SECRETARY VILSACK: Bob, thank you very much. It is a distinct honor for me to be here this afternoon, and I must say that I come today, as you would expect, with somewhat of a heavy heart.

Our country obviously has gone through a very difficult weekend, and our thoughts and our prayers are extended to those who have been victimized in Tucson, to those who have lost loved ones, to those who are struggling for their lives, and to the family members who are dealing with this tragedy. I can't help but think, since Bob mentioned that I was the mayor of Mount Pleasant, that this reminded me of a circumstance that occurred in my hometown in 1986.

During that period in December of 1986, an individual who was upset with our mayor and city council walked in and shot and killed the mayor and seriously wounded two council members. It was a devastating thing for that small community, as this weekend's events have been a devastating circumstance for this country, and it's awfully difficult to know what to say or how to give a speech in the context of what's going on around us. I'm going to do my best today to speak from the heart.

You know, when you are faced with a circumstance like this, you often try to search for answers, and you try to figure out why things like this happen, but I learned from the experience in 1986 that we also need to take a minute to appreciate what we have, to appreciate family and friends, and to appreciate those who make our lives better, whether they be those who serve in public life or others.

So I think it's very fitting for me to be here today to speak to Farm Bureau members, to speak to people who are responsible for feeding my family and the families of America, the folks who every single day work hard to take care of their families and support their communities and in doing so provide us the most productive, affordable, accessible food supply in the country.

So it's important, I think, to start my acknowledgement in my speech today with an acknowledgement of who I'm speaking to and to express my thanks for what you do, to express my thanks also to the Farm Bureau and Bob Stallman and the officers of the Farm Bureau for this opportunity. I have appreciated over the last two years to get to know Bob, and we are working well together on a number of issues, and I have begun looking to Bob and the Farm Bureau increasingly for direction and advice on the many issues that confront us, and I'd be remiss if I didn't mention my own homestate's Farm Bureau president, Craig Lang, a friend of mine for many years, who served in a similar capacity to Bob Stallman when I was Governor of Iowa.

We had a pretty good year in 2010, and for that, we should be thank you. Farm income is expected to be at a level, perhaps a record level, and there are many reasons for that. Obviously, the most important reason is the productivity and the hard work of American farmers and ranchers and growers, but we also had a record year in exports, and I know that the Farm Bureau is interested in making sure that we continue to focus on exports, and I'm here today to assure you that we are going to do so.

We have worked tirelessly to convey to the rest of the world that we have the best food at the most affordable prices. We've traveled all over the world speaking about the importance of the American brand, and that's one of the reasons why we've had record exports.

We've looked at each individual country as an individual market, not treating countries as one great export opportunity but each individual country, trying to figure out what we could do to open a market to remove a barrier.

Just today, Jim Miller, our Under Secretary of Farm Services and Foreign Ag, is in China in an effort to try to reduce the barriers that have existed for far too long in our beef trade.

Just last month, I was in Mexico speaking to my counterpart, Secretary Mayorga, about the importance of putting down the barriers on beef and potatoes that have been existing in Mexico for far too long, and I was certainly appreciative of the opportunity to reach out to him this month, as I did to Bob and other farm leaders, to convey my hope that what Ray LaHood has done as Secretary of the Transportation in laying out a framework for resolving our trucking issues with Mexico will lead to a reduction and ultimate elimination of the tariffs that have been assessed against our agricultural products. That will obviously increase export opportunities, and I am thankful and appreciative of that work.

I'm also appreciative of what Rural America is doing for the rest of the country, and I don't think people fully appreciate that one of the reasons why we had such a good year in agriculture is because of the steps that you all have taken, steps that the rest of the country could learn from, and I think we are going to begin to learn from them.

If you think about American agriculture and what it's been able to do over the course of the last 20 of 30 years, first and foremost, it learned lessons from the 1980s when we went through a difficult time, when folks were over-leveraged. American farmers and ranchers and growers made the decision that they were going to reduce their debt load. They were going to work hard to be productive, to make sure that they only borrowed that which they needed.

So, today, for every dollar of debt in the countryside, there is $11 of asset value. There's a message there for the rest of the country. American agriculture is, I think, one of the most productive aspects of our economy; in my lifetime, a 300 percent increase in corn yields, a 200 percent increase in soybean yields, almost 200 percent increase in wheat, the list goes on, because we have been engaged in embracing technologies and innovation and have not been afraid to embrace new ways and new approaches. And the result is that we are the most productive agricultural force in the world.

And we have learned that by virtue of this great productivity, we are able to export and bring wealth into our communities, into our country. Agriculture is the only major aspect of our economy that has a trade surplus. We expect it to be at a record level this year and expect it in 2011 to again be at a record level. That helps to bring resources into this country, creating wealth in this country.

So what's the message for the rest of the country? Well, it's simple. I think Farm Bureau members and Rural America is saying to the government, we have to be a government that spends less but spends our resources wisely. We have to be an economy that makes and creates and innovates again, and we have to be a nation that exports. If we're able to do that, we'll be able to reduce the responsibilities of the next generation in terms of debt. We'll be able to increase our productivity in agriculture and other aspects of our economy, and we'll be able to export the American brand creating wealth here, rebuilding the middle class. We know it can work because it's worked in agriculture.

But there are several issues that we must address as a community, as a farm community, as a rural community. They are reflected in the discussions that will take place over the next year to two about the farm bill. I mean, it's fairly clear. I'm not going to tell you something that you haven't already heard from your leadership. When you're dealing with having to reduce deficits, we're going to have to make difficult choices. It's one of the reasons why we stepped up at the Department of Agriculture 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 have been wanting to do for sometime. So we not only reduced the government's exposure, but we figured out a way to expand coverage.

And just last week, we announced the 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.

We're going to have a conversation about the safety net, and there's no question we need a safety net. Last year, 144,000 producers needed the protection of SURE and the other disaster programs, and many farm families rely on some form of government assistance in order to be able to keep the farm.

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 a thousand dollars of agricultural products. That's not a very high standard. 1.3 million of those are folks who sell very, very little, less than $10,000. They may have an orchard. They may have a small garden. They may have a small operation. They may be connected to a farmer's market. They may be connected to a community-supported agricultural activity. 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.

Then there are the 600,000 American farmers and ranchers and growers who sell less than $250,000 in sales. They're good, hardworking people. They care about their families and their community. They sell less than $250,000, which means 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.

So, when we talk about a safety net, we have to ask how are those farmers doing, how are those ranchers doing. Well, in this last ERS income study, we found that they will average in the best year in a long while for farm income, where we saw a 34 percent increase in farm income. 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.

It's one of the reasons why we're looking for diversification within agriculture, and one of the ways we think we can diversify agriculture is looking at biofuels, and I don't mean 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, and today and over the course of the next several weeks, we're going to be making announcements about facilities that we're going to be investing in other parts of the country other than the Midwest, so that we create an opportunity in every corner of the country. Whether it's municipal waste or whether it's 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 1 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.

The last group of farmers are roughly 300,000 in number, less than 1 percent of the 1 percent that farm totally in this country, less than 1 percent of the population, 300,000 farmers who 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, and 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.

And that's why it was important to have a State tax relief in this bill that assured all the members of this audience and your family members that 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.

It's important that those messages are sent and repeatedly sent as a way of acknowledging the important role that that small percentage of people who are extraordinarily important and who are under-appreciated in this country, that we do, in fact, recognize their significance.

You know, the rest of the 99 percent of us not only don't take, not only don't appreciate what you all do, but we don't appreciate the benefits we receive from what you do. I've been telling audiences all over the country in terms of expressing appreciation for farmers and ranchers and growers that when I go into the grocery store and I purchase groceries, I walk out of that grocery store with more of my paycheck in my pocket than just about anybody else in the world. American consumers spend somewhere between 10 and 15 percent of their paycheck on food. The rest of the world may spend 20, 25, and in some developing countries as much as 40 or 50 percent.

And so I'm asking my friends around the country, what is it that you do with that extra 10 to 15 percent that you get because of the productivity and hard work of American farm families? Do you buy a nicer car? Do you live in a bigger home? Do you have a vacation? Do you put money aside for college? Do you have a retirement nest egg that's bigger than it might otherwise be? What do you do every year with that benefit? And when was the last time you thanked a farmer or rancher or grower?

Folks, this is an important message for us to convey to the rest of the country as we begin to discuss the farm bill in the context of less debt for the country because you all know and I know we cannot continue to sustain high deficits. So everyone is going to have to do their part, and we at USDA began that process with our efforts in crop insurance.

Now, innovation. It's going to be important for us to continue to be as productive as we possibly can be in agriculture. That means we need to continue as part of the farm bill discussion to recognize the important role that research plays not only in increasing productivity but also in dealing with invasive species and pests and diseases. We spend and invest roughly a billion dollars a year in a variety of pests and diseases that I know impact and affect your productivity. We're trying to figure out how to solve these problems, and we're going to continue to do that.

We're going to continue to invest in the research that tries to solve those problems. 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.

And speaking of dairy, I recognized that challenges that that industry suffered specifically in 2009, and we saw a slight rebound in 2010, but I know and you know that we are also watching carefully what's happening as herds increase. We know what can happen if they increase too quickly and too much and we have an oversupply of milk. That's the reason why we put a Dairy Council together and challenged them with coming up with a formula and a format that might provide greater stability, less volatility in dairy pricing, and we expect and anticipate their recommendations will be forthcoming within the next month or so.

And we will be working with both House and Senate agricultural committees to ensure that we actually do take action. Our dairy farmers need this help. In just the last 10 years, we've gone from 110,000 producers to 65,000, and so I think it's important and necessary for us to see if we can figure out a way in which we can provide greater profitability and more stability in that industry.

Innovation also requires us to take a look at our regulatory processes, and I know that there's been a lot of conversation and discussion about our regulatory processes. And I know that Bob sent a letter to me on the issue involving alfalfa, and we appreciate that letter, but I just want to give you just some of the background.

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, and I know that there's a discussion about alfalfa.

What we're trying to do is to stimulate a conversation and to ensure that every person, every farmer, every rancher, every grower has the capacity to do on their land what they wish to do. I was struck in another letter that Bob sent me on another issue that one of the principal fundamental principles of Farm Bureau is that notion that a farmer ought to be able to sell and do on his land, ought to be able to raise what he wants to raise and what she wants to raise on their land. It's a property rights issue, and so we're trying to figure out, as difficult as it might be, is there a way in which we can assure that we have less interference with the capacity for folks to do what they want to do on their land.

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.

Now, you know, this problem, Bob, isn't probably going to work with a little baling wire and duct tape, but you know what I'm talking about. You have the capacity to figure things out, and you're expecting us to do the same.

I'm not going to shy away from asking the tough questions and trying to find those illusive answers because you deserve that, because, as I say, every farmer ought to be able to do what he or she wants to do on their land, so we're going to continue to have that conversation.

Innovation also requires fair and open markets. That's one of the reasons why we just asked a series of questions during these hearings we have with the Department of Justice and why we've proposed the GIPSA rules, and the Farm Bureau correctly suggested to us that we ought to make sure that we have a full and complete understanding of the economic consequences and analysis of those proposed rules. And I want to assure this audience today that that's precisely what we're going to do.

Now that we've received 62,000 comments, we have a full range of opinions and thoughts about this, we can take all of that into consideration and take a look in a more meaningful and comprehensive way, the concerns that have been expressed in those comments, and that will require Joe Glauber and his team to do a thorough and complete economic analysis. And he's been instructed to do that, and we will not move until that is done, so that we know precisely what the impact of those rules will be.

But what we want to do and what every farmer deserves to have happen is that we ought to have fair and open markets, without necessarily jeopardizing processes that are in place today that might be beneficial to the producer, because I understand and you understand that producers are receiving an ever-shrinking piece of that food dollar, and that's perhaps one of the reasons why we now have roughly one-tenth of the pork producers we had 30 years ago. We've lost 90 percent of the pork producers, and we've lost roughly a third of our cattle producers. So we have to ask these questions, and they have to be asked in the context of a farm bill discussion.

So we're going to continue to focus on innovation, focus on making sure that we help partner with you in terms of innovation, and we're also going to be innovative when it comes to conservation. And I understand and appreciate that there are many challenges that farmers and ranchers face, one of which is exactly knowing what to do and how to do it in terms of conservation and the various regulations that impact agriculture.

We are learning a very valuable lesson with a program which we call the Sage Grouse Initiative, in which we partnered with the Department of Interior who is in charge of the Endangered Species Act, and we basically asked them is there a way in which we at USDA can use our conservation resources and allow folks on a voluntary basis to adopt certain practices that will lead to greater protections of sage grouse, and if they do that, can they have some degree of regulatory certainty as it relates to the Endangered Species Act, and the Department of Interior was willing to work with us.

We think that that creates the opportunity for that kind of conservation and discussion to take place in other areas of government, can we figure out a creative way to use our resources, as limited as they may be in tough economic times, in a creative way to provide greater certainty. The farmer benefits; society benefits. That's the goal as we look at a record number of acres now enrolled in a variety of conservation programs as we figured out ways to extend CRP, as we continue to look for resources and opportunities in the conservation area.

Last but not least, the export piece of this. I mentioned that we're working very hard on reducing barriers, on looking at countries as individual countries from a trade perspective. We are going to continue to do that. We recognize that not every country is the same on the market continuum. There may be a fragile market like in Afghanistan where we have no likelihood of immediate trade opportunities, but there is a chance at some point in time in the future, if we build the relationships, to create trading opportunities. That's a fragile market, so we have a long-term strategy.

And I want to tell you how proud I am of National Guard troops and American military working with USDA officials in Afghanistan as they convince Afghan farmers to move away from poppy production to producing pomegranates and other products that they can sell for more than poppy and do a better job of supporting their families and their villages. This is a tremendous effort that American agriculture is undertaking, and it's the kind of relationship building that will help us create a fragile market partnership that over time could produce market opportunities.

There are closed markets that we have to continue to work on to open. That's one of the reasons why I traveled to India, to continue to talk to the Agriculture Minister in India about the necessity of opening up their markets, of having greater confidence in the ability to have a free flow of exchange of goods and services.

There are emerging markets, and China is certainly one of them. China is now our number-two trading partners. They're a half-a-billion dollars away from being the number-one trading partner in this country in agricultural products. It's Canada, it's China, and it's Mexico.

That's the reason why Jim Miller is spending two weeks over there in an effort to try to figure out if we can reduce the barriers that have existed in terms of beef and how we might be able to use that to reopen closed markets.

There are mature markets like Japan, and there again, we're having conversations about reopening markets. It's also about negotiating Free Trade Agreements. We are hopeful that Congress will be able to act appropriately and quickly on the Korean Free Trade Agreement. We hope that creates momentum for other Free Trade Agreements because we know and appreciate the impact that that can have specifically on agriculture.

And it's also about multilateral arrangements. That's one of the reasons why we're engaged in the Trans-Pacific Partnership discussions in Southeastern Asia, which is another growing opportunity for American agriculture.

So we're going to continue to focus on exports, and that's one of the reasons that we need to make sure that as we fashion a farm bill, as we put together an understanding of what it takes to support agriculture in this country, that we don't forget that 1 out of every 12 jobs in this country is connected to agriculture, and that we have that export surplus, that trade surplus because of our exports in agriculture, and we want to maintain that with a good, strong trade, that section of the farm bill.

Bob told me that he was never going to give me the hook, and so I don't want to overspend my time because you've got Mike Rowe here, and I've checked out his back side, and it's actually looking pretty good tonight.

But I want to end with this. There are many reasons to be appreciative of the folks in this audience. You are the supplier of food and fiber and feed. Eighty-five percent of the renewable water resource in the country is impacted and affected by what happens on our private working lands. It's 800 million acres of forested land that is in Rural America, so 1 out of every 12 jobs, the export surplus.

There's lots of reasons, but the one reason that is often overlooked, and I end almost every speech I give with this, is what Rural America does in terms of protecting the rest of us. Rural America represents 16 percent of America's population, but 44 percent -- I just checked this the other day -- 44 percent of those who serve us in uniform come from these small towns and these ranches and these farms, 44 percent.

Now, there is a reason. There is a reason why that happens, and some may suggest the reason is because it's another opportunity for these young folks, but I don't think that's the reason. I think the reason that this happens and has happened throughout our history is because of the value system that you all represent.

I'm pretty confident that when you raise your children and your grandchildren on those farms and ranches and in those small towns, you convey to them a sense of understanding the laws of nature, and there's a very basic law that you understand, and that is that you can't keep taking from the land. You just can't keep taking. You've got to give something back, and when you give back, then it renourishes and replenishes the land, and it continues to provide bounty. And you convey that to the young people who are growing up and your families and your communities, so that when they get older, they realize it's not just the land that works on that principle, it's also a country.

We can't keep taking from this country. We have to give something back to it, and in this time after the tragic events of this weekend, this is an opportunity for us to recalibrate, to look back into that value system that's so important, to recommit to this country. Whether it's in public service or it's on the farm or the ranch, we need to give back. When we're faced with difficult decisions about farm bills and deficits and long-term economic opportunity, we have to figure out a way in which we can also give back to support this great country because that value system is what makes this country unique. It's what makes this country special. It's what makes this country the greatest country on earth, and it starts with you and your generations on the farm and on the ranches continuing to make sure that that traditional set of values is carried on to the next generation. And it is my responsibility at USDA to try to partner with you, and we will do everything we can to be a strong a valid partner.

Thank you, and God bless you.