Vilsack's first task will be to help the enormous department determine how to put the new $290 billion farm law in place. The five-year law, signed by a reluctant President George W. Bush earlier this year, includes plump subsidies for a wide variety of crops.
Obama acknowledged the Iowan's challenges in finding ways to lead the department through tough economic times, saying he would have to be "innovative and creative" in his new post.
Vilsack should have better luck pushing another of Obama's priorities - promoting renewable fuels like corn-based ethanol. As governor of the nation's largest corn-producing state for eight years, Vilsack was a leader on the issue and made it a central part of his short-lived campaign for president. He also has endorsed tax breaks for the ethanol industry.
Farm groups praised his nomination, encouraged by his Iowa roots. National Corn Growers Association President Bob Dickey said Vilsack understands the corn industry and was a "wise choice."
Others were not as pleased. A coalition of food and environmental groups have taken on the powerful ethanol industry in the past year, arguing that government subsidies for the industry have led to increased damage of lands used to plant corn and contributed to a run-up in food prices.
Ken Cook, president of the Environmental Working Group, said he is nervous that Vilsack won't listen to all sides of the issue.
"We need to rethink some of these basic questions," Cook said.
Vilsack also will oversee nutrition programs, which make up the bulk of the department's budget, and conservation programs designed to protect farmland. That idea is popular in Iowa, which is also home to the chairman of the Senate Agriculture Committee, Democratic Sen. Tom Harkin.
"With our economy in a downturn, Tom Vilsack knows how to bring change that will rebuild rural economies and keep them vibrant," Harkin said Wednesday.
Those who favor lowering subsidies were encouraged last month when Obama reacted to a congressional report that found many wealthy individuals who exceed income caps were still receiving farm subsidies. He called it a prime example of government waste.
Obama also has called for lowering the cap on farm payments - a popular position in the Midwest, where crops are less expensive to grow. Southern lawmakers have long blocked lowering those limits, however, as Southern rice and cotton crops require more investment.
Cook, of the Environmental Working Group, said Obama and Vilsack may be able to find small ways to trim subsidies as the new administration writes rules to implement the new farm law.
"We'll certainly be making the case that this is a test of President-elect Obama's position," Cook said.
Although Iowa is one of the nation's most productive farm states, Vilsack didn't focus heavily on agricultural issues as governor. But he headed gubernatorial groups that focused on biotechnology, ethanol and Midwestern issues, and he eventually headed the Democratic Governors Association.
Since his presidential bid, Vilsack has worked at several jobs, including one at Iowa State University's Biosafety Institute. In that position, he has a role analyzing the risks and benefits of genetically modified plant and animal products.
He was rumored last month to be Obama's top choice for the post, but he quashed the rumors by telling aides he would not be agriculture secretary.
