BREAKTHROUGHS BUsiness Horizon Quarterly

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// O P P O R T U N I T Y F O R R U R A L A M E R I C A !"!#

Technological breakthroughs have always been critical to the economic success of rural areas. Today, this innovation holds promise for the

entire American economy.

Our farmers and ranchers have consistently found through innovation new ways to grow more with less. American researchers and agronomists are responsible for some of the most amazing and groundbreaking discoveries of the 20th century. And since the time of President Lincoln, we as a nation have found it important to support such innovation at the federal level.

We are uniquely poised today to continue our traditions of innovation, partnership, and investment. To achieve this, we must understand the evolving importance of rural areas to our nation. As a part of that discussion we must recognize the willingness of Americans to innovate and adapt to changing circumstances. We must appreciate our potential as a society to further invest in new markets, and always be looking for new partnerships that translate innovation into business success.

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Rural America provides a great deal to all of us—an abundant food supply, clean water, renewable energy, outdoor recreation, and much more.

Almost all of our food supply is grown in rural parts of the country, which is why the United States imports less than 20% of the food it consumes annually. Much of our food is then processed and packaged in our cities, creating jobs for those in urban areas.

It wasn’t always this way. For example, corn production per acre remained static through the 1940s at about 35

bushels per acre. Yet technology and research into new crop variants helped production skyrocket over the last generation. From 2007 to 2011, America’s corn growers were producing more than 150 bushels per acre, on average. And in 2012, even in the face of an historic drought, they were able to produce more than 122 bushels of corn per acre.

Rural America bears primary responsibility for conservation. Some don’t know it, but 88% of water falls on private land, ultimately supplying the watersheds that provide drinking water to our cities. E!orts in the years following the Dust Bowl revolutionized America’s soil conservation e!orts—and in the decades since, farmers and researchers have greatly expanded our knowledge for how best to care for the land.

Today, rural Americans have undertaken targeted e!orts to implement speci"c conservation practices that can yield three to "ve times the bene"ts of old, general approaches. Ultimately, they further reduce problematic runo! nutrients making it to rivers and streams by as much as 45%.

Rural America also provides a great deal of America’s energy resources. In 2010, for the "rst time in more than a decade, America imported less than half of the oil it consumed. #is is both because we have expanded our domestic production of conventional fuels—which come almost exclusively from rural areas—and because we have invested in greater e!orts to generate renewable energy.

Wind power, for example, is expanding dramatically and accounted for about a third of new electric capacity in the United States in 2011. Further, nearly 70% of all wind generating equipment installed at U.S. wind farms in 2011 came from domestic manufacturers, doubling from 35% in 2005.

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BREAKTHROUGHS BUsiness Horizon Quarterly

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And while conventional biofuels continue to support nearly half a million jobs while bringing down the price of gas, development of advanced renewable fuels holds tremendous promise. Biodiesel production, for example, reached more than one billion gallons of production in 2011, supporting nearly 40,000 jobs across rural America.

We have also found tremendous new uses for agricultural products that hold promise to revolutionize manufacturing. More and more companies today are making products from renewable sources grown locally and regionally. !ese goods include building materials, industrial cleaners and paints, and plastics that can be used to make everything from car parts to soda bottles. !ey are helping reduce our dependence on foreign oil, while holding the promise to create more sustainable jobs.

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In all of these areas, Americans have achieved great things. As we look ahead to the future of rural America, I believe we will need to create new markets to reap the full economic bene"t of this innovation. Creating these new markets is a priority at the U.S. Department of Agriculture (USDA), and we are doing so today in four key areas: production agriculture, local and regional food systems, natural resource development, and the bio-based economy.

First, American farmers continue to grow more food and increase their capacity to feed the world—and USDA is creating new opportunities to sell U.S. products. By prioritizing exports, USDA has expanded markets abroad for U.S. commodities, helping the Obama Administration secure new trade agreements with Panama, Colombia, and South Korea. USDA has removed numerous other barriers to U.S. trade. In the past year alone, we have removed restrictions to help farmers provide more U.S. apples to

South Africa, potatoes to Japan, logs to China, organic produce to the European Union, and more.

Further, through our research e#orts, USDA scientists continue to develop groundbreaking methods for use by producers while partnering with colleges and universities across America to conduct similar research.

Second, we have developed stronger local and regional agricultural food systems. USDA’s e#orts have increased the number of farmers markets to 7,800 nationwide, a 67% increase over 2008. !is also includes creation of regional food hubs—more than 200 of which exist today—to help smaller producers reach larger markets.

!ird, USDA is helping to create markets for advanced biofuels, from the farm "eld to the end user. We have invested in the next generation of biofuels, establishing a program to help growers and landowners farm 60,000 acres of plants that will ultimately be converted into advanced renewable energy. To ensure those feedstocks are put to use, USDA has invested in e#orts to create or retro"t nine new advanced re"neries nationwide, along with six regional research centers across America to develop energy technology that’s appropriate to every region. And we have worked with agencies across the government to develop a customer base for the resulting products. For example, the U.S. Navy has taken steps to create a “Great Green Fleet” of ships and aircraft that run on the next generation of advanced biofuels.

We are also helping create markets for bio-based products. USDA has created the “USDA Biobased Product” label that now appears on more than 25,000 products that are manufactured by more than 3,000 companies. Meanwhile, the Obama Administration has prioritized such products for purchase by the Federal government, giving preferred status to more than 9,000 bio-based products across more than 75 product categories.

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// O P P O R T U N I T Y F O R R U R A L A M E R I C A !"!#

Fourth, we are focused on creating markets in the area of conservation and natural resources. USDA has supported e!orts to develop environmental markets for water quality, carbon sequestration, and other natural services. "ese markets hold potential for farmers, ranchers, and forest landowners to receive new revenue streams, while delivering cost e!ective results for businesses to address environmental requirements.

USDA scientists are also conducting research on the use of wood, helping companies meet green building design standards and create cost-e!ective products. U.S. Forest Service research into wood-based nanotechnology is leading the way to the development of plant-based construction materials, body armor, and more. Additionally, the Forest Service has carried out more than 150 projects since 2009 to convert woody biomass and other forest products to energy. "is is just one more avenue through which we can help create new markets for forest products, along with new opportunity for business.

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Ultimately, I see an opportunity for our nation to reap tremendous economic bene#ts from the innovation taking place across America’s small towns and rural areas. "e same innovation that helped farmers increase crop production, produce renewable energy, improve conservation practices, and revolutionize manufacturing can continue in the coming decades.

"e key lies in developing even more partnerships that draw on our unique strengths as Americans. Government, academic, and private sector innovators can partner to develop groundbreaking methods that our farmers will be eager to incorporate. Likewise, the growing prosperity of agriculture holds numerous bene#ts for business—from

advanced renewable energy to wood nanotechnology as well as innovative new local and regional food marketing.

Innovative research and development are going on across the country today, from our smallest towns to our biggest cities. Our investments at USDA are aimed at building partnerships and furthering innovation. We have tremendous partners across the nation, from the farm #eld to the boardroom. Together, I know that we can grow prosperity in rural America, and grow the bottom line for American business.

Tom Vilsack serves as the Nation’s 30th Secretary

of Agriculture. As leader of the U.S. Department

of Agriculture (USDA), Vilsack is working hard to

strengthen the American agricultural economy,

build vibrant rural communities, and secure a

stronger future for the American middle class.

Prior to his appointment, Vilsack served two terms as the Governor

of Iowa, in the Iowa State Senate, and as the mayor of Mt. Pleasant,

Iowa. A native of Pittsburgh, Pennsylvania, Vilsack was born into an

orphanage and adopted in 1951. After graduating Hamilton College

and Albany Law School, he moved to Mt. Pleasant - his wife Christie’s

hometown - where he practiced law.

At the Business Horizon Series in December 2012, Secretary Vilsack highlighted USDA’s work to create new markets, foster new understanding, and further opportunity in rural America. You can learn more about these e!orts at www.usda.gov/opportunity. For more on this topic, go to forum.uschamber.com/agriculture.