The farm downturn is likely to continue this year — and possibly last into 2018 — with operating costs slow to decline and record production filling the nation's grain bins, an expert at the Peoples Company's 10th annual Land Expo in West Des Moines said Friday.
The expo lineup ranged from Grover Norquist, president of Americans for Tax Reform, to Steve Eisman, a portfolio manager who bet against the subprime mortgage industry in 2007, to Iowa Agriculture Secretary Bill Northey, who discussed the state's water quality challenges.
Here are some highlights from the day-long event that attracted nearly 700 Midwest farmers, landowners and investors:
Continued softness: Iowa farmers need to cut costs to adjust to agriculture's continuing sluggish financial picture, said Jim Knuth, senior vice president at Farm Credit Services of Iowa.
Knuth urged farmers to refinance their real estate, machinery and equipment debt with longer repayments — which he called the "power of amortization" — to lower annual payments and improve cash flow.
Many farmers, he said, adopted aggressive repayment plans when the farm economy was stronger. But that approach now can restrict cash, which every business — and household — needs to operate.
"As we adjust to the different revenue environment — we think we don't have options or solutions, but we do," said Knuth, adding he doesn't expect interest rates to rise too far from historic lows and hurt farmers.
Declining commodity prices and stubbornly high costs for seed, chemicals and other inputs have cut U.S. farm income over the past three years. It's expected to fall to $66.9 billion in 2016, 46 percent below a high in 2013.
This year looks like the fourth "soft landing" agriculture will see, said Knuth, adding that it's hard to say when the industry will hit bottom and begin rebounding.
'One lawsuit away'
Noting farmers could be one lawsuit or one election away from greater environmental regulations, Bruce Rastetter, CEO of Iowa-based Summit Agricultural Group, asked Northey and others what farm leaders could do to encourage greater adoption of existing federal conservation programs.
"When you drive around Iowa and the Midwest, you don't have enough participation in building waterways, filter strips or wetland reserves — programs that we know would make an impact," Rastetter said.
"We don't have every terrace or every waterway we need out there," Northey said. "But I think we're seeing momentum around a better conservation ethic. Is it happening fast enough? I don't know. Are consumers happy with it? Well, some are, but most aren't; we have a ways to go."
But, he said, he hears no interest from farmers in backing away from water quality work. That's even with potentially fewer federal water regulations — or a recent Iowa Supreme Court ruling that said Des Moines Water Works is unable to collect damages in its lawsuit against three north Iowa counties over high nitrates in the Raccoon River, a source of drinking water for 500,000 residents.
"Five years ago, we had arguments about whether we need to be involved in this at all," Northey said. "But when I talk with farmers, I don't hear that. I hear farmers say, 'We need to figure out how to do this;' 'I want to be a part of this.'
"I do believe there is a change in the way that people are engaging in this," Northey said.
Bright, shiny diversions
Norquist said President Donald Trump is focused on important issues, such as cutting taxes, even if he's picking fights with former California Gov. Arnold Schwarzenegger over ratings for Trump's former reality TV show, "The Celebrity Apprentice."
"Some people think it's because he's brilliant and he's cleverly distracting people," he said. "Some think it's because he likes throwing out bright shiny things. We're just going to have to live with that while we cut taxes and fix health care and pursue the deregulation agenda," which Norquist called "phenomenally important."
"Every day, the press is chasing after fairy dust, the House is having committee meetings and the Senate is having committee meetings," finessing a tax bill that's been in the works for five years or more.