Secretary Vilsack: Russell, thank you very much, and, first of all, I want to express my appreciation to you for your willingness to chair this important discussion and conversation you are about to enter in on.

Russell is from my home state of Pennsylvania and served in a variety of capacities including as the Commissioner, Secretary of Agriculture, in Pennsylvania. We had an opportunity to work with each other during the course of a tough 2009 situation with the dairy industry, and I know him to be someone who is dedicated very much to making sure that folks get along in the countryside. And that's why I have asked him to serve in what I think is one of the most important discussions and positions that I have had the opportunity to create in the time that I have been Secretary. So I want to thank you very much for your willingness to take this on.

And while I'm extending thank-yous, I want to thank each and every one of you for your willingness to be here today. Many of you have traveled significant distances, taking time from important work that you do, and from your family and friends to be engaged in this conversation, and it's an important and significant conversation.

And I appreciate the sacrifice that you're making to be part of this, and I want you to know that we at USDA appreciate your willingness to be part of this.

This is a department that really requires significant input from people who are in the field, and we have a number of advisory committees and activities at USDA, all of which really do benefit from input from those who understand the details and the consequences and the significance and the complexities of issues that we talk about in this building.

Those issues are often not fully appreciated by folks outside of agriculture, outside of rural America, outside of the issues that we deal with. I think sometimes people look at issues involving agriculture and food as somewhat simplistic, and everyone around this table understands and appreciates it's far from that. It is very, very complex.

I have often said that the business of farming is the most complex business in America. I truly believe that, given all of the issues that you in agriculture, either in whatever area or connection you have with agriculture, I'm sure you appreciate that.

The President last February established the Rural Council. It was the first time in the history of our country that a President had signed an Executive Order directing his cabinet members to form as a group to have a conversation and to have discussions about the state of rural America, and to work together in an integrated and more coordinated fashion to provide help and assistance to rural America.

The President was aware of the demographic challenges that rural America has faced. He was aware of the fact that the census now tells us that the percentage of people living in rural America is at its lowest percent of this country's population in our history.

I think the President also understood and appreciated the tremendous contribution that rural America makes to the rest of the country, one that, frankly, is often underappreciated by the rest of the country.

He understood, as we all do, that it is the source of most of what we consume in terms of food. It is a significant percentage of the water that we use for a variety of purposes. It is the source of an ever-increasing amount of the energy that this country will need to fuel its future. And, as he often is reminded by me, it is also the source of a disproportionate number of our military.

It is the value system of this country is rooted in these rural communities and in these farms and ranches of America, and, as a result, the President asked his cabinet members to really take a concerted look at what needed to happen in rural America in order for there to be opportunities for families to stay together, if you will, in these rural communities.

We focus our efforts in four areas. We focus on capital investment, on innovation, on strong communities, and on making sure we do the very best job of conserving our natural resources.

I tell you that because the work that you are about to engage in is, in a sense, part of that effort to ensure that there is viable opportunities and options for people who live in rural communities, people who want to live and raise their families in areas small towns.

While I grew up originally in Pittsburgh, Pennsylvania, I spent a good part of my professional life in a small town in southeast Iowa, married to a native of that small town, and got to know and to love the people of that small town.

You know, I – it is difficult for me on a Friday night in the fall not to want to be in the stands of the Mt. Pleasant Panther football team to watch them play. So I have substituted Friday Night Lights reruns for

(Laughter.)

for that endeavor. It's the kind of sense of community and connection that I felt when I lived and worked and served people in Mt. Pleasant.

These areas of our country are challenged, and they are challenged because of the changing aspects and nature of agriculture. When you consider the economics of agriculture, and when you realize that in just a handful of years in my lifetime real commodity prices have increased, so there has been a pressure placed on those who produce to produce more.

When you look at the ag census, which tells us that there are a shrinking number of production sized operators in this country, but there is an increase in the number of small operations, a significant number in the last census, over 100,000 opportunities, you see the challenge of rural America.

How do we acknowledge the important contribution and role that production agriculture plays in the United States, the important role it plays in job creation at a time when we are dealing with a very difficult economy?

I suspect on Friday we are going to have good news in terms of agricultural exports. Those are jobs, those are improved income opportunities for people in those small communities. At the same time, we have this great infusion of entrepreneurship and innovation to complement the entrepreneurship and innovation of production agriculture in these small-sized operations.

How do they get along? How do they live together? How do they work together? How do they advance the opportunities in rural America together?

That's why you are here to help us figure that out. Each of you comes to this particular conversation I know from a particular, potentially a particular point of view or a particular experience in your lifetime that you bring to this table.

And we made a concerted effort to try to create an AC21 Committee that was representative of America, representative of the diversity of America, representative of the diversity of thought and attitudes about agriculture at every level in this country. And as you learn about each other, I think you will find that we did a pretty good job of putting all of the thought processes and all of the viewpoints at the table.

We did this in an effort to really try to create an opportunity here for a conversation of this significance, and we'd like to have something concrete come from it.

The second reason – and probably the more important reason – is this conversation may take you in a variety of different directions, and what we are really trying to establish is, if there is a mechanism available for compensation, then that will lead you to further conversations about how you would ultimately implement such a system, which in turn establishes the parameters for acceptable or unacceptable risk.

Those parameters are important I think for informing the third question or the third charge. Once you have the parameters of acceptable of unacceptable risk, whatever they may be based on the mechanisms that you all talk about, then you can then begin having a conversation about how you would mitigate or reduce or alter or modify those risks.

But until you've got the parameters, it's really, really difficult to have that conversation. We have tried to have that conversation for the last two and a half years. When I say "we," I mean we, the collective agricultural we. We have had –we have tried to have that conversation. Unless I missed it

(Laughter.)

we didn't get to an answer. So this is a very specific charge and a very specific responsibility we are asking you to embrace, which is, is there a compensation mechanism or mechanisms - plural? If so, how would you implement them? And once you have established that, that will help inform any further conversation about other steps that could potentially be taken that will allow folks to get along.

Now, if I were on this Committee, the first thing I would ask is, well, what if we come up with something that currently isn't allowed to be done? I don't want you to be limited in your thought process about what the statutes or the regulations may or may not be. I want you to come up with an appropriate mechanism, and then we will try to figure out what has to happen, if anything.

It may very well be that we have existing authorities that can be utilized. It may be that we have existing authorities that could be modified through regulation. It may be that we require statutory changes.

Whatever we need to do, it will be helpful to know what it is so that we can then ask the appropriate authorities for permission to proceed. I don't want you to have to worry about whether or not you need an act of Congress, or you need a regulatory change, or you need some kind of construct, that it, in your view, may be difficult to establish or to achieve. That should not govern how you all ultimately come to conclusions.

If you were looking at it that way, I think it would make it that much more difficult for you to come to a resolution. So don't worry about the mechanism.

There are risk management tools, there are a variety of other things that could potentially be utilized. It just depends on where you all land, and then we'll figure out what we have to do to make it happen.

We will probably charge you later in terms of when we would like to see a final product. I'm not - Michael, do you, do we have a deadline yet? Okay.

Okay. So to show you why we think this is a constrained situation in terms of time, we think you have opportunity to meet potentially four times, three times to have a conversation and discussion. Three times in addition to this, at which point at the end of that third meeting you should have some idea of whether or not you can reach any degree of consensus on it, and, if so, what that consensus might be.

And so it's a relatively short timeline. We will all try to deal with schedules. We can use technology to link folks who, for whatever reason, can't make it to an in-person meeting. But I think it's important that you understand this is not something that is going to linger for a considerable period of time.

You all come to this table with an understanding basic understanding of many of the issues, and it's I think it's important and necessary for you to really get to the business of trying to figure this out.

Let me stop by ending where I started, which is to thank you for your willingness to do this. I fully appreciate fully appreciate, having been the subject of many blog posts how difficult this all is.

It's not an easy topic. It's not an easy issue. But it is one of the most important things that is going to be discussed in this building in the time I have the time I am here of that I'm convinced. And it may be one of the most important things to have been discussed in this building for a long, long, long, long time.

And at the end of the day what motivates me is the opportunity to revitalize the rural economy. That's what motivates me, recognizing the contribution that currently is being made by a lot of good, hardworking people, whether it's in production agriculture or any other form of agriculture.

I have no favorite here. You all may; I do not. I don't have that luxury. I respect and I use this word advisedly and I love those people who are working the farm fields and ranches, regardless of what type of operation they have, because I know the contribution they make to my family every day. I know the contribution they make to this country every day. And I know that they often feel underappreciated by people like me.

So I have no favorites. I just want to find consensus, and I have an unfailing confidence and belief that people who are smart and reasonable, and who are willing to listen and willing to work together, can find a solution, because that's the way it happens in small towns across the country.

When there's a conflict or a problem, it's usually folks getting together in a community meeting and working it out. So I believe in that value.

So with that, let me open it up. I've got a few five, ten minutes for questions, and then I've got to, unfortunately, leave to go to look at disaster stuff.

Yes, sir.

Mr. Corzine: Hello, Mr. Secretary. Leon Corzine from Assumption, Illinois. I want to thank you, first off, for your presence and for reconvening the AC21, and also for the appointment. It's very important for our future, as you've stated very well.

My son, who is our sixth generation, is pretty much running the farm now, and I help out. And he understands the importance of this, as well as my wife, and that's why they allowed me to leave the fields of central Illinois to be here for a couple days.

Also, I am near the Farm Progress Show, which is going on, and I know with your schedule you may not be able to be there, with what's going on, but I am sure USDA will have a good presence, and we are expecting a good show.

So thank you very much, and this is extremely important for us for future and what we're going to be doing on the farm for the next 10 to 20 years.

Secretary Vilsack: Is that Farm Progress Show better in Illinois or when it's in Boone, Iowa?

(Laughter.)

Mr. Corzine: Well, let's see

(Laughter.)

The neat thing is that I think each state tries to outdo the other as we go along, and they have continued to improve. And the weather is really good this time, so a lot of times Mother Nature is the one that really determines how good a show is as far as what we're able to see happen in the fields.

Secretary Vilsack: It's a great show. It's a great show.

Participant: The complexity of this issue is dramatic, so how deep in the weeds do you want us to go in those first two questions?

Secretary Vilsack: My expectation is that you come up with a recommendation about what you think the world the way the world ought to be not the way the world is, but the way the world ought to be, which is why I understand and appreciate the complexity of it.

But, again, I'm not sure that it is an impossible task. I wouldn't be asking you if I thought it was impossible. I think it is possible, and it will take some creativity and some innovation and problem-solving, but I think you can come to a conclusion in this group representing many, many interests. And then we will determine how we might be able to go about making that happen.

But absent it, absent that solution, absent that this conversation, what you are going to have is the continuation of what we have today. And the continuation of what we have today and some of you have heard this before is a circumstance where within agriculture there is this struggle.

And it takes energy and time and effort and resources away from communicating to the other 99-1/2 percent of the public that benefits from what happens in our agricultural fields, but has no clue how important it is to their life, and often takes it totally for granted.

And, you know, if we want to change policy generally for rural America, if we want to get to ensure that there's adequate investment in the infrastructure and all the things that are important to economic activity and community life, you've got to have the rest of the country being paying attention a little more attention to rural America. Well you can't do that if you're fighting with each other.

I'm not sure who put their card up first, but

Ms. Martens: A farmer, Mary-Howell Martens from upstate New York. A farmer, yes, but an organic farmer first. And if you're coming up to see if you're going to see disasters, you may very well be heading up to the northeast, because we are parts of the northeast is definitely a disaster right now from the hurricane.

But unfortunately, we are not the only area in the country that is suffering from disasters. And my sense is, as farmers, there are just to many pressures against us. The last thing we need in rural America is to turn one farmer, one neighbor, against another over this issue. If we can find ways in our communities not to have this be a divisive issue, we will be so much better off.

So I appreciate what you are trying to do here, and, as an organic farmer, I am definitely on your side.

Secretary Vilsack: What part of upstate New York are you from?

Ms. Martens: Finger Lakes area.

Secretary Vilsack: Okay. I went to school at Hamilton College in upstate New York, so

Ms. Martens: It's a beautiful place.

Secretary Vilsack: Darren?

Participant: Well, thank you, Mr. Secretary, for the invitation to participate in this. First and most important question, how is your nephew doing?

Secretary Vilsack: Well. Thank you. We have an interesting conversation, Darren and I. Darren's son is in the Marine Corps and served overseas in Afghanistan, and my nephew is in the Marine Corps and he may very well today be on his way to Afghanistan.

My nephew is an explosives expert. This is a 19-year-old kid who has been taught how to blow the doors off of places that may be housing folks that we don't necessarily like. And he tried to reassure his mother that it was a safer occupation

(Laughter.)

being the first one in the door after it is blown off, but I don't think his mother was convinced, and certainly his uncle wasn't. But thanks for asking.

Participant: Yes, one follow-up. I know you're headed down to North Carolina, and we've got some growers in that area that had 20 inches of rain. They've got wet corn in the bins, no electricity, and so, again, just reiterate the importance of crop insurance and risk management, and just appreciate the efforts that you have been able to help in that area.

Secretary Vilsack: You know, appreciate that comment. And you're right, crop insurance is extraordinarily important. I probably should have said this at the outset, but I but your question allows me to sort of amplify.

Unless you haven't been following this this may not be news, but in the event you haven't been following the papers, I've got a news flash for you. We're going to have a lot less resources to deal with at the USDA, and I mean a lot less.

When folks talk about trillion dollars of cuts, you know, it's hard for individuals to get their arms around what that means. But I have been dealing the last several days with the actual numbers for this department.

We had a 10 percent reduction as a result of the continuing resolution, which we had to implement in about five months. So it was the it was almost as if it was a 20 percent cut. And the House has just passed a before they went on recess, they passed a budget that would cut our budget another 13 percent. And that's before the Super Committee of 12 begins taking a whack at various programs.

This gets back to the point of we are a relatively small percentage of the country, relatively small percentage of the farmers are a relatively small percentage of the population. We have really much bigger battles in a sense to fight in terms of being able to preserve the investment in rural America. This is going to be hard.

Now, crop insurance is one area where we, fortunately, have already saved money by renegotiating with the insurance companies. But it is and it's a very important tool, significant tool, but, frankly, it works for some better than for others. And we've got to figure that out if we are going to make that one of our principal safety net components. It's great for folks in the midwest. It's not so good for folks in upstate New York.

Participant: I'm glad to be here, and thanks for taking this on. I had the pleasure to try to help out with that Roundup Ready Alfalfa working group that you spent a lot of time with in December and January, and I think we made some good progress there, and I hope we can build from that foundation.

It seems to me there's two things that strike me as someone who has sort of been a part of this debate for almost 20 years now. One is that AC21 is kind of the only policy game in town dealing with all of the issues around agriculture biotechnology.

And I think there is going to be an inevitable effort by a lot of people to bring all of the issues that are on the table to this process to try to find a way through the work of AC21 to deal with this much broader laundry list of concerns and tensions about ag biotech.

And I think that whatever you can do, and the department can do, to create more appropriate fora for some of these other issues to get dealt with, it will make it more manageable for us to deal with the core issues you'd like to see AC21 deal with.

I mean, I it's we just we can't ignore this set of other issues. They are going to continue to come up. And to the extent that some progress is made in dealing with them, it's going to make our job easier.

And you broached some of that in the announcement in January where you started the restarted the Germ Plasm Committee, which I think was a very positive thing. So I think I would keep your eye on that ball, because there are other certainly other big issues that need to be dealt with.

The other thing that strikes me as a to really talk about compensation mechanisms and dealing with the economic tensions that are out there about ag biotech. It's really I think it will be helpful for us to break it down into some of its component parts.

I think there is a very important cluster of issues that arise mostly within the seed industry, and that relate to seed purity and the management of how seed gets managed and impacted by agriculture biotechnology.

I think there is a cluster of issues that you certainly talked about a lot that, you know, production agriculture, you know, farmers that are growing crops. They're not in the seed business, but they are growing crops and they need to access markets.

And there is certainly a set of issues and mechanisms, hopefully, that can deal with that. But, and then last there is the economic risk that this sector as a whole or major food brands face, and what you know, the sort of thing that has happened in the wake of LibertyLink and StarLink and, you know, brands that, you know, get impacted by ag biotech.

And that's it's another cluster of economic impacts that I think require a different mechanism than what may be needed on the farm, in the farm sector, and what may be needed in the seed industry. So I hope that we can break this problem down into more some more manageable parts and talk about the solutions in that way.

Secretary Vilsack: Yes. That's a very constructive comment, and it's I think it underscores why the charge that we have given is very specific, and why we have prioritized the charge. I guess my view is that we have begun that process of breaking these things down into smaller pieces.

Given the complexity, given the passions, given the emotions that are engaged and involved in this discussion, and the importance of it, our view is that let's take one bite at a time, let's see how this works.

You're right, we have reconstituted the Germ Plasm Committee, which is a much more technical committee. We have also engaged the seed industry in conversations around the protection, the patent protection if you will, that seed companies have, and how does that work, and what happens when these patents expire, and where are we headed. Do we have a game plan? Do we have a sense of where that is all headed?

We also will be challenged in terms of budgets, because the research aspect of this continues to be an important consideration. And so what we will be forced to do in tight budgets is to really focus on core competencies. What is it that USDA does better than anybody else in the country can do or does do? And that's really what we should continue to do. And everything else that we do not as well as other folks, maybe somebody else should do it.

So we are engaged right now in a very significant conversation within the halls of this building about precisely what that new, modern USDA looks like in a constrained resource environment. And I honestly believe that, you know, with some innovative and creative thought we actually can leverage our dollars more effectively than we have in the past.

So we entered into, for example, recently a memorandum of understanding with the Council on Foundations. And one would not think of the USDA and foundations in the same thought, but our view is that if you're interested in rural development, foundations are sitting on a trillion dollars in assets.

Where do they invest those assets? How much of those of their portfolio is invested in rural development? And can we convince them to maybe inch that up a bit? When they make grants, can we figure out how their grants and our grants can be integrated and coordinated in a fashion that actually moves the dial a little bit further and moves the ball down the field a little bit farther than it's moving?

So there are ways in a constrained environment you know, as my staff has heard me talk on a number of occasions, you know, there are two ways to look at this budget-cutting stuff.

One is to be depressed by it, and to realize how difficult and challenging it is and how many lives are going to get, you know, disrupted because of it. That's a very depressing set of thoughts, and, frankly, it doesn't motivate you to want to do anything and sort of paralyzes you.

The other way is to say, you know, this USDA was founded 149 years ago. We are going to celebrate our 150th birthday. Maybe this is an opportunity for us to modernize this department, really bring it into the 21st century, better utilize technology, be more creative with our resources, focus on research that we really own, if you will, and, as a result, do a better job and maybe even do a better job even with fewer resources.

And that's a much more hopeful and optimistic way of looking at this, and, frankly, it's one that you can kind of get your arms around and get excited about, as difficult as this challenge will be.

So I see this as part of that creative process, and I see this as a way in which I bring you know, you all have phenomenal backgrounds. I'm sure you are going to go around and introduce yourselves to each other, and you are going to go, "Man, it's a pretty impressive group of people from all over the country, from all walks you know, all aspects of this conversation."

If you guys can't get this done yes, if you guys can't get this done, who can? I'm betting on you. And I think the countryside is betting on you, and the country needs you to get to needs you to get to yes.

So we will have an opportunity to visit again. I apologize, but this is a command performance, so I've got to go.

(Laughter.)

Thank you all.

Mr. Redding: Thank you.