FDA New Leadership, US Farming Economics, Corporate Breakups

25:38We grind about 30 million bushels of corn a year. We're making about 90 million gallons of ethanol out of that corn, shipping it all over the country into our liquid fuel supply. When you and I think of corn, we may think of corn on the cob, corn chips, corn starch, or even popcorn. but only about 8 % of the corn America produces is eaten by humans. The majority is crushed and turned into livestock feed or processed into ethanol and used in gasoline. We think that the ethanol policy gets debated around from time to time. The current administration talks a lot about domestic energy production and has been really good for biofuels.

26:20And we've seen biofuels be a real bipartisan solution over our history. and it's really been good. And so as far as corn demand today and where corn demand can grow into the future, we really think that there's a huge potential for ethanol to continue to be a bigger and bigger part of that local demand. The same transition from food to fuel is happening for soy. Now we're trying to find alternative uses, for example, to those soybeans, some of which can be turned into alternative sources of fuel. So, for example, the government announced some changes to the renewable fuel standards and so forth that have been very, very good for the soybean market.

27:01But that may be only half the story. As farmers reel from a challenging export market, higher interest rates have delivered a second blow in what turns out to be a pretty capital-intensive business. The high horsepower tractors in new situation is probably$600 ,000 to$700 ,000. dollars. This machine was actually built in 2009, probably the oldest piece of equipment that we utilize in a regular basis. So its value as it sits today probably a hundred and fifty to hundred seventy five thousand. How fast do they depreciate it? Yeah, really fast. Farming is such a capital intensive endeavor whether it's the cost of finance their land acquisitions, just their interest rate to put the operating loan in, you know, to put a crop in.

27:51They're investing hundreds of dollars in acres just in the input side to put the crop in. And then their machinery and equipment purchases have just really skyrocketed in the last three years. Rising costs and falling prices do not add up to a successful business. So what do America's row crop farmers do to make ends meet? And how much of it depends on the federal government? That's where we turn next. We don't want to rely on government payments. That's the last thing that we want to do.

28:26Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com by selecting Work Mode, available on Plus and Pro plans.

29:09You already know how AI is changing how everyday work gets done. how much ground you can cover, and how fast a team can scale. To stay ahead, you need the tools that give you a competitive advantage, built for this new era. Welcome to Agentic Revenue. Adio is the CRM for this world. It meets you where you work, compounds every customer signal into context, then axon it across your pipeline to let you move in on match speed and scale. With agents and automations for every job in revenue, Adio orchestrates your work around the clock. Built to handle the scale of your workloads, extensible with API and MCP, and with the infrastructure to keep up with your most ambitious agents.

29:45Loved by high-growth startups like Granola, Modal, and Etched, Adio runs the work behind every win. That's Adio, the agentic CRM, the intelligent system that never sleeps. Picks up leads at 2 a.m., catches renewals before they slip, hands you the answer before you ask. Try Adio free at adio.com slash iHeart. That's adio.com slash iHeart.

30:10This holiday, the difference between buyers just checking things out and checking out

30:15Dr. Marty Makary:comes down to the last few clicks. PayPal Checkout is a trusted conversion engine fueled by 400 million active PayPal and Venmo accounts. Add Pay Later and turn holiday shoppers into regulars. 96 % of Pay Later shoppers are repeat users. PayPal Open. Built for all business. Get started at paypalopen.com. PayPal Pay Later data, 8 markets, March 2025 to February 2026. Repeat users defined as more than one Pay Later purchase in the past year.

30:48In the cornfields of Iowa, farming is more than just a business. It's a way of life passed down from generation to generation. So do you come from a family of farmers? I do. I am the third generation. I was born on a farm in southeast Iowa. When my grandfather came here, you couldn't farm very much in this part of the state because it was all water. It was wetlands. This is where I grew up, and I'm the fifth generation, so we're raising the sixth generation here on this farm. So back in the late 1800s, my great-great-grandparents would have came here and started the farm. J.D. Meyer's farm lies a short drive from Stu Swanson's.

31:30You'll start seeing, I don't know if we can see it yet, but you'll start seeing an ear shoot. And he too farms corn and soybeans. But where Swanson is the third generation in his family growing row crops, J.D. Myers is fifth generation and plans on passing it along to his own son. 300 bushel on the bottom of that bin that's left. So take a few loads to get up there. But other than that, we'll be done and then we can grease the shivers and get it ready to go. For decades, passing it on to the next generation has been the story of American farms. But the agricultural workforce has been in steady decline, from 8 million in 1949 to just over 2 million today.

32:15Technological innovation has certainly made farming more efficient, but urbanization has also contributed. As folks have moved into the cities and we even see that here in Iowa, you know, there's definitely an urbanization trend and that's all good. I mean, that's all good and well. But I think that the value of folks really truly understanding where their food and fuel come from, there's just tremendous value there. And we need to keep doing that as ag leaders to keep telling that story. But if Iowa's farming families hope to pass their way of life onto the next generation, it has to be a sound business as well as a way of life.

32:53And the combination of low prices and higher costs has meant that farm income has plummeted over the past few years, meaning that sometimes financial institutions like CoBank have to make up the difference through loans. We rely not only on CoBank, but local banks to help provide financing. The cost of production is at such a high level and it just keeps increasing that we need that backstop to know that we can average cash flows out. One of the most important indicators of credit quality for the farm credit system and indirectly for farmers as well is farmland value, right? So we watch very carefully what's happening to farmland value.

33:39My family owns some so we watch to two. And farmland values are always a massively lagging indicator. Commodity prices have come down a lot, right? Corn's down, beans down, wheat's down since, you know, the peak two years ago. But farmland value is still like this. It has sort of stopped rising in the way that it had been rising for a long time. But as you can imagine, if prices stay low and cash flows are negative for a lot of producers, they don't have free cash flow and working capital and they have to draw down because farmers tend to be asset rich and cash poor, right? They own land and physical assets and machinery and stuff that's worth things, but it's not liquid.

34:22So credit quality is actually pretty good. Balance sheets of most farmers were in good shape until the last 12 to 18 months, but this stress period that we're now in is going to manifest over the coming, you know, 6, 12, 18 months, and that'll show up in tougher cash flows, people needing to raise liquidity in other ways. Farmers can't keep borrowing forever to make up shortfalls. But there are signs that things could turn around, not because of higher prices or lower costs, but because of the government, something farmers like J.D. would rather not rely on. Biggest thing, you know, I guess for me as a farmer is that I want to make sure we have markets.

35:09I don't want direct payments. I would rather not have direct payments from the government. If we can have markets that will buy the grain and stuff from us, not have to depend on the government for it and develop those markets. We don't want to rely on government payments. That's the last thing that we want to do. We've worked to try to eliminate that, and we want to try to create demand through domestic markets, through exports, to offset that. Last year, the U.S. government paid out roughly$9 billion to farmers. This year, that figure is set to surge to an estimated$42 billion, much of it aimed at weather-related disaster relief and support for those in financial distress.

35:51Still, the role of subsidies raises tough questions. After all, the U.S. didn't bail out DVD manufacturers when streaming upended the industry. But then again, DVDs are a luxury, while food is a necessity. Now, your viewers who are not close to this would probably say, well, why do we do that? And how much do we do that? And what's the explanation for that? And to which the answer is, if you travel around the world, as I have in my career, you realize and know that feeding your population is a national security consideration for everyone on Earth, right? And we kind of take that for granted here because we're so productive in our agricultural economy.

36:31We don't just feed ourselves. We feed a lot of other people all around the world. But being able to have a food self-sufficiency and a comprehensive, productive, safe, secure sources on a through the cycle basis of food and fiber for the United States of America is frankly a matter of fundamental and vital national security interest. And in order to safeguard that, we have put in place over many decades in this country a whole bunch of support infrastructure to ensure that we will be able to feed our population under any and all circumstances. And that infrastructure has been enormously successful for so long that almost all Americans take it for granted.

37:15Is there also a risk in terms of business and the economy in ongoing subsidies to farmers? It's a very important question. I never met a farmer that wants to make a living at the expense of their fellow taxpaying citizens. That is a true statement. On the other hand, just like every other advanced industrialized country in our peer groups, so think Japan, France, UK, Germany, or whatever, because of the national security implications and so forth, you've got to have a good, stable food supply. You've got to make sure that that's taken care of. So you can't leave that 100 % to the vagaries of the marketplace.

37:56And so it's not a surprise, therefore, that all of our peer countries have similar kinds of mechanisms in place to ensure that and to ensure the care and well-being of the rural land. But having said all of that, it is a risk that if you take too much too often and get your significant risks taken off the table for you whenever they manifest by the government, that you become, you're subject to the risk of the complacency of thinking that that's always going to happen. And, you know, that can be true in a variety of ways. And I think in our country and in our society these days, there is a tendency for the population to want the government to de-risk things when they go wrong.

38:53All those things are legitimate and reasonable. But they also, over long periods of time, change people's behavior in the marketplace. And the market starts to take risks that end up becoming mispriced. You know what I mean? And they end up that the people who are having to provide that support are going to have to provide more of it more often than would otherwise be the case. And that is a risk for the agricultural economy. The Congress, I know, grapples with this on a consistent basis to try and determine the appropriate and most effective place level for this. It needs to be enough to ensure that we safeguard the stuff that we think we need to safeguard for the best interest of the country, but not so much as to create bad risk-taking behavior or unsustainable subsidies or to stimulate overproduction that we don't want or need.

39:51If we don't have a strong agriculture sector, if we can't feed ourselves, we are no longer the superpower in the world. And so all of this, it's a complicated sort of balance that we're striking, that we're working to achieve. President Trump's secretary of agriculture, Brooke Rollins, has a packed travel agenda, visiting the likes of the U.K. and Italy and scheduling trips to India, Brazil and Peru, all in an effort to drum up overseas interest in U.S. agriculture. Specific to soybean, corn, really our row croppers, that's really a very direct result of China. And I know we're making progress on China.

40:28We'll continue to make progress, hopefully. But if we don't, opening up markets all over the world. Listen, EU, for example, charges a 10 percent tariff on average on American products and vice versa. We only charge 5 percent. That's 2x. The average tariff charge around the world is about 15 percent on American products. When we charge on average 5 percent, we've been taken advantage of over and over and over again. So as we are realigning, we're also opening up these markets with the trade deal. So you'll continue to see this moving forward. Now, if around harvest time into the summer, beginning of the fall, we see some real economic harm with our farmers, our president has been unequivocal, unequivocal in saying that he's got the farmers back.

41:13And if there is short term consequences, we'll make sure to do everything we can to mitigate that. Yet mitigation through subsidies could be detrimental to the farmers of today and the generations to come. I'm a big believer that ultimately market forces are the most important thing. But government policy can become, can be either a tailwind or a headwind or it can be, sometimes it's confused and it's both at the same time. And right now the market forces have swung against farmers. So you put that all together, it's not good business to be a farmer in America today. And when the business is not good, what you see is that ultimately some farmers will call the day.

41:52But more importantly, and I think that here is the big problem, is that we are going to see the children of those farmers deciding that farming is not their way of living. Right now I'm going to Iowa State. I hope to come back and try some new things on the farm and continue to grow it. America's history is rooted in agriculture. For J.D. Myers and Stu Swanson, it's run in the family for generations, and their children are set to continue the tradition. But for the tradition to continue, they will need robust export markets for what they produce. The technology is there, the land is fertile, but ultimately there has to be a solid business to make sure someone's around to farm it.

42:39Coming up, breaking up may not be hard to do after all. as Discovery moves to break up with Warner Brothers, even as Paramount Global tries to get together with Skydance. That's next on Wall Street Week.

42:57Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at chatgpt.com by selecting Work Mode, available on Plus and Pro plans.

43:40You already know how AI is changing how everyday work gets done, how much ground you can cover, and how fast a team can scale. To stay ahead, you need the tools that give you a competitive advantage, built for this new era. Welcome to Agentic Revenue. Adio is the CRM for this world. It meets you where you work, compounds every customer signal into context, then acts on it across your pipeline to let you move in on match speed and scale. With agents and automations for every job in revenue, Adio orchestrates your work around the clock. Built to handle the scale of your workloads, extensible with API and MCP, and with the infrastructure to keep up with your most ambitious agents.

44:16Loved by high-growth startups like Granola, Modal, and Etched, Adio runs the work behind every win. That's Adio, the agentic CRM, the intelligent system that never sleeps. Picks up leads at 2 a.m., catches renewals before they slip, hands you the answer before you ask. Try Adio free at adio.com slash iHeart. That's adio.com slash iHeart.

44:41This holiday, the difference between buyers just checking things out and checking out

44:46Dr. Marty Makary:comes down to the last few clicks. PayPal Checkout is a trusted conversion engine fueled by 400 million active PayPal and Venmo accounts. Add Pay Later and turn holiday shoppers into regulars. 96 % of Pay Later shoppers are repeat users. PayPal Open. Built for all business. Get started at paypalopen.com. PayPal Pay Later data, 8 markets, March 2025 to February 2026. Repeat users defined as more than one Pay Later purchase in the past year.

45:17This is a story about the company we keep and the company we lose. Sometimes the world of corporate restructuring seems like an episode of The Bachelor, what with all the theatrics of getting together and then very publicly breaking up when the partnership doesn't go as planned. Warner Brothers Discovery announcing that they would be splitting into two different companies. Changes are coming to Comcast, the media giant announcing it will spin off its cable TV channels, including MSNBC. A deal finally between CBS and Viacom. The media world has been particularly eager to break up and get back together again.

45:57CBS merged with Viacom in 1999, split in 2005, and came back together in 2019. Now renamed Paramount Global, it's on its way to merging with Skydance. And the saga of Warner Brothers is almost as complicated. It's kind of the trend, I think, and it's a cycle that seems to happen over and over again, and people don't really learn their lessons. You know, AOL Time Warner was not that much different than Time Warner, you know, then versus how you look at Warner Discovery today and how they saw AOL. Mark Patrykhoff has spent a career as an investment banker and technology investor, specializing in media and entertainment deals.

46:39He now heads Patrykhoff Company, working with athletes on their private investments. Content's always going to be the most important thing. It's one continuous part of our industry that we know you can't really change radically. It's about talent and creativity and it continues to hold value. Distribution will catch up and recreate itself and new technologies will come, but the content's the constant. With all the back and forth, when does it make sense to merge companies or break them up? And most importantly, when does it work for shareholders and when does it not? We see every year half a dozen to a dozen of these spin-offs and breakups of S &P 500 companies.

47:21The long history of that is that on average they perform average and they end up essentially receding to S &P 500 kinds of returns. Greg Taxon is the managing member of Spotlight Advisors, consulting with corporate boards on activist shareholder campaigns, shareholder proposals, and capital structure debates. There are outliers where splitting a business makes a lot of sense and can actually add value, both on a valuation perspective or a growth and opportunity perspective. But by and large, these things don't really create value. I think when you look at those indices, which basically buy the spun-out entities and hold them, they tend to perform in line or under the S &P 500.

48:10So on average these things don't really create value. There are times when a spin-out or a sale can enable something different but it's only really when the spin-out enables the two businesses to engage in some activity or attract people or investors that are different than the conglomerate that these things really work. The fact that a company has different business lines growing at different rates doesn't necessarily mean it needs to break itself up. The fact is that the people who are running every division inside a business are pretty focused on that business. And it's unclear to me at least how separating it into either a separate public company or selling it creates more focus out of the people whose job it is to run that business.

48:57There are very complex businesses that perform incredibly well. Think Amazon, which has two very disparate businesses with Amazon Web Services and all of their retail, and even within retail, an advertising business, a physical business with Whole Foods, an online business. They got lots of things. They seem pretty focused on creating profit and growth and value, and it's unclear to me that separating any one of those, putting Whole Foods back out as a public company, would actually create more focus on the part of the people that run that business. Yulia Snehor is a professor at the University of Navarra.

49:32Professor Snehor's study of spin-offs like Hewlett-Packard splitting from Hewlett-Packard Enterprises has led her to conclude that there is what she calls an ecosystem that can trigger corporate splits, one driven by the balance between complexity and complementarity. A recent split of eBay from PayPal, where the digital payments, the fintech, started to evolve much faster than the second-hand marketplaces where the eBay, the corporate parent, was competing. And so this difference in growth between the payment business model, where PayPal was looking at serving many different customers in addition to eBay at a much quicker pace with a much higher complexity, was very different from the marketplace, more mature business model of eBay.

50:24And this divergence over time, this increasing difference between the two business models within the same company led to a split in this case. In the case of HP, where HP was originally selling computers, selling printers with the razor and blade business model, but it got also into software, particularly cloud, that started to grow at a very different pace in the 2010s compared to what was happening in the computer commoditizing ecosystem. We saw in 1980s a lot of conglomerates building up and in the last 20 years we saw the VCG, Siemens, several companies in this wave of deconglomerization becoming much more focused and investors looking for pure place out there.

51:10In the last 10-20 years we see the separation between investors who want growth and investors who want value and for a company that pursues both, that has a cash cow business that is delivering high dividends to investors and has another business that is growing a lot and needs a lot of investment, it's very hard to balance these two businesses. It's like riding a skateboard with one foot and riding a scooter or Formula One car on the other foot. When it comes to the media sector, Patrikoff's experience is that these spinoffs and consolidations are all about the relationship between distribution and content.

51:45It seems like these companies merge when they feel afraid of the distribution and they need to own the distribution. But then when a better distribution product or technology enters, they of course want to move to that. And that devalues the deal that they did when they merged. It's like cells coming together and cells separating and cells coming together again. Discovery with all these networks really is a legacy of the cable industry. So cable was distribution. Content filled distribution. and as soon as that distribution channel seemed less interesting, late 90s, you had AOL convincing the media giants that they were the future of distribution.

52:25Cells may come together and separate regularly in the media sector, but when it comes to the particular area of sports entertainment, the get-together, break-up, and get-back-together trend doesn't apply. 98 of the 100 most-watched television shows in the last 12 months for sports programming, I mean, appointment-based programming, live entertainment. It's the ultimate non-scripted, of course, because you don't know the outcome. Why isn't there dilution? In a lot of entertainment, you get dilution over time as you add more and more. So far in sports, I can't see it. Because I think the cream rises to the top.

53:02It's the same argument that people have with women's sports ever generate significant amounts of value and our ancillary sports, whether it's volleyball or men's or women's or the Olympics, but basically there's so much value in these few assets that are out there and they put so much money and energy into marketing them and maintaining them that the consumer only has so many hours in a day and if you are a fanatic of football or basketball there's enough to satiate you over the course of a 12-month calendar year that you're not really going to take a lot of time to put it to other sports. Unlike the rest of the media world, sports investors are looking to get in rather than looking to get out of slower growing business lines.

53:46So what does that mean for potential investors? There are plenty of funds out there now that have raised a large amount of money to take minority stakes in NFL teams, MLB teams, NBA teams. I think it's an interesting idea. I think it helps professionalize the sport. It's certainly driven up the valuations. I'm just not sure how those limited investors, those small investors buying 3 % of the Spurs or 5 % of the Giants or 3 % of the Dolphins without a path to control, without a path to exit, without information rights. It's probably inevitable. I think the teams are going to have to be public entities at some point down the road.

54:24The valuations are getting too high. There won't be enough billionaires to buy them. It will require a board of directors to run businesses of that scale. Community representation, minorities are not represented at the ownership level the way they should be. So you need racial diversity at the ownership level. There's a lot of things that are going to come into play now as these are no longer family businesses run by patriarchs of family-run companies from the 50s. Whether it's traditional media coming to terms with the changing world of distribution or sports leagues and teams basking in the glow of ever-increasing interest, the one constant is the quality of content on offer.

55:03Content is king. I think content is the one constant. There will be content. Consumers will want to experience original content, non-scripted content, sports content, what I do for a living. I think that that's something you could always count on as having value. And then the question is, how is that value achieved? How do you monetize that value? And there is ultimately one source for that high-quality, compelling content and one rule that has stood the test of time. I work for a man around Cap City's ABC who used to say, sooner or later, all the money goes to the talent. He was talking about shortstops back then.

55:39I get it. Is that true? Sure. Look how much money the NFL quarterbacks are making. There's going to be a separate salary cap for quarterbacks for the next two or three years. I'll also give you a prediction, and hopefully we'll sit down again in five years. It's inconceivable of me to think that NFL quarterbacks and other prime positions, and then they'll go to the NBA and other sports, won't be owners of the teams they play on, and that'll be part of their contracts. Why would a chief technology officer at a Facebook or Google get equity in that business, but Joe Burrow doesn't get equity in the Cincinnati Bengals?

56:09So the talent is driving the value. They are part of the ecosystem that historically had been undervalued, while the owners and the media rights holders and the people building stadiums were creating all the wealth. But that pendulum has shifted. And that's part of our business model. But more importantly, it's appropriate, because they are the ones who are doing the work. In the end, it turns out that the company we need to keep isn't so much the corporate form or name. It's the company of outstanding talent. Talent that can create the content that is king. That does it for us here at Wall Street Week.

56:46I'm David Weston. See you next week for more stories of capitalism.

56:57If you listen to financial news, you know a lot of time is spent thinking about what's next. The next opportunity. The next investment. The next move. But sometimes what matters most is being ready for what you never saw coming. For more than 75 years, Cincinnati Insurance has worked with independent agents to help protect businesses, homes, valuables, and more. Because planning for the future isn't only about knowing what's next. It's about making sure you're ready for what you can't predict. Let Cincinnati Insurance make your bad day better. Find an independent agent at CINFIN.com. Game night rush, or any night of the week, really, Genius keeps every order moving.

57:40From online ordering to your kitchen to the front counter. Big league reliability for any business. That's Genius. You already know how AI is changing how everyday work gets done, how much ground you can cover, and how fast a team can scale. To stay ahead, you need the tools that give you a competitive advantage, built for this new era. Welcome to Agentic Revenue. Adio is the CRM for this world. It meets you where you work, compounds every customer signal into context, then axon it across your pipeline to let you move it on match speed and scale. With agents and automations for every job in revenue, Adio orchestrates your work around the clock.

58:18Built to handle the scale of your workloads, extensible with API and MCP, and with the infrastructure to keep up with your most ambitious agents. Loved by high-growth startups like Granola, Modal, and Etched, Adio runs the work behind every win. That's Adio, the agentic CRM, the intelligent system that never sleeps. Picks up leads at 2 a.m., catches renewals before they slip, hands you the answer before you ask. Try Adio free at adio.com slash iHeart. That's adio.com slash iHeart. Thank you.