Iowa Soybean Association District 1 Director Brent Swart asks Rep. Cindy Axne about investing in rural infrastructure. (Photo: Bethany Baratta/Iowa Soybean Association)
Soy priorities on Capitol Hill
July 1, 2021 | Bethany Baratta
In face-to-face conversations with all six of Iowa’s elected representatives in Washington, D.C., last week, Iowa Soybean Association farmer leaders voiced their concerns and support on a host of topics important to the state’s 40,000 soybean farmers.
Transportation and infrastructure
Farmers rely on locks and dams, rural roads and bridges, railway and other means of transportation to get their soybeans from the farm to the market. A lack of infrastructure funding, however, puts Iowa soybean farmers at a competitive disadvantage.
“I’ve traveled to South America and I’ve seen the improvements to their transportation infrastructure,” said Robb Ewoldt, ISA president-elect and District 6 director. “I live 4 miles off the river, and I deliver my product there. The lock and dam system has looked the same in the 50 years that I’ve been alive. And to see what’s been done in South America in the last 10 years? It’s alarming. If we want to stay competitive, that river is crucial. The more efficient we can be the more money that comes in our pockets. I keep hoping I’m going to see these improvements in my lifetime.”
Representatives noted that they’ve submitted locks and dams, roads and bridges as community funding projects (formerly called earmarks) to be considered for additional funding through the appropriations process. Ewoldt referenced the Soy Transportation Coalition’s Top 20 Innovations for Rural Bridge Replacement and Repair guide as an example of how farmers are thinking about the dollars and cents to repair Iowa’s crumbling infrastructure.
Representative Cindy Axne said she’s long supported improvements to locks and dams and efforts to improve infrastructure on the rivers. The conversations with her constituents regarding infrastructure has broadened, she says.
“Our infrastructure isn’t the same as it used to be,” Axne said. “It was our farms, roads, bridges, and then it became highways and manufacturing. Now it’s childcare and broadband. I can’t tell you how many times I’m hearing from folks about childcare.”
Still, ISA farmer leaders asked that additional consideration be made to rural infrastructure.
“As soybean farmers, when we talk about competitive advantages, we talk roads, bridges, locks and dams. What’s most important to soybean farmers right now is that over time we’re losing our competitive advantage to South America, who is outpacing the investments the United States is making when it comes to infrastructure,” said Brent Swart, ISA District 1 Director from Spencer.
Axne noted that the Surface Transportation Bill also has dollars built in for transportation infrastructure improvements.
Discussions related to an infrastructure package have been ongoing since President Biden took office. Progress and effectiveness of these conversations was unclear until last week when the White House announced it had reached a deal on infrastructure with a bipartisan group of lawmakers. The bipartisan group’s measure includes $579 billion in new spending on infrastructure, for a total price tag of $1.2 trillion over eight years. Rather than raising taxes on corporations, the measure would be paid for by unused Covid-19 relief money, increased tax compliance and user fees, among other measures. Many details are still lacking, however, and more progressive Democratic senators have signaled opposition to an infrastructure package that does not address social infrastructure needs, such as climate, affordable housing, and Medicare expansion.
Inheritance/estate tax, stepped-up basis
Proposed changes to stepped-up basis and other tax provisions under the Biden Administration have sparked serious concern from Iowa soybean farmers.
“When we go around the state we find out what farmers’ needs are. What we’re hearing first and foremost is taxes: stepped-up basis and inheritance taxes,” said ISA President Jeff Jorgenson. “It’s important for us in Iowa to keep that intact for that farm generational shift.”
Since taking office, President Biden and other Democratic leaders have consistently positioned any tax changes/increases as offsets for infrastructure and other spending initiatives. However, a recent study shows how detrimental the changes could be to farmers.
A newly released Texas A&M Agricultural and Food Policy Center (AFPC) study considered the impacts of recent U.S. Senate legislation – the Sensible Taxation and Equity Promotion Act (STEP Act) proposed by Sen. Chris Van Hollen (D-MD) that would eliminate stepped-up basis upon death of the farm owner and Sen. Bernie Sanders’ (I-VT) 99.5% Act that calls for a decrease of the estate tax exemption to $3.5 million. AFPC maintains a database of 94 farms in 30 states. Under current tax law, only two of the 94 representative farms would be impacted by an event triggering a generational transfer. By contrast, under the STEP Act, 92 of the 94 (or 98%) farms would be impacted, with additional tax liabilities incurred, averaging $726,104 per farm. Under the 99.5% Act, 41 of the 94 farms would be impacted, with additional tax liabilities incurred, averaging $2.17 million per farm.
Under current law, when the owner of a farm dies, the estate is subject to federal estate taxes. The study said as of 2021, $11.7 million per individual and $23.4 million per couple in assets are exempted from the estate tax, effectively protecting most farms from the estate tax. This current but temporary estate tax exemption of $11.7 million per person has allowed farmers and ranchers to expand their businesses, upgrade buildings and purchase needed equipment and livestock, rather than spend their money on life insurance and estate planning. More importantly, when a family member dies, the family can continue farming, without having to sell land, livestock, or equipment to pay the tax. The exemption is indexed for inflation while continuing stepped-up basis and portability between spouses.
Passage and implementation of changes to stepped-up basis would have serious consequences on family farms, says Suzanne Shirbroun, ISA District 3 Director. She’s the sixth generation on her family’s farm near Farmersburg.
“The seventh generation just graduated from college and is starting to move back to the farm. If we see changes to stepped-up basis, generation seven is not going to be there. We can’t afford it,” she told her elected representatives.
Conservation and climate
The Growing Climate Solutions Act passed through the Senate last week. The legislation creates a certification program at USDA for technical assistance providers and third-party verifiers of carbon credits with a goal of helping farmers better access private carbon market programs.
ISA President Jeff Jorgenson says farmers are curious about what that looks like at the farm level. “The biggest thing for farmers is how we stay productive,” Jorgenson said. “Our goal is to produce as much as we can every year.”
“We want to stay productive and be financially sound,” Shirbroun added. “We all want to do the right thing, but we have to be able to afford it.”
They noted the Soil and Water Outcomes Fund as an opportunity for farmers to increase on-farm conservation practices and generate an additional revenue stream for their farm. Representative Hinson also pointed to the PRECISE Act, a bill she sponsored as a response to the Green New Deal.
“There’s a lot of innovation happening in Iowa on that (carbon capture) right now,” Hinson said. “We’re trying to figure out how we can do more of that and reward people who are actually doing it, which I think we should. If we want to move that direction (with climate goals), it’s not cheap to do that. If that’s where we’re going, I think it’s important to put it on the private sector to innovate and do it instead of just setting climate goals and arbitrary numbers.”
Waters of the U.S.
The Biden administration recently announced its plan to undo the Trump-era “Navigable Waters Protection Rule” which shrank federal protections/jurisdiction under the original Clean Water Act. EPA Administrator Michael Regan said he would repeal the 2020 Navigable Waters Protection Rule as the EPA begins creating their own, more expansive definition of waterways subject to federal water protections. According to the EPA Administrator, the new, more protective, and “durable” definition will be consistent with Supreme Court precedent and informed from previous regulations.
Representatives shared their frustrations as the move would take the process back a full step, requiring additional time and dollars to redefine navigable waters.
“It should be very obvious what a navigable waterway is and what it’s not,” said Representative Mariannette Miller-Meeks. “Ag certainly is impacted by WOTUS, but so is housing, manufacturing, builders; I don’t know one sector it doesn’t involve.”
Senators Ernst, Grassley and Braun introduced the Define WOTUS Act, a bill to legislatively define the “waters of the United States,” (WOTUS) and make a reasonable, workable definition of the term permanent. Sens. Ernst and Grassley recently sent a letter to U.S. Department of Agriculture Secretary Tom Vilsack to also express concerns over the Biden Administration’s decision to roll back the previous administration’s rule.
“I’ve had conversations with Vilsack about it,” Grassley said. “He thinks this administration will approach it a little bit differently than the previous administration. I reminded him of the American Farm Bureau Federation map that shows 97% of Iowa would be impacted under the original definition.”
Trade and market access
Even after China and the United States reached a deal under the Phase 1 agreement in February 2020, U.S. soybean exports still face a 25% tariff going into its top export market. Demand for soybeans in China is growing as their pig population builds to pre-African swine fever levels.
ISA farmer leaders also encouraged representatives to push for trade negotiations; namely, the free trade agreement negotiations started by the Trump administration with the European Union and the United Kingdom.
“We’re going to be harvesting a selling a crop soon, and we want to make sure we get a maximum opportunity to sell these soybeans worldwide,” Jorgenson said.
Under the administration’s climate goals, electric vehicles are at the top of the list when it comes to carbon-reducing solutions. Representatives said they understand that biodiesel—made primarily of soybean oil and other feedstocks—is a right-now answer to this goal.
"I’ve taken this role in hearings like, ‘all right, you want to talk climate charge and carbon? Biofuels are a great thing,’ ” said Representative Randy Feenstra.
“I’m pushing for biofuels,” Axne said. “It’s a great tool, available right now. Why are we not doing more with the tool we already have that reduces greenhouse gas emissions?”
Senator Ernst said she's helping to find "sustainable answers" for climate change and farming.
"Our grid won't support the number of electric vehicles they (the administration) want to see on our roads in the next decade. So while they have this pie-in-the-sky idea of this perfect utopia, it doesn't happen in the here and now," she said. "We're working to find sustainable answers for climate change and farming, but they have to be commonsense solutions."
Farmer leaders thanked the representatives for their continued support and encouraged them to oppose negatives changes in renewable volume obligations under the Renewable Fuel Standard (RFS) program.
Farmers also pointed to a recent biodiesel study, which shows health benefits in switching to 100% biodiesel from petroleum-based fuel and home heating oil.
ISA as a resource
Before leaving each of the six offices on Capitol Hill, ISA farmer leaders reminded their representatives that ISA is an available resource and connection for them.
“That’s why I’m here,” Ewoldt said. “I want you to know that we’re a resource and we want to have a voice and help you make Iowa—and the United States—stronger.”