Comprehensive Talking Points: August 2022

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Comprehensive Talking Points: August 12, 2022

CONTACT:

Sierra Henry

Media Relations Specialist

Illinois Farm Bureau

309-557-2083

DeAnne Bloomberg

Director of Issue Management

Illinois Farm Bureau

309-557-3162

Inflation Reduction Act (IRA) of 2022 Talking Points

Sources: American Farm Bureau Federation talking points; Summary: The Inflation Reduction Act of 2022

Background: The U.S. Senate on Aug. 7 passed the Inflation Reduction Act (IRA) of 2022, a slimmed down version of the Build Back Better Act. This piece of legislation enacts a historic deficit reduction to fight inflation while investing in domestic energy production and manufacturing and reducing carbon emissions by 40% by 2030.

Ag and Biofuel Climate Change Provisions:

$1-a-gallon tax credit for biomass-based diesel extended through 2024.
- This would be replaced by the clean fuels tax credit that would vary according to the biofuels carbon rating.
- The new clean fuels credit would be in effect through 2027.
$500 million for blender pumps and other biofuel infrastructure.
$5.3 billion farm debt relief:
- $3.1 billion in assistance to “distressed” borrowers who hold direct or guaranteed farm loans
- $2.2 billion in payments to farmers who had experienced discrimination in USDA loan programs
- Payments are capped at $500,000 per producer
- Debt relief provisions would be paid for by repealing a debt relief program authorized by the American Rescue Plan in 2021 and later blocked by the courts
Roughly $2 billion for USDA’s Rural Energy for America Program, which funds renewable energy and energy efficiency projects.
$9.7 billion in assistance to rural electric cooperatives for renewable energy and energy efficiency projects
- Another $1 billion in loans for renewable energy projects in rural areas.
Rural electric cooperatives would get direct payments for the benefit of renewable energy tax credits
- Electric co-ops now have to work with third parties to get such benefits.
$18 billion for four conservation programs starting in 2023
- USDA will prioritize projects that mitigate or address climate change through the management of agricultural production
- $8.45 billion for the Environmental Quality Incentives Program, receiving $250 million in FY 2023 beginning Oct. 1, 2022
- $4.95 billion for the Regional Conservation Partnership Program
- $3.25 billion for the Conservation Stewardship Program
- $1.4 billion for the Agricultural Conservation Easement Program
- All funding authorized by the IRA must be spent before FY 2032
$1 billion provided to USDA’s Natural Resources Conservation Service for conservation technical assistance
- $300 million is allocated to USDA for measuring the impact of agricultural practices on greenhouse gas emissions

Additional Background on the IRA:

$739 billion in total revenue raised
- $313 billion – 15% Corporate minimum tax
- $288 billion – Prescription drug pricing reform
- $124 billion – IRS tax enforcement
- $14 billion – Carried interest loophole
$433 billion in total spending
- $369 billion – Energy security and climate change
  - $40 billion – USDA spending on climate programs
    - Forestry, rural electric co-ops, biofuel infrastructure
    - $19.9 billion – Four conservation programs
    - $1 billion – Conservation technical assistance
    - $300 million – Measure the impact of farming practices on carbon emissions
  - $64 billion – Affordable Care Act extension
- $300 billion – Deficit reduction

Updated Inflation Talking Points (Aug. 5, 2022)

Sources: Illinois Farm Bureau inflation talking points; AFBF inflation talking points

Headline Messages:

Farmers aren’t alone in facing a tough economy, but many family farms are struggling to hang on in the face of skyrocketing input costs.
Like consumers, farmers are price-takers not price-makers.
Farmers cannot increase the price of their products to make up for supply costs that have doubled, or tripled in some cases.
General inflation is a long-term problem, which we expect to put pressure on our wallets and create price uncertainty for the next few years.
The ripple effects of the war in Ukraine, and general supply and supply chain issues add to the challenges of ensuring the security of the global food supply.
The impacts of inflation and global disputes on our food supply create added pressure to make sure we get it right when it comes to the 2023 farm bill.
Despite seeing high commodity prices, farmers are feeling the strain of rising costs for fertilizer, seed and fuel.

Additional Messages:

Federal Reserve Action to Blame
- The Federal Reserve Bank increased the money supply by $6.4 trillion from 2020 through early 2022, an increase of 42%. This can’t all be absorbed by economic growth, and much of it must work out as inflation over the next two-three years.
- Increased spending and increased money supply overstimulated the economy.
Input Prices
- Prices for seed, pesticides and herbicides, and fertilizer have all increased because of the supply challenges, rising demand, the war in Ukraine and inflation.
  - Overall production costs are up at least 6% from 2021 t0 2022
    - This is after production costs increased 12% from 2020 to 2021
  - Overall, costs for diesel, which is used for machinery fuel and every day diesel, remain at high levels.
    - Diesel prices were up 74% from June 2021 to June 2022.
  - Propane gas (liquid form of natural gas) which is the input needed to dry harvest grain, was up 30% this past spring compared to spring 2021.
    - Natural gas in the U.S. doubled within a two-year period and European Union natural gas increased six times its 2019 price level in a two-year period.
  - Prices for land continue to rise at an astonishing rate, which increases the challenges for new and beginning farmers and ranchers.
Grocery Prices
- The increased cost of food is a real concern in our country – even more so across the globe.
- U.S. food assistance programs and food banks help those who struggle to make ends meet here at home, but the story is much different elsewhere as food insecurity skyrockets.
- Despite increased costs, we are still fortunate to have the safest and most affordable food supply in the world.
- America’s food supply is strong, but we must not take it for granted, especially when U.S. farmers are under increased pressure to feed the world.

Atrazine Request for Action Letter on EPA Restrictions

Sources: “EPA proposes atrazine restrictions,” by Timothy Eggert, FarmWeek; “Thought the battle to reregister atrazine was over? A call to action to protect farmers’ access to atrazine,” PowerPoint presentation

Background:

The U.S. Environmental Protection Agency (EPA) has proposed changes aimed to address atrazine’s impact on aquatic plants. The restrictions include prohibiting applications in saturated fields and limiting annual application rates to 2 pounds per acre for sorghum, sweet corn, and field corn growers.

The EPA also plans to set the acceptable level of atrazine in a watershed, or concentration equivalent level of concern (CE-LOC), at 3.4 parts per billion (ppb). That level, if finalized, would fall below the 15 ppb CE-LOC set by EPA in 2020 through an interim decision.

New restrictions would also prohibit all aerial applications and any applications “during rain or when a storm event, likely to produce runoff from the treated area, is forecasted to occur within 48 hours following application.”

Field corn, sweet corn, and sorghum growers in watersheds with atrazine levels above 3.4 ppb (about 18% of all U.S. watersheds) will be required to choose from a “picklist” to mitigate runoff.

Headline Messages:

Regulatory decisions are required by law to be science-based and should not be impacted by political shifts.
If this low level is adopted, it will be extremely difficult to apply atrazine in farm country.
Atrazine is a key tool in sustainable practices like no-till farming.
It is a cost-effective tool to control weeds.
An important tool to fight herbicide resistance.
The most researched herbicide with the longest safety record.

Key Points:

EPA’s proposal hurts farms and the environment.
Many of the EPA’s mitigation options are not feasible.
The regulations will impact 65 million acres of corn, sorghum, and sugarcane.
More than 70% of U.S. corn acres will be affected.
Atrazine is a key tool for conservation tillage and no-till practices.
The EPA has estimated that losing atrazine would cost farmers at least $42/acre (growers are encouraged to consult their input providers for accurate impacts on their farm)

Investigate TV Dicamba Report 2022

Overview: Investigate TV wrote and aired an in-depth report on “thousands of farms across the U.S.” that have been “damaged by ‘dicamba drift,’”.

Headline Messages:

The EPA in 2021 approved new registration for dicamba, based on sound science that affirms its safety.
Farmers who use dicamba faced unpredictability when the courts stepped-in, making its future use uncertain.
Farmers are committed to using only safe products and using them wisely.
Dicamba is a key tool in farmers’ sustainability strategy in that it supports no-till and conservation tillage practices, which reduce water use, retain nutrients in soil and lower emissions.

Supporting Messages:

Not every farm faces the same challenges.
Farmers need options to make the best decisions to ensure that they can get healthy crops to America’s families.
The 2021 registration took steps to ensure dicamba is as effective as possible on its intended target:
- This included a cut-off date for spraying to mitigate concerns with off-target crop damage, with flexibility available to states with unique needs.

Increased Tariffs on Key Fertilizer Product Rejected

Source: American Farm Bureau Federation; read the AFBF letter to the U.S. International Trade Commission here.

Main Messages:

We are pleased the U.S. International Trade Commission rejected the Commerce Department’s proposal to impose tariffs on imports of urea ammonium nitrate (UAN)
UAN is a key fertilizer
The cost of fertilizer increased more than 60% from 2021 to 2022
Farmers are feeling the strain of high input prices
AFBF sent a letter to USITC in June asking the commission to reject the tariff proposal.

Quote from AFBF President Zippy Duvall: “AFBF is pleased the U.S. International Trade Commission did as we asked by rejecting the Commerce Department’s proposal to impose tariffs on imports of UAN, a key fertilizer. Skyrocketing supply costs are already forcing some farmers into the red. The cost of fertilizer increased more than 60% from 2021 to 2022 and that’s not sustainable.

“We appreciate the commission’s recognition that adding unnecessary import costs would have made it difficult for farmers to access an affordable supply of this crucial nutrient at a time when America’s farmers are being called on to meet growing demand here at home and abroad.”

Regarding farmer’s share of the food dollar:

According to the U.S. Department of Agriculture’s revised Food Dollar Series (Figure 1), farmers currently receive approximately 16% of every food marketing dollar. The farmer’s share of the retail food dollar is as low as 2% to 4% for highly processed foods such as bread and cereal, and as much as 35% for some fresh-market products.

Figure 1: USDA Food Dollar Application, 2020

Update on Proposition 12 Case

Source: American Farm Bureau Federation & National Pork Producers Council, June 14, 2022.

The American Farm Bureau Federation and National Pork Producers Council filed a brief with the U.S. Supreme Court challenging the constitutionality of Proposition 12, a California law banning the sale of pork from hogs that don’t meet the state’s production standards, even if the hogs were raised on a farm outside of California.

The U.S. Supreme Court is due to review a recent ruling upholding Proposition 12. The AFBF and NPPC have argued that the law violates the U.S. Constitution’s Commerce Clause because:

The law unconstitutionally regulates commerce outside of California
Governs activity outside of California’s borders and beyond its police powers
Imposes substantial burdens on out-of-state farmers and their customers.

“California is attempting to set the rules for the entire country,” said AFBF President Zippy Duvall. “Farmers are dedicated to caring for their animals, but this misguided law inhibits efforts to provide them a safe environment. Almost all of the pork consumed in California is produced outside of its borders. This law has the potential to devastate small family farms across the nation through unnecessary and expensive renovations, and every family will ultimately pay for the law through higher food prices.”

To read the full brief filed with the U.S. Supreme Court, visit: Natl Pork Producers v Ross No. 21-468 Brief for Petitioners (supremecourt.gov).

Background:

California has an estimated 40 million pork consumers, representing 15% of the U.S. market.
Less than 1% of pork consumed in California is produced in-state.
The law has far-reaching effects that will negatively affect both farmers and consumers:

1. Farmers will be forced to change operations to meet stringent animal housing rules.
2. The $2 billion-$3 billion cost harms small farmers.
3. A University of Minnesota study found the barn and group pen conversion will cost between $1.9 billion to more than $3.2 billion; and a $5 billion cost to consumers over 2 years.
4. Small farms are unlikely to convert barn sizes, forcing them out of business.
5. Costly production will lead to higher price tags at the grocery store.
6. A Cornell University study found a similar California law on hen housing resulted in a 49-cent per dozen increase in egg prices.

SEC Proposed Climate Rule “The Enhancement and Standardization of Climate Related Disclosures for Investors”

Illinois Farm Bureau, American Farm Bureau Federation and 117 other ag groups are calling on the U.S. Securities and Exchange Commission to extend its comment period on a proposed rule that would require publicly traded companies to provide climate-related information from their entire value chain in their filings and annual reports.

The proposed rule requires extensive reporting requirements for public companies to report on Scope 3 emissions, which are the result of activities from assets not owned or controlled by an organization but contribute to its value chain. This could create burdensome reporting requirements for farms selling into supply chains and force the disclosure of private information.

Main Messages

This is an overreach by the Securities and Exchange Commission.
Farmers are focused on growing food, fuel and fiber for this country and have never subjected to regulations intended for Wall Street.
Farmers are already heavily regulated by multiple agencies as the local, state and federal levels.
Unlike large corporations currently regulated by the SEC, farmers don’t have a team of compliance officers or attorneys dedicated to handling SEC compliance issues.
The proposed rule may create substantial costs and legal liabilities, which creates obstacles to ensuring national food security.
Onerous reporting requirements could disqualify small, family-owned farms from doing business with public companies, or companies that supply public companies, which could lead to more consolidation in agriculture.
Farmers and ranchers have not chosen to receive the benefits of participating in the public markets, like public companies, and should not be subject to the burdens.

Supporting Messages

Unlike corporations, farmers work and raise families on their place of business. There are many questions about how their privacy will be protected.
We’re concerned about the lack of specifics in the proposed rule. It has the potential to require very detailed information from each farm, down to how many gallons of fuel are put into each piece of machinery and each machine’s emissions.
The SEC has not taken into account the burden on farmers and ranchers, who are critical to the value chains of many larger companies.
The SEC proposed rule is 510 pages long, with 1,068 technical footnotes and 750 direct questions, but the SEC has only given farmers 39 days for review. That is not good and transparent government.

Supply Chain and Rising Input Costs

One of the most highly variable costs, fertilizer, has tripled since 2021. Farmers across the country are grappling with skyrocketing fertilizer prices, which began its sharp increase in 2021. Fertilizer costs were predicted to be 80% higher than last year for the 2022 planting season, according to a study by Texas A&M University’s Agricultural and Food Policy Center.

Recent fertilizer price increases across all three primary nutrients have caused significant concern among producers.

Many farmers feel these rising input prices are taking away all the momentum provided by the higher commodity prices that were going to help them break even or be just above the bottom line.

Fertilizer costs account for approximately 15% of total cash costs in the U.S. and were a top concern for farmers this growing season.
With increased fertilizer prices, the shortage of truck drivers, congestion at American ports and other input costs still expensive, finding ways to address supply chain disruptions is another IFB priority.
Producers remain concerned that farm input prices are likely to rise much more sharply in 2022 and nearly half of corn/soybean farmers expect farmland rental cash rates to rise, potentially squeezing profit margins.
Illinois Farm Bureau held meetings with international fertilizer companies, including a Jan. 4 zoom meeting for CFB Presidents and managers discussing the issue.
We’ve seen this before, in 2008. History suggests that fertilizer prices can change rapidly, likely bringing modifications to fertilizer cost projections.

Market Intel piece: (Dec. 13, 2021)

U.S. agriculture production costs are increasingly important to the near- and long-term viability of U.S. farms. Fertilizer prices are the issue top of mind for farmers heading into 2022.
All major crop production nutrients have experienced increased prices when compared to September 2020: ammonia has increased over 210%; liquid nitrogen has increased over 159%; urea is up 155%; MAP has increased 125%; DAP is up over 100%; and potash has risen above 134%.
Fertilizer is a global commodity and can be influenced by multiple market factors beyond the control of U.S. producers. Similar to globally traded commodities, 44% of all fertilizer materials are exported to a different country.
The U.S. is the third-largest producer of fertilizer globally, however, it still requires the importation of all three nutrients to fully meet demand. This means that U.S. fertilizer dealers and U.S. producers are required to pay the price defined by the global market for fertilizer and fertilizer materials, plus transportation.
When it comes to global exports, the U.S. is not a major fertilizer exporter. The U.S. holds a share of about 4.6% of the nitrogen exports, ranking seventh.

The Illinois Livestock Industry

The Illinois livestock industry benefits agriculture in our state by creating market opportunities, driving economic growth, strengthening our communities, and protecting the environment.

Economic Growth

Livestock farms, along with meat and dairy processing, are economic engines for Illinois. The dollars generated from livestock production ripple through the state’s economy. The steady flow of commodities supports a sustainable industry that offers new opportunities for farm families to grow their businesses.

For every $100 of output from livestock farms, an ADDITIONAL $80 is generated in economic activity outside of our industry. That means more dollars to support local needs.
Statewide, livestock farms support 91,000+ jobs and account for $4.7 billion in Illinois household income.
One small meat processor generates $27.9 million in economic activity and supports 88 local community jobs each year.

Supporting Food Security

Illinois is home to more than 71,000 farms, 96% of which are family-owned and a third of which include livestock. For these farm families, producing high quality meat and dairy products means providing important protein sources for their families and others.

These farmers raise more than livestock on their farms; they improve their communities by providing local products Illinois residents rely on for well balanced meals.

Illinois’ state licensed meat establishments processed more than 31 million pounds of meat to feed families across the state in 2020.
Illinois farm families donated more than 250,000 pounds of food to local food pantries in 2020.

Strengthening Our Communities
Farmers raise more than animals and crops on the farm; they support neighbors, local businesses, and the rural way of life to ensure a bright future for generations of farm families.

A recent study of property values in Illinois showed that livestock farms, rural neighbors, and town residents can successfully coexist with no adverse impacts to property values, thanks to modern technology and statewide siting criteria.
Adding livestock to the farm creates built-in customers for crops and a new revenue stream to help the next generation take steps toward farm ownership.
Farmers serve as volunteer firefighters, school board members, elected officials, church elders and in other essential roles that support communities.

Protecting the Environment
Using fewer natural resources to produce more high-quality food, fuel and fiber than ever before is essential for Illinois agriculture. Farmers care for their animals in ways that also benefit the land. Their dedication to conserving the resources entrusted to them preserves their way of life for future generations.

Pig farmers today use 75% less land and 25% less water than they did 60 years ago.
Cattle farmers are producing 60% more beef with 40% fewer carbon emissions than 50 years ago.
Each gallon of milk produced by dairy farmers creates 63% fewer carbon emissions than in 1944.
Barn construction is subject to multiple layers of regulation involving state and federal agencies, as well as an 18-step approval process managed by the Illinois Department of Agriculture.

Soil Conservation Efforts

Although nutrient loss is a complex environmental issue that will require many solutions, farmers are committed to discovering what will work for each farmer, in each region of Illinois.

Farmers are leading through investment. Since 2013, Illinois farmers and agricultural retailers have invested over $30 million dollars into nutrient research through IL NREC.

Illinois Farm Bureau (IFB) announced its seventh consecutive year of Nutrient Stewardship Grants. The grant program is a multi-year effort that has supported 120 projects in over 70 counties to help promote local nutrient stewardship, soil health and water quality projects.

In 2022, 13 county Farm Bureaus will work together on 9 pollinator projects, and 25 county Farm Bureaus will collaborate on 21 nutrient stewardship projects. Since 2015, the IFB Board has committed nearly $2.4 million to nutrient stewardship efforts. This includes $850,000 for the Nutrient Stewardship Grant Program.

Every year is a learning experience where you’re constantly building better knowledge and considering new strategies or adjusting current ones.

This is a long-haul effort, not a sprint. Farmers will continue to evaluate research, find the best fit for their fields, and make steady progress in this space.

FARMER PROMPTS:

I am a family farmer in ____. My family and I are personally invested in the mission to reduce nutrient runoff.
The conservation practices I am currently using on my farm are ….. These help me manage my nutrient loss by ….
The data released each year doesn’t always look like success, but it does look like progress. I am making continuous progress and increasing my farm’s sustainability metrics each year.
There are factors that are out of my control. Rainfall and growing conditions can impact my conservation intentions. An example is ….
Knowing that weather and rainfall are beyond my control, I make the best possible management decisions to limit the risk of negative environmental impacts while also protecting my agronomic and economic assets.

ACTIVATOR/Political Education

ACTIVATOR® is a grassroots member driven program to support incumbent legislators and candidates for United States House or Illinois General Assembly. Endorsement decisions are made by ACTIVATOR Trustees who go through a process that has been tried and tested since its creation in 1984.

ACTIVATOR is an effective grassroots political tool to elect candidates or incumbents that support agriculture. Members have the ability to build relationships with elected officials, which further helps to promote Illinois Farm Bureau’s goals and policy initiatives to lawmakers. This is crucial to safeguarding agricultural interests in Illinois.

Goals:

Encourage good government
Head off Burdensome legislation
Increase personal involvement in the political process
Respond to farmers' positions and the changing political climate
Build meaningful relationships with elected officials and candidates

Our Candidates:

Understand our issues
Fight for our priorities
Work with our members to develop sound public policies
Run for either Illinois House, Illinois Senate or U.S. House

Climate/Carbon sequestration

Key Messages:

Farmers are at the forefront of climate-smart farming, putting scientific solutions, technology, and innovation to work to protect our land, air and water.
U.S. agriculture contributes around 10% to overall greenhouse gas emissions by economic sector, far less than other major industries.
Thanks to farmers’ dedication to conserve natural resources, that share drops to negative 2% when additional carbon absorbing practices are factored in.

Farmers are promoting healthy soil by planting cover crops and adopting sustainable practices that trap carbon. Farm Bureau is leading the way in policies that reduce emissions, enrich the soil and protect our water and air, all while producing more food, fiber and renewable fuel than ever before.
Sustainability and efficiency on the farm go hand-in-hand. Farmers today are doing more with less thanks to innovation and technology. In fact, U.S. agriculture would have needed nearly 100 million more acres 30 years ago to match today’s production levels.
Smarter farm equipment, precision ag tools and biotechnology are helping farmers care for their crops, while using less water, fertilizer and pesticides.
According to the EPA, land management practices alone removed 764 million metric tons of CO2 from the atmosphere in 2018. That is equal to taking 165 million vehicles off the road for a year.

Policy:

Support House passage of the Growing Climate Solutions Act, which would help solve technical entry barriers for farmers who wish to participate in voluntary carbon credit markets.
All existing funding for farm bill programs must be protected during the development of carbon banks, and a USDA-led carbon bank should not undermine voluntary private markets.
Information gained from the pilot programs will help USDA build the foundation for a carbon bank that will gain long-term bipartisan support and it will help USDA build confidence on how to verify the climate benefits delivered by specific practices.
This approach will create opportunities for all producers and landowners to participate in voluntary private markets.
FACA recommends USDA lay the foundation for a potential carbon bank by developing a series of pilot projects that focus on four areas:
- Scaling Climate Solutions
- Removing Barriers to Adoption
- Improving Carbon Accounting Standards
- Ensuring Equitable Opportunities

Additional Messages:

Not only are agriculture’s overall emissions low, farmers are taking active steps to make their footprint even smaller.
For example, farmers are converting waste into energy, and they are participating in conservation programs, which preserve green spaces (like grasslands, forests, and wetlands) that absorb greenhouse gases.
More than 140 million acres of U.S. farmland are used for conservation efforts and wildlife habitats—that land area is equal to the states of California and New York combined.

Rural Broadband

Key Messages:

Broadband is no longer a luxury, it’s a necessity. Rural broadband is essential to modern agriculture, the farmers who grow our food and the quality of life in rural America.

While most people take broadband for granted, 25% of U.S. farms have no access to the internet.
As technology on the farm continues to advance, a fast and reliable internet connection is more important than ever. Whether mapping a field, tracking markets, or updating software on equipment, farmers need the internet to remain competitive and implement climate-smart practices.

Precision Agriculture:

Farmers not only grow our food, fuel and fiber, they also generate terabytes of data allowing them to precisely apply fertilizer where it is needed, target seed distribution during planting, monitor farm machinery for potential problems and make data-driven business decisions.
Broadband connectivity allows equipment like cloud-connected planters, irrigators, tractors and harvesters to automatically change application rates for seed, fertilizer and other inputs. This improves sustainability by allowing farmers to apply less water, protect soil health, plant seeds to achieve optimal yield and reduce environmental impact.
Broadband-based programs also make it possible for livestock producers to monitor feed usage, schedule delivery of animals, improve the efficiency of their operations and ensure animal health.

Quality of Life:

Students in rural areas should not have to go to a fast-food restaurant or coffee shop in town to get access to high-speed internet because it’s unavailable at home.

Current and future generations of rural Americans will be left behind without affordable broadband service that gives them online access to health care and education services, government agency resources and new business opportunities.
The expansion of broadband access will help our rural businesses grow and remain competitive. This is critical infrastructure for the future of rural America.