By Stewart Doan

© Copyright Agri-Pulse Communications, Inc.

Washington, Jan. 9 – Agriculture Secretary Tom Vilsack makes a return appearance this week on Agri-Pulse Open Mic. At the halfway point of President Obama’s first term, Vilsack gives farmers and ranchers much of the credit for an improving U.S. economy and he suggests that agriculture’s strong balance sheet makes it better equipped to tolerate forthcoming budget cuts to safety net programs. The USDA chief delivers a spirited defense of his controversial “coexistence” strategy, insisting it’s all about making sure that conventional, GM and organic crop growers can prosper and is not meant to politicize USDA’s science-based regulation of biotech crops. Turning to the GIPSA rule on livestock and poultry marketing, Vilsack promises to finalize a rule this year that’s as helpful to small producers as possible “without unduly burdening the industry.”

The subscriber-only complete transcript of Stewart Doan's Open Mic interview with Agriculture Secretary Tom Vilsack on January 3rd follows:

SD: Secretary Vilsack, welcome back to Agri-Pulse Open Mic and happy new year to you.

TV: Likewise Stewart, and happy new year to all the viewers and listeners today.

SD: First, I’d be interested in hearing your views on the condition of the farm and rural economy as we begin 2011.

TV: Well Stewart, I think we had a pretty good year in 2010 all things considered. As the general economy continues to rebound I think agriculture is leading the way. We saw a 34% increase in net farm income, fueled in part by the increase in exports. As you know, USDA is engaged with American agriculture and American agribusiness in promoting agricultural products around the world. This year we saw a record amount of American agricultural products sold to the rest of the world. That not only helps to generate better bottom lines for farmers, ranchers and growers but also creates good jobs. We saw a record surplus this year in agricultural activity, a $41 billion surplus projected in ag products, so that’s certainly important and key. We don’t ever want to forget our responsibility to provide a strong safety net for those who for whatever reason, markets or weather or a combination, find themselves in difficult straits. This year about 140,000 producers benefited from our SURE program and other disaster relief programs which we got out to them in an expedited way. We continue to work very hard on increasing productivity in American agriculture, a lot of research being done at USDA in genetics so that we can learn how to do a better job of being even more productive. It’s one of the untold stories of American agriculture how productive it’s been over the course of many decades, but there’s still work to do and still progress to be made and that’s important if we’re going to feed ourselves and feed the world. A very important part of our effort also is to make sure that we continue to expand markets domestically, so we’ve been doing a better job of trying to link local producers and local consumers so that folks in schools and hospitals, institutional purchasers of food know that they can buy locally, keep that money in the community. So all in all, I think a good year. We’re projecting another strong export year next year. Obviously we’re keeping an eye on commodity prices. Sometimes they can get to a point where they’re not in balance, so we’re keeping an eye on that but right now prices are fairly strong and our hope is for a good, prosperous 2011.

SD: Looking back over the last twelve months, can you name one thing USDA did that you are most proud of?

TV: That’s tough to do. That’s kind of like asking which of my two sons I love the most. I’m very proud of the record we’ve been accumulating in trade, reducing barriers. We invested money in trade promotion and, for every dollar that we invested, we received about a thirty-five dollar return in terms of trade activity. So I’m very proud of that. I’m obviously proud of the work that we did in beginning to turn the page on the civil rights history in the USDA, which has not always been the most positive experience, so we’ve begun that process of turning the page and making sure USDA programs are available to all farmers and producers regardless of race or gender or color or even size. I’m very very pleased with the work that we’re doing in protecting markets. The food safety work that we’re doing is not only about protecting people but also making sure that we don’t get in a circumstance where products are hit in the market because of one or two bad operators so we’re trying to make sure we do a better job in food safety.

SD: Going forward, what’s on your to-do list that you have not already talked about?

TV: Well I think it is important that we take a look at the current discussion that’s taking place at USDA, which I know your viewers and listeners are interested in and that is how we make sure that conventional genetically-modified crops and organic crops can all basically co-exist in the same country if you will. We see this as important in terms of developing diversification in agriculture and making sure that everyone has a viable opportunity to prosper. We also see it as kind of a property rights issue, everybody being able to do with their land what they think is best for their land and their operation and their family. Obviously, there have been a lot of lawsuits and there may well continue to be lawsuits, but what we want to be able to do is try to at least spark conversation to see whether or not there are ways in which the various industries can get along better so that we don’t have judges making decisions about who gets to farm and in what way folks get to farm. That’s an issue. We’ll obviously be working very hard to review the 62,000 comments that we got on the GIPSA rule, take those comments into very serious consideration, take a look at a significant cost-benefit analysis as has been requested by many, and come up in 2011 with a rule that makes sure that our marketplaces are as fair as they can be, without unduly burdening the industry. We think it’s important that these smaller producers in particular have a fair shake in the market, simply because we’re excited about making sure that rural America stays populated. One of the concerns that I have generally is who’s going to be the next generation of farmers, where are they going to be? Can we maintain as many options as possible to get in the farming business? Can we maintain both the population and the political support for rural America? As we see populations trends continue to urbanize and go into the suburbs, we’re beginning to see a lot of these rural legislators be essentially reapportioned out of existence. That concerns me in terms of having people in Congress and state legislative halls that understand and appreciate what rural America does for all of America as a source of food and fiber and ever-increasing amount of fuel. Eighty percent of the renewable water resource comes from rural America. It’s where our forests are. It’s one out of every twelve jobs in this country, are connected to what happens on the farms and ranches of this country. So, it’s going to be necessary and important to have people in Congress who understand that.

SD: There are a lot of balls in the air at USDA right now. Listening to the numerous issues that you just mentioned, are you spread too thin?

TV: I don’t think so. We’ve got quite a few people who work here. I think it’s important that folks understand and particularly folks in rural America understand that farmers represent less than one percent of the country’s population, and those who produce the bulk of our food represent really one tenth of one percent of our population. So it is important to speak to the other ninety-nine percent through USDA so that we can garner the support of the other ninety-nine percent when it comes to discussing issues like the 2012 Farm Bill and that is obviously a piece of legislation that we’ll be beginning to work on in 2011 and it’s one that has obviously a major impact on what happens in rural America, whether it’s the farm programs or the rural development programs or the trade aspect of the Farm Bill or the energy title of the Farm Bill. All of that has ramifications as to what goes on in rural America and so if you don’t have the other ninety-nine percent of the country understanding and appreciating what farmers and ranchers and growers do and they don’t understand the full scope of USDA’s responsibilities to the agricultural community, to helping create jobs in rural America, to protecting the environment in rural America, then it may be difficult for us to get as strong a Farm Bill as we possibly can and it’s going to be particularly challenging given the fact that we’re all focused on the deficit and making sure that we begin the process of getting ourselves back in fiscal balance.

SD: I want to follow up on a couple of things you just mentioned. First, the GIPSA proposal on livestock and poultry marketing: are you anticipating Congress trying to reverse whatever final rule USDA comes out with and/or industry filing a lawsuit to block the implementation of it, whatever it turns out to be?

TV: Well we’d certainly hope to prevent either one of those two circumstances. I’ve had opportunities to briefly talk to Chairman Lucas on the House side and Chairwoman Stabenow on the Senate side to let them know that we are in the process of taking a look at this, at these comments very seriously, that we are going to do the cost-benefit analysis that folks have requested. We’re going to be, I’m going to be, personally engaged to make sure that this is, that we look at these things very carefully and make sure that we come up with the very best rule that we possibly can come up with and our hope would be to avoid that type of activity. It can obviously happen, but if we do our job well, that minimizes the risk of that happening.

SD: On coexistence, you ended 2010 with an open letter to stakeholders on this topic and the letter followed a meeting hosted by USDA in which people on both sides of this debate seemed to complain that USDA was trying to do too much too soon; in this case, forcing them to reach consensus by the end of January on geographical restrictions and isolation distances for planting Roundup Ready alfalfa. Both sides also told you that doing this would not end the cycle of litigation. Are you politicizing a regulatory process that is supposed to be determined here by sound science?

TV: No, we are certainly committed to sound science, Stewart. There’s no question about that. There are many aspects of science in this particular discussion. There’s the science relating to alfalfa, there’s the science relating to cross pollinization that occurs because alfalfa is sort of a unique crop in a sense in terms of its ability to cross pollinate and how it can be cross pollinated. So you have to take into consideration all of those aspects and we’ve been directed to by the court in terms of putting together an Environmental Impact Statement that was far more substantial than the one that was put forward several years ago. Our effort here is not to politicize. It’s actually to put us in a situation where farmers put themselves back in control of this as opposed to courts. I don’t know that I can or that USDA can prevent litigation but I do know that right now, the way this thing is structured, judges have very limited options relative to how they can decide these cases, and right now the only option that many judges feel they have is to basically tell one group of farmers they can farm in one way while preventing another group of farmers from farming in they way they want to. It seems to me that we’re dealing with property rights here. We’re dealing with the opportunity for agriculture to be diverse, which I think is important. There are income opportunities in all areas of agriculture and we want to protect and enhance those as best we can. America needs all forms of agriculture. There’s no question that we need in my view biotechnology and GM crops, I’m a supporter of those, and I know that irritates folks on the organic side. At the same time, I also recognize that organic farming is an opportunity for smaller landholders, smaller farming operations and ranching operations, to potentially profit and allow those families to stay on the farm. When you take a look at what’s happened to our farm numbers, we’ve lost ninety percent of our pork producers in the last thirty years. We’ve lost a third of our cattle producers in the last thirty years. We’ve lost nearly half of our dairy producers just as an example in the last ten years. And I don’t think that’s necessarily good for the country, so we need to make sure that we have options available for all size operations. So it’s, I think, obviously there are, folks are obviously concerned but I think this conversation that we’re having, while it’s a difficult one to have, is long overdue and my hope is at the end of the day that we get closer to figuring out what needs to be figured out so that we don’t always have judges telling some folks they can farm and other folks they can’t.

SD: Paraphrasing a point made by writers at the Wall Street Journal, why have anti-biotech activists been given a seat at this table? And I would add, when many of these groups opposed your nomination?

TV: It’s not a question of folks having a seat at the table. It’s a recognition of the diversity of agriculture and the economic opportunities that are available in all forms of agriculture. We’re not dealing with a small industry now. We’re dealing with major players in the grocery business, in the retail business. And consumer demand is driving what is now a multi-billion dollar opportunity. We’re seeing premium prices being paid for some of these commodities, which gives some farmers and some ranchers another opportunity to continue to farm and stay on the farm. So, it seems to me that we ought to be figuring out a way that can happen, if it can happen, without jeopardizing the ability of larger commercial-sized operations to do what they need to do to in order to make sure we have sufficient productivity in this country to feed ourselves and feed the world. I’ve been attacked from both sides, which kind of suggests to me that maybe there’s some sense in what I’m trying to do here, because people have taken, I think, very strong and stringent stances in this discussion and I think what you do when you get to that point is you become comfortable with litigation and I think litigation is expensive, it’s time consuming. I think it creates a heck of a lot of uncertainty. We’ve got sugar beet growers that don’t know precisely what they can and can’t do. We’ve got alfalfa folks who have been waiting for years and years and years in response to a court decision and there may be other lawsuits. But maybe we can give judges more options. Maybe we can give people a clear path to avoid litigation. Maybe we can prevent farmers from not being able to get along in their community because they choose to farm one way or the other. It just seems to me the Secretary of Agriculture needs to be for all forms of agriculture.

SD: In the transcript of the December 20th stakeholder meeting, I read where you tentatively planned a January 5th follow-up meeting of the stakeholders, and specifically you and the Deputy Kathleen Merrigan asked that groups not come to any more meetings restating their positions. You want some movement on consensus. Is that still the goal? Are you going to meet on January 5th and do you want consensus by the end of the month?

TV: Well there are going to be additional meetings. I don’t want to pin myself down to a specific date and time, but there are going to be additional meetings for folks to voice their concerns and their interests. What we were really trying to do is to have people discuss their interests and I think when you get reasonable people in a room that are willing to listen to the other side, that it’s been my experience that eventually you can find some common ground upon which to build a better relationship, one that doesn’t necessarily always lead to litigation. You’re going to have folks I’m sure that will not be happy with whatever we ultimately decide to do but my goal here is to stimulate a conversation that I think in the long run is beneficial to rural America, to agriculture and to diversification of agriculture and making sure that people’s property rights are respected in this country. You know, we’re going to continue to work at it. I can tell you that not engaging the conversation will just simply for sure guaranteed lead to more litigation, more expense, more delays, longer regulatory processes, and I think the people I talk to want exactly the opposite of that.

SD: Given the “Know your farmer, Know your food” initiative and carve-outs for organic in virtually every agency within USDA, is this coexistence discussion not simply another step in the Administration’s process to give organic production equivalence to non-organic production methods?

TV: Stewart, the premise of that question I would take issue with. I don’t think this is a question of equivalence. When you take a look at the EQIP program for example, you’re talking about $50 million of EQIP being utilized for organic producers and you compare that to over a billion dollars being made available for other operations. We’re not talking about equivalence here at all. We’re just talking about a recognition that there are different types of agriculture that a Department of Agriculture should recognize and to a certain extent should be supportive of, so that people have options and choices, and that those that wish to be involved in small operations and grow organically and receive premiums ought to be able to do that. At the same time, if you want to have a larger scale commercial operation, you should be able to do that. We need those operations. We’ve seen an increase in trade activity; we’ve seen an increase in conservation programs for large commercial sized operations; we’ve seen the implementation of a disaster relief program; we’ve seen a shortcutting of time the direct payments and counter-cyclical payments and so forth are getting out of this office. Over the last twenty months, we’ve seen a significant disaster relief program for the dairy industry that this office was involved with. So I don’t think this is a matter of trying to suggest that we’re creating equivalence. It’s just a reflection of the diversity that we ought to be celebrating in American agriculture today. It’s wonderful that we have these options. It’s wonderful that we’ve got people that want to farm differently and that we have this choice. I think, frankly, that it’s one that we ought to be celebrating because we want to encourage more young people to get involved in farming. When the average age of a farmer is 57 years of age and we’ve got thirty percent of our operators over 65, we ought to be talking about how do we get more people engaged, and if some young person wants to get engaged and they want to farm one way or the other, why should we be in a position to say they can’t do that, or shouldn’t do that, or ought not to do that, or ought to be penalized for doing it. We ought to be about encouraging folks to get into farming. We ought to be about creating ways in which those young people can get engaged in whatever agriculture is of interest to them, whether it’s a small operation in a rural area or a large commercial operation that they’re able to get into because mom and dad have been farming the land for a long period of time.

SD: Moving on, also in December, the USDA and Department of Justice completed a year-long series of competition in agriculture workshops. USDA has already taken some regulatory action and proposed others based on what was said at these sessions particularly in the area of livestock and poultry. What else did you learn from these sessions that might warrant changing USDA regulations?

TV: Well, we’re still in the process of putting together all the comments and so I want to be careful about suggesting that we’ve reached conclusions about this. We really haven’t, except that we did make, as you pointed out in your question, several steps in terms of poultry contracting in particular because we knew that there were circumstances that we heard about in Normal, Alabama, and we heard prior to the effort in Normal, Alabama. We’d also been working with the dairy industry and the Dairy Council prior to the meeting in Madison, Wisconsin, but clearly following the meeting in Madison, Wisconsin, the Dairy Council has been trying to put together a set of recommendations which we hope to have available early this year for Congress to consider in terms of creating more stability and less volatility in the dairy market and the dairy industry. And obviously the work that we’re doing in GIPSA generated a lot of discussion and comment at the Fort Collins meeting and thereafter and we are as I said sifting through the 62,000 comments on the GIPSA rule. So there’s been a lot of activity at USDA either in response to or in result of or in conjunction with these hearings.

SD: Retail margins were discussed in December, seed industry concentration back in March out in Ankeny, Iowa. In the final analysis, can you assure us that what was heard will be acted upon, these comments? All the things that were said, they’re just not going to sit on a shelf and gather dust?

TV: Well I think our actions up to this point already indicate how seriously we took this process Stewart and the assurance will be that we’re going to continue to take it seriously. There are some issues relative to the patents that were discussed during the seed discussions in Ankeny, and you know the market issues that were probably more in the area of the Department of Justice than in the USDA but we’re obviously going to try and make sure that our markets, to the extent we have anything to say about them, are fair.

SD: President Obama signaled that deficit reduction will be a priority. In its first two budgets, the Administration proposed a $500,000 gross revenue test for Direct Payments and cuts in foreign market development programs, or some re-shifting of dollars at least, as ways to save money, and then of course last year, saved $4 billion via the SRA renegotiation. What types of belt tightening should farmers expect in the FY12 Blueprint that comes out next month?

TV: We’re still in the process of putting that together so no decisions have been made. I think it’s important for folks in the countryside to know that we’ve, I think all of us could learn a lesson from what farmers in agriculture learned in the 1980s. During the 1980s, agriculture in the country, many parts of the country, was highly leveraged, and we had a farm crisis in many parts of the country and a lot of folks were not able to keep their farms as a result. Since that time, American agriculture and American farmers and ranchers have been very, very sensitive to being careful about their debt load, so that today it’s accurate to say that for every dollar of debt that farmers and ranchers have in the country, they have eleven dollars of assets. So they’ve put themselves in a very strong position from a debt to asset ratio standpoint and that’s standing them in good stead when you combine that with the extraordinary productivity gains of American agriculture and the work that we’re collectively doing in promoting exports in this country. In agricultural exports what you have are obviously increasing incomes for many American farmers and ranchers so there’s a lesson for the country to learn in that. We want to do our part at USDA in terms of deficit reduction. Obviously, we don’t want to do more than our share but we certainly need to do our share. We stepped up last year as you pointed out with a significant savings in the crop insurance program and as an indication that we take this issue of deficit seriously. I think the country sent a very clear message to policymakers in both parties that there’s an expectation that they’re very serious about this. And when you make these decisions, the Congress made the decision to reduce the tax burdens of Americans in the latter part of last year, all Americans including the wealthiest of Americans. When that decision was made, that obviously will compel additional choices that have to be made, so we will see what develops but I’m proud of the fact that USDA has stepped up and that we’re going to take this thing very seriously.

SD: I want to finish up on exports. U.S. farm sales overseas are projected at record highs this fiscal year, but are expected to go even higher if pending free trade agreements are ratified. What is the Administration’s timeline for sending the Korean FTA to Congress, and how soon can we expect action on Colombia and Panama?

TV: We are anxious to get the Korean Free Trade Agreement to Congress. My belief is that it will be provided to Congress very shortly. You know, I think it will provide momentum for completing the arrangements in Colombia and Panama hopefully during the course of 2011. I would say that it isn’t just free trade agreements that are responsible for the increase in activity. It’s an aggressive effort on the part of agribusiness and American agriculture. It’s extraordinary increases in productivity and it’s also the work of what we’re doing at USDA in terms of focusing strategically on individual countries and where they are in the market continuum, tailoring those efforts and prioritizing those efforts. Jim Miller is over in China right now in an effort to try to reopen a beef market that’s been closed for far too long. We continue to have conversations and discussions with folks in Japan on that same issue. We’re going to continue to work with folks in Mexico on a number of issues that are making it difficult for some of our products to be traded at the border. So there are many activities taking place on a free trade discussion on a bilateral trade discussion and also on a multi-lateral trade discussion with the Trans-Pacific partnership discussions which the President has initiated for the country. So, there are a number of ways in which agricultural exports can be increased and we’re looking at trying to make sure that we continue to have strong growth. The American brand is a strong one. Everybody in the world knows that we produce an extraordinary amount of high quality agricultural products and as we see middle classes grow and emerge in countries like China and India and Indonesia and other locations in Asia, in particular, we think there are tremendous market opportunities for us.

SD: Do you anticipate a lengthy, drawn out negotiation with China on reopening its beef market?

TV: Well, it’s all relative I guess. We’ve been talking to them for several years so our hope is that we get this done in a matter of days, weeks, months, not years.

SD: Agriculture Secretary Tom Vilsack. Mr. Secretary, as always, thank you so much for being with us on Agri-Pulse Open Mic.

TV: You bet Stewart. Take care.

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