USDA Secretary Shares Vision of Value-Added Agriculture

Listen, it just seems like I’ve been with you for the 80 years of this association. But it is good to be back and I think I’ve got quite a bit to talk about today.

Secretary of Agriculture Tom Vilsack spoke at the National Association of Frm Broadcasting convention in Kansas City last week. Something has been on his mind: Consolidation. He points to a book from the 1800s in his office, the first report from the Commissioner of Agriculture.

In the preface of that report, he talks about concerns that he has about consolidation of farmland and the impact that it had in history on what he believed to be the rise in the fall of the Roman Empire and was suggesting that we in the United States need to keep an eye on that very issue.

Fast forward to the 1980s. Vilsack says the Secretary of Agriculture at the time expressed similar concerns as they moved away from contain production to market orientations.

And so you may remember Secretary Butts, who basically said to American farmers, hey, fence row to fence row, plant wherever you can produce whatever you can. Bob Bergland expressed similar concerns to what Isaac Newton expressed which was, is this policy going to lead to larger farms and fewer farmers. and if so, is that a good thing?

After reading those reports nearly 100 years apart, Vilsack says he had some self-reflection.

I asked myself whether or not there is fact been a decline in the number of farms and if so, how much and should we be concerned? about it? Well, it turns out since 1981, to the present time, we’ve lost 437,300 Farms. That’s one out of every six farms in this country. Gone. Just to give you a sense of how many farms that is. That’s every farmer today in Iowa, Minnesota, Wisconsin, Illinois, South Dakota, Nebraska and Colorado, gone. And the first question I think I asked audiences, including this one is are we okay with that? The second thing I learned from the ers report that I looked at was that in addition to losing all those farms, we also lost farmland about 141 point 1 million acres of farmland which was in farming in 1881. That isn’t in farming today. Now to give you a sense of how much land that is, that’s the entire states of Florida, Georgia, South Carolina, North Carolina and Maryland that was in farming that isn’t farming today. Are we okay with that?

Last year was the best farm income in the history of the U.S, yet Vilsack was concerned because half of the farms didn’t make money, and 40% of farms that made money still needed an off-farm job to support themselves. So he asked, who got the money?

Well, it turns out that if you have farms that sell more than a half a million dollars in sales every year you are one of 150,000 farms in the country. You’re seven and a half percent of all farms. They received 89% of the income. Now they didn’t produce 89% of the products. They produced about 68%. So they got a majority, they got almost 90% of the income, which meant that 92 and a half percent of our farms, roughly 2 million, had to share 11%. So it’s really difficult to get big if you’re part of that 92 and a half percent. Unless there’s an alternative.

That alternative Vilsack wants to promote is another option for small and mid-sized farmers. He listened to 89 organizations, including farm, conservation, and environmental groups.

(They) basically said we need help to embrace climate smart practices. But in order for it to work, it has to be voluntary. It has to be market oriented. And you have to provide assistance for farmers to basically embrace those climate smart practices. So that’s essentially what we set up. We took resources from the Commodity Credit Corporation as those groups suggested. In fact, we were pretty modest. They suggested we go at $50 billion. We did three (billion). We funded 141 projects. And in those projects, we’re now in the process of seeing farmers being paid to embrace farm climate smart practices. So there’s no risk to the farmer. They are essentially going to get resources to be able to embrace if they wish, voluntary, totally voluntary.

Many projects include an arrangement with a buyer where they pay a premium.

You’ve got organic, which is high value, you’ve got commodities, which is low value, you got nothing in between. This is essentially creating if you will, a third type of commodity which is value add.

These value-added projects is a key part of what Vilsack wants to do.

My favorite is the sustainable aviation fuel opportunity. You’re not going to be flying in a hydrogen-powered plane for a long time. You’re going to be flying in a low carbon fuel plane. And that low carbon fuel is sustainable aviation fuel, and it is a 36 billion-gallon industry. That does not exist at all for all intents and purposes today.

That’s nearly twice the size of the existing biofuel industry. Vilsack says the value-added aspect gives multiple avenues of opportunities for farmers.

It’s not in lieu of, it’s not in place of, it’s in addition to, and it gives every producer small, midsize, large opportunities they didn’t have before. And we think at the end of the day, that’s really important. The future of agriculture.

This is all paid for at the moment for the next five years or so allowing a structure for the next Farm Bill. Vilsack says what US agriculture needs is a system, one that gives opportunity.

It isn’t just about the future of agriculture. It’s about the reliability of the food supply. The reality is, if we have heavy concentration, a disruption within that concentration can cause serious problems with our food supply.

Vilsack says that was seen during the pandemic and beyond that, fewer farmers hurts rural communities, creating fewer hospitals, schools, and businesses. Additionally, he says with a disproportionate amount of military volunteers coming from rural areas, it also hurts national defense.

So I think this is a really, really, really important thing. And I think it’s important for the country to ask the question whether we’re okay with 437,000 fewer farms. Are we okay? With 141 million acres lost? Are we okay with that heavy concentration of farm income? Or would we prefer an option?