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TRANSCRIPT OF ACTING AGRICULTURE SECRETARY CHUCK CONNER'S REMARKS TO THE DTN-PROGRESSIVE FARMER AG SUMMIT
Chicago, Illinois - December 5, 2007
SEC. CHUCK CONNER: I appreciate that introduction, Urban [Lehner], very much, and I thank all of you for having me here today, ladies and gentlemen. Coming to Illinois and coming to Chicago, it's really like coming home for me. I think most of you know that I do come from the great state of Indiana which I'm very proud of. But my family's roots are actually in Illinois, Iroquois County, Illinois, to be exact, and some of my family is still on the land in the Sheldon, Illinois area. So coming here again is always like coming home, and I'm glad to have a chance to be back.
All of you in the crowd who are producers have had a major role in something that we were very, very proud of; and that is our record agricultural exports in 2007, and it makes five years running now that we've had record agricultural exports. And I'm sure you're excited if you've seen some of the numbers that just came out in the last week. We said for fiscal year 2007 U.S. ag exports hit a record $82 billion. Ladies and gentlemen, I remember the day when if you hit $50 billion you were having a pretty good year in the export business, and we've hit $82 billion. And you know what? Matter of fact, we are projecting for next year $91 billion. Who could have imagined that we would be approaching $100 billion of agricultural exports in this country?
The corn and the beans grown here in Illinois and throughout the Corn Belt states certainly play a vital role in this achievement. High value added products are part of these gains thanks to a solid demand as well as contributions from a very competitive dollar. And again my thanks for your great work in helping us break all these records that many felt were probably impossible going forward.
Looking at the markets for guidance has created more efficiency and it's brought more returns for our producers, ladies and gentlemen, and it's given them more freedom to choose what they want to produce for the market, and not for the government. Many of you are here today to get a good analysis of the market situation that exists. For example, imagine the impact on the corn market in 2007 if we had not had the foresight to put in place the policies that enabled producers to plant based upon the market rather than based upon government set-asides, government acreage controls.
Right now we have a great opportunity, I believe, to set our agricultural policy on the road to a very competitive future, a future based upon this year's Farm Bill. We are fortunate to be enjoying a very strong farm economy today. We're fortunate as producers; I think we are thankful, for that opportunity, with market prices near or at record levels for virtually all our major commodities including our livestock commodities. And of course we continue, despite those higher prices, to have extremely strong demand from our foreign buyers.
Just last week the Economic Research Service estimated that net farm income next year will come in at $87.5 billion. Of course, that is an all-time record, and ladies and gentlemen that's $28.5 billion more than what we had last year, which was a very good year for American agriculture. But these are numbers that if I would have quoted them to you a couple of years ago, you would have thought that I'd lost my mind. These are tremendously large income numbers.
This kind of success gives us a chance to take a long-term view and to work together to put American agriculture on the strongest possible footing to sustain these better economic times and to deal with the challenges that lie ahead of us in the future.
That is the best way to assure future growth, it is the best way to assure future prosperity for our industry, and it's the best way to ensure that we have a viable agricultural sector in the next generation of producers in this country. At the moment, the farm bill is stalled in the Senate. You know this, I know it. You are frustrated by it, and I am frustrated by it as well. Fortunately we have three more weeks, three more weeks, ladies and gentlemen, until the new year begins. And I believe that is still enough time to pull together and to produce a good farm bill. But honestly I have to acknowledge as well that window of opportunity is closing very, very rapidly; each passing day that window closes substantially.
I can tell you that the President of the United States, as late as yesterday when I saw him, wants to sign a strong farm bill before the end of this year. At the moment, we still have some important differences over the farm bill as it stands in the Senate, differences over tax increases which it calls for, over how the costs of that bill are being pulled and presented to the public, and of course over the lack of any reform that it would bring to our existing farm programs.
But I think it is also important to point out and to take a step backward and look at how far, ladies and gentlemen, we have come with this farm bill process and how much has already been achieved in both the House as well as the Senate versions of this bill. We should not, I believe, let our differences obscure the fact that broad consensus has simply emerged on what needs to be done in a whole host of vital areas going forward.
Throughout this year those of us at USDA have made the case for what we heard across the country in our 52 Farm Bill Listening Sessions. We heard that our current system of countercyclical supports fails to deliver help to the farmers when they've had a big crop loss and of course need the help the most. As well, the time has come to provide support, we believe, for other sectors of agriculture, including specialty crops. And of course we believe strongly that we need to provide help to the next generation of farmers and ranchers in this country, or else they are going to have a very, very difficult time getting started.
Both the House and the Senate versions of the farm bill have attempted to address these issues. Their approaches, frankly, may not be exactly what we had in mind, but I've acknowledged there was important progress, and I think it's important that I do that. The House and the Senate, for instance, have laid out different paths for reform of the countercyclical program. Both would give us an optional support program based on total revenue rather than simply price levels. And again this is an important step; it goes to the issue of simply saying, we want to provide the most help when farmers need it the most.
The House bill would also provide $215 million in funding for research, competitively awarded research, for our specialty crop sector, as they face many new challenges going forward in the future. And both the House and the Senate bills would provide expanded support for beginning farmers. For agriculture to have a future I believe we must make it possible for the next generation of farmers and ranchers to get a start by working their own land, and I believe these provisions are an important step in that right direction.
Expanded funding for conservation as well is in order to help farmers meet the ever-increasing environmental requirements and environmental challenges being placed upon them by the federal government, by the state government, and by local governments. And those increases in funding were a cornerstone of the Administration's farm bill proposals. These programs do deliver important financial support for farmers and ranchers and support in a non-trade-distorting way, in a market-based way, while of course providing those environmental benefits that the general public is demanding of our farmers and ranchers.
The Senate bill as well would expand the conservation stewardship program, CSP, by enrolling over 13 million - that's 13 million acres, ladies and gentlemen - nationwide, every year. Every year. This program is a $2 billion mandatory funded program; eligibility criteria is going to be based upon the local input in order to help farmers at the local level address those environmental conservation requirements that have been placed upon them. An important program.
We also have made the case for significantly expanding funding for research and development on renewable energy, particularly for cellulosic ethanol as an alternative and a supplement to our well-established grain-based ethanol industry. Ladies and gentlemen, renewable fuels have taken a lot of criticism in the press in recent months, but I will tell you as I travel extensively around the country the support from all Americans - and I stress "all" in this term - for the U.S. producing more of its energy at home rather than imported from countries that probably don't like America, that support has never been stronger among all Americans. That I believe will overcome a lot of differences that we may have over the renewable fuels industry.
Both the House and the Senate Farm Bills recognize the need for greater investment in renewable energy, and the Administration's farm bill proposals call for $1.6 billion in new funding for this purpose, and for the most part that has been provided through these bills. Both the House and the Senate farm bills would provide mandatory funding to stimulate the production, storage and harvesting of that next generation of renewable fuels through cellulosic ethanol.
The bottom line, ladies and gentlemen, is that there is good, a lot of good, in this year's farm bill. Clearly, Congress listened as we laid out our priorities for the future, and we appreciate that. So today by not acting responsibly to finish this bill off, there is a lot at stake for our agricultural industry, a lot to gain and unfortunately a lot to lose as well.
I do want to offer a few thoughts to you on where we are right now and how I believe we can capture the good that has come about in this bill by removing the ill-advised and in some cases indefensible provisions from the bill.
First, if I could, let me just talk about the farm bill and new taxes. We have not had taxes, greater taxation of American and American businesses, be a part of the farm bill since 1933. For those of you who are students of farm policy, you might note that the '33 Act was actually declared unconstitutional. So there really is no precedent to say we're going to raise taxes to fund a farm bill. But yet the House and the Senate of course do and proceed down that very track.
To get the farm bill on the right track, we've got to get off the notion that we've got to increase the size of government by raising taxes.
Secondly, a farm bill that raises our trade-distorting supports above the already successfully-challenged 2002 bill, I believe, is destined to bring even greater problems for American agriculture. It will bring greater challenges for the world against a bill that has already successfully come under a lot of challenges. We describe this as simply putting a bull's eye on your back. You do not need a bull's eye on your back, ladies and gentlemen, and we would encourage the Congress not to go the direction of further increasing trade-distorting supports.
And finally, I will tell you and perhaps I will note as most controversial, the types of things we're suggesting to get us back on track for the farm bill that can be done quickly, is that we believe we must recognize that today's farm programs are not about acreage set-asides, they're not about marketing quotas, they're not about the base. They are about providing income support. We no longer use production controls; therefore, we must deal with the fact that some of the very wealthiest Americans that exist today are getting taxpayer funded income support. As a matter of fact, we've identified them as the wealthiest 2 percent of Americans are getting taxpayer-funded income support.
You will note on the chart to my left, I have a map here that shows farm payment recipients with red dots. For those of you in front, you can see there are quite a few red dots on this map, and the larger red dots are actually large farm program payments in excess of $250,000 grand.
Now ladies and gentlemen, if this were a map of my home county of Benton County, Indiana, or if this were an Illinois farm county, you'd say, okay, it's good to know, nice information, let's move on. That's not the case, folks. This is not the Midwest. This is actually a map of Manhattan, and I've reminded folks that's not Manhattan, Kansas. That is Manhattan, New York City. And if you will notice those yellow lines representing streets in New York City, where you see those large red dots that track a particular street in New York City that we refer to as Park Avenue in New York. So these are payments going to people who are residents of Park Avenue.
Now as I've noted, farm subsidies are paid for by taxpayer dollars. Obviously we know that. When we allow payments to go to people with an adjusted gross income of more than $200,000 -- and I stress "adjusted gross," in case there's any question about that; this is the money after all expenses have been paid, money left over - adjusted gross over $200,000. We are asking, ladies and gentlemen, 98 percent of Americans basically pay income subsidies to the richest 2 percent among us. The richest 2 percent. I don't see how you can justify that, ladies and gentlemen. I don't see how you can justify this situation. People living on Park Avenue in New York, some of the highest-priced real estate that exists in the entire world should not be the recipients of our farm program subsidies. We need to take the very wealthiest among us off these payments.
And guess what, ladies and gentlemen. That saves money, and that's going to free up resources for us to use on the very high priority items that we feel are essential to maintain the prosperity that we've seen in the last couple of years, investments in energy, investments in conservation, investments in that next generation of farms out there, all by making, again, simple types of reform changes.
I say "simple." Believe me, I know, ladies and gentlemen, this is very controversial, and the people who come into my office defending this very thing are very passionate about their defense. I continue to maintain, however, that it is simply indefensible.
With so much on the table and so much at stake, I believe there should be enough incentive for all sides to find a way to narrow our differences to do these simple approaches, to find a way to come together on a farm bill that will deliver benefits to real American farmers, real American farmers in need, and of course to the American people who I believe wholly benefit from having farm programs in general. It has taken a lot of work to get us to where we are today. For those of us at USDA, this process began two and a half years ago, in the summer of 2005, and we traveled across the country for 52 Farm Bill Forums. We went to 48 states, heard from over 4,000 producers who came to the mike and told us what they hoped we'd do in the farm bills. And we used all this input to put forward our proposals in January of this year in order for Congress to get an early start on the farm bill.
Unfortunately, our best-laid plans have not materialized, obviously, and they remain blocked in the Senate. But they started us off on the road to reform, modernizing our farm programs, to respond to today's marketing realities. One of those marketing realities I do want to close with is a mention of continued importance of trade, because this is something that is controversial within our ag community. I am pleased that the Congress of the United States, the Senate in fact this week approved the Peru Free Trade Agreement by a vote of 77 to 18, a very, very large margin of agreement, which is unusual for trade agreements during these days. This is an important step, an important step toward leveling the playing field so that our producers have the same access to the Peruvian market as Peru farmers have to our market. That is what these trade agreements are about.
We believe, according to Farm Bureau estimates, that over a very, very short period of time our exports to Peru can actually double, more than double as a matter of fact. Overall, the Farm Bureau said that we can provide more than $700 million within short order per year for American agricultural goods into that country. The Administration worked hard for this FTA. I remind you that we have other FTAs that are pending with Panama, Colombia, and Korea. And if Congress ratifies these agreements as well, we believe they will represent almost $3 billion of short-term growth in our ag exports because, again, these are agreements that are leveling the playing field for us.
So while there's a lot that's been achieved through these bilateral agreements, I do want to make note as well that the Administration continues to work intensively for a multilateral Doha Round of international trade talks. Reaching a multilateral agreement that lowers tariffs and other trade barriers around the globe would open many more market opportunities for our producers, for each one of you. And dare I need to remind you guys that we are projecting on this planet close to one billion new consumers over the next several years, on this planet. Most of those consumers are not going to be in the United States of America.
If you want an opportunity to feed these people with your labor, with the products you produce, we have got to have trade agreements to break down access to these markets.
To keep you fully updated on the trade front, I want you to know as well that I will be headed for China later this week as part of the delegation dealing with trade and environmental issues. As our number one market for soybeans and cotton, China has been moving up in the ranks and actually we expect China to move into fourth place in terms of our overall exports to that country. They are going to be, next year, ahead of all of Europe in terms of buyers for our products. Again, what a profound change that has had in our markets just in the last few years.
So know the importance of trade. Know that we're going to continue to focus on this. Know as well, ladies and gentlemen, with the sincerest points that I can make that we want to get this farm bill done. The way to get it done is to get this farm bill on a different track that does not involve taxes, that provides (unclear) and does what I consider again to be some fairly simple reforms, reforms that will enable this Secretary of Agriculture, the next Secretary, all of us, to travel all over the country and say, Absolutely, this is a great farm bill for America! And I believe if we do the right farm bill that is a farm bill that will enjoy as much support in New York City as it will in Benton County, Indiana. And to me that is a good farm bill. That's the one I'm striving for, and I still think we can get it done. I look forward to working with you, with the DTN organization which I have a long history with, and does great work. And know that our doors are open to you, and don't hesitate to communicate with us when you realize you have something you need. So thanks for having me here today, and I look forward to hearing from you again.