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Former secretary of agriculture is keynote speaker at Chicago Farmers’ December meeting

Tom Vilsack, who served as secretary of agriculture from 2009-2017, stressed the importance of the combined industries of agriculture and food in today’s economy during remarks he made at the Chicago Farmers’ December 10 meeting at the Union League Club of Chicago,

“It is very important to reeducate the public about agriculture’s and food’s contributions to the United States economy,” said Vilsack, president and CEO of the U.S. Dairy Export Council. “The two really comprise one industry; an industry that employs 43 million Americans or 28 percent of the workforce, has a $6.7 trillion impact on the American economy, and enjoys a trade surplus with other countries. In short, it is a really important industry.”

He pointed out that the strength and productivity of the agriculture and food industry ensure that the United States is capable of feeding itself. “All the nations that are causing us problems don’t have the security of being able to feed themselves; they rely on others. We are a more secure nation thanks to farmers and ranchers,” remarked Vilsack.

Vilsack pointed out that many of the troubled countries around the world don’t have a functioning agriculture industry. As a result, those countries have a lot of hungry and unemployed people.

He noted that the agriculture and food industry has a keen understanding of the significance of trade: 20 percent of all agricultural products in the United State is exported. The exports include 50 percent of soybeans, 40 percent of wheat, 21 percent of corn and pork, and 16.3 percent of dairy.

Vilsack shared that the dairy industry’s experience is instructive and reflective of trends regarding trade. He said that the American dairy is the best in the world and the most productive.

“In 1950, the average cow in the United State produced 5,500 pounds of milk. Today, it produces 23,000 pounds,” he said. “The reason for the increase is due to more efficient farmers who are more technically savvy and have a keener understanding of a cow’s digestive system. Additionally, cows are equipped with fitbits that are providing important data.”

While productivity has increased, consumption has not. Vilsack said that there are more alternatives available, such as energy drinks and carbonated and caffeinated beverages. As a result, not as much milk is being consumed as is being produced. Additional challenges are the “alternative” milk products that do not have the nutritional value of natural vitamins that milk has, but still use the name milk.

This lower consumption in the United States makes exporting a key factor in the viability of the dairy industry. However, it also has its challenges:

• United States has a strong dollar
• There is an oversupply of dairy in Europe
• The European dairy industry is heavily subsidized by the government

However, noted Vilsack, while the European dairy farmer has years of experience, he does not have the natural resources that the United States farmer has. The European farmer is more constrained geographically than we are and knows that at some point he will be unable to compete with the United States, said Vilsack. To combat this, the Europeans put protections in place that prohibit use of identifications of certain cheeses, for example, that are made in the United States and not in Europe.

Trade policies also are a hindrance. Vilsack related that the United States buys more from China than it buys from us. Additionally, China puts a number of conditions in place for trade to take place. “For example, the Chinese want the technology that comes with the production of many items, but they are unwilling to let us know the identity with whom they might share that technology. The administration has a point to ask China to change its policy, but, I believe, it will be a long and protracted discussion,” said Vilsack. “It is hard for a country to acknowledge that it has to change its way of doing business.”

Vilsack said that another trade problem is that the United States also enters into trade discussions by itself and does not encourage others to join it when it is renegotiating trade agreements.

Also, the thought that the United States could “out-tariff” China is a mistake. “China owns a portion of our debt and can use that to possibly impact interest rates,” Vilsack said.

Regarding the exporting of United States soybeans to China, Vilsack said that China knows it is over-reliant on one supplier, so now it is turning to South America, despite the fact that our soybeans are superior. China also is asking its livestock industry to look at other kinds of animal feed and it is turning to Russia for support.

But there is good news. The United States has a story of innovation that will encourage domestic consumption and increase exports; it is not constrained by natural resources; and its cheeses are winning international competitions.

“We also have a new and emerging opportunity for sustainability; there is a product in development that will reduce the emission of methane from cows,” Vilsack said.

Vilsack noted that the United States’ regulatory system is not keeping pace with change. “The government has to understand that it needs to keep pace with change and not just be reactive,” said Vilsack. “We over-test and over-examine things. We make the process slow. We have to have systems in place that will let us test, but get the product to market sooner.”

Vilsack suggested that responsible marketing has to be encouraged and consumers have to be educated to be more skeptical of claims. Additionally, better branding has to be in place in the export markets and alliances have to be promoted with organizations in other countries so that the United States is aware of the tastes of foreign consumers. For example, the dairy industry is producing lactose free milk for Asians and adjusting the taste. “We’ve learned there is not just one way of doing something. We have to adjust to other countries’ tastes. The dairy industry is partnering with universities in other countries to help us with this,” Vilsack shared.