2013 Agricultural Policy Outlook Unpredictable

No matter where one sits in the world of agriculture, weather matters. While the past season’s drought is fresh in everyone’s minds, Mother Nature provided equally taxing incidences that placed agriculture in the opposite circumstance of floods with very much the same outcome. Whether it’s a drought or a flood, we are in the business of helping customers operate with maximum productivity. Much like the weather, the strength and direction of public policy is often unpredictable. Using this analogy, I characterize the 2013 policy outlook as cloudy with a strong chance of rain.

While the cloud of policy gridlock is very much in the news, inaction rarely extends to the activities of federal regulators and the outside stakeholders they impact where it seems to be raining much of the time. From the environment to fertilizer transportation and security, developments in Washington, DC, and in the states during the coming year are worthy of retailers’ attention.

All Shapes & Sizes

Policy developments come in many shapes and sizes, so it’s important to focus on more than government activity. Many times our challenges originate outside the government and instead come from environmental organizations and are concerned with the impact that we might have on the environment and particularly in their own community. Very often these groups’ legal or advocacy efforts engage the attention of policymakers who then step into action.

The push and pull between the industry’s stewardship of resources, policymakers and non-governmental organizations’ questions about the depth of our commitment — is the figurative umbrella under which all of our challenges sit. In many arenas, we are being evaluated not on practice but on performance. It’s really no different than how you evaluate any of your employees: It’s not what you say you want to do, but the manner in which you are carrying out the job and making a positive difference.

Water quality issues remain front and center for the retail community largely as a result of EPA’s ongoing action in watersheds and individual states. In this policy area, litigation is often a large part of the equation. Under a process that is called “sue and settle,” an environmental group will sue EPA, upon which time EPA will settle the suit which allows the agency to move forward with regulation which it does not have a Congressional mandate to enact.

At presstime, developments in Florida regarding EPA’s action to impose numeric nutrient criteria on agribusiness and others look to be moving in a positive direction, with EPA indicating that it plans to step back and allow the state to resume much of its role in regulating water quality. Make no mistake — regardless of who ultimately comes out on top in this battle, water quality will continue to be regulated. It is worth noting that the any net positive that results in Florida resulted from a strong legal and lobbying response to EPA from the fertilizer industry, farmers, municipalities, state and national politicians, and the business community.

Water Issues Heating Up

On a related issue, we anticipate that action will continue to heat up in March of 2013 in regards to the Mississippi-Atchafalaya River Basin (MARB) and the northern Gulf of Mexico. Gulf Restoration Network has filed a legal challenge of EPA’s denial of a petition to establish numeric nutrient criteria and a Total Maximum Daily Load to address excess nitrogen and phosphorus levels in the MARB and the northern Gulf of Mexico.

As was the case in Florida, it is reasonable to expect the EPA’s nutrient limits could be very stringent and in some cases impossible to meet. Furthermore, it would be enormously expensive to implement the limits, assuming they could even be met. Just for Florida freshwater systems, the cost was estimated at $298 million to $4.7 billion a year, increasing Floridians sewer utility bills by a range of $570 to $990 per year per household. Because most all states would like to maintain control over regulating their own waters, many states have directly stepped in as parties supporting our intervention in this litigation.

Remember what I said earlier about the necessity of “walking the walk.” Here is where your customers’ implementation of 4R nutrient stewardship (use of the right nutrient source at the right rate, time and place) can play a positive role in keeping nutrients out of the environment in the first place. If you don’t already have one in place, you should consider developing a plan for assisting your growers implement all four of the Rs. This step will not only have benefits for the environment and associated policy but will benefit your customers’ financial bottom line.

Quality is not the only water related challenge for the industry. Our attention is also on the river system and its ability to function for the transport of fertilizer during the spring season. As mentioned earlier, the impact of the drought of 2012 continues to be felt in agriculture, both in your customers’ fields and here in Washington, where there is much attention on the Mississippi River system and its critical role in transporting fertilizer products. Although the Corps of Engineers Annual Operating Plan for the Missouri River requires water releases from dams on the upper Missouri River be scaled back each year, we are asking for a Presidential disaster declaration for the Mississippi River to allow the Army Corps of Engineers to take emergency action that will keep the river open. Without such action, the fertilizer delivery system may be extremely challenged before and during the spring planting season. If you depend on the river, we encourage you to keep in touch with us regarding opportunities to weigh in with your elected officials now and in the future to let them know how important the river transit system is to your business.

Product Security

Moving beyond water issues, product security remains an issue of concern. Earlier this year, The Fertilizer Institute was contacted by the U.S. Department of Defense regarding the use of ammonium nitrate in improvised explosive devices that are being used against American servicemen in Afghanistan. While the fertilizer used in these explosive devices is not from American sources, ammonium nitrate is again in the public spotlight and has garnered the attention of reporters from large circulation publications such as the Washington Post. With this attention, it is incumbent upon retailers who handle ammonium nitrate to take every step possible to ensure that the product is secure and sold only to legitimate farmers.

While the implementation of an ammonium nitrate regulatory program is pending at the Department of Homeland Security (DHS) retailers shouldn’t wait for its implementation. The recommended steps from the industry’s “Be Aware for America” program apply as much today as it did more than 10 years ago when the initiative was launched. As a reminder those steps are: Know your customer, protect your product and make the right call to law enforcement if there is a theft of ammonium nitrate or if you notice other suspicious activity.

So there you have it, with the weather as an analogy, I have laid out the cloudy portion of the weather forecast for the policy year ahead. Unlike the weather, however, the prospects for staving off rain are partially in your hands.

As we start the New Year, I encourage you to remain aware of the policy challenges that our industry faces and to get proactively involved in your community, watershed and in the political system as an advocate for fertilizer retailers.

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