Release No. 0452.02

of

Press Conference with Agriculture Secretary Ann M. Veneman,

Deputy Under Secretary Hunt Shipman, Chief Economist Keith Collins and Deputy Budget Director Scott Steele.

Friday, October 18, 2002

LARRY QUINN, USDA MODERATOR: Welcome to this news conference with Secretary of Agriculture Ann Veneman, and joining the Secretary today are Hunt Shipman, Deputy Under Secretary for Farm and Foreign Agricultural Services; Keith Collins, our USDA Chief Economist; and Scott Steele, our Deputy Budget Director.

We'll begin today's session with an opening statement by Secretary Veneman. Good morning.

SECRETARY VENEMAN: “Thank you, Larry, and thank you all who are on the line today for participating in this teleconference.

“During the past several months, we have tried to do these forums on a fairly regular basis to communicate with farm broadcasters and agriculture reporters all around the country, particularly regarding the farm bill implementation and other important agriculture issues.

“Today, we want to talk about progress on the farm bill, but we also want to talk about a number of other issues as well, including some of the trade issues, some food safety issues, including the recall that we announced last weekend, and of course the farm bill implementation.

“Since President Bush signed the farm bill into law in May, our team here at USDA has worked very hard, very aggressively and efficiently to put in place the complex and many new programs required under the new law. In a very short amount of time, we've accomplished a tremendous amount, and I'm very proud of all of our employees here in Washington, and throughout the country, for their dedication and hard work in getting the job done on behalf of our nation's farmers and ranchers.

“I particularly want to thank the three gentlemen who are with me here in the studio today--Hunt Shipman, Keith Collins and Scott Steele--who have served as the overall coordinators for the farm bill implementation process, and I must say they've done an outstanding job in accomplishing this overwhelming task.

“The work that they have done and through the farm bill implementation, as well as other programs, will pump more than $13 billion into our farm economy, to our farmers and ranchers in the coming weeks. I want to review some of these programs with you today.

“First, starting with Direct and Countercyclical Payments. This week we began making direct payments to producers for the 2002 crop, which will amount to approximately $1.3 billion. This amount was included in the new law and is in addition to the $4 billion in direct payments, which have already been distributed under the 1994 Farm Act for the '02 crop year.

“As well, producers will be receiving new countercyclical payments. These payments were issued when effective prices fall below target prices set in the farm bill. Market conditions indicate producers of cotton, rice and peanuts will begin receiving approximately $610 million in advance payments this month.

“So both the direct and countercyclical payments are on schedule, and just about two weeks the payments begin after the sign-up began. So this is very good news for our farmers and ranchers.

“With regard to the Dairy Payment Program, payments also began this week for what's called the Milk Income Loss Contract or MILC program, M-I-L-C, compensating dairy producers when domestic milk prices fall below a specified level.

“Approximately, $900 million in payments will be made for the transition period that began December of '01 and runs through September of this year. In addition, payments are also beginning at once for the program year that began on October 1st for the '03 year.

“USDA also has implemented an historic overhaul of the peanut program, as indicated by the farm bill, replacing the market quota system with a marketing loan program. Peanut loan rates were announced in late August, and loans began under the new program last week.

“Sign-up for the Peanut Quota Buyout Program began on September 3rd, and $1.3 billion in payments began October 11th to quota holders who may elect to receive either a lump-sum payment or five equal installments on the quota buyout.

“Regarding the 2000 Apple Market Loss Assistance Program, approximately, $75 million in payments begin next week. Sign-up also began on October 1st for the Apple Program third stage authorized in the new farm bill. This will provide about $94 million to eligible growers for their 2000 crop year apple production.

“The new farm bill also provides record levels of support for environmental stewardship and conservation on working farmlands. We have also talked about that this law provides an 80-percent increase in conservation funding, with 85 percent of that being conservation programs for working farmlands. That's quite a very, very strong, new addition to this farm bill.

“President Bush and this administration worked hard to strengthen the tools that producers have to continue to be the best stewards of the land in this farm bill, and I think these numbers show that we have succeeded.

“Earlier this month, we began issuing nearly $1.6 billion in annual rental payments to producers under the Conservation Reserve Program, reauthorized in the 2002 farm bill.

“We've also made available recently to producers through the Farmland Protection Program, the Wetlands Reserve Program and Conservation Reserve Enhancement Program additional assistance.

“On the issue of drought assistance, we in this administration continue to utilize every tool available within our authority to provide disaster assistance to our farmers and ranchers experiencing drought and other weather conditions.

“Today, we are announcing seven additional counties in seven states that we have declared agricultural emergencies because of various adverse weather conditions, thus making producers in these areas eligible for disaster programs and low-interest loans. These states are Ohio, Georgia, Illinois, Pennsylvania, Maryland, New Jersey and Delaware.

“USDA has worked hard to make assistance available to livestock producers who have been affected by severe drought conditions and have very limited risk management tools available.

“Just less than a month ago, we announced a new $752-million Livestock Compensation Program for cattle, sheep and buffalo producers in counties that have received primary disaster designation due to drought in 2001 and/or 2002. We began making payments to producers on October 8th, just one week following program sign-up, thus, providing another source of immediate drought assistance to those producers most in need.

“In August, we announced $150 million Feed Assistance Program for cow-calf operations in four states hit hard by drought conditions. Almost three-fourths of those funds have been provided to producers to date.

“I would also like to point out that we have provided other assistance to producers in response to drought and other weather-related conditions.

These have included:

Authorizing emergency haying and grazing on Conservation Reserve Program acres nationally;

Providing more than $50 million in Emergency Conservation Program funds to help producers rehabilitate farmlands damaged by natural disasters;

Working with states to expedite the approval process for declaring emergency disaster areas so that farmers can receive the same type of low-interest loans available to other sectors of the economy stricken by natural disasters; and,

Allocating $10 million for EQIP funds to states severely affected by drought.

“But our efforts have not stopped there. The Federal Crop Insurance Program is providing much-needed risk protection for the nation's farmers and ranchers. This year, almost 80 percent of the nation's insurable acreage is included in the program, and producers covered by crop insurance will begin receiving their indemnity checks this month.

“Current estimates indicate that about $4.1 billion in indemnity payments will be issued for 2002, mostly for production losses for the major commodities as a result of drought and other adverse weather conditions.

“These amounts could be higher when the impact of the recent hurricanes on the coastal cotton and sugar cane crop are fully tallied.

“I must say that we are pleased, not only in our progress to date on Farm Bill implementation, but that we have delivered in a very short time frame major program benefits that will help farmers and ranchers throughout the country. Farmers will receive their checks on time, as required by the new law, and the more than $11 billion that this additional cash flow is--that this additional cash--I should say $13 billion of this additional cash that's flowing to the agricultural sector, is being done at a critical time in the year for our producers.

“But our work is not done, there is still much more to do, and we continue to work diligently to complete implementation of the law's many, many other provisions.

“We will also continue to work closely with producers to make sure that they best utilize these programs to receive needed benefits as intended by Congress.

“I want to just touch for a moment on the trade front. U.S. Trade Representative Bob Zoellick left yesterday for Santa Cruz, Bolivia, to lead the U.S. delegation for meetings this weekend with ministers of the Cairns Group of agricultural-exporting countries to discuss the WTO negotiations.

“This is a similar meeting to the one that Ambassador Zoellick and I both attended last year in Uruguay, and it was important at that time in launching the Doha negotiations.

“Dr. J.B. Penn, USDA's undersecretary for farm and foreign agricultural services, and David Hegwood, our international trade counselor, have both joined Ambassador Zoellick for these discussions.

“As you know, in late July, the United States became the first WTO member to put forward a comprehensive agricultural trade reform proposal that would bring more fairness and equity into the international trading system.

“This is an important meeting as we work together to achieve an ambitious and comprehensive agricultural trade reform as outlined in the Doha development agenda.

“Regarding another trade issue, we are pleased that China has officially published new measures that should provide a nine-month extension of interim provisions regulating biotech agriculture products, which will allow continued exports to China of up to $1 billion in U.S. soybeans. As you know this has been an important issue for the Bush administration.

“President Bush has discussed this issue with the Chinese premier, and as well I traveled to China this summer to press the matter and Ambassador Zoellick and his team have worked as well to resolve this issue.

“China is one of the fastest-growing markets for U.S. soybeans, so we are pleased with China's announcement and it is an important step in assuring that the market continues to function smoothly as China implements new regulations.

“I know that I've gone for quite a long time today but there are several issues that we wanted to discuss today. One last topic and then we will take your questions, and that relates to food safety.

“Just over this weekend, we announced a voluntary recall of more than 27 million pounds of ready-to-eat meat products due to the discovery of Listeria on a product contact surface at a processing facility in Pennsylvania. This followed a smaller recall where product tested positive for Listeria.

“While the initial recall was not associated with the report of consumers who have been stricken from the Listeria outbreak, the Centers For Disease Control have confirmed that one environmental sample on a product contact surface was associated with the strain linked to some of the reported deaths and illnesses.

“USDA, along with the Centers For Disease Control, and other federal and state health agencies, is continuing its scientific investigation into this situation.

“We don't have all the answers now as to how the contamination may have occurred, but a great deal of work is being done to determine the facts.

“The plant involved will remain closed until our investigation is complete and appropriate corrective actions in that facility have been taken to protect the public health.

“The voluntary recall and the removal of product from retail establishments is actively underway. USDA's conducting an aggressive education and outreach campaign to consumers, particularly those at high risk as well as retail establishments and other institutions including schools that may have received product.

“Let me just say that our top priority at USDA is the protection of public health and we must continue to ensure strong prevention and enforcement programs are in place to best protect consumers.

“That is why USDA's food safety team, upon learning of the initial illnesses, has worked very closely with the CDC to determine the source of the contamination, and it took quick action to begin the voluntary recall and suspension of production by the plant when the tests showed Listeria in the facilities.

“I have requested FSIS, the Food Safety Inspection Service, to develop a plan to strengthen our current testing program for this organism.

“This includes a revised testing protocol focusing on those establishments that produce the vast majority of product, thereby increasing the number of samples taken in testing being conducted at each establishment.

“This testing will include product as well as environmental samples. We will also require that establishments producing ready-to-eat products reassess their HACCP plans to account for the likelihood of contamination with Listeria.

“The team at USDA has been working hard to complete a rule that was proposed last year in ready-to-eat meats. A risk assessment, which is critical to implement this rule, is in the final stages of completion.

“As well, USDA is conducting a scientific symposium in November on this issue, which will help to provide the information needed to complete the new rule in the coming months. Again, USDA is strongly committed to ensuring that our programs are effective to best protect the public health. Our response will continue to be aggressive and swift, and these immediate actions will further strengthen food safety protections.

“Consumers who would like more information about the product recall can visit our website at www.usda.gov. Public health information, including precautionary steps that can be taken to prevent food-borne illness are contained on that site, so I encourage all of you to help us get the message out to consumers about this important food safety information.

“Again, I would like to express my appreciation for those in the media who have already helped us get this information to consumers. I want to thank you all again for joining us today, and all of us here in the studio will now be happy to respond to your questions. Thank you very much.”

USDA MODERATOR: Thank you, Madam Secretary.

And we will begin our questions now with, first question from Ron Hayes, followed by Orion Samuelson. Ron Hayes of Oklahoma Agrinet and Clear Channel Networks in Oklahoma City, go ahead please.

QUESTION: Thank you, Larry.

And good morning, Madam Secretary. I mentioned on the air this morning, Madam Secretary, that I was going to have an opportunity to take part in this briefing, and got a call just about a half an hour ago from a farmer, a listener who farms in the Oklahoma panhandle near Hooker, Oklahoma. Larry knows that area pretty well.

He indicated that he had heard from me several times that farmers could indeed go in and sign up for the new Farm Program at their local FSA office, but that when he had gone and set up an appointment, they told him that they weren't ready as of yet.

I called the Director's Office just a few minutes ago, Texas County, Oklahoma. The Director there said that farmers could come in, sign papers, but she added that she didn't have the software to actually add the base and yield changes onto the contract computation, so--and they didn't know when the software was coming, so they had asked their producers to actually hold off for a few weeks before coming in and actually doing the final paperwork. She said there wouldn't be checks going out until they had that actual software to be able to finish the computations.

You know, where do we actually stand on that? Do we have some checks actually going out from the commodity portion of the Farm Bill?

SECRETARY VENEMAN: “ Indeed we do have checks going out, and farmers and ranchers are getting checks as we speak. Obviously, there are going to be areas of the country which may be better prepared in terms of having everything in place to service the customers, but we want to make sure that we get the appropriate benefits to everyone as quickly as possible, and we are working with FSA all throughout the country to make sure that that happens. But if we can get the specific information on the office that has difficulties at this point, we will put some extra emphasis from here in Washington to make sure that they have the appropriate tools to deliver the benefits to our farmers and ranchers.”

MR. SHIPMAN: And, Ron, I would just add that the regulations that were necessary in order for us to be able to issue these checks was published on October the 16th, and that was the same day that the software was made available to the county offices. You know, this particular individual may have encountered a county office that may have been a day late in getting the software just because of postal delays or whatever, but certainly the software is out there. The regulation's been published. The tools are there for these payments to be made, and they're in fact happening around the country.

USDA MODERATOR: Thank you, Ron.

Our next questioner will be Orion Samuelson, followed by Jeanette Meritt. Orion Samuelson from WGN in Chicago, and Tribune Radio Networks. Go ahead, Orion.

QUESTION: Thank you, Larry.

Madam Secretary, two-part question. With Congress away for a month, might the Bush Administration change its thinking on that $6 billion Senate aid package?

And number two, if they do go elsewhere, the President's saying that it must be offset by spending cuts elsewhere. Can you tell me if we went that direction, how that would work, or where it would come from?

SECRETARY VENEMAN: “Well, again, we have I think made our position very clear on this issue throughout the time that we've discussed it, and that is, we would work with Congress to find appropriate offsets.

But I think it's very important to re-emphasize what I did in my opening remarks, and that is, we have taken every action possible, including some very creative ones with this Livestock Feed Assistance Program that utilized non-fat dry milk out of our storage cave, as well as this Livestock Assistance Program we just announced to make sure that regardless of whether or not Congress finished its action, we were able to get as much assistance as we possibly could out to farmers, particularly those that didn't have other risk management tools available. And that's why we really focused on the livestock sector, because even though we are working on the kinds of risk management tools through crop insurance programs that could apply in the future to livestock producers, they don't currently have the kinds of crop insurance tools available that so many of our other farmers and ranchers do.

“As I said earlier, one of the things that we're very pleased about is the fact that our crop insurance programs are working. We have over 80 percent of our croplands now in crop insurance, which means our farmers and ranchers have these kinds of tools available and aren't left with nothing when they're stricken with this kind of drought or other weather-related disaster. So we are going to continue to get--

“Those program benefits are starting to go out as well. That will amount to over $4 billion in assistance this year. And so again we understand the situation out there and we've tried to do everything we can to provide the absolute maximum assistance that we can under our current authorities.”

USDA MODERATOR: Rick Cowan should be standing by, and Jeanette Meritt is next with Agro-America Network in Indianapolis. Jeanette?

QUESTION: Thank you, Larry.

Good morning, Madam Secretary. Since lawmakers have left or will be leaving to go home and focus on their own election races, what does that do to the proposed Department of Homeland Security and the agricultural components of that department?

SECRETARY VENEMAN: “Well, as you know, this has been a priority of the President to get this new Department of Homeland Security done. And obviously, the Congress has not reached agreement, primarily over the issue of certain kinds of authorities relating to employees and having some flexibility.

“But the fact of the matter remains, we are absolutely committed in our department to doing our part in Homeland Security, to protecting the food supply at every level. As you know, the part of the Department of Agriculture that would be transferred to the new Department of Homeland Security is that portion that conducts inspections primarily with imports coming into this country. And the thinking behind that is so that we can better coordinate inspection resources with Customs and other--and INS and so forth with other agencies that have border responsibilities, so that it would be a coordinated system.

“We continue to coordinate, despite not yet having a Department of Homeland Security, we continue to review all of the things that we're doing to make sure that we are able to do everything we can to protect the food supply.

“I might add that the House acted quickly on the President's request, passed this legislation that would be required, and the Senate could not reach agreement, so we were unable to get this Homeland Security new office implemented as the President wants so badly.”

USDA MODERATOR: Cyndi Young should be standing by. The next question is from Rick Cowan of Reuters. Rick?

QUESTION: Hi. If I could ask a two-part question related to trade in the Middle East. This week Egypt bought a large amount of U.S. wheat, even though much cheaper French wheat was available. The first part of the question is, do you know whether that as because Egypt was using a U.S. aid program to buy it and whether you anticipate more purchases through that?

The second part of the question is whether you have any concerns of sales like these being jeopardized if there is a war in Iraq and the Middle East?

SECRETARY VENEMAN: “Well, I'm quite certain that this was a commercial sale to Egypt. I am aware that it was made, and certainly we appreciate the business of Egypt, and we would hope that we can continue to expand agricultural exports all around the world. You know, if there are conflicts, certainly sometimes trade is interrupted temporarily, but we plan to do everything I believe in this country to make sure that we continue to be a reliable supplier of agricultural exports.

“You know, one of the issues that we discussed recently that showed the very importance of our agricultural exports, is the issue that came up with the West Coast port strike, when we had so much product waiting to go out. And I think we really--it was brought home to all of us how critical agricultural exports are to our farm sector, particularly when we were in a position where we couldn't get that product onto ships and exported to our customers.

“So we're going to continue to do everything that we can. Certainly the President's action with regard to Taft-Hartley was very important to make sure those exports continue to move and to make sure that we continue to be a reliable supplier, and we want to do everything we can to make sure that happens.”

USDA MODERATOR: Ed Maxiner will be our questioner following Cyndi Young from Brownsville Network, Jefferson City, Missouri. Cyndi?

QUESTION: Thank you, Larry.

And good morning, Secretary. My understanding--kind of as a follow up I guess to the question, the last question--my understanding is that things are still slow at the West Coast ports. What long-term repercussions do you see in agriculture, specifically in wheat, beef and pork trade?

SECRETARY VENEMAN: “Well, let me just say that--and I'll have Keith Collins also respond to this--but there is a backlog that accumulated during the 11 days that the ports weren't operating. That has had an impact on some perishable products that we will not be able to ship. There is still a backlog on a number of agricultural products, but the fact of the matter is, product is now being loaded and off-loaded and being shipped.

“I think if this strike were to continue for a long time, or this work stoppage were to continue for a long period of time, we could be questioned as a reliable supplier of agricultural products, and thereby lose market share to other countries around the world, and certainly we hope that that won't happen.

”But I'll ask Keith Collins to make a few comments as well.

MR. COLLINS: Yeah, I'd be happy to. The 11-day strike is not something that you can overcome in just a couple of days. A transportation expert suggested it takes 4 to 6 days to get back to normalcy in West Coast ports for every day that they're out on strike. So we did expect that it will be several weeks of a lot of work would have to be done. There were over 250 ships that were anchored off West Coast ports when they went back to work. So I think what we're seeing is simply what people expected, that there would be some difficulty in recovering to that, but that we will recover.

Regarding long-term prospects for our exports, of course, 40 percent of our wheat goes out of West Coast ports. A lot of--virtually all of our soft white wheat out of the Pacific Northwest goes out. I don't see a long-term effect from that providing we can resolve this problem over this 80-day cooling off period. If we face the prospect of another shutdown of West Coast ports, then we will--we'll have to deal with that if that occurs. But I don't see any long-term effect at the moment.

This year in particular, the Australians, our main competitor for soft white wheat, are having a horrible crop. Their normal production is cut in half, so we have actually a good competitive opportunity this year with our soft white wheat.

This year has been a weak year for meat exports. We're down roughly 5 percent on meat exports. This is the first decline in meat exports in the modern era that we've been exporting meat, but we have some good prospects I think in 2003. I think Japan is getting over its BSE problems and will buy more U.S. beef, and we have a very strong pork market in Asia. And as long as the ports gets back to work and we don't have further disruptions, I don't see any long-term consequence for our agricultural exports.

“

SECRETARY VENEMAN: “I would just add again that the President I think has been very strong in his commitment to try to get this resolved and to make sure that our economy is not disrupted by the work stoppage in West Coast ports. The President clearly understands how important this is to agricultural exports. As you know, he talks a lot about trade and agriculture. He knows the importance of the situation with regard to our agricultural exports and wants to continue. We've worked very, very closely with the Labor Department as they have taken the lead in trying to get this issue resolved.”

USDA MODERATOR: Joe Wary will follow Ed Maxiner from Farm Progress Publications.

Ed, go ahead, please.

QUESTION: Thank you. Good morning, Madam Secretary.

A question on Europe and biotech rules. You know, after four years of moratorium on new biotech products, the EU yesterday approved or put into place actually new rules, but their ag ministers and the European Parliament are still debating and unable to agree on other elements of the same rules. So the USTR yesterday had called their rules basically a violation of world trade law, world trade rules.

My question is how long does the U.S. wait to challenge EU on their long hold-up of new biotech products?

SECRETARY VENEMAN: “Well, we have continued to press the EU very, very hard on this issue. As you know, the EU has a system that works a little differently than ours in that they need to get all countries to agree on the new rules and regulations, which has been the holdup because they've been unable to do that. We just recently had some foreign visitors in from the EU and talked very extensively about this issue and continue to do that whenever we have discussions with any people from the EU coming to the United States or us going there.

“USTR is looking at various alternatives for what we might do in terms of whether or not we should take some kind of action. Certainly, that's being seriously considered. But, again, as we look at the whole issue of biotechnology and acceptance, it is so important that we have an understanding of these technologies, what they mean for the future. You look at already the environmental benefits we've seen in this country from using Bt corn and cotton, for example, in water quality. These are measurable results we're seeing.

“We are going to begin to see health benefits from so many of these crops. We're going to be able to see crops that can grow in areas in Africa where there have been food deficits for so many years.

“We need to continue to educate people all around the world about the benefits, and when things happen like they did recently with these food aid shipments, and African countries not taking food aid because of concerns over biotech, this is something that's a very, very serious issue and begins to impact whether or not hungry people have food. And so we have continued to press the EU very hard because the kind of thing that they're doing I think does start to spill over, in terms of even feeding the hungry world.

USDA MODERATOR: Following Joe Wary, we will have a question from Emery Cleveland.

Joe Wary, Mid America Ag Network, Wichita, Kansas. Good morning, Joe.

QUESTION: Good morning, Larry. Thank you very much, and good morning to you, Madam Secretary. [Audio break] --poultry was distributed to U.S. schools and state agencies nationwide. Is this a cause for concern, especially for folks like me who have children?

USDA MODERATOR: I'm sorry. We lost the first part of your question there, please.

QUESTION: The first part of the question was how will the recent recall of poultry products affect trade with Russia's poultry purchases?

SECRETARY VENEMAN: “We don't anticipate that it should have any impact whatsoever. This was ready-to-eat products that was recalled due to the Listeria find. Again, this was a find within a plant on a surface. We have had no findings of Listeria matching the Listeria from which people have gotten sick on a product. In other words, there's been no product actually linked to the illnesses.

“So there is still some uncertainty, but these actions were taken to make sure because, number one, there was Listeria of the same strain actually found in the plant in an environmental survey. With all of the product testing that's been done, we have not yet linked it to a product. But, nevertheless, the recall is going on, it's going on very aggressively, and the product is being pulled off the shelf.

“It's also very important to recognize that Listeria generally is not a serious health risk to anybody but the populations most at risk, and that would be pregnant women, people who have health problems, usually the elderly or very small children probably under the age of two.”

USDA MODERATOR: Following a question from Emery Cleveland, we'll be going to Don Wick.

Emery Cleveland is with Waitt Farm Network in Bellevue, Nebraska. Emery?

QUESTION: Thanks, Larry, and good morning, Madam Secretary.

On October 1st of this year, the Department of Agriculture published rules to implement the CCC Bio Energy Program. Now these rules are proposing to cut bio diesel funding by 60 percent. Now, given the fact that there's been unused funds in all three of the past years and also the Department's own studies show that stimulating biodiesel demand will save money in the soybean program, why would USDA want to cut the bio diesel funding so dramatically?

SECRETARY VENEMAN: “I'm going to have Keith Collins just review some of our alternative energy programs because I think we've been very aggressive in those areas, and he is the lead in the implementation of the new energy title of the farm bill.”

MR. COLLINS: Thank you, Madam Secretary.

Regarding the BioEnergy Program, that's a program we started two years ago under our own discretionary authority. It was codified in the farm bill. The rule that you're talking about that we put out on October 1st was to implement the farm bill language for the CCC Bio Energy Program. We did not cut the funding of that program under that rule. We have available, by law, $150 million a year to operate that program. We will use $150 million this year if we have that many ethanol or bio diesel producers make a claim on the funds.

What you are referring to, I think, is the fact that we changed some of the payment rates, the compensation rates. Under the program, we share the costs with ethanol plants and bio diesel plants in purchasing corn or soybeans or other agricultural inputs that they use to produce their energy product. We share the cost only on the additional production.

We did change our payment rates to producers of bio diesel using soybean oil to make bio diesel. The reason we did that is, is that we believe we, in fact, made an error last year when we established the payment rates for soybean oil. We calculated our payment rates based on soybeans, not soybean oil, and it resulted in what we believe to be a higher-than-competitive rate that we paid last year. But once we had announced that, we realized three-quarters of the way through the year what we had done, we continued to finish the year with those payment rates, but we fixed our error with this rule that we just put out.

So we're not cutting back funding. The $150 million is available. However, we are establishing payment rates that are more accurate and based on competitive market prices.

SECRETARY VENEMAN: “I might also add, with regard to the energy situation in agriculture, that, first of all, the President's energy plan that he initiated at the very beginning of his term included strong language with regard to renewable fuels from agricultural products, both ethanol, bio diesel.

“And as well, there's been an energy bill that was passed by the House, pending in the Senate. It's a priority of the President to get that energy legislation passed, and yet it has languished in the Senate, frankly. And that again had, at least in the Senate version, a renewable fuel standard that's been supported by the administration and is something that we know would help agriculture substantially, as well as help the country in terms of being more self-sufficient in energy. So, again, we continue in this administration to be very supportive of alternative fuels, and of renewable fuels and the opportunities that those provide for agriculture.

“If I might go back to the previous question for one second because I was reminded here in the studio that I did not answer the question as it related to the schools and the school lunch program.

“It is not uncommon for us to have recalls that involve a product that may have been purchased for school feeding programs and school lunch programs, and we have processes where schools are notified, they are part of the recall process, and certainly we will do everything we can to protect the public health with regard to schools, as well as everyone else in the country, and that's why we took such immediate action first with regard to the recall, and part of that is also working with schools.

“We do that both as a general matter, but also we have the Food and Nutrition Service dealing with the school lunch and the Agricultural Marketing Service that helps purchase some of the product that goes into school lunch, and we're working very closely with them.

“We also have a substantial information on our website to provide information on these issues.

“So, again, I just wanted to answer the rest of that question and reassure everyone there that we are doing all that we can to protect the public health in this situation.”

USDA MODERATOR: Emily Gersma from Associated Press should stand by, and our next question comes from Don Wick, WCCO, Minneapolis.

QUESTION: Thanks, Larry.

Madam Secretary, last month nearly 300 U.S. exhibitors were in Havana promoting U.S. food sales into Cuba. What opportunities do you see in Cuba for U.S. ag products and could the trade be liberalized so we could have more financing?

And if I could just ask a follow-up as well, what's the status of your health right now?

SECRETARY VENEMAN: “ My health is fine. I am in the process of the treatments now, but as I said when we initially discussed these issues when I made it public that I was going to continue to work and perform the responsibilities of my position, and I will hopefully continue to do that to the best of my ability.

“But thank you very much for asking. I appreciate that, and I truly appreciate all of the support that I've gotten from the agricultural media. It really is very much appreciated and has helped a lot.

“With regard to--let me just have Hunt Shipman answer your specific question on Cuba in terms of the--I mean, we continue to have product that's going into Cuba through commercial sales in accordance with the law, and I'll have Hunt and Keith Collins give you the exact numbers for this year, if we've got them available. We don't have them available.

“But we have seen commercial sales into Cuba, and clearly there were sales that were made from this show. There is not financing available because it is not authorized in the law at this point in time.”

MR. SHIPMAN: I would add to that that our analysis of the Cuba situation is that they don't have large amounts of cash with which to purchase agricultural products from the United States. So I think the point there is that the upside potential of growing that market is not very great at this point, right now, with the current situation that's going on in Cuba.

USDA MODERATOR: Okay. Our next question from Emily Gersma. Emily, go ahead, please. If not, I think at this point, Madam Secretary, I would offer you any opportunity for closing remarks.

SECRETARY VENEMAN: “Well, again, I would just like to thank all of you for joining us today. We appreciate the opportunity that you all give us to talk directly with you about the issues that we've been dealing with here at USDA and particularly I think it's been a critical time period as we've tried to effectively and efficiently implement a Farm Bill under a very short time frame, given the fact that this passed very late in the year and we had a Farm Bill that applied to the 2002 crop year, and I again want to commend the gentlemen that are in the studio with me today, Hunt Shipman, Keith Collins, and Scott Steele, for their tremendous leadership in helping to coordinate the USDA processes to make sure that this got done.

“As we now are able to get these payments out to farmers and ranchers, as I said, we are in the process this month of putting out over $13 billion in various kinds of payments to farmers and ranchers, both through the Farm Bill, through crop insurance.

“We believe that over 90 percent, probably over 95 percent will reach farmers and ranchers by the end of this calendar year. So there's a tremendous amount of money giving a big boost to our farm sector in the fourth quarter of this year and we're very pleased that we were able to implement the programs to do that.

“Again, I would just like to thank everyone today for being here and for joining us as we continue to talk about the issues that are so important to agriculture.”

USDA MODERATOR: Thank you, Secretary of Agriculture Ann M. Veneman. I'm Larry Quinn, bidding you a good morning or perhaps nearly good afternoon from Washington.

Thank you.

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