Secretary Vilsack addresses Commodity Classic on farm bill implementation

Farm Forum

Editor’s note: These are the remarks as delivered by U.S. Secretary of Agriculture Tom Vilsack at the Commodity Classic on Feb. 28, 2014, in San Antonio, Texas.

Thank you very much. Thank you. Thank you very much. It’s great to be back at Commodity Classic. And I want to start off this morning with a couple of thank-you’s to every single person in this audience and to producers around the country.

You know, we unfortunately in this country do not thank you all enough or as frequently as we should. We are a food secure nation because of your hard work. Our families don’t have to worry about where the next meal is coming from. You produce it. We don’t have to worry about whether we have to rely on someone else for our food. Virtually everything we need to feed our families is grown and raised in this great country.

You provide us economic security because we spend so little of our paychecks and wages for food because of the efficiencies of your operations. Virtually nowhere else in the world can you get out of a grocery store and still have money in your pockets from your paycheck the way you can in the United States.

We spend around 10 percent of our paychecks for food. So, that gives us about a 10 to 15 percent flexibility that others in the world don’t have because of your great work. We are more and more energy secure because of your work, no longer importing as much foreign oil as we once did because of the energy crops that you raise. And because of our economic security, our energy security and our food security, we are a stronger nation in terms of our national security.

As I’ve stated so often said to groups around the country, rural families and agricultural families send their sons and daughters to into military service and community service more frequently and in greater numbers. So, first and foremost, thank you for everything that you have done for this country, and thank you as well. And it is awfully nice to come here today to talk today about the passage a of farm bill as opposed to a need for a farm bill.

I am convinced we would not be having this conference today about the farm bill were it not for the tremendous advocating that came from the commodity groups across the country. Members of all of the commodity groups represented here did a phenomenal job of making sure that their members of Congress and Senators understood the significance of getting this done and getting it done quickly. So again, a big thank you for the work that you’ve done in getting us a farm bill.

So I thought what I’d do today is talk to a little bit about our plans in USDA for 2014. And to do this, it is important I think to put this into the context of where we are nationally. The American economy is rebounding. It is recovering. It is regaining strength.

For the last four years, we have seen consistent job growth, over eight million jobs being created but the challenge for our country remains the ability for people to get into and stay in our middle class. And so we face this enormous challenge of making sure that we constantly have that great American ladder of opportunity available to all.

Our recent agriculture ag census says that in our rural economy. The good news is that we have had a strong agricultural economy, arguably, the best in our history. We have had a strong record according to experts which we expect to continue. We have seen an expansion of new market opportunities for local and regional food systems and for the utilization of what we grow and raise for things beyond food and feed and fiber and fuel, now the chemicals and polymer and plastics and biobased products.

But that same census, while showing great strength in the economy, saw the continued trend of fewer farmers and aging farmers. But the good news is that we are beginning to reverse that trend as we have seen more young people become interested in this great calling of farming.

We have seen increases in the number of farmers under the age of 35 for the first time in quite a while. We have a proactive and positive and hopeful message about agriculture that’s beginning this process of slowly turning this aging and reduced number of farmers around. But we remain challenged because as is the case with the general economy, those mid-sized operations in agriculture continue to struggle.

So with the passage of the farm bill, it seems to me that at USDA we have three basic responsibilities. We need to continue the profitability of large-scale commercial sized operations. We need to continue to promote programs and policies that will ensure that profitability will remain. Commercial size operations are important to this country and to our ability to continue to feed our people and the world’s people. At the same time, we have the responsibility to preserve and expand mid-sized operations coming up with new ways to create income opportunities so folks don’t necessarily have to give up the farm. For me, that’s extremely important and I know it is for you as well.

And our final responsibility to assist smaller-sized operations, those that are our beginning farmers and ranchers, women, minorities, social disadvantaged, our returning Veterans who are interested in reconnecting with the land. We have a responsibility to enable them to start and stay in this business. Our farm bill, which you helped pass for me, creates a hopeful set of opportunities and rewards and will invest some in innovation.

So, for 2014, as we focus on our responsibilities, it seems as if we have two messages to convey here today. One is that there are some programs that continue from previous farm bills in which you will expect as operators payments. And there are other new programs that as operators you need knowledge and information so that you can make the right and proper choice for your operations in the future. And we at USDA will be focused in doing both in 2014.

Let me start first with the opportunity to ensure you that payments due will be paid. As you all know, for those of you who also have livestock operations, we saw the need to send a clear message to our livestock operators that we were with them as they went through two and a half difficult years of facing disaster without assistance because our assistance programs had expired under the previous farm bill.

Well, they were restored by this farm bill and we are committed at USDA to make sure that those who suffered losses due to disasters will be able and empowered by April 15th to make application for those losses. And we will work very hard shortly thereafter to make sure the resources are paid. We want to make sure that we keep as many operators in business as possible.

At the same time that the disaster assistance programs are restored, so too are our export promotion programs. Those are the monies that we use to fund trade shows, reverse trade shows, exchange ways in which we market American agriculture products overseas. It is one of the reasons why we have had record exports.

Well, we wanted to continue to promote trade. We understand it is importance and we are now at the position to begin allocating resources under our trade promotion programs. And will have a slight twist for those programs this year. We are going to add an additional opportunity for promotion, and that is in the area of biofuel production. We think it is not just an opportunity here domestically to use biofuel, we think the world is ready for American biofuel.

So, we want to use these resources to promote this great American product. It will start with a trade mission to China this spring where we will invite folks from the biofuel industry to participate for the first time in a trade mission under Secretary Michael Scuse, who will be in charge of that trade mission.

So we will target our efforts on India and Japan and China where we think there are opportunities to discuss octane and environmental benefits from biofuel. And we believe that that will help promote additional opportunities. We will this spring and early summer implement our Market Assistance Loan Programs, our MILC, dairy program, crop insurance, the sugar program, the common definition of programs that already exist for which there is an explanation of assistance and help sometime during 2014.

We will make sure that those programs are up and running. And we will make sure that that Market Assistance Loan Program is clarified for all of you so that it can continue for the subsequent years in the farm bill. And we will do that in 2014.

We also recognize that there are tremendous opportunities in our credit programs. We know that there is a reduced interest at any rate that can be forthcoming and some farm ownership loans reducing that interest rate from around five percent to about two-and-a-half percent. We will institute that very quickly. We also will eliminate the guaranteed loan term limits which Congress instructed us to eliminate that too will likely be done in 2014, hopefully in the spring and summer of this year.

We will work by the end of the year to institute the beginning farm provisions of greater credit opportunities to make credit more easily available for beginning farmers, and by the end of the year we will also improve and upgrade our microloan program. We are proud of the fact that we have had record amount of loans to farmers across the United States. We want to build on that record.

We know that every single producer in this audience today is a conserver of our soil and water and the opportunity to continue your good work in conservation. We have a record enrollment of conservation practices. We want to build on that record. That’s why we are already taking applications under EQIP and the Management Assistance Program.

We expect and anticipate that by May 17 or around thereabouts, we will notify folks of whether or not their application has been accepted and those obligations beginning June 1. Our CSP applications are also being accepted and we expect notification around June 1, with obligations beginning sometime in late July or early August.

There is a new Easement Program established under this farm bill. And we are already accepting applications under the Wetland Reserve Easement but we expect Ag Land Easement Program will be in a position to accept applications around May 1. Notification there will take place sometime in July and hopefully obligations begin to flow in late summer.

For the organic produces, our organic cost share payments will begin allocating those until they are expended because we realize they have been increased and folks are anxious to have those resources.

So, that gives us a sense of the list that you would expect us to have in place, monies and payments and programs that have been around for a while that we will continue but we also know that you are as interested and maybe even more interested in the new programs. And so I am here today to commit to you the following:

The key here is for us to set the table for all of you to be able to make informed decisions for the 2015 crop year and many of these programs. You all are interested in the ARC and PLC that you have. So let me talk about the steps we will take.

First, obviously we have to establish the educational materials and training materials that will be used to educate you and educate our field staff. We will be soon be dispersing the $3 million that Congress has provided for the tab of those training materials and the web-based tools that you all will use and study over the course of the next several months to make determinations and decisions about your operation. We will establish the opportunities that will assist us in our outreach which we can expect to do this in the summer and fall of this year.

We will allow you during the course of that summer and fall to update production history. We want to make sure we are communicating with you about base and yields in your production history. We are going to hope to publicize and focus on publicizing the final program and the regulations for both ARC and PLC in the Fall of 2014.

We will allow, after that occurs, to update your information concerning yields and relocate your business if you need to do that with the hope that by the end of 2014 and early 2015, you will be in a position to be able to make your election and your decisions. So, we hope that that reassures you that we understand the importance of getting these programs up and going as quickly as we possibly can.

I’m sure you are always interested in the status of supplement and coverage option and stats. So, let me talk to about what 2014 will hold for both of those important risk management tools.

Now, let me say at the outset that in order for the supplemental coverage option to be put in place, we have to have enough data and enough history and information that will allow us to make an appropriate determination from an actuarial standpoint of precisely how to price these options. So, we will be looking at information. And we have already begun that process of looking at whether or not in each county where a commodity is being grown, whether it will have an adequate number of farms, whether we have an adequate number of years of back history that will allow us to do a good job of actuarially determining the cost of this option.

We expect and anticipate that for most counties, for corn, soybeans, grain, sorghum, cotton and rice, we will be able to publish maps sometime in the summer and fall of 2015 that will give you a sense of precisely where this coverage will be made available. And we recognize that this creates a dilemma, particularly for wheat producers. We know that you may have to make elections and option before you have all the information. You may have to make a decision about coverage before you really know for sure what you are doing relative to the various programs.

So, we want to assure you are that we are going to give you the ability prior to the coverage recording deadline to opt out of the decision as you may on the Supplemental Coverage Option. And if you opt out prior to that date, you won’t incur any responsibility for the payment of premiums. This should give you a reassurance that we are aware of challenges that we are presented.

If Congress obviously had passed this a little bit sooner, last year, for example, we might have been able to structure this a bit differently but given the past agenda this year, we are going to do the very best we can to make sure that you have the information you need to make the appropriate determination because, as you know, you can’t have it both ways. You can’t have both ARC coverage and supplemental coverage option. You will have to choose. So, we want to make sure that you at least have some time to re-evaluate the decision you may have made.

On stats, we believe that almost all cotton production nationwide will be covered in 2015 crop year. This summer, our RMA will again provide information about counties that will be covered. And, of course, we want to make sure that the cotton transition payments are, in fact, made this year to allow you that opportunity to transition to this new program.

In the same vein, we will be working with our beginner farmer and rancher incentive in the Crop Insurance Program improvement made to that to make it a little bit easier for beginning farmers and ranchers to have access to crops insurance and to use it. We are hopeful of working on that program in 2014 so that those incentives will be available for spring crops in 2015.

We know that we have responsibility to establish a whole farm pilot. And pending board approval, our hope is that we are in place with board approval to have enrollment sometime in the spring of 2015. And we know that all of you are concerned about conservation compliance. So what we’re attempting to do is to begin the process of figuring out what that implementing rule will be this summer. And we hope to be able to impact and effect deregulations relating to 2016 crop years that has to do with the timing on this. The peanut revenue policies are subject to board approval but if it is approved, we hope that too will be instituted in 2015.

We also know that we have got a responsibility of looking at and examining the definition of actively engaged. We expect and anticipate that whatever definition will be applied, it will be in the form of a proposed rule which hopefully will be done sometime by the end of calendar year to explain our view of actively engaged. It is quite restrictive based on the law but there is some work that USDA needs to do.

So, that should give you some reassurance that we are going to be able to make the payments that are due and expected in 2014, and that we are going to set the table, lay the ground work, do the education and training that will allow all of us to have a better field and understanding of new programs so that when we hit the 2015 year, for the most part, we are ready to be engaged.

We also understand and appreciate that you are faced with a series of challenges and that’s why the innovation section of the farm bill is so exciting to me. We know you are faced with pests and diseases every year. We know that you know better than anyone the nature of climate change in your particular region and the impact it is having on your operation. We are facing droughts and floods and in the intensive storms.

That’s why we will work this year to begin the process of establishing the Research Foundation that was established in this bill. This Research Foundation will allow us to leverage an additional $400 million investment in agricultural research. It is extraordinarily important. We have for far too long been underfunding our research efforts and if we are to continue to maintain the extraordinary productivity and efficiency that you all represent, we are going to have to continue to invest and step up our investment in research.

So, we will be convening a meeting of the ex officio members of this Foundation for the purposes of establishing it and getting it set up this spring and then begin the process of appointing the permanent board so that we can begin attracting matching monies that are required so that we can begin investing in key research.

At the same time, we understand that the necessity of continuing to open up market opportunities for all forms of agricultural production, including agricultural crop residue and livestock waste. That’s why I am excited about the Congress has done, at our request, to expand the energy title of the farm bill to focus not just on our ability to use rural development resources for biorefineries, which we have done on five occasions and which we are continuing to do, but now to make available over $880 million of mandatory money to be used to focus not just on biorefineries but also on biobased product manufacturing.

We think we can begin aggressively in 2015 with investments in chemical production, in fact, we think we can do that sooner and then, in 2015, expand that to other biobased manufacturing products so that we can create additional markets opportunities as a result of this farm bill.

So we are working hard. We obviously have fewer people because of constrained budgets but a prioritization that we have done, our teams have really worked hard to work out precisely what needs to be done, how it needs to be done, whether it requires a rule or just guidance, whether it requires a review by other aspects of our operation, our General Counsel Office, our budget and policy folks and how we might be better able to coordinate with OMB that has to sign off on rules so that we get this process through as quickly as possible.

Time does not permit me to talk about every aspect of this bill. There are other aspects of it that folks may be interested in, and we will obviously cover those over the course of time. There may be interest in the dairy programs which we institute. They may be interested in the regional conservation programs that this bill calls for. They may be interested as well in the forestry. I will have opportunities at other venues to discuss those matters and they too will receive attention in 2014.

The challenge at USDA is to understand that all of the steps that are required to institute and implement a farm bill have some things in common. First of all, the mission area has to figure out what needs to be done. Then, the mission area has to figure out how it needs to be done. Did it require rule or guidance? And then, it has to craft the rule or guidance.

Then it has to be reviewed by the General Counsel’s Office and the Office of Budget and Policy. And then, if it is a rule, it has to go over to OMB for approval. And by working for the last couple of weeks to prioritize what we are doing, we hope to avoid creating a kind of funnel effect at USDA where the same person in the General Counsel’s Office has to review multiple steps in the process at the same time. We hope to be able to have it organized in a timely way to move it through the process.

And we will obviously be using the resources that USDA has been provided by the Congress to hire some temporary help in our local offices to be able to ensure that people can get up to speed with these programs and be able to institute them appropriately. And to incorporate all of this the best we can in the work that we are doing to modernize our technology through the MIDAS program and through the conservation streamlining initiative.

It is going to be a busy year at USDA but we are happy to have this opportunity. Trust me, I would much rather be talking about this than the need for farm bill. So, let me conclude with a couple of additional points of why this is so important. I’ve been asked recently there by media and by others: What kind of message do we need to have come from agriculture? How do we make sure that young people are inspired to be involved in agriculture? What can we say to the rest of the country to have them understand and appreciate what agriculture does for them? How can we avoid some of the negativity that sometimes surrounds agriculture?

Well, let me suggest two points. Let me suggest, first of all, taking extraordinary pride as you should in the value system that you all represent. It is reflected in how you raise your kids. It is reflected in the notion that youngsters who are raised on farms and ranches and in small towns fully understand and appreciate the value of hard work. They are raised from the outset at understanding that they aren’t entitled to anything. They have to earn it. And they take that value system and they may stay on the farm or ranch or they may go into town or they may go into the city with that value system. And those who employ those young people understand and appreciate that there is something just a little different about kids who come from a farm or ranch.

They also understand by virtue of how they have been raised that they have to give something back. They are heavily engaged not just in military service but in community service. And they learn that lesson from all of you because you teach them that anything that’s valuable cannot just simply be taken from and also be invested in.

So the country is stronger and better for the value system that you represent and that you pass on from generation to generation. And this farm bill, if we implement it right and if we are aggressive about it, will create more opportunities for that value system to be carried on from year to year, generation to generation.

But there is an additional point that I think you all should help me make and that we collectively should make to the rest of the country. I go to ask my friends from city and suburbs what they do for a living. And invariably I will have someone say, well, I’m a teacher or I’m a lawyer, or I’m a than a engineer, a doctor, a business owner, I’m a welder, I’m an artist, carpenter, I’m a plumber.

And then I ask them, well, why are you doing that? How is it that you got to be a lawyer, a doctor, plumber, a carpenter? They will say they went to school, went to training courses, got certified, passed the Bar exam. I’ll say no, no, no. How is it that you got that job? What would you have been doing 50 years ago or 100 years ago?

Would you be doing the same thing? Would you be a teacher, carpenter or a plumber, or would you have been on a farm working in back-breaking work because you had to feed your family, and the only way you could feed your family was to grow it and raise it? And do you realize what has happened in this country is that over the course of that 50 to 100 year time frame, most of us have shifted that responsibility to somebody else, to a relatively small group of somebody else, to American farmers and ranchers.

We have shifted that responsibility. We have said, you know, we prefer someone else do that and do it well and give us great diversity, and give us great affordability and make sure we have access to it relatively easy.

So, instead of back-breaking work, all we have to do is get in our car, drive down the road, stop at this grocery store, spend about 45 minutes there, pay less of our paycheck for food, walk out of that grocery store with still money in or pocket, put the food of bags in the car, drive back home, put it in the fridge, hour or two, done for the week.

And that means that we are then freed up to become a lawyer, or a doctor, or a plumber, or a carpenter, or anything else in this society. You see the great flexibility, the great freedom, the great liberty that we enjoy in this country to be whatever we want to be starts with the fact that we have a strong enough agriculture that we can shift that responsibility to somebody else gladly and have it fulfilled year after year.

And it is because of you, every person in this country that does something other than farming and ranching owes you an enormous debt of gratitude for the freedom that you’ve given them to pursue their dream, to make this country strong and diverse as it is.

So, they’re not here today but I am. So, let me thank you from my ability to be a lawyer. Let me thank you for my wife’s ability to be a teacher. Let me thank you for my older son’s ability to be a lawyer, and my younger son to be in the nonprofit world. None of us would have had that opportunity if it hadn’t have been for you. And, trust me, if you knew how I gardened, my family would be in a world of hurt if they had to rely on me. Thank God for all of you and God bless you all.