A Chat With Tom Vilsack

December 8, 2010 03:40 AM

Hot topics including ethanol, trade and livestock marketing have kept Tom Vilsack in the spotlight as USDA Secretary. In October, we sat down with Vilsack in Washington, D.C., to talk about what’s ahead for U.S. agriculture.

With President Barack Obama setting a goal of doubling U.S. exports in five years, agriculture has the potential to benefit. Current U.S. ag exports were valued at more than $108 billion in fiscal year 2010.

“What the President’s comment had to do with was the economy as a whole and our entire trade picture,” Vilsack explained. “And there are obviously opportunities in manufacturing for significant growth since we’re operating at a deficit.”

As for agriculture, Vilsack predicted there will be more export opportunities ahead, even if they don’t double.

“We’ve become more strategic in our approach to trade,” he explained. “We’ve analyzed individual countries as to where they are on the market continuum: Some are fragile markets, some are emerging markets, some are closed markets we want to open and some are mature markets. We have devised a strategy for each type of market instead of treating this as sort of a one-size-fits-all approach.”

That approach of “personalizing and customizing” the ag trade effort will pay dividends, he added.

In addition, the U.S. is “looking for countries where there are emerging middle classes—some of the Asian countries such as China, India and Indonesia. As they [grow], they are going to be looking for higher-value products and that plays into the strength of America,” he noted.

Besides the shift in strategy, Vilsack also noted that the administration has been focusing on markets that “have been closed for too long,” referring primarily to the beef market.

When it comes to biotechnology, Vilsack said it plays into the trade strategy as well. “We’re doing a more informed and better job of touting the benefits of biotechnology, trying to get the rest of the world to understand what we know—that is, we’re not going to be able to meet the needs of a growing world population, the food that will be required, unless we embrace science and use science to our benefit,” Vilsack stressed. “We’re going to have to produce more without overtaxing our natural resources, water in particular.”

Beef Trade
When it comes to beef trade, Vilsack said getting full access for U.S. beef is key. He stressed the importance of presenting a consistent message to Japan, China and other countries. “It’s
important for us to be very sensitive to the need for a proper balance because we have the capacity to reopen not just a single market but multiple markets, and that’s going to be very good news for beef producers,” he said.

When we talked in October, Vilsack was waiting on word from the Environmental Protection Agency on whether E15 will be allowed for 2001 to 2006 model year cars and light trucks. “The more models that are covered under the E15 rule, the greater the opportunity for us to expand
demand for our product,” he said.

As Congress considers issues related to biofuel incentives for ethanol and biodiesel, Vilsack said he hoped lawmakers would realize “they cannot pull the incentives away from this industry too quickly.”

The biodiesel tax credit expired at the end of 2009 and lawmakers were unable to agree on a plan to revive the credit during 2010. “We saw a loss of 12,000 jobs when the biodiesel tax credit was allowed to lapse. We’re obviously urging Congress to consider restoring that,” he added.

On the ethanol side, Vilsack said he hoped Congress would renew the incentives in a way that would “allow us to create better demand for biofuels and more convenience in terms of customer locations with biofuel access.” USDA’s Rural Development agency has embarked on an effort to help fund the installation of blender pumps across the country.

When ethanol comes up, not everyone in the agriculture community is in favor of expanding use of the fuel made from corn. “I think it is important for us to continue to tell livestock operators who are a little nervous about this that there are and will be multiple ways that biofuels will be produced in the future,” Vilsack noted.

“In the past, it has been pretty much a corn-based, Midwestern system. I think everyone recognizes the need for us to broaden geographically, to go into other parts of the country and to take a look at what might be an alternative feedstock to produce biofuels and advanced biofuels. There are a multitude of interesting research and development programs under way right now that we want to continue to foster and support.”

A stronger distribution system is key, Vilsack reasoned. “We recognize that the distribution system needs to be strengthened, and there needs to be an opportunity for us to work with our petroleum marketers, with our convenience store operators, in a way that can encourage them to establish the distribution systems that make it more convenient.”

Still, the biofuel industry is a major factor that Vilsack is eyeing to bolster rural America.
“We’re looking for ways at USDA where we can put a marker down and say, ‘This is an industry worth investing in, and this is an industry worth expanding for the benefit of the country,’” Vilsack stated.

“It’s energy security. We believe it’s also environmentally friendly, and it is absolutely a job creator,” he said.

“As we institute and implement the rules that were passed in the farm bill and as we finalize work on the Biomass Crop Assistance Program and some of the other bio-refinery assistance programs, we know there will be jobs created in rural America,” Vilsack said. “We know there will be substantial investment taking place in rural America.”

Vilsack’s bottom line on biofuels: “This is a linchpin in my view to rebuilding and revitalizing the
rural economy.”

As the level of budget red ink continues to swell, so will the focus on this issue when the new Congress takes over in January.

Vilsack says USDA has once again provided leadership on budget issues.

“We restructured the reinsurance agreement with the industry. We essentially saved $6 billion—$2 billion we poured back into CRP [Conservation Reserve Program] expansion and some of the crop insurance programs and the other $4 billion was dedicated to deficit reduction,” he detailed. “In our view, USDA has led in this effort, so we have given our pint of blood.”

Rural Development
Vilsack highlighted that the agency has even shifted its focus on delivering rural development efforts.

“We are looking at focusing on regional development instead of community-by-community development,” he said. “We think when you look at a rural region as opposed to a single rural community, you can leverage brain power and resources more effectively and use them more wisely. I think the research is showing that is the case. I think there are creative ways. I don’t think we can use the budget as an excuse. We have to live within the parameters that have been set, and then it’s a challenge for us to be as creative as we possibly can within those resources.”

One area the Obama administration has focused on is livestock and livestock marketing practices. A series of joint USDA and Department of Justice workshops has shed light on livestock marketing practices and Grain Inspection, Packers and Stockyards Administration (GIPSA) efforts under the Packers and Stockyards Act of 1921. GIPSA has come out with a proposal that has generated controversy and allegations that there wasn’t enough analysis done on its possible impact.

Vilsack takes issue with those allegations. “Economic analysis was done. The law requires it,” he stated. “A number of agencies inside and outside of USDA were engaged in doing the analysis required by law. I think two or three analyses were done.”

Vilsack expects GIPSA will receive a lot of feedback on its proposal. “We solicit comments for a reason: so that we can pull together the most informed and best policy possible after we analyze and take in the comments that are forthcoming.”

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