Trade and Profitability Top Iowa Farmer's Minds at State Fair

Welcome into the MToM podcast. I'm Paul Yeager at the Iowa State Fair. Secretary of Agriculture Mike Naig is here for our annual trip around the fair. And, we're going to try to make it as uneventful as possible with the cart. We'll see what we can find. See, there's a few things going on content wise. Let's start first, if we could, with news, things. Saturday, when you were here, the US Secretary of Agriculture, Brooke Rollins, was here. And I know that you always get just a couple of moments before we see things. What was your lead? Pitch for Iowa to the USDA.

[Naig] Well, first of all, we were thrilled that Brooke Rollins came to the state Fair. And, of course, she's quite competitive. We, governor and I had had, invited her to come in and participate in the governor's charity steer show, which was wonderful. And she did, and that was great, but of course, had a chance to visit with her. And, you know, top, top line message for the secretary. And that's the thing I'm hearing about from farmers as I'm working the fairgrounds here, is it's all about profitability, profitability. And, you know, call it $5 corn. But really, what we're talking about is, we have got to pinch. Prices aren't where we need them to be. And we got input prices that are coming in high again. And so, we have got to be thinking about that and really just trying to drive home the idea that. So that means we need to unleash markets, both here and around the world. So we made it, you know, obviously making the pitch for expanded trade biofuels, E15, SAF, and all of the above. We don't want to enter an era where we're relying on payments from the government to make things work. So that was the that was the main point that we we drove home, in addition to bragging about some really good Iowa cattle.

[Yeager] And, and she was saying that you were going to finish third. Yes. We know that neither one of you knew the governor or the secretary came in for a second or third.

[Naig] So I guess in theory, because they don't place at the top five, we were both we were all three in the top five. I in one sense, you could say we we tied. I still think that I probably placed higher than them, just given the quality of the steer that I was showing. But, see, that allows us all to have our own level, our ability to save face, if you want to.

[Yeager] That is important. When you're here at the fair, we'll get to all the people and all the things, to. Farmers are stopping me. I know farmers, they're.

[Naig] Stopping me right now.

[Yeager] It is. It's always about price. That's the big, big thing. I if I would have had a chance to answer the question on Saturday, it was going to be give me some details about China because, yeah, we have people that say frameworks are nice. The markets think that's great. We know that there needs to be a deal. But we are to the point now it's the farmers are telling me that we need details. Are you closer to hearing details are coming because we can't have time to sort of much longer.

[Naig] Well, we just actually just wrapped up. I spent the afternoon with Luke Lindbergh, who's the newly confirmed USDA undersecretary for trade. He's five days on the job. He did a roundtable with farmers. It wouldn't surprise you that several of the farmers in the room are saying, what about details? You know, it's one thing to put frameworks together, and then it's another to actually and it's even another thing to have, an agreement and in detail, then you actually have to go execute trade. And there's lots of non-tariff things that happen. And so that is really where you've got to be. You really have to be focusing on, go make new agreements in for, yeah. Then execute on those agreements and then enforce those agreements. Really. And so it's all it's all of those things all at once. No, I look, we're not we don't have a lot of detail yet on some of these, but I think directionally we're headed in the right to the right place. When you've got, this was also a way to think about this. You know, typically, it seems like we're trying to get somebody attention when we're trying to advocate for trade or this program or that, and you can't get higher than the president of the United States when it comes to trying to appeal to the highest authority within government to get something going. The president is talking about tweeting about trade and talking about ag products and soybean to China. So I mean, you you've got the highest levels of government. Cabinet level members negotiate the president himself negotiating on these things. And so at that level frameworks, hey, I'll take them. Then you then you have to bring the detail and focus. And that's where frankly, again, you just got an undersecretary confirmed, just a few days ago. We need the ag negotiator is still nominated but not confirmed. You know, and they're negotiating all over the place. So I do think this is going to continue to take some time. But we also stressed both to the Secretary and to the Undersecretary that there's a real urgency to this profitability and price. Peace and trade is one component of that. But we got to keep we got to keep the wheels moving.

[Yeager] We've talked China numerous times over the years, and what is fair and what is right. The president before we took before we visited a tweeted about, quadruple. Well, that's more soybeans than we produce right now and have a home. We just need to fulfill what was dealt. Yeah, six years ago.

[Naig] If we could just have phase one and be working on phase two. Yeah. Well, you know, the president sort of does these things to get the attention right and say, hey, you ought to pay at. Look, the fact is, again, he's sending a signal to the Chinese. You asked specifically, did we get a lot of did we get some insight into that and no other than to no, I mean, we asked specifically and other than to say that, again, at the highest levels, cabinet level, you're seeing negotiations. India, of course, is another question mark. Right now we think that that's a huge potential largest country in the world by population. They have a significant productivity gap. They have lots of needs. And yet, you know, trade deals are hard to come by, but but we we are again told that the negotiations are ongoing.

[Yeager] Members of the Iowa delegation have gone to India, but India has always kind of been that.

[Naig] Yeah, hard.

[Yeager] To reach for anybody.

[Naig] Out there.

[Yeager] They're always kind of just keeping you at arm's length. And I get that.

[Naig] Though famously protectionist, I mean, India, non-GMO, you know, they restrict GMO access, those types of things. And yet they have a way of getting the things they need. And I think we got to get position to be be ready for that opportunity.

[Yeager] I'm taking you around the barns because I know you're always tempted to jump out and start popping into the ring or hopping into, to show these cattle and these farmers that are these producers with these cattle right now and the prices that they are enjoying. Yeah. They look good from a new chart, from a chart perspective. But they are hard to buy those new.

[Naig] Hard to finance.

[Yeager] Yep. Hard to find the bank that wants to write that check because it's a steep check. Yes, it's good for the livestock producer right now, but it's also pretty soon that consumer is going to maybe back away. Where's that balancing act for you in talking to people this week?

[Naig] Good question. Right. I mean, so, wouldn't you argue that perhaps we would have thought that demand destruction would have already occurred at some of the prices that we're seeing? I mean, conventional wisdom would tell you that we should be seeing a lessening demand for beef at the consumer level, and we're not, so, of course, it's a balance. And you don't want to push that too far. No we don't. That's the demand destruction bad on all the way around. And and yet the signals continue to be said. I, I always use this as an example. If I'm talking to a non eg group and I say one of the bright spots in eg is that beef industry from a price standpoint. But then you say, well, why aren't we seeing a massive expansion? All the signals should be telling you that you should see, well, we still have the smallest cattle our cow heard in this country since the 1950s, and that's not changing dramatically. And what it tells you is it's that exact thing. It's hard to it's hard to, finance that that investment. It's hard to take take that much and make that much of investment bite off that big a chunk and and drought out west. And all those challenges really contribute to us being kind of going sideways here.

[Yeager] But in a way, and this is the weird thing about it, it's this magic of supply and demand that if we don't have this massive supply, there is going to be a strong demand. And, you know, like the corn farmer right now, what are they going to maybe do? They might try to overproduce through the problem. The it's not intentional is it. On the beef product beef industry do you think?

[Naig] I don't think so. Yeah.

[Yeager] That's what I just it's like that's that's what you know, that's what the finance people like me and I don't know, hog producers. What are they, talking about right now?

[Naig] Part producers finally, finally see some light and part of it, you know, you've got lower feed costs and but, I mean, you were talking about historical. I, I always say when you use the words historical and unprecedented to describe what you're going through. Yeah. Oh, boy. Have you got troubles. And they really many of them dug up very, very had a very deep hole that was dug for them. And they're climbing their way out of that. But generally I'm hearing some really positive things out of the pork industry. Health is is a major challenge. Purs. And and, those types of things, I mean, we've got headwinds when it comes from a market standpoint. Prop 12 is a is a real issue. And we got now we're going to enter a football game. Here we are.

[Yeager] This is a new one. Can you go over here. Let's see over.

[Naig] And he caught it. Didn't catch it. Yeah.

[Yeager] You got it. You got it.

[Naig] Just catch. Nice work. Now.

[Yeager] Let's see if he can. You think he could thread it? That one's, That would be always something new.

[Naig] You don't always have to be looking pork, obviously. And very export dependent. And then prop 12, we we those are things that we view as headwinds potentially for this industry that's finally seeing some bright, bright spot. So I'd say disease the threat of foreign animal disease and then, you know, market access domestically and internationally. Those would be some headwinds that we see coming. But I'm generally hearing some pretty good things from our our swine sector.

[Yeager] Back to the USDA secretary, talked about how a lot of things were put into the one bill, the big bill. Yeah, that were farm bill related. What are you hearing? What are you wanting to see? New new farm bill? Or is that going to be enough that was given to.

[Naig] You, months ago? Not enough. Must see a completion if you will call it a skinny farm bill. Call it a, close out. I don't know, but there has to be some policy pieces that are put into another a bill, and we know that, certainly G.T. Thompson on the House side. They're working on getting that language put together in the Senate side. So I think as we get into fall, we really do need to see a piece of policy move now, I, I also we need to then zoom out and say, and, and yes, the big beautiful Bill did did have significant impact, you know, from a tax standpoint, but also increasing reference prices and those types of things brought a lot of certainty. But it didn't do the it didn't do all of it because it couldn't. That kind of vehicle can't we have got to get back to normal order on farm bills, which is to say we got a five year farm bill that's written by the House and the Senate Agriculture committees. And that's so this had to happen for a whole series of reasons, set of reasons. Now we've got to make sure that and by the way, it always starts sooner than you think. The next five year cycle really is coming at us just here in a couple of years.

[Yeager] But I would say we've never even answered the last five years.

[Naig] Well, we technically know, right? No. Still, in an extension.

[Yeager] To the thing, traditionally, farm bills have been some of the most bipartisan.

[Naig] They have parts of legislation.

[Yeager] The big hang up has been on food assistance on one side, and we're not hearing much on the conservation side and the commodity title, I mean, they're lots of titles. How are we going to get people back together? And, well, do we need to keep the bill together and separate food and everything else?

[Naig] I mean, historically, what the reason for that. Yes, it's 80, 85% of what's authorized in the farm bill is supplemental nutrition. But the whole point is that you've got, you've got congressional districts that don't have one scrap of farm ground. And it and you say, well, you know, so you're trying to say, how do you go argue for crop insurance to somebody that represents, you know, Manhattan or Los Angeles, County. But the point is they should care, because that all leads to food security and national security and economic security. But I think when you put that all in the context of food and farm bill, that's how you get a bipartisan bill across the line. And don't forget to the other that they are bipartisan. They have to be. They should be, but the breakdown, if you will, or some of the controversy that can occur is actually regional. You know, it's sugar beets versus cotton versus wheat versus corn versus.

[Yeager] And that's always something that we have watched over the years of who's in charge. Yeah. Means which commodity might have a little more. Yeah. Strength.

[Naig] And we're very fortunate in Iowa and in the Midwest. I mean, you got John Thune, you've got, Klobuchar and Craig and and, you've got our whole delegation, two thirds of which is on the their agriculture committees. None. And Feenstra, Ernst and Grassley. I mean, we're we're really well positioned. We just need to make sure that there's a vehicle to, to, to.

[Yeager] To move somewhere to find, controversy. Let's stick one more in here in this discussion. Water has been a big topic in central Iowa when the largest population has restrictions, people get attention. There's, studies put out there, there's comments out there. There's a group of people, this audience at the fair. Secretary, is your prime opportunity?

[Yeager] I'm guessing, to have a conversation. What are you talking like?

[Naig] Where? And here and anywhere else. We're trying to talk about the fact that. And look, I first of all, I want to say at the outset, we appreciate our partnerships with Polk County. We've got partnerships with Des Moines. We've done we've done projects together with Des Moines Water Works. And we want to continue that. And there is just no reason for us to try to divide, here that the fact is, we've got a one of the fastest growing metropolitan areas in the Midwest, the fastest Des Moines metropolitan area. And we want a thriving, strong capital city, growing residential sector, growing industry data centers, recreational opportunities, you name it. This community, this city largely uses surface water as the source water for drinking water, which means you're going to get a lot of variability. That's a fact, yes, which means you're going to have treatment capacity for all kinds of things that come with river water. And here's the other fact. We haven't seen this kind of nitrate spike over the last few years. Why is that? It's weather driven largely what we're seeing. We had dry years. We don't move as much. We have a normal or a wet year. We move some some nitrate. That is a reality of our landscape. It's not all because of what gets applied in a farm field. A lot of it is naturally occurring or legacy nutrients that are laying in our stream beds and banks. So what we should be looking at is, and I think we are largely there's many who want to get in and try to break that apart and want to create controversy where there doesn't need to be. We should be working and are working upstream in the watershed to try to reduce nutrient loss. One there's an economic reason to do it for farmers, too. It's an environmental reason to do it. There are cities upstream, stormwater upstream. All those things can be improved. And you have to also then increase the treatment capacity that you need here to support to to support a growing metro area. And we should do both and we should be supporting each other in both regards.

[Yeager] Do you get the sense, because speaking of the people, I need to show more of the people here at the fairgrounds. We're going to spin around. I know we're at our end destination, but I want to spin around and show a few more of these people. Yeah, because those projects are expensive and we're having a little bit of, pushback on, on government spending for some things. Are the people really interested in clean water? Do you get the sense they even care about clean water?

[Naig] Oh, yes. No, I do, I do look and we this is also why you need to have sustained what we've we've been implementing Iowa's nutrient reduction strategy now for over 12 years. We didn't just wake we don't just wake up today and say, hey, let's get started. We've been working on soil erosion prevention and and working on soil health for for decades now. So, I mean, we what what is important here is that you have a long term, dedicated, sustained strategic focus. And that, again, should be on the treatment side and on our work within watersheds and working with water treatment providers, you know, stormwater cities all up and down the watershed. So I think that's the lesson here is to continue that strategic long term focus and then leverage resources. So yes, state dollars, but federal dollars and private sector dollars, we've done a really good job. I think, in the state of doing that. And it takes leadership and it's going to take some time to to ultimately see the progress that we want to see. But I'm, I'm, I'm look, cover crops. We've gone from almost no cover crops in the state of Iowa, 12 years on where 4 million acres. We need more than that. We need to double that. We need to go beyond that. But don't tell me that's not progress. And if you can go right down the line and find all kinds of ways that we've been progressing.

[Yeager] Where do you find more progress? Because if you isn't the same, are you getting new producers?

[Naig] Yes.

[Yeager] To participate in cover crops because it's easy for one to expand. But you got to get the 1 or 2 new in the county to join.

[Naig] So the one data point is that we actually offer that for cost share for the state of Iowa. We offer a, a $3,030 per acre cost share for, first time user of cover crops in 20 for a previous user. So we are tracking and we know who's used the program in the past. We've got 1000 new cover crop cost share applicants every year and have for the last several years. And you think at some point, well, we're going to run out, right? No, but we're also working with partners to drive more awareness and more interest and flat out just go sell conservation across the state of Iowa. So, no, we're having new, new people are engaging. And we're also trying to work with ag retail. We're working with Pheasants Forever, Ducks Unlimited, you name it. We've got lots of partners that are helping. So that's not just the state of Iowa that's out there talking to folks, that it's all these other partners and something that may motivate you to make a to invest in a practice or say yes to a practice may not be the same thing and isn't the same thing that motivates others and then recognizes that every city and every acre of ground is different, every farm is different. And we ought to respect that in our approach to things.

[Yeager] But when you walk around here, you will see someone that will have a very loud shirt about water. They might have a loud shirt about politics, they might have a loud shirt. How aggressive are you having conversations with people when you see that?

[Naig] Oh, oh I don't, I won't I mean I'm not going to go go seek that person out and never be.

[Yeager] They seek you out.

[Naig] Oh I get there people. People like to to tell me what they what they think. And I like that. I like that look, you know what? You know what I find the vast majority of people are vast. Majority of Iowans don't want that kind of, screaming at each other. They want collaboration. They want people to work hard and, do what they say they're going to do, follow up and care, and we do care, and we're working at it. And then we're trying to be very transparent in our work to say, look, go to Iowa State University's website for the nutrient reduction strategy. Look at the measurements. You can see it's updated on an ongoing basis. We're not trying to hide anything. We even talk about some of our challenges. You know, we're having permitting issues for some of our wetlands. You know, we try to be very open about that. But, I would just encourage folks, you know, it's not this work isn't easy. And there's a lot of folks that are committed to it. And, you know, we'll recognize on Wednesday of this week, and we do this every year with the governor and the DNR and the Iowa Department of Energy. It'll be about 40 families a year. So it's a pretty selective group. But they're environmental farm leader Awards. And we, we recognize families who really have had a generational commitment to conservation, but they're also folks that are usually people that are hosting field days and their people will say, I learned about no till from that, that family or that farm. And that's how you create lasting change, a culture of conservation that endures. And it's not a flash in the pan. It's not a regulatory reaction. It's not something that that takes away the innovation. It's something that really becomes part of our culture. And, more so that's the kind of thing that we're trying to promote.

[Yeager] Okay. I've held off as long as I can. Best new fair food this year. I need you to have something. Controversy on here.

[Naig] I won't do it.

[Yeager] It is hard, isn't it?

[Naig] I the drop the mic and walk away. I, actually funny, I have this real problem, right? Because I'm out here every day. And yet, for some reason, I still don't seem to get everything accomplished that I need to after 11 days. I like some of the traditional pieces. I did have the the, what was the new the new, sandwich, the pork pork tent with the, pork loin, coleslaw, pineapple, and then the hot chili drizzle. All I can say is that I had that, and it was phenomenal, but I'm not. It's relatively early in the fair when we're talking here, Paul, so I think. But but the one thing that the one thing I'll always go on the record as saying is it's always a great day for ice cream at the state Fair. And I just had some cookies and cream right before this, right before this.

[Yeager] We are oh, look at this, look at this. Someone who has definitely been in, agriculture programs over the years. Good to see Pam Johnson here. And I will say that she's here. So to cut it out right now, she she's already giving me the look. But when you see, let's let's use it this way. We'll close on this, when you see producers who have been involved in leadership over time and they are continuing to be there and serve as mentors, what is it that you need with your young producers who are in the ring, who are trying to find a way? Because inputs are high, prices are low, land is not available. This is going on this regulation. How? Give me some of that mentorship that a young producer can.

[Naig] Can go home with. We actually had president Brent Johnson of Iowa Farm Bureau, and I did another roundtable this year with beginning farmers just a couple of days ago. And, I am finding that to be one of the most, most important engagements of the fair anymore. And just because you do get a sense of what's on their minds, what are the challenges? And yes, land access and and actually things that may surprise if you don't know it. But child care, child care is a huge issue for our farm community, our community. Because, you know, mom and dad are both typically working and off one, you know, both maybe off the farm at times. Kids, kid, what do you do with the children is a is a big deal and those things come out. But profitability, it really comes back to profitability. When you don't have profitability, then it's almost like, well, how do you talk about all these other issues? And it's it's challenging when there is profitability, don't get me wrong. But right now we're in an era where it just feels like we have got to go back to talking about some basics. We need markets. We need markets domestically and internationally. And if you have those things, if there's profitability that's possible, then these other things can happen. But look, I do appreciate that. You know, I, I always tell folks, you know, sometimes ask a question and then listen, you know, ask somebody who farmed through the 80s what it was, what it was like. And then, listen, I love to talk to bankers and say, tell me a story about the 1980s and then just listen. You can learn a lot.

[Yeager] I just I had that a conversation this morning about that, about, talking about interest rates, 7%. And I'm like, but don't you goes, yeah. Bankrupt me. Yeah. The old stuff of, you know, teens.

[Naig] So, there's a lot of folks that will say, these these are normal interest rates. Right. Well, we've been experiencing as of late is is not. And those are just it's good perspective.

[Yeager] All right. That's always good to have his perspective. Mike Naig secretary of Iowa's agriculture.

[Naig] Look at the heavy equipment we avoided.

[Yeager] We did it all. It's a good day and only two interruptions. So that might be a record for us, but maybe it's because it was raining. We do it. We can. Thanks for watching this end to end podcast. I'm Paul Yeager. Next, episode comes your way Tuesday here on, wherever you get your podcasts. Thanks for watching.