What's up in DC?

Jim

Wiesemeyer: We are grateful that you are joining us for another episode of the Ag View Pitch, as we know that your time is very valuable. Our team at Ag View Solutions is always here for you for any questions or comments that you may have. Please feel free to reach out to us at cbarron@agviewsolutions.com. And now here is your host, Chris Barron.

Chris: Welcome everybody to another episode of the Ag View Pitch. We are sitting here in Florida in the balmy, nice weather with Jim Wiesmeyer. Jim, how's it going? We're really good, especially the warm temperatures here.

Jim

Wiesemeyer: Here compared to where I've been. Fargo and other areas.

Chris: Yeah, they think it's cool here. It's in the 60s, but we'll take that any day.

Jim

Wiesemeyer: We'll take it.

Chris: Sounds good. Well, again, welcome everybody back to the, to the Ag View Pitch. And we are at the Ag View Executive Business Conference. And Jim, you just got done giving a phenomenal presentation again. I heard rave reviews again from everybody during lunch with your content and everything. And so what we kind of want to do is just kind of wrap up some of what you talked about at the event and kind of some of the things you're seeing. And so I guess what I'd like to do is just start out with what's, what's going on in DC. What, what do the farmers need to know about just in general? And then we'll dive into some specific topics.

Jim

Wiesemeyer: Well, we have the new leadership in the House, you know, being the Republicans, and we've already had some battles. The key one is coming up between now and either late June or July. We have to have an increase in the debt limit or a expansion of the debt. Now I bring that up for agriculture because if we can see a bipartisan agreement on that, that at least gives the opportunity to have a bipartisan agreement on a new farm bill.

Chris: Okay, awesome. Well, that kind of leads me into a question, you know, so we're going to be— President Biden is going to be giving the State of the Union address, and we're recording this, I'm not even sure what the date is, but the address is on February 7th. And so talk a little bit about, as farmers, why should we watch that and what should we pay attention to during that State of the Union?

Jim

Wiesemeyer: Sure. Anytime a president makes any mention of agriculture, be it the transportation system or foreign policy, would, would be very important. And there's a possibility that President Biden may include a push for, for a bipartisan farm bill in one of his list of agendas to do. If that's the case, that will put a little more pressure on both political parties to get a farm bill done yet this year. So I remember several years ago when President Herbert Walker Bush, George W.'s father, mentioned his support for corn-based ethanol, and it was a very key element that night that aided the industry.

Chris: So if we don't hear anything about agriculture, that won't be good.

Jim

Wiesemeyer: It's not on their priority list, but I got a hunch he's going to include that.

Chris: Okay, well hopefully, and that kind of does lead into the next topic I wanted to have you just address for a minute here is the Farm Bill. You know, we're coming up on a new one. You've been involved, you can talk a little bit about, you've seen a lot of these, right? So you've got a little history here and a lot of credibility with that. So talk a little bit about the timing and then from there some of the changes you see happening.

Jim

Wiesemeyer: We've had 19 farm bills, including this new one, since our history. I've— this will be my 11th farm bill, and I've seen a lot of changes. And we should see, hopefully, some changes in the next farm bill. I never put a year under a farm bill because if they can't get agreement, they'll just extend it, you know, 1 or 2 years. And that's happened at least a couple of times in my career. But we have a sincere need for an improved safety net. That's called Title I in the Farm Bill because for the last 4 or 5 years, we've had ad hoc disaster, you know, payment programs of multiple billions of dollars. And that says that the safety net isn't keeping up with the need for income support. So I think that will be a big debate coming up.

The most veteran observers of Farm Bill in Washington will usually tell you that they don't think that they'll get it through, you know, this calendar year. But I don't know. I would take the other position. I'm not cocky on that one. But you have both House Ag Committee Chairman G.T. Thompson from Pennsylvania and Debbie Stabenow from Michigan both saying they want to get a bill done this year. So I would say if we're going to get one, it'll be September or October of this year. And some people hope that actually we don't have a new bill because they're worried about potential negative amendments on the House and Senate floor that would attack the crop insurance program and maybe the sugar program. But I think with education they can deal with those amendments.

Chris: Mm-hmm. Are you concerned at all about the amount of available money? When you look at the amount of spending that's going on or that has gone on since COVID to now, any concerns there with just access to funds?

Jim

Wiesemeyer: I do, because with now the focus being on the debt for the first time in many years, it's going to be hard to get those multi-billion-dollar ad hoc disaster programs through, which again increases the pressure to look at Title I because it's not working. Right now. If we went with the support levels or reference prices, say for corn or soybeans, it's not near the price level that we've seen the past few years. So the need is there. The last time we had a focus on the deficit, agriculture had to actually cut $23 billion. Now, I'm not predicting that at all. I think a push will be made to add some additional funding even this in, in this environment, because it's going to be needed. Even if they don't get more funding, it looks like the Congressional Budget Office is estimating the total over 10 years will be $1.1 trillion, and that's a big hefty price tag.

Chris: Yeah. One of the things that we do from a granular perspective with our clients and with our farmers is, you know, we're doing budgets every year and we're looking at that. We're going into 2023, the most expensive crop we've ever put in, probably the most risk we've ever had. If you think of the, you know, of the programs, we're using zero essentially government aid, right, you know, for the next couple of years. Do you see any reason to do anything different than that, or do we continue to put a zero in that box for government assistance?

Jim

Wiesemeyer: I don't think— you can't really count on—

Chris: Other than crop insurance.

Jim

Wiesemeyer: Yeah, crop insurance is the best risk management tool I've seen in my entire career, and there's not been there any changes in the crop insurance that I see in the crop insurance packages this year, which is not a bad thing because we've had a lot of changes already. But there are so many options. I do a lot of crop insurance meetings, and it, it depends on the crop, the region of the country, whether or not you should add on SCO, you know, all that stuff. So there are a potpourri of add-ons that you can do. It will be interesting to see eventually when either the crop insurance companies or via the Farm Bill they come up with any new program on the input cost, which we've seen dramatic increase in fertilizer prices and fuel prices. I think that's one of the avenues they'll discuss in the Farm Bill.

And some crop insurance companies are coming out with some type of individual revenue assurance, I think. That could deal with that, but I don't think it's anywhere near ready to go.

Chris: Yeah, that risk management zone is a phenomenal place to inject, you know, some money because you're helping with that risk management component as opposed to just throwing money at a problem.

Jim

Wiesemeyer: Absolutely, and there's bipartisan, big bipartisan support for the crop insurance program.

Chris: Right.

Jim

Wiesemeyer: So that, you know, that's a good thing. And when a farmer looks at his is cost. At least most of the sheets that I've looked at, crop insurance expenditures at the farmer level is about 2.5%. So there could be some increases in that even from the producer level compared to other costs they have. To me, that's the best return on a potential investment and a protection that I've ever seen.

Chris: Yeah, it's the best rate of return we see as well. One last question on the Farm Bill stuff. You made a quote, so I'll kind of halfway ask the question correctly and you'll know what I'm talking about. But you basically had stated, you know, when you look at the Farm Bill, what percent of the Farm Bill actually help is helping the farmer versus helping the rest of society, right? Food nutrition. So can you address that?

Jim

Wiesemeyer: Yeah, sure. Up to 85%, near 85% of Farm Bill spending is on food and nutrition. The reason for that is many. Food and nutrition is key amongst the suburbanites and urbanite lawmakers, and it's got wide support. I mentioned that a few years ago I was at a meeting and the CEO of Walmart told me that 20% of every dollar spent at Walmart is basis of the food stamp expenditures.

Chris: That's crazy.

Jim

Wiesemeyer: Of focus there. That means around 15% are all other titles, you know, and so that shows you the— although the narrow focus, that doesn't mean it's not a lot of money because Title I is. Conservation program in legislation last year got an additional $20 billion for conservation programs. So that was a mini Farm Bill in and of itself. Itself, and food stamps also got additional funding. So I think the focus should be on that Title I because it's just not keeping up with the times.

Chris: Interesting. So a couple other topics here I want to hit. Waters of the U.S. ruling— WOTUS.

Jim

Wiesemeyer: Yep. We recently had an EPA— Environmental Protection Agency— announcement on WOTUS. I wouldn't pay too much attention on that one because we're all waiting on the Supreme Court ruling on that. Yeah. That hopefully will clarify some of the uncertainty regarding how that program should be operated. And it can come out any time between now and I don't think any later than June. And that's what everybody is waiting for, to see whether or not, hopefully from the, you know, producer's perspective in agriculture, it's not as draconian as some of the early WOTUS rulings have been, such as in the Obama administration. Now, Trump lightened up the regulations on WOTUS, so we've got a jump ball right now as far as what it can be. But watch the Supreme Court ruling. That's the next litmus test on WOTUS.

Chris: Timing-wise, what does that look like?

Jim

Wiesemeyer: I would say, you know, there was some speculation that we could have even had it a recent Monday when the Supreme Court started issuing their rulings.

Chris: Pretty soon here.

Jim

Wiesemeyer: Yeah, they don't usually like to announce rulings that are controversial early on in their term. And I would say this is a controversial ruling. So I wouldn't be surprised it could wait into that May-June timeframe. Okay, interesting. So it could be a while.

Chris: Okay. Last topic, and then I have one question after that, but renewable fuel credit. Talk a little bit about that with diesel and that kind of stuff.

Jim

Wiesemeyer: Absolutely. A month ago now, I guess it's been, EPA finally released the mandated levels for, you know, traditional ethanol, advanced biofuels, including renewable diesel, and for the next 3 years. So that was a good thing that they did. The market seemed to think they low-balled the renewable diesel mandate because of what the expansion of the soybean oil processors, both in new plants and existing plants, the industry thought, and I think correctly, that it should have been a higher number. In the call for public comments on the RFS, Renewable Fuel Standard program, EPA asked for comments on food versus fuel. Publicly they asked for that. Because there must be some concern that the additional acres needed to fulfill, it looks like the movement that eventually we're going to crush for soybean oil. And not meal.

That would be a fundamental change for agriculture if that were to occur. But that does raise the question to some in government and in the industry is, is the food versus fuel argument. I think that's a fallacious argument. We had the same thing in the early days of the corn-based ethanol industry, and I just don't believe they should go there. But they did lowball that number, which tells me EPA could eventually increase the mandated level for renewable diesel. In the case of traditional ethanol, we're going to get an announcement from the EPA sometime whether or not a relatively new credit program for clean fuels, whether or not traditional ethanol qualifies for that. The program begins in 2025, but it's something the industry is watching for.

Chris: Okay, awesome. So kind of the last question I have for you is You pay attention a lot to all the politics that are going on, both on the Republican side and on the Democratic side. What do you see as we move forward, and what are some of the pros and cons to some of the people that might be running on either side? Or maybe, you know, rattle off some of the people that you anticipate on either side of the aisle that we need to keep an eye on, and who maybe makes sense for us as producers to keep a close eye on.

Jim

Wiesemeyer: Sure. Well, for the existing House Speaker, the new House Speaker Kevin McCarthy, Republican from California, comes from an agricultural district. They grow a lot of different crops in California. So I think he's well grounded in agriculture. So it always helps to have a speaker know agriculture. For the comers, for the up-and-comers, for potential presidential candidates on the Republican side, Of course, former President Trump has already entered the arena. Most people tell me they do not see him, you know, being the nominee this time because of the independent voters in large part have moved away from him and a growing number of women voters. Ron DeSantis is the current governor of Florida. He's the, the one that most people are looking for. And again, Florida grows a lot of crops. And he's well versed at all. But there's other comers on the Republican side.

Tim Scott, senator from South Carolina, is somebody to watch for. He's got a story to tell. He works with both political parties. He could, if he doesn't get the presidential nod as the nominee, he could be a pretty good vice presidential candidate. Candidate. One more on the— well, there's— yeah, one more on the Republican side would be my governor from Virginia, Glenn Youngkin. He's a former Goldman Sachs official. He's not a politician by career, but he knows markets. So it's somebody— he's a clear up-and-comer for the years ahead, if not decades. On the Democratic side, The issue continues to be whether or not current President Joe Biden will choose to announce to run again. A month ago, I would have said he would not. But ever since he took a trip to the border in Texas, people in Washington have increased the odds that he will indeed, you know, go for the nomination.

But there's more than a few Democrats who want to— want him not to run.

Chris: Yeah.

Jim

Wiesemeyer: And to run. And the biggest one I hear that has the odds if Biden doesn't run would be Gavin Newsom, the governor of California. He has the ability to attract a lot of funding, and that's one of the key requirements to run for president. Others on the Republican side, I don't know whether Amy Klobuchar from Minnesota— she may have taken herself out the last few weeks. I'm still getting confirmation, I want to get confirmation of that. But she would be a good candidate for agriculture because just coming from Minnesota, you better know agriculture.

Chris: She knows ag.

Jim

Wiesemeyer: Yes, she knows ag. And there are a number of other ones, but they don't have the name power of some of the Republicans that I mentioned. So, you know, we'll just have to see. I didn't mention if Trump would not get the nomination, one of the scuttlebutt items in Washington is whether or not he would run as an independent candidate. And that would then up the odds that a Democrat would probably be reelected because he would split, you know, the Republican vote. But it is very important who runs the country, and not just the White House, but also the House and Senate, because they decide what bills go on the House and Senate floor. And from the White House, we've seen since President Obama And Trump, and now Biden, they have the power of the veto. And then they also can do executive orders and regulations that have been so important over the last 3 presidencies.

Chris: So I'm notorious for a last, last question. So I'm going to give you that one, and then I promise I'll quit picking on you. You made a comment, and I'm going to just ask the question and see how you answer this, but Someone had asked in one of the questions of how much longer do you anticipate this negativity? Because we have this, you know, you can watch the media, which I gave up watching the media a long time ago because it's just so volatile both ways. And, you know, so number one, where do you get the truth? And then number two, you know, how much longer does this negativity last? What's your take?

Jim

Wiesemeyer: The uncivilness in Washington, D.C. You know, several years ago, he's no longer with us, but I asked former USDA Secretary, used to be U.S. Trade Rep, was the head of the MERC, so he knew agriculture, from Nebraska, Dickens, Nebraska, to be exact. I asked him when we'll get back to a true bipartisan Washington again. He thought for a while, and then he said when the minority party is truly a minority party, and he defined it as not being able to come back to power the next election. And right now we're about a 51 to 49 country. And so it may take a few elections to get there, but I think that's the best barometer ahead too. Because if you're truly minority, that you can't be a chairman or a ranking member of congressional committees. You're going to want to work with the opposing party to get any bills you might want to get support. And I think that's the— best thing.

And because agriculture is going to have a lot riding in the next decade, because it's not pie in the sky what's going on in the industrial revolution again in agriculture. I talked, and you had another speaker at your conference here, of the unbelievable technology that's ongoing in agriculture right now. Up to 90% of all the drones in business now is for the business of agriculture. You've got your, what we call the agbots, the robotics in agriculture playing an increasing role in the meat processing industry. You've got your driverless trucks going on in the grain merchandisers, all that helping out the labor problem. And I think we're just beginning that. We're seeing digitization and other aspects. So this will eventually lower the cost of the logistics in agriculture keeping the U.S. competitive in the years ahead.

Again, I just hope I'll be able to see how it concludes because we're putting a lot of muscle in the innovation and the ingenuity of Americans and it's fully forced into agriculture. Bottom line, this continues to be a very phenomenal growth industry. If you raise or produce anything protein, you're in a growth industry.

Chris: Yeah, it's a technology— technological revolution is just happening.

Jim

Wiesemeyer: Yeah, absolutely, it's there, which again is going to lower the cost to transport either domestically or internationally. There are some people who think we're going to turn into a domestic market and kind of give up on the export side. I just do not see that because that's where you're— the, the thing that makes America so great is our innovation, and I think we're going we'll see it take off in the next few years.

Chris: That's awesome. Hey, Jim, I really appreciate all of your wisdom, your content, your experience. You know, there's a difference between wisdom and experience, and you've got both. So, you know, and we really appreciate it. We really appreciate it.

Jim

Wiesemeyer: I want to compliment you. Your meeting is one of the best ones I attend each year.

Chris: Well, thank you.

Jim

Wiesemeyer: You can tell the farmers are sitting down and thinking. Conferences. And that's, that's like a trip through one year of college.

Chris: Yeah.

Jim

Wiesemeyer: When they come to your conferences, because you stretch their, their brain.

Chris: And I always like that. Well, I appreciate that. And that's why we call it the Executive Business Conference. It's all about being an executive of your business. And you've been a great part of that. You were at our first Executive Business Conference, you're at the second one, and we need to get you locked in again for you. So you'll be back again. So appreciate it. So thank you very much. If somebody wants to reach out to you with a specific question, could they email you?

Jim

Wiesemeyer: Absolutely, my last name at gmail.com, W-I-E-S-E-M-E-Y-E-R at gmail.com. Every letter is an E except at the beginning.

Chris: That's how I learned it as a kid. Alright, if they didn't get it the first time, they just have to rewind a little bit and get that. So again, Jim, this has been a great conversation. Really appreciate you being at the Executive Business Conference. Get you back again, and really appreciate everybody listening as well. Thank you. And we will catch you again next time on The Aggie Pitch.