The interesting thing about the new tax law that got rammed through is that no one really seems to have known what was in it, not even the people who wrote it. This law was literally written in secret, behind closed doors, with only a very few people being allowed to know what was actually in it. Special clauses were inserted for no other reason than to get support from members of congress who threatened to vote against it. And often the people writing it had no idea what they were actually putting into the law. Except for a few high profile items and talking points, none of it was allowed to be made public until it came to the floor for a vote. And finally it was passed in such a rush that the people voting on it didn’t know what they were actually voting for or against.
Apparently even the people who actually had specific items inserted into the law didn’t know what the clauses that they themselves had put in would actually do. Part of the new law, IRC Section 199A that applies to earned income from pass through business activities is one of the items that even it’s authors didn’t really understand. And one section of the 199A deduction could have a huge impact on farmers and how they sell the commodities they produce. I ran across this over at WallacesFarmer and it gives a brief rundown on how it works. But if you don’t have time to go read it yourself, here is how it would work.
The law includes a deduction for income from cooperatives for members of co-ops that is calculated differently from other sources of income. Basically income derived from selling your crops to a co-op you belong to is treated entirely differently from income from selling your products to a non-co-op.
The whole thing is a bit complex. What it essentially does for farmers is that in certain situations it carves out a huge deduction for selling your commodities to your co-op instead of to a commercial grain dealer. In the example they give in the article over at Wallaces, a farmer who sells his grain to a non-co-op business like an ethanol facility and ends up with a $50K profit, will end up owing about $4K in taxes on the profits from the sale.
If he sells it to a co-op, however, the farmer will end up owing zero taxes on the net income from the sale.
The really scary part is that the senators who inserted this into the tax bill, apparently had absolutely no idea this would be the result of the clauses they put into it. Two senators, Hoeven of ND and Thune of SD seem to have been largely responsible for shoving this into the bill just hours before it passed, and both claim that they did not intend to favor co-ops over any other business, despite the fact that is exactly what this does.
And this is just one clause in a law that is hundreds of pages long. No one knows yet what kind of traps, loopholes, give aways or other little surprises are lurking in this thing, and it could be months before we really know. And you can be sure that a lot of this is going to end up going through the courts before it all gets settled.
I haven’t done one of these in a while, so let’s take a look at what’s been going on in agriculture. And since this is January 2018, maybe take a peek at the crystal ball (I actually use an old tennis ball because, well, have you seen what a good crystal ball costs these days?) and see what might be going on in the upcoming year.
Dicamba has been in the news again. This time the Arkansas state legislature has weighed in on the issue. It’s legislative council has approved the Arkansas plant board’s ban on the use of Dicamba from April 16 to Oct. 31. The board put the ban in place after receiving almost 1,000 complaints of Monsanto’s new “no-drift” blend of the herbicide doing exactly that, drifting, and damaging thousands of acres of crops in the state. The company has released the hounds lawyers, is filing for court orders, is threatening to sue everyone in sight, has launched attacks against at least one individual member of the plant board, and it’s getting nasty real fast.
Meanwhile other big soybean growing states have instituted new, much stricter controls on the use of the new herbicide after hundreds of thousands of acres of crops were allegedly damaged by the new blends. Even the feds have gotten into the act, instituting stricter rules and usage regulations about using the stuff.
Monsanto and it’s partners that are selling these blends claim that the drifting isn’t their fault, and that it’s the farmers and people performing the applications that are to blame. The clam is that they’re using the wrong equipment, spraying at the wrong time, at the wrong temperature, and even using not Monsanto’s patented product, but straight dicamba that they’re purchasing elsewhere that volatilizes much more easily. But in order for this much damage to be caused that way, a huge number of farmers and applicators would have to be breaking the law, and I don’t believe that. Commercial applicators won’t risk it. They could lose their licenses, get huge fines, be sued, basically be put out of business if they didn’t apply these products in the proper way. And farmers who apply these products themselves would face similar penalties.
A2 Milk – I don’t recall now if I’ve talked about so-called “A2” milk before, but if you haven’t heard of it yet, you will in the near future. I suggest you go read the Wikipedia article on it which goes into extreme detail, and which has a plot like a soap opera, complete with bankruptcies, threats, untimely deaths, utterly ridiculous health claims including that it cured diabetes, cancer, etc., bogus marketing scams and I don’t know what all else before it finally became “legit”. I just re-read it and– oh brother, it’s a mess. The thing you want to remember about A2 milk is that it is, well, milk. The only difference is that the casein in the milk has a slightly different chemical makeup than A1 type milk. Nor is A2 milk entirely free of the A1 type of casein. Despite all of the hype, it is still just milk, and there seems to be no real basis in fact for any of the health claims being made for it. If you want to drink it, fine. But for heaven’s sake, don’t pay more for it than you’d pay for regular milk because it doesn’t cost any more to produce the stuff than it costs to produce A1 milk.
Dairy – There doesn’t seem to be much good news for the dairy industry for 2018. Thanks to continued overproduction and a projected increase in production during 2018 of 3% or more, milk prices look like they’re going to be heading down, with some people predicting the price could drop to $13/CWT or even lower. A dairy economist over at UW Madison thinks prices could climb as high as $16 in the second half of the year, but he seems to believe that production and demand are going to start to balance out, and frankly there doesn’t seem to be any real reason to believe that.
Some people think China is going to dramatically increase imports of milk products, but there’s no real reason to believe that, either. China has had a moderate increase in imports, but not to the point where it is having much effect on milk prices.
Don’t look to NAFTA for any help, either. If anything, the NAFTA negotiations are doing little more than making Mexico and Canada increasingly irritated. But more about that lower down on the page.
About the only good thing that’s happened in the dairy industry is that cattle feed prices have remained fairly low. But while that’s good news for dairy, it’s bad news for grain farmers.
Corn – Corn prices don’t look like they’re going to get much better either. Despite predictions that farmers are going to be planting less acreage in corn in 2018, the amount of grain actually produced isn’t going to be shrinking much because of improvements in yield, and as a result the price of corn on the commodities market has remained at or near the $3.50 level, where it’s been for months now. Demand for corn appears to be relatively flat.
As is the case with milk, there is hope that China will start to ramp up imports of corn, but there seems to be no real proof that is going to happen any time soon. The biggest buyer of US corn used to be Mexico. In 2017 Mexico curtailed it’s purchases of US corn, and has been talking to sellers in Brazil and Argentina. Increased sales to Japan has made up for some of that loss, but the way things are going in the political arena, don’t look for any improvement in grain exports any time soon.
NAFTA – The trade agreement that administration officials were claiming would be done in just two or three weeks back in mid summer of ’17, wasn’t, of course. Negotiations are still going on, and despite public statements by the administration indicating things are going just fine, they aren’t. Behind the scenes reports from the proverbial “unnamed source” indicate that things are definitely not going well. And when one considers that the ruling party in DC can’t even negotiate with it’s own members to keep the government funded and has to depend on the opposition to get enough votes to keep government offices open, that shouldn’t be surprising.
The question isn’t when a new NAFTA will be negotiated, the question should be is there going to be any kind of NAFTA at all. Right now I’d say that the chances of NAFTA being successfully renegotiated are around 50/50.
As is common this time of year, the experts are trotting out their opinions about what’s going to happen in the upcoming year in the agriculture sector. And as for that question up there in the headline, the answer is no.
The only analyst who seems at all optimistic is McGlone from Bloomberg, and his comments are a bit, well, odd, frankly. McGlone’s comments seem to be made by someone who hasn’t read a market report recently. He thinks ethanol demand is going to hugely increase, China is going to import US ethanol at a high level, and that is going to drive prices up. And none of that is really true. There is no huge increase in demand for US ethanol from China, ethanol use in the US has flatlined. And the “robust” global demand for corn he talks about? If that “robust demand” actually existed we wouldn’t be seeing record levels of corn sitting in storage.
As for the rest of the sources quoted in the summery, none of them are very optimistic about corn prices. Rabobank seems to think corn will reach $4 or better, but it’s basing that on are, I think, some pretty sloppy speculations about decreases in corn acreage.
Most of the others don’t see corn prices going up any time soon. Unless some kind of major disruption occurs like a severe weather event like a widespread drought, corn prices aren’t going to be moving up and may even move down a bit.
I was tempted to add in a bit about the whole ethanol industry here at the end, but I think I’ll leave that for an upcoming article. I’ll leave you with this thought, though. The entire ethanol industry is going to utterly crash and burn within the next twenty years or so, so I wouldn’t invest your 401(K) funds in it if I were you.
Now that’s a scary headline, isn’t it? You’ve probably seen similar headlines over the last few days as even some of the major news outlets have been talking about it. What’s especially troubling is that canola oil has been marketed as being a “healthy” oil for many years now, and it is in very wide spread use around the world. So the possibility that it is linked to something as scary as dementia is pretty serious.
What is canola in the first place? Well, in a way “canola” doesn’t really exist. It actually a variety of rapeseed. The term “rape” comes from the Latin word “rapum”, which means turnip. Rapeseed is related to turnip, rutabaga, cabbage and mustard. We’ve been using plants in this family for oil for thousands of years. It seems that rapeseed oil in the first half of the 20th century was used more as a lubricant than as a food product. Production in Canada increased enormously curing WWII.
After the war demand fell drastically and farmers began to look for other uses. Rapeseed oil was brought to the market in the mid 1950s as a food product, but it had some problems. It had a nasty green color and tasted pretty bad. Even worse, it had a high concentration of erucic acid. Animal experiments indicated that consuming large quantities of erucic acid caused heart damage.
In the 1970s Canadian researchers bred a variety of rapeseed that had far fewer objectionable qualities and far less erucic acid. The term “canola” was originally a trademark name for the new variety, made out of “Can” for Canada, and “ola” from other vegetable oils like Mazola.
Modern canola oil is considered, or was considered before this study came along, to actually be fairly healthy. But now…
How concerned should we be about this? This was just one study and more research needs to be done, but it still is something we need to be concerned about. Dementia is very scary and anything that increases the risk of getting it needs to be avoided if at all possible. To be honest, I’m not going to be buying canola oil after this. There are other oils out there with similar smoke points and nutrition profiles that can be used instead.
Let’s catch up with what’s been going on in agriculture.
Let’s lead off with this odd little item. So, here’s the scenario: You’ve just survived a hurricane. Your house has been flooded, your whole neighborhood has been destroyed, you’ve lost everything you own, you’re trying to cleanup and rebuild. You desperately need money, building supplies, cleaning supplies, drywall, lumber, shingles, plywood… So you’re sitting there staring at the ruins of your neighborhood and you think, “Wow, what I really need is a big hunk of cheese…”
That is apparently what some people in Wisconsin thought when they shipped 45,000 pounds of cheese to the hurricane ravaged areas of the country. Yep, they thought, what they need isn’t money or building supplies or cleaning supplies or anything else that might actually be, well, useful. What they need is forty five thousand pounds of cheese…
Dairy/Milk: All things considered, the dairy business wasn’t totally horrible this year. Not great, but not terrible. The average price for Class III milk (the kind that’s used for cheese and butter) for the year was in the $16.10 to $16.20 range for 2017. That’s considerably better than 2016 when the average price was about $1.60 lower. The price seems to have been propped up largely by demand for butter and cheese, which has remained fairly strong through a large part of the year.
But the ever present specter of over production is once more haunting the dairy business. Production in the US was up around 2.5% over the year, and production has been going up in other dairy producing areas of the world as well, and the market is showing signs of strain. Butter prices on the Chicago Mercantile have dropped from 2.65 to around 2.21, butterfat exports have fallen, cheese prices have dropped about 10 cents and cheese in storage has increased almost 6% over last year.
Mexico is one of the biggest purchasers of dairy products from the US, but it is actively seeking other sources of supply because, well, would you be comfortable dealing with a merchant who called you a drug-running murdering rapist? It has cut it’s purchases of nonfat dry milk from the US by around 20%, and is getting it from Canada and the EU.
Throwing a monkey wrench into the works is NAFTA, which the administration is supposedly renegotiating. Does anyone except me remember that the Ag Secretary, Perdue, was proudly claiming that the administration was going to renegotiate NAFTA in just three weeks back in early May? Sigh… I try to keep politics out of this, but it’s hard sometimes.
The end result of all of this is that the future for the dairy industry doesn’t look very good. Between over production, declining demand, declining exports, well, right now it looks like 2018 is going to see milk prices dropping by at least $1/cwt, down to the $15.50 range, and they could even get lower than that.
Wild Pig Population On The Rise: Wild pigs are a huge problem. It’s estimated that there are 6 to 11 million wild pigs running around out there, and according to the National Feral Swine Damage Management Program they are responsible for up to $1.5 billion in damage every year.
They’re trying to get approval for a poison based on sodium nitrate called “Hoggone” which would apparently be placed out in the field in “a species-specific feeder”.
The problem with that kind of thing is, of course, that other animals other than that target species often consume the poison because these “species-specific feeders” often aren’t all that specific. Then there are problems with poison residue left in the carcass being consumed by predators and scavengers. And if you read the article tagged up there you’ll see that some of the experts don’t think poisoning is going to do all that much to cut down the size of the population.
Can you hunt them? Hell yes. You need to check the regulations in your own area for specifics, but most states strongly encourage hunters to take wild pigs, and have few restrictions and no bag limits, and no restrictions on size, gender, no specific season.
Can you eat ’em? Ah, well… Here’s where I get a bit nervous. A lot of DNRs encourage people to eat them. But that’s because they hope you’ll go out and shoot a lot of the buggers. I know people who wax poetic about the joys of eating wild pig. Me? I wouldn’t touch one. They carry a lot of diseases, many of which are infectious to humans and pretty nasty. A lot of them are infested with parasites… No, I wouldn’t eat one.
Cranberry Glut: We are growing way, waytoo many cranberries. We have so many cranberries already in storage that even if we’d lost the entire 2017 crop, we still would have had a surplus.
The Cranberry Marketing Committee is trying to get USDA to issue a marketing order that would require cranberry growers to produce 25% less cranberries than market demand.
The problem with cranberries is that except for the holiday season, there is really little demand for them. Despite efforts by marketing companies to boost demand, consumption of cranberries in any form has been shrinking. Cranberries, at least by themselves, just don’t taste very good. They are so sour and so bitter on their own that they are virtually inedible unless you add a huge amount of sugar to them, or use them only in very small quantities as a flavoring agent.
What The Heck Is Actually In That Stuff? You might like to think that manufacturers are required to list the ingredients in a product on the label, but there are all kinds of loopholes in labeling regulations that let them refuse to tell us what exactly is in the products we use. But California has passed new legislation that will lift the veil from at least one category of products, cleaning chemicals. When you see that term listed, it means that chemicals have been added to make the product smell nice. But what exactly is “fragrance”, or the ever popular “cleaning agents” that are listed on the labels? Turns out “fragrance” can contain one or more of thousands of different chemicals, some of which, it seems, are highly toxic, and even are known to be carcinogens. Some labels don’t tell you anything at all. This will will help a bit, but the law doesn’t really go far enough. It only covers cleaning products, for one thing.
Note: The article at Mother Jones that I’ve linked to here seems to be focused on fragrance for some reason, while the bill itself (yes, I’ve read the thing) does not seem to be restricted to chemicals added for fragrance alone. Fragrance is specifically mentioned in the bill, yes, but the bill seems to cover all chemicals in a product not just those used as fragrances.
I finally pulled the plug entirely on my blog over at Tumblr. I’m not exactly sure what Tumblr has become, but it isn’t a blogging platform any more, isn’t a social media platform.
The first blog I had was over at Tumblr and I was fairly active over there for many years. It was wildly popular at one time, and I liked it over there. It was a unique place. It was simple to write short entries, a few paragraphs long, shovel in some photos, and generally talk about anything you wanted with few, if any, restrictions on content. There were no intrusive ads being shoved in your face. There were a lot of thoughtful, interesting people. A lot of them were friendly, supportive. A lot of us using the service made some very good friends among the inhabitants of Tumblr. It had a commenting system that was easy to use, permitted people to respond easily to comments, fostering lengthy discussions.
Yes, it had it’s problems. It had the usual trolls, jackasses, jerks, etc. But generally speaking it was a fun, informative place to hang out. At it’s peak, Tumblr was seeing over 100 million new posts every day, and almost a quarter of a million new blogs were starting up every day. Now the number of new blogs starting up has fallen by more than half, and the number of new posts has fallen to 35 million.
How many people actually use the service? That’s almost impossible to find out. Tumblr seems to not make the number of active users public. Plus what exactly is a “user”? While I still have an account there, I’m not active any more. Haven’t been for some time. The situation is the same for most of the people I followed over there. Their accounts are still active, but they don’t bother posting anything any more. Considering that the number of new posts has dropped by two thirds, I’d suspect that the number of actual users has dwindled considerably as well.
Now, to make things even more interesting, the founder of Tumblr, David Karp, announced he is leaving.
What happened? Well, a lot of us who have seen the service falling apart blame it on Yahoo. Yahoo bought Tumblr in 2013 for $1.1 billion. Yahoo publicly promised it wouldn’t screw things up. But, of course, it did. Well, Yahoo already had a long track record of buying prosperous companies and running them into the ground through mismanagement, starving them of resources, and operating with a ‘profit at any cost’ philosophy that quickly destroyed the popularity of the services.
The problem with Tumblr was that while it was wildly successful, it also wasn’t making any money. Yahoo planned on changing that. They waited a while for the anger over the sale to die down and lull users into a false sense of security, and then started to tinker with things. They injected ads into people’s dashboards, utterly destroyed the comment system while claiming they were “improving” it, destroyed the messaging system, and even worse, enabled the abuse of the system by allowing people to deploy “bots”, automated systems that had the guise of being regular users but which instead were fake accounts set up by porn distributors, advertisers, etc. It’s added “enhancements” which rearrange the material that shows up on your dashboard so that it is no longer in chronological order, but now places what Tumblr considers to be the “best” content first, which means cute GIFs of kittens will be pushed to the top of your dash while the stuff you really want to see is shoved down to the bottom…
The whole atmosphere became increasingly difficult to deal with, even downright toxic. At the point I abandoned Tumblr entirely about 2/3s of my “followers” were bots because I gave up trying to weed them out. It wasn’t worth the effort.
Well, Verizon now owns the thing, and it doesn’t seem to know what to do with it either. With a declining user base the value of the service as an advertising platform is shrinking fast. The only thing that surprises me, really, is that Verizon hasn’t spun it off into an independent company again or sold it at a loss just to get out from under it.
I think the biggest mistake that was made was they tried to monetize Tumblr at the expense of the people who created the content that kept it going. It was the bloggers, the people who wrote the material, posted the pictures, created the artwork, that made Tumblr popular and who attracted new users to the service. And almost everything Yahoo did to “improve” the service seemed to destroy the atmosphere that had attracted the bloggers to begin with. About all that’s left over there now are “blogs” that are really nothing but thinly veiled advertising sites, the bots, and people who endlessly reblog content created by others.
I knew that Yahoo was not going to deal gently with Tumblr. It’s track record with other acquisitions, some of the things it’s CEO and others at the company said when they thought no one was listening, the pressures Yahoo was facing from investors as it continued to fail at pretty much everything it tried to do, everything was indicating that the future was not bright for Tumblr. The only thing that’s really surprised me is that it’s taken this long for it to get this bad over there.
This morning I was scrolling through my dash, and I realized that of all the blogs I followed over there, only about three are left, and they don’t post very often any longer. I was looking at endless re-blogs of other people’s material, photos I don’t care about, and realized this was pointless. I haven’t posted over there in ages. Why am I bothering?
So I pulled the plug, deleted my account, removed the shortcuts, killed the links. That’s it. I’m not going to put up with it any more.
I haven’t done this in a while, so let’s see what’s going on out in the farming world.
Butter Tumbles In Europe: Wholesale butter prices have plummeted by almost 10% from September in the EU, and have dropped by 20% overall from the high point. The market for butter and butterfat was the only thing that was driving improved farmgate milk prices in the EU. There was a very modest reduction in milk production, but that quickly reversed as milk prices began to improve, and from what I’ve been seeing milk production is on the rise once again.
Butter prices in the US dropped a bit, but are still pretty strong, about 20% or so higher than they were a year ago.
I’ve been hearing the price on powdered skim milk in the EU has dropped precipitously because they can’t get rid of the stuff.
Basically it looks like a return to the old boom/bust cycle. As soon as prices start to get even a tiny bit better, dairy farms begin to ramp up production, glutting the market with product, and pushing the prices back down again.
Sargento Expansion: The company is expanding again locally. It’s adding another 40,000 sq. feet to it’s facility here in Hilbert after a major 70,000 sq. foot expansion just a year ago, and will be adding another 150 jobs here. Sargento is privately owned, employs about 2,000 people, and produces cheese, snacks, sauces and ingredients for the food industry. It had net sales of well over $1 billion last year. Starting wages for most jobs are going to be in the $18/hr range I’ve been told.
This situation has been going on ever since Monsanto and it’s partner in this, BASF, brought their dicamba blend herbicides to market to use with Monsanto’s dicamba resistant soybeans. Dicamba has always had a problem with volatility and drifting, meaning the product goes into vapor form very easily and can drift far beyond the point of application. These new formulations were supposed to cure that problem, but the problem with drift seems to still be a serious issue. Ever since these products came to market there have been reports of tens of thousands of acres of crops and ornamental plantings being killed or damaged by the herbicide.
Both companies have been blaming everything but their products for the problems. Arkansas banned Monsanto’s version of the herbicide and only BASF’s was permitted for use in the state, and the reported damage is so bad some states are thinking of banning the product completely. Monsanto is currently suing Arkansas over the ban. Monsanto is also criticizing scientists who are coming forward to point out problems with the product that date back to the first tests of the dicamba blends, and claim that the company’s testing of the product was seriously flawed and failed to point out the dangers of the herbicide.
Now BASF is claiming that the damage is because farmers have been using illegal forms of dicamba, and not it’s product at all. The company claims that it only sold about half the amount herbicide that would be needed to cover the acreage that was actually sprayed.
The whole thing is a complete mess, with lawsuits either in the works or already heading for the courts, lots of finger pointing, bizarre conspiracy theories, and even one murder attributed to the issue.
Not So Great Pumpkin Controversy: If you’re the FDA, a squash is a squash is a pumpkin. Its all pretty much the same. So that orangey brown gunk you dump out of that can to make your pumpkin pie isn’t really, well, pumpkin. Pumpkin is Cucurbita pepo while what you’re mostly getting in that can is Cucurbita maxima, a different variety of squash. The problem is that real pumpkin doesn’t really work very well for a lot of the things we eat, like pie.
Personally I can’t stand the stuff, the pumpkin pie fillings and all that. I love squash. There’s nothing better than a slow roasted butternut or acorn squash with a bit of, oh, apple baked with it, a little brown sugar, some butter, a touch of salt. It is amazingly good. But pumpkin? No thanks. I’ll pass on that pumpkin pie and head straight for the mincemeat. Although come to think of it mincemeat doesn’t really have meat in it either any more, does it?
And don’t get me started on the abomination that is “pumpkin spice”.
That’s it for now. Well, actually there’s probably more but I’m getting bored and MrsGF is making deep dish apple pie and I need to go peel apples.
As always, comments are welcome or you can email me at email@example.com