In a major speech on Monday, Agriculture Secretary Tom Vilsack lauded U.S. agriculture then outlined the perils it faces in coming years. Vilsack’s comments at the annual conference of the American Farm Bureau Federation (the nation’s largest farmer advocacy group) touched on strengthening rural American infrastructure, strong export numbers for U.S. agriculture, the coming funding struggle over the next farm bill and biotechnology.

“When dealing with reducing deficits, we're going to have to make difficult choices,” while crafting a new farm bill, Vilsack warned the audience. “It's one of the reasons (the USDA) stepped up in an effort to convey a sense that we were serious about this deficit in restructuring our crop insurance program to save $4 billion to apply it to deficit reduction.

“But we didn't stop there. We decided that we could become innovative with crop insurance. We could figure out how to use resources to expand coverage in range and pasture land, which we’ve been wanting to do for some time. So, we not only reduced the government's exposure, but we figured out a way to expand coverage.”

Vilsack also pointed to the recently hatched “good producer premium discount, which acknowledges that those who have great production records and those who have had good records in terms of crop insurance ought to perhaps receive a break on their premiums. So there are ways in which we can be creative with our resources while making sure that we spend our money wisely.”

Regarding future difficulties in funding agriculture programs, Vilsack was beaten to the punch by Georgia Sen. Saxby Chambliss, who opened the AFBF conference.

“The good news is, when we look at American agriculture today, it’s as healthy as it’s ever been in my lifetime,” said Chambliss, a farm bill veteran, who will be replaced as ranking member on the Senate Agriculture Committee by Kansas Sen. Pat Roberts (Chambliss is now expected to be ranking member of the Senate Intelligence Committee).“And that’s due certainly to in some small part policy, but from an overwhelming standpoint it’s due to what you do, and your family and your farmer friends around the country do every single day.”

However, continued Chambliss, “It’s going to be the toughest farm bill we’ve ever produced.”

And, according to reports, Chambliss will wait before adopting Vilsack’s positive attitude on crop insurance savings. Will the Obama administration gives agriculture credit for those cuts when constructing a 2012 budget?

“We know that the current baseline is going to be reduced if nothing else because of the hit we took on crop insurance,” said Chambliss. “That’s already a price agriculture is paying to try to reduce the deficit. I expect there will be additional shots taken at us. You know, we’ve always been willing to step up, whether it’s in a reconciliation process or whatever to try to pay our fair share in reductions in spending and we’re going to continue to do that. But we’re only going to be willing to do what’s fair and appropriate for agriculture compared to other agencies around Washington and we’re not going to let there be an undue burden be put on farmers because of excess reductions of spending in agriculture.”

Safety net and taxes

In 2010, Vilsack told attendees, 144,000 producers made use of SURE and the other disaster programs.

“When you look at American agriculture and you understand who farms and who makes money in American agriculture, you understand why we need a safety net. By some definitions, we have 2.2 million farmers in this country today, but that means that we have 2.2 million people who sell more than $1,000 of agricultural products. That's not a very high standard.”

About half of the 2.2 million “sell very, very little -- less than $10,000. They may have an orchard. They may have a small garden. … They are not necessarily making much money in their farming operation. They no doubt have off-farm income or are retired and are operating this small operation.”

Another 600,000 American farmers and ranchers have less than $250,000 in sales. At that amount, “their ability to make a living is compromised unless they have off-farm income, and the vast majority of those producers, indeed, work off the farm,” said Vilsack, advocating for the continuation of a “safety net.”

The latest number-crunching shows “those farmers will average about $10,000 from their farming operation net. So it's obvious that we need to be addressing that group of farmers with a farm bill that addresses and recognizes the important role they play in helping to populate and support rural communities. It's not easy for them. That's why you need safety nets. It's also why you need rural development programs.”

The last group of farmers -- some 300,000 in number --make up “less than 1 percent of the 1 percent that farm totally in this country” and yet “produce roughly 85 percent of what we consume and what we export. They'll do quite well, but they also will have significant capital investment.

“That's the reason why it was important to pass tax legislation in this last session of Congress, not only to reduce payroll taxes for a year but more importantly to allow business expensing at 100 percent this year, so that folks could feel free to go out and purchase that implement that they have been wanting to purchase for sometime but have been concerned about their ability to afford it.”

That's also why it was important to have estate tax relief “that assured … you're not going to have to worry about whether or not the farm is going to have to be sold or split up. It's important.”

Diversification and biofuels

Last October, the Obama administration rolled out an aggressive plan promoting biofuels. During his speech, Vilsack continued the push as a way to diversify agriculture and strengthen rural America.

The effort isn’t just “limited to corn-based ethanol. I'm talking about expanding opportunities in biofuels, so that every part of the country has a chance to benefit, every part of the country can produce biofuels and biodiesel, everyone has the capacity.”

Additional information about facilities and investments will soon be announced, said Vilsack.

Editor’s note: on Wednesday, Vilsack announced the EPA would back off expectations it would oversee greenhouse gas permitting requirements for biomass feedstocks. The EPA will now “defer for three years greenhouse gas permitting requirements for biomass and that it is also undertaking a scientific assessment of how emissions from biomass should be treated under the Clean Air Act,” said Vilsack.

For more, see EPA to defer GHG permitting requirements for industries that use biomass

Vilsack promised biofuel investments outside the Midwest “so that we create an opportunity in every corner of the country. Whether it's municipal waste or crop residue or woody biomass or livestock waste, all of that can be creating new opportunities in rural communities.

“When we reach 36 billion gallons of biofuel -- roughly one-fourth of what we need for our fuel needs in this country -- we will help to create one million new jobs in rural America and see an investment of over $100 billion.

“That's why it's important for us to have a diversified effort on biofuels. That's why we will have a conversation and discussion about how we can support this industry as it matures, and as oil prices go up, and they will no doubt go up, this becomes even more important from an energy security standpoint for the country. So any discussion about safety nets has to include a discussion about diversifying income opportunities.”

Research and GM regulations

Nearly $1 billion is spent annually to combat crop pests and diseases.

“We're going to continue to invest in the research that tries to solve those problems,” said Vilsack. “At the same time, we're going to continue to partner, to try to figure out ways in which we can increase productivity, taking the look at the genome of corn, for example, and trying to figure out how we might be able to better use that information, looking at dairy cows and trying to determine whether or not we can learn something that would lead to more and greater productivity.”

Innovation also means having a look at regulatory processes.

“I know that there's been a lot of conversation and discussion about our regulatory processes. … We have today roughly 23 pending deregulation efforts within USDA. These regulation efforts, at least the ones I'm familiar with, take somewhere between five and six years to get through, and they cost millions of dollars. And I've tasked our team to figure out a way in which we potentially can reduce the amount of time it takes to review and come to a decision.”

Regulations on GM alfalfa are also in the mix.  

For more, see Ag groups write White House regarding GM alfalfa 

Addressing the brewing controversy over GM alfalfa (and his recent admonition to all sides to work out a compromise rather than litigate), Vilsack said “If you want to grow GM crops, you ought to be able to do that. If you want to grow identity preserve, conventional farm, you ought to be able to do that. If you want to be an organic farmer, you ought to be able to do that.

“This is not an easy conversation, and the simplest thing for me to do in the position I'm in is to ignore it, but that's not how you all handle tough situations on the farm or on the ranch. You don't ignore problems. You're the greatest solvers and innovators and thinkers that I know of. When there's a problem, you can figure it out.”

dbennett@farmpress.com