Corn Belt Climate Resilience, with Agri-Business Association of Iowa CEO Bill Northey

The State of Iowa is home to some of the richest, most productive farm fields in North America. But it’s also the site of one of the greatest agricultural climate disasters of all-time, the 2020 Derecho storm event that flattened six million acres of crops. In this episode, we talk with Bill Northey, former USDA Under-Secretary and the new CEO of the Agri-Business Association of Iowa, about how growers in that state are adjusting their practices to promote climate resilience and nutrient management.

He explains how extreme weather events have elevated growers’ awareness of climate issues, and about how the Agri-Business Association of Iowa is expanding its 10-year test plot project to explore how variable rate nitrogen application can be used to maximize nutrient retention and crop yield in varying soil and planting conditions. Plus, Tom and Sally discuss how a Spring season full of economic and policy volatility, like the Federal Reserve’s planned interest rate hikes, will effect growers at a farm-level.

Read more about the relationship between interest rates and land value.

Episode Transcript

Bill Northey:

Farmers always listen to weather first and market second. They're impacted by everything. From whether you can get out and plant today or not, or all the different things that are happening, but they are thinking about soil quality, other ways to minimize our financial risk, our risk to weather too.

Dusty Weis:

Welcome to The Future. Faster. A sustainable agriculture podcast by Nutrien Ag Solutions. With our very own Tom Daniel director, North America Retail and Grower Sustainable Ag. And Dr. Sally Flis senior manager, North America Sustainable Ag and Carbon. This is your opportunity to learn about the next horizon in sustainable agriculture for growers, for partners, for the planet.

Dusty Weis:

To us, it's not about changing what's always worked. It's about continuing to do the little things that make a big impact. The state of Iowa is home to some of the richest, most productive farm fields in North America, but also the site of one of the greatest agricultural climate disasters of all time, the 2020 derecho storm event that flattened 6 million acres of crops.

Dusty Weis:

In this episode, we talk with Bill Northey, former USDA undersecretary, and the new CEO of the Agribusiness Association of Iowa, about how growers in that state are adjusting their practices to promote climate resilience and nutrient management.

Dusty Weis:

But if you haven't yet, make sure you're subscribed to this podcast in your favorite app. Also make sure you follow Nutrien Ag Solutions on Facebook and Instagram. I'm Dusty Weis, and it's time once again, to introduce Tom Daniel and Sally Flis. And Tom and Sally, we talk a lot about the environmental leg of the sustainability triangle, the other two legs being the economic and the social. So as far as that goes with these supply chain issues and changes and interest rates, everything that's happening out in the big world, what are we seeing in the field as far as those things go, Tom?

Tom Daniel:

If you're tracking current interest rates Dusty, you're seeing they're going up. I think I saw on the news today, they're talking about an additional half a point here in the next month or so then followed by another half and then possibly another quarter. So interest rates are going up. And look, I'm one of the older guys on this podcast. So I remember the 80s and I remember farmers back in the 80s, that interest was one of the leading costs on an acre. So we think about today, well, fuel's going to be a big cost for farmers that are operating their equipment, but interest rates in 2023 may turn out to be a significant portion of the overall input cost too. So as we see these rates go up in years past, we've always had different opportunities from different vendors, for lower interest rates on different kinds of programs.

Tom Daniel:

And Sally, I just have got to believe that going into 2023 growers are going to have to start looking at what are some of the financial options out in the field that they can maybe get interest at a cheaper rate on their seed corn, or get an interest rate that's cheaper by bundling some things together. I think that's going to become more of an issue than it has been over the last four or five years when interest rates were low.

Sally Flis:

Well, yeah. There's that part of it and then there's the land part of it or the equipment piece of it and how those interest rates are also going to impact those two areas. If you're thinking about not just land ownership, but also a land lease, how is it going to change that land lease or the term of that land lease or does that land disappear and isn't part of a farm anymore, or as part of an investment group? And the ownership or length of a lease on a piece of property directly impacts some of the practices that we're going to be getting out there to talk to growers about this fall, like cover crops and tillage changes, where it takes that three to five years to see the positive impact on soil health. If people are going back to one year leases, or if there are more investment groups buying up land, which changes the opportunities for growers to get on that land versus working with their neighbor that they've always leased from, it changes that opportunity as well for making a practice change around some of these soil, organic carbon practices, Tom.

Sally Flis:

So there's an impact down the whole supply chain and the whole sustainability circle as we see some of these interest rate changes.

Tom Daniel:

Yeah. And I think some of the fear's going to be now too. If I'm having to borrow a capital. I mean, who's not having to borrow a capital today with the cost of inputs. Right. So you're looking at 2X, 3X in some of our different categories for inputs this year. So interest against those significant values for the cost of inputs is going to be a big factor going forward. And look, when we talk about the value of a cover crop, for instance, we all know from research that's been done by our land grant colleges and others, that we don't see an ROI return on investment for those dollars spent in cover crops till probably year three or year four, maybe even year five, depending on which crop that we're specifically talking about.

Tom Daniel:

So I think it's going to be important that we start looking at possibilities of how do we finance some of these practice changes on the farm, especially around cover crops and some of those things that have a later return. Can we get some finance options that will allow us maybe to finance these things until we can actually see a return on yield or some of the other metrics that may lead us to be able to pay for some of these practices like cover crops? And Sally, I'm going to throw this into the mix. We always seem to, around this time of year, talk about it, but what's our availability of cover crops going to be this year? Are we going to be able to get the seed that we need and do we need to be making arrangements right now to find a seed source for cover crops? Because I think from the last I've seen, we're still facing some of the same weather patterns out in the west that's going to create a lack of cover crop availability, possibly.

Sally Flis:

I think the simple answer to that is always, yes, the earlier you can get out and look for cover crop seed, the better you're going to be almost any season. The challenge is growers like we've discussed on previous episodes are still in the midst of planting. And so it's trying to get to that higher number of years of planning over time. Right. And not just getting focused on, what's the field practice I have to get done right now?

Sally Flis:

So yeah, we were talking to some growers in the last week or so, that would be wheat growers usually and are getting late enough in planting that it might just go to something else because it's getting too late to even bother with a spring wheat planting in some areas. That's not necessarily wheat for cover crop seed, but those are the same geographies where you're growing some of that cover crop seed. So there's still going to be a big challenge out there again this year to find that cover crop seed. And it ties into that interest rate and financing piece. Right. If that's something that you normally finance and it's hard to find, then starting to make that decision now is a good idea.

Tom Daniel:

Oh, absolutely. It is. And one of the other things that we're starting to see... In fact, Dusty, I think we're going to attach an article that we were reviewing a little while ago. What do these interest rates actually have in relationship to land values? Are we going to see opportunities to purchase land? Are we going to see the values of land going up or going down? And my assumption has always been that as the availability of financing becomes more restrictive then it puts a direct pressure on land values and drives them down.

Tom Daniel:

But Sally, we see a lot of groups that would normally maybe invest in stock market opportunities and things like that may be taking funds out of that and actually investing through some of these management groups and farmland investment groups and actually starting to purchase land. So it may be harder for me as an individual grower to access the capital needed to purchase a farm, but some of these investment groups may see opportunities now to capture more land through these processes.

Sally Flis:

Well, and then you add on top of that, Tom, how crazy the real estate market is in general and how many people have cash to spend on real estate. And if you see prices of larger pieces of land coming down, and you're still at a point where you're able to move your home for three times what you paid for it and a third of that money is in cash because that value isn't what the value of the actual home is, then there's a lot of opportunity to go out there and pick up some of this cheaper farmland and take it out of production or make it less available to growers. So it's just another thing to add to the list of weird complications that seem to be really new to the marketplace that we haven't seen in agricultural history, but because of how different, the last three to five years have been, it's just something new every day. It seems like, Tom.

Tom Daniel:

It does. And I was sitting in on a meeting the other day and there was discussion about what do we think is the future for commodity prices and corn was actually brought up. And so I know there's some projections out there that say that on the low side, corn could get to 4.50, but on the high side, it's $8. Well, Sally, I've never seen a range from 4.50 to $8 for corn. I mean, that just kind of blew my mind a little bit. So I guess we're just going to call it 5.50 and move on. Right. We're going to take an average and move down the road.

Tom Daniel:

But there's just a lot of unknowns out there today. And I think growers are finding themselves having to be more dependent on working with their crop advisors, with their bankers or maybe with their bankers and their crop advisors working together, just to make sure that there's a sustainable economic plan that's going to keep the farmer farming for the future. And so I know our group, our team at Nutrien is working on that just every day, but I think it's going to become more important in 2023 than ever. And we don't need to wait until December to make some changes. We need to think about what are we going to do from a financial point of view, what financial tools are we going to use and what are going to be some of my better options. And I think financing options this fall are going to become a big play.

Dusty Weis:

You know, Tom, I don't know about you, but every time I turn on the news lately, it feels like the federal reserve is the top story and that's never a good sign as it pertains to what's happening in the farm and what's happening in the world. So the federal reserve, certainly one group in Washington that growers are paying attention to these days. But another one is the USDA, they're always up there as well.

Dusty Weis:

And up next, we have Bill Northey, CEO of the Agribusiness Association of Iowa, who just wrapped up a term as undersecretary at the USDA. He's going to fill us in on the latest policy from Washington and planting updates from the field in Iowa. That's coming up in a minute here on The Future. Faster.

Dusty Weis:

This is The Future. Faster. A sustainable agriculture podcast by Nutrien Ag Solutions. I'm Dusty Weis, along with Tom Daniel and Sally Flis. And we're joined now by Bill Northey, CEO of the Agribusiness Association of Iowa. Bill has an impressive resume, more than 40 years experience in agriculture, and he's served in some pretty notable roles from a leadership perspective. Most recently, he served as undersecretary for farm production and conservation for the US Department of Agriculture, winding down his term in January, and then taking the reins of the Agribusiness Association early in May. So, Bill congratulations on the new position and thanks for joining us on The Future. Faster.

Bill Northey:

Good to be with you.

Dusty Weis:

So Bill, CEO of the Agribusiness Association in one of the great agriculture powerhouse states of the Midwest is a pretty impressive feat in and of itself. And I kind of just gave a cliff nodes version, but can you tell us a little bit more about the Agribusiness Association, what it is, what it does and then your career path leading up to this role as CEO?

Bill Northey:

Well, certainly very glad to be able to be here. We have some great ag organizations in the state of Iowa. Certainly we think of our farmer organizations, whether it's the farm Bureau, or corn, or soybean growers, livestock associations. The Agribusiness Association really focuses on that business community out there. So our members are the supply co-ops and private supply companies as well that support farmers. They buy the products from farmers as well. We include some manufacturing companies that are ag manufacturers in Iowa, software providers and others. About 200 companies in Iowa. A few of the international companies are also members of the Agribusiness Association of Iowa.

Bill Northey:

My background, I started on a farm in Northwest Iowa and went to Iowa State University, came back to that farm, happy to be able to farm. Farmed with my grandfather and started doing some activities off the farm and getting involved in Iowa Corn Growers Association, later served as president of Iowa Corn Growers, National Corn Growers Association, and really gave me a taste for the things you can do off the farm while still farming and how important associations are.

Bill Northey:

And then in 2006, I ran for secretary of agriculture in Iowa. That's an elected position. Really didn't have enough experience to rightfully do it, but the people of Iowa elected me in a very close election and I was elected and I served and was reelected again in 2010 and 2014. And then in 2017, I got a call from Secretary Purdue and he wanted to sit down and have a conversation about what he was thinking about doing at USGA. And of course you take a call from the secretary, glad for a conversation and 45 minute conversation turns into two hours and we both felt like we could work together. And somehow I fit in his puzzle pieces of what he wanted in different roles at USGA.

Bill Northey:

I had to go through a Senate confirmation and serve for three years as undersecretary at Farm Production and Conservation, which is Farm Service Agencies, the farm programs at USGA, NRCS, the conservation programs, and then crop insurance, which is a big program that's delivered mostly privately, but about 500 folks work on that at USGA, so 22,000 people, and we kicked out a few billion dollars worth of programs and something, this small town, Northwest Iowa farm boy never thought he'd be doing, but really enjoyed and great experience.

Tom Daniel:

Wow. It sounds like to me, Bill, as my dad would say, we've been around the shop a couple of times. Right. So a lot of experience, a lot of experience. So I'm going to ask you something about Iowa in general right now. Weather has been really varied this year and depending on what part of the country you're in. I had a call from one of our guys in Texas last night. He said for the first time in eight months, they've had rain in Texas now. And in some places they've had six to 12 inches. So I guess rainfall and crop planning is all over the place. And I was just kind of curious, how do you see Iowa right now as far as where does it stand in planning and what challenges are you seeing in planning across the state?

Bill Northey:

I guess probably Texas wish they could have said the weather change in 15 minutes, like we all think it does everywhere. And two weeks ago you would've asked me, I would've had a bunch of nervous farmers in Iowa because we didn't really have much crop in the ground. And in the last two weeks, almost all of it has gotten in the ground. So we are mostly planted in Iowa. We've got actually some rain again today as we're talking, but for the most part, most of Iowa has gotten in the ground and it's late, but we had some warm weather, a lot of it's coming up, it looks pretty good. Folks are feeling a lot better than they did two or three weeks ago. So it didn't get in on time, but it got in mostly in pretty good conditions and folks can't help, but be optimistic in spring, if you can get the crop in the ground.

Tom Daniel:

Right, right.

Sally Flis:

Bill, well, it's never ideal to start planting so late in the season, and there's always something that makes us all feel a little anxious this time of year, about when we were going to plant. There's been other extreme weather events that have come through Iowa in the last couple of years, including the derecho in 2020, that destroyed about 10 million acres of corn and soybeans, which was about 43% of the crop that year and was declared to be kind of a unique, severe weather event. But it seems in general, we're seeing more of these events across North America. And Iowa's had a few of them specifically.

Sally Flis:

As you've interacted with growers or crop consultants or your members out in the field, how has that changed the discussion of how climate and environment might be changing and what growers think about what they might want to change on the ground?

Bill Northey:

I think it has changed kind of the perspective. Although farmers always listen to weather first and market second when it's growing season. They're impacted by everything from whether you can get out and plant today or not, or all the different things that are happening. So farmers have always been sensitive to those weather differences. And what may occur in one part of the state of Iowa doesn't occur two counties away. So we see some differences, but we have seen some floods in recent years. The derecho, something that I'd never really heard of before it happened. Certainly nothing had happened on that scale, the way that happened. And it was devastating not only to our crops, but to trees and power lines in our cities. It was a terrible mess.

Bill Northey:

How you attribute that to climate or other things, farmers aren't really sorting that out, but they are thinking about resilience as you suggest. Now, there isn't a corn stock built yet that can withstand those kinds of winds, but they are thinking about soil quality, other ways to minimize our financial risk, our risk to weather too. So I think it is a higher priority, but it has to sort through with everything else, including all the input prices and output prices and everything else that's going on the farm right now. So it is more on their plate, but it certainly hasn't taken over the plate.

Tom Daniel:

So Bill, we've had a lot of guests on our podcast and we've had a lot of discussion around sustainable ag and just what sustainable ag is. And I think the consensus has always been that the growers we work with today are all trying to be sustainable and protect the environment, especially the resources of water and soil and air, because those are the resources that they hope to pass on to the next generation, somewhere down the line.

Tom Daniel:

We're always trying to promote when we talk about sustainable ag and we have growers that talk about carbon programs or water management programs. I know in Iowa, water management, watersheds are a big subject matter piece for you up there. How have you guys found the best way to incorporate these new practice changes on the farm, whether they be cover crops or field tiling reduced tillage, biodiversity, there's multiple different things out there that we can do that can help improve some of the environmental conditions we're dealing with. What have been some of the best ways you've seen to get growers to incorporate those things?

Bill Northey:

Well, I think for drainage probably yield monitors were the biggest thing. You know, we came across the field and we knew we had a wet spot and we thought, boy, the yield probably is 20 bushel lower there. And it was really 70 bushel lower once we had a yield monitor. And so we had a lot of folks that said, I've got to do something to address that drainage. And so I think the tools that we have to be able to look at that I think help us prioritize some of those things to address. We spent a lot of time talking about water quality in Iowa as well. And we've seen a big growth in cover crops, still a small percentage. We have north of 3 million acres of cover crops in Iowa. That's out of 23 million acres of corn and soybean. So it's not the majority by a long ways. And in some places you can drive for a while before you see a cover crop growing in that field.

Bill Northey:

But when we started what we call Nutrient Reduction Strategy, about 10 years ago, we had less than 50,000 acres of cover crops in Iowa. So we have an interest. I think it grew out of several things. One is the ability to address water quality. Another was a discussion around the benefits to soil health and maybe of resilience as we just talked about in trying to make sure that in dry years and in wet years, that soil's able to absorb moisture and provide it for the crop and make sure that there's still some air in that soil, and that we grow a healthy plant because we don't know what the year is going to be when we stick that seed in the ground.

Bill Northey:

So I think there's a lot of things. We also have better tools than we used to. We can place that fertilizer just when we want it at the right time. We can get that planter across the field and make sure that all the down pressure works, even in our light ground and our heavy ground and wet soil and dried soil. And some of those tools that allow us a better job of that application, I think give a few more options in management to some of those farmers as well.

Sally Flis:

Yeah. And I like that resilience term, you keep saying, Bill. That is really an important piece or a different aspect to think about on this. And I think it ties into one of those NRCS terms of resource concern, where, what is the resource concern that's going to help make the grower the most resilient out in the field. And sometimes it's an environmental practice change. Sometimes, as you mentioned, it's what is the market bearing down on that grower? What are they able to get for supply? Can they get cover crop seeds? Can they get the equipment they need?

Sally Flis:

So it's just such a diverse challenge out there right now for growers and crop consultants to make a lot of these practices work in the field. So following up on that, I know you guys are working on some science to try and update nitrogen management or nitrogen recommendation rates in Iowa because of some of these technology changes and different challenges that we see in the field and water quality concerns. Can you explain a little bit with the project you guys have going and how you hope to see that expand in the 2022 crop season?

Bill Northey:

Yeah. I appreciate the question, Sally. Pretty excited about this project. It happened before I got here. I was off in Washington DC and smart people thought about it before I came back. So I'm just glad to be able to help it. But it really is to say that we know nitrogen is a really tough thing to manage. We know there is no one perfect rate for nitrogen application for a crop. We'd love if there was, but we have soil mineralization that happens in our nutrient rich soils that are out here. And that varies in year to year because it may be a warm year, a wet year. Those all have impacts. We have different productivities of soils across the same row in the field. We have actually hybrids that use different amounts at different times as well. And so this project is to take across, I'll be about 150 fields this year, and we'd like to grow that to 500 test sites in the next year or so, and then run this test for the next 10 years, at least to be able to see what happens at different rates across that field.

Bill Northey:

And one of the things that allows us to do this in a very efficient way is precision agriculture. So we can change the rate as we drive across that field without having to stop and turn a dial. It's just a prescription on the machine. And so that machine is applying 180 pounds, and then suddenly it's applying 120 pounds for a certain period of space. And then all of a sudden it's up, back to 180 pounds. We know exactly where that is when we take that combine across the field later, we can be able to see what that yield difference was between that and the crop right beside it. And so it didn't take a whole test plot, stopping, emptying a planter out, changing rates, figuring out strips. And we can do these in small plots and repeat them across a field in ways that give us a lot more ability to test.

Bill Northey:

And that allows us to be able to get to hundreds of sites across the state of Iowa and to be able to have it  in multiple years so that we can get a chance at finding out what's the rate in different years, in different sites, on different types of soils, with different hybrids and come up with better recommendations. And it likely won't be one recommendation that says 1.1 pounds of nitrogen for every bushel that you plan to plant or a little bit more, if nitrogen's cheap and corn is expensive, it's going to be more complex than that. But up until now, we haven't been able to do that. So we are really looking forward to this. We know we need to do a better job because we want to manage those nutrients and get them into our crop. We also want to make sure that those nutrients don't leave the field and go someplace else and cause problems for other people, whether it's in Iowa streams or down the Mississippi river, and this should help us get to numbers that are better.

Tom Daniel:

So, Bill, we talked earlier, but you've had a lot of experience in your career from being a farmer and grower yourself to all the way to being the undersecretary of US Department of Ag. And I'm going to kind of change this question a little bit because your current job as CEO of the Agribusiness Association of Iowa, I'm part of the agribusiness association here in Kentucky. And when we get together as a group or we visit, we always talk about what are the current problems that we're all seeing today and what are we seeing in the marketplace? And I know there are a lot of concerns today around the availability and production of food, overall fuel prices and all those type things. What are you hearing in the marketplace today? When you're talking to dealers, people in the agribusiness association in Iowa, or even from the grower side, from the coffee shop talk with farmers today, what are some of the biggest concerns that you hear being mentioned today?

Bill Northey:

Well, I'll tell you. Two weeks ago it was about getting in the field and getting crop planted or getting the sprayer in behind that. Certainly it's about the crazy price adjustments that are happening. If you're feeding livestock, your feed price it's gone up. If you're growing it, its trying to figure out when to market it. It's the input prices as well. If you're a fertilizer dealer, it's wanting to make sure that you don't have any expensive fertilizer left at the end of the season in case it's not quite as expensive this fall. So it's inventory management as well. So there's a lot of pieces around that.

Bill Northey:

I would say another thing is just the technology is changing. So darn fast for everybody. We've got new products out there. There's new equipment options, there's new fertilizer products, biologicals, herbicides, other kinds of things, attachments to equipment. Certainly, folks are saying what's going on with carbon markets and sustainability programs. There're just so many things that are changing at the same time. A guy's just trying to get crop in the ground. Right. He got a friend here as was talking about, he ended up getting a new planter this year and get into a much of equipment on it. And it took him about the first week just to get all the equipment to work together. And he's proud as heck of the stuff that's there and he thinks he did a really great job.

Bill Northey:

But there's a lot of things that interact with other things when you have different products, different prices, different technologies. So we've got to be good at the small stuff, but somehow we got to be big at making sure the small stuff all works together too. And so there's a lot of pieces out there that people are trying to fit together to figure out how to make this year work, and then looking over the horizon to see what next year looks like and what we ought to kind of focus on as we go forward too.

Sally Flis:

So, Bill, Tom mentioned, he's a member of the Kentucky Ag Business Association. I'm a member and interact a lot with our New York Agribusiness Association, and curious in Iowa, what is the legislature trying to decide for agriculture in Iowa? Because I know in New York it's a lot around pesticide use, herbicide use, seed treatments, that kind of stuff. Just curious, what's coming up as legislative decisions that you guys are having to deal with on top of all the other things we've already talked about today.

Bill Northey:

So our legislative session just wrapped up actually this year and they did some great things on leveling taxes out a little bit and putting a proposal in that'll actually create a flat tax going forward and a little less income tax. They actually helped fund this nitrogen study that's going on. A million dollars to be able to fund that effort over the next year, and then hopefully will look at it in some additional funding going forward. They did some things around truck weights too, to allow some higher truck weights in certain instances as well.

Bill Northey:

So we certainly get some conversation around siding of livestock facilities and pesticides and those kinds of things. But for the most part, we're such an agricultural state. Somewhere in one of those committees, when they're talking about, if there's a farmer or there's somebody connected with agribusiness and somebody says, Hey, let me take you out to the farm and show you how some of those things may sound good to somebody not familiar with the farm, but really wouldn't work in our communities out there either for the neighbors or for the farmers.

Bill Northey:

And so for the most part, we've been very happy with most of the things that legislature's been working on. We pay attention to what's happening in other places because those things do pop up in other states from time to time too. So hopefully good things like a nitrogen science study, our initiative here, can pop up in other places and we hope that some of those things that challenge agriculture in a negative way from not understanding agriculture, don't pop up in some of our states.

Dusty Weis:

Well, I'll say this, Bill, you've got the unique perspective of being the kind of person that's worked in, both worlds out in the fields on the farm, but also that wild and strange place, Washington DC, where a lot of the policy gets made. And so these are two sides that don't always see eye to eye on farm policy. And you've got a perspective that bridges both of those worlds. So we've really appreciated your taking the time to talk to us here today and share some of that perspective with us.

Dusty Weis:

Bill Northey, CEO of the Agribusiness Association of Iowa. Thank you so much for joining us on this episode of The Future. Faster. That is going to conclude this edition of The Future. Faster. The pursuit of sustainable success with Nutrient Ag Solutions. New episodes arrive every other week, so make sure you subscribe in your favorite app and join us again soon. Visit futurefaster.com to learn more. The Future. Faster podcast is brought to you by Nutrien Ag Solutions with executive producer Connor Erwin and editing by Larry Kilgore III. And it's produced by Podcamp Media, a branded podcast production for businesses, podcampmedia.com. For Nutrien Ag Solutions, thanks for listening. I'm Dusty Weis.