SEC. ED SCHAFER: Thank you, Chuck, for your kind comments and great introduction. It really is an honor for me to be working with you again. Good morning, and thank you for the warm welcome. It's a great day in America and I am sure glad to be here with you this morning. It is fun to be on the stage with the USDA team and to listen to their comments. The bad news is, they said everything I'm going to say.

[Laughter]

So when Chuck is talking about change, I think we need to change the order of the speakers, so I can lead with some of these things. But I am glad to be here. As Chuck mentioned, you know, I've been on the job a little over three weeks, and things have been moving pretty quickly. It is trial by fire in a lot of ways, but I've been enjoying it, and it's great to be in the job shadow program of Chuck Conner.

[Laughter]

It's been a challenge moving to Washington, D.C., from North Dakota. Things are bigger here, they are more compressed, they have a lot more people. You know, moving around is a little different, and I'm getting adjusted to it, but there are things that I have managed in my life that I just haven't before. For instance, the security around here. It's pretty interesting; everywhere you go there's all kinds of security and things, and we deal with that a little differently in North Dakota. It's the safest state in the nation, so we don't have to worry too much about security issues.

As a for instance, in the governor's residence there are security cameras, and they watch over, and every once in awhile they see something of interest. And one afternoon somebody asked me, I was sitting in the governor's residence in the little office there, and the phone rang, and it was a security officer. He said, "I'm looking at the camera and I see a little box that's up against the wall along the garage." He said, "I hadn't seen that before, and it's got some things sticking out, looks like it might be wires. I'm not sure what it is." He said, "Maybe you want to go out and take a look at it and check it out."

[Laughter]

They take security a lot more seriously here in Washington.

[Laughter]

But I am getting used to that and other issues of living in this community. But I have to tell you, I am very fortunate to be meeting with USDA at this time because these are really good times for agriculture indeed. We have plenty to celebrate—record farm income, record commodity prices, growing demand for exports give us a really good platform to be working from.

And as you just heard from Mark Keenun, that platform just keeps getting stronger. You know, $101 billion worth of exports, and it's just been a thrill to be able to report. But the continued growth in our exports is just nothing short of spectacular. The fact that our forecast has climbed so sharply just over the last three months shows how quickly things are moving in the marketplace and how readily we are adapting to that.

It's the market that is driving these decisions, the demand out there that causes decisions made by farmers today in what they plant, in what they grow and how they manage their operations. In making decisions in the agricultural community people are looking less to Washington and to farm programs created by Congress and the USDA and more to the marketplace around the world and the political and the economic and climate conditions that shape those conditions.

You know, it's just not your grandfather's or your father's farm anymore. It's changing. It's growing—it's moving these days. Agriculture is changing rapidly and there's more and more changes coming. You know, I expect to serve about a year as the Secretary of Agriculture. I'm starting out as term-limited.

[Laughter]

But procrastination is not going to be something that we're going to be able to use in this job. I mean things are moving, things are going, I've got a short time here, so a lot of things are on the agenda. At the top of the list is working with Congress to deliver a farm bill that the President of the United States can proudly sign. That means a bill that preserves a strong safety net for producers, and achieves real reforms in farm policy and it does it without imposing new taxes on the American citizens.

We're making progress toward that goal, and I'm increasingly optimistic that we can see a farm bill that conforms to the Administration principles and meets the needs of Congress and the people of the United States, this year. And Chuck is working hard, our team is working hard, and the members of Congress are representing their constituents in the process, and we're working through that effort. And that is I must say going as well as can be expected, so I'm pleased to report that today.

But as well as the farm bill, one of the most important things that we in the USDA can do is work to secure a level playing field for U.S. producers who want to participate in the global marketplace. We are continuing to press our case, along with USTR to reopen markets for U.S. beef that have remained closed to us. And we're going to be working with Congress to win approval this year of the pending free trade agreements with Colombia, Panama and South Korea. In that effort, I'm leading a delegation of members of Congress to Colombia here in just a few weeks. And we're trying to understand the importance of these free trade agreements and how they affect the economic well-being of the agriculture community.

If you look at the pending agreements with Colombia, Panama and South Korea and combine them with the newly approved free trade agreement with Peru, it opens the doors to $3 billion of additional agricultural exports from the United States annually.

We're going to continue to participate seriously in the Doha Round of trade talks—because the potential of this multilateral forum offers huge trade gains with so many nations around the world.

At Doha, we will press for a deal this year that is fair to all parties.

These are our top-line goals, and things we're looking forward to getting accomplished this year. But since this is the Outlook Forum, I thought I might take a minute and really look forward a little bit here and express some thoughts about how we may need to reshape our farm policies to better support the rapidly evolving agricultural economy.

I believe that the bedrock role for USDA should be one that it has always traditionally played, helping farmers and ranchers and rural communities adjust to the rural realities and the marketplace and to prosper from them. But we also need to be clear in our analysis of how agriculture has changed and the far-sighted view of where it is headed.

USDA itself has had to evolve over the years to meet the needs of our times. That's how the SCS became the NRCS, and the ASCS is now the FSA, and the ARS is now the CREES and ETA is the FTS. Ah, you know, things are moving out there. The challenge beyond these acronyms up there is to make sure that we evolve with the right public policies and the right structure of the agency to help farmers and ranchers across this land, all the folks who live in rural areas, in their ability to fully realize the opportunities that the market is sending their way.

Having sound domestic farm policies, fighting barriers that keep our producers out of foreign markets, remaining vigilant about the safety of food products that enter our market whether from domestic or foreign sources, all are part of what we must do to meet the demands of the global economy.

But having the right structure of public policies in place may also mean looking beyond the traditional safety net of marketing loans and crop insurance and disaster aid.

These are extremely important tools for sure, but it is just as important for the future competitiveness of America's farms and ranches to recognize that their capital investment in the changing of the economy is a huge issue facing them. We ask you to recognize those changing demands on farmers and that they are sure to have the tools to meet them.

That can mean taking a look at new policies like accelerated depreciation of farm equipment or tax credits for carbon sequestration, repealing the death tax on family farms. These public policy directions really can do more for many of today's farmers than a bump in prices or loan rates or program crops can do. We have to be making sure that we are leading up here in public policy that enhances opportunities in the agriculture community. Today, America's farmers and ranchers and rural residents must have full access to the knowledge and skills that they need to compete vigorously and successfully in the global economy.

That means making sure that our rural communities have the infrastructure in place that will allow the 60 million Americans who live there to participate fully in the new economy and to achieve the same quality of life of their fellow citizens who live in the urban and suburban areas.

And that turns on, I believe, is bringing adequate broadband access to rural areas. And you heard Tom Dorr talk of the opportunities that are out there. In fact, it's something that I feel very strongly about.

Tom outlined the ways that broadband access can already bring new business and new opportunities and how we can connect health care and commerce and lifestyle choices to the rural areas, and how important that is. But you know, he doesn't have to work very hard to convince me about how important broadband is in our rural areas.

This is an issue that I have been intimately involved with, both as governor of North Dakota and subsequently in a career in the private sector. If we go back 100 years to the way life was lived on farms around this country and compare it to the way it is today, it is unimaginable.

From the backbreaking work of plowing fields with a team of mules or horses, today's farmer is likely to be driving a $250,000 air-conditioned combine, and at the same time he's checking the futures on the markets and watching the latest weather forecast from the cab in that tractor.

You know, that's real-time change and significant opportunities. The fact [is] that farming today is much more of a white-collar managerial occupation than it's ever been before. The skills required are a lot more than just pulling calves and being able to do a hard day's work. Today you have to know something about distribution and accounting, you have to be adept at transportation and computers, and you have to have an education and skills to deal with the complexities of today's marketplace.

And that's not a matter of just harvesting a crop and selling it and paying off the loan to the PCA.

Our farmers need to succeed, and they must take full advantage of the opportunities that the market offers them, and they must be skilled and resourceful at controlling the costs of their own operations.

They have to find ways to cut waste and pollution, perhaps by turning waste into energy through biodigesters; and to squeeze revenue from marginally productive land, perhaps by participating in conservation programs or siting windmills and cell towers—new economics in the farm land.

To take full advantage of the nation's new demand for energy crops, farmers will also have to be able to work their way through the complexities of the energy and agriculture programs that we devise here in Washington. We've been known to change them from year to year as well just to kind of keep you on a steep learning curve. But we hope that those policies as developed are leading the opportunities in the agriculture arena.

My grandparents homesteaded a piece of property in Hettinger County, North Dakota, back in 1905. They raised wheat and livestock on that farm. They turned the dirt with their hands, built a sod hut, and raised a great family and I'm prejudiced when I say that. But really were active in the community, involved politically. They lived their life on that prairie—often in unrelenting weather and hard times.

I remember my grandmother reminiscing on her 100th birthday several years ago. She talked about the changes that she had seen in her lifetime on the farm. She remembered when she saw the first car, heard the first airplane going overhead, when the radio first came into the house and operated on little batteries. She talked about the first wind-powered water pump that was hooked up in the yard so they could bucket the water into the house; when electricity and telephone service came to their farmstead, and how each of those things when they arrived changed the way they lived.

Machines made farms more productive. But it was that radio and that electricity and the telephone that connected people; it transformed farm life and connected rural areas to the outside world.

Back in the beginning of the last century, railroads went across this land, and they went across the land because of government and citizen taxpayers' monies—that we needed to connect this country. They brought connectivity, they brought the mail, they brought visitors, they brought commerce. They were connected to the larger community and they brought opportunity.

You know, the railroad of the last century is the Internet of this century. The Internet is connecting people. It's providing commerce, it's providing lifestyle choices, it's providing opportunity, and it's transforming the way that we live in rural areas. It allows you to live and work wherever you want to, to live in an area that is crime-free and pollution-free that's clean and open and still have access to health care, to pursue learning opportunities.

But taking full advantage of these opportunities means having the broadband infrastructure in place to deliver a high-speed service at a competitive price.

And this is an area where our rural areas continue to lag behind the more densely populated areas of our nation. In fact our whole nation continues to lag behind the connectivity opportunities that most other countries in the world are providing.

And this is the reason, that same one. The reason for that is the same one that slowed electricity and slowed telephone services to our rural areas is just the high cost of building out an infrastructure faced with a lot of geography and not very many people. But if we're going to continue to enhance our rural lifestyle, we need to do that.

There are many ways to deliver infrastructure. Existing telephone or cable TV lines, fiber optic cables, power cables, cellular towers, satellites, even weather balloons. When you fly over the land at night and look down, you see the twinkling lights of farmsteads all over this country, and it was a public policy decision that made that happen. And I believe now our challenge is finding the best strategy for making sure that broadband reaches deeply into our rural areas as does the telephone, electric service of today. Otherwise, the great economic opportunities and the growth that the new merging of energy and agriculture is providing won't be fully realized.

These opportunities are tremendous. It is exciting to see a forecast like the one that experts at the Economic Research Service came out with recently that predicts the net cash farm income this year will hit $96 billion, an all-time record. That's a 12 percent increase from the year before. Think about it, 12 percent increase in net farm income in one year, and we expect that to continue on an upward trend.

But if we can continue to build opportunities, like for instance through the renewable fuel industry, think about how that impacts the agricultural economy. We import close to four billion barrels of oil a year. If we can displace one billion barrels of oil through agri-fuels, it could double the level of farm income in this country. That would mean generating 42 billion gallons of renewable fuel a year instead of nine billion we expect to produce this year.

To reach that level, we must aggressively develop our capacity to make ethanol from cellulosic feedstocks. That sort of research is going, as was mentioned we're moving from the research labs into practical applications. But the Renewable Fuels Standard in last year's Energy Bill prods us to do this. And we must make sure that our efforts go to moving the feedstocks and renewable fuels that are not price-distorting for our commodities and our foodstuffs in this country. And we're on that path.

I'm excited about it. I think in the next 10 to 15 years we're going to move a long way toward meeting the goals of this country in self-sufficiency in energy, and it's going to come from an effort in the agriculture community. While bringing greater energy independence to this country, we will see greater prosperity taking hold in rural areas as well.

Even with this kind of opportunity at hand, if life on the farm or in small towns in our rural areas still means being left out of participation in the information and communications grid, it will still carry a hidden tax that will make it less appealing over time, and especially to young people to live in rural areas. And I believe that we have to remove this unfair tax, the cost of living and working in the rural arena.

We just simply cannot allow that people living there not have access to modern day and futuristic communications opportunities, the tools that are going to help them be globally competitive. It's important not only to the future health and viability of three-quarters of this nation that we call rural America, but it is essential to the rest of America as well.

We should make it a goal not only to preserve the natural beauty and bounty in the rural areas, but we need to nurture the values of hard work and honesty and care for your neighbor that are part of the fabric of life there and have helped form our national character over generations.

There are many ways to make this happen. As governor, I was able to aggregate all of North Dakota's IT and telecom needs into one package and that gave the incentive for our rural telephone cooperatives to build a state-of-the-art fiber optic network that linked nearly 200 communities around the state, with the goal of having a high speed port in every community in North Dakota. It made our state the most wired rural state in the nation.

But that was infrastructure. To help address the gap in the coverage, after I got out of office I co-founded a company called Extend America. Our mission there was to find innovative ways to provide voice and broadband access in five states in the Midwest in the most rural areas.

So I know firsthand the challenges and the opportunities that exist out there. I believe we have to have a national conversation about this subject and I hope to contribute to it over the next year. We have good programs at our Rural Utilities Service that have been working toward the President's goal of universal access to broadband service throughout this nation. But we need to make further progress.

If we have a national dialogue on the subject, I believe the public will respond with support for equal access to broadband services in the 21st century, just as they did for electricity and telephone services in the 20th century.

You know, I have an opportunity to talk to students in rural areas a lot, and I really enjoy the conversations. One of the things I ask them about is, "When you get done with your schooling and you're looking at raising your families and becoming a part of the community, will you stay here?" And I'm surprised that their response. I don't think I was that aware when I was their age—of the great environment and clean air and clean water and crime free status and a good place to raise a family, and they have a great education for your children. They talk about that. I don't think I was that astute when I was growing up. But they talk about the advantages of that rural lifestyle.

But then they talk about lifestyle changes, and they may want to go to a professional ballgame someplace or they may want to go to the symphony or have access to the arts and culture that sometimes you just don't get in the rural areas.

And today broadband is transforming lifestyle choices for people living in these rural areas. And the kids growing up today are going to have opportunities of virtual museums, of holographic presentations of being able to socialize through the electronic mediums that we can't even imagine today. But as it changes their lifestyle choices of being able to see a holographic image of the New York Philharmonic Symphony in the parking lot of the local school and have it almost seem real, they may choose to live and work where they are, and we have an opportunity, in fact the responsibility, to provide the infrastructure across this land to make the economics work and to make sure that we connect those people to the rest of the world.

So that's exciting times for agriculture, and that's why I'm looking forward to this next year at USDA because I think we will have an unimaginable impact on the world … agriculture … lifestyles in the United States of America.

So now our next speaker I believe is going to tell us even more about the rural areas and what they can do for the entire nation in solving the environmental and economic challenges that we face.

Stephen Johnson, the head administrator of the EPA since 2005, and brings a strong scientific background and a wealth of experience to the job. During his 27-year career at EPA he served in a series of senior leadership positions and has received numerous awards and commendations for his work including the Presidential Rank Award, which is the highest award given to a civil federal employee. He's originally from Washington, D.C., area; but he earned his bachelor's degree in biology from Taylor University in Upland, Indiana, and his master's degree in pathology from George Washington University. We are very pleased to have him here with us today.

Would you please join me in welcoming Steve Johnson?

[Applause]