Market innovation a path to economic equity in farming, Vilsack tells ag conference

WASHINGTON – U.S. Agriculture Secretary Tom Vilsack urged the private sector and government officials to address inequity and promote innovation in what he called a “pivotal moment” in the nation’s history at an industry conference Thursday.

In the opening session of the 99th USDA Agricultural Outlook Forum, Vilsack said new income streams and markets will be key for the next generation of American farmers of all sizes and backgrounds. 

“I think we have to ask ourselves a serious question,” Vilsack said in the opening address. 

“Whether we want a system that continues to see further consolidation, and the impact that that has on farmers and on rural communities, or whether we’re innovative enough to figure out a different way and expand opportunity.” 

The Agricultural Outlook Forum is a conference put on by a collection of USDA divisions each year for government officials and those in the industry to discuss “current and emerging trends in the sector.” 

In addition to talking about industry trends, Vilsack spoke to the cultural significance of rural America and its connection to the land, saying rural Americans understood that farmland must be cared for and not exploited. 

“You can’t keep taking from it,” he said. “You can’t just keep putting the seed in the ground, and getting the crop out of it. You’ve got to put something back in the ground.”

Addressing growing economic inequality concerns among farmers

Vilsack used examples from American history to show that the federal government can address growing economic inequity among farms. 

Amid failing farm operations during the Dust Bowl and Great Depression, Henry Wallace, the agriculture secretary under President Franklin Roosevelt, steered funding to conservation programs and developed a supply management plan to shore up farm income, Vilsack said. Vilsack is a former governor of Iowa and Wallace, who went on to serve as vice president under Roosevelt, was a native Iowan.

Then, as the global population exploded in the 1970s, Earl Butz, the agriculture secretary in Richard Nixon and Gerald Ford’s administrations, removed the supply management system and led a government push for improving production practices to “feed the world,” Vilsack added.

Butz’s move produced remarkable gains in commodity productivity, but also led to significant specialization, farm size increases and high input costs, Vilsack said.

He added the boom in large-scale commodity farming has hurt rural communities, as on-farm employment, topsoil levels and rural populations have shrunk over the last 50 years. 

Amid the COVID-19 pandemic, ongoing climate challenges, and Russia-Ukraine war, the United States brought in record farm income, Vilsack said. Yet, input costs rose significantly, and the department reported that roughly half of U.S. farms made negative income over the past several years.

Those statistics showed that commercial-scale farms were prospering while small ones floundered, he said.

“Those large commercial-sized operations did very, very well — and they should because they’ve invested a lot of time and energy in producing an extraordinary crop,” he said. “But the other 90% or so are struggling.” 

As such, Vilsack said he believed former Secretary Sonny Perdue was “unfairly criticized” for his take on farm consolidation during the Trump administration.

Still, Vilsack proposed an alternate path from the one Perdue charted.

“He essentially said in America, the economies of scale are such that either you get big or get out,” Vilsack said. “I think there’s a different way. I think we can push back on what traditionally happens in the industry in this country. I think we can create a different innovative, creative way to approach the future.” 

Seeding new agriculture markets

An “innovative” strategy for farmers and ranchers could include generating new markets and on-farm income diversity, Vilsack said. 

“It’s not just growing crops and selling them, or raising livestock and selling them, or government payments,” Vilsack said. “We can be innovative and creative enough to create additional profit opportunities.”

Vilsack hailed what he viewed as an early success in the department’s Partnership for Climate-Smart Commodities program, which develops sustainable agricultural products. The program has invested in 141 projects since September 2022.

The program is also developing more “ecosystem service markets,” which would pay farmers to hit water quality, biodiversity, and soil carbon benchmarks. The department operates 24 of those markets today, he said. 

The additional markets would add to the potential income streams available to farmers, he said.

“So instead of two or three ways to generate profit and income on a farm, we have five or six or seven different ways,” Vilsack said. “Each farm becomes a center of entrepreneurship.”

Vilsack added that funding from the $1.9 trillion American Rescue Plan, the COVID 19-relief law Democrats passed in early 2021, has enabled expansion of independent meat and agricultural product processors. The department allocated $59 million from the law to meat packers Tuesday. 

And he said a program in the $1.2 trillion bipartisan infrastructure law would enable funding for agricultural building materials, like soybean-based road materials and sustainable aviation fuels. 

“Now that small- or mid-sized operation can stay in business,” Vilsack said. “Higher farm income, more rural jobs, better soil health, purer water quality and a stronger sense of community and connection. That’s the future. That’s what we’re investing in now.” 

Vilsack said lawmakers had an “extraordinary” opportunity to act on this vision by reauthorizing the farm bill this year. 

He noted that rural regions of the country embody a culture of giving back to the land. 

“We want that value system to be alive and well and flourishing in this country, especially now at a time of division,” Vilsack said. “This isn’t just about farmers and ranchers. It’s not just about jobs. It’s about the essence of this country.”