SECRETARY MIKE JOHANNS: (in progress) It's been one of the most interesting things I've done in my life, a fascinating job. But I'll share a story with you which maybe describes what my tenure has been like. As many of you know, one of the things that is provided, if you're in the Cabinet, is that a car would pick you up, bring you to work, and then take you home at night. It's a black car as so many – you know, a big black car. Here in Washington, they are fairly common.

Well, we decided early on, Stephanie and I, that that was fine, but I ride into work with Stephanie and then she picks me up at the end of the day and we go home together, and it gives us a little extra time together. Well, we had just gotten here; I'd only been Secretary a couple of weeks. I really wasn't all that well-known even at the Department yet, and we had rented this Pontiac because we didn't have anything here, including our car. And Stephanie and I oftentimes have lunch together. We've been doing this dating back to the time when we first started dating each other. So we had been out the night before and we'd had pizza, and there was a couple slices left over and we thought, "Well this works great. I'll just take it in to work, and we'll have that leftover pizza for lunch the next day."

So we pull up to the USDA, to the front door of the building. I get out of this rented Pontiac, and I'm heading up to the front door and I've got my briefcase, I'd brought a box of things I wanted to bring in, and I had this pizza carton and I'm juggling all of this.

Well, one of the security guards at the door saw that and took pity on me and came running out and opened up the door for me. And as I'm getting to the door, he said, "Mr. Secretary, could I say something?" I said, "Sure, what?" He said, "Mr. Secretary, I just want to tell you, we've never had a Secretary like you before."

I don't know if that was a good thing or not. And he's not told me what he had in mind when he made that comment.

It's been maybe a little bit like that. We came here and did everything we could to hit the ground running. I want to start out and tell you though, one of the really, really great partners we have had over the last three years has been this industry, the pork industry. We were just visiting at the table; you've been leaders in so many areas, including trade, and I want you to know, it's appreciated. We appreciate it immensely.

And that brings me to where I want to start today. I thought I'd visit with you a little bit about trade, talk to you a little bit about the Farm Bill process, and then, most importantly, I want to save some time so I can take whatever questions you have.

So let me start with trade. We have, as you know, four trade agreements that are queued up and ready to go—Peru, Canada, Colombia, and South Korea. I have statistics; you do too. Your officers and directors, etcetera, have probably been throwing statistics at you as to what these trade agreements mean. And we can cite those literally item by item.

Let me just say, overall, though, these are very, very solid agreements for agriculture. But the most important thing I can tell you: If there's one thing I hear about trade as I am in the country, from farmers, is, "Mike, do everything you can to level the playing field." And I think that's very, very important.

So if you look at these countries and the trade that they do here, because of preferences of who did in the past, in many areas they have open access to our market without duties, without tariffs. And what that means is that they can move their products here and meet the requirements, they can move their products here, sell their products. They don't have to pay any tariff or duty. It's a preference that we have given them. And again, we can go through each agreement and show you where those are at.

It is not the same when you sell your products there. Again, if you go agreement by agreement, item by item, you can see that they have high tariffs on your product, and under WTO rules they can even impose higher tariffs if they were so interested in doing that.

So what do these agreements do? They bring those down, eliminate them in many cases. In many cases eliminate them over time, and all of a sudden we start to have a more level playing field in terms of the marketing of our products to these important markets.

Now these are good markets. When you put them all together, all four agreements, there's a lot at stake, a tremendous opportunity for agriculture to sell products into these countries, very significant. It's very, very important that we do everything we can to get good information on the Hill so they can make a good decision about the trade agreements, and my hope is: approve them, get them to the finish line.

I also wanted to share with you a success story about trade. A couple weeks ago I had the opportunity to go to El Salvador and Guatemala. We were going to go to another country, but we were there right during the big hurricane that came through, and so that didn't work out. But we did get to El Salvador and Guatemala. And if you will remember, these are two of the CAFTA countries.

Now, pork producers really stepped up on this CAFTA Agreement. You know, we were working on that almost from the moment I arrived. Pork producers were there and they were up on the Hill. They were educating, they were providing information, they were doing everything they could, and demonstrated real leadership. Again, for that we are very, very appreciative.

There were all kinds of stories at that time, speculation about what these agreements would mean. Let me share a success story and then I'll maybe give you more of a global picture. Success story:

We had an opportunity when we were in Guatemala to visit with some ag producers about what CAFTA had meant to them. The reason this came about is because we have partnered with a group there to provide micro-lending. Now I am going to imagine -- when I describe to you that I met with ag producers -- you probably have an image of a pretty big operation somewhere in Guatemala farming.

Let me describe what these producers are about. They farm a plot of land maybe about half as big as this room. They were all women. And the lending that we were doing for them through this group was in the vicinity of $100, $150, maybe $200. These women traveled five hours just to be with me. Part of that, literally, they came out of the mountains there because they felt it was so very important that they see me and describe to me what a difference CAFTA had made in their lives.

I mean it's downright emotional. It was very, very moving to have these women talk about "Your loan allowed me to go out and buy fertilizer, and all of a sudden my life and the lives of my children have changed." Then they form a group where these women can get together and talk about where their successes have been and where their failures have been, trade ideas on how they marketed their product. It's just the most remarkable thing. And so all of a sudden they create a bond, a bond built upon the opportunity that is presented by this trade agreement, again very, very remarkable.

And when they talked about the difference it had made in the lives of their family, I want to tell you: you were very, very proud to be an American, that you could participate and help somebody like this. It was just a very moving experience.

Now on the macro-level, ladies and gentlemen, we have seen the kind of two-way trade that we hoped would occur. Yes, our trade in those CAFTA countries has significantly improved just over the last year or so since CAFTA was approved here in the United States. Their trade has improved here also. And that's what you hope would occur. But again, one of the things I will remind you is: they had access to our market. You (unclear), not without the tariffs. So again, what did CAFTA do? It really did truly level the playing field, plus open up opportunity for the kind of people that I'm talking about. And it's a life-changing thing. They were very pro-American, they were very pro-CAFTA, and they were very hopeful about their future.

Trade does work. It can sometimes be a tough sell, and sometimes it gets demagogued. It's the easiest thing in the world to demagogue, but it does work. And it turns countries into friends very, very quickly. They are very supportive of us.

Now if I might change my focus here, somewhat abruptly, to Farm Bill process, and kind of where that is all at at this point, and then I'll be happy to take some questions.

Farm Bill process, as you know, kicked off this year maybe in a little bit of an unusual way. In January 30 after working on this issue pretty much since I arrived, we released the Administration proposals for farm policy. The proposals were put together after a series of 52 listening sessions all across the United States. We were in every state except two. The only two we did not get to were states that were involved in really, really tough hurricanes right during the time we were doing the Farm Bill Forums. So we did not get to two states. But all the other states we got to.

We were in traditional program crop country, the kind of country where I grew up, where I was governor, where dairy, pork, corn, soybeans, those kinds of products are raised. And when I refer to the "program crops," the major ones of course I'm referring to the corn, beef, rice, cotton, and soybeans.

We were in other parts of the country where they don't raise a lot of those major program crops, but very, very active farming operations. In California, they do raise cotton and rice there, but as you know they grow a tremendous amount of products that are classified as specialty crops, fruits and vegetables, etcetera.

I met with those farmers, and I will tell you, although they grow a much different crop than what I was used to, they are as interested in agriculture, interested in the land, interested in conservation, etcetera, as you are. Very, very much so.

Well, they would show up at our forums, and we started to hear a common theme, whether you were in specialty crop country in California or Michigan or Florida, wherever. And that theme was: "Look, we do not want to be a subsidized crop; that's not what we're here for. But we really do have needs in the area of research, market promotion, sanitary/phytosanitary issues, etcetera." Very, very real issues for them.

All of you remember the BSE incident relative to beef a few years ago. We worked very, very diligently at the USDA to deal with that; we continue to do so. We've put a lot of resources into that, testing, on and on. We've done that for pork, maybe not in as dramatic a way, but when you have a sanitary/phytosanitary issue, we need that partnership right away, and we need resources to try to help you through that issue.

Potato cyst nematode. Now that probably hasn't popped up on your radar screen a lot, but it's a huge issue up there in Idaho. It is a huge issue. And when they found that there, guess what? Markets closed. All of a sudden they needed our help to test and regionalize and work with those foreign countries that had closed their market. And I could go on and on. We deal with these issues every day.

So when they came to the forums and pointed out the need for this kind of support, and support to buy more fruits and vegetables in our Nutrition Programs, I have to tell you it made sense to me. And so we released the Farm Bill proposal that really tried to reach across agriculture in America and do some positive things.

That was our shot at it. Then the next effort came from the House side. Collin Peterson, the chairman of the House Ag Committee, a fine gentleman from Minnesota, indicated he wanted to get a Farm Bill out of the House by the August recess. And they did. Right before the August recess, the House took a vote, the Farm Bill proposal came out on the House side. I won't go into depth on that. Parts of that we liked, and parts of it we did not like.

So we went into August Recess, and now all eyes turn to the United States Senate. Mark-up on that, I have some, I think, recent information, not inside information – I read a news report probably like many of you did – where Chairman Harkin says they are going to be ready for mark-up pretty soon here. In fact, he even talked about some specific dates.

When it successfully goes through mark-up, then it goes to the Senate floor. They will have a proposal.

I'll make two guarantees to you today. The first guarantee is that we're all going to have a different approach. There will be a Senate version, there will be a House version, there will be an Administration version. That's probably not going to surprise anybody in the room. The second thing I will tell you, though, is that looks to me -- we haven't seen the Senate version yet of course -- but it looks to me like no matter what proposal, it's looking like it's going to be patterned upon the '02 Farm Bill. You're going to have a marketing loan program, you're going to have a countercyclical program, you're going to have a direct payment program, you're going to have a conservation program, you're going to have a Rural Development program, and I could go on and on.

And it's going to look a lot like the 2002 Bill. Why? Well, we heard from farmers as we were out there. They said, "We like the structure of the '02 Bill. But we got a lot of great ideas on how we might provide some things that I believe improve that safety net for farmers. We got some great ideas on how to do that." We tried to propose and implement those ideas. But again, I think no matter which proposal you look at, it's going to look a lot like the '02 Bill in terms of structure.

At that point, you know the drill. Different proposals, a conference takes place, and hopefully we can get a bill to the President's desk that he is proud to sign.

So that's kind of where the process is at today. I can talk about individual issues, and I'd be happy to, in response to your questions. But if I get into that, then we're going to be here awhile because I can talk to you about that for a couple of hours, and we don't have that kind of time today.

Let me just wrap up and say, it's good to see the people from Nebraska here. I will tell you, if there is anybody here from California, we were kind of lamenting that we lost to USC last weekend in the football game. Jim Pillen, here, played football at Nebraska, so I'm kind of turning this over to him. Jim, we need a win this coming weekend, all right? And I just want to say also finally, what a pleasure it has been to work with you during the time I've been here. Thank you very much.

[Applause.]

Okay. Can I take some questions? Don't be shy. Yes.

QUESTION: (off-mike)

SEC. JOHANNS: You know, there is an ordering that will occur, and I've heard that same discussion about Peru. I must admit, USTR is the group that decides the ordering and what's going to come first and second and this and that. I'm not even certain if that's all been hashed out at this point in terms of the order of the trade agreements. I can tell you this: I know we will be active just simply because it does have such an important positive impact on agriculture. Plus, as you know, our agricultural groups are supportive, and so we'll very definitely be involved.

I do see mark-up occurring on Peru, and so that would seem to indicate that that one's ready to go, and of course it's out of the chute, and this and that. So my hope is that this will start a succession of votes that will move us all forward. They're all very important—Peru, Panama. You know, you look at the strategic importance of Peru and Panama and Colombia, very, very important, and South Korea too.

In fact, South Korea, as you know, that's the one where you start looking at that market, it's a very large market. I think a great opportunity.

QUESTION: (off-mike)

SEC. JOHANNS: China has been a source of frustration for me recently I have to tell you. We thought we had this ractopamine issue solved. This was an issue Joy [Phillippi], I think when you were president that was on everybody's radar screen, and we thought we had successfully worked through that.

And now it's popped up again with kind of an attitude from China of 'zero tolerance.' Well ladies and gentlemen, in any trade issue all we ask of our trading partners is that they work with us based upon good science. And I can tell you that the science here is very, very clear. This is not a problem. Now we are engaged with China – 'every day' may be a strong statement, but practically every day on this issue and some other issues that we are working on. Beef, we'd like to see them open up their marketplace.

My hope is that we will resolve this issue and get back to a normal flow of product into China. This is a big market. The overall numbers for agriculture have been very, very positive. In fact we actually sell more agricultural products into China than they sell to us. It has been a very, very positive agreement for pork, soybeans, and we can name other products that have really benefited. So we're hoping we get this solved.

We thought we did have it solved, thought the issue was dealt with, and then all of a sudden: "Surprise." We've got a problem with this marketplace because of this item. But we're not giving up. We're going to stay engaged, we're going to do everything we can to move them to a science-based approach to this and get it solved.

Yes, sir.

QUESTION: (off-mike)

SEC. JOHANNS: It's a great question, 'premises ID.' Again thanks. You've been leaders in this area too, and we appreciate it. Some years ago, maybe a couple years before I came out here, we did a trade mission. We did a couple of these every year in Nebraska when I was governor, the current governor continues to do that. We went over, I think it was, to Japan. We were in Japan and we came back and said to ourselves as we were talking on our way back on the flight, "We've got to step up on this 'premises ID' issue."

At that point I'm not sure there was even much activity here at the national level. So I think we put together one of the first conferences on premises ID to try to get the various animal industries interested in starting a forum. I can tell you, I think it's worked back there. I think Nebraska is at 50 percent now for premises ID.

But having said that, I recently looked at the numbers in other states. Iowa is doing very, very well, and I could go on and name a number of states that have really moved that and see that we have a very solid success. Other states, not doing as well.

This is a voluntary program, and I feel very strongly that as you roll out a program like this, we're on the right track in terms of the voluntary approach. Not everybody agrees with me. I will tell you that if you went up on the Hill you would have members that are saying, "We don't believe in this voluntary approach; we believe it should be a mandatory approach!"

I think I've worked around agriculture long enough and grown up around it to tell you that the "Washington way or the highway" doesn't sell very well, and that is almost a guaranteed recipe for disaster. So we continue to work with our groups, we continue to see success, we continue to believe that we are absolutely on the right track.

Our under secretary in this area is a gentleman by the name of Bruce Knight. Many of you know him now, he's somewhat new to the job, and he's just doing a bang-up job. He talks the language, he understands, he's working with groups, he's working with individual groups like Pork Producers, Angus folks and etcetera, and I think we're making very positive headway in most states.

Now here's the issue. Remember a few weeks ago we had that scare, the rumor is going out in the countryside that we were worried about some testing we were doing relative to foot and mouth. It wasn't that at all. But that's the kind of thing that I feel very strongly we have to be prepared for in the future.

I hope and pray, and I promise you we will do everything we can, to deal with that kind of issue and we can keep it out of the United States. But just in the time I've been here we've been actively involved with BSE issues. That testing, avian influenza on the poultry side, and you can just go on and on. It's an international marketplace. I really do believe: As we have cemented our place in terms of providing food for the world, we have to be ready to think about what's the next step.

Final thing I'll say: other countries do have animal ID. For example, Australia. I've been to Australia, seen a demonstration of their system. What I'd tell you though is that they're using that as a marketing tool. They are saying, "We can do something that other countries can't do, whether it's the United States, whatever, and that's because we have animal ID." I just think this is the important issue. It is a voluntary program. I ask producers to take a good look at the program and make a decision: "Does this fit within my operation, is this where I want to be?"

So in a rather short period of time from that first meeting we've moved quite a ways here, because if you would have said to me back then, "We need to register premises," there was no mechanism to register. We had nothing in place. And so now I can tell you that: not only do we have things in place, we have states that are really doing good things, and it's only going to get better.

Maybe one more question and then I'll head out the door here, if there is one?

QUESTION: (off mike)

SEC. JOHANNS: It's been a remarkable story. When I came here three years ago, when I would read the ag publications that I get on a daily basis, if I would have stacked those all up and saved them for you, here's what you would have been reading just three years ago: "What are we going to do with all this corn? We have a surplus of corn as far as the eye can see and another big crop coming. What are we going to do with all these soybeans? Is there a market out there for these soybeans?" And it's unbelievable how literally in less than 36 months that world has changed. It's changed pretty significantly.

A friend of mine talked to me recently and said, "I've got a good strategy for you." I said, "What?" He said, "Take credit for all these high prices and quit."

[Laughter]

It's a remarkable time for agriculture and I could not be happier about it. But has it created some challenges? You're darned right it has, especially in the pork industry. You don't have the benefit that the beef industry does where they can maybe feed cattle close to the ethanol plant or feed the distilled grain, the dry distilled grain, that may be shipped to them. So you don't have that benefit, different digestive systems.

But here's what I see out there. Number one, I do believe: I think if you studied the USDA analysis of this, what we are really doing in this rather aggressive growth period is we're occupying the 90-10 blend market. That's really what we're doing. We burn about 140 billion gallons of gasoline a year. If we were to occupy all that 90-10 blend market, you can do the math -- 140 billion times 10, so about 14 billion gallons. We're at about seven, moving toward seven. I always have to remember these figures up in my head, but I can tell you, we're going to be moving in that vicinity of 12 to 14 billion gallons. I think 18 months, 20 months, the growth continues.

What does that mean? In 2007 the market responded to that. Farmers went out and planted corn. As we've looked at that crop, it looks like a good solid crop. You can read our projections on what that looks like. Combines are running. And they are only going to start running more and more across the country. So that crop is headed for the bin, and looks like it is going to be a good crop, by and large, across the country. There are pockets, but by and large it looks like a really solid crop.

But then we look at next year, 2008. Seems to me it's going to be a pretty tight market. Why? Because 1,000 different decisions are being made. You're making them in your household, saying to yourself, "Let me see, (unclear) price is pretty strong, maybe I can convert some wheat acres that really are better for wheat than they are for corn. Wheat price is really strong…"

You've got options and you're going to make the best decision for your operation, your land, that you can make. We don't know what those decisions are today. I see the projections and this and that, but we're months away from that. I mean, we're not done with harvest, much less talk about planting for next year.

But as you look out there, it still looks like 2008 is a fairly tight commodity year. We think after that the ethanol starts to level off. We've seen such rapid growth, and again I think you're going to get into that 90-10 blend area. Now here's some thoughts.

I think what that represents for us is an opportunity for agriculture, not only with this Farm Bill but the Energy Bill, whatever that Congress is working on, to really embrace the future. We are a different agricultural community than we were, certainly, when I grew up on that farm, It is really different than we were when we passed the '02 Farm Bill.

Think about this. The '02 Farm Bill was the first farm bill that had an energy title. Isn't that remarkable? And look at how much of agriculture now relates to energy production.

Now I personally believe that the right direction here is to do the things that the President has talked about, lessen our dependence upon foreign oil. Do all we can to continue to build this alternative fuels market. Some of it will be biodiesel, some will be ethanol, some might be batteries in cars. It might be a whole host of things, but because of what's happening here agriculture can be a part of that.

We need to continue our research in how best to use this byproduct for a wider array of livestock. By and large now it works really well for cattle, and pretty well drops off after that. It just doesn't work quite as well as it does for cattle, if you're talking about dairy or pork or poultry or whatever, and "quite as well" is probably an understatement. We need to continue our research into this area. We need to continue to think about the future when we think about ethanol production. Are we ready for the E-85 step where we have an 85 percent blend? That means pumps, that means cars, that means all of those things.

We need to be thinking about other investments. But the thing that is encouraging to me is that farmers are so productive and capable in the United States. I believe that if we can agree upon a course of action, I believe we set an opportunity for this young man here to get into farming, make a good living, have a great life. I believe there's a really good future out there, but it's very important that we do the right things with farm policy, energy policy, all the things that make it hit on all eight cylinders.

With that I'll wrap up and just say, it's been a pleasure being with you, and I thank you. God bless you all.

[Applause]