NAWG Quarterly Report, April through June 2016 Hello,

As the new CEO of NAWG, I am excited for and looking forward to a year full of advocacy, productive action in the journey to the next Farm Bill, and increased engagement with wheat growers across the country. This past year has seen vital progress in the agriculture industry, with the signing of the GMO labeling bill; key developments in wheat research, particularly in the sequencing of the wheat genome; and other important accomplishments that the agriculture community has faced this past year. On behalf of the association, I want to thank you for another year of unwavering support and engagement in NAWG’s efforts to build wheat’s presence and influence to help wheat farmers.

I came to Washington with a lifetime of experience in agriculture, having grown up in rural Texas. My background in and familiarity with agriculture policy and the rural way of life, followed by an education and 16 years of experience in agriculture policy, has taught me that farmers have strong, effective voices that create change and drive conversations that lead to compromise, accomplishments, and growth. It is these growers’ voices that will be the key to the next Farm Bill. NAWG’s grassroots organization and involvement will be the foundation to working towards an effective Farm Bill, particularly given the likely potential of continued price suppression, opposition to free trade deals, and the transparency controversy between producers and consumers. Despite these odds and more, wheat growers have continuously come out on top and we expect no different in the coming years.

In increasing engagement with our state associations, I have taken it upon myself to visit each state association to emphasize my commitment to improving those relationships and meeting with the leaders who make our work successful. In visiting with growers in these states, and engaging with the staff of our associations, I am constantly impressed and inspired by their dedication to the future of wheat. I hope that with the support of our states and growers, we will hit the ground running in the rest of 2016 and 2017 to work towards the Farm Bill and other necessary accomplishments for the wheat industry, including lobbying for the passage of the Trans-Pacific Partnership.

Since my arrival at NAWG, we have worked with Monsanto and Bayer on the Wheat Industry Leaders of Tomorrow (WILOT) and Wheat Organization Leaders of the Future (WOLF) programs, building engagement and focusing on how to move forward in preparing our industry leaders. Further, the National Wheat Foundation wrapped up this year’s National Wheat Yield Contest, with an impressive number of registrations and excellent outlook for increased grower engagement next year.

I am proud to start my tenure as Chief Executive Officer of NAWG and I look forward to working with growers and state associations to not only ensure the strength of the wheat growers’ voice in Washington, but also to work towards a hopeful and positive future for the wheat industry. Thank you, Chandler Goule Chief Executive Officer National Association of Wheat Growers

Regular Communications, Outreach, and Partnerships NAWG and NWF continue regular communications updates, including the weekly newsletter, press releases, social media interactions, regular website updates, the NWF blog, and periodic alerts distributed to states and board of director members.

NAWG continues the Wheat Leaders Communications Outreach Program and Agri-Pulse leadership program, which offer weekly information to our board and state executives on what is going on here in Washington D.C. This program provides both NAWG and NWF the opportunity to release organizational and wheat issue related information in an expedited fashion through the cover wrap of each week’s Agri-Pulse e-newsletter. NAWG also participates in regular radio interviews with agriculture networks to discuss recent developments in the wheat industry.

In April, NAWG communications staff participated in the National Association of Farm Broadcasting (NAFB) Washington Watch event in Washington, D.C. NAWG President Gordon Stoner participated at the event, which is an opportunity for most of the major commodity and general farm organizations to be interviewed by farm broadcasters in attendance. Stoner spoke with several media representatives about crop insurance, Farm Bill implementation, and other important issues for NAWG this quarter.

This summer, NAWG Communications staff continued developing social media initiatives to increase member engagement and content regularity, and developing policy research for use in Farm Bill planning. NAWG plans to continue these social media initiatives through the development of further platforms to increase social media presence, as well as increase member state and agriculture sector interaction in an effort to encourage conversations about relevant issues to wheat growers.

These social media efforts have been developed in conjunction with continued output of regular news items and upkeep, as well as continued analysis of the National Wheat Action Plan, which will act as a catalyst for improving wheat productivity, encouraging public and private research, and encouraging grower investment in modern wheat production practices.

In welcoming new Chief Executive Officer Chandler Goule, the Communications department looks forward to a new year of increased external communications to create dialogue with state organizations and other commodities in working towards a functional Farm Bill. NAWG’s communications efforts are key to enhancing public support of the wheat industry and maintaining the excellent reputation of American wheat.

Corporate and Industry Relations

The goal of the NAWG and NWF Corporate/Industry Relations program is to identify and create opportunities for NAWG, the National Wheat Foundation (NWF) and its value chain partners to work together on programs and projects of mutual benefit to grow the U.S. wheat industry.

Increased engagement with our industry partners has been the focus of this past quarter, particularly in establishing involvement in the Wheat Organization Leaders of the Future (WOLF) program, and the Wheat Industry Leaders of Tomorrow (WILOT) program. NWF has partnered with Monsanto and Bayer on these programs to help prepare our industry leaders for the future. Further, plans and proposals have been discussed by industry relations staff and the NWF officers to increase online engagement with industry partners by creating a space on the NWF website expanded dialogue about products and

techniques being developed by industry partners. These proposals are in a developmental stage and we hope to see a proposal begin to take place in the next fiscal year.

At the end of this quarter, the National Wheat Foundation paid off its mortgage on the Wheat Growers building in Northeast Washington, D.C. Thirty-eight years ago, then-President Glen Moore signed the mortgage with the support of several states, investing in what he felt would be an inspiring vision for the future of NAWG and NWF. In July, NWF Officers celebrated the paying off of the mortgage at the U.S. Wheat Associates Summer Board meetings in Fargo, ND.

The National Wheat Foundation and NAWG have partnered with industry leaders such as BASF, Monsanto, John Deere, and WinField, to provide our nation’s wheat growers the opportunity to utilize new and expanding technology to achieve higher yields and better quality crops, while highlighting sustainable practices that are in line with conservation efforts to preserve the environment and maintain farm productivity.

Winter wheat entrants have been entering yield data since harvest began in June. Spring wheat producers were enrolling through the August 1 deadline. NWYC will drive innovation among growers and encourage further wheat-focused research. The sharing of grower knowledge and expertise is also one of the main objectives of the contest.

Technology providers have the opportunity to showcase their products and tools with growers to produce exemplary crops and encourage the transfer of knowledge from experts to growers. The technologies developed by these industry leaders will help farmers optimize their fields’ potential, and provide a new standard of excellence for wheat varieties

Meanwhile, The United States Department of Agriculture (USDA) Economic Research Service (ERS) predicts in a recent report that due to excellent growing conditions over much of the United States, particularly in the Great Plains region, the winter wheat average yield is now projected to be a record high 50.5 bushels per acre, with total production projected at over 1.5 billion bushels. Additionally, despite an 8-percent year-to-year decline in production area, this improved outlook for winter wheat will increase 2016/17 aggregate wheat production by 25 million bushels over the 2015/16 crop. High yields are expected to be entered into this year’s wheat contest as a result of the ideal growing conditions.

Environmental Policy Pesticide Regulation NAWG worked on several regulatory issues this quarter, specifically on issues related to the availability of pesticides used on wheat and Environmental Protection Agency (EPA) actions that could impact the way growers use pesticides. NAWG submitted comments to the EPA on Quelex, a new wheat herbicide that was developed by Dow AgroSciences that was undergoing final review of a proposed pesticide label. EPA sought comments on tank mixing for several products, including Quelex, with the potential for restricting the ability to tank mix on farms. NAWG’s comments touched on the importance of being able to tank mix for Quelex, and Dicamba resistant soybeans and cotton, because of the significance of the issue. NAWG also commented on the availability of Paraquat, an herbicide from Syngenta. Comments were also submitted regarding Chlorpyrifos and other organophosphates, which is a class of chemicals

that are under review by the EPA and one of the first class of chemicals to undergo Endangered Species Act (ESA) Consultation with the U.S. Fish and Wildlife Service (FWS). The actions by the EPA and FWS to develop a process for ESA Consultation will have far-reaching impacts for all pesticides. Coalition Partnerships NAWG continued to work within coalitions addressing pollinator habitat, including the Honey Bee Health Coalition and the Monarch Collaborative. These efforts are seeking positive, collaborative approaches to issues of declining Monarch Butterfly populations, ensuring sufficient pollinator habitat and reviewing data on causes of pollinator decline. The Fish and Wildlife Service is undertaking a review of a petition to list the Monarch Butterfly as Threatened or Endangered Species, which could impact a broad area of agriculture production. The White House issued a National Strategy to Promote the Health of Honey Bees and Other Pollinators, and the Honey Bee Health Coalition works to make sure USDA programs and other efforts as part of the strategy are beneficial for agriculture and are not adversely impacting agricultural production, as well as gathering information and on the health of bees. Both of these issues could have an adverse impact on the future use of pesticides, and our proactive involvement in helping to manage the issues is critical to ensuring positive outcomes.

NAWG also continued working as part of Field to Market: The Alliance for Sustainable Agriculture, participating in a work group meetings, board meetings and plenary sessions. Field to Market will be releasing an updated National Indicators report in 2016 and is undertaking modification and updates to the FieldPrint Calculator. FieldPrint projects are underway across the U.S. and several food companies are becoming more interested in sustainably sourcing wheat and using Field to Market metrics as part of their sustainable sourcing efforts.

Committee Activity The NAWG Environment and Renewable Resources Committee is an important part of all NAWG efforts, providing input on pesticide use, review comments and policy. The 2016 committee is reviewing USDA conservation programs and had discussions about changes to the Conservation Stewardship Program. Additionally, NAWG provides ongoing support to state associations that have concerns with regulatory actions, specific producer questions about programs and the translation of NAWG policy efforts to workable programs at the state and local level.

Farm Bill Implementation, Crop Insurance, and Agriculture Appropriations

Agricultural Risk Coverage (ARC)-County Data issues Throughout the fourth quarter, NAWG staff continued to work with other agricultural organizations on efforts to adjust the data that is utilized by the Farm Service Agency (FSA) in determining ARC-County payments.

As background, FSA administratively established a cascade whereby yield data from the National Agricultural Statistics Service (NASS) would be the priority data set used in establishing benchmark and actual yields. NASS publishes yields for a given county only if at least 30 surveys are submitted (or 25% of the acreage in the county is covered by the survey responses). If those minimum thresholds aren’t met, then the next data set in the cascade is Risk Management Agency (RMA) data, followed by regional National Agriculture Statistics Service (NASS) data, followed by a decision by the state FSA. NAWG and other agriculture organizations have expressed concern to the United States Department of

Agriculture (USDA) about this cascade because it leads to the use of incomparable data (both in terms of the data that’s used in neighboring counties as well as the mixing of different data sets for setting benchmark and actual yields). We pursued an adjustment to the cascade where state FSA directors would have the ability to blend similar or contiguous county yields in those counties where there wasn’t sufficient NASS data. Throughout the meetings, FSA has been reluctant to change the cascade, raising concerns about the impact doing so could have on currently pending appeals for 2014 crop year payments, the potential cost, and the potential for backlash resulting from making some producers ineligible for payments (or reducing their payments).

Though FSA has so far been unwilling to make adjustments, NAWG staff is exploring pursuing efforts to educate wheat farmers about the importance of NASS surveys and to encourage producers to complete them accurately and timely.

During Senate Appropriations Committee consideration of the FY 2017 Agriculture Appropriations bills, Senator John Hoeven (R-ND) successfully included an amendment that would create a $5 million pilot program to enable some states to use this process of blending similar or contiguous NASS county yields in those counties that weren’t able to publish data. NAWG supported this amendment, and has continued to work for a more wide-scale and permanent solution.

SCO Data Issues Similar to ARC-County, there were some data issues that arose in calculating 2015 crop year payments under the Supplemental Coverage Option (SCO). Specifically, for 2015, the Risk Management Agency (RMA) also used NASS data for determining expected yields (and thus there were concerns about data accuracy and yields being set too low), and the Agency set final yields based on harvested acres instead of planted acres. As the use of harvested acres wouldn’t account for failed acres, this approach doesn’t appropriately factor in what farmers would’ve intended to have harvested when they planted their crop. NAWG sought adjustments for the 2015 crop year, but as producers had signed contracts for SCO laying out this process, the Agency was unwilling to make changes. However, the adjustments were made for the 2016 crop year to use RMA data for setting expected yields and the Agency will use planted acres in establishing final yields.

Crop Insurance Coalition Activities NAWG staff continued to participate in activities of a broad crop insurance coalition comprised of most of the national agricultural organizations as well as groups representing crop insurers. In anticipation of potential floor action in the House and Senate on the FY 2017 Agriculture Appropriations bill, the coalition met with Congressional offices to discuss the importance of the crop insurance program and the impact that cuts to the premium subsidy or delivery system could have on farmers.

FY 2017 Agriculture Appropriations The third quarter report included highlights from both the House and Senate versions of the FY 2017 Agriculture Appropriations bills. Thusfar, there has not been floor consideration of the bill in either chamber. Moving forward, with the limited Congressional calendar, it appears unlikely that there will be much floor action on any remaining appropriations bills; rather, a short-term continuing resolution (CR) to fund the government until the end of the calendar year appears to be more likely. Action on a CR rather than on the Agriculture spending bill itself has both positive and negative implications. Action on the spending bill itself opens the door to the possibility of consideration of amendments that could

negatively affect Farm Bill programs. Action on a CR generally excludes the inclusion of outside policy riders. However, action on a CR also means that wheat research funding increases in the House and Senate bills (including the increase for the U.S. Wheat and Barley Scab Initiative) aren’t enacted.

NAWG continues to engage policymakers as the Appropriations process moves forward.

2018 Farm Bill Development Though the current Farm Bill doesn’t expire until September 30, 2018, NAWG has begun efforts to prepare for the reauthorization process. NAWG staff has participated in a series of meetings as part of an informal Farm Bill Coalition, which is comprised of most of the major agricultural organizations in DC. This group has met several times to discuss various titles of the Farm Bill, including commodity programs, crop insurance, trade, conservation, and nutrition. The intent of these meetings have been to enable organizations to discuss concerns about current programs, efforts the groups have individually been undertaking to develop priorities, and laying the ground work for more collaboration moving forward.

Internally, NAWG has developed a Farm Bill survey to gather feedback from wheat farmers about how programs have worked, whether adjustments need to be made, and what NAWG’s priorities should be moving into the next Farm Bill. An information-gathering process will lead into the fall conference, where the NAWG board will consider and potentially adopt high-level Farm Bill policy priorities based on input from farmers and state associations.

International Trade

Trans-Pacific Partnership (TPP) Despite political and policy challenges facing Congressional consideration of the Trans-Pacific Partnership (TPP), NAWG has continued to interact with Congressional offices about the urgent need for action. The limited time that Congress is in session, combined with the heated political rhetoric about TPP on the Presidential campaign trail has led most stakeholders to believe that any action on TPP would likely only occur during a “Lame Duck” session of Congress, which falls in between the November elections and the end of the calendar year.

Despite this uncertainty, NAWG has continued to engage Congress about the importance of expanded market access that would occur in Japan and Vietnam, and the potential for other countries in the region to enter the TPP framework in the future. Wheat in particular also faces a growing competitive disadvantage with Australia every day that TPP isn’t enacted. Australia and Vietnam have a bilateral agreement that went into effect at the beginning of 2016 that has enabled Australia to have tariff-free access to the Vietnam market (the U.S. faces a five percent tariff). This argument has resonated well in Hill visits, but discussions usually revert to overarching political arguments about TPP in general.

ITC report In May, the International Trade Commission (ITC) released a Trade Promotion Authority (TPA) required report estimating the economic impact anticipated to result from implementation of TPP. The report estimated a $7.2 billion increase in exports for the entire food and agriculture sector by 2032 compared to a non-TPP framework. However, the report concluded that U.S. wheat exports to Japan would decline by 17 percent under TPP. NAWG and U.S. Wheat Associates (USW) reviewed the report and disagreed with this conclusion. As background, there are two distinct markets for wheat in Japan: one for high

quality food grade wheat and one for lower quality, lower priced livestock feed wheat. Japan has consistently imported about 60 percent of its annual milling wheat needs from the U.S., with Canada and Australia making up the balance. Because access to Japan’s milling wheat market would remain equal among the three suppliers under TPP and because Japan requires different types of wheat for distinct uses, NAWG and USW saw no reason why U.S. sales would decline. NAWG officers and staff hit the Hill to discuss these concerns in order to fend off potential arguments that TPP would be negative for wheat exports.

Cuba Activities of the U.S. Ag Coalition for Cuba (USACC), of which NAWG is a member, have continued to revolve around advocacy of legislation to ease financing restrictions and to ultimately end the trade embargo. This has also included extensive work on amendments to the FY 2017 Financial Services Appropriations bill (as the financing restrictions would be dealt with through the budget for the Treasury Department). We successfully worked with Senator John Boozman’s (R-AR) to include an amendment to the Senate version of the bill that would permanently end the prohibition on U.S. financial institutions financing sales of agricultural goods to Cuba (the amendment was based on legislation authored by Sens. Heidi Heitkamp (D-ND) and Boozman). NAWG undertook similar advocacy efforts in the House to support an amendment offered by Rep. Rick Crawford (R-AR) during House floor consideration of the bill. His amendment would have provided a one-year reprieve of the financing restrictions. Though our advocacy efforts appeared to be effective, Rep. Crawford withdrew his amendment after he received a commitment from several Members of Congress that have been opposed to liberalizing trade with Cuba whereby they would work with Rep. Crawford on finding a compromise position related to the financing restrictions. NAWG continues to work with Rep. Crawford and other champions on the Hill to move the needle on the Cuba debate.

Foreign Domestic Support Following the release of U.S. Wheat Associates’ (USW) updated econometric study showing that China’s domestic support programs are causing U.S. wheat farmers to be losing out on more than $650 million in lost revenue, NAWG has engaged Congressional offices to raise attention to this issue. The House Agriculture Committee staff has taken a particular interest in this topic and held a hearing about the issue last fall. Though the Congressional calendar for the remainder of the year is limited, we continue to explore further opportunities for possible hearings.

Canada Grain-Grading NAWG has worked collaboratively with U.S. Wheat Associates (USW) in directing public attention to Canada’s grain grading system. Specifically, Canada will only designate a feed-quality grade for any U.S. wheat that enters its bulk handling system. USDA Secretary Tom Vilsack and United States Trade Representative (USTR) Chief Agricultural Negotiator Darci Vetter have spoken publicly about this topic. NAWG officers and staff have also worked with USW staff to engage Canadian government officials about the need for the Canadian government to reform its grain grading system.

Transportation

Surface Transportation Board (STB) Implementation Implementation of S. 808, the Surface Transportation Board Reauthorization Act of 2015, has continued through the fourth quarter. NAWG has participated as part of the Rail Customer Coalition (RCC) and Ag

Transportation Working Group, and in our own independent efforts, to ensure that implementation reflects the desire of Congress to improve transparency in the STB’s operations. The Board has undertaken several rulemakings related to transparency requirements to ensure the reporting of the nature and disposition of complaints by the Board as well as the establishment of a voluntary arbitration process to resolve disputes. The Reauthorization Act also authorized the new ability of the Board to initiate investigations without having to wait for a formal complaint to be filed and to increase the membership of the Board from three to five members.

Research & Technology USDA and APHIS Part 340 Fed Register Posting & Comment On April 20, 2016, NAWG formally registered its comments on the Notice of Intent (NOI) posted by the United States Department of Agriculture (USDA) Animal and Plant Health Inspection Service (APHIS) to the Federal Register. The NOI outlined APHIS’s intent to re-define the term “biotechnology”, which includes expanding it to include new breeding techniques. NAWG did not support APHIS in the definition change. NAWG also provided comments on four rule change options listed by APHIS in the NOI. Of the four options, NAWG outlined its support for the phase-in approach of Option 2, which states a system of “analyze first, regulate second”, whereby the agency would conduct a risk analysis before determining whether the product should be regulated. NAWG supported Option 2 because it will potentially streamline the process for a product toward a commercial path. The other options included an option for no change, and option for wide-scale increased regulatory oversight and an option for withdrawing the current rule, 7CFR part 340, altogether. NAWG believes these three options would hurt producers, cause unnecessary costs, and burden researchers and technology providers. NAWG comments were spearheaded by the Research and Technology Committee with input from Executive Officers and several State offices. NAWG Supports Letter to Secretary Vilsack on APHIS 340 In addition to registering its own comments with the USDA, NAWG supported the signing of a letter by 65 members of Congress to Secretary of Agriculture Tom Vilsack regarding the Animal and Plant Health Inspection Service’s (APHIS) Notice of Intent (NOI) to revise pre-market biotechnology regulations. The NOI was published in the Federal Register in February. The letter states that although the United States Department of Agriculture (USDA) is supported in their commitment to scientific discovery and risk-based regulation for biotech, APHIS must be cautious in developing any revision of the current biotechnology regulatory structure. APHIS has proposed to exempt classes of biotech products that the agency knows do not present a risk to agriculture, which will benefit agriculture, but these proposals have also created uncertainty and ambiguity as to which breeding processes and products will receive pre-market regulatory scrutiny, and to what degree. The signers of the letter worry that the ambiguity present in these proposals will inhibit the development and commercialization of innovative technologies which will be valuable to crop producers, and that APHIS will group whole classes of plant breeding methods into a pre-market regulatory structure. The signers state that without scientific and risk-based justification, safe methods which have been utilized for decades could be jeopardized by APHIS’s proposals, hindering innovation and preventing the breakthroughs in biotechnology that are crucial to sustainable global food security.

U.S. Senate Foreign Relations Committee Moves Forward On International Seed Treaty The Senate Foreign Relations Committee recently approved the International Treaty on Plant Genetic Resources for Food and Agriculture, which was supported by NAWG. This action follows a May 19 hearing on the treaty, which included testimony from John Schoenecker, Director of Intellectual Property at HM.Clause, on behalf of the American Seed Trade Association (ASTA). The Treaty, which was adopted by the UN Food and Agriculture Organization in 2001, and signed by the U.S. in 2002, creates a stable legal framework for international germplasm exchanges, allowing for facilitation of access by public and private entities for the sharing of plant resources. Though the U.S. has signed the agreement, the Senate must ratify the Treaty in order to enable the U.S. to participate in the framework. With Committee action complete, the Treaty would now have to be considered by the full United States Senate.

The Treaty is a simple and non-controversial solution to enable the exchange of plant materials globally. The Treaty has been ratified by more than 139 countries, many of which are both competitors of U.S. agriculture as well as important sources of seed exchange for public and private breeders here at home. Ratification would require no new laws, and it would not require any appropriations from Congress.

The Treaty enjoys bipartisan support, as well as strong support from private industry and public researchers. The Treaty would not alter access to U.S. gene banks by U.S. researchers, nor would it compromise existing intellectual property protections.

The American Seed Trade Association has lead the effort to ratify a 2002 Treaty, which has been stalled in the U.S. Senate since 2010. NAWG’s Board of Directors approved a resolution supporting the ratification.

Biotechnology

GMO Labeling With the July 1, 2016 Vermont GMO labeling law implementation date nearing, the Senate Agriculture Committee’s Chairman Pat Roberts (R-KS) and Ranking Member Debbie Stabenow (D-MI) released a federal labeling bill after months of debate and compromise. The bill would create a national standard and preempt state-by-state patchwork of labeling laws. The mandatory labeling bill would allow manufacturers a variety of options to disclose the information from electronic options like QR codes to websites to phone numbers directing consumers to contact for more information on the product including the presence of GMOs. NAWG supports this language and urged the Senate to vote in favor and pass the bill swiftly prior to the July 1 implementation date. The Senate voted in support, 68-29, on a procedural motion to insert the new language in place of the former Roberts language that failed earlier in the year. The Senate then set a vote for July as the process continued to pass the bill. Zika In support of the many benefits of biotechnology, NAWG submitted comments for the approval of using GE mosquitos to combat the Zika virus. The mosquitos are modified to cause the offspring to die before

transmitting the disease. This technology by Oxitec of the Intrexon Corporation had been pending approval in the United States by the FDA who asked for public comments for a trial in Florida. NAWG linked biotechnology as a positive technology to battle public health crisis and global food security and urge for a decision based on science and facts.