Brookings Institute Conference - "Regional Innovation Clusters: Advancing the Next Economy"

Closing Keynote Remarks by The Honorable Tom Vilsack Secretary of the U.S. Department of Agriculture;

SECRETARY VILSACK: Thank you, folks. Thank you very much. I appreciate the opportunity to be with you this afternoon, and I realize that I am the last of many speakers that you all have listened to today, so I will try to be as quick as I can.

But this is an important topic for me, and it is an important topic for the country. To give you a sense of why this is important and who it's important, let me take you to a rural community in any of the States that are represented in this room today. Let me take you to a small town, to a home on one of the main streets of that small town, around the kitchen table where you have a mother, a father, and a child. The child is just about graduating from college, and the question is whether or not he or she will leave that small town and that rural area or whether they will pursue their dreams in their hometown. If you are that mother or that father, you have a challenge ahead of you.

If you take a look macroly at the rural economy, what you find is that you would have to tell your son or daughter that the per capita income difference between what he or she can make in an urban and suburban area and what they might be able to make in a rural area is over $10,000 a year difference.

You might have to explain to him or to her that this is a place, rural America, where there is a significant amount of poverty. In fact, 90 percent of the persistent poverty counties of this country are not located in inner city areas or in urban areas or suburban areas. They are located in rural America.

And you might have to also remind them that over the last Census, 56 percent of the counties that are rural counties essentially reported that they lost population, and I would be willing to bet anyone in this room that when this Census is completed, that number will be closer to 60 percent.

How do we make the case to bright, young people that there is economic opportunity in rural America? And when I conclude my remarks, I'll tell you why that's important to all of us, regardless of where we live.

We at USDA take this challenge very, very seriously. In the past, we were able to say very easily, if we could just simply improve the farm economy, that will have a rippling effect and create opportunities in those rural communities. As the old saying goes, if farmers are doing well, communities in those farm country and rural areas will do well. That's tough to -- a tough case to make today because farmers and ranchers and growers represent less than 1 percent of our total population, and only about 11 percent of those who farm make sufficient money to support their families.

In fact, if you took a look at all of farm families and you asked the question how much of your income comes from farming, you might be surprised to know that only 9 percent of all farm families' income comes from farming. That puts a high premium on the need for us to have economic development and job growth in rural communities, so we can make the case to that son or daughter that there is a future in their small town.

I think this administration has aggressively attacked this challenge. We first of all decided that there needed to be a series of different strategies, different new opportunities that we would focus and showcase in a way of suggesting that the rural economy is capable of revitalization, and one of the first things we did was to take a look at the enormous impact that broadband can have on expanding opportunity.

The Recovery Act gave us this chance with essentially allocating to the Department of Agriculture roughly $2.5 billion, and over the last 18 months or so, we have made decisions to allocate those resources in over 330 projects which will help to expand broadband access, allow small businesses to be able to expand their markets from local markets and perhaps regional markets to potentially global markets; the opportunity for farmers and ranchers and growers to have real-time information, so they can make more informed decisions about their operations; the opportunity for schools, rural schools that are stressed and strained to find the resources to have advanced placement courses, to be able to expand their course selection through technology by linking up with other schools that have more teachers available; and by improving health care access by allowing telemedicine to be developed, so if you are a small business or small industry, you know that you can access quality health care, even though you may be 100 or 200 or 300 miles away from a tertiary care center. Broadband expansion is one of the key strategies for expanding opportunity in these rural areas.

Another strategy is the enormous opportunity that energy presents, from biofuel production to renewable energy production. Just take biofuel production, for example. The Congress has challenged us to produce 36 billion gallons of biofuel by the year 2022. When we meet that challenge, $95 billion will be invested in rural communities across the country in biorefineries, and somewhere between 8- and 900,000 jobs will be created. It will certainly improve the bottom line for farmers because we will move away from a biofuels industry that is focused in one region of the country, the Midwest, and allow it to expand and grow in all four corners of the country. That's an enormous opportunity.

We have a program which we refer to as "Know Your Farmer, Know Your Food" which is also part of a strategy to reawaken the rural economy by better linking local consumption with local production. Do our schools and institutional purchasers of food know what is actually grown and raised in their region? And if not, how can we facilitate an awareness of what is grown, and how can we create the supply chain locally that will allow that local school or that hospital or that small college or that prison to be able to purchase food locally, maintaining the wealth in that community, allowing it to roll over several times over?

So we have teams of people from USDA traveling across the country in school districts, advising school districts as to what is being grown. We are using our Rural Development resources -- and perhaps Victor went into this -- to help finance the supply chain, the storage facilities, the warehousing facilities, the slaughter facilities, job creation opportunities, again, improving bottom lines for farmers, ranchers, and growers.

We even see as part of our strategy a more effective use of our conservation resources. Few people realize the enormous opportunity that outdoor recreation represents. It is roughly a $700-billion industry. Those who fish, those who hunt, those who hike, those who bike, those who four wheel spend a tremendous amount of resource. To the extent that we can better link economic opportunity with our conservation dollars, improve the utilization of our natural resources, we will grow that industry even further.

In our mission area of USDA, we have responsibility for 193 million acres of forest and grasslands area called the U.S. Forest Service. Each year, 173 million people travel to those forests. Each year, at least 300 million people travel around those forests, a tremendous tourism opportunity that we need to take more and better advantage of.

And, finally, the creation and development of ecosystem markets is an opportunity for new resources and capital to be invested in rural communities. I'll give you an example of what an ecosystem market is. If you are a small town in Southern Ohio and you're confronted with a circumstance of having to build a new wastewater treatment facility because your department of natural resources is suggesting that there are problems of the water quality that you're utilizing, you have now two choices. You have the choice to build the facility, or you have the choice to establish water credits that you can essentially sell to farmers that they can use to institute conservation practices that prevent soils containing pesticides and chemicals from getting into rivers and streams, thereby reducing the necessity for the upgrades that the department of natural resources is requiring. As we create these opportunities of ecosystem markets, we create resources that otherwise might go into high-priced infrastructure that can be used to create wealth opportunities in farm country.

All five of those strategies are currently at work within USDA and are being worked on and expanded. Today, for example, we're announcing roughly $3.3 million in technical assistance grants on our broadband program to 14 States and Tribal areas designed to give them the resources to go out and aggressively promote the utilization of broadband, so that small business owners and communities fully understand the power of this resource, but even if we focus on these strategies, it will not work as effectively unless we put it into a frame that encourages communities in those small towns and in those rural areas to look beyond the borders of their own individual town. It is important that they understand that they are part and not alone. They are part of an economic region. They are part of a larger geographic area, and they must understand their role that they play in that region, and they have to understand the opportunities that the region presents and how they can leverage resources and leverage brain power to take full utilization of those opportunities. And so we're in the process of trying to encourage economic development directors, chamber of commerce folks in these small communities to think beyond their borders.

The way it used to work, you were only concerned about that industrial park on the outskirts of town. You built that spec building, and you hoped and prayed that somebody would come and fill it. And when it did, you would have a celebration. The balloons would be out, the ribbon would be cut, the small-town newspaper would cover it, and you would think you had been involved in significant economic opportunity. I'm not demeaning those efforts. I'm just simply saying that we need to do more and we need to leverage, and we need to get a bigger bang for the resources that we are currently spending in these communities.

The reality is that if you leverage those resources and leverage the brain power of a region as opposed to a small town, you have extraordinary opportunity to fully utilize these strategies of broadband and energy and conservation and outdoor recreation in ecosystem markets and this local production opportunity significantly -- significantly -- and you can use the resources more effectively and efficiently in terms of infrastructure construction, and those infrastructure dollars can be wisely targeted and spent if you have an overall regional vision.

That requires a different thought process. It requires folks to sit down and talk to each other. It requires folks to think about what their strengths and weaknesses are as a region, not just simply as a community.

We want to facilitate that kind of conversation at USDA, and so today, as part of our Rural Business Opportunity Grant Program, we are announcing 27 grants of a little over $2.5 million in 17 States. Nine of those 27 grants are specifically targeted to nine regional efforts to encourage the kind of planning and visioning that is required in order to have a full understanding of precisely what your capacity as a region can be, how you can fit that capacity into some of these strategies that USDA is investing in, and how you can leverage your resources.

In addition to that, we're also announcing, as part of our Rural Community Development Initiative, efforts to provide more technical assistance in the development of these plans, and so we're putting out a Notice of Funds Availability today of $6.25 million in which we are going to encourage folks to understand and appreciate thinking regionally by offering additional points as part of the application process if what is submitted is something beyond what we usually get, which is an individual community's application, where we see opportunities for communities to essentially come together and make a single request as a region. They will get additional points and most likely make their application far more competitive than it might otherwise be.

We decided to test-market this in 2010. We had a small amount of money, which I referred to earlier, the $2.5 million, and we decided to say is there anybody interested in this regional approach. And I see Chuck here. He knows where this is headed. I think we thought maybe we'll get 10 or 15 or 20 applications. I think the folks in Congress thought we wouldn't get any applications. We ended up getting over 400 applications.

We were so overwhelmed with the response that we realized we had a responsibility above and beyond awarding the resources that we had available, that we really needed to also provide additional technical assistance to those who weren't successful because we have something going here, and we want to continue to sort of support it. And as a result of that response, we crafted our 2011 budget to really promote this concept because once you have people thinking regionally, once they have a strategic vision for their region, once they understand where there are possible opportunities for broadband or conservation, whatever it might be, then the question is how can you help them implement that vision.

Well, we have roughly 40 Rural Development programs. We take roughly 20 of the 40 Rural Development programs that could really be meaningful, and we essentially say to yourselves we are going to take a percentage of those programs off the top. You can pick a percentage, 1 percent, 5 percent, 10 percent, whatever the percentage is. We are going to park those resources, and we are going to say to those successful communities that are thinking regionally, "This is the pot of money that we will use to help you succeed. We will break down the silos of these programs. We will try to provide as much flexibility and simplicity as we possibly can and try to target those resources to basically have your plan become a reality," and then we'll take one additional other step that needs to be taken by every department of every government at every level, which is that you don't simply say we've done our job at USDA. If the plan requires some resource from the Department of Transportation or it could potentially qualify for a Department of Energy grant or it may be something that even HUD might be interested in, we will help walk you down the Mall to the building, and we will help navigate you through the maze of programs that other departments have like we have. We'll adopt you. We'll help you. We'll assist you in understanding what the requirements are.

Here is why this is important, apart from the fact that for many people living in rural America, they think that folks in this city do not understand them and sometimes do not craft programs with them in mind. If I had a dollar for every time I've heard in this city since I've come here that 80 percent of America lives in urban America, we wouldn't have a deficit. I care about that other 20 percent, and here's why.

I make the case that the value system of this country is rooted where those 20 percent live. If you think about how this country got started and who started it, it is pretty clear that the folks who started it were rural, and most of them were farmers. And as they concede this country, they understood that there was some mutual obligation here between country and citizen, just as there is a mutual obligation between farmer and land. The farmer wants to reap the benefits of planning but understands that you can't continue to take from the land. You got to give something back. You have to replenish it. A country is no different. You can't keep taking from it. You have to give back from time to time. Now, who is it that gives back to a country, and how do they do that?

Well, one area where you can give back to your country is in military service. Rural America represents 16 percent of the population of this country, but 40 percent of the kids over in Afghanistan or Iraq that are risking their life every day, they come from rural America. They come from those small towns, those farms, those ranches.

Now, why do they do that? Now, I would imagine that some are saying, "Well, because that's where the opportunity is." I think it's more than that. I think they're raised in an area where the value system that surrounds them impresses upon them that they do have an obligation, a responsibility to give something back. I think that makes rural America a very important place. I think that makes rural America a place that everybody, regardless of where you live, ought to be concerned about, apart from the fact that it's a source of your food, 80 percent of your water, an ever-increasing amount of your energy. That's where your value system is. It's where it's alive and well. It's where it's replenished from generation to generation, and if we allow it to age and decline and present less of an opportunity for those to enter the middle class and be part of the middle class and enjoy the benefits of the middle class, we will all suffer.

So I am here today to tell you that USDA is certainly focused on this. It is part of our responsibility. It is part of our mission. It is part of our passion, and we are going to work hard to convince policy-makers to give us the tools and the flexibility to make this work, and I think if we are given those tools and that flexibility, we can create more opportunity.

Now, why am I so confident of that? Because as a governor for eight years, I saw it happen in my State. Reference was made to the great places. They just did a study of great places. Reduce the decline in population. Increase tourism. Increase jobs. Increase income levels. We also saw the benefit of focusing on strategies and industries that made sense. In 2004, 2005, Iowa had one of the fastest-growing economies in the country in large part because of our focus on energy, expansion of broadband statewide, opportunities of using conservation dollars, the kind of strategy we see here. Every State has the capacity to make and take advantage of this, and every State should.

So, with that, I would be happy to answer questions.

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