As Iowa caucuses wane, what businesses suffer

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On Thursday, the Iowa State Fair—11 glorious days of "butter cow" idolatry and cholesterol baiting—kicks off, melding the state's two great passions: home-grown industry and presidential politics.

In addition to its agricultural displays and farm shows, the state fair will feature a roster of presidential hopefuls, most of whom will participate in The Des Moines Register's Soapbox speakers series that goes through next week.

But the forecast is already a little cloudy for the event: The fair takes place amidst a growing concern that the Iowa presidential caucuses, set for Feb. 1, are in decline and that state's cache might go along with it. Although caucus doomsayers have made similar prognostications, there is reason to believe that the wane is real this time.

Last month, in a truly concessionary move, the state Republican Party decided to end the Iowa straw poll, after a number of the candidates opted not to participate. Matt Strawn, the former Iowa GOP chair, told the Register that the machinations of his national party had effectively "chipp(ed) away at Iowans' role in the process."

It's not just Hawkeye State politicos who are grappling with the potential change to their accustomed status: There's an entire political-industrial complex that has, since 1972, oriented itself around the quadrennial political horse race.

With their first-in-the-nation status, the caucuses have long held an outsized influence in presidential nominating process; In 2008, the election was credited for singularly launching Barack Obama's White House run. But last election, caucus night ended on an off note, and the epigraph chisels have been carving away ever since.

It's a big concern across the state, especially for industry and interest groups that have long relied on the caucuses to lobby and market their interests to future presidents and the national press. Not only is Iowa's political influence up for grabs, but the agricultural issues that have come to define its politics have grown more complex and diffuse.

"The commodity groups have had a lot of power," said David Swenson, an expert in agricultural economics at Iowa State University. "Corn, soybean and hog producers have always been very opportunistic at making sure they use these candidate forums or candidate interviews or candidate interactions to advance their pet interest. That is really not as likely now."

There also hasn't been, for the last several decades, a truly unifying agricultural policy issue to support, such as after the 1980s farm crisis (federal subsidies).

"The nature of representation has changed over the years and the whole idea of gratuitously advancing (agricultural) interests has lost its taste among politicians," Swenson said. "Ethanol was the last great gasp of some of the super ag interests issues—it has lost its shine."

In March, Bruce Rastetter, an Iowa businessman and GOP donor, who has made his fortune from hogs and ethanol interests in the state, convened an agricultural forum in Des Moines that was attended by a dozen GOP presidential candidates. In spite of the setting and the pro-ethanol exhortations of the state's Republican governor, Terry Branstad, several of the candidates, including Jeb Bush and Sen. Ted Cruz, advocated for an end to the Renewable Fuel Standard (RFS), which the industry aggressively supports.

Bob Dinneen, president and CEO of the Renewable Fuels Association, the top ethanol lobbying group, said his organization is now beginning to focus on other key early states.

"It's not just about Iowa, obviously," Dinneen told CNBC.com.

When asked where else his sights were set, Dinneen was circumspect—"I don't necessarily want to let the opposition know where we are focused," he said—but described the group's overall efforts as having "put the program we had four years ago on steroids."

Ray Gaesser, an Iowa farmer who serves as chairman of the American Soybean Association, said the issues that concern his industry constituents have grown more complex over the years.

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"It is not just about agriculture," said Gaesser. "It is about health care and education and jobs and infrastructure and national security. ... We are not just about soybeans, even though we are a soybean association."

At the same time, other industries not normally associated with the caucuses are seeing a political vacuum they can occupy. Last month, the American Gaming Association, a casino industry lobbying group, held a roundtable event in Council Bluffs, Iowa, and later sat down with The Des Moines Register editorial board.

"Frankly, the reason people don't think about gaming in Iowa is we never had an effort before in this context," said the group's spokesman Chris Moyer.

The Greater Des Moines Partnership, the region's main public-private economic development consortium, said it is ramping up its caucus strategy and trying to demonstrate the state's white-collar economies, such as insurance and financial services.

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Democratic presidential hopeful and former Secretary of State Hillary Clinton speaks to guests gathered for a campaign event at Iowa State University on July 26, 2015 in Ames, Iowa.
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"In Des Moines, that is why we are so sensitive about getting skyline shots in the background [of television hits]," said Greg Edwards, president of the city's convention and visitors bureau.

Whatever its future fate, the caucus' will still bear fruit this election.

"We are really taking it as it comes," said Ryan Achterhoff, chief administrative officer of the Pizza Ranch restaurant chain, which gained lots of media attention in 2012 for being a popular presidential candidate meet-up spot. Achterhoff said the company decided not to market itself to the presidential campaigns this cycle: "We know this will probably run its course and candidates will find other places to meet, but we are just enjoying the publicity and public relations that go along with it."