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CNN "State of the Union with Candy Crowley" - Transcript

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CROWLEY: Joining me now is agriculture secretary Tom Vilsack. Mr. Secretary, this drought seems to have taken everyone but the farmers by surprise here. I want to give our viewers some idea of the breadth of it. 1,000 counties in 26 states have been declared natural disaster areas. 61 percent of the land in the lower 48 states is in drought condition. 30 percent of the corn crop in 18 of the biggest corn growing states is in poor or very poor condition. And half of America's pastures and ranges in poor or very poor condition.

We see nothing in the weather forecast that suggests this is going to change. Ultimately, what does that mean for food prices and what does that mean for farmers?

VILSACK: Well, first of all, Candy, our heart goes out to all those producers, the ranchers and farmers who are dealing with something they have no control over and appreciate you giving an opportunity to talk a little bit about this.

We're really not going to know the full extent of all of this until the cotton is picked and the beans and kernels are counted, but clearly our yields are going to be down. Now what impact that's going to have is somewhat dependent upon our areas of the country that are actually having decent rains and the technology that's allowing us to basically do better under these drought conditions than we would otherwise.

We'll probably see less in terms of crop production, but we're still going to be able to meet the food needs of the country. We're still going to be able to export. We're still going to be able to utilize crop residue to produce energy, all of which is important for rural America. We have a momentum going in rural America.

The real challenge for us though is that the USDA, the Department of Agriculture, does not have the tools it once had to help people through this difficult times. When the disaster programs of the 2008 farm bill expired on September 20 of last year, it left us with very little option in terms of being able to provide help to these folks. And that's why it's just imperative that the House leadership get the food, farm and jobs bill that recently went through the House ag committee on the floor and get it voted on before September 30th so we can provide additional help and assistance to these folks.

CROWLEY: Let me push you a little bit to -- I don't think anyone questions whether the food supply is in danger but the price of the food supply because we see in terms of crop price increases, corn up almost 17 percent, soy 37 percent, wheat is up 29 percent. That is bound to have an effect on food supply at some level. And what we're talking about here as you well know coming from Iowa is meat, eggs, poultry, milk. Do you expect prices on those products to go up in the grocery store?

VILSACK: Here's the interesting thing about this, and it gives me an opportunity to point out how little of that grocery store dollar the farmers and ranchers actually get. Fourteen cents of every food dollar that goes through a grocery store goes in the pocket of a farmer or rancher. So while these commodity prices will likely increase, it will have a marginal impact on food prices. What really drives food prices more significantly are energy costs. That's why it's important for us to continue to focus on the president's "all of the above" approach to produce more energy here in the United States so that those energy costs are kept stable.

Food costs are liable to increase.

CROWLEY: It's my understanding, Mr. Secretary, that prices on a lot of things from cereal to soft drinks and meat prices are already up in some cases by 30 percent. That has nothing to do with the drought?

VILSACK: They shouldn't be because those -- the prices and the impact of a drought probably will not likely be seen in the grocery aisles until later next year, 2013. If folks are using this opportunity to raise prices inappropriately, shame on them. It takes a long time for the prices to basically work itself through the system.

We're going to have folks in USDA go out throughout the country to many of the states that are impacted negatively by drought to see what we can do to help these producers. We've got emergency loans. We're providing opportunities to use conservation reserve program lands for hay grazing which might mitigate some of the consequences of all this.

But, again, our tools are limited. And the impact of those tools are limited unless a food, farm, and jobs bill gets passed by Congress.

CROWLEY: And I think they have a September deadline for when they're looking to pass this, is that how you understand it?

VILSACK: That's correct. And there are some folks who say, well, let's just extend the existing 2008 farm bill.

CROWLEY: Right. VILSACK: The problem with that is it will not revive the programs that have expired. So there still will not be disaster programs for livestock operators. We contributed nearly $4 billion to a nearly 400,000 producers during the course of the 2008 farm bill when those disaster programs were available.

So you can see they are very important. And it's just -- it's an unfortunate circumstance that we're not getting this bill to the floor right now.

CROWLEY: Let me turn your attention to something, I want to take advantage of the fact that you were governor of Iowa. You once ran for president yourself. You now see how Washington works.

I was looking at the statistics for Iowa right now, vis-a-vis the presidential race. And what we saw was that, first of all, Iowa has a relatively low unemployment rate, at least compared to the rest of the nation, 5.1 percent. The president won Iowa by nearly 10 points four years ago. And right now, all the polling is showing dead even. Could you tell me why.

VILSACK: Well, I think the Republicans had a contested primary for governor, and they had a contested presidential primary which obviously stokes a lot of interest on that side. I think the president will win Iowa.

And the reason he's going to win Iowa is when folks take a look at the rural economy, when they look at the fact that we've had record farm income, we've had record exports, we've had record farm implement shipments, all of those play to the strength of the Iowa economy.

And it's in part because of the policies of this president to expand exports, to focus on rural development, to strengthen communities with investments that we've made, and it's a result of a better economy.

And if you look at all the battleground states, what you're going to find is those states have strong agricultural economies and those strong agricultural economies are helping to reduce unemployment.

Rural manufacturing also has increased over the last couple of years. So I think there's a good story to tell. And as we tell that story during the course of the campaign, I'm very, very confident that Iowa is going to be in the right column for my perspective on November.

CROWLEY: Agriculture Secretary Tom Vilsack, it's very good to see you, sir. Thanks for joining us.

VILSACK: Thanks, Candy.

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