Highlights of USDA Secretary Vilsack's Press Conference

Published on: 12:46PM Jan 27, 2009

via a special arrangement with Informa Economics, Inc.

Vilsack shows he and USDA will be very active -- in controversial areas

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The following are highlights of a press conference given Monday by USDA Secretary Tom Vilsack. I have provided some of my comments where appropriate.

-- Payment caps; actively engaged: Vilsack said USDA would reconsider revising the pay cap and actively engaged rules for 2010 forward by taking additional public comments for another 60 days. Just seven comments have been received so far. This gives the department 60 additional days to seek feedback and figure out the best way to “limit and reduce the number of times that payments are going to people that aren’t eligible,” Vilsack said, adding that he would be especially interested in ideas that would help USDA “target the payments to farmers who really need the payments.” He emphasized that 2009 crop payments would not be affected -- "In no way is this move a signal that we will modify the rules for the 2009 crop year," Vilsack said. “I realize that sign-up has begun and it’s important for farmers, ranchers, and bankers to have clear and consistent rules in place so that producers can prepare for the crop year and manage their risks appropriately. However I want to pursue an extended comment period so that we can review the extent and purpose of the rule for future crop years.”

Reaction to the announcement was mixed, with some lawmakers and farm groups expressing concern about possible major changes ahead in the controversial areas. Others, like Sens. Chuck Grassley (R-Iowa) and Byron Dorgan (D-N.D.), were pleased about the new USDA review. Grassley said the existing rules continue a weak definition of what it means to be actively engaged in farming. Grassley has repeatedly said the prior USDA rules should have included specific time requirements for farm program payment recipients to show they are actively engaged in a farming operation. Grassley and Dorgan wrote Vilsack on Jan. 13 that the new rule "left open a glaring loophole that allows individuals to qualify as eligible payment recipients through vague and ambiguous criteria of management."

Senate Ag Committee Chairman Tom Harkin (D-Iowa) said the change would “allow adequate time for everyone interested in the program to weigh in and provide suggestions that would help target payments and ensure payments are going to those producers for whom they are intended.”

My comments: We will see how much of an activist Vilsack will be when he has to confront southern lawmakers and better yet, cotton and rice producers about this issue.

-- Fruits and vegetables and MCOOL: Vilsack said he had also reversed a Bush administration cut in the Specialty Crop Block Grant Program that would have taken $3.2 million to use those funds to enforce mandatory country-of-origin labeling (MCOOL). "It is clear from what President Obama has indicated to me, that he wants this department to promote nutrition through the use of healthy fruits and vegetables, and so we are withdrawing that rescission so that those resources can be made available,” Vilsack said.

Background: The original decision was made by former Agriculture Secretary Ed Schafer, who told congressional leaders he planned to transfer $3.2 million from the block grant program to pay for education activities and enforcement responsibilities of MCOOL.

My Comments: The unanswered question is where the education and enforcement money will come from.

Reaction: Robert Guenther, senior vice president of public policy at United Fresh Produce Association, said in a release that he is pleased that Vilsack chose to reverse the original decision, saying it “would have been bad public policy all the way around.”

Any MCOOL changes ahead? While Vilsack did not detail what, if any, changes the Obama administration would make to the Bush administration rule for implementation of MCOOL, he said, "I want to state very clearly that I strongly support COOL."

Meanwhile, Vilsack pledged strong enforcement of existing laws administered by USDA, including the Packers and Stockyards Act.

-- On food issues, Vilsack said USDA “has an incredible opportunity to combat childhood obesity and to enhance health and nutrition.”

My comments: I anxiously await who will hold some of the USDA sub-Cabinet positions, including in the food and nutrition area. We will get an activist official or two?

-- Ethanol plants: Vilsack said USDA will help struggling ethanol facilities identify the most efficient ways to produce the alternative fuel, so more plants can stay in business. USDA should research, develop and promote "best practices" to improve efficiency at corn-based ethanol plants, which have been hit hard by volatile corn prices, followed by a sharp drop in demand for the biofuel, which is more expensive than gasoline, Vilsack said.

"We need to make sure that the biofuels industry has the necessary support to survive the recent downturn, while at the same time promoting policies that will speed up the development of second- and third-generation feedstocks for those biofuels that have the potential to significantly improve America’s energy security and independence,” Vilsack said. He noted that the 2008 Farm Bill included $400 million in tax credits for ethanol producers and resources for new production facilities and to revamp existing ones.

Vilsack said USDA will work very quickly to implement new programs in the farm bill to pay farmers to raise energy crops and to help existing ethanol plants move toward using cellulosic feedstocks as well as corn.

My comments: Advice to Vilsack: let the market work. Several ethanol plants are currently up for sale, and better managers and those with far better marketing skills will likely buy them and those are the best ingredients for efficiency ahead.

-- Ethanol blends: Vilsack did not provide any new information regarding the push by some to boost the current 10 percent maximum for the amount of ethanol that can be blended with regular unleaded gasoline (for non flex fuel vehicles), which is controlled by the Environmental Protection Agency, not USDA. The current 10 percent limit is seen by the industry as a "blend wall" that's preventing greater use of ethanol in the fuel supply. Vilsack said it is important for USDA to have a good working relationship and good communications with EPA.

My comments: Some sources say there is a last-minute push by some ethanol producers and corn growers to put some ethanol blending language in the Senate's economic stimulus package, which is being marked up today by the Senate Finance Committee.

-- Rural Internet access: Vilsack said he wants USDA to be a supporter of 21st Century rural communities and said he would lend his support to a proposal to expand broadband Internet access in rural areas. “The capacity of folks in rural communities to have access to the Internet cannot be under-appreciated or underestimated,” Vilsack said. “You can’t open yourself up to world markets, to new opportunities, unless you have access to that tool.”

My Comments: Don't just talk about it, do it. Too often this topic has been long on hope and woefully short of funding.

Vilsack said beyond the expansion of broadband Internet, the department will look at the expansion of modern infrastructure, energy-efficient housing and expanded small business opportunities to promote a more vibrant rural America.

-- Climate change: Vilsack said one of his top priorities for USDA is to become a national leader in mitigating global climate change through conservation, energy efficiency and expanding opportunities in biofuels and renewable energy.

USDA will also conduct research on how farmers can participate in carbon trading and sequestration programs, Vilsack said. He added that USDA's work in carbon sequestration will also involve its Forest Service and efforts to manage forests to reduce wildfires. "Right now with uncontrolled wildfires we're actually contributing greenhouse gases rather than reducing them," he said.

-- Ethics: Vilsack said he has met with ethics officers to ensure he and members of his incoming team understood the existing ethics rules and rules that will be in place with President Obama’s administration. “The president has clearly established how important it is that we adhere to high ethical standards, and that we make it a priority to reshape government to make sure that the people of this country are served, and not the special interests,” Vilsack said.

-- How many people actually work at USDA? In an interesting development, Vilsack said he cannot find out how many thousands of employees he has at USDA. "They could tell me how many checks are issued, but not how many people work here," he said. "It was the first question I asked the transition staff when the president nominated me for this position. I was interested to know how many people actually work at USDA," Vilsack said. "And I was told that no one knows for sure."

Vilsack said the department's computer system is so outdated they are not sure how many full- and part-time employees are on the payroll. "That together with a number of reports from the Inspector General's office and the (General Accountability Office) concerning the operations and management suggested that what we have here in some aspects and areas is charitably outdated," Vilsack concluded.

My comments: Several decades ago, a Wall Street Journal reporter was walking the hallways at USDA and noticed a lot of people talking, reading books, etc., and she began asking what work they did at USDA. Some of the answers were not what a lot of people wanted to hear. That set off hearings and a USDA "task force" to identify its people and define what they did or were supposed to do.

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