Jennifer Vincent, editor, Michigan Farmer contributed to this report.
There's no greater time to be in the ag industry and U.S. Agriculture Secretary Tom Vilsack says there are no excuses, it's time for action to draft a farm bill this year that gives farmers tools to reduce risk, increase trade opportunities, protect the environment and grow yields for both food and bio-products. But, most of all, Vilsack says we need to encourage a new generation of beginning farmers and supply the tools for them to succeed, including financial incentives and risk management tools.
Vilsack spoke in front of more than 5,800 participants at the Commodity Classic in Nashville, Tenn., today saying, "we need to have a conversation about the Farm Bill and pass it, and pass it now," while outlining key components of what he wants to see in the legislation that encompasses everything from farm programs and conservation to trade and nutrition assistance.
The ag secretary pulled no punches on the job Congress and the Senate must do for the farm bill noting action is needed. He outlined the key parts to address in a new farm bill going forward, including a strong crop insurance system and safety net; a commitment to continued market development and trade agreements; promotion of the biobased economy; a continued investment in public research; and support for many levels of conservation.
As he spoke to the crowd, Vilsack earned applause from the general session as he told producers of their importance to the country, and he opened the door to some new ideas to help the transition of land into the hands of younger producers.
The Ag Secretary introduced an interesting issue facing young farmers in the face of rising land prices, that could include an incentive to help beginning farmers acquire land without sellers tangling with high capital gains costs.
He pointed to the Iowa farm he owns with his wife. "That farm has increased in value nine times since we've owned it," he notes. "I have two sons that are interested. But if we sold the farm today we would be subject to a substantial amount of taxes." He joked that his sons might be rooting for he and his wife to "leave this earth" which would save on taxes, "but I want to root for me to live." The taxing structure will not allow this kind of sale today.
During a post-speech media discussion, Vilsack notes that some kind of tax incentive could be built around land sales to younger farmers. "The average age of farmers is nearly 60 and the number of farmers over 75 rose 30%," he notes. He says the market should provide a system for young farmers to invest in land.
He notes the pressure is on for the farm bill, and during the post-speech media conference he notes that waiting on the farm bill won't be possible. "Kicking the can down the road will not help. In the old days, you could hope the number would get better," he observes.
What follows is a rundown on key points from his presentation, and that media session during Commodity Classic.
Crop Insurance: "We had 55 million acres hit by natural disaster in 2011, but the companies are still making money and it's a good system, a solid system that serves you well," Vilsack says. He notes the farm bill should insure that the crop insurance system is stable and secure. During a media conference later he elaborated noting that the average return should be about 12% to those companies with agents clearing $900 to $1000 for each premium sold.
He did add that not everyone agrees with those numbers but there are ways to manage costs and maintain a healthy crop insurance system.
Market Commmitment: "It is important to build on what we've seen the last several years. We have a strong export effort and the farm bill…should make sure and reassure the market that we are not going to take a step back," Vilsack says. He pointed to $137 billion in ag exports last year, which was a $42 billion surplus. He adds that every $1 billion in surplus is 8,400 jobs. He also noted that the trade surplus was just $5 billion five years ago.
Keeping markets open won't be easy noting the government encountered 1,500 trade barriers, and the competition is getting steeper. He reiterated the focus on trade and markets with the recent announcement of the largest trade mission to China, taking more than 40 companies along to engage in that market.
Biobased Economy: "We need to take every aspect of ag, every blade of grass, every particle of livestock waste, for the fibers and fabric and virtually every element of the economy," he notes. That biobased economy will require support in the farm bill for USDA to invest in the infrastructure for those programs. Vilsask noted the need to have the ability for USDA Rural Development to invest in biorefineries and to "create these local markets for local production and create new opportunities."
A Focus on Research: Vilsack notes the need to support research. "In the past we have invested in research, mapping the genome of crops and animals. I know times are tough fiscally…we need to invest in basic research to be the most productive today and tomorrow. The extent to which we invest in research is correlated to our ability to be productive," he says.
He added during his talk with media that the research investment is critical given that food production has to rise 70% in the next 40 years. "Who is going to lead that, China? Europe? Brazil? My preference is America."
Conservation Investment: The next farm bill should have a continued commitment to CRP and conservation. "The conservation reserve program is a working program for almost 25 years," Vilsack notes. The agency recently announced the general signup, showing continued commitment to the program and a 750,000-acre continuous signup for highly erodible lands is underway too.
During the meeting, the agency announced a 1 million acre expansion for CRP including 100,000 acres for a new pollinator practice; 200,000 acres for wetland restoration including important habitats with threatened or endangered species; 400,000 acres for SAFE, a program that provides flexibility to meet specific needs of high-value wildlife species; and 300,000 acres for duck nesting habitat and upland bird populations.
To encourage producers to sign up, the Farm Service Agency will increase the Signing Incentive Payments to $150 per acre from the current $100 per acre.
Hot Topics: Two key areas he addressed that are beyond the farm bill but closely related to the future of agriculture include regulations and immigration.
In the issue of regulations, Vilsack notes that farmers need "regulatory certainty" as they invest thousands of dollars in their businesses. "We need to work to build that certainty," he notes. Vilsack says he has worked with Lisa Jackson, administrator, U.S. Environmental Protection Agency, to expand their understanding and appreciation for what potential regulations mean in the real world.
As for immigration, Vilsack squarely laid this challenge in the lap of Congress. "You also need a workforce," he told Commodity Classic attendees. "Immigration is another tough issue and there are some who like to use it to divide us. But sadly situations existed last year and perhaps this year, where your hard work to produce crops will go for naught if there aren't people to pick, process and package what you produce."
He notes that as Congress works with this farm bill they need the "political courage and spine for immigration reform. They need to get it done and get it done now," Vilsack remarks.
With 2012 being the 150th anniversary of USDA, Vilsack reflected on the department's turbulent beginnings and foresight by our country's leadership to create not only the department of agriculture, but also the Homestead Act, the transcontinental railroad and the land grant university system in the midst of a Civil War. "I'm not buying that this is hard," Vilsack said referring to passing a farm bill. He called on Congress to act and to quit passing the buck. "That's not what America does; we don't make excuses, we solve problems."