Food, fiber and fuel. The nation's farms producing raw materials providing jobs, filling export markets, boosting the economy. That's elevating status for the USDA and Department Secretary Tom Vilsack. We're questioning him on this edition of Iowa Press.
Borg: As the nation's business and manufacturing sectors show tepid signs of economic recovery, strong prices and growing demand are supporting the nation's farm economy. But the good times are generating some concern. In Iowa, for example, corn and soybean growers taking advantage of profitable margins are converting now every possible acre to row crops including some environmentally sensitive land that has been in the Conservation Reserve Program. Amidst the optimism in rural America Congress is considering new farm legislation during a tumultuous election year. And perhaps more than ever, because world grain stocks are extremely tight right now, consumers have a huge stake in the farm bill and the season's drought threatened crop season. The task of nurturing and protecting the nation's supply of food, fiber and fuel lies at the desk of our guest today. Mr. Secretary Vilsack, welcome back to Iowa and to Iowa Press.
Vilsack: It's great to be back.
Borg: Nice to have you here. And across the table Associated Press Senior Political Writer Mike Glover and Radio Iowa News Director Kay Henderson.
Glover: Mr. Secretary, you're out here, welcome back to Iowa by the way. You're out here making the case for the administration's farm policies in the Midwest which is a critical state in the upcoming election. What is your role going to be as this campaign begins to unfold?
Vilsack: Mike, I think the most important thing I can do now is to point out the significance of agriculture in the economy and what agriculture is currently doing for the country. The fact is we have record income, farm income, record exports. One out of every twelve jobs is connected to agriculture and so it is a good news story. Agriculture has been helping to get this country back on track and I think it is basically providing the road map for recovery. It is interesting to me that the Midwest has seen a 14% increase in manufacturing and the reason it is seeing that is not just the auto industry's rebound but farm income, farmers who have income are in a position to be able to purchase implements, folks in Waterloo and Ankeny and places across the country are building those tractors and those combines and those planters and it is putting people back to work.
Glover: So how big a plus is that as you begin looking towards November? Is this a major factor?
Vilsack: I think it is. I think it certainly is -- in many states agriculture is either the first or second most important industry in most states and if it is doing well I think we need to make sure that people understand in this country the important role that agriculture plays. I think it is underappreciated. Farmers and ranchers are extraordinary in terms of their productivity and we need to begin paying a bit more attention and I think appreciate them a bit more than we have.
Henderson: This past weekend Secretary Geithner indicated that after the first term of President Obama is done, he is done as well. Have you signaled to the Obama administration a willingness to serve in a second administration if there comes to pass a second administration?
Vilsack: Well, that is the President's call. I love my job. I think I've got the greatest job in America and I think there are a lot of factors that go into a decision like that and I think rather than me take the President's initiative we'll let the President make those decisions. Clearly I think the President is going to be re-elected and I think his USDA has been a department that he can be proud of, the achievements that we have been able to accomplish, a record number of acres in conservation, record farm exports, record farm income, record farm loans, record home loans in rural America. I think there's a lot to talk about.
Henderson: How many miles have you traveled as ag secretary? And is that the kind of job that you want to continue? It takes a lot to travel around the globe as the ag secretary, does it not?
Vilsack: It does, it does but a lot of -- I've been to virtually I think every state. I don't think I've been to Wyoming yet. I've been to 49 of the states in the country for a variety of activities. There are obviously a lot of overseas trips that are involved. But it's a great story and I'm excited and enthusiastic about telling it. Again, I think farmers are underappreciated. Second most productive aspect of our economy since 1980. Who knew that? One out of every twelve jobs. Who knew that? Allowing the United States to reduce its imports of foreign oil. When the President took office 62%, now we're down to 45% in part because of biofuels.
Glover: It sounds to me -- I don't want to put words in your mouth -- it does not sound to me like this is a job you're getting ready to walk away from.
Vilsack: It's a great job and it is one that I appreciate every single day and I think the fact that I've had an opportunity to serve as a governor, as a state senator and as a mayor, this is just a tremendous opportunity and I think I learned when I left the governorship that you should always appreciate every opportunity you have to serve.
Henderson: You've been talking about the rosy ag economy. There are some signals though that energy prices are a drag now on the ag economy. What sort of danger lies ahead in terms of the fertilizer that farmers buy and the diesel that they use to run their implements?
Vilsack: Input costs are high, that's why it is important for us to continue to expand markets. It's why free trade agreements like the three that we got done last year and the multi-lateral agreement that the President is working on, the Transpacific partnership are so important. That is why local mutual food systems are important because it expands markets. It's why the bio-based economy, which I think is one of the most exciting opportunities for the United States to really reconfigure its economy. I visited a plant in Wisconsin earlier this week and they are making plastic that Coca-Cola is now going to use to produce all of their bottles, billions of bottles. 3100 companies, 100,000 people, it is the beginning of a new economy for this country. So while obviously you're concerned about input costs, you're obviously concerned about everything that goes into those input costs, the key here is to make sure that we continue to have strong markets and I'm very, very bullish on the agricultural markets. I see just unlimited opportunity.
Borg: We mentioned the input costs and what that means is farmers are buying seed, fertilizer, investing in fuel and getting a crop in right now and hoping that the weather allows them to harvest a crop. And in there is the protection in farm legislation, in the farm bill. That is being re-written right now, reauthorized. What is the timetable? And what do you expect to be in that? Will that be finished by Election Day?
Vilsack: Well, first of all, Dean, I've got a one man campaign to rename this bill. It is a food bill, it's a jobs bill, it's a farm bill and so I like to refer to it as the food, farm and jobs bill. It has to get done this year and here's why it has to get done. When September 30th of last year all of the disaster programs under the 2008 legislation expired so if we're hit with a tornado, a drought, a fire, a flood, there is no relief other than crop insurance for many producers. That is a problem. We had 55 million acres last year. We have had over 325,000 farmers receive benefits under crop insurance. Another quarter of a million farmers received disaster payments. So when that happens and there is no program that is a problem. So we have to have a food, farm and jobs bill. In addition I think we want to send a signal to agriculture -- it is on a roll, we obviously want to continue it. The uncertainty of not having legislation will create some confusion in the markets which we don't need.
Borg: Are you going to have a tough sell on that though?
Vilsack: Well, I think the tough issue is going to be reconciling the very deep and serious cuts that House republicans have called for and the more modest reductions that the Senate and the President have focused on. I think that is the key. And of course it is going to focus on nutrition programs. And one thing that people don't understand about nutrition programs is that 16 cents of every dollar that goes through our grocery store goes in a farmer's pocket. So when you're cutting nutrition programs you're also cutting farm income.
Glover: And as we start to look towards that farm bill ...
Vilsack: Food, farm and jobs bill, Mike.
Glover: Okay. As we start to look towards that legislation one of the issues that is always debated is farm subsidies. Are farm subsidies out of date? Should we continue to subsidize farm products? What is your view on including subsidies in that bill?
Vilsack: I think it is important to understand the difference between subsidies and safety net. I think we will always need a safety net for our producers because we have in this country enormous food security. We're able to produce virtually everything we need to feed our own people which is an enormous national security advantage. We want to maintain that so we need a safety net. So I think you're going to see, I suspect, a bill that will continue to promote crop insurance as they key to the safety net and then some additional program -- much different than the direct payment program that people have been so critical of -- that will essentially provide additional revenue protection in the event of declining prices or in the event of a natural disaster.
Glover: And how would that work?
Vilsack: Well, it depends on the commodity but essentially you'd have a situation where you purchase crop insurance and that would say protect 70% of your revenue and then you would be able to have in addition to that some kind of program that would supplement that. Now there's a difference of opinion about how deep and how significant that revenue protection should be which is pointing out the importance of understanding that there are different commodities in different regions of the country and they all have different views about this which is why this food, farm and jobs bill often is so difficult to get negotiated. But I think there is a belief and a desire on the part of the Senate republicans and democrats to get it done and that will put a lot of pressure on the House to get it finished.
Henderson: The majority of spending in the ag department is on food assistance programs, is it not?
Vilsack: That is correct.
Henderson: What are the prospects for what many people call food stamps, you might call SNAP? What level do you think will wind up being in the final product?
Vilsack: Well, I think the key here is understanding who receives these benefits and whether or not we want to reduce the access to this program. 92% of recipients of SNAP payments are either senior citizens, people with disabilities, working moms and dads and children of those working moms and dads. Only eight percent are on cash welfare. So the question is do you want to cut out senior citizens from that help? Do you want to cut out people with disabilities? Do you want to reduce access to working families? We want to reward work and these folks are working hard, it's a tough economy, they need a little help. At the same time you have to recognize that these nutrition assistance programs also extend the economy. Every dollar invested in SNAP generates $1.83 of activity. So in addition to farm income, in addition to helping the right folks who are working, playing by the rules, this is a program that I think we'll continue to see significant investment in.
Henderson: Iowans heard a lot of republican presidential candidates traveling around the state in 2011 ridiculing the level of food stamp or federal SNAP assistance. Newt Gingrich, for example, called President Obama the food stamp president. What is your rebuttal to that?
Vilsack: Well, I'd like to have an opportunity to speak to the former Speaker and maybe educate him about the nature of the current program. I think he was talking about a program that may have been back in the 1980s and 1990s when he was in office. This is a different program. This is a program that is rewarding work. This is a program that acknowledges that senior citizens who have played by the rules need a little help because they are living on very low fixed incomes. This is a program that helps people with disabilities survive. It is also a program that extends the economy during a difficult time and it is a program that puts billions of dollars in the pockets of our farmers. It creates stability in markets which is very, very important. It's one of the reasons why we have a strong agricultural economy today.
Borg: And decades ago I can recall when the hot lunch program, we used to call it in school, was really the place where the USDA would buy farm, surplus farm meat and things like that, milk and put it into the school lunch program as a price support. Now it is more of feeding kids, in Des Moines, for example and it is not unusual -- this is around the country -- more than 60% of the students are getting either free or reduced lunch. And so you have a food assistance program going and ever increasing in the nation's schools. Is that an economic drag on your budget?
Vilsack: 32 million youngsters benefit from that program and it was established in 1946 by Harry Truman to ensure that we had sufficient people with sufficient health to be able to defend the country. It is why admirals and general went to Capitol Hill two years ago to argue the need for us to increase the nutrition of these and to improve the nutrition of these meals. So there is a real focus now on not only expanding access to the program and making sure youngsters get fed but that they get well fed. So you're going to see the USDA be a better partner with local schools by providing additional reimbursements, 6 cents per meal, you're going to see us basically work with school districts to increase fruits and vegetables, whole grains, low fat dairy, reduce the fat content, the sugar and the sodium from the meals that we have been feeding so that youngsters get good, healthy meals. And we're also going to make sure that the vending machine snacks that kids have access to will compliment what we're doing with the meals.
Glover: I'd like you to step back a second and take a larger look at the role of the Secretary of Agriculture and your view of how that role fits in the federal government and our larger economy. Is the role of the Secretary of Agriculture to see that Americans are well fed? Or is the role of Secretary of Agriculture to see that farmers make money?
Vilsack: The beauty of this job is that we actually have so many different responsibilities. The role of Secretary of Agriculture is to promote agriculture, to continue to promote and expand markets so that farmers have good income opportunities. It is to make sure that science is advanced and that the research continues to support expanded production in this country. We have an enormous global challenge. As the world economy grows we're going to have to produce more. America has got to lead that effort so we have a research responsibility. The Forest Service is under our purview so it is important for us to focus on natural resources and water conservation and preservation. We have private working lands programs through the National Conservation Resource Service. All of that, Mike, is part of our responsibility and then the nutrition of the people is also our responsibility and also job growth and community development also within the purview. So to answer your question, what the Secretary of Agriculture is, is the -- in my view -- is the voice and advocate for rural America. Now why is that important? Because there is no other department of government that has as its principle focus the 16% of people who live and the 80% of the land mass that consists of rural America.
Glover: And what is the role of American agriculture as it fits into the world agriculture? At one point America seemed to be the dominant producer of farm products. That's not the case anymore. Where do we fit in this whole world market?
Vilsack: We're still a leader, Michael, and I think we'll continue to be so but I think we have an additional responsibility not only to produce here at home but also to transfer our technology and our knowledge to other parts of the world. We will not be able to meet the 70% increase in food production that will be required with the world economy, world population growing. So it is important for us to partner.
Borg: Transferring some of that technology is running into some roadblocks in genetically modified crops. Does that bother you especially in France, for example?
Vilsack: Well, we're working with countries like China, Vietnam, in the southeastern Asian areas of the world, some African nations, Kenya in particular. Many of the South American nations are embracing biotechnology. Clearly we need to make sure we have a clear understanding of the risk associated with any kind of new technology but it will be important to use this technology and science because we're developing crops that will be better able to grow in adverse weather conditions. We're seeing very extreme weather conditions. So if you have drought resistant corn that is going to be important to grow in sub-Saharan Africa. If you have a rice product that can basically become dormant during flooding process that might be important for Southeast Asia. So it is going to be very important for America and particularly for Americans to invest in research.
Borg: But it's a political problem too isn't it?
Vilsack: Well, it is partly a political problem but we're beginning to see a better understanding in Europe. We're beginning to see many European nations, particularly Eastern European nations being more willing and more accepting of biotechnology. It is an education process. It is a process that we have created in this administration, a parallel effort of government officials, researchers, academics, farmers, all basically singing the same song about this technology and slowly but surely the world is beginning to understand there is a need for it. At the same time, I might add, it is important to have diversity in agriculture which is why this administration has made a historic investment in organic and sustainable, other sustainable practices.
Henderson: Let's talk about lean, finely textured beef. Governor Branstad has asked for a congressional inquiry to determine who or what started what he determines to be a smear campaign. Congressman King has issued a statement asking you to repair the reputation of the companies that produce this product. Where do we stand today in regards to lean, finely textured beef?
Vilsack: Well, we certainly welcome Governor Branstad and Congressman King getting engaged in this conversation that we frankly were engaged in long before the Governor and the Congressman were engaged. And the key here was to make sure that people understood that this was a product that was safe, a product that had less fat and a product as it related to school budgets was probably less expensive and that is the message that we have been conveying throughout. We'll continue to convey that. At the same time we have a responsibility at USDA to be responsible to our customers, the school districts of the country and when school districts contacted us -- and hundreds of them did -- saying we'd like to have a choice or we would prefer you not offering this, we had to be responsive so we offered a choice. We're going to continue to promote good, nutritious, safe food as part of our school program and we are hopeful that superintendents, administrations, school boards will make the right decision based on the facts.
Glover: Are you losing this public relations war though?
Vilsack: No, I don't think so, Michael. Let me just suggest to you -- I think there's a bigger problem here and the problem is that there is a disconnect between agriculture and how agricultural production takes place and the public. When this department was founded 150 years ago -- we celebrate our 150th anniversary next month -- when this department was founded 90% of America had some connection to the land, a direct connection to the land. Today less than 2% of America is responsible for producing our food. And so there is a disconnect with the other98%. So I think the larger issue here, the larger problem is a greater advocacy for agriculture, a greater understanding of the national security advantage that we have from agriculture, the economic advantage that we get from being able to have a productive agriculture, the environmental advantages associated with a record amount of conservation acres. All of this I think has to be educated -- we have to educate the public and I think this situation, I think, has given us an opportunity and I think we need to seize the opportunity to reconnect people with farming. That is why we have our Know Your Farmer, Know Your Food effort to try to reconnect the other 98% to a very important part of our country.
Borg: CRP acres, I mentioned it in introducing you, being taken out of CRP, Conservation Reserve, going into row crops. Does that bother you?
Vilsack: Well, it would if it were true. The reality is that we've had a general sign up here for CRP recently and I think the expectation was that we would see very low interest in that program. We're actually quite surprised. We actually had to extend the sign up period because there was greater interest than we anticipated. So I think we're going to continue to see roughly 30 million acres in that program. And I think the reason we are is because we increased the rental rates, we increased the incentive payment. We have looked for continuous CRP sign up programs that are tailored to duck habitat, to the sportsman's community so there's a continued interest in this. Now having said that, conservation itself will be a challenge because there may be less resource coming through the federal government in conservation as a result of the food, farm and jobs bill discussion. So the key here is to figure out how we could use what we refer to as regulatory certainty, how we can encourage private sector investment in conservation and I think you're going to see those kinds of activities being promoted over the course of the next several years.
Glover: One of the reasons for your trip out here on this particular swing is you're visiting some industries which are biologically driven. What is your role in promoting that industry?
Vilsack: To educate folks about the extraordinary opportunity we have to get back in the business of making, creating and innovating in this country which will allow us to export what we make that the rest of the world does not. These new products, these new bio-based products, Mike, are a tremendous opportunity for us to have a whole new economy in this country away from petroleum and towards plant, crop and livestock waste based. 3100 companies today. So one thing is to advocate. The second thing is as part of our rural development strategy we need to continue to invest in these types of programs. As part of our energy title of the food, farm and jobs bill we need to continue to invest in the companies that will produce these products. And finally, we are the lead agency in the federal government for encouraging other federal agencies to purchase these bio-based products under a bio-preferred program. The President has directed us to double the number of products available and to begin doing a better job of keeping track of how much the federal government is helping to spur this industry. And frankly there's a tremendous opportunity with drop in aviation fuel. The Navy, the Department of Energy and us, we're working together to build this industry. The Navy wants to have 50% of their fuel being bio-based in the very near future. We want to help them get there. And we want the commercial aviation industry to adopt this as well.
Henderson: Speaking of energy, what are the prospects for tax breaks for renewable fuels, specifically biodiesel and ethanol, both of which are produced in Iowa?
Vilsack: These are tough. We obviously are advocating for a continued level of support. But the reality, the budget reality is what it is and I think our job here is not so much to focus on the tax policy as it is to create market opportunities. And the drop in aviation fuel is an example. The ability to with E-15 to encourage the blenders and petroleum companies to begin embracing E-15, that would bring gas prices down somewhere between a nickel and fifteen cents a gallon, just that one thing. So expanding market opportunity and creating new market opportunities I think is the way in which we can sustain this industry.
Henderson: But it's kind of a chicken and egg thing. You have E-85 out there but not a lot of people can buy E-85 because they can't find a pump that will dispense it.
Vilsack: That's why it is important for us to use some of our programs like the Renewable Energy for America program which we have to extend assistance for blender pumps. So a lot of the focus will be on distribution and markets as opposed to tax credits and subsidies that helped this industry get started.
Glover: What is the most important thing you can do -- I assume that expanding the use for renewable fuels is a priority for you -- what is the most important thing you can do to expand the use of those fuels?
Vilsack: Basically making it more conveniently available. To Kay's point a distribution system and trying to encourage that.
Glover: But how do you go about that?
Vilsack: Well, you go about that by providing incentives and assistance, financial assistance which is what we are doing through the REAP program. We started in a relatively slow -- we have a very specific goal. We have helped a couple hundred of these pumps be installed. We need to do a better job of that and a more aggressive job of that in the future.
Henderson: As an advocate for the rural economy what is your view of this XL pipeline proposal?
Vilsack: Well, that is part of the infrastructure and it's part of trying to get the product to market more easily and more conveniently. I think it, again, I think it begs a larger question and I think we have to have a discussion in this country about our infrastructure, not just pipelines but bridges, roads, dams, locks, our transportation system. We need to be competitive. I've traveled to these foreign countries that have invested a substantial amount of money in their infrastructure. They are going to be able to get product to market more quickly and therefore less expensively and more competitively.
Henderson: We have about half a minute left. What is your view of the Army Corp of Engineers' management of the Missouri River vis-à-vis farming in that area?
Vilsack: I think the Army Corp, it would be well for the Army Corp to be more attentive to the needs and to listen more closely to the concerns along the rivers systems. I think there is a tendency for the Army Corp to say we've got the answer. You really have to have better dialogue and better communication with folks.
Borg: As Kay has said, we're out of time but I just wanted to get this -- food, farm and jobs bill. It doesn't roll off the tongue as much as a farm --
Vilsack: No, but here's the thing. It conveys the complex and comprehensive nature of the legislation.
Borg: Thank you, Mr. Secretary. We'll be back with another edition of Iowa Press same times next weekend, 7:30 Friday night and a second chance to see the program Sunday at noon. I'm Dean Borg. Thanks for joining us today.