Paying for the Nutrient Reduction Strategy – A Nutrient Management Strategy Fee

It is estimated that implementing the nutrient management strategy will require $5 billion.  Since releasing the draft Nutrient Reduction strategy in 2012, the Iowa Department of Natural Resources and Iowa Department on Agriculture and Land Stewardship has lagged in implementing the strategy.  Along with lack of will to implement the proposals, implementation efforts have been plagued by the lack of financial resources.

In this blog, we are going to discuss a Nutrient Management Strategy Fee.  The fee would be assessed for every animal unit raised in a confinement where a Nutrient Management Plan or a Manure Management Plan must be filed with the Iowa Department of Natural Resources.  Using readily available sources of information, and given a 15-year window, the fee would be $29.96 per animal unit per year.  A steer is 1 animal unit; a hog is .4 of an animal unit.  The proposal is that the integrator, who is the owner of the animals, is the party responsible for paying the nutrient management fee.  In other words, the polluter pays.

Evaluation of the Problem

We have all heard of the phrase, “the polluter should pay”.   Those who live in urban areas pay for the sewage treatment plant to keep nutrient pollution out of the processed wastewater.  Today manufacturers are assessed a fee for each ton of nitrogen fertilizer that they manufacture.  That fee is deposited in the groundwater protection fund, where the funds are used to protect Iowa’s groundwater. [1]  Unfortunately there is a group of polluters that is not assessed a fee to deal with their pollution - the owners of livestock raised in animal feeding operations (concentrated animal feeding operations, or CAFOs).  Under the CAFO model, the animals are owned by the integrator.  The integrator contracts with the operator to raise the animals and take care of the pollution.  The integrator makes the decisions, including selecting where to put the CAFO – which watershed, county, community, neighborhood; sells the animal to the slaughterhouse or owns the slaughterhouse; provides feed; and sets the rules on how the animals are to be taken care of.  The operator feeds the animals, disposes of the manure and deceased animals, and provides the buildings.

Every large and medium-sized animal feeding operation must file either a Manure Management Plan or a Nutrient Management Plan with the Iowa Department of Natural Resources (DNR).  They have to be updated every five years.  When a Manure Management Plan or Nutrient Management Plan is filed, the owner/operator must list species of animal, plus the number of animals and animal units that will be housed in the facility.   

Part of the DNR regulations is a concept called an animal unit.  The intent of the animal unit is to set a value for each animal species that equates the amount of manure each animal excretes in relationship to the other species.  A slaughter or feeder steer or heifer is given the animal unit of 1, while a finished market hog is given the animal unit of .4 which means that a market hog generates .4 of the manure as a feeder cow.

The United States Department of Agriculture publishes an inventory of the animals growing in each state, including Iowa. [2]  Not all animal species are tracked, nor are the animals raised in animal feeding operations counted separately from those not raised in animal feeding operations.  However, most of the pigs, chickens, turkeys, and cattle in Iowa are raised in animal feeding operations, either in an enclosed building or an open feedlot.

Table 1 – Total Animal Units in Iowa.  Table 1 shows the animal units identified in the Iowa Department of Natural Resources regulations, the inventory of animals counted by the United States Department of Agriculture, and a calculation of the total animal units living in the state.

 Nutrient Management Strategy Fee

 Given the information that is already collected on the Manure Management Plans and the Nutrient Management Plans, it would be very easy to use those animal units to assess a Nutrient Management Strategy Fee each year for the animals living in the animal feeding operation. 

 Table 2, below, shows how much would be needed in a Nutrient Reduction Strategy fee

•  It makes sense that the owner of the animals – the integrator – pay the Nutrient Management Strategy Fee.  In other words, the integrator should pay to internalize the costs of cleaning up the manure and its constituent nutrients that are entering Iowa’s waterbodies. 
•  It also makes sense that the owner not be allowed to pass that fee to the operator who is contracted to raise the animals and take care of the manure, all the while most of the profits go upstream to the integrator.  It makes sense that the consumer not be charged for the Nutrient Management Strategy Fee. 
• The fee is simple and easy to calculate.
• It is a simple and easy way to assess the fees and to collect those fees.
• The fees collected would be used to implement the Nutrient Reduction Strategy and could fully fund the Strategy in a reasonable period of time.

It is obvious that Iowans will need to work diligently to reduce the overall contribution of nutrients into the waters flowing to the Gulf of Mexico.  But we can do it by investing in the Nutrient Reduction Strategy.  Without funding, it simply won’t happen.

To read more, see our flyer Paying for the Nutrient Reduction Strategy - a Nutrient Managment Strategy Fee

To review the slides from a presentation on Paying for Iowa's Nutrient Reduction Strategy

See our Lunch and Learn livestream "Paying for Iowa’s Nutrient Reduction Strategy"

Footnotes

[1] See Iowa Code Chapter 200 – Fertilizers and Soil Conditioners and Iowa Code Chapter 455E – Groundwater Protection.

[2]  “2020 Iowa Agricultural Statistics”, compiled by USDA, National Agricultural Statistics Service, October, 2020; “Iowa Ag News – Chickens & Eggs”, compiled by USDA, National Agricultural Statistics Service, December 23, 2019; “Iowa Ag News – Cattle on Feed”, compiled by USDA, National Agricultural Statistics Service, March 19, 2021; “Iowa Ag News – Hogs & Pigs”, compiled by USDA, National Agricultural Statistics Service, March 26, 2020; “2020 State Agricultural Overview - Iowa”, compiled by USDA, National Agricultural Statistics Service

[3] Iowa Department of Agriculture, Iowa Department of Natural Resources, Iowa State University, “Iowa Nutrient Reduction Strategy 2018-19 Annual Progress Report”, June, 2020, page 10