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Agriculture News

Trump Trade War Fallout Could Haunt U.S. Soy Farmers for Years

BLoomberg | Posted on November 15, 2018

If history is any guide, the trade war with China will have lasting affects for U.S. farmers and their soybean crops that the president won’t be boasting about. Donald Trump is set to meet Xi Jinping, his counterpart in China, at the G-20 summit and traders are optimistic for a resolution. But a flashback to Richard Nixon’s 1973 soybean embargo and Jimmy Carter’s 1980 Soviet grain ban suggest that what’s already happened this year may lead to permanent changes ahead as China seeks alternatives to the U.S. market."It’s possible that China will never fully trust the U.S. as a reliable trade partner again," said Ann Berg, an independent consultant and veteran trader who started her career at Louis Dreyfus Co. in 1974. "They will always be on their toes and their decision to diversify supplies could become a ‘de facto’ import quota for U.S. soybeans."As China looks elsewhere for its beans, many countries could jump on the bandwagon and look to boost planted areas. The obvious candidates would be in South America, but Russian Prime Minister Dmitry Medvedev has already warned his country is planning to increase production in the Far East for delivery to China.


Brucellosis reported in Wyoming

Jackson Hole News and Guide | Posted on November 15, 2018

 rare disease has popped up in a Teton County cattle herd. The Wyoming State Veterinary Laboratory and the National Veterinary Services Laboratory found five cows infected with brucellosis, a bacterial disease that can pass from wild animals to cattle, according to a press release from the Wyoming Livestock Board. The disease causes cattle, elk and bison to abort their pregnancies. All reported cases in Wyoming since 1988 were caused by transmission from wildlife to livestock.

 


Farmers Seek Additional Markets for Soy, While Fears Grow for Lasting Trade Impacts

Farm Policy News | Posted on November 15, 2018

U.S. farmers would need about 11,000 markets the size of Sri Lanka to replace Chinese soybean purchases, but these days many growers will take any shred of new business they can get. A small but growing number of farmers have all but given up waiting for diplomatic solutions and started scrambling themselves to help open new markets and salvage existing ones disrupted by tariffs, according to dozens of interviews with producers, industry officials and trade lobbying groups.“Outside of China, foreign soybean importers have capitalized on bargain-priced U.S. supplies. In the European Union this year, a higher soybean crush is being encouraged by a diminished rapeseed supply and a scarcity of soybean meal shipments from Argentina. At the same time, competition from China has also depleted the normal supply of South American soybeans in Europe. Consequently, EU purchases of U.S. soybeans have swelled 150 percent compared to a year ago. Likewise, U.S. soybean sales to Mexico, Argentina, Egypt, and other Asian markets have surged. As of November 1, the year-to-year increase in U.S. sales to countries other than China is equivalent to 239 million bushels.”


Ohio commission delays Lake Erie protections ordered by Gov. John Kasich

Cleveland.com | Posted on November 15, 2018

A state commission declined Thursday morning to designate eight Lake Erie watersheds as distressed, which would have set in motion requirements to protect the water against toxic algae blooms.The Ohio Soil and Water Conservation Commission instead decided that the rules to protect Lake Erie should be written with input from the agriculture community before the distressed designation will be approved at a Feb. 15 meeting.The decision is the latest in the tug-of-war over the protections between Gov. John Kasich -- whose administration called Thursday’s move a delay tactic -- and members of the agriculture community -- who praised it.In July, Kasich signed an executive order to reduce agricultural runoff that contributes to the algae blooms in the lake, affecting 7,000 farmers in Northwest Ohio. Millions of Ohioans rely on the lake for drinking water, and algae levels were so harmful in 2014, Toledo residents were advised not to drink or use the water.

 
 


ADM looks to buy Argentina soy crusher Molinos Agro

Watt AgNet | Posted on November 15, 2018

Archer Daniels Midland Co. (ADM) has approached Argentina-based soy crusher Molinos Agro about buying its livestock feed and soy oil manufacturing plant, according to a Reuters report. A spokesman for the Perez Companc business group, which controls Molinos Agro, said the company has been approached several times by potential buyers and the offers were rejected. But Reuters reported that discussions between ADM and Molinos Agro began last year and then stalled over the price.Trade tensions between the U.S. and China have given U.S. soy crushing companies a competitive advantage over Argentina’s. Argentine soy crushers are working at half capacity, and U.S. soy crushers are benefiting from low soy prices as a result of China’s tariffs on U.S. soybeans. As U.S. soy prices go down, profits for U.S. soy processors go up.


Dairy Sector Consolidation, Scale, Automation and Factor Biased Technical Change: Working through “Get Big or Get Out”

Choices Magazine | Posted on November 15, 2018

Milk production in the United States has become increasingly concentrated among fewer herds. This consolidation has, as in other on-farm agricultural sectors, long been recognized (e.g., Drabenstott, 1994; MacDonald, Cessna, and Mosheim, 2016). According to USDA milk production reports (LMIC, 2018), the number of licensed dairy herds in the United States declined from 45,344 in 2014 to 40,219 in 2017, a 4% annual rate of decline over the period.Large and small farms are, in aggregate, different in their output, production costs, and quality metrics. Significant scale economies exist in dairy production (Mosheim and Knox Lovell, 2009): larger herds are generally better positioned to attain quality standards as reflected by somatic cell count indicators (Norman, Walton, and Dürr, 2018) and technical inefficiency is a factor in exit decisions (Dong et al., 2016). Given the obstacles faced, smaller dairy farms generally have difficulty competing with larger farms unless they receive higher prices in specialty milk markets or have low opportunity costs of operator time.Less well understood are the investment dynamics that precede both exit and expansion. In this article, we provide a snapshot of the dairy industry based on a survey of dairy farmers in a market environment of multiple continuous years of low milk prices and low milk profit margin. The survey allows us to analyze how farm size relates to dairy farmers’ views of industry outlook and their decisions regarding expansion or contraction of herd size, labor, and capital as the industry adjusts to market pressures and emerging technological opportunities.


America’s Dairy Industry Facing Difficulties from Long-Running Structural Changes

Choices Magazine | Posted on November 15, 2018

The themes addressed in these papers are topical. The U.S. dairy industry has recently attracted national attention. The country as a whole lost over 10,000 licensed dairy farms in 2017. It is common to read news of dairy farms having to sell their milk cows and dealing with the consequences of losing their livelihood and tradition of lifestyle. In the recent much-publicized renegotiation of the NAFTA trade agreement with Canada and Mexico, President Trump called dairy “a deal breaker.” The newly re-drafted NAFTA (renamed USMCA) will, if approved by Congress, allow the American dairy industry somewhat easier access to the Canadian market. As with the sorts of problems regarding U.S. milk marketing arrangements that several of the papers in this theme discuss, the devil is in the details. It pertained to interactions between regulations and a technologically advanced product form, namely ultrafilter separation, which can reduce milk transportation and storage costs while enhancing processability and better meeting consumers’ taste preferences.In one way or another, the papers in this theme address capital investments and their consequences. Feng and coauthors survey Great Lakes dairy farmers about changes in herd size, capital investment, and labor input over the last few years and their future intentions in these regards. Their findings reveal that investments emphasize the replacement of labor; herd consolidation is likely to continue, with larger herds generally at the forefront; and smaller farmers in particular are pessimistic about the sector’s market conditions. Because installed assets have few alternative uses, low prices are likely to persist when expansion depresses prices. This begs questions about coping strategies to survive until profitable conditions return.Using a 10-year panel dataset of Minnesota dairy farmers, Mahnken and Hadrich address how individual farmers can cope with tight dairy margins through alternative income-management strategies intended to stabilize enterprise profits. These strategies vary from income diversification through the feed make-or-buy decision, insurance choices, and government support programs. Their research and the data-collection system that supports it point to the merits of a two-way, data-driven extension programs.


Quiet shakeup begins at CHS after fraud and overstated profits

Minnesota Star Tribune | Posted on November 14, 2018

A quiet shake-up is happening at CHS Inc. after the firm uncovered an employee’s financial misstatements had led CHS to massively overstate its profits in recent years.A trader at the Inver Grove Heights-based agricultural cooperative inflated the value of rail-freight contracts, lied to an auditor about it and was fired, the firm announced last month.Because of the misvalued rail contracts, CHS overstated its pretax profit by as much as $190 million over the past four fiscal years, or 12 percent of its $1.6 billion pretax profit in that time. The company said in a filing with the Securities and Exchange Commission that the company’s reports about its financial performance in those years “should no longer be relied upon.”Since that announcement, Dan Mack, the vice president of rail transportation and terminal operations, has resigned, he confirmed to the Star Tribune. Mack was not directly responsible for overstating the rail contracts, he said. He added he “strongly supports CHS’ decision to terminate that employee.”Mack arrived at CHS from Canadian Pacific in 1998, rose to vice president of transportation and was promoted to his most recent role in 2011. The problems with misvalued rail contracts started about five years ago. CHS makes long-term contracts with rail lines for rail capacity and then sells some of that capacity to other grain companies and elevators in a secondary market as prices fluctuate based on demand and other factors.The rail-contract values contributed to the company’s reported profitability. It’s unclear whether or how other executives will be held accountable for the fraud that led to the inflated results.

 

Over the past three years, CHS has awarded $20.6 million in incentive pay and $1.2 million in bonuses to six top executives including CEO Jay Debertin, CFO Timothy Skidmore and former CEO Carl Casale. Asked whether the company planned to take back any of the performance pay, since the company’s performance was not as good as had been reported, a CHS spokeswoman declined to comment, saying executive pay is a personnel matter


Immigration, unemployment and labor force participation in the US

Nationa Foundation for American Policy | Posted on November 14, 2018

Critics of immigration often allege that immigration worsens US-born workers’ labor market outcomes, such as their employment and earnings. A large body of economic research has examined how immigration has affected natives’ wages. Most of these studies have concluded that immigration has little or no adverse effect on US natives’ wages. However, few studies have examined other key dimensions of US natives’ success in the labor market: unemployment and labor force participation. Understanding how immigration affects unemployment and labor force participation among US natives is important for several reasons. The foreign-born share of the population is the highest in a century, and immigrants account for 1 in 6 workers. Although unemployment is currently near a record low, it soared during the Great Recession of 2007-2009 and was slow to return to pre-recession levels. Labor force participation, meanwhile, has been declining for years, a trend that accelerated with the recession and has yet to reverse. Unemployment and labor force participation are markedly worse among disadvantaged groups, such as less-educated workers, that may compete the most intensively with immigrants in the United States. This study examines the relationship between immigrants’ share of the labor force and US natives’ unemployment and labor force participation rates using comprehensive data from 2005-2013. The study controls for economic conditions that may affect the number of immigrants in a state and presents two-stage least squares estimates that control for endogeneity. The results of the state-level analysis indicate that immigration does not increase US natives’ unemployment or reduce their labor force participation. Instead, having more immigrants reduces the unemployment rate and raises the labor force participation rate of US natives within the same sex and education group


R-CALF USA to Sue Beef Councils

DTN | Posted on November 14, 2018

The federal district court in Montana granted the Ranchers-Cattlemen Action Legal Fund United Stockgrowers (R-CALF USA) a motion to expand its beef checkoff program lawsuit to include at least 13 states in addition to Montana, R-CALF USA said. “The district court in Montana previously granted, and the appellate court recently upheld, a preliminary injunction temporarily stopping the U.S. Department of Agriculture (USDA) from violating the U.S. Constitution by compelling cattle producers in Montana to pay for the private speech of the private Montana Beef Council without first obtaining consent from producers,” R-CALF USA explained in the release.R-CALF USA, which prides itself on a membership of only cattle producers, asked the court to expand the case to include additional states in which producers are similarly required “to pay for the private speech of their respective private beef councils without their consent,” the release said.


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