CHICAGO/WASHINGTON, Dec 9 (Reuters) - President-elect Joe Biden plans to nominate former Iowa Governor Tom Vilsack for U.S. agriculture secretary, according to two sources familiar with the decision, a choice that will reassure farmers but disappoint climate and nutrition activists.

Vilsack, who led the U.S. Department of Agriculture (USDA) under then-President Barack Obama, has a long relationship with Biden and served as a trusted adviser on rural issues during the Democratic former vice president's campaign.

It was not immediately known when Biden would nominate Vilsack. The two sources familiar with his decision to tap Vilsack spoke on condition of anonymity.

Vilsack's return to the USDA is likely to be applauded by Midwestern states that produce the bulk of commodity crops like corn, soybeans and wheat. But it has already been criticized by activists who had hoped the department would focus more on the environment and nutrition as millions of Americans go hungry during the COVID-19 pandemic.

The USDA oversees billions of dollars in farm support programs, as well as food programs for schools and families in need - and critics of large-scale agribusiness say its leadership needs to better reflect the needs of small family farmers, global environmental changes, and the country's growing racial and economic diversity.

As Iowa governor from 1999 to 2007, Vilsack is seen by establishment Democrats as a politically safe choice, largely because of his moderate politics, previous experience, and long-standing, friendly relationships with large-scale farmers.

“Biden (in choosing Vilsack) said, ‘I am not going to try to stir things up. ... I am going to give you somebody you know, who has been in that role before, who comes from the Midwest, who still works within agriculture right now,'" said Iowa State University agricultural economist Chad Hart.

"That provides a signal to farmers and rural communities: 'You have worked this gentleman before, and we're asking you to work with him again,'" Hart said.

The Farm Belt was battered by Republican President Donald Trump's trade war with China and waivers exempting oil refiners from obligations to use corn-based ethanol. But Midwestern farmers also received an unprecedented amount of direct farm subsidies under Trump even as coronavirus stimulus for millions of other Americans stalled in Congress, helping him maintain broad support.

Vilsack, who is the chief executive of the U.S. Dairy Export Council, actively campaigned for Biden in farm states.

Vilsack's spokeswoman, Regina Black, declined to comment "as an official announcement hasn't been made." The Biden transition office did not respond to a requests for comment on the choice.

A coalition of progressive food, farming and environmental advocacy groups promoted rival candidates.

Top among them was Democratic U.S. Representative Marcia Fudge of Ohio, who would have been the first Black woman to fill the role and had been expected to increase the department's focus on small farmers, global environmental changes, and racial and economic diversity.

Biden has selected Fudge to be secretary of housing and urban development, Politico reported.

"Vilsack is not what the USDA and our country needs to help make U.S. agriculture more sustainable and resilient in the time of climate crisis," said Jaydee Hanson, policy director for the Center for Food Safety. (Reporting Jarrett Renshaw, P.J. Huffstutter, Tom Polansek and Julie Ingwersen; editing by Jonathan Oatis)