I scoffed at reports some months back that claimed milk prices would climb to levels that are almost comfortable for dairy farmers. I shouldn’t have. Milk prices on the commodities markets have hit 20.18 for November and 19.73 for December. Of course that’s the price on the commodities market, not the price farmers are actually getting for their milk. That varies widely for a variety of factors. But for the first time in a long time dairy farmers are finally starting to get a price that might let them make a bit of profit and get some of their debt paid down.
I wasn’t going to do one of these for a while yet but some interesting stuff has been going on in the world of agriculture that I wanted to pass along… Oh, all right, I was bored, okay?
ADM and Perfect Day Make Cow Free Milk But Not Really
According to a wildly misleading headline on Fortune’s website, ADM (Archer Daniels Midland) and a San Francisco start up
company claim they can make real milk (they aren’t, not even close) with yeast. According to the article, they got “some yeast” from USDA, then “They then got a cow’s DNA sequence, had it printed via 3D-printer, and inserted it into a specific location of the yeast” according to the article. And if that statement makes you scratch your head a bit, well, yeah, I understand. That’s about as misleading as the story’s headline is.
No, they aren’t making actual milk. Not even close. All they’re making is a casein and whey which are chemically similar to that produced in real milk. Casein and whey are not milk, they are merely two components of the complex compound that milk really is. Nor are they really trying to if you read carefully. They’re planning on selling the stuff as an ingredient to the food processing industry, not as some kind of substitute milk.
Trade War Drags On. And On. And On. And On…
While the administration is touting a new trade agreement hammered out with Canada and Mexico, don’t hold your breath waiting for any kind of improvement in that sector. Treaties still have to be approved by all three governments before anything goes into effect. And even if it is approved, the administration still has its steel and aluminum tariffs in place which were what helped to trigger a lot of this trade war nonsense in the first place.
And despite comments from D.C. that there will be an agreement with China real soon now, the information coming from Asian sources doesn’t indicate anything of the kind. At the Asian – Pacific Economic Cooperation meeting in New Guinea attended by VP Pence the mood was anything but pleasant. The Chinese government said the US exhibited a “blaze of anger” during the meeting and Pence was “unhelpful”. Pence openly accused China of intellectual property theft and a whole laundry list of other alleged misconduct and, well, the whole meeting was pretty much a fiasco.
Will The Federal Farm Bill Pass This Year?
The current farm bill expired in September. A lot of programs which did not have permanent funding are shut down until a new bill is passed by Congress and signed by the president. Some ag marketing programs are closed, food aid to locations outside of the US are shut down, as are a lot of conservation programs, because once the farm bill expired the funding for those programs ended. Crop insurance and the SNAP (food stamps) program are both permanently funded so they continue even though the bill has expired.
While I’m sure the GOP would love to get the farm bill out the door before the Dems take over the House in January, that doesn’t look likely at this point in time. The House leadership is apparently not going to back down on its insistence to include strict work requirements for the SNAP program, and the Senate already voted those down by a 2-1 margin. I’m not going to delve into what’s going on in the fight over the SNAP program because I promised myself long ago I wasn’t going to descend into politics in this blog. Considering the difference in opinion between the two bodies of Congress, I suspect the Senate would be more than content to let the farm bill languish until the Dems take over the House in January.
Complicating things is Congress facing a Dec. 7 deadline to pass a funding bill to avoid the government shutting down. The administration is threatening to veto any funding bill that doesn’t include funding for “the wall”, so you can expect this to start to get nasty pretty quickly.
It’s possible that a farm bill might get passed, of course, but I’d think the chances of that are less than 50/50 right now.
[Edit: as of Nov. 23 it seems the Senate and the House may be getting closer to an agreement on SNAP issues and might actually produce a bill to present for a vote before the end of the year. At the moment I have no idea what’s actually in this compromise, nor do I know the chances of it actually passing.]
It’s no secret that the prices dairy farmers have been getting for milk has been utterly horrible for a long time. Wisconsin alone has lost 584 dairy farms just this year and 1,086 over the last two years. You’d think that with that many farms going out of business there would be a significant reduction in the amount of milk being produced, but that isn’t true. What generally happens is that when a dairy farm goes out of business the cows end up being sold to other dairy farms that expand their operation. So while the number of farms goes down, the number of producing cows doesn’t change very much.
As we get close to the end of the year there is a trend in the ag press to start publishing optimistic articles claiming that the price of milk is going to go up, sometimes significantly. Unfortunately those overly optimistic claims are generally based on data that is looked at in isolation. For example, about 12 states in the US report that milk production has declined significantly. If you look at just that fact, that might indicate milk prices might be moving up. But it also ignores the fact that the rest of the milk producing states have actually increased production by as much as 10%. Overall, milk production in the US has gone up about 1 – 2 % (the number varies according to who’s data you look at) despite the reduction in the number of dairy farms in operation.
News on the international scene is even worse. The last big sale conducted by Global Dairy Trade in New Zealand had prices dropping on almost every type of milk product being sold. And this is despite the fact China has, according to some reports at least, lost a considerable percentage of milk production.
What it boils down to is that there is very little information to support the claim that there will be a significant increase in the price of milk any time soon.
Farm Bailout Payments
The administration promised that the trade war it started with much of Europe, Canada, Mexico and China wouldn’t harm farmers, and came up with a bailout plan to help financially support farmers and reduce the impact of the loss of exports to other countries. So how is that going? According the administration it’s going wonderfully. According to the actual facts, well, not so good according to at least one source.
According to the administration the program is wildly successful. In actual fact less than 8% of the money the administration claimed it was going to give out has actually been paid as of Oct. 31, and a lot of that has been given away to non-farm interests. And while the dairy and corn farmers have been hit hard, the bulk of the money seems to be going to soybean growers, with other farmers being offered so little that it’s actually insulting.