Acting Secretary of Agriculture Chuck Conner
Remarks at News Conference Regarding the Farm Bill, USDA Response to California Wildfires, and Pending Free Trade Agreements
Washington, D.C.

MODERATOR: Good afternoon, ladies and gentlemen. This is Tricia Klintberg speaking to you from the Broadcast Center. Welcome to today's news conference with Acting Secretary Chuck Conner. He's here today to talk to you about the Farm Bill action in the Senate. USDA's response to the wild land fires in California and pending free trade agreements. Following the Secretary's opening remarks, if you wish to ask a question please let us know by pressing *1 on your telephone touchpad.

Secretary Conner.

SEC. CONNER: Thank you, Tricia. And I really do thank all of you for joining us on the line today. It's been a busy couple of days here at the Department of Agriculture, and I'm pleased to have this opportunity to update you on the topics that Tricia has mentioned.

First, with regard to the Farm Bill, I think as most of you know the Senate Agriculture Committee has now completed its action. We appreciate the opportunity to work with the committee in producing a Farm Bill. We have been encouraging the committee to take up the Farm Bill and get it passed quickly. They have now completed that action. We are pleased that the committee members recognized and agreed with a lot of our priorities that we have been talking about for almost a year now, priorities such as energy, conservation, specialty crop assistance, help for beginning farmers. Again, these were all very, very important priorities, and clearly they have put additional emphasis in the Senate Committee bill on those areas.

We also recognize that the committee made some effort to address some of the concerns that we raised about the current safety net, for example the revenue-based countercyclical, ending the so-called pick-your-price loophole or otherwise known as the "beneficial interest provision," direct attribution of payments to so-called live bodies out there, and of course the end of the Three Entity Rule.

The inclusion of the revenue-based countercyclical program really is a recognition that the current safety net has some flaws in it, a safety net that pays farmers the most when they need it the least and doesn't pay them very much at all when they do need a lot of help.

Let me just say that the adjusted gross income limit that has been passed by the Senate Committee with its so-called "soft cap" we don't believe at this point represents real reform, and really equates to no reform at all. In fact our economists do believe that it will have less of an impact on payments than the House version of the bill which openly continues to allow millionaires to participate in farm programs.

We hear that there will be a lively debate on the Senate floor over payment limits. We look forward to that debate. We believe that is a debate that desperately needs to occur. I will just tell you simply that the administration and I do not understand the unwillingness to take wealthy investors who are simply among the wealthiest of Americans, the top 2 percent of tax-filers in all of our country, off of direct government subsidies. We just simply can't understand that unwillingness.

Additionally, I have to note the provisions that raise loan rates and target prices for half a dozen crops. This is just simply bad policy. It paints a bull's-eye on the backs of the American farmer, causes us enormous trouble internationally. It's just simply bad farm policy. No reform at all.

The administration did propose a better way to provide that support. We believe we have a strong safety net that provides the kind of predictability our producers are looking for, and it does offer more protection from challenge in the world arena, and that in our opinion is simply a better way to go.

So with these points, again acknowledging they've done some things well, acknowledging that in some other areas we have a long way to go, we do look forward to continuing to work with the committee and of course the full Senate and then ultimately the House-Senate Conference Committee, we believe, to deliver a better Farm Bill to the President's desk this year.

On another topic, obviously as most of you know and have been seeing throughout the media, the USDA has been very actively engaged in battling the unfortunate wildfires in Southern California. USDA has over 2,500 firefighting personnel on the scene. In addition, we have 47 aircraft deployed which includes air tankers and helicopters. We have over 150 fire engines, bulldozers, water tenders and other heavy equipment as well on the scene. We are making some headway as a result of a change in weather late yesterday where we were able to directly engage this fire, and we're making some progress.

The Buckwheat fire for example which was over 38,000 acres is now reported to be 100 percent contained. The Ranch fire, another big fire burning out there, is 70 percent contained. So we are making some headway. The USDA Forest Service deployments of course as we always do are coordinated through a national interagency fire center. Those fire centers bring together federal, state and local partners all for the purpose of coordinating one response to the fire situation.

I will just say as Secretary of Agriculture, I am very proud of the men and women for what they are doing to assist in battling these fires. These people are putting their lives on the line to save lives, to save people's fortunes in terms of their homes. We really appreciate their work, we honor their work, and I hope you do too.

Finally as well, following on that point in terms of the California fires, let me just say that yesterday afternoon President Bush did declare a major disaster declaration for the affected regions of California. The President's declaration cleared the way for California to request from the Department of Agriculture emergency Food Stamp assistance. The state of California late in the day yesterday submitted a request for the disaster Food Stamp program to USDA. We worked with the state of California well into the night last night, and early this morning I did approve the request so that the state of California is free to move forward with this program in San Diego County. They have made that request for San Diego County. They requested it through November 19th.

The state of California does estimate that as many as 62,000 people might apply for this type of emergency food relief, but we're proud to be there. We're proud to be offering a hand, again for some of the people most strongly affected by the force of the fires. And we're going to continue to work with the state of California so that all these people will have access to the assistance they need at this point.

Finally one quick item I would update you on as well, folks, and that is that I do look forward to co hosting a bipartisan congressional delegation to Colombia with U.S. Trade Ambassador Sue Schwab. We intend to take members of Congress so that they can see and we can see in person the transformation of the Colombian people and their government and all that they have undertaken in recent years to revive their own economy and to reduce violence in that country.

We want members of Congress to have an opportunity to meet with Colombian officials including their president and see Colombia agriculture firsthand, meet with a number of Colombian officials and labor leaders and business leaders in that country. So that delegation will be departing in the next few weeks, and again I look forward to hosting that trip. It's very, very important to the Colombia Free Trade Agreement. Again, we believe it offers many, many opportunities for American agriculture. You've heard us say many times that we believe the Colombia Free Trade Agreement does level the playing field for our producers, virtually all of Columbia's ag exports to the U.S. come in duty-free; virtually none of our exports go down there duty-free. So this is very, very important effort for our own producers. Again, we look forward to hosting members of Congress on this trip.

So with that, I think I'll stop and take any questions on any of those topics or anything else you guys want to discuss with me.

MODERATOR: Thank you, Secretary Conner. Our first question comes from Luke Engan with Inside U.S. Trade. Go ahead, Luke.

REPORTER: Thanks for taking my question. I just wanted to follow up on this delegation. Can you elaborate a little bit on who from Congress might be participating and who in Colombia, particularly in the labor community might be speaking with the delegation?

SEC. CONNER: Luke, at this point we're not releasing any further – in some cases we don't have and we're not really releasing any further details about the trip at this point. Again it will be occurring in the next few weeks. Again I can tell you we will be meeting with government officials, business leaders, farmers, as well as some labor leaders when we go to Colombia. We'll get you more details as they become available to the public.

REPORTER: Thanks.

MODERATOR: Our next questioner is Jerry Hagstrom, followed by Peter Shinn. Jerry, go ahead, please.

REPORTER: Yes. Mr. Secretary, do you think that the bill that has emerged from committee is enough of a problem for the Bush Administration that you would be likely to issue a veto threat as you did with the House bill?

SEC. CONNER: Well, obviously, Jerry, you know that I don't make that decision. I believe from what I have seen from the Senate bill and obviously from the House bill I think a lot more needs to be done. This needs to be a better bill; it needs to have more reform in it. And I'll just leave it at that for now.

REPORTER: Okay. And just to follow up, Senator Lugar, your former boss, proposed cutting the Direct Payments Program in order to provide more money for Food Stamps. Would the Administration support such a move?

SEC. CONNER: Well, Jerry, as you know, in the Administration Farm Bill proposal we actually increased the level of direct payments in that bill in addition to having a number of favorable provisions for the Food Stamp program. We believe direct payments are predictable for the producers, it's something they can count on, they are green box so they're not under challenge from the international side of the equation. And we favor direct payments.

REPORTER: Thank you.

MODERATOR: Thank you. Our next caller is Peter Shinn with Brownfield Radio Network, followed by Dan Looker. Peter?

REPORTER: Thank you very much for taking my call. Mr. Secretary, I was wondering if you could just discuss briefly what your strategy will be going forward to influence the process as the bill comes to the Senate floor and then as it goes into committee to get a bill that's even more, or, as some would say, at all reform oriented.

SEC. CONNER: Well, as I indicated, Peter, our understanding is that there is going to be a lively debate on the Senate floor. One of the items that is going to be part of that debate is the payment limit issue including adjusted gross income as well as limits on individual payments. We look forward to being a part of that debate. As you know the Senate has a strong track record on payment limit debate from prior farm bills. We want to be involved in that, and we think there's a chance for additional reform on that particular issue. That's obviously an important one. As I said earlier, you just have to look at this thing and say, there has to be some willingness to simply say that we're not going to take tax dollars from middle income taxpayers and transfer that money to what are some of the absolute wealthiest Americans out there.

We've identified them in our own proposal as being the top 2 percent of tax filers. We think that's wrong. I think there's a chance that the entire Senate will concur and believe that we should have better AGI as well as the payment limit situation, and we look forward to being a part of that debate.

MODERATOR: Our next caller is Dan Looker with Successful Farming Magazine, followed by Matt Kaye. Dan?

REPORTER: Good afternoon, Secretary Conner. Have you had a chance to look closely at the amended average crop revenue program as it has passed? And I wondered what your thoughts are about the Roberts Amendment which members of the National Corn Growers Association are saying will make the program less attractive for farmers.

SEC. CONNER: Well, Dan, let me just say, and you have heard us talk about this extensively, as we gathered input on our farm bill proposals from around the country, a common theme that we heard out there was complaints from producers that this was a farm bill that paid them the most money when they needed it the least. And we heard from a lot of farmers, particularly wheat farmers around the country, who simply said, "You know, I haven't had a good crop at all. As a matter of fact, I've had disasters, some of my worst years ever, and guess what. This Farm Bill you're talking about being so generous didn't provide me really anything at all."

And we took note of this, and on that basis really developed the revenue based countercyclical program as a better safety net for our producers.

Now I am familiar with the Roberts language and how they've worked with Harkin at this point in terms of this thing they're calling, I guess, ACR. We're supportive of the concept, and let me just be clear about that this is an effort to address the very problem that we identified, and that is a farm bill that pays too much in good times and too little in bad times. So we appreciate that effort. I acknowledge, there needs to be a lot of work done. I think Senator Roberts and others would acknowledge that this issue needs a lot of work.

We've got a provision in the House passed bill now. We've got the amended Roberts language. You know, we look forward to sitting down with these guys and working through something that can work for the producers. The important thing though is they are acknowledging that, look, the current system has some holes in it, and we need to have a better safety net.

MODERATOR: Our next caller is Matt Kaye with Burns Bureau, followed by Jackie Fatka with Farm Futures Magazine.

REPORTER: Yes, Secretary Conner. Thanks for taking my call. What is your view about the apparent conflict in the committee bill between the status quo and reform, the status quo in the form of permanent disaster assistance which Chairman Harkin says will only help a few states and the ACR which attempts to protect not just yield but production, to protect revenue. He thinks that the proposal, the Fresh Act Proposal by former chairman Lugar will get a big vote.

Do you think this conflict between the status quo and future-looking proposals in the committee bill would perhaps raise a question in senators' minds and maybe move people to a more sweeping reform proposal?

SEC. CONNER: Well, Matt, I don't know how it will move senators one way or the other, but let me just say that in our proposals and what we're going to continue to press for, there is no conflict on this issue. We have said with regard to the permanent disaster assistance fund, which they have provided $1 billion a year for, on average our disaster requests have been more than $3 billion a year, and I think Congress has asked ultimately for a lot more than that.

The problem with this disaster assistance fund is, it doesn't solve any problems. It still leaves the producers with a tremendous amount of uncertainty, and any kind of crop disaster year at all that billion dollars will be a drop in the bucket. So the producer will be out there trying to make decisions, probably decisions that will influence whether or not he will stay in business or not based upon whether or not he or she thinks Congress will pass yet another disaster on top of this billion-dollar-a-year plan.

That is not a good farm bill. A farm bill should be a blueprint that the producer can look at and say, "Here's what I know is going to be there for me. I can take this to my banker. I can take this to my landlord." Our proposal was predictable. It was a lot more predictable than this. This adds no certainty to the producer whatsoever, and they're still going to be out there in the countryside scratching their head trying to figure out what Congress is and isn't going to do. We simply say, don't do that, create a program where they know the level of revenue that's going to be protected, take that to their bank. They can make their decisions based upon that, know that it's going to be a guarantee for them. They have no guarantees under this current permanent disaster assistance fund.

MODERATOR: Our next caller is Jackie Fatka, followed by Sally Schuff. Jackie?

REPORTER: Hi. Thanks for taking my question. How optimistic are you that a final bill can be reached before the end of the year, and also do you anticipate the administration playing a large role in the final negotiations in Conference Committee?

SEC. CONNER: I'm optimistic that there's going to be a farm bill. Farm bills are always tough sledding, but at the end of the day they get done. I'm confident this bill will get done in a timely way. I also believe strongly that the Administration is going to play a critical role here, both in the Senate Floor debate and in the House-Senate Conference Committee. We've already played a substantial role.

As I pointed out at the beginning of our remarks, we were the ones that went to the countryside and started, based upon the input we received, started talking about a farm a bill that focused on energy, conservation, specialty crops, beginning farmers. We raised the issue about the current Farm Bill having a hole in the safety net and the need to go to a revenue-based system. We talked about the pick-your-price loophole, beneficial interest where producers were able to collect too much during certain periods of time. We talked about direct attribution and the Three Entity Rule. These are all areas that the committee has done, perhaps in some cases, maybe not as cleanly as we would like. But again, where the committee has acknowledged that the Administration actually raised some good points here, and we're going to take action to try to address those points.

So we're going to be a player. We've been a player, and we really look forward to doing that, getting this bill completed and on its way to the President so that producers can know the rules of the game out there.

MODERATOR: Our next caller is Sally Schuff, followed by Phil Brasher. Sally?

REPORTER: Thank you, Trish. Mr. Secretary, the EnBloc Amendment that passed included a ban on packer ownership of livestock. Will the administration be supporting that on the Floor?

SEC. CONNER: I appreciate the question, Sally. Undersecretary Mark Keenum is here with me. I have not had a chance to look at that EnBloc Amendment on the packer ownership—honestly was not aware that language was in there quite to that extent. We were aware they were talking about having a special counsel but was not aware of a particular ban on packer ownership. But we'll go back and look at that again. This is a very large bill, and so we're still analyzing it, working our way through it. Mark, if you have an additional comment?

SEC. MARK KEENUM: I don't have all the specific details. I do know the percentage of ownership of a packer would be limited on the percentage of the livestock that they process in their packing plant. And they have to also limit how many days they can hold that livestock before it's processed. It's something that's been discussed for many years as an issue to address, what some people view as unfair competition in certain areas about livestock.

We think it's going to be very controversial. It is controversial, although it was accepted EnBloc. I do expect it's going to be possibly even debated on the Floor, and I'm sure it will be a conferenceable issue when the House sits down with the Senate.

REPORTER: Thank you.

MODERATOR: Our next caller is Phil Brasher, followed by Forrest Laws. Phil?

REPORTER: Yes. Mr. Secretary, did you address, I think you talked about the Permanent Disaster Program that came out of the Finance Committee. What about that tax measure they funded that with, tax shelters. The administration obviously checked into the tax provision in the House bill. Secretary Johanns at the time said it was not unprecedented but a first time since the '30s that a farm bill had been funded from tax increase.

Does the Administration see this in the same way? Would it contribute to a veto?

SEC. CONNER: Well, Phil, let me answer it this way, and you can follow up if I don't directly address your question, because you were cutting out just a little bit there on me. But in terms of the Senate Finance Committee's package that our understanding is likely to be offered as an amendment on the Senate Floor – though it's not a part of the package yet, it may become part of the package later in the process. We're in the process of looking at this. Obviously these are areas outside the jurisdiction of the Department of Agriculture. Certainly a lot of them are, and we're consulting with others and particularly the Department of Treasury, to fully understand and analyze the implications of what everyone has to acknowledge is a fairly extensive piece of legislation that is likely to get married on to a Farm Bill.

We have said all along, I will tell you Phil that the days when you actually have to have tax legislation from the Finance and Ways and Means Committee in order to pass a farm bill, those are a little bit troubling for us just on that basis. Farm bills are always some of the most difficult legislation to pass in the Congress. And when you have to rely upon action from your other committees in order to raise revenues to pass a farm bill, that adds a great deal of complexity on to what is already a very, very difficult task. So we're hoping this does not become a precedent at this point.

I'd note as well that one provision in the Senate Finance Committee package did deal with these so-called 1031 land exchanges. Again, this was something that as we traveled the countryside we heard a great deal about, producers expressing concern that because of the 1031 land exchange some producers had a disadvantage in the purchase of the land.

We had addressed this in our own farm bill recommendations to deny price support benefits to those who acquired property as a result of the 1031 land exchange. I found it interesting and was actually excited about the fact that the Finance Committee package did pick up on this 1031 situation. Again, I think it shows the Congress is looking at our recommendations and that we're having an influence on this process.

MODERATOR: Our next caller is Forrest Laws with the Delta Farm Press, followed by Tim Kaufman from Federal Times. Forrest?

REPORTER: Yes. Thank you, Mr. Secretary. The Administration obviously is pushing for stricter payment limits on the current farm programs, as are members of the Senate. Is it your understanding that these would also apply to ACR benefits, or should they?

SEC. CONNER: My understanding from the Senate language, and Mark Keenum can certainly jump in here, but that they apply the same payment limits to any ACR benefits as they would to the countercyclical payment program I believe.

SEC. KEENUM: Correct. That is correct.

MODERATOR: Our next caller is Tim Kaufman, followed by Luke Engan.

REPORTER: Yes. Hi, Mr. Secretary. This is regarding the California fires. You mentioned you have over 2500 Forest Service firefighters that are out there. I was wondering if you could elaborate on what the Department's doing to assist those employees who are on the job, and second if you know of any of your employees who have been displaced or otherwise impacted by the fires?

SEC. CONNER: Well, Tim, it's a great question. Let me just say as I indicated in my statement, we have 2,500 firefighting personnel on the scene. I will add as well that U.S. Forest Service with our firefighting crews has very, very strict rotational requirements, where we have limits on the amount of time we will allow our firefighters to be on the scene actively engaging that fire before we require them to be rotated with other firefighters.

This is something that we have found over the experience of time is absolutely necessary in order to protect the life and well-being of those firefighters. So we've got a large group of personnel, at one point over 2,600 people ready to be on the scene to actually rotate with the firefighters that are there and in place and working to make sure that we're not pushing people to their limits to a point where they perhaps might be putting themselves in danger.

I will tell you as well that we did in terms of loss of USDA property, we did lose one Forest Service regional office. I forget the name of that particular office off the top of my head, but we can get that for you. That office was an office for 20 of our employees who have been displaced as a result of that. Of course we'll relocate those employees until we're able to reestablish that office.

MODERATOR: Our next caller is Luke Engan, followed by Stewart Doan. Luke?

REPORTER: Yes, thank you. I have a question about this ACR program. How do you feel about what the committee has done there, and will the Department be suggesting any changes on the Senate floor or in conference?

SEC. CONNER: Well, as I have indicated, the ACR program is really a revenue-based countercyclical type of program, and this is again something the Administration has been actively supporting. We're actively supporting it because we just simply feel it represents a better safety net for the producer, it eliminates the situation that we heard about so often as we traveled the country, again where producers came to us themselves and said, "You know, this 2002 Farm Bill is very generous to me when I've had a great crop, but boy if I've had a disaster like this year that Farm Bill doesn't do very much for me at all."

To us this is the exact opposite of what it should be. A safety net should be there for the years where the producer has really stumbled upon tough times, and is a motivation of our revenue-based countercyclical, I believe it's the motivation as well of the ACR.

Having said that, again we've acknowledged that there's a lot of issues to be worked through here in order to have a good workable program. We look forward to working with Chairman Harkin, Senator Roberts, all the other people interested in revenue-based and the ACR to develop that program between now and ultimately in Conference Committee.

MODERATOR: Our final caller is Stewart Doan from Clear Channel Ag Network. Go ahead, Stuart.

REPORTER: Good afternoon, Mr. Secretary. The House Farm Bill includes as I recall a one-year moratorium on FSA office closures. Senator Thune was successful in inserting an amendment into the Senate Ag Committee bill dealing with critical offices that could not be closed during the life of the 2007 Farm Bill. Does this tie FSA's hands as it tries to modernize its operation?

SEC. CONNER: I'm going to let Dr. Keenum respond to that because he was the one there for the debate on the Thune Amendment.

SEC. KEENUM: Yes. The Thune Amendment is just that. It definitely ties our hands. As many of you know, about a year and a half ago USDA reached out to our state directors, and we asked them to assess each state's operation, FSA operation, and develop their own plan, a plan developed by the state committees. The director would input from local stakeholders, hold public meetings, to determine a way to better serve farmers. That was the purpose of this whole reorganization plan.

It was not a Washington down dictate to states that they must do anything. In fact we have many states that have submitted their plans and recommended no office consolidations. And those plans were readily accepted.

But when states develop their plans and indicate they can better serve farmers with the resources they have – as many of you know our budgets resources have diminished. It puts greater strain on the state offices to provide these services. They develop their plans in a way they think is the best way to best serve farmers in their states. And FSA is a service agency, that's what it's about.

We've taken those plans and just off the top of my head we have 12 state plans that have already been submitted and where consolidations were requested they've already occurred. So 12 states have already been through this process, 10 states are in the 120-day stage where the Secretary has signed off on their plans and offices are either being consolidated or will very soon be consolidated. So you have 20-plus states that have already been through this process. And the Thune Amendment if it becomes the law would greatly hamper our ability at USDA to put together plans that will in the end provide better services to farmers. Again, to emphasize, that's what our whole approach has been about.

SEC. CONNER: If I could just add on that as well, believe me we understand the difficulty of this office closure situation. We want to work with Senator Thune and Congress on this. What this action by both the House and Senate tells me is that we still need to work to educate members of Congress about really the consequences of these offices and the consequences of forcing these offices to stay open oftentimes when literally there's just virtually no business left going on in that office, just no activity at all.

That can be for a variety of reasons. In some cases perhaps even the fact that the farms have gone by the wayside because of development, this kind of situation. So those offices need to be consolidated. We need to use then those resources to really better equip the offices where there are farmers that actually need help, need business activity, need to come in and face someone who's not a generalist, who maybe understands a little bit about each one of our programs but they could come into an office where there would be a specialist who could help them with their loan application, help them with the activity they need for their farm program.

This is the type of service we envisioned. It's not the type of service producers currently get, and it's not the type of service they're going to get until we can consolidate some of these offices, close down those offices frankly again where there's just very little activity going on.

So we've obviously got some more work to do on the Hill.

REPORTER: Thank you.

MODERATOR: Thank you, Secretary Conner. Do you have any final thoughts for us today?

SEC. CONNER: Again, I just appreciate everyone joining on. As you can tell, there's again a tremendous amount going on here at the Department of Agriculture. I will just say with regard to the Farm Bill that we appreciate the fact that we have been heard in this Farm Bill debate, and I really want to underscore that. I think you can just point to so many different areas that trace directly back to the type of input that the Department of Agriculture and the Administration has been giving Congress in so many different areas.

At the same time, obviously this simply is not enough. There's not enough reform in this, not enough in terms of the AGI limit, not enough in terms of loan rates and target prices, a number of areas that again are just so vital to us. We think and we believe and we're confident that we can work these things out, work with the members of Congress on this. The President is anxious to sign a Farm Bill this year. I know the producers are anxious to have a Farm Bill as soon as possible so that they can know the rules of the game going forward. And that is what we're going to strive for.

We look forward to working with everyone to see that come to happen.

MODERATOR: Thank you. And thank you, everyone, for joining us today.