Ep. 115 The Business of Soybeans with Kirk Merritt

Join host Libby Wixted for a compelling conversation with Kirk Merritt, Executive Director of the Ohio Soybean Association and Ohio Soybean Council, as he unpacks the critical issues shaping Ohio's soybean industry. With nearly 20 years of experience advocating for farmers, Kirk dives deep into the distinction between policy-driven advocacy and checkoff-funded research, explaining how these dual organizations work together to support Ohio's 20,000+ soybean farmers.

 

Transcription

Speaker 1 (00:08):Welcome to AgCredit Said It, your go-to podcast for insights on farm finance and maximizing your return on investment. Join us as we talk to industry leaders, financial experts, and area farmers, bringing you skillful advice and strategies to grow your farm's financial future. AgCredit Said It, where farm finance goes beyond the balance sheet.

Libby Wixtead (00:38):Welcome back to AgCredit Said It, where we take you beyond the balance sheet. I'm your host, Libby Wixted. Today, we're talking soybeans, policy, markets, and the future of agriculture in Ohio. I'm joined by Kirk Merritt, executive director of the Ohio Soybean Association and Ohio Soybean Council. Kirk, thanks so much for being here.

Kirk Merritt (00:58):My pleasure, Libby. Thanks for having me.

Libby Wixtead (01:00):Yeah, absolutely. Let's start off with you sharing a little bit about your career path and how your work has led you to serving Ohio soybean farmers.

Kirk Merritt (01:09):Yeah, so I have been with Ohio Soybean going on 20 years, and it's been a great place to be. I love working for the farmers. I love working with the farmers. I first joined our staff as a member of our team and was one of our staff members here. And then a couple years in, I had the opportunity to be promoted to executive director. So I've been executive director since 2009, going on 17 of those years. I really enjoy the work. I really appreciate the opportunity to work for farmers. I feel like the work has real meaning when you're benefiting folks who have such importance to our economy and to our society as farmers. In terms of career path, prior to coming here, I was engaged in international finance, international marketing, trade, worked in business, worked in banking for several years, worked in state government for several years.

(02:25):So trade promotion, export promotion, international finance, banking, business development, that sort of background before I came here. So it flowed real nicely. It was not specifically in ag, but it really flowed nicely into the work that we do here in terms of trying to develop and promote and advocate for farmers.

Libby Wixtead (02:51):Wow, you have a very diverse background. That is very neat to see that that led you to be working with the farmers, the soybean farmers. For somebody who is listening that may not be familiar with the Ohio Soybean Association, can you give us a quick version of what OSA does and who it represents?

Kirk Merritt (03:11):Yes, be happy to. So the Ohio Soybean Association is a member-driven advocacy organization. Most of our members are farmers and folks who work with and for farmers. So it's very much an attempt on the part of OSA to understand what farmers need in policy, state level, federal level policy, and then try to execute on that. Sometimes that means advocating in favor of a policy that we like. Sometimes it's advocating in opposition to a policy that we don't like. And so we have a board of farmers from across the state who I work for. So I work on the staff here and the decision makers in our organization are our board members, like many other organizations out there, private and nonprofits. Our board members who are all farmers are the ones who are making the decisions on what we should advocate for, what we should advocate against in terms of state level policy, federal level policy, but it's very much a policy driven, member driven organization, OSA.

Libby Wixtead (04:29):And I think a lot of farm organizations are like that, which is great for our industry. Okay, so we've talked a little bit about OSA and you guys also have the Ohio Soybean Council and both of these groups work closely together. Can you explain the difference between the two?

Kirk Merritt (04:47):Yes, happy to. So I mentioned the association is engaged primarily in member outreach and advocacy. The council, the Ohio Soybean Council is the organization in Ohio that is responsible for investing the soybean checkoff. And farmers certainly, and most folks in the industry will be familiar with the checkoff. It's an attempt by farmers to pool their funds to benefit themselves. We have a separate board for the council. So I work for both organizations. We share the staff, but we have a separate board for the association, a separate board for the council. The council also is all farmers who are making the decisions on how to invest the checkoff. So they volunteer their time, they come from across the state, and they dedicate a lot of effort and take very seriously the responsibility to invest checkoff funds in ways that benefit their fellow farmers. You can't use the checkoff for advocacy.

(05:51):There's a very fine line between what the association can do with their funds and what the council can do with the checkoff funds. So it's very clearly prohibited to use the checkoff for advocacy. So what do we invest in? Our board invests in, for example, research to benefit farmers. Some of that research is agronomic nutrient management. We're trying to help farmers grow a bean that's more resistant to pests, more resistant to disease, help farmers with weed management, nutrient management, yield increases. So that's some of the research we do. Another bucket of research is more in trying to find new uses for soybeans, trying to create demand, create new markets, new consumer products, new industrial products. And in fact, we have kind of led the way in that space. The council several years ago established our own lab. We call it Arable Research Lab that's been successful in this space in commercializing new products.

(06:59):And we can talk more about that in a few minutes if you'd like. The other area that we really try to help farmers with, and it's more important now than ever, is in creating demand. Some of that is in export promotion.

(07:22):With all of the trade situation that's been going on the last few years, still more than half the soybean crop gets exported. China is still a big market. We're trying to diversify our markets as well. We traditionally relied a lot on China, so we're trying to build new export markets. We're trying to build new markets domestically for biofuels, bio-based products, soy-based products, so really focusing on demand. And another area where we can really help, I think, create demand that benefits soybean farmers and is a win-win for the rest of Ohio agriculture is in livestock and animal agriculture. We try to be very supportive of our livestock partners. They are very good partners of ours, whether we're talking beef, poultry, pork, dairy, sheep, all of them are very important in Ohio and they consume a lot of soybeans, make no mistake. And then lastly, our board invests the checkoff in communicating to farmers, communicating to consumers, really trying to deliver positive messages and useful messages.

Libby Wixtead (08:33):Yeah. Wow, you guys are doing quite a bit on the investing side and that's really exciting. And I know we'll get to that here in a few minutes, like you had mentioned. You have talked about some advocacy, so I would like to talk a little bit about that. When you look at the current landscape, what are the biggest policy priorities for Ohio soybean farmers?

Kirk Merritt (08:55):Yeah, there's a lot going on in terms of policy that impacts soybean farmers, and we're really working hard to stay on top of it and also work very closely with many partners here in Ohio and nationally. You mentioned other ag groups earlier. We work very closely in the policy space with Farm Bureau, Ohio Farm Bureau with the Corn and Wheat Association, Agribusiness Association, the livestock groups I mentioned, and many other partners. Ag Credit is a very strong partner of ours. So in terms of federal level policy, we're looking at a couple of very important issues, one being the Farm Bill. We're way overdue for a Farm Bill. Last Farm Bill was passed in 2018. It was intended to be a five-year farm bill, so we're already three years overdue. And we did get a lot of work done in the budget bill, in what they called the one big, beautiful bill, the big budget bill.

(09:58):We got a lot of the work done in that bill that benefits farmers that in a lot of cases would've been in a farm bill, but

(10:08):It's not the farm bill, and there's still a very strong reason we need a farm bill. There are important parts of the safety net for farmers that still need to be updated. We definitely need a new farm bill. So that's one thing at the federal level. Another issue at the federal level is biofuels policy. Mentioned earlier that we work hard to create more demand for soy-based biofuels. In our case, it's diesel. Corn is ethanol, soy is diesel. And so there's a lot of opportunity for that, but we do need policies that will facilitate the increase in demand for soy-based diesel. There are good opportunities to grow this market, but we really need good policy at the federal level to make sure that happens. We've had some wins lately in that space, but there's still a lot that we're watching very closely that we need to make sure it comes home in the right way.

(11:06):At the state level, also a lot of policy that impacts farmers that we're keeping an eye on. A couple things I'll mention. One is tax policy at the federal level, excuse me, at the state level. There's a lot of discussion at the state level around property taxes in Ohio. We just need to make sure that any changes that are coming down the pike that might be considered don't hurt farmers

(11:30):In terms of property taxes. So make sure the farmer voice is heard at that table. Another tax policy issue that we, very specific that in the last budget cycle that we worked on, the legislature had proposed that we end the Ohio sales tax exemption on grain bins. Been very beneficial to farmers over the years. We want to keep that in place. So we push back on that. That's one where I mentioned earlier, sometimes you're favoring, sometimes you're opposing. We opposed that and pushed back along with our partners and we got that done. That sales tax exemption was reinstated. Farmers could still benefit from that in Ohio. Last thing I'll mention in terms of state policy is just overall land use policy. A lot of concern about farmland being converted at a higher rate than maybe we'd like to other purposes. So we just need to make sure that the farmer voice is at the table in those discussions as well.

Libby Wixtead (12:39):Yeah, absolutely. You had mentioned that you guys work so closely with those other ag organizations. I think that is one of the coolest things about Ohio agriculture is how closely all of our ag groups work together, and I think you would agree with that. It's just we are very strong in that, and I think that is great for our farmers.

Kirk Merritt (13:01):I agree, Libby, and we can't take that for granted. I'm amazed sometimes other states where that's not the case and it's an impediment to getting stuff done. And so we are very lucky in Ohio, and we've worked hard at that to make sure everybody's on the same page and working together. And we're very, very fortunate that that's the case here.

Libby Wixtead (13:27):Absolutely. And I think the one thing is we are here to serve our farmers and that's the purpose. And so obviously at AgCredit, we're hearing a lot about input costs, the changing markets, the tight margins. I mean, we see that every day. What are you hearing directly from farmers across the state on a lot of this in this tough time right now?

Kirk Merritt (13:51):Yeah, we certainly talk to a lot of farmers across Ohio, and no secret, farming is very challenging these days and has been for several years. I mean, you know as well as I, input costs are high, have been high, continue to increase. I saw a report just this morning actually that input costs for crop farmers across the board are as high as they've ever been in terms of cost to grow a crop. Some of the input costs are all time high, some of them have come down a little bit, but overall it's as expensive as it's ever been to grow a crop, row crop. So that's a challenge. It's going to continue to be a challenge. The other side of that coin obviously is that crop prices have not kept pace, so it's been difficult to be profitable in crop farming the last several years.

(15:01):Input costs have stayed high, crop prices have fluctuated. So we've seen some recent increases in crop prices for soybeans and corn. That helps. Obviously that gets us moving in the right direction toward profitability, but there's still a long way to go. I think organizations like ours and other organizations in this space really need to focus on building demand. We have to have markets for our crops.

(15:39):We can't assume that markets are going to be there. We have to create them. We have to build them. We got to diversify our export markets like I was talking earlier. We got to increase domestic markets for biofuels, grow our livestock markets, and really focus on building demand going forward.

Libby Wixtead (16:03):Would you say that what you had just mentioned there, is that your main message that you want lawmakers to hear when they're trying to understand Ohio agriculture or is there another message, the main message that you want them to hear?

Kirk Merritt (16:18):Yeah, I think that is the message. I think overall the message that I want to make sure that a lawmaker understands is that agriculture and food are still Ohio's number one industry and thousands of jobs rely on our industry. Across Ohio, agriculture, farming, grow crop and livestock farming is really the backbone of rural communities and our rural communities will not thrive if agriculture does not thrive. I think it's important that legislators at the state level and the federal level have that in their head, have it in their head that from another angle, food security is national security. We have to have a policy environment that allows Ohio farmers, American farmers, and their families to thrive. The policy is increasingly important in that regard, whether we're talking safety net, whether we're talking creating demand, the legislative aspect is increasingly important. And bottom line, most farmers I talk to want to leave their operation stronger than it was when they took it over and then pass it on to the next generation.

(17:50):That's what it's all about. So I think those are the themes that I think are important for our elected officials to understand.

Libby Wixtead (18:00):Yeah. You talk about that farming is generational, and we hear that all the time working with a lot of, in my 12 years at Ag Credit of, "Man, I just don't want my son and daughter to have to buy the farm again. How can I transition it on?" And there are so many young farmers and kids that are so motivated to take over the farm, whatever that looks like. If it's 5,000 acres, a thousand acres, 200 acres, they want to be a part of that. And that message I think is a lot different than in other businesses where it is very generational.

Kirk Merritt (18:35):Yes, yes. I agree 100%, Libby, and it is different. Ag is different. And I think it's another theme that legislators need to understand. We're not like other businesses. It's a multi-generational, it's a family business. I mean, you know, still almost all farms are family owned, so I think those are really important themes.

Libby Wixtead (19:02):Yeah. Well, let's talk about the up and coming opportunities that we have for soybeans beyond the field that you had mentioned earlier. You had mentioned renewable fuels and soybean-based products that are getting a lot of attention. So what opportunity does that create for Ohio soybean farmers?

Kirk Merritt (19:22):Yeah, happy to dive a little deeper on both of those biofuels and soy-based products, because I think Ohio has great opportunities in both. We already have significant production of ethanol here. That's great. You know corn farmers are soybean farmers, and so the more corn ethanol we can produce here, the better. We also think there is opportunity for soy diesel production here. We used to have soy diesel production in Ohio, we don't now. So I think with the increase in soybean processing that's coming online in Ohio the last few years and looking toward the future, there is going to be great potential for producers to come to Ohio and make soy diesel, which would be a big benefit for our farmers. The more value we can add in Ohio, the better.

(20:23):It improves basis. Competition for beans is good. More usage of soybean oil and soybean meal is good, and it's a virtuous circle. It's a win-win for others in this industry as well. So what are we doing about that? Our association is in the process right now of working with stakeholders, working with key members of our Ohio legislature to put together an idea, a bill. We'll be introducing a bill that would encourage soy diesel production in Ohio. So stay tuned on that. It's not out there yet, but it will be soon because we think there's great potential here.

Libby Wixtead (21:07):Yeah, that's exciting.

Kirk Merritt (21:11):The other aspect of that, soy-based products, we touched on that briefly a little bit ago, but we also think there's great potential here to create and market more soy-based products, consumer uses, industrial uses, and we have all kinds of examples of commercialized products in that space. But we think Ohio, given our industrial and agriculture economies, is really well positioned to be a hotbed for soy-based product production and marketing as well.

Libby Wixtead (21:49):Yeah. Would you talk a little bit about the Arable labs that you had mentioned earlier? I think I had a tour of it a couple years ago when I spoke at one of your events, and I was just blown away by what you guys were doing there. Can we talk just a little bit about that?

Kirk Merritt (22:06):Yeah, yeah. We're really proud of what we have created there with Arable Research Lab. So one of our staff team who's been with us, oh, 12, 13 years, a guy by the name of Barry McGraw, we brought on board to manage our soy-based product research and development. And he has developed this concept around a research lab where we have our own staff who all day, every day, all they do is research and commercialization of soy-based products. It's a one of a kind lab. It's been very successful so far. I think maybe the biggest indicator of success is that many of our state checkoff organizations, our partner organizations in other states have looked at what we're doing with the lab and said, "We don't need to recreate this wheel, but we want to be part of creating more soy-based product demand, so we'll provide check-off funding to your organization." So we have now eight state partners along with Ohio that are providing support, providing funding to Arable Lab.

(23:24):So what's Arable Lab do? It's an attempt to work directly with companies who are looking to get more involved in soy-based products, the more sustainable markets, the regenerative markets. And so our lab works directly with those companies and tries to either solve a problem, create a new product, and let them participate more actively in that market. Two examples. One, we have worked with Stanley Black & Decker and a contractor that does research and development for them around a soy-based bar and chain oil for chainsaws. So in lumber production or you're in your backyard cutting down a tree,

(24:22):Your chainsaw needs bar and chain oil to stay lubricated to keep going. Traditionally, that substance, it's a liquid substance. It's very toxic. It's a petroleum-based. It's not good for the operator of the chainsaw. It's not good for the environment. So Stanley Black & Decker was looking for a more bio-based alternative to that. We developed a soy-based bar and chain oil through Arable Research Lab that's basically biodegradable, no harm to the environment, no harm to the operator. And you can go buy a bottle of that in Home Depot today. It has our logo on it. It's soy-based bar and chain oil. You can buy it through Amazon. So it's out there. It's creating demand for soybean farmers. Another example that's coming to the market is a soy-based firefighting foam, also traditionally a substance that's been highly toxic. It has the PFAS in it, the forever chemicals.

(25:31):Traditionally, this stuff is not good. It's bad for the operator, a health concern for firefighters and not good for the environment, but they've had to use it because there are certain fires that are really only contained effectively with foam, firefighting foam. So there's a soy-based firefighting foam that has come onto the market that we're helping to promote, helping to get out there. It's non-toxic. It's also biodegradable, no PFAS, no harm to the operator, no harm to the environment,

(26:14):And it works as well or better in terms of fighting the fire as the old stuff, the toxic substance. So a couple of examples that I think illustrate the opportunity and the potential benefit for soybean farmers from this type of work.

Libby Wixtead (26:35):Yeah, that's a very exciting innovation that's coming through the lab. So I guess my next question is then, is there a soy-based project innovation or new market that you're especially excited about right now, or is it just everything that you had just discussed?

Kirk Merritt (26:54):I think those were a couple really good examples of stuff that we are excited about. There's stuff in the pipeline every day that we're working on. Another very interesting example that we're excited about and that has also driven a lot of new demand is a product called RoofMax. They've been advertising on TV some, so listeners might be somewhat familiar with this, but it's a liquid substance that you spray on your asphalt shingle roof to essentially rejuvenate the asphalt. Over time, 10, 15 years of an asphalt shingle roof starts to dry out, starts to crack, and eventually needs to be replaced. So this Roof Max substance essentially extends the life of the roof another five or 10 years. It brings the flexibility back to the asphalt shingle. So that is a soy-based product that our lab helped to develop. It's going gangbusters. They're

Libby Wixtead (28:08):Literally

Kirk Merritt (28:08):In every state in the union and selling this RoofMax roof restoration product. So that's another one that we're really excited about. But I just think overall, the opportunity, the sky's the limit for this, and we can do a lot in this space with our arable lab, but there's other opportunities beyond that. I mean, this is a big potential market, big potential opportunity.

Libby Wixtead (28:39):Yeah. Actually, I've seen those commercials recently and kind of just wondered and though, "Well, that's really interesting, and I had no idea that that was soy-based, so that's really neat. Okay, so we've talked about some exciting things here. I mean, you've got me excited for our soybean farmers. Let's talk about some challenges that you see over the next couple of years that will shape the future of soybean production in Ohio.

Kirk Merritt (29:05):Yeah, couple things. We certainly don't lack for challenges. We talked earlier about input costs. I think input costs are going to continue to be a challenge. There's not a significant amount that we all can do about that. Farmers can't individually negotiate the price of their fertilizer. It's going to continue to be a challenge. So we certainly can push for policies that could mitigate that, but I guess I look two, four, six years down the road that input costs are going to continue to be a challenge.

(29:55):I think we talked earlier about the policy space. I think it's also going to continue to be a challenge. We're going to continue to need to deliver the messages we were talking about earlier because so few elected officials are coming from farming and coming from agriculture. There are a few and they're very valuable and we partner with them in most cases very closely and they do a great job. But fewer and fewer folks that are in elected office understand what farming is, understand how row crops are grown or how livestock is raised. I think that's going to continue to be a challenge. Our opportunity is to continue to push hard and educate and advocate whether they understand farming or not. And if they don't, we bring them up to speed, but I think that's going to continue to be a challenge. I also think that there's both a challenge and an opportunity in terms of demand.

(31:03):We've talked earlier about the importance of new markets, whether we're talking biofuels, bio-based products, exports, diversifying our export markets, we're going to need to do that. That's going to continue to be very important looking out the next few years, going to continue to need to find new domestic markets and diversify our export markets.

Libby Wixtead (31:28):Yeah. I mean, it wouldn't be fun if we didn't have some challenges in this life because things to work towards. So let's talk about what you're optimistic about for the next generation of soybean farmers coming through.

Kirk Merritt (31:42):I'm very optimistic, Libby, about the next generation. I am very confident that they'll figure it out. Farmers always do. And I don't know any industry where the business owner works any harder, is any smarter than we see in farming. I think the next generation will benefit from their ability to apply technology. I'm amazed every day with the level of technology that goes into growing a crop. They will continue to leverage that, the next generation. They will be more productive, they will be more efficient. They will continue to grow a crop with the least possible inputs and with cost inputs, that's a win-win.

(32:54):But I think I'm confident and I'm optimistic about that. I'm also optimistic and confident looking forward about our ability to build new markets, and I do think we're going to be able to do that. I do think we're going to be able to continue to build markets that will grow soybean demand domestically, internationally. We will need to work hard on that. The next generation of soybean farmers will need to participate, will need to lead in that space. But I think that is another reason I'm optimistic. I think the demand opportunities are there and we just need to make sure that the market and the policy is in place that allows it to grow.

Libby Wixtead (33:52):Yeah, that is. There's lots there to be optimistic and excited about with that next generation. Before we wrap up, what is one thing you wish every Ohioan knew about soybean farmers?

Kirk Merritt (34:05):I wish every Ohioan understood that Ohio soybean farmers are working hard every day to put food on their table that is nutritious and cost-effective and is produced in the most sustainable way possible. Sustainability is a buzzword. Folks want to make sure that what they're eating is not only nutritious but sustainable. Our farmers are doing that. We have the best farmers in the world right here in Ohio. They're growing a crop and will continue to grow a crop that uses the least possible inputs, but still allows us to produce a food supply that is cost-effective and nutritious. Every day our farmers are out there working hard to do that.

Libby Wixtead (35:07):Absolutely. We do have the best soybean farmers in Ohio. Now you had just mentioned just a few minutes ago about the next generation stepping up and getting involved and we need some new leaders coming through and I 100% agree with you on that. So how can they get more involved with Ohio Soybean Association? What's the best first step for them?

Kirk Merritt (35:32):I'd say there's a couple opportunities. One would be probably the easiest lift would be to go to our website and spend a little time. We're at www.soyohio.org, soyohio.org. A lot of information there, and that's probably the easiest first step. I think another step they could take, and they can find this on that website, would be to touch base with one of their fellow farmers that serves on one of our boards. That tends to be the best way for a farmer who has not been involved with our organization to get involved. There is no substitute for just talking to their fellow farmer, whether it's one of our association board members, one of our council board members, they are listed on the website. They are happy to talk with a fellow farmer about what they do and how their work as a volunteer is benefiting their fellow farmers.

(36:40):Also, call our office, ask for me. I'm happy to talk with any farmer that would have any interest in learning more about what we do and how to get involved.

Libby Wixtead (36:52):Yeah, the world is ran by those who show up. You better believe it. And I will say before our podcast, I got on your website and was poking around just looking at some things, and I was surprised how many familiar faces I saw on your council and on the board. So I'm sure there would be a familiar face for somebody out there, and I agree with you to just connect with those farmers, and I'm sure they'll get you set up and get that succession plan in place for them. Kirk, we thank you so much for being with us today. We've learned a lot. I've learned a lot myself just listening to you, so thank you. We appreciate your time.

Kirk Merritt (37:35):My pleasure.

Speaker 1 (37:43):Thank you for listening to AgCredit Said It. Be sure to subscribe in your favorite podcast app or join us through our website at agcredit.net so you never miss an episode.