Tom Hall, Senior Agronomist, Rooster Strategic Solutions
Rooster is following issues that threaten production agriculture, ranking them from 1 (Low Danger) to 5 (Extreme Danger).
The imminent threats we’re following and changes from previous rankings:
- Ethanol Outlook: Level 4 – High Danger
- Weed and Insect Resistance: Level 5 – Extreme Danger
- Animal Ag and Nutrient Management: Level 2 – Moderate Danger (previously Level 3)
- Crop Protection Products: Level 2 – Moderate Danger
- Senate and House Ag Committee Bipartisanship: Level 1 – Low Danger (previously Level 3)
The Biden Administration has already issued a flurry of executive orders – 23 and counting. Members of the cabinet are being confirmed by a new Senate led by Democrats and New York Senator Chuck Schumer. A new face, former North Carolina Environment head Michael Regan, will lead the USEPA; an old hand, Tom Vilsack, will return to lead the USDA, a post he held in the Obama administration. While President Biden continues to preach about the importance of unity and partisanship, the Democrat’s thin majority in the House and 50/50 split in the Senate suggest a future of continued gridlock.
As 2020 ended, biofuels advocates hoped the Trump Administration would block small refinery exemptions to blend ethanol. However, USEPA Administrator Andrew Wheeler chose not to take any action and left the exemption issue to the Biden Administration and the courts. The ethanol industry is optimistic that the Biden Administration will revoke exemptions for small refineries, and that biofuels will be an essential part of the administration’s soon-to-be-announced comprehensive Climate Change Strategy.
But the lack of action by Wheeler was a setback for a biofuels industry that was already suffering from the fact that Americans are driving less during the pandemic. On top of that, corn prices are rising. This is very good news for grain farmers, but the rising costs of corn – combined with a decreased demand for ethanol – has caused one plant to shut down and many others to slow production. The ethanol industry annually buys a third of the US corn crop, which has a corresponding impact on the price of corn. Farmers are pleasantly surprised by the appearance of $5-per-bushel corn considering the low demand for ethanol. The fundamentals behind rising corn price are due to renewed China buying, a short eastern Europe and South American corn season, a downward revision by the USDA on the 2020 US crop, and a drought now gripping the western United States.
As long as farmers have to rely on 50-year-old crop protection products to control resistant weeds, we will continue to rate this threat at our highest level.
However, we do have some good news to report with the label renewal for dicamba and the approval of GMO soybeans resistant to both dicamba and glufosinate. These approvals allow farmers to easily rotate modes of actions or use a mix of these products or rotate to 2,4-D. Rotating modes of actions is the most important tool in the fight against enemy number one: pigweed. There’s also good news on insect resistance with the approval of Bayer’s SmartStax® Pro, a new mode of action to control corn rootworm which has developed resistance to first Bt proteins. The industry expects this new trait to be licensed broadly in the seed industry by 2022.
The Biden Administration signed an Executive Memo (similar to an Executive Order) titled “Modernizing Regulatory Review” that directs agencies implementing rules to account for both cost/benefit analysis and new developments in scientific understanding. This new standard of including new science opens the door for rules to be applied more broadly — think climate science, hypoxia and pipelines. However, we dropped the threat level because the narrow majorities that control the US House and Senate make it highly unlikely that significant legislative action will emerge anytime soon.
We continue to have concern for livestock producers who were struggling with profitability at $4 corn; the recent run up to $5 will take a toll on cattle feeders. According to farmdocdaily, the outlook for cattle producer profitability remains bleak as the breakeven price (red line in graph, below) continues to outpace the fed price (blue line).
We will also continue to watch meat substitute products from Beyond Beef and Impossible Foods that have the potential to reduce beef and poultry demand in the food service sector, which is an important profit center to the beef and poultry industries.
The big story of 2020 was Bayer’s attempt to settle a billion-dollar class action lawsuit brought against its product Roundup – even as one safety agency after another deemed the product safe for use. The largest threat to the crop protection industry for now is in the capricious hands of juries. Bayer in 2021 will likely see additional glyphosate cancer suits outside of the US early in the new year.
For the coming year we will also watch efforts in Colorado, Minnesota, New York, and Maryland to ban the residential and government use of pesticides. The long game concern is that activists are chipping away at FIFRA state preemption laws that prevent states from banning USEPA-labelled pesticides. Proposals floated by Senator Tom Udall (D-NM) and Congressman Joseph Neguse (D-CO) supported activists’ aims of allowing states and local governments to regulate (ban) pesticides. A bill like this has no chance in a 50/50 Senate.
We have lowered the threat level to 1 because the election of 2020 maintains the status quo on both the Senate and House ag committees under the new leadership of Congressman David Scott (D-GA) and Senator Debbie Stabenow (D-MI). The all-important balance of rural ag issues with urban food and nutrition are firmly in place, which will continue to keep the peace on this most bipartisan of committees. As a new Farm Bill is developed, watch for a climate change-inspired program to pay farmers to sequester carbon. There is no free lunch here, however; a carbon sequestration payment program could come out of the dollars for an existing program.
As conditions change, we’ll do our best to alert you on these issues and tell you if they’re moving up or down the “danger list.” For now, we recommend:
- Joining an organization like Farm Bureau of other Ag livestock or commodity organizations that will help you see what’s coming and how to plan accordingly.
- Lend your voice to shape legislation, both in writing and by attending public hearings
- Take action to stay in front of the situation. For example, every livestock farm should implement a nutrient management plan with the guidance of local soil and water associations or the NRCS.