monsanto – grouchyfarmer

Farm Catch Up

Spring has finally arrived! Well, sort of. At least according to the calendar if not the weather. It’s been too wet and too cold to be able to do much of anything outside except cleaning up the flower beds and yard. So let’s take a look at what’s going on in the ag industry since the last time I did one of these.

Dean Foods For Sale

If you’ve ever had a hankering to own one of the largest dairy processors in the world, now is your chance. Dean Foods, once the largest dairy processor in the U.S., is apparently trying to sell itself off. The company has been having a difficult time of it. It’s been forced to close processing facilities, it lost a major contract with Walmart, and its efforts to rebrand some of its products and buy into other businesses haven’t been successful, or at least not successful enough to prop up the company’s dwindling sales. It’s been missing its sales targets for something like two years in a row now, and there are no signs things are going to get any better. Supposedly Canadian based Saputo, the 8th largest dairy company in the world, is interested in acquiring Dean. If successful this would be just the latest in a wave of mega-mergers among agriculture related businesses in the last few years.

If you find these mega-mergers to be troubling, well, you should. Despite claims to the contrary, these mergers are resulting in the creation of huge, multinational companies that dominate their markets and often they have virtual monopolies on the product lines they sell.

Bayer Stockholders Angry

Speaking of mega-mergers, Bayer’s management is facing repercussions from stockholders over it’s acquisition of Monsanto. It was expected that a lot of large stockholders were going to disapprove of the board of directors’ and management’s acquisition of Monsanto at the annual general meeting of the company. While this doesn’t change what management has done, it does indicate that a lot of stockholders are very angry over the decision to buy Monsanto, and the subsequent legal problems over the lawsuits about the adverse health effects from RoundUp, and most importantly, Bayer’s plummeting stock value.

Frankly, buying Monsanto was a really bad idea from the beginning, and if the executives at Bayer didn’t realize it, the company’s lawyers sure as hell should have. Even back when the negotiations for the purchase started Monsanto was already facing thousands of lawsuits over the alleged cancer risks of glyphosate. Now there are about 13,000 lawsuits in the pipeline concerning the herbicide. No, that was not a typo. Thirteen thousand.

And that isn’t the end of Monsanto’s legal problems. There is the whole dicamba fiasco to be concerned about as well. The lawsuits over the damage the company’s dicamba based herbicide has done since it was released a couple of years ago, along with lawsuits over Monsanto’s marketing tactics for it’s dicamba resistant soybeans, are starting to pop up now and are only going to get worse. Basically Monsanto is a legal nightmare and it is dragging down Bayer with it.

Beef Industry Lawsuits

While I’m on the subject of legal problems, the beef industry has been hit with two separate but related lawsuits alleging the four biggest beef packing companies, Tyson, JBS, Cargill and United Beef Packing (together they control 80% of the US beef market) conspired together to manipulate the price they paid to cattle growers and the prices charged to consumers. Basically it’s another claim of monopolies using their lock on the market to manipulate prices. Just those four companies control about 80% of the beef market in the US. Anyway, I won’t go into depth on this one. I’ll leave it to you to follow the link and sort out the details if you’re interested.

Walmart Gets Into Beef

I mentioned Walmart briefly when I talked about Dean Foods. Dean lost a huge contract to make Walmart’s house brand liquid milk not long ago when the retailer decided to experiment with eliminating the middleman and become its own processor. It built a large milk processing facility, cut deals with dairy farms to supply milk, and cut Dean Foods out completely in one district.

Walmart is now trying to do the same thing with beef. It is developing its own end to end supply chain to supply beef to some 500 Walmart stores. This won’t take care of all of Walmart’s meat. Most of it will still be supplied by Tyson and Cargill. But it does indicate a troubling trend where these big companies are trying to develop a complete monopoly over not only sales, but supply as well. Costco is doing something similar with chicken, developing its own supply chain that will supply about 40% of its needs.

Trade Wars Continue: Updated 5/6/19

I had this section all wrapped up and ready to go when the you-know-what hit the fan and… Okay, here’s what’s going on.

I really want to talk about the China situation, but let’s deal with something closer to home first, the new NAFTA treaty, USMCA, the US-Mexic0-Canada-Agreement. The USMCA negotiations finished some time ago, a treaty was agreed to, and all is well and good now, right? (Side note: Am I the only one who thinks USMCA is the title of a Village People song?)

Well, no. Yes, the treaty was negotiated, but everything is most definitely not good because not only are we still operating under the old NAFTA treaty, the administration has still left the punitive tariffs in place that have been causing disruptions of the economies of all three countries.

So what the hell is going on? We have the new treaty, so why are we still operating under the old NAFTA and why are the tariffs in place yet? Because before a treaty can go into effect it has to be ratified by the US Senate, and the US Senate has been doing what it does best, acting like a bunch of petulant, spoiled brats who are more interested in back stabbing each other and playing at politics and dabbling in personal attacks than they are in actually doing their bloody jobs. Supposedly one of the reasons why the tariffs are still in place is because the administration is trying to use that to goad the Senate into doing something. And since that hasn’t worked, the administration has threatened to cancel the existing NAFTA treaty, which would cause utter chaos, if the Senate doesn’t get off its ass and actually do its job for a change.

Now let’s move on to China. Now if you haven’t really been following what’s been going on there, you can be excused for thinking that all is sweetness and goodness and we’re all well on the way to being best buddies and all of this trade war nonsense will be over soon and, well, no. Sorry, but no.

As you’ve probably found out in the last couple of days, despite all of the positive PR fluff that’s been released by both sides over the last few months, things have most definitely not been going well with the negotiations. While both sides have been putting out positive sounding press releases, there have been issues, as they say. Behind the scenes things have been more than a bit testy.

Yes, China did a soybean purchase, but that was more PR than anything else. While the amount they purchased sounds quite large to the average person, in actual fact it was little more than a token purchase to indicate good faith on their part.

Things did sound positive for a while, though. Both sides were stating that things were going well and that they were on the verge of coming to an agreement. But then something happened. I’m not sure what, exactly, but whatever it was put a definite chill on the whole thing. There are a lot of rumors flying around. One is that the Chinese are very much aware of the legal and ethics issues the administration is involved with here in the US and as a result they just don’t trust anything the White House says.

Anyway, we suddenly had the administration muttering vague threats that it was considering pulling out of the negotiations entirely. Then the administration started threatening to ramp up the trade war to new heights, doubling the cost of the tariffs and including even more Chinese products in the tariff war. Then the Chinese started threatening to pull out of the negotiations… Oh, brother…

As I write this (May 7, 2019) things look tense, and the effects from this little tiff are rippling through the economy. The stock market is down. Commodities prices have fallen. Corn is down to 3.55, soybeans are down to 8.20… Sigh…

Even more disturbing is the fact that statements being made by the administration indicate that the administration doesn’t really know how tariffs work in the first place. One statement implied that the administration believes that China is paying the tariffs and that they are actually good for our economy. If the administration really believes that, it shows a fundamental ignorance about what tariffs are. Let me explain.

A tariff is intended to discourage the importing of a particular product into the US by increasing it’s cost to the importer. Let me emphasize that by repeating it: “increasing it’s cost to the importer.” Not the country of origin, but to the person or company that is importing the product. So for the most part, China doesn’t pay anything extra on products it exports to the US (except indirectly through lost sales). The people who pay the tariff are the US companies that are importing the products. And that cost is passed along directly or indirectly to us, the consumers.

Let me emphasize that: China doesn’t pay the tariffs, we do.

This is one of the reasons why tariffs are generally a bad idea except under extreme circumstances. It causes as much economic pain or more to the country importing the products as it does to the country exporting them.

It also makes the stock and commodities markets very, very nervous, especially in this situation because they don’t know what the hell this administration is going to do next. The markets like stability. They like predictability. And this administration is providing neither of those things at the moment.

Well, I’ve been babbling along for far too long already here, so let’s wrap this up.

Hopefully in the very near future I’ll have some new radio equipment to talk about. I’m seriously considering going QRP and I’ve been looking at mag loop antennas and the Yaesu FT-818ND QRP transceiver. We’ll see how that goes.

Farm Catch Up

I haven’t done one of these in a while, so let’s take a look at what’s been happening in the farming world.

Dicamba Herbicide Fight Continues: The fighting over the new Dicamba blends of herbicides continues. BASF and Monsanto continue to argue that their newly approved blends of herbicides containing dicamba are completely safe and aren’t a problem at all, while the farmers who have had thousands of acres of soybeans ruined by the herbicide after it drifted long distances, argue that it isn’t safe for use.

Arkansas is pushing for a ban on all dicamba use except for those uses that were permitted before the new blends came on the market. The ban would last until October, 2018, and would halt the sale and use of both Monsanto and BASF’s new dicamba based products, and probably halt the sale of Monsanto’s dicamba resistant soybeans as well because if the herbicide can’t be used, there’s no point in paying a premium for Monsanto’s new beans, either.

Monsanto is, of course, not happy about any of this since they stand to lose millions of dollars in sales of both their herbicide and seed. The company is blaming anyone and anything for the problems that have been going on, claiming that there is no “scientific” basis for the ban, that “scientists” have discovered that even if their product does drift outside of the application area, it doesn’t really hurt anything anyway, that some of the experts testifying in favor of the ban are prejudiced against the company, blaming the people who apply the herbicide, blaming the equipment used.

It isn’t just Arkansas that’s having problems. In Missouri it’s estimated that up to 22% of the soybeans planted in the Bootheel area were damaged by dicamba drift, along with acres upon acres of tomato, watermelons, vineyards, pumpkins, organic vegetables and even trees, shrubs and people’s home gardens. The product isn’t just moving a few yards, in some cases there are indications the herbicide is drifting for miles according to the Missouri Extension weed specialist Kevin Bradley.

Farmland Partners Makes Major Buy: Farmland Partners is an investment company that buys up farmland for no reason other than to rent it to actual farmers. The company now has about 160,000 acres of farmland. They just bought over 5,000 acres of nut orchards for $110 million from Olam, a Singapore based company that ventured into the nut business.

My feelings about this kind of thing? I find it extremely concerning. Companies like this are, well, to put it bluntly, parasites. They insert themselves into the process, competing against actual farmers for a scarce resource, farmland. They artificially inflate demand for that resource, driving prices up. They rent the land back to the farmers at ever increasing prices because the shareholders demand ever increasing profits, and at the same time the company itself provides absolutely no value at all to the whole process. It exists only to skim off profits from the whole system while contributing nothing itself, while at the same time destabilizing the whole system and actually degrading its health through it’s manipulation of the market.

Seed Terminator: Combines are great at two things; harvesting wheat, corn, soybeans, Screen Shot 2017-09-26 at 5.53.30 AM etc., and spreading weed seeds all over your fields. The problem is that a lot of weeds are coming ripe at around the same time as your crop. So when you combine your crop, you’re also combining the weeds and blowing the weed seeds out the back of the combine and scattering them all over the field. A lot of people have worked for a very long time on this problem, with various attempts at a solution.

This one which is now going into production it seems, adds a screening system and high speed flails that pulverizes the weed seeds before they get blown back onto the field. If you click the link up there you’ll jump to the article about it. Apparently it works pretty good, and I’m always in favor of anything that helps farmers reduce the need for herbicides.

The problem is that this puppy costs about $70,000. Even when we’re talking about combines that cost a quarter of a million dollars or more, that is a pretty significant amount of money. Is it worth it? No idea.

Pork Cheap, Beef getting more Expensive: Beef prices at the consumer level haven’t been all that good for some time now. Pork is almost ridiculously cheap right now. Pork futures have fallen like a stone since July, dropping some 30%. Pork bellies, where we get bacon from, dove straight into the dumper, falling 60%. Although I note that hasn’t helped the price of bacon in the store. That keeps going up and up, it seems.

Beef on the other hand… Sheesh. Prices on some cuts have moderated a bit, but not by much, and they’re claiming prices are going to go up significantly over the upcoming months. We generally buy a lot of beef from MrsGF’s brother and sister, but because of logistics issues they aren’t going to have any ready to go for probably a year now. So MrsGF and I are looking into seeing if we have enough freezer space to get a quarter or half of beef from the local butcher because we can get that dressed, cut, wrapped and frozen, for $3.90 a pound which is less than what hamburger is going for in the grocery stores around here.

Syngenta Lawsuit Settled: Syngenta, a seed company, was sued a while back over one variety of it’s corn. The corn, a GM variety, was heavily marketed by the company and a lot of farmers planted it. Only to find that when it came time to actually sell their corn to China, the country rejected it because Syngenta allegedly hadn’t told told the farmers that China had not approved that type of corn for import. In addition, it was alleged that the company deliberately misled farmers by claiming the corn variety had been approved by China when it had not.

Farmers, grain shipping companies, etc. lost millions of dollars on the deal and sued. Syngenta claimed they had told them that China hadn’t approved it. Lots of lawyers paid for their kids’ college education out of this one, raking in millions in legal fees, and the final result is Syngenta and the plaintiffs are apparently now going to settle out of court. I haven’t heard yet what the settlement will be, but you can expect that the company is going to have to pay a huge amount of money to make this one go away.

Addendum: Just ran cross another story that had more details. Syngenta is apparently going to cough up $1.4 billion to make this lawsuit go away. The company already lost a $218 million jury trial to a group of Kansas farmers about three months ago. There are still lawsuits pending in Canada against the company that will not fall under this agreement and will be thrashed out in the Canadian courts.

Dicamba – What’s The Problem?

Screen Shot 2017-06-24 at 7.58.59 AM In the last Farm Catch Up I talked a bit about the herbicide dicamba and noted that Arkansas regulators had already banned Monsanto’s brand Xtendimax of herbicide blend that contained the product and were considering a ban on the other one that was approved for use with Monsanto’s Xtend line of seeds, Engenia. “Procedural irregularities” prevented the Arkansas State Plant Board from passing an emergency ban on June 20, but I should have waited a couple of days because on June 23 ASPB passed a 120 day emergency order banning in-crop use of dicamba.

Someone pointed out to me that a lot of my readers aren’t in the agriculture business and may not know what the whole problem is, and that it would be a good idea to give a better explanation of what’s going on and why this is so important to so many people. So here goes

Super Weeds

That’s where it all starts, of course: super weeds, the ones that have been developing resistance to glyphosate, the active ingredient in herbicides like RoundUp. Everyone knew that as soon as glyphosate and the GM crops developed to work with it were released, weeds would begin to evolve resistance to the herbicide. That’s just the way nature works. Guidelines for usage that would help to prevent this, or at least slow it down, were developed even before the products were released for general sale. But everyone knew it was just a matter of time before “super weeds” started to pop up and spread. The fact that the guidelines and safeguards were largely ignored didn’t help much, either.

So now we’re faced with glyphosate resistant weeds that are spreading all across the country. So a new magic bullet needed to be found, and they picked dicamba.

Dicamba has been around for a long time. It was first discovered back in 1942 and has been used to control brush, legumes and cacti. It was also used along fence lines and roads to control brush. Some formulations have been used for weed control on lawns, golf courses, etc. for decades as well. It was never used on crops because it was highly toxic to commercial crops.

Dicamba has some serious issues, not the least of which is it’s tendency to drift over large areas beyond the treatment area.

Monsanto decided that dicamba was an excellent solution to the problem of weeds that were resistant to glyphosate, and developed it’s Xtend soybean plant, which could tolerate both glyphosate and dicamba. It developed a new formulation containing both glyphosate and dicamba.

Monsanto developed what was supposed to be a complete system, it’s new GM soybean coupled with the new formulation of glyphosate and dicamba. The new formulation was supposed to cure the problems dicamba had with easy volatility and wide spread drifting. The company claimed that if used according to its guidelines and with the proper equipment, the issues with the herbicide would be eliminated.

Well, there was one big problem right off the bat. Monsanto started to sell the GM seed before the government had approved the use of it’s new herbicide blend. This led some farmers to dump dicamba on their fields even though the government had not yet approved any form of dicamba for use on crops. Without the special low volatility formulation and without using the proper equipment, dicamba spread widely, damaging or destroying tens of thousands of acres of non-Xtend soybeans, it is claimed. Oh, and somebody got shot and killed over it, too. A heated argument between farmers over alleged damage to crops ended up with someone getting killed.

Well, the new formulation of herbicide is now approved, and things don’t seem to be doing much better for either Monsanto or the other company that makes the new herbicide. There are reports popping up all over the place that the new herbicide, even when used exactly according to the recommendations, is drifting all over the place. In one case it’s alleged that it drifted more than a mile and a half. In Arkansas alone there have been around 250 reports of damage caused by herbicide drift.

As noted at the beginning of this, Arkansas has already instituted a ban on Monsanto’s formula, and the government is now issuing an outright ban on all dicamba use on cropland because of all the damage reports.

The whole thing is a real mess at the moment. Lots of finger pointing, lots of accusations, even conspiracy theories. I heard one farmer claim that the drift problem is deliberate. He claims that the company knew this was going to happen, wanted it to happen, because it would force farmers to buy the GM seed from the company because even if you didn’t use the new herbicide, drift from neighboring farms that did would wipe out your crop unless you used their beans.

I haven’t seen reports from other states about this situation. If I do I’ll pass them along. Right now it’s a huge mess and the only people who are going to be profiting from any of this seems to be the lawyers.

Merger Fever

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If you follow ag news you must be aware of the high profile mergers and buyouts going on in agribusiness. After months of trying to sell itself or merge with another agribusiness company, Monsanto seems as if it is going to be snapped up by pharmaceutical giant, Bayer, so the German company can increase it’s ag presence. Bayer is already a major maker of pesticides and snapping up Monsanto would give it a significant presence in the GM seed market as well.

It is not a done deal by any means. It still has to be passed by antitrust regulators both here and in the EU. There seems to be considerable resistance to the merger in Germany and in the EU as a whole, and a lot of politicians over there have been making disapproving noises.

This isn’t the only big ag merger going on, either. Dupont and Dow Chemical are in the process of merging, with the details still a bit up in the air. Swiss company Syngenta, which Monsanto had attempted to cut a deal with earlier, is being snapped up by the China National Chemical corporation, which is owned by the Chinese government. All four of these companies are major players in the agricultural chemical industry. (ChemChina seems to be on a buying spree. Last year it bought Pirelli, the Italian tire maker)

Mergers, acquisitions, buyouts, etc. aren’t anything new, especially in the ag industry. It’s been going on for ages. And generally the results, at least for the farmers, aren’t pretty. Over the years we’ve seen virtually every small, independent co-op, feed processor, seed maker, machinery dealer and independent mechanic be bought up, forced out of business or merged into ever larger semi-monopolistic businesses. And while competition has dwindled, farmers have fewer choices of where to go to buy seed, fertilizer, feed, chemicals and equipment, prices have, of course, skyrocketed.

The problem with all of these mergers is that they don’t seem to benefit anyone except a handful of investors, lawyers and, of course, the upper management of the companies themselves. They certainly don’t benefit the consumers, that is the farmers and you, the people who buy the milk, cheese, eggs, meat, vegetables and fruit that the farmers produce.

We used to plant 30 to 40 different types of soybeans in the US. Today, 90% of all the soybeans planted in the US are a single variety, produced by Monsanto. The fact that Monsanto has a literal monopoly on soybean seed isn’t the only problem with the situation. It’s the fact that we could be facing a very serious biological crisis. If a new disease pops up that this one variety of bean is susceptible to, the entire US soybean crop could be jeopardized because of this lack of genetic diversity. These monopolies have resulted in such a lack of genetic diversity in our agricultural systems that many of them now lack the genetic diversity to be sustained if a disease strikes them.

What these companies try to do, want to do, is lock farmers into a specific “system” of agriculture. You buy a specific type of seed to plant. That plant comes along with a specific program of herbicide and pesticide control systems, also sold by the company. Farmers do it because it’s easy. Sort of one stop shopping. They get everything they need from one vendor. And generally these systems are profitable.

At least at first. What generally happens is the company starts to get greedy. After releasing the system at a relatively decent price, the company starts ratcheting the price up once farmers get hooked into it. Prices go up until farmers realize the system isn’t all that profitable any longer. But by that time, well, they have such a heavy investment in the system they can’t really get out of it any more. Besides, where else are they going to go because the company has driven all of it’s competition out of business.

Farmers who want an alternative have enormous trouble even trying to find one. These semi-monopolies claim there is still a lot of competition out there. And it’s true that there are some competitors. But not many, and even fewer who could provide large scale farmers with the quantity of seed they need at a price they can afford to pay.