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108th Congress                                            Rept. 108-750
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

======================================================================
 
              SPECIALTY CROPS COMPETITIVENESS ACT OF 2004

                                _______
                                

October 6, 2004.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Goodlatte, from the Committee on Agriculture, submitted the 
                               following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 3242]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Agriculture, to whom was referred the bill 
(H.R. 3242) to ensure an abundant and affordable supply of 
highly nutritious fruits, vegetables, and other specialty crops 
for American consumers and international markets by enhancing 
the competitiveness of United States-grown specialty crops, and 
for other purposes, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.
  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Specialty Crops Competitiveness Act of 
2004''.

SEC. 2. FINDINGS AND PURPOSE.

  (a) Findings.--Congress finds the following:
          (1) A secure domestic food supply is a national security 
        imperative for the United States.
          (2) A competitive specialty crop industry in the United 
        States is necessary for the production of an abundant, 
        affordable supply of highly nutritious fruits, vegetables, and 
        other specialty crops, which are vital to the health and well-
        being of all Americans.
          (3) Increased consumption of specialty crops will provide 
        tremendous health and economic benefits to both consumers and 
        specialty crop growers.
          (4) Specialty crop growers believe that there are numerous 
        areas of Federal agriculture policy that could be improved to 
        promote increased consumption of specialty crops and increase 
        the competitiveness of producers in the efficient production of 
        affordable specialty crops in the United States.
          (5) As the globalization of markets continues, it is becoming 
        increasingly difficult for United States producers to compete 
        against heavily subsidized foreign producers in both the 
        domestic and foreign markets.
          (6) United States specialty crop producers also continue to 
        face serious tariff and non-tariff trade barriers in many 
        export markets.
  (b) Purpose.--It is the purpose of this Act to make necessary changes 
in Federal agriculture policy to accomplish the goals of increasing 
fruit, vegetable, and nut consumption and improving the competitiveness 
of United States specialty crop producers.

SEC. 3. DEFINITIONS.

  In this Act:
          (1) The term ``specialty crop'' means fruits and vegetables, 
        tree nuts, dried fruits, and nursery crops (including 
        floriculture).
          (2) The term ``State'' means the several States, the District 
        of Columbia, and the Commonwealth of Puerto Rico.
          (3) The term ``State department of agriculture'' means the 
        agency, commission, or department of a State government 
        responsible for agriculture within the State.

             TITLE I--STATE ASSISTANCE FOR SPECIALTY CROPS

SEC. 101. SPECIALTY CROP BLOCK GRANTS.

  (a) Availability and Purpose of Grants.--Subject to the appropriation 
of funds to carry out this section, the Secretary of Agriculture shall 
make grants to States for each of the fiscal years 2005 through 2009 to 
be used by State departments of agriculture solely to enhance the 
competitiveness of specialty crops.
  (b) Grants Based on Value of Production.--Subject to subsection (c), 
the amount of the grant for a fiscal year to a State under this section 
shall bear the same ratio to the total amount appropriated pursuant to 
the authorization of appropriations in subsection (i) for that fiscal 
year as the value of specialty crop production in the State during the 
preceding calendar year bears to the value of specialty crop production 
during the preceding calendar year in all States whose application for 
a grant for that fiscal year is accepted by the Secretary under 
subsection (f).
  (c) Minimum Grant Amount.--Subject to the appropriation of sufficient 
funds to carry out this subsection, each State shall receive at least 
$100,000 each fiscal year as a grant under this section notwithstanding 
the amount calculated under subsection (b) for the State.
  (d) Eligibility.--To be eligible to receive a grant under this 
section, a State department of agriculture shall prepare and submit, 
for approval by the Secretary of Agriculture, an application at such 
time, in such a manner, and containing such information as the 
Secretary shall require by regulation, including--
          (1) a State plan that meets the requirements of subsection 
        (e);
          (2) an assurance that the State will comply with the 
        requirements of the plan; and
          (3) an assurance that grant funds received under this section 
        shall supplement the expenditure of State funds in support of 
        specialty crops grown in that State, rather than replace State 
        funds.
  (e) Plan Requirements.--The State plan shall identify the lead agency 
charged with the responsibility of carrying out the plan and indicate 
how the grant funds will be utilized to enhance the competitiveness of 
specialty crops.
  (f) Review of Application.--In reviewing the application of a State 
submitted under subsection (d), the Secretary of Agriculture shall 
ensure that the State plan would carry out the purpose of grant 
program, as specified in subsection (a). The Secretary may accept or 
reject applications for a grant under this section.
  (g) Effect of Noncompliance.--If the Secretary of Agriculture, after 
reasonable notice to a State, finds that there has been a failure by 
the State to comply substantially with any provision or requirement of 
the State plan, the Secretary may disqualify, for one or more years, 
the State from receipt of future grants under this section.
  (h) Audit Requirements.--For each year that a State receives a grant 
under this section, the State shall conduct an audit of the 
expenditures of grant funds by the State. Not later than 30 days after 
the completion of the audit, the State shall submit a copy of the audit 
to the Secretary of Agriculture.
  (i) Authorization of Appropriations.--For each of the fiscal years 
2005 through 2009, there is authorized to be appropriated to the 
Secretary of Agriculture $44,500,000 to make grants under this section.

                  TITLE II--SPECIALTY CROP ADVANCEMENT

SEC. 201. TECHNICAL ASSISTANCE FOR SPECIALTY CROPS.

  For each of the fiscal years 2005 through 2009, there is authorized 
to be appropriated to the Secretary of Agriculture $2,000,000 to carry 
out section 3205 of the Farm Security and Rural Investment Act of 2002 
(7 U.S.C. 5680). Amounts appropriated pursuant to this authorization of 
appropriations shall be in addition to any other funds made available 
to carry out such section.

SEC. 202. REDUCTION IN BACKLOG OF AGRICULTURAL EXPORT PETITIONS.

  (a) Reduction Efforts.--To the maximum extent practicable, the 
Secretary of Agriculture shall endeavor to reduce the backlog in the 
number of applications for permits for the export of United States 
agricultural commodities. In achieving such reduction, the Secretary 
shall not dilute or diminish existing personnel resources that are 
currently managing sanitary and phytosanitary issues for--
          (1) United States agricultural commodities for which 
        exportation is sought; and
          (2) interdiction and control of pests and diseases, including 
        for the evaluation of pest and disease concerns of foreign 
        agricultural commodities for which importation is sought.
  (b) Report.--The Secretary of Agriculture shall submit to the 
Committee on Agriculture of the House of Representatives and the 
Committee on Agriculture, Nutrition, and Forestry of the Senate an 
annual report specifying, for the year covered by the report--
          (1) the total number of applications processed to completion;
          (2) the number of backlog applications processed to 
        completion;
          (3) the percentage of backlog applications processed to 
        completion; and
          (4) the number of backlog applications remaining.

SEC. 203. REPORT ON SANITARY AND PHYTOSANITARY EXPORT ISSUES.

  Not later than 180 days after the date of the enactment of this Act, 
the Secretary of Agriculture shall submit to the Committee on 
Agriculture of the House of Representatives and the Committee on 
Agriculture, Nutrition, and Forestry of the Senate a report on 
significant sanitary and phytosanitary issues that affect the export of 
specialty crops.

                   TITLE III--SPECIALTY CROP RESEARCH

SEC. 301. METHYL BROMIDE ALTERNATIVES.

  (a) Priority.--The Secretary of Agriculture shall elevate the 
priority of current methyl bromide alternative research and extension 
activities and reexamine the risks and benefits of extending the phase-
out deadline in effect on the date of the enactment of this Act, 
including the estimated cost to the grower or processor associated with 
any alternatives proposed.
  (b) Authorization of Appropriations.--For each of the fiscal years 
2005 through 2009, there is authorized to be appropriated to the 
Secretary of Agriculture $5,000,000 to carry out this section.

SEC. 302. NATIONAL SPECIALTY CROP RESEARCH PROGRAM.

  Section 1672(e) of the Food, Agriculture, Conservation, and Trade Act 
of 1990 (7 U.S.C. 5925(e)) is amended by adding at the end the 
following new paragraph:
          ``(45) Specialty crop research.--Research and extension 
        grants may be made under this section for the purpose of 
        improving the efficiency, productivity, and profitability of 
        specialty crop production in the United States.''.

SEC. 303. SPECIALTY CROP COMMITTEE.

  The National Agricultural Research, Extension, and Teaching Policy 
Act of 1977 is amended by inserting after section 1408 (7 U.S.C. 3123) 
the following new section:

``SEC. 1408A. SPECIALTY CROP COMMITTEE.

  ``(a) Establishment.--Not later than 90 days after the date of the 
enactment of the Specialty Crops Competitiveness Act of 2004, the 
executive committee of the Advisory Board shall establish, and appoint 
the initial members of, a permanent specialty crops committee that will 
be responsible for studying the scope and effectiveness of research, 
extension, and economics programs affecting the specialty crop 
industry.
  ``(b) Members.--Individuals who are not members of the Advisory Board 
may be appointed as members of the specialty crops committee. Members 
of the specialty crops committee shall serve at the discretion of the 
executive committee.
  ``(c) Annual Committee Report.--Not later than 180 days after the 
establishment of the specialty crops committee, and annually 
thereafter, the specialty crops committee shall submit to the Advisory 
Board a report containing the findings of its study under subsection 
(a). The specialty crops committee shall include in each report 
recommendations regarding the following:
          ``(1) Measures designed to improve the efficiency, 
        productivity, and profitability of specialty crop production in 
        the United States.
          ``(2) Measures designed to improve competitiveness in 
        research, extension, and economics programs affecting the 
        specialty crop industry.
          ``(3) Programs that would--
                  ``(A) enhance the quality and shelf-life of fresh 
                fruits and vegetables, including their taste and 
                appearance;
                  ``(B) develop new crop protection tools and expand 
                the applicability and cost-effectiveness of integrated 
                pest management;
                  ``(C) prevent the introduction of foreign invasive 
                pests and diseases;
                  ``(D) develop new products and new uses of specialty 
                crops;
                  ``(E) develop new and improved marketing tools for 
                specialty crops;
                  ``(F) enhance food safety regarding specialty crops;
                  ``(G) improve mechanization of production practices; 
                and
                  ``(H) enhance irrigation techniques used in specialty 
                crop production.
  ``(d) Consideration by Secretary.--In preparing the annual budget 
recommendations for the Department of Agriculture, the Secretary shall 
take into consideration those findings and recommendations contained in 
the most recent report of the specialty crops committee that are 
adopted by the Advisory Board.
  ``(e) Annual Report by Secretary.--In the budget material submitted 
to Congress by the Secretary in connection with the budget submitted 
pursuant to section 1105 of title 31, United States Code, for a fiscal 
year, the Secretary shall include a report describing how the Secretary 
addressed each recommendation of the specialty crops committee 
described in subsection (d).''.

                TITLE IV--PEST AND DISEASE RESPONSE FUND

SEC. 401. PEST AND DISEASE RESPONSE FUND.

  (a) Establishment.--There is established on the books of the Treasury 
an account to be known as the ``Pest and Disease Response Fund''. There 
shall be deposited into the Fund any proceeds received by the Secretary 
of Agriculture as reimbursement for services provided by the Secretary 
using amounts in the Fund.
  (b) Availability.--Amounts in the Fund shall remain available until 
expended.
  (c) Use of Fund.--In implementing the Animal Health Protection Act (7 
U.S.C. 8301 et seq.) and the Plant Protection Act (7 U.S.C. 7701 et 
seq.), the Secretary of Agriculture shall have complete discretion 
regarding the use of amounts in the Fund to support emergency 
eradication and research activities in response to economic and health 
threats posed by pests and diseases affecting agricultural commodities.
  (d) Authorization of Appropriations.--For each of the fiscal years 
2005 through 2009, there is authorized to be appropriated to the 
Secretary of Agriculture $1,000,000 for deposit in the Fund.

SEC. 402. IMPORT AND EXPORT REGULATION REVIEW.

  (a) Peer Review.--The Secretary of Agriculture shall enter into an 
agreement with the National Plant Board to obtain a peer review of the 
procedures and standards that govern the consideration of import and 
export requests under section 412 of the Plant Protection Act (7 U.S.C. 
7712). The peer review shall be consistent with the guidance by the 
Office of Management and Budget pertaining to peer review and 
information quality.
  (b) Elements of Review.--The peer review required by subsection (a) 
shall address, at a minimum--
          (1) the preparation of risk assessments; and
          (2) the sufficiency, type, and quality of data that should be 
        submitted to the Secretary of Agriculture.
  (c) Submission of Results.--The results of the peer review conducted 
under subsection (a) shall be submitted to the Secretary and Congress 
not later than 180 days after the date of the enactment of this Act.

SEC. 403. MAINTENANCE OF FREDERICKSBURG INSPECTION TRAINING CENTER.

  For each of the fiscal years 2005 through 2009, there is authorized 
to be appropriated to the Secretary of Agriculture $1,500,000 for the 
maintenance of the Agricultural Marketing Service inspection training 
center in Fredericksburg, Virginia.

                           Brief Explanation

    H.R. 3242 is intended to make changes in Federal 
agriculture policy in order to accomplish the goals of 
increasing fruit, vegetable and nut consumption and improving 
the competitiveness of United States specialty crop producers.
    The bill is an authorization of $54 million per year over 
five years. There are several provisions designed to help U.S. 
specialty crop producers compete globally and export 
internationally, improve the focus of specialty crop research, 
and help improve response to pest and disease problems.
    H.R. 3242 authorizes $44.5 million per year in state block 
grants to be used solely to enhance the competitiveness of 
specialty crops. Base grants of $100,000 will be awarded to 
each state with remaining monies to be allotted based on the 
proportion of the value of specialty crop production of each 
state in relation to the national value of specialty crop 
production for that year. Each state will have to submit a plan 
that fulfills the requirements of enhancing the competitiveness 
of specialty crops to the Secretary of Agriculture for 
approval. Additionally there are yearly audit requirements and 
the ability of the Secretary of Agriculture to disqualify 
states for future grant receipt if the states fail to comply 
with the requirements of the plan.
    This bill also authorizes the appropriation of $2 million 
per year, in addition to Commodity Credit Corporation funds 
already made available, to carry out the Technical Assistance 
for Specialty Crops (TASC) program; authorizes $5 million per 
year and requires the Secretary of Agriculture to elevate the 
priority of current methyl bromide alternative research and 
extension activities and re-examine the risks and benefits of 
extending the phase-out deadline; authorizes $1.5 million per 
year for the maintenance of the Agricultural Marketing Service 
inspection training center in Fredericksburg, Virginia; and 
establishes and authorizes $1 million per year on the books of 
the Treasury a pest and disease response fund account. The 
Secretary shall have complete discretion regarding the use of 
this fund to support activities in response to economic and 
health threats posed by pests and diseases affecting 
agricultural commodities.
    H.R. 3242 requires the Secretary of Agriculture to reduce 
the export petition certificate backlog, submit a report to 
Congress on the significant sanitary/phytosanitary issues that 
affect the export of specialty crops, and instructs the 
Secretary of Agriculture to enter into an agreement with the 
National Plant Board to obtain peer review of procedures and 
standards that govern consideration of import/export requests. 
Additionally the bill adds specialty crop research to the list 
of the United States Department of Agriculture's high priority 
research and extension activities, and establishes a permanent 
specialty crops committee under an existing board to study 
research needs of specialty crops and make recommendations. 
Specialty crops are defined for the purposes of this bill.

                            Purpose and Need

    The specialty crop industry is very diverse and is 
comprised of fruits and vegetables, tree nuts and nursery 
crops. Specialty crop growers believe that there are numerous 
areas of Federal agricultural policy that could be improved to 
promote increased consumption of specialty crops and increase 
the competitiveness of producers in the efficient production of 
affordable specialty crops in the United States. Increased 
consumption of specialty crops will provide health and economic 
benefits to both consumers and specialty crop growers.
    Due to the industry's diverse array of products, the 
specialty crop industry in the United States faces a higher 
number of emerging pests and diseases every month than any 
other market in the world. This problem is compounded by 
frequent trade restrictions and the imposition of sanitary and 
phytosanitary barriers placed on our commodities by other 
countries. United States specialty crop producers also continue 
to face serious tariff and other non-tariff trade barriers in 
many export markets. As the globalization of markets continues, 
it is becoming increasingly difficult for United States 
producers to compete against heavily subsidized foreign 
producers in both the domestic and foreign markets. It is the 
purpose of this Act to make necessary changes in Federal 
agriculture policy to accomplish the goals of increasing fruit, 
vegetable and nut consumption and improving the competitiveness 
of United States specialty crop producers.

                      Section-by-Section Analysis


Section 1. Short title

    Provides that this Act shall be known as the ``Specialty 
Crops Competitiveness Act of 2004.''

Section 2. Findings and purpose

    Enumerates Congress' findings with respect to the nature of 
the specialty crops industry in the U.S. Declares that the 
purpose of this Act is to increase consumption of specialty 
crops and competitiveness of specialty crop producers.

Section 3. Definitions

    (1) Defines ``specialty crops'' as fruits and vegetables, 
tree nuts, dried fruits, and nursery crops (including 
floriculture).
    The Committee is aware that no one legal definition 
currently exists for ``specialty crops'' and that each agency 
at the United States Department of Agriculture (USDA) has 
various definitions that reflect the development of different 
programs. For the purposes of this Act the definition of 
specialty crops is: fruit, vegetables, dried fruit, tree nuts 
and nursery crops (including floriculture). The block grant 
program is intended for all specialty crop producers, however 
their crops are marketed.
    The State of Hawaii grows many unique crops, and the 
Committee considers certain crops such as, but not limited to, 
coffee, cacao, cut flowers, foliage, herbs, vanilla, ginger 
root, algae and seaweed as specialty crops for the purposes of 
this Act. The Committee encourages Hawaii's State Department of 
Agriculture to work with USDA to determine additional eligible 
specialty crops, as appropriate.
    (2) Defines ``State'' as the several states, the District 
of Columbia, and the Commonwealth of Puerto Rico.
    (3) Defines ``State department of agriculture'' as the 
agency, commission, or department of a State government 
responsible for agriculture within the State.

             TITLE I--STATE ASSISTANCE FOR SPECIALTY CROPS


Section 101. Specialty crops block grants

    (a) Requires the Secretary of Agriculture, during each of 
fiscal years 2005 through 2009, to make grants to States to be 
used by State departments of agriculture to enhance the 
competitiveness of specialty crops.
    (b) Provides that the amount of each grant shall be based 
on the value of specialty crop production in each State in 
relation to the national value of specialty crop production for 
that year.
    (c) Provides that each State shall receive no less than 
$100,000 during each year in which grants are provided to the 
states.
    (d) Restricts eligibility for grants to those states that 
submit, for approval by the Secretary, an application 
containing a State plan.
    (e) Requires a State plan to identify the State agency that 
will carry out the plan and indicate how the funds will be used 
to increase the competitiveness of specialty crops in that 
State.
    (f) Instructs the Secretary of Agriculture to ensure that a 
State plan would carry out the purpose of the grant program. 
Provides that the Secretary may reject applications for grants.
    (g) Provides that the Secretary may disqualify, for one or 
more years, a State from the grant program if the State fails 
to substantially comply with its State plan.
    (h) Requires a state who receives a grant to conduct an 
audit of the expenditures and submit to the Secretary of 
Agriculture.
    (i) Authorizes $44,500,000 for each of fiscal years 2005 
through 2009 to make specialty crop block grants to states 
under this section.

                  TITLE II--SPECIALTY CROP ADVANCEMENT


Section 201. Technical assistance for specialty crops

    Authorizes $2,000,000 per year, in addition to CCC funds 
already made available, to carry out the Technical Assistance 
for Specialty Crops (TASC) program.

Section 202. Reduction in backlog of agricultural export petitions

    (a) Instructs the Secretary to reduce the number of backlog 
permit applications for the export of agricultural commodities 
without diluting or diminishing existing personnel resources 
that are currently managing sanitary and phytosanitary issues.
    (b) Requires the Secretary to report annually to the 
Committee on Agriculture of the House of Representatives and 
the Committee on Agriculture, Nutrition, and Forestry of the 
Senate, regarding the progress made in considering 
applications.

Section 203. Report on sanitary and phytosanitary export issues

    Requires the Secretary to submit to Congress a report on 
the significant sanitary and phytosanitary issues that affect 
the export of specialty crops.

                   TITLE III--SPECIALTY CROP RESEARCH


Section 301. Methyl bromide alternatives

    (a) Requires the Secretary of Agriculture to elevate the 
priority of current methyl bromide alternative research and 
extension activities and reexamine the risks and benefits of 
extending the phase-out deadline.
    (b) Authorizes $5,000,000 for each of fiscal years 2005 
through 2009, to carry out this section.

Section 302. National specialty crops research program

    Adds specialty crop research to the list of the Department 
of Agriculture's high priority research and extension 
activities.

Section 303. Specialty crops committee

    Establishes a permanent specialty crops committee, under 
the National Agricultural Research, Extension, Education and 
Economics Advisory Board.
    Requires the committee to study the scope and effectiveness 
of research, extension and economics programs affecting the 
specialty crop industry and report its finding to the Advisory 
Board.
    Provides that if the Advisory Board adopts the findings of 
the committee's report, the Secretary of Agriculture shall 
submit the report to the Committee on Agriculture of the House 
of Representatives and the Committee on Agriculture, Nutrition 
and Forestry of the Senate. Requires the Secretary of 
Agriculture to consider the annual report of the committee when 
developing the Department of Agriculture's annual budget 
recommendations.

                TITLE IV--PEST AND DISEASE RESPONSE FUND


Section 401. Pest and disease response fund

    Establishes a pest and disease response fund account on the 
books of the Treasury. Provides that the Secretary of 
Agriculture shall have complete discretion regarding the use of 
this fund to support activities in response to economic and 
health threats posed by pests and diseases affecting 
agricultural commodities. Authorizes $1,000,000 for each of 
fiscal years 2005 through 2009 to be deposited in the fund.

Section 402. Import and export review

    (a) Instructs the Secretary to enter into an agreement with 
the National Plant Board to obtain a peer review of the 
procedures and standards that govern the consideration of 
import and export requests under section 412 of the Plant 
Protection Act (7 U.S.C. 7712).
    (b) The peer review, at a minimum, shall address the 
preparation of risk assessments and the sufficiency, type, and 
quality of data that should be submitted to the Secretary.
    (c) The results of the peer review shall be submitted to 
the Secretary of Agriculture and to Congress.

Section 403. Maintenance of Fredericksburg inspection training center

    Authorizes $1,500,000 for each of fiscal years 2005 through 
2009 for the maintenance of the Agricultural Marketing Service 
inspection training center in Fredericksburg, Virginia.

                        Committee Consideration


                              I. HEARINGS

    The Subcommittee on Energy Policy, Natural Resources and 
Regulatory Affairs of the Committee on Government Reform held a 
hearing on December 12, 2003, in Salinas, California. The 
hearing focused on the merits of H.R. 3242, the Specialty Crop 
Competitiveness Act. Witnesses representing the specialty crop 
industry discussed Federal financial assistance and domestic 
and international trade policies affecting the U.S. specialty 
crop industry's ability to be competitive in today's expanding 
global market. The hearing focused on the industry's concerns 
to demonstrate that legislative and regulatory changes are 
needed in order to moderate impacts on specialty crops.
    The first witness panel was the Secretary of the California 
Department of Food and Agriculture, Mr. A.G. Kawamura. The 
second panel was Mr. Joseph Zanger, a member of the board of 
directors of the California Farm Bureau Federation; Mr. Jim 
Bogart, president of the Grower-Shipper Vegetable Association 
of Central California; Mr. John D'Arrigo, chairman of Western 
Growers; and, Mr. Robert Nielsen, vice president of Tanimura & 
Antle.

                    II. FULL COMMITTEE CONSIDERATION

    The Committee on Agriculture met, pursuant to notice, with 
a quorum present, on September 30, 2004, to consider H.R. 3242, 
the Specialty Crops Competitiveness Act of 2004, and other 
pending business.
    Chairman Goodlatte called the meeting to order and made an 
opening statement as did Ranking Member Stenholm. Without 
objection, H.R. 3242 was discharged from the Subcommittee on 
Livestock and Horticulture and placed before the Committee to 
be open for amendment at any point. Counsel was then recognized 
to give a brief summary of the bill.
    Mr. Ose was recognized to offer and explain an amendment to 
move $24,000,000 from Title IV, Section 401, the Pest and 
Disease Response Fund, to Title I, Section 101, Specialty Crop 
Block Grants, increasing the block grant total to $39,500,000. 
Discussion occurred, and by voice vote the amendment was 
adopted.
    Mr. Dooley was then recognized to offer and explain an 
amendment to increase the funding for Title I, Section 101, 
Specialty Crop Block Grants, to $220,000,000 per year, offset 
by reductions in direct payments. Discussion occurred and by a 
voice vote, the amendment failed.
    Mr. Pence was recognized to offer and explain an amendment 
to allow for the production of fruits and vegetables for 
processing on covered commodity base acres. Discussion occurred 
and without objection, the amendment was withdrawn.
    Mr. Dooley was again recognized to offer and explain an 
amendment to increase the funding for Title I, Section 101, 
Specialty Crop Block Grants, to $220,000,000 per year, offset 
by increased payment limitations. Discussion occurred and 
without objection, the amendment was withdrawn.
    Mr. Cardoza was then recognized to offer and explain an 
amendment to increase the funding for Title I, Section 101, 
Specialty Crop Block Grants, to $200,000,000 per year. 
Discussion occurred and without objection, the amendment was 
withdrawn.
    Mr. Baca was recognized to offer and explain an amendment 
to improve border inspection facilities. Discussion occurred 
and without objection, the amendment was withdrawn.
    In response to the concerns of Members, Mr. Ose offered a 
perfecting amendment to increase the funding for Title I, 
Section 101, Specialty Crop Block Grants, to $44,500,000 per 
year. Discussion occurred, and by a voice vote, the amendment 
was adopted.
    Mr. Case was recognized and expressed concern with the 
broad definition of the term ``specialty crop.'' He indicated 
that some Hawaiian crops such as coffee, vanilla, and cacao, 
not commonly grown on the mainland, should be included in this 
definition. Chairman Goodlatte indicated that he would work 
with Mr. Case to define Hawaiian crops as specialty crops, if 
appropriate.
    There being no further amendments, the Amendment in the 
Nature of a Substitute to H.R. 3242, as amended, was adopted, 
by a voice vote.
    Mr. Stenholm moved that H.R. 3242, as amended, be adopted 
and reported favorable to the House with the recommendation 
that it pass.
    By voice vote, the motion was agreed to in the presence of 
a quorum, and H.R. 3242, as amended, was ordered to be 
favorably reported to the House of Representatives.
    Chairman Goodlatte advised Members that pursuant to the 
rules of the House of Representatives that Members have 2 
calendar days to file supplemental, minority or additional 
views for inclusion to the committee report.
    Mr. Stenholm then moved that pursuant to clause 1 of rule 
XXII, that the Committee authorize the Chairman to offer such 
motion as may be necessary in the House to go to conference 
with the Senate on H.R. 3242, or a similar Senate bill. Without 
objection, the motion was agreed to.
    Without objection, staff was given permission to make any 
necessary clerical, technical or conforming changes to reflect 
the intent of the Committee.
    The Committee then adjourned, subject to the call of the 
Chair.

                   Reporting the Bill--Rollcall Votes

    In compliance with clause 3(b) of rule XIII of the House of 
Representatives, H.R. 3242 was reported by voice vote with a 
majority quorum present. There was no request for a recorded 
vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee on Agriculture's 
oversight findings and recommendations are reflected in the 
body of this report.

           Budget Act Compliance (Sections 308, 402, and 423)

    The provisions of clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives and section 308(a)(1) of the 
Congressional Budget Act of 1974 (relating to estimates of new 
budget authority, new spending authority, new credit authority, 
or increased or decreased revenues or tax expenditures) are not 
considered applicable. The estimate and comparison required to 
be prepared by the Director of the Congressional Budget Office 
under clause 3(c)(3) of rule XIII of the Rules of the House of 
Representatives and sections 402 and 423 of the Congressional 
Budget Act of 1974 submitted to the Committee prior to the 
filing of this report are as follows:

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, October 6, 2004.
Hon. Bob Goodlatte,
Chairman, Committee on Agriculture,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3242, the 
Specialty Crops Competitiveness Act of 2004.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Jim Langley.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

H.R. 3242--Specialty Crops Competitiveness Act of 2004

    Summary: H.R. 3242 would authorize the appropriation of $45 
million a year over the 2005-2009 period to make grants to 
states to enhance the competitiveness of specialty crops 
(including fruits, vegetables, tree nuts, dried fruits, and 
nursery products). The bill also would authorize the 
appropriation of $2 million a year to provide technical 
assistance for growers of those crops, and $5 million a year to 
research certain pesticides over the 2005-2009 period. H.R. 
32242 also would authorize the appropriation of $2.5 million a 
year over this period to respond to threats posed by pests and 
diseases affecting agricultural commodities, and to maintain a 
crop inspection center in Virginia. In addition, CBO estimates 
implementing the bill would cost $10 million a year to 
establish a federal research program for specialty crops, 
subject to appropriation of the necessary amounts.
    Assuming appropriation of the amounts specifically 
authorized by the bill and estimated to be necessary, CBO 
estimates that implementing H.R. 3242 would cost $60 million in 
fiscal year 2005 and $320 million over the 2005-2009 period. 
Enacting this legislation would not affect revenues or direct 
spending.
    H.R. 3242 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments. The grant funds authorized by this bill would 
benefit state governments, and any costs they might incur to 
comply with the conditions of this assistance would be incurred 
voluntarily.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 3242 is shown in the following table. 
The costs of this legislation fall within budget function 350 
(agriculture). The estimated cost of the specialty crop 
research program that would be authorized by the bill is based 
on the size of similar research conducted by the Department of 
Agriculture.

----------------------------------------------------------------------------------------------------------------
                                                                       By fiscal year, in millions of dollars--
                                                                    --------------------------------------------
                                                                       2005     2006     2007     2008     2009
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Specified Authorization Level......................................       55       55       55       55       55
Estimated Outlays..................................................       55       55       55       55       55
Estimated Authorization Level......................................       10       10       10       10       10
    Estimated Outlays..............................................        5       10       10       10       10
Total Changes:
Estimated Authorization Level......................................       65       65       65       65       65
    Estimated Outlays..............................................       60       65       65       65       65
----------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: H.R. 3242 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments. The grant funds authorized by this bill 
would benefit state governments, and any costs they might incur 
to comply with the conditions of this assistance would be 
incurred voluntarily.
    Estimate prepared by: Federal Costs: Jim Langley; Impact on 
State, Local, and Tribal Governments: Marjorie Miller; and 
Impact on the Private Sector: Amina Masood.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                    Performance Goals and Objectives

    With respect to the requirement of clause 3(c)(4) of rule 
XIII of the Rules of the House of Representatives, the 
performance goals and objections of this legislation are to 
ensure an abundant and affordable supply of highly nutritious 
fruits, vegetables, and other specialty crops for American 
consumers and international markets by enhancing the 
competitiveness of United States-grown specialty crops, and for 
other purposes.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the 
Constitutional authority for this legislation in Article I, 
clause 8, section 18, that grants Congress the power to make 
all laws necessary and proper for carrying out the powers 
vested by Congress in the Constitution of the United States or 
in any department or officer thereof.

                        Committee Cost Estimate

    Pursuant to clause 3(d)(2) of rule XIII of the Rules of the 
House of Representatives, the Committee report incorporates the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to sections 402 and 423 of the 
Congressional Budget Act of 1974.

                      Advisory Committee Statement

    No advisory committee within the meaning of section 5(b) of 
the Federal Advisory Committee Act was created by this 
legislation.

                Applicability to the Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act (Public Law 
104-1).

                       Federal Mandates Statement

    The Committee adopted as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act (Public Law 104-4).

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

 SECTION 1672 OF THE FOOD, AGRICULTURE, CONSERVATION, AND TRADE ACT OF 
                                  1990


SEC. 1672. HIGH-PRIORITY RESEARCH AND EXTENSION INITIATIVES.

  (a) * * *

           *       *       *       *       *       *       *

  (e) High-Priority Research and Extension Areas.--
          (1) * * *

           *       *       *       *       *       *       *

          (45) Specialty crop research.--Research and extension 
        grants may be made under this section for the purpose 
        of improving the efficiency, productivity, and 
        profitability of specialty crop production in the 
        United States.

           *       *       *       *       *       *       *

                              ----------                              


 NATIONAL AGRICULTURAL RESEARCH, EXTENSION, AND TEACHING POLICY ACT OF 
                                  1977

SEC. 1408A. SPECIALTY CROP COMMITTEE.

  (a) Establishment.--Not later than 90 days after the date of 
the enactment of the Specialty Crops Competitiveness Act of 
2004, the executive committee of the Advisory Board shall 
establish, and appoint the initial members of, a permanent 
specialty crops committee that will be responsible for studying 
the scope and effectiveness of research, extension, and 
economics programs affecting the specialty crop industry.
  (b) Members.--Individuals who are not members of the Advisory 
Board may be appointed as members of the specialty crops 
committee. Members of the specialty crops committee shall serve 
at the discretion of the executive committee.
  (c) Annual Committee Report.--Not later than 180 days after 
the establishment of the specialty crops committee, and 
annually thereafter, the specialty crops committee shall submit 
to the Advisory Board a report containing the findings of its 
study under subsection (a). The specialty crops committee shall 
include in each report recommendations regarding the following:
          (1) Measures designed to improve the efficiency, 
        productivity, and profitability of specialty crop 
        production in the United States.
          (2) Measures designed to improve competitiveness in 
        research, extension, and economics programs affecting 
        the specialty crop industry.
          (3) Programs that would--
                  (A) enhance the quality and shelf-life of 
                fresh fruits and vegetables, including their 
                taste and appearance;
                  (B) develop new crop protection tools and 
                expand the applicability and cost-effectiveness 
                of integrated pest management;
                  (C) prevent the introduction of foreign 
                invasive pests and diseases;
                  (D) develop new products and new uses of 
                specialty crops;
                  (E) develop new and improved marketing tools 
                for specialty crops;
                  (F) enhance food safety regarding specialty 
                crops;
                  (G) improve mechanization of production 
                practices; and
                  (H) enhance irrigation techniques used in 
                specialty crop production.
  (d) Consideration by Secretary.--In preparing the annual 
budget recommendations for the Department of Agriculture, the 
Secretary shall take into consideration those findings and 
recommendations contained in the most-recent report of the 
specialty crops committee that are adopted by the Advisory 
Board.
  (e) Annual Report by Secretary.--In the budget material 
submitted to Congress by the Secretary in connection with the 
budget submitted pursuant to section 1105 of title 31, United 
States Code, for a fiscal year, the Secretary shall include a 
report describing how the Secretary addressed each 
recommendation of the specialty crops committee described in 
subsection (d).

             ADDITIONAL VIEWS OF REPRESENTATIVE CAL DOOLEY

    U.S. farm policy has long overlooked the importance of 
specialty crops, despite the fact that these non-subsidized 
crops account for the majority of crop production in this 
country. Instead, U.S. farm policy has tended to focus on so-
called ``program'' crops, such as cotton, rice, sugar, peanuts, 
wheat, corn, oilseeds, feed grains, and others, which account 
for less than half of domestic production.
    Representative Doug Ose and I introduced H.R. 3242 not to 
bring fruits, vegetables, tree nuts, and other horticultural 
products into the category of ``program commodities'' but 
instead to focus federal attention and resources on the 
problems facing this segment of U.S. agriculture. The bill as 
introduced included various regulatory reforms as well as a 
modest level of federal dollars to invest in non-market-
distorting ways in the competitiveness of the U.S. specialty 
crop sector.
    As the lead Democrat sponsor of H.R. 3242, however, I am 
very disappointed that the version of the bill reported out of 
committee is significantly scaled down from the bill as 
introduced. In particular, the federal funding provided by this 
bill has gone from a mandatory spending level of $508 million 
per year for five years, to a discretionary authorization of 
only $54 million per year that is further subject to annual 
appropriations.
    This is a far cry from the level of federal commitment to 
the specialty crop sector that is warranted.
    Specialty crops have an annual farm-gate value of $52 
billion and receive no federal subsidies. Program crops, on the 
other hand, have a farm-gate value of only $48 billion. Yet the 
program commodities received federal subsidies in the amount of 
$12-13 billion, the equivalent of 27% of their farm-gate value.
    This bill does not change the fact that producers of 
specialty crops receive no federal subsidy payments, and 
instead rely solely on the market for their income. No new 
federal price supports, direct payments, marketing loans, or 
counter-cyclical payments are created in this bill.
    A serious federal commitment to this sector, however, 
requires a serious level of federal dollars.
    The bulk of federal expenditures under H.R. 3242 would go 
to a block grant program that would distribute federal dollars 
to interested states for research, marketing, promotion, and 
other competitiveness-enhancing programs for their specialty 
crop industries. These funds are designed to increase consumer 
awareness and demand for specialty crop products and otherwise 
strengthen U.S. producers' ability to supply a safe, nutritious 
and quality product to both domestic and foreign markets.
    Unfortunately, the bill as amended in committee drastically 
reduced the federal commitment to this block grant proposal, 
from $470 million in mandatory spending down to $44.5 million 
in discretionary spending.
    During the committee markup of the bill, I attempted to 
restore merely half of the mandatory funds provided under the 
original bill for the block grant program. In order to keep the 
legislation revenue-neutral from a budgetary standpoint, I 
offered two separate alternative offsets--one based on a small, 
pro rata reduction in direct fixed payments to program 
commodity producers, and the other based on a bipartisan 
payment limitations proposal pending in the Senate (S. 667).
    My amendment to finance the cost of a mandatory $220 
million per year block grant program for specialty crops would 
have reduced the annual federal subsidies received by program 
crops by merely 1.7 percent. As a percent of program crop gross 
income, this represents a 0.36 percent reduction. Yet even this 
miniscule reduction encountered fierce resistance by those farm 
and commodity organizations benefiting from these federal 
subsidies today.
    The inequitable distribution of federal expenditures 
between program commodities and non-subsidized specialty crops 
must be changed. The United States can no longer afford to 
short-change the majority of its crop producers who rely on 
market forces--not federal program payments--to drive their 
income. The fact that the current farm bill, enacted in 2002, 
does not expire until 2007 is no excuse for not reallocating a 
small portion of federal expenditures by less than 2 percent.
    Some of my colleagues seek to support the specialty crop 
sector without simultaneously disturbing the enormous benefits 
enjoyed by the program commodities. However, federal dollars 
are scarce resources and a more equitable distribution of these 
limited resources is long overdue. I hope my colleagues will 
eventually agree.