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Agriculture Secretary Tom Vilsack Speaks at Agricultural Outlook Forum 2011

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DEPUTY SECRETARY MERRIGAN: Ladies and gentlemen, a little bit out of order. My boss already got the mic away from us all, but it's my great pleasure to introduce to you a man who needs no introduction -- there's a tough one -- but Tom Vilsack, compelling life story, visionary leader, starting out as a mayor in a small town in Iowa. Here he is leading us all with his visions for American agriculture. He has traveled the globe knocking down trade barriers, allowing for that very invigorating outlook that Joe presented today on exports. We're doing really, really well. Yesterday, he was meeting with the President of the United States to talk about the struggles and the needs that are very apparent in Rural America. He's an incredible leader for all of USDA, for all of us here in the room, the thirtieth Secretary of Agriculture, Tom Vilsack.

[Applause.]

SECRETARY VILSACK: Thank you. Well, thank you very much. It's obviously a great honor to be here today, and this is a wonderful gathering. I do want to take this opportunity to thank the Deputy for her passionate work, especially in the area of local and regional food systems. This is an important component of our efforts to rebuild and revitalize a rural economy and to provide options and diversification in agriculture, and there's no better spokesperson for that effort than Kathleen Merrigan.

And, Joe, you know, every time you talk, I feel like Charlie Brown, you know Charlie Brown with the football with Lucy, you know. Joe teased it up, basically saying prices are up and income is up, and you're just about ready to kick the ball through the goalpost, and he goes, "But there are problems." That's the nature of an economist, isn't it, Joe? Always hedging the bets.

[Laughter.]

Well, I'm here today to suggest that the safest bet in America is American agriculture. The safest bet in America is on America's farmers, ranchers, and growers, and despite the challenges and the difficulties that we confront, I have the utmost confidence in our capacity and our ability to meet these challenges.

When faced with the numbers that Joe gave us, one might suggest, given food prices and some of the issues internationally, that we might want to take the foot off the gas in terms of exports in order to rebuild supplies, but we're not going to do that. We're just simply not going to do that. We're going to continue to aggressively promote the American brand of agricultural products around the world.

In fact, in the first quarter of 2011, our gross export numbers were the highest that they have ever been, well on the way to the record that Joe has indicated, and it starts with an aggressive effort this spring to ensure that Congress takes quick action on passing the Korean Free Trade Agreement.

Now, the reason why this is important to American agriculture is that today, our farm products that are sold in Korea are facing very serious and significant tariffs, and this agreement will over a period of time eliminate most, if not all, of those tariffs, which will create enormous opportunity for us. It could increase access to American products in Korea by $1.8 billion and, as importantly, will create, I think, momentum for us to continue focusing on bilateral trade agreements in Colombia and Panama and in other areas. It will provide additional opportunities for us to promote the Trans-Pacific Partnership that the President is interested in as part of his National Export Initiative, and it will also give us impetus to continue working to try to strike down the barriers that exist in other Asian countries in particular to our beef trade.

This is an enormously important thing that has to be done, and despite the challenges, despite the issues relative to supplies, et cetera, it's very, very important for us, particularly for our livestock industry, that we continue to promote these free trade agreements. There's no question this is beneficial to the country, and there's no question it's beneficial to agriculture. So we're not going to take the foot of the gas.

In fact, we are very focused on exports, and we are doing it in a very strategic way. We, first of all, have identified countries where we think there are the largest opportunities for growth in exports.

One of the reasons why I will be traveling to Indonesia and Vietnam later this year is because we recognize and appreciate that these are upcoming markets that create new opportunities for American products.

We are going to continue to strike down barriers, continue to work hard in international forums to make sure that we support a science-based effort. So we're not going to take the foot off the gas in terms of trade and exports. We're going to focus on making sure that there's a greater acceptance and appreciation of some of the science that will allow not just American farmers to be more productive but the world's farmers to be more productive. There has to be an embracing in all parts of the globe of the opportunities that science presents to increase productivity worldwide.

As the Chairwoman indicated, our numbers are growing in world population, and that is going to create an additional challenge for us in agriculture, how do we in fact create enough food to be able to feed an ever-increasing world population. And as great as American farmers and growers and ranchers are, they cannot do it themselves. They cannot do it alone. They will require the help and assistance of other farmers and growers and ranchers around the world, and there has to be a greater understanding and appreciation for science.

It's one of the reasons why we put together a specific effort to do a better job of educating folks about the benefits about technology, the capacity of that science to be able to reduce the reliance on chemicals in fertilizer, the ability to produce food in areas that today may not be as productive, the opportunity to use less water, and potentially conserve our natural resources as a result of the science. We need to do a better job of working with scientists and farmers and political leaders to make sure there is a consistent message that comes from this country about the importance of biotechnology as a strategy for meeting world demand, and there is an opportunity here in the United States for us to continue to have a dialogue that the Deputy Secretary and I began last month in an effort to make sure that there is continued diversification in agriculture in this country.

There's no reason why we cannot do it all in this country. There's no reason why we cannot figure out the difficult challenges that face organic farmers and biotech farmers and conventional farmers to be able to work and live and raise their families and run their operations in the way that they deem best for themselves. We are smart enough, we are tough enough, we are creative enough and innovative enough to figure this out, and we have to because we want to give people as many opportunities and choices to succeed as possible in agriculture.

This is an amazing new world we live in, tremendous opportunities not just to use agricultural products for food and for feed and for fiber, but also in addition to fuel, there is an emergence of bio-based products. We now have over 5,000 bio-based products that we are going to be labeling at USDA to ensure that consumers have the opportunity to promote American agriculture by buying things that are made from what we can grow on a renewable basis.

And one might suggest that now is the time to take the foot of the gas in terms of our commitment to renewable energy and fuel. That's not the case either. This is an important component of energy security in this country. As a result of American farmers and growers today, America is importing 450 million fewer barrels of imported oil. Despite that effort, we still are importing 60 percent of our oil from foreign countries, and as there is turbulence and difficulties and disturbances in the Middle East, we are seeing gas prices go up.

One way we can confront that, one way we can deal with those interruptions or the perceived interruptions of oil supplies is to provide greater reliance on our own capacity. This is an amazing opportunity for us to rebuild and revitalize rural communities. It is a tremendous opportunity for us to add up to perhaps as many as a million new jobs in Rural America, to see $100 billion of capital investment in new facilities. There's no reason for us to take the foot of the gas. This is a great opportunity for us because we can do it all.

Make no mistake about it. Those who suggest we cannot just simply are not betting on the American farmer and rancher and grower, and that's a bet that I'm happy to take. I think we can do it all, and I think we are doing it all.

We've seen extraordinary increases in productivity in the last 30 or 50 years. In my lifetime, corn has increased by 300 percent, soybeans 200 percent, wheat almost 200 percent, and there is still grains to be made. In talking to leaders of seed companies, they are confident that corn can perhaps increase by as much as 100 bushels to an acre over time, above and beyond where it is today. So this is a great opportunity for us to build domestic markets, to expand foreign markets, to rely on science, and to provide enough diversification, so that folks can operate their operations in the way they deem best.

Now, there are issues internationally, and I think it is important for me to comment on the issue of the international situation. As Joe indicated, markets are tight and food prices are high in some parts of the world, and that can create shortages. And this, I think, does bring back memories, as Joe indicated, to the situation in 2007 and 2008, and I think we're keeping an eye on this, but I would suggest that as a result of what we went through in 2007 and 2008, we are better prepared to respond as a country and as a globe.

By working together internationally, we can implement sound responses by working in an interagency situation within the United States. Within USAID and the State Department and the U.S. Department of Agriculture, we can provide those sound responses. We can help governments be able to avoid the mistakes that created a food crisis several years ago.

And I want to assure you that we are working not only bilaterally but also through multilateral institutions such as the UN food agencies, the G20, and APEC to identify where there are vulnerable populations and to respond appropriately and encourage nations to pursue sound policies.

In the short term, countries can reduce the risk of food price crisis by sharing information, on having opportunities like we have here today. When Joe gets up and gives you a sense of where we're headed and what our stocks are going to be, we are encouraging other countries to do the same. Let us know about stocks and production.

We encourage countries to abstain from export bans and using export quotas and taxes sparingly. We unfortunately saw export bans disrupt the situation in what not so long ago.

We want to encourage folks to avoid any kind of panic buying or hoarding, reducing import tariffs and taxes, and putting in place targeted safety nets for the most vulnerable, the things that we have done in this country.

In the long term, food prices may continue, and this reminds us of the importance of increasing agricultural productivity. It gets me back to the point about the need for game-changing research and innovation and an acceptance of that game-changing research and innovation around the world.

Higher prices are also a catalyst for the private sector to increase production, and the challenge is obviously a catalyst for human innovation. That's why I'm so -- I have so much faith and confidence in our research institutions, our land grant universities, and USDA science agencies led by Under Secretary Woteki are investing in financial and fundamental research in those land grant universities to increase agricultural productivity and also to make sure that we protect crops and livestock from invasive species and diseases, as the Chairwoman indicated.

We're spending a substantial amount of our research dollars in these areas to make sure that we gain productivity gains and that we protect our crops and our livestock. We're addressing plant agriculture or the hardiness to environmental stresses with our agriculture, specifically focused on drought and pests and pre- and post-harvest technologies to reduce crop losses.

Long-term population growth calls on us to search our ways to increase production and make sure food is reaching those who need it the most. Today, almost one billion people suffer from chronic hunger, and USDA is working USAID to implement the Feed the Future Initiative, and what this is, is a country-led effort around the world where the United States working through USAID with the assistance of USDA is providing information, providing technical assistance, providing knowledge and greater awareness of how individuals and farmers in other countries can be far more productive, encouraging investments in innovation and research in these countries, developing Extension.

As I travel around the world talking about American agriculture, the one thing that has struck me is how jealous the rest of the world is about Extension, how they would love to have the capacity that we have in this country and often, unfortunately, take for granted, of the ability to reach out and gain very useful information and insights to improve productivity. We are trying to replicate that around the world.

For global supplies to keep pace with global demands originating in emerging markets and to mitigate price volatility, we have got to embrace proven technologies, and Extension can help us do that. It's not just biotechnology. It's also conservation tillage. It's drip irrigation. It's multiple cropping practices. There are a variety of ways in which we can help the world do a better job of providing food to a growing population. So there are serious opportunities here for the United States to provide leadership, and we are prepared to do that.

At the same time, I think it's fair to say that we also have a responsibility to our own farmers here in the United States to make sure that markets are fair and they are transparent. That's one of the reasons why we have proposed some changes which I know have generated a great deal of comment on the part of a lot of folks in terms of our Packers and Stockyards Act. We are working through that process. We are taking those comments very seriously. Joe and his team will be using the comments to formulate an economic analysis, so that we know that what we are doing is not at the end of the day going to be harmful but helpful in establishing fair markets.

And we're also working with our sister agencies in a way to make sure that we are focused not just on increased productivity and not just on increasing markets and increasing domestic uses of our crops, so creating more opportunity for income. We also recognize, as the Chairwoman indicated, the necessity of keeping an eye on expenses and working with sister agencies, particularly the Environmental Protection Agency to address some of the concerns that they are required by statute or by court decision to address, but making sure that when they do it, they do it in a way with a full and complete understanding of the reaction and the impact on agriculture.

It's one of the reasons why we have encouraged the Administrator of EPA to spend some time on farms across the country, which he has begun to do. The Chairman mentioned the dust regulation, which is involving ambient air quality standards. We are encouraging, and EPA has indicated a willingness, to meet with farmers before the rule process is completed, to make sure that there is an understanding of precisely how rules may potentially impact farming operations, and we encourage that type of activity, encourage that type of communication, encourage that type of information sharing. And we've seen the same set of opportunities on the spray drift rule and the tailoring rule that EPA is in the process of formulating.

Even if we do the best job of expanding opportunity, creating additional markets, expanding exports, even if we do the best job we can do in reducing the costs and keeping them to a minimum, the reality is, as the Chairman indicated, there are times and situations and circumstances which through no fault of the farmer or the rancher or grower that they are faced with a disaster, they are faced with a declining market, they are faced with weather conditions that make it difficult for them to affect a yield.

That's why we need a safety net. That's why last year the U.S. Department of Agriculture generally provided support of one form or another in the form of safety net payments to almost 200,000 of American farmers, ranchers, and growers. That's one of the reasons why we were proud to expand our crop insurance opportunities to rangeland and grassland areas, why we are implementing a good producer premium reduction rule for crop insurance, and it's a way of providing additional opportunities for risk management and acknowledging those who do a good job of managing risk by reducing and providing a premium reduction.

And we're doing this in the context of some very difficult budgets. There's no question that we have got to get our deficit under control, and the Department of Agriculture stepped up in a very significant and meaningful way and suggested to the rest of the country that we understand and appreciate as well as anyone the need to live within our means.

Those that we serve in rural communities, those hard-working folks in small towns around the country, those folks who are working on those ranches and those farms, they understand and appreciate that the books have to balance at the end of the day, and so we wanted to reflect that in our approach to budgeting, and it's the reason why we reformed our Crop Insurance Program. it's the reason why we identified up to $4 billion of savings to apply to the deficit as a way of suggesting that we understand and appreciate the importance of doing that.

Now, we're continuing to look for ways in which we can do a better job of using taxpayer resources to more efficiently and more effectively run the Department. We're looking at supervisory personnel ratios. We're taking a look a process improvement to try to reduce the time and simplify the process, so that we can do more with less, but it is important when you are dealing with difficult budgets. It is important to give folks who are managing departments sufficient time to manage it properly.

The one thing we don't want to do is we don't want to force a very large budget reduction in a relatively short period of time that makes it much more difficult to use all the tools that are available to manage this in a way that will not harm our farmers, our ranchers, our growers, and our small towns. It's the reason why the President's proposal to freeze discretionary spending over a period of five years makes sense because it gives us time to manage appropriately. We didn't get into this budget circumstance and situation over the last several years, and we're certainly not going to get out of it in a year or two. It is going to take a consistent disciplined approach and a thoughtful approach to managing departments of government.

So we'll continue to work with our friends in Congress to make sure that they understand and appreciate fully and completely the impact, the tough choices that we have to make will have on the people we all care about.

But at the end of the day, I come back to the point that I made at the beginning of this talk, and that is the safest bet in America is on American farmers and ranchers and growers. These are extraordinarily hard-working people who have done an incredible job. If you think in the time period that the Chairwoman indicated, the first Farm Bill discussion in 1933, if you look at where we were then, with subsistence farming just barely making it, in some cases not making it very well, to the point today where every farmer in America is responsible for feeding up to 155 people, the opportunity to export, the opportunity to create export surplus -- and make no mistake about how difficult that is. Most aspects of our economy are not working in a trade surplus.

Every billion dollars of ag trade generates 8- to 9,000 jobs, and when we do $135 billion worth of trade, that translates into hundreds of thousands of people who were employed off the farm, creating a more revived economy. Make no mistake about the fact that that could not have been done but for the extraordinary productivity and hard work and imagination and creativity and problem-solving that American farmers and ranchers and growers have reflected.

This is a group of people that are underappreciated in our country. Oftentimes, they are put in a position with reference to the Farm Bill and the safety net of having to explain the risks associated with farming. These are folks who allow us as consumers to have extraordinary flexibility with our paycheck. Less than 10 percent of our paycheck goes for food cost in this country.

When you compare that to any other developed country or developing country, you find that we have probably 10 to 15 or perhaps as much as 20 percent more of our paycheck when we leave the grocery store than anybody else in the world has, and so those who are receiving that benefit should be asked what are you doing with that 10 to 15 to 20 percent, are you driving a nicer car, do you live in a bigger home, are you taking a vacation that you might not otherwise be able to afford, do you have college money that you are putting aside for your child, is your retirement a little bit larger, and have you thanked a farmer or rancher or grower.

This is an extraordinary story, and it's the epitome of the American experience. And these are also people, as I often say in audiences like this -- these are also people who understand the importance of raising the next generation to understand that they have a responsibility to give something back.

I told the President yesterday that Rural America represents 16 percent of the entire country's population but 44 percent of the military, and the reason why there is a disproportionate number of rural kids who are over in Afghanistan and Iraq risking their life for us, risking their life to make a safer world is because they grow up with an understanding of a very basic value from agriculture, which is that you can't keep taking from the land, you have to give something back to it. And the reality is that when you give something back, you then can expect greater bounty, and that's the story of American agriculture. That's the story of these farmers and ranchers and growers who are providing extraordinary benefits to all of us, and that's why I think the safest bet in this country is always betting on those farmers and ranchers and growers.

Thank you very much.

[Applause.]

DEPUTY SECRETARY MERRIGAN: Ladies and gentlemen, we have time for about 10 minutes of question-and-answer, and I don't know if we have mics or I'm just going to repeat the question.

Mics all over, and I already see someone standing over there. Do you have a question, ma'am? Oh. Marshall? I thought our mic person was a questioner. Okay. Marshall.

QUESTIONER: Thank you. That's working. Mr. Secretary, thank you. Kudos on that speech.

Mr. Secretary, a question. USDA, AID, the Clinton Foundation which we'll hear from, the Alliance for a Green Revolution which I work with, all trying to boost production around the world, but specifically in Africa, to address famine and hunger and grow them out of poverty. A lot of the domestic commodity groups want to be supportive of that but yet are very concerned that we are sort of raising our own competition and competitors. I had a discussion with a lot of the commodity groups on that the other night. What assurances do you have? How do we address that issue that it's in the best interest of American farmers, and in fact this country, to help boost production overseas and specifically in Africa where the potential is so significant, it's the only place on this planet that really has not experienced a green revolution yet? Thank you.

SECRETARY VILSACK: Marshall, that's a great question, and I think first and foremost, it starts with population numbers. I mean, the reality is that we are looking at a population increase up to 9 billion people by the year 2050, and so that is going to put a significant stress on our capacity worldwide to be able to grow enough food and raise enough food.

At the same time that increase in population is occurring, you are having emerging middle classes in countries with large populations, China and India to mention two, and with the emergence of a middle class, you have changing diet habits, which often require and put either further stress, if you will, on agriculture, so the demand is going to be great. The demand is going to be great.

And if we think we have challenges today from a national security standpoint, they will pale in significance once we get into a circumstance where there is too little food for too many people. A lot of the unrest that is currently occurring today is because there is a perception within a country of food shortages, but what happens if that becomes a global perception? So, first of all, I would say the increased population and the changing diets are going to create demand.

Secondly, you got to have faith and confidence in the capacity of the United States to respond to that competition, no matter how stiff it might be. Why? Because we have got great research universities. We have commodity groups that are constantly looking for ways to increase productivity, to reduce input cost, to be more efficient.

The Chairwoman mentioned GPS, a small mention in her speech, but the reality is that when you have a GPS system, the chances are pretty good you are going to spend less seed, less fertilizer, less inputs because you are going to apply it more efficiently. If you have irrigation systems that become more sophisticated and use scarce water resources more effectively, that, too, is going to make you more productive. So I think number two, in addition to the demand, is that our capacity to meet the competition because of our capacity to always be innovators and creators and makers. The American experience, the American economy has always been based on the notion that we're one innovation, one step ahead.

The third thing I would say is these commodity groups have to understand how far folks have to go in other countries. I mean, this isn't a situation where they are just going to tomorrow embrace biotechnology. We're dealing with -- I saw this in Kenya. We're dealing with farmers who plant soybean and corn in the same place at the same time -- same place at the same time, two seeds, same time, same place, because they feel that that's a good way to increase their capacity on a very small acreage, and the reality is that they have a long, long way to go in just basic conventional and traditional agriculture before they -- you know, they're dealing in 18th century circumstances or 19th century circumstances, clearly not 20th or 21st century technologies.

And then finally, you have to understand the makeup of the Department of Agriculture or the comparable Department of Agriculture in these other countries, and that brings to mind Afghanistan. We have people over in Afghanistan right now, USAID, USDA, trying to help the Afghans become more productive farmers of saffron and growers of almonds and pomegranates and things of that nature because they can actually generate more income from that than selling poppy.

But creating a Department of Agriculture in Afghanistan that provides services and information and supports the farmer in Kandahar, for example, is really hard. It's very, very difficult for a multitude of reasons, because they just haven't had that kind of structure. They don't have the regulations in place. They don't have the notion of sanitary and phytosanitary standards. They don't have the research capacity. They don't have the knowledge. They don't have the equipment. They don't have the capacity to travel, and they don't have Extension. They don't have any of that infrastructure that we oftentimes take for granted.

So the combination of all those things puts us in a better position to be competitive, to meet the challenge, which is why I think the safest bet in America is betting on the American farmer and rancher.

Look, we'll just do one more or two more. That was a long answer to a short question. Yes, sir.

QUESTIONER: Thank you, Secretary Vilsack, and thank you for visiting Vermont there last fall. I got to speak with you. I want to thank you about your positive comments about the impact of land grants and research as well as the importance of the rural community. And also, just some ideas on how you can recommend that Cooperative Extension become even more pervasive in the application of that research throughout this country. As you know, we have struggled through the last couple of decades, even though we're internationally recognized as a very strong system, so some of your suggestions on how we move forward and make our rural communities and our agriculture even stronger. Thank you.

SECRETARY VILSACK: Well, one thing I think is that, you know, one of the difficult traits of folks who are in this business of rural development, in this business of farming is there is a certain humility about the folks who work in this space, and so they are doers. They're not self-promoters, and so they're out doing, and they just assume because they're doing, everybody knows what they're doing and everybody appreciates it, but that's not the case today.

There has to be a better education opportunity among legislators, State legislators and Members of Congress and folks in departments and in agencies about what Extension does and the capacity that it has to get information out to folks.

And then I think there has to be a willingness on the part of Extension to take a look at modern ways to communicate. That's one of the reasons why we are promoting broadband expansion because we think that there are tremendous opportunities here for using technology. Even if personnel resources are stretched, you still have the capacity to use technology to get information out to folks, and there needs to be, obviously, an embracing of that and an effort to utilize that, to get the message of Extension out.

And then, third, I think it is important for us to celebrate the diversity of agriculture and Extension's role in promoting alternative opportunities. It's not just production agriculture. That's extraordinarily important, but if we want to repopulate rural communities and we want to bring young people into farming and we want to have continued entrepreneurship and innovation in agriculture, we're going to have to also recognize that there's a place for small farm systems, there's a place for regional and local food systems, and we ought to be building the supply chain that allows that to happen. And we ought to be having the conversation that needs to take place, so that everybody can do what they need to do on their farm without necessarily having difficulty based on what their neighbor is doing.

That's a difficult conversation, but it's one that Extension could help facilitate. It can happen at the local level, it can happen at the community level, and it ought to happen. It ought to be happening all across the country.

So I think there are enormous opportunities, but it starts with you all making sure that folks know what you do, and don't assume that people know what Extension does because they don't, and don't assume that they know how important it is because they don't. And then if you can get farmers and ranchers and growers who benefitted from Extension to basically carry that message as well and not just somebody from Extension but the people who benefitted from Extension, I think it can be a very powerful message to preserve the resources you need to continue Extension.

DEPUTY SECRETARY MERRIGAN: Thank you, sir.

SECRETARY VILSACK: Okay. Well, I'm getting the hook here.


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