Skills
Sleep Services
Overnight oximetry studies Sleep apnea evaluations
Swing Bed Program
Wound Care
Non-healing chronic wounds Traumatic wounds
Pressure ulcers Surgical wounds
Diabetic ulcers Abdominal stomas
Venous ulcers Continence disorders
Arterial ulcers Rash and lesion identification
Skin lesion removal and biopsies Minor burns
[Attachment]
Earlier this year, the Minnesota Hospital Association released its
annual report examining the financial health of Minnesota hospitals and
health systems. Below is a summary of the findings. Here is a link \1\
to the full report.
---------------------------------------------------------------------------
\1\ https://online.fliphtml5.com/pzfal/pnuz/#p=1.
Editor's note: this report is retained in Committee file.
---------------------------------------------------------------------------
Minnesota hospitals' operating margins declined in 2019 to 1.4%--a
signal that Minnesota's hospitals and health systems are experiencing
challenges including declining reimbursements from both government and
commercial payers; health care professional shortages that bring higher
staffing costs; and increasing costs of products and supplies such as
pharmaceuticals, devices and technology systems for electronic health
records
Between 2014 and 2018, the trend of overall median hospital
and health system operating margin in Minnesota remained steady
at just over 2%. In 2018, however, the median operating margin
declined to 1.7% and fell yet again in 2019 to 1.4%
This year-over-year declining trend line of median operating
margin signals a financially fragile health system in
Minnesota, even before the additional significant challenges
presented by the global pandemic in 2020.
While 45 of the 76 hospitals and health systems shown on the
report generated positive operating margins in 2019, 31
hospitals, or 41% of the hospitals and health systems reflected
in the report, experienced negative operating margins.
The number of hospitals reporting negative margins has
grown over the last 2 years.
In 2017, 26 hospitals reported negative margins.
In 2018, 27 hospitals reported negative margins.
A negative operating margin does not mean a hospital
may close. It simply means a balancing act for hospitals
and health systems in providing the right mix of services
for the community.
Many hospitals and health systems in Minnesota
continuously adjust their service lines depending on the
community's needs, which services are better provided at a
larger nearby hospital, and their health care professional
workforce's skills and experience.
Compared to other states in the country, Minnesota
benefitted from expanding Medicaid in 2011. More people on
insurance helped hospitals and clinics. That is one of the
reasons Minnesota has not seen the rural hospital closures
seen in other states. In addition, Minnesota's critical
access hospitals (CAH) benefit from a different payment
model.
Historically Minnesota's urban hospitals have had higher
margins than rural hospitals; however, the trend in recent
years has been convergence, with both urban and rural hospitals
and health systems showing declines since 2017. The median
operating margins for urban and rural hospitals and health
systems were the same in 2019 at 1.4%.
A positive operating margin is necessary to ensure hospitals' and
health systems' ongoing ability to serve patients in their community,
maintain strong credit ratings and affordable access to capital, and
recruit and retain the highly educated and skilled workforce necessary
to care for patients.
Hospitals and health systems face significantly increased
expenses in products, supplies and services they need to care
for patients provided by vendors, including pharmaceutical
companies, medical device companies, and technology companies.
Approximately 52% of hospitals' expenses are in the form of
wages and benefits to recruit and retain all the care team
members necessary to deliver high-quality patient care.
Health care, especially the complex level of care provided
in hospitals, is a capital-intensive undertaking and requires
hospitals and health systems to obtain capital bonds or loans
to finance major projects or expensive equipment. A hospital's
margin is necessary to fund these types of capital
improvements.
A hospital's mix of payer sources can significantly impact its
ability to achieve a positive operating margin.
Serving a community with higher poverty rates tends to
result in the hospital or health system receiving less revenue
because it provides care for more uninsured, underinsured and
patients on public programs.
Hospitals across the state all care for low-income, elderly
and disabled residents in their communities, many of whom are
covered by the state's Medicaid program, called Medical
Assistance, and the MinnesotaCare program.
The Medical Assistance program's provider
reimbursement rates are below the actual cost for
delivering patient care. The most recent estimate from the
Minnesota Department of Human Services shows the Medical
Assistance program's fee-for-service payments support only
74% of the actual costs hospitals incurred to provide that
care.
The Federal Medicare program, which provides coverage
for most Minnesotans over age 65, routinely reimburses
hospitals below the actual costs of care.
Financial pressures on hospitals and health systems are
increasing as commercial insurers reduce their payment rates to
providers.
To reduce the rate of growth of health care costs, hospitals
and health systems have partnered with the Medicare and
Medicaid programs and health plans to enter into value-based
payment arrangements. In these arrangements, hospitals, health
systems, and payers work together to reduce care costs while
improving quality and patient safety.
These financial arrangements increasingly allow health
care providers to create ways to improve population health,
provide care management to the communities they serve and
improve the overall quality of care to ensure the best
outcomes.
Partnership models between governmental and commercial
payers and delivery systems--in which the partners work
together to create value for the individuals and
communities they serve and equally share in the value
created--provide hope for the health care industry's
future.
Other factors that might result in lower revenues include
each organization's commitment to providing services that are
needed in the community but with low- or even negative-margin
financial impacts, such as mental and behavioral health care,
nursing home services or home health agencies.
Net margins at not-for-profit or government-owned hospitals are
reinvested back into the facilities and services that advance their
community service missions and support access to high-quality medical
services.
Most of Minnesota's hospitals are part of an organization
that provides other kinds of medical services, such as clinics,
nursing homes, ambulance services, mental and behavioral health
care, home health care and hospice services, that often
generate low or even negative margins.
A positive margin earned from a hospital's patient care
activities is used to cross-subsidize and financially support
some of these non-hospital health care services to meet these
high-priority community needs.
Data collected for the report precedes the COVID-19 pandemic, which
caused substantial financial instability, though hospitals and health
systems saw some positive mitigation from state and Federal funding
responses.
MHA expects next year's financial health report to encompass
the pandemic's impacts on hospitals' and health systems'
financial health during FY 2020.
To get an idea of the impact of the COVID-19 pandemic, MHA
surveyed hospitals for a preview of their calendar year (CY)
2020 operating margins for the first, second and third
quarters. These survey results do not include any state or
Federal provider relief funds, given regulatory compliance
issues determined at year-end. In total, 52 individual
hospitals and two health systems encompassing 20 additional
hospitals replied to the survey.
In the first quarter of 2020, hospitals saw a median
operating margin of ^2%.
During this time, hospital and health system efforts
included caring for the
state's initial cases of COVID-19, ensuring stable supply
chains, deploying
crisis response plans and implementing additional
precautions to prevent
virus spread.
In the second quarter of 2020, hospitals saw a median
operating margin of ^5%.
From March 23 to May 10, 2020, a state executive order
postponed non-
time-sensitive surgical procedures to conserve PPE for
front-line caregivers,
ensure care capacity in hospitals for a potential surge
of COVID-19 pa-
tients, reduce potential exposure for patients and health
care workers and
slow the increasing spread of the virus.
At the same time, patients also deferred routine care
and necessary serv-
ices such as knee and hip replacements. Hospitals and
health systems saw
losses in patient volumes of 20% in inpatient, 26% in the
emergency depart-
ment and 41% in outpatient surgeries based on MHA's
statewide claims
data system. This deferral of care caused harm for
patients and contributed
to the financial impact.
In the third quarter of 2020, hospitals saw a median
operating margin of 3.5%.
Some of this improvement can be attributed to the return
of pent-up de-
mand for health care services as the surgery pause was
lifted and patients
felt more comfortable accessing care in health care
facilities.
MHA did not survey for the fourth quarter of 2020. The
second peak of COVID-19 hit Minnesota during this quarter.
These preliminary survey results align with national results
in a report \2\ from the U.S. Department of Health and Human
Services Office of Inspector General released on March 23,
which found that the COVID-19 pandemic has significantly
strained health care delivery.
---------------------------------------------------------------------------
\2\ https://oig.hhs.gov/oei/reports/OEI-09-21-00140.pdf.
Editor's note: this report is retained in Committee file.
Many hospitals and health systems nationwide reported
experiencing financial instability because of increased
expenses associated with responding to a pandemic and lower
revenues from decreased use of other services. Hospitals
and health systems indicated that many of the challenges
---------------------------------------------------------------------------
were more severe in rural areas.
The Chairman. Thank you, Mr. Mattson, and let me just say
thank you to all of the witnesses for your very informative and
insightful testimony.
At this time, Members will be recognized for questions in
order of seniority, alternating between Majority and Minority
Members. You will be recognized for 5 minutes each in order to
allow us to get to as many questions as possible. Please keep
the microphones muted until you are recognized in order to
minimize background noise.
I now will recognize myself for 5 minutes, and I do want to
begin with Mr. Erling.
Your testimony mentions issues facing rural communities,
lack of capital access, underfunded schools, failing
infrastructure, and access to high-speed broadband. You also
mentioned the Rebuild Rural America Act as a way to provide
sustained strategic investment in our rural communities. I
introduced the Rebuild Rural America Act with several of my
colleagues on this Subcommittee after hearing from
constituents, local elected officials, and community leaders
that our rural communities need, as you put it, direct and
flexible resources to best fit their needs. The bill would
provide 5 year block grants to strengthen rural communities.
Often, we hear rural communities lack the time or resources to
work through the different Federal application processes. The
Rebuild Rural America Act would also help rural regions
navigate the application process by providing training and
technical assistance.
Mr. Erling, can you expand on how this sort of model could
help get rural communities above water and moving forward?
Mr. Erling. Absolutely. Thank you for the opportunity. I
mentioned my background of working across affordable housing,
holistic community development, and then really specializing in
agricultural economic development. And several of the
challenges that have been universal, whether I was working on
affordable housing, whether I was working on traditional
economic development, has been year over year funding and
consistency, and flexible access to critical funds or critical
mass funds that could then be also leveraged with additional
state, additional municipal or local, and even philanthropic
dollars. And the Rebuild Rural America Act at its base really
provides some of that foundation and addresses the competitive
disadvantage that many of our rural regions and many of our
rural communities have compared to urban areas that have the
year over year block grant funding available, and consistently
can plan to implement and have the flexibility for both the
human soft infrastructure side as well as the hard traditional
infrastructure side.
I think some of the things that are critical that we want
to make sure that we can actually address is not just having
access to the funding to implement, but also having access to
the funding to plan and create the tools on the human side. So,
I just want to address a little bit with the business technical
assistance. Business technical assistance relies on experts:
accountants, attorneys, strategists, PR specialists, and in the
food and rural development world, food safety specialists,
engineers, et cetera. Having a solid Rolodex and having
opportunities for those experts to make a living, providing
services to rural entrepreneurs in rural communities is
critical, and the planning that you get with year over year
funding and the stability opportunity that you have with
something like a community development block grant lays that
foundation so you can build the Rolodex, if I go back to a
previous era, or build the bench of service providers. And it
is not unlike what we need to do to address successional
planning for farming. The average age of the farmer in New York
State is in the high 60s, and is creeping up. And successional
planning and successional members, whether they are farm
members or whether they are actually never ever farmers that
want to move into the arena require the human resources to
support them.
So, that is one of the things I really just want to drive
home about the Rebuild Rural America Act. It is not just the
year over year funding; it is the fact that it is regional. It
is the fact that it can be planned for and implemented by a
strategy that is brought up by the regional communities, and
then you can actually start to benchmark and build momentum and
critical mass and human resources because you have that
stability and because you have that block grant year over year
access.
Thanks for the opportunity. I am happy to build off of this
at any time.
The Chairman. Thank you. I see I am bumping up against 5
minutes. You basically addressed my second question, the
importance of business technical assistance for agricultural
businesses? I actually sent a letter to Secretary Vilsack
urging use of existing pandemic funding to support one-on-one
business technical assistance for small and mid-size farm and
food businesses, and you have done a good job of explaining why
that is so important, so thank you for your answers there.
I now would like to recognize Ranking Member Fischbach for
5 minutes.
Mrs. Fischbach. Thank you, Mr. Chairman.
Mr. Mattson, and thank you again for testifying. I enjoyed
my visit to the facility in Fergus Falls, and so thank you for
that.
But I am just wondering, did you seek other sources of
funding for the Prairie Ridge facility, and why did you decide
to move forward in particular with the Community Facilities
Program?
Mr. Mattson. Yes, thank you for that question. The
Community Facilities Loan Program put together a total package
of about $20 million, $16 million was a direct loan, and $4
million was a guaranteed loan. We did look at other funding
sources, but quite frankly, with all the USDA programs, it
wouldn't have been possible. The longer repayment term, fixed
interest rate at a lower rate created affordable access to
capital that wasn't otherwise available in the market through
traditional programs, whether it is bond or a commercial bank.
The long-term amortization period allowed us a more favorable
cash flow, and the other component of it, our borrowing profile
at the facility and our creditworthiness might not have been up
to spec with some of the commercial lenders at that time. So
the USDA program and the eligibility requirements which we met
and surpassed created affordability, and not only
affordability, but also access. We were a qualified borrower
for USDA, but maybe on the cusp of a commercial bank.
We were also able to fund a higher level of project costs
than traditional markets required, so we get more of a facility
than we could have if we had to come up with a higher up-front
payment. Financial convenance requirements were less
restrictive with the USDA. They are appropriate. They monitor
our progress and our status, but some of the commercial lending
requirements are a little bit onerous for a smaller facility
like ours.
While there is more paperwork with USDA programs, the
requirements of the loan are actually less onerous and less
restrictive. The up-front costs are less. The loan closing
process is more efficient, and the monitoring and compliance
requirements during the loan term are less onerous. So, we did
look at other bond financing opportunities, commercial bank
financing opportunities, but the USDA program by far checked
all the boxes of this community facility that was ultimately
developed.
Mrs. Fischbach. Thank you very much, I appreciate that.
Commissioner Fox, I will just ask you. I appreciate you
again for being with the Committee today. You mentioned
broadband, and in your experience with broadband, are there any
lessons you learned between the state grant experience and
applying for ReConnect?
Mr. Fox. I guess the lessons I have learned is I wish I
could do a retake about 25 years ago and let the REA take us
all over and do it, rather than hodgepodge pieces together. I
think that is the hardest piece, especially in our county, we
have five different telephone companies and systems, so it was
kind of cumbersome at times.
But people are really into the piece where we got wireless
to them, especially last year when their kids were at home, and
we got probably 80, 85 percent covered. But no, it is just a
process, a process you have to go through to get to the end
result.
Mrs. Fischbach. And just a quick follow-up, are there any
suggestions you would make, based on your experience with the
program? Any suggestions you might make in improvement? I have
about a minute left, so there might not be time to explain them
all, but if there is something that you have that would be
helpful for us to know?
Mr. Fox. I think the biggest thing for us as counties was
talking to our neighbors. If we didn't talk to our neighbors,
we could have never got a provider to come in and help us do
what we wanted to do, and that was the biggest key. Talking to
our neighbors and know that you can get connected and get the
service that you need. You are never going to do this alone in
a rural county. You need partners and you need the neighbors.
Mrs. Fischbach. Thank you very much, and thank you, Mr.
Chairman. I will yield back my 20 seconds.
The Chairman. Thank you, Ranking Member.
I now recognize the gentlewoman from Iowa, Mrs. Axne, for 5
minutes.
Mrs. Axne. Thank you, Chairman Delgado, for holding this
hearing, and to our witnesses for being here today and sharing
your experiences. This has been a great conversation so far, so
much to talk about.
But of course, the success of rural America is so vital to
this country, and Mr. Erling, I so appreciate you bringing that
up. Every ball bearing for every Ford Explorer is made in my
district, so folks in Detroit benefit.
But the topic of this hearing, of course, is around rural
America, and I first want to talk about something that is so
important to rural America and the middle parts of our country,
biofuels for our rural communities.
Unfortunately, the last Administration repeatedly
undermined the Renewable Fuel Standard through small refinery
exemptions, removing over 4 billion gallons of ethanol demand
from the market, and conservative estimates put that cost of
over 2 years of those exemptions at over $5.3 billion in
economic loss. So, what happened here is a greatly reduced
opportunity in rural Iowa, and of course, rural communities
across the country. And while I have been pleased with what
this current Administration has previously said that they
believe and value the importance of RFS, it is important to
reiterate that any action that reduces big oil's obligation to
decarbonize their fuel through biofuels would be a continuation
of Trump's failed policies.
So, that can't happen, and as we look to invest in our
rural communities and decarbonize our transportation sector, we
must uphold the RFS.
Now, Mr. Fox, you note in your testimony that rural
communities were still struggling to recover from the 2008
economic crisis when COVID-19 hit. I know you don't have direct
experience with biofuels facilities, but can you talk about how
critical agricultural facilities or similar plants are for
rural communities and the devastating impact closures of such
plants would have on our communities?
Mr. Fox. Chairman Delgado, Congresswoman, I do have a lot
of experience. I have been involved in the State Corn Growers
of the past and present of the state and the National Corn
Board. And so, I saw the ethanol industry grow in Minnesota
through the cooperative model. It has done tremendous growth
throughout our state because of those dollars getting back to
the farm. When I was farming full-time and trying to make a
living and raise children with $1.75 corn and no ethanol
plants, it didn't work. When we got the ethanol plants and we
got another 50 or 75 a bushel to that crop, and that money
goes down main street and we spend it seven times down that
main street. It has created wealth in the State of Minnesota
and across the Midwest. It has been a great thing that the
biofuel industry has done.
Mrs. Axne. Well, I appreciate you reinforcing how important
this is to our rural communities, and thank you so much for
that.
Now I want to turn to the USDA's Rural Development
programs, which, of course, is so important to our community.
And I have introduced bipartisan legislation, the Rural Equal
Aid Act (H.R. 498), which provides for 9 months of loan relief
for USDA RD loan programs like RMAP and IRP.
So, reviewing the testimony today that I am hearing, many
of you have experience with these loan programs. So, with the
time remaining, I would love to open this up to hear about what
your thoughts are for rural communities if USDA provided such
relief for the borrowers of these programs.
Ms. Polonius, I would like to start with you, and thank you
for mentioning my Rural Equal Aid Act. Given your experience
with IRP, what are your thoughts on implementing something like
this and the benefits of that?
Ms. Polonius. Congresswoman Axne, thank you for being--the
legislation and thank you for your question.
We have direct experience with this through the SBA Debt
Relief Program that was part of the CARES Act. It provided for
6 months and then it came back and provided an additional 3
months. This was a lifesaver, relatively easy to implement
because SBA literally sent us those payments, and then we
credited those borrowers for those months of payments. It was a
lifeline, and what we attribute to the fact that our portfolio
is relatively intact. I think we need exactly the same on the
IRP side, on the RMAP side, because there are a lot of micro
entrepreneurs that had a very difficult time accessing programs
like the PPP, and they now stand in line, waiting for some kind
of debt relief in the process. And the same thing goes for our
portfolio on the IRP side, which is water and wastewater loans.
I am very happy to hear about the 9 months versus the 6 months,
which I was made aware of, which would be even greater help.
What these water systems need right now is to be able to
save money to put back into a reserve, because they don't know
when the next crisis is going to hit. And while USDA
infrastructure lending is so critical, it has a longer lead
time. And so, we strongly encourage every system to have a
strong reserve for those small emergencies that turn out to
have huge impacts.
So, I will end there, seeing that I am out of time. Thank
you.
Mrs. Axne. Thank you so much. My time has expired, and I
yield back.
The Chairman. Thank you.
I now recognize the gentleman from California, Mr. LaMalfa.
Mr. LaMalfa. Thank you, Mr. Chairman, and to our panelists
for being here today.
Let me follow up on some of the previous thoughts that were
being made here. Mr. Mattson, I have a very rural district,
too, like a lot of us on this Committee, and I want to talk
about the importance of telehealth, the ability to do a lot
more things at a distance electronically. Would you touch base
on how--there in Minnesota for you how key that is for you or
others that you have worked with, your experience on that?
Mr. Mattson. Yes, thank you for the question.
Telehealth was one of the first tools that we pulled out
when the pandemic hit, recognizing that we started to shut our
facilities down from the outside to make sure that our
workforce and our patients were protected. We rapidly spun up
increased telehealth. We saw probably an 80 percent uptake in
what we had been previously experiencing, so it was definitely
an accelerator.
And since then, we have continued to step that up. So, we
refined our processes. We created better patient flows. We
created better care flows. And one of the things that we are
also able to do now is we are able to use that technology to
bring consultations from larger metropolitan areas to our
patients. So, it is not just primary care, but it is also
specialty care, and a lot of the techniques to deal with care
that comes in through our emergency departments like trauma
evaluations, stroke care, those things can be done on a
consultative basis from a distance. So, we are able to take
care of people closer to home and more at home than previously.
So, definitely the crisis was an accelerator event, and I
believe that telehealth will continue to stay. We do need some
time to put system process in structure and some funding for
that, so we have asked for some parity in reimbursements so we
are treated and paid the same way as an inpatient visit, or an
in-person visit. But once we get those systems and structures
in place, we should be able to deliver them at a lower cost
profile. But that will take some time to do.
Mr. LaMalfa. Yes. So, that makes perfect sense with what we
are experiencing in my home area, too. And so, it always comes
back--we talk a lot on this Committee, and we have made some
good ground on broadband, and so, when we are looking at
different funding sources and different--well, more emphasis on
broadband, would you please expand upon that thought for me?
Mr. Mattson. Yes, definitely. We can make services
available on our end, but if we don't have connectivity to all
of our patients, it is either no experience because we can't
get to them, or it is a very poor experience. When you are
conveying healthcare information, details and specifics are
very important, so an interrupted, a slow, or downtime events
really impair our ability to take care of our patients.
So, strong broadband, a strong network, a strong build of
that infrastructure is really important, no different than the
bricks and mortars that we built out through the Community
Facilities Program.
And again, we are going to need this more and more, and
building that out is something a little bit different than we
have done before. So, we are facing a little bit of new
challenges, but that is new opportunities. But we do partner
with our teleservices around our community. We have quite a few
of them, but it is a long distance to string the lines, so to
speak. But it is very important to deliver our essential
service.
Mr. LaMalfa. Yes. You made a really good point about the
ability to have more specialized services that maybe a small
rural hospital can't possibly employ the type of personnel, or
maybe even equipment that they can't cost effectively do. So,
with the telehealth via good broadband, it makes a lot more
things possible at that local level.
So, why don't you--when we are talking about specialists
and the challenges of getting them and getting them into,
again, a more rural scene, why don't you finish out my 40
seconds with that, please?
Mr. Mattson. Yes. As I pointed out in my testimony, as a
direct result of the facility build out which created better
places to take care, plus facilities that were built-out that
weren't available in the 1960s building, like a brand new,
state of the art surgical center, we are able to recruit 37
specialists to our small communities, and that would have been
very difficult to do with our aging facility. In this day and
age, there is a provider shortage on primary care, definitely
on specialty care, and some of the economic opportunity that
the metropolitan areas offer, we just can't offer it in rural
communities. So, we need facilities that attract and retain
talent.
Mr. LaMalfa. Thank you.
I yield back, Mr. Chairman. I appreciate it.
The Chairman. Thank you.
I now recognize the gentleman from Illinois, Mr. Rush.
Mr. Rush. Well, thank you, Mr. Chairman. An excellent
hearing, and I want to again welcome all the witnesses.
Mr. Erling, in your testimony you discuss how farmers too
often lack training in business planning and financial
literacy, which can make it even harder for them to access
government assistance during difficult times.
I recently toured the Chicago High School for Agricultural
Sciences, which is in my district, and which rigorously
prepares its students to succeed in a variety of agricultural
fields. Do you believe that more agricultural high schools like
the Chicago High School for Agricultural Sciences, as well as
community or junior colleges, that have a focus on agriculture
could be beneficial in equipping future farmers with these
skills and other types of skills?
Mr. Erling. Thank you for that insightful question,
Congressman, and I applaud you and your district for having the
opportunity to implement an innovative opportunity with the
public school system, and it sounds like with also the
community and the private entrepreneurial market and producers.
A broad-spectrum approach that does include our public
schools is absolutely critical. In our rural regions as well as
our urban centers, we are seeing some insight and we are seeing
some significant synapses closing so that we have these new
opportunities, or are restarting these opportunities. Future
Farmers of America in my area is one of the programs being
embraced by public schools.
But I also want to reinforce that our public school system
often relies on a solid tax base, and so, the public school
system is really a component to make sure that we are feeding
the entrepreneur system, the producers, and the markets so that
we continue to produce revenue and capital. And it is really
that opportunity to be at the forefront to make sure that our
youth, as well as our existing entrepreneurs and our senior and
aging business members are all working together, one-on-one.
Thank you for asking that great question. I look forward to
working with you on that in our own district.
Mr. Rush. Last April, I published an op-ed in the Chicago
Sun-Times entitled, When white America catches a cold, black
America catches pneumonia.* In the op-ed, I wrote, `` . . . it
is always the most vulnerable who fair the worst by far,
particularly when it comes to the black community. Hurricane
Katrina devastated a region, but effectively obliterated the
black middle class there; the Great Recession damaged the
entire economy, but, by all accounts, was particularly
disastrous for black Americans and further widened the already
vast racial wealth gap; and although America is rightfully
fixated by the mass shootings that happen at our schools,
churches, and concert venues around the country, there have
been 36 mass shootings in my district--which is a majority
minority district--since 2013 alone.'' It is clear, in my
opinion, that rural America is in the same boat as too often
left behind by our recovery efforts.
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* Editor's note: the article referred to is located on p. 53.
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Mr. Fox and Ms. Polonius, do you have any suggestions for
ways rural America can partner with urban America to address
these same shared concerns?
Ms. Polonius. So, in my 10 seconds I will address the fact
that part of our technical assistance program, moving forward,
focuses not just on the health of the business, but also the
opportunities for wealth creation of those business owners, in
particular Black business owners, which make up about 85
percent of our technical assistance portfolio, and about 80
percent of our lending portfolio.
So, you speak to a really important issue, Congressman
Rush, that is really dear to our hearts at Communities
Unlimited, and something that we focus on very much in the
South.
Mr. Rush. Thank you.
Mr. Chairman, thank you so much, and I yield back the
balance of my time.
The Chairman. Thank you, and now, I recognize the gentleman
from New York, Mr. Jacobs.
Mr. Jacobs. Thank you, Mr. Chairman, and thank you to all
the witnesses. Great testimony from all of you.
I represent western New York State, which is heavily rural,
and so, a lot of what you have talked about today encapsulates
many of the challenges in the 27th Congressional District.
I wanted to just ask a question for Dr. Koneru, as we talk
about certainly the need for more business creation, more
entrepreneurs, Doctor, you are the sole person who is one of
those. And I was just curious as a pharmaceutical company, a
biotech company, why did you decide to locate your business and
launch your business in a rural community, and just as a
follow-up on that, what advantages do you see you have by
making that choice, because maybe we could kind of replicate
what you are doing elsewhere? Thank you.
Dr. Koneru. Mr. Jacobs, thank you very much for asking that
question.
I have been asked this question several times. The reason
why I went to Lenoir is because it was the best choice at the
time. I had--considering we had limited funds and our needs
were small at the time, so we could just get by with a small
building and limited funds. That is what we did. But there were
other factors as well. For example, the location has a very
strong infrastructure in the--because of the furniture industry
that was there. So, it had a very strong electrical grid that
was there already. And then, the local community was based on
manufacturing, so they already had manufacturing experience,
even though they were not really a GNP, FDA manufacturing base.
But we thought that we could train them and it will take some
time, 6 months or longer, but that was an investment we were
willing to make. And there were other factors for Lenoir. For
example, the facility, the place is a very nice area. I lived
in a lot of heavy traffic cities, Los Angeles, San Diego, New
York, San Francisco, D.C., et cetera, so I know what traffic
is. And this was very refreshing for me to see zero traffic
with 2 minutes to work, all of that stuff, very clean air, very
attractive to me.
And then, the other aspect of this is the low cost of
living compared to East Coast and West Coast. So, these are all
really the many advantages that it can be replicated. They can
be replicated in many rural communities. So, I would strongly
encourage you to kind of encourage your entrepreneurs to start
businesses like me, like mine there.
Mr. Jacobs. All right. Thank you very much, Doctor.
I will just conclude by I think that as a post-COVID--and I
am glad we can talk about it, calling it post-COVID now--there
is a great opportunity for rural America. I have seen in my
area of western New York that we have seen a lot of people come
back home, ex-pats from, let's say, New York City, during this
COVID time, and actually had a new-found appreciation for the
quality of life, the ease of moving around. And, the big issue
here is the opportunity to try to keep these people here. They
realize that they can work remotely. They can keep their job in
the big city and travel there periodically, but they don't have
to sacrifice quality of life for them and their family. I think
that is a great opportunity for us to seize, and rural
broadband is key to that. And I am so glad that we are talking
about that at every level, every discussion right now in this
Committee and elsewhere, and I hope that is matched by our
budgets and our funding that is critical for the future of our
regions here collectively.
Thank you very much, Mr. Chairman. I yield back.
The Chairman. Thank you.
I now recognize the gentlewoman from New Hampshire, Ms.
Kuster.
Ms. Kuster. Thank you very much, Mr. Chairman, and thank
you to my colleague. I commend your remarks, and we have
bipartisan common ground when it comes to rural broadband, and
to people moving from the city into our communities. So, I
agree we need to capitalize on that opportunity.
I am glad we are having this important discussion on
sustaining and strengthening our rural communities and
economies. In order for our nation to thrive, especially as we
recover from the devastation of this pandemic, we need to make
sure that no part of the country is left behind. In times of
economic turmoil, rural America is often hardest hit. Congress
hasn't always done a good job of addressing this, but I am
pleased with the progress we have made over the last decade,
especially here on the Agriculture Committee.
In the last three farm bills, I have been proud to allocate
funding and expand the reach of the Northern Borders Regional
Commission, an economic and community development Federal-state
partnership that serves rural counties in the upper Northeast.
NBRC awards millions of dollars to worthy projects in New
Hampshire each year that help to generate jobs and career
opportunities, as well as to bolster the infrastructure and the
economy in our rural communities. More broadly, USDA Rural
Development loans and grants have been a critical lifeline for
towns and nonprofits across my district. From affordable
housing to community colleges to clean energy projects, USDA
Rural Development is a key part of making innovative ideas a
reality in rural America.
Moving forward, there is much that Washington can do to
further support our rural communities, and that includes
expanding broadband access. The most recent USDA Agricultural
Census found that 13 percent of New Hampshire farms did not
even have internet access, and even looking beyond how this
impacts farmers and food producers, we know that broadband
connectivity is critical for everyone.
So, I would like to ask the witnesses, if I could, what
would you recommend that we do with broadband access, and how
do you think we can make a difference in providing internet
access to every household?
Mr. Fox. Chairman Delgado, Congresswoman Kuster, I will
take a stab at this, Mr. Fox will.
I think that is different in different parts of the
country, but we are a flat agricultural land, so we were able
to connect our middle mile with WiFi towers and get that out
and have services up to 50 mbps up and 50 mbps down, and that
was enough to get the education piece going when kids were at
home. So, it is technology, and it is always changing
technology, because the word I hear now from providers is that
if we move the towers closer, we can even increase those
speeds, and as time goes on, that is going to be the most
important piece.
The dream would be to have a fiber to every home and every
farm, but right now, some places it is just not economically
feasible.
Ms. Kuster. Mr. Erling, I am impressed by your efforts to
build out agricultural entrepreneurship in the Hudson Valley.
Could you speak to the most predominant challenges farmers face
with business development and financial planning, and do you
see ways for the USDA to enhance their capacity for providing
business and technical assistance to synchronize the efforts?
Mr. Erling. Thank you, Congresswoman. I really want to also
commend you on the efforts that you have done with the
Agricultural Viability Alliance that we are a part of. You and
your team have added to the support opportunities with the
letter Congressman Delgado led on, and also with diversifying
the different alphabet soups. I really appreciate Northern
Border Regional Commission recognition, but also, recognizing
that it is only islands in the stream at this point, and we
need some more flexibility for those Federal funds to really
make the difference.
So, the biggest opportunity that I see is making sure that
the technical assistance service providers, the BTA, have
consistency, training, and professional qualifications similar
to what we see with other disciplines and other opportunities.
And I think that in rural regions like yours, as well as with
some of our partners like Lanford Good, which your office is an
amazing partner with, we can really develop some of those tools
in concert with your support and your staff.
Ms. Kuster. Great.
Well, my time is up. I did want to ask about the aging
population, particularly in our Northeast region. I am a big
fan of the Beginning Farmer and Rancher Program and the Arm to
Farm Program for military veterans. So, I will work with you
and with our Committee to encourage new energy and new vitality
on our farms as well.
Thank you very much, and with that, I yield back.
The Chairman. Thank you.
I now recognize the gentleman from Iowa, Mr. Feenstra.
Mr. Feenstra. Thank you, Mr. Chairman Delgado and Ranking
Member Fischbach.
My question for Mr. Erling, in your testimony, you
mentioned that 40 percent of American farmland is likely to
change hands in the next 20 years. You note in your work in
providing succession planning to aid in the transfer of
agricultural land. As you've helped farmers with their
transition planning, would you describe each family farm's
transition as being unique to each one, and depending on the
particular farm structure or the number of children and family
members involved in the operation? Mr. Erling, would you say
that this would be unique for each transition planning issue?
Mr. Erling. Yes, I appreciate the question, Congressman,
and I do have to say, I agree with you that there are unique
circumstances to each transition and to each family, and
individual farms. Opportunities as well as challenges, but
there are also some common denominators. We actually have a
program that is partially funded by philanthropic as well as
state called Hudson Valley Farm Link Program here, and the
American Farmland Trust was really critical in helping us
launch that.
So, we do have some common denominator components to that,
but then we also do have some opportunities where it is a
challenge and unique by funding, by inter-family relationships,
and sometimes even by pivoting to new commodities and new
market opportunities.
But the bottom line is, we need to facilitate those unique
circumstances to fill the gap with our aging populations and
our market demands that we have in our suburban and urban areas
to support our rural communities.
Mr. Feenstra. Yes, I firmly agree with you. Thanks for
noting that. Each family farm transition is probably unique, as
to their situation there is some commonality, but it is very
unique.
This is why I have grave concern about the Biden
Administration's proposed tax policies. I have heard from many
Iowa farm families concerned about proposed policies regarding
the treatment of capital gains and stepped-up income basis. The
Administration claims they will provide agricultural exemptions
for inherited agricultural land, but I don't know if it is
possible to provide a workable exemption for all farmers, given
the complexity and diversity of how farm operations are
structured.
In fact, a study from the Agricultural and Food Policy
Center released this morning confirms that eliminating stepped-
up income basis probably will impact 98 percent of the farm
transactions.
Mr. Chairman, I would ask that this study be submitted for
the record.
The Chairman. Submitted.
[The report referred to is located on p. 55.]
Mr. Feenstra. Thank you so much.
The Chairman. Without objection.
Mr. Feenstra. As discussions around tax policy continue, I
think it is extremely important that we consider how these
proposals would work in real life and real situations. We need
to be looking towards solutions that help family farmers to
transition operations and create additional investments in our
rural communities, not creating huge tax liabilities for our
farmers and small businesses.
Thank you, and I yield back.
The Chairman. Thank you, Mr. Feenstra.
I now recognize the gentlewoman from Illinois, Mrs. Bustos.
Mrs. Bustos. Thank you, Chairman Delgado, and thank you,
Ranking Member Fischbach, for holding this very important
hearing today. I want to thank also those who are testifying.
I would like to look back to the 2018 Farm Bill for a
moment, if I may, and talk about some language that I was able
to secure in the farm bill through our office to create a rural
health liaison position at the USDA. Then last year, we filled
the position through the appropriations process.
The goal of the rural health liaison is three things.
Number one, improve coordination in rural healthcare delivery;
number two, promote awareness of the USDA resources available
to help finance the construction of hospitals and telehealth
infrastructure; number three, coordinate with other government
agencies on rural health issues.
My questions are for Mr. Fox and Mr. Mattson, and Mr. Fox,
if you could answer first and then, Mr. Mattson, if you have
anything to add onto this, if you could chime in.
Given what I just shared with you about the office's
duties, how do you feel the rural health liaison can be most
valuable, most valuable in the COVID recovery? Second part of
that same question, are there specific areas in the rural
healthcare space that could be helped by better Federal
Government coordination?
Mr. Fox, if you could go first, please.
Mr. Fox. Chairman Delgado and Congresswoman, I think
anything that can be done to help rural hospitals with the
technical piece and being able to move forward with
telemedicine is very important. The more we can partner and the
more we can learn from each other, the better off we are is
just so important. We appreciate the work you've done.
Mrs. Bustos. Mr. Mattson?
Mr. Mattson. Yes, thank you for the question.
One thing that was illustrated through COVID crisis, John
Maxwell recently quoted, ``A crisis doesn't make you; it
reveals you.'' And one of the things that was revealed was the
need for coordination of all of the resources that we had.
Funding, patient care, we are so geographically disconnected in
some respects that the level of coordination in rural spaces
was much higher demand and more dragging on our system than in
urban metro concentrated areas.
Definitely we are thinking now about how we are going to
recover from the pandemic. The OIG report released on March 23,
that hospitals supporting the COVID-19 public health crisis has
significantly strained the healthcare delivery system. I would
recommend the Subcommittee to review that report,* because it
really does accurately capture the pulse of healthcare
organizations. And definitely one of the things that we are
concerned about is our ability to recover post-COVID. Our
financial instability, higher costs and lower revenues, we are
not sure where our volumes are going to recover. So,
coordination of funding resources, coordination of the
infrastructure build-out, and definitely coordination of
building-out telehealth, not just the infrastructure to deliver
the product, but also the electronic medical record. Over the
next 5 years, our organization is going to spend about $28.5
million on EPIC, which is our electronic medical record, which
helps us take better care of patients as a better data
resource. We are required under all the regulations that they
have, the connectivity, but it is expensive. Getting that
product and having money available for that is equally as
important as having funds available to build buildings and
other facilities.
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* Editor's note: the report referred to is retained in Committee
file and is available at https://oig.hhs.gov/oei/reports/OEI-09-21-
00140.pdf.
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So, like $28 million over 5 years, that is a significant
spread, and it is an ambulatory surgery center, bricks and
mortar locally. But interoperability requirements bring
together a great policy to have. That has to be coordinated
again, so it's not just the access, but it's the product that
we use to deliver the care that's important to consider equally
as much as the broadband side.
I think that coordinator position would tie a lot of loops
that might remain open right now. It would be nice to close
those.
Mrs. Bustos. I will yield back. Thank you.
The Chairman. Thank you.
I now recognize the gentlewoman from the U.S. Virgin
Islands, Ms. Plaskett.
Ms. Plaskett. Thank you so much, Mr. Chairman, and thank
you to our guests who are here. Thank you for your testimony.
This is really--has been said by so many of my colleagues,
a really important hearing to examine opportunities for growth
and investment in rural America. Our rural communities face a
number of serious challenges today, as we continue to recover
from the coronavirus pandemic. I can't think of a more
important topic for this Subcommittee's first hearing of the
117th Congress, and I look forward to working with the Members
of this Subcommittee to address these issues today and over the
course of this next Congress.
Ms. Polonius, you raised some important points in your
testimony about the role that USDA Rural Development plays in
providing critical services in communities across the country,
including in response to natural disasters like drought or
hurricanes.
My home of the Virgin Islands is a prime example of what
you mentioned in your testimony. Our home was ravaged by two
devastating hurricanes in 2017, while drought currently
persists across the Virgin Islands. USDA Rural Development has
played a key role in helping us respond to these challenges,
and the agency conducts extensive lending activities in the
Virgin Islands.
But I still believe that there are ways that we can improve
and expand the reach of the USDA Rural Development programs.
So, my question is of the infrastructure investment
priorities that you have outlined in your testimony, do you
believe that these investments can help rural communities
improve resiliency and better respond to natural disasters,
going forward?
Ms. Polonius. Thank you, Congresswoman Plaskett, for the
question.
Through the Technical Assistance Program, which is funded
by USDA by the name of Technitrain, we actually assist
communities in building resiliency plans, and this addresses
both cybersecurity vulnerability all the way to natural
disasters.
What we have been inquiring about, Congresswoman Plaskett,
is a dedicated pool of funds that would allow us to respond
immediately at the time of a disaster and be able to lend into
some of these projects. So, during that same year that your
home was destroyed, we were working on the other end of the
country in Texas after Hurricane Harvey. Within 5 days, we had
mapped out every single water and wastewater system that is a
USDA borrower to understand the level of need of those systems.
With our relatively small CDFI and loan fund, currently we are
about $20 million in assets. Back then, we were at about $12
million. We made a $900,000 loan. We made a $650,000 loan,
which was really an exception to our policy, because we wanted
to move quickly to help those communities rebuild those key
infrastructure systems before people left the community.
And, what we learned from Hurricane Harvey is once people
leave a community because they don't even have basic services
like water and wastewater, they can't clean their home, they
can't rebuild their home. They don't come back, and that
community is then further devastated because all the businesses
that were relying on the population now are half the demand for
their businesses and the process sort of keeps going.
So, that is where, as a country, but also as a USDA RD and
the technical assistance providers that are supported through
RD need to be prepared to react and move quickly, and have the
flexibility in funding to be able to do that.
Ms. Plaskett. Thank you. Thank you.
Mr. Fox, you mentioned in your testimony how various
matching requirements for certain Federal programs often create
hurdles for local governments. Can you speak to how these
requirements may disproportionately impact rural areas,
especially in areas that are working to recover from natural
disaster, or areas that have economic recession?
Mr. Fox. Thank you, Chairman Delgado and Congresswoman.
The matches are very difficult for rural counties,
especially now with this money that is supposed to help replace
all of our funds, and now we are told we are not going to be
able to use that as a match. So, how do we do that? For some
counties that can't raise any more funds because of state laws,
that will cause problems in rural counties. So, anything that
we can do to reduce that or maybe U.S. Treasury look at
changing their guidance, that--whatever tool we can put in that
toolbox to use to help these rural counties.
Ms. Plaskett. Thank you. My time has expired, and I yield
back. Thank you very much, Mr. Chairman.
The Chairman. Thank you.
And now, I would like to recognize the gentlewoman from
Florida, Mrs. Cammack.
Mrs. Cammack. There we go. I wanted to make sure I was off
mute.
Well, good afternoon now, and thank you, Chairman and
Ranking Member Fischbach, and to all of the witnesses for being
here today virtually.
For too long, our rural communities have been left behind,
playing catch up in the 21st century economy, as we all know.
Many of us represent rural districts.
Now, beyond this Subcommittee hearing, there is a larger
discussion afoot on the future of infrastructure rebuilding
America, and doing it better. However, that conversation has
become hopelessly distorted as words like rural development and
infrastructure have now a catchall, per the Administration and
the Majority's policy agenda.
Many of the witnesses here today have already echoed my
view that rural development is about building back critical
infrastructure, blanketing rural America in reliable, fast,
affordable broadband, and supporting our domestic producers. I
am encouraged to hear about what many of you have done to
harness the resources through USDA for accomplishing these
goals.
So, I am going to jump into some questions. Ms. Polonius,
in your testimony you mention the importance of community-based
strategies and building regional partnerships, and this is the
model of economic development that I also support. In the last
farm bill, the Committee provided the authority for the
Secretary to set aside funds for communities that worked
collaboratively across multiple stakeholders and government
entities.
Now, can you just very quickly elaborate on how these
stakeholder groups can work a bit more efficiently as we move
forward in talking about rural development?
Ms. Polonius. Congresswoman Cammack, thank you for the
question.
For us--and again, my vantage point is specifically in
persistent poverty rural places, because we have so many of
them here in the South. It is a three-step process. First, we
build leadership teams in communities, because we can't just
rely on a part-time mayor with little or no staff. It needs to
be carried by the diverse leadership team that reflects the
community. And then as we build the capacity of that leadership
team, we look together with them at strategic opportunities on
how to link up to micropolitan areas, how to share resources
with other local rural communities, and really begin to develop
strategy, whether that is a regionalization of a water or
wastewater system where that makes sense, or whether that is an
economic opportunity to really figure out how do we create
suppliers for corporations that may be located in that micro or
metropolitan entity, and then figure out how do we create that
regional connection between the two. I hope that begins to
answer your question.
Mrs. Cammack. It does, and as a follow-up, having worked
pretty extensively throughout the years on the issues of rural
development, a lot of times with our stakeholders, there tends
to be a lot of finger pointing with accountability or lack
thereof. When we have multiple stakeholders from different
government entities and community organizations who come
together, how can we better hold the group accountable and get
into a more productive conversation, rather than a lot of the
finger pointing? Maybe you could point to some best practices.
Ms. Polonius. I think one of the challenges, Congresswoman,
is that funding goes to one lead entity, and then there are
sub-grants and subcontracts that go out to the other
stakeholders, and that instantly creates sort of a hierarchy
and puts that lead entity in a position to be accountable to
the Federal agency, when, in fact, it is the subcontractors
that may or may not be able to perform at that point in time.
So, if there could be a funding mechanism that actually
looks at the collaboration as a whole, that would be a very
powerful model for us to work on, where everyone is equally
accountable and not just the lead agency. Because quite
frankly, it is difficult to find that lead agency for this very
reason, whether that is in a community or whether that is in a
nonprofit or a county agency.
Mrs. Cammack. Excellent. Thank you so much for your
commentary.
In the time I have left, I want to shift gears a little
bit.
Mr. Erling, in your testimony you had discussed the
challenges of transferring agricultural land, both through
succession and new farmers. Now, what are the challenges, in
your opinion--I have my own opinion, but I would love to know
your opinion on what some of those challenges are, and how you
specifically can help farmers successfully plan for what is
outside of control for the clients?
Mr. Erling. Sure, thanks. In the short time I have, I
appreciate you recognizing that.
Often, it is flexible funding and making sure that you get
fair value for the exiting farmer or for the previous
generation's investment and equity.
Mrs. Cammack. Okay. Really short answer, and I appreciate
that. Thank you so much.
And with that, I yield back. I think my time has expired.
The Chairman. Thank you. I think that concludes all
questions from the Members.
Before we adjourn today, I invite the Ranking Member to
share any closing comments she may have.
Mrs. Fischbach. First of all, thank you, Mr. Chairman, for
putting together the hearing, and I appreciate the opportunity
just to say a couple of words. Thank you to everybody for
participating today in the hearing. I appreciate the
perspectives of all of the witnesses that joined us and all of
the valuable information you have been able to provide.
I will just say, Mr. Chairman, I look forward to continuing
the dialogue and working with you to really come up with some
great solutions for rural America.
So, thank you very much, and I appreciate it. Thank you,
Mr. Chairman.
The Chairman. Thank you, Ranking Member Fischbach.
As we close out this hearing, I would again like to thank
our panel of witnesses for their time and expertise. I have no
doubt that you are all assets to the rural communities you work
in and with to support long-term sustainable growth and
development. The lessons and successes you shared with this
Subcommittee are invaluable as you work to build back better
after the COVID-19 pandemic.
One thing was made abundantly clear today. Meaningful
investment in rural America and rural infrastructure is
critical to our nation's recovery from the COVID-19 pandemic,
and necessary for rural communities to reach their full
potential. We have an opportunity right now to make significant
direct investments in rural America that will improve the lives
of generations of people, support our goals as a nation to
build back better, and help ensure that our rural communities
aren't left behind.
For the sake of every farmer, rancher, forester, student,
teacher, or business owner living in a rural area, I hope this
Congress recognizes the importance of a strong rural economy
and are willing to make the critical investments that we heard
the need for today.
With that, under the Rules of the Committee, the record of
today's hearing will remain open for 10 calendar days to
receive additional material and supplementary written responses
from the witnesses to any question posed by a Member.
This hearing of the Subcommittee on Commodity Exchanges,
Energy, and Credit is adjourned.
[Whereupon, at 12:47 p.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Article by Hon. Bobby L. Rush, a Representative in Congress
from Illinois
[https://chicago.suntimes.com/2020/4/8/21213747/african-americans-
coronavirus-racial-inequities-racism-bobby-rush]
When white America catches a cold, black America catches pneumonia
Black people will continue to die at disproportionally higher
rates than white Americans as a result of COVID-19. It is
imperative that black Americans remain hypervigilant.
By U.S. Rep. Bobby Rush \1\ Apr. 8, 2020, 12:13 p.m. CDT
---------------------------------------------------------------------------
\1\ https://chicago.suntimes.com/authors/bobby-rush.
African Americans are more likely to have jobs that have been
deemed ``essential'' during the pandemic, writes U.S. Rep.
Bobby Rush, making it impossible for them to stay home. Ashlee
---------------------------------------------------------------------------
Rezin Garcia/Sun-Times.
Every few years, America catches a nasty ``cold'' that afflicts
untold damage on its communities and citizenry. These colds aren't
always pathological, and they manifest in different forms, but the
carnage they wreak on our nation's most vulnerable is always
staggering.
In 2005, this cold took the form of one of the costliest hurricanes
on record, slamming into Louisiana and Texas and leaving $125 billion
in damage in its wake. A few years later, we suffered as a nation from
the Great Recession, which was brought on by the collapse of the
housing market and further decimated the already waning middle class.
And in the latter part of the 2010s, we have lived through a scourge of
mass shootings that have left virtually no part of the country
untouched.
Opinion
These colds have impacted all Americans, but it is always the most
vulnerable who fair the worst by far, particularly when it comes to the
black community. Hurricane Katrina devastated a region, but effectively
obliterated the black middle class there; the Great Recession damaged
the entire economy, but, by all accounts, was particularly disastrous
for black Americans and further widened the already vast racial wealth
gap; and although America is rightfully fixated by the mass shootings
that happen at our schools, churches, and concert venues around the
country, there have been 36 mass shootings in my district--which is a
majority minority district--since 2013 alone.
Over the history of our country, we have weathered a number of
these sorts of colds, but in every case, it is clear that when America
catches a cold, the black community has caught pneumonia. This time,
however, there is an actual virus that is ravaging our nation.
Specifically, a severe acute respiratory syndrome brought on by a novel
coronavirus, and it has proven to be particularly deadly for the
African American community.
As of April 4, out of the 86 recorded deaths from COVID-19 in
Chicago, 61 were black residents. Less than 30 percent of Chicago's
population is black, and yet this population makes up a full 70 percent
of those who have succumbed to this disease. Looking at Cook County as
a whole, we are seeing strikingly similar trends. African Americans,
who make up only 23 percent of Cook County's population, represent 58
percent of the county's COVID-19 deaths.
Tragically, these terrible trends are not unique to Chicago. In
Milwaukee County, Wisconsin, African Americans make up about half of
the county's 945 confirmed cases but account for 81 percent of the
deaths. In Michigan, which is only 14 percent black, African Americans
accounted for 35 percent of the cases and 40 percent of the COVID-19
related deaths.
While these statistics are shocking, they are not a coincidence,
and as I have outlined, this situation is, unfortunately, all too
predictable. According to an article published in ProPublica last week,
``Environmental, economic and political factors have compounded for
generations, putting black people at higher risk of chronic conditions
that leave lungs weak and immune systems vulnerable: asthma, heart
disease, hypertension and diabetes.'' Furthermore, African Americans
are more likely to have jobs that have been deemed ``essential''--
including those in industries such as health care, transportation,
government, and food supply--making it impossible for them to stay
home.
What's equally alarming is the gross amount of misinformation that
very well might have led an already vulnerable population to not take
this pandemic as seriously as they should have. In the weeks leading up
to these staggering deaths, various social media platforms found
themselves overrun with an alarming amount of misinformation related to
the coronavirus. These falsehoods ranged from fraudulent vaccines and
cures for the virus to more outrageous mistruths that claim African
Americans are altogether immune to this pathogen.
Although this might make for tempting wishful thinking, the numbers
coming out of Chicago, Milwaukee and Detroit tell us that this could
not be further from the truth.
In the face of the grim reality that black people will continue to
die at disproportionally higher rates than white Americans as a result
of COVID-19, combined with the startling amount of misinformation being
thrown at us online, it is imperative that black Americans remain
hypervigilant as we weather America's latest cold. We must follow the
Centers for Disease Control and Prevention's guidance as well as the
stay-at-home order issued by Gov. J.B. Pritzker. If you must leave your
home, take the necessary precautions and practice social distancing.
On the Federal level, I am also calling for the Secretary of Health
and Human Services to ensure that the data, clinical trials and access
to vaccines and treatments include the communities that are the most
likely to catch ``pneumonia'' when this is all said and done. When
vaccines and treatments do become available, the federal government
must prioritize hot spots and medically underserved areas when
determining distribution, as these areas will need access to tests and
treatments as quickly as possible.
America has weathered some terrible colds in the past, but sadly,
it has been, and it will continue to be, the black community that
catches the resulting pneumonia. If we are going to break that cycle,
we must take this current cold deadly serious, and we must ensure that
the needs of the black community as it relates to COVID-19 are taken
just as seriously as well.
U.S. Rep. Bobby L. Rush, a Democrat, represents Illinois' 1st
Congressional District. He is a senior member of the House
Energy and Commerce Committee, chairman of the Committee's
Subcommittee on Energy and sits on the committee's Subcommittee
on Health.
Send letters to [email protected].
______
Submitted Report by Hon. Randy Feenstra a Representative in Congress
from Iowa
Economic Impacts of the Sensible Taxation and Equity Promotion Act and
the For the 99.5 Percent Act on AFPC's Representative Farms and
Ranches
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Cover photo by Phil Hogan, USDA.
Joe L. Outlaw, Bart L. Fischer, Henry L. Bryant, J. Marc Raulston,
George M. Knapek, Brian K. Herbst
Agricultural and Food Policy Center, Texas A&M University
June 15, 2021
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Department of Agricultural Economics College Station, Texas 77843-2124
Texas AgriLife Research Telephone: (979) 845-5913
Texas AgriLife Extension ServFax: (979) 845-3140
Texas A&M University http://www.afpc.tamu.edu D
@AFPCTAMU
2021 by the Agricultural and Food Policy Center
Research Report 21-01
Agricultural and Food Policy Center, Department of Agricultural
Economics, 2124 TAMU, College Station, TX 77843-2124
Web site: www.afpc.tamu.edu
Twitter: @AFPCTAMU
Executive Summary
Under current law, when the owner of a farm or ranch dies, the
estate is subjected to Federal estate taxes. As of 2021, $11.7 million
per individual and $23.4 million per couple in assets are exempted from
the estate tax, effectively protecting most farms from the estate tax.
In addition, when a decedent passes farm assets to an heir, the heir is
allowed to take fair market values as their basis in the property
(i.e., stepped-up basis), effectively avoiding capital gains taxes.
Given that cropland values have roughly tripled over the past 25 years,
most producers are extremely sensitive to any changes to the estate tax
exemptions or stepped-up basis.
In Spring 2021, a number of proposals surfaced that would
significantly change how inheritance is treated. For example, the
Sensible Taxation and Equity Promotion Act (STEP Act)--announced by
Sen. Chris Van Hollen (D-MD)--proposes to eliminate stepped-up basis
upon death of the owner. The For the 99.5 Percent Act (99.5% Act)--
introduced by Sen. Bernie Sanders (I-VT)--would decrease the estate tax
exemption to $3.5 million ($7 million per couple), among other things.
Senator John Boozman, Ranking Member, Senate Committee on Agriculture,
Nutrition, and Forestry, and Representative G.T. Thompson, Ranking
Member, House Committee on Agriculture, asked the Agricultural and Food
Policy Center (AFPC) to examine the impact of the proposals on
agricultural producers.
AFPC maintains a database of 94 representative farms in 30
different states. That data, in conjunction with a farm-level policy
simulation model, allows AFPC to analyze policy changes on farms and
ranches across the country. As part of this analysis, AFPC analyzed a
total of five scenarios:
Scenario 1: Current Tax Law with No Generational Transfer.
Scenario 2: Generational Transfer under Current Tax Law.
Scenario 3: Generational Transfer under STEP Act.
Scenario 4: Generational Transfer under 99.5% Act.
Scenario 5: Generational Transfer under STEP Act and 99.5%
Act.
Under current tax law, only three of the 94 representative farms
would be impacted by an event triggering a generational transfer. By
contrast, under the STEP Act, 92 of the 94 representative farms would
be impacted, with additional tax liabilities incurred averaging
$726,104 per farm. Under the 99.5% Act, 41 of the 92 representative
farms would be impacted, with additional tax liabilities incurred
averaging $2.17 million per farm.
If both the STEP Act and the 99.5% Act were simultaneously
implemented, 92 of the 94 representative farms would be impacted, with
additional tax liabilities incurred averaging $1.43 million per farm
across the 92 representative farms.
Introduction
This report analyzes the economic impacts of the tax provisions of
the Sensible Taxation and Equity Promotion Act (STEP Act) and the For
the 99.5 Percent Act (99.5% Act) on the Agricultural and Food Policy
Center's (AFPC's) 94 representative farms and ranches. The analysis was
requested by Senator John Boozman, Ranking Member, Senate Committee on
Agriculture, Nutrition, and Forestry, and Representative G.T. Thompson,
Ranking Member, House Committee on Agriculture. The results are
presented relative to a status quo baseline that maintains the current
estate tax exemption and stepped-up basis provisions through 2026.
Background
Overview of Capital Gains Tax Provisions in Current Law
When an asset appreciates in value, the difference between the
current fair market value and the amount paid for the asset (less
accumulated depreciation) is known as a capital gain. Under current tax
law, assets held longer than 1 year are taxed at long-term capital
gains rates of up to 20% depending on one's underlying taxable income.
As noted in an April 2021 report by Ernst and Young for the Family
Business Estate Tax Coalition (FBETC), ``a longstanding provision of
U.S. tax law, in place since the Revenue Act of 1921, is that a capital
gains tax is not imposed when assets are transferred at death to an
heir. Furthermore, tax law allows the heir to increase their basis in
the bequeathed assets to fair market value without paying capital gains
tax. This is referred to as a step-up of basis.''
Overview of Estate Tax Provisions in Current Law
While stepped-up basis provisions have largely rendered capital
gains tax irrelevant when assets are transferred to an heir at death,
that is not the case with the Federal estate tax. Prior to passage of
the Tax Cuts and Jobs Act of 2017 (P.L. 115-97), the estate tax
exemption level was $5.49 million (indexed to inflation) (Figure 1).
Because property left to a surviving spouse transfers free of the
estate tax, the exemptions for a married couple are effectively
doubled--$10.98 million for 2017.
The Tax Cuts and Jobs Act of 2017 raised the exemption level to
$11.18 million for 2018 (still indexed to inflation). As of 2021, the
estate tax exemption is $11.7 million per person which is set to expire
in 2025, at which point the estate tax exemption reverts to $5.49
million per person. When accounting for a spouse, the current exemption
level is effectively $23.4 million per couple.
Application to Agriculture
Agricultural producers are extraordinarily sensitive to changes in
stepped-up basis and estate taxes because much of their net worth is
traditionally comprised of land and equipment. Given recent trends in
land values, that concern now is even more heightened. As noted in
Figure 2, cropland values have more than tripled since 1997. So, even
if a producer has not purchased any additional land, the land they were
already holding is now considerably more valuable.
Figure 1: Historic Individual Estate Tax Exemption Levels
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: IRS and Jacobson, et al.
Figure 2: Farm Real Estate Values (Including Buildings), Cropland
Values, and Pastureland Values (in $/Acre), 1988-2020
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: USDA/NASS.
Proposed Changes
The Sensible Taxation and Equity Promotion Act (STEP Act)--
announced by Sen. Chris Van Hollen (D-MD)--proposes to eliminate
stepped-up basis upon death of the owner.\1\ Under the STEP Act, $1
million in capital gains would be excluded from taxation. The STEP Act
also anticipates situations where generational transfers do not occur--
for example, imposing capital gains taxes on trusts every 21 years.
With that said, it is not clear how similar situations would be
treated. For example, assume an institutional investor (e.g., hedge
fund) holds farmland in an LLC. It is not clear if those institutional
landowners would be impacted. As a result, that analysis is beyond the
scope of this report.
---------------------------------------------------------------------------
\1\ For more information on the STEP Act, see: https://
www.vanhollen.senate.gov/news/press-releases/van-hollen-leads-
colleagues-in-announcing-new-legislation-to-close-the-stepped-up-basis-
loophole.
---------------------------------------------------------------------------
The For the 99.5 Percent Act (99.5% Act)--introduced by Sen. Bernie
Sanders (I-VT)--includes modifications to estate, gift, and generation-
skipping transfer taxes.\2\ The 99.5% Act would, among other things,
decrease the estate tax exemption to $3.5 million per individual and $7
million per couple. If signed into law this year, the changes would be
effective for decedents dying and gifts made during calendar year 2021.
---------------------------------------------------------------------------
\2\ For more information on the 99.5% Act, see: https://
www.sanders.senate.gov/press-releases/sanders-and-colleagues-introduce-
legislation-to-end-rigged-tax-code-as-inequality-increases/.
---------------------------------------------------------------------------
This analysis evaluates the elimination of stepped-up basis alone
and in conjunction with estate tax changes, depending upon the scenario
being analyzed. Each of the scenarios are described in more detail
below and do not assume any special rules or exceptions other than
those explicitly stated.
Data and Methods
Model
For over 30 years, AFPC has maintained a farm-level policy
simulation model (FLIPSIM) developed by Richardson and Nixon (1986) for
analyzing the impact of proposed policy changes on U.S. farms and
ranches. AFPC currently uses a next generation simulation model--Farm
Economics and Solvency Projector (FarmESP)--developed by Dr. Henry
Bryant, that moves to the Python platform and includes all of the
previous generation's policy and tax capabilities with a significant
upgrade in terms of crop insurance capabilities.
Data
The data to simulate farming operations in FarmESP comes primarily
from AFPC's database of representative farms. Information to describe
and simulate these farms comes from panels of farmers (typically 4-6
producers per location) located in major production regions in 30
states across the United States (Figure 3). The farm panels are
reconvened frequently to update their representative farm's data. The
representative farms are categorized by their primary source of
receipts--for example, feedgrain, wheat, cotton, rice, dairy, and
cattle ranches. The representative farm database has been used for
policy analysis for over 30 years.
Figure 3: Map of AFPC Representative Farm and Ranches
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
In the tables that follow, the first two letters of a farm's name
is the state abbreviation followed by the letter describing the type of
farm (e.g., G for feedgrain, W for wheat, etc.) followed by an M or L
indicating if the farm is moderate or large (an X indicates there is
only one farm size of that type in the region). The number in a farm's
name indicates the acres or number of head of cattle for ranches or
milk cows for dairies. Appendix A provides an overview of the
characteristics of AFPC's representative farms. Appendix B provides the
names of producers, land-grant faculty, and industry leaders who
cooperated in the panel interview process to develop the representative
farms. Additional information about the representative farms can be
found in AFPC Working Paper 21-1 by Outlaw, et al., March 2021. The
breakdown of farms by type is as follows:
Feedgrain: 25
Wheat: 11
Cotton: 13
Rice: 15
Cattle: 10
Dairy: 20
Projected prices, policy variables, and input inflation rates are
from the Food and Agricultural Policy Research Institute (FAPRI) 2021
Baseline (Tables 1 and 2). Notably, there are occasions when we would
expect a policy change to greatly change relative commodity prices
necessitating a FAPRI analysis of the sector level that would feed into
the representative farm models. This is not the case for the current
tax analyses. We expect any impacts to be experienced over time and
localized to operations with significant owned land. AFPC's
representative farms and ranches are all assumed to be full-time,
commercial-scale family operations. The results of this analysis will
vary greatly by farm depending upon each farm's asset base and the
share of their farmland they own versus rent. Tables 3 and 4 provide
the percent of the farm's cropland or ranch's pastureland that is owned
for the representative farms. The percentage varies greatly across
farms and farm types. For example, two of the four Texas rice farms are
comprised only of rented land. As a result, any capital gains or estate
taxes accrue from sources other than land (if at all--as noted later in
the results, two Texas rice farms were the only farms not impacted by
this analysis). Importantly, the analysis does not include indirect
impacts. For example, while two of the Texas rice farms were not
impacted, if they were renting land from a landowner who was impacted
by either proposal, one could reasonably assume that rental rates would
increase as a result.
Table 1: FAPRI January 2021 Baseline Crop and Livestock Prices, 2019-2026
----------------------------------------------------------------------------------------------------------------
2019 2020 2021 2022 2023 2024 2025 2026
----------------------------------------------------------------------------------------------------------------
Crop Prices
----------------------------------------------------------------------------------------------------------------
Corn ($/bu.) 3.56 4.22 4.04 3.96 3.91 3.85 3.80 3.78
Wheat ($/bu.) 4.58 4.84 5.00 5.09 5.09 5.05 5.03 5.01
Upland Cotton 0.5960 0.6816 0.6785 0.6675 0.6689 0.6807 0.6821 0.6919
Lint ($/lb.)
Sorghum ($/bu.) 3.34 4.59 4.06 3.98 3.90 3.86 3.82 3.82
Soybeans ($/bu.) 8.57 11.15 10.49 10.34 10.09 9.80 9.60 9.45
Barley ($/bu.) 4.69 4.64 4.76 4.78 4.73 4.68 4.63 4.61
Oats ($/bu.) 2.82 2.77 2.63 2.69 2.70 2.69 2.67 2.67
All Rice ($/ 13.50 13.10 12.61 12.85 12.98 13.12 13.33 13.60
cwt.)
Soybean Meal ($/ 285.67 366.40 334.10 334.07 329.04 323.51 317.02 314.86
ton)
All Hay ($/ton) 163.00 159.10 162.69 161.62 160.53 159.08 157.73 157.14
Peanuts ($/ton) 410.00 426.61 412.71 404.76 400.25 401.29 402.55 404.02
----------------------------------------------------------------------------------------------------------------
Cattle Prices
----------------------------------------------------------------------------------------------------------------
Feeder Cattle ($/ 153.65 145.83 148.81 163.34 171.77 177.61 182.36 184.49
cwt)
Fed Cattle ($/ 116.78 108.46 116.47 122.63 127.73 131.68 134.85 136.33
cwt)
Culled Cows ($/ 58.97 58.50 60.45 64.85 66.71 68.25 70.68 71.82
cwt)
----------------------------------------------------------------------------------------------------------------
Milk Price
----------------------------------------------------------------------------------------------------------------
U.S. All Milk 18.63 18.30 17.50 17.59 17.78 18.01 18.05 18.04
Price ($/cwt)
----------------------------------------------------------------------------------------------------------------
Source: Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri-Columbia.
Table 2: FAPRI January 2021 Baseline Assumed Rates of Change in Input Prices and Annual Changes in Land Values,
2020-2026
----------------------------------------------------------------------------------------------------------------
2020 2021 2022 2023 2024 2025 2026
----------------------------------------------------------------------------------------------------------------
Annual Rate of Change for Input Prices Paid
----------------------------------------------------------------------------------------------------------------
Seed Prices (%) ^2.00 2.45 3.17 2.51 1.94 1.47 1.22
All Fertilizer Prices (%) 3.29 3.63 4.11 ^1.03 0.37 0.54 0.50
Herbicide Prices (%) ^1.85 3.80 1.96 1.51 1.62 1.58 1.67
Insecticide Prices (%) ^6.59 2.80 1.87 1.71 1.81 1.77 1.82
Fuel and Lube Prices (%) ^3.26 2.17 6.45 6.72 2.42 3.17 4.20
Machinery Prices (%) ^0.12 1.98 1.84 0.94 1.13 1.17 1.30
Wages (%) 1.48 2.62 3.31 3.42 3.22 3.20 3.30
Supplies (%) 1.49 1.63 1.42 1.43 1.39 1.57 1.62
Repairs (%) 1.29 2.57 2.35 2.39 2.29 2.42 2.50
Services (%) ^0.24 1.81 2.44 2.15 2.16 2.13 2.24
Taxes (%) 1.36 3.17 2.46 4.94 5.13 1.33 1.40
PPI Items (%) ^0.89 3.52 2.51 1.33 1.04 1.12 1.27
PPI Total (%) ^0.39 3.32 2.57 1.71 1.47 1.38 1.53
----------------------------------------------------------------------------------------------------------------
Annual Change in Consumer Price Index (%)
----------------------------------------------------------------------------------------------------------------
1.25 2.12 2.46 2.10 2.12 2.15 2.23
----------------------------------------------------------------------------------------------------------------
Annual Rate of Change for U.S. Land Prices (%)
----------------------------------------------------------------------------------------------------------------
0.00 5.15 5.10 ^2.20 ^1.92 ^1.33 ^1.20
----------------------------------------------------------------------------------------------------------------
Source: Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri-Columbia.
Table 3: Percent of Cropland on the Farm that is Owned by Farm Type
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Feedgrain Farms Wheat Farms
Cotton Farms
Rice Farms
----------------------------------------------------------------------------------------------------------------
IAG-M-1350 19% WAW-M-2800 29% TXSP-X-4500 11% CAR-M-1200 23%
IAG-L-3400 25% WAW-L-10000 25% TXEC-X-5000 25% CAR-L-3000 30%
NEG-M-2400 25% WAAW-X-5500 45% TXRP-X-3000 29% CABR-X-800 40%
NEG-L-4500 48% ORW-X-4500 44% TXMC-X-2500 7% CACR-X-800 30%
NDG-M-3000 24% MTW-X-9500 53% TXCB-M-4000 15% TXR-M-1500 27%
NDG-L-9000 44% KSCW-M-2000 35% TXCB-L-10000 15% TXR-L-3000 0%
ING-M-1000 30% KSCW-L-5300 25% TXVC-X-5500 32% TXBR-X-1800 0%
ING-L-3500 35% KSNW-M-4000 29% ARNC-X-5000 20% TXER-X-2500 0%
OHG-M-700 50% KSNW-L-7000 30% TNC-M-3000 10% LASR-X-2010%
OHG-L-1500 25% COW-M-3000 70% TNC-L-4050 25% ARMR-X-6500 18%
MOCG-M-2300 60% COW-L-6000 50% ALC-X-350010% ARSR-X-3240 20%
MOCG-L-4200 43% GAC-X-2500 100% ARWR-X-2500 50%
MONG-X-2300 70% NCNP-X-1600 38% ARHR-X-4000 25%
LANG-X-2520% MSDR-X-5000 60%
TNG-M-2500 25% MOBR-X-4000 25%
TNG-L-5000 28%
NCSP-X-2000 35%
NCC-X-2030 11%
SCC-X-2000 28%
SCG-X-3500 40%
TXNP-M-3450 75%
TXNP-L-10880 38%
TXPG-X-2500 75%
TXHG-X-3000 15%
TXWG-X-1600 9%
----------------------------------------------------------------------------------------------------------------
Table 4: Percent of Crop and Pastureland on the Farm/Ranch that is Owned by Farm Type
--------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ranches Dairy Farms
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cropland
Pastureland Cropland
Pastureland
------------------------------------------------------------- -----------------------------------------------------------
Acres Percent Acres Percent Acres Percent Acres Percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
NVB-X-650 1,300 100% 10,725 81% CAD-X-2000 700 86% 0 N/A
NVSB-X-550 125 100% 375 100% WAD-M-300 250 50% 0 N/A
MTB-X-600 900 100% 20,700 63% WAD-L-1200 850 50% 0 N/A
WYB-X-475 330 100% 2,200 68% IDD-X-1500 850 50% 0 N/A
COB-X-275 650 69% 3,050 75% NVD-X-1000 500 60% 0 N/A
NMB-X-210 0 N/A 12,333 82% TXND-X-3800 1,920 100% 0 N/A
SDB-X-600 1,000 100% 14,200 46% TXCD-X-1500 616 59% 500 100%
MOB-X-250 360 60% 850 67% TXED-X-400 950 50% 0 N/A
TXRB-X-400 0 N/A 20,000 50% WID-M-180 800 50% 40 100%
TXSB-X-300 100 100% 1,575 51% WID-L-1700 3,200 50% 0 N/A
OHD-X-400 700 50% 25 100%
NYWD-M-400 800 60% 0 N/A
NYWD-L-1200 2,100 67% 50 100%
NYCD-M-180 400 80% 30 100%
NYCD-L-800 1,800 75% 50 100%
VTD-M-160 220 45% 60 N/A
VTD-L-400 1,000 53% 100 50%
MOGD-X-550 460 100% 0 N/A
FLND-X-550 600 75% 60 100%
FLSD-X-1750 400 100% 470 100%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Producer Input
Each time a policy proposal is evaluated that depends on individual
producer responses, AFPC sends an email asking for information from
representative farm panel participants that would make the analysis
more realistic. For this analysis, representative farm participants
provided information that assisted with allocating the percentage of
owned land on each type of farm (crop, dairy, ranch) into time periods
of acquisition to calculate potential capital gains tax obligations.
Naturally, AFPC anticipates land that was recently acquired will have a
higher basis compared to land that panel members acquired comparatively
earlier.
A total of 247 responses were received from the representative
farm/ranch panel members. This represents approximately 40% of the
panel members in the AFPC database. This is by far the highest response
rate AFPC has ever received when asking questions about potential
policy changes. There were 23 responses from the ten ranches, 186
responses from the 64 crop farms, and 38 responses from the 20 dairy
farms. As noted earlier, we typically have 4-6 producers on each
representative farm panel, so the number of producer responses we
received easily exceeded the number of representative farms in our
analysis. Major agricultural states often have more than one
representative farm/ranch panel in our network of representative farms;
producers in every state with a representative farm or ranch registered
responses.
The percentage of owned land by years of ownership has similar
patterns across farm types. A relatively large percentage was purchased
within the past 5 years, and 49 percent or more of the land for each
farm type was acquired over 15 years ago. As discussed in more detail
below, these percentages were utilized in the FarmESP simulation model
to incorporate realistic land ownership patterns (Figure 4).
Figure 4: Simple Average of Panel Member Responses to Length of Time
They Have Owned Land
Model Modifications
To simulate the effects of the STEP Act and 99.5% Act provisions,
the following changes were incorporated into FarmESP:
To calculate the potential capital gain tax liability under
the STEP Act, capital gain amounts were calculated for each
farm based on owned land and equipment. The capital gain on
land was dependent on the farm type (crop, dairy, or ranch) and
panel member feedback on the length of time the land was owned.
For example, if a crop farm owned 100 acres, it was assumed
that 18.3% of the 100 acres was owned for more than 30 years,
6.6% was owned for 26 to 30 years, and so on based on the
producer responses summarized in Figure 4.
The taxable amount of capital gains on owned land was
defined as the difference between the current market value of
the land in 2021 and the value of the land when it was
acquired. The current value of the land reflects discussions by
panel members in the most recent update meeting with AFPC
personnel. The value of the land when it was acquired was
determined by taking the current market value in 2021 and
applying a percentage price change for each land vintage that
is equal to their state-level pastureland (ranches) or cropland
(all other farms) percentage price change based on NASS data.
The taxable amount of capital gains on machinery was
calculated on the current market value of machinery in 2021
less the book value in 2021. The current market value of
machinery reflects discussions by panel members in the most
recent update meeting with AFPC personnel. The book value is
based on the purchase price and depreciation schedule in
FarmESP. Both the machinery and land capital gains were assumed
to be taxed at the current 20% long-term capital gains rate.
The exclusion of tax on the first $1 million of capital gain
was also assumed (consistent with the STEP Act).
The estate tax liability under the 99.5% Act was calculated
using the nominal net worth of each farm in 2021. The nominal
net worth was taxed at the applicable updated marginal tax
rates outlined in the 99.5% Act. Each farm was assumed to be
eligible for double the $3.5 million exclusion amount
(consistent with AFPC's assumption of two payment limits for
purposes of Title [I] benefits). Thus, the assumed estate tax
exclusion on each farm went from $23.4 million in current law
to $7 million under the 99.5% Act. In scenario 3 (Generational
Transfer under STEP Act) and the final scenario (Generational
Transfer under STEP Act and 99.5% Act), it was assumed that the
applicable capital gains tax amount was deducted from the
decedent's gross estate for purposes of calculating the estate
tax obligation.
This analysis for all of the farms starts in 2018 using
actual prices and output variables (e.g., crop yields, milk
production per cow, and calf crop) for 2018-2020 and uses FAPRI
commodity and input price forecasts for 2021-2026. Using 3
years of history provides the opportunity to check to ensure
the model results are aligned with the panel's experiences.
AFPC's representative farms are constructed to analyze
policy changes going forward. Under the status quo, the farms
are assumed to continue operating in perpetuity. For purposes
of this analysis and for the sake of consistency, the operator/
landowner is assumed to die in 2021 with the farm transferring
ownership in 2021 and taxes due in 2022. Naturally, farms that
recently went through a generational transfer would not be
impacted by the proposed changes (at least not in the near
term), but this assumption is obviously key to analyzing the
impact of the tax proposals on the farms in the event of an
operator death.
Finally, farms are expected to pay the calculated tax
obligations in the year they are due. All farms are assumed to
pay calculated taxes out of existing cash (if available). If
the farm does not have enough cash to pay all cash obligations,
then a carryover is experienced, and a short-term loan is
established for the debt. While the results would suggest that
some farms would have difficulty securing financing, this
assumption of available financing is consistent with the fact
that the STEP Act, for example, provides a 15 year financing
option. While there are a number of ways a producer could
choose to address a large additional tax liability, the
assumptions made in this analysis provide a snapshot of the
magnitude of the financial impacts of the proposed tax policy
changes.
Scenarios Analyzed
The following five scenarios were analyzed for each of the 94
representative farms and ranches:
Scenario 1: Current Tax Law with No Generational Transfer.
This baseline scenario assumes current tax law remains in place
and that no event triggers a generational transfer.
Scenario 2: Generational Transfer under Current Tax Law.
This scenario assumes current tax law remains in place and an
event triggers a generational transfer in 2021 (e.g., death of
the principal operator).
Scenario 3: Generational Transfer under STEP Act. This
scenario assumes the STEP Act is in effect and an event
triggers a generational transfer in 2021 (e.g., death of the
principal operator). Under the STEP Act, the current estate tax
exemption levels are maintained and stepped-up basis is
eliminated.
Scenario 4: Generational Transfer under 99.5% Act. This
scenario assumes the 99.5% Act is in effect and an event
triggers a generational transfer in 2021 (e.g., death of the
principal operator). Under the 99.5% Act, the estate tax
exemption levels are lower but stepped-up basis is maintained.
Scenario 5: Generational Transfer under STEP Act and 99.5%
Act. This scenario assumes both the STEP Act and the 99.5% Act
are in effect and an event triggers a generational transfer in
2021 (e.g., death of the principal operator). In this scenario,
the estate tax exemption levels are lower and stepped-up basis
is eliminated.
Results
As noted above, Scenario 1 is a baseline scenario where no event
triggers a generational transfer. Under this status quo scenario, 38 of
the 94 representative farms and ranches are projected to have a
negative ending cash balance at the end of 2026--and that is without
any policy changes. In other words, even in the status quo scenario,
there are farms struggling to cash flow across all types of farms and
ranches (seven feedgrain, four wheat, five cotton, ten rice, eight
dairy and four cattle ranches).
Table 5: Summary of Results for the Representative Farms for the Five Tax Scenarios
----------------------------------------------------------------------------------------------------------------
Scenario 1
No Scenario 2 Scenario 3 Scenario 4 Scenario 5
Generational Generational Generational Generational Generational
Transfer Transfer Transfer Transfer Transfer
Current Tax Current Tax STEP Act 99.5% Act STEP + 99.5%
Policy Policy Acts
----------------------------------------------------------------------------------------------------------------
Number of Farms Impacted N/A 2/94 (2%) 92/94 (98%) 41/94 (44%) 92/94 (98%)
Average Additional Tax Liability Incurred N/A $370,431 $726,104 $2,166,415 $1,431,408
for Farms Impacted
Average Change in Ending Cash Balances N/A ^$382,200 ^$796,627 ^$2,375,717 ^$1,588,365
(2026)
----------------------------------------------------------------------------------------------------------------
As noted in Table 5, under Scenario 2 (Generational Transfer under
Current Law), only two of the larger dairies (CAD-X-2000 and TXND-X-
3800) face estate tax liabilities as a result of a generational
transfer--owing to stepped-up basis (i.e., no long-term capital gains
tax) and the $23.5 million estate tax exclusion in current law.
Naturally, larger farms would be impacted by current law during a farm
transition, but none of the other 92 farms in AFPC's database would
incur capital gains or estate taxes resulting in a change in ending
cash balances under current law.
In sharp contrast, under Scenario 3 (Generational Transfer under
the STEP Act), 92 of the 94 representative farms are impacted. Despite
the $1 million exclusion included in the STEP Act, the elimination of
stepped-up basis impacts almost all of AFPC's representative farms.
Across the 92 impacted farms, the additional tax liability incurred
averages $726,104 per farm.
Under Scenario 4 (Generational Transfer under the 99.5% Act),
lowering the estate tax exemption levels to $3.5 million (or a combined
total of $7 million per couple) impacts 41 farms, with the additional
tax liability incurred averaging $2.17 million per farm.
If the STEP Act and 99.5% Act were both implemented (Scenario 5),
92 of the 94 representative farms would be impacted. The additional tax
liability incurred would average $1.43 million per farm across all 92
farms. While the average impact in Scenario 5 is lower than that in
Scenario 4, that is entirely because Scenario 5 impacts 92 farms
(whereas Scenario 4 impacted only 41 farms). Importantly, when looking
at individual farm results (Table 6), in no case was the tax liability
in Scenario 5 lower than that incurred in Scenarios 3 or 4; in other
words, combining the two policies always resulted in an equal or higher
tax liability.
Table 5 also includes the average change in ending cash balances in
2026 for each scenario. The fact that the reduction in ending cash
balances exceeds the tax liability incurred largely reflects the
interest costs incurred in financing the debt resulting from the tax
liability.
Tables 6-8 contain the results for the 25 feedgrain, 11 wheat, 13
cotton, 15 rice, and 20 dairy farms along with ten cattle ranches. For
this analysis, the key output variables used to demonstrate the impact
of the two tax policy changes are (1) additional tax liability incurred
and (2) ending cash balances in 2026. With everything on the operation
staying the same except for the policy change associated with each
scenario, these variables highlight any liabilities and potential cash
flow shortfalls that would be created by the tax changes.
Tables 6 and 7 also utilize average annual net cash farm income
(NCFI) for 2021-2026 under the baseline scenario (i.e., current tax law
with no generational transfer) as a point of reference. NCFI equals
total cash receipts minus all cash expenses. It is used to pay family
living expenses, principal payments, income taxes, self-employment
taxes, and machinery replacement costs.
Table 7 reflects the ratio of additional tax liability incurred to
NCFI for Scenarios 3-5. For context, Table 7 illustrates how many years
it would take to pay off the new tax liability if NCFI were used
exclusively for that purpose. For example, on the 4,500-acre Nebraska
feedgrain farm, it would take 14.5 years using all of the NCFI
generated by the farm (while ignoring all other obligations normally
covered by NCFI) to pay off the tax liability from the STEP Act and
99.5% Act.
Table 8 includes the average change in ending cash balances in 2026
for each scenario. As noted earlier, any reduction in ending cash
balances that exceeds the tax liability incurred largely reflects the
interest costs incurred in financing the debt resulting from the tax
liability. As shown in Table 8, a number of farms were already facing
negative ending cash balances in 2026 under status quo.
While there is no perfect point of reference (or context), another
approach would be to compare the additional tax liability incurred to
the cost basis of the assets on the farm. For 11 of the 94
representative farms, the tax liability incurred in Scenario 5 was more
than 50% of the cost basis of the assets on the farm. In the extreme
case, for the large Texas dairy (TXND-X-3800), the tax liability
exceeded the cost basis of the farm (106%).
Table 6: Average Annual Net Cash Farm Income (NCFI) and Tax Liability for the Representative Farms for Select
Tax Scenarios (in Dollars)
----------------------------------------------------------------------------------------------------------------
Scenario 2
Average Generational Scenario 3 Scenario 4 Scenario 5
Type Farm Annual Base Transfer Generational Generational Generational
NCFI (2021- Current Tax Transfer STEP Transfer Transfer STEP
26) Policy Act 99.5% Act + 99.5% Acts
----------------------------------------------------------------------------------------------------------------
Feedgrain IAG-M-1350 89,090 0 283,842 0 283,842
IAG-L-3400 531,862 0 1,244,826 1,027,064 1,711,563
NEG-M-2400 435,960 0 713,177 0 713,177
NEG-L-4500 419,070 0 2,956,842 4,591,837 6,070,258
NDG-M-3000 278,514 0 450,627 0 450,627
NDG-L-9000 1,351,884 0 2,763,619 5,996,955 7,378,764
ING-M-1000 239,848 0 332,811 0 332,811
ING-L-3500 652,927 0 1,467,786 1,738,634 2,507,257
OHG-M-700 125,353 0 201,014 0 201,014
OHG-L-1500 407,906 0 346,212 0 346,212
MOCG-M-2300 575,856 0 1,513,229 1,873,664 2,655,537
MOCG-L-4200 1,122,730 0 2,321,461 4,605,774 5,766,504
MONG-X-2300 587,196 0 1,716,843 2,201,626 3,065,311
LANG-X-25205,219 0 193,054 0 193,054
TNG-M-2500 322,796 0 288,653 0 288,653
TNG-L-5000 874,612 0 850,887 1,835,971 2,268,907
NCSP-X-2000 183,313 0 306,738 0 306,738
NCC-X-2030 422,000 0 4,424 0 4,424
SCC-X-2000 195,420 0 191,371 0 191,371
SCG-X-3500 493,834 0 784,226 42,908 784,841
TXNP-M-3450 666,326 0 760,188 491,731 933,396
TXNP-L-108801,515,870 0 2,026,900 6,140,075 7,153,525
TXPG-X-2500 324,813 0 503,516 0 503,516
TXHG-X-3000 154,201 0 119,460 0 119,460
TXWG-X-1600 63,661 0 31,866 0 31,866
Wheat WAW-M-2800 307,995 0 113,573 0 113,573
WAW-L-10000 751,923 0 839,410 1,580,241 2,019,522
WAAW-X-5500 16,889 0 90,880 0 90,880
ORW-X-4500 145,686 0 30,282 0 30,282
MTW-X-9500 759,114 0 844,122 497,394 970,260
KSCW-M-2000 315,536 0 215,694 0 215,694
KSCW-L-5300 751,846 0 618,500 8,088 618,533
KSNW-M-4000 289,968 0 479,058 0 479,058
KSNW-L-7000 525,991 0 1,048,546 378,545 1,084,027
COW-M-3000 179,199 0 368,527 0 368,527
COW-L-6000 65,283 0 666,247 0 666,247
Cotton TXSP-X-4500 230,148 0 140,492 0 140,492
TXEC-X-5000 410,855 0 338,474 0 338,474
TXRP-X-3000 5,356 0 12,680 0 12,680
TXMC-X-2500 161,687 0 52,494 0 52,494
TXCB-M-4000 175,477 0 219,094 0 219,094
TXCB-L-10000 845,126 0 727,223 981,309 1,381,657
TXVC-X-5500 594,979 0 663,329 212,613 706,259
ARNC-X-5000 1,278,995 0 1,029,805 2,157,625 2,676,174
TNC-M-3000 612,663 0 62,219 0 62,219
TNC-L-4050 644,658 0 505,551 95,867 515,022
ALC-X-3500967,496 0 291,897 0 291,897
GAC-X-2500 614,064 0 770,004 1,245,734 1,667,186
NCNP-X-1600 77,648 0 174,455 0 174,455
Rice CAR-M-1200 349,839 0 387,583 0 387,583
CAR-L-3000 112,705 0 1,471,776 2,696,234 3,440,680
CABR-X-800 262,352 0 400,802 0 400,802
CACR-X-800 ^76,059 0 352,582 0 352,582
TXR-M-1500 37,579 0 147,822 0 147,822
TXR-L-3000 157,929 0 4,464 0 4,464
TXBR-X-1800 148,843 0 0 0 0
TXER-X-2500 213,467 0 0 0 0
LASR-X-20099,116 0 116,394 0 116,394
ARMR-X-6500 831,787 0 797,103 958,548 1,418,087
ARSR-X-3240 316,344 0 464,406 0 464,406
ARWR-X-2500 291,745 0 885,012 82,666 885,133
ARHR-X-4000 209,290 0 880,740 271,001 899,695
MSDR-X-5000 1,009,655 0 2,132,270 4,659,867 5,726,002
MOBR-X-4000 229,378 0 1,119,486 741,637 1,368,706
Ranch NVB-X-650 97,922 0 1,851,122 2,064,410 3,011,086
NVSB-X-550 83,046 0 386,106 0 386,106
MTB-X-600 144,217 0 874,000 620,397 1,101,097
WYB-X-475 34,455 0 236,199 0 236,199
COB-X-275 151,476 0 1,460,362 4,038,415 4,768,596
NMB-X-210 47,185 0 544,318 0 544,318
SDB-X-600 10,942 0 1,032,121 297,084 1,032,193
MOB-X-250 216,147 0 192,957 0 192,957
TXRB-X-400 119,777 0 972,300 731,541 1,266,307
TXSB-X-300 134,256 0 570,520 0 570,520
Dairy CAD-X-2000 1,483,972 1,815 2,124,243 7,016,637 8,078,759
WAD-M-300 ^67,127 0 223,542 0 223,542
WAD-L-1200 376,854 0 1,158,760 3,055,598 3,634,978
IDD-X-1500 1,276,968 0 1,217,659 1,888,263 2,514,284
NVD-X-1000 814,030 0 318,521 218,965 434,172
TXND-X-3800 2,318,634 739,047 2,091,233 8,910,791 9,821,758
TXCD-X-1500 526,077 0 779,773 1,033,075 1,462,828
TXED-X-400 ^53,969 0 81,163 0 81,163
WID-M-180 345,162 0 455,045 0 455,045
WID-L-1700 1,205,662 0 2,459,744 4,761,203 5,991,074
OHD-X-400 298,843 0 651,910 0 651,910
NYWD-M-400 267,324 0 422,625 0 422,625
NYWD-L-1200 797,816 0 1,733,207 3,802,948 4,669,552
NYCD-M-180 237,356 0 105,510 0 105,510
NYCD-L-800 598,976 0 1,384,251 1,860,716 2,572,514
VTD-M-160 ^57,479 0 48,520 0 48,520
VTD-L-400 ^158,767 0 544,104 0 544,104
MOGD-X-550 279,483 0 174,427 0 174,427
FLND-X-550123,601 0 109,499 0 109,499
FLSD-X-175190,761 0 761,215 1,409,379 1,814,163
----------------------------------------------------------------------------------------------------------------
Table 7: Years of Net Cash Farm Income (NCFI) Required to Eliminate Tax Liability for the Representative Farms
for Select Tax Scenarios
----------------------------------------------------------------------------------------------------------------
Scenario 5
Scenario 3 Scenario 4 Generational
Type Farm Generational Generational Transfer STEP +
Transfer STEP Act Transfer 99.5% Act 99.5% Acts
----------------------------------------------------------------------------------------------------------------
Feedgrain IAG-M-1350 3.2 3.2
IAG-L-3400 2.3 1.9 3.2
NEG-M-2400 1.6 1.6
NEG-L-4500 7.1 11.0 14.5
NDG-M-3000 1.6 1.6
NDG-L-9000 2.0 4.4 5.5
ING-M-1000 1.4 1.4
ING-L-3500 2.2 2.7 3.8
OHG-M-700 1.6 1.6
OHG-L-1500 0.8 0.8
MOCG-M-2300 2.6 3.3 4.6
MOCG-L-4200 2.1 4.1 5.1
MONG-X-2300 2.9 3.7 5.2
LANG-X-2500 0.9 0.9
TNG-M-2500 0.9 0.9
TNG-L-5000 1.0 2.1 2.6
NCSP-X-2000 1.7 1.7
NCC-X-2030 0.0 0.0
SCC-X-2000 1.0 1.0
SCG-X-3500 1.6 0.1 1.6
TXNP-M-3450 1.1 0.7 1.4
TXNP-L-10880 1.3 4.1 4.7
TXPG-X-2500 1.6 1.6
TXHG-X-3000 0.8 0.8
TXWG-X-1600 0.5 0.5
Wheat WAW-M-2800 0.4 0.4
WAW-L-10000 1.1 2.1 2.7
WAAW-X-5500 5.4 5.4
ORW-X-4500 0.2 0.2
MTW-X-9500 1.1 0.7 1.3
KSCW-M-2000 0.7 0.7
KSCW-L-5300 0.8 0.0 0.8
KSNW-M-4000 1.7 1.7
KSNW-L-7000 2.0 0.7 2.1
COW-M-3000 2.1 2.1
COW-L-6000 10.2 10.2
Cotton TXSP-X-4500 0.6 0.6
TXEC-X-5000 0.8 0.8
TXRP-X-3000 2.4 2.4
TXMC-X-2500 0.3 0.3
TXCB-M-4000 1.2 1.2
TXCB-L-10000 0.9 1.2 1.6
TXVC-X-5500 1.1 0.4 1.2
ARNC-X-5000 0.8 1.7 2.1
TNC-M-3000 0.1 0.1
TNC-L-4050 0.8 0.1 0.8
ALC-X-3500 0.3 0.3
GAC-X-2500 1.3 2.0 2.7
NCNP-X-1600 2.2 2.2
Rice CAR-M-1200 1.1 1.1
CAR-L-3000 13.1 23.9 30.5
CABR-X-800 1.5 1.5
CACR-X-800 a a
TXR-M-1500 3.9 3.9
TXR-L-3000 0.0 0.0
TXBR-X-1800
TXER-X-2500
LASR-X-2000 1.2 1.2
ARMR-X-6500 1.0 1.2 1.7
ARSR-X-3240 1.5 1.5
ARWR-X-2500 3.0 0.3 3.0
ARHR-X-4000 4.2 1.3 4.3
MSDR-X-5000 2.1 4.6 5.7
MOBR-X-4000 4.9 3.2 6.0
Ranch NVB-X-650 18.9 21.1 30.7
NVSB-X-550 4.6 4.6
MTB-X-600 6.1 4.3 7.6
WYB-X-475 6.9 6.9
COB-X-275 9.6 26.7 31.5
NMB-X-210 11.5 11.5
SDB-X-600 94.3 27.2 94.3
MOB-X-250 0.9 0.9
TXRB-X-400 8.1 6.1 10.6
TXSB-X-300 4.2 4.2
Dairy CAD-X-2000 1.4 4.7 5.4
WAD-M-300 a a
WAD-L-1200 3.1 8.1 9.6
IDD-X-1500 1.0 1.5 2.0
NVD-X-1000 0.4 0.3 0.5
TXND-X-3800 0.9 3.8 4.2
TXCD-X-1500 1.5 2.0 2.8
TXED-X-400 a a
WID-M-180 1.3 1.3
WID-L-1700 2.0 3.9 5.0
OHD-X-400 2.2 2.2
NYWD-M-400 1.6 1.6
NYWD-L-1200 2.2 4.8 5.9
NYCD-M-180 0.4 0.4
NYCD-L-800 2.3 3.1 4.3
VTD-M-160 a a
VTD-L-400 a a
MOGD-X-550 0.6 0.6
FLND-X-550 0.9 0.9
FLSD-X-1750 4.0 7.4 9.5
----------------------------------------------------------------------------------------------------------------
a Under the current baseline outlook, the average annual NCFI is negative. In other words, the farm is already
in poor shape under status quo conditions and there is no expected NCFI available to help pay down the tax
liability incurred.
Table 8: Changes in Ending Cash Balances in 2026 for the Representative Farms for Select Tax Scenarios (in
$1,000)
----------------------------------------------------------------------------------------------------------------
Scenario 2
Ending Cash Generational Scenario 3 Scenario 4 Scenario 5
Type Farm Balance Base Transfer Generational Generational Generational
(2026) Current Tax Transfer STEP Transfer Transfer STEP
Policy Act 99.5% Act + 99.5% Acts
----------------------------------------------------------------------------------------------------------------
Feedgrain IAG-M-1350 ^887.9 0.0 ^330.8 0.0 ^330.8
IAG-L-3400 89.3 0.0 ^1,367.2 ^1,120.6 ^1,896.6
NEG-M-2400 771.3 0.0 ^755.2 0.0 ^755.2
NEG-L-4500 ^2,087.6 0.0 ^3,597.6 ^5,612.3 ^7,438.9
NDG-M-3000 318.4 0.0 ^483.2 0.0 ^483.2
NDG-L-9000 4,813.6 0.0 ^2,842.0 ^6,378.4 ^7,944.2
ING-M-1000 212.1 0.0 ^348.9 0.0 ^348.9
ING-L-3500 1,154.5 0.0 ^1,525.4 ^1,816.6 ^2,653.6
OHG-M-700 14.3 0.0 ^226.6 0.0 ^226.6
OHG-L-1500 1,252.1 0.0 ^348.7 0.0 ^348.7
MOCG-M-2300 921.9 0.0 ^1,640.7 ^2,048.8 ^2,944.9
MOCG-L-4200 3,188.1 0.0 ^2,408.3 ^4,882.3 ^6,160.5
MONG-X-2300 289.1 0.0 ^1,934.7 ^2,490.4 ^3,483.2
LANG-X-250^232.5 0.0 ^223.7 0.0 ^223.7
TNG-M-2500 183.0 0.0 ^315.9 0.0 ^315.9
TNG-L-5000 2,349.2 0.0 ^877.4 ^1,926.3 ^2,412.5
NCSP-X-2000 ^1,021.9 0.0 ^361.8 0.0 ^361.8
NCC-X-2030 1,356.2 0.0 ^4.5 0.0 ^4.5
SCC-X-2000 ^115.6 0.0 ^217.1 0.0 ^217.1
SCG-X-3500 910.6 0.0 ^822.7 ^43.2 ^823.3
TXNP-M-3450 2,038.7 0.0 ^772.9 ^494.3 ^948.4
TXNP-L-10880 6,946.2 0.0 ^2,042.4 ^6,383.8 ^7,560.5
TXPG-X-2500 366.6 0.0 ^550.5 0.0 ^550.5
TXHG-X-3000 ^212.7 0.0 ^136.1 0.0 ^136.1
TXWG-X-1600 ^479.4 0.0 ^40.4 0.0 ^40.4
Wheat WAW-M-2800 702.6 0.0 ^116.1 0.0 ^116.1
WAW-L-10000 1,654.5 0.0 ^903.2 ^1,723.3 ^2,248.8
WAAW-X-5500 ^1,153.0 0.0 ^112.6 0.0 ^112.6
ORW-X-4500 ^274.5 0.0 ^35.6 0.0 ^35.6
MTW-X-9500 1,508.6 0.0 ^869.4 ^510.0 ^1,000.6
KSCW-M-2000 766.8 0.0 ^218.3 0.0 ^218.3
KSCW-L-5300 2,810.2 0.0 ^626.6 ^8.2 ^626.6
KSNW-M-4000 354.7 0.0 ^526.6 0.0 ^526.6
KSNW-L-7000 1,206.3 0.0 ^1,106.4 ^387.3 ^1,143.3
COW-M-3000 ^120.8 0.0 ^434.9 0.0 ^434.9
COW-L-6000 ^2,420.8 0.0 ^828.5 0.0 ^828.5
Cotton TXSP-X-4500 ^182.4 0.0 ^156.4 0.0 ^156.4
TXEC-X-5000 1,142.1 0.0 ^358.1 0.0 ^358.1
TXRP-X-3000 ^1,036.4 0.0 ^15.6 0.0 ^15.6
TXMC-X-2500 ^149.4 0.0 ^57.8 0.0 ^57.8
TXCB-M-4000 ^8.9 0.0 ^238.2 0.0 ^238.2
TXCB-L-10000 3,439.2 0.0 ^743.2 ^1,000.8 ^1,412.7
TXVC-X-5500 2,406.7 0.0 ^667.5 ^212.9 ^710.6
ARNC-X-5000 4,101.8 0.0 ^1,045.6 ^2,191.9 ^2,726.8
TNC-M-3000 2,610.7 0.0 ^63.0 0.0 ^63.0
TNC-L-4050 2,126.1 0.0 ^508.6 ^96.2 ^518.1
ALC-X-35004,072.0 0.0 ^309.4 0.0 ^309.4
GAC-X-2500 1,610.9 0.0 ^783.9 ^1,277.2 ^1,735.1
NCNP-X-1600 ^1,017.1 0.0 ^206.1 0.0 ^206.1
Rice CAR-M-1200 702.4 0.0 ^401.2 0.0 ^401.2
CAR-L-3000 ^2,314.8 0.0 ^1,663.4 ^3,066.5 ^3,920.9
CABR-X-800 153.2 0.0 ^424.2 0.0 ^424.2
CACR-X-800 ^1,665.0 0.0 ^425.4 0.0 ^425.4
TXR-M-1500 ^1,125.1 0.0 ^185.9 0.0 ^185.9
TXR-L-3000 ^452.0 0.0 ^5.2 0.0 ^5.2
TXBR-X-1800 ^161.0 0.0 0.0 0.0 0.0
TXER-X-2500 ^28.9 0.0 0.0 0.0 0.0
LASR-X-200^504.7 0.0 ^142.2 0.0 ^142.2
ARMR-X-6500 1,918.8 0.0 ^830.7 ^985.2 ^1,478.5
ARSR-X-3240 275.6 0.0 ^500.4 0.0 ^500.4
ARWR-X-2500 ^620.3 0.0 ^1,058.6 ^96.1 ^1,058.8
ARHR-X-4000 ^2,029.5 0.0 ^1,036.9 ^317.0 ^1,059.2
MSDR-X-5000 1,487.6 0.0 ^2,299.2 ^5,206.8 ^6,445.0
MOBR-X-4000 ^864.7 0.0 ^1,343.1 ^877.9 ^1,649.8
Ranch NVB-X-650 ^109.1 0.0 ^2,317.5 ^2,590.1 ^3,802.2
NVSB-X-550 ^54.0 0.0 ^490.4 0.0 ^490.4
MTB-X-600 234.2 0.0 ^1,039.9 ^726.4 ^1,324.7
WYB-X-475 ^460.8 0.0 ^291.5 0.0 ^291.5
COB-X-275 461.7 0.0 ^1,660.9 ^4,806.4 ^5,713.1
NMB-X-210 ^78.0 0.0 ^684.7 0.0 ^684.7
SDB-X-600 ^1,088.2 0.0 ^1,296.4 ^373.1 ^1,296.5
MOB-X-250 616.5 0.0 ^196.4 0.0 ^196.4
TXRB-X-400 319.4 0.0 ^1,122.0 ^832.4 ^1,479.5
TXSB-X-300 262.8 0.0 ^654.3 0.0 ^654.3
Dairy CAD-X-2000 3,280.4 ^1.9 ^2,222.6 ^7,612.8 ^8,804.7
WAD-M-300 ^2,092.3 0.0 ^274.2 0.0 ^274.2
WAD-L-1200 ^284.4 0.0 ^1,279.6 ^3,468.4 ^4,144.0
IDD-X-1500 3,888.0 0.0 ^1,288.6 ^2,006.0 ^2,694.4
NVD-X-1000 3,146.2 0.0 ^327.9 ^225.4 ^446.9
TXND-X-3800 9,200.1 ^762.5 ^2,167.1 ^9,497.1 ^10,511.6
TXCD-X-1500 1,084.7 0.0 ^826.6 ^1,095.8 ^1,563.5
TXED-X-400 ^1,334.1 0.0 ^107.8 0.0 ^107.8
WID-M-180 734.5 0.0 ^470.4 0.0 ^470.4
WID-L-1700 3,938.9 0.0 ^2,579.6 ^5,100.3 ^6,495.3
OHD-X-400 ^788.5 0.0 ^754.8 0.0 ^754.8
NYWD-M-400 448.5 0.0 ^446.6 0.0 ^446.6
NYWD-L-1200 1,199.9 0.0 ^1,860.5 ^4,244.1 ^5,259.7
NYCD-M-180 555.0 0.0 ^108.3 0.0 ^108.3
NYCD-L-800 405.3 0.0 ^1,535.4 ^2,097.0 ^2,945.8
VTD-M-160 ^1,200.7 0.0 ^58.5 0.0 ^58.5
VTD-L-400 ^3,034.8 0.0 ^653.6 0.0 ^653.6
MOGD-X-550 544.3 0.0 ^183.3 0.0 ^183.3
FLND-X-550 ^246.4 0.0 ^123.9 0.0 ^123.9
FLSD-X-1750^715.9 0.0 ^843.7 ^1,574.8 ^2,042.5
----------------------------------------------------------------------------------------------------------------
Summary and Conclusions
This analysis utilized AFPC's 94 representative farms to determine
the likely impacts of two tax policy proposals--the Sensible Taxation
and Equity Promotion Act and the For the 99.5 Percent Act--on the
farm's ability to cash flow. Under current tax law, an assumed death of
the principal operator would impact 2 of 94 representative farms.
Eliminating stepped-up basis in the Sensible Taxation and Equity
Promotion Act--even with the $1 million exclusion--would impact 92 of
94 representative farms, including all of the ranches and dairies, with
an additional tax liability incurred of $726,104 per farm.
Imposing lower estate tax exemption levels from the For the 99.5
Percent Act would impact 41 farms (26 of 64 crop farms, 5 of 10 ranches
and 10 of 20 dairies) with an average additional tax liability incurred
of $2.17 million per farm.
The combination of the two tax policy changes would impact 92
representative farms at an average additional tax liability incurred of
$1.43 million and an average loss in ending cash balances of all
affected farms of $1.59 million in 2026. While the average tax
liability declines (relative to imposing the For the 99.5 Percent Act
alone), the number of farms impacted climbed from 41 to 92.
References
Ernst and Young. Repealing step-up of basis on inherited assets:
Macroeconomic impacts and effects on illustrative family businesses.
Prepared for the Family Business Estate Tax Coalition (FBETC), April
2021. Available at: https://www.fb.org/files/FBETC_Stepped-
Up_Basis_Report_2021.
Food & Agricultural Policy Research Institute. U.S. Agricultural
Market Outlook. University of Missouri, Division of Applied Social
Sciences, FAPRI-MU Report #01-21, March 2021. Available at: https://
www.fapri.missouri.edu/wp-content/uploads/2021/03/2021-U.S.-
Agricultural-Market-Outlook-FINAL.pdf.
Internal Revenue Service (IRS). Estate Tax. Available at: https://
www.irs.gov/businesses/small-businesses-self-employed/estate-tax
[accessed on May 28, 2021].
Jacobson, D.B., B.G. Raub, and B.W. Johnson. The Estate Tax: Ninety
Years and Counting. Available at: https://www.irs.gov/pub/irs-soi/
ninetyestate.pdf.
Outlaw, J.L., B.L. Fischer, G.M. Knapek, B.K. Herbst, J.M. Raulston,
H.L. Bryant, D.P. Anderson, S.L. Klose and P. Zimmel. Representative
Farms Economic Outlook For The January 2021 FAPRI/AFPC Baseline.
Agricultural and Food Policy Center, Texas A&M University, College
Station, Texas, AFPC Working Paper 21-1, March 2021. Available at:
https://www.afpc.tamu.edu/research/publications/files/707/WP-21-01.pdf.
Richardson, James W. and Clair J. Nixon. (1986). Description of
FLIPSIM V: a General Firm Level Policy Simulation Model. Texas
Agricultural Experiment Station. Available at: https://hdl.handle.net/
1969.1/129137.
Appendix A--Representative Farm and Ranch Characteristics
------------------------------------------------------------------------
------------------------------------------------------------------------
2020 Characteristics of Panel Farms Producing Feed Grains and Oilseeds
------------------------------------------------------------------------
IAG1350 IAG1350 is a 1,350 acre northwestern Iowa (Webster
County) grain farm. The farm is moderate-sized for the
region and plants 810 acres of corn and 540 acres of
soybeans annually. Sixty-one percent of this farm's
2020 receipts come from corn production.
IAG3400 This 3,400 acre large-sized grain farm is located
in northwestern Iowa (Webster County). It plants 2,040
acres of corn and 1,360 acres of soybeans each year,
realizing 60 percent of receipts from corn production.
NEG2400 South-central Nebraska (Dawson County) is home to
this 2,400 acre grain farm. This farm plants 1,600
acres to corn and 800 acres to soybeans. The farm
splits its corn acres evenly between yellow and white
food-grade corn. Sixty-four percent of gross receipts
are derived from corn sales.
NEG4500 This is a 4,500 acre grain farm located in south-
central Nebraska (Dawson County). This operation
plants 3,000 acres of corn and 1,000 acres of soybeans
each year. Remaining acres are planted to alfalfa. A
portion (25 percent) of the corn acreage is food-grade
corn. In 2020, 67 percent of total receipts were
generated from corn production.
NDG3000 NDG3000 is a 3,000 acre, moderate-sized, south
central North Dakota (Barnes County) grain farm that
plants 500 acres of wheat, 1,000 acres of corn, and
1,500 acres of soybeans. One hundred acres are
enrolled in the Conservation Reserve Program. The farm
generated 39 percent of 2020 receipts from soybean
sales and 40 percent from corn sales.
NDG9000 This is an 9,000 acre, large-sized grain farm in
south central North Dakota (Barnes County) that grows
4,500 acres of soybeans, 2,500 acres of corn, 1,250
acres of wheat, and 500 acres of barley annually. The
remaining acreage is enrolled in the Conservation
Reserve Program. Soybean and corn sales accounted for
75 percent of 2020 receipts.
ING1000 Shelby County, Indiana, is home to this 1,000 acre
moderate-sized feedgrain farm. This farm annually
plants 475 acres of corn, 525 acres of soybeans, and
50 acres of wheat that is double cropped with
soybeans. Due to this farm's proximity to
Indianapolis, land development pressures will likely
constrain further expansion of this operation. Forty-
seven percent of 2020 receipts came from corn sales.
ING3500 ING3500 is a large-sized grain farm located in east
central Indiana (Shelby County). This farm plants
1,750 acres to corn and 1,750 acres to soybeans each
year. In 2020, 53 percent of gross receipts were
generated by corn sales.
OHG700 This is a 700 acre, moderate sized grain farm in
north western Ohio (Henry County). This farm planted
105 acres of corn and 280 acres of soybeans in 2020.
Because of the wet spring there were 315 acres that
were not planted and was taken as preventive planting
insurance. Normally would be 350 acres each of corn
and soybeans. Twenty-seven percent of 2020 receipts
were generated by corn sales.
OHG1500 This is a 1,500 acre, large-sized grain farm in
north western Ohio (Henry County). This farm planted
202 acres of corn, 304 acres of soybeans, and 150
acres of wheat in 2020. Because of the wet spring
there were 844 acres that were not planted and was
taken as preventive planting insurance. Normally would
be 675 acres each of corn and soybeans plus the 150
acres of wheat. Thirty-five percent of 2020 receipts
were generated by corn sales.
------------------------------------------------------------------------
2020 Panel Farms Producing Feed Grains and Oilseeds
------------------------------------------------------------------------
MOCG2300 MOCG2300 is a 2,300 acre grain farm located in
central Missouri (Carroll County) and plants 1,150
acres of corn and 1,150 acres of soybeans annually.
This farm is located in the Missouri River bottom, an
area with a large concentration of livestock
production. This farm generated 52 percent of its
total revenue from corn and 38 percent from soybeans
during 2020.
MOCG4200 This is a 4,200 acre central Missouri (Carroll
County) grain farm with 2,310 acres of corn and 1,890
acres of soybeans. This farm is located in the
Missouri River bottom, an area with a large
concentration of livestock production. Corn sales
accounted for 59 percent of farm receipts and soybeans
accounted for 32 percent in 2020.
MONG2300 MONG2300 is a 2,300 acre diversified northwest
Missouri grain farm centered in Nodaway County.
MONG2300 plants 1,125 acres of corn, 1,125 acres of
soybeans, and 50 acres of hay annually. The farm also
has a 300 head cowcalf herd. Proximity to the Missouri
River increases marketing options for area grain
farmers due to easily accessible river grain
terminals. In 2020, 46 percent of the farm's total
receipts were from corn, 42 percent from soybeans, and
8 percent from cattle sales.
LAN This is a 2,500 acre northeast Louisiana (Madison
Parish) diversified grain farm. This farm harvests 500
acres of rice, 875 acres of soybeans, 375 acres of
cotton, and 750 acres of corn. For 2020, 49 percent of
farm receipts came from corn and soybean sales.
TNG2500 This is a 2,500 acre, moderate-sized grain farm in
West Tennessee (Gibson County). Annually, this farm
plants 1,025 acres of corn, 1,475 acres of soybeans,
and 375 acres of wheat (planted before soybeans) in a
region of Tennessee recognized for the high level of
implementation of conservation practices by farmers.
For 2020, 39 percent of farm receipts were from sales
of corn and 43 percent from soybeans.
TNG5000 West Tennessee (Gibson County) is home to this
5,000 acre, large-sized grain farm. Farmers in this
part of Tennessee are known for their early and
continued adoption of conservation practices,
including no-till farming. TNG5000 plants 2,500 acres
of corn, 500 acres of wheat, 2,500 acres of soybeans
(500 of which are double-cropped after wheat). The
farm generated 50 percent of its 2020 gross receipts
from sales of corn and 35 percent from soybeans.
NCSP2000 A 2,000 acre diversified farm located in southern
North Carolina (Bladen County). NCSP2000 plants 400
acres of peanuts, 1,100 acres of corn, and 500 acres
of soybeans. Sixty-two percent of receipts for this
farm came from corn and soybean sales in 2020; thirty-
one percent of receipts came from peanut sales.
NCC2030 This is a 2,000 acre grain farm located on the
upper coastal plain of North Carolina (Wayne County).
NCC2030 plants 400 acres of corn, 200 acres of wheat,
and 1,000 acres of soybeans annually. Corn accounted
for 23 percent of this farm's 2020 receipts, while
soybeans accounted for 35 percent.
SCC2000 SCC2000 is a moderate-sized, 2,000 acre grain farm
in South Carolina (Orangeburg County) consisting of
800 acres of corn, 550 acres of cotton, 250 acres of
peanuts, and 400 acres of soybeans. Thirty-nine
percent of the farm's receipts were from corn sales
during 2020.
SCG3500 A 3,500 acre, large-sized South Carolina (Clarendon
County) grain farm with 1,800 acres of corn, 750 acres
of cotton, 600 acres of peanuts, and 350 acres of
soybeans. The farm generated 45 percent of 2020
receipts from corn sales and 5 percent from soybean
sales.
TXNP3450 This is a 3,450 acre diversified grain farm located
on the northern High Plains of Texas (Moore County).
This farm plants 1,206 acres of cotton, 1,294 acres of
irrigated corn, 260 acres of irrigated sorghum for
seed production, and 432 acres of irrigated wheat
annually. Forty-five percent of total receipts are
generated from corn sales.
TXNP10880 TXNP10880 is a large-sized diversified grain farm
located in the Texas Panhandle (Moore County). This
farm annually plants 4,454 acres of cotton (3,962
irrigated/492 dryland); 3,962 acres of irrigated corn;
1,272 acres of grain sorghum (530 irrigated for seed
production/492 dryland/250 irrigated for commercial
use); and 492 acres of dryland winter wheat. Thirty-
eight percent of 2020 cash receipts were derived from
corn sales.
TXPG2500 The Texas Panhandle is home to this 2,500 acre farm
(Deaf Smith County). Annually, wheat is planted on 534
acres (350 irrigated and 184 dryland), 1,000 acres
planted to irrigated corn, 783 acres are planted to
cotton (600 irrigated and 183 dryland), and grain
sorghum is planted on 183 dryland acres. Fifty-three
percent of 2020 cash receipts were generated by corn
sales.
TXHG3000 This 3,000 acre grain farm is located on the
Blackland Prairie of Texas (Hill County). On this
farm, 2,000 acres of corn, 500 acres of cotton, and
500 acres of wheat are planted annually. Grain sales
accounted for 65 percent of 2020 receipts with cotton
accounting for nineteen percent of sales. Forty beef
cows live on 300 acres of improved pasture and
contribute approximately two percent of total
receipts.
TXWG1600 This 1,600 acre farm is located on the Blackland
Prairie of Texas (Williamson County). TXWG1600 plants
800 acres of corn, 300 acres of sorghum, 400 acres of
cotton, and 100 acres of winter wheat annually.
Additionally, this farm has a 40 head beef cow herd
that is pastured on rented ground that cannot be
farmed. Grain sales accounted for 54 percent of 2020
receipts with cotton accounting for 29 percent of
sales.
------------------------------------------------------------------------
2020 Characteristics of Panel Farms Producing Wheat
------------------------------------------------------------------------
WAW2800 This is a 2,800 acre moderate-sized grain farm in
the Palouse of southeastern Washington (Whitman
County). It plants 1,840 acres of wheat and 800 acres
of dry peas. Disease concerns dictate rotating a
minimum acreage of peas to maintain wheat yields. This
farm generated 63 percent of 2020 receipts from wheat.
WAW10000 A 10,000 acre, large-sized grain farm in the
Palouse of southeastern Washington (Whitman County).
Annually, this farm allocates 5,800 acres to wheat and
2,700 acres to dry peas. Diseases that inhibit wheat
yield dictate the rotation of a minimum acreage of
peas. Wheat sales accounted for 61 percent of 2020
receipts.
WAAW5500 South-central Washington (Adams County) is home to
this 5,500 acre, large-sized wheat farm. Annually,
this farm plants 2,600 acres of wheat in a wheat-
fallow rotation. Additionally, 300 acres are enrolled
in CRP. In 2020, 91 percent of the farm's income came
from wheat.
ORW4500 ORW4500 is a 4,500 acre large-sized grain farm
located in northeastern Oregon (Morrow County). This
farm plants 2,250 acres annually in a wheat-fallow
rotation. Eighty-six percent of this farm's 2020 total
receipts came from wheat sales.
MTW8000 North-central Montana (Chouteau County) is home to
this 9,500 acre farm on which 3,500 acres of wheat
(1,920 acres of winter wheat, 1,344 acres of spring
wheat, and 544 acres of Durham), 590 acres of barley,
and 1200 acres of dry peas are planted each year.
MTW8000 uses no-till production practices. In 2020, 50
percent of receipts came from wheat.
KSCW2000 South central Kansas (Sumner County) is home to
this 2,000 acre, moderate-sized grain farm. KSCW2000
plants 800 acres of winter wheat, 1,100 acres of
soybeans, 200 acres of cotton, and 500 acres of corn
each year. For 2020, 18 percent of gross receipts came
from wheat.
KSCW5300 A 5,300 acre, large-sized grain farm in south
central Kansas (Sumner County) that plants 2,385 acres
of winter wheat, 1,590 acres of corn, and 3,352 acres
of soybeans. Twenty-two percent of this farm's 2020
total receipts were generated from sales of winter
wheat.
KSNW4000 This is a 4,000 acre, moderate-sized northwest
Kansas (Thomas County) grain farm. This farm plants
1,200 acres of winter wheat (wheat-fallow rotation),
1,200 acres of corn, and 600 acres of sorghum. This
farm generated 33 percent of 2020 receipts from wheat
and 57 percent of its receipts from feed grains.
KSNW7000 KSNW7000 is a 7,000 acre, large-sized northwest
Kansas (Thomas County) grain farm that annually plants
1,700 acres of winter wheat, 3,770 acres of corn, 700
acres of sorghum, and 130 acres of soybeans. The farm
generated 16 percent of receipts from wheat and 74
percent from feed grains during 2020.
COW3000 A 3,000 acre northeast Colorado (Washington
County), moderate-sized farm that plants 1,012 acres
of winter wheat and 675 acres of corn each year.
COW3000 has adopted minimum tillage practices on most
of its acres. This farm generated 54 percent of its
receipts from wheat and 34 percent from corn.
COW6000 A 6,000 acre, large-sized northeast Colorado
(Washington County) wheat farm. It plants 2,000 acres
of wheat, 1,000 acres of millet, and 1,000 acres of
corn. During 2020, 50 percent of gross receipts came
from wheat sales and 23 percent came from corn sales.
------------------------------------------------------------------------
2020 Characteristics of Panel Farms Producing Cotton
------------------------------------------------------------------------
TXSP4500 The Texas South Plains (Dawson County) is home to
this 4,500 acre, large-sized cotton farm that grows
4,380 acres of cotton (2,880 dryland, 1,500
irrigated), and 120 irrigated acres of peanuts. Cotton
sales comprised 76 percent of 2020 receipts.
TXEC5000 This 5,000 acre farm is located on the Eastern
Caprock of the Texas South Plains (Crosby County).
Annually, 4,700 acres are planted to cotton (2,230
irrigated and 2,470 dryland) and 300 acres to dryland
wheat. In 2020, cotton sales accounted for 75 percent
of gross receipts.
TXRP3000 TXRP3000 is a 3,000 acre cotton farm located in the
Rolling Plains of Texas (Jones County). This farm
plants 1,800 acres of cotton and 1,200 acres of winter
wheat each year. The area is limited by rainfall, and
the farm uses a conservative level of inputs. Sixty-
five percent of 2020 farm receipts came from cotton
sales. Fifty head of beef cows generated three percent
of farm receipts.
TXMC2500 This 2,500 acre cotton farm is located on the
Coastal Plain of southeast Texas (Wharton County).
TXMC2500 farms 300 acres of sorghum, 1,455 acres of
cotton, and 655 acres of corn. In 2020, cotton sales
comprised 57 percent of total cash receipts on this
operation.
TXCB4000 A 4,000 acre cotton farm located on the Texas
Coastal Bend (San Patricio County) that farms 2,000
acres of cotton, 1,600 acres of sorghum, and 400 acres
of corn annually. Sixty percent of 2020 cash receipts
were generated by cotton.
TXCB10000 Nueces County, Texas is home to this 10,000 acre
farm. Annually, 5,000 acres are planted to cotton,
4,500 acres to sorghum, and 500 acres of corn. Cotton
sales accounted for 63 percent of 2020 receipts.
TXVC5500 This 5,500 acre farm is located in the lower Rio
Grande Valley of Texas (Willacy County) and plants
2,550 acres to cotton (425 irrigated and 2,125 acres
dryland), 2,295 acres to sorghum (170 irrigated and
2,125 dryland), and 255 acres of corn. In 2020, 42
percent of TXVC5500's cash receipts were generated by
cotton sales.
ARNC5000 This 5,000 acre farm is located in northern
Arkansas (Mississippi County) and plants 2,500 acres
to cotton, 500 acres to corn, 1,000 acres of soybeans,
and 1,000 acres to peanuts. In 2020, 44 percent of
ARNC5000's cash receipts were generated by cotton
sales.
TNC3000 A 3,000 acre, moderate-sized West Tennessee
(Fayette County) cotton farm. TNC3000 consists of 825
acres of cotton, 1,375 acres of soybeans, and 800
acres of corn. Cotton accounted for 29 percent of 2020
gross receipts, with corn and soybeans contributing 24
percent and 28 percent, respectively.
TNC4050 TNC4050 is a 4,050 acre, large-sized West Tennessee
(Haywood County) cotton farm. This farm plants 1,500
acres of cotton, 1,950 acres of soybeans, 550 acres of
corn, and 750 acres of wheat each year. During 2020,
cotton sales generated 34 percent of gross receipts.
ALC3 A 3,500 acre cotton farm located in northern
Alabama (Lawrence County) that plants 1,050 acres to
cotton, 1,050 acres to corn, 1,400 acres of soybeans
and 875 acres to wheat (double cropped with soybeans)
annually. This farm was early to adopt no-till
cropping practices. Cotton sales accounted for 27
percent of total farm receipts during 2020.
GAC2500 Southwest Georgia (Decatur County) is home to a
2,500 acre cotton farm that plants 1,250 acres to
cotton, 800 acres to peanuts, and 450 acres to corn.
In 2020, farm receipts were comprised of cotton sales
(36 percent), corn (15 percent), and peanut sales (33
percent). The farm also runs a 125 head beef cow herd,
generating 3 percent of 2020 receipts.
NCNP1600 A 1,600 acre diversified farm located in northern
North Carolina (Edgecombe County). NCNP1600 plants 320
acres of peanuts, 240 acres of corn, 640 acres of
cotton, and 400 acres of soybeans. Twenty-three
percent of receipts for this farm came from peanut
sales in 2020, 38 percent from cotton sales and 23
percent came from corn and soybean sales.
------------------------------------------------------------------------
2020 Characteristics of Panel Farms Producing Rice
------------------------------------------------------------------------
CAR1200 CAR1200 is a 1,200 acre moderate-sized rice farm in
the Sacramento Valley of California (Sutter and Yuba
Counties) that plants 1,200 acres of rice annually.
This farm generated 99 percent of 2020 gross receipts
from rice sales.
CAR3000 This is a 3,000 acre rice farm located in the
Sacramento Valley of California (Sutter and Yuba
Counties) that is large-sized for the region. CAR3000
plants 3,000 acres of rice annually. In 2020, 99
percent of gross receipts were generated from rice
sales.
CABR800 The Sacramento Valley (Butte County) is home to
CABR800, a 800 acre rice farm. CABR800 harvests 800
acres of rice annually, generating 99 percent of 2020
farm receipts from rice sales.
CACR800 CACR800 is an 800 acre rice farm located in the
Sacramento Valley of California (Colusa County). This
farm harvests 800 acres of rice each year. During
2020, 99 percent of farm receipts were realized from
rice sales.
TXR1500 This 1,500 acre rice farm located west of Houston,
Texas (Colorado County) is moderate-sized for the
region. TXR1500 harvests 600 acres of rice. The farm
generated 97 percent of its receipts from rice during
2020.
TXR3000 TXR3000 is a 3,000 acre, large-sized rice farm
located west of Houston, Texas (Colorado County). This
farm harvests 1,500 acres of rice annually. TXR3000
realized 98 percent of 2020 gross receipts from rice
sales.
TXBR1800 The Texas Gulf Coast (Matagorda County) is home to
this 1,800 acre rice farm. TXBR1800 generally plants
\1/3\ of its acres to rice annually and fallows the
remainder. The farm generated 98 percent of its
receipts from rice during 2020.
TXER2500 This 2,500 acre rice farm is located in the Texas
Gulf Coast (Wharton County). TXER2500 harvests 1,250
acres of rice each year. The farm also grows 1,250
acres of corn. Seventy-three percent of 2020 receipts
came from rice sales.
LAS A 2,000 acre southwest Louisiana (Acadia, Jeff
Davis, and Vermilion parishes) rice farm, LASR2000 is
moderate-sized for the area. This farm harvests 1,000
acres of rice and 200 acres of soybeans. During 2020,
58 percent of gross receipts were generated from rice
sales.
ARMR6500 ARMR6500 is a 6,500 acre diversified rice farm in
southeast Arkansas (Desha County) that plants 650
acres of rice, 3,900 acres of soybeans, and 1,950
acres of corn. For 2020, 10 percent of gross receipts
came from rice sales, 27 percent from corn sales, and
50 percent from soybean sales.
ARSR3240 ARSR3240 is a 3,240 acre, large-sized Arkansas
(Arkansas County) rice farm that harvests 1,458 acres
of rice, 1,458 acres of soybeans, and 324 acres of
corn each year. Fifty-five percent of this farm's 2020
receipts came from rice sales.
ARWR2500 East central Arkansas (Cross County) is home to
this 2,500 acre rice farm. Moderate-sized for the
region, ARWR2500 annually plants 1,250 acres each to
rice and soybeans. During 2020, rice sales generated
60 percent of gross receipts.
ARHR4000 ARHR4000 is a 4,000 acre large-sized northeast
Arkansas (Lawrence County) rice farm that annually
harvests 2,400 acres of rice, 1,400 acres of soybeans,
and 200 acres of corn. Rice sales accounted for 73
percent of 2020 farm receipts.
MSDR5000 MSDR5000 is a 5,000 acre Mississippi Delta (Bolivar
County) rice farm that annually harvests 1,667 acres
of rice and 3,333 acres of soybeans. Rice sales
accounted for 39 percent of 2020 farm receipts.
Soybeans account for 54 percent of receipts.
MOBR4000 MOBR4000 is a 4,000 acre Missouri Bootheal
(Pemiscot County) rice farm. The farm annually
harvests 1,320 acres of rice, 1,800 acres of soybeans
and 880 acres of corn. Rice sales accounted for 44
percent of farm receipts in 2020.
------------------------------------------------------------------------
2020 Characteristics of Panel Farms Producing Milk
------------------------------------------------------------------------
CAD2000 A 2,000 cow, large-sized central California (Tulare
County) dairy, the farm plants 975 acres of hay/silage
for which it employs custom harvesting. Milk sales
generated 81 percent of 2020 total receipts.
WAD300 A 300 cow, moderate-sized northern Washington
(Whatcom County) dairy. This farm plants 250 acres of
silage and generated 79 percent of its 2020 gross
receipts from milk sales.
WAD1200 A 1,200 cow, large-sized northern Washington
(Whatcom County) dairy. This farm plants 850 acres for
silage annually. During 2020, 80 percent of this
farm's gross receipts came from milk.
IDD1500 A 1,500 cow, large-sized dairy located in the Magic
Valley of Idaho (Twin Falls County). This farm plants
550 acres of corn silage and 300 acres of hay
annually. Milk sales account for 79 percent of 2020
gross receipts.
NVD1000 A 1,000 cow, moderate-sized Nevada (Churchill
County) dairy. This farm plants 475 acres of hay and
200 acres of corn silage annually. Milk sales
accounted for 85 percent of NVD1000's gross receipts
for 2020.
TXND3800 A 3,800 cow, large-sized dairy located in the South
Plains of Texas (Bailey County). This farm plants
1,920 acres of corn silage annually. Milk sales
account for 83 percent of 2020 gross receipts.
TXCD1500 A 1,500 cow, large-sized central Texas (Erath
County) dairy, TXCD1500 plants 366 acres of silage and
500 acres of hay annually. During 2020, milk sales
accounted for 85 percent of receipts.
TXED400 A 400 cow, moderate-sized northeast Texas (Hopkins
County) dairy. This farm has 200 acres of hay. During
2020, milk sales represented 77 percent of annual
receipts.
WID180 A 180 cow, moderate-sized eastern Wisconsin
(Winnebago County) dairy, the farm plants 120 acres of
silage, 50 acres for hay, 320 acres of corn, 100 acres
of wheat, and 180 acres of soybeans. Milk constituted
64 percent of this farm's 2020 receipts.
WID1700 A 1,700 cow, large-sized eastern Wisconsin
(Winnebago County) dairy, the farm plants 850 acres of
haylage, 1,000 acres of silage, 75 acres of soybeans,
150 acres of wheat, and 1,200 acres of corn. Milk
sales comprised 80 percent of the farm's 2020
receipts.
OHD350 A 350 cow, moderate-sized central Ohio (Gonzalez
County) dairy, the farm plants 575 acres of silage,
200 acres of corn, 50 acres of soybeans, and 50 acres
of wheat. Milk sales comprised 73 percent of the
farm's 2020 receipts.
NYWD400 A 400 cow, moderate-sized western New York (Wyoming
County) dairy. This farm plants 50 acres of corn, 750
acres of silage, and double crops 425 acres of haylage
annually. Milk sales accounted for 84 percent of the
gross receipts for this farm in 2020.
NYWD1200 A 1,200 cow, large-sized western New York (Wyoming
County) dairy. This farm plants 1,900 acres of silage
and 900 acres of corn annually. Milk sales accounted
for 85 percent of the gross receipts for this farm in
2020.
NYCD180 A 180 cow, moderate-sized central New York (Cayuga
County) dairy. This farm plants 200 acres of corn, and
350 acres of silage annually. Milk sales accounted for
70 percent of the gross receipts for this farm in
2020.
NYCD800 A 800 cow, large-sized central New York (Cayuga
County) dairy. This farm plants 950 acres of silage
and 850 acres of hay annually. Milk sales accounted
for 78 percent of the gross receipts for this farm in
2020.
VTD160 A 160 cow, moderate-sized Vermont (Washington
County) dairy. VTD160 plants 160 acres of hay and 260
acres of silage annually. Milk accounted for 79
percent of the 2020 receipts for this farm.
VTD400 A 400 cow, large-sized Vermont (Washington County)
dairy. This farm plants 75 acres of hay and 600 acres
of silage annually. Milk sales represent 71 percent of
VTD400's gross receipts in 2020.
MOGD550 A 550 cow, grazing dairy in southwest Missouri
(Dade County), the farm grazes cows on 300 acres of
improved pasture cut for hay. The dairy uses minimal
inputs with 9,000 lbs of milk per cow. Milk accounted
for 58 percent of gross farm receipts for 2020.
FLND A 550 cow, moderate-sized north Florida (Lafayette
County) dairy. The dairy grows 130 acres of hay and
200 acres of silage each year. All other feed
requirements are purchased in a pre-mixed ration. Milk
sales accounted for 76 percent of the 2020 farm
receipts.
FLSD A 1,750 cow, large-sized south-central Florida
(Okeechobee County) dairy, FLSD1750 plants 300 acres
of hay. Milk sales represent 84 percent of 2020 total
receipts.
------------------------------------------------------------------------
2020 Characteristics of Panel Farms Producing Beef Cattle
------------------------------------------------------------------------
NVB650 NVB650 is a 650 cow ranch located in northeastern
Nevada (Elko County). The operation consists of 1,300
acres of owned hay meadow and 8,725 acres of owned
range, supplemented by 3,560 AUMs of public land. Each
year, the ranch harvests 975 acres of hay. Annually,
cattle sales represent 78 percent of the ranch's
receipts.
NVSB550 NVSB550 is a 550 cow ranch located in southeastern
Nevada (Lincoln County). The operation consists of 125
acres of owned hay meadow and 375 acres of owned
range, supplemented by 7,600 AUMs of public land.
Annually, cattle sales represent 77 percent of the
ranch's receipts.
MTB600 A 600 cow ranch located on the eastern plains of
Montana (Custer County), MTB600 runs cows on a
combination of owned land and land leased from
Federal, state, and private sources. The ranch owns
14,000 acres of pasture. 800 acres of hay are produced
annually. Also, all deeded acres are leased for
hunting. Cattle sales represented 71 percent of this
ranch's 2020 receipts.
WYB475 This 475 cow ranch is located in north central
Wyoming (Washakie County). The ranch leases 2750 AUMs
from the U.S. Forest Service and owns 1,500 acres of
range. Annually, the ranch harvests 315 acres of
alfalfa and grass hay on owned ground. In 2020, cattle
sales accounted for 78 percent of gross receipts.
COB275 This 275 cow ranch is located in northwestern
Colorado (Routt County). Federal land provides seven
percent of the ranch's grazing needs. The ranch owns
2,300 acres of rangeland, and the cattle graze Federal
land during the summer. Cattle sales accounted for 51
percent of the ranch's 2020 total receipts.
NMB210 NMB210 is a 210 cow ranch located in northeastern
New Mexico (Union County). During 2020, 82 percent of
gross receipts were derived from cattle sales with the
balance of receipts generated from fee hunting.
SDB600 SDB600 is a 600 cow West River (Meade County, South
Dakota) beef cattle ranch. This operation produces hay
on 1,000 acres of owned cropland, and runs its cows on
6,500 acres of owned native range. In 2020, cattle
sales accounted for 83 percent of gross receipts.
MOB250 A 250 cow beef cattle operation is the focal point
of this diversified livestock and crop farm located in
southwest Missouri (Dade County). MOB250 plants 160
acres of corn, 160 acres of wheat, and 200 acres of
soybeans. Improved pasture makes up another 570 acres
of this ranch. During 2020, cattle sales comprised 38
percent of gross receipts.
TXRB400 The western Rolling Plains of Texas (King County)
is home to this 400 head cow-calf operation. This
ranch operates on 20,000 acres (half owned, half
leased) of native range. Seventy-one percent of 2020
receipts came from cattle sales, while 29 percent came
from fee hunting.
TXSB300 A 300 head cow-calf operation is the central focus
of this full-time agricultural operation in south
central Texas (Gonzales County). Contract broiler
production and hunting income are vital to the ranch's
viability. Cattle sales accounted for 74 percent of
2020 gross receipts.
OTHERS Five other representative farms have beef cattle
operations along with their crop production (MONG2300,
TXHG2700, TXWG1600, TXRP2500, and GAC2300). These
farming operations have from 40 to 300 cows. Cattle
contributed approximately 10 percent of gross receipts
for these farms in 2020.
------------------------------------------------------------------------
Appendix B--Representative Farm Panel Members and Facilitators
------------------------------------------------------------------------
------------------------------------------------------------------------
Feed Grain Farms
Indiana
Facilitators
Mr. Scott Gabbard--Extension Educator, Shelby County, Purdue
Cooperative Extension
Panel Participants
------------------------------------------------------------------------
Mr. David Brown Mr. Kevin Carson
Mr. Gary Everhart Mr. Andy Fix
Mr. Jason & Dan Foltz Ms. Carmen Hawk
Mr. Darrell Linville Mr. Gary Robards
Mr. Ken Simpson Ms. Angie Steinbarger
Mr. Doug Theobald Mr. Jeremy Weaver
------------------------------------------------------------------------
Iowa
Facilitators
Mr. Jerry Chizek--County Extension Director, Webster County
Panel Participants
------------------------------------------------------------------------
Mr. Doug Adams Mr. Brad Black
Mr. Dean Black Mr. Perry Black
Mr. A.J. Blair Mr. Gregg Hora
Mr. Tyler Lane Mr. Jay Lynch
Mr. Steve Peterson Mr. Doug Stanek
Mr. Jason Stanek Mr. Brent Wells
Mr. Kent Wuebker Mr. Loren Wuebker
------------------------------------------------------------------------
Missouri--Central
Facilitators
Mr. Parman Green
Panel Participants
------------------------------------------------------------------------
Mr. Joe Brockmeier Mr. Michael Brockmeier
Mr. Kevin Casner Mr. Mark Casner
Mr. Kyle Durham Mr. Dennis Germann
Mr. Todd Gibson Mr. Dale Griffith
Mr. Jack Harriman Mr. Todd Hensiek
Mr. Mike Hisle Mr. Preston Hisle
Mr. Glenn Kaiser Mr. Marc Kaiser
Mr. David Kipping Mr. Robert Kipping
Mr. Craig Linneman Mr. Mike Ritchhart
Mr. James Wheeler
------------------------------------------------------------------------
Missouri--Northwest
Facilitators
Mr. Peter Zimmel--FAPRI, University of Missouri
Panel Participants
------------------------------------------------------------------------
Mr. Terry Ecker Mr. Curtis Lewis
Mr. Russell Miller Mr. Matt Rosenbohm
Mr. Nick Rosenbohm Mr. Andrew Stoll
------------------------------------------------------------------------
Nebraska--Central
Facilitators
Ms. Sarah Sivits
Mr. Bruce Treffer--Extension Educator, Dawson County
Panel Participants
------------------------------------------------------------------------
Mr. Jim Aden Mr. Rob Anderson
Mr. Bart Beattie Mr. Greg Hueftle
Mr. Pat Luther Mr. Tim Maline
Mr. Clark McPheeters Mr. Scott McPheeters
Mr. Cody Peden Mr. Rod Reynolds
Mr. Dave Rowe Mr. Paul Stieb
Mr. Dan Strauss
------------------------------------------------------------------------
North Dakota
Facilitators
Mr. Randy Grueneich--County Extension Agent, North Dakota State
University
Dr. Bryon Parman--Extension Associate-Farm Management, North Dakota
State University
Panel Participants
------------------------------------------------------------------------
Mr. John Robert Anderson Mr. Eric Broten
Mr. Jim Broten Mr. Wade Bruns
Mr. Mike Clemens Mr. Mark Formo
Mr. Leland Guscette Mr. Rob Hanson
Mr. Jason Haugen Mr. Charlie Kreidelcamp
Mr. Greg Shanenko Mr. Anthony Thilmony
------------------------------------------------------------------------
Ohio
Facilitators
Mr. Ben Brown--Assistant Professor
Panel Participants
------------------------------------------------------------------------
Mr. Dean Bixel Mr. Scott Conrad
Mr. Mark Drewes Mr. Matt Eggers
Mr. Todd Hesterman Mr. Tim Holbrook
Mr. Eric Johnson Mr. Jeremy Tedrow
Mr. Kevin Thierry
------------------------------------------------------------------------
Ohio--Napoleon
Facilitators
Mr. Ben Brown--Assistant Professor
Panel Participants
------------------------------------------------------------------------
Mr. Dean Bixel Mr. Scott Conrad
Mr. Mark Drewes Mr. Matt Eggers
Mr. Todd Hesterman Mr. Tim Holbrook
Mr. Eric Johnson Mr. Jeremy Tedrow
Mr. Kevin Thierry
------------------------------------------------------------------------
South Carolina
Facilitators
Mr. Scott Mickey
Dr. Nathan Smith
Panel Participants
------------------------------------------------------------------------
Mr. Neal Baxley Ms. Vikki Brogdon
Mr. Chris Cogdill Mr. Harry DuRant
Mr. Sam DuRant Mr. Jason Gamble
Mr. Steven Gamble Mr. Barry Hutto
Mr. Tommy Lee Mr. Joe McKeower
Mr. John Michael Parimuha
------------------------------------------------------------------------
Tennessee--Trenton
Facilitators
Mr. Jeff Lannom--Extension Agent & County Director, Weakley County
Mr. Chris Narayanan
Mr. Philip Shelby--Extension Agent, Gibson County
Mr. Tim Smith--County Extension Agent, Obion County
Panel Participants
------------------------------------------------------------------------
Mr. Steven Agee Mr. Brent Baier
Mr. Kenneth Barnes Mr. Randy Boals
Mr. Mike Brundige Mr. John Chester
Mr. Kaleb Dinwiddie Mr. Mike Freeman
Mr. Bobby Garner Mr. Derek Griffin
Mr. Brent Griggs Mr. Gary Hall
Mr. Rob Holman Mr. Josh Little
Mr. Todd Littleton Mr. Jason Luckey
Mr. Ben Moore Mr. Scotty Ogg
Mr. David Oliver Mr. Eric Owen
Mr. John Parrish Mr. Eric Partee
Mr. Hedrick Shoaf Mr. Kevin Smethwick
Mr. Keith Steele Mr. Seth Taylor
Mr. James Wall Mr. Jody Wright
Mr. Jay Yeargin
------------------------------------------------------------------------
Texas--Northern Blackland Prairie
Facilitators
Mr. Zach Davis--County Extension Agent, Hill County
Panel Participants
------------------------------------------------------------------------
Mr. Chad Kaska Mr. Todd Kimbrell, Jr.
Mr. Chad Radke Mr. John Sawyer
------------------------------------------------------------------------
Texas--Northern High Plains
Facilitators
Mr. Marcel Fischbacher--County Extension Agent, Moore County
Panel Participants
------------------------------------------------------------------------
Mr. Tommy Cartrite Mr. Brent Clark
Mr. Justin Garrett Mr. Kelly Hays
Mr. Casey Kimbrell Mr. Tom Moore
Mr. Chandler Preston Mr. Jon Reznik
Mr. Stan Spain Mr. Darren Stallwitz
Mr. Dee Vaughan Ms. Linda Williams
------------------------------------------------------------------------
Texas--Panhandle
Facilitators
Mr. Rick Auckerman--County Extension Agent, Texas Cooperative
Extension
Panel Participants
------------------------------------------------------------------------
Mr. Michael Carlson Mr. Roy Carlson
Mr. Greg Chavez Mr. Steve Hoffman
Mr. Bob Meyer Mr. Tom Schlabs
------------------------------------------------------------------------
Texas--Southern Blackland Prairie
Facilitators
Mr. Cooper Terrill--County Extension Agent, Williamson County
Panel Participants
------------------------------------------------------------------------
Mr. Terry Pekar Mr. Herbert Raesz
Mr. Ken Seggern
------------------------------------------------------------------------
Texas--Southwest
Facilitators
M[s]. Samantha Korzekwa--County Extension Agent, Uvalde County
Panel Participants
------------------------------------------------------------------------
Mr. Jimmy Carnes Mr. Ralph Hesse
Mr. Mark Landry Mr. Danny Parker
------------------------------------------------------------------------
Wheat Farms
Colorado
Facilitators
Mr. John Deering--Ag Business Agent, North Star Bank
Mr. Dennis Kaan--Director, Golden Plains Area Extension, Colorado
State University
Panel Participants
------------------------------------------------------------------------
Mr. Rollie Deering Mr. Ward Deering
Mr. David Foy Mr. Dale Hansen
Mr. William Harman Mr. Barry Hinkhouse
Mr. Terry Kuntz Mr. Shane Leoffler
Mr. Dave Lillich Mr. Max Olsen
Ms. Sara Olsen Mr. Ken Remington
Mr. Craig Saxton Mr. Calvin Schaffert
Mr. Harlan Schaffert Mr. Dave Wagers
Mr. John Wright
------------------------------------------------------------------------
Kansas--Northwest
Facilitators
Dr. Dan O'Brien--Area Extension Director, Kansas State University
Mr. Mark Wood--Extension Agricultural Economist, Kansas Farm Mgmt.
Association
Panel Participants
------------------------------------------------------------------------
Mr. Tanner Brown Mr. Steve Busse
Rich Calliham Mr. Richard Calliham
Mr. Sam Crouse Mr. Aaron Horinek
Mr. Lee Juenemann Mr. Brian Laufer
Mr. Lance Leebrick Mr. Steve Schertz
------------------------------------------------------------------------
Kansas--South Central
Facilitators
Mr. Randy Hein--County Extension Agent, Sumner County
Mr. Zach Simon--County Extension Agent, Sedgwick County
Panel Participants
------------------------------------------------------------------------
Mr. Colton Day Mr. Dennis Gruenbacher
Mr. Doug Hisken Mr. Aaron Lange
Mr. Kent Ott Mr. Steve Schmidt
Mr. Mike Slack Mr. Nick Steffen
Troy & Julia Strnad Mr. Tim Turek
Mr. Robert White
------------------------------------------------------------------------
Montana--North Central
Facilitators
Mr. Lochiel Edwards
Panel Participants
------------------------------------------------------------------------
Mr. Darin Arganbright Mr. Steve Bahnmiller
Mr. Duane Beirwagen Mr. Will Roehm
Mr. Dan Works
------------------------------------------------------------------------
Oregon--North Central
Facilitators
Jon Farquharson
Panel Participants
------------------------------------------------------------------------
Mr. Dana Heideman Mr. Bill Jepsen
Mr. Joe McElligott Mr. Craig Miles
Mr. Eric Orem Mrs. Shannon Rust
Mr. Tim and Shannon Rust
------------------------------------------------------------------------
Washington
Facilitators
Mr. Aaron Esser--County Director, WSU Extension
Panel Participants
------------------------------------------------------------------------
Mr. Trevor Jantz Mr. Ron Jirava
Mr. Mike Miller Mr. Justin Simonson
Mr. Travis Simonson Mr. Tim Smith
Mr. Traven Smith Mr. Steve Taylor
------------------------------------------------------------------------
Washington--Palouse
Facilitators
Dr. Janet Schmidt--Extension Faculty, Washington State University
Mr. Steve Van Vleet--Extension Agronomist, Washington State University
Panel Participants
------------------------------------------------------------------------
Mr. Ben Barstow Mr. Asa Clark
Mr. Gavin Clark Mr. Scot Cocking
Mr. Aaron Gfeller Mr. David Harlow
Ms. Kenda Hergert Mr. Dean Kinzer
Ms. Heidi Kopf Mr. Brian Largent
Mr. Gary Largent Mr. Michael Largent
Mr. Steve Mader Ms. Amy McKay
Mr. Clark Miller Mr. Bruce Nelson
Mr. Chris Schultheis Mr. David Swannack
Mr. Steve Teade Mr. Jon Whitman
------------------------------------------------------------------------
Cotton Farms
Alabama
Panel Participants
------------------------------------------------------------------------
Mr. James Blythe Mr. Paul Clark
Mr. Jarred Darnell Dr. Steve Ford
Mr. William Lee Ms. Larkin Martin
------------------------------------------------------------------------
Arkansas
Facilitators
Mr. Ray Benson
Mr. Ronnie Kennett
Dr. Brad Watkins--Research Assistant Professor, U. of Arkansas
Cooperative Extension
Panel Participants
------------------------------------------------------------------------
Mr. Chad Costner Mr. Heath Donner
Mr. Todd Edwards Mr. Cole Hawkins
Mr. Justin Hawkins Mr. Kenny Jackson
Mr. David Wildy
------------------------------------------------------------------------
Georgia--Southwest
Facilitators
Ms. Nan Bostick--County Extension Coordinator, Decatur County
Mr. Cody Powell
Dr. Adam Rabinowitz
Panel Participants
------------------------------------------------------------------------
Mr. Andy Bell Mr. Jerry Jones
Mr. Greg Mims Mr. Willard Mims
Mr. Brad Thompson Mr. Raymond Thompson
------------------------------------------------------------------------
North Carolina
Facilitators
Mr. Daryl Anderson--County Extension Agent
Dr. Blake Brown
Mr. Gary Bullen
Mr. Kevin Johnson--County Extension Director, Wayne County
Panel Participants
------------------------------------------------------------------------
Mr. Landis Brantham, Jr. Mr. Michael Gray
Mr. Willie Howell Mr. David B. Mitchell, Sr.
Mr. Danny C. Pierce Mr. Craig West
Mr. Bryant Worley
------------------------------------------------------------------------
South Carolina
Facilitators
Mr. Jonathan Croft
Mr. Scott Mickey
Dr. Nathan Smith
Panel Participants
------------------------------------------------------------------------
Mr. Jimmie Griner Mr. Dean Hutto
Mr. John McLaurin Mr. David Tindal
Mr. Landrum Weathers
------------------------------------------------------------------------
Tennessee
Facilitators
Mr. Walter Battle--Co-Director, Haywood County Extension
Mr. Chuck Danehower--Extension Area Specialist, Farm Management
Mr. Chris Narayanan
Mr. Tyson Raper
Ms. Lindsay Stephenson-Griffin
Mr. Jeff Via--County Extension Director, Fayette County
Panel Participants
------------------------------------------------------------------------
Mr. Alex Armour Mr. Chuck Dacus
Mr. R. Morris English, Jr. Mr. Willie German
Mr. Lee Graves Mr. Dewayne Hendrix
Mr. Ed Karcher Mr. Rob Karcher
Mr. Allen King Mr. John King
Mr. Travis Lonon Mr. Kinney McRae
Mr. Hassell Smith Mr. Ronald Woods
------------------------------------------------------------------------
Texas--Coastal Bend
Facilitators
Mr. Bobby McCool--County Extension Agent, San Patricio County and
Aransas County
Mr. Mark Miller--Chief Operations Officer, Texas AgFinance
Mr. Jeff Nunley--Executive Director, South Texas Cotton & Grain
Association
Mr. Jason Ott--County Extension Agent, Nueces County
Mr. John Parker--Vice President, Texas AgFinance
Panel Participants
------------------------------------------------------------------------
Mr. Travis Adams Mr. Marvin Beyer, Jr.
Mr. Colin Chopelas Mr. Jimmy Dodson
Mr. Jon Gwynn Mr. Darrell Lawhon
Mr. Larry McNair Mr. Andrew Miller
Mr. Toby Robertson Mr. Darby Salge
Mr. David Weaver Mr. Jon Whatley
------------------------------------------------------------------------
Texas--Eastern Caprock
Facilitators
Ms. Caitlin Jackson
Panel Participants
------------------------------------------------------------------------
Mr. Lloyd Arthur Mr. Brooks Ellison
Mr. Mark Schoepf Mr. Conner Wilmeth
------------------------------------------------------------------------
Texas--Mid Coast
Facilitators
Mr. Jeff Nunley--Executive Director, South Texas Cotton & Grain
Association
Mr. Jimmy Roppolo--General Manager, United Ag
Panel Participants
------------------------------------------------------------------------
Mr. Daniel Gavranovic Mr. Duane Lutringer
Mr. Cedric Popp Mr. Michael Popp
Mr. Darrell Schoeneberg Mr. Mike Watz
------------------------------------------------------------------------
Texas--Rio Grande Valley
Facilitators
Mr. Matthew Rodriguez--County Extension Agent
Panel Participants
------------------------------------------------------------------------
Mr. Jerry Chappell Mr. Joe Pennington
Mr. Spence Pennington Mr. Ivan Salazar
Mr. Zachary Swanberg Mr. Mark Willis
------------------------------------------------------------------------
Texas--Rolling Plains
Facilitators
Mr. Steven Estes--County Extension Agent, Texas AgriLife Extension
Panel Participants
------------------------------------------------------------------------
Mr. Larry Lytle Mr. Michael McLellan
Mr. Cody Roberts Mr. Brian Sandbothe
Mr. Mike Sloan Mr. Dale Spurgin
Mr. Rick Vickers Mr. Ferdie Walker
Mr. Terry White
------------------------------------------------------------------------
Texas--Southern High Plains
Facilitators
Mr. Gary Roschetzky--County Extension Agent, Dawson County
Panel Participants
------------------------------------------------------------------------
Mr. Terry Coleman Mr. Will Cozart
Mr. Kirk Tidwell Mr. Johnny Ray Todd
Mr. Donald Vogler Mr. David Warren
------------------------------------------------------------------------
Rice Farms
Arkansas
Facilitators
Mr. Chuck Capps
Mr. Steve Kelley
Mr. Steven Stone
Dr. Brad Watkins--Research Assistant Professor, U. of Arkansas
Cooperative Extension
Mr. Gus Wilson
Panel Participants
------------------------------------------------------------------------
Mr. John Gates Mr. Andrew Gill
Mr. Andy Gill Mr. Tad Keller
Mr. Joe Mencer Mr. Matt Miles
Mr. Jim Whitaker Mr. Sam Whitaker
------------------------------------------------------------------------
Arkansas--East Central-Arkansas County
Facilitators
Mr. Bill Free--Riceland Foods, Inc.
Dr. Brad Watkins--Research Assistant Professor, U. of Arkansas
Cooperative Extension
Panel Participants
------------------------------------------------------------------------
Mr. Brandon Bauman Mr. Derek Bohanan
Mr. Monty Bohanan Mr. Dusty Hoskyn
Mr. Stephen Hoskyn Mr. David Jessup
Mr. Garth Jessup
------------------------------------------------------------------------
Arkansas--East Central-Cross County
Facilitators
Dr. Brad Watkins--Research Assistant Professor, U. of Arkansas
Cooperative Extension
Mr. Rick Wimberley--County Extension Agent--Staff Chair, U. of
Arkansas Cooperative
Panel Participants
------------------------------------------------------------------------
Mr. Corbin Brown Mr. John Cooper
Mr. Byron Holmes, Jr. Mr. Bryan Moery
Mr. Roger Pohlner
------------------------------------------------------------------------
Arkansas--Northeast-Lawrence County
Facilitators
Mr. Michael Andrews
Mr. Bryce Baldridge
Ms. Courtney Sisk
Dr. Brad Watkins--Research Assistant Professor, U. of Arkansas
Cooperative Extension
Panel Participants
------------------------------------------------------------------------
Mr. Greg Baltz Mr. Jeremy Baltz
Mr. Ricky Burris Mr. Ronald Cavenaugh
Mr. Doug Cox Mr. Bruce Manning
Mr. Joe Richardson Mr. Vic Stone
------------------------------------------------------------------------
California--Butte County
Facilitators
Dr. Luis Espino
Mr. Tim Johnson--President and CEO, California Rice Commission
Panel Participants
------------------------------------------------------------------------
Mr. Seth Fiack Mr. Imran Khan
Mr. Peter Rystrom Mr. Josh Sheppard
Mr. Derek Sohnrey
------------------------------------------------------------------------
California--Colusa County
Facilitators
Dr. Luis Espino
Mr. Tim Johnson--President and CEO, California Rice Commission
Panel Participants
------------------------------------------------------------------------
Mr. Don Bransford Ms. Kim Gallagher
Mr. Leo LaGrande Mr. Charles Marsh
Mr. Alex Struckmeyer
------------------------------------------------------------------------
California--Sutter County
Facilitators
Ms. Whitney Brim-DeForest--UCCE Farm Advisor
Mr. Tim Johnson
Panel Participants
------------------------------------------------------------------------
Mr. Bard Anderson Mr. Paul Baggett
Mr. Tom Butler Mr. Mike DeWit
Mr. Ned Lemenager Mr. Charley Mathews
Mr. Jon Munger Mr. Rick Nelson
Mr. Michael Rue Mr. Don Traynham
Mr. Rob Van Dyke Ms. Nicole Van Vleck
------------------------------------------------------------------------
Louisiana--Northeast
Facilitators
Mr. Scott Franklin
Panel Participants
------------------------------------------------------------------------
Mr. Ed Greer Mr. Heath Herring
Mr. Jim Lingo Mr. Jon Michael
------------------------------------------------------------------------
Livingston
------------------------------------------------------------------------
Mr. John Owen Mr. Russ Ratcliff
------------------------------------------------------------------------
Louisiana--Southwest-Acadiana
Panel Participants
------------------------------------------------------------------------
Mr. Al Cramer Mr. Tommy Faulk
Mr. David Lacour Mr. Alan Lawson
Mr. Jackie Loewer Mr. Micah Loewer
Mr. Christian Richard Mr. Fred Zaunbrecher
------------------------------------------------------------------------
Mississippi--Cleveland
Facilitators
Dr. Larry Falconer--Extension Professor
Mr. Craig hankins--Extension Agent
Panel Participants
------------------------------------------------------------------------
Mr. Michael Aguzzi Mr. Austin Davis
Mr. Gary Fioranelli Mr. Randy Howarth
Mr. Kirk Satterfield
------------------------------------------------------------------------
Missouri
Facilitators
Mr. Trent Haggard--Director, Fisher Delta Research Center
Panel Participants
------------------------------------------------------------------------
Mr. John Anderson Mr. Alex Clark
Mr. Rance Daniels Mr. Russ Hoggard
Mr. Jim Priggel Mr. Will Spargo
------------------------------------------------------------------------
Texas--Bay City-Matagorda County
Panel Participants
------------------------------------------------------------------------
Mr. Donnie Bulanek Mr. Barrett Franz
Mr. Billy Mann Mr. Curt Mowery
Mr. Bob Reed Mr. Joey Sliva
Mr. Paul Sliva
------------------------------------------------------------------------
Texas--Eagle Lake-Colorado County
Panel Participants
------------------------------------------------------------------------
Mr. Andy Anderson Mr. Kenneth Danklefs
Mr. W.A. ``Billy'' Hefner III Mr. Jason Hlavinka
Mr. Ira Lapham Mr. Patrick Pavlu
Mr. Bryan Wiese
------------------------------------------------------------------------
Texas--El Campo-Wharton County
Panel Participants
------------------------------------------------------------------------
Mr. Daniel Berglund Mr. Timothy Gertson
Mr. Mark Rasmussen Mr. L.G. Raun
Mr. Glen Rod Mr. Tommy Turner
------------------------------------------------------------------------
Dairy Farms
California
Facilitators
Dr. J.P. Martins
Panel Participants
------------------------------------------------------------------------
Mr. Steve Gaspar Mr. Dino Giacomazzi
Mr. Claudio Ribeiro Mr. Jeff Wilbur
------------------------------------------------------------------------
Florida--North
Facilitators
Ms. Mary Sowerby--Regional Dairy Extension Specialist, UofF Extension
Mr. Chris Vann--County Extension Agent, Lafayette County
Panel Participants
------------------------------------------------------------------------
Mr. Johan Heijkoop Mr. Everett Kerby
Mr. Rod Land Mr. Terry Reagan
Mr. Klaas Reynevelds Mr. George Wedsted
------------------------------------------------------------------------
Florida--South
Facilitators
Mr. Ray Hodge--Director of Govt. Relations, Southeast Milk
Panel Participants
------------------------------------------------------------------------
Mr. Ben Butler Mr. Bob Butler
Mr. Jacob Larson Mr. Woody Larson
Mr. Tony Moens Mr. Keith Rucks
Mr. Sutton Rucks, Jr. Mr. Glynn Rutledge
Mr. Tommy Watkins
------------------------------------------------------------------------
Idaho
Facilitators
Mr. Rick Naerebout--Executive Director, Idaho Dairymen's Association
Panel Participants
------------------------------------------------------------------------
Mr. Willie Bokma Mr. Christopher Stevenson
Mr. Ted Vander Scheaf Mr. Pete Wiersma
------------------------------------------------------------------------
Missouri
Facilitators
Mr. Stacey Hamilton--Dairy Specialist and Dade Co. Program Director
Panel Participants
------------------------------------------------------------------------
Mr. Niall Murphy Mr. Gary Nolan
Mr. Bernie Van Dalfsen Mr. Zach Ward
Mr. Craig Zydenbos
------------------------------------------------------------------------
Nevada--Fallon
Facilitators
Mr. Bob Fletcher
Dr. Tom Harris--Dept. of Resource Econ, University of Nevada
Ms. Pam Powell--Extension Agent
Panel Participants
------------------------------------------------------------------------
Mr. Pete Homma Mr. Cameron Mills
Mr. Alan Perazzo Mr. David Perazzo
Mr. Charles Turner Mr. Jeff Whitaker
------------------------------------------------------------------------
New York--Central
Facilitators
Ms. Betsy Hicks
Panel Participants
------------------------------------------------------------------------
Mr. Eric Carey Ms. Amanda Fitzsimmons
Mr. and Mrs. Mike McMahon Mr. Kenton Patchen
Mr. & Mrs. Todd & Josie Spencer Mr. Zach Young
------------------------------------------------------------------------
New York--Western
Facilitators
Ms. Joan Petzen--Farm Business Mngt. Specialist, Cornell Cooperative
Extension
Panel Participants
------------------------------------------------------------------------
Ms. Tammy Andrews Mr. Benjamin Chamberlain
Mr. Gerry Coyne Mr. Malachy Coyne
Mr. Peter Dueppengiesser Ms. Kitty Dziedzic
Mr. John Emerling Mr. Walter Faryna
Mr. Tom and Bill Fitch Mr. Craig Harkins
Ms. Sarah Keem Mr. John Knopf
Mr. Jeff Mulligan Ed & Jody Neal
Mr. John Noble Mr. Lyman Rodgers
Mr. Steve Sondericker Ms. Cyndy Van Lieshout
Mr. Ken Van Slyke
------------------------------------------------------------------------
Ohio--Wooster
Facilitators
Ms. Dianne Shoemaker
Panel Participants
------------------------------------------------------------------------
Ms. Jenny Bernhard Mr. Gary Dotterer
Mr. Henry Hughes Mr. Joe Miley
Ms. Joan Winkler Ms. Rebecca Winkler
------------------------------------------------------------------------
Texas--Central
Facilitators
Mr. Lonnie Jenschke--County Agent, TexasAgriLife Extension
Dr. Jason Johnson--Area Economist, TexasAgriLIfe Extension
Panel Participants
------------------------------------------------------------------------
Mr. Frans Beukeboom Ms. Linda Beukeboom
Mr. Johann DeBoer Mr. Johan Koke
Mr. Clemens Kuiper Mr. Joseph Osinga
Mr. Henk Postmus
------------------------------------------------------------------------
Texas--Northeast
Facilitators
Dr. Mario Villarino--County Agent, Texas Cooperative Extension
Panel Participants
------------------------------------------------------------------------
Mr. Alan Bullock Mr. Blake Fisher
Mr. Don Smith Mr. Jerry Spencer
Mr. Mark Sustaire
------------------------------------------------------------------------
Texas--South Plains
Facilitators
Ms. Janet Claborn--Director of Economic Development
Mr. Curtis Preston--County Extension Agent Bailey County
Panel Participants
------------------------------------------------------------------------
Mr. Tom Alger Mr. Matt Beckerink
Mr. Larry Hancock Mr. David Lawerence
Mr. Reed Mulliken Mr. Joe Osterkamp
Mr. Bob Wade
------------------------------------------------------------------------
Vermont
Facilitators
Dr. Bob Parsons--Asst. Professor--Farm Management, University of
Vermont
Panel Participants
------------------------------------------------------------------------
Mr. Paul Bourbeau Mr. David & Deb Conant
Mr. Ashley Farr Mr. Ted Foster
Mr. Steven Jones Mrs. Polly McEwing
Mr. Les Pike Mrs. Kathrine Scribner
Mr. Onan Whitcomb
------------------------------------------------------------------------
Washington
Facilitators
Dr. Amber Itle
Dr. Susan Kerr--Dairy Extension Specialist, WSU
Panel Participants
------------------------------------------------------------------------
Mr. John/Rich Appel Mr. Ed Blok
Mr. Rod & Jon De Jong Mr. Larry DeHaan
Mr. Troy Lenssen Mr. Sherman Polinder
Mr. Ed Pomeroy Mr. Jeff Rainey
Mr. Galen Smith Mr. John Steensma
Mr. Harold Van Berkum Mr. Jerry Van Dellen
Mr. Peter Vlas
------------------------------------------------------------------------
Wisconsin
Facilitators
Ms. Tina Kohlman
Panel Participants
------------------------------------------------------------------------
Mr. David Beck Mr. Mark Breunig
Mr. John Diedrichs Ms. Gooitske Dijkstra
Mr. Roger Grade Mr. Ben Hesselink
Mr. Clint Hodorff Mr. Corey Hodorff
Ms. Linda Hodorff Mr. Matt Hunter
Mr. Randy Julka Mr. Jim Kasten
Mr. and Mrs. Charlie Knigge Mr. Pete Knigge
Mr. Jeff Liner Mr. Chris Pollack
Mr. Jeff Reiden Mr. Jim Rickert
Mr. John Ruedinger Mr. Steve Smits
Mr. Rob Stone Mr. Jason Vorpahl
Mr. Bill & Tammy Wiese
------------------------------------------------------------------------
Beef Producers
California
Facilitators
Mr. Josh Davy--Livestock and Natural Resources Rep., UC-Davis
Extension
Mr. Larry Forero--Farm Advisor, Livestock and Natl. Res., California
Cooperative Extension
Mr. Glenn Nader--Farm Advisor, Livestock and Natl. Res., California
Cooperative Extension
Panel Participants
------------------------------------------------------------------------
Mr. Jerry Hemsted Mr. Ron Masingale
Mr. Dick O'Sullivan Mr. Wally Roney
Mr. Britt Schumacher
------------------------------------------------------------------------
Colorado
Facilitators
Mr. Todd Hagenbuch--County Extension Agent, Routt County
Mr. CJ Mucklow--Western Region Director
Panel Participants
------------------------------------------------------------------------
Mr. Doug Carlson Mr. Jay Fetcher
Mr. Larry Monger Mr. Dustin Neelis
Mr. Jim Rossi Mr. Phillip Rossi
Ms. Kathy Smith Mr. Justin Warren
------------------------------------------------------------------------
Florida
Panel Participants
------------------------------------------------------------------------
Mr. Mike Adams Mr. Wes Carlton
Mr. Alan Kelley Mr. Cary Lightsey
Mr. Ralph Pelaez Mr. Bert Tucker
Dr. Fred Tucker Mr. Wes Williamson
------------------------------------------------------------------------
Missouri--Southwest
Facilitators
Mr. Brian Gillen--Agricultural Science Instructor, Lockwood High
School
Panel Participants
------------------------------------------------------------------------
Mr. Marc Allison Mr. Steve Allison
Mr. Scott Daniel Mr. Randall Erisman
Mr. James A. Nivens Mr. Mike Theurer
Mr. Gary D. Wolf
------------------------------------------------------------------------
Montana
Facilitators
Mr. Michael Schuldt--County Extension Agent, Custer County
Panel Participants
------------------------------------------------------------------------
Mr. Clarence Brown Mr. Art Drange
Mr. Levi Foreman Mr. Kendall Groer
Mr. Alyn Haughian Mr. Scot Robinson
Mr. Andy Zook
------------------------------------------------------------------------
Nevada
Facilitators
Dr. Tom Harris--Dept. of Resource Econ, University of Nevada
Dr. Ron Torell--Custom A.I. & Ranch Consulting
Panel Participants
------------------------------------------------------------------------
Mr. Tom Barnes Mr. and Mrs. Brad & Dani Dalton
Mr. and Mrs. Jay Dalton Mr. Jon Griggs
Mr. and Mrs. Mitch & Rhonda Mr. Pete Mori
Mr. and Mrs. Sam Mori Mr. and Mrs. Ed Sarman
Mr. Paul Sarman Mr. and Mrs. Craig Spratling
------------------------------------------------------------------------
Nevada--Caliente
Facilitators
Ms. Holly Gatzke
Dr. Tom Harris--Dept. of Resource Econ, University of Nevada
Panel Participants
------------------------------------------------------------------------
Mr. Pete Delmue Mr. Sam Higbee
Ms. Kena Lytle-Gloeckner Mr. Robert Mathews
------------------------------------------------------------------------
New Mexico
Facilitators
Ms. Talisha Valdez--County Extension Agent, Union County
Panel Participants
------------------------------------------------------------------------
Mr. Justin Bennett Mr. Damon Brown
Mr. Blair Clavel Mr. John Gilbert
Mr. Russell Kear Mr. J.C. Miller
Mr. Red Miller Mr. John Vincent
Mr. Derek Walker
------------------------------------------------------------------------
South Dakota
Facilitators
Ms. Adele Harty
Panel Participants
------------------------------------------------------------------------
Mr. Kory Bierle Mr. Reed Cammack
Mr. Jim Cantrell Mr. Gary Clanton
Mr. Casey Doud Mr. Josh Geigle
Ray & Linda Gilbert Mr. Riley Kammerer
Mr. Willis Kopren Mr. Sam Smith
Mr. Andrew Snyder Mr. Monty Williams
------------------------------------------------------------------------
Texas--Rolling Plains
Facilitators
Mr. Thomas Boyle--County Extension Agent, Dickens County
Mr. Toby Oliver--County Extension Agent, King County
Panel Participants
------------------------------------------------------------------------
Mr. Greg Arnold Hon. Duane Daniel
Mr. Steve Drennan Mr. Leland Foster
Mr. Glenn Springer
------------------------------------------------------------------------
Texas--South
Facilitators
Mr. Dwight Sexton--County Extension Agent, Gonzales County
Panel Participants
------------------------------------------------------------------------
Mr. Jason Breitschopf Mr. Michael Ehrig
Mr. Brian Fink Mr. Mitchell Hardcastle
Mr. Michael Kuck Mr. Billy Parker
------------------------------------------------------------------------
Wyoming--Worland
Facilitators
Mr. Jim Gill--Senior University Extension Educator, Washakie County
Panel Participants
------------------------------------------------------------------------
Mr. Matt Brown Ms. Teresa Brown
Mr. Maurice Bush Mr. Tim Flitner
Mr. Dan Rice Mr. Gary Rice
------------------------------------------------------------------------
Peanut Farms
North Carolina--Conway
Facilitators
Dr. Blake Brown
Mr. Gary Bullen
Mr. Bob Sutter
Panel Participants
------------------------------------------------------------------------
Mr. Clarke Fox Mr. Ray Garner
Mr. Wayne Harrell Mr. Donny Lassiter
Mr. Brad West Mr. Donnie White
------------------------------------------------------------------------
North Carolina--Elizabethtown
Facilitators
Dr. Blake Brown
Mr. Gary Bullen
Mr. Matthew Strickland
Mr. Bob Sutter
Panel Participants
------------------------------------------------------------------------
Mr. Robert Byrd Mr. Wade Byrd
Mr. Jart Hudson Mr. Alex Jordan
Mr. Dan McDuffie Mr. Sean Morris
Mr. Dan Ward Mr. Wilbur Ward
------------------------------------------------------------------------
Mention of a trademark or a proprietary product does not
constitute a guarantee or a warranty of the product by Texas
AgriLife Research or Texas AgriLife Extension Service and does
not imply its approval to the exclusion of other products that
also may be suitable.
All programs and information of Texas A&M AgriLife Research
or Texas A&M AgriLife Extension Service are available to
everyone without regard to race, color, religion, sex, age,
handicap, or national origin.
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