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USDA Sec. Vilsack Sits Down with Market to Market

posted on June 11, 2010

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Hello, I'm Mark Pearson. Wall Street traded higher Friday despite bearish reports on consumer sentiment.

According to the Commerce Department, retail sales declined 1.2 percent in May. Auto sales accounted for much of the slide, but weakness was noted in numerous sectors of the economy.

The announcement poked the bears on Wall Street, but all of the major stock indices finished the week in positive territory.

Earlier in the week, the government reported the U.S. trade deficit rose in April to its highest level in more than a year due, primarily, to a decline in exports. The politically sensitive trade gap with China jumped nearly 15 percent due, in part, to steep declines in U.S. exports of cotton and soybeans.

China notwithstanding, total agricultural exports are booming, and the Obama Administration is optimistic that will translate into job growth. I sat down with the president's "point man" on rural affairs last week who identified "opportunities -- -- and obstacles" -- -- on the road to a "rural recovery"...

Sec. Tom Vilsack, U.S. Dept. of Agriculture: "our exports are tremendous this year, Ag exports are through the roof, our first six months $59 billion record, anticipate $108 billion for the fiscal year which would be the second best year in Ag exports in history. Every billion dollars of Ag exports eight to nine thousand jobs. So it's not only improving, again, the bottom line for farmers but it is also making sure that we have jobs, again, primarily in rural America.

So, we are very anxious and very focused on expanding trade opportunities and I want to make sure the infrastructure is there to be able to meet the need and so far that's the case."

Mark Pearson: "Infrastructure is an issue and I know as governor of Iowa something you dealt with closely situation on the Mississippi River Locks and Dams the bill has been out there, the dollars haven't been there to get that done. What are your thoughts on that? Is that something that we could see maybe happen over the next two to four years?"

Vilsack: That's a set of tough issues because it requires dollars and in this economic climate dollars are hard to come by because of pay-go regulations basically every time you send an additional dollar you've got to find some offset or you have to find some revenue source to offset it. Having said that I think it's important for your viewers to understand that there is a commitment to 21st infrastructure by this administration. We understand and appreciate investing in infrastructure. That's one of the reasons why a vast percentage of the Recovery Bill was focused on new transportation systems. I would anticipated and expect that we could continue to see a real concerted effort to improve navigation to make sure that it -- we can get product as quickly as we possibly can. We're in a competitive circumstance now. We are competing globally especially in Ag we're competing globally."

With the global economy in the midst of a fragile recovery, Secretary of Agriculture Tom Vilsack fondly points to the positive trading position for U.S. agricultural exports. Vilsack, a former two-term Iowa governor, is well aware of the integral role foreign markets can have for domestic commodities. And he's pushing to change the mindset of U.S. trade policy.

Sec. Tom Vilsack, U.S. Dept. of Agriculture: "In the past we've treated every market the same. Well, frankly China is a lot different than India and India is a lot different than South Africa and South Africa is a heck of a lot different than Mexico or Canada. You have to take a look at each individual market and tailor your approach to where that individual country is in a market continue. We've basically mapped that out and we're really focused on expanding trade."

Mark Pearson: "From a financial standpoint the eyes have been on Europe. Obviously the situation that developed in Greece, Portugal, Spain, Ireland, and the holding together of the European zone has been some question, but an agricultural issue that keeps dogging all this has been the lack of acceptance of bio-technology. Are you seeing any movement on that so far in your administration?"

Sec. Tom Vilsack, U.S. Dept. of Agriculture: "You know I started talking to EU officials about this when I was first elected governor and at that point in time I didn't get hardly anywhere with those conversations. Today, there is a growing recognition. I won't forget for quite some time my discussion with the Danish Ag Administer in Copenhagen during the climate change discussions. A recognition that if we're going to really be serious about global food security, being able to make sure that we meet the growing demands of food, we're going to have to use science and we're going to have to be open to science.

First and foremost we think we need to do a better job of advocating the benefits of bio-technology. Whether it's utilizing water resources, less chemicals or pesticides, or the ability to be more resilient to climate change these are the advantages in addition to productivity that bio-technology can offer.

Secondly it's about establishing what we refer to as global diplomacy. Farmer to farmer exchanges, scientist to scientist exchanges, opinion leader to opinion leader exchanges so that there's a consistent message being delivered about the benefits of bio-technology. Making sure that our regulatory systems are in place, making sure that we figure out in this country how bio-technology and organic can co-exist. It's not an either or situation. Some would like to pit one against the other. I'm not into that. I believe we need both."

While biotechnology presents both a significant opportunity and a potential hurdle for U.S. agriculture, domestic farm policy also looms large around the globe. Policies crafted by lawmakers and administered by USDA have occasionally riled farmers and policy makers from third-world countries. As early preparations have begun for the 2012 farm bill, Vilsack contends an even greater opportunity for rural America is on the horizon.

Sec. Tom Vilsack, U.S. Dept. of Agriculture: "I certainly have gotten an earful as I've traveled around the country about the disparity between folks who are struggling and folks who are doing quite well and that gets you into the whole discussion of payment limits. I think the Chairman wants to avoid that. I think he wants to get into a system where that's not the discussion and candidly I want to get in a position where people around this country understand and appreciate that a farm bill is not just simply about subsidies for farmers. It is about maintaining food costs that allow you to have ten to fifteen percent more of your paycheck to spend as you wish as opposed to spending it at the grocery store. I don't think there's a full appreciation for that in the rest of America.

In terms of priorities I think it's not just a farm bill. I think it's a rural development including production agriculture but also recognizing that there are probably 58 million people who live in rural America that aren't necessarily on the farm and they want their schools, their communities to be vibrant great places so they can say to their kids you can pursue the American dream here. You don 't have to go to the city or some other place. You have an opportunity right here to make a difference to be a leader."

Mark Pearson: "USDA and Department of Justice joint meetings. You held the first one here in Des Moines. There was concern about patent issues, about round-up ready about the technology we've had out there, where do you do you see those going and what's the next step in that process?"

Sec. Tom Vilsack, U.S. Dept. of Agriculture: "Well, we've put a team together at USDA to begin discussing the issue that was raised at the Ankeny hearing which I think is a very valid one and that is, Varney raised it, is that there really isn't in place a structure to deal with a generic seed industry. That as these patents expire what happens next? How do we insure that technology is widely available and available at costs that farmers can afford? There is no generic seed technology structure in place today. So, that's one of the things we're working on. How would that be structured? What would it look like? What does it include? Very complex set of issues be we need to talk about it now and not three or four years from now when these patents start to expire."

Mark Pearson: "Environmental issues are another issue you dealt with as governor of the state of Iowa. What would you say to pork producers and cattlemen out there who are in confinement setting and who are in, you know, certainly challenging regulatory and confused regulatory world right now?

Sec. Tom Vilsack, U.S. Dept. of Agriculture: "I'd like to take (EPA Administrator Lisa Jackson) down to North Carolina and I'd like to show her the eight thousand head hog operation that I saw in North Carolina where they are basically taking the methane and producing power for the farm operation and when you drive up to that farm operation you would never ever know that there's a single hog on that operation much less eight thousand. I mean, it's a fabulous place. So, that's the kind of things farmers are doing all over the country and I think people need to see a little bit more of that. "

Mark Pearson: "Final question related to the livestock sector. Dairy industry, tough times, great times followed by horrific times, struggling still to get back to center."

Vilsack: "You know what's interesting about this we instituted a number of programs last year to try to prop prices up and assist folks and they began to work and the prices got a little bit better. And the industry was reducing herds and the combination of those two things we saw an increase in the price and then all of the sudden folks started adding to their herds instead of waiting, instead of being patient, and instead of allowing that price to become more stabilized they started adding to herd and the result is we had a drop in prices.

We've got a dairy council that I put together. I've basically charged them. Representative from all aspects of dairy big operations, small operations, all parts of the country represented. I said, you know, we have got to have a consensus position on this. We can no longer have these peaks and valleys. There are fewer peaks and too many valleys and they're coming too soon and too quick and folks can't recover.

Mark Pearson: "Mr. Secretary, thank you for joining us on Market to Market."

Vilsack: "Thank you."


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