|Director Katy Coba speaks to the Pendleton Rotary Club
October 17, 2011: Director Coba speaks to the Pendleton Rotary Club and offers an update on Oregon agriculture's challenges and opportunities.
Good afternoon everybody. It is great to be here. I think I feel the most pressure though when I come back home to speak. That's probably normal, though, and it's really wonderful to see so many familiar faces. Some of you have changed just as much as I have. I do want to talk today but leave time for questions and answers. I'd like to hear what's on your mind or questions that you might have of me. Clearly, I'm going to talk about agriculture, it's what I know and love. What I will do at the end of my remarks is talk about what has helped me in my career in state government because of the fact that I came from Pendleton.
I am very lucky to have the job that I have. Clearly, growing up in Pendleton may have groomed me for that job- the fact that I was a wheat truck driver on our family operation every summer that I worked outside of Salem. Being the director of the Department of Agriculture truly is, I think, one of the best jobs in state government. A funny thing though, when I went to Salem and first started in the Oregon Department of Agriculture- which was 1989 while working for then director Bruce Andrews- I thought I knew a lot about agriculture. I started working at the agency and quickly realized that wasn't the case. Agriculture in Oregon is fascinating, it's incredibly diverse. One of my first projects was to actually help develop a Pacific whiting processing operation on the Oregon Coast. I went down and met with a bunch of fishermen. First, they were all wondering what a girl from Pendleton knew about fishermen. I told them they are a lot like the wheat farmers I grew up with in Pendleton, you just farm on water and we farm on land.
So I've been exposed to the fishing industry, berries, wine, beef, hay, of course, wheat- in Oregon, over 250 commodities are grown here in this state. So we are very much like California in terms of diversity, but we are not like California at all in terms of quantity. So I always say to those in agriculture, we have to be extra special to compete in a global marketplace, which is indeed what Oregon agriculture does.
What has been happening in agriculture the last three years? It's very similar to what's happening in the rest of the economy around the state, around the nation, around the world. It's been a tough time, probably one of the toughest times in agriculture's history for a long, long time- certainly in my lifetime. In 2008, we reached an all-time high in farmgate value- the total value of agricultural products coming off the farm. We hit $5 billion. Clearly, in 2009 that crashed. In 2010, we were back up, but to just $4.4 billion. So we clearly have a ways to go before reaching that high that were at in 2008, as does the rest of the economy.
There are clearly bright spots in agriculture in Oregon. One of those is right here in Umatilla County. Wheat production and wheat prices have been higher than they've been in many, many years. As a result, that has really infused additional cash back into our rural economies that grow so much wheat. That is truly a bright spot.
Some of the places that are struggling include Oregon's number one agricultural sector, the nursery sector, which reached the $1 billion mark in terms of value in 2008. They are now at about $667 million- a very significant drop in the value of nursery production in Oregon. I think they are still barely the number one commodity that we produce in the state followed closely by cattle and calves. Beef cattle are doing fairly well. The primary reason is because herd numbers around the US are probably the lowest they've been since the early 1950s. That's driving prices up. So for those who do have cattle, they do get good prices for their product. Hay is also doing very well with some of the highest prices we've seen for hay in a long time. It's great if you are a hay farmer, it's not so good if you are a livestock operator because feed prices are very, very high.
We see a lot of diversity within the agriculture economy in Oregon. But one of the things I'm optimistic about is the future of agriculture in this state and this nation. When you think about where the world is going and the world population- currently at about 6 billion and projected to grow to about 9 billion in the next 30 years. With the current technology we have in agriculture and with the current land base we have in agriculture, we cannot feed a global population of 9 billion. So we in agriculture are going to face a lot of demand for our products as well as a lot of push to continue to expand what we are able to produce on what I see is a reduced land base, what with global population increasing.
What do we need to do that? We need a lot of investment in research and technology. When you look over the last 50 years in agriculture and where we've come, it's pretty amazing. But when you think about where we need to go in the next 30 years, it's also pretty amazing. I'm convinced agriculture will continue to be a very strong part of Oregon's economy. Currently, agriculture, processing, transportation- the things associated with agriculture in the state- represents about 12 percent of Oregon's economy. I think that will continue to be an important part and probably will grow in terms of a percentage of Oregon's economy. And I think we are going to start seeing more and more pressures worldwide, like food shortages and increasing food prices.
A lot of interesting times ahead for those in agriculture and for those who like to consumer agricultural products- which just happens to be all of us each and every day.
What are some of the challenges we are facing? Probably the biggest place where all the activity is happening is at the federal level. Challenge number one is the budget balancing act that we will see play out in the next couple of months. This will affect agriculture. It will affect all of us, but it will definitely affect agriculture. The House and Senate Ag Committees at the federal level were supposed to have their recommendations to the super committee by the end of last week. I think their goal is to basically ask the super committee to give them a target of cuts. There will be cuts in agricultural programs. And then let those two committees actually determine where those cuts happen. In terms of the big federal programs for agriculture, probably the area where we will see the most change is with direct payments. Those are the direct payments made to the program crops. We have basically one program crop in Oregon, and that's wheat. Corn, soybeans, sugar, cotton are the ones that receive direct payments in the US. This is the program where most people say agriculture gets all its subsidies. I think given the political pressure and the fact that we do have to make cuts at the federal level, we will probably see the direct program have either significant cuts or actually be eliminated. The switch will be to a more robust insurance program.
That really is what we need in agriculture. When you think just in the last year of the weather challenges that we had around the US, it was unprecedented in terms of flooding, freezing, and drought. Agriculture is a business. The difference is we don't have walls and we don't have a ceiling. The impact that weather plays on our industry can make or break you. And it has made and broken a lot of farmers and ranchers, not only in Oregon, but the US and the world. Especially, if we are going to be feeding a population of 9 billion in 30 years, we really need to have that insurance program available so that if we have a crop that is wiped out, a farmer is able to come back and replant in the next year.
We are also going to see cuts in the conservation programs. Oregon is a big user of the federal conservation programs. These are programs that are popular not only within agriculture, but with the environmental community. They provide a lot of habitat for wildlife in Oregon and throughout the US. So there will be pressure there.
There has been a disinvestment in research at the federal and state level the past couple of decades. Yet, here is where we need that research and investment in order to continue to expand our output in agriculture. It's very, very critical. Finally, for Oregon, specialty crop support is important, because we are truly a specialty crop state.
Those are the things I'm watching as we look towards where we ultimately come out with the super committee recommendations, and then whether those recommendations will be accepted by Congress. The alternative is across the board budget cuts.
The other thing causing a level of challenge for us at the state ag department level and on down into the industry is a lot of the federal regulations that are coming at agriculture. There is a lot of focus on pesticides, pesticide use, and pesticide regulations. These are tools that are absolutely critical for those of us in agriculture- especially when we see changes in climate and what that brings in terms of new pests and diseases. We've got to have those tools in our toolbox in order to keep producing food. The other front is a lot of interest in the Endangered Species Act, and a lot of push to get more species listed. I think it's fair to say that we in agriculture are reeling with the seemingly endless number of species that are added for protection. The one probably most known right now that we are trying to figure out how to coexist with is wolves. We have wolves in the northeast corner of the state. We know that wolves are moving into the Walla Walla area, which will probably effect Umatilla County in the not too distant future. It causes a lot of emotion around that issue. If you are a cattle rancher and you go out and find a cow that has just been ripped apart by a wolf, you get a little bit angry. That's what we are trying to deal with now.
On the state level, we are also facing potential budget cuts. We've got to get the economy turned around. For those of us that rely a little bit on general fund- natural resource industries tend to rely only a little on general fund, but it does affect our budget and how we continue to manage our agency- it's been a never ending challenge during the eight and a half years I've been director. I keep thinking maybe just once for a couple of years, we'll have an adequate budget. But I don't think that's going to happen. We continue to be as creative and innovative in our agency as you in the private sector expect us to be. We have a few different constraints than you all do, but we are trying to do the best we can to deliver programs in a way that meets our customers' needs in a way that is as efficient and effective as possible.
Finally, I'll wrap up by saying we just did return from a governor's trade mission to Asia in September. We took an agricultural delegation of about 10 folks. It was the largest part of the governor's delegation. We had a couple folks from the Oregon Wheat Commission, we had a blueberry grower, we had Bob and Bobby Levy from the Hermiston area, and Mitch Lies from the Capital Press that went on the trip with us. The target markets were Japan, Korea, and China. Japan is still Oregon agriculture's largest overseas market. It's an absolutely very critical market for us and maintaining our relationships in japan is very critical. We thank the wheat industry for basically opening that door to other agricultural products moving into the Japanese market.
The Korean market is probably the one most ripe with opportunity right now for Oregon agriculture. Our blueberry grower that went with us- we've been working in Oregon to open up the Korean market to fresh blueberries. We just received word a couple of weeks ago that Korea has accepted that agreement. We will be the first state in the nation to be able to ship fresh blueberries to Korea. We currently have processed blueberry products going into Korea. The Koreans are complete health nuts. Everywhere we went, they have blueberry cough drops, they have blueberry energy drinks- they are very health conscious and very much into focusing on healthy products. So we think that market for blueberries will be a great opportunity for Oregon along with other Oregon agricultural products. Of course, good news just this week- Congress ratified the Korean Free Trade Agreement. That will bring great opportunities for Oregon agriculture into that market. I think the challenge for us and the industry right now is where do we focus?
China was our last stop. China is probably the most difficult and complex market that at least we in Oregon deal with. Yet, it's a market you have to be in. So we are carefully trying to pick our way through there and see where there are opportunities we can take advantage of. Frankly, you have to build relationships in that market if you are going to get anything done. Even then, it can be very difficult.
What did Pendleton do for me? When Bob asked me that question and I was driving up here, I spent a lot of time thinking about it. A couple of things came to mind. First of all, being from a small community, you become very self-reliant. You really rely on yourself, your family, or your community to solve problems. You don't expect others to come in and solve your problems for you. I think this rotary is a classic example of that. It's probably one of the largest rotary groups I've ever spoken to, yet I've spoken in towns much larger than Pendleton. Certainly, if there is a problem, it's up to us to fix it because no one else is going to do it for us. I've carried that into the Oregon Department of Agriculture. If we've got a problem, it's incumbent upon us to go out and fix it in a way that's going to work.
Secondly, and probably Pendleton is a little more special than maybe other rural communities in the state because we are the most well known rural community in Oregon, but there's a sense of pride in community. A sense of contributing back to the community. I think a number of us do that in so many different ways. We are all to be commended for that, and I think I took some of that from the many of you in this room that helped raise me. I have a former chemistry teacher sitting here. I have a father of a former babysitter here. So really, there's a sense of people know you, they watch you. You have that extra incentive to perform.
The third thing is everyone knows what you are doing in Pendleton. They knew when I was late to class for some reason and you just don't hide things from people. I think that just makes you have a little more extra incentive to perform. If you don't, everyone is going to know about it. I consider myself very lucky, privileged, and honored to be from this community. When I go out and around the state, I'm very proud to say that I'm a native Oregonian born and raised in Pendleton.
So with that- two things: Let er' buck and Go Bucks! I will open it up now for questions and comments.
What are the top areas of research you see needed? Are we going to be able to fill those research needs with our universities?
Oregon State University is part of the state system struggling with the same budget challenges the rest of us are. Those of you well connected with Oregon State know that the experiment and extension service offices are now being asked to go out and raise 25% of their own funding because of state reductions. What we are seeing in our own agency as we lose general fund in programs, more of that burden shifts to farmers, ranchers, or other customers to pick up those costs. There is a certain level when people say, I'd love to pay more, but I can't afford to pay anymore. How we are going to reach that balance is a huge issue for us. The cuts at the federal government are going to be are going to be very difficult. We will see more cuts. But we are seeing folks in the private sector step up more. You may feel about Monsanto as you do, but the fact of the matter is they do some amazing research and they develop some amazing products. I think GMO foods will continue to be an area where there is going to be controversy. Yet, I don't see us feeding a population of 9 billion with less land mass and changing climate if we don't' incorporate that kind of technology into our food.
During your visit to China, what were some of the commodities they expressed an interest in?
In China, Oregon is blessed because our door into China was opened by the grass seed industry. They've been active in that market for 30 years. Tianenmen Square was planted with Oregon grass seed. So that has really helped us make connections. The largest export market for Oregon grass seed is still China. We've seen some opportunities for Oregon nursery products. We know that Oregon apples end up in China. They go through Washington. Most apples in Oregon do get packed under the Washington apple label. There are definitely opportunities for cherries and wine. It's really those niche things. China is still very poor yet with a burgeoning middle class. They like all things western. Some of the outfits you see there are a lot more modern than what my kids wear. So they are interested in western products, western food. In Oregon, it's those niche things where we think there are opportunities.
What is the department's take on getting more water from the Columbia and the recharge project?
The Umatilla Aquifer Recharge Project is really exciting and I'm hopeful we can make it work. I got a chance to come up a couple of weeks ago on a tour with the Water Resources Commission and joined the groundbreaking. There are different amounts of water drawn out of the Columbia River between Washington and Oregon. This is a sore sticking point for producers who happen to be on the Oregon side. One of the reasons for that is more of the Columbia runs through Washington than Oregon, but there are also different laws in Washington compared to Oregon. I don't believe we are going to be successful on a political front in getting a change to the restrictions in withdrawing summer water from the Columbia anytime soon. So I think we really have to focus on how we can creatively tap into winter water- not just from the Columbia, but from all over the state. We have water shortages elsewhere- everyone knows about the Klamath Basin- but we have water shortages in the Willamette Valley in the summertime. Yet look at all the rain we get in the valley in wintertime. With climate change and if snowpacks are going to decline, we've got to figure out a way to capture winter moisture to use in the summertime. For that reason, I'm very hopeful that we can be successful with the recharge project, and then use that model and replicate it in other places around the state.
That's it. Thank you.