My grandfather was best friends with her father. At the same time, the president was someone very close with japan, obviously. But we do have the territorial issue between japan and the United States. Japan and korea, sorry. Even with those issues, the economic relationship is very strong. The people to People Exchange is very strong. The ties with japan and korea is something that cannot be severed. I think the relationship that we have which south korea is extremely important, the cooperation we can achieve between these two countries. We can try to work to resolve these issues and have a Good Relationship with three out. With korea. We are planning to dispatch the vice Prime Minister and finance minister to participate in the ceremony on the 5th of february. Thank you for a speech with so many good sound bites. Are there things you would like to have the United States say or do . Have you conveyed some wishes or perhaps something more, like actions or statements . [speaking japanese] on that issue, the Obama Administration has already made clear that article 5 of the japanu. S. Treaty applies. They have also made clear that they opposed unilateral action to undermine japans administrations. Maybe this is not just limited to the same issue, but on the issues of the sea, i think it is important that we do not tolerate peoples actions when they try to alter the status quo based on force. That is what is necessary. And on that issue, our intention is not to ask the United States to do this or that. We intend to protect our territory. If it is inherently japanese territory and we intend to continue to protect our own territory into the future. At the same time, our intention is to deal with this issue in a reserve the matter. Youll be doing so in the future. We think that this issue should not be escalated and we do not agree to that kind of approach. I know that they have a press conference later, so i am trying to look for nonjapanese questions. Over there in the back. A senior associate with the defense department. Thank you for sharing your reassuring message about japans intention to return to the world stage and claim greater international responsibility. You mentioned you and president obama agreed that the north korean threat requires a chapter 7 resolution. What is your expectation of chinas role, and do you think china has played an enabling role in the missile and Nuclear Program . [speaking japanese] i believe that china is a country with the biggest amount of influence over north korea. And i think implementing sanctions, we need the cooperation of china. And also in our efforts to adopt chapter 7 sanctions resolution in the un security council, since china is a permanent member of the council, we need cooperation from them as well. And when we look at the recent missile launcher and the nuclear test by north korea, we look to these, not as simple events, but in combination. They have increased the range of their missile immensely and they have not attained the ability to reach even mainland United States. And they themselves have said that they have made their Nuclear Bombs smaller, and they have delivered on a missile. At the same time, i believe they are working and moving towards obtaining those kinds of technologies. This is why i think the United States is pressuring china to exert more influence over north korea. I think the important thing is for the entire International Community to work on china towards that end. Japan is back. It has a strong leader and america is your partner. Would you share with me your applause . [applause] everybody please stay seated because we need to let the Prime Minister get out. It is a security thing. The escorts will take him out. [captioning performed by national captioning institute] [captions Copyright National cable satellite corp. 2012] next, agriculture secretary Tom Wilson Tom douthat discusses some of the problems in the agriculture industry. Then, business and government leaders discuss methods to encourage hiring the disabled. We will have more from the National Governors association tomorrow as they close their winter meeting with a conversation with dr. Oz on healthy eating. That is live on cspan two. We know Foreign Countries and companies swipe our corporate secrets. Now our enemies are also seeking the ability to sabotage our power grid. Our financial institutions. Our air Traffic Control systems. We cannot look back, it years from now, and wonder why we did nothing in the face of real threats to our security and economy. Interestingly, one of the concerns we hear and you see it reflected, polity and timeliness. Great, you have shared information with us about stuff that happened three months ago. What about now . One reason we are trying to increase our timeliness so that we are out ahead of the issues. We are making progress. I think that we are over the last year particular, we have really improved our ability to share formation faster with the private sector. Concerns from different sectors about ensuring that the other sectors they rely on are also increasing their cybersecurity. If you are a bank, you are reliant on power and water in transportation to conduct your business. What i frequently hear is that all the Companies Want to make sure that all of the Critical Infrastructure or span moving together to increase their cybersecurity because everything is so interdependent. The new cybersecurity executive order, monday night on the communicators. On thursday, the u. S. Apartment of agriculture hosted its annual agricultural look for them. The agricultural secretary discussed risks to the agricultural industry, including the upcoming budget cuts and Climate Change. Former us senator tom daschle spoke about the challenges of Food Security and Agricultural Development. Good morning, everyone. Good morning. Good morning, everyone. I hear some response. I am asking everyone to settle in for a great morning, now. Hi there, i am debbie terry secretary kathleen deputy secretary kathleen and want to welcome you to the outlook form agricultural look for him. Agricultural Outlook Forum. Silence those cell phones, please. On behalf of the secretary and usda, a chief economist, i really want to welcome you here to arlington, virginia, especially our International Guests and all of those watching the for him via live webcast. We have several representatives from foreign embassies and we welcome you, thank you so much, we are honored to have you with us. Organizing this conference, 2000 people, 25 sessions, it is really quite a lot of work. I want to begin by thanking the organizers of the conference for all they have done. I work with a Top Flight Team in the office of the chief economist and i want to thank our chief economist and the world Board Chairman for all the great work they have done. They planned to do very full days. I know we will learn a lot. Along with the traditional commodity and food price outlook, this year the program emphasizes agriculture must manage risk. From finances to Natural Resources to transportation. One of the things i am really excited about in this program this year is more time spent on fruit and vegetables, which i think are increasing importance in american agriculture and diet. We are seeing them more center stage and i think that is a terrific thing. Also, i am really excited to be here because we have senator tom daschle as our great speaker this morning. I do not know how many of you survived many congressional hearings like i do, i sit there and look very intent, but i have my fingernails in my thumb to keep myself awake. That is the truth. I had the glorious assignment when i worked in the Senate Agriculture committee, i was the person who chaired the subcommittee on ag research, that tom daschle chaired. I have never been to such exciting committee hearings. He would pull everyone on the panel and get them in a back and forth, engaged discussion, with very pointed questions, so that we pulled out really Important Information about what we needed to do in the research enterprise. I learned so much from this man that it is just an honor to be here on stage with him. And of course, we are at the beginning of the second term for president obama. Our great leader, tom vilsack, has an opportunity to share his visions for the second term. It does seem like it is sequester, sequester, sequester these days, and that does weigh heavily on our shoulders. We are plowing through and going to do great things in the second term. I am sure he is excited to share that with you. I also want to recognize that we have a lot of young people in the audience from the Outlook ForumStudent Diversity program, now in its seventh year. 20 undergraduates, and for the first time, 10 graduate students, are here to gain insights into food and agriculture. So be sure to seek them out during the breaks. If you see them in the sessions, congratulate them for being here. Mentor them a little over the course of a couple days. That would be great. I know how important these young people are, because i have an alumnus of this program, johnnie jones, who works in my office. These are the people who are going to lead american agriculture in the future. Many thanks to our partner, the university of maryland, eastern shore, and the sponsors who make this possible, including the usda Natural Resources conservation service. Students, can i ask you to stand, please . There we go. Thank you. Congratulations. Without further ado, i am going to ask our chief economist to kick off this conference, with the traditional presentation on his economic and Foreign Trade outlook. Joe has been our chief economist for 15 years. He was the deputy chief economist for 15 years before becoming the current chief economist. I know he is someone you rely upon, his analysis, for all the work you do, and is someone who has the trust of the secretary completely. So let us know what is going on. [applause] thanks very much, and thanks for enhancing that resume and letting me be chief economist for 15 years. It was good. I want to welcome everyone, and am delighted to see such a large crowd. We have had really great crowds the last few years. I think it is a tribute to jerry and the program committee, putting together such good programs. In my comments today, i am going to talk a little about the historic drought that affected agriculture this year. Despite the drought, i think the ag economy is very strong. Farm income, near record highs. A record high for 2012, and for 2013, projected cash income close to record highs. Low debttoasset ratio. Assets at record highs. However, i think the aggregate measures belies some sharp differences between sectors. Despite the adverse weather, producers have fared well, with high prices and record Crop Insurance indemnities, which helped offset the losses we saw this year. If you are an uninsured or underinsured farmer, crop losses are hitting those producers a little more than those who have insurance. And if you are a livestock, dairy, and poultry producer, this is the third year since 2007 when we have seen record high prices, with the effects that has on higher feed costs, tight margins. And we have seen, particularly on the cattle side, some liquidation. 2013, we were expecting a rebound in yields. We should see record production of soybeans. That means lower prices and improved profitability toward the end of the year for livestock, dairy, and poultry producers. If you think i am just taking the 2012 outlook and rereading it, it does look similar. We came in with low stocks this year. We were expecting record crops. We know what happened. There is a lot of uncertainty in these markets, one of the reasons we wanted to focus on risk in this outlook conference. As i go through the charts, i will focus on some of these aspects. First, let us go for the next for picture. Exports, as i said, are forecast at a record 142 billion for fiscal year 2013. The first three months of this year, 43 billion in exports. That is what we were exporting annually in the early 1990s. Imo 112. 5 billion, to mean assay trade balance almost 30 billion, at 29. 5 billion. For the second year in a row, china is our major export destination. Since 2005, exports to china have been growing by 25 annually. No surprise, it is dominated by soybeans and cotton. They have accounted, in recent years, as much as 3 4 of trade to china. If you look at the minor, but still large other exports, for things like coarse grains, corn, feeds and funders, distiller dried grains, or red meats, those are showing impressive growth figures as well. In terms of overall exports, values are up for most of the commodity categories. These are exports on a fiscal year basis. You can see that up for most of these categories, with the exception being corn. These are pricedriven events. We see volumes up for some categories. For most of the individual commodity categories, we are seeing lower volume. The drought is having some effect. For most commodities, that is being offset by higher prices, whose values are up. The big difference, obviously, is corn. It is striking that we are down 38 . On a fiscal year basis, what that has meant is, we are currently forecasting our corn exports at the lowest level since the early 1970s. I think 1971. A dramatic increase in corn exports, such that, if you look at where we are relative to the rest of the world, corn, as many of you know, for many years, the u. S. Was and have historically been the number one exporter of corn. Years ago, we had 80 of that market. That has declined in recent years, particularly since 2007, 2007, as we have seen an increase in corn used for ethanol production. Particularly, with the drought, lowest since the early 1970s. Because of increased growth of production and southern hemispheres and brazil in particular, we are likely to be the number two exporter, at least on a fiscal year basis. We would like to see crops rebound this year. But because of unusual circumstances this year, a record crop in brazil, and a poor crop here in the u. S. , we will likely see brazil being the number one exporter, at least for fiscal 2013. Let us turn to the commodity Balance Sheets. There is no question, much like last year, we are coming in with very low stocks, globally, for most commodities. If you look at wheat, because of problems in the black sea region and southern europe, Wheat Production was down this year. We know that corn, the last few years, very low stock levels. Our projected carried out for the current crop year if you look at it globally, we are at the lowest stocks used ratio since 19731974. That is just to say it has been an unusual year, the last couple of years for corn. It has been drawn down by poor weather in the states last year. Particularly because of the drought this year. Soybeans, low stocks. We have had problems with the u. S. Soybean crop because of the drought. Brazil still looks good, but drought in argentina has a lot of analysts looking at those numbers. The one exception here is cotton. Cotton, in terms of stocks, has increased dramatically over the last couple of years. What that is being driven by, largely, is china. China, because of policies to support producers, have been acquiring a lot of grain. Excuse me a lot of cotton. You can see that cotton stocks have been increased substantially in china. They currently account for over 50 of total world inventories. On a commodity basis, stocks as percent of use in china is some 120 . A lot of analysts wonder how sustainable that is. China is a large importer of cotton for its textile mills. Certainly, with this sort of stock level overhanging the market, i think this will lead to some uncertainty in the cotton market, as we move forward into this year. Let us turn to planning plantings. Obviously, we are expecting to continue strong plantings, certainly for grains and oil seeds. Some new land is coming out of crp. This shows the amount of acres that came out of crp this past fall. Around 2. 5 million acres, most of that in northern plains. You can see by the coloration of the charts, a lot of the area is coming out of some of the dakotas, where a lot of that area first went in, in the mid 1980s. This has been historically wheatland. Over the past 10 years, a lot of corn and soybeans creeping up in those areas. Turning to the planted acres, last year, i think the combined acreage for corn, wheat, and soybeans was some 240 million acres. Excuse me 230 million acres. Certainly, we have seen some of the largest corn planting since the 1930s. We expect this year for corn to be very strong again. Because of strong prices, many were able to get in corn. Perfect planning conditions. Of course, the world turned ugly in june, as the rain stopped in a lot of key states. This year, we expect planning to be very strong. It favors soybeans a little bit more than it did a few months ago. As we move toward march, when we put out are planning numbers at the end of march, this is something certainly to look at. We should see some decline in cotton. That is no surprise. We have seen surveys which suggest that. About yield, this is where most analysts are directing their attentions. If you look at the drought monitor, and they are saying few of you have not looked at the drought monitor, if you follow these markets closely, we still have significant drought in the central plains. The good news is, if you were to look at this map six months ago, we would have seen significant drought in illinois, indiana, and western kentucky. That has improved a lot. The forecast suggests some improvement. More improvement creeping into the western corn belt. The plains still look like they have a