Agrimoney.com | ags dip, as funds succumb to pre-election nerves

Agrimony is one of my favorite sites to go to for current information on the ag markets, and for good reason. They avoid hype, clickbait headlines and pretty much focus on what is actually going on. And one thing that’s going on right now is that people in the ag business are very, very nervous. You can take a look at the current situation here: Source: Agrimoney.com | ags dip, as funds succumb to pre-election nerves

The article only mentions Trump once, but he is really the elephant in the room, and he makes a whole lot of people in the ag industry very nervous indeed.

No one has been able to really pin him down on anything, really, but one thing is certain, is he has an extremely antagonistic attitude towards China. His campaign speeches and his off-the-cuff comments have portrayed China as some kind of economic super villain that has decimated the US economy. While most people understand that most of his comments are largely campaign rhetoric and could very well change 180 degrees the next time he opens his mouth, it makes a hell of a lot of people in the ag business very nervous indeed, and for good reason.

China buys massive amounts of US agricultural products, and making vague threats and uttering dire warnings about what he’d do to interfere with China’s business interests, is a very dangerous thing to do when China could easily put barriers in place to restrict the importation of US farm products.

Has China damaged our economy? Probably. But it was done with the full cooperation of the US companies who gleefully started snapping up Chinese products instead of making them here because it was more profitable. And with the full cooperation of the US government which did little or nothing to try to stop it.

But that point is moot right now. It’s already happened. Pointing fingers and uttering vague threats isn’t going to do anyone much good at this point in time. And it could make things far worse. If Trump gets elected and continues to try to use China as a scapegoat for our own largely self created economic problems, the end result could be very nasty indeed.

Like it or not, we are in a world wide economy. US ag exports are a relatively bright spot in what is an otherwise overall mediocre or even worrisome economy. If Trump becomes elected and continues his blustering, threatening attitude, China could simply take its business elsewhere.

The ‘Ick’ Factor

I was reading an item over at AgWeb about what appears to be a growing interest in raising insects for animal feed <click the link to read the item>. Now you wouldn’t think that there would be any interest in feeding bugs to cattle. Cows, after all, are herbivores, they eat grass, grain. And they do. But cattle also need protein, especially if you want them to grow quickly for meat or if you want them to produce milk. Most rations for beef and dairy cattle both have some kind of added protein, often in the form of fishmeal or soymeal, but sometimes other types of proteins derived from animal sources. (Until the discovery of BSE (mad cow disease) including animal protein and bone meal derived from waste from cattle processing facilities was fairly common.)

In the US and EU feeding cattle insect derived proteins is illegal, but it is a common practice in other parts of the world, and there seems to be considerable interest in the practice. There are attempts to start up companies that produce insect proteins (usually some kind of larvae) specifically as a cattle feed supplement. There seems to be some justification for the practice. It would be relatively environmentally sound because the insects would be raised mostly on organic waste that would have otherwise been discarded. They can be grown in controlled, sanitary conditions. And there’s no doubt that it could produce feed supplements that would work just as well as other supplements.

But there has been some rather strenuous objections, especially in the US and the EU, over the practice. Mostly for reasons that aren’t really all that logical. This seems to be changing, but I suspect that many of the arguments against the practice aren’t due to logic, but to the ‘ick’ factor.

In Western cultures we’ve been raised to see insects as dirty, filthy, carriers of disease, to be disgusting, horrible things that should be killed on sight. We’ve been trained to be scared of insects rather than look at them as beneficial animals that have their own and very necessary niche in nature.

This kind of cultural

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Yummy yummy blutwurst

conditioning takes place in all cultures, of course. Every society, every culture, has it’s own ‘ick’ factors. Heck, I probably eat things, and enjoy them, that would make you gag. Like blutwurst or blood sausage. And yes, it’s made with real blood. Headcheese, which isn’t cheese, but is made with heads. Raw fish…. And I’m sure you eat things that would make me shudder. My sister used to dip sardines in milk. I have no idea why. And yes, she’d drink the milk after.

I’ve always been fascinated with this ick factor, why some people are disturbed, even disgusted by some things, while others find the exact same thing not at all disturbing, even kind of nice. And with how it changes in individuals, including myself.

If thirty years ago someone had told me that I would one day love squid, octopus, raw fish, eel, I’d have questioned their sanity. But I do. If they had also told me that I would one day find chicken so disgusting that just the smell of it would make me retch, I’d have told them the same thing. But I do.

People are weird.

 

It’s been a weird fall here in Wisconsin

This fall has been ridiculously warm. You’d think we’d like this unusually warm fall up here in the land of blizzards, frozen cars, burst water pipes and children frozen to flag poles. But we don’t. Not really. We’re not used to this.

img_0828It’s October 23, and I’m still harvesting eggplant and peppers, for heaven’s sake. I mean look at that box full I picked this morning over there on the left. And there seems to be no end in sight. The eggplant and assorted pepper plants are in full bloom, loaded with baby fruit. I’m harvesting dill for the second time this year. I have a second crop of spring onions about ready to eat. I planted those at the end of September. I have chives coming out my ears. I’d be drying those but we already have far, far more chives than we know what to do with. The greek oregano is going crazy. It’s over a foot tall and in full bloom, for the second time this year. Same with the sage. Some of my hostas have put out flower stalks for the second time this season. I was looking back in the tomato bed that I cleaned out at the end of September and found a dozen or more volunteer tomato plants newly sprouted, some six inches tall already. I’m tempted to pot some of them and see if they’ll grow indoors.

According to the recording thermometer the coldest night we’ve had has been about 41. Daytime temperatures have generally been up in the high 60s to low 70s. The only way we know it’s fall is that the days are much shorter and the trees are losing their leaves.

This isn’t a horrible thing, this extended warm streak. It certainly is keeping the heating costs down. But it’s, well, odd. It doesn’t feel right. And you can tell it’s bothering people. They seem nervous, edgy, waiting for the other shoe to drop. We all have this feeling of mild dread.

I don’t know if it’s our upbringing, or some kind of inherent human trait, but we all seem to share it. We all get this feeling that something is too good. Some malicious deity or force of nature or something is deliberately lulling us into a false sense of security, and then wham, drops ten feet of snow on us, or plunges the temperature down to -30, or — or something is going to happen.

The thing is, we like winter up here. We like the snow. We like the bone chilling cold. It’s part of our heritage. It’s part of our nature.

We complain about the cold, the winter, true. But if you listen to those complaints, you begin to realize that we also take a perverse pride in it as well, pride in our ability to deal with it. And an enormous amount of delight in laughing at the people down south when an inch of snow shuts down the entire metro Atlanta area.

Our complaints about the cold and snow are part of the fun, the bragging about how cold it was, the complaints about shoveling six feet of snow off the porch before we could even get outside to get to the outhouse.

Well, okay, the outhouse thing is a bit outdated. We’ve had real indoor plumbing here in Wisconsin for, oh, two or three years now. But you know what I mean.

What’s the point in living in Wisconsin if we can’t brag about the bad weather any more? Is it really worth putting up with living here if we can’t laugh at the people in Illinois because they don’t know how to drive in the snow any more?

 

Rise of the robot tractors | Dairy Herd Management

Ghost in the machine. A John Deere 7930 tractor rumbles across a canola field, buggy in tow, and eases alongside a rolling combine to collect grain. Speed, distance, and timing are synced in a farming machinery version of a harvest mating dance. Except this is no ordinary two-step. The box is empty. There is no wheelman in the tractor cab.

Source: Rise of the robot tractors | Dairy Herd Management

 

I’ve been waiting for someone to do something like this for a while now. I figured it was only a matter of time before someone out there came up with a system like this.

Now there are self-drive systems out there for high-end tractors, but they’re complex and expensive. Mr. Reimer here did it for around $8,000. Granted, it certainly isn’t as complex as what is needed to make a self-driving car, but it’s still useful and pretty darned neat. His system doesn’t have collision avoidance systems, radar, video or the other things necessary for automobiles, but the tractor is only used in large fields where there is little or no danger of it hitting something. For this application it works quite well indeed.

There are self-driving tractors out there, but the option is, as I mentioned, expensive, and it’s only available on new, high-end (and expensive) tractors. A system like this could be adapted for use on just about any tractor, no matter how old.

Agrimoney.com | China’s pork imports to ease from record, as domestic output grows

The top pork consuming country will see its imports ease, a bit, next year as the boost to domestic output from high prices works through

Source: Agrimoney.com | China’s pork imports to ease from record, as domestic output grows

The agriculture industry is going to have to begin to accept the fact that in the future China is not going to be the massive importer of food that it has been in the past. Unfortunately it seems that a lot of agribusinesses in the US, South America, NZ and the EU haven’t figured that out yet. This is especially true of the dairy industry which still seems to be betting the farm on the hopes that China will return to the days when it was importing all of the milk and milk products it could get its hands on.

For years now China has been pushing hard to improve its agricultural systems. It has been investing heavily in almost every type of agriculture, from grain production, to meat, to dairy, China has been putting a great deal of money and work into improving and modernizing its farming techniques. The ultimate goal of the country is to be at least 90% self sufficient in food production within the next ten to twenty years.

Whether or not China will succeed in reaching that 90% goal I don’t know. But even if they don’t, it will still have a profound effect on world agriculture. We’ve been treating China as a guaranteed market, a buyer of massive amounts of product that will always be there to help absorb our products. But it won’t. And the effects will be profound, as they were when China abruptly cut back drastically on milk product imports. The result from that was the price of milk and milk products plummeting by almost half, and the dairy industry still hasn’t recovered from that.

There will almost certainly be a China market, but it’s almost certain to be far smaller than it has been in the past. If agribusiness can’t learn to adjust, other agricultural sectors are going to find themselves in the same situation dairy is in now.

Merger Fever

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If you follow ag news you must be aware of the high profile mergers and buyouts going on in agribusiness. After months of trying to sell itself or merge with another agribusiness company, Monsanto seems as if it is going to be snapped up by pharmaceutical giant, Bayer, so the German company can increase it’s ag presence. Bayer is already a major maker of pesticides and snapping up Monsanto would give it a significant presence in the GM seed market as well.

It is not a done deal by any means. It still has to be passed by antitrust regulators both here and in the EU. There seems to be considerable resistance to the merger in Germany and in the EU as a whole, and a lot of politicians over there have been making disapproving noises.

This isn’t the only big ag merger going on, either. Dupont and Dow Chemical are in the process of merging, with the details still a bit up in the air. Swiss company Syngenta, which Monsanto had attempted to cut a deal with earlier, is being snapped up by the China National Chemical corporation, which is owned by the Chinese government. All four of these companies are major players in the agricultural chemical industry. (ChemChina seems to be on a buying spree. Last year it bought Pirelli, the Italian tire maker)

Mergers, acquisitions, buyouts, etc. aren’t anything new, especially in the ag industry. It’s been going on for ages. And generally the results, at least for the farmers, aren’t pretty. Over the years we’ve seen virtually every small, independent co-op, feed processor, seed maker, machinery dealer and independent mechanic be bought up, forced out of business or merged into ever larger semi-monopolistic businesses. And while competition has dwindled, farmers have fewer choices of where to go to buy seed, fertilizer, feed, chemicals and equipment, prices have, of course, skyrocketed.

The problem with all of these mergers is that they don’t seem to benefit anyone except a handful of investors, lawyers and, of course, the upper management of the companies themselves. They certainly don’t benefit the consumers, that is the farmers and you, the people who buy the milk, cheese, eggs, meat, vegetables and fruit that the farmers produce.

We used to plant 30 to 40 different types of soybeans in the US. Today, 90% of all the soybeans planted in the US are a single variety, produced by Monsanto. The fact that Monsanto has a literal monopoly on soybean seed isn’t the only problem with the situation. It’s the fact that we could be facing a very serious biological crisis. If a new disease pops up that this one variety of bean is susceptible to, the entire US soybean crop could be jeopardized because of this lack of genetic diversity. These monopolies have resulted in such a lack of genetic diversity in our agricultural systems that many of them now lack the genetic diversity to be sustained if a disease strikes them.

What these companies try to do, want to do, is lock farmers into a specific “system” of agriculture. You buy a specific type of seed to plant. That plant comes along with a specific program of herbicide and pesticide control systems, also sold by the company. Farmers do it because it’s easy. Sort of one stop shopping. They get everything they need from one vendor. And generally these systems are profitable.

At least at first. What generally happens is the company starts to get greedy. After releasing the system at a relatively decent price, the company starts ratcheting the price up once farmers get hooked into it. Prices go up until farmers realize the system isn’t all that profitable any longer. But by that time, well, they have such a heavy investment in the system they can’t really get out of it any more. Besides, where else are they going to go because the company has driven all of it’s competition out of business.

Farmers who want an alternative have enormous trouble even trying to find one. These semi-monopolies claim there is still a lot of competition out there. And it’s true that there are some competitors. But not many, and even fewer who could provide large scale farmers with the quantity of seed they need at a price they can afford to pay.

Starving Amidst Plenty

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Not a day goes by when you don’t see a news item about more food aid being needed somewhere as enormous numbers of people go hungry or are even starving because of natural disasters, political disasters, poverty. If you follow the agricultural media as I do you will see articles about the mega ag companies like Monsanto talking about how they need to get ever bigger, absorb even more small companies, because they need to develop new seeds, new herbicides, to satisfy an ever expanding and increasingly hungry world population. Articles about food deserts in the inner cities in the US and other otherwise prosperous countries. Articles about how we need to cultivate more land, increase the yield of crops because people are starving all over the world.

But then along comes items like this story from AP at AgWeb: Why Is There So Much Food?

The US alone is producing 24 billion gallons of milk a year. We’re producing enough milk every year to fill a good sized lake or two. So much milk that it’s driven the farmgate price down so far farmers are going bankrupt. The US alone has 1.24 billion pounds of cheese in storage and 322 million pounds of butter. USDA has been buying up stored cheese and giving it away to try to keep prices from collapsing.

If milk were the only commodity we have massive surpluses of, it wouldn’t be so bad. But it isn’t. The US has 377 million pounds of strawberries and 313 million pounds of blueberries in storage. In total we have around 1.5 billion pounds of fruit in storage. We have 1.3 billion pounds of turkey and chicken in storage.

If you look at grains, the situation is similar. The 2016 corn harvest is just getting started here in the US, and it looks like it’s going to be a near record breaking crop. And we still have millions of bushels of corn in storage from last year’s near record breaking crop. The price of corn has plummeted to $3.30 or so a bushel, and will probably drop considerably as the new crop floods storage facilities. The story with soybeans is similar. Same with wheat. Eggs, which suffered massive price increases that saw the local stores selling eggs at $1.75 a dozen, have fallen to $0.49 cents in our local grocery store.

Right now we are looking at the lowest prices for ag commodities that we’ve seen in many years. Retail consumer prices are flat or falling. One source I read the other day claimed retail food prices have dropped by 8% in the last six months. The UN claims food prices are at the lowest level they’ve been at (adjusted for inflation) in a very long time indeed. We have a glut of food on the market, so much we don’t have enough storage space for it.

And we still have people going hungry, even starving. Even in the most affluent countries in the world we have large parts of the population who are hungry, who don’t know where their next meal is coming from.

It isn’t agriculture that’s at fault here. It isn’t farming. It’s politics. Petty nationalistic disputes, power struggles in congresses and parliaments. It’s prejudice and discrimination. It’s greed and selfishness.