Legislative priorities and consumer meat trends: The Spokesman Speaks Podcast, Episode 4

Narrator: Welcome to The Spokesman Speaks a podcast from Iowa's leading agricultural news source, brought to you by the Iowa Farm Bureau. Now here's your host, Laurie Johns.

Laurie Johns: Welcome to The Spokesman Speaks podcast. This is our January 14th edition, our first episode of 2019. If you're already a subscriber, welcome back! And if you're new to the podcast, thanks for joining us. We hope that today's topics will whet your appetite for more of The Spokesman Speaks podcast, which you can subscribe to in your favorite podcast app. We've already released some great episodes on market opportunities in a down farm economy, international trade opportunities, dealing with farm stress and more. So, start bingeing. Today marks the beginning of the 2019 legislative session in Iowa. So we're bringing you an interview with Iowa Farm Bureau's Director of Government Relations and going to talk to him about the issues that Farm Bureau will be advocating for this year. We also have my interviews with the CEOs of Fareway Grocery Stores and the Iowa Restaurant Association talking about the 2019 protein trends they're seeing in restaurants and grocery stores. Let's start with the legislative preview. Spokesman editor Dirk Steimel recently sat down with Iowa Farm Bureau's Director of Government Relations, Don Petersen. Let's listen in.

Dirk Steimel: We're here with Don Petersen, director of government relations for the Iowa Farm Bureau Federation, to get a preview of Farm Bureau's focus during the 2019 Iowa legislative session, which begins soon. One focus of Farm Bureau members during the 2019 Iowa legislative session will be enhancing the state's Beginning Farmer Tax Credit program. Why is that important and what steps is Farm Bureau supporting to enhance that program?

Don Petersen: That program is really a tool that's designed to help beginning farmers compete for cash rents and for rented land around the state. It offers land owners who rent their farm to beginning farmers a tax credit on their income taxes. And so right now the program is really, what I would call, in a crisis mode. Really no new credits issued for 2018 and a very limited number of available for 2019. So, without any changes in the legislature, we're just looking at a program that's not working for beginning farmers. It's come about because of some changes in the legislative cap and some of the administrative choices being made, but the good news is that it can all be repaired and taken care of and so we'll be working on a bill to do that. This year.

Dirk Steimel: Farm Bureau has long focused on protecting property taxpayers in Iowa. In the upcoming session, how will Farm Bureau members work to continue that effort?

Don Petersen: Well, property taxes are always high on our list and, you know, funding people related services with property just isn't a sustainable method of funding. And so for a long time and probably forever, we're going to be focused on property taxes and how to keep those reasonable for farmers and other property owners in the state. So, this year, like always, you know, the homestead, ag land and family farm tax credits need to be funded. We've got a program that started six years ago that's provided over $50 million in property tax relief related to school aid. Mental health funding. We're one of only a couple of states that fund their mental health programs and important programs with really a bad choice of funding mechanism and that's probably going to get discussion again this year. And then on a proactive note, the sales tax for school infrastructure is nearing it's sunset. And so, that's been a key property tax replacement feature for a long time. It needs to be renewed. We need to make a few adjustments to that same formula. But clearly that's another focus for us on property taxes this year.

Dirk Steimel: Farm Bureau will be working during the session to emphasize the need to maintain and invest in our existing parks and conservation areas instead of spending state funds to acquire more land. Why is this issue important for Farm Bureau members?

Don Petersen: You know, I think farmers have taken a common sense view of this just like most Iowans. We've got some great state parks but clearly struggling to keep them refreshed and renewed and keep facilities up to date. There's always a shortage of funds to do that and despite the fact that the state's been spending between $5 and $8, million dollars annually to purchase more undeveloped land for state use. And so instead of focusing on expanding and leaving our current parks in disrepair, we think it's time to take a renewed focus on commit those resources to building our parks up to be the best and useful parks that we can make them. Use that money to reinvest in those areas and kind of put a pause on acquiring new, undeveloped land. That takes land out of production every time the states acquired, you know, between 3 and 5,000 acres a year for some time now. And so, you know, we keep that land in private hands, do better by our state parks we have today. And kind of a win-win for everyone.

Dirk Steimel: As part of the Income Tax Reform Package passed in 2018, the state will continue to allow capital gains deductions for the sale of farmland after certain triggers are met in the year 2023. However, the law, if triggered, would not allow the deduction when selling to anyone who is not a relative and would require the seller to have been materially participating on the farm for 10 years prior to the sale. Why do farm members believe it's important to change that portion of the tax reform law?

Don Petersen: Well, tax policies always complicated, but one thing farmers understand is that tax policies do influence sales decision. So when someone gets ready to sell a farm, you know, the last thing you need in today's farming industry is a new tax or a tax on the sale of that capital, that land capital, that we need for new farmers, beginning farmers, expansions of other farms. You know, having land on the market is a good thing. And so during last year's sweeping income tax reform that was done, some changes were made to the exclusion that farmers currently enjoy from the sale of land to either close family members or even to neighboring farmers who they want to sell their farm to. So again, there's a lot of complication there, but the key point and the key focus here is to restore that tax treatment so that we don't keep land bottled up and not on the market. It's a change that doesn't affect anyone today, but there's no need to wait to get it repaired. Some inadvertent changes were made and I think we've got a chance to restore that benefit, that we'll keep land available for new or expanded farmers to acquire land without a tax penalty.

Dirk Steimel: Don, any other key issues that Farm Bureau will be focusing on during the 2019 session?

Don Petersen: You know there's always a lot going on in the Capitol that affects farmers in rural Iowa and any of those topics that affect our rural communities, our farmers, are gonna need our attention. And so, you know, things like regulation or tax changes, supporting our land grant universities and their programs or department of agriculture and conservation funding. All of those are areas of focus for us and more so, you know, anytime the Capitol is in business, anytime there are legislators in town, we're going to be there watching out for the interests of farmers in our rural communities.

Laurie Johns: Well in the world of politics, especially this year, you know how anything can happen. So it is nice to know that those folks are down there everyday, plucking away. Way to go guys. Farm Bureau is an advocate for farmers. We're grassroots, which means you, our members, set the priorities and we work on those issues at the local, state and national levels. We also keep our finger on the pulse of emerging trends that have potential to impact your farming operation. Last month during Iowa Farm Bureau's Annual Meeting, we invited the CEOs of Fareway Grocery Stores and the Iowa Restaurant Association to speak with our members about the latest trends they're seeing at grocery store meat counters and at restaurants all around the state. I had a chance to speak with Fareway CEO Reynolds Cramer about the hot protein trends. Here's what he had to say. I'm here with Reynolds Cramer, who is the CEO of Fareway. And, big hit, a lot of questions at our meet panel and a lot of folks in the room, of course, livestock farmers and they had a lot of questions for you. Tell me a little bit about it because they specifically want to know about trends.

Reynolds Cramer: Oh, for sure. I was first off, pleased that I was asked because not a lot of opportunities I get to talk with the producers and the farmers themselves directly. So it was a neat experience for me. I think overall, everyone's kind of looking at the same thing. They're saying to themselves, how do we continue to produce great products and get them to the consumer. And obviously we're kind of the middleman in that in finishing that off. But I think, yeah, we had some great conversations about what types of products that are working the best. The portion sizes. We talked about some of the new trends from the standpoint of recipes and what some of the younger millennials and Generation Z are trying to learn how to cook and do some of the things. So, without a doubt it was a great conversation today.

Laurie Johns: It certainly was and one of the questions that came up too had to do with about the different types of practices. And of course at Farm Bureau as a general farm organization, we have poultry, we have pork, we have beef, we have fish, we have just about everything, but in certain practices of course will cost more. But when at one point you were pushed to go all cage free, can you tell us a little bit more about that? For the folks who weren't sitting in the room at the time?

Reynolds Cramer: Right. Well obviously in the grocery business, there's opportunities for those strange groups that are out there that are supposedly doing things for the right reasons and yet we know aren't the right reasons for the growers, the farmers, etc. And so when we were faced with the opportunity to continue to sell eggs, like we've always done, and or say that in 2023 we're only going to sell cage free. We knew right away that this was just the start of something. So obviously our answer was no. Of course, you know, when you deal with groups that are going to pick at you or create a lot of problems, you know, that's a lot of pressure. And so that's why a lot of people cave for those things. But at Fareway we knew that if we decided to say, okay, we'll do it your way, then the next thing is we can't sell beef. We can't sell pork. Because we know what overall certain groups out there really trying to get at, and that is the route is they don't want animals to be produced and eaten by the consumer today. And that goes against everything that we stand for. And obviously it goes against why all the great farmers and producers are out there working hard every day.

Laurie Johns: I know you travel the country and you connect with so many folks within the industry, and you know, Kroger's or some of the others, you know, and oh, they cave, they cave, but you know, you are Iowa and you will be here. That was an interesting thing too when you were talking about that because you are the future and it's here in Iowa.

Reynolds Cramer: Yeah, without a doubt. I mean we started in Iowa. We're 80 years old as a company. We're in five states now and we continue to grow. And not just in the surrounding states, but there's still opportunities in Iowa and that means that we're going to have to continue to partner with the great farmers and producers here in Iowa, in the Midwest. And that means that, you know, without a doubt, we have to continue to sell great products and make sure that the standards that we set are there for our customer and we believe that we've got great people to work with, with the farmers and producers who believe in those same standards

Laurie Johns: And they'll even see those farmers on your trucks. Reynolds Cramer: I'll tell you what, it's been really fun. I think I mentioned earlier that, you know, we could put an employee on our truck anytime. That's simple. But actually it's much more fun to have, you know, like Dan, our farmer, who's famous now, on our truck and continue to do that. And that's why it's so great to work with the beef producers, the pork producers, on and on. The great people in this state that, you know, this is how Iowa was started, you know, it was started with great farmers working the land and producing great animals. Laurie Johns: What advice would you have for Iowa's livestock farmers who might be going, listen, I want to make sure I'm raising animals and something that's going to be a trend that you guys will be looking for down the road two years, five years.

Reynolds Cramer: I think communication is the biggest thing. And if the producers continue to communicate with us and the people in our industry and we communicate with them what we're seeing from the customer's standpoint, that's where it's going to work. We don't want to get either side out of bounds. And so I had a farmer come up in Marshalltown, he said, hey, could you come visit what we do and I'm going to do it. I'm going to set one up here in the next week or two. I think that's really important. It's not that we're such a big company that we don't know who these individuals are. I enjoy visiting the farms. I enjoy visiting the plants and just seeing what's going on. Laurie Johns: I need to ask if you're a good cook because I understand you even showed up with the cut of meat one time for someone who said, yeah, I don't know. They were a critic and you weren't sure. And you showed up. And I'm like, do you cook it too?

Reynolds Cramer: I'll tell you what, I grew up cooking and to be honest with you, what was interesting when I was in college in Decorah, at Luther, I worked three years in the meat department and I actually learned more how to cook then because I was forced to communicate with the customer over the counter, and when the customer said, okay, so what do I do with this chuck roast or what do I do with the crockpot roast or this pork loin roast. I had to know, hey, you know, it's 45 minutes, 375 degrees, here's how you're going to want to do this. And so in doing so, it really taught me and it got me excited about it. So that's one of the things that we work with our butchers today, from the standpoint of they talk to every customer and they help teach them if they need some help and how to cook things.

Laurie Johns: They probably do because they come in and they go, listen, it's just me and my wife. Or maybe it's, I've got three kids. I need something. How do I fix this? And how long would it last me? I mean, they're starting from scratch.

Reynolds Cramer: For sure. And I think my wife, Sheila, would say that she's a pretty good cook too. And she's taught me. So I can't take all the credit. But, you know, that's actually something that's really fun to do at home, is to cook, and to try things. And I think today, be it online, be it on the internet, Youtube, the cooking channels or at Fareway.com, we've got recipes. Trying something. I think that's the hardest thing for a consumer today is, I don't know if I want to spend money on this roast or this item because I'm not sure exactly how to cook it. Take a chance because, you know what it's going to turn out okay. And you might have some really fun in the kitchen doing so.

Laurie Johns: And it's affordable.

Reynolds Cramer: It is affordable. And here's a fact. I'm going to tell you, it's a fact. I talk to people all the time about eating healthy. And so, yeah, maybe you shouldn't eat a 16 ounce ribeye. Maybe you shouldn't, maybe you need to have a 10 ounce, maybe that's a little more healthy. A portion control. And have some great broccoli with it and things like that. But here's the deal. You can go into the grocery store, into Fareway and you can buy healthy products, both proteins and nonproteins. And guess what, it doesn't cost that much more. I think there's a crazy thought out there that if you're going to eat healthy, it's going to cost way more. That's not the case at all. And think about healthy. The beef, the pork, the chicken that we sell every day. That's healthy stuff.

Laurie Johns: It is. And so, you know, there are price points. We always say whatever you want it, farmers will grow it. So if it's organic or whatever it is, hey, you'll pay more for it. But it's out there.

Reynolds Cramer: Yeah. The options are unlimited today and you know, even from the organic standpoint, those prices are coming down because they're realizing that average consumer isn't going to pay $2 more for certain things. So I think once again, everything's relative when it comes to pricing, but the quality is what's really important and in the Midwest and in Iowa, especially with the growers and producers, qualities there.

Laurie Johns: Yes and quality. Our Iowa farmers certainly know that. Hard working bunch. By the way, thanks for all the work you guys are doing out there. Now, you know, joining Reynolds Cramer onstage at Iowa Farm Bureau's Annual Meeting was Jessica Dunker, CEO of the Iowa Restaurant Association. When I spoke with Jessica, I was really struck by her honesty, her sense of humor, her straightforwardness. I think she made a lot of fans there. Oh, you're going to see what I mean. Let's listen into that conversation. So much great information presented, and farmers had tons of questions and I'm not surprised. Setting the world on fire, definitely, with your presentation, Jessica Dunker, who is the CEO with the Iowa Restaurant Association. A lot of information out there and where do they start? Because you know, like you said, for the folks who like to go out, there are so many choices today.

Jessica Dunker: Yeah, there are a lot of choices. There are about 6,100 restaurants in the state of Iowa and we really like to encourage people to go to every restaurant of course, but in particular to those independent restaurants that are owned by our friends and neighbors in our communities. They need our support and we know that the farm community understands that and, and with them in particular, where goes the farm economy is where their business goes. And so we really need to support each other as part of this symbiotic food chai.

Laurie Johns: What is the biggest obstacle or hurdle or challenge for the Iowa restaurants?

Jessica Dunker: Well, right now, quite honestly, it's workforce. 39 percent of Iowa restaurants would tell you that they're most imperative need is workers. We quite frankly can't find people, and we are expecting a net 1,000 jobs increase every single year for the next 10 years. And so when you are looking for workforce, we know we have to pay competitive wages, we're paying more competitive wages, but we need people. And so I think that that is the thing that anyone would point to.

Laurie Johns: What did you see as some emerging trends? You had a lot of information out there, but what are some top two or three things that people need to know, especially our livestock farmers maybe who were sitting in on that panel.

Jessica Dunker: Everyone loves local. And that's true for produce, that's true for meat and I think that that is something that can be capitalized on in our smaller communities and in our larger communities. If those independent restaurants are using their value proposition to be something that's locally sourced or featuring local products, make those relationships. Go out there and talk to the person who is creating these interesting menus. We're really seeing an interest in food and an interest in food experience. And local is part of that food experience. We always point to the statistic that more than 60 percent of consumers want an experience rather than a thing and that's a place that we can all work together to create that for the consumer.

Laurie Johns: Something that we've studied in our Food and Farm Index about how Iowans are turned off and they think that meat should be meat, and fake meat or lab grown products shouldn't be labeled meat, the overwhelming majority. So what is your thought on that?

Jessica Dunker: So, you know, words matter. And I think a lot of the definitions of things that we look at in the food industry, are marketing and marketing hype. And in the restaurant industry, we don't see a huge call for us to start offering things that aren't real food. In fact, back that up a little bit and what people really do want is to understand where their food comes from. And so, you know, we're going to continue to sell things that people like and people want that allow us to make money. Fake meat isn't on the list.

Laurie Johns:Shocking. So when you, it was interesting too, when you're talking about themes or types of offerings, what used to be considered cultural food or something versus today.

Jessica Dunker: Right, so ethnic food just continues to gain in popularity. And I laugh because when I was growing up, Chinese and Italian and Mexican food, that was ethnic food. Today for the millennials, that's just food. They are much more likely to have eaten takeout Chinese than they are have a meatloaf. And so one of the things that we're seeing really emerge on menus are comfort foods. And think about how a nose to tail type of approach on using our proteins and using the animals can really leverage that. All of a sudden we're seeing pot roast on the menu. We're seeing things like flank steak really used on the menu. And we liked that, we like to see that's a sustainable approach. That's an approach that really pays homage to the food of the past and it's introducing some of these kids to things they probably ought to try.

Laurie Johns: Right? And some of these trends you talked about the takeout versus eat in versus, you know.

Jessica Dunker: Well the face of our industry is changing greatly as are competitors. 20 years ago we're not competing with convenience stores for restaurant food and today some of the, for example, Casey's pizza based right here in Iowa, that is the largest pizza company in the United States. And so, you know, those are the things that we have to think about differently. 63 percent of restaurant food is eaten somewhere other than in the restaurant. Whether it's delivery, drive-through or carry out. And so that means that we have to think about food quality and what we're offering in totally different ways.

Laurie Johns:Well, I think you got some applause in the room when you said, hey, regulations are a big problem for restaurants. Livestock farmers are saying, yeah, hello, like that.

Jessica Dunker: Well, you know, we try to, we are obviously a purple industry. But we have looked with much favor on the move at the federal level in particular to reduce regulation. We knew that when the Trump Administration came in, they had made a pledge that for every regulation they were suggesting they wanted to have two repealed. And that has really been a tenfold instead, that it's for every regulation they've offered that more than 20 have been taken back. We've felt that in our industry and that's been very helpful to us on many, many fronts. Whether it's related to labor, whether it's related to even on menu labeling, helping us get a little bit of relief there. So, we've appreciated that greatly.

Laurie Johns: Speaking of menu labeling, are the calorie counts going to go back on all those menus?

Jessica Dunker:Well, you know, our industry was collaborative in some of these things and part of that was we wanted to prevent the small independent restaurateur from having to do menu labeling that showed every calorie, every carbohydrate, every fat count, every sodium count because that would limit creativity so much and if you were having a chef's special of the day, how do you possibly do that? And so the industry has been supportive of the regulation which says that if you have 20 or more establishments that have the same or similar menu that you have to go ahead and do this menu labeling. I don't see that changing anytime soon, we're having enough trouble role in some of those things out.

Laurie Johns: Any advice for farmers who are listening to us right now, in their tractor or they're in the their feed lot. You know, going, okay, how do I connect to these restaurants? Or what advice would you have for them as a final thought?

Jessica Dunker: Well, a couple of things. One is we, we work with our food purveyors and so if you're having a great relationship already, I would continue to have that great relationship. But if you're really looking to get your products into boutique type situations, approach the restaurateur. Approach, the chef. There are many chefs that are doing these chef driven concepts that are looking for locally grown and sourced product and that relationship is very valuable to them as well. You might be surprised that you would very quickly get a seat at the table with one of the owners of a great local independent establishment.

Laurie Johns: And by the way, I want to sit at that table, give me bacon and steak, right? That's great stuff. What wonderful news to hear. Isn't that great to hear that they're on our side? That's great. They're bullish on the future of real meat and real farmers produced right here in Iowa. All good news. Well, that does it for this episode of The Spokesman Speaks. We hope that you'll join us for the next episode of our podcast on January 28th. Until then, thanks for reading The Spokesman. Thanks for all the great stories and inspiration and thanks for listening to The Spokesman Speaks. I'm Laurie Johns.

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.