Farm Stuff: Bayer Pulling Roundup Off Consumer Market and Milk Milk Everywhere

Bayer, the owner of Monsanto, announced on July 29 that it was voluntarily withdrawing glyphosate (sold under the brand name RoundUp) from the consumer market by January, 2023. Once existing stocks are cleared out of the supply chain the company will no longer sell glyphosate in the lawn/garden market. A herbicide labeled “Roundup” will remain on the market but it will no longer contain the glyphosate herbicide. It will contain a blend of other herbicides, older ones, which presumably will be less lawsuit prone.

Bayer has been facing widespread lawsuits (the last I heard Bayer was facing 30,000 claims) in the US over claims that glyphosate causes some types of cancer. And it has been losing, not just in local courts but also in appeals court. The company is apparently appealing to the US Supreme Court but it isn’t known if SCOTUS will even take the case up, and if they do no one knows how they will rule.

Since 90% of the lawsuits are coming from the home consumer market, Bayer’s decided to cut its losses and stop sales, but only in that market. Glyphosate will continue to be sold to the agricultural market so the product will still be in widespread use.

The whole situation is — is complicated, to put it mildly. There is even considerable debate over whether or not glyphosate is actually a carcinogen. So I’m not going to get into that whole argument.

I know some environmentalists who are celebrating, claiming this is some kind of victory. It isn’t. Let me point out some things.

Bayer, and only Bayer, is withdrawing glyphosate from only the consumer market. This means two things.

One: the most widespread usage of glyphosate is in the agricultural market in the first place. That usage will continue unabated. Also glyphosate has been off patent since 2000 so it can be made and sold by any licensed herbicide manufacturer for any legal market. Under US regulations glyphosate is still legal to make and use. Bayer stopping sales to the lawn/garden market isn’t going to do anything to reduce the usage of the product.

Two: glyphosate was widely adopted because it was actually safer than a lot of the herbicides in widespread use at the time. There were far less health risks involved in using it, it was less persistent in the environment, and it was less toxic to wildlife. Many of the herbicides in widespread use at the time glyphosate was first introduced were seriously nasty. Bayer has already announced that the new “Roundup” is going to include a blend of various herbicides, some of which probably predate glyphosate, and which could very possibly be much, much worse for the environment, far more persistent in the soil, and worse for the health of human beings, animals and insects.

Sidenote: One wonders what the hell Bayer thought it was doing when it bought Monsanto. Just about everyone, including a lot of Bayer shareholders, saw the disaster in waiting that Monsanto was when the purchase was made. The first glyphosate cases were already in the courts, and the whole dicamba fiasco was already on the horizon. Bayer’s attempts at defending itself have probably cost the company tens of millions of dollars in legal fees, court costs, PR damage and regulatory problems, not to mention bribes lobbying efforts to various politicians.

Milk, Milk Everywhere. Here We Go Again

Photo by Monserrat Soldu00fa on Pexels.com

Well, here we go again… Sigh… Dairy farmers have been getting fairly decent prices for their milk for the last few months, but it is highly unlikely that situation will continue for much longer because milk production has been skyrocketing. If USDA’s estimates are accurate, the dairy industry is on track to produce in 2022 at least 8.4 billion pounds more milk than in 2020, 13 billion pounds more than in 2019.

The climate situation has caused some cutbacks, but not much. Dairy farms added 153,000 more milking cows to their herds since last year. This is the largest number of dairy cows on record since 1993. And you have to remember that modern dairy cows are much more productive than they were back then.

What it all means is a massive increase in a production while there is no corresponding increase in demand and even a slight decrease in demand. The result is that wholesale prices for cheese and butter have been falling, and stockpiles of unsold cheese and butter have been skyrocketing. USDA says that the stockpile of unsold cheese as of mid year is the highest on record, and the butter surplus isn’t far behind, with wholesale prices dropping there as well.

At the consumer end of things generic butter and cheese have been dropping in price. I’ve seen a lot of generic and house brands of butter going for $1.99/lb or even less. Interestingly, brand name and “artisanal” butter is still going for absolutely insane amounts of money, ranging from $5/lb to as high as $11/lb for some brands of “organic” butter.

Borden Dairy Files Bankruptcy

Borden Dairy Company filed for bankruptcy. Borden said it had debts of $500 million and assets of only $100 million. It employs over 3,000 people. This doesn’t mean the company will completely go out of business, and the statement said the company will continue operations as it works out a way to get its finances straightened out.

Interestingly, Borden was listed as one of Forbes 2019 “Most Reputable Companies” back in May, where it was listed as number 16. Obviously Forbes didn’t look at the company’s actual finances when making up that list.

When companies like Borden and Dean Foods goes under, the pundits and the companies themselves are quick to point the finger of blame at anything and everything. The articles I’ve read about the Borden’s bankruptcy and the earlier Dean Food bankruptcy blame the decline in the consumption of milk, the increasing popularity of plant based “milk”, changes in diet, dietary fads, major retailers like Walmart building their own milk processing facilities, etc. They blame it on everything except the real reason, the company itself. Or, rather the management of the company. The company itself was unable to adapt to changing market conditions, and that is what drove them into financial failure.

Yes, consumption of liquid (drinking) milk has been declining. But this is a trend that has been going on for decades. They can’t claim that they were blindsided by this. Walmart made no secret of the fact that it wanted to build its own milk processing facilities. That was known for years before they actually did it. The growing interest in vegetarian and vegan diets that reduce or even eliminate the consumption of dairy products isn’t new either. This is a trend that has also been going on for years now. The same is true for the increased interest in grain and nut based “milk” products.

That Bordens and Dean couldn’t make it is due entirely to the failure of their own management teams being unable to adapt to changing markets.

I’m sitting here in eastern Wisconsin, just 20 miles or so south of Green Bay, and I’m surrounded by dairy companies that are doing pretty darn good. Over the last few years I’ve seen at least a half dozen major expansions by large processing companies, mostly cheese makers, including some multinational corporations. And they’re all doing pretty well. Why? Because they’ve been able to adapt to a changing market.

Dean and Borden failed because they didn’t adapt to an ever changing marketplace.

As Milk Prices Decline, Worries About Dairy Farmer Suicides Rise : NPR

“The nation’s dairy farmers are facing their fourth year of depressed milk prices. The outlook is so bleak, it’s increased worries about farmer suicides. One recent outreach effort drew criticism.”

Source: As Milk Prices Decline, Worries About Dairy Farmer Suicides Rise : NPR

The situation for dairy farmers in 2017 was not good. A lot of diary operations are running right on the edge, trying to stay profitable at a time when there is ever shrinking demand for liquid milk for drinking, and a glut of other dairy products like cheese, butter and powdered milk. This story above from NPR illustrates just how bad the situation is getting. Go read the article if you have the time. It isn’t very long.

If you don’t have the time, here’s a brief summary: A dairy co-op in the north east US, Agri-Mark, has seen three of it’s farmer members commit suicide in the last few years. Agri-Mark makes Cabot cheese among other products, and has about 1,000 members. In February when it sent out the milk checks, it included a chart showing just how bad the dairy market was looking for the upcoming year, and a list of suicide prevention hotlines. The reporter talked with Will Rogers, who milks 75 cows in Massachusetts, who is having a difficult time keeping above water. Even more upsetting is the fact that his own father who used to own the farm, killed himself because of financial problems.

While the letter from Agri-Mark was probably well intentioned, it certainly added to the stress a lot of it’s farmers are already facing and Rogers says in the article, it might push some farmers so far that they think “there’s no point in going on.” Agri-Mark certainly could have done a better job of trying to communicate with it’s farmer members.

And as if dairy farmers don’t have enough problems, they are increasingly worried about being able to sell their milk at all. Dean Foods just told at least two dozen farmers in Pennsylvania, Indiana, and four other states that Dean will no longer take their milk as of May 31, leaving them scrambling to find a milk processor they can sell their milk to.

The same thing happened here in Wisconsin last year about this time when Grassland rather abruptly dumped a group of farmers, leaving them to desperately try to find a market for their milk.

The article at Dairy Management about Dean seems to be trying to blame Walmart for Dean’s decision. Walmart used to buy it’s in-house brand milk from Dean, but Walmart is building it’s own milk processing facility in Indiana which will come on-line in May, so Dean is going to be losing a significant amount of sales as Walmart switches to product coming from it’s own production facility.

Certainly there is enough blame to go around, but everyone is ignoring the fact that the real reason behind almost all of the money difficulties dairy farmers are having is over production. They are producing more product than the market really wants, which is pushing prices down lower and lower.

There are various marketing boards, government agencies and others trying to help the situation, but almost all of them are focusing on one thing, trying to increase sales of a product that increasingly people don’t really want, and¬†shouldn’t be eating much of. At at time when a recent study just found that 75% of the people in this area are overweight, we have government agencies and marketing boards trying to convince food makers to shovel ever more cheese into their products.

Seventy-five percent. Think about that for a moment. We are facing a national health crisis due to people eating too much of what is bad for them, with government agencies and others trying to figure out how to help people get their weight under control, and at the same time other government agencies and marketing specialists are trying to get food manufacturers to drastically increase the amount of cheese they use in their products.

 

Agrimoney.com | Revival in US milk prices to continue, says Dean Foods

 

Source: Agrimoney.com | Revival in US milk prices to continue, says Dean Foods

This is one of those situations where I don’t know where they’re getting their information because what they’re saying here isn’t what I’ve been reading in the ag news.

Dean Foods seems to be trying to claim farmgate prices are going to go up significantly, that US dairy exports are robust and growing, and that the markets are giving off “buoyant signals”.

But well, no, the market is doing no such thing, and there seems to be no indication that we’re going to be seeing any kind of significant increase in farmgate prices in the US any time soon.

While milk production in NZ and the EU is trending down a bit, here in North America it has continued to rise significantly, with significant numbers of new cattle being added to milking herds and continued increases in milk production. Texas was up about 11%, Minnesota and Wisconsin were up about 2% or a little less. Overall US production is around +1.2% to +2.3%, depending on the numbers you believe, and there doesn’t seem to be any sign that’s going to stop.

As for cheese, yes, there was a blip in the cheese price last week, but that happens all the time, especially as we get closer to major holidays, and we haven’t even begun to make a dent in the truly massive amounts of cheese and butter already in storage. The USDA’s recent purchase of about $20 million in surplus cheese (if I remember the number right) didn’t even make a dent in the amount of cheese in storage. And as of this morning, cheese prices have already started to fall again, down 6 cents over the weekend.

And the statement that “foreign buyers are lapping up” US dairy products is, aside from being a horrible pun, simply not true. Exports of dairy products actually¬†dropped 2% in September.

There is always an uptick in prices this time of year as we approach the holiday baking season. Cream, cheese and butter prices almost always begin to rise around this time of year as retailers and suppliers try to cash in on increased demand. It’s a seasonal blip that doesn’t really indicate any kind of significant improvement in the market.

Maybe Dean foods is just trying to make investors feel a bit better about the fact that Dean’s profits fell by 28% last quarter?