2021 March Roots by Iowa Corn

Roots IOWA CORN

A LOOK INSIDE: MARKET DEVELOPMENT

Corn Demand Around the World

RESEARCH

Iowa Corn Opportunities Providing Valuable Tools to Corn Farmers

EDUCATION

How Can You Reduce Nitrogen Loss?

ICPB SPECIAL EDITION March 2021

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LEGRAND ELABORATES ON CORN DEMAND AROUND THE WORLD

t Iowa Corn, we know trade matters, that is why the Iowa Corn Promotion Board (ICPB) invests checkoff dollars to partner with the U.S. Grains Council (USGC) to build demand for corn in all forms around the world. One in three U.S. farm acres are planted for export and 32% of U.S. gross farm income comes directly from those exports. By acting as a bridge between U.S. suppliers and international customers, USGC develops markets to enable trade for U.S. farmers in the global export market. Ryan LeGrand serves as the president and CEO of USGC, making his knowledge and involvement in the promotion of the global use of U.S. corn, ethanol and dried distiller’s grains invaluable. Iowa Corn leans on industry professionals and partners such as LeGrand to keep us informed on programs in over 50 countries. Below are questions answered by LeGrand gathered from Iowa farmers across the state about the 2021 year ahead. Can you expand on the strong corn exports the U.S. is seeing right now and where that corn is headed around the globe? U.S. corn exports are off to a great start in the 2020/2021 marketing year. Having China make large purchases of U.S. corn over the first five months of the marketing year has been a big boost to U.S. corn export sales and shipments and has us on pace to potentially break the previous annual record. We have seen strong sales and shipments to our expected big buyers of corn such as Mexico, Japan, Colombia and South Korea, as well as the markets in Central America, Guatemala, Costa Rica, Panama, Nicaragua and Honduras. This marketing year we have seen markets like Taiwan, Peru, Morocco, Algeria, Tunisia and Egypt buying U.S. corn, compared to last year when buying from these markets was down. While China makes all the headlines, we do have good steady corn export business to several other key markets. Is this the “new normal” for crop prices and is this trend here to stay? After going through global events like African Swine Fever (ASF) and COVID-19, events many refer to as “black swan” events, in addition to weather in major grain growing regions of the world having effects on global grain prices, it is difficult to say what is a “new normal.” COVID-19 has slowed down animal protein demand in some countries and in other countries we have seen shifts from poultry or pork meat to eggs as a lower cost protein source. These factors and many others influence global feed grain demand and

LeGrand, far left, stands with producers and a customer representative at a production facility. Trade missions that bring farmers to meet overseas customers are a key part of the Council’s work. 2 | Roots • 2021

thus prices back here in the U.S. At the same time, we see stable and even growing demand for animal protein — and thus feed grains to feed those animals — in other countries that haven’t been affected by COVID-19. Global feed production actual grew 1% in 2020. We feel strong global demand for feed grains and corn will continue into 2021, which would be a positive aspect on prices, but is one of several factors that affect grain prices here in the U.S. What’s our biggest hurdle to exporting grain to many countries? How can we overcome that? There is no one-sized-fits-all barrier to grain exports — overseas sales are more complex. For long-term success, we know we need strong trade policy to give us access to markets; robust market development in-country to help us prove to new customers that our products are the best and to show existing customers how to make the most of their purchases from the U.S.; strong defense of our products when we run into market barriers, as well as response mechanisms when there are problems contracting, shipping, etc.; and a strong domestic industry to continue to produce and ship high-quality grains, year in and out. Iowa Corn often gets questioned about sending farmers on trade missions or investing in staff and offices. Can you explain why these things are important? Customers want to see farmers and have direct access to ask questions. We believe it’s important for farmers to see their customers, but customers also want to see their producers. In some parts of the world and over time, with customers who have been customers for decades, this remains a critical part of doing business. Having staff on the ground ensures we respond to customer needs in a timely fashion. Being there offers unique information, even today in the virtual work world. Language skills, cultural skills and geographic proximity are all investments in offering what customers demand in terms of information, service and relationships. If pandemic restrictions have taught us anything, it’s the importance of in-person presence. We have been able to do a lot remotely and virtually. Yet, we have learned very viscerally that there is no substitute for being in person. When COVID-19 restrictions first hit, our teams on the ground around the world were our eyes and ears — for USGC, state corn organizations and farmers themselves. Over the past year, though we’ve done many virtual programs, we’ve also seen how important it is to be with our customers, and we look forward to returning to that soon. Is there a growing global demand for non-GMO corn? There is some demand globally for non-GM corn, but I don’t see it growing. At least not currently. There are some specific markets that request it for certain segments in their market like Japan or South Korea, and those markets, especially Japan, will contract with growers in the U.S. specifically. But we have seen that non-GM corn demand decrease or remain flat at best over the last 10 years. Other markets that want you to believe they use all non-GM corn, such as the EU, meet their demand with their own

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grain production, but also import large amounts of GM corn and GM oilseeds globally. The picture they paint is not equal to the reality of what is taking place. Other markets that put non-GM requirements on imports must juggle finding quantities they need at prices they are willing to pay, or source from origins that are non-GM on paper, but not in reality. That type of buying structure cannot last long term.

Brazil with RenovaBio, Canada with the Clean Fuel Standard and even the U.K. is updating their policy to double the allowance of ethanol to E10. Globally, we have a vehicle fleet that can reduce emissions today through greater ethanol use and expect countries to take advantage of those benefits of using ethanol. For fuel demand, globally it is not expected to recover until 2022 as it continues to be impacted by stay-at-home orders.

How will plant-based meat change the market? I think we are still too early into plant-based meat to know its impact globally on corn demand. While well-developed consumer markets like the U.S. and the EU could continue to grow, we don’t know if that translates into other developed consumer markets like Japan, South Korea and Taiwan with very different cultures and eating habits.

Aren’t ADM, Bunge, Cargill the winners of all the work USGC does, and do they care if the corn comes from the U.S. farmer? Multinational grain companies, both U.S. and foreign based, have played a part in U.S. and global grain export business in the past and will continue to play a part in the future. Their investments in infrastructure inland/upriver and at major export points in the U.S. play a vital role in exporting corn and all our feed grains to the global marketplace. Having them part of USGC’s membership and as part of the agribusiness/farmer partnership is fundamental to meet and grow global corn and feed grain demand and U.S. exports to meet that growing demand.

Is ethanol here to stay or is electric on the horizon for many? Ethanol is a readily available solution for countries to meet their environmental and climate goals. While electrification will add some pressure to demand for liquid fuels, countries are simultaneously developing policies that expand the use of ethanol.

HOW CAN YOU REDUCE NITROGEN LOSS?

mproving water quality is an important concern for Iowa’s corn farmers. The Iowa Nutrient Reduction Strategy (INRS) is a voluntary, science-based approach to reduce phosphorus and nitrogen losses. Excess nutrients can cause local water quality issues like algae blooms and contribute to the “dead zone” in the Gulf of Mexico. INRS’s goal is to reduce nutrient losses by 45%, which requires massive efforts across all land uses in the state of Iowa. Reducing nitrogen loss helps farmers retain this valuable nutrient for crop growth, essentially saving them the cost of paying for the product later. Farmers are encouraged to start small when adopting new conservation practices. But how do you know where to start?

Iowa Corn provides free nitrate test kits to help farmers test your tile outlets and identify “hot spots” to start your conservation efforts. Over 1,500 kits have been shared with farmers, landowners, students, watershed projects, ag retailers and others. Each kit contains 25 test strips, information on how to use the strips and conservation practices to reduce nitrogen losses. The strips can be used to measure the nitrate concentration of tile outlets, receiving streams and other waters so users can evaluate the losses, target conservation practice implementation and assess nitrate reductions after practices are put in place. For your free kit, contact Iowa Corn at 515-225-9242 or email bgleason@iowacorn.org. More information on farmer insights, conservation practices and partnerships is available at iowacorn.org/water. At the website, we encourage you to sign up for Iowa Corn’s Stewardship Advocate monthly email with the latest information on soil health, conservation practices and water quality.

For more information on farmer insights, conservation practices and partnerships visit iowacorn.org/water.

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IOWA CORN OPPORTUNITIES PROVIDING VALUABLE TOOLS TO CORN FARMERS

owa Corn’s mission is to create opportunities for long-term Iowa corn grower profitability. Part of this mission includes helping create and support agriculture companies that could provide valuable tools and resources to better help farmers achieve success and profitability within their operation. That is why the Iowa Corn Opportunities LLC (ICO) was created, with the belief that farmers benefit from a strong agriculture economy where farmers and rural communities gain increasing benefits and profits while investing in new value-added agriculture business opportunities. ICO seeks out investment opportunities and partners that will deliver positive outcomes to Iowa corn farmers Essentially ICO is a dedicated investment fund established by the Iowa Corn Growers Association (ICGA) and managed by a board of farmers and industry advisors. ICO networks with other established equity funds and sources of capital to jointly evaluate and invest in new agricultural business opportunities. The board also networks with companies and source of capital outside Iowa to encourage more investment in companies that matter to Iowa’s corn industry.

ICO serves as an incubator for ag-based start-ups and their opportunities for growth. — Mark Mueller, Iowa Corn Organization board member, ICGA director and farmer from Waverly, Iowa.

“Over time, we have seen these successful companies deliver benefits to farmers in the form of new markets, new technologies and new products. As an ICO director, I advocate for new ideas and ventures from the ag community that might not get a hearing in other business arenas. Not every investment is a homerun but, over the last decade, the ICO portfolio has easily been a winner for farmers,” said Mark Mueller, Iowa Corn Organization board member, ICGA director and farmer from Waverly, Iowa. Two recent investments include ICO’s support in companies such as Tractor Zoom and FarmlandFinder. Both investments highlight the opportunity to provide better price transparency to agricultural producers.

Tractor Zoom approached ICO in 2019 with a business plan and hopes of creating a better tool for farmers to understand the value of agricultural machinery in today’s changing market. Tractor Zoom set out to create a product and experience allowing farmers to track upcoming auctions, as well as track actual auction prices for equipment from those same auctions, all housed on a database available via subscription on the Iron Comps website. This platform has created a unique opportunity to understand agricultural equipment price data and to provide that data to farmers, equipment dealers and lenders to allow more transparency and better decision making. Founder Kyle McMahon said, “ICO aligns with Tractor Zoom's mission of improving used equipment price transparency. It is important for us to partner with people who also want farmers to succeed and increase longterm profitability. ICO achieves this with increased access to corn markets, and Tractor Zoom is helping farmers save money by making data-driven decisions when buying, selling, financing or insuring expensive farm machinery.” Another recent ICO investment is FarmlandFinder, an online marketplace for farmland. The Des Moines-based company is working to bring transparency and liquidity to the agricultural real estate market by providing a digital framework for farmland transactions to occur. FarmlandFinder has often been referred to as the Zillow for agricultural land. "We couldn't ask for a better partner and we’re proud to have association with Iowa Corn,” said Steven Brockshus, FarmlandFinder founder and fifth generation dairy farmer from North West Iowa. “Not only do they put the farmer first, but their values also help us keep the farmer's perspective in mind as we push the boundaries of the status quo. In agriculture, nothing truly industry changing has been done without putting the farmer at the center. We're grateful that Iowa Corn embodies this ethos and drives us to do the same.” Investments like Tractor Zoom and FarmlandFinder are hopefully providing new tools for Iowa corn farmers when making decisions that will impact their farm profitability. “ICO wants to bring the value to the corn farmer and explore new ideas and businesses that can do just that,” said Mueller.

For more information visit iowacorn.org/about/iowa-corn-opportunities.

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