Join us in Brazil, studying agricultural production and infrastructure | The Spokesman Speaks Podcast, Episode 27

Narrator: Since 1934, Iowa's farmers have turned to the Iowa Farm Bureau Spokesman as their trusted news source. Now, The Spokesmen Speaks. Listen in and hear from leading experts on topics important to farmers and agriculture. Now here's your host, Laurie Johns.

Laurie Johns: Welcome to The Spokesman Speaks Podcast. This is our December 2nd edition. It's also the one year anniversary of The Spokesman Speaks. Oh wow. Can you believe it? A year. Over the past year, we've brought you 27 podcast episodes featuring interviews with experts on some of the most important issues facing agriculture. You can find all of those past episodes in your favorite podcast app. Be sure to subscribe to The Spokesman Speaks in your podcast app and look for more great stories in interviews in the weeks to come. Today's episode features some insights into Iowa State's soon to be released Iowa Land Value Survey, a recent study about how hog farmers are reducing manure odor and an exciting opportunity for you to tour agricultural and cultural sites in Brazil. Let's start with ISU economist Dr. Wendong Zhang who is the lead researcher for ISU Iowa Land Value Survey, which will be released on December 11th. Of course, we're all curious about what the survey will show. Spokesman writer Corey Munson track down Dr. Zhang Mason City before one of ISU's recent pro ag outlook meetings for farmers. And Dr. Zhang was able to offer Corey a few insights into that upcoming land value survey. Let's listen in.

Corey Munson: Can you tell us a little bit about what all goes into the land value survey? Just explain the functioning of it.

Dr. Zhang: Sure. So Iowa is unique in the sense that we have been providing county level land value estimates for all the 99 counties since 1950 using the same way. This is the only state that does this. So essentially, we do an expert opinion survey. So with sent out the surveys to ag lenders, farm managers who are appraisers, we ask what their opinions, what the typical land values are far high, medium, low quality land in a particular county that they provide professional service. In the reporting fashion that we only provide the average land value for a county but we do have breakdowns at the state and district level for high, medium, low quality. But, in general when you are thinking about high quality land in southern Iowa, probably it's more in terms of CSR2 is probably more comparable to medium quality in northwest Iowa for example. So it's a localized quality benchmark. Over the recent years we have seen it's a crop market, crop prices have been declining. So northwest Iowa has more diversified income for folio that is, has additional income from livestock production, but also has another factor that a lot of the livestock producers need nearby acres to spread manure. So is there more competition, meaning the land auctions that help also push up the land prices too. But we're still in a fairly tight market in the sense that they're not a whole lot of land for sale and this year we don't know the answers yet, but I think there'll be more local variations than before because the impacts of the preventive planting differ from district to district and also the trade war impact on crop sector is more severe and the livestock production and crop production even within Iowa it's not homogeneous.

Corey Munson: So, in basic terms then if the crops are worth as much, the lands that's producing them isn't worth as much.

Dr. Zhang: Yeah. So a useful formula I always talk about is you can think about land values equals income divided by interest rate. So depending on how you draw interest rate in your local area and that will mainly be reflected in the land market. And now federal reserve have lowered the interest rates three times. So that ingenious theoretically should help bolster the land markets. I don't think we're going to see a major change, but it's probably we're seeing maybe a flat to modest decline. That would be my guess.

Corey Munson: Sure. Now, I have seen recently they've been talking about more farmers being forced into more borrowing and leveraging values of their land to borrow against. And so is that taking on more debt load? Is that affecting values at all or is that part of an individual economics issue?

Dr. Zhang: So far, I don't think, that hasn't become a widespread phenomenon yet. And often the land market is capitalizing multiple years of income streams. So far I don't think that has caused a major impacts yet, but we are closely monitoring the financial stress and I think that although we're overall we're okay, I don't think we're going to see a replay of 1980's farm crisis yet, but there is a growing share of people who are feeling the pinch of a growing farm, financial stress and for those people especially are talking about probably like 8% of the producers are experiencing significant hardship.

Laurie Johns: Remember to mark your calendars, ISU's Iowa Land Value Survey comes out December 11th. Okay. Let's switch from markets and land values to a conversation about livestock production. Specifically a recent study about how pig farms are generating less odor causing manure nutrient content. The study funded by the Pork Checkoff and conducted by Harper Consulting in consultation with Southern Utah University took a look at 106,000 samples from 182 North Carolina farms. And what it found is that those farms had significant reductions in ammonia levels and manure nutrient content. So how do those North Carolina results compare to pork production here in Iowa? Corey Munson reached out to Dr. Daniel Anderson. You remember him. The manure expert at Iowa State University. We wanted to get his reaction. So, let's hear what he had to say.

Corey Munson: What were your takeaways from looking at the report the Pork Board introduced to your back in August?

Dr. Anderson: So, I think the big takeaways from the study were that while emissions might've been higher than what we tended to anticipate before this study we do see pigs growing faster and improved in nitrogen use efficiency as well. So the industry has made a lot of improvements along the way that have helped increase our sustainability in that metric. So, I think this research work was just really trying to look at what are some of the issues and can we sort of correlate what we see on the ground with what people measured here in this study.

Corey Munson: Now this specific study did look at lagoons in North Carolina and I know the production models a little bit different here in Iowa. So, can you kind of compare and contrast that and describe the Iowa model to us?

Dr. Anderson: Absolutely. So I think in North Carolina, what you see is historically they've used lagoons and irrigation systems to dispose their manure. Right. So it's shallow pit, the manure flows outside to lagoon, and then it is land applied through irrigation systems. In Iowa we use more of a deep pit model where the manure falls through the slats and is held within the animal barn and then land applied as a fertilizer for mostly corn being grown the next growing season. So I think there's a few key takeaways where there's some similarities and differences. When this research talks about improvement in pig performance and less nitrogen excretion per animal. We've tended to see the same thing in Iowa, right? We have pigs that grow a little bit faster. We're able to formulate diets better balanced because we have supplemented amino acids. But in terms of nitrogen loss, lagoons are a lot bigger issue than what we tend to see with the pits. With North Carolina lagoons, we've tended to think of nitrogen emissions being somewhere in the neighborhood of 40% to 70% of the nitrogen that's excreted from an animal. Deep pits here in Iowa tend to be 15% to 30% of the nitrogen excreted from the animals volatilize. So just by our production system design, it tends to be a much lower number here in Iowa.

Corey Munson: So, we're already ahead of the game, which is a good thing.

Dr. Anderson: That's right. Yeah. I think, you know, Iowa's a state where manure really has some value. We're typically averaging in the neighborhood of $32 worth of nutrient value per a thousand gallons of manure in Iowa. So we really can get it out to the field in a cost effective manner most of the time. With North Carolina systems, that hasn't always been the case. Who are, we're a step ahead just because of our cropping and production system model.

Corey Munson: So as far as these results go then, is there anything that is applicable for producers here in Iowa?

Dr. Anderson: Well I think the big thing is one of the ways to improve sustainability is still try to do the best you can raising pigs. Right. And I think that's one of the key takeaways from this study really is that while emissions are related to our production system model, one of the key things we can do is just really try to drive home pig performance and keep improving there. And those incremental improvements help with sustainability. One of the big takeaways that you sort of see there is while pig performance does improve they still did see higher emissions from their manure storage and we have to keep trying to find practices that in Iowa where we can do a little bit better job of that. And for the most part we have, I mean if you look at the last 15, 20 years in Iowa, we went from surface application manure towards injection and we continue to make improvements in facility design. For instance Iowa Select has been building barns without pit fans and moving those up to sidewall ventilation for their minimum ventilation because we know that that can help reduce ammonia emissions from the barn. So, trying to keep more of that nitrogen fertilizer in the manure where we can get it recycled out into the field. So I think hopefully we'll continue to see production like practices like that evolve where it doesn't change how our production facilities work, but it makes us just a little bit more sustainable in terms of our nitrogen use efficiency of livestock. This is a complicated topic and really the research looked at a lot of factors, but it's nice to see some discussion on how animal production really relates to some of these sustainability metrics. So, I think it was a useful study from that perspective.

Laurie Johns: Some good stuff from Dr. Anderson. He certainly a go to expert on the topic of manure. Remember he even goes by the handle "Dr. Manure" on Twitter. He might want to check it out and you might recall that we interviewed Dr. Anderson back in episode 18 of The Spokesman Speaks as when he was talking in great detail about the value of manure and why Iowa could actually use more manure to fertilize its crop land. That episode was actually one of our most popular episodes of this past year, so if you haven't heard it, I didn't courage you to go back. Again, it's episode 18, and give it a listen. We certainly know that winter is getting started here in Iowa, but who is looking for a good reason to escape the cold? How does Brazil sound? Well, Iowa Farm Bureau is offering its members an exclusive opportunity to participate in an intensive market study tour of Brazil. It's February 28th through March 8th. Iowa Farm Bureau's Senior Economist Dr. Sam Funk will be leading that tour. He sat down with Spokesman Editor, Dirck Steimel to discuss this unique opportunity for Farm Bureau members.

Dirck Steimel: Sam, why did Iowa Farm Bureau decide to offer a market study tour to Brazil in 2020?

Sam Funk: You know, obviously there've been a lot of changes in Brazil. We've watched it for decades increasing as far as for the volume of soybeans especially. We've seen through, but also they've got a lot of grains when you start talking about corn being exported out of that nation as well. And Iowa Farm Bureau has taken trips to Brazil before and one of the trips that focused in a lot on some of the livestock aspects that they're there and they've got a growing livestock sector that's focused on exports again. But when you think about this time around going to Brazil, the special aspect of this one is looking at that northern arc of exports for getting the soybeans and corn out of Mato Grosso, which is the primary growing area and getting it up through that northern arc to the Amazon. So we've talked for, you know, over a decade now about how much work they've done on the Amazon to open up that export channel. But what we know now is that they are very close to having the road completed coming out of Mato Grosso and they've already got the infrastructure up there with the export capacity on the Amazon and soon it's not going to be just a road. They're going to build a rail beside that road. And we're really losing a lot of the substantial logistics advantage that we had for the United States. If we're losing that competitive advantage of being able to get our crops to export first, then we're really headed for a world of hurt in a very large open space where they're adding what the equivalent of the size of Vermont every year into their productive area. So, it's significant for what we're going to face with headwinds for what's gonna come out of Brazil in the future.

Dirck Steimel: When you talk about infrastructure, what kind of things are you going to be looking at?

Sam Funk: Well, and that's one of the very interesting aspects of this. We're going to start by flying into that Northern Amazon region. We're going to look at how the rivers come together. We're going to talk about some of the environmental aspects with that and then we're going to actually fly over and look at some of those ports and some of those facilities that are on the Amazon. Then we're going to get onto a charter plane and actually fly from those northern port cities on the Amazon and go over Mato Grosso and look at the roads that have been built and think about some of those infrastructure issues from the air and the ability to be able to look at it very closely, not in a commercial airline, but in a charter flight so that we can see what that infrastructure actually looks like to get that flavor for what is it changing right now between Mato Grosso and the Amazon and the advantages that they're trying to take advantage of with a much shorter route to export.

Dirck Steimel: And what do you think members will see when they look at these changes? Will it be infrastructure? Will it be cropping? Will it be all of those things?

Sam Funk: You know, it's going to start out obviously looking at the infrastructure because the crop ground is not in that northern portion along the Amazon. That's not it. That's their export channel, if you will. It's the interior where they've got that very good, strong growing area where they can grow so many cool season crops down there because they're so close to the equator. So we're going to see the infrastructure, we're going to see the changes that are taking place. We're going to see some of the challenges that might still stand in the way that those, if you will, those barriers to completing the project. And then we're going to actually go into the heart of the growing area to see what's going on right there and get a flavor for what some of the other challenges are. What are the opportunities because they still export a lot going to the south and they've got that thriving livestock and poultry industry down in Brazil. And there's a lot of interesting dynamics coming into play. And I think as you see this change in global agriculture, we see some of the issues with African swine fever ASF in China. We see some of those export issues. They're facing those export issues as well because they've been sending a very large percentage of their soybean crop over to China. So what's happening right now in Brazil and how that livestock industry is changing because you know that they want to capitalize on that animal protein desire globally as well because that's a way to add more value to that grain to feed it to livestock. And they've invested into their harvest capacity, just like they've also invested here in the United States in buying slaughter capacity up through here with beef, cattle, pork, and even poultry. So JBS is very big up here along with other Brazilian companies. So, it's important that we understand what the dynamics are for this major competitor to U.S. agriculture.

Dirck Steimel: What will the season be in Brazil and will there be harvesting? What stage is the crops?

Sam Funk: You know, that'll be an interesting standpoint. There might be some crops that will be harvested at that point in time. You're actually still probably right toward the end of their growing season for that first crop. So you're going to have a lot of people getting ready to harvest. May see a lot of standing crops out through there. Maybe some people that might potentially have some harvest going on, but it's kinda in that early part. You're really in the late growing season there.

Dirck Steimel: And will the scale and technology surprise farmers?

Sam Funk: You know, I think a lot of us have heard about a lot of the technology adoption Down through there. And my hope is that we see some big farms and maybe some smaller farms out through there. They're not all giant farms. Now there are giant farms in Brazil without a doubt. But it's good if you can see that there's a very much a mix and those large farms don't necessarily look like what you would think a large farm here just multiplied by a couple would look like. You've got a lot of interesting dynamics for what happens especially in Mato Grosso and how those societies have built up and how they have to interact with those societies to be able to operate those large farms. It's a very interesting dynamic and I think people will take away a new found appreciation for what it's like to farm in Brazil and what it means and why they're being forced to do what they're doing to be able to become more efficient, technologically advanced in what they're doing. And a large part of that is that the dynamics in the economics there have shifted. Let me just say this, a Brazilian real is not like a U.S. dollar and it's not nearly as stable and they've had to find ways to get by some of those currency challenges themselves and that's driven a lot of what agriculture has had to do. So, there'll be a lot of very interesting and very dynamic things to take away from this market study tour to Brazil.

Dirck Steimel: We talk about the market study tours being knowledge sharing tours. What's that really mean?

Sam Funk: You know, we're not just looking to take people there to just see it. We want people to come back and to tell others what they saw. It's very much a learning activity and a sharing activity. We're trying to leverage our investment in these dynamic study tours so that people can come back and share what they've learned in those deeper insights into those markets, whatever they may be. And in this case, what people to be able to provide an update of what's going on. I mean, it's been going on for a lot of years, but things have changed dramatically here in the last couple of years and they're so close to being able to make this dynamic shift. We've already seen a lot more product flowing through that northern arc to be exported out the Amazon. So, what can they bring back to tell people this is what's going on right now and how close they are to completing some of their projects?

Dirck Steimel: And how will members share that?

Sam Funk: You know, we ask for all of the members who go on this trip to participate in a number of educational activities to give presentations and we'll help them to provide pictures and points for those presentations. They're not alone. We're going to support members in that aspect, but we're asking them to go out and provide a farmer firsthand experience and share their story. Sometimes your testimony is just as important as anything else because you can say firsthand, this is what I saw and this is what's happening. And farmers take that farmer to farmer communication and that's a great way to get information out to a broader audience by having so many people come back to make presentations.

Dirck Steimel: When members come back, they've seen Brazil. How can they use that to either change their own operations or push for changes in policy to address what they've seen?

Sam Funk: You know, we've seen a lot of shifts in U.S. agriculture and a lot of shifts in Iowa agriculture with what we have to deal with. Obviously the soy transportation coalition that's based here in Iowa has been a fundamental advocate for trying to enhance our competitive advantage in transportation logistics. I mean, let's face it, we've been the envy of the world for being able to get our product into the export market. Now you've seen a lot of changes like the enhanced Panama Canal. You've seen export ports now on the Amazon region is able to make that northern arc for exports from Mato Grosso and Brazil work. But it's necessary for us. One is producers to come back and understand what are these changes mean for strategically what the impact might be for corn, soy in our marketplaces, what might it be for pork? What are we facing? Are we going to be a, you know, longer term losing more market share in this global strategy game that's trade? Or is there something we can do to enhance our strategy game out through here? And what do we do for planning for our own individual operations? And as you've alluded to, what do we do for being able to make those policy shifts? As we consider what we call for with investments into our, you know, our waterways with investments into, you know, our roads and bridges. What does that mean when we think about the billions of dollars of investment, nay, maybe even a trillion dollars of investment that might happen when they build this new rail system going up in that northern arc? What does that fundamentally mean for us? When we talk about locks and dams and you know, shutting down part of our river transportation, you know, for extended periods of time for maintenance. What does it mean here if we don't have the ability, if we still have to break apart barges in the smaller units to get them through these smaller locks and dams, what does that mean for us? And what does it mean when we see the advantages that Brazil is putting into place? And those are all things that will shape hopefully what people are able to contribute to as they talk about what they saw firsthand in Brazil and be able to think about what happens on my farm and what happens in the broader infrastructure question for the United States.

Dirck Steimel: How can members find out more?

Sam Funk: You know, the best way to be able to go to find more information about this is to go to IowaFarmBureau.com. And if they'll go there, you'll be able to find right there on the homepage links to be able to log in and to find out more about this market study tour that we're going to take to go to Brazil.

Laurie Johns: Think warm thoughts and be sure to head out to IowaFarmBureau.com to learn more and apply for that market study tour of Brazil. That application deadline is December 15th so be sure to get out to IowaFarmBureau.com and learn more about that and apply today. That's all for this episode of The Spokesman Speaks Podcast. Be sure to tune in for our next episode on December 16th when we'll have multiple interviews from Iowa Farm Bureau's 2019 annual meeting. You don't want to miss that, so until next time, thanks for reading The Spokesman. Thanks for all the great stories and inspiration and thanks for to The Spokesman Speaks.

Narrator: Thank you for listening to The Spokesman Speaks, a podcast by Iowa Farm Bureau. Check out more podcasts and articles from The Spokesman at IowaFarmBureau.com/Spokesman. You can also find and subscribe to The Spokesman Speaks Podcast in the Apple Podcasts app, Google Play, and other popular podcast apps. We appreciate your ratings and reviews and welcome your feedback at Podcast@ifbf.org