SEC. CHUCK CONNER: Mark, thank you very much for that introduction. This morning, ladies and gentlemen, I hope everyone's awake. I am delighted to be here with you. Let me just start though by telling you that I really am still getting used to this new position and being called the Acting Secretary. Around the Department for many years as deputy secretary I was simply known as "Chuck." I don't want you to feel like this is getting to my head in any way, ladies and gentlemen. I have a number of people in my life who keep me humble. When I told my wife about what was going on with former Secretary Johanns and my potential promotion, she said, Congratulations, and then she quickly added, I will not call you "Mr. Secretary."

[Laughter.]

My mother, my dear 84-year-old mother who still lives on the farm in Indiana, her reaction has always been a little more encouraging to me. As you might expect from an 84-year-old mother, she has absolutely been glued to CNN and Fox News I think literally 20 hours a day thinking that she's going to see my face on one of those programs. I did inform her that most networks don't feel that the Secretary of Agriculture is very newsworthy on these issues, particularly the acting secretary of Agriculture, and they've got a lot of other stuff that they would prefer to cover. So I think she's gradually phasing out of that, and she did tell me a couple of nights ago that she has become an expert on Brittany Spears, OJ Simpson, and Princess Diana, so some good has come out of this I guess.

I couldn't be more honored, ladies and gentlemen, to be doing the job that I'm doing right now. As has been noted by Mark, I did grow up on a farm in Indiana. Frankly, I always intended to return to that farm and head back there and help my brother run the family's farming operation. Things never seemed to quite work out for me to do that from each crop-planting season. But I am proud of what I'm able to do every day here in this job with the producers of farm country, the very people that I grew up with, certainly the very people that have been my relatives for many, many generations.

There are so many exciting developments going on out there in agriculture today. Some of the things we are doing is certainly we are pressing for some beneficial free trade agreements. And we are working on the challenges that come along with benefits that global markets offer to us. For example, import safety. We are gearing up for the Farm Bill debate in the Senate, and of course we are attempting to develop and manage a renewable energy industry that is so dynamic and vibrant at this time.

I'd like to talk to you a little bit about each of these subjects today, where I see them going and how they potentially could relate to your industry, and then perhaps we'll have time for a few questions.

First, let me talk about a topic that I had mentioned to you in the past of course, and that is avian influenza, or AI for short. We do remain vigilant, ladies and gentlemen, on our threat to AI. Although it is certainly off the front pages of the newspapers it is not off the front page of our policy and work load. Our Wild Birds Surveillance Program aims to test 50,000 wild birds in the coming year as well as 25,000 commercial environmental samples. Congress has appropriated to us $47 million for AI surveillance, including $13 million specifically towards the wild bird population.

We are expanding as well our successful biosecurity for birds program and developing that program in a Spanish language website. I think most of you understand the importance of having that bilingual translation. And to halt the spread of AI abroad, we are continuing to provide funding and personnel to the crisis management center in Rome established by the U.N.'s Food and Agricultural Organization.

We've also worked with the Food and Agriculture and Rural Organization for Animal Health to organize the first global animal health communicators network to develop global animal health communications strategies for high path AI, with a particular focus on H5N1.

As you know, high path H7N3 avian flu was recently detected in Saskatchewan, Canada. This is not high path H5N1, and if you noted our first public comments that was indeed what we made clear and the public understood. But we are working hard to ensure that this high path deadly strain does not spread across our border. Even though we have not imported poultry products from Saskatchewan since 2005, we have placed a ban on the importation of poultry and commercial shipments of live birds, hatching eggs, and processed avian products from the entire providence of Saskatchewan.

Until we got enough information about the outbreak to safely reduce the area of restriction, that ban will remain in place. Obviously we are anxious to have normal trade relations with Canada, but again I stress that we will not do that until we believe we can safely lift that restriction and not have any potential spread of the H7N3 virus into this country.

The National Chicken Council we know has been a strong partner in our efforts to deal with high path AI. We appreciate that continued cooperation. Let me just say, we see it as absolutely essential to our success going forward.

That does bring me to our trade situation. We do have a tremendous opportunity, ladies and gentlemen, right now we believe, to open markets for our agricultural goods with the pending free trade agreements with Panama, Peru, Colombia, and Korea. I'm sure many of you have spent some time on the Hill already and you know there is a great deal of talk that is going on on the Hill about what to do with these free trade agreements.

TThe agreement with Korea is the most commercially significant FTA that we have negotiated of course since NAFTA. Korea has a $1 trillion economy, and we would gain access to that fast-growing market of nearly 50 million consumers. A full $1.6 billion worth of farm exports would become duty free immediately under Korea FTA. Over time, Korea's current 40 percent tariffs on chicken cuts, including frozen leg parts, would be eliminated.

Passage of Colombia, Panama, and Peru FTAs will provide duty free access to markets with a combined population of about 75 million people, consumers, and a GDP of about $575 billion.

What I mean by these statistics, ladies and gentlemen, is to help you understand that we are trying to open trade to people who have growing economies, people that have cash to buy our products. They are not looking for credits, not looking for food aid. They have the cash on hand, and they are ready to buy if we can break down these barriers.

More than half of our current farm exports to those three countries would enjoy duty-free access immediately. Our agreement with Colombia will phase out their tariffs on fresh, chilled, frozen and processed chicken leg quarters over 18 years, with a grace period during the first six years. The Colombia agreement also immediately eliminates tariffs on most other poultry products within the 10-year phase-down period.

Panama's tariffs will be eliminated within five years on chicken wings and processed chicken. All other poultry tariffs will be gone within that agreement's 15 year phase-out period.

Peru's 30 percent tariffs will be lifted over a period of years, and it will fully reopen its market to U.S. poultry and poultry products from all of our states.

They've also agreed to continue to recognize the equivalence of our poultry meat inspection system, and to accept poultry shipments accompanied by USDA's export certificate of wholesomeness.

I know this group recognizes how important trade is to your industry, and I hope you will continue to voice your opinions as Congress considers passing these agreements. As is always the case, there is a battle ahead, ladies and gentlemen, a battle where those who would have our borders shut down to all trade will attempt to make their voices known and the vast majority of American agriculture will line up on the opposite side of that equation and the battle will begin. And that battle has begun in Congress today, and we hope as you have in the past we can count on you to stand there with us.

Free trade does create jobs, it creates wealth for our sector. But there are obviously as well acknowledged challenges inherent to increasing local markets of this scale. One challenge is ensuring that our trading partners adhere to the same strict science-based standards that we rely upon in this country to maintain safety, high quality food supply for our nation. And again, that's why these FTAs are important in terms of them acknowledging USDA's export certificate as a statement of wholesomeness of our products.

In July President Bush convened as well, ladies and gentlemen, a Working Group on Import Safety to evaluate our current import procedures and to recommend improvements to those procedures. Health and Human Services Secretary Mike Leavitt is chairing a working group, and he's been working hard traveling the country inspecting our import plants, reaching out to producers and consumers about their views on this topic, and he's been doing a great job on securing people's views on how we can improve our system.

On Monday Secretary Leavitt and I opened a public meeting at the Department of Agriculture to gather input from stakeholders on what they would like to see done to improve import safety standards. And just under a month ago on September 10, the working group released a strategic framework that outlines the overall approach to strengthening safeguards at every step of the import cycle. The keystones will be prevention, early intervention, and of course rapid response once there is a problem.

All of these efforts are geared toward one primary goal, ladies and gentlemen, maintaining the free flow of goods across our borders while assuring with absolute certainty the safety and the quality Americans expect in our food supply.

We are well-aware that a food safety issue, even if affects only a small percentage of imports, has the potential to hurt all of our domestic producers, and we have seen that played out so many times in the last three years.

So we will continue to work hard to preserve the safety of our food supply. The Interagency Working Group's next step will be to develop an action plan that addresses the goals set forth by the strategic framework as well as based upon the input that we have been getting from stakeholders all over the country, stakeholders like you guys.

Another issue that is, of course, very much on our minds these days is the Farm Bill. The Senate, we believe, should begin debate as it will, and we're hoping to work with them to produce some real reforms to some of our farm policies. One of the things we'd most like to see in the final legislation, of course, is greater funding for renewable fuels. The administration has proposed spending $1.6 billion in renewable energy research, development and production, targeted specifically towards the development of cellulosic energy supplies.

While the House version of the Farm Bill incorporated many of our proposals on energy, we were disappointed that it did not target that funding exclusively towards cellulosic technologies. And in the case of our proposal for a $500 million bioenergy and biobased products research initiative, the House included our proposal, but of course as is often the case they didn't provide any funding for that proposal.

We are working to address these issues with the Senate. I know that votes in corn-based ethanol is something that you guys are watching and in some cases have some concerns about going forward. Overall we expect ethanol demand for corn will rise 2 to 3.3 billion bushes this year and consume about 25 percent of our crop compared to 20 percent in 2006 and of course compared to virtually nothing just a few short years ago.

But we are working with a much larger corn crop this year than last thanks to some extraordinary planning efforts on the part of farmers across the country. They put nearly 93 million acres of corn in the ground this spring, an increase of almost 18 percent from last year, and of course the most corn acreage that we have seen in this country since WWII.

Thanks to their hard work and some favorable weather, which is always obviously necessary for these circumstances, we are looking forward to a, we believe, about 13.3 billion bushel corn crop coming in this fall. Of course, ladies and gentlemen, that is an absolute all-time record, a higher level than most economists thought was even possible for this country.

So while the share of the corn crop devoted to livestock this year will be lower in percentage terms, one point I do want to make ladies and gentlemen to you is that this year we estimate that we will consume more corn for livestock feed than what we have in past years. Compared to last year, 5.7 billion bushels, this year we believe we will feed about 5.8 billion bushels.

So we understand the dilemma of livestock producers very much. We are watching this circumstance very, very closely, but we do note in this equation that thanks to the productivity of the American farmer there is more corn being fed, supplies are greater than what they have been in the past. Our farmers are responding to the increased demand for corn. We believe this does show that the market can work effectively even in these quickly changing circumstances.

I know as well that there was some call for early withdrawal from the Conservation Reserve Program, or CRP, in order to ease our supply situation. After evaluating this current situation, I did decide not to offer penalty-free releases from our CRP contracts at this time. We believe that production is adequate. I stress the term "adequate." And on September 30 more than 2 million acres of current CRP acreage will expire, and we are saying that land will no longer be in the CRP and is available to come into production. So there is already some phase-down here, and again we felt that early release of additional acreage was simply inappropriate at this time.

But again, ladies and gentlemen, understand that we do understand your concerns with this growing percentage of corn being used for renewable fuels. We know that 2008 is going to be an interesting year, and I want you to know that we are watching this market situation very, very closely in order to ensure that there are adequate supplies of the feed grains, food grains as well as now energy stocks available for this rapidly, rapidly growing marketplace.

That is why, folks, we are stressing the development as well of cellulosic ethanol, which we believe can be produced from a far wider variety of feedstocks, that it can be grown all over our country. Energy independence is a goal that we all share. I have never run into anybody in all my travels in this country where someone has said, I really don't believe that America should try to produce more of its own energy. Without fail that is the unanimous goal. But as well we recognize that we need to expand our horizon in terms of development of those home-grown renewable energy sources, and that is why we stress and hopefully will work with the Senate to stress focusing on other sources of ethanol beyond our current situation which is so targeted toward corn-based ethanol.

We're looking to make cellulosic ethanol a practical and cost-effective alternative to both grain-based ethanol as well as an alternative to gasoline. That is going to require not only scientific breakthroughs, but innovative approaches to the logistical planning and infrastructure challenges that cellulosic brings. Ultimately, the development of cellulosic ethanol will we believe ease the pressure on some of our corn supply, and a thriving renewable fuels industry will help us lighten the burden of $80-a-barrel oil and the burden that puts upon the agricultural economy which we believe is very, very significant and is the reason that we are seeing some increase in food prices today.

So those are some of the challenges before us, folks. Trade, food safety, renewable fuels. It's a mark of how far we believe that agriculture has come when you list out our top priorities like the ones that I had outlined. When Pennsylvania farmer Isaac Newton began his term as the first commissioner, a commissioner of the newly created Department of Agriculture in 1862, his goals were simple-collecting, arranging, and publishing ag data.

I can tell you that we're doing just fine on our agricultural data front. If there's one thing USDA has learned to do very, very well since 1862 it's, we collect a lot of data. But we've come so far beyond those modest initial goals. I do look forward to our continued cooperation as we work towards progress on so many challenging issues before us. You have been a partner in this effort. I thank you for that partnership. Note that it will continue. From our standpoint we look forward to that, look forward to working with you not only for promotion of the chicken industry but for all of American agriculture as well.

And again, thank you for your friendship and support that you've given us. Thank you all.

[Applause.]