MODERATOR: Good morning from Washington. I'm Larry Quinn speaking to you from the Broadcast Center at the U.S. Department of Agriculture. Welcome to today's news conference with Secretary of Agriculture Ed Schafer who is joining is by audio connection from the United Nations Food and Agriculture Organizations World Food Summit in Rome.
Before we begin, I'll remind reporters, if you wish to ask a question, please let us know that by pressing *1 on your telephone touchpad. Now it's my pleasure to introduce Secretary of Agriculture Ed Schafer.
SEC. ED SCHAFER: Thank you, Larry. Hello, everyone. I am Ed Schafer, and I'm pleased to be representing the United States at our high level conference on World Food Security here: The challenge of climate change and bioenergy. It's been an interesting several days, many issues on the food price crisis we're seeing around the world today, and it's been a good interaction I think by the member countries that are here.
The United States came with a three pronged approach. First, to provide immediate humanitarian need as we see people are hungry that need food, need nutrition. The United States has pledged $5 billion over the next two years for an immediate relief effort.
We also as a second prong of attack are looking at the long-term infrastructure needs to how we can increase yields, how we can help our partners around the world to provide the food, fiber and in a lot of cases fuel for the people as we move into increasing populations and increasing consumption.
And thirdly, we are working on trying to eliminate barriers, export restrictions, things that block the free flow of food around the world, again to help people meet their nutritional needs.
So I think we've carried the leadership here on this three-pronged approach, and as we start to wind down the conference here we're looking to see what elements are going to be set forth by this body so that we can deal with the problem of the food crisis.
So with that, I'll be glad to answer any questions that anybody might have.
MODERATOR: Thank you, Mr. Secretary.
Reporters, as we prepare to receive your questions, we remind you to press *1 on your telephone touchpad to indicate that you do have a question. Our first question today comes fro Stewart Doan of AgriPulse. He'll be followed by Alan Bjerga. Stewart, go ahead, please.
REPORTER: Thank you, Larry. Good morning, or good afternoon, Mr. Secretary. I'm sort of curious as to whether or not the preliminary draft as it stands now looks favorable or acceptable to the U.S. in terms of biofuels language. Also, I had read earlier this morning that perhaps Cuba has been objecting, and maybe some others, to some language regarding doing away with embargos, etcetera. Have those two issues been worked out to the United States' satisfaction? Thank you.
SEC. SCHAFER: Now, everybody's cutting in and out here for some reason, so you'll have to forgive me if I didn't totally get the question. But the first question is the language regarding, I believe – the first part of the question, what does the language look like in the final declaration regarding biofuels?
We have not seen the final drafts of this yet, but it's our understanding from our folks that are in the negotiating sessions that the biofuel language is acceptable. We have had a lot of conversations about biofuels here over the last several days, and hopefully when we see the final declaration that this language that we anticipate being in there will hold. And certainly that is acceptable to our country.
The second part is Cuba and their interaction here. I'd point out that our longstanding policy with Cuba has not changed. There are some issues open with that country and others about the final drafting, and the negotiators are working hard. And the effort is to come to a consensus on a final declaration. And we're hopeful that that will happen.
MODERATOR: Our next question comes from Alan Bjerga of Bloomberg News, who will be followed by Jackie Fatka. Go ahead, Alan.
REPORTER: Yes. Thank you, Mr. Secretary. Just a point of clarification and then a question: On the $5 billion of aid that the U.S. is pledging, is that in addition to the aid that's already been pledged? - Because $2.5 billion is kind of roughly what the U.S. has been doing anyway.
My second question then is, given the sentiment you've seen toward U.S. biofuels policy, do you come out of this thinking you will be scrutinizing U.S. biofuels policy maybe a little more closely, examining it with a more critical eye than you would have before you came to the conference?
SEC. SCHAFER: I think as far as the first part, I think we've been spending about $2 billion a year. I don't know where you got the $2.5 billion. But I think that looks like that. You know we authorized $200 million out of the Emerson Trust. The President has asked for another $770 million for immediate relief. That's pushing $1 billion of new money that would go into this program.
And as you are aware also, the United States and the people of the United States have always provided over one-half of all the food disaster relief around the world, and we're proud of that position, and we feel that we've taken a strong leadership position here in the money that we're going to put forth over the next two years.
As far as the biofuels effort, I am personally heavily involved in this issue. And I'm pleased that I think what we've found here is: people use different numbers; different focus. They look at long-term projections and say, "Well, prices have increased over the last 10 years from this to this."
You know, what we've been focusing on here is that while corn-based ethanol is a factor in the price increases in food -- certainly it is not anywhere near one of the major driving factors in food price increases. And during this time here, I've become more confident that our ethanol policy of energy security, of better environmental factors, and a reduction in the cost of petroleum use in our country is the right policy direction. And I certainly am going to urge continuing along the way we're going.
MODERATOR: Jacqui Fatka is up next with a question, followed by Missy Ryan. Jackie?
REPORTER: Good morning. Could you kind of walk us through what the final steps of your work there in Rome, and when final language would be approved and things like that? Just kind of walk us through the future steps in this meeting? Thank you.
SEC. SCHAFER: Sure. Thank you, Jacqui. We are now in the process of finalizing the declaration language. It is a quarter to 5:00 (here in Rome). We have a general plenary session scheduled at 6:00 where the language of the declaration will be taken up, and should we have come to consensus on that declaration language that would be adopted at the direction of this body. So then we're all going to go out and get some rest.
MODERATOR: Missy Ryan is next from Reuters, and she'll be followed by Philip Brasher. Missy, go ahead.
REPORTER: Hi, Secretary Schafer. Just two quick questions: Did you perceive sort of a new rift at this conference between countries that were vigorously defending biofuels, such as the United States and Brazil and those that are calling more actively for a rethink or even a halt to the biofuels policy?
And also, is there anything else that you can tell us about that the United States will do coming back from this conference in terms of bolstering any of the components of the three pronged approach that you discussed.
SEC. SCHAFER: I kind of got part of that. Was the question about, is there a rift between the ethanol –
REPORTER: Yes. Is there a rift between the countries that are defending biofuels and ethanol in particular and the ones that would like the United States and Brazil to reconsider their policies? And the second is, is there anything else new that the United States is going to do coming back from the conference to help with the food crisis?
SEC. SCHAFER: I think on the first part, "is there a rift?", you know I don't sense a rift between those who produce and those who don't. I think everybody came here interested in finding and identifying the factors that are involved in the food price increases. And biofuels is one of them, and as I mentioned a minor factor as compared to many others.
So I don't sense this is the ethanol producers versus the non-ethanol producers at all. I think this is an effort to combine and people are trying to understand the numbers, the different studies that are out there, the causes or whatever. As we've seen, there are a lot of developing countries that are interested in biofuels. They are looking at that again to push down their huge cost of energy increases that are about there. They are looking at ways to create economic activities with their agriculture efforts and provide some energy independence for their countries as well.
So I don't see some big huge rift here. I just think people are trying to understand the situation, its impact or lack thereof, and focusing on what we can do about it.
As far as the United States coming out of this conference, I think we've all understood that the immediate needs, the humanitarian needs, the hungry people needs, have to be dealt with right now. But there is an understanding that there's a long-term effort here to increase productivity, to increase yields.
As we see not only the world population increase but as we see economies in many areas creating increases, people are shifting their consumption patterns: They are eating different foods, they are eating more food. And if we are going to meet that demand for food in the future, we in the United States have to teach the rest of the world how to increase yields, how to manage fertilizer, how to do water management, our precision farming techniques, all the areas that we can put on the table to increase yields -- because unless the rest of the world starts matching the United States' yield increases, people are going to go hungry.
MODERATOR: Philip Brasher of the Des Moines Register is next, followed by Mary Clare Jalonick. Philip, go ahead, please.
REPORTER: Yes. Secretary, a couple of questions: One, just a non-summit question related to biofuels: I wondered if you'd been monitoring the ongoing weather in the corn belt and whether you have any concerns about the corn crop getting planted and coming in at the levels that are needed?
And second of all, on the issue of agricultural development aid, which you've touched on. That obviously has dropped considerably over the last couple of decades. How much is the U.S. specifically committing to a level of agricultural aid? How much is it? Because the UN obviously is calling for a 50 percent increase in production in order to deal with food needs.
SEC. SCHAFER: Philip, I need your second question again.
REPORTER: Okay. Second question is, with regard to agriculture development aid, how much is the U.S. committing to spending on agriculture development aid, which as you know has dropped considerably over the last couple of decades?
SEC. SCHAFER: Okay. Stay on. I'm going to answer your first question and I'm going to invent an answer for your second question because I'm not sure what you said, but I think I know what you said.
As far as weather, yes, we are monitoring the weather effort closely. We've got a lot of concern of the wet conditions in corn country and how that's affecting the planting of the crop and certainly the maturity of the crop. As you are aware, we recently released CRP haying. We think that will put $1 billion worth of feed and forage on the marketplace. Hopefully that displaces corn as a feed, at least to some extent.
So we're looking at it. We're trying to do everything that we can to deal with it, and as you said we're monitoring it closely because it is of concern.
The second part I believe you were talking about yields and what yields we've seen and how that can be beneficial. If I'm going down the wrong track, let me know. But the example that we have been using here of course is, over the last 10 years we've seen a 50 percent increase in corn production up from 100 bushels an acre to around 150 bushels an acre. That's over 15 years I guess, not 10.
So a 50 percent increase in yields. And certainly part of that is biotechnology. So we are excited about the opportunities of biotechnology, what they can deliver to the rest of the world as far as yield increases, and how they might help solve some of this food demand ratio that we're going to see in coming years.
MODERATOR: Mary Clare Jalonick of Associated Press has the next question. She'll be followed by Alan Bjerga. Go ahead, Mary Clare….
….Mary Clare, are you there?
REPORTER: Sorry, I had my phone on mute. Hello?
You said your understanding is that the final language is acceptable. Can you detail exactly what that language is according to your understanding at this point?
SEC. SCHAFER: I'm sorry, Clare. I didn't get that. Can you –
REPORTER: Yeah, sure. You said, can you hear me now?
SEC. SCHAFER: Yep. You're fading in and out; that's the problem.
REPORTER: You said your understanding is that the final language on biofuels is acceptable. Can you detail exactly what your understanding is that is contained in that language?
SEC. SCHAFER: You know, I'd rather not at this point in time. Everything is still in draft and we haven't seen the final draft. But as our negotiators at the table have come in and out of the sequestered room, we have ascertained that the language that looks like it's moving toward the final draft is acceptable.
REPORTER: Okay. Thank you.
SEC. SCHAFER: We should know shortly.
MODERATOR: Alan Bjerga of Bloomberg News is next, followed by Stewart Doan. Alan?
REPORTER: Yes. Just one more follow-up, Mr. Secretary: One note that the U.S. has been using is saying that biofuels are connected to about 3 percent of rising food prices globally. Yesterday former USDA Chief Economist Keith Collins said that number is low and the methodology is flawed. I'm wondering if you are revising that contribution number upward and if you're sticking with the methodology you've been using?
SEC. SCHAFER: I didn't hear. The USDA Chief Economist said what?
REPORTER: He said that the number you're using is too low, that basically you have to put in more factors, which would give you a larger estimate for biofuels increase in global food inflation.
SEC. SCHAFER: Now, did you say it was the former USDA economist?
REPORTER: Chief Economist until January. Right before you showed up, Mr. Secretary.
SEC. SCHAFER: Yes. Here's the story. First of all, as we look at the numbers, there is anticipating a 43 percent increase in global food inflation this year. Ethanol, corn-produced ethanol in the United States we rate as 3 percent of that 43 percent increase. People have differences of opinion about that, but we have to be very careful about how you measure it. And certainly Keith Collins is an expert, former – Keith is an excellent economist. He was in the past an ethanol champion, by the way.
And the factors are, if you look at the corn price increase and the relationship of corn to all grains and the relationship of corn that goes into food -- if you look at the global increases in energy as related to food prices -- if you look at the global increases in food prices based on increased consumption and lowering of stocks around the world -- if you look at the factors of poor weather and how they affected grain and cereal production in grain-producing countries -- if you put all this stuff on the table -- you find ethanol production in the U.S. is 3 percent of the 43 percent increase.
So I think we just, we look at the numbers. I'd have to remember that we have to be careful of people who are getting paid to say things now and to adjust the outcomes to what a certain group or organization wants to hear. But we've got the numbers; you've seen them, we released them to you. You've got the charts, the text behind the charts, and you can see exactly how we came up with the number.
MODERATOR: Next question comes from Stewart Doan of AgriPulse followed by Matt Kaye. Stewart?
REPORTER: Thank you again. Mr. Secretary, a non-summit question about South Korea. There have been reports in the last several hours indicating that the South Korean government could live with the offer made by five U.S. beef processors earlier in the week, the Temporary Labeling Program. I'm wondering, sir, if you could tell us what is your understanding of the situation regarding resumption of beef trade in South Korea?
SEC. SCHAFER: You know, we are currently visiting with the South Korean government about the issue. Talks are ongoing. They are changing rapidly as they are facing the pressures they are at home. And at this point in time we're just working through the process.
We understand that there's been some conversations directly with the producers, but we're reacting to it as it changes, and hopefully we'll keep the dialog open and work out the problems because we had made an agreement. We think the agreement was important between our two countries; we know that U.S. beef is safe, it's good, and it's less expensive than Korean beef, important to their market, and hopefully we can continue to work through these issues and get back on the table the agreement that was made.
REPORTER: Matt Kay of Burns Bureau is next followed by Mary Clare Jalonick. Matt, go ahead.
REPORTER: Yes. Thank you, Mr. Secretary, and thank you for holding this teleconference. What do you see are the practical barriers to implementing some of these goals, particularly the 50 percent increase in food production by 2013?
I mean, have you seen any change in attitudes among, for example, the Europeans on GMO or some of the nations that have been imposing restrictions on exports and others that have been reluctant to make concessions on their tariffs?
Is there anything that gives you hope that these barriers will come down any time soon?
SEC. SCHAFER: Well, you know the governmental barriers are one thing, but getting back to the original or premise of your question, which is what barriers are in place to keep us from meeting the goal of 50 percent increase in production: As we've talked to a lot of the developing countries, it becomes apparent that many of them missed the previous Green Revolution because they have a lot of real poor people on small plots of land. They don't have good water management. They have no refrigeration or distribution systems. They don't have credit.
There are many, many problems in the way of helping us meet this goal, one of which we believe is the acceptance of biotechnology.
I think it becomes apparent that when people are hungry -- when we don't have the right food where we need it -- that increased yields, increased production is important. And this has been at least opening the door to people who have said, "Well, maybe we have to rethink our biotechnology resistance to issues."
So yeah, it is still. I don't expect people to change their attitudes overnight, but as we work through this, I think there's been an opening of the necessity-- the understanding of the necessity -- that we need to increase yields dramatically. And one of the ways beyond precision farming of good fertilizer regimes, water programs and another effort is the biotech products.
So it's going to be hard to meet that goal. There are a lot of barriers out there, not the least of which are the infrastructure capabilities of the developing countries. But we're hopeful that by focusing on that issue here at the World Food Conference is something that people now believe is important, and we're all going to try to get it done.
MODERATOR: Mary Clare Jalonick is next followed by Dan Looker. Mary Clare?
REPORTER: This afternoon the Senate is going to revote on the Farm Bill to fix the glitch that they had a couple weeks ago. I'm just wondering if you know if Bush is going to veto the bill again or if you all might just let that become law, and any comments you have on the glitch and possible delays in food aid that it could have created.
SEC. SCHAFER: Well, you know, the colossal mistake that was done by Congress on this issue is unprecedented, so we're not sure how all of this works. But the reality is, the President is going to get a Farm Bill on his desk that he has vetoed, and strongly vetoed, already. I am not aware of any changes in the bill that have been made or any changes or heart that any members of Congress have put forth on meeting the needs of the President's, or meeting the President's requirements. I expect this bill will be vetoed.
MODERATOR: Our next question comes from Dan Looker of Successful Farming Magazine, and then he'll be followed by a final question from Phil Brasher. Go ahead, Dan.
REPORTER: Good morning, Mr. Secretary. You mentioned the obvious needs for more infrastructures in developing nations. Senator Harkin -- when he talked about the food aid portion of the Farm Bill -- mentioned a visit to Africa by him, and I believe it was to Kenya. And he said that he was there during the rainy season, and they basically didn't have good roads to get food and crops to market.
What if anything has this conference done to address the needs for infrastructure, not changes in trade policy or better use of GMOs, but physical infrastructure such as roads, dams for irrigation, that sort of thing?
SEC. SCHAFER: Yes, and you reminded me. Let me step back one second to Mary Clare (Jalonick of AP) and your question.
I am not aware of any delays in food aid or problems that were caused by the veto or override of the Farm Bill. We've worked through a couple of weeks here. I'm not aware of any kind of restriction or delay in the food aid that we're delivering -- either at home or across the world.
Now to follow up on the infrastructure, you know we've talked to the Kenyans, here actually, about the same issues that Senator Harkin was talking about. And there's a clear need for infrastructure development. In the $770 million request that the President has made to the Hill, there's $125 million or approximately $150 million in place there for infrastructure development. And it's not – I wish (the infrastructure issues) were only the roads. When the crops get to the market, even if they can get across the roads, there's no refrigeration, no way to keep the products – they spoil, they get thrown out.
We have talked a lot about the full range of infrastructure needs. I participated as a co-chair of a panel here talking about this very issue, and I was very impressed with the conversation and the understanding of what needs to be done here to increase productivity, especially in the African developing nations.
The focus has been there. While a lot of the work here has been meeting the immediate needs, I'm very pleased that the long-term direction has said, "Let's focus on infrastructure.…" Many countries who are pledging dollars to this effort are redirecting some of those dollars to infrastructure development.
MODERATOR: Our final question today comes from Philip Brasher of the Des Moines Register. Philip?
REPORTER: Mr. Secretary, I wanted to get back to the question that I asked that you didn't hear previously. You set it up with the answer to that one.
It's how much is the United States devoting to agricultural aid? Or are you making a commitment to increase agricultural aid? You mentioned $150 million that all requested as supplemental. How much are you going beyond that?
And, two, are you dealing with – can you do anything to deal with -- the rising cost of fertilizer, because that's a problem too for obviously the developing –
SEC. SCHAFER: Yes. The fertilizer is just a huge issue, and we've heard that over and over and over again. Of course we hear that at home as well. So what specifically can be done about it? I don't know. A lot of it's tied to the rise in energy prices, natural gas costs. Those are market driven here, and certainly if we increased our exploration and recovery efforts in the United States of America we could do a better job and help make more available, which always lowers cost.
So the issues are there. We didn't see any specific addressing in any of the work here as to what to do about the rising prices of fertilizer. A lot of countries are subsidizing the cost to their producers or buying it themselves totally and giving it in certain circumstances. So no direct policy I think to address that issue.
What was the other part of your question?
REPORTER: Agricultural aid, if you have made a commitment –
SEC. SCHAFER: Agriculture aid. We don't have any specific numbers, Phil, because as you know a lot of it is interactive. When we, for instance on the Emerson Trust that $200 million that goes into aid, the requests come from the companies that receive the donations as to what they need. Sometimes that food or those commodities are converted, are sold, and then the money goes into infrastructure development.
What I can tell you though is that our focus has moved into infrastructure development. USAID (U.S. Agency for International Development), who had moved away from infrastructure development, now is back in the game with that type of focus. And that will be interactive with the countries that need it, and it certainly is going to be a balance with the immediate needs of feeding people and the longer-term needs of infrastructure development. So I don't have a jack number, but certainly the focus is there, and we're going to be funneling more dollars for the immediate and long-term efforts to increase production.
MODERATOR: Thank you, reporters, for your questions.
Mr. Secretary, any final thoughts today?
SEC. SCHAFER: It's been a good conference. I'm pleased with the United States representation here. And I think all in all we will come out with a declaration that will move us forward. If we do not get to a declaration, I am confident that the member countries have focused on this issue and will proceed accordingly.
MODERATOR: Secretary of Agriculture Ed Schafer. I'm Larry Quinn bidding you a good day from Washington.
