SEC. MIKE JOHANNS: Thank you very much. Well, thank you very much. It's great to be here with you today. There are so many topics that I could talk about that I thought maybe what I'd do is just pick a couple of topics and maybe bring you up to date, and then what I'd be happy to do of course is take some questions as time permits at the end.

The two topics that I'm going to visit with you about are the Hong Kong ministerial because of course is that ever timely. We leave for Hong Kong this weekend for the next eight or nine days. And then avian influenza, which of course you're covering a lot more these days, and we'll be very engaged in that effort. So those are the two things I wanted to visit with you about.

The timing today is perfect relative to Hong Kong. We just got back just a few days ago from yet another trip to Geneva, the ambassador and I. And I noticed that Rob Portman will be on your schedule a little later on today; so you can compare notes from the both of us and get an impression of what we each thought of in terms of the meeting.

This is one in a series of meetings we've been holding with top trade ministers to do everything we can to clear the path for negotiations at the WTO ministerial and for the ministerial meetings that will occur in Hong Kong over the next couple of weeks.

A few weeks ago we held three days of talks with ministers in London, Geneva, and quite honestly it's been a non-stop effort especially since the passage of CAFTA relative to the WTO process. I do believe very strongly that most of the WTO member countries view Hong Kong as we do, an opportunity to make some tough decisions about the framework as we move forward.

I will be candid with you on my assessment. We have not made the kind of progress that we had once hoped as we close in on the Hong Kong ministerial. But we haven't achieved as much as we'd hoped, but I also want to tell you that I continue to be optimistic about this round.

I want to stress what I said a few weeks ago, and that is the Hong Kong meeting is very definitely part of a work in progress. It is not, and for that matter really was never intended, to be the end of the negotiating process. U.S. is pushing hard for a very successful meeting. We devoted a lot of time and energy to this the last weeks and months.

We'll be doing everything we can to build consensus for a successful ministerial first of all, and for negotiations as we go into 2006. And as you know, the round does extend through 2006.

In terms of the differences among trading ministers, and there are important differences, of the three pillars of the agriculture piece of the Doha negotiations I would suggest that we're really in good shape, decent shape in terms of the domestic support pillar in the export competition. I don't mean to imply to you that all of the work is done on those pillars; it is not. But very definitely they are in pretty reasonable shape.

But the point I've made over and over again is that it is a complete package. It must be a complete package and there has to be substantial progress on all three pillars, and of course that would include the third pillar, which is market access.

In October when the U.S. made a substantial proposal to cut allowable farm subsidies by 60 percent if Europe and Japan cut their subsidies by 83 percent, this was met with universal approval really worldwide. And that approval continues even today.

I will share with you; even some of the people that have been most aggressive in criticizing our programs have said that this was a substantial move. Now needless to say they continue to say, but can you do better? And that kind of thing.

But the reality is, it was viewed as a substantial step in terms of this round being successful. It was also considered an offer that restarted the agricultural piece of the talks. You were reading a lot back then about talks that were really just at a standstill between the European Union and the United States. The dynamic was changed by that proposal.

At this point, many countries have had an opportunity, have had the time to analyze the European Union proposal, the proposal that they made in response to what we put out there. I can tell you really without exception they share our view that the European Union leaders fell short in offering greater access to their protected markets.

This is really the main roadblock without question. We see these talks as a once-in-a-generation opportunity that is vital for American agriculture. Now we do have an entire year ahead, a year where we will do everything we can to continue our aggressive work to make this Doha Round successful. We're absolutely committed to that.

We'll keep pushing to level the playing field and to do the best possible deal for American agriculture. In 2004, ladies and gentlemen, we set a new record for U.S. export sales in more than $62 billion. In 2005 we pushed past that total, and now for 2006 we're again forecasting a third year in a row where we anticipate record exports.

This is good news for American agriculture, and we're determined to do everything we can to keep that momentum going.

When you study the numbers, there's some very obvious things that jump out at you; 27 percent of our agricultural income comes from export markets. Trade is more critical than ever in terms of our deliberations relative to future farm policy, but it's also enormously important to the bottom line on the farm.

I get the thoughts of our farmers and ranchers on that policy in the 2007 Farm Bill by holding the listening sessions that were referenced in my introduction. I will report to you that as of today we've done 52 of these in 48 states. I would mention -- somebody asked me, well you did 48, so why didn't you do the last two and call it good for 50? Actually there's a good explanation for that. Louisiana and Mississippi had much more to worry about at the moment than a Farm Bill listening session. So those were the two states, and I can assure them that if they have an interest sometime after the first of the year I'd be happy to do some listening sessions there.

I would also mention that I conducted 22 sessions myself. If you do the math on that, that's about 66 hours of listening.

[Laughter]

And I will share with you, it was mostly listening. I very rarely offered much in terms of my comments except to get it started and then to sum up.

From what I've heard, I believe that this is a time for the nation to decide whether we continue to rely on a policy structure that was really conceived for a different kind of agriculture 75 years ago. While program crops represent a quarter of the total farm cash receipts, they receive virtually all of the funding as you know. Farmers raising other crops, two-thirds of American farmers really receive little support from the current farm programs.

Yet I will share with you that these farmers really weren't showing up at these listening sessions and making the case that they should be a program crop. But they were making the case that they would like to see more dollars for research, for market promotion, for increased sanitary and phytosanitary enforcement, dollars to access new markets.

When you think about it, their argument does carry weight. With 95 percent of the world's population living outside of the United States and our own agricultural productivity currently outpacing consumption, you have to be bold. You have to pay attention to that foreign market.

I believe strongly that we must use the WTO process to force open new markets to U.S. products by showing leadership in this area. So we're going to do everything we can to continue to do that.

This is what we did with our proposal of a few weeks ago. We talk about a safety net a lot in agriculture. And as I said on farm bill forum stages across this country, true safety net for agriculture these days is so much more than subsidies. It's good policy that provides a number of things.

It might be good tax policy, it might be good energy policy, and it also is policy that provides market access.

We don't know at this point how these ideas should come together for future farm policy. I said some weeks ago in a speech that we're really months away from specific proposals. But we did gain a lot from the Farm Bill Forums. We heard a lot from all kinds of agriculture.

On a personal note, as you know my experience by and large has been based upon Midwest agriculture. I grew up on that dairy farm in Northern Iowa and I was the governor of a very large ag state, the state of Nebraska. It was a great experience for me to go to the West Coast and go to other parts of the country where agriculture is hugely important but a much different crop than what I grew up with. I gained a lot from this experience.

Now if I might shift my focus to just a few comments on avian influenza, and then as I indicated I'd be happy to take a few questions.

Another development on the world stage and something that we wanted to discuss with you today is the whole issue of avian influenza. The administration, as you know, continues to fight AI through science, through research, international partnerships geared to global readiness and travel teams to China, to Indonesia, Asia and other countries. The reality is that USDA has been responding to AI for decades. We have partnered with states, industry and other federal departments to develop elaborate surveillance and testing programs and cover commercial flocks, live bird markets, wild bird populations.

We restrict poultry imports from countries affected by the strain that is circulating in Europe and in Asia. We impose quarantines on live birds entering our country and we monitor our borders for smuggling operations.

And USDA has a detailed response plan to stamp out the virus when detected in the United States.

As many of you know, each year there is a season for bird flu just as there is a season for flu in humans. And as with humans, it causing varying degrees of illness. Those common strains of AI appear virtually every year. They are not new here in the United States, and they really pose no significant threat to human health.

We are working hard to educate the public about that to avoid any overt reaction in terms of avian influenza. But there's a bottom line. The bottom line is that it is safe to eat properly prepared poultry, and that is the message that we are trying to send. We are going to continue to be very, very engaged in the AI issues. And stay tuned as we continue to get information out there for you.

My thanks again for the opportunity to offer a few thoughts on these topics. And with that, I would be very, very happy to take any questions that you might have. Questions?

Geesh. That's easy, you guys. I see a hand that went up right here. Oh, in the back first? Okay.

QUESTION: Mr. Secretary, Isi Siddiqui with Croplife America. You mentioned efforts being made in making a success in Hong Kong. I agree with you that the U.S. proposal was real ambitious and substantive. What would it take for the EU to really get in tune again as it appears August and September of this year?

SEC. JOHANNS: That's a really good question. Here's a couple of thoughts on that. One is, as you know after the meeting this last weekend Brazil talked pretty publicly about some of the things that they were willing to do in the other two pillars outside of agriculture -- (nom and services). And I think generally that was received very positively.

Someone said within the last few days that, boy, if that doesn't set the stage for the EU to step up -- because although I focus on agriculture there in my judgment is tremendous opportunity for the European Union in the other two pillars.

We said publicly during these meetings that we really believed for the negotiations to continue that the EU needed to be somewhere between the proposal made by the G20 and the proposal that was made by the United States.

Now without getting down into the weeds on that -- because there's plenty of information out there on what those are -- that's probably the most straightforward answer that I can give you, that negotiations aren't done until they're all done. But what we have said and I think what other countries around the world have said is, look, to keep these negotiations going, that's kind of the ballpark; that's where we need to have the discussion occur.

So my hope is that as we continue through Hong Kong, as we continue into 2006, that the EU will respond and we can continue this effort to bring about a final agreement in the agricultural pillar. And like I said that's kind of where I'm focused on although services and (nom) are enormously important also.

Yes, sir?

QUESTION: Mr. Secretary, Thomas Friedman had written a lot about globalization. A quote I keep remembering in the last few weeks, especially as these trade talks drag on, that one supporter said he supported globalization but it's just been going on too damned hard and too damned fast for too damned long. Do you sense a growing weariness with the pace that is affecting not merely these talks, the ministerial, but the entire approach we have to global negotiations?

SEC. JOHANNS: Well, you know, you were all around during the CAFTA debate. That was a tough one. And when it finally came down to it, it's not like we had dozens of votes hanging around.

[Laughter.]

It was a tough one, and it really placed a burden on us to make the case as to why this agreement made sense. And I have to tell you, in terms of agriculture CAFTA was very one-sided in favor of agriculture. It really was. I mean it was all about bringing tariffs down that when we had granted them pretty open basically complete open access for their ag products for a long time.

And yet we still had, we had a battle on our hands.

But there have been many stories written about the United States Congress stepping back from globalization and other parts of the world also.

Here's what I would offer. First to start with a perspective of the United States-- you know it would be front-page news if I got up here this morning and said, "You know folks, I been thinking bout this over the last year and I've got a great idea for you: I'm going to adopt policies as Secretary that jeopardize 27 percent of farm receipts." You'd be calling for my resignation, as you should.

And yet that's what we have at stake here. This is not incidental. And in some states that I travel to -- obviously North Dakota during the height of the CAFTA debate, we looked at some of their numbers, and a case could be made that it's literally 40 percent. I mean this is, this literally is the difference between success and failure on the farm.

And then you start looking at individual commodities. You know a beef animal in the end it's the parts that you sell. It's 70 percent of the hides go into the export market -- 70 percent. Now tell me what you do with that if you don't have a strong, vibrant export market?

And 95 percent of the world's population does live outside the United States. Those are just facts. And we're already more productive than we can consume, and our productivity is growing by about 2 percent a year while our consumption in our population grows by less than 1 percent.

So it is just enormously important to have a very robust trade agenda. And if we recede from that, our farmers and ranchers will pay a very, very heavy price. It may be popular to go out there and beat up on trade, but quite honestly our farmers and ranchers will pay a very heavy price.

Now in terms of the whole global community I would just make the case to you that in terms of the overall success of the world economy, what we want to do is improve the standard of living for people so they can look to the United States to buy our products. It is I believe a given that as people start to improve their standard of living, they start to look for our products to put into their diet because we just raise great products.

And so again I just feel very, very strongly that if you really want success here for the future of agriculture you look for opportunities to build the economies in other parts of the world as well as our own economy.

And so I just think globalization, the opportunity to trade with a minimum of trade-distorting barriers, is just very important to our personal success as a nation, but I believe it's also very important to the world's success. It's just a part of what I think we have to do in terms of laying a foundation for a good future in agriculture.

Yes, sir. Right there.

QUESTION: Mr. Secretary, would you comment on the Japanese beef situation?

SEC. JOHANNS: See the smile on my face? You know, when I was going through the confirmation process I said, getting U.S. beef into Japan was going to be my number one priority. And I can't, I've lost track of the number of discussions I've had with Japanese officials and the number of times our Department has been engaged with them providing information back and forth.

And I really do believe that we're at a point where I can tell you, I believe it's paying off and soon to pay off.

That work with the Japanese government and painstaking at times and you saw my comments, painstakingly slow, I really do think the end is in sight here.

I offer that for a number of reasons, but the primary reason is that I became very familiar with their process over the last year. It was explained to me over and over again by their ag secretaries. And every indication is that we really are at the end of that process.

So I am very encouraged by the statements in Japan. Like I said, I have a smile on my face about this issue at the moment because I really, really do believe the end is in sight. And I'm very encouraged by it.

I'm very anxious to return a very quality beef product. I'll remind our friends in Japan that we agreed to a 20-month approach. You know that. That was agreed to just before I arrived. And so without hesitation I can assure everybody that they're going to get a very quality, safe product returned to their supermarkets and their restaurants, and we're very anxious to continue to work with them as we move on to other steps.

But today I'm just really encouraged that the light is very definitely at the end of the tunnel, and we're going to get this wrapped up and start trading beef with Japan again.

Our discussions with other parts of the world continue to go well. And so it's been a pretty successful year in this regard, at least that will be my hope that I can tell you that at the end of the year.

Yes, sir?

QUESTION: Mr. Secretary, one of our previous speakers advocated the elimination of farm subsidies 100 percent going cold turkey like Australia and New Zealand. What comment would you make?

SEC. JOHANNS: Wow. Who was that?

[Laughter.]

QUESTION: A gentleman from the Cato Institute.

SEC. JOHANNS: Oh, Cato Institute, okay. Not running for the Senate out there.

[Laughter.]

SEC. JOHANNS: Here's what I would offer you. You know, keep in mind I grew up on a farm. I got a lot of passion for agriculture. I mean it really is my roots, and I just owe a lot to that. But because of that I've been able to see it from a number of different standpoints. I will always argue that an investment in agriculture is a wise fiscal decision, a wise fiscal decision. And I've said that many times. I'll be arguing that the very last day that I am the Secretary of Agriculture.

Now I will offer to you in that vein -- we need to be really smart about that in how we approach that.

What do I mean by that? You know you've covered the same story that we've lived through. We fought like crazy arguing that our cotton program was perfectly in compliance with the WTO, and we lost. And now Canada talks about our corn program, and you know it goes on and on. I mean there just isn't any subsidy program that somebody isn't saying they might challenge or they're looking into or they're investigating or this that or the next thing.

The worst possible thing I could do as Secretary of Agriculture is to ignore all of that and lead our farmers down a road where as three years ago as I'm about ready to ride off into the sunset somebody says, why weren't they paying attention to this?

We had this ruling that's been laid at our doorstep, and now what? Where was Johanns? Was he asleep at the switch here? I appreciate these are sensitive topics to talk about, but quite honestly I believe very strongly we have to talk about it.

We have to talk about them in terms of our trade because it is 27 percent of our receipts that come from trade. We have to talk about them in terms of crafting new farm policy.

But I will tell you what I said when I spoke to I think it was a Senate Ag Committee hearing, Senate or House I don't remember which at the moment, but I said, "The greatest risk for future farm policy may be to say everything's fine, let's just do more of the same."

That may be the greatest risk for the American farmer and rancher. But again on the last day this Secretary will be arguing that investment in agriculture makes sound sense. I mean it does.

But I will also make the case very, very forcefully that we better be very, very thoughtful and wise about how we do this and how we do it in our farm policy. Otherwise, we may be very surprised.

Yes, sir? Or, yes, ma'am? Yes, ma'am.

QUESTION: Mr. Secretary, you alluded to this just a minute ago, but in the event that you aren't successful in the next round of the WTO do you believe that other farm programs will be under constant challenge, such as our corn program and our rice program, our wheat program? The Cato Institute issued another study yesterday that said that our corn program depresses world corn prices by 9 to 10 percent, world wheat prices by 6 to 8 percent, and world rice prices by 4 to 6 percent.

So if the peace clause expires in the WTO round, what happens then?

SEC. JOHANNS: First in response to your question, it's really an excellent question. First in response to your question, we will always aggressively defend our programs. We did with cotton and will do so with corn and soybeans and rice and whatever other program we have out there.

We will aggressively defend those programs.

But your question gets to the heart of the issue, which is, do you anticipate that there will be additional challenges?

Well, you just read the best answer I can offer. Everybody out there is queuing up. And it's not just them, it's not just that study. It's other nations where we do trade.

You know, when Canada says, we're going to look at the corn program and see what's what here -- folks, I'll remind you, this is our number one trading partner. This is not, you know, some country out there that maybe we do half of one-tenth of 1 percent. This is a major trading partner.

You got to be thoughtful about how you do these things. And so I just don't think this discussion goes away. I just think there's a lot riding on these negotiations, but there's also a lot riding on how we approach the future here. I just think it's enormously important.

Yes, sir?

QUESTION: You said you've been doing a lot of listening. Obviously you're thinking about the program. When does the administration plan to put forward a plan for the next Ag bill?

SEC. JOHANNS: The question is, when does the administration plan to put a plan forward for the next ag bill? We truly haven't set a time. We really haven't had any specific discussions about would it be better in this month versus that month. The House is we anticipate going to be doing field hearings probably through, maybe even through next summer. I'm not sure what Chairman Chambliss has in mind. You have to anticipate that they'll have something in mind in terms of what they want to gather out there.

So it really is months away.

This Farm Bill lasts through 2007. Our Farm Bill sessions give us an opportunity to kind of organize the input and try to bring that into some kind of coherent fashion. It gives us an opportunity maybe to look into some issues that were raised. It also gives me an opportunity to talk to the House and the Senate and work with them on some ideas.

So I wish I could be very specific and say here's the date, but there is no date today. I will promise you this -- I will do everything I can, everything I can to be a player in that discussion. It may be a stand-alone piece of legislation; it may be an outline of what we think is important in the titles and how to approach that. It could be a variety of approaches. We haven't even decided on what the best approach would be.

But it truly is months away.

Yes?

QUESTION: Mr. Secretary, John articulated the question that was in my mind about getting weary of negotiations. My question is, I know when you think of Illinois and the mass of our corn going to export market down that river, we are very, very pro-trade. My question is, as you listen to farmers across the United States do you find that same great support for the trade that agriculture has had in the past?

SEC. JOHANNS: That's a really good question again. It depends. It really depends. And it depends a lot on what their leadership in that state is saying, and it depends a lot -- maybe not a lot but to some extent on the commodity grown in that state.

You know. So you get a variety of responses just to be perfectly candid about it. Some states really are very, very pro-trade. You know, I did eight trade missions as governor of Nebraska, probably would have been aggressively criticized had I not done trade missions. We always had ag people with us -- cattlemen and pork producers and corn, soybeans, etcetera, Farm Bureau.

But you know they'd always report how much it cost and there were definitely some farm groups that made the case that it was a waste of money. But they were very, very clearly in the minority. So anybody I think that raises the issue of what does trade mean, keep it in mind that so much, 60 percent of our grain is passed down the Mississippi, ultimately and through the Port of New Orleans into that market. Even a short disruption backed everything up. How could anybody make the case that trade is unimportant? What are we going to do with all that corn?

You know, we run out of spare bedrooms to put it into.

[Laughter.]

Yes?

QUESTION: In your opening remarks you asked the question, are the farm programs that we have today that were designed for another era, are they appropriate to take us forward? And you've implied that you may be thinking of some changes in your proposal to Congress for the Farm Bill. Would you care to take some broad-brush swipes at what your office may propose in the Farm Bill?

SEC. JOHANNS: Here's what I would do for you.

[Laughter.]

Because you know I just wrapped up these forums just a few weeks ago. Here's what I will share with you in terms of what farmers and ranchers are saying with me. You go to West Texas, it's 100 percent -- well, 99.9 and on and on percent in favor of the Farm Bill. You go to North Dakota, I think we heard the same in Arkansas -- again, boy if I could just promise that all we need is a new cover I think I would get pretty good acceptance.

But then the other thing I will offer about that is that in those same atmospheres I have farmers telling me about prices and some of those areas, especially in the western part of the United States suffered drought -- well, guess what? Under the farm program if you don't raise a crop there's no LDP, is there?

And all of a sudden they're very, very dependent on whether Congress is going to pass a disaster relief package or not, and it's just really difficult for them. And I happen to be from a state that lived through a lot of drought over the last half a dozen years.

And then you get to other parts of the country and you do hear from the people that are raising fruit and vegetables. They're not -- I don't remember a single case where somebody said, we want to be a program crop. I do remember a lot of testimony about, we want greater investment in phytosanitary, sanitary issues; we worry what is imported is risking our crop. Canker in Florida, and we could go on and on about the phytosanitary/sanitary issues.

Market promotion. Research. They really believe their future is in cutting-edge research in terms of crops and disease-management, pest-management. So they are looking for a place here in this Farm Bill.

You know you talk to people in the pork industry and the cattle industry. By and large there are exceptions to this. They are looking for markets. It's the question, when would Japan open? The pork producers are just really very pro-trade. And again maybe it's not 100 percent, but it's very definitely a dominant piece of what they look at. And so they are looking for anything we can do to improve market and access. And we don't subsidize them in the direct ways that we do with corn or soybeans or the other program crops.

So all of those things I think are features of this. And then the other thing I will share with you is that what we see out there is that there is real strong acceptance of two programs that have become more major in farm legislation -- Rural Development and Conservation. Just almost universal acceptance of those programs.

Rural Development it is universal. And I get letters from people saying they're just doing so many great things out here with your Rural Development. And conservation is nearly unanimous. There's, not every part of the country is completely enamored. You know, the cow-calf guys worry that we're raising the price of their grazing land with our conservation payments and this and that, and so there's all that. We've heard a lot about the concept of working conservation, and I think that got almost unanimous thumbs up out there.

I think it was the Illinois Farm Bureau that gave me some information on a revenue-based approach to farm policy. And that I think has been around a long time. But you know, it's an idea that they've asked us to look at in the Farm Bill Forum. And so there's no shortage of ideas here.

And now our challenge is, how do we fashion that? But, gosh, I'm not at any point where I can tell you, I favor this versus that. Really the whole idea here was to gather information. And the House and the Senate will be doing more of that after the first of the year, and we'll pay very close attention to what they're hearing.

I will warn them, they will go to some parts of the country where people will say, do the same Farm Bill. They will go to other parts of the country where they will hear a different message.

QUESTION: Mr. Secretary, I farm in North Dakota. I have had any number of European visitors on our farm in the summertime in the last half dozen years. And I don't pretend to be an expert on European agriculture. But given the fact of the size of their farms and the financing and land values that are capitalizing to their individual farms, are we asking them in a way to implode themselves with the reductions that we're asking in the past?

SEC. JOHANNS: Everybody hear that question? The question was, this gentleman has worked with people who have been involved in European agriculture. He's from North Dakota, and because of the size of their farm and the capitalization of payments into land values are we asking the Europeans to implode themselves in this Doha negotiation?

I'll share something with you. This is really interesting when you start looking at how agriculture is doing worldwide. We of course focus on competitors like Brazil on soybeans and that sort of thing. European agriculture, I have to tell you, is very successful agriculture. Now let me explain what I mean by that.

If you're in the media, verify these statistics because I'm pulling them out from memory, but I think this is accurate. You're all in the media, aren't you?

[Laughter.]

No, you're not. I see heads shaking. If I remember correctly, 20 percent of our ag imports are coming out of the European Union -- 20 percent. And they have seen steady growth in their imports of agricultural products into the United States in a number of areas. Of course wine is one that you would obviously think of. But cheese and specialty meat products.

Collin Peterson, whenever I cite the growing figures in terms of trade, he says, "But you know, Mike, you never talk about how much is coming in."

But European agriculture has had a real success story. They are competing very, very effectively in those farms across Europe.

Their numbers are growing. Our numbers into the European Union have been flat or declining. I can tell you, these folks can complete in modern day agriculture. They've been very, very successful in recognizing what the market is looking for and presenting a product to that market that people want to buy and consume and enjoy.

Next time you go to the grocery store -- and I do it -- pick up the cheeses and look at what's there, and the specialty meat products and where it came from. I think you will see that it's very much the opposite. They can be very successful, and they are being very successful today. They are real competitors.

That's why I don't believe they have anything to fear in this Doha round. Open the world to their products, and I think their farmers are going to be real solid competitors.

So God bless you. Merry Christmas.