Farm Catch Up

SNAP Program

The SNAP (food stamp) program has been in the cross hairs of certain parties for ages now. They haven’t been able to entirely eliminate the program because it would generate an enormous amount of public outrage. So they go after it with what I call “Death From A Thousand Cuts” (DFATC). DFATC works by going after a program by deliberately instituting rules and requirements that make it so difficult to apply for and get benefits that people just give up and don’t even try. Of course that’s not how the administration presents these changes. The changes are presented as being “reasonable”, cutting fraud, or even somehow “helping” the recipients.

The latest one to be proposed for SNAP is that the administration now wants to charge retailers fees for being able to accept SNAP that range anywhere from $250 – $200,000 depending on the size of the retailer. The amount would range from $250 for small retailers, up to $200,000 for large retail chains like Walmart. It doesn’t sound like much, but small retailers are already financially stressed, and this would just add even more to their cost of doing business. A lot of them are going to think it isn’t worth the extra cost and paperwork involved and will just drop participation in the SNAP program.

Be Careful What You Ask For

People in the ag industry are getting a wee bit nervous as the date for the administration to “renegotiate” the NAFTA agreement approaches. Mexico is a huge market for US agricultural products, and the administration’s near constant use of Mexico and Mexican immigrants as scapegoats hasn’t been doing much to make Mexico willing to cooperate with us. As the article linked to above says, “Farmers are hoping NAFTA can be updated without blowing up the trade agreement.”

Considering this administration is spending almost all it’s time trying to do damage control as one scandal after another hits the media, and that it it doesn’t seem to understand what NAFTA actually is, doesn’t seem to understand how it works, and doesn’t even seem to understand how trade agreements work, and that it regularly uses one of our NAFTA partners as a scapegoat, calling the people of that country rapists, drug dealers and “bad people”… Well, let’s just say this has the potential of blowing up in everyones faces.

The biggest issue for the US dairy industry is Canada. Canada has a dairy marketing system that actually works relatively well. Granted, a lot of people up there don’t like it, but it has kept Canadian prices fairly stable, kept dairy farmers reasonably profitable, and it has avoided the boom/bust cycle that the dairy industry in the rest of the world has been following for decades now. The US dairy industry would like to see that system totally destroyed, it seems, and force Canada into the same chaos we’re enduring down here.

Don’t get me wrong, the Canadian system has a lot of problems, but you have to admit that the system has kept Canadian dairy farmers largely insulated from the insanity going on in the rest of the world where, it seems, the business model is that if the market is flooded with way, way too much milk, the solution is to produce even more milk.

China to Import US Beef

Back in 2003 China banned imports of US beef because of incidents of Mad Cow Disease (bovine spongiform encephalopathy, or BSE). Although the ban was eventually lifted fairly quickly, China shifted it’s imports to Australia and South America, and the US has exported pretty much no beef at all to China. That looks like it will be changing. China’s imports of beef have expanded massively in the last five years, going from $275 million in 2012 to $2.5 billion in 2016. Needless to say the US beef industry would dearly love to get a piece of that market.

Wally Melons?

For decades we’ve been putting up with fruits and vegetables that pretty much don’t taste like fruits and vegetables. Those California strawberries may look beautiful, but they don’t actually taste much like strawberries. Or pears that are so rock hard you have to boil the bloody things to make them edible. And don’t get me started on whatever the hell it is supermarkets sell as “tomatoes”. I don’t know what those things are. They look like tomatoes, but they have the flavor and texture of drywall. Well, I’ve never actually eaten drywall. I mean that would be silly. But I suspect that if I ever did eat drywall, it would have that… Wait, what was I talking about?

Oh, yeah, melons.

Apparently Walmart’s melons are so bad that even Walmart hates them, and they’ve apparently done something about it. They’ve come up with their own variety of melon.

Wally world apparently worked with Bayer to develop… I was going to make a joke about an aspirin flavored melon, but that would be in bad taste, wouldn’t it… Develop a melon that can handle the stresses of shipping long distances, but still somehow manages to taste like something reasonably close to an actual melon.

It is not genetically modified, but was specifically bred just to satisfy Walmart’s specifications. Is it any good? I have no idea, and I’m not about to try one of the things.

Weather Worries Push Prices Up

Weather concerns in the US have been slowly pushing grain futures prices up on the commodities market. Hard red spring wheat, used for bread, has been hurt by dry conditions in large parts of the US grain belt. And while there is rain in the forecasts, it’s felt that much of the crop is too far along for rain to help much at this point. One of the concerns is the protein content of the wheat. They want a protein content of at least 10.2% and it looks like large amounts of the crop is going to be coming under that level. Hard red spring wheat hit $6.45 at one point, the highest it’s been since 2014, before going to 6.41. From what I’ve seen they’re claiming the spring wheat crop is the worst it’s been in almost 30 years.

Weather concerns have the markets a bit nervous right now as the climate can’t seem to figure out what it wants to do. Here in my part of Wisconsin we’ve been abnormally wet. In other parts of the grain belt it’s been abnormally dry, with parts of the Dakotas going through drought. Corn finally has been seeing some significant movement in prices, pushing up to 3.83 as of this morning.

Mergers and still more Mergers

It seems that every ag company is trying to buy every other ag company these day. The Bayer/Monsanto merger is still in the works, with Bayer trying to sell off bits and pieces of itself so it can claim that its takeover of Monsanto won’t reduce competition. Of course it won’t. (I wish there was a “sarcasm” font, don’t you?) Of course it will reduce  competition. That’s the whole point behind these mergers, to get rid of competition and increase the market share and profits of the new company that emerges after they have merged.

Anyway, Bayer is trying to sell off it’s Libertylink genetic modification trait, it’s glufosinate weed killer, and maybe it’s garlic and pepper seed operations and some other bits and pieces it hopes will satisfy regulators. BASF and Syngenta are supposed to be interested.

Meanwhile Syngenta itself is the target of a takeover. It’s being bought by China National Chemical Co, owned by the Chinese government. DuPont is selling parts of itself off in order to try to merge with Dow Chemical.

Will any of these mergers and buyouts actually help farmers as the companies claim? Of course not. The only people who ever benefit from these mergers are the lawyers, corporate executives who cash in big time on bonuses and stock deals, and a handful of investors.

Glyphosate Study Craziness

Glyphosate, commonly known as RoundUp(TM), was ruled to be a “probable carcinogen” by the World Health Organization, despite the fact that it has been throughly studied for decades by dozens of organizations and scientists and they’ve found no real link between the herbicide and cancer. Even the European food Safety Authority, one of the most cautious and paranoid out there, didn’t find a link.

But WHO and IARC, the International Agency for Research on Cancer which is part of WHO, came to the conclusion that it was “probable”. Why?

This is where the story gets very, very strange. A fellow named Aaron Blair who led the IARC’s review panel on RoundUp, knew of a large study which indicated the herbicide did not cause cancer. If that study had been included in the data given to the IARC it would almost certainly have determined that glyphosate was not a carcinogen.

So why wasn’t that study included? Did Blair not know about it? Well, he did know about it. It was his study. He knew that if the study was included glyphosate would ruled to be not a carcinogen. He admitted that is a sworn deposition, as well as admitting that if that data had been included IARC’s analysis would have been significantly altered.

So why did a scientist deliberately withhold the results of his own study from IARC’s analysis? Because it hadn’t been published yet, he said. And that it wasn’t published yet because it was “too big” to put in a single paper, he claimed.

 

Milk Again

Some of you are probably getting tired of me talking about the dairy industry and the

Screen Shot 2017-04-27 at 6.43.56 AM

Cow is angry.

problems it faces, but I ran across an editorial over at Wisconsin Agriculturalist that was really well written and well thought out that talks about the situation the dairy industry is facing. Go give it a look if you have a few minutes.

The writer brings up a lot of points that I’ve talked about myself, or have at least thought about. I wanted to pass some of that along with my own thoughts on the subject. So if you’re sick of me babbling about dairy farming, feel free to skip this one. I won’t blame you at all if you do.

As the author points out, blaming Canada for our overproduction problems down here is just plain stupid. He doesn’t use that word. He’s more polite than I am.

Blaming Canada for our problems and Grassland cutting off some 75 or so farmers from a market for their milk is stupid. Demanding that the government “do something” to change Canada’s milk production and marketing system because of our problems down here is sort of like a kid demanding his parents take away his friend’s Playstation because he doesn’t have one himself.

Canada has a milk production/marketing system that works fairly well. Dairy farmers enjoy relatively stable prices that let them make a reasonable profit. But the price they pay for this is that their production is strictly limited. They have a system in place that permits them to only produce a specific amount of milk. If they want to expand their operation, the only way they can do it is by acquiring the quota of a different farm that is shrinking or going out of business.

This also means that Canada has to put in place import restrictions that prevent outsiders from dumping their surplus product onto Canadian markets at cut-throat prices and destabilizing their whole system.

This, some claim, is “unfair”. Canada, they claim, should simply allow the US to dump it’s surpluses on the Canadian markets so the US can continue to ramp up milk production to make even more product that no one wants and wrecking the Canadian dairy industry just as badly as we’ve wrecked the US markets.

They want a “free market”. But only a market that’s “free” for them, and not for anyone else, it seems. They want a market where they are free to dump their excess on everyone else, but at the same time they want the US to protect them from other countries doing the same thing to us. Hence all of the rhetoric coming out of DC about tariffs on imports, claims that China and Mexican products are “destabilizing” our markets by dumping cheap products on us.

But we should be able to do it to them?

Could the government here ever develop a marketing system that actually works? Sure it could. But it won’t. It can’t.

The problem is that the government is no longer in the hands of elected leaders who represent us. Instead politicians have sold their souls (and ours) for the almighty dollar. Their actions are being influenced not by the voters who elect them, but by a handful of well financed special interest groups that are largely funded by a tiny handful of wealthy individuals and corporations and which pump hundreds of millions of dollars into election campaigns.

The author of the editorial wants farmers to join up with one marketing board or farmers’ organization or other to try to work with the government to get changes made. It’s highly unlikely that will work. It certainly hasn’t worked in the past. Farmers’ organizations attempting to change the system have come and gone by the dozens, and almost none of them have had any real positive influence on things. In some cases, they’ve made things worse.

What’s the solution? The government isn’t going to be any help. That system is largely broken. The government no longer responds to the needs of the people it’s supposed to represent, but only responds to those who can write out six figure checks or own a high priced and well funded lobbyist in DC.

I wish I had an answer. I don’t.

 

 

70 Percent Chance Dec. Corn Futures Hit $4.40-$4.50 – Corn – News | Agweb.com

As

Source: 70 Percent Chance Dec. Corn Futures Hit $4.40-$4.50 – Corn – News | Agweb.com

I read this item over at Agweb twice and I still don’t understand why she thinks there’s a 70% chance corn could go over $4.40. She doesn’t give any data to actually back up that statement in the article. I hate items like this where some “expert” comes along and makes a specific statement, and then the report doesn’t give any reason why.

As of right now I don’t see any indication corn is going to go that high barring some kind of significant weather event or similar wide spread problem. We have massive amounts of corn still in storage from last year’s harvest, planned corn plantings for this year are down only slightly from last year… There basically is no pressure at all on the market to move the price up significantly.

At the moment, China has drastically cut back imports of corn to try to draw down it’s own stocks, and has increased production. There seems to be no increased demand for US corn anywhere, really. Ethanol production is relatively flat, we have grain storage facilities full to bursting with last year’s crop, weather has been relatively good… There doesn’t seem to be any reason for corn to go up almost $1 a bushel over the next few months. So why does she think it’s going to go up? Don’t know.

Farm Catchup

Time to get caught up with what’s been going on in the farming world.

Elderly Corn

China has a problem with corn. As in it has too much of it. It’s been sitting on a large amount of stockpiled corn for years now, and it needs to get rid of it because some of this has been sitting in storage for ages now and if they don’t get rid of it soon it’s going to be unfit for even animal consumption. Agrimoney posted a story indicating China is going to start dumping a lot of it’s aging corn on the market beginning May 5. Some of this stuff has been in storage since 2012. The country has had a problem with this for some time now, and there are rumors flying around that the quality of this stuff is marginal at best. China has been working to make their grain markets less dependent on government support programs and to draw down massive amounts of grain that they have in storage. The result has been a huge drop in the import of grain, especially corn. Chinese corn imports in March were 91% lower than they were a year ago.

GM Corn Saving Lives?

My opinion of genetically modified crops is mixed. I believe the science that proves that the GM crops in use currently are generally safe and that consuming them does not cause health problems. But GM crops have other issues associated with them that are problematic. Like the fact they don’t really improve yield at all, that they lead to the development of herbicide tolerant weeds and that in the long run, GM crops modified to resist weeds and things like the corn borer are little more than stop gap measures that will ultimately fail… The list goes on and on.

But there is one GM crop that could genuinely be of benefit. Aspergillus is a type of fungi or mold that produces aflatoxin, which is not only a carcinogen, but can also cause stunted growth in children and damage immune systems. And it causes liver cancer. It can be found in all kinds of things; peanuts, walnuts, the list goes on and on. Aflatoxin is especially a problem in corn. Corn that is harvested wet, stored improperly, can easily be hit with this stuff, and it can be very nasty.

Here in the US and other first world countries corn and other food crops are tested for the the stuff, but that’s not the case in other places that don’t have the resources, the money, or the expertise to do the testing.

They’ve developed a modified variety of corn that resists the development of the toxin in the corn kernel. Aspergillus can still develop, the the toxin itself will not get into the kernels of the corn.

The early test results are very promising, but they’re going to have to hook up with someone who can afford to foot the bill for large scale testing of the modified crop and go through all of the regulatory paper work and testing.

It wouldn’t just help poorer countries which can’t do the testing. Farmers have  huge amounts of corn rejected because of testing positive for the toxin, so a variety of corn that didn’t develop the toxin would be a significant financial benefit.

Weed Wars

I ran into this item over at agweb.com: When Will the Herbicide Cavalry Arrive? It talks about herbicide resistant weeds and new chemicals to kill them and all that stuff. The usual kind of thing that reads like a PR piece written by the chemical companies. But if you scroll down a bit over halfway through the piece, you’ll find a somewhat different tone when someone, finally, utters the phrase “we’ll never spray our way out of the problem.

And we won’t. Sooner or later the pests will develop resistance to whatever chemical solutions they come up with and the problem will come back just as bad, probably worse, than it was before. They go on to praise two Australian “innovations” that attach to the combine to capture weed seeds before the combine can blow them back out onto the field.

It’s certainly a good idea. Any weed seeds you can capture at the combine aren’t going to germinate the next year to infest your crops. But innovative? Hardly. Similar technologies have been around for decades. Back in the late 1950s our old Massy Harris combine had a device mounted on it that did something similar. It collected the weed seed that would have been blown back out onto the field or gone into the grain tank with the oats and dumped it into a feed sack attached to the back of the combine. At the end of the day we’d have bags of the stuff. It certainly wasn’t 100% effective, but every weed seed it did collect was one that wasn’t going to cause a problem the following year.

Will these devices be helpful? Hell yes, if they ever get them into production and farmers buy into the idea.

I’m not sure why the process went out of favor. I think our combine was the last one I ever saw that was equipped with it. I suppose people figured why bother when all we need to do is just spray. Just blow the weed seed out the back of the combine and let the chemicals deal with it.

School Lunch Controversy

You’d think that one thing everyone would agree on is that school kids should be fed lunches that are safe and healthy, right? But you’d be surprised. Opinions range all over the place out there, from people who think parents should be responsible to feeding their kids and the schools shouldn’t be serving any food at all, under any circumstances, to those who think schools should be feeding kids everything; breakfast, lunch and dinner.

And as for what schools should be serving, well, it’s turned into an utterly ridiculous and totally unnecessary political fight that started the moment the Obama administration announced new rules to insure that what kids were being fed in schools was, if not actually good for them, at least wouldn’t actively harm them. There is absolutely no doubt that we eat too much fat, too much sugar, too much salt, too much processed food and we don’t eat enough vegetables, fruit and whole grains. The new rules were intended to help deal with that, and from the moment they were even mentioned, the fight started because, well, Obama, and as far as certain politicians and special interest groups were concerned, anything coming out of the Obama administration was automatically the spawn of Satan.

As the current administration works to roll back or eliminate everything that it’s predecessor did, it’s been going after the school lunch program as well. The ag secretary announced in a self promotional fluff piece that reads like it was written by the food processing companies and backed with “information” that either isn’t true, is misinterpreted or cherry picked, that they’re going to “make school meals great again” by rolling back the Obama era nutritional guidelines, and allow schools to return, at least partly, to serving kids little more than junk food disguised as a meal. Restrictions on salt, fat, sugar, serving increased amounts of vegetables and whole grain breads and fat free milk are all being rolled back

One of these days I need to do an article about the school food service system. I’ve been involved in it either directly or indirectly for decades and some of the crap going on in that system, well, it’s scary sometimes.

Milk Prices: Sigh…

Milk prices, especially the price of skim and whole powdered milk, plummeted at Global Dairy Trade of New Zealand, dropping 12.4% and 15.5% respectively. (Source: Agrimoney.com | New Zealand milk prices follow Europe, US lower)

People were starting to think that milk prices were beginning to stabilize, and that milk prices were finally starting to go up to the point where dairy farmers might not be under such financial stress from low prices.

But that might all have been little more than a house of cards. There were always a lot of problems with those hopes.

The first problem was that except for the New Zealand and Australian producers, milk production in the rest of the world had not really declined all that much, and in large parts of the world like North America, production had actually been increasing. While prices have been going up here in the US, that increase in milk price seems to have been due more to market stabilization and corrections than to anything else. There has been no significant increase in demand for dairy products to push prices up.

The second was that many seem to rely on prices at GDT as some kind of indicator of the overall health of the milk market. They shouldn’t. Global Dairy Trade is owned by Fonterra, the huge milk co-op in New Zealand. It markets it products mostly to Southeast Asia and China. And because it is owned by Fonterra, Fonterra can do whatever it likes with it. Fonterra has deliberately restricted or increased the amount of product flowing through GDT in order to manipulate the market prices in the past.

So relying on a sales organization that serves a rather narrow market, and which is wholly owned by a milk producer, and which has used that sales organization to manipulate market prices in the past… Well, do I really need to tell you that relying on sales figures at GDT as some kind of indicator of market conditions is really not a good thing to do?

 

Glad I’m Not Farming Anymore

I really liked farming, but I’m rather glad I’m out of the business these days, especially when I see headlines like this one over at agweb.com:

Betting the Farm and Losing: Banks Seek Collateral as Debts Rise

The financial situation for a lot of farmers is pretty stressful right now. Farm income is down 42% from what it was in 2013, farm land prices are dropping and they’re predicting land prices could drop 20% or more over the next couple of years. Corn prices are less than half what they were in 2012, cattle and hog prices are down 38%. Corn and soybean inventories are going to be at the highest level in something like 30 years. The University of Illinois says many farmers in the state are going to be losing about $28 an acre on their corn, and while soybeans are still profitable, they’ll be lucky if they make $67 an acre this year compared to $229 back in 2010.

The situation isn’t good when you look at the financial data. The Federal Reserve Bank of Kansas City is reporting a decline in the financial health of farmers. They have less working capital, are having to resort to taking out loans just to meet operating expenses. In the Midwest banks are reporting that about 22% of farmers will have a negative cash flow for 2016.

As usual the farmers who are getting hit the worst are the young ones who are just starting out or have only been in business a few years. They don’t have the land base or the credit history to get enough capital to buy equipment or to even continue operating.

Farming is a difficult business at the best of times. And it operates under financial conditions that pretty much no other business faces. How many companies would invest huge amounts of money in infrastructure, equipment, land, buildings, labor, etc. when they have absolutely no idea what their product will sell for when it finally gets to market?

That’s the situation farmers face. Farming is a long term proposition. You invest hundreds of thousands of dollars in tractors, combines, planters. You spend tens of thousands of dollars on seed. You invest huge amounts of money buying or renting land. Invest tens of thousands of dollars in labor to plant and tend to a crop.

And you have absolutely no idea what that crop is going to sell for because you have no control over the markets. You could have a boom year like we had a few years ago when the drought drove commodity prices up through the roof, or you could lose your shirt because prices on the commodities markets fell. You can make predictions, run models, listen to the experts, make educated guesses. But in the long run you’re depending on a market that has so many variables; weather, political climate, disease…

I miss farming, but I am glad I’m not doing it any more.