Farm Catch Up: What’s going on in Agriculture.

Screen Shot 2017-11-29 at 6.48.45 AMLet’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

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Little known fact: Cows are one of the few animals that can pick their noses with their tongues.

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.

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This was a pasture before the pigs got into it

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, way too 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.

 

Farm Catch Up

 

Syngenta Loses Lawsuit

Hundreds of farmers in both class action lawsuits and individual suits, along with Archer Daniels Midland Co. and Cargill are suing Syngenta, claiming that the company misled them into believing that it’s GM corn was accepted for import by China when it wasn’t. They claim that the company cost them billions of dollars in lost sales and shipping fees and caused corn prices to plummet.

One trial just ended last week, and Syngenta lost. It was ordered to pay $217.7 million to Kansas farmers. It’s not over yet. Syngenta is going to appeal, of course, so this Kansas suit could drag on for years yet. And this is just the start. Lawsuits involving 350,000 corn growers plus ADM And Cargill have yet to go to trial. Another suit is scheduled to start in Minnesota in August for more than $600 million. Cargill’s suit is supposed to start next year, and another one is coming up in Louisiana yet this year.

Still More Dicamba News

It isn’t just Arkansas with reports of dicamba drift causing crop damage. Now Tennessee has been hit with problems as well. As of June 26 there have been 27 reports of crop damage caused by dicamba drift. Not many compared with Arkansas, but Tennessee doesn’t get its crops in the ground as early as Arkansas does so it’s still relatively early in that state. No one seems to know yet if this is a problem with the herbicide blend itself or if it is a problem with the application techniques and equipment. Monsanto, of course, is claiming that either A) no such thing is happening at all, B) the product wasn’t used in accordance with proper application techniques, or C) insert your favorite excuse here. I don’t know, maybe fairies are killing off hundreds of acres of beans.

German Grocery Invasion

The Germans are coming. Lidl, the no frills German grocery store chain, is coming to the US. They’re planning on opening 500 new stores over the next five years. They’ve opened 10 new stores in the Carolinas and Virginia. The store is similar to Aldi’s model; no frills, very limited selection of product, lots of private label products at cheap prices, no shelves, just boxes of product stacked up.

Will it survive? My best guess is that they’re going to have a rough time of it. Most of the areas where they want to put stores are already more than saturated with grocery stores, and the chain has little to distinguish it from the other no-frills outfits like Aldi and Save-a-Lot. And it’s going to have a difficult time competing against Walmart which has fairly good prices and much better selection of product.

I have two major problems whenever I go to one of these places. The first is that if you really watch what the prices are, they generally aren’t all that cheap when compared to other stores. If you average out the overall cost of all the products, except for a few loss-leader items you aren’t really saving all that much money. The second is that the quality of the store brand products often isn’t all that good.

Beef Exports to China Begin

Well, sort of. A packing company sold a whopping 40 boxes of ribeyes and other steaks to somebody in Shanghai a couple of weeks ago. And I suspect most of those were eaten by US politicians for photo ops where they were trying to take credit for China announcing it was going to start buying US beef.

There are, of course, some problems. One of the biggest being that the vast majority of beef raised commercially in the US doesn’t meet Chinese health and safety standards. China bans the use of growth promoting drugs and hormones, feed additives, antibiotics and artificial growth promoting tricks US growers use. As the Farm Bureau pointed out, “only a small proportion of commercial beef production would fit the current parameters”. Commercial growers who want to get in on the market are probably going to have to start from scratch, raising cattle from birth to meet Chinese standards. As of right now, it’s going to cost growers more to meet the stringent health and safety requirements than it’s worth for most of them.

The articles I’ve seen on this subject all seem to also ignore the fact that the primary reason China is suddenly interested in US beef is because their suppliers in Brazil are now embroiled in a massive corruption scandal that seems to involve much of the Brazilian government. The scandal included bribing inspectors, shipping out diseased and contaminated beef and I don’t know what all else. The president of Brazil has been formally charged with corruption, allegedly taking $150,000 in bribes from the huge JBS meat processing company. China, like the US and most other countries, has banned imports of beef from Brazil until they get the situation straightened out down there.

“Pink Slime” Case Finally Over?

It seems that ABC has settled out of court with BPI in the slander case BPI brought against ABC for it’s stories about so-called “pink slime”, a heavily processed, treated meat substance made from scraps and trimmings, and then injected into hamburger. BPI was suing ABC for almost $2 billion. With damages and other penalties, ABC could have been on the hook for $5.7 billion if it lost the case.

ABC is claiming the stories “accurately presented the facts and views of knowledgeable people about this product”, while BPI claims it’s product is “safe, wholesome, and nutritious”.

What bugged me the most about the whole thing wasn’t the “pink slime” itself. I’ve eaten raw eel, lutefisk and cheese that smells so bad it wouldn’t be allowed in a landfill. What bothered me about it was no one told me this stuff was in the hamburger in the first place.

Ethanol Still Doesn’t Make Sense

While this was sparked by an article about ethanol production possibly ramping up in the UK, this is more of an editorial comment, so feel free to skip this one if you like.

I’m not a fan of ethanol. It makes no sense at all. At least not the way we’re doing it. If you look at the entire production cycle of ethanol production and it’s overall effects, one could argue that producing ethanol is actually worse for the environment than producing the equivalent amount of energy in traditional fossil fuel. If you trace back all of the energy inputs into the system, the things like transportation costs, fertilizer costs, herbicide costs, the energy used to plant, grow and harvest the crops, it quickly becomes apparent that ethanol, as a “green” fuel, isn’t all that much better than gasoline. Yes, it produces less carbon and pollution when it’s burned, but that is just looking at the end product and its use, and is ignoring everything else that goes into actually making the stuff. When everything is added in, the adverse environmental effects of ethanol production and use is almost as bad as fossil fuels, and according to some studies, actually worse. Go look it up. You got Google. If you ignore the industry funded fluff and nonsense studies and look at the truly independent research, you’ll quickly find that the whole ethanol system is far from being environmentally friendly.

Then there is the economics of the whole industry. Without massive government subsidies, tax breaks, usage mandates, and other taxpayer funded subsidies, i.e. “corporate welfare”, the whole system would fall apart like the house of cards in an earthquake.

Disconnected from Reality?

That’s what I suspect a lot of “experts” are when it comes to milk prices, disconnected from reality. While various experts are claiming milk prices will be pushing $18/cwt “real soon now”, things out in the real world are considerably different. The market has actually been trending down for a while now, with prices on the commodities market falling on the futures market.

Of course the futures market isn’t what farmers actually get paid for their products. What a product trades for and what the farmer is actually paid for the physical product often have no relationship to one another. As a lot of farmers found out when Grassland told them they were going to have to find a different place to sell their milk and some got offers as low as $6/cwt from some processing facilities.

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.