Iowa's agribusiness economy greatly affects the state's overall economic health, so with Iowa's overall unemployment rate currently hovering just under 7 percent, depressing revenue for state government services, there's a lot of interest in keeping Iowa agriculture profitable. Sometimes that's more easily said than done because weather isn't controlled by market forces or government regulations. But most of what government can do is closely monitored by Iowa's Department of Agriculture. A good example is corn-based ethanol and the current push to get more of it blended into motor vehicle fuels. Iowa's Secretary of Agriculture Bill Northey grows corn near Spirit Lake, while also administering myriad statehouse responsibilities, everything from scales and gas pumps to water quality and farm markets.
Borg: Secretary Northey, welcome back to Iowa Press.
Northey: Great to be with you.
Borg: And across the table, two people that are up at the statehouse every day, Associated Press Senior Political Writer Mike Glover and Radio Iowa News Director Kay Henderson.
Glover: Secretary Northey, just this past week Governor Culver sent his proposed state budget up to the legislature. Tell us what that state budget does to you and your department.
Northey: The general fund dollars, which is a lot of the dollars that we use for people is flat from what it was now. Over the last two years we've seen a big reduction in our general fund dollars. Two years ago it was $22 million. Now it's $16.8 million. We’re actually funded at the same level we were in 1994. There’s also some environment first dollars and some REAP dollars that are part of that. We actually pulled some dollars there for staffing. So we get a net reduction in staffing of $800,000 by that budget --
Glover: And what impact will that have on your agency?
Northey: We'll certainly see some reduction in force. We were down about 10 percent in the number of people compared to last year. We’ll have to or we'll have retirements that we don't fill positions or some combination of both of those.
Glover: And state government has an impact on people. The people care about state government in terms of what it does in their daily lives. Will average ordinary Iowans notice this and, if so, how?
Northey: Well, I think they will. You know, in many cases they won't necessarily see it up front. But for example, some of those cuts are environment first REAP dollars. These are conservation dollars looking at local water quality projects. We will have less folks out there being able to do that if this budget goes through and, obviously, the legislature has something to say about what the budget is that goes through. We’ll have less projects. We have about 50 projects that are out there now doing local water quality efforts.
Glover: So Iowa's water will be less clean.
Northey: Well, we'll have less projects trying to make it even more clean. And those projects generally are trying to clean things up. Challenges -- those are long-term projects but they certainly have an impact right now. We have less folks out there managing to do some of the engineering on grass waterways and filter strips, putting conservation practices on the ground. We’ll have some less inspectors around -- around weights and measures and feed and fertilizer and some of those programs as well. Generally most folks will still not necessarily see that something is not safe. But the challenge is at what level does that risk become high enough that it starts to impact regular Iowans.
Henderson: It seemed as if in the written statement that you issued earlier this week that you were arguing that your department needed more money. In this environment, it seems a tad bit odd for a republican to be arguing for more spending for his agency.
Northey: We don't really expect that there's going to be more dollars in a budget that's so upside down the way that it is right now, so we don't expect that there be more dollars. But our argument is what will the impact be to our Department of Agriculture. We’ve seen a significant cut. we will likely see even with a flat budget, even before these environmental cuts that we're seeing, we're going to see another 50 people out of our department not being there a year from now, whether it's retirements that we don't refill. But the process of fulfilling the final parts of the cuts from last year will cause us to be down about another 10 or 15 percent in staffing at the Department of Agriculture.
Borg: In introducing you, I said it's important that Iowa's farm economy say healthy for the overall state's economic health. Nationwide what is the state of the farm economy? And I ask nationwide because I want you to distinguish that if there is a difference between Iowa and the nation's farm economy?
Northey: You know, I think generally fairly good. Now, we've had a couple years -- tough years for the livestock industry, especially the hog industry. But the cattle industry -- and, of course, last year was a terribly tough year for the dairy industry as well. So we're seeing some struggles there. We have expectations that those will get a little bit better. I think overall when you look at things, the impact of agriculture on the state's economy has softened some of the recession blow in comparison to other places. So although maybe the ag economy is not growing enough to be able to pull us out of this recession, it's certainly been softening some of that blow that we're seeing other places.
Glover: Let's look at the livestock industry in particular. There have been some fairly damaging announcements just recently. Morrell said they're closing the packing operation in Sioux City, 1,400 jobs. There’s been some foreclosures up around Council Bluffs. Tell me about the state of the livestock industry. Is that just moving out of Iowa?
Northey: No, we're still seeing that livestock production here. We’re concerned about that processing capacity. And right now we produce -- we generally process most of the livestock that we produce in the state -- certainly in the hog side we do -- and this will hurt. This will hurt those bids for farmers out there that are trying to decide which company to sell it too, obviously the workers and all the impact around those facilities, but this has a potential of impacting those farmers significantly as well.
Glover: Is there anything the state can do about that or is that just a normal ebb and flow of the economy or is it something we're going to have to live it?
Northey: It's tough to do very much about it. I know there was a lot of conversation ahead of this. Is there some way to save that? We had a plant there. My understanding is they were behind in technology compared to other plants. But they had had enough losses in the processing side and the production side that they didn't feel like they could keep the plant open.
Henderson: That's the plant in Sioux City. The plant in Council Bluffs packaged products, which are taken to the grocer's food case. And Tyson announced they're shifting to other parts of the country because that's where the population is. Is there a danger that Iowa is going to lose this industry?
Northey: I don't think lose but there's certainly -- obviously we're seeing something here that we don't like. We need to be able to find out what that is and if there's other things that can be done to be able to keep that. That processing industry is very important. We produce $20 billion worth of ag products every year. Half of that is livestock. And we don't get all the benefit of that if we don't process that livestock and get those value-added jobs as well.
Glover: Put it on a scale. Are we losing this processing industry in Iowa? Is it going uphill? Is it flat? Can you tell us what direction we're headed and what that means for producers?
Northey: I think generally it's been flat until these last announcements, and then there's got to be a concern about losing them. I think we have some opportunity again at the Postville to be able to see some more processing come back there and come back in the right kind of way. We’d love to be able to see some new processing. We’re not seeing a lot of growth in livestock processing around the country. In fact, the cattle numbers around the country are down.
Glover: Is that a reflection of demand? Are Americans eating differently?
Northey: Yeah, a little bit and certainly trade and lots of other issues out there too. But we've struggled with this last year as well with trade. We’ve struggled with trade to
Borg: Does the loss of that plant in Sioux City at all affect the prices that were paid to Iowa producers?
Northey: I think it will. I think it almost has to because certainly everybody -- not only the farmers but the other processors around there know that plant is not buying livestock to process in that plant. So it has to impact. I don't know how much, Dean, that impact would be, but it has to, to some extent.
Henderson: One of the major factors in that closure was because it's an old plant. It was built in the 1950s. Is it time for the state to go partner with a community like Sioux City and bankroll construction of a brand-new state-of-the-art facility that's modern and is up to date?
Northey: Well, I think it would be great to be able to find those folks, and it's probably not going to be the city -- we've got to find private investors that are willing to do that. This is a business decision. This isn't something to be owned by us. But there can be incentives to be able to create some opportunities for that to happen. Now, we've got to be careful in where we go. We don't have a lot of tax money to throw around. We just talked about that and other issues and challenges, but I think we do have an industry -- an agriculture industry that we have to look at efficiencies.
Glover: There are talks going on between some local officials and some state officials about what to do about that plant in Sioux City. They’d like to find a way not to let that plant sit empty for a decade like the stockyards in Sioux City did. Are you supportive of that? Are you involved in it? What role can the various levels of government play?
Northey: We really haven't been involved. We be glad to be involved and certainly are supportive of any conversation like that that could help retain some of that processing and some of those jobs that are there. We’ve got to figure out what the role for government is. But there's -- but there certainly can be some kind of role there for encouragement and understanding some of the --
Glover: What I’m told is that it's right in the middle of a major new re-development area and there are a lot of local economic development officials like Debbie Durham who are saying that they're worried that this big old two-story empty plant is going to sit right in the middle of their brand-new shiny development area.
Northey: Yeah, there's lots of consequences and certainly folks on other sides. I think, you know, if there's an opportunity to be able to put in a new plant someplace that could do some higher end processing and create those jobs, that would be a wonderful thing. I don't know how it's all going to play out. But --
Borg: Nobody is talking about that? Nobody is taking a lead in saying we need to develop new processing, let's have some ideas?
Northey: I think there's conversations on the edges and, of course, this prompted those. So this is fairly recent but there's conversations around the edges. I have not heard those in the private industry that would need to come forward with hundreds of millions of dollars, talk about that yet. But I know folks are trying to figure out, because we know we have some processing capacity that we need to have in this state to be able to process some of that livestock.
Henderson: Livestock producers have had some tough economic times. So have row crop people. There’s been some discussion among the economists at Iowa StateUniversitythat there may be a new wave of farm foreclosures. Do you see farm foreclosures being a problem in 2010?
Northey: I don't see it in general. I know there were some folks that were specifically hit. We had areas where you had hail and large losses. We had some dairy farmers that certainly got hit more than other segments. You even had some around the hog industry as well that have some segments, but when you look at overall, the crops, although they were a big challenge to be able to get harvested this year, we had generally good crops. So overall I think we're in pretty good shape. The other thing that's interesting is most of our industry is financed through local banks, and so one of the concerns that you hear out there is the national bank regulations and what their loan requirements are. Those have a potential impact in our local banks, but not the same way as if one bank made a big decision or getting out of agriculture. We’re seeing a lot of that locally, and we have local relationships that I think will cause folks to look at it on a case-by-case basis.
Glover: Do you think there will be an ethanol mandate, or do you think that there will be an increase in percentage of ethanol to be blended with gasoline, and what will the impact of that be on Iowa?
Northey: The percentage of ethanol blended is an EPA decision. I believe that that will probably happen. I don't know when that will happen. Of course, I don't know anything more than what I hear or side conversations, but I think that will happen. I’m not sure that we'll see an ethanol mandate in the state of Iowa. I don't think that we'll see that. I think we'll look at -- you know, the way to really expanded that ethanol market is expanding that blending opportunity nationally. That’s how you impact serious demand.
Glover: What would the impact be in the state should you be allowed to have 10 percent, 15 percent, whatever?
Northey: Yeah, it offers an opportunity to be able to use more of that ethanol here, for one thing, and use it in places where it takes less transportation to get there. Our challenge right now is getting it to all the places that we need to get it to when we're selling 12 billion gallons of ethanol.
Borg: Does that mean a pipeline?
Northey: Well, I think there's opportunities for that. And there is discussion of a pipeline starting up in Sioux Falls, going through northern Iowa, going all the way out to New Jersey. I think there's an opportunity and there's some folks that are seriously looking at that. This may lead into that if there's an opportunity to be able to have more use in that area that could receive that ethanol. I don't think we'll see a whole other round of new plant construction because you still can't make a lot of money building ethanol plants and selling ethanol, but at least we would have markets for those existing plants.
Henderson: This past week the governor suggested the state tax credits which were awarded in Iowa should be reduced by $52 million in total over the next year. He said don't touch the biofuels tax credit or the wind energy tax credit, but there are people at the statehouse who would like to look more seriously at those. As the state ag secretary, how do you defend the state process of awarding tax credits in those areas?
Northey: That's been a complicated process and we looked at some of those and some of those have been very questionable. I think the biofuels tax credit has been very beneficial for the state of Iowa. When you look at an ethanol industry that produces 3 billion gallons, twice as much ethanol as we use in gasoline in this state, that is very beneficial. The biodiesel tax credit has been very beneficial in creating important industries. So I think those certainly need to stay. There’s a young farmers tax credit that's in that as well. I think those are things that are good. Now, the battle is where do you find the dollars and what do you do? But I think those should definitely stay.
Glover: There's been occasional discussion about your job and whether it should be an elected office or an appointed office. Now, since you were elected to the job, I’m going to take the big risk and assume you favor an elected secretary of agriculture. Why?
Northey: Yeah, yeah.
Glover: Wait a bit, yeah.
Northey: Yeah, I think it's very important. I think -- I think for lots of reasons. I think the connectedness an elected official has with the public -- again, an appointed official can have it as well, but when you have an election, you have a campaign and you have an effort to get out and talk to folks about what matters in agriculture. And agriculture is such a huge part of the economy. Even though our budget is a very small part of the budget, it's a huge part of the state's economy.
Glover: But how independent are you? You just mentioned that your budget came down from the governor's office just like everybody else. How much independence do you have?
Northey: Well, we have some independence on where we spend our time and my focus and what issues we talk about, but you're absolutely right. The legislature decides what we do and what we're funded to do. That’s -- we understand that. We work within those parameters. But we have some time in what we think those most important issues are.
Henderson: Secretary Northey, you are one of two statewide elected officials who are republicans in this state. You considered the idea of running for governor in 2010, and you didn't. Did you know that Terry Branstad was, and that's why you decided against it?
Northey: No, I didn't know. And I didn't know who was going to be in or out, and certainly some folks have left since then. I just -- for me it wasn't the right time. I love what I’m doing. I think I’ve got a lot of work to do yet in the Department of Agriculture, and I’m certainly glad and appreciate the field that's out there. And that race is very, very important to the state of Iowa.
Henderson: You appreciate the field of people who are running for governor on the republican side. Do you intend to endorse one of them before the primary?
Northey: I doubt that I will. I haven't said that I won't, but I doubt that I will. I like to be able to let it play out. First of all, I don't think anybody is holding their breath to see what I feel about it anyway. I don't know that it makes any difference what I feel. But I like the field and I certainly will be there for the nominee.
Glover: And I’ve asked this question of a number of people. I’d like you to step back and put on your republican politician hat for a second and take a look at this year. History would teach us this is the first midterm election of a new democratic president. That’s good for republicans, history would you say. But the economy seems to be driving the discussion. That tends to help democrats. Give me your take on what this year looks like. Is this a republican year? Democratic year? Balancing year? Anti-incumbent year?
Northey: It may be a combination of all those things, Mike. You know, I think -- I think it's likely a republican year because of the concerns. And I think that the economy may or may not help the democrats since they've been in charge of that economy. And so we'll see how that plays. But I don't think as republicans, we can say we're just going to sit here and let the wind pick up on our sail and carry us to victory. We have to have policies and issues and directions too. People are not going to just vote against the democrats. They need to vote for republicans.
Glover: Talk for a second about the health of your party. Democrats have built about 110,000 registered voter lead in the state. They control the house, the senate, the governor's office. What’s the health of the Republican Party? Yet you won a couple of special elections recently.
Northey: We did. You know, I think it's a challenging time and the last two election cycles for the republicans have been very, very tough. I think there's an opportunity to turn that around this time. I think the Republican Party is more united than what it has been these last couple times. But again, I think it comes back to candidates: how are the matchups in the candidates in the races? Certainly the governor's race, it's important what the party attitude is and how things are working there. But really it's a head-to-head race between two folks that potentially have different directions.
Glover: You said you're not running for governor but you're, in many people's eyes, a bright, young, up-and-coming republican. What’s your future? Where do you see yourself in five years, ten years?
Northey: That's a 6good question. I don't know. I love what I’m doing. I’d be happy being secretary of ag for as long as folks want me to do that. I may look at something else. Right now my future is the next ten months and trying to be secretary of agriculture again and be able to do the best job that I can for Iowans. So I don't know where that takes me, Mike.
Henderson: I’ve got a couple of questions about fundraising. We asked you earlier in the program about the state of the economy. Through your fund-raising, are you able to gauge the state of the economy by people's willingness to give, or is that more about an enthusiasm level for the party?
Northey: I think it's more about an enthusiasm level for the party and for the candidates. You know, we were very fortunate in some of the fundraising that we were able to do. I think folks have been happy with some of the things that we're doing. So I really haven't seen that. I think it plays into pieces of it. Probably it's hard to gauge exactly, but I think it's really about where they think things are going to go and who they want to support.
Henderson: There was also a U.S. Supreme Court decision in regards to corporate financing for campaigns. Do you intend to accept corporate donations?
Northey: You know, I don't even know how that's going to play out. I’m still on the sideline watching that all. I don't know how it's going to play out. We’ve been very fortunate with individual contributions from lots of folks, and we had 1,600 people contributing to our campaign last year. So we certainly are comfortable with where we're at, at this point. I don't know --
Borg: We're in the midst of a very harsh winter. Environmentally, what has been the effect? I’ll ask economically later. But environmentally, what the effect on Iowa and the farm economy?
Northey: Well, I’m not sure that, you know, we have -- we've had winters like this other times. One of the challenges that I think we're all looking forward to this spring is to figure out can we get this stuff melted without a big flush going down our rivers and flooding again. We have a lot of snow, a lot of ice out there. Right now freezing grounds and piling up snow doesn't necessarily cause much more environmental problems. It causes some real challenges taking care of livestock, getting feed to livestock. Certainly for farms out there, it costs some money to be able to run some generators and those kinds of things.
Borg: But are we looking at increased pollution possibly in the spring?
Northey: I don't know that we are. We certainly will have runoff from these farms, but often that ground is frozen and it's really runoff that's coming off of the snow itself. Snow moves --
Glover: Can you gauge the economic impact of it? I mean you've mentioned that it's a challenge for livestock farmers. What’s the economic fallout for --
Northey: I don't know what that is, Mike. I think we know that there's some, but we don't know what it is for sure. we have some producers certainly that have had to run generators for over a week and others that have had livestock that they're worried about whether they were going to run out of feed for and certainly cattle feeders -- or cattle producers that would have run cows on corn stalks starting in November but haven't been able to since the ground has been covered. So there are costs there, but I don't think that we've figured out a way to gauge that yet. It’s going to depend on the rest of the spring -- the rest of the winter.
Henderson: Iowans like to talk about the weather and one of the things they're talking about, oh, my gosh, this winter is setting us up for flooding. If that is the case, do you support the idea of paying farmers to allow their land in floodplains to be flooded to avoid flooding in urban areas, for instance, Cedar Rapids. There are some who argue that may have helped in some areas of Cedar Rapids but may have been used more.
Northey: Yeah, I think we'll see -- we'll see some of that floodplain management, and that is going into place. That’s a federal program and we'll see that certainly in some of that Cedar River Valleyarea. I think that's some opportunities. At the same token, it is really hard to store enough water on a piece of ground beside a river to prevent the kind of flooding that we would worry about. So I think it's a possibility, but it's going to be a small part of a solution.
Glover: Do you see your department having a role in that? Do you have some proposals for the legislature? Do you have some role for your department in flood management as we head into spring, or can you serve as an educational purpose saying, hey, watch out for this, these are the sorts of things that we need to do?
Northey: Within the state government, most of that role is through the Department of Natural Resources, that they manage some of that. But we do have some hydrology control programs where we do small programs around some cities, holding this water back above some of those cities with our conservation practices like terraces and grass waterways and filter strips. So a small piece but not a lot compared to others.
Borg: Thank you, Secretary Northey, for being with us today.
Northey: Thank you.
Borg: Well, we'll be back next week with another edition of Iowa Press, the usual times, that's 7:30 Friday night and 11:30 Sunday morning. Before leaving today, a comment of statewide significance. Iowa lost an accomplished and creative journalist this past week with the passing of Iowa Public Radio's Greg Shanley. Radio listeners first heard him at KUNI Public Radio in Cedar Falls, and more recently statewide as a part of Iowa Public Radio. Greg wrote, produced, and hosted award-winning news programming, and other broadcast journalists recognized his creative energy, electing him as a president of the Iowa Broadcast News Association. His well-informed, personable, and gauging style made him a popular host of Iowa Public Radio's Talk at 12, Talk of Iowa, and a few years ago on Morning Edition. Most radio listeners never knew the congenial personality bringing them the news and insightful news interviews was courageously fighting the effects of diabetes. At age 49 he left us far too soon. Journalists working with him and Iowans who listened to his work are missing him greatly. I’m Dean Borg. Thanks for joining us today.
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