**{As Prepared for Delivery}**

**WESTI AG Days**

**Worland, Wyoming**

**January 31, 2006**

**Thomas C. Dorr**

**Under Secretary for Rural Development**

**Remarks**

**Thank you. I'm delighted to be here today. I want to thank John
Etchepare** *\[Director, Wyoming Department of Agriculture\]* **for
taking the time to be with us.**

**I'd like to also introduce Del Tinsley, our Rural Development State
Director for Wyoming. As you may know, USDA Rural Development is one of
the most decentralized agencies in the federal government, with over 800
State and local offices. Most of our staff is in the field. That's a
real strength. We think we make better decisions by relying on people on
the ground, in the community, rather than by trying to make the calls
from inside the bubble in Washington, D.C.**

**Del heads up our team here in Wyoming, so he's really the person to
see if you want to do business with us. I'm just the guy from
Washington. It's ok to forget about me once we're done, but keep Del on
speed dial. He and his staff do a terrific job, and I know they look
forward to working with you to bring investment, jobs, and opportunity
to rural Wyoming.**

**Most of you are probably already familiar with USDA Rural Development.
Our mission is simple, but never ending -- it is to increase economic
opportunity and improve the quality of life in rural communities.**

**That is every bit as broad as it sounds. Our statutory mandate makes
us the leading federal advocate for rural America.**

**We administer over 40 programs ranging from housing to infrastructure
to business development.**

**In 2006, we will leverage roughly \$2.5 billion in budget authority to
support over \$17 billion in investment in rural communities. The
running total since 2001 exceeds \$63 billion invested and over 1.1
million jobs created or saved. The numbers do add up. Today, we have a
\$90 billion portfolio.**

**Our mission has evolved significantly over time. In the beginning,
during the Depression era, my predecessors at the "Resettlement
Administration" and then the "Farm Security Agency" were concerned
largely with emergency relief and farm stabilization.**

**Today, however, we are an economic and community development
organization. Increasingly, we function as a venture capital entity.**

**We've grown up with rural America. In fact, when it comes to rural
electrification, water, wastewater, and telephone service, we
[built]{.underline} the rural America of today. And we have learned a
great deal along the way:**

-   **Today we recognize that sustainable development must be market
    driven, not program dependent. We're reorienting our programs toward
    market disciplines, both internally and externally.**

-   **We want to be an investment banker for rural America, not a
    central planner or a lender of last resort. Our role is to support,
    encourage and empower local initiative, both public and private. And
    in the course of these efforts to be a collaborator with you.**

-   **We also understand that money is part \-- but [only]{.underline}
    part \-- of that role. We can't pay for everything, everywhere,
    every time \-- and we don't want to. Rural America doesn't need
    Potemkin Villages that wither and die the moment the subsidy plug is
    pulled. What it [does]{.underline} need is viable businesses,
    self-sustaining communities, and young families eager to build a
    future.**

-   **Our success, therefore, depends on partnerships \-- and we know
    that to be a good partner we must be responsive to local needs and
    opportunities, flexible, and accountable.**

**That's just a thumbnail sketch \-- but bottom line, this year we're
going to invest around \$17-18 billion in rural America. Those
investments will be made largely through loan guarantees originated at
the local level by local lenders. They will be managed, as I suggested
earlier, mostly by our various State Offices.**

**And they will cover a lot of ground -- everything from ethanol plants,
wind farms, and anaerobic digesters to affordable housing to rural
hospitals to water treatment to broadband access.**

**I don't have a crystal ball and I can't tell you what the figure will
be next year or the year after. That's for Congress to decide, and we're
at the front end of what promises to be a challenging budget cycle.**

**But as an aside, if you look from 1995 to 2006 Rural Development
program funds have increased from \$6.8 billion to over \$17 billion.
Clearly we do bring significant resources to the table -- enough that we
need to be thinking pro-actively and strategically about our role. And
the question for us -- as it is for you -- is:**

-   **Where do we go from here?**

-   **Where are the opportunities?**

-   **What should we be doing [today]{.underline} as a lender and
    economic developer to maximize the return for rural America?**

**These are important questions, and the answers aren't always obvious.
The world is changing. And the change is, if anything, accelerating.**

-   **In a single lifetime, we've gone from farming behind a mule to
    gene splicing. We've seen incredible productivity increases.**

-   **We've gone from over 6 million farms at the end of WWII to 2 ¼
    million today. Of those, 175,000 produce most of our food and
    fiber.**

-   **We've seen the hollowing out of farm towns and the depopulation of
    rural counties caught on the wrong side of technological change.**

-   **But, on the other side of the ledger, we've seen the erosion of
    old barriers of time and space ... remarkable new possibilities
    unleashed by modern technology ... and the emergence of a new rural
    based energy industry with unlimited potential.**

> **In fact, rural America includes many of the most dynamic, fastest
> growing counties in the country today.**

-   **Last but not least, due to globalization and connectivity, we see
    competition, that our grandparents could never have imagined.**

    -   **Since the fall of the Berlin Wall, between 2 and 3 BILLION
        people have joined the world market system. Many of them are
        formidable competitors. They will also be great customers if we
        can win their business.**

> **In sheer numerical terms, this is the greatest expansion of economic
> freedom and opportunity in human history. [Of course]{.underline} it
> poses challenges. Competition always does.**
>
> **But this is, in fact, what we fought the Cold War to achieve. We
> have turned enemies into competitors and customers. [Ready or not,
> this is what victory looks like]{.underline}.**

-   **At the same time, we are on the leading edge of a new world in
    which every person is going to be connected \-- more-or-less
    instantaneously \-- with everyone else. Whether we want to or not,
    we will be competing with everyone in the world with similar skill
    sets and a modem. The upside is that our potential customer base
    will be just as broad.**

**So ready or not, the changes are coming. The old saying was, "you can
run but you can't hide." Today, with information flowing across the
internet at the speed of light, you can't even run anymore.**

**And you certainly can't hide in rural America, because globalization
and connectivity are just as real in my hometown of Marcus, Iowa, as
they are in New York or Chicago or Phoenix. Brazil grows soybeans, China
makes widgets, India writes software, and markets price competitively.
We can't hide. Neither can anyone else.**

**Change is a double edged sword. It's a threat to those who aren't
prepared. It brings opportunity to those who are. But either way, it's
coming \-- and our mission today, as an economic development agency, is
to put rural America on the winning side of the change equation.**

**This is a big change in mission and vision, and we're working through
it on several levels. Earlier in 2005 President Bush and Secretary
Johanns decided USDA would conduct a series of Farm Bill Forums to
engage rural stakeholders in this discussion, in preparation for the
next Farm Bill in 2007. Some of you may have participated in this
process.**

**Over 50 Forums have been held. We are now evaluating the hundreds of
comments and suggestions that were made. This will be finished this
spring, and by mid- to late summer, Secretary Johanns expects to be able
to forward comprehensive draft comments to the White House.**

**On some questions, therefore, I simply have to punt for the time
being. There is a lot of work yet to be done before the President makes
his recommendations to the Hill, and before Congress finally writes the
bill. I simply don't know what the President will propose and what
Congress will do regarding \-- for example \-- the commodity support
programs.**

**But I have been walking around and kicking the tires on Farm Policy
issues most of my life. And it's clear to me -- whatever Congress
eventually does on supply management, price supports, and trade \-- that
we are reaching a tipping point in agricultural and rural policy.**

**The basic fact is that agriculture is no longer the primary driver of
the rural economy. 65 million people live in rural America. 63 million
of them [don't]{.underline} farm. 96% of rural income is from non-farm
sources. In fact, about 90% of [farm family]{.underline} income is from
non-farm sources.**

**This requires a mental shift for policymakers, but it can't be
ignored. While farming is and will remain vitally important ... and
while we intend that American agriculture to remain a world leader ...
the engines of growth in the 21^st^ century rural economy in fact will
likely lie elsewhere.**

**Three things in particular stand out as transformative. These three
factors are connectivity, energy, and something that I call "place."**

**"Place" is my own term \-- you may think of a better one \-- for the
quality of life considerations that attract so many of us to rural areas
to live, work, and raise our families.**

**"Place" is peace and quiet, green fields, and fishable streams. It's
lower taxes and a lower cost of doing business. It's affordable housing
and a big yard for the kids. It's the pace of life, low crime, and good
schools.**

**These things are significant rural comparative advantages. Conversely,
I've been on temporary assignment for five years in Washington, D.C.,
and I've never seen a real estate ad in D.C. or any other city boasting
about a bigger mortgage for a smaller house, high taxes, noise, crime
waves, and a three hour commute.**

**Rural communities that can provide good jobs, quality healthcare, and
good schools are [great]{.underline} places to live. Given the chance,
people will vote with their feet. Our job is to help empower that choice
by investing in the infrastructure and business development that makes
it possible.**

**Frankly, [nothing]{.underline} hits closer to home than this. For
decades, rural communities have had difficulty offering opportunities to
young people. A majority of kids left after finishing school. Very few
of the college graduates came back. In my class, for example, I may have
been the only one who returned to Marcus -- I'm not really sure, but I
was certainly one of very few, if not the only one.**

**Our goal, therefore, begins right at home ... to create communities
where our kids have a future ... and where they can realistically talk a
spouse who probably wants a good job to come back with them.**

**If our kids' hopes, dreams, ambitions, and talents take them around
the world, that's great -- and we want them to have that opportunity \--
but they shouldn't be forced to leave simply because there is nothing at
home.**

**And if we can build communities that retain our own young people, we
will find that they become destinations for others as well. Not everyone
will make the same lifestyle choices \-- but we [can]{.underline} level
the playing field so that rural America is again competitive in terms of
economic opportunity. That's the goal.**

**A second, related opportunity for rural communities arises from the
communications revolution, especially broadband.**

**IT is producing the most radical decentralization of information in
human history. Today, data can be shared easily across great distances.
We no longer need everyone in the same building so they can talk, or
shuffle paper from desk to desk. Administrative structures,
manufacturing, and distribution networks can be decentralized.**

**To a degree unprecedented in history, people are going to have real
choices about where to live and how to work. From a rural development
perspective, this leverages "Place."**

**Bottom line is you can live locally and compete globally:**

-   **TOM PFOTZER EXAMPLE**

-   **PLAINS, MONTANA EXAMPLE**

**Sooner or later, organizations will adapt. They will have to. At the
Department of Agriculture, for example, we have employees in carpools
departing at 4:30 in the morning for three hour commutes. Many of them
are using their laptops and Blackberries on the way. They're actually
[already]{.underline} telecommuting \-- they're just doing it from their
vanpools over wireless networks because the office says they have to
warm a seat 8 hours a day.**

**That's really [not]{.underline} a satisfactory arrangement if your job
is computer based and you could be at work each morning with the click
of a mouse.**

**A generation from now, our grandchildren will be scratching their
heads and wondering how we ever managed to live the way we do.**

**Broadband makes rural communities more competitive than they have been
in generations. It opens the door to everything else. These things don't
change overnight, but the spatial organization of America is being
reengineered ...**

**... And I am convinced, if we do our jobs right, that smaller cities,
small towns, and rural areas indeed have a very bright future in
store.**

**Finally, rural America has a major new cash crop -- energy. We've
waited a long time for this. Energy has been a political football for 30
years. But talk is cheap. If speeches and press releases produced
energy, the energy crisis would have been solved long ago.**

**The barrier to renewable energy has been price. Today, \$50-60 per
barrel of oil has changed the equation. Alternative energy is taking off
-- so much so that I make a point of saying that we shouldn't call it
"alternative" energy anymore. It's going mainstream:**

-   **U.S. ethanol production this year exceeded 4 billion gallons. The
    7.5 billion gallon renewable fuels standard in the Energy Bill will
    keep that growth on track.**

-   **Biodiesel usage has soared from about 5 million gallons in 2001 to
    25 million gallons in 2004 to 75 million gallons last year. You
    heard that correctly. It tripled in a single year, and many
    observers expect it to double again this year.**

-   **U.S. wind power capacity by the end of last year reached 6,740
    Megawatts, and another 5,000 MW are currently under construction or
    in negotiation.**

-   **The U.S. Department of Energy estimates that wind can generate at
    least 6% of U.S. electricity by 2020. That's an extrapolation of
    current growth rates.**

**Energy from agriculture, in fact, offers the rural economy its biggest
new market in history. And this isn't just a way of turning on the
lights and filling up the gas pump. It means investment, good jobs,
opportunities for young people, and the recirculation of capital through
rural communities across the nation. -- if we are smart and adaptive
enough to capture them.**

**When we reach the point at which we are fueling our cars with biofuels
from the Midwest instead of petroleum from the Mideast, we will have
turned a corner in more ways than one.**

**To sum up, I am an incurable optimist about the future of rural
America. I am an optimist about energy from agriculture. I am an
optimist about the decentralizing implications of IT. I am an optimist
about the attractions of the rural quality of life. This is a powerful
combination. With leadership, determination, and hard work, it's a
winning hand for rural America in the next generation.**

**Yes, we face challenges. Standing still isn't an option, not in an era
of globalization and connectivity-driven competitiveness. But our
opportunities are even greater than our challenges, if we have the
vision and the will to pursue them.**

**I am confident that we will, and I look forward to working with you to
get the job done. Thank you.**