In an interview last week, Iowa Secretary of Agriculture Bill Northey reviewed the top agricultural issues affecting Iowa in 2015 and he also looked ahead at what's likely in store for 2016. One of the biggest issues grabbing headlines in 2015 was water quality. Northey sees continued progress by Iowa farmers in putting more soil conservation practices on the land, which will help improve water quality in 2016.

AG ECONOMY: What will be the top agricultural news story in 2016? "It's hard to know for sure, just about anything can happen," says Iowa Ag Secretary Bill Northey. "The economic situation with farming bears watching as we will likely see continued low prices for grain and livestock."

"We saw a continued ramp-up in conservation engagement by producers this past year," he notes. "Our Iowa Legislature stepped forward in 2015 with some additional cost-share dollars and we saw lots of farmers putting cover crops on their land for the first time. We had 1,800 producers participating in our $3.5 million statewide cost-share program, most of them using the cost-share funding for cover crops."

A number of Iowa farmers also tried cover crops without being part of the cost-share program. And Iowa has other conservation programs as well, that encourage farmers to try cover crops, establish wetlands and buffer strips, and build bioreactors on the edge of their fields. "We will continue to make progress in putting more conservation practices on the land, as we scale-up the effort in 2016 and the years ahead," he says.

Will there be increased funding for water quality efforts in Iowa?
Does he sense that water quality will be a serious topic the 2016 Legislature will discuss, especially related to funding for state cost-share efforts with farmers, for soil conservation and water quality purposes? "I do," says Northey. "We'll hear about several different proposals as the Legislature looks at how to increase the funding."

A number of lawmakers are asking: How can we as legislators do more? What can we do to help boost soil conservation and water quality efforts in Iowa? "We've seen farmers step up in 2015," says Northey. "And in a financially challenging year like 2016 with the farm economy in a tight squeeze due to continued low crop prices, the state needs to provide additional cost-share funding to encourage more farmers to continue to put more conservation practices on the land."

Iowa's record crops in 2015 present a challenge in 2016
Record crop production in 2015 is still a big story going into 2016. The huge 2015 crop now must be marketed and it is facing a lot of competition in the global marketplace. Corn and soybean prices are low, and farmers are wrestling with tight and sometimes negative profit margins.

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"Many farmers in Iowa saw their best ever yields in 2015 as it was a year of record production for both corn and soybeans in the state," notes Northey. "Only three countries in the world are now producing more corn than the state of Iowa. And historically there have been four countries that produce more soybeans. But in 2015 Iowa produced more soybeans than China, so now only the U.S., Brazil and Argentina produce more soybeans than Iowa."

While the significant drop in crop and livestock prices has created real challenges economically for farmers, Northey says, "Farmers are optimistic and are looking forward to 2016 and the new opportunities it will hopefully bring."

"Bird flu" outbreak was definitely huge news in 2015
USDA has described the H5N2 Highly Pathogenic Avian Influenza outbreak of 2015 as the largest animal health emergency in U.S. history. Nationwide there were 223 detections of HPAI from Dec. 19, 2015 through June 17, 2015. There were 48 million birds in 21 states affected, but Iowa and Minnesota were the most severely impacted.

In Iowa, there were a total of 77 premises in 17 counties and 31.5 million birds were affected with the disease, according to the Iowa Department of Agriculture. This includes 35 commercial turkey flocks, 22 commercial egg production flocks, 13 pullet flocks, one chicken breeding flock, one mail order hatchery, and five backyard flocks.

As of early December 2015, all HPAI quarantines had been lifted. Iowa poultry producers are resilient, with all but one of the 72 commercial poultry farms that had quarantines on their facilities having begun the restocking process or are fully restocked by now. To lift the quarantine, all sites had to complete the cleaning and disinfection process and they had negative environmental tests. They also underwent a 21-day fallow period following disinfection.

Hopefully, we will never see an outbreak like this again
The Iowa response operated under a Unified Command involving the Iowa Department of Agriculture and Land Stewardship (IDALS) and USDA Animal and Plant Health Inspection Service (APHIS) Veterinary Services. The state ag department had responsibility for maintaining safe movement of poultry and poultry products from farms that were affected by HPAI. IDALS issued a total of 3,700 movement permits to 42 states and the Virgin Islands. This includes 2,323 permits issued for movements within Iowa and 1,377 permits have been issued for movements out of state.

"We are nervous about this coming spring," says Northey, "when the migratory wild geese and ducks make their way through Iowa again. They can spread the bird flu virus to poultry farms. We are asking all poultry producers to make sure their biosecurity effort is as good as it can be. We want our producers to be vigilant in checking the health of their chickens and turkeys. Be watchful and report sick birds to your veterinarian and to IDALS immediately. We hope we don't see anything like the bird flu epidemic we had in 2015 ever again, but I want to emphasize that everyone has to be careful and practice biosecurity."

Iowa Water Quality Initiative is continuing to expand
The Iowa Department of Ag is continuing to expand efforts to work with all Iowans to make water quality improvements. Earlier in 2015 Northey announced that 1,800 farmers committed $3.5 million in cost-share funds statewide. Farmers used this cost-share funding to install nutrient reduction practices in each of Iowa's 99 counties. 

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The practices eligible for this funding are cover crops, no-till or strip till, or using a nitrification inhibitor when applying fall fertilizer. Participants include 980 farmers using a practice for the first time and more than 830 past users who are trying cover crops again and are receiving a reduced-rate of cost share. Farmers using cost-share funding contribute 50% or more to the total cost of the practice. 

In addition, 29 demonstration projects are currently located across the state to help implement and demonstrate water quality practices. This includes 16 targeted watershed projects, four projects focused on expanding the use and innovative delivery of water quality practices and nine urban water quality demonstration projects. More than 100 organizations are participating in these projects. These partners will provide $16.72 million to go with the $11.11 million in state funding going to these projects.

Northey also says more than $325 million in state and federal funds have been directed to programs with water quality benefits in Iowa last year. This total does not include the cost-share amount farmers pay to match state and federal programs and funds spent to build practices built without government assistance. More information about the Iowa Clean Water Initiative can be found at CleanWaterIowa.org.

Record crops in 2015 present economic challenges in 2016
A near ideal growing season in much of the state in 2015 saw Iowa farmers produce record corn and soybean crops. The state's 2.49 billion bushel corn crop is 5% above the 2014 production and tops the previous record, set in 2009, by 4%. A record yield of 189 bushels per acre is 11 bushels above last year and exceeds the previous record of 181 bushels per acre set in 2004 and 2009.

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Iowa farmers produced a record 550 million bushels of soybeans, up 10% from 2014 and 5% above the previous record of 525 million bushels produced in 2005. The yield of 56 bushels per acre is 5.0 bushels above 2014 and 3.5 bushels above the previous record yield, set in 2005.

Crop prices have continued to fall as a result of large production worldwide, softening global demand. The strength in the value of the U.S. dollar also hurts our exports, as it makes U.S. corn and soybeans more expensive for foreign buyers. Average statewide corn prices fell from $3.76 to $3.48 from December 2014 to December 2015 and statewide average soybean prices fell from $9.89 to $8.17 per bushel over the same period. The livestock industry also faces challenges as the prices they are getting have fallen as well. Fed cattle have seen the price drop from $161 per cwt down to $116. Hogs are down from $76 to $49 per cwt.

Tighter margins on the farm are affecting Iowa's economy
Today's tighter margins on the farm are starting to ripple through Iowa's economy. Land prices are down 3.9% as a statewide average compared to a year ago. There have been several announcements of layoffs at Iowa manufacturers, machinery providers, seed companies and other business that serve the agriculture industry.

Despite the challenges, opportunities remain, notes Northey. In general, exports remain strong.  Agricultural exports account for 10% of the U.S. exports and supports nearly one million jobs across the country. Value added products such as ethanol and meat products have made up the largest share of agricultural exports at approximately 63%.

Iowa is a leading producer and exporter of ag products, ranking second among the 50 U.S. states in the value of its agricultural exports in USDA's most recent calculations. Iowa's exports help boost farm prices and income, while supporting about 77,300 jobs both on the farm and in related industries such as food processing, transportation and manufacturing. To help continue to grow exports, Northey participated in several trade missions abroad in 2015. He went with the Iowa Economic Development Authority, USDA and Iowa ag organizations to Malaysia, the Philippines, China and Japan.