As farmers and others who make their living in agriculture look ahead, many of the concerns for 2019 remain the same as in 2018. Trade disputes with China, Mexico and Canada still hang over the markets, especially the major export markets for U.S. grain, meat and dairy products.
While there has been some improvement in trade prospects in recent weeks, tariffs and trade disruptions continue to impact farmers and the economy. Plus, the federal government shutdown is continuing in early 2019. That’s another cloud over the markets, as nearly a million people are going without pay, creating a significant economic impact. With a divided Congress and a president who isn’t budging, most people expect increasing arguments and less action in Washington in 2019.
Iowa Legislature to gavel into session
Meanwhile in Iowa, the 2019 Iowa Legislature gets underway Jan. 14 at the Capitol in Des Moines. What are the key ag-related issues facing lawmakers? Iowa Secretary of Agriculture Mike Naig provides his view.
Water quality, beginning farmer programs, taxes and research funding are among the issues. “We accomplished a lot on water quality funding last year, and it’s nice to have that funding in place,” Naig says. “It’s long-term dedicated funding, so we don’t have to come back and debate water quality funding again this year.”
However, it’s quite possible the issue of water quality funding may arise in the 2019 session, he adds. A year ago, a bill was approved by state lawmakers to provide longer-term funding for cost-share practices and water quality projects, and Gov. Kim Reynolds signed it into law.
But Reynolds and legislative leaders also said that bill, SF512, was only a start and more funding would be needed. Question is, will the governor and lawmakers follow through on that now, or will passage of SF512 a year ago put a damper on water quality funding debates for a year or two?
Boost in sales tax?
Some ag interests, such as the Iowa Soybean Association, are pushing for passage of a version of the proposed Iowa’s Water and Land Legacy legislation. IWILL has roots in a statewide referendum approved by Iowa voters in 2010. It says if the state sales tax is increased, the first 3/8th of a cent would go to funding a natural resource and outdoor trust fund, some of which would be used for water quality programs. Although this proposal has existed for years now, the Legislature hasn’t debated it yet. It may be introduced in 2019.
This idea has some support from the public and from Democrat lawmakers, but Republican leadership isn’t supportive of a tax increase. Some observers say for IWILL to be approved by the Legislature, changes would have to be made in the proposed bill, as to how the funding would be allocated. An IWILL bill could end up being part of a tax reform package, as it is more likely that any sales tax increase would be for a full 1 cent, rather than a 3/8th-cent increase.
Dedicated, long-term funding
SF512 provides long-term water quality funding that commits more than $280 million to water quality efforts in Iowa over the next 12 years.
The Iowa Department of Ag and Land Stewardship received $2 million in 2018 and will receive $4 million in 2019 and then $15 million annually as part of the legislation. The remaining funds will go to the Iowa Finance Authority to support communities upgrading wastewater treatment facilities and urban water quality practices.
The new funding is being targeted toward conservation infrastructure practices, such as wetlands, saturated buffers and bioreactors. These practices are placed on the edge of fields and provide significant, long-term nutrient reduction and habitat benefits.
The science assessment as part of the Iowa Nutrient Reduction Strategy shows these practices can reduce nitrate levels by 40% to 60% in tile drainage water.
“There is still a tremendous amount of work to be done to improve and protect water quality in Iowa, but we are on the right path,” Naig says. “We are committed to continuing to work collaboratively, with science as our guide, to make significant water quality improvements in our state.”
Beginning farmer tax credit
Iowa’s Beginning Farmer Tax Credit program will likely be discussed in 2019. “The Legislature needs to strengthen it,” Naig says.
Legislation passed several years ago made some changes to this program and increased its spending cap. But that legislation had a sunset clause and the spending cap dropped from $12 million a year to $6 million. The program was unable to offer any new loans this past year. While it should be able to offer some new loans in 2019, that number will be limited unless the Legislature increases the cap.
This program is used to assist some of Iowa’s beginning farmers by providing tax incentives to landowners to either cash-rent their ground to a beginning farmer or to have a crop-share agreement with the beginner.
“Each year we use up all the dollars allocated for this tax credit program,” Naig says. “We need to make sure we have enough room in the program to accommodate all of the beginning farmers who are interested in it. With more of today’s farmers getting older and retiring each year, we know the transitioning of ownership and of farm operators over the next several years will accelerate. We need to make sure we’ve got the next generation coming back to the farm and that there are opportunities for them to be successful.”
In his budget request for the Iowa Department of Ag, Naig is also asking for money to deal with livestock diseases. “Any major animal disease outbreak in Iowa would have a negative impact on our state’s economy,” he says. “We look at African Swine Fever and the way it is hurting China. We hope it doesn’t show up in Iowa or the U.S., but this disease is a potential threat to our hog industry. We need to continue to improve our protection efforts, so we are asking for additional dollars.”
Widespread cases of ASF in China, as well as confirmed cases in Europe, are causing concern for Iowa pork producers and highlight the importance of farmers following strict biosecurity protocols. ASF is a reportable foreign animal disease that could have a devastating economic impact if found in the U.S.
The Iowa Department of Ag has scaled up foreign animal disease response preparations in recent years in response to concerns about ASF, avian Influenza and foot-and-mouth Disease. The department received additional funding last year to better equip and prepare for potential future outbreaks, including hiring an emergency management coordinator, updating emergency response plans and organizing disease response exercises.
There are other ag-related topics the 2019 Legislature may consider. Last year lawmakers approved funding for building a much-needed new state veterinary diagnostic lab at Iowa State University, but that funding level is probably too low, says Iowa Farm Bureau President Craig Hill. Also, ways to help the state of Iowa provide better mental health care, especially in rural areas, will likely be introduced.
There is support for more funding for Iowa’s renewable fuel infrastructure cost-share program. It helps pay for installing blender pumps to handle higher ethanol blends and biodiesel at retail fuel stations.
Iowa ag leaders also say there is some discussion of revamping the master matrix system the state uses to determine the location of new livestock facilities when issuing permits. Some groups want to update the matrix; others want to keep the existing matrix.