Agriculture, the Environment and Special Interests: Operating in a New Era of Regulation

Transcription

1 Agriculture, the Environment and Special Interests: Operating in a New Era of Regulation A Special Multi-Client Study July 2011 Informa Economics, Inc., is pleased to announce an important new multi-client study on a series of issues of unparalleled concern. Agriculture, the Environment and Special Interests: Operating in a New Era of Regulation will examine the regulatory pressures that are mounting throughout the food system, along with their implications for costs, competitiveness, and markets. Introduction The US food and agriculture system is among the most productive and dynamic in the world, built and strengthened by its ability to respond rapidly to changing markets, and to economic threats as they emerge. This capacity reflects the system s capacity to use new technologies from public and private sources and take advantage of growing economies of scale along with increasingly efficient farming methods. Increasingly, however, market signals are being obscured by pressures from other sources from pervasive new governmental regulations as well as social pressures from environmental groups, food safety advocates, populist agrarian groups and others aiming to curb perceived abuses. There is considerable concern in the farm community regarding recent court and Environmental Protection Agency (EPA) actions that could negatively affect U.S. farmers competitiveness, hinder their ability to produce food by increasing their costs, overburden them with regulations and increase their liability. The breadth of new and proposed regulations that impact agriculture is unprecedented and promises to have a profound effect on the structure and competitiveness of the industry. In addition to the new rules imposed by new laws, the industry is increasingly responding directly to activist threats with self-imposed regulations that go far beyond existing legislation, trends that seem likely to accelerate as they reflect a growing public awareness of environmental issues, often fueled by media reports touting the latest perceived risks of particular behaviors or environmental trends.

2 The main goal of these efforts is to reduce the impact of human activities on natural ecosystems by restricting some practices and promoting others. Still, when applied to agricultural systems, these efforts necessarily restrict a number of traditional activities and practices widely used to produce crops and livestock. Sometimes the result is higher production costs or reduced output, but almost always there are impacts on agricultural input use and/or the types of products and services required by farmers. These impacts are not entirely detrimental to the sector, of course. While the market for some inputs such as fertilizers and pesticides is likely reduced when farmers are forced to comply with rules to reduce agricultural runoff, for example, opportunities for input suppliers can emerge or grow in areas such as nutrient management planning services, precision application, and even sales of livestock fencing or erosion control devices. The growing awareness by firms of the power of consumer perceptions also has caused many firms to change their practices even without suggestion by government entities. Firms attempting to promote themselves as environmentally friendly have developed profitable niche markets in areas such as organic farming and various green industries. As consumer incomes increase, willingness to pay more for products that they believe are produced using environmentally friendly methods increase as well. Some of the most important areas of regulatory focus on agriculture are identified below. The ones that are most diligently applied today focus on improving water quality by reducing agricultural runoff, but there are many others. These issues continue to gain momentum, fueled by the media, activist groups and lawmakers and are changing fundamentally the nature of agricultural production systems as substantial costs are imposed on individual firms. It will be fundamentally important to the agriculture and food industry to understand and evaluate these challenges and their likely direction for the future. Questions of Critical Concern What are the key regulations in place now that affect agriculture and farming? What new regulations are being proposed, and what is the likelihood of their implementation? What common factors are driving trends toward greater regulation, and where might they lead? Who will be affected? Where? What will be the impact on production costs if current practices and/or technologies are affected as current trends indicate might be the case? Who will bear these costs? Producers, input suppliers, the taxpayers, consumers? What are cost implications for key regulations? Could more stringent regulation affect our competitive standing in world markets? If so, how? 2

3 Will regulatory pressures push some firms or industries such as livestock or meatpacking off shore? What will be the role of supplier restrictions to promote certain environmental or social causes (eco-friendly production, animal welfare, and organics) versus government-imposed restrictions? What business opportunities might arise for firms operating in this environment? Will regulatory compliance be easier for larger firms with greater resources or will niche markets develop that small firms can successfully exploit? I. Background and Drivers of Change Preliminary Study Outline This section describes the need for this study; the historic context of agricultural regulation, and characterize and describe new developments throughout the food system that are leading to more regulation and tighter restrictions. It includes an extensive review of current regulatory developments throughout the system, including pressures from government agencies and the consumer. II. Regulatory Landscape This section reviews key existing and proposed laws and regulations and describes and evaluates their impacts on the sector. Just a few of the regulatory forces taking shape are: Proposed rules on livestock marketing by the U.S. Department of Agriculture (USDA); Clean Water regulations from Environmental Protection Agency and States especially concerning livestock feeding, crop and livestock land use regulations and many others including, potentially new, severe rules on watercourse and stream pollution levels such as those being proposed under the Chesapeake Bay Compact that could be applied in other areas and limit a broad range of farming practices; Clean Air regulations from federal and state agencies; Federal rules being proposed concerning greenhouse gas emissions regulations; New rules on livestock antibiotic use, and proposals concerning further limits on nontherapeutic antibiotic use by livestock; Animal welfare activist groups across the spectrum forcing change on industries and firms under the threat of boycotts, media campaigns, and legal action; and Efforts by activists to delay and prevent approval of genetically-modified crops such as wheat and sugar beets among others. These issues continue to gain momentum, fueled by the media, activist groups and lawmakers and are changing fundamentally the nature of agricultural production systems as substantial costs are imposed on individual firms. 3

4 III. Focus on New Regulations from Government Agencies This section describes the important recent regulatory changes affecting agriculture, including those that are imminent. Which agencies are involved, what parties and legislators support them? What are their duties; from where will most of the changes come? And, what is the impact along the supply chain? A. Livestock Sector Regulations: Confined Animal Feeding Operations Manure storage and disposal USDA s proposed marketing rules Humane treatment Feed and supplement regulation Others B. Crops Sector Regulations Nitrogen runoff/groundwater protection Spray drift, record keeping Pesticide tolerance Water usage changes Others C. Other Regulations Impact of the Commodity Futures Trading Commission s implementation of the swaps and derivatives title of the Dodd-Frank financial services bill on farmers, co-ops, agribusinesses and other entities. Others IV. Forcing Change through the Market: Pressures from the Private Sector and Activist Groups This section examines the growing influence of interest groups promoting their agenda through boycotts, media campaigns, and threats; and discusses current industry responses to this pressure. This section will include: Review of voluntary industry guidelines and supplier restrictions covering such issues as animal welfare, environmental protection, biotechnology, and other special interests. Which firms are most vulnerable to pressure? How are guidelines developed, are they enforceable, feasible? Will public pressures continue to grow? Which issues/groups could gain influence in the future? Profile of the most influential consumer/activist groups; what marketing strategies they use to influence public perception or policy makers? What third parties support these groups? Ideas/recommendations on actions or strategies that can limit the negative impact that these organization may have on agriculture and food. 4

5 V. Environmental and Conservation Incentive Programs This section reviews current and pending incentive-based agricultural conservation programs, such as the Environmental Quality Incentives Program, Conservation Reserve Program and others. It will report on levels of funding and the likely impact such programs will have on the land base, tillage practices, and the need for various inputs and services. VI. Implications for the Food and Agriculture Sector This section provides an economic analysis of the current regulatory pressures, both from government agencies and consumer/activist groups and answers the following questions. Which sectors are feeling the greatest pressures? What are the likely costs, efficiency implications? How might demand for services, inputs change? What new service/product opportunities might arise? Are there implications for industry consolidation? Profitability? How local, regional, or national crop or livestock production competitiveness may change? What actions/strategies can the food and agriculture industry take to prevent future regulations or affect potentially damaging legislation? VII. Findings and Conclusions/Strategic Considerations This section will draw together the foregoing analysis and principal findings and suggest how the food system will evolve in light of ongoing regulatory pressures. Based on the project findings, and the input from participants, a set of recommendations and strategies will be drawn. Study Products The project will involve several specific products for participating clients, including: Pre-Study Web-Based Seminar and Conference. A virtual meeting of participating clients and Informa staff will be held to review the detailed plans for the study and to identify particular areas and issues that clients want to receive special attention. This seminar will address the major study topics, provide a presentation on each to update clients on current developments, and enable specific client comments and interests relating to each to be noted. 5

6 Comprehensive Study Report and Presentation Materials All participating clients will receive, Agriculture, the Environment, and Special Interests: Operating in a New Era of Regulation the fully documented study report containing all description, background statistics, analysis and evaluations, empirical projections and supporting detail developed during the study. Clients also will receive copies of all PowerPoint presentations used in reporting study results. (All materials will be available electronically.) Post-Study Web-Based Seminar. A concluding highly detailed seminar will be held for all clients as a group to participate with study staff and consultants in fully reviewing the findings and implications. Final Report Presentation at Clients' Offices. Informa staff will travel to client s office to present the final report and conduct in-house seminars, upon request. Each seminar will be tailored to each client s individual needs and interests. Presentations will be made for only out-of-pocket expenses. Project Schedule (Dates are preliminary and will be finalized based on timing of sign-ups) August 2011 November 2011 December 2011 January March 2012 Pre-study conference and study begins Study completed final report sent to clients Client seminar to review report Individual presentations at client offices Study Staff and Review Team Informa has assembled a special team of highly qualified individuals to conduct this evaluation. The project leader will be Juan Sacoto, Senior Vice President and Head of Informa s Consulting practice. He will be supported by a uniquely well-qualified team of experts including Mr. Joe Somers, Senior Consultant; Dr. William Motes, Informa s Chief Economist; James Kielkopf, Vice President; and Mr. Tom Scott, Informa s President. Dr. Bruce A. Scherr, Chairman of the Board and Chief Executive Officer will serve as overall project reviewer. Informa will draw on its full team of professionals as required to accomplish this project. Individual biographies for each team member follow: Bruce A. Scherr, Chairman of the Board and Chief Executive Officer: Dr. Scherr has been with Informa Economics, Inc. (formerly Sparks Companies, Inc.) since 1987 in several executive capacities including President and CEO. In addition, he is an Advisor for Metalmark Capital LLC, a private equity fund. Formerly he was president of Sparks, Jacobs, Scherr, Inc. (SJS), a sister company to Sparks, and president of Agri- Commodities, Inc., an agriculture consulting firm based in Andover, Massachusetts, which was acquired by SJS. Prior to forming Agri-Commodities, Dr. Scherr was a divisional vice president at Data Resources, Inc., where he developed and utilized for the 6

7 public and private sectors the first commercially available econometric model for US agriculture. Dr. Scherr received his bachelor's degree from Rutgers University and his master's and doctorate degrees from Purdue University, all in agricultural economics. Currently, he is a member of the Board of Trustees of the North American Electric Reliability Corporation, E. Ritter & Company, and he serves as a member of the Global Strategy Institute Advisory Council of the Center for Strategic and International Studies. He served as a member of the Board of Directors for Desert STAR Inc., an electrical transmission Independent System Operator for the Desert Southwest from January 2000 through February In addition, Dr. Scherr has served as a member of The University of Tennessee s (UT) Institute of Agriculture Agricultural Development Board and UT s Committee for the Future. He was named a 2007 Distinguished Agriculture Alumni from Purdue University and he is a member of several honorary research and agricultural societies, a member of the National FFA Foundation Sponsors Board 2000 through 2001 and a former advisor to the President's Council of Economic Advisers and National Aeronautics and Space Administration. Thomas P. Scott, President and Chief Operating Officer: Mr. Scott has been with Informa since 1989 with the majority of that time being the head of the Informa Economics Project Consulting Group. Mr. Scott's specialized work has included business strategy, agribusiness economic development, feasibility and site selection work, as well as various market analyses. In addition to his work in North America, Mr. Scott has extensive experience in the agribusiness sectors of Central Europe, Southeast Asia and South America. He has been involved in many training programs developed and delivered by Informa Economics. Prior to joining the company, he had various assignments in management, trading, logistics and merchandising with Continental Grain Company. He received his bachelor's degree in agricultural economics and business from Cornell University and a master's degree in business administration from the Amos Tuck School of Business Administration at Dartmouth College where he was an Amos Tuck Scholar. Juan Sacoto, Senior Vice President: With Informa Economics since 1997, Mr. Sacoto is the leader of Informa's Project Consulting Group with his primary responsibility including research and analyses for international and domestic consulting clients. His work often involves market assessment, financial and competitive analyses, economic modeling, business strategy, international economic development, economic impact, risk management, and acquisition/investment due-diligence studies. Mr. Sacoto has extensive knowledge and experience analyzing most agricultural, food and related markets, including grains and oilseeds, feed ingredients, livestock and meat, vegetable oils, fisheries, fertilizers, fruits and vegetables, grain storage, and farm equipment as well as the renewable fuels industry, particularly biodiesel. He also has extensive practical experience evaluating agribusiness and renewable fuel projects across several regions, including Latin America, Europe and Africa. He is fluent in Spanish and has broad crosscultural training. Prior to joining the company, he worked as a financial and equity analyst. He received his bachelor's degree in finance from Jacksonville State University and his master's in international business administration from The University of Memphis. 7

8 Joseph F. Somers, Senior Consultant: Mr. Somers is responsible for economic analyses and agricultural policy consultant of Informa s Project Consulting Group. He works at the Informa Economics Washington, D.C., office. He came to the company with 27+ years experience with USDA s Foreign Agricultural Service as a foreign service officer and as a private sector consultant. While at FAS, he served in Brazil and Argentina and extensively traveled on FAS overseas fact-finding trips. In Washington, D.C., he supervised and conducted world supply/demand and trade policy analyses for a wide range of commodities and managed publication of several analytic circulars. Most recently, he was director of research and marketing for the GIC Group, Alexandria, Virginia, where he was responsible for business development and economic and market analyses. He received his bachelor s degree in political science from Northeastern University, Boston, and master s in agricultural economics from the University of Massachusetts, Amherst. James J. Kielkopf, Vice President: Based in Informa s Eagan, Minnesota, office, Mr. Kielkopf has responsibilities for research, client services, and consulting within Informa Economics Project Consulting Group. With a background in banking, policy studies, and tropical agriculture, Mr. Kielkopf also provides expert support for projects involving agribusiness finance, policy analysis, land values, and tropical agriculture. He came to Informa from the US Farm Credit System (FCS) where he served as the principal economist for AgriBank FCB, the largest of the FCS s five wholesale banks, encompassing the 15-state region of the American Midwest and about 55 percent of America s cropland. Before joining AgriBank, Mr. Kielkopf had 15 years of experience in finance and banking, including credit risk management and credit score modeling. He is fluent in Spanish and has lived and worked extensively in Latin America, establishing rural credit cooperatives and other international aid and development work. He also plants cocoa, rice, and soybeans on his farm in Ecuador, South America. He graduated from The Johns Hopkins University with a bachelor s degree in economics and earned his master s degree in applied and agricultural economics from the University of Minnesota. He is currently finishing his doctorate degree in New York City at the New School s Milano School of Management and Public Policy, where he also teaches a course on the US farm bill process. Mr. Kielkopf is a member of the Agricultural Advisory Council of the Federal Reserve Bank of Minneapolis and the National Agricultural Credit Committee of the Federal Reserve Bank of Kansas City. William C. Motes, Chief Economist: Dr. Motes works out of the Informa Economics Washington, D.C., office, as chief economist, working with Informa's Office of the Chairman, with his primary responsibilities including client consulting for international commercial clients and development projects. Formerly, he was a principal member of Economic Perspectives, Inc. and served as director of policy analysis for the Secretary of Agriculture ( ). Dr. Motes was associate director of USDA's Budget and Program Evaluation Office and also was legislative assistant for agriculture for US Senator Dick Clark. He holds degrees in agricultural economics from Kansas State University and received his doctorate in agricultural economics from Iowa State University. 8

9 Callie P. McAdams, Consultant: Ms. McAdams is a consultant within Informa Economics Project Consulting Group. She works at the company s Washington, D.C., office. Her responsibilities include assessing agricultural policy as it relates to US producers, consumers, policymakers, and the food industry. She also performs research and analysis of diverse domestic and international agricultural matters. She has a background in a wide range of agricultural areas, including livestock, crops, and diversified agricultural production. Prior to joining Informa, she worked as a research assistant at Texas A&M University where she modeled the influence of health information on consumers willingness to pay for horticultural products. She also interned with the North Carolina Agricultural Extension Service, doing work on marketing and crop production. She received her bachelor s degree in agricultural business management and animal science from North Carolina State University and her master s degree from Texas A&M University in agricultural economics. Kirsten M. Rasmussen, Consultant: Ms. Rasmussen is a consultant within Informa Economics Project Consulting Group. She works at the company s Washington, D.C., office. Her responsibilities include performing research and analysis of diverse domestic and international agricultural matters. Within Informa Economics Project Consulting Group, she focuses on assessing agricultural policy as it relates to US producers, consumers, policymakers, and the food industry. Prior to joining Informa Economics, Ms. Rasmussen was a research and teaching assistant at the University of Illinois in the Department of Agricultural and Consumer Economics where she studied commodity markets and agricultural trade policy, and analyzed pork price integration among China s regional markets. She was also an intern at the US Department of Agriculture s Foreign Agricultural Service (FAS) in Beijing, China, where she contributed to FAS Global Agricultural Information Network (GAIN) publications on China s agricultural sector. Ms. Rasmussen received her bachelor s degree in French and philosophy with a minor in international studies from Illinois State University, Normal, Ill., and she obtained her master s degree in agricultural and applied economics from the University of Illinois, Urbana-Champaign, Ill. Study Fees The fees for participating in the study are $17,500 for Informa clients and $19,500 for non-clients. The fees include the pre-study web-based conference, the client group review seminar, and a presentation at client's offices by Informa staff. Cost of company representatives' travel to the conference and seminar, and expenses for Informa staff travel to companies' offices for the presentation are not included. 9

10 About Informa Economics Informa Economics, Inc. (Informa) is the world leader in broad-based domestic and international agricultural and commodity/product market research, analysis, evaluation and consulting. Informa serves hundreds of firms, institutions and trade organizations worldwide from our headquarters in Memphis, Tennessee. Informa also maintains offices in McLean VA, St Paul MN, Winnipeg MB (Canada), São Paulo (Informa Economics-FNP), London and Brussels (Agra CEAS) and Washington DC (WPA). Informa s broad categories of services include: Management Consulting for Agribusiness; Commodity Market Analysis and Evaluation (Agriculture and Energy); Risk Management Strategies; Education and Training; Newsletters and Other Publications; and Transportation, Industrials and Energy Market Analysis. The company s professional depth and experience allow us to provide a wide range of services related to the economic and management concerns of clients, as well as to focus on broader issues concerning markets, facilities, resources and many others. In addition, Informa Economics is a world leader in the collection, analysis, and dissemination of agriculture and food information. The Informa team has also has extensive experience in agricultural policy analysis, especially since many employees formerly held senior policy, analysis or advisory positions in government; worked for major trade associations; held positions in land grant universities; or held senior management positions in leading agribusiness companies; most hold advanced degrees in agricultural economics or related fields. (For more information on Informa Economics, its staff and the services it provides see About our Parent Company Our parent company, Informa plc, is the leading provider of specialist, high quality information to the global academic, scientific, professional, and commercial markets via publishing, events, consulting and training. Informa publishes approximately 2,500 subscription based products and services, has a book backlist of over 35,000 volumes, organizes some 10,000 events worldwide each year and has a database of approaching 22 million names. It has an unparalleled portfolio of brands including Lloyds List, Routledge, Taylor and Francis, IIR and Euroforum. Informa employs approximately 7,000 people operating out of 150 offices in 42 countries and doing business in 70. Informa is listed on the London Stock Exchange. 10

11 ENROLLMENT FORM Yes, I want to participate in the special multi-client study, entitled Agriculture, the Environment and Special Interests: Operating in a New Era of Regulation. The cost of the study for current Informa Economics clients is $17,500 and $19,500 for non-clients. One half will be billed upon initiation of the study and the remaining one half upon my receipt of the final written report. Return Form to Informa Economics, Inc. Via Fax to (901) or (703) Please have someone contact me to provide further information. Name: Signature: Title: Company: Street Address: City, State, ZIP: Telephone: Fax: Address: Please feel free to contact us with questions: Mr. Thomas P. Scott Joseph F. Somers President and Chief Operating Officer Senior Consultant Informa Economics, Inc. Informa Economics, Inc. 775 Ridge Lake Blvd., Suite Elm St., Suite 210 Memphis, TN McLean, VA Phone: Phone: Fax: Fax: tom.scott@informaecon.com joe.somers@informaecon.com