During the weste Governors Association annual meeting in jackson hole. Good morning and welcome t day two of the western Governors Association winter meeting. Its greato see all of you after a fun night at a great bar. Who had fun last night . Good. Im 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 g 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 dont 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 ldfire mitigation. The single most important thing we can do is better Forest Management. He gets th 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 inoduction. Have a greateal of respect for the way western governo Work Together collaboratively and i apeciate the opportunity to visit wi you today. Im 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 tir support and weook forward to trng to expand nutritional opportunities for youngsters who are currently free anreduced lunch families. We are working very hard to convince our friends icongress to fully and adequately fund our wic program. If infant deaths, fewer emature births and lower bir weight babies as a relt of the Important Role that wic can play. We know this program has had birtisan support. We are looking forward to working with congress to make sure the is adequately funded in this go around because if its not, the challenges will roll downhill to governors and you all will have to basically deal with the consequences of tt and we will do everything we can to mitigate that. Appreciate gernor coxs 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 increasedhat to 4. 2 million acres. We are looki at primarfire 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 lk for ways to continue and expand on that work as well as look at ways we cant utilize resources in reforestation as well and expended recreational opportunities in our fores. We have a major issue and challenge in terms of making sure our firefighters are adequately pd. We have asked congress for a permanent fix to the wildfire fighr pay iss. We are hoping toet that done in this legislative session. We are also addressing housing and Mental Health support for these brave n 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 rul communities. Of the 5 billion dollars, nearly 1 billion was allocated for Western States. Looking forward to oucontinued 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 scaleonservation in your respective states. Excited about our continued effort to connect lks in rural areas to highspeed inrnet 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 highspeed internet. I would be happy to respond to questions about your issues, b let me just traition to talking about an issue i have been talking about quite a bit recently. In 1981, bob berglunfrom minnesota was leaving office he issued a report concerning the status of american agriculture. His concern that what had taken place in the 1970s when we transitioned awa from new deal oriented foreignolicy to a more mart orientation that we risked the possibility of laer and larger and fewer and fewer farms. I dont thk he could have guessed the extent to which she was correct in those conrns. Since 1981 we have lost 487,300 farms. Thats one out of every six farms that existed in 1981 gone. We have seen millions of acres land no longer capable of being fmed because of expansion. To give you a sense of e magnitude of those numbers, 437,300 farmers represents all of the farmers in south dakota and nebrka 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 oget out. Heres the problem with that. The concentration of farm income. Last year was a record year in farm income. Nearly 50 of our farms didnt make any mey at all. Nearly 40 made money that the majority ce from off farm income. How is that possie given the fact that we had record income . The 7. 5 of American Farms among thlargest, that sell more than 500,000 in sas annually, it represents 150,000 farms. They received 89 of the income which meant that nearly 2 millionarms had to share 11 of the income. Which explains why some didnt make money and some continued to struggle. The question i have for governorand 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 . E we ok with heavy concentration of fa income . If we are, we neeto say that and make sure peoplunderstand the consequences of saying its 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 theres an alternative to get entrepreneurial. The challenge is to focus o increasing the numbeof income sources that small farmsan actually generate from their operation. I have a chart here. I will do my best to explain it. There are basically three strategies. 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 1 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 srt agriculture practices so there is no risk in adopting tse practices and then they are guaranteeing those same farmers a premium from the market for a Climate Smart commodity. Essentially they a creating a new commodity. We are going to spend 300 million from the Inflation Reduction Act verifying the results of this clite 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 brandnew income source that will be available to small and midsize producers. We are also encouraging the conversion of waste into sustainable iation 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 notoing to have Battery Powered planes. So we are going to need a low carbon fuel. Its an opportunity that needs to exi 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 proders of the suainable Aviation Fuel that creates a new avenue for Forestry Products as we are taking Forest Management, a new commodity if you will. There are lerally 40,000 bio products that could be produced from agricultural wastand residue. Opportunities for processing in Rural Communities, job creation. So thats the strategy on the Climate Smart side. On the localnd regional food side. Farmers get . 18 of every dolr you spend at the grocery store. Talking to the folks a 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 neay a billion llars in supporting local foodystems. Colorado State University is one them. The university of california is one. There is an intertribalollege that is also one of them. These locaons will providthe Technical Assistance for anybody interestedn establishing a local and regional food system to create more opportunities f 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 procsing 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 he 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. Th can creatopportunities for farmershat can create excess Renewable Energy to be ableo establish coops of that excess energy to be able to provide another income source for farmers. They are now selling eltricity. We have over 12 billion that wi 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 berusian fertilizer. Basically u. S. Production of fertilizer will make us far more independent. So what youave is a framework an system where youve got small and dsize producers a payment for the environmental result that they are cating with the climate spot practice smart practice. The abily to reduce costs and create new opportunity for income, a lower fertilizer cost, cooperatively owning processing and meat so theyet a better price, the ability to negotiate a better price and get a higr percentage of the food dollar and utilizing the federal procurement capacity to be able 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 t figure out additnal ways to make our operation more profitable so its eaer to make the case to our sons and daughters. I know two things about farme. They love to farm and they desperately want to transition that farto the next generation. I dont think this country will be better off if we continue to see a ss of farmland and farms. We need a farmill ande 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 prove adequate staffing. We need to partner with the governors of the Western State and governors of every state to figure outays 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 landgrant universities. They need to provide a companion opportunity to help small a midsize farming operations be entrepreneurial. Some land grants areurrently 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 fish as to why this is important. Im 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 didnt have as many customers and we have to close and we have a dollar store and a walmart. That hospital was so great didnt have enough patients to support aull operation so it became a clinic. We saw these small communies 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 a to think about this in terms of your decisionmaking 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 its outrageous how much the department of agricuure is spending on the visual aids that u have up there. [laughter] i was going to say the opposite. Itthe most captivati thing i have seen in years. You immediately ha our attention. Thank you for your work. I want toomplement the department of agriculture for working with folks on the ground. You have been a consisnt advocate of bottomup nfigurations. 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 in008 we were able to sequester 2640 tonsf co2 in the land. We had to go thrgh the Chicago Climate Exchange to get recommendations out that. My problem is, we dont have ough incentive. We try to regulate these things. Cows have methane. Deer, elk and moose all emit methane as well. Rather thaputting the heavy hand of government down on a regulatory side and what you are talkg about is trying to figureut 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 mure that is proded, 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. Its 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 thats willing to pay you more for the milk or the beef being produced, whatever is being produced. And we will help you measure a verify and certify that rest 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 inco opportunity, the Market Driving the innovation and an additional income source you didnt have befe. If you convert your waste into something more valuable, th you have a third opportunity. Maybe you casay to your kids, you can really do something pretty significant on this farming operation regardless of the size of it. Thats 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 froenergy production. In addition to being Climate Smarts a big part of the formula. Its 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 c 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. Thats 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 thats not thease and a lot of other states. The land issue is aeally 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 tl 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 hasnt 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 oership which is going to be significant. And the pressures for Development Versus farming ar going to be even greater. Are we ok with losing hundreds of thousands of farms every generation because that leads ultimately to a circumstance ere you g two or three farms accounting. At the end of the day i dont think thats a good idea for the country. I think the taxing structure is where the incentive isoing 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 secos. We have not h a budget on time in this country since995. At the end of the date you have your fits and starts in the legislature, but you eveually get a budget and you get it on time so that your entire operation has ceainty about what the next fiscal year is going to look like and h youre going to affordhatever your priorities are. It is exceedingly difficult to run aepartment with a budget of150 bilon, 100,000 plus employees, 1different 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 priories. 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, justreates an incredible amount disruion that frankly doesnt have to be. These difficult budget decisions do notet a by delaying them. They just dont. Whatever the differences in philosophy, they do not get easier by saying lets wait until christmas to decide. What idoes do is create continuing resolutions. If you have a continuing resolution that frees freezes your funding based on last yeas numbers if you do get that increase, you can find ways tonvest it. When you knotheres going to be a reduction, the longer it goes t get the budget so you know precisely what e reduction is, the less time you have to make the adjustments to be able to managit appropriately because if you get to a circumstance where you dont have enough time and you actually have to do it by basically takingolks who work for you and laying em 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. Its just absolutely unacceptable and we have a significant difference of opinion about the department of agriculture budget. The nate has passed a budget consistent with the agreent that was reached when the debt ceiling discussiontook 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 hoe appropriations subcommitt responsible for putting her budget together basically did not pay any tention 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 youre 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 isnt 20 its 40 or more, which is devastating. So thats a problem its also a problem when you combine it in a farmville year with not having the farmill done because tre are a series of programs funded through the farm bill that if its not continued or a new farm bill not passed, the support ructure for farmers that they rely on goes away and we literally revert to what is called permanent law. Farmers might look permanentaw beuse they would seeramatic increases in commodity costs. Consumerwould 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 1940s. You have to basically sayn the 1940s, farmers were getting is. What would be the equivalent of that in todays 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 wasorn 48 years ago, a gallon of mk cos 1. 75 dollars a gallon. You can get it for two dollars a gallon sometimes. Thats 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 dont get an extension or farm bill by the end of the year. I think they are going to extend the farm bl. My guess is it will be a year extension which is interesting because whats 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 arsome who want to change the reference prices that arapplied to certain commodities so when we do the plc program it would adjust the price farmers woul get because Commodity Prices have increased since the last farm bill in 2018. If you do it for all the key commoditie 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 th 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 reductio 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, thats 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 y for the arc programs. It also pays for crp. My comment was why wouldnt 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 didnt have it was when the secretary basically used it to offset tariff iues with china. So its a resource. Use the resource. Be creative about it. Thats what we did with Climate Smart agriculture. We said lets walk before we run here. To me there is a way out of this dilemma they have created for themselves, but th 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. Thats the fundamental issue right now. The house once disaster assistance. The 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. Its 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 wld 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. You see a way to expedit forest planning, to a better j of managing our forests and make that palatable for the public . It does seem to have gotten so stnge now with all the legal challengeshat it gets in the way of doing almoseverything. I would respond that with something that is being done and then throw out an idea for what its worth. Within the Inflation Reduction Act and the resources alloced, ngress 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 dot 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 frontend of the process, trying to speed that up as best weould. 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 dont know why we dont have a special court structured system that would essentially be responsible for adjudicating those decisions because i think u would get greater consistency with people who do this every day. You would have precedent, people would understand what the rules are. He wouldnt 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 dont 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 doesnt interfere with the quality of the analysis and assessment, youre going to continue to be stuck with taking forever for things to get done. I know its frustrating for you, i can guarantee its frustrating sitting in the chair im sitting in. Theres always some hiccup. That makes far too much sense. There is no way it could ever happen. While ive got you, you raised an sue yeerday about the animal id iss and let me simply respo to the coerns you had about privacy. The on thinghat aphis will have is the number of tags. Therwill be no identifying information about which farm the tag is associatewith. You actually have that information at t 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 pblem a we have to figure out what to do about it, that information could poteially be shared, but we sist any effort to try to identify the specific operation. We may get itown to theounty without penalizing the entire country. We all have the basic information yowere concerned about yesterday. Thank you, secretary. You have been