Remarks by Agriculture Secretary Tom Vilsack to American Farm Bureau on Monday, January 10, 2011- Edited version of full speech

It is very fitting for me to be here today to speak to Farm Bureau members, to speak to people who are responsible for feeding my family and the families of America and in doing so provide us the most productive, affordable, accessible food supply in the country.

We had a pretty good year in 2010. Farm income is expected to be at perhaps a record level, and there are many reasons for that. Obviously, the most important reason is the productivity and the hard work of American farmers, but we also had a record year in exports, and I know that the Farm Bureau is interested in making sure that we continue to focus on exports, and I'm here today to assure you that we are going to do so.

We have worked tirelessly to convey to the rest of the world that we have the best food at the most affordable prices. We've traveled all over the world speaking about the importance of the American brand, and that's one of the reasons why we've had record exports.

We've looked at each individual country as an individual market, not treating countries as one great export opportunity but each individual country, trying to figure out what we could do to open a market to remove a barrier.

American agriculture learned lessons from the 1980s when we went through a difficult time. American farmers made the decision that they were going to reduce their debt load. They were going to work hard to be productive, to make sure that they only borrowed that which they needed.

So, today, for every dollar of debt in the countryside, there is $11 of asset value. There's a message there for the rest of the country. American agriculture is, I think, one of the most productive aspects of our economy; in my lifetime, a 300 percent increase in corn yields, a 200 percent increase in soybean yields, almost 200 percent increase in wheat, the list goes on, because we have been engaged in embracing technologies and innovation and have not been afraid to embrace new ways and new approaches. And the result is that we are the most productive agricultural force in the world.

And we have learned that by virtue of this great productivity, we are able to export and bring wealth into our communities, into our country. Agriculture is the only major aspect of our economy that has a trade surplus. We expect it to be at a record level this year and expect it in 2011 to again be at a record level. That helps to bring resources into this country, creating wealth in this country.

So what's the message for the rest of the country? Well, it's simple. We have to be an economy that makes and creates and innovates again, and we have to be a nation that exports. If we're able to do that, we'll be able to reduce the responsibilities of the next generation in terms of debt. We'll be able to increase our productivity in agriculture and other aspects of our economy, and we'll be able to export the American brand creating wealth here, rebuilding the middle class. We know it can work because it's worked in agriculture.

But there are several issues that we must address as a community, as a farm community, as a rural community. They are reflected in the discussions that will take place over the next year to two about the farm bill. When you're dealing with having to reduce deficits, we're going to have to make difficult choices. It's one of the reasons why we stepped up at the Department of Agriculture in an effort to convey a sense that we were serious about this deficit in restructuring our crop insurance program to save $4 billion to apply it to deficit reduction.

But we didn't stop there. We decided that we could become innovative with crop insurance. We could figure out how to use resources to expand coverage in range and pasture land, which we have been wanting to do for sometime. So we not only reduced the government's exposure, but we figured out a way to expand coverage.

And just last week, we announced the good producer premium discount, which acknowledges that those who have great production records and those who have had good records in terms of crop insurance ought to perhaps receive a break on their premiums. So there are ways in which we can be creative with our resources while making sure that we spend our money wisely.

We're going to have a conversation about the safety net, and there's no question we need a safety net. Last year, 144,000 producers needed the protection of SURE and the other disaster programs and many farm families rely on some form of government assistance in order to be able to keep the farm.

When you look at American agriculture and you understand who farms and who makes money in American agriculture, you understand why we need a safety net. By some definitions, we have 2.2 million farmers in this country today, but that means that we have 2.2 million people who sell more than a thousand dollars of agricultural products. 1.3 million of those sell very, very little, less than $10,000. Then there are the 600,000 American farmers who sell less than $250,000 in sales which means their ability to make a living is compromised unless they have off-farm income.

So, when we talk about a safety net, we have to ask how are those farmers doing, how are those ranchers doing. Well, in this last ERS income study, we found that they will average in the best year in a long while for farm income, where we saw a 34 percent increase in farm income. Those farmers will average about $10,000 from their farming operation net. So it's obvious that we need to be addressing that group of farmers with a farm bill that addresses and recognizes the important role they play in helping to populate and support rural communities. It's not easy for them. That's why you need safety nets. It's also why you need rural development programs.

Expanding Biofuel investment

It's one of the reasons why we're looking for diversification within agriculture, and one of the ways we think we can diversify agriculture is looking at biofuels. I'm talking about expanding opportunities in biofuels, so that every part of the country has a chance to benefit, every part of the country can produce biofuels and biodiesel, everyone has the capacity.  We’re going to be investing in other parts of the country other than the Midwest, so that we create an opportunity in every corner of the country. Whether it's municipal waste or whether it's crop residue or woody biomass or livestock waste, all of that can be creating new opportunities in rural communities.

When we reach 36 billion gallons of biofuel, roughly one-fourth of what we need for our fuel needs in this country, we will help to create 1 million new jobs in Rural America and see an investment of over $100 billion. That's why it's important for us to have a diversified effort on biofuels. That's why we will have a conversation and discussion about how we can support this industry as it matures, and as oil prices go up, and they will no doubt go up, this becomes even more important from an energy security standpoint for the country. So any discussion about safety nets has to include a discussion about diversifying income opportunities.

1 percent of farmers produce 85% of output

The last group of farmers are roughly 300,000 in number, less than 1 percent of the 1 percent that farm totally in this country, less than 1 percent of the population, 300,000 farmers who produce roughly 85 percent of what we consume and what we export. They'll do quite well, but they also will have significant capital investment, and that's the reason why it was important to pass tax legislation in this last session of Congress, not only to reduce payroll taxes for a year but more importantly to allow business expensing at 100 percent this year, so that folks could feel free to go out and purchase that implement that they have been wanting to purchase for sometime but have been concerned about their ability to afford it.

And that's why it was important to have a State tax relief in this bill that assured all the members of this audience and your family members that you're not going to have to worry about whether or not the farm is going to have to be sold or split up. It's important.

You know, the rest of the country doesn’t appreciate the benefits we receive from what you do. American consumers spend somewhere between 10 and 15 percent of their paycheck on food. The rest of the world may spend 20, 25, and in some developing countries as much as 40 or 50 percent.

And so I'm asking my friends around the country, what is it that you do with that extra 10 to 15 percent that you get because of the productivity and hard work of American farm families? And when was the last time you thanked a farmer or rancher or grower?

This is an important message for us to convey to the rest of the country as we begin to discuss the farm bill in the context of less debt for the country because you all know and I know we cannot continue to sustain high deficits. So everyone is going to have to do their part, and we at USDA began that process with our efforts in crop insurance.

Investment in Research.

It's going to be important for us to continue to be as productive as we possibly can be in agriculture. That means we need to continue as part of the farm bill discussion to recognize the important role that research plays not only in increasing productivity but also in dealing with invasive species and pests and diseases. We spend and invest roughly a billion dollars a year in a variety of pests and diseases that I know impact and affect your productivity.

We're going to continue to invest in the research that tries to solve those problems.

Dairy Farmers need help

I recognized that challenges that that industry suffered specifically in 2009, and we saw a slight rebound in 2010, but I know and you know that we are also watching carefully what's happening as herds increase. We know what can happen if they increase too quickly and too much and we have an oversupply of milk. That's the reason why we put a Dairy Council together and challenged them with coming up with a formula and a format that might provide greater stability, less volatility in dairy pricing, and we expect and anticipate their recommendations will be forthcoming within the next month or so.

And we will be working with both House and Senate agricultural committees to ensure that we actually do take action. Our dairy farmers need this help. In just the last 10 years, we've gone from 110,000 producers to 65,000, and so I think it's important and necessary for us to see if we can figure out a way in which we can provide greater profitability and more stability in that industry.

Innovation also requires us to take a look at our regulatory processes, and I know that there's been a lot of conversation and discussion about our regulatory processes. We have today roughly 23 pending deregulation efforts within USDA. These regulation efforts, take somewhere between five and six years to get through, and they cost millions of dollars. And I've tasked our team to figure out a way in which we potentially can reduce the amount of time it takes to review and come to a decision.

What we're trying to do is to stimulate a conversation and to ensure that every person, every farmer, every rancher, every grower has the capacity to do on their land what they wish to do. One of the principal fundamental principles of Farm Bureau is that notion that a farmer ought to be able to sell and do on his land, ought to be able to raise what he wants to raise and what she wants to raise on their land. It's a property rights issue, and so we're trying to figure out, as difficult as it might be, is there a way in which we can assure that we have less interference with the capacity for folks to do what they want to do on their land.

If you want to grow GM crops, you ought to be able to do that. If you want to conventional farm, or you want to be an organic farmer, you ought to be able to do that.

Innovation also requires fair and open markets. That's one of the reasons why we just asked a series of questions during these hearings we have with the Department of Justice and why we've proposed the GIPSA rules, and the Farm Bureau correctly suggested to us that we ought to make sure that we have a full and complete understanding of the economic consequences and analysis of those proposed rules.

Now that we've received 62,000 comments, we have a full range of opinions and thoughts about this, we can take all of that into consideration and look at the concerns that have been expressed in those comments, and that will do a thorough and complete economic analysis so that we know precisely what the impact of those rules will be.

Producers are receiving an ever-shrinking piece of that food dollar

But what we want to do and what every farmer deserves to have happen is that we ought to have fair and open markets, without necessarily jeopardizing processes that are in place today that might be beneficial to the producer, because I understand and you understand that producers are receiving an ever-shrinking piece of that food dollar, and that's perhaps one of the reasons why we now have roughly one-tenth of the pork producers we had 30 years ago. We've lost 90 percent of the pork producers, and we've lost roughly a third of our cattle producers. So we have to ask these questions, and they have to be asked in the context of a farm bill discussion.

So we're going to continue to focus on innovation, focus on making sure that we help partner with you in terms of innovation, and we're also going to be innovative when it comes to conservation. And I understand and appreciate that there are many challenges that farmers and ranchers face, one of which is exactly knowing what to do and how to do it in terms of conservation and the various regulations that impact agriculture.

Reducing barriers to export

Last but not least, the export piece of this. I mentioned that we're working very hard on reducing barriers, on looking at countries as individual countries from a trade perspective. We are going to continue to do that.

There are closed markets that we have to continue to work on to open. That's one of the reasons why I traveled to India, to continue to talk to the Agriculture Minister in India about the necessity of opening up their markets, of having greater confidence in the ability to have a free flow of exchange of goods and services.

There are emerging markets, and China is certainly one of them. China is now our number-two trading partners. They're a half-a-billion dollars away from being the number-one trading partner in this country in agricultural products. It's Canada, it's China, and it's Mexico.

There are mature markets like Japan, and there again, we're having conversations about reopening markets. It's also about negotiating Free Trade Agreements. We are hopeful that Congress will be able to act appropriately and quickly on the Korean Free Trade Agreement. We hope that creates momentum for other Free Trade Agreements because we know and appreciate the impact that that can have specifically on agriculture.

And it's also about multilateral arrangements. That's one of the reasons why we're engaged in the Trans-Pacific Partnership discussions in Southeastern Asia, which is another growing opportunity for American agriculture.

So we're going to continue to focus on exports, and that's one of the reasons that we need to make sure that as we fashion a farm bill, as we put together an understanding of what it takes to support agriculture in this country, that we don't forget that 1 out of every 12 jobs in this country is connected to agriculture, and that we have that export surplus, that trade surplus because of our exports in agriculture, and we want to maintain that with a good, strong trade, that section of the farm bill.

But I want to end with this. There are many reasons to be appreciative of the folks in this audience. You are the supplier of food and fiber and feed. Eighty-five percent of the renewable water resource in the country is impacted and affected by what happens on our private working lands. It's 800 million acres of forested land that is in Rural America, so 1 out of every 12 jobs, the export surplus.

We can't keep taking from this country. We have to give something back to it, to look back into that value system that's so important, to recommit to this country. Whether it's in public service or it's on the farm or the ranch, we need to give back. When we're faced with difficult decisions about farm bills and deficits and long-term economic opportunity, we have to figure out a way in which we can also give back to support this great country because that value system is what makes this country unique. It's what makes this country special. It's what makes this country the greatest country on earth, and it starts with you and your generations on the farm and on the ranches continuing to make sure that that traditional set of values is carried on to the next generation. And it is my responsibility at USDA to try to partner with you, and we will do everything we can to be a strong a valid partner.