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Release No. 0362.07
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REMARKS BY ACTING AGRICULTURE SECRETARY CHUCK CONNER TO THE ILLINOIS FARM BUREAU FEDERATION ANNUAL MEETING

Chicago, Illinois - December 2, 2007

*REMARKS AS PREPARED FOR DELIVERY

Phil, thanks very much for that warm introduction. What a terrific audience.

In many ways, being here is like coming home for me. You know that I hail from the great state of Indiana. But I am only a second generation Hoosier. My grandfather and the remainder of the Conner clan came from Iroquois county, Illinois. They farmed near Sheldon, Illinois, and some of that land remains in the family.

It's good to see you and have this chance to say thanks personally for your tremendous contributions-in production, in exports and jobs-to the nation's agriculture and economy.

As producers in the nation's number four export state, you've had a major role in our record agricultural exports, 2007 makes five years running, and you'll be as excited as I am about some stunning numbers that just came out Friday.

The final numbers are in for fiscal year 2007. And U.S. agricultural exports have hit a record $82 billion.

Even better things are in store for 2008-we are projecting another record in export sales for all major commodity groups and we expect total U.S. agricultural trade to reach $91 billion.

Illinois corn and soybeans are vital to this achievement. But high-value animal products are also part of these gains, thanks to solid demand and the benefits of a very competitive dollar. My thanks for your great work in helping us break these export records.

If agriculture had a fantasy football team, I would definitely want Illinois as one of my picks.

Before I get too carried away, I want to recognize someone else who has had a profound influence on American agriculture, my old friend, former Secretary of Agriculture John Block.

Jack Block will always be known as a Secretary of Agriculture who put the interests of farmers first. He was a great role model for me.

Jack worked with Congress on the 1985 Farm Bill to establish the nation's largest and most effective conservation program: The Conservation Reserve Program.

In fact, if memory serves me, he announced the CRP at the farm of my former boss, Senator Richard Lugar of Indiana.

The 1985 legislation directed American agriculture toward the kind of market-oriented farm policy we want to keep building on today. Looking to the markets for guidance has created more efficiency, brought better returns to producers and has given them more freedom to choose what they want to produce-for the market, not for the government.

Imagine the impact on the corn market in 2007 if we had not had the foresight to put in place policies that enabled producers to plant based upon the market rather than the program.

From 1985 on, I've been around the farm bill track a few times myself...this is my sixth farm bill, to be exact.

And we still have a great opportunity to set agricultural policy on the road to a very competitive future with this year's farm bill.

We are fortunate to be enjoying a very strong farm economy-with market prices at or near record levels for our major commodity crops-and strong demand from foreign buyers.

Just last week, our Economic Research Service estimated that net farm income this year will come in at $85.7 billion, almost $18 billion higher than last year.

Phil, I remember talking to your predecessor about how to get net farm income above the $50 billion mark.

This kind of success gives us a chance to take the long view-and to work together to put American agriculture on the strongest possible footing to deal with the competitive challenges that lie ahead.

That is the best way to assure future growth and prosperity for our industry.

At the moment, the farm bill is stalled in the Senate. I know this is frustrating for farmers who are eager to make their planting decisions for next year. Believe me; it's frustrating for me too.

Fortunately, we have more than four weeks until the New Year begins, and that's still enough time to pull together and produce a good farm bill. But the window of opportunity is closing very fast.

I can tell you that the President very much wants to sign a strong farm bill before this process is over.

At the moment, we still have some important differences over the farm bill as it stands in the Senate, differences over the tax increases it calls for, over how its costs are being presented and over the lack of any reform it would bring to existing programs.

But I think it is also important at this point to step back a bit and look at how far we have already come in this farm bill process and how much has already been achieved in both the House and Senate versions of the bill.

Because a great deal has been achieved. Both of these bills offer important gains for American farmers and ranchers and for the nutrition programs on which our neediest citizens rely.

We should not let our differences obscure the fact that a broad consensus has emerged on what needs to be done in a number of vital areas.

Throughout this year, those of us at USDA have made the case for what we heard across the country in 52 Farm Bill listening sessions.

We heard that our current system of counter-cyclical supports fails to deliver help to farmers when they need it most as well as that the time has come to provide more support to specialty crops and to beginning and socially disadvantaged farmers and ranchers.

Both the House and Senate versions of the farm bill have addressed all of these issues. Their approaches may not have gone as far as we would have liked but they still represent important progress.

The House and Senate, for instance, have laid out different paths to reforming the counter-cyclical program. But both would give us an optional support program based on total revenue rather than price levels and would provide more help for farmers when they need it most.

And I want to thank the Illinois Farm Bureau for its leadership in helping move us toward a revenue-based solution.

Both the House and Senate bills would take important steps toward providing more support to specialty crop growers through expanded research efforts and direct purchases of fruits and vegetables for nutrition programs.

The House bill would also provide $215 million in funding over the next five years to fund research focused on specialty crops.

And both the House and Senate bills would provide expanded access to farm operating and ownership loans for beginning farmers.

The Senate bill would also give beginning farmers and ranchers new priority in conservation programs as well.

For agriculture to have a future we must make it possible for the next generation of farmers and ranchers to get their start by working their own land and these provisions are a step in the right direction.

Expanded funding for conservation is in order to help farmers meet ever increasing conservation requirements and was a cornerstone of the Administration's Farm Bill Proposals.

These programs deliver important financial support to farmers and ranchers in a non-trade distorting way while also bringing environmental benefits to the broader community.

The Senate bill would expand the Conservation Stewardship Program by enrolling over 13.2 million acres nationwide every year. And it would provide more than $2 billion in mandatory funding for the program over the next five years. Eligibility criteria will be based on local input, which will help address regional realities and environmental concerns.

We have also made the case for significantly expanded funding for research and development of renewable energy particularly for cellulosic ethanol as an alternative to grain-based ethanol and biodiesel.

Ladies and gentlemen, renewable fuels have taken a lot of criticism in the press in recent months. But I will tell you that as I travel, the support from all Americans for the U.S. producing more of its energy at home has never been stronger.

Both the House and Senate bills recognize the need for greater investment in renewable energy. The Administration's farm bill proposals called for $1.6 billion in new funding over the next ten years.

The House bill would provide more than $3 billion in new mandatory funding for renewable energy programs. And both the House and Senate bills would provide mandatory funding to stimulate the production, storage and harvesting of cellulosic feedstocks for biofuels.

Illinois is now the third-largest ethanol producing state and it is closing in on one billion gallons a year of production capacity, so these programs will be important for all of you.

Finally, both the House and Senate bills would remove the restrictions on the food stamp program that discourage participants from saving the money that will help them build better lives.

The bottom line, ladies and gentlemen, is that there is good in this year's farm bills. So by not acting responsibly, there is a lot at stake for the agricultural industry to gain or to lose.

Let me just offer a few thoughts on where we are right now.

1) Farm bills cannot be about greater taxation on other Americans.

2) A farm bill that raises our trade distorting supports above the already successfully challenged 2002 bill is destined to bring even greater challenge to our farm bill from other countries.

3) We must recognize that today's farm programs provide income support and are no longer used to control production. Therefore we must deal with the fact that some of the very wealthiest Americans are getting taxpayer funded income subsidies.

With so much on the table and so much at stake, there should be enough incentive for all sides to find ways to narrow our differences and come together on a bill that will deliver real benefits to America's farmers and to the American people.

It has taken a lot of work to get us to where we are today. For those of us at USDA, the process began with those 52 farm bill forums we held across the country in 2005 and the 4,000 comments we collected from farmers such as yourselves.

They started us off on the road to reform to modernizing our farm programs and responding to changing market realities.

One of those changing market realities, of course, is the growing importance of agricultural trade.

I can't say it better than Phil Nelson at our Decatur Farm Bill Forum two years ago. Phil said, "We believe in free trade, fair trade and more trade."

Phil, we hear you. And that's why the Administration continues to work exhaustively on the Doha Round of the WTO.

On a bilateral basis, Illinois has a lot to gain from the upcoming Senate vote on the Free Trade Agreement with Peru.

As the nation's second largest exporter of soybeans and feed grains and with your role as a major producer of pork, beef, wheat and dairy; you'll increase your market share in Peru by gaining from duty-free access on a number of products.

The Administration has worked hard for this FTA and we're doing the same for agreements with Panama, Colombia and Korea. If Congress ratifies these recently-signed agreements, you'll enjoy greater access in markets that could represent over $3 billion in added farm exports.

For the livestock producers in the audience, I'm happy to report that U.S. beef exports increased almost 18 percent in the first nine months of this year. And their value is up almost 30 percent over that same period a year ago.

To keep you fully updated on the trade front, I'll be heading to China next week as part of a delegation dealing with trade, along with economic and environmental issues.

As our number one market for soybeans and cotton, China has been moving up the ranks and is now our fifth largest overseas market for agricultural products.

One sign of how rapidly things are changing is that next year we expect China to move up to fourth place in that ranking ahead of the European Union.

You know better than anyone that foreign trade does matter. That's why we're working hard to maintain existing export markets while gaining new access opportunities.

Through the farm bill, through free trade agreements, through Doha, we have to build for the future together.

I thank you for your interest, your leadership and your vigorous involvement in these debates. And thank you for having me here today.

[Applause.]