Agriculture Secretary Tom Vilsack says the government must begin to look at new ways to support farmers — including the use of “green payments” — because of the impact of the recently passed economic stimulus package on the federal deficit.

Vilsack, the former two-term governor of Iowa who became secretary on Jan. 21, said producers must begin to think creatively and innovatively about how they can use their land to absorb carbon, how they can structure a financial market for the use of their land and provide additional support for everyone who farms.

“I don't think that is unrealistic,” he told delegates to the National Cotton Council's annual meeting in Washington. “I think we need to be focused on this because it is coming, and I don't want agriculture to be left at the station. I want us to lead that effort because I think we have a critical role to play here.”

The speech marked Vilsack's third before a major commodity group in less than a week. As with the earlier appearances before rice and wheat commodity groups, Vilsack appeared to be laying out the Obama administration approach to farm policy for the next four years.

He also seemed to be echoing some of the comments by environmental groups and Senate Agriculture Committee Chairman Tom Harkin, his chief sponsor for the secretary's position, during the 2008 farm bill debate.

Those groups and Harkin have argued that traditional farm program payments should be dismantled and replaced with “greener” conservation program payments that would reward producers for reducing the carbon footprint in the farming practices. Markets for trading “carbon credits” have already sprung up in some areas.

If there was any doubt about Vilsack's sincerity, he repeated his comments in a question and answer session at the NCC meeting.

Vilsack was asked if he would give “full consideration to the importance of the current safety net and for mitigating any unintended negative impacts on the cotton industry resulting from policies designed to stimulate production of renewable fuels?”

Initially, he seemed to be dodging the question by talking about the state of renewable fuel producers. He said he was committed to strengthening the alternative fuels industry as a base for transitioning from corn-based to cellulosic-based ethanol production.

“I think it is important to maintain a safety net, but I'm going to be honest: There will be challenges to the safety net,” he said. “The reality is you can't sustain trillion-dollar deficits out into the future. The challenge will be for us to find new ways in which we can continue to support production agriculture.

“Do not underestimate the capacity and the power for climate change to be a vehicle for helping, and that is in all parts of the country and all parts of agriculture.”

Vilsack repeated those comments again in a brief meeting with agricultural editors following his speech, adding he considers USDA's responsibility to provide as many options for farmers to be profitable as possible.”

Noting the latest Census of Agriculture reported an increase in the number of small farms and large farms, Vilsack said USDA must do more to help those farms in the middle, including the 125,000 U.S. farmers who account for 75 percent of the nation's agricultural output.

“With the passage of the stimulus bill and the deficits we have inherited, our government likely will have a trillion dollar deficit this year and maybe next year,” he noted, “We can't continue to sustain trillion dollar deficits, so we will face some tough decisions in the future.”

One of those will be how agriculture deals with climate change. “I strongly believe that as people get to know what we can do in terms of reducing the carbon footprint of farming and create carbon sinks for the use of fields, we can create a system of green payments that will help support those small farms, mid-size farms and those large production operations.”

Vilsack's comments received a lukewarm response from cotton producers, who have long fought for the more traditional price support programs contained in the farm bills. “I just don't see how that can help me on my farm,” said a producer from the Southwest.

The new secretary also said he believes the country must do more to promote trade, including making USDA more actively engaged in trade discussions to make sure the interests of farmers are represented.

“The concern I have is that as we focus on some aspects of trade that have not been focused on in the last several recent years — labor and environmental standards — the chances are agricultural interests will be forgotten or not taken into full consideration,” he said.

“I'm determined to make sure USDA is at the table on trade discussions and negotiations and that our interests are protected. There are areas around the world where we need to do a better job of breaking barriers down and work for free and fair trade. We are going to continue to focus on this and, as soon as we have a new trade representative, sit down and discuss our role.”

Vilsack said he also hoped few changes would have to be made to the payment limit regulations issued by the outgoing Bush administration in December. Vilsack extended the comment period for the rules for 60 days, but he said any changes will apply to the 2010 crops. Farmers, meanwhile, will have to abide by the Bush regulations for 2009.