Media Conference Call on 2010 Farm Income Forecasts, Trade, Statistics and Final Passage of Pigford II Settlement

Press Conference

MODERATOR: Hello, everyone. I'm Susan Carter, and thank you for joining us for today's media conference call.

Agriculture Secretary Tom Vilsack is here in the studio, and he is going to be discussing a host of topics, including the new 2010 Farm Income Forecast and the trade statistics, as well as recent congressional action, including final passage of the Pigford II Settlement Agreement. And, of course, while we are here on the air at this moment, the child nutrition bill is being debated on the House floor.

If you'd like to join in and participate in today's media conference, let us know by pressing Star/1 on your touchtone pad, and with that, I turn it over to the Secretary.

SECRETARY VILSACK: Susan, thanks very much, and thanks for all who are on the call today.

As we just concluded the Thanksgiving holiday, the Farm Income Report that was published yesterday by USDA gives us another reason to be thankful for American farmers and ranchers and growers. They are helping to lead this country's economic recovery, and we received encouraging news from Farm Country and Rural America yesterday.

Despite the fact that American agriculture has struggled through difficult economic times, the 2008 farm bill, the efforts of the Obama administration and the Recovery Act, and most importantly of all, the hard work and resilience of American farmers and ranchers and growers have helped put America agriculture on the road to recovery.

All three measures of farm sector earnings have experienced a rapid rebound in 2010, up from double-digit declines in 2009, and looking even better than they did in August when we had our last projected income report. Net cash income is now expected to rise nearly 34 percent from 2009 levels, which is 28, almost 29, percent above the previous 10 year average. At the same time, net value-added at $132 billion is expected to be up $20 billion from 2009, and this represents a 22 percent increase above the 10 year average.

An increase in the value of livestock production accounted for a good deal of the upward movement in net value-added, and the value of dairy production, which is important to note, is projected to rise to almost 30 percent, animal production nearly 17 percent, and poultry and egg production nearly 10 percent.

Additionally, this also reflects itself in farm asset values pointing to a sustainable recovery. According to today's numbers, farmers are earning more for their products than they made last year, and that's making a real difference for American farm families whose household income overall is set to rise by nearly 8 percent over 2009.

The recovery that we're seeing is sectorwide. The forecast for higher farm income in 2010 is responding to cash receipts in all of the livestock categories, led, as I said earlier, by the double-digit growth in meat, animals, and dairy products. We'll see cash receipts for cotton, soybean, and corn expected to increase nearly $9.4 billion. Livestock receipts are expected to increase by $20 billion in 2010, led by surges in cash receipts for dairy and hogs.

As I said, a combination of factors have led to this successful report, but first and foremost, it's the dedication and hard work of America's farm families, ranch families, and growers. They're second to none. They've worked extraordinarily hard to keep their debt low and to capitalize on broad economic opportunities. They have an extraordinary willingness to adapt, innovate, and embrace new research and technologies that ensure success, and I think this will ensure success for decades to come. And we continue to maintain a strong safety net for those farmers who, because of weather or market conditions, have had some difficulty.

One of the important driving factors in this recovery and an increase in income is our area of agricultural exports, and again we received an excellent report yesterday about the prospects for export markets in 2011, announced that U.S. farm exports in fiscal year 2011 are forecast to set an all-time record high of $126.5 billion. This is up $13.5 billion from the August forecast and almost $18 billion from the final FY10 export numbers. The new high exceeds fiscal year 2008, which was formerly the highest level on record at 114-, almost $115, billion, and it exceeds it, as you can tell, by over $11 billion.

Agriculture continues to be one of the major sectors of the American economy that has a trade surplus. Based on our projections, we're looking at a $41 billion surplus in this fiscal year. Obviously that not only means better incomes for farmers, ranchers, and growers, but it also means more job opportunities for Americans. This forecast I think demonstrates the extraordinary demand for U.S. food and agriculture around the world and that it's stronger than ever.

We're seeing sales surging in China, Southeast Asia, North America, and the Middle East. Just recently we had Chinese officials here signing a very large soybean contract, and soybean exports are forecast to be up by more $5 billion, due in part to that demand in China and in the EU.

Grains are up nearly $4 billion, due mostly to higher corn and wheat export prices. Wheat exports are expected to benefit from those high prices. And cotton exports are also forecasted up as global stocks are tightening. Beef exports are forecasted on strong Asian demand. We're keeping an eye on horticultural exports that are expected to be down slightly, but our hope is that over time we can increase those numbers as well.

One final point about trade, and that is that Asia accounts for more than half of the increased forecast, with China up more than any other market, $2.5 billion increase to $17.5 billion, and this is an important number because it's only a half-a-billion dollars less than Canada, our number-one trading export partner, is expected to do business with the United States. So it shows the importance of China in future agricultural trade opportunities.

As I say, this is particularly encouraging news for all Americans as we try to deal with economic difficulties. For those living in rural America and earning a living at farming, ranching, and agriculture-related industries, this indicates additional income. And for those who work as a result of agricultural trade, increasing our surplus and increasing agricultural trade, for every billion dollars we do that, it supports an additional 8,000 jobs, and we see agricultural exports alone in fiscal year 2011 expected to support more than a million U.S. jobs, so a good set of positive outcomes.

I want to take this opportunity to briefly acknowledge the work of the Senate and the House in passing the Pigford II settlement appropriation. I have spoken to leaders in both the House and the Senate to express my personal appreciation for the work that was done, the work that was done in a bipartisan way in the Senate to strengthen the bill, and the work that was done in the House in passing it, and we look forward to implementing the settlement in a fair and equitable and timely way. We're also hopeful that today marks an historic opportunity for America's children to receive better nutrition and better access to nutrition in school lunch and school breakfast if Congress is able to pass the Child Nutrition Reauthorization Act.

So, with that, Susan, I'd be happy to try to answer any questions.

MODERATOR: We will go to our lines, but just to let you know, if you want to get in on this call, press Star/1 on your touchtone pad.

And we'll go to Jeff Nalley with Cromwell Ag Radio. Jeff?

QUESTIONER (Cromwell Ag Radio): Mr. Secretary, thanks for your time, and happy holidays to you, sir. A question as it relates to estate taxes. Bob Stallman, President of Farm Bureau, yesterday suggesting that the estate tax, according to the USDA, would hit 13 percent of the largest, most productive farms in the country, do you see this as a matter of concern for the security of food in the country if these largest, most productive farms are targeted by this estate tax, that ultimately they'd have to sell off to survive?

SECRETARY VILSACK: You know, I see this as a matter of concern to all of us who are interested in making sure that rural America remains vibrant and strong. I fully expect and anticipate that as Congress deals with a variety of tax issues, that the estate tax will be something that they do deal with, and my hope and belief is that exemption levels that will be created will be large enough to cover 99.9 percent, if you will, of most farming operations and ranching operations in this country.

I think it is an important topic. I think people are well aware of the need for some kind of exemption level that reassures America's farm families and ranch families that they're not necessarily going to lose the farm because of a death in the family.

QUESTIONER (Cromwell Ag Radio): One of the concerns to follow is that if those lands are ultimately sold to raise the tax revenue, chances are, with what we've seen lately, it wouldn't go back to a farmer but some more to an investor, and that's a shifting of intentions of the revenue.

SECRETARY VILSACK: Well, you know, I think it's always difficult to talk about hypotheticals. I prefer to take a look at things as they are today, and my expectation and belief is that there is going to be action on this, and I don't think it's going to be helpful for us to project or hypothesize what the consequences might be. Let's see what happens. My belief, again, is that the Congress is going to take action to make sure that there's adequate protections in place for farm families.

There are also in the law today a variety of ways in which taxes that are to be paid can be paid over an extended period of time at very low interest rates. So there may be lots of options here, but first and foremost, let's focus on getting an exemption level that's high enough to reassure people that they're not going to have to sell the farm.

MODERATOR: All right. Our next caller on the line is Tom Steever, with Brownfield Radio. Tom?

QUESTIONER (Brownfield Radio): Thank you. And, Mr. Secretary, concerning the Pigford II settlement, Congressman Steve King of Iowa is suggesting fraud in the settlement and suggests also that it be investigated and voted against, in this case, in the House. Comment on that.

SECRETARY VILSACK: Well, I'm just disappointed that Representative King took this opportunity to suggest something for which there is absolutely no proof. We've not yet instituted the settlement, and the reality is that inherent in the settlement, inherent in the law that was passed, as a result of bipartisan work in the Senate, led in part by Senator Grassley, there are provisions that involve a neutral third-party arbitrator taking a look at evidence to determine whether or not there is an indication by substantial evidence or preponderance of evidence that discrimination took place.

There is the provision requiring the Comptroller General to review the implementation of this settlement. There is a requirement that the Inspector General of the USDA also be engaged in conducting audits. And finally, there is the need for the court to essentially approve the final accounting of the settlement proceeds. So that there are a number of steps inherent in the settlement which, again, a bipartisan group of Senators worked on, Senator Grassley from my homestate, Representative King's homestate, was very much involved in this. And prior history would suggest that there was very little evidence of this in Pigford I.

We're obviously going to be sensitive and aware of the need to make sure that those who have been discriminated against receive their appropriate measure of justice and that we do our very level best to make sure that folks who are not entitled to relief don't get relief.

MODERATOR: We move on now to our next caller, Matt Kaye, from Berns Bureau. Matt?

QUESTIONER (Berns Bureau): Yes. Secretary, thanks so much for taking my call. Can you bring us up to date? Are there any new developments on the continuing negotiations with South Korea on the beef front? And also we haven't heard for a number of weeks now about efforts to negotiate some kind of agreement with the Mexicans on the trucking dispute, which, as you know, has resulted in additional retaliation against our meat and other produce.

SECRETARY VILSACK: I can tell you that negotiations are ongoing with the Koreans as we speak. I believe that there is a delegation or group that's meeting in the United States today and will continue to meet in the hopes of reaching an agreement on the two issues that I think are still being discussed, automobiles being one of them and beef being the second issue.

We're hopeful that ultimately the negotiations result in an opening, a true opening, of that market, that is consistent with international standards and rules and consistent with science. We think if that happens, then it creates another opportunity for us to go into other countries in the region to make the same case that these markets that have been closed for a considerable period of time need to be reopened. And, of course, if and when they are, that will obviously add significantly to the numbers we talked about here today, which are record-breaking export numbers.

So we're going to continue to work hard. That's I think one of the reasons why we've seen increase in exports, is the individualized attention we're giving to individual countries in our new strategic approach to trade. I know that every dollar of export assistance that we've provided at USDA in the last year has generated $35 of trade activity, so we're going to continue to look for those leveraging opportunities. The hope is that these negotiations get resolved quickly.

On the Mexican issue, I'll be traveling later this month to Mexico to meet with my counterpart. We continue to encourage Secretary LaHood and others to continue working on this truck issue. I think he is well aware of my concerns about the tariffs that have been imposed and the impact it's having, particularly on a number of our specialty crops in particular, and now being expanded recently to pork and other items. We've obviously got to get this resolved. My hope and belief is that this gets resolved sooner rather than later, and we will do everything we can to facilitate that resolution, but it is not something that I directly have control over. We are just simply encouraging the Transportation folks to iron out whatever details need to be ironed out to get this thing done.

MODERATOR: Moving right along, we go to the National Journal's Jerry Hagstrom. Jerry.

QUESTIONER (National Journal): Good morning, Mr. Secretary. On Friday morning, there is going to be a hearing in Federal District Court in Washington about the status of the women's and Hispanic cases, and the lawyers in those cases are contending that even though the court has not declared these to be class certified suits, that USDA and DOJ could treat them like that, and that also that the process that they have put in place is going to make it much more complicated for Hispanic or women farmers to make claims than it is for black or Native American farmers. Is this still in negotiation, this settlement, or where do you view it as standing?

SECRETARY VILSACK: Jerry, thanks for that question, and it's a complicated set of questions that you've asked, and I think it requires me to sort of lay the groundwork for those who are listening about this.

There is a significant difference, two significant differences, between the Pigford II litigation which Congress appropriated money for and the Love and Garcia claims, which you've alluded to as the Hispanic and women cases.

The first difference is that the Supreme Court of the United States denied class certification to the Garcia plaintiffs and I believe also to the Love plaintiffs, but clearly neither one of those two cases were certified as a class action, which means that there is not a single case representing multitudes of farmers who are alleging discrimination, but there are in fact individual separate cases for each and every farmer who believes they've been discriminated against. So it could conceivably be thousands of individual cases.

Because it's not been certified as a class action and because the Supreme Court has spoken, at least on Garcia, that it ought not to be a class action, we have to treat these as individual cases, and what our belief is that what we need to do in an effort to try to give folks a choice to resolve their case is to give them an option to either pursue litigation on an individual basis or to accept a settlement that we're in the process of finalizing that we'll make available hopefully very soon. And in that settlement, the procedures that will be followed are very closely aligned to the procedures that are being utilized in the Keepseagle litigation, which has been settled, and the Pigford litigation, which now we can move forward on.

So there may be slight differences and slight variations, but fundamentally it's about essentially you asserting a claim, providing enough substantial evidence, documentary evidence, of the fact that you tried to do business or you did do business with USDA and you were not treated fairly or you were discriminated against vis-à-vis another class of farmers and that you are, as a result, entitled to receive compensation. And the second difference is that we don't have to have an appropriation from Congress for Garcia/Love; this is something that can be resolved, as is the case with virtually every other claim against the United States from the Judgment Fund.

So it's not been certified as a class action, so it means it's individual lawsuits, and so individual plaintiffs have to make the decision whether or not to resolve their dispute with the Government or to proceed to court. We've created and will create a process very similar to what's being done and will be done for Native American and black farmers, and we've done and will continue to do a significant amount of outreach to make sure that we get the message out about what the process is.

So I don't think I agree with the characterization that it's fundamentally different or it's more cumbersome or it's more difficult than what other folks have to do, and I don't think it's necessarily, in light of the Supreme Court's determination, something that we can revisit in terms of class certification.

MODERATOR: Back to the callers on the line. Mike Hergert from Red River Farm Network. Mike.

QUESTIONER (Red River Farm Network): Thank you very much, Susan, and Mr. Secretary. There is a judge in San Francisco yesterday; he said that Roundup Ready sugar beet stecklings have to be destroyed. To my knowledge, this is the first destruction of biotech crops. Your comment, and would you plan or recommend an appeal?

SECRETARY VILSACK: First of all, let me make sure that we're clear about what the judge decided and what folks are saying about what the judge decided. There's a difference. If you take a look at the order that the court entered, he did not request or order a destruction of the stecklings, he ordered that they be taken up out of the ground. That's a fundamental difference, and I think it's important to clarify that difference.

We are - we meaning USDA - is currently engaged in discussions with the Department of Justice about next steps and what the options are relative to appeal. I don't want to preempt those conversations and discussions. I would say that we recognize the significance of this to growers and the concerns that are being raised as a result of the uncertainty. And I think that it raises a larger set of questions generally about the need for us at some point in time to have a much better system, if you will, than we have today that creates a circumstance where a single judge can essentially decide whether someone gets to farm or doesn't get to farm.

We need to do better for American farmers and ranchers, and we need to figure out ways in which those who wish to do biotech and those who wish to do organic can live together in the same universe and be able to do what they think is best for their operation. That is not an easy thing to accomplish; it's not an easy thing to talk about. It's very complex and very difficult. We're going to have more to say about that later, but I would say let's be clear about what the judge did and didn't do. He didn't order destruction; he ordered that they be removed from the ground. And we will be deciding very shortly what the next step is reference to that litigation.

MODERATOR: We have enough time for two more questions. We go to Kevin Bogardus with the Hill Newspaper. And after that, that will be Philip Brasher with the Des Moines Register. Philip? Ken? Kevin?

QUESTIONER (Hill Newspaper): Thanks for doing this, Mr. Secretary. Just following up on the question about Hispanic and women farmers. One complaint from lawyers you've already addressed is the process, but another complaint is that it's not the same amount of funds that's on the table from USDA that at least has been given to black farmers. I think there was supposed to be a pot of $1.33 billion that will be split between Hispanic and women farmers while black farmers just by themselves are 1.15- or 1.25 billion. I was just wondering if you could address that.

SECRETARY VILSACK: And I think it's really, really important for people to understand these numbers. Essentially what Congress has made available is an amount up to 1.25 billion for African-American, for black farmers. It is possible that not all of that will be needed. It depends on how many claims are ultimately determined to be appropriate claims entitled to compensation, how many folks opt for Track A, which is a $50,000 track, and how many folks opt for Track B, which could be potentially a larger amount, and how many of those folks are ultimately denied because they have insufficient proof of discrimination. So it's a little premature for anyone, for anyone, to suggest that numbers are either the same or not the same. We simply don't know.

What we do know is that this money is being made available and that folks have the capacity to opt into one of those two tracks with reference to black farmers.

Now, the Garcia and Love folks, the same thing holds true. We don't know that there is going to be a significant difference in the amount of money that's being paid to any of these claimants because we don't know how many total number of claims there might be that are ultimately found to be appropriate. And so it may very well be that there is absolute equity here, and that certainly is the goal, that's certainly what we're going to work towards, and that's certainly what we're committed to trying to achieve as best we can.

I should also say that the reason why there is no Track B in the Garcia and Love case is because it wasn't certified as a class action, which means that we don't have the capacity to settle every case within the confines of one court proceeding. Each individual plaintiff has to make that decision for themselves, which is why we give them the option potentially to settle with us for an amount up to $50,000 plus debt relief if they have a direct loan with USDA and tax, which is very similar to what the Pigford Track A is, or they have the option if they believe they've been damaged to an extent greater than $50,000, they have the option to go into court and get a larger amount which would be satisfied from the Judgment Fund.

Now, how many people opt for that second option? How many people opt for the first option? How many folks basically are determined to have legitimate claims? We won't know and can't know until the process is allowed to move forward and until we've processed all of these claims, and this will take, obviously, some time. So I think it is premature for anybody to make a determination about equity or inequity.

What we do know is that there has been a concerted effort by President Obama and by his USDA to do what has not been done in many cases for 10, 15, 20, and in some cases 30 years, which is to try to resolve as many of these cases in as fair and equitable way as possible. This has been a concerted effort the President has been behind, a concerted effort that we at USDA have been behind, and I think it is an historic opportunity for us to close the chapter on what has been a sordid chapter of civil rights in this USDA and start a new chapter, a new chapter that not only settles these cases but also is taking a look at our current procedures, working with our current workforce and cultural transformation to send a very strong message that we are committed to a USDA that doesn't discriminate.

MODERATOR: We have time for one last question, and that's from Philip Brasher with the Des Moines Register. Philip?

QUESTIONER (Des Moines Register): Yes, Mr. Secretary. The latest proposal that the Deficit Commission is working on includes a $15 billion cut in farm and conservation programs up to 2020. When you did the new SRA crop insurance, you indicated that that was Agriculture's contribution to deficit reduction. This proposal may not go anywhere on its own, but do you think that additional cuts of this magnitude are justified in farm spending? And could you specifically address the proposal in here to shift money to disaster payments to keep that program, the SURE Program, going, in the next farm bill? Is that something that the administration would support?

SECRETARY VILSACK: Well, I think it's a little premature to express opinions about the 2012 farm bill. That process has not yet begun in earnest. I've had an opportunity to talk with the incoming chair of the House Ag Committee, Representative Lucas, about his intentions, and have talked to the incoming chair of the Senate Committee, Senator Stabenow, about her intentions, and I think that there is obviously a lot of work that both of those individuals need to do to get their staffs up to speed to begin a discussion in earnest about the 2012 farm bill.

And I don't think it's appropriate for me, given the fact that Congress writes this farm bill, to suggest what is or isn't appropriate. We will do what we ought to do, which is to provide assistance to both the House and the Senate as they craft farm bill, and as this process unfolds, we'll obviously be weighing in with opinions and attitudes about what we think is appropriate.

You know, as far as the Deficit Commission, obviously we have two or three different ideas out there. The Commission itself has not decided, voted, approved any set of recommendations, and so I think it's difficult to answer a hypothetical because you don't know at the end of the day what the Commission is going to vote on, if they're going to vote on anything. You don't know how that conflicts or is collaborated through other deficit reduction proposals.

Having said that, this is what I am willing to say. I don't think everyone in Washington, D.C., is fully aware of the fact that we indeed did do what we did on the crop insurance renegotiation and that we did commit $4 billion to deficit reduction. And I think it's incumbent upon anyone who is suggesting any further reductions of significance in any part of the USDA budget to be fully cognizant and aware of the fact that we've already taken those steps.

I was speaking with a Senator the other day, and he is a fairly knowledgeable guy, and he had no idea of the $4 billion in savings, and he very much appreciated knowing that, and as he talked about deficits and so forth, that was a very important piece of information for him to have.

I can't say that any member of the Deficit Commission is fully cognizant and aware of the steps that have been taken by USDA. I honestly doubt that they are, and I believe if they were, it is possible that that might influence the extent or the degree to which they're asking USDA's budget to carry further reductions.

It's obvious. Everyone in this town knows that the deficit has to be brought under control. Everyone understands and appreciates that there are going to be some difficult decisions that have to be made. I think what's appropriate is for everyone in this town to recognize that USDA didn't have to wait for Deficit Commission to do its work. We stepped up and we stepped up in a significant way.

So we'll see what evolves from this point, but my goal now is to make sure that everybody understands that we've already made a significant commitment, and we will continue to make sure that whatever happens, that we have an adequate safety net for America's farm families and ranch families and growers. Why is that necessary? Simply because, despite the fact that we saw very, very robust income numbers for American agriculture generally, if you take a look at it on an individual farmer-by-farmer basis, there are still a number of farmers across this country and a number of ranchers across this country that need a substantial amount of off-farm income just to be able to keep the farm.

So whether it's a disaster program or whether it's some other type of conservation program that provides them the assistance and allows them to stay on the farm or on the ranch, that's important because we want to continue to populate these rural communities. We want to revitalize this rural economy. We want more people having the chance to farm and ranch, not fewer. And I think it's very, very important that people understand who is farming, who is making money in farming, and who is just barely making it, and as they understand it, then they have perhaps a better understanding of why many of these programs are important.

To your last point, I know the Iowa Farm Bureau has put forward a provocative and thoughtful proposal about disaster assistance and a disaster program, and I think that is the kind of thing that ought to be happening now in terms of farm groups thinking about the future, thinking about what will best serve America's farmers and ranchers, and the kind of safety that will actually work and that will do what it needs to do, which is to keep people on the land when they have tough times.

Clearly, the Congress took a step in establishing the SURE program, but we also found this year with our supplemental disaster program that there are some commodities that are not necessarily well served by that program or served at all by that program. So, if Congress is looking at ways in which it can perfect this disaster program, that might be an avenue of discussion and conversation, so that we really do move away as best we can from ad hoc year-by-year disaster programs, and we would certainly work with Congress in that respect.

MODERATOR: Mr. Secretary, we've run out of time. I want to thank you and thank you for everyone that was on our call today. And that concludes our media conference.

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