Remarks by U.S. Department of Agriculture Secretary Schafer
Delivered at the National Cattlemen's Beef Association Annual Convention and Trade Show
Reno, NV

SECRETARY SCHAFER: Thank you. Thank you very much. Thank you, Andy, for the great introduction. Thank you for the warm welcome this morning, and I especially appreciate my North Dakota cheering section down here.

[Cheers and applause]

It is indeed a great pleasure to be with you here today, a great day in America. I am pleased that this is my first outing from the office as the Secretary of Agriculture. I'm especially proud to be here with you as I sure appreciate the NCBA's efforts to advance the economic, political and social interests in the U.S. cattle business.

You know, I'm from beef country, and so it's comforting for me to take this first step forward with you. It's been an interesting couple of weeks since I have gotten involved in the new office. I'm adjusting to many new things in my life as is Nancy. We have to get lifts to get in and out now of loading docks, in the back rooms, and we go through the kitchens and things like that instead of walking through the front door to say hello to people, which is interesting. But you know there's always security people all over the place. I'm not used to that, and I like wide open spaces and be able to see the sky, and I'm getting adjusted to that security.

It was a little different in North Dakota when I was governor. Security wasn't quite as intense. We had some security cameras on the governor's residence. One time I was enjoying a Sunday afternoon quietly at home and the phone rang and it was the security center. And the person on the phone, the officer, said, "You know, I'm looking at the cameras, and I see a box that's sitting up kind of against the garage door, and I hadn't seen it before, and now it's there. And looks like it's got some wires sticking out of it. We're not sure what it is. Maybe you ought to go out and take a look at it."

[Laughter]

Well, you know, I also note that after I was in the office for about a week I had a briefing from the litigation folks, the lawyers in the agency, and I was pleased to find out that after only one week I had already been sued for over $100 billion. You know, there are certainly some legitimate claims in there, but I'm not so used to all this waste of your taxpayer dollars as we go through all of these kinds of things. So we're going to be mindful of that as well.

But I really am pleased to be here today because I do believe being from beef country I guess I know that you are a vital part of the economy. And really the efforts that you put forth in your everyday lives make this country better, providing the food and the hides; and that part of our economic process is so important to us.

I have been there a short period of time, and I already love this agency. The USDA is involved in so many things and so many efforts, and I'm pleased that you're a part of that. I can't tell you how great the people are over there and the mission of the agency. It is because, you know, they are like you; they've been out there. They've lived on the land, they understand the pillars of our economics in our society, and they work hard to deliver the mission. And I want you to know also that when we found out about the horrible tornados and things in Tennessee and Mississippi, Missouri and Kentucky and Alabama just this last Tuesday, you know immediately we dispatched USDA people from Ag Center in Washington, DC, as well as field offices all over the country to help in that recovery and rebuilding effort that's going to take place there.

And I want to say that our thoughts and prayers are with the folks who lost their homes and their loved ones in the tornadoes there. And I was pleased that the President is in Tennessee today to offer his support to let folks know that the American people are standing with them, and our government will be there to help them get back on their feet.

I also want to commend all of you for your generosity, the generosity that you have shown to your fellow cattlemen who were caught in that disaster. The National Cattlemen's Foundation did great work in the aftermath of Hurricane Katrina in helping ranchers in North Dakota too and other high plain states after they had been hit hard from winter storms. It's a great foundation, and we appreciate your work up there.

I just got into Washington as I mentioned a couple of weeks ago, and it's a challenge to take on the Secretary of Agriculture's job, and it is certainly an honor. And as I kind of weaved my way into the workings of the agency, I wasn't there very long and already beef was very much on the top line. My second day on the job we were presented with the Human Society videotape of how cows were being handled at the Hallmark/Westland beef plants in Chino, California. I don't know if you've seen the video, but it shows cows that are being handled in ways that I can only describe as shocking and disturbing.

I immediately ordered a full investigation by our Inspector General as well as the Food Safety Inspection Service and the Agriculture Marketing Service. We suspended Hallmark/Westland as a supplier for the federal Food and Nutrition programs.

[Applause]

I carried with me a motto into office and to my public service: Do the right thing. And it was the right thing to suspend that effort. But I want you to know that the investigation is still under way, but we've already uncovered evidence that there are egregious violations of our regulations on humane handling of animals. And I want you to know that I recognize how important a matter this is to the beef industry. I want to assure you that our investigation will be probing and thorough and that any corrective action it calls for will be taken swiftly.

Our communications to the public about food safety questions in this matter will be clear and consistent. The public's confidence in the safety of our food supply is something we have to earn every day at the USDA. It is the foundation of your industry. And I have to tell you, I'm going to be doing my part in that. I'm on the trail here for a few days, and I'm going to be eating a lot of hamburgers as we go. But as you know, that mission of providing food safety is so important, and the message that you all deliver of providing a good, clean, safe food supply in this country is important.

That's why even in a tight budget year we are boosting spending at USDA on Food Safety Inspection including our efforts to improve our ability to detect E.coli and other pathogens. We did see an increase in outbreaks last year that caused USDA to immediately respond, and we're now working together with the beef industry and other stakeholders to make sure that in the areas of research, inspection changes in industry and public education materials that we provide proper direction.

You know, all of us face barriers and obstacles every day as we try to get our jobs done. They could be financial, historical, practical – certainly I'm learning in Washington, political. But all of us are out there pushing to get things done and find solutions to the problems that we face.

When you're down there in the arena, as Theodore Roosevelt might say, amid all the dust and the sweat and the blood it's easy to lose sight of the bigger picture along the horizon and to overlook how much has actually been accomplished. When I went back over the last year at Department of Agriculture's ongoing effort to win fair access for American feed in markets all over the world, it strikes me that really a good deal has been accomplished.

In May of last year we won the designation as a controlled risk nation. With that label in hand we've been able to open markets for American beef that have previously been closed to us. Once those markets are open what we see is that our export sales grow rapidly as consumers respond to the quality of American beef. In fact, we expect our exports of beef for 2007 to total more than $2.6 billion, and that's up over 30 percent.

We still have work to do to get back to where we were before 2003. But the trend is clearly in the right direction. And momentum is on our side. Just in the last couple of months Indonesia and Barbados and the Philippines have all agreed to open their markets to U.S. beef under OIE guidelines. We have resumed beef shipments to Russia. In fact, the first load of containers were moved out just last month. And we expect to see continued growth in that market. We're actively engaging with Taiwan and its government, and we're now seeking a risk assessment on U.S. beef and beef products. We're pleased that this is moving along expeditiously, and we are optimistic that we'll make a science-based agreement consistent with OIE guidelines in the near future.

We're also very interactive with Korea, and I believe we have reason to be optimistic. I must tell you that I knew a friend that I visit with almost every day either in person or on the phone, Trade Ambassador Susan Schwab. She's very actively pursuing your interests out there, and I believe that we have reason to be optimistic. We're encouraged by recent statements in the transition team of incoming Korean President Lee Myung-bak. He understands the importance of fully reopening the Korean beef market.

We look forward to working with the incoming administration to achieve a full reopening of this important market as soon as possible, and we will continue working with the government of Japan at the highest levels to bring the market into full OIE compliance as well.

When I visit with the President and had the conversation about me becoming the Secretary of Agriculture, he said, "Ed, I want you to weigh in on trade issues. This is important." He's from an agriculture state; he understands what needs to be done in trade out there, and he asked me to get involved. And I certainly will, and I am; and I'm going to, and I certainly will be actively engaged in the future.

We all believe that the progress we have made in opening markets around the world to U.S. beef in just the last six months shows what a valuable tool our OIE classification is. We worked long and hard to get it. It provides an objective and science-based platform for trade, and we plan to stand by it.

I want you to know that removing the trade barriers for U.S. beef that are still out there remains a top priority of President Bush. He's very interested to get this done; he's charged us in the past to making it happen. And he wants us to do all we can over the next year to help all of us that we can compete fairly, and with a bigger share of export markets.

Our export market is so important to us. Overall our agriculture exports have never been stronger. We have benefited from a very competitive dollar and strong growing demand for our products in foreign markets. That's how we generated $82 billion in export sales last year, the fourth record year in a row. And that's why we are projecting that we will hit another record of $91 billion in sales this year.

One of the things we are seeing as a new dynamic in the marketplace, those one billion new middle class consumers that had been expected to emerge in developing countries over the next decade have arrived. They are making their presence known in China, Mexico and other markets. They are buying more prepared foods and more dairy and meat products. We believe U.S. beef can capture an even larger part of this market, and we want to work with you to make sure that happens.

This administration is firmly committed to free trade. Moving passage of the pending free trade agreements in Colombia, Panama and Korea is one of President Bush's top priorities for the coming year, and I assure you we will be working on Congress to make that happen. When I visited with the President about taking the job I said, "Well, are we just going to caretake the position until the end of the year? Am I going to be a figurehead there? What's the mission?" He said, "You know, our effort is to run as fast as we can to get over the finish line in record time." And I can assure you that we will be engaged and be there because working on this trade issue is so important for us. Taken together, the four agreements of Colombia, Panama, Korea and Peru, together they could open up more than $3 billion of new export sales for America' s farmers and ranchers.

We don't have to look for examples of how that can work. In 1994 the NAFTA agreements created a free trade zone covering the U.S., Canada and Mexico. I know there's a lot of discussion about those types of agreements and whether they're good or bad. But agriculture exports, since that agreement has been signed, our exports to Canada and to Mexico have grown from about $10 billion a year to more than $25 billion a year now. Today Mexico is the largest export market for U.S. beef, and Canada is number two. Those are two pretty strong arguments for free trade.

We view bilateral and regional free trade agreements as the right tools for expanding our market access, but multilateral talks such as the Doha Round sponsored by the World Trade Organization offer even greater potential for gains. That's why we remain committed to the Doha Round of trade talks, and we will continue to push for a comprehensive agreement this year that is fair to all parties.

Along with the agreements we made with other nations, one of the most important ways that we can get our agriculture trade policy is through the farm bill. The farm bill is in the midst of the conference process right now between the House and the Senate, but as I know you have all heard the administration has serious concerns about both the House and the Senate versions of the bill. If the changes are not made in the area of taxes and reform of farm programs, the President just said that he will veto this legislation. We simply don't believe that programs in the farm bill should be funded by tax increases on the rest of our country. We don't believe that subsidy payments continue to go to people who don't need them and aren't involved in production agriculture, and that we should use those monies to put into the hands of people who need a hand up.

We don't believe that now, when we're receiving record prices for so many commodities, record exports and very strong farm income, it is the time to raise target prices or loan rates. It's not to say that there aren't good things in the farm bill as they stand, because there are. In fact we probably have broad agreement on over 90 percent of the things that are in the bill. One good thing is the increased funding for conservation funding that both the House and the Senate would provide.

When the administration put its farm bills together last year, we proposed – I'm already saying "we" and I wasn't even a part of it – but we as an administration proposed a greater spending increase for conservation than any other program area. The House and the Senate have taken different roads than what we proposed, but they both provide more support for conservation. We believe that support is appropriate, and that programs that help farmers and ranchers in non-trade-distorting ways while bringing environmental benefits to the broader community are important.

Both the House and the Senate versions of the farm bill include language that would make it easier to comply with the Country of Origin labeling requirements, and I know that's something you all have worked very hard to bring about. All of you have a lot at stake in whether or not we have a successful conclusion to the farm bill process this year. And if you make your voices heard in this debate, and I know you will, it will help all of us in Washington find the common ground that we can all agree on. And I must say, over the last several days, I've become more optimistic about finding ways that we can narrow the gap between the administration, between the House and the Senate, so that we can put on the table a farm bill that's acceptable to the taxpayers of the United States, and that will deliver the mission in the program to the public policy that will support the cattle industry as we move forward.

I also want to say a word about beef prices because I know that's been causing a good deal of concern for you over the last year. There's no getting away from the reality that the nation must reduce its dependence on imported oil and find ways to generate more of its energy here at home. That means making more renewable fuel, more ethanol, more biodiesel, and doing it as effectively as possible. For today and tomorrow the growing demand of ethanol is likely going to be that corn prices will stay higher than you want them to be.

But I believe that the energy bill that Congress passed and President Bush signed last year does offer us an outline to where we are going to be headed in the future on this issue. And that is towards cellulosic ethanol production. The new renewable fuels standard created by the energy bill requires us to boost grain-based ethanol production this year to 9 billion gallons. Ladies and gentlemen, it also requires us to meet a rising portion of our renewable fuel needs from cellulosic and other nongrain sources starting from just one year from now in 2009. And as that technology develops as we move into nonfeed sources to generate our energy needs, it will stop distorting the prices of your feed.

By the time the full mandate of 36 billion gallons of renewable fuels kicks off 15 years from now, 21 billion gallons of that, nearly 60 percent, will come from cellulosic fuel and other advanced biofuels. I believe this mandate is going to spark an innovation that we will need to make more cellulose biofuels an economic and practical alternative to that corn-based ethanol.

This new mandate offers a tremendous opportunity for us to work with farmers and ranchers to develop new energy crops such as switch grass which can be cultivated on land that may also be eligible for conservation protection.

Let me now return to a subject that is very important to us at USDA, and I believe can be a great help to all of you, and that is the National Animal ID System. We have continued to register premises that we now have more than 430,000 enrolled, and this an essential first step to having a modern integrated approach to animal identification and tracing. But we still have a ways to go to enroll all of 1.4 million premises around the country where livestock is being raised. Registration is free, it's easy, it's voluntary, and it's the right thing to do. So if you haven't done so already, please make this year the year that you sign up for this important effort.

In closing, I want to commend you for leadership roles that you have taken. You wouldn't be here if you hadn't stepped forward in an effort to improve our ranch, your farms, to improve your economy, to improve your communities, and to improve your industry. That shows me that you are willing to engage and to be involved and help the efforts to move our country forward and to make America better. And I so much appreciate that. You have all taken your time and your money and your efforts to be here and be a part of this.

I was thinking of Theodore Roosevelt when I was riding in the car this morning. And you know he was probably one of the most visible beef ranchers out there. And he moved to the Badlands, North Dakota. It was a tough time for him. His mother and his wife had died on the same day, Valentines Day. He moved out to North Dakota to seek solace and to repair his soul and to gain physical strength. He was a sickly individual, and born and bred blueblood from the East, and didn't understand the Old West in his values. He started three cattle ranches and became an important part of the beef economy in North Dakota. And as often happens in this industry, the tough issues it faces, he failed as a cattle rancher. But it was there that he said, "Had it not been for my time living and working in North Dakota I never would have been President of the United States."

You know, it wasn't North Dakota. I like to say it was North Dakota because that's my home. But it wasn't North Dakota.

It was, Teddy Roosevelt living on the land. It was raising cattle. It was learning frontier justice and strength and hard work and a good day's pay for the efforts that you put in. It was learning how to give a neighbor a hand up when in need. It was learning about character and honesty. And it was those foundations that Theodore Roosevelt learned from our ancestors, the people that came before us that created those very cornerstones of the foundations of the United States of America that are exciting to me. And when I look and see all of you I know that's what you do in your everyday lives. You are the ones that are generating the character of our society.

And I want to urge you to continue along that path. I think it's so important that we strengthen the United States today. And as we see the strife and the pollution and crime in our country, I in my heart know that the people in this room are the basis of improving our society as we go forward.

So I ask you to do a few things for me as I leave today. Take the opportunity to say to your spouse that, I love you and I respect you. That's so important. And every time you get a chance, hug your children and tell them that you're proud of them. You know, you are really raising the future leaders in our community. You're raising the future leaders in our states and in our country.

Teach them, help them to be kind and considerate and helpful servants of the good.

Importantly, finding someone out there that you can forgive makes you feel better, and it's a good deal. And I ask you to do these things because I honor and respect you and the work that you do every day to help our country achieve its greatest heights, to make our country the greatest in the world and it is through you that we provide hope and a future.

Thank you for the opportunity to be with you today. It's an honor for me to be here.