Transcript of Remarks by Agriculture Secretary Mike Johanns At the Grow America Project Indianapolis, Indiana
October 26, 2006
SECRETARY MIKE JOHANNS: Thank you, Steve. I appreciate the kind introduction. Ladies and gentlemen, if I might start out by using a little personal speaker's privilege here, I would like to acknowledge again someone who is traveling with me today, and this is enormously unusual these days - and that would be my wife, Stephanie, who is sitting in the - (interrupted by applause.)
Stephanie actually went to high school in Elkhart, Indiana, and so I guess, Governor, that means I married a Hoosier, I suppose. (Laughter.) So - and her father lives here in Indianapolis, so this is a perfect opportunity to mix business with pleasure, if you will.
Well, it is indeed a pleasure for me to be here, to have an opportunity to offer a few thoughts. I've been asked today to speak a little bit about the state, the ag economy, and maybe offer some perspectives as we look out in the future.
Let me start out by, if I might , and just acknowledge that, as business leaders and as professionals, you help Indiana make impressive contributions to the nation's economy, and that happens day after day and it happens year after year. As the fifth largest corn producer and the fourth largest soybean producer in the entire United States, Indiana is also becoming very quickly a leader in alternative fuel production, and it's a natural.
When Governor Daniels says he is proud to be "burning the bean" - (laughter) -- to promote Hoosier agriculture and economic development, he is not kidding. Under his leadership, the world's largest biodiesel plant is scheduled to be built in Claypool, Indiana. It's impressive to hear about the announcement of additional plants that are scheduled throughout the state. These facilities will have the capacity to produce about 1.2 billion gallons of biofuels, which will easily surpass the governor's goal of producing 1 billion gallons annually. It is impressive. Alternative fuels, ladies and gentlemen, are providing a terrific source of growth and development for Hoosier farmers and for our rural areas, and that would be true not only here, but in rural America as a whole. It is literally transforming the rural countryside.
I want to take a moment, if I might, to recognize the great work that is being done by Indiana's Department of Agriculture. This new department has done so much and has a tremendous amount of responsibility. Agriculture employs more than 14 percent of Indiana's work force and contributes nearly $25 billion to your state's economy, when you add up farm and food and forestry and all of the related products. That's an enormously large industry, and I congratulate the governor and Andy and the entire team for the successes that they are achieving.
We at USDA already have a very strong partnership with the Indiana Department of Agriculture. That's important, but there is so much potential for growth and expansion on the horizon. The future is truly bright for Indiana agriculture. The state has strengthened its commitment to conserving natural resources, and I'm pleased to hear about the governor's goal of expanding animal agriculture in this state. As a former governor myself in an agricultural state, I can tell you that was a goal I had also. Clearly, he is determined to move Indiana agriculture forward.
As I mentioned, renewable energy is a terrific example of his determination. I don't think there is any question that agriculture has the potential to boost income in this state, and renewable energy very definitely is part of that equation. But I will also tell you that renewable energy is only one of the many reasons for my optimism about the future of agriculture in Indiana and in the United States. Let's take a look, if we might, for example, at this year's harvest, and kind of build that into a notion of what's happening with the state of our farm economy.
USDA experts predict that farmers will harvest one of the largest corn and soybean crops on record, despite the devastating impact of drought in some areas of the United States. Even in the face of higher energy prices and natural disasters, our farmers' resiliency is evident. Domestic demand for farm products has soared, and we're forecasting a fourth consecutive year of record agricultural exports. We expect this year to export $68 billion dollars' worth of ag products. That's equal to about one-fourth of farm cash receipts.
Our impressive trade numbers have contributed to some other pretty impressive numbers. For the last three years in a row, farm net worth has grown by an amazing, if not eye-popping, $90 billion dollars per year, and we expect the same to be true in 2006. Farm equity, ladies and gentlemen, well, it's at a record high today: just an unbelievable $1.6 trillion dollars. And we expect the debt-to-asset ratio, by the end of the year, to be the lowest in 45 years.
So why the abundance of good news? Why are we seeing this happening in agriculture? I believe the flexibility and the ingenuity of our farmers and our ranchers are among the reasons U.S. agriculture is one of the most remarkable success stories of the last several years. Everything's improving. Irrigation techniques are improving, better seed stocks are being developed; farmers are managing their operations much like the CEO would manage a very large business in the United States. Today, producers grow more crops and handle more livestock more efficiently than at any time in the history of mankind. Corn yields are just an example of these remarkable advances. I believe this is a historic time in American agriculture. I think it's a benchmark time. The potential for future growth and success, I believe, is almost without limit.
But we must not become complacent or convince ourselves that the strength of the farm economy and renewable fuels provides us with a pass when it comes to policy advances. We must face challenges head-on and seize the opportunities that are before us. If we fail to lay the right foundation for future growth, then we limit the future possibilities for the next generation - people like the FFA members that are gathered in Indiana this week.
What do I mean by laying the right foundation? Well, let's start with farm policy. I strongly believe that farm policy must support today's agriculture, not be allowed to stagnate based on agricultural conditions that existed as recently as five years ago. A great deal has changed in five years, and farm policy needs to keep pace. I certainly heard that a time or two during the more than twenty farm bill forums that I personally conducted all across the United States last year.
I must say, traveling across the country to conduct these listening sessions was a great experience. There is really no better way to connect with agriculture than to get out of the Beltway and to listen to the thoughts of the farmers and ranchers. President Dwight D. Eisenhower probably said it best, and I'm quoting, "Farming looks mighty easy when your plow is a pencil and you're a thousand miles away from a corn field," unquote. Now, I've certainly taken my turn with a plow, and I've hoed many more corn rows than I want to remember. I grew up on a dairy farm. And yet, I have to tell you, there was tremendous value for me personally to get out of the Beltway.
We heard consensus on many issues, and pretty varied opinions on others. In general, our conservation programs are very popular, and our rural development programs, well, they got nearly unanimous support. The popularity of our rural development programs is easily explained when you examine the changes that have occurred in rural America and consider the impact of these programs.
The fact is, for roughly 70 years we have operated under a basic rural policy matrix that was created during the Depression. Back in 1940, ladies and gentlemen, when the first farm bill was written, more than 6 million farms existed in the United States. Today, two thirds of those farms are gone. On the farms that remain -- about 150,000, still mostly family-owned and -operated, I might add -- produce most of our food and fiber-150,000 farms.
Most of America's farmers work in town, and farm part-time. Across the spectrum of agriculture, large and small, about 85 percent of total farm-family income is from non-farm sources. That's why our rural development programs are so important. They help to strengthen rural communities; they provide that job that adds that 85 percent of income for farmers. It is no wonder we had nearly unanimous support for those programs. From meeting infrastructure needs, to expanding hospitals, to supporting new businesses, to creating jobs, our rural development programs have made a difference all across the United States.
As I traveled the country I also heard a lot about trade, especially for an industry that relies so heavily upon exports. That's why we have focused so much attention on negotiations in the Doha Round of the World Trade talks. The United States put forward a very ambitious proposal about a year ago. You know, we offered to reduce subsidies, but we firmly stated that we had to have market access in exchange. Unfortunately, the European Union and other countries showed no flexibility, and so the stalemate continues.
Market access is critical for American agriculture. One in three acres nationally is planted for export. One out of every five rows of U.S. corn is planted for export. The fact is that U.S. agricultural productivity is quite simply outpacing consumption in the United States. Think of these figures, if you would, for a moment: Productivity grows about 2 percent every year - 2 percent every year. Our population and consumption, by comparison, grow at a rate of less than 1 percent a year. Now, chart that out over the next decade.
Now, the other thing I have to tell you is that 95 percent of the world's population doesn't live here in the United States; 95 percent lives outside of our boundaries. That truly represents a piece of our future. We're striving, through these trade rounds, to have fair access to these markets. That's why market access is so important.
So now I've discussed a few areas that are broadly supported by producers in the country. Now let me take a moment to talk about a topic that generated a real diversity of opinion out there in those forums.
Our farm subsidy programs generated very mixed reviews. Some producers told us that they're very happy with the subsidy programs as outlined in the '02 farm bill. They told us, "Don't change a thing." But we also heard from many producers who are very dissatisfied with the uneven distribution of very large amounts of dollars in these programs.
In the United States, five crops receive more than 90 percent of the subsidy payments. Meanwhile, other crops, like specialty crops, which are now equal in value to the program crops, receive no cash subsidies. In fact, 60 percent of all farmers receive little cash support - in fact, virtually no cash support from the farm bill. What I find especially interesting is that specialty crop farmers are not coming and asking for subsidies, but they are asking for strengthened funding for phytosanitary issues, research and market promotion.
I believe their emphasis on research is important. Research has enabled agriculture to achieve things I could have only dreamed of as a young child on that Iowa dairy farm. For example, biotechnology research has enabled some of the most dramatic advances in agriculture. Ladies and gentlemen, in the -- (inaudible) - an investment in research is a wise investment.
In the U.S., 89 percent of soybeans, 83 percent of cotton, and 61 percent of corn crops are produced using biotechnology. Increased yields, decreased input costs, and increased planting flexibility have resulted in, literally, double-digit growth. In '03-'04, biotech crops generated nearly 28 billion (dollars) of gross revenue for our farmers. In addition, with worldwide projections, it is estimated that we will grow twice the amount of food on the same amount of acres by the end of 2030. Agricultural biotechnology will make this possible.
Investment in the future was a theme throughout the forums. We began each forum with 4-H members and FFA members. I was a member of both, which brings me to the place where I began my remarks - talking about renewable energy to boost your economy. It's amazing how quickly $70-dollar oil and a mention of renewable energy in the State of the Union Address can influence markets. Some have worried out loud about whether the enthusiasm for renewable fuels will disappear. After all, we've seen spikes in energy costs, only to see an interest in renewable energy grow and then decline as the prices fell.
This time, however, I believe its different. This time we have an infrastructure in place to support renewable energy. This time we have a president who is firmly committed to lessening our dependence on foreign oil. This time we have governors and leaders, like Governor Daniels, who are providing the necessary leadership to move this forward. USDA is doing all we can to be a partner in this effort.
Right now, ladies and gentlemen, 20 percent of the U.S. corn production is going to go into ethanol use this year, and about 8 percent of U.S. soybean production. Our experts predict that these percentages will climb rapidly in the next few years. Two weeks ago, the USDA and the Department of Energy co-sponsored the Renewable Energy Conference in St. Louis. What an amazing success story. Over 1,500 people from across the country showed up at that forum.
You know, not too many years ago, if you looked at the farm bill, it was very simple. Title I was dairy, Title II was wool, Title III was feed grains, and on and on. Today we have a conservation title, a rural development title, an energy title, among others. Read the descriptions -- simply describe where agriculture is headed. Man alive, is the world changing. Rural America is changing, and the rural economy is changing. The question is, "Will farm policy reflect those changes?"
I will tell you that this administration intends to put forth farm policy proposals that recognize and embrace change. We must strive to develop farm policy that is equitable, predictable and beyond challenge. Agriculture is our nation's first industry, and it's a critical contributor to our economy. It also, I believe, embodies the values upon which the United States was founded: hard work, family, faith and opportunity.
The FFA motto starts, "I believe in the future of agriculture with a faith born not of words but of deeds..." You know, it was a long time ago that, as a young FFA member, I took that pledge, and I still believe in it. I commend the governor for sharing in that belief, and I commend each of you for the role you are playing in keeping American agriculture strong.