(Recasts, adds Obama's goals, reaction to Vilsack; byline)
By Charles Abbott
WASHINGTON, Dec 16 President-elect Barack Obama, a backer of tighter farm subsidy rules and renewable fuels from rural America, selected former Gov. Tom Vilsack from the major U.S. farm state of Iowa to be agriculture secretary, a Democratic official said on Tuesday.
The nomination would be announced at a press conference in Chicago at 10:45 a.m. CST on Wednesday, along with his selection for Interior secretary, Colorado Sen. Ken Salazar.
Both appointments require confirmation by the Senate, where Democrats have a majority.
Obama supports a $250,000 a year "hard" cap on farm payments and stricter rules on who qualifies as a farmer, changes that could save $100 million a year. Last month, he cited a congressional report on improper farm payments as an example of where to save federal money.
If confirmed by the Senate, Vilsack, 58, would be the first Iowan to lead the Agriculture Department since Henry Wallace during the Depression era. Wallace, an editor, economist and developer of hybrid corn, had a seminal role in the creation of the U.S. farm support system still in use.
Vilsack, a popular two-term governor of Iowa, was the first Democrat into the race for president won by Obama. He withdrew from the race three months later in February 2007. He was not immediately available for comment.
Critics said Vilsack is too much of a supporter of agricultural biotechnology and not enough of a friend to organic or sustainable farmers.
The National Farmers Union said Vilsack was "a great choice" who understands the threat to farmers from U.S. recession and the potential income from renewable energy.
On his website for the presidential transition, Obama says he would "ensure that our rural areas continue their leadership in the renewable fuels movement." Corn-based ethanol is the major biofuel now produced. The next generation of fuels is expected to use feedstocks like wood chips and grasses, reducing "food vs. fuel" friction.
Obama also supports strict regulation of pollution from large-scale feedlots, a ban on meatpackers raising livestock in competition with farmers and country-of-origin labels on U.S. food "so that American producers can distinguish their products from imported ones."
Vilsack's major issues as governor were funding for education and bringing more high-tech agribusiness to Iowa. Before election as governor in 1998, Vilsack was mayor of Mount Pleasant and an Iowa state senator. He also served as head of the centrist Democratic Leadership Council.
Senate Agriculture Committee Chairman Tom Harkin, Iowa Democrat, applauded the news. He said Vilsack "knows production agriculture and he knows the changes we need to ensure its profitability and future, including for young and beginning farmers and ranchers."
Selection as agriculture secretary was an startling rebound for Vilsack. He was a consensus front-runner immediately after the Nov. 4 election but in late November declared he was not under consideration for the job. In the past few days, there were murmurs he was back in contention.
"This comes as a surprise," said Sen. Charles Grassley, Iowa Republican, "but it sure isn't a surprise because of his qualifications." (Additional reporting by Deborah Charles in Chicago; Editing by Eric Walsh)