Patiently impatient. U.S. Secretary of Agriculture Tom Vilsack awaits congressional compromise crafting new farm and food assistance legislation. But he's not hiding impatience. A conversation with former Iowa Governor, now Obama administration cabinet member Tom Vilsack on this edition of Iowa Press.
Borg: Tom Vilsack's responsibilities to the nation fall under three F's, food, fiber, and increasingly, fuel. That is as in biofuels. And you might add forest to that because as Agriculture Secretary he is also directing the National Forest Service. But another F is increasingly apparent, it's frustration, frustration that the federal law governing how the nation ensures a stable, adequate food supply and distributes some of it to Americans who can't otherwise afford good nutrition. That law expired a year ago and a stop gap extension expired this fall. As House and Senate conferees are now working on something new, Agriculture Secretary Tom Vilsack is our guest today. Secretary Vilsack, welcome back to the Iowa Press table. I hope that, it is for all of us around this table, I hope that you consider it as familiar as a kitchen table because you're here quite often.
Vilsack: Well, I'm pleased to be back, Dean, very pleased to be back.
Borg: Nice to have you. And across the table, two people you know well, journalist James Lynch who writes for the Gazette published in Cedar Rapids and Radio Iowa News Director Kay Henderson.
Henderson: Mr. Secretary, people are going to the grocery store and buying corn flakes and hamburger, farmers are conducting the 2013 harvest. There doesn't appear to be an economic impact yet from a lack of a farm bill. When will people who aren't farmers find out about the economic impact of a lack of a farm bill?
Vilsack: Hopefully never. But if it happens it would happen at the end of this year. We'd have to begin instituting what is called permanent agricultural law and when we do that we basically go into the market as a government entity and we begin purchasing commodities. We'd start with milk, butter and cheese. We would be purchasing it at a price that would probably be twice what the market is currently paying for those items, which would result in shortages and higher prices for consumers in the grocery store shortly thereafter. That is one of the principle reasons why it is absolutely essential for Congress to complete its work on a farm bill before the end of the year. It's one of those adverse consequences that we really seek to avoid.
Henderson: Are farmers being hit this fall as they arrange financing for buying seed and fertilizer for the coming year?
Vilsack: Well, I think more to the point, I think they're having a harder time figuring out precisely what their long-term plan should be. The fact that we don't have certainty in terms of what the risk management programs are and what the support systems will be makes it a little bit difficult for them to decide whether they want to expand their facility, whether they want to purchase another piece of equipment. So we're beginning to see people sort of scale back a bit. I think they'll still be able to get credit this year. But obviously if we go to permanent law then all bets are off.
Lynch: Mr. Secretary, you have said that a one year extension, another one year extension is unacceptable, that it would simply be kicking the can down the road. But given the current state of gridlock in Washington, is kicking the can down the road the best outcome for farmers?
Vilsack: It isn't, James, for two reasons. One, an extension would actually cost money. So the Congress would have to find an offset to be able to extend existing programs. It wouldn't have any of the reforms that the current proposal that they are considering would have. Secondly, we're also involved in a budget discussion and in order for us to avoid the very adverse consequences of sequester, which have been very painful for many departments and which are going to be quite painful for departments like the Defense Department coming up, Congress is going to have to figure out a way to save money some place else and that is why the farm bill becomes an important vehicle, not just for the farm policy and the food policy and the jobs and the innovation and the research and conservation, but it is also an opportunity for us to reduce the deficit and maybe take some of the pressure off the budget.
Lynch: Does it also set a dangerous precedent that a one year farm bill would become standard operating procedure?
Vilsack: Well, that is obviously a serious problem and that is the uncertainty of not knowing precisely what the five year program is going to be. It's very difficult for producers. I've talked to producers all over the country and I ask them the question, how are you planning? And they're saying, we're not, we are waiting for Congress to act. And that is also true of chamber of commerce and rural development folks in rural Iowa and rural America, they don't quite know precisely what they can do in terms of business development, in terms of housing projects, in terms of utility projects. Just in the state of Iowa alone this year, in 2013, the USDA invested nearly $500 million in housing, business development and renewable energy projects and community facility projects. That is just one aspect, one mission area that is dependent on a farm bill.
Borg: Those things, housing, in the farm bill too?
Vilsack: Absolutely Dean. We did over 10,000 projects this year in our rural development office just in the state of Iowa. We have done, since I've been secretary, 744,000 home loans, we have done over 15,000 business loans, we have done nearly 8,000 water projects and over 6,000 community facility projects. So the thing that people do not understand about this bill, it's more than food, it's more than forests, it's more than farms. It is about jobs, it's about innovation and research.
Borg: And one thing that it is about too, in fact 80% of it, SNAP, the food assistance program. And there's a big difference between what the House and the Senate have approved in the food assistance aspect of the farm bill, in eligibility and in scope in the cost. Where do you think is a compromise there? I mean, they're so far apart right now.
Vilsack: Well, Dean, a couple of things. First of all, the SNAP program is also about that farm safety net because if folks can buy more at the grocery store they're in fact going to buy more and it helps to stabilize farm prices. 15 cents of every food dollar spent in the grocery store ends up ultimately in a farmer's pocket. So it is part of the safety net in addition to helping our struggling families. The question that most often gets asked is the one you asked, which is what is the right number? I think it's not the right question to ask. What I've been saying to folks is, the question should be what is the right policy? And I think everybody agrees that we want t make sure that folks who are looking for work, who need work, who if they had a job would not need SNAP or not need as much, we need to do a better job of connecting them to job opportunities. Here's what people do not understand about the SNAP program, 92% of people receiving SNAP are either senior citizens, people with disabilities, children or folks who are actually working today. So when we talk about work requirements we're only talking about 8% of SNAP beneficiaries. Of that 8% the current law says that if they are not getting a job, if they're not in an education program or training program they only get 3 months of benefits every 36 months. It gets waived from time to time, that requirement, by governors and state legislatures, when the economy is tough. So I think you have to be very careful about the rather radical changes the House wants to make. We would do better if we encouraged states to do a better job of linking up jobs to job seekers. And we spend about $400 million a year in that effort. We ought to be demanding more accountability.
Borg: I think what I hear you saying is that there's a misunderstanding, and I'm going to use maybe a disparaging term here to make my point, but that many of the cuts are being predicated on deadbeats getting food assistance.
Vilsack: Yeah, you know, that's the unfortunate circumstance here. People just do not understand what SNAP does. If you're a senior citizen and you have a very small Social Security check you've got to choose between prescription drugs, heat, rent and food. If you're a struggling family in a rural area you're spending 36% of your income on food and you need a little help. If you're a person with a serious disability it's probably not likely that you're going to have too many employment opportunities. And if you're already in the workforce, you're working a part-time or full-time job you're doing everything you can to take care of your family, you just need a little help.
Henderson: Given the gridlock in D.C., is there a part of you that wishes you had decided to come back and run for governor?
Vilsack: No, you know, Kay, I love this job. I really do. It is a fabulous job and I'm in a department where that gridlock is not as apparent as it is in a lot of other places.
Henderson: But you don't have a farm bill.
Vilsack: We don't have a farm bill today but we have Chairman Lucas and Chairwoman Stabenow, ranking member Cochran and Peterson, have been meeting as part of the conference committee. We finally have a conference committee. They're meeting, they're talking, they're trying to figure out where and how to bridge the gap. We at USDA are providing technical assistance and creative ideas to help them do that. There is a real concerted effort I think now to get this done. And I think part of it is the need for a farm bill, the consequences of not getting a farm bill, the benefits of a farm bill but also it is tied to the budget. They need savings and this is one place where there can be significant savings.
Lynch: What is your role in those negotiations? Are you actively involved in those, in the conference committee negotiations? Or is it all down at the other end of the avenue?
Vilsack: It's a little different than being governor when you were directly engaged and involved in discussing with legislators about what policy it was going to be. My job is a little different. The last administration tried to inject itself into the policy formulation and that ended up with two veto overrides and not a very good way to do things. Our view is that we want to help, we want to assist, we want to provide technical assistance, we want to provide creative ideas and we want to encourage the leadership to get together. So earlier this summer I called the leaders and said hey, you've got to start talking to each other. You've got 90 differences between the two bills, let's start working on some of the smaller items that we can get out of the way so that when you have to tackle the big issues you've got time to be able to do that. So I'm an encourager, I'm a provider of assistance and help and I'm out here talking about the need, the important need of getting a farm bill done now.
Henderson: You have also been out on the hustings talking about the importance of immigration reform. Your department would have a role in implementing it under the Senate bill that passed earlier this year. What are prospects for that? And are you offering some of these creative solutions that you speak of for resolving that impasse?
Vilsack: Well, actually I went up and spoke with Chairwoman Feinstein when she was taking a look at the immigration bill and I offered the services of the Farm Service Agency offices as a way of helping because I think there's a great deal of trust out in the countryside in those FSA offices and farmers and producers would be more likely to go to FSA offices than say a labor department office. Look, this is an important issue for agriculture. Right now, unfortunately and tragically, today we have producers that are not producing as much, not harvesting as much and actually making decisions to move production outside the United States because they do not have a reliable workforce. Comprehensive immigration reform is critical to the future of American agriculture. So we're up there trying to provide assistance and help and congratulating both the Farmer Workers Union and the growers in coming together in a coalition that is historic in support of the Senate version of the bill. Now, what we need is the House to take action so we get in a situation as we are with the farm bill where folks can sit down in a conference and work out differences. But this is important, it's a deficit reduction bill, it's a border security bill and it also will strengthen Social Security. A lot of benefits coming out of immigration reform.
Borg: Do you think that Iowa falls in that category of needing immigration in order to sustain the farm operations here? I remember early in your administration as governor you encouraged immigration in Iowa and sort of backed off that because there was a bull back.
Vilsack: Well, we didn't back off, Dean, we actually established new Iowan centers and that was really about Iowa's population and the fact is, you know, since then we've lost another member of Congress because our population has not kept pace with the rest of the country. So, to answer your question about agriculture, it's not as prominent here in Iowa but if you're a dairy producer you're looking for help, if you are a livestock producer you might be looking for help, obviously if you're a specialty crop grower you're definitely looking for help. So yes, we do have immigrant labor in Iowa. It's not as pronounced as it might be in California or Arizona or Florida but it clearly is an issue here. But for American agriculture generally it is one of the principle issues. We need a farm bill, we need a sustained budget for our programs and we need immigration reform.
Lynch: You've talked about your work on the farm bill and immigration now. But to much of the public the focus is on the Affordable Care Act or Obamacare and the debacle that the enrollment has been. How much of a drag is that on everything the Obama administration is trying to do and the federal government is trying to do? How much has that taken the steam out of --
Vilsack: Well, I think, James, first of all, it is important for the Affordable Care Act to work, especially for rural folks, because under the old system rural folks were paying more for their health care out of pocket and they were getting poorer results and there was a higher percentage of uninsured in rural America than in other places around the country because there's a great deal of persistent poverty in rural America. So it is important for this to work. I think, unfortunately I think people draw the conclusion that nothing in government works because some aspect of a program is not working as well as we would like. But when I can tell you that we did 744,000 home loans, I can tell you that over 15,000 businesses were helped by USDA, we've done over 6,000 community facility projects, nearly 8,000 water projects, nearly 800 electric projects, 50 broadband projects, expanding broadband access to hundreds of thousands of folks, I can tell you USDA is working. And the unfortunate circumstance is sometimes we focus on things that aren't working and fail to realize all of the things that are occurring, the credit that we're extending to farmers, the disaster assistance that we have provided in tough times. USDA is a place where we're looking for solutions, we're trying to solve problems and I think that is true of a vast majority of folks working in government today. And I think we saw that during the shutdown. I think people realized, hey, there are reasons for government and there are things I depend on and partner with government on, I'd like my government open, thank you very much, and obviously I want it to be efficient and working.
Borg: I'm wondering, out in Lincoln, Nebraska earlier this week you talked about income disparity between rural America and urban America and one of the things you said rural America has the highest poverty in 25 years. I'd like to bring that home as I did the immigration question to Iowa. Is Iowa not included in that? Because I think that generally people look out across rural America right now and say prosperous. And yet you're saying the lowest, or rural America the highest poverty in 25 years.
Vilsack: I think we have to distinguish between farm income and rural income. Farm income is at record levels and it used to be that when farmers were doing very, very well the rest of the town, the rest of the community would do well. That is not necessarily the case today because of the reduction in the overall number of commercial sized farming operations. Today we have 2.3 million farmers in the country but really, frankly, about 200,000 to 300,000 of those folks produce 85% of what we grow and indeed 33,000 farming operations produce 50% of what we grow. So we have seen a substantial reduction in the number of farmers out there in the countryside. So the farm income is important and it has probably stemmed a lot further bleeding that is taking place in rural America. But we should not kid ourselves that because farmers are doing well that rural folks on the whole are doing well. Higher unemployment, higher poverty rates, lower incomes. That is why it is important to get a farm bill done, Dean, because we have put in place a four part strategy to begin turning those numbers around. Production agriculture and exports, local and regional food systems and entrepreneurship that they spawn, conservation, outdoor recreation, ecosystem markets and the biofuel and biobased economy, these are all new strategies, if you will, focusing on trying to reverse the trends in rural America and trying to repopulate rural communities.
Borg: Is that saying that if farming does well, rural America does well in general?
Vilsack: If farming does well it is part of helping rural America do well. But we have to extend beyond that. The problem was that we became so efficient in agriculture that we didn't overlay additional economies to support and compliment what production agriculture was capable of doing. We started to do that with biofuels and now we're extending that to the biobased economy where we're making chemicals and polymers and fabrics and fibers. We're now complimenting that with conservation and extending its reach to outdoor recreation in a thing called ecosystem markets where folks need conservation benefits and are willing to pay landowners to get those benefits and this local and regional food system. 107,000 farms today are selling directly to consumers or to a grocery store as a local food or regional food. That is a growing aspect of new entrepreneurship and small business opportunity. That is going to help us repopulate. We need the programs of the farm bill to support all four of those cornerstones of this new economy we're trying to build.
Borg: I see.
Lynch: Talking about the jobs, you have said there were no net new jobs in rural America in the past decade I think it was. Is that just an indication of the efficiency in food production and processing? And if you're going to create more jobs, where are those jobs going to come from?
Vilsack: Well, I think it is a combination of a lot of things. I think first of all it is indeed the efficiency of production agriculture, no question about that, and the failure in the past, 20, 30, 40 years ago to recognize what was happening in agriculture and to compliment it. But I also think it is the tendency of this country to take rural America for granted. Rural America is an extraordinarily important place for the country. It is the source of our food, a good deal of our water, most of our energy comes from rural America, it is where most people out in country and cities and suburbs go to recreate and it is also disproportionately contributing to the military. 16% of America's population, nearly 40% of our military coming from rural America. So we need a focus on rural America that we haven't had and that is what this farm bill discussion and debate is allowing us to do. It is allowing us to sort of remind Americans about how important rural America is and the need for investing in programs like the biobased economy, businesses that can take corn residue, crop residue or livestock waste and produce a new chemical from it. That is happening in America today. We need to expand beyond the 3,100 companies that are in that business today so that we can create new processing opportunities in rural America and more job opportunities.
Henderson: Let's talk about ethanol processing. The EPA has not yet announced the Renewable Fuel Standard. Are you concerned that they may reduce that, which is much the talk among traders?
Vilsack: Well, I'm looking at the Renewable Fuel Standard in terms of the long haul. I have seen a number of members of Congress propose repeal of the Renewable Fuel Standard or substantially changing the Renewable Fuel Standard and that concerns me because at the end of the day we need a strong standard. Regardless of what the numbers might be from year to year, we need a continued commitment to that Renewable Fuel Standard. Secondly, we need an understanding that the oil industry has done a very good job of making it very difficult to expand ethanol use in this country by discouraging people from using E15 and not providing opportunities to access E85 for flexible fuel vehicles. There are around 9 to 10 million flexible fuel vehicles in the country today, they're all over the United States, but it's hard to find an E85 station that will allow you to have an upgraded amount of blend in your tank. We need to do a much better job. Now, at USDA we have tried, we have put a proposal, our REAP program, we made announcements today of an additional 242 REAP projects, 126 of which I know are in Iowa --
Henderson: What does that mean?
Vilsack: I'm sorry, 424 projects. It is the Renewable Energy for America Program.
Henderson: Thank you.
Vilsack: That program basically would provide resources to create opportunities to for folks to put blender pumps in gas stations. And I spoke to Governor Branstad about the need for us to continue to partner with his initiative here to expand opportunities in Iowa. But we've got to go way beyond Iowa in terms of access to E85. And the last thing I would say is we need to see a much accelerated pace in the development of these advanced biofuels. And part of that will be not just liquid transportation fuel for cars and trucks, but also expanding it to aviation and marine fuel. There is a huge opportunity there that we need to take advantage of.
Henderson: Would it be a mistake for EPA to scale back the Renewable Fuel Standard, reduce it?
Vilsack: I think EPA has got a difficult task because they are faced with the fact that those standards were set on the premise that we as a country would consume more and more gasoline from year to year. The reality is with fuel efficient vehicles we're consuming less. So the assumption upon which those numbers were based was incorrect, number one. Number two, because of the oil industry's reluctance to allow expansion and its campaign to discourage people from using E15 and not having enough E85 stations we're now bumping up against a thing called the blend wall where essentially there's no other place to put that ethanol unless we have increased blend rates and that requires a distribution system. So the focus should not, in my view, necessarily be just on the numbers and what EPA's decision is going to be, it should be on how do we circumvent the oil industry? Or how do we work with them to provide more distribution systems? I was in Brazil earlier in this year and I asked the question, how is it that you folks have been able to have higher blends in Brazil? And they said, simple, it's available. And that is the problem, it's available in Iowa but it's not available in a lot of other states and it needs to be.
Borg: I'm going to go back just a second, Jim, to the farm bill because we haven't explicitly asked you or got a response from you on, what is your prognosis? You've got your -- you aren't involved in the legislative process but you have your thumb on it and you know intelligence wise, what is the prospect of getting a farm bill before the end of the year, by the Christmas holidays? Or is it going to push into 2014?
Vilsack: Well, look, a key date is January 15th. That is the date upon which Congress has to enact a budget for 2014 or else the following day a sequester comes into play and budgets get cut, including the Defense Department, by a substantial amount. So something has to occur before January 15th on the budget. For something to occur on the budget, there has to be savings. For savings to occur, you either have to further reduce discretionary spending, which is difficult to do, we're trying to get away from that or you have to look at the mandatory programs. Well, I don't know that anybody is real interested in Medicare, Social Security or talking about tax revenues, but they are seeing a possibility of farm bill savings and farm programs and the like and so that's where I think you'll see Congress finally deciding, hey, we need a farm bill, not just for all the benefits of the farm bill, not just to avoid the consequences of permanent law, but also because we need the savings in order to get a budget done. And I think hopefully, I'm hopeful, I'm not quite optimistic because I've been optimistic before and things have not happened the way they should. But I'm hopeful. I see a lot of signs, I see a lot of interest and a lot of both private and public comments that lead me to believe that people are now serious about getting this done.
Lynch: Mr. Secretary, when you were talking about energy a minute ago it made me think back to a couple of years ago, you and the President were in northeast Iowa and announced this plan that the Navy would be buying biofuels and you were very excited about that. What are the results of that? Has that paid off, paid dividends?
Vilsack: Well, we have four projects that we have now invested in, one of which is located in the adjoining state of Nebraska and they are in the process of working on producing 170 million gallons of this new, advanced fuel that would be a drop-in, it's not a blended fuel, it would be a drop-in fuel. They have committed to selling it for about 90 cents a gallon less than what traditional jet fuel sells for. So the Defense Department is going to save money. So these four projects are in the works, we're investing in them and our expectation is that within a year or two we'll begin seeing the benefits of that. And not only is the Navy interested in this, James, but we have a farm to fly initiative in which we have a goal to create a billion gallons of aviation fuel for commercial aviation interests. You know, commercial aviation is a lot easier to deal with than this ethanol issue we've been dealing with because you're dealing with tens of thousands of gas stations you have to impact. With aviation fuel it is like 40 airports consume 90% of all the aviation fuel. So if you can distribute biofuels to those 40 airports you've got a ready made market. And commercial aviation needs this because they needed to deal with the emission standards that, international emission standards for greenhouse gases.
Henderson: Many people who are prominent members of the galaxy of supporters of Bill and Hillary Clinton have started coming out and saying, run, Hillary, run. Iowa democrats this past weekend heard from New York Senator Chuck Schumer who said exactly that. What are your thoughts? You supported her bid in 2008.
Vilsack: Well, first of all, I think it is, with due respect to Senator Schumer, it is pretty early to be talking about 2016. We still have the 2014 elections to be concerned about and it seems like we just got over the 2013 elections. Secondly, I think the decision to run for president is a very personal one. Having myself made it I know the thought that has to go into it and I want to respect Secretary Clinton's ability to make that decision on her own based on whatever criteria she decides. Obviously I have a great deal of respect for her. Obviously I think she would be a great president. But it's a little early and hopefully folks recognize that and give her enough space and time to make that decision on her own. And I'm confident that whatever she decides, democrats will be fielding very strong, a strong slate of candidates in 2016.
Borg: Mr. Secretary, thanks for being our guest today.
Vilsack: You bet.
Borg: And we'll be back with another edition of Iowa Press next weekend, same times, 7:30 Friday night and noon on Sunday. I'm Dean Borg. Thanks for joining us today.