Milk Wars

Well, the politicians have gotten involved in the dispute with Canada over their change Screen Shot 2017-04-27 at 6.43.56 AM.png to their milk import policies, and as you might expect, there has been a lot of muttering, tut-tutting, bloviating and ranting, with absolutely nothing being done about anything. The president got involved, appearing in Wisconsin briefly where he said many, many things to try to make it sound like he was going to do something, and as soon as he got out of the state and safely back in DC, the Whitehouse immediately disavowed everything he said, blunted or even eliminated entirely the vague threats, and we aren’t going to do this or that, but oh, even though the dispute is about milk we’re going to put a tariff on Canadian wood…. Wood? Really? Oh, well…

The state’s ag secretary is apparently actually doing his job, trying to help the dairy farms that are being dumped by Grassland. But in the long run there isn’t a heck of a lot that can be done at the state level. Fortunately it seems like most of the farmers effected by this have now found other markets for their milk, but the situation is still very concerning, and I expect things will get worse before they get better.

Blaming Canada for this, as many are doing, is silly. These new rules should not have blind sided anyone. From what I’ve been reading, the rules have been in the works for at least a full year, if not longer. Back in November already we were seeing stories popping up about the change in rules and warnings of how it would effect the markets here. So the processor’s claim that they were blindsided by this is a bit disingenuous. If their management didn’t see this coming, they really should be in a different business.

The real problem is the dairy industry itself and the politicians who keep fiddling with it, not any specific country. And the problem is world wide, not limited to the US or Canada. The problem is that dairy farms are producing way, way too much milk. More than the market can absorb. And instead of trying to deal with the situation, the reaction of the whole industry is to try desperately to come up with some kind of market for the stuff, any way they can, even if it destabilizes some other country’s farming industry. Pressuring politicians to institute still more ways to artificially prop up prices.

Canada has done something no other country has, it has actually been trying to deal with the problem of oversupply. It has a fairly strict quota system on milk production to try to keep the market stable. But in order to make it work, they have to restrict imports of dairy products from outside of Canada or the whole system would fall apart as the country is flooded with cheap imports. (The EU tried a quota system but abandoned it a year or two ago)

Is this protectionism? Of course it is. But you have a choice: Do you protect your businesses at home, giving them a level playing field to work with, restrict production so the farms can be relatively profitable, or do you open up your markets to cheap imports, often cheap because of government subsidies, tax breaks and other things that make it cheaper for them to produce the product than you can?

Then the politicians get involved… Price supports, tax breaks, grants, subsidies, government agencies buying up surplus product to artificially prop up prices, mandates that you have to use certain products (Wisconsin still has laws that force restaurants and food service operations to serve butter, for example), the list goes on and on. The end result is that anyone who thinks there is a “free market” for dairy products is living in a dream world.

What’s the solution to the problem? I really don’t know. My father used to say that the system was so screwed up that the whole thing should be scrapped. All of it. Make it a true free market. No government subsidies, no tax breaks, no marketing boards. Leave the health and safety regulations, testing, etc. But get rid of everything else. Turn it into a real free market that has to respond to normal supply and demand rather than a government supported mess where farms are propped up by various programs and price manipulations that encourage overproduction.

Would it help? I don’t know. But it seems to be about the only thing we haven’t tried yet. It’s obvious that all of the quota systems, price supports, surplus buys and everything else isn’t doing any good.

Farm Round Up

Lettuce Shortage

MrsGF works with the state’s various food service operations, including monitoring food purchases, and she tells me that the state’s prime food vendor has put out a warning that it may not be able to fulfill orders for lettuce because of adverse weather in California. Those poor buggers out in California — first a years long drought, then they get so deluged with rain that they can’t get their crops planted on time… They just can’t seem to get a break. She’s put out warnings to the state’s food service operations that they’re going to need to change menus, switch to different types of greens, etc. until the situation is resolved. Kale and cabbage haven’t been hit quite as hard, but they’re seeing some serious shortages for various types of lettuce. Apparently it’s hitting the consumer market hard as well and prices are going up fast at the retail level. The Chicago Trib had a story about it just the other day here. (warning: may be paywalled) I was just at the local grocery store this morning and noticed iceberg lettuce is now around $2.50 a head, a dollar a head more than what it was what it was a couple of weeks ago, and they’ve put a limit of 2 heads per customer on purchases. Romain lettuce has also shot up in price. Pre-cut salad mixes containing lettuce have also gone up in price.

If you’re really desperate for leafy greens, fresh spinach looks like a bargain, going for about one third of the cost of lettuce at our local store. It also tastes better and is significantly better nutritionally than iceberg lettuce.

Over Supply

The biggest problem with agriculture right now seems to be over supply. There’s just too much corn, soybeans and milk being produced. Here in the US I’ve heard of co-ops, large farmers and grain dealers renting abandoned airport runways to pile up corn because they don’t have anyplace to put the stuff. Corn prices on the futures market are sitting at around 3.63 right now, and haven’t moved more than twenty cents up or down for months. And with the US looking at a seriously huge corn harvest in 2017, barring some kind of disaster, about the only direction that price is going to go is down.

Low soybean prices have made farmers in Brazil hang on to their crop, storing it rather than selling it in the hopes of higher prices. But now the corn harvest is going to start in June, and with the bins full of beans, there’s no place to store the corn. The Ukraine is predicting a huge increase in corn production to further destabilize things.

And as for the milk market, oh brother… The market is so glutted right now, especially in the US, that they don’t know what to do with the stuff. I’ve heard of processors pouring milk down the drain because they can’t deal with all of it.

The ag industry is going to have to get a grip on the problems with over production or the whole system is going to come crashing down around our ears.

Herbicide Resistance On The Rise

Weeds resistant to commonly used herbicides are becoming a massive problem. Glyphosate resistant waterhemp, a type of pigweed, has been spotted in at least 17 counties here in Wisconsin, and its cousin, a resistant Palmer amaranth, has been spotted in the state as well. Pigweed is especially difficult to deal with because it produces massive amounts of seed.

This is just another indication that we really need change the way we deal with weed problems. We can’t just keep trying to come up with ever more toxic chemicals to kill off weeds and GM modified crops. That scheme will always result in weeds eventually developing resistance to the herbicides and the cycle starting all over again.

Climate Change

It’s interesting to note that while we have an administration that continues to deny climate change, everyone else seems to have just accepted it and is trying to deal with it. Even Wal-Mart, which isn’t exactly known as a bastion of liberal policies, is trying to deal with the situation and is putting pressure on its suppliers to do likewise. While the politicians bluster and bluff and bloviate and grasp at straws to try placate whoever writes them the biggest check that week, out in the real world a lot of major companies have realized that if anything positive is going to get done, they’re going to have to do it themselves. Even some of the oil companies have started to admit that something has to be done.

GIPSA Rules Delayed

I don’t blame you in the slightest if you don’t know what the GIPSA rules are. If you raise poultry or pigs for one of the big meat packers, you know all about this and are quite possibly pulling your hair out. But almost no one outside of the business does.

The rules were intended to protect farmers who contract to raise meat animals for a meat packing company from abusive and discriminatory practices. “because the processors own the birds, the feed, and other inputs, they can unfairly disadvantage or preference one grower over another as a way of forcing the growers to do things against their will or shut down dissent.” is how critics put the behavior of the processing companies in one article. The basic idea is that the rules would have given farmers who raise animals on a contract basis some minimal rights without having to jump through a lot of hurdles that are basically impossible to jump. The rules were changed by court interpretations about ten years ago so farmers now have to prove that a company’s actions harmed not just them, but the entire market, before they can try to take any kind of legal action against the processing company. As one representative for farmers put it: “We can’t overstate the level of fear and intimidation felt by poultry growers that contact us or our partner organizations,” says Harvie. “If they choose to speak up, they risk everything—their contract, their land, their homes.” You can read that whole story here.

The administration has delayed the implementation of the rules and right now it looks like they will be eventually be abandoned entirely and the meat packing companies are already celebrating a victory.

Vomitoxin

A nasty name for a nasty mycotoxin. Vomitoxin is nasty stuff and it seems to be getting more common in US corn. It is a toxin caused by mold in corn, and generally hasn’t been much of an issue in the US, but it seems to be getting worse, especially because of wet conditions during last year’s corn harvest. The toxin makes corn unfit for consumption, even as animal feed.

It isn’t even suitable for use for ethanol, because the ethanol makers depend on dried distillers grain (DDG) to make a profit. DDG is what’s left over after the ethanol making process. It’s a fairly high protein cattle feed. The ethanol making process concentrates the mycotoxin, making the resulting DDG even more toxic than the corn originally was.

There is More on the Dairy Farm Story

I mentioned previously that a short time ago Grassland Dairy Products here in Wisconsin, which makes mostly butter, sent out letters to 75 dairy farmers telling them that as of May 1 Grassland would no longer be buying their milk. This left those farmers in a terrible situation. They now have no place to sell their milk. And the way the market is right now, finding a new processor to sell to is almost impossible.

In it’s press releases and comments to the media Grassland blames Canada. Canada, according to Grassland, changed their dairy import policies almost literally overnight, making it impossible for Grassland to continue to sell almost a million pounds a day of ultra-filtered milk, used in cheese making, to Canada. According to some of the information that came from the company, they received only two days notice before the change was implemented. The company had no choice but to cut back on the amount of milk it purchases. Grassland claims that it cut off those farmers that the company felt would have the best chance of finding a new market for their milk elsewhere.

But some people started to do some digging, and as is often the case, what’s been coming out in the press releases and statements from the company seems to have some problems. I ran into an op-ed piece over at Wisconsin Agriculturist that points out numerous problems with the whole story as it’s being presented by Grassland, and if true, there is a lot more going on here. You can read it here.

First of all, allegedly Grassland was not blind sided by this as they seem to be claiming. This didn’t happen overnight as the press releases seem to claim. This has been in the works by Canada for a long time. Grassland allegedly knew about this back in November already, and may have known as much as two years ago according to the editorial piece. Governor Walker actually wrote a column about it back in November.

Then there is the issue of which farms they cut off. The company claims it picked farms that it believed would best be able to find markets for their milk. But almost all of the farms being cut off are the ones that are the farthest away from the company’s processing facility in Clark County. Cutting off the farms that are the farthest away from their processing center would save the company a small fortune on shipping costs.

There there is this little tidbit: At the same time the company is cutting off 75 dairy farms, it is trying to get the permits to build it’s own 5,000 cow company owned mega-farm.

There’s no doubt that the company lost significant sales of product to Canada, but there seems to be a lot more going on here than just a trade squabble with Canada.

Too Much Of A Good Thing

As of this morning the ag futures markets are listing corn at 3.67 a bushel, soybeans at 9.46, and wheat at 4.33. But as if often the case, out in the real world, at the farm level, the situation is far different. If you’re a farmer trying to sell, you don’t get the futures prices, you get farm gate prices, what a buyer will actually pay to a farmer. And that is often much, much less than what that commodity is trading for on the floor of the Chicago exchange and other commodities markets.

Out in the real world, farmers are looking at farm gate prices for corn of as little as 2.90 and wheat around 3.15. Those prices are well under the cost of production for most farmers. US farmers are looking at a fourth straight year of increasing costs, declining income, and increasing debt.

The problem is we’re growing too much food.

Sounds ridiculous, doesn’t it? Especially when we’re hearing about mass starvation in some parts of Africa and other parts of the world. But the problem isn’t a lack of production. We’re producing more than enough to keep everyone fed. The starvation is due not to a lack of food, but to government corruption, incompetence and war, not to any kind of shortage of food.

Overproduction has become a very serious problem. Most of the grain producing nations are looking at massive surpluses of product. Storage facilities are packed tight. In Kansas they’re actually renting runways at decommissioned military airbases and parking lots to pile the stuff up because there’s no place to go with it.

Meanwhile countries like China and Russia are trying to dump old stock in storage in order to make room for new production, resulting in prices being driven down even farther.

And there seems to be no end in sight. USDA is estimating that corn, wheat and soybean production in the US alone could be the biggest ever since they started keeping records.

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?

Nebraska Gov. Ricketts Touts ‘Major’ Property Tax Bill in Nebraska

“Property tax reforms in Nebraska could help farmers, but not as much as some groups want.”

Source: Nebraska Gov. Ricketts Touts ‘Major’ Property Tax Bill | Agweb.com

Please have patience with me while I talk about agriculture and property taxes for a moment so I can explain why this is important for farmers and environmentalists. Talking about things like taxes and government policies tends to make my eyes glaze over and I find myself with a sudden desire to take a long nap. But if you aren’t a farmer you may not know why this move by Nebraska is important for farmers. Wisconsin already did something like this years ago, and I think it’s the right thing to do.

Property taxes are based on the value of your property, of course. If your house, for example, is valued at, oh, $100,000, you pay property taxes based on that value. If it’s valued at $200,000, your property taxes are going to be significantly higher.

It’s the same with farmland. Under law here in Wisconsin the property is supposed to be assessed for purposes of property taxes at fair market value. (That law had to be instituted because some local jurisdictions were playing fast and loose with property evaluations in order to jack up the tax money they were getting. Before that law was put in place, I knew one poor bugger who had a mobile home that was worth about $10,000 get a tax assessment for $64,000. Seriously. I saw the documents myself.)

The question now is what exactly is “fair market value”? Is it the value of the property as it currently exists, what it is being used for at the moment, or the potential value of the property if it were sold for some other purpose.

That distinction is important, because what was happening in Wisconsin and a lot of other states is that local jurisdictions were assessing property not at it the value of the property as it currently existed, but what the property could be worth if it were sold for some other purpose.

The result was that if you had a farm on the outskirts of a town or city, you were pretty much screwed. Local governments were assessing the farms not on their value as farms, but their value as if they were commercial or residential property.

To illustrate what I mean, let’s look at an example. Farmland in this area is currently going for around – well, let’s round it off to $7,000 an acre to keep the math simple. So if you have a small, 100 acre farm, it’s worth about $700,000.

Meanwhile, land being used for, oh, let’s say a fairly upscale housing development in a nearby town, is going for about $20,000 per 1/4 acre lot, or about $80,000 an acre. Over time the town grows, and now you find that your farm is on the outskirts of the town. And as a result of that, the local government is now assessing your farm not for what it is worth as a farm, but for what it would be worth if it were sold for a housing development. You are now being forced to pay property taxes not on a farm worth $700,000, but property worth $8 million. Your property taxes just went up more than ten times what they’d been before.

While that’s a bit extreme, it isn’t exaggerated by much. I knew farmers who were seeing their property tax bills shooting up into the astronomical range because the jurisdiction they were in decided to evaluate their property not for what it was, but for what it could be. Their taxes were going up five, eight times what they’d been before when their property was evaluated at commercial or residential rates rather than agricultural.

There was some very heated debates over this, of course. The towns (and the developers) claiming that the new value was fair because that was what the property was actually worth if it were sold off to some developer, and the farmers on the other side saying no it isn’t because that’s not what it’s being used for… It was nasty.

I don’t think anyone ever actually proved that the governmental jurisdictions, seeking ever more tax money, along with developers smelling profits, abused the system by ratcheting up the taxes on farms specifically to force farmers to sell at bargain basement prices to a developer, but it was pretty much an open secret that this was exactly what was going on. At the time the laws curbing this were under consideration dozens of farmers appeared before the legislature claiming that this was exactly what was going on. Developers would find a nice farm in a good location near a town, smell the heady scent of money, convince the local government that it would be to it’s advantage to annex the farm into the town, evaluate the farm as commercial or residential property rather than farmland, and the farmer would be forced to sell at cut throat prices to the developer or go bankrupt from the taxes… It was nasty.

And for those concerned with urban sprawl it was nasty as well. This kind of thing was driving the construction of huge housing developments on the outskirts of cities and towns with McMansions sitting on quarter acre “estates”, endless cookie cutter boxes, hastily constructed, looking exactly alike…

Wisconsin did finally change the property assessment laws, but local jurisdictions and developers are still griping about it and occasionally manage to ~~bribe~~ convince some legislator to try to introduce a measure to “reform” the system, turn back the clock and let local jurisdictions snap up all that yummy, yummy tax money by assessing farmland at utterly absurd valuations.

The change didn’t halt urban sprawl, but it did help to slow it down a tiny bit. Maybe. Depends on who you talk to, really. Certainly it helped a lot of farmers whose property is adjacent to towns and cities.

Give Me Land Lots of Land

screen-shot-2017-01-04-at-4-37-48-pm One trend in agriculture has been making me nervous for some time now, and that is how large quantities of farmland are being concentrated in the hands of fewer and fewer people.

This has been going on for some time, of course. When I was a kid the road we lived on was dotted with small farms of various sizes ranging about 80 acres to 150 acres or so. Ours was actually one of the larger ones when I was a kid, with 140 acres and about 120 under cultivation. If memory serves me correctly, there were ten or twelve farms just on that one stretch of road when I was a kid. Today the houses and even many of the barns are still standing, but they aren’t farms any more, they’re residences. The actual farmland is now owned by one of three huge farming operations.

Whether or not this is a “good thing” is open to debate. But there is one trend that I think is definitely not a good thing, and that is that large amounts of farmland is being snapped up by investment companies.

Corporations like Farmland Partners (which doesn’t actually do any farming) and a lot of others, located both in the US and in other countries, are buying up farmland wherever they can find it and then renting it back to real farmers. For, of course, a profit

One can understand their point of view. People have to eat, after all. Therefore there is always going to be demand for land on which to grow crops. If a farmer can’t afford to buy land, he or she has to get it from somewhere, so they’re forced to rent it from a land owner. To an investor this seems like a fairly safe type of investment, especially with the stock markets being as volatile as they are.

But for farmers, for agriculture in general, this practice is disturbing in more than one way and is potentially damaging for consumers, farmers and agribusiness in general.

These companies do no farming, grow no crops, harvest no grain, raise no cattle. They do nothing to improve the quality of the land they own. They exist for only one reason, to rent land back to real farmers for the maximum amount of money they can squeeze out of them. They contribute nothing to agriculture. I dislike the term ‘parasite’, but, well… Isn’t that what you call an entity which does nothing but syphon off the resources of others and provides no benefit to those it feeds off of?

So far these companies have had little adverse effect on agriculture. Up until now they have been picking off the ‘low hanging fruit’, so to speak, snapping up deals here and there, in widely scattered areas. But as they acquire more, as more farmland is taken out of the control of farmers and placed in the hands of a few companies that care only for making profit… Well, the potential for abuse is obvious.

This kind of thing is legal. I certainly can understand the attraction people may have for this kind of an investment. With the stock market going through endless series of boom/bust cycles over the last few decades, a fairly stable investment like farmland is certainly attractive.

But what kind of effect is this going to have on agriculture as ever increasing amounts of land are being held in perpetuity by companies whose only goal is to squeeze as much profit out of farmers as possible?

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.

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?

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.