SEC. ANN M. VENEMAN: "Thank you for that kind introduction. It is truly an honor to be here at the St. Louis AgriBusiness Club today. And I want to say thank you to your club and the Gateway Chapter of the National AgriMarketing Association for all that you do on behalf of farmers and ranchers and agriculture in this country. It is wonderful to be here in St. Louis and to have this opportunity.

"I've had the chance this morning to visit AgriTalk Radio and do the show live. And we really appreciated the chance to do that today. So that was an added bonus to be come in here today and visit.

"I also appreciate the kind words of Congressman Hulshof. I can say that he truly deserves the award that your organization has given him because he does understand farmers and ranchers and does a tremendous amount for them in Congress.

"I also want to introduce a special guest today. His name is Blake Welge. And he is sitting at this table over here. He is president of the Highland, Illinois FFA chapter. And he is with us today as part of a program that I started a couple of years ago, about two and a half years ago, called the Leaders of Tomorrow. And we have several aspects of this program enhancing the scholarship programs that we do at USDA, creating internship opportunities.

"Yesterday I was in North Carolina celebrating the 40th anniversary of the Job Corps. And we have 18 Job Corps centers in the U.S. Forest Service. And oftentimes as I travel around the country I try to have someone like Blake who shadows me for the time that I'm in the spot that I'm visiting. And so Blake today is shadowing the Secretary of Agriculture.

"And I also appreciate his colleagues that are here from FFA, and it's wonderful to see them participating in this event today. They are our leaders of tomorrow, and it's important for all of us to recognize them and support them so that they can develop and support this great industry that we are all involved with.

"I'm also very, very honored to be here to kick off your new program this year and discuss issues of American agriculture. When the Department of Agriculture was created in 1862 no one could have imagined the world farmers and ranchers live in today. Science and technology continue to revolutionize farming and agribusiness along with what we produce and how we produce, transport, and market our products.

"Last month we learned that researchers just a few hours up the road at the University of Illinois have developed robots that can walk through fields on their own looking for weeds and pests and taking soil samples and spraying. What once seemed like science fiction, actually has now become a part of modern agriculture.

"The pace of the technological advances is increasing, and the results are real, and they are substantial.

"USDA's National Agricultural Statistics Service has found that if we were still operating with technology from 1950 we would need roughly four times our existing corn acreage just to feed our current population.

"And it's not just corn. In every corner of agriculture -- for every commodity -- science and technology have dramatically increased efficiency and production and contribute to rising farm income. In fact -- and many of you have heard these statistics but I think they're worth repeating -- net cash farm income was a record $68.6 billion for the year 2003. And that's $7.7 billion more than the previous record that was set in 1997. And we expect, again, that net cash farm income to be strong this year.

"The President's tax cut package has let America's farmers and ranchers keep $4 billion more of their hard-earned money last year in 2003 and another $4 billion for the year 2004, for a total of $8 billion benefits to farmers and ranchers just in the last two years from the President's tax cuts.

"One of the things that the tax plan did was, it quadrupled the amount that can be immediately expensed for equipment purchases from $25,000 to $100,000. And I note when I've traveled around the country and I talk to farmers to ranchers, that's one of the provisions of this new tax law that they are most appreciative of.

"Farmers' equity also reached a record $1.16 trillion last year, putting agriculture in the best financial health ever. In the first half of this year we have seen particularly strong crop prices, and livestock prices remain well above average.

"We also expect record agricultural exports of $62 billion in 2004, and production this year is forecast at a record or near-record levels for several crops. Just on Friday USDA released new projections for crop production. Corn production is forecast at a record high of 11 billion bushels this year, up 8 percent over 2003 with a record yield of more than 149 bushels per acre.

"Rice production is also forecast at a record 221.7 million hundredweight with a record yield also of more than 6,600 pounds per acre. And we are forecasting a record cotton production of 20.9 million bales with soybean production projected to be the second-highest ever at 2.84 billion bushels and 17 percent obove 2003.

"While these numbers are historic, it is not a time to rest on our laurels. American agriculture needs additional avenues to sell their products, and two of the best ways to make sure we have more opportunities available are: looking at new and alternative uses for agriculture and international trade.

"Long gone are the days when agriculture simply meant the production of food and fiber. We are in a new world that includes pharmacrops and industrials, bioresins used in environmentally friendly plastics. And I've just got plastic silverware this morning that is made from corn as well as recently I got a pillow and a blanket also made from corn polymers. So these are very new uses, alternative uses, for the products from our farms in the United States.

"And of course we have seen an increase in alternative uses in terms of energy production -- sources of energy that are now grown in the field rather than pumped from deep underground. Using new technologies and research to create ethanol, biodiesel, wind energy, anaerobic digestors, and other bioenergy resources to fuel our nation helps the productivity and the profitability of agriculture.

"And it helps our environment and our economy.

"USDA and this Administration are working hard to help the country and the world realize the potential of these energy sources.

"The Energy Bill that passed the House of Representatives but that has been held up in the Senate would create new opportunities for renewable production and use, including ethanol use. Our Chief Economist's Office has analyzed this bill and found that it would provide significant benefits to farmers, ranchers, and rural communities.

"A Renewable Fuels Standard, setting minimum production at 5 billion gallons, could significantly increase the number of bushels of corn for ethanol production from nearly 1.4 billion bushels today to about 2 billion by the year 2012. That would boost corn and sorghum prices by an estimated 10 cents, to perhaps as much as 30 cents per bushel. It would also have spillover effects to other crop prices as farmers shift acreage to corn and sorghum. The overall effect would be an increase in the net farm income by an estimated $2 billion to $4 billion by the year 2012.

"The plan also calls for a nationwide phase-out of MTBE, which would create additional demand for ethanol.

"But even without the Energy Bill, ethanol production is on the rise, currently accounting for 12.5 percent of the utilization or our corn crop, or one in every eight bushels. And 19 states have already called for a phase-out of MTBE, which will continue to expand that demand.

"Ethanol production in June stood at 222,000 barrels a day, an all-time monthly production record and up 23 percent over last year. It was the ninth consecutive all-time monthly production record.

"The 2002 Farm Bill, which includes the first-ever energy title, also provides us with additional tools to promote renewable energy. For example, USDA operates the Commodity Credit Corporation Bioenergy Program which makes payments to processors to encourage increased demand for commodities used in biofuels production and to support expanded production capacity.

"We are also enthusiastic about the prospects for biodiesel production. In addition to our support of biodiesel expansion through the CCC Bioenergy Program, we are funding a national program to educate users and the public about the many benefits of biodiesel. Our primary partner in the program is the National Biodiesel Board which is headquartered here in Missouri.

"Under the Farm Bill we have funded projects including wind power, anaerobic digesters, solar energy, direct combustion, fuel-pellet systems, and combined ethanol plant and anaerobic digesters. We are making an additional $23 million available this year to fund renewable energy systems and energy-efficiency improvements by farmers, ranchers, and rural small businesses. We are in the final stages of issuing rules for a new program that will require all federal agencies to prefer biobased products over fossil-fuel based products in their procurements.

"And we're working hard with all parts of the federal government as we implement this new program at USDA. This program is going to greatly expand the government's purchases on a broad range of biobased products, and I think there's tremendous potential to expand utilization of things like products that are made with the corn polymers.

"The Farm Bill also provides $24 million to USDA and the Department of Energy for a jointly-run Biomass Research and Development Program. And we continue to provide grants and loan guarantees for farmers, cooperatives, or small businesses that want to use agriculture materials to produce energy.

"Renewable energy is no longer a futuristic or abstract idea. It is here now. And as we have seen decade after decade, the energy security of the United States goes hand in hand with national security. President Bush strongly believes that if there were ever a time that showed the pressing need to enhance our energy independence, that time is now.

"Another area of continuing promise is biotechnology. Last year I created the Advisory Committee on Biotechnology and 21st Century Agriculture to help shape USDA's role and efforts on regulatory and policy issues. I met with the full committee in June, and together we outlined the promises and the challenges of this new era of biotechnology.

"Two things are certain. The first is, that the President and I believe in the tremendous promise of biotechnology and that USDA can and should have a role in supporting research to help realize this potential.

"The second is that consumer confidence in the food supply is crucial and that transparency in our regulations is critical if our efforts are to succeed. USDA is playing a key role in biotech research across the country.

"Right here in the heartland we are supporting the Illinois-Missouri Biotech Alliance which is studying how new science and technology can increase agricultural productivity. The Alliance is supporting 54 research projects in Illinois and Missouri including nine new ones just this year.

"We are also supporting science and technology around the world as a means of increasing productivity and feeding the hungry as a follow-up to USDA's Ministerial Conference on Agriculture, Science, and Technology, which I hosted last year in Sacramento, California. As a part of the follow-up to that program, just two weeks ago USDA welcomed 33 Norman E. Borlaug International Science and Technology Fellows to the United States.

"The Borlaug Program, which I announced last March, provides specialized training for scientists from developing countries each year at U.S. universities, USDA and other agencies, research centers, non-profit institutions, and private companies.

"We continue to reach out to developing countries to help them understand and utilize new technologies that will help them feed their own people. And this again is targeted at those countries where hunger is most pervasive. There are about 800 million hungry people still in the world that we live in today. And support for these new technologies, because there is a growing recognition around the world of their promise in terms of hunger, is really increasing in both developed and developing countries.

"There were a couple of follow-up conferences following the Sacramento Conference, one which we helped to host in Costa Rica in May. But more significantly was one that USDA helped to sponsor in Burkina Faso in West Africa in June.

"At that conference, four West African heads of state attended along with a number of people at the ministerial level. And the most unusual thing that happened at that meeting is that these heads of state, all of them, endorsed the promise of biotechnology. They endorsed what biotechnology can provide for people in Africa. They talked about: now it is not a matter of 'if' we adopt such technologies, but 'how' and how will it be most effective in our own countries.

"So this is a significant change that we're now seeing in some of these developing countries, especially in Africa.

"Another example is just last month the Swiss government announced that it was opposing a ban on GM crops. And only a week ago Brazil's biotech regulatory authority said it could begin clearing new varieties of GM commodities for commercial use this winter.

"The world is at a turning point in this debate where the precautionary principle yields to the compassion for people who are so desperately in need. However, that does not mean that the USDA is taking a hands-off approach to carefully evaluating these new technologies. In fact, far from it.

"If this new science and technology is truly to be embraced worldwide, its safety and reliability must be ensured. We are working to do that as well by creating a rigorous, open, transparent regulatory process.

"I made it a priority to create a Biotechnology Regulatory Services Program under USDA's Animal and Plant Health Inspection Service to ensure that these issues receive continued and proper attention. We are involving -- and listening to -- stakeholders. All of these processes are meant to protect consumers, but they are also to protect those who produce products because consumer confidence is so critical to the bottom line of agriculture and agribusiness.

"The debate about 'whether biotechnology' is over. The question is now: how to utilize it for the benefit of the entire world.

"Aside from new technologies and new uses, additional trade opportunities are critical to the future of American farmers. And that's why this Administration has embarked on the most aggressive trade agenda to open markets and to maintain our existing ones.

"As you know, our country exports the product of nearly out of every three farm acres. None of us wants to imagine what American agriculture would look like if one-third of our products sat unsold or unshipped.

"We are grateful for your support as we seek these new trade opportunities. This is a critical time for agriculture. It is a time of change. It is a time of great promise. We look to a bright future for agriculture, a future where science and technology remain indispensable, and a future of productivity and profitability. It is a future that you are not just living but one that we are all building together.

"So I want to take this opportunity to thank all of you for what you do for American agriculture and therefore for our economy and for our people. Thank you all again very much for having me here today, and God bless you all."

[Applause.]