conversation took place

during the western governors association annual meeting in jackson hole. >> good morning and welcome to day two of the western governors association winter meeting. it's great to see all of you after a fun night at a great bar. who had fun last night? good. i'm very pleased to introduce secretary of agriculture tom vilsack. i think all of us are partial to sec. vilsack because he has held

the best job in the world, he has been a governor. some of us are more partial to sec. vilsack because he has been a farmer. it says something about his willingness to engage with the western governors association so frequently even though obviously we are not the size of egg production -- ag production. he has been a champion of the small and midsize farmer. we thank the secretary for his responsiveness and common sense approach on a variety of topics. i lamented to him this morning that we don't have him running multiple departments at the federal level. he has not only supported the shared stewardship agreement that began between utah and the

trump administration but supported it enthusiastically and renewed it with us for an additional five years. we had a conversation yesterday afternoon about wildfire mitigation. the single most important thing we can do is better forest management. he gets that and has been very proactive and compelling advocate for active forest management. please join me in welcoming sec. vilsack. [applause] >> thanks very much. thank you for the kind introduction. have a great deal of respect for the way western governors work together collaboratively and i appreciate the opportunity to visit with you today. i'm going to touch on a couple issues quickly and spend a good deal of my time talking about

the fate of small and midsize farming operations in our country. let me thank you all for the tremendous response to the summer ebt program we are attempting to launch next year. the western governors have been very forceful and -- in their support and we look forward to trying to expand nutritional opportunities for youngsters who are currently free and reduced lunch families. we are working very hard to convince our friends in congress to fully and adequately fund our wic program. if infant deaths, fewer premature births and lower birth weight babies as a result of the important role that wic can play . we know this program has had bipartisan support. we are looking forward to

working with congress to make sure the is adequately funded in this go around because if it's not, the challenges will roll downhill to governors and you all will have to basically deal with the consequences of that and we will do everything we can to mitigate that. appreciate governor cox's comments about wildfire management. we remain committed to our wildfire crisis strategy. in our first year of operation we did about three .2 1,000,000 acres of treatment. her last fiscal year that just ended in september of this year, we increased that to 4.2 million acres. we are looking at primary fire sheds which create great risk. the work we are doing is helping protect 500 50 communities and 2500 miles of power lines that are so important to the resiliency and effectiveness and economic opportunity in western

states. we will continue to look for ways to continue and expand on that work as well as look at ways we can't utilize resources in reforestation as well and expended recreational opportunities in our forests. we have a major issue and challenge in terms of making sure our firefighters are adequately paid. we have asked congress for a permanent fix to the wildfire fighter pay issue. we are hoping to get that done in this legislative session. we are also addressing housing and mental health support for these brave men and women fighting to protect our communities and resources. excited about the announcement president biden made in minnesota last week of additional resources being invested in rural communities. of the 5 billion dollars, nearly $1 billion was allocated for

western states. looking forward to our continued work with the regional conservation partnership program. 505 million dollars coming into western states. 37 projects in wga states. should be an important opportunity to improve landscape scale conservation in your respective states. excited about our continued effort to connect folks in rural areas to high-speed internet and brought and -- broadband. -- fill in the gaps and hopefully by the end of all of this we will have all parts of the united states connected to high-speed internet. i would be happy to respond to questions about your issues, but let me just transition to talking about an issue i have been talking about quite a bit recently. in 1981, bob berglund from

minnesota was leaving office. he issued a report concerning the status of american agriculture. his concern that what had taken place in the 1970's when we transitioned away from new deal oriented foreign policy to a more market orientation that we risked the possibility of larger and larger and fewer and fewer farms. i don't think he could have guessed the extent to which she was correct in those concerns. since 1981 we have lost 487,300 farms. that's one out of every six farms that existed in 1981 gone. we have seen millions of acres of land no longer capable of being formed because of expansion. to give you a sense of the magnitude of those numbers, 437,300 farmers represents all

of the farmers in south dakota and nebraska and colorado today. -- represents the entire landmass of florida, georgia, south carolina and maryland gone. he was quite honest with the american agriculture, suggesting that the way our system was set up, it was you get big or get out. here's the problem with that. the concentration of farm income. last year was a record year in farm income. nearly 50% of our farms didn't make any money at all. nearly 40% made money that the majority came from off farm income. how is that possible given the fact that we had record income? the 7.5% of american farms among

the largest, that sell more than $500,000 in sales annually, it represents 150,000 farms. they received 89% of the income which meant that nearly 2 million farms had to share 11% of the income. which explains why some didn't make money and some continued to struggle. the question i have for governors and american agriculture and for all of the u.s. is, are we ok with that? are we ok with losing 141 million acres of farmland? are we ok with heavy concentration of farm income? if we are, we need to say that and make sure people understand the consequences of saying it's ok. the consequences are shrinking rural communities and the significant role they play in

life and the values of this country. we have made an effort to create an alternative. i think there's an alternative to get entrepreneurial. the challenge is to focus on increasing the number of income sources that small farms can actually generate from their operation. i have a chart here. i will do my best to explain it. there are basically three strategies. a climate smart strategy, reducing the cost of operations strategy and local and regional food system strategy. the climate smart strategy is centered on the fact we are funding 140 one projects across the united states. every state in the country is currently participating.

every major environmental group. what they are essentially doing is taking $3 billion that we provided to these partnerships and they are essentially using the money to pay farmers to embrace climate smart agriculture practices so there is no risk in adopting these practices and then they are guaranteeing those same farmers a premium from the market for a climate smart commodity. essentially they are creating a new commodity. we are going to spend $300 million from the inflation reduction act verifying the results of this climate smart agriculture practice. we will be able to have those farmers qualify for ecosystem service markets. to the extent that you can

measure something, you can sell it. this is a brand-new income source that will be available to small and midsize producers. we are also encouraging the conversion of waste into sustainable aviation fuel. i totally get electric cars. but if you are in a plane and you are over a body of water and the battery wears out, how is that going to work? we are not going to have battery powered planes. so we are going to need a low carbon fuel. it's an opportunity that needs to exist in the next 10 years. it can be made from virtually anything. and we are investing $4 billion to get this started to the department of energy and there is also significant tax credits

that will be available to the producers of the sustainable aviation fuel that creates a new avenue for forestry products as we are taking forest management, a new commodity if you will. there are literally 40,000 bio products that could be produced from agricultural waste and residue. opportunities for processing in rural communities, job creation. so that's the strategy on the climate smart side. on the local and regional food side. farmers get $.18 of every dollar you spend at the grocery store. talking to the folks at pittsburgh the other day, i said how much to the farmers get from your operation. they said conservatively $.50 out of every food dollar.

sometimes as high as $.75. i was in minnesota. how much do you pay your farmers in your local systems? 50 cent to $.75. this is a better value proposition. we are investing nearly a billion dollars in supporting local food systems. colorado state university is one of them. the university of california is one. there is an intertribal college that is also one of them. these locations will provide the technical assistance for anybody interested in establishing a local and regional food system to create more opportunities for farmers to be able to negotiate the price for what they get as opposed to having it basically fixed by the global market. we heard the call of western

governors for the need for more processing for meat, poultry and other products. we have invested at least a billion dollars and continuing to grow in that amount. we have a second round of funding coming in sometime at the end of this year. we have a very small processing opportunity that will be announced next year as well as a set of tribal opportunities so you will continue to see an expansion of local processing which creates a new market opportunities for producers. we are also for the first time using the power of federal procurement. we buy a lot of food. we are requiring a portion of those resources be spent in local food systems. we provided each of your directors millions of dollars to do this. we have also provided your

commissioners and directors with millions of dollars as well to establish the physical infrastructure necessary, they now have resources available to make grants in support of the local and regional food system. we have the renewable energy for america program which encourages producers to embrace renewable energy. we are also encouraging rural cooperatives as they look to transition away from total reliance on fossil fuels. as they transition, they are going to receive resources from the federal government to do so. they can create opportunities for farmers that can create excess renewable energy to be able to establish co-ops of that excess energy to be able to provide another income source

for farmers. they are now selling electricity. we have over $12 billion that will be invested in that effort and we suspect it will leverage at least another $10 billion of investment. we were overreliance on russian fertilizer. -- overreliant on russian and belarusian fertilizer. -- basically u.s. production of fertilizer will make us far more independent. so what you have is a framework and system where you've got small and midsize producers -- a payment for the environmental

result that they are creating with the climate spot practice -- smart practice. the ability to reduce costs and create a new opportunity for income, a lower fertilizer cost, cooperatively owning processing and meat so they get a better price, the ability to negotiate a better price and get a higher percentage of the food dollar and utilizing the federal procurement capacity to be able to increase and support a regional food system. so you now have an entrepreneurial alternative to essentially get big or get out. it seems to me if you were to ask most farmers, what do you think of that is, most would say , appreciate the opportunity to figure out additional ways to make our operation more profitable so it's easier to make the case to our sons and

daughters. i know two things about farmers. they love to farm and they desperately want to transition that farm to the next generation. i don't think this country will be better off if we continue to see a loss of farmland and farms. we need a farm bill and we need to continue to protect the programs that are currently in the farm bill that support local and regional food systems. we need a budget that will provide adequate staffing. we need to partner with the governors of the western state and governors of every state to figure out ways in which you can essentially reinforce some of this or perhaps all of it. there may be opportunities on the local and regional food side to benefit from climate smart agriculture. we need you to partner with us and land-grant universities.

they need to provide a companion opportunity to help small and midsize farming operations be entrepreneurial. some land grants are currently doing that. and we need you to fully utilize and encourage the utilization of the food business centers already set up to complement any work you are doing from the perspective of local and regional food systems. let me finish as to why this is important. i'm trying to be respectful of your time. when we lost 437,300 farms, we lost those farm families, the children going to schools which meant they had to merge with the archenemy down the road.

the small business that relied on customers didn't have as many customers and we have to close and we have a dollar store and a walmart. that hospital was so great didn't have enough patients to support a full operation so it became a clinic. we saw these small communities begin to diminish and then moms and dads saw their sons and daughters had someplace else away from the farm towards what they perceived to be a better opportunity. we have shrunk the capacity of small communities to provide the number of military they currently provide. most significant percentage of our defense department came from those small and midsize communities in rural places. if you shrink the population of those places, you are shrinking the capacity of us to be secured. as we consolidate farmland, it just takes one major disruption

before you begin to have shortages and we lose the ability of being a food secure nation. this is pretty important. i would appreciate you all to think about this in terms of your decision-making in terms of economic development can reinforce this opportunity. >> thank you for your great work in this area and so many others. we will open it up for questions. questions from fellow governors. >> i was going to comment that i think it's outrageous how much the department of agriculture is spending on the visual aids that you have up there. [laughter] >> i was going to say the opposite. it's the most captivating thing i have seen in years.

you immediately have our attention. >> thank you for your work. i want to complement the department of agriculture for working with folks on the ground. you have been a consistent advocate of bottom-up configurations. the issue i have as a rancher and former myself, one of the big issues that we hear now is methane emissions from cows. doing what we have always done, in 2008 we were able to sequester 2640 tons of co2 in the land. we had to go through the chicago climate exchange to get recommendations about that. my problem is, we don't have enough incentive. we try to regulate these things. cows have methane. deer, elk and moose all emit

methane as well. rather than putting the heavy hand of government down on a regulatory side and what you are talking about is trying to figure out ways to innovate people to do the right things and recognize that a direct relationship with the marketplace is far superior to any kind of regulatory landscape on this issue. >> the climate smart agriculture projects include a number of projects on methane reduction. some of those involved taking a look at feed additives and seeing if they can actually reduce the amount produced. some are looking at ways in which the manure that is produced, you can reclaim the liquids which in water scarcity areas is pretty important.

you can ship and transport those anywhere and everywhere that can be converted into a multitude of products. it is in scenting the farmer -- incentivizing the farmer. it's pretty tough to ask you to do more with less. we will give you money to do it. we will help you track the benefits of it. we will get a market that's willing to pay you more for the milk or the beef being produced, whatever is being produced. and we will help you measure and verify and certify that result so as ecosystem service markets are being set up and a willingness of some other industry that needs an offset to pay, you will be in a perfect position to take full advantage. now you have a value added income opportunity, the market

driving the innovation and an additional income source you didn't have before. if you convert your waste into something more valuable, then you have a third opportunity. maybe you can say to your kids, you can really do something pretty significant on this farming operation regardless of the size of it. that's the power of this idea. >> many of our farmers in colorado are also in the energy business. they may have somebody paying pipeline fees. having an ancillary revenue source from energy production. in addition to being climate smart is a big part of the formula. it's hard for farmers to justify

farming in many parts of our state especially generational transfers. many of these areas are worth more for other uses. you can have a hardscrabble life or you can retire and live off the interest and sometimes living off the interest is higher income than running the farm. i wonder how you deal with areas with high property value. we are opting in and this is important for governors to be aware of because this is a $120 debit card for low income families next summer. the free and reduced lunch families get $120 to buy groceries with. that's a big deal and there is work you need to do to be eligible for that. i was hoping you could address

both energy and how you deal with the land value issue. >> you are right. this is an extension of what you are doing in colorado and expanding it because farmers can right now when they produce energy, electricity, often times the excess that they produce just is wasted and the question is how do you monetize that and what kind of structure do you have to have? it seems to me you have that figured out in colorado but that's not the case and a lot of other states. the land issue is a really tough one. we invested 300 million dollars in 50 different organizations asking them the question, how can you make land available and accessible. we are going to try to see what best practices are out there in

terms of opportunities. but i would tell you that i think at the end of the day, there has to be a conversation about the taxing structure and whether or not we can create sufficient incentives for folks to say, it could go to a developer but maybe it would be better if it went to a beginning farmer or veteran and because of that i get enough of the deal that i feel better about what i done. we have articulated the need for that. the challenge has been, there hasn't been -- the incentive for the urgency of doing this. i think there are two issues that cause us to start thinking about this seriously. one is the aging nature of farms and farmers in the transition of land ownership which is going to be significant.

and the pressures for development versus farming are going to be even greater. are we ok with losing hundreds of thousands of farms every generation because that leads ultimately to a circumstance where you get two or three farms accounting. at the end of the day i don't think that's a good idea for the country. i think the taxing structure is where the incentive is going to have to be created. >> other questions. >> maybe you could give us what you refer on the budget and the farmville, anything you would like to share with fellow governors who can help to encourage things along. >> i have 16 minutes and 47 seconds.

we have not had a budget on time in this country since 1995. at the end of the date you have your fits and starts in the legislature, but you eventually get a budget and you get it on time so that your entire operation has certainty about what the next fiscal year is going to look like and how you're going to afford whatever your priorities are. it is exceedingly difficult to run a department with a budget of $150 billion, 100,000 plus employees, 18 different separate mission areas to be able not to have a budget and to know what to tell your folks about the next fiscal year and your priorities. it is very difficult. the angst and the concern that folks have about are we going to shut down, are we going to get resources, is the cut going to

be severe, just creates an incredible amount disruption that frankly doesn't have to be. these difficult budget decisions do not get a by delaying them. they just don't. whatever the differences in philosophy, they do not get easier by saying let's wait until christmas to decide. what it does do is create continuing resolutions. if you have a continuing resolution that frees -- freezes your funding based on last year's numbers -- if you do get that increase, you can find ways to invest it.

when you know there's going to be a reduction, the longer it goes to get the budget so you know precisely what the reduction is, the less time you have to make the adjustments to be able to manage it appropriately because if you get to a circumstance where you don't have enough time and you actually have to do it by basically taking folks who work for you and laying them off, you create this enormous rippling effect of folks pumping each other from one job to another and you end up with chaos in your workforce. it's just absolutely unacceptable and we have a significant difference of opinion about the department of agriculture's budget. the senate has passed a budget consistent with the agreement that was reached when the debt ceiling discussions took place. there was a handshake deal that

said we are going to increase the debt ceiling by so many trillion dollars in exchange we are going to say the overall budget is going to be cut by 1% or 2%. so we clearly can do that and live with that. the house appropriations subcommittee responsible for putting her budget together basically did not pay any attention to that agreement and proposed a budget that would have the equivalents of a 20% cut. a lot of the things people want us to do, you want us to do more conservation, stuff in the forest, we have to have people to do that. if you're cutting 20% of the budget, you are cutting your workforce. if you wait until march to pass a budget with that kind of cut, it isn't 20% it's 40% or more,

which is devastating. so that's a problem it's also a problem when you combine it in a farmville year with not having the farm bill done because there are a series of programs funded through the farm bill that if it's not continued or a new farm bill not passed, the support structure for farmers that they rely on goes away and we literally revert to what is called permanent law. farmers might look permanent law because they would see dramatic increases in commodity costs. consumers would go crazy. >> can you clarify that means a little bit? why do the prices change so much. >> you have to adjust the prices of the commodity based on what

prices were in the 1940's. you have to basically say in the 1940's, farmers were getting this. what would be the equivalent of that in today's money. just think about that. >> not for every commodity. some flow with the market. >> for the key commodities. they basically go into most of what we consume. >> when i was born 48 years ago, a gallon of milk cost 1.75 dollars a gallon. you can get it for two dollars a gallon sometimes. that's the point. >> if you go across the border to canada, you can get it for that cheap because they have a similar system and they pay significantly more for their dairy products because of it.

so combine the lack of certainty about the budget with the fact that if we don't get an extension or farm bill by the end of the year. i think they are going to extend the farm bill. my guess is it will be a year extension which is interesting because what's going to be different today year from now? the issues are basically the same and i will explain what the issue is. within the farm bill, you have baseline. governor polis knows about this. within the farm bill programs, the baseline is x basically defines the amount of money you can invest in a new farm bill. there are some who want to change the reference prices that are applied to certain commodities so when we do the

plc program it would adjust the price farmers would get because commodity prices have increased since the last farm bill in 2018. if you do it for all the key commodities it will cost $20 billion over 10 years which means you have to find within the baseline $2 billion a year or $20 billion. the only place you can find that kind of cash without destroying a lot of programs is in the snap program. well, the deal was cut on snap during the debt ceiling and adjustments were made to the work requirements. the age limit was extended. certain populations were exempted. a deal was made. handshake did snap off the tape. the other alternative would be to take money from the inflation

reduction act which is designed for conservation which basically is a fund and resource to help any firm or interested in doing conservation on their farm. if you talk to most farmers, they are kind of excited about the fact that these programs are finally going to get the resources necessary to eliminate the waiting list that has been around forever and if you want to continue this, that's the pot of money over long term that will do that. the architects of the inflation reduction often are not really keen on tapping into that resource, so we are at loggerheads. what i have suggested to members of the committees is you have to think creatively. we have the commodity credit corporation. every year at the beginning of the fiscal year, $30 billion becomes available to the department of agriculture for the promotion of commodities and

markets. it is the fund that has been used to pay for the arc programs. it also pays for crp. my comment was why wouldn't you think about doing something creatively within ccc? every year there might be 2 billion left over, there might be told -- $10 billion. the only time we didn't have it was when the secretary basically used it to offset tariff issues with china. so it's a resource. use the resource. be creative about it. that's what we did with climate smart agriculture. we said let's walk before we run here. to me there is a way out of this

dilemma they have created for themselves, but they need to be creative and willing to look at other sources outside the baseline as they have in the past. or they need to lower their expectations in terms of reference prices. that's the fundamental issue right now. the house once disaster assistance. those things you can manage potentially within the framework of the baseline and adjusting things here and there to get the resources necessary to do it. it's doable. it just requires people to sit down and commit themselves to getting it done. >> excellent. thank you for that very thorough update. any other questions? >> i would have one at the risk of opening another long discussion forest management is

an issue that we touch on lots of times. forest plans come about from time to time and immediately get litigated and it slows down the whole process and have had some real challenges from that. do you see a way to expedite forest planning, to a better job of managing our forests and make that palatable for the public? it does seem to have gotten so strange now with all the legal challenges that it gets in the way of doing almost everything. >> i would respond that -- with something that is being done and then throw out an idea for what it's worth. within the inflation reduction act and the resources allocated, congress basically gave us the

capacity to utilize emergency powers which allows us to in essence fast track that process without sacrificing the quality of the assessment but to be able to do it on a much more streamlined timeline. that seems to be working pretty well. the question becomes is that something that could intentionally be utilized in other circumstances and if so, what would they be. that would be certainly in terms of the front-end of the process, trying to speed that up as best we could. the challenge is no matter what you do, somebody always disagrees with it. and you have litigation. sometimes people inc. you should be doing more and sometimes less. i don't know why we don't have a special court structured system

that would essentially be responsible for adjudicating those decisions because i think you would get greater consistency with people who do this every day. you would have precedent, people would understand what the rules are. he wouldn't have the form shopping that takes place. could that possibly be a way of preserving and protecting the environment and allowing things to get done in a more efficient way and not sacrificing the role? i don't know. it seems to me until you deal with the issue of litigation and trying to figure out ways to streamline it in a way that doesn't interfere with the quality of the analysis and assessment, you're going to continue to be stuck with taking forever for things to get done. i know it's frustrating for you,

i can guarantee it's frustrating sitting in the chair i'm sitting in. there's always some hiccup. >> that makes far too much sense. there is no way it could ever happen. >> while i've got you, you raised an issue yesterday about the animal id issue and let me simply respond to the concerns you had about privacy. the only thing that aphis will have is the number of tags. there will be no identifying information about which farm the tag is associated with. you actually have that information at the state level and you have the ability to operate it consistent with whatever your laws are.

if there is a circumstance where there is a problem and we have to figure out what to do about it, that information could potentially be shared, but we resist any effort to try to identify the specific operation. we may get it down to the county without penalizing the entire country. we all have the basic information you were concerned about yesterday. >> thank you, secretary. >> you have been