Borg: There's a lot of nervousness these days concerning the federal budget.  Federal spending from defense to education ... subsidies from housing to farming are under scrutiny and the budget reducing congressional super committee will soon be announcing its recommendations.  Now, even if the super committee, and we don't expect this, but even if the super committee doesn't tackle agriculture Congress will be rewriting farm legislation.  It is that and the shaky economy that is concerning former Iowa Governor Tom Vilsack these days as now U.S. Secretary of Agriculture representing the Obama administration he is campaigning for the President's legislative proposals for creating jobs.  Mr. Secretary, welcome back to Iowa Press.

Vilsack: It's great to be back.

Borg: Thank you, nice to have you here.  And also at the Iowa Press table Iowa Public Radio Statehouse Reporter Jeneane Beck and Radio Iowa News Director Kay Henderson.

Henderson: Mr. Secretary, a lot of farmers in the field combining.  Will the 2011 harvest meet demand?

Vilsack: Kay, I think we're going to have a pretty good harvest.  It's probably going to be the third or fourth largest in the history of modern agriculture.  When you say meet the demand, the demand is pretty significant both in terms of food and feed and fuel but I'm very confident we're going to be able to meet the needs and continue a strong export effort.  We're going to see a record year in exports which is good news for American agriculture, it's also good news for folks looking for work.

Henderson: You mentioned food versus fuel, there is that debate.  Is there too much demand on the corn harvest from the ethanol industry?

Vilsack: Not at all.  I think what people fail to realize is that there's been enormous productivity gains in corn production.  When I first started practicing law in Mount Pleasant in 1975 a farmer might be planting sixteen, seventeen, eighteen thousand seeds per acre, now it's upwards of 30,000, some are considering 40,000 seeds per acre.  There's just been enormous productivity gains.  That is going to continue as long as we continue to fund research.  So, I don't have any problem with our ability to meet all of these needs.  We want a renewable fuel industry that is strong and vibrant in this country.  For consumers it means a few dollars less at the pump, about 90 cents a gallon less because we have a renewable fuel industry.  For folks looking for work it's about 400,000 jobs that are directly connected to that industry or indirectly connected to it.  And for farmers it is increased income.  So, we want to make sure it is healthy.

Beck: At the last World Food Prize the food versus fuel argument was a lot of the conversation but this year it seemed to be the conversation was that current crop subsidies are subsidizing crops that make us fat, that it goes to over production of corn and soybeans and that it turns into high fructose corn syrup, things like that and that was the argument I heard a lot at this year's World Food Prize.  Do you agree with that?

Vilsack: I don't think that that's the issue.  I think the issue is calories in and calories out.  Part of the issue is that we've got to have more physical activity which is why the First Lady is focused on the Let's Move initiative which we're certainly a part of.  Part of it is improving the diets of youngsters at schools which we have been working on with the Healthy, Hunger-Free Kids Act of 2010, improving more fruits and vegetables, more low fat dairy and whole grains, less sodium, less sugar, less fat content to the meals.  Part of it is making sure that folks are well educated about the whole notion of calories in and calories out.  That is why we have a number of tools on our USDA.gov Web site to encourage people to eat healthy.  IT really isn't about what we're growing.  There is a tremendous fruit and vegetable production that is taking place in this country.  There is an enormous expansion of farmer's markets.  We've seen a 30% increase in farmer's markets.  There is a real interest in knowing where your food comes from.  So there's a lot of exciting things going on.

Beck: But those aren't as inexpensive in some cases as some processed foods.

Vilsack: There is this whole theory that somehow fruits and vegetables are far more expensive.  We've actually done some study on this and for roughly 50 cents a day per family member of four you can provide the USDA required fruits and vegetables for a family.  So, it is not as expensive as people realize.  There are also ways in which you can stretch your food dollar.  That's why we've had a number of recipes that we put on our Web site to encourage folks, particularly those struggling in these tough economic times, to stretch their food dollar without sacrificing nutrition.  So, I think we have a mission that focuses on calories in and calories out, getting our kids 60 minutes of physical activity a day and we're going to see a change in the obesity rates.

Henderson: If you look at the calendar, December 31st is fast approaching.  That is when the ethanol production subsidy is scheduled to end.  What are the prospects for continuing that?

Vilsack: Kay, I don’t think it's going to continue.  I think we will see, however, a continuation of the renewable fuels standard which requires a certain level of renewable fuel to be produced in this country which I think is an appropriate thing to do.  When we get to 36 billion gallons of renewable fuel, which is what the standard sets as the threshold, we'll see a nearly million additional jobs in rural America and we're going to see again increased incomes for farmers and ranchers.  So, that is the thing that is really going to drive this.  Plus innovative and creative ways in which government is going to work to support the industry.  We just recently announced a memorandum of understanding with the Department of Navy and the Department of Energy to create a drop in aviation fuel which is going to be enormously successful I think in this country and allow us to begin exporting fuel to other countries and meet our commercial fuel needs as well.

Henderson: The Iowa Renewable Fuels Association had hoped that the federal government would step up subsidies to help install blender pumps and do other things to drive consumer demand.  In this environment in which Congress is actually talking about steep reductions in spending is that doable?

Vilsack: It is if we are creative about the way in which we use our existing programs.  We have the Renewable Energy for America program, REAP we call it, the USDA which can be used to help the blender pump or flex pump expansion which it is being used.  We're going to continue to use those tools and be creative about the tools that we have.

Borg: As I look at the USDA involvement in conservation programs it seems to me that you are a major renter of farmland through the CRP program, the Conservation Reserve and also wetlands programs and things like that.  But are you in danger of losing some of that land because farmers want to really put that into productivity growing corn and soybeans when prices are high now?  So, and then the budget super committee and rewriting farm legislation -- are you in danger of losing some of the funding for that or even not having as attractive for farmers?

Vilsack: We would be if we weren't being creative and innovative about trying to market conservation programs.  We are now in the process of working with the private sector to create local opportunities for private industry to invest in conservation because as we quantify and measure results from conservation it may be something the industry needs in order to satisfy regulatory responsibility they have.  So, that creates a new private sector and investment opportunity.  We're also working with the EPA, the Department of Interior on some regulatory issues to try to create regulatory certainty tied to conservation which will incent and encourage farmers to continue to promote conservation.  Farmers want to conserve, they know the benefits of conservation in terms of soil quality and water quality.  I don't think we're going to see a diminishment even though the nature and the way in which we incent or encourage that activity may change a little.

Borg: But it's going to cost more money isn't it because rent, farm rents are up about $300, $400 even $500 an acre now.  USDA is going to have to outlay some more money.

Vilsack: Geez Dean, we're going to have to put you in charge of rent on our farmland, about $500 an acre.  But no, I don't think it necessarily costs more federal money.  I think, again, if you can figure out ways in which you can leverage and partner with the private sector you actually can encourage a continuation of conservation programs at the same time doing it with reduced federal commitment but expanded private sector commitment.  Another way of doing this is to work with groups like Pheasants Forever, Ducks Unlimited, they are heavily engaged and involved in conservation programs in order to increase habitat.  That is an issue that we in Iowa need to be serious about.  Pheasant populations have suffered recently and that has an economic impact.  We used to do $80 million of pheasant related activity, economic activity in this state.  That total is now down to $24 million.  So, there's obviously opportunities for us to look for creative partnerships with Ducks Unlimited, Pheasants Forever and other groups like that.

Borg: Thank you.

Henderson: There was serious flooding along the Missouri River corridor this year touching Iowa and other states in the Midwest.  There is a debate now about the way the Army Corp of Engineers manages the river and whether flood mitigation should be a higher priority in that management plan.  What role will you at USDA play as that debate plays out?

Vilsack: Kay, our role primarily is to provide technical assistance but more importantly to provide the resources and the help when floods actually occur.  It is one of the, I think, one of the interesting discussions that is taking place in the context of these reduced federal budgets, what do we do about disaster programs?  The disaster programs, as you know, expired on September 30th of this year.  I think there is going to be an effort to try to renew some form of disaster assistance.  It may look a little different.  It may act hopefully more quickly than the previous program to provide assistance and help to folks.  So, our role really is to provide the financial assistance to get people over the hump but we'll be willing and able to provide as much technical assistance to the discussion as the Corp and others need.

Beck: Let's talk about the assistance to those landowners because this is property that in some cases has been under water for months as opposed to just a short time period.  What kind of assistance is there long-term for rehabilitation of that land or should it be?  I mean, is this land that should now remain out of production?

Vilsack: Well, that is what the individual landowner is going to have to decide.  There are obviously easement programs that are available to potentially purchase the rights to using that land for an extended period of time if that is what the landowner wishes.  But our view is that we can provide disaster assistance through this year and potentially next year under the SURE program.  Even though it has expired the disaster occurred before September 30th and so therefore folks are entitled to benefits.  So, hopefully that will make it a little bit easier to do the transition work and, as I said, I think the Congress will probably restructure the support programs and the safety net programs in the farm bill and I think you'll probably continue to see a way in which we'll provide folks through these disasters.

Beck: There was some criticism here in the Midwest that they felt like the federal government didn't act quickly enough to recognize the depth of this disaster.  As a former governor of Iowa did you share that concern that if this disaster had happened somewhere else that there would have been a more quick reaction or more understanding of the long-term impact?

Vilsack: Well, I'm surprised in that reaction because I think people did react fairly quickly.  The problem with our current disaster programs at USDA is that it requires a calculation of loss based on statewide calculations which require you to get through the harvest before you can make those calculations.  That then delays the implementation or the payment of the disaster assistance for an extended period of time.  So, that is a problem with the design of the program which I think we're going to try to address.  Having said that there are emergency loans that are available immediately through USDA.  We've been faced with a rash of disasters this year, we've had drought in the southwest, we've had fires, we've had tornados, we've had hurricanes, it has been an interesting year and it is one that really underscores the necessity of having a strong safety net for or producers.  That safety net is going to change, it's going to look differently but hopefully it won't compromise the capacity to help people through tough times.

Borg: You mentioned the drought and the fires, particularly in Oklahoma and Texas.  What is the USDA's assistance to farmers and ranchers there?  Is it somewhat the same as the Missouri River problem out here and that is individual farmers having to make decisions for themselves or is the USDA assisting in disaster?

Vilsack: It is a little bit different because you're dealing with grazing land and so what might have taken place in Texas and Oklahoma is relaxation of the CRP rules and regulations about haying and grazing.  In fact, that did occur.  We also have a disaster program for livestock which is more effective than the crop disaster program because it provides immediate benefits.  The livestock indemnity program, the livestock forage program provide help and assistance to those Texas and Oklahoma farmers.  We had secretarial declarations I think for every county in Texas I believe and for many counties in Oklahoma which makes those programs available.

Borg: Is there some concern -- there's widespread dispersal of herds down there right now -- is there some concern on your part through the USDA of beef supply and other commodity supplies because of that drought?

Vilsack: I don't think so.  I don't think we have a supply issue at this point.  The markets are good and when the markets are good we obviously see expansion of supplies ...

Borg: Elsewhere?

Vilsack: Elsewhere.  And we're in a global situation right now.  It's not like the United States is by itself in this process.  It depends on what is happening in other parts of the world which in turn impacts and affects exports of certain products which obviously impacts the supply.  We're in pretty good shape right now.  Agriculture is going to experience the best year from an income perspective after adjusting for inflation in the last 40 years and if you just take a look at nominal numbers it is the best year we've ever had.  So, agriculture is a bright spot in this economy, it is also responsible for one out of every twelve jobs so I think one of the reason we've seen private sector growth the last 19 months in part is because we've got a strong agricultural economy.  I saw examples of that at John Deere last week when I visited, the opportunity to take a look at a plant that has grown by 25% employment in the last ten, eleven months because of the strong agricultural economy.

Henderson: Let's talk about this so-called super committee in Congress.  There are those who argue the 2012 farm bill will be largely written by that panel because of the decisions they make in regards to spending.  What sort of influence do you have over that group of people and what are you asking them to do?

Vilsack: Well, I'm certainly one of those folks who believes that the farm bill is liable to be structured based on what the super committee does and you'll forgive me if I refer to it as the farm, food and jobs bill because I think when you just discuss it as the farm bill you really don't do service to it.  I think that committee is basically to create, two things, it is going to create the fiscal parameters in which the bill will be structured and it will also create a need for an accelerated timetable to get it done.  We will provide technical assistance to that committee and frankly to the ag committees of both the House and the Senate.  I have laid out some priorities of things that I think folks ought to be considering, making sure that the safety net is indeed strong, making sure that we have vibrant markets both here and abroad, I continue to look for ways in which we can be creative about conservation as we discussed earlier, opportunities for us to focus on the need for not just a safety net for farmers but also struggling families with SNAP and rural development and job growth.  So, we're laying out some priorities.  We're working with technical assistance to make sure it is crafted properly.

Henderson: But in an era when the political debate seems to be dominated by folks who have the ethanol subsidy as the poster child for how bad subsidies are and they also attack farm subsidies how likely is it that there will be a seismic change in the way the safety net is structured for commodities?

Vilsack: I don't think it is going to be seismic.  I think there are ways that we can be creative about the design of the program to be more effective and still actually cost less money.  I mean, obviously the direct payment issue is one that I think people are concerned about so we do have to recognize we're speaking to the 98% of America that doesn't farm and we have got to be able to justify what we do to that 98%.  I think that they will understand a revenue program that also has disaster assistance compliance to it.  I think they want to see a continuation of investment in conservation.  Frankly, you could do away with all of the farm payments, it is $10.5 billion this year, the lowest level I think in fifteen or twenty years as a percentage, you could do away with all of that and you're not going to solve the fiscal problems of the country based on farm programs.  I think there is a lack of understanding of precisely how much support there is or isn't in these farm programs.

Beck: You mentioned the farm, food and jobs program.  The food component you mentioned SNAP but for most people they understand food stamps.  Some of the republican presidential candidates have been calling Mr. Obama the food stamp president and have been touching on comments you made saying that that is an economic stimulus to families.  How do you get that 98% to support increased food stamps or at least a level playing field when they think that it is something that doesn't benefit the greater good?

Vilsack: Well, I think two things.  One, you have to understand who is actually receiving the benefits.  I think perhaps candidates are operating under a false assumption about who the beneficiaries of the program are.  20 years ago it may very well have been the case that folks on welfare were the primary recipients of SNAP, today that is not the case.  Only 8% of SNAP or food stamp beneficiaries are on cash welfare, only 8%.  That then raises the question of who the other 92% are.  Well, they are senior citizens, they are children and they are people working.  They are people who are working full and part-time jobs and are just basically having a tough time making ends meet.  They are playing by the rules, they are working hard, they are trying to take care of their families and I think we're a country big enough and compassionate enough to be able to provide support.

Vilsack: The second thing I think people have to understand is that when people are in a position to purchase more from a grocery store it does have an impact on the economy in the sense that somebody has to shelve more food, somebody has to stock more food, somebody has to truck more food, somebody has to package and process more food, somebody has to produce more food, all of those are jobs and that is one of the reasons why agriculture has such an impact on the economy generally.  So, when you are supporting agriculture and supporting the purchase of agricultural products you're supporting job growth.  $1.00 of SNAP generates $1.84 in economic activity so there's no question it is an extender in the economy.  So, when people understand those two things about SNAP they have a different attitude about it.

Borg: Do you think SNAP is adequate?  Food pantries throughout Iowa and I guess around the United States, but we know firsthand here in Iowa, are often bare and the demand outstrips what they have.  Is the SNAP program really adequate?

Vilsack: I think it is adequate.  I think we have a responsibility to make sure it is being operated efficiently and effectively.  We have reduced the rate to a historic low.  We are focused on making sure that we reduce incidence of fraud. We had over 850,000 investigations last year which probably eliminated tens of thousands of people that otherwise not would be qualified from getting help.  We looked at 1800 retail organizations that were probably not operating the program properly and sanctioned them.  In terms of the food banks, we at USDA will continue to provide help and assistance to the food banks and I think the good, positive thing we're seeing is actually a decline in the number of SNAP beneficiaries.  As we've seen 19 months of consecutive private sector job growth maybe things are getting a little bit better.  It will take time for that I think to be seen at the food banks but hopefully we'll see the same trends there as we are seeing in SNAP.

Henderson: Let's talk a little bit about trade.  There are folks, democrats and republicans, who accused China of currency manipulation.  If Congress were to take the step and make an official statement there that the country is a currency manipulator would that trigger a trade war?  And what impact would a trade war with China have on farm income?

Vilsack: Well, I'll leave the currency issues to Tim Geithner and the folks at the Treasury Department, I've got enough on my plate.  But I will tell you this, between China and Canada they basically every month change places in terms of our number one ag trading partner.  So, obviously it means a lot to agriculture.  And we have really worked hard to try to create a relationship with China in the agricultural area so they feel confident about receiving American exports.  I remember as Governor of Iowa going to China and actually sitting down with the Chinese Vice Premier and actually having him walk out of a meeting when I suggested that in China they should purchase Iowa soybeans.  That was five, six, seven years ago.  Today they're the number one purchaser worldwide of American soybeans.  So, obviously things have changed.  We want to continue that relationship and we want to strengthen it.

Beck: The administration has recently announced trade agreements with Korea, Panama, Columbia and while republican presidential candidates are saying great, we need those, they want to know what is next.  Why aren’t there more on the table to be signed?

Vilsack: Well, these are three pretty significant agreements.  They will increase ag exports by $2.3 billion.  Korea alone when you add the additional opportunities in Korea as a result of that trade agreement it will be the equivalent of the nine previous free trade agreements that we have signed.  So, it is a big deal.  The President is committed to both multilateral and bilateral trade discussions.  I think you're going to see a continued effort on a Transpacific partnership which is a combination of a number of Asian countries, Australia, New Zealand and the United States which has tremendous opportunity.  I'll be traveling to China and perhaps Vietnam later in November, later this month and I'll have an opportunity I think to potentially see expanded opportunities on a bilateral basis.  We're going to continue to figure out ways in which we can knock down barriers.  One of the jobs that I have as the USDA Secretary is to work to break down those barriers that occur in countries that are not based on science.  We will be talking to China and to Japan as a result of the Korean free trade agreement about how we could reopen the cattle industry, cattle opportunities, export opportunities to those two countries.  They have been significantly limited since the BSE incident in 2003.  So, there are tremendous opportunities that are going to be generated from these three agreements.  It was a great accomplishment for the President and the Congress.

Henderson: The USDA is involved in food safety and there have been a couple of outbreaks recently.  People remember the egg trauma that the nation went through and then there has been this Listeria outbreak regarding cantaloupe.  Your agency has announced that we will have additional tests for beef sometime in the spring.  Are you concerned that the U.S. food supply is indeed safe and can you assure Americans that what they are buying at the supermarket is safe?

Vilsack: Well, I can tell you that it is safer today than it was two and a half years ago.  When the President took office one of the first things he did was to establish a food safety working group.  He asked Secretary Sebelius and myself to co-chair that effort and as a result of that effort we have seen significant change. You mentioned the 90157 ...

Henderson: The E-coli ...

Vilsack: E-coli, that is a big deal and it is going to make obviously ground beef safer.  We've also expanded our testing procedures for ground beef to include what is called bench trim which was not tested before.  We have new performance standards for poultry and turkey which is important.  So, there has been a lot of work in this space in the last two and a half years.  Kay, we will never be done until there's not a single person that suffers from a food borne illness and certainly we won't be done until we get the fatalities to zero.  This most recent outbreak obviously involves FDA regulated products but we will be working with our sister agency to make sure that we continue to focus on food safety.

Henderson: Republican presidential candidate Michele Bachmann recently visited a food locker, a meat locker rather here in Des Moines and the folks who run that were complaining about the number of tests that they have to do for the meat and the overregulation in their opinion of the meat industry.  Do you think there is overregulation of the meat industry?

Vilsack: I don't think so.  When you look at the numbers, 75 million Americans potentially food borne illness, 125,000 or so in beef alone are sick, 33,000 of them coming from E-coli, 33,000 coming from beef, it's a significant number of people that are impacted so we obviously have to, and we have been reducing those numbers, we obviously have to continue that.  I don't think it is a matter of overregulation.  I think it is a matter -- in fact, what we recently announced was already being adopted by some of the major beef processing companies in the United States and some of the major retailers.  So, the market is demanding this.  It's not just the USDA.  The market demands a lot of this.  If you take a look at Wal-Mart, for example, they are now demanding a much higher threshold in terms of food safety activities at their suppliers.  So, it is not just the government, it is the market as well.

Borg: As I went through the introduction I mentioned your traveling around promoting the jobs bill and I'm not so politically naive as to be unobservant of your responsibilities as a cabinet officer in the Obama administration.  But what is the USDA's role in promoting that jobs legislation?

Vilsack: Well, I chair the rural council which the President established by executive order.  It is the first time in the history of the country that a President has required his cabinet members to focus on rural issues in this format and part of what we're trying to do is figure out ways in which we can increase job opportunities.  Now, the President's proposal is not just the President's proposal, these are proposals that have been advocated by republicans and democrats in the past.  Infrastructure improvement has always been bipartisan, always been bipartisan.  Tax relief for small business has always been something that republicans and democrats have been supportive of.  So, the President believed by putting this out there would be an opportunity for Congress to work.  The reality is that I think there are some who, for whatever reason, want to wait until November of 2012 to begin to get serious about this.  The President thinks that November of 2011 is when we need to get serious about this.  We need to focus on jobs now.

Vilsack: So, my jobs is to focus on the rural component of this and right now we're looking for ways in which we can increase capital investment in particular in rural areas.  USDA has a very strong presence in rural development.  We loan, guaranteed about $5.5 billion of loan guarantees for several thousand businesses to save or create 105,000 jobs in rural America.  We want to continue to do more of that.

Henderson: Democrat Christie Vilsack is running for Congress.  She is Iowa's former First Lady.  Is her candidacy impacting your relationship with Congress and in particularly Iowa congressional delegation?

Vilsack: Not that I'm aware of.  I haven't seen any indication of that at all.

Henderson: Does it not complicate your job as ag secretary to be an advocate with republicans in Congress?

Vilsack: I haven't had any problems with Chairman Lucas, with Senator Roberts who are chair and ranking members in the House and Senate side of that.  We've had a very good relationship.  I've had them over -- I've had Chairman Lucas over to my house for dinner.  We meet on a regular basis and we have good, I think, constructive conversation.  We all understand that the ag area is a bipartisan area.  It is one of the few areas in Washington, D.C. where you really do have bipartisan support.  We want to continue that.

Borg: Thank you very much for being with us today.  It's nice to have you back in Iowa.

Vilsack: It's great to be back here.

Borg: When you are you coming back again?

Vilsack: I've got two grandchildren to come back to now so quite often I hope.

Borg: We'd like to have you back on Iowa Press soon.  Thank you.  We'll be back next weekend on another edition of Iowa Press.  It will be the same times, 7:30 Friday night and 11:30 Sunday morning.  I'm Dean Borg and thanks for joining us today.