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Dairy proved one of the best commodity performers of 2016, as the price slump of the previous two years at last curbed output. Has the rally got legs?

Source: Agrimoney.com | Dairy prices – will their recovery continue in 2017?

At the start of the year everyone seems eager to present their predictions of what’s coming for the future, and the markets gurus are no exception.

Right now their view of the future looks fairly good, although not exactly what I would call glowing. USDA is predicting a milk price of around $17.25/CWT. While better than the $13-$14 farmers were getting at one point, it’s still not really all that good. To give you some historical perspective, with bonuses for butterfat, protein, low somatic cell count (i.e. our cows were healthy) we were getting around $13 for our milk back in 1979 or 1980. So now you know why dairy farmers were in so much financial trouble over the last year or so as prices dipped below $14/CWT(2).

The US actually escaped the worst of it. New Zealand and other milk producing regions around the world suffered far worse than we did. NZ was hit especially hard because a huge amount of their milk goes to China, and when China began to cut imports of milk, the NZ market crashed so hard it actually caused a devaluation in the NZ dollar and had repercussions through their whole economy.

China has been slowly ramping up imports again. While the country has been increasing its own dairy production, it’s having trouble meeting demand for various reasons. Many Chinese consumers still remember the melamine horror of a few years ago where domestic milk was deliberately contaminated with melamine(1). Consumer confidence in domestic products plummeted, increasing the demand for imported dairy products. Over the last few years China has increased it’s own milk production, and by improving food safety they’ve made some progress in restoring the confidence of consumers. But China still doesn’t produce enough milk to satisfy demand and imports have had to increase to keep pace.

New Zealand and the EU both saw production decline because of the plummeting prices. The EU didn’t return to the quota system it had a couple of years ago, but it did institute pricing incentives to get dairy farmers to reduce quantities. Between the low prices, farmers in NZ being pushed out of business, and the new pricing system in the EU, milk production in both areas has dropped by several percent.

Not in the US, though. Here production has continued to ramp up. Depending on whose data you believe, production in the US during 2016 went up anywhere from 2 – 4%, and there seems to be no end in sight at the moment. But then the US isn’t as sensitive to the international market as is the EU and NZ. Domestic demand has more of an effect, and it has remained fairly strong. But while we weren’t hit quite as hard as the EU or New Zealand, the prices dropped to the point where a lot of dairy farmers were suffering financially and were just barely hanging on. At $17 – $17.50 the situation is a bit better, but not by much.

I’m not all that optimistic, to be honest. In the US we’re looking at continued growth in production, and almost no increase in demand for milk products. While demand for butter has grown and the cheese market has remained fairly stable, we still have huge stockpiles of both sitting in warehouses. The market for fluid drinking milk is flat or is even shrinking. And now that the holiday season is over demand for both butter and cheese is going to shrink.

None of this bodes well for dairy farmers in the upcoming year. About the only good news dairy farmers have seen is that feed prices have remained low. But that’s bad news for the farmers who raise grain, especially corn. Corn prices have been sitting in the $3.40 – $3.52 range for months on the futures market, with farmgate prices dipping down to the $2.75 level or even less.

Will things ever improve? I hate to say this, but in all honesty, no. Farming has always been like this. You have long periods of mediocre prices, followed by a year or two of absolute panic, with the occasional good year thrown in just often enough to give you hope that maybe things will get better. And then the rug gets pulled out from under your feet…

 

 

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1. When melamine is added to milk, it makes milk quality tests indicate it has a higher protein content than it really has so they can get a higher price for it. It sickened hundreds, even thousands of people and even caused the death of some children. China acted quickly and clamped down hard, even executing some of the people responsible. But the damage was done and people didn’t trust domestically produced milk any more.
2. CWT stands for hundred weight. While you may buy milk by the gallon in the store, farmers get paid by weight, not volume.

Okay, what in the world is wrong with GF? It’s the middle of December, the temperature at 6 AM as I write this is about -3 degrees, and by Sunday night we’re supposed to have another 18 inches of snow, and I’m talking about gardening? Ridiculous.

But no, it’s not ridiculous really. This actually is the time when you should be starting, even if you’re here in the Great White North in Northeastern Wisconsin. This is when the planning and preparation for spring really begins, or should. And that’s what we’ve been doing – thinking, planning, looking for deals, etc.

Starting in late fall I begin keeping an eye out for bargains in stores when I’m shopping. A lot of department stores have bargain bin areas where they put heavily discounted items they’re trying to dump to make room for new stock, and you can pick up all kind of goodies, often at steep discounts.

Beginning in late fall and early winter we keep an eye out for deep discounts on things like canning supplies in the bargain bin areas of department stores. Once the prime canning season is over in the fall, a lot of department stores are eager to clear out their stock so they don’t have it taking up storage space and you can find some good deals. Things like pressure canners, waterbath canners, etc. take up a lot of storage space, aren’t hot sellers to begin with, so some places try to clear them out in late fall or early winter. Same with other home canning and processing equipment; funnels, strainers, cheesecloth, etc. We’re pretty well set up with equipment, but we still keep an eye out for good deals.

After the spring rush, you can get huge discounts on seeds, often cents on the dollar in some cases. There’s nothing wrong with picking up left over seeds at the garden center or department store if you get them cheaply enough. Yes, there is a chance there may poorer germination rate with older seeds, but most seed will survive for years if stored properly. When we cleaned out my mother’s house we found packets of seed that must have been 20 – 40 years old and while some didn’t sprout and there was a poor rate of sprouting, well, it was free seed and a lot of it did come up. It’s going to depend on the plant and how well they were stored. Some seeds require specific conditions for storage. Google can be your friend in cases like that. Most seeds will keep quite nicely in a relatively cool, dark place if kept dry, but some may have specific requirements for proper storage. Doesn’t hurt to look.

Anyone who does home canning can tell you that canning jars can get expensive. But if you buy at the end of the canning season in late fall or early winter, you can find some excellent deals there as well. We also tend to watch thrift shops like St. Vinnie’s and those kinds of places. But if you buy used jars, be careful. Check them carefully for nicks, chips, etc. Especially around the neck and mouth of the jar. If there is any damage at all to the neck and mouth of a jar, throw it away. And when buying used jars I stick with brand names like Kerr and Ball. The tomato crop was so good this past year that we ended up using almost every jar we had except for the tiny jelly jars. The ones we seem to use the most are pint jars. They’re ideal for things like soup, chili sauce, etc. I’d picked up a couple of cases on a sale about four years ago that we still had on the shelf and we even used up all of those this year. So I’m looking for pint jars now.

(And do I really need to tell you to never, never use peanut butter, mayonnaise, or other jars that came from commercial products you picked up in the grocery store? Even if you can find lids that fit them, those jars were made as cheaply as possible, were intended for a single use only, and there is no guarantee they will survive use in a home canner. Do you really want to risk your health and safety to save a few bucks on canning jars? I don’t.)

This is also the time we do some planning. I sit down with a notepad and think about the season that just ended. What plants worked well? What plants worked poorly? Was there anything you especially liked or didn’t like? Write everything down. (Keeping a notebook just for the garden is a good idea.)

Our eggplant was absolutely spectacular this past season, for example. They were ridiculously prolific. But we quickly found out we don’t like eggplant all that much, and by the end of the season, we were so sick of the stuff we couldn’t even look at them. So no eggplant. Using that space for more tomato plants is a better idea.

Speaking of tomatoes, we had about a dozen plants in the garden at the end of the garage and they didn’t do very well at all. They were spindly, produced badly, died off early. We hauled a ton of compost in there at the end of the season and that should help, but we aren’t going to be putting tomatoes in there. We know from past experience that leafy greens do pretty well there, so we’ll probably use some of that area for various lettuce in addition to the small stump(1) garden.

The herb garden — I’m not sure what we’re going to do with that to be honest. It’s in a corner where the new addition is attached to the main house, facing south-west. It’s an ideal spot, gets lots of sun, very well sheltered, and has, alas, some of the poorest soil I’ve ever seen. We have a well established area of chives that I don’t want to disturb. We also have an Italian parsley clump that’s ridiculously prolific in there, and we don’t want to mess with that either. But the majority of the area…

We made the mistake of putting oregano in there, and it immediately went absolutely nuts, taking over everything. It even jumped out into the surrounding lawn. And while it makes mowing the lawn back there smell amazing, we would much rather have the oregano go away. One year we dug the entire thing up, down to a depth of six inches, hauling the dreaded oregano down to the compost pile, filled it up with compost and put in strawberries. And within two years, the damned oregano was back… Sigh. My wife put in cone flowers at one end, and those managed to do pretty good against the oregano. But I’d rather be using the space for something edible.

Planning what to put where needs some careful planning. And sometimes you have to admit that something just isn’t working, dig it all up and try again. We did that with the front of the house. We’d inherited some utterly miserable bushes and horrible lawn from the previous owner. The bushes were invasive, required constant trimming and weren’t all that good looking. The only good thing was a ridiculously prolific and beautifully scented rose, which we loved. But the rest of it was just nasty. We left it for a long time because we loved that rose, but finally we gave up. We pulled everything out, went in with a 6 foot rotary tiller and a tractor and ground everything that was left into dust, and started from scratch. We got rid of the grass completely and turned the whole area into a hosta garden and we’re rather pleased with that. So sometimes you just have to bite the bullet, plow everything up and start over.

I think that’s what we’re going to eventually do with the herb garden. I don’t want to give up the parsley or chives, but they’re a fairly small percentage of the whole area and the rest is horrible.

I was going to try an experiment this year. I picked up a couple of really nice yellow roses that I put in containers in the front of the house over the summer and they did beautifully, even though they were in shade most of the day. I was going to try bringing them in and putting them in the living room and seeing if I could keep them going during the winter. If it worked, good. If not I was only out a few bucks for a couple of plants.

Alas, Mrs GF decided enough was enough. The living room already looks more like a greenhouse than a living room, she declared. And I have to admit she has a point. From where I’m sitting now in the kitchen I can see about fifteen different plants in various planters and groupings in the living room, including a bloody great evergreen tree of some kind that we have to keep cutting back every couple of years because it’s decided it likes the living room just fine, thank you. I made a rolling frame for it a few years ago so we could move it around because trying to shift a four foot wide, five foot tall tree is a pain in the neck. During the summer it lives out on the deck and in the fall we roll it back in. It doesn’t care where it is, just keeps growing…

Anyway, enough was enough, she said, so the roses went to live in the basement where, she says, they’ll go dormant and come back in the spring.

 

1. Ah, the stump garden… When we bought this place about 20 years ago there was a big old tree stump back there. We didn’t want to go to the expense of having someone grind it off, didn’t want to go through the work of trying to dig the thing out, so we built a retaining wall around it, filled it with dirt and compost and planted strawberries over the top. The stump completely disintegrated within four or five years, and we got a lot of tasty strawberries out of it. We kept it, occasionally planting flowers, but also using it for onions and lettuce which seem to do pretty well there.

Agency approves $7.7 million for solar and other renewable projects at homes and businesses.

Source: State may expand funding for dairy farm digesters

I’m all for alternative energy sources, but putting any kind of tax funding or other subsidies into manure digesters in the belief that they will somehow help deal with the impact of manure on water pollution, well contamination, quality of life problems caused by manure from CAFOs (concentrated animal feeding operations) is utterly ridiculous.

CAFOs like the mega dairy farms here in Wisconsin and other parts of the country, large animal feedlot operations and pork operations that raise thousands upon thousands of animals, produce such large amounts of manure that it is mind boggling. One single dairy farm here in Wisconsin produces as much manure as a city of 180,000 people.

And, of course, that manure has to be disposed of somehow. One of these days I’m going to have to tell you horror of manure disposal here in Wisconsin. I don’t want to get into that now because if I could probably do a thousand words on just that. So let’s stick to digesters.

The idea behind digesters has been around for a long time. The manure is put into air tight holding tanks. Bacteria is added to the mix. The bacteria thrive in this environment, and as they grow and multiply, they produce, among other things, methane gas. Because the tank is sealed, the methane accumulates and is piped off and used to power engines which drive generators to produce electricity.

It sounds rather logical, I suppose. You can produce electricity from cow poo, or pig poo, or whatever kind of poo you shove into the tank. It sounds all ‘green’ and environmental and good for the planet, doesn’t it, producing electricity from manure. It solves a lot of problem, doesn’t it? Gets rid of the manure, makes electricity to keep all of our gadgets running…

Only doesn’t do any of that. Not really. Especially not the getting rid of the manure part.

These things are ridiculously expensive, first of all. We’re talking millions of dollars even for a relatively small one. Without heavy taxpayer subsidies, no farm could afford to put one of these in. Special holding tanks have to be built, first of all, because they have to be completely sealed to keep the gas in. Otherwise all that methane is going to go straight up into the atmosphere, and since methane is a green house gas that is much worse than CO2.

The gas that comes off these things  is highly corrosive. That means all of the pipes, tanks, even the engines used to run the generators, are extremely expensive to make because special materials have to be used to prevent them from just corroding away. Special filter systems have to be installed to remove unwanted elements from the gas, dryers to remove moisture… The list goes on and on.

The whole process is neither efficient, nor is it ‘clean’ by any stretch of the imagination.

Oh, and did I mention they explode sometimes? Like this one that happened at a digester here in Wisconsin. If you click the link to the jsonline article, you’ll note that the project has been plagued with problems from the beginning. And this isn’t the only one that’s had major difficulties. Plug ‘manure digester explosion’ into Google and you’ll see what I mean.

But they generate electricity, right? Well, sort of. Not much. Certainly no where near enough electricity to pay for building and maintaining one of these systems. And it isn’t “clean” energy by any stretch of the imagination because it still generates electricity the good old fashioned way, by burning stuff. Burning methane is cleaner than burning coal or oil, but it still produces waste material like CO2 and other gases.

They’re pushing these things by claiming that they somehow help to eliminate the manure disposal problems CAFOs have. So let’s look at that.

They don’t. I’m sorry, they just don’t. They do nearly nothing to eliminate manure disposal problems.

The digestion process does alter the chemical composition of the manure, I’ll grant you that. It will reduce the amount of phosphorus, and that’s important because it is a major problem around here. Phosphorus runoff causes toxic algae blooms in lakes, causing major fish die offs. We have huge dead zones in the Bay of Green Bay on Lake Michigan that seem to get bigger every year, due to phosphorus.

But that’s all these digesters do, remove some of the phosphorus. And only some of it. About half of it still remains. And the other pollutants in the manure remain virtually unscathed.

And then there’s the quantities involved. You put 100,000 gallons of manure into a digester and what you get out the other end when the process is done is, well, 100,000 gallons of manure. It does absolutely nothing to reduce the sheer quantity of manure.

The single biggest problem with manure is the sheer volume of it, and digesters do absolutely nothing about that. All the digesters seem to be is little more than a lame attempt at ‘greenwashing’, trying to cover up the real problem.

I would really, really like to take whoever designed this website out behind the shed and introduce them to my little friend, Mr. Smackupsidethehead.

Vertical columns that scroll up and down at different speeds from the main columns, inconsistently colored headlines, a refresh system that constantly updates the main page even as you’re viewing it so it abruptly drops you to a different part of the page while you’re still reading. Go off to read an article and click the back button and you have no idea where you’ll end up. Even more interesting, now the story blurbs on the main page are different, moved, some gone, others added. Auto-start videos that you have to manually click to turn off. Only to have them start up again as soon as you scroll. Headlines that needlessly move as you scroll.

Dear lord, my cats could design a better website than this.

 

 

I don’t really comment on politics here, and I don’t plan on starting (Aren’t you relieved? I am.). Unless you are a hermit living in a cave somewhere, you already know what’s going on out there, what a bizarre circus our political system has become. I’m not going to talk about that. I’m more interested in the responses of the GOP faithful to what’s happening, what the politicians, the power brokers, the GOP leadership are doing and saying.

And it’s been interesting, to say the least. I don’t think I have ever seen such astonishing mental contortions, such grasping at straws, so many ridiculous attempts at rationalization in my entire life as these people attempt to defend the indefensible. For “the good of the party”.

I think that’s the key, here, that phrase, ‘the good of the party’. I think that the GOP and the Democrats both,  the politicians on both sides,  have forgotten one little fact. They weren’t elected ‘for the good of the party’, were they? They were elected for the good of the country as a whole, the good of the people who elected them.

They all seem to have forgotten that, though. They’ve forgotten that they were elected to protect the welfare of all of us. They were elected to protect the entire country. They were elected to safeguard all of the people in the United States, not just those who support a particular political party.

It looks like The Great Mayonnaise War is finally over as the USDA issues rulings on the antics the egg board was engaged in that started the war.

If you don’t remember the Mayonnaise War, I don’t blame you. As such things go, it made barely a blip on the media’s radar. But for some it was a very big deal indeed.

The war began when a company called Hampton Creek released a vegan mayonnaise that they called Just Mayo. Unlike ‘real’ mayonnaise, Just Mayo was made without the use of eggs.

Just Mayo was the kind of product that would probably not have made much of dent in the marketplace, to be honest. It might have gotten exposure in places like Whole Foods and other speciality retailers, but it’s unlikely that it would have been all that popular in most mass market grocery store chains. Vegan foods intended to replace more traditional non-vegan options generally don’t do all that well in the mass market.

The egg producers, and especially the American Egg Board, the egg industry’s marketing organization, didn’t see it that way, though. They looked at Just Mayo and went full Chicken Little, running around in circles like a chicken with it’s head cut off, clucking that the sky was falling, and that they had to do something, right now, to shut this down, before they were left with (Oh, no, he’s not really going to say it, is he? Yeah, he is) egg on their faces.

Now, have I gotten all of the chicken references out of the way in this little item? Lord, I hope so. I hate it when I start doing that. Are there no depths to which I will not stoop in order to grab for a cheap laugh? Uh, well, no, not really. Ahem, let’s get on with this.

The egg board went a bit loony, to be honest. It launched attacks against Just Mayo, claiming it wasn’t ‘real’ mayonnaise because it didn’t have eggs, filing complaints with the FDA, USDA and any other agency that had blank complaint forms laying around in the lobby.

But the board’s efforts to derail Hampton Creek and it’s vegan mayonnaise weren’t limited to just legal objections.

An alleged industry consultant, someone named Zolezzi, got in touch with the board and during a strategy session in 2013 claimed he could make a phone call and get Whole Foods to pull the product line from it’s shelves. An offer that was, for a time at least, taken seriously. In a note written to the president of the board, the head of United Egg Producers offered to get in touch with Zolezzi and actually try to do it.

Internal memos and emails showed one instance where it was suggested egg board members pool their money and hire a hit man to take out the founder of Hampton Creek.

This was, they say, a joke.

And it was also a ‘joke’ when another member offered to have his old buddies in Brooklyn to pay a visit to the founder of Hampton Creek with the apparent intent to, I’m sure, have a nice, pleasant chat with him and not at all do him bodily injury.

Investigators from the USDA said that the actions and comments of the egg board were “inappropriate discussions about an action which, if acted upon, would have significantly exceeded the provisions of the Egg Research and Consumer Information Act” that was responsible for setting up the board and defining its duties.

(Good heavens, really? How can an egg board operate if can’t take out a hit on the competition? What’s the world coming to?)

The board did take some action, including trying to rig internet advertising services so searches for Hampton Creek’s products would bring up the board’s own ads. It discussed spending money for “research and coordination with key influential bloggers in food and health/nutrition space, drafting key messaging and coordinating posts”, according to the reports I’ve read. In other words, trying to hire or otherwise influence food bloggers to present a message that was pro-egg and anti Just Mayo.

 

I should point out that Hampton Creek allegedly wasn’t behaving in exactly an ethical fashion either. An investigative reporter for Bloomberg news filed a report that claimed Hampton was running a covert operation to buy up large amounts of its own products in order to inflate sales figures and make it more attractive to investors.

According the the Bloomberg report (click the link to jump to the story) executives at the company launched a large scale undercover operation to buy back its own products in order to make it seem the company was selling far more than it really was. Five former workers came forward to talk about it, hundreds of receipts, expense reports, cash advance records and emails were discovered by Bloomberg describing how the scheme worked. In addition, Bloomberg claims that the company had contractors calling store managers asking about Just Mayo, requesting they stock it.

Bloomberg’s report also shows contractors and employees bought large quantities of product from Safeway, Kroger, Costco, Walmart, Target and Whole foods around the country. Employees were assigned specific stores, instructed in techniques for making the buys so they wouldn’t be seen buying mass quantities of the product.

The CEO claims the purpose of the purchases was to check quality of product, not to inflate sales. But internal memos and emails from company executives don’t back that up. Emails from from a Hampton Creek vice president actually outlined how contractors should use self checkout lanes or make several transactions at different lanes to avoid appearing to be buying large amounts of product and to avoid wearing Hampton Creek logoed clothing. One email specifically said “this is an undercover project.” according to Bloomberg.

The company was being investigated by the SEC and the Justice Department, but I haven’t heard of any results from those investigations as yet.

But let’s get back to the marketing board, which is what I started out talking about.

The whole thing was just silly, and it points out just how out of control these product marketing boards have become, and how cutthroat product marketing can be.

The whole kerfuffle ended up with the egg board getting a slap on the wrist from the government, and a promise that the board would ‘retrain’ its employees on just what it could and could not legally do.

 

 

This entry was sparked by an article I read over at NPR’s website about the failure of GM corn, and the seed companies desperate search for something to replace it. You can read it yourself by clicking here. As the article points out, one of the original commercially available genetically modified plants, BT corn, is failing. But a lot of my readers aren’t farmers and don’t know what BT corn is or know about the problem it was developed to cure, so let me tell you about that first.

The problem is this guy here:

This is the european corn root worm, otherwise known as the corn borer, and its rather nondescript parent moth. The european corn root worm is not native to North America. It first appeared in the US around 1917, and quickly spread throughout the US and up into Canada. The moth itself is harmless. It’s offspring, however, loves to eat the roots of corn plants, tunneling through them, weakening them, reducing yields, and even killing the plant. Over the years it became a serious problem, infesting much of the corn belt. There were pesticides that could kill it, but they are expensive, and a lot of the most effective pesticides are toxic and many have been outright banned because of their toxicity over the years.

BT corn was one of the first genetically engineered plants to be approved for commercial use. It incorporated genes from bacillus thuringiensis, a naturally occurring bacteria that lives in the soil. The modification causes the corn plant to produce a protein called Bt delta endotoxin, which kills the larvae of the corn borer. The BT toxin itself is not new. It’s been available for use as a pesticide since the 1960s, and it has a pretty good safety record. It is generally recognized as safe for humans, other mammals, fish, birds, and most insects.

BT corn worked very well indeed. So well that it quickly dominated the market and a large number of different varieties of BT corn are now available. But there’s a problem. It’s not working very well any longer.

In just twelve years the corn borer began to develop a tolerance for the BT toxin, and it began to spread. We are rapidly approaching the point where BT corn will no longer be effective against the pest and we’ll be right back where we started.

The same thing is happening with the other big GM cash cow, engineered plants like soybeans that are immune to glyphosate, the active ingredient in RoundUp from Monsanto. As was the case with BT corn, it wasn’t long before the so-called ‘super weeds’ began to emerge which were immune to glyphosate. And they are spreading throughout the country.

In both cases, these products were supposed to be quick and easy fixes for problems that have no quick and easy solution. And in both cases these ‘solutions’ were doomed to fail from the beginning. And everyone knew that they were not going to be long term solutions. Even as they were developing these products, the researchers involved were warning that sooner or later the pests they were intended to fight would eventually develop resistance and we’d be back where we started again. They recommended various techniques to help to reduce the spread of resistance. Those techniques were ignored because most companies these days operate on the basis of generating as much profit as possible right now and the hell with the future.

And that seems to be the problem with a lot of the GM products I’ve seen. They’re little more than quick fixes. Very little thought seems to go into determining if the products are going to be viable, useful, over the long term. The focus is profit, as much profit as possible, and profit right now. And hopefully the CEOs can cash out their stock options and bank their bonuses before the whole thing falls apart and leaves the company, and the farmers, worse off than before.

I’m not anti-GMO. Genetically modifying organisms has the potential to be incredibly beneficial. But as long as this current business climate where the only thing that matters is profit, right now, and the hell with the future, remains in effect, it is never going to fulfill that potential.