Thank you. Thank you, Jon, and thanks to all of you for that very warm Kansas welcome. And special thanks to you, Jon, and to Ruth Ann for entertaining me so royally at your beautiful residence yesterday evening.
I can have a lengthy nostalgia trip when I return to Manhattan, Kansas. I could take up the whole time this morning by reiterating my memories of Kansas State and Manhattan, but we don't have the time. But as many of you know, Duane Acker, who was Jon's predecessor, was a long-time friend all the way back to my undergraduate days at Nebraska. Jim McCain, who was here when I headed the Nebraska mission in Colombia, South America, came down there to visit us.
The first time I ever came to Kansas State, as I reiterated at dinner last night, was when I came to work with Don Good as a member of the Nebraska livestock judging team here at Kansas State. I just saw a few minutes ago, for the first time in years, Wilfred Pine, who would have been my major professor had I done my Ph.D. here at K-State. And I almost chose to do so. It was marvelous to see Wilfred again. And I could go on and on. I've also so enjoyed working with your senatorial and congressional delegation: Nancy Kassebaum, of course, whose name is attached, indirectly really, to the Landon Series; Bob Dole, who has been such a magnificent leader in the Senate for so many years; and a lot of fine members of Congress as well. Governor Hayden graciously helped in the transportation here, and I enjoyed being at the education summit at Charlottesville, Virginia, with him last week. So with all of those connections at Kansas State, it's a good feeling to come here.
This morning I would like to talk primarily to the students in this audience, but I hope that what I have to say might be of some interest or fascination to those who have left the student category. The first question one might pose is whether agriculture will be an attractive career for you students as you build your lives over the next several decades. My answer is an unequivocal "Absolutely." In my judgment the potential for agriculturally related careers is truly outstanding today, not withstanding the economic turmoil that we have gone through in American agriculture during this decade. One must always look ahead, not behind. And as I look ahead, the future is bright if we do the right things in the policy arena and in business and in a number of other areas. I will embellish on that in just a minute.
The potential for agriculture is illustrated first of all simply by the demographics. We now have about 250 million people here in the United States, but the population in the world is 5.2 billion. We have the .2. Five billion of the people who are living and eating in this world reside outside the borders of the United States. By the turn of the century, that population will be 6.2 billion. That is only about a decade away. The world will add a billion people in that time. Four times the population of the United States today. Four times in the next decade. And, that means that at the turn of the century we'll still be the .2. It will be about .26 at that time with the rest of the world being about 6 billion.
So we must ask as we evaluate the potential for American agriculture, can we play in that international ball park?
And can we find a significant role for American agriculture in helping to feed those 6 billion folks who live outside the United States? My view is that we can do so, must do so, and will do so.
But there are some caveats to all of that. Life is never quite as simple as just demographics, and it is always much more complex than just numbers. So let us place some attention on the caveats for just a minute.
What I am going to visit with you about this morning is, first of all, the international opportunities that provide us the chance to increase farm incomes in the United States in coming years. Second, I would like to discuss environmental issues just a bit because they are also on the public policy agenda in a major way today. And third, I would like to discuss the potential for broadening job opportunities in our rural communities. So let us see if we can go through all of these rather quickly, in a sensible way.
First of all, the farm income picture, the job opportunities in agriculture for the students here at Kansas State and elsewhere. Agricultural trade policy, which is at the heart of the export opportunities that we may have in the coming decades, is today at a crossroads. What happens or does not happen with the trade policies of the major nations of the world over the next 12 months may well do as much as any single thing to determine the incomes of American agriculture over the next half century. As many of you know, we are now engaged in a major trade negotiation in Geneva, Switzerland, called the Uruguay Round.
Ninety-six countries, including the United States, are participating in that exercise, with 15 negotiating groups being involved, only one of which is agriculture. That negotiation is scheduled to conclude in Brussels, Belgium, the first week of December 1990. That means that 96 nations have just a little over one year of negotiations remaining.
Agriculture is probably the most challenging issue on that entire agenda, and we will certainly have to negotiate with great skill over the next 12 months if we are to open up the export opportunities around the world for American agriculture. What we must do is unlock those markets around the world so that we have a chance to compete for them. My judgment is that we have a very efficient and competitive agricultural plant in the United States. We simply need to have the opportunity to sell the output of that plant throughout the world.
There are two major impediments to reaching that objective and to providing the kinds of careers that you all would like to have in the next 20 or 30 years. One of these lies in the area of export subsidies and the other one in the area of what I call import constraints.
Let us take the latter one first. You see, what has happened is that there are a lot of countries around the world which would like to keep our agricultural products out for a whole variety of reasons, and they have very skillfully and effectively developed some creative gimmicks through the years for doing so. One of those is simply the application of quotas. What that means is no matter how competitive we may be, once we reach the quota amount in a given country, our exports stop. We can't sell another pound or another bushel, no matter how efficient we may be.
Another is variable levies. The European community uses this, for example. If we become more competitive and are able to sell at a more attractive price, the community simply increases their duties accordingly so it neutralizes any advantage that we may achieve because of our competitiveness. That, too, is an onerous barrier.
A third one is import licensing systems. They can deny us the opportunity of selling simply by refusing to give us a license, or giving buyers in their country a license to import. That is an excellent mechanism for keeping our exports out. The fourth one is to have minimum import price requirements. In other words, they require our prices to be a little bit higher than their local prices so that obviously nobody will want to buy our goods; they would prefer to buy the locally produced goods.
Those are just four examples. There are many others. The way to rid the world of those kinds of impediments is to do so at the negotiating table, and we have a chance, the first really good chance ever, over the next 12 months.
The other onerous set of activities arises from export subsidies, and, obviously, what that does is pit our farmers in Kansas, or wherever, against the treasuries of other nations.
And again, it matters little how efficient your wheat farmers or sorghum farmers may be in the country here in Kansas if they have to compete against billions of dollars of subsidies provided by the governments of other nations who simply undercut them in the world market.
I can recall a time a few years ago when the export subsidies being used by the European community were so high that Kansas farmers could have given their wheat away and would not have been able to move it into some of the world marketplaces. In other words, at a price of zero we still could not have been able to compete against wheat coming out of the European Community. Those kinds of policies are simply ludicrous, and we must change them so that we can move toward what people typically call a level playing field in the conduct of agricultural trade. But if we can do that, if we can achieve those objectives of the negotiating table, we can open up excellent opportunities for American agriculture and for the people who are going to be working in it in the coming years.
I will give just one example of a success story so that we don't feel that there is no opportunity for success in this regard. It arises from our beef and citrus negotiations with Japan, which we finished just a year or so ago. The estimate of the U.S. meat export federation, which is our exporting arm, if you will, for the beef industry of the U.S., is that beef exports now are adding about three dollars a hundred to the price of feed cattle in the United States. Well, that's three dollars a hundred to the bottom line, and any time that we can complete negotiations, and most of that came out of the Japanese negotiations, not all of it, but most of it, any time we can complete negotiations that will add that kind of additional black ink to the net worth statements of cattle producers or any other kind of agricultural producers in the United States, it's obviously worth doing. If we can duplicate that, emulate it on a global basis for a lot of other products in a lot of other countries, one can visualize the earnings potential for American agriculture that could result.
However, one must add a second caveat: assuming we have a level playing field, we must be able to compete. We should not take our international competitiveness for granted. We must make sure that we take actions here at Kansas State and elsewhere to make sure that we sustain that competitiveness. And that gets to what must be done to ensure that we're the low-cost producer internationally, because if we're on a level playing field the low-cost producer is likely to win. The way to do that, of course, is through research, technology, and the development of management skills for people in our production enterprises in Kansas and elsewhere in the country. We can do that, but that's an edge that we must sustain. In my judgment we have that edge today.
I believe that we have got the best research programs in the world, we are the most technologically advanced in agriculture anywhere in the world, and I believe we have the best farm managers in the world. But that is not to say that we can rest on our laurels and assume that will be the case 10 or 15 years from now. We must make the capital investment in people and in research programs and in other such activities to make sure that takes place.
In addition, it's important that we maintain an increased market share around the world. We simply have to recognize that that's an important dimension of being a major player in the global economy. Earlier in this decade we significantly lost market share. Our agricultural exports plummeted. Over the last three years or so we have been trying to earn that market share back. It has been a very costly proposition. We have used a lot of export subsidies of our own, our so-called E.E.P. program, to generate the financial support to regenerate those exports to where they were a few years ago. We have done that now. Our agricultural exports today are about $40 billion for the present fiscal year, and that is a major improvement over $26 billion, where we were just about three years ago. But we need to sustain that momentum. I wish there were $80 billion instead of $40 billion. Our exports could have been $80 billion had we sustained our momentum and built export share over the last 30 years or so.
We cannot go back and change the past 30 years. It is too late to correct the mistakes of the past, but we can avoid those mistakes in the future, and we can do what is necessary to protect and enhance market share around the world. The Japanese have learned that lesson well over the last 40 years. We ought to learn from them what it takes to become a successful participant in international trade.
And finally, and this is a challenge for the students who are moving into the next generation of economic activity in agriculture, we also need to search for ways to identify and create new demand opportunities for American agriculture. It is not just what we do internationally, as important as that may be, but it is also what we do domestically. We ought to be able to find some opportunities to grow milkweed to produce textiles, or to grow corn and produce biodegradable plastics. Or to use corn in ethanol or ETBE as alternative fuels for auto-mobiles later in this decade. Or to produce kenaf for the printing presses of this country. Or to begin to produce canola here instead of Canada, because canola has some nutritional advantages as an oil seed that soybeans and some of our other products do not have.
There is a bright future out there, or there could be a bright future out there for products that are not even in our vocabulary today. There's nothing that says that Kansas must grow wheat and sorghum forever: let us grow what will generate the highest income. And 20 years from now, or 50 years from now, that could conceivably be crops or products that today we do not even know about, that are not even on the drawing boards of our research institutions or our commercial firms. Let us identify what the people of the world wish to consume in the way of food products over the next half century, and then let us figure out how to produce the ones that will generate the highest incomes for American agriculture.
And finally, my other caveat is that if we are going to be enormously active on the international scene, as I believe we must be if we are to achieve the higher earnings that we would like to see in American agriculture, we must make exports a high priority for this nation, not only in agriculture, but in the industrial sector as well. Over and over again during my tenure as U.S. trade representative, the representatives of governments of other nations have come to me and said, "What can you do to get your American firms to market more aggressively around the world? They are simply not doing so. They could sell more if they would just work harder at it." And in many cases that's true. The follow-up comment is: "You have such a big market, such an attractive market in the United States, most of your firms consider that to be your primary outlet, and you become interested in international trade only when you generate surpluses at home, and then you look for a place to put those surpluses outside of your borders. We take a different outlook. We consider your market to be our primary market, and our own domestic market is secondary."
Well, in many cases they have no choice, because this is the most attractive market in the world. But we ought to recognize that there are some excellent opportunities elsewhere in the world if we are dependable suppliers and aggressive sellers. And, many of you have the opportunity in your futures to contribute to that end.
Well, let me quickly go on to the final two topics that I would like to discuss with you very briefly this morning.
The first one relates to the environment. The environment has been in the headlines a great deal lately. It has come up in the context of food safety issues such as Alar in apples; ground water quality in many areas of the country, including here in Kansas; soil conservation challenges of various kinds; our swamp buster and sod buster provisions of the 1985 Farm Bill. It has come up in the context of input levels that are provided in agricultural production today, such as the so-called L.I.S.A. Program, Low Input Sustainable Agriculture, and in many other ways as well. Without doubt, there will be a lot of additional public debate on this subject in the coming months and years. For example, next year in the context of the 1990 Farm Bill discussions, but in many other areas as well and through separate legislation.
I would just like to make a couple of points with respect to this issue this morning, although one could easily do a full scale speech on this subject all alone. I hope that we have the good judgment in America to make sensible public policy decisions in this area. And by that I mean that it is imperative that we analyze these very sensitive emotional issues objectively, methodically, scientifically, and rationally.
Unfortunately, the debate in many of these areas today is not objective, the approach is not methodical, the basis for decision in some areas has not been scientific, and the answers that have been provided have often not been rational ones. We ought to change that. We live in a democratic society in which we try to make the right decisions when we deal with sensitive issues. We need to have a little less emotion and a little more good sense in this area and a proper balancing of the interests so that we come out in the right place on the environmental pendulum swing.
It seems that in democratic societies we have a tendency to swing the pendulum too far. We swing it to one extreme, and then we get into difficulties of one kind or another and we swing it back. But we do not stop in the middle, we swing it all the way to other extreme, and then we get into trouble again and we begin to swing it back. In the environment, and a lot of other public policy debates, it would certainly be advantageous and wise if we could swing the pendulum with a little less extreme movement, and I hope that we can begin to do that in the future.
You can have an influence on that, both because an institution like Kansas State can provide the research underpinning for these kinds of rational decisions, and because as citizens you can evaluate what you hear and what you see on television and decide whether it really has been approached in the way that I suggested. Is it emotional? Is it fear-oriented? Is it hysterical? Or is it objective and methodical? There's been a little too much of the former in recent months, and not enough of the latter.
Finally, I want to make some observations about what most of us would call rural development, and that is a term that has different meanings to different people. In my judgment, what we are really talking about in this area is what we can do to enhance job creation in our rural communities. We have talked a lot about what we can do in farm areas themselves through generating increased earnings from American agriculture, but rural communities go beyond our production plant. They go into what can be done in the small towns, the villages, and the medium-sized cities of Kansas, and the other parts of our nation. We should have an interest in their welfare as well, and as agriculturalists, a particular personal self-interest, because we must be concerned about the job potential for future generations. Is it necessary for folks in those rural communities to go off to Chicago or New York or San Francisco to find well-paying jobs? Or can we have some well-paying jobs out there in Clay Center, Kansas, or Phillipsburg, or wherever we might pose the question?
My judgment is that there ought to be ample opportunities to expand the job base in those rural areas, and we should concentrate on those. Kansas State can play a role in that. State government has a role, the federal government has a role, so does local government, and so does the private sector. The question becomes how we can better coordinate all of those efforts, focus them in such a way as to achieve additional job opportunities, in such a way as to broaden the job base in that area.
It's not easy. There has been a lot of rhetoric on the subject of rural development through the years, but not much productivity, not much output in the way of results. But my feeling is that we are approaching the time where we can create some jobs in those areas. And timing is everything in this business. And, if I am correct in my assumption, then we ought to devote more time and effort to this rural development question. I say that because fundamentally we have a well-trained, well-educated population. We have a good work force in the rural areas of this country. Today there is no reason technology production operations cannot be located anywhere. They do not have to be in a big city. It seems to me that it is advantageous for a lot of our high technology operations plants to be located in the rural areas of this nation. We ought to make that argument to the folks who are running high-tech companies and see if we can convince them of the merits of putting those operations in Kansas or Nebraska or Iowa.
The same applies to services. We have become a much more service-oriented economy. Lots of different services are available today, the financial service arena being an example. Citicorp put one of their major operations, their credit card operations, in Sioux Falls, South Dakota, and it has been a huge success, and a magnificent addition to the Sioux Falls economy. That is just one example, but there are innumerable others.
In some areas, of course, there is recreation and tourism potential. In some areas there is forestry. I have seen what South Carolina has done in forestry. And in others it is food processing. We ought to be adding value to our corn and wheat and sorghum in our rural areas rather than shipping the products off somewhere and letting the value be added either in the big cities or the United States or in foreign countries. What we need is to develop some local leadership in this area, because I am convinced that job creation in rural areas will never happen without excellent, vigorous, enthusiastic, local leadership. Our agriculture extension people can help in that. Our research people can help. We should have consultants available. There are a lot of things that can be done by the University system, our educational systems, and by all these units of government in enhancing rural development in this country.
Enough on this subject matter. Let me turn for just a minute to preparation by students. I am going to personalize this now for the students themselves, because we do need to prepare you for the occupations you will occupy in your lifetime. President Wefald and the Kansas State faculty are obviously going to do their very best in that preparation process, but it goes deeper than that. We need to start at the primary and secondary schools. Now it is a little too late, in your case, to have an impact there, but before very long you are going to be parents, and it will be your kids coming up through those primary and secondary schools. We do pretty darn well in those institutions in a place like Kansas. But when one looks at the picture for the nation as a whole, we have fallen behind. All one has to do is compare test scores of students coming out of high school in the United States with students coming out of high school in a lot of other countries, and we do not compare. We ought to change that. That means making adjustments in our primary and secondary school systems.
We just had an education summit in Charlottesville, Virginia, to talk about this last week. President Bush called that summit of all the governors and all the cabinet members, as you know. I chaired one of the sessions on higher education. Governor Hayden of Kansas was there at that session, and we saw some very creative ideas emerge from that process that ought to be adapted in our primary and secondary systems if we are going to provide the training that our young people need in agriculture or anything else in the coming years.
I will give you one example that I thought was the most fascinating of all. Rhode Island is going to begin to assign mentors to its grade schools in the third grade. These mentors will be volunteers, grandmothers or whomever, and they will stay with these students from the third grade through the twelfth grade. Nine years of mentors. And if the students complete those additional nine years, their high school education meeting the standards that are set up in this program, they will be given tuition free college education. That is a major, major achievement in my judgment. I hope it will be emulated in other states around the country. Michigan has something similar already, and I suspect we will see similar opportunities elsewhere. We have had two examples in recent years of athletes who have gone through grade school, high school, and four years of college here in the midwest four years of athletic competition, in two neighboring states, not in Kansas, and then it was discovered that neither of those athletes could read. It seems to me that we ought to have a better educational system in this country than one that puts students all the way through 16 years of education, and they still cannot read.
Enough on that. Let us talk about college for just a minute. You need to get sophisticated in your education these days, because we live in a sophisticated world, and I will let you students define what sophistication means. It will be different depending upon your fields, and different depending upon your future endeavors. But surely, sophistication will be the mark of the jobs you will occupy in the future. And because the international sector is going to be so important to all of you, I strongly recommend the studies here at Kansas State, or studies after you leave Kansas State, in the culture and languages of other nations in which you have a particular interest.
I have often said that every American ought to speak at least one other language, and I feel that very strongly. Most of us do not do so. I had the good fortune of learning Spanish from living in South America. But many of us simply do not think about learning other languages. We have been insisting that our children do so, and I hope you all will insist that your children do so. It does make a difference, and I am going to give you a personal example from my own family to illustrate the point. I hesitate to do this because parents should not be bragging about their kids, and I will try not to do so here, but I will do it to illustrate a point.
We have a daughter who is just about to emerge in her first job, and I will tell you what she did in preparation, because to me it illustrates what many of us, many of you, will need to do in your future careers. She did her undergraduate work at the University of Nebraska, but she studied at Sophia University in Japan one summer while she was at Nebraska. She then did a master's in business administration at Georgetown, and while there did an internship with one of the large trading in companies in Japan during one summer. She polished her Japanese language skills at that time, and came back and qualified in Japanese in a program in international relations at Johns Hopkins. She has now finished that double master's degree program and has demonstrated her competence in the language.
She has gone through the interview process, and I will say with some pride that she was offered positions by almost every company with whom she interviewed, and finally narrowed it down to a position with an American company. She and her new husband will be moving to Tokyo in just a few weeks to start their lives off with living and working experience in Tokyo. And whether or not it pays income-wise, she will be going out at an income level that's just a little bit below what I earn as a cabinet officer. Now I am not sure what the meaning of that is.
Let me conclude by saying that in my judgment the future for agriculture and the future for college graduates is generally a very bright one today. It is as bright as you make it as you go out into life, and if you have the typical enthusiasm of somebody from Kansas, I think you will make it very bright indeed. But it will be a different future. You must prepare yourselves to live in a world that will never look like the one that has been occupied by your parents and grandparents. The world is changing more rapidly today than ever before, and you are going to have to adjust to that.
It is not a time, students, for people to go out on jobs with an attitude that is one of timidity. It is not a time to be averse to risk. It is not a time to be resistant to change. If you fit in those categories you will experience a very frustrating life indeed. If, on the other hand, you are prepared to be a courageous risk-taker, and you have a bit of the pioneer spirit that we saw in this country 100 years ago, and if you are prepared to be broad and creative and global in your thinking, you should have a very productive and rewarding career indeed. Thank you.