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Transcript of Agriculture Secretary Mike Johanns' Remarks To the Northern California Agriculture Summit

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Location: Auburn, CA


Transcript of Agriculture Secretary Mike Johanns' remarks To the Northern California Agriculture Summit

Release of the 3rd Farm Bill Theme Paper on Rural Development

Auburn, California - July 7, 2006

SEC. MIKE JOHANNS: Well, Congressman, thank you. It's great to be back in California. The Congressman did mention that I have two children, I do -- three grandchildren, I do; although I'm very, very pleased to announce that any day now we are going to add to that and bring into this world a fourth grandchild. So I'm pretty excited about that.

The Congressman also mentioned that I grew up on a dairy farm in Iowa. I will tell you that was in North Central Iowa near a community called Osage. And I look out across the room, and I see some of you are puzzled, and you're wondering where Osage, Iowa, is at. So I better clear that up so you're not thinking about that while I'm trying to visit with you. Osage is actually south of Staceyville and St. Ansgar, and it's straight east of Manley. So now you know where Osage is at.

[Laughter.]

I've been in elected office almost all of my adult life. I never thought that was going to happen, but it did. I tell people this story. My father had three sons. And my dad John Johanns, his idea of building character in his sons was that he would hand us a pitchfork and we would head to the barn or the chicken house or the hog house, and we would stand knee-deep in you-know-what and that was John's idea of building character in his sons. Now little did he know that he was preparing his youngest son for his life in politics, right?

[Laughter.]

Sorry about that, Congressman. I tell that joke kind of on myself, you know?

But it is great to be here. I do appreciate the nice introduction. Thank you for the compliments, Congressman, but I will tell you this is a mutual fan club here. I really hope you appreciate -- I know you do -- the good work that the congressman is doing for you back in Washington.

One of the things about Congress is, you put in some time there and you start building your way into very, very important places. And the Congressman mentioned that he serves I think the formal title is the Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration and Related Agencies. That's a mouthful. But the net effect of that, ladies and gentlemen, is that it's a very, very important place to be.

When I go talk about my appropriations -- and you know we have a large budget. I have about a $90 billion budget on an annual basis devoted to a lot of very important programs. I'm talking to your congressman about that budget. I'm talking to him about the importance of what we're doing. So he serves in a very, very critical capacity.

I'll also tell you it's great to be in Auburn today. What a beautiful area. It's always good to be in California. This area is very pretty, and people tell me that if I was actually here a few months earlier, everything is green and lush. But, you know, I think it's very, very nice now.

So you know California is an exceptional producer of agricultural products. You do agriculture very, very well in this state. You are leaders in the nation as a matter of fact in production value. You're the top producer of fruits and vegetables, dairy and nursery and floral products just to name a few.

I got to know your ag secretary here. A.G. is a great guy, does a great job for you. But we were together a few weeks ago down here in California, and someone was pointing out to us that one California county can actually produce more in agricultural products than many of our states in the United States. That's an incredible statistic. Your agricultural productivity helps us keep our nation strong, so if I have a single message today it would be to say thank you for that and definitely keep up the good work.

American agriculture has had quite a run in the last five years, and that is a powerful demonstration of the tremendous contributions that this region brings to agriculture. We are fortunate to have a healthy ag industry -- some of the most innovative and determined producers anywhere in the world. And I tell you that from experience. I've seen agriculture in other parts of the world. We just do it very well here.

American agriculture productivity is expanding at about a rate of 2 percent per year, and that's pretty consistent. Meanwhile, our population is increasing by only about 1 percent a year. You chart that out over the next two decades, you begin to realize that those numbers make it very clear we need to do all we can to open markets to American products. It's important to our producers.

I did recently return from Geneva -- in fact just got back on Wednesday -- where I joined U.S. Trade Representative Susan Schwab in pressing for an agreement in the Doha Round and World Trade Organization's free trade discussions. I will be candid with you-- I'm disappointed we haven't reached an agreement yet, but we're committed to continuing the effort.

The United States has put forward a very generous proposal to reduce domestic trade-distorting subsidies. But our ambition has not really been matched. We don't intend to sign on to an agreement unless other countries come forward with significant market access. It's important in California, but it's important across the country too.

There's still an opportunity to reach an accord, and let me assure you that Ambassador Schwab and I are going to work hard to make that happen. It is important for U.S. agriculture, it's important for developing countries, and it's important for the global economy.

President Bush said it well in the State of the Union. He said, "With open markets and a level playing field, no one can out produce or out-compete the American worker." He's right about that. I believe that's very true. American agriculture is enormously productive.

One of the challenges we face is ensuring that you have enough workers to help produce and harvest your crops. On ranches and farms all across America from planting to harvest, production could not be completed without the use of hired hands. The demand for workers is frequently met by large numbers of immigrants -- it's been that way for decades -- willing to perform the intense labor required to bring the crops in from the field. Immigrant labor is especially relevant in California, being a border state with a strong ag economy.

In Washington there's been a lot of debate about this issue. The President has talked about the need for a comprehensive approach to immigration reform. There are a number of components to the program including securing the border, ending the practice of catch-and-release and improving worksite enforcement. The President has also proposed a new Temporary Worker Program that would allow immigrant workers to register for temporary legal status for a fixed period of time. This would allow producers to fill commercial jobs with willing workers; but it's also the right approach to protecting all workers in America.

The House of Representatives drafted a strong bill that won the President's endorsement and would significantly increase border security and enforcement capabilities. We applaud them for their efforts. The Senate created a bill that addresses the many complex components necessary for comprehensive immigration reform. So a House bill and a Senate bill.

It is my hope that Congress will work together to pass comprehensive immigration reform. It is necessary. It's necessary for the nation as a whole, and it's important to agriculture.

Another significant challenge facing producers today is energy costs, and we've been working hard on that issue at the Department. We're developing tools that will help reduce the costs on the short term, such as interactive on-line energy estimators that allow producers to calculate potential savings from implementing energy-saving practices in areas like tillage, nitrogen use, irrigation. I'm pleased to report to you that the calculators have been a hit, and they've been very widely used. Since the release of the first estimator in December, the three tools have received a combined total of more than 1.4 million hits.

We're also investing in long-term solutions such as renewable sources of energy. I think there's real potential here to California. Since '01 the USDA Rural Development alone has invested over $356 million in 650 renewable energy and energy-efficient projects. Those investments though have leverage in an additional $1.2 billion in private investment.

In the President's budget proposal for '07, USDA's core investment in energy-related research and public lands projects increases to $85 million. And it is an increase. We also expect to provide more than $250 million per year this year and next in Rural Development programs that generate increased energy supply and efficiency.

Demand is rising for renewable fuels like biodiesel and ethanol. We are pleased with our current success but realize there's tremendous opportunity here to make alternative fuels more economically viable. To that end, USDA is cosponsoring an Renewable Energy Conference with the Department of Energy in St. Louis in October. This conference will bring together government leaders charged with addressing our nation's energy problems as well as key stakeholders from the finance, agriculture and energy sectors.

At the conference we intend to deal with the tough issues, areas where government can play an important role in helping to overcome obstacles to expansion of renewable energy. Renewable energy derived from wind and solar power. Agricultural sources not only help rural America by providing alternatives to oil, but it also serves as an economic generator for our rural communities in this nation.

I look forward to a day when a large percentage of our energy sources are produced by the bushel in rural America or by using biomass instead of by the barrel overseas.

Rural development is a key component of our mission in USDA. Our efforts to increase energy production in rural America represent just one section in a large portfolio of Rural Development programs. That portfolio is the focus of much attention as we turn our attention to prepare for the next Farm Bill.

Last year I traveled across the country. We did 52 Farm Bill Forums. I hosted more than 20 of them. It was a great experience for me. One was here in California. I enjoyed those hours of listening to the ideas and concerns of farmers and ranchers.

All in all, we received over 4,000 comments, and recently we released 41 papers that summarized the comments we heard at the forums. A few topics were raised more frequently than others during those listening sessions. I asked our economists to perform an in-depth analysis of these topics, the themes from the listening sessions. Their findings are being presented in analytical papers that are posted on our website.

I want to ensure that you and producers across America have access to the same analysis I do. The first paper released in May was about risk management. The second paper on conservation and the environment was released in June. Today at this event I'm very pleased to announce that I am releasing the third analysis paper, and we have copies in case you want a hard copy.

This one focuses on that topic I was just visiting with you about, Rural Development. It evaluates our current Rural Development policies and discusses possible alternatives from the economist's perspective. The purpose of this paper is not to lay out the administration's Farm Bill policies, but rather to inform and to educate the public about our Rural Development programs and their relationship to agriculture.

The first step to productive debate is to ensure that we all have the facts on the table, which is the purpose of this paper and the others. During the Farm Bill listening sessions we heard nearly unanimous support for our Rural Development programs. One California producer told us that USDA's impact is seen in many small communities in what he calls "the sticks and bricks" from our Rural Development programs. And he said, and I'm quoting here, "And it's not just in the sticks and bricks as much as the community pride and in the public health nexus that the federal investment brought to those communities," unquote.

At USDA we're enormously encouraged by comments like these, but also the comments we got across the country. We want to build upon that success, and this paper examines opportunities to do that. Now the term "rural development" has broad connotations, implications encompassing a wide variety of community improvement approaches. They include improving the community's economic status, its infrastructure, its healthcare, its housing, its technology, its environmental qualities to name a couple.

Rural America is home to about 50 million people, and it encompasses about 75 percent of the total landmass in the United States. With such a large scope, it's easy to see why Rural Development is of key importance to the U.S. When you hear that statistic 50 million people, about 2 million farmers in the United States. As the American Farm Bureau Federation noted in a November report -- and again I'm quoting -- "Farmers are more dependent on rural communities than rural communities are dependent on farmers." That was the Farm Bureau analysis.

Given the changing reality of agriculture, the Farm Bureau, along with many people who spoke during our listening sessions, would like to see an increased focus on rural America. Developing rural America has become a higher priority as rural communities across our nation have evolved.

In 1950, the year I was born, about 40 percent of rural residents lived on a farm, and one-third of the rural workforce worked in production agriculture. Today less than 10 percent of rural people live on farms, and fewer than 7 percent of the rural workforce is directly employed in farm production agriculture. Even more telling, in 2003 nearly 70 percent of farm households reported that the operator or the spouse worked off the farm and just under 90 percent of farm household income was earned off the farm.

These are profound statistics. This is what has happened. Rural America has changed. Again, in 2003 nearly 70 percent of farm households reported that the operator or the spouse worked off the farm, and just under 90 percent of farm income was earned off the farm. Rural America has changed.

Even larger farming operations with sales between $250,000 and $500,000 per year earned nearly half of their income from off-farm sources. Additionally, nearly 8 percent of farm-dependent counties lost population from 2000 to 2005. This loss is primarily due to inadequate amenities or a lack of off-farm employment opportunities. The jobs aren't there, so the young people leave.

These statistics demonstrate some of the challenges facing rural America today. They vary of course from place to place. If you step back and look at rural America as a whole, you see an incredible diversity-- diversity of strengths, diversity of challenges. From the cornfields of Iowa to the Central Valley of California, from the small towns of New England to native villages of Alaska and communities of our Southwest, each community is unique and it has unique challenges, but unique opportunities.

USDA attempts to address this varied set of challenges through a very diverse portfolio. Some provide business assistance to stimulate the local economy by creating and retaining jobs and encouraging investment. Other programs assist with that infrastructure I talked about-- water, electric, telecommunication systems. Still others are designed to assist low-income communities, while offering financial and technical assistance, leadership training.

On a different track, we have programs that capitalize on the work to enhance the natural environment, spurring economic development and improving quality of life. We implement these various programs through grants and loans, loan guarantees, financial and technical assistance, and research.

The analysis paper I'm releasing today provides some very fascinating facts. For example, in Fiscal Year '05, our business programs created more than 73,000 jobs. Our electric programs connected just under 200,000 new customers and improved service to over 2 million existing customers. Our water and our wastewater programs helped to improve water distribution and wastewater disposal to over 1 million customers. In that same year we invested more than $4 billion to assist more than 44,000 families through home ownership.

We invested another $66 million in the rehabilitation of homes, something every small community needs, for more than 11,000 families. Since 1997, Rural Development has invested nearly $3 billion here in California alone. Over the last five years we've invested more than $54 million in this state to increase the capabilities of first responders-- fire protection and law enforcement agencies in those areas.

These funds have been used by rural communities to purchase the new police cars, fire trucks, emergency rescue equipment, and other critical items. Since '01 more than $500,000 has been provided to communities right here in the Fourth District to enhance fire suppression capabilities. Reducing the risk of wildfire in rural communities is a very high in priority for us. We encourage sustainable agriculture and forestry practices, and we support state efforts to protect sensitive forestlands and to help local communities mitigate potential for wildfires.

You know I so appreciate Congressman Doolittle's efforts in forest health and in fire safety. It's the kind of leadership we need in Washington. By sponsoring the Healthy Forests Restoration Act, he's helped enable our Forest Service -- which incidentally is under the USDA umbrella -- to conduct important forest treatments. Congressman, we thank you for that.

The Forest Service assists with Rural Development as it pertains to rural forest dependent community planning, fire safety and diversification efforts. From '99 to '03 economic action programs in California provided $19 million in aid to rural communities and businesses dependent on forest resources to become sustainable and self-sufficient.

All of this doesn't happen accidentally. It happens because there are champions in Congress, and as I said we are so appreciative to your congressman for his leadership and help.

Now those are just a few of our Rural Development programs. As I said earlier, we heard broad support for these efforts during our listening tour. And the analysis by our economist now supports that conclusion.

However, the analysis also references several concerns in its review of Rural Development program performance, including insufficient information on the economic impacts of specific programs and, potentially, duplication that occurs. The report noted a need to ensure broadband modems are focused on rural areas that would not have adequate service in the absence of the program assistance. Additionally they pointed out that there could be greater effort to make certain that we aren't duplicating in our programs. So although our Rural Development efforts are considered wildly successful, there is room for improvement.

With that in mind, Dr. Keith Collins, USDA'S chief economist, offers three broad alternatives in this analysis paper that would enhance our efficiency. The first alternative would be to maintain the structure and tools in the existing program, but refine the targeting and assessment of some programs where targeting would be appropriate and would better leverage tax dollar investment.

The second alternative would be to focus on this new business formation supported with rural private investment. Currently only 8 percent of USDA's Rural Development program assistance is directed at economic development through direct creation of new business and employment in rural areas. The remaining 92 percent, while related, is focused on infrastructure development special needs. This alternative emphasizes the view that new business formation and retaining the return on investment in rural areas is the ultimate driver of our success in Rural Development.

The third and final alternative to current rural policy would involve a move towards greater regionalized funding. This approach would encourage rural communities to band together, to join forces if you will, to maximize the regional assets in pursuing rural economic development programs.

So those are the three possibilities that have been identified. They are not exhaustive and they're not definitive policy proposals as such. The day will arrive not far off when we will make policy proposals to Congress, but not until we're done with the analysis. Rather, these approaches give us a generalized idea, hopefully, to help frame the debate.

I don't think I have to tell this audience that rural America is important. I don't believe I have to sell you on the importance of a vibrant rural America. I grew up on a farm in Osage, Iowa, as I told you. The rural lifestyle offers advantages that, I can tell you, cannot be met in urbanized settings. Rural America embodies both a glimpse back to another time as well as a promise of a future bright for our children and our grandchildren.

At USDA we appreciate you, and most importantly we want to preserve the values, the traditions and the quality of life that is epitomized in rural America. So I encourage everybody in this room to read the paper. It will be on our website as I said. We do have some hard copies.

Our goal in all of this is to provide efficient support, as efficient support as possible, to American agriculture. Good farm policy has to be equitable. It has to be predictable. And it has to be beyond challenge.

I look forward to engaging in a thoughtful discussion as we work with Congress to craft a new Farm Bill, and I look forward to continued input in the process. It is my hope that producers all across America will help decide the future of agriculture for our nation, not just one area of our nation.

Ladies and gentlemen, I thank you for your time and your patience. God bless each of you. God bless our great country.

[Applause.]

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