The “top-to-bottom” review of the U.S.-China trade policy (cringe) is finally complete… and it only took eight months.
After an unveiling earlier this week, U.S. Trade Representative Katherine Tai’s trade plan got mixed reviews.
Refresher: In the wake of a vicious U.S.-China trade war that left the ag industry up the creek without a paddle, a “Phase 1” trade deal was implemented in February 2020.
Under the agreement, China was to purchase U.S. ag and manufactured goods worth $200B more than 2017 levels over the course of the two-year agreement.
As of right now, they’ve purchased a little over 60% of those promised goods. Getting there… right?
During her announcement, Tai noted she would engage in talks with China about their failure to meet Phase 1 expectations, but also said a planned Phase 2 would not be implemented.
The reaction to the plan? It depends on who you ask:
Secretary of Agriculture Tom Vilsack: Vilsack was supportive of the new approach, noting that China has met 50 of the 57 Phase 1 agreements, but conceded Tai should “press the Chinese on fulfilling their responsibilities,” especially in the area of biotechnology trait approvals.
Senator Chuck Grassley (Iowa): Grassley said China was “making an effort,” but also opined: “It seems like the Biden administration, then without pursuing Phase 2, is throwing in the towel.”
Industry: Overall, multiple sectors expressed concern over the plan’s lack of foreseeable action. One trade economist out of Syracuse University summed it up as “her whole plan seems to be, ‘I’m going to have a conversation.'”
Dairy demand is getting butter and butter.
A Tuesday report from the U.S. Dairy Export showed increases in total exports of all dairy products at 13%. Other export increases:
- Cheese is up 18.1%
- Nonfat dry milk is up 15.4%
- Condensed and evaporated milk is up an udderly amazing 128% over 2020
Comfort cows: Even with COVID restrictions on restaurants, domestic dairy demand is churning and burning. A USDA report noted people were seeking comfort food—like ice cream and butter—through the pandemic.
In fact, the average American consumed three more pounds of dairy products across all segments in 2020. We all had to get through the pandemic somecow.
Some months even saw an increase of 30% in ice cream sales from grocery stores. Butter increases were around 20-25%.
“Despite challenges posed by the pandemic to all parts of the supply chain in 2020—including the near-overnight loss of the foodservice sector—per capita dairy consumption continued to surge upward thanks to growth in ice cream, butter, and yogurt,” said Michael Dykes, D.V.M., president, and CEO of the International Dairy Foods Association (IDFA).
He added, “Last year’s consumption figures are nearly 70 percentage points above the annual average, showing America’s growing appreciation for their favorite dairy products.”
Southwestern French wine growers were hit hard this year with devastating frosts and blistering heat. But for Pierre Escudie, his Marselan, Grenache Gris, and Chardonnay grapes fared better than his neighbors’ thanks to the rows of solar panels above the vines protecting the plants.
Throwing shade: The panels insulate the ground below them by around 1.1-ish degrees Fahrenheit. They rotate to allow more/less light to hit the vines depending on the day.
The solar panels at the vineyard generate enough energy to power 650 homes in the area, even though 15-20% of the power production is sacrificed for crop quality.
It’s a win-win for crops that can’t take the heat and the solar panels that work better with the cooler microclimate provided by the crop underneath. Many companies in Europe are developing similar solar panel systems to cover a variety of crops.
More grape tech: Maybe the solar panels can power the new robo-pickers that Italian winemakers are embracing amid pandemic-induced labor shortages.
With borders shuttered by COVID travel restrictions, Italian winemakers haven’t been able to hire the (mostly Eastern European and North African) workers who typically fill their vineyards during harvest season. The use of harvesting machines spiked 20% this year among a group of winemakers in the central Italian region.
Some were able to cut a typical 18-day harvest down to just 10. Wine not make the switch?
Conservation programs to help farmers protect the soil, air, water, and wildlife on their land exist: but new data shows they’re pretty darn picky.
Nearly 70% of those who applied to the programs during the past decade have been denied.
A closer look: Between 2010 and 2020, 31% of farmers who applied to the Environmental Quality Incentives Program (EQIP) and 42% who applied to the Conservation Stewardship Program (CSP) were actually awarded contracts. Going a step further, this means that 946,459 EQIP and 146,425 CSP contract applications were denied over the decade, many of those in major agricultural states.
What gives? As the government focuses on addressing the climate crisis, farmers are often at the front lines. While the EQIP and CSP programs have been successful, albeit under-funded, programs to address climate change efforts on the farm, many of the funds and resources have been misdirected despite best intentions.
No relief in sight: Funding for EQIP will rise $200M per year from 2019 to 2023, which sounds nice. But on the downside, CSP—meant to be the more comprehensive program—will see its funding decline. Per the 2018 Farm Bill, CSP funding was $2.3B in 2019. By 2023, it will only be $1.4B.
What this means: CSP has historically provided higher conservation and financial benefits to farmers, but is now seeing its funding decline. Due to a shortage of NRCS staff, there’s also a gap in providing assistance to farmers as they fill out the rigorous paperwork associated with CSP.
Farmers Business Network (FBN) is blowin’ the seed industry’s cover with their recent Seed Relabeling Report.
The problem: While FBN stays neutral on relabeling, they say their report provides transparency into a practice typically shrouded in secrecy. The relabeling concern is twofold: overpaying for the same seed from different brands, and lack of genetic diversity despite attempting to reduce agronomic risk by purchasing from multiple brands.
By the numbers: The fourth annual report has grown from 8,000 seed tags in 2017 to 35,000 seed tags this year, which contributed to the following findings:
- 49% of corn and 57% of soybean seed products are relabeled
- 6% of farmers who submitted tags bought the same variety from multiple brands
- 73% of FBN members bought relabeled seed products
And new traits and companies are not immune. Qrome, Enlist E3, and LLGT27 traits, as well as a very high percentage (75%+) of Zinesto, Brevant, and Apex seeds were relabeled.
It’s a pervasive problem, bigger than farmers may think. Only 31% of FBN farmer members believe they plant relabeled seed—but based on the data from the report, the actual number is closer to 73%.
A soundbite: “The practice of seed relabeling means that farmers may pay vastly different prices for the same seed and is a good example of the lack of transparency in agriculture that Farmers Business Network is working to change,” says FBN CEO and Co-Founder, Amol Deshpande.
Farmers will soon face a harsh reality when it comes to fertilizer availability and cost. China, the top exporter of phosphate, is banning exports of the major fertilizer component through 2022. Fewer supplies spell higher prices for farmers.
Not Phunny: China’s government has started limiting production of phosphate due to climate emission concerns. They’re also banning exports so they can supply their own farmers the product. The thing about China and phosphate is they produce nearly 30% of the world’s trade.
Here comes the Black Swan: Several factors continue to wreak havoc on prices and availability for fertilizer, including Hurricane Ida, which impacted production in the Delta. Then there’s COVID-19 supply chain issues and increasing shipping costs and energy prices.
Fertilizer prices have increased from 2020 already—U.S. farmers spent around $119 per acre for corn in 2020, which is up from $115.86. And prices of urea, diammonium phosphate (DAP), monoammonium phosphate (MAP) and potash are up 59% or more from 2020. The news from China will not help that trajectory.
Phinding Phosphate: A field crop specialist for Michigan Farm Bureau says farmers should talk to their fertilizer retailers sooner rather than later to figure out what they’ll do in the 2022 growing season. The issues in supply could mean a possibility of inadequate fertilizer for the 91M acres of corn expected for 2022.
Better pull out those shades. The future of the livestock industry is upon us, and investors are banking on it being a bright one.
Cha-ching: Vytelle, the Kansas City-based precision livestock company is rolling in the dough thanks to a recent Series A funding round worth a cool $13.2M. Their plans with the cash? Speeding up genetic advancement in cattle.
Vytelle officially launched its integrated technology platform last year, and its forward-thinking team is “reshaping genetic progress” via a three-pronged approach:
- A data capture system that records feed intake and weight gain.
- An AI-powered genetic analytics tool that processes genomic, phenotypic, and performance data.
- A souped-up in vitro fertilization technology.
The up-front herd efficiency and sustainability service provided to the producers is what brought ag investment firms including Open Prairie, Wheatsheaf Group, and Fulcrum Global Capital to the table with big checks in hand.
And with one recent study noting that livestock production is the source of around 57% of greenhouse gas emissions stemming from the global food industry (with beef alone contributing 25%), a more sustainable and efficient herd that requires fewer inputs with exceptional output could gain traction fast.
Soundbite: CEO Kerryann Kocher said it best when summing up Vytelle’s core mission: “We want to make meat and milk viable food choices for future generations. We want every producer to have the choices available to them to make a more sustainable cattle herd.”
Well, that escalated quickly.
The National Pork Producers Council and American Farm Bureau are running their case against California’s Proposition 12 up the flagpole—all the way up. They’re appealing the Ninth Circuit Court decision in July that upheld a lower court ruling against the groups and have petitioned the U.S. Supreme Court to take the case.
The argument: California’s Proposition 12 establishes “arbitrary” production standards. Pork from hogs not meeting the standards does not pass go and is banned from being sold in California. NPPC President Jen Sorensen says the groups are asking the Supreme Court to consider the constitutionality of California establishing regulations that affect operations outside the state.
A little background: In a few short months, on Jan. 1, 2022, Proposition 12 will require all pork sold in the state—no matter where it was raised—to comply with California’s specific housing standards. Unfortunately, almost none of the pork produced in the U.S. meets those standards. And the cost of converting to alternative sow housing systems is estimated in the billions of dollars.
If Proposition 12 stands, NPPC and AFB say it will be out of the frying pan and into the fire for pork producers across the country and California households wanting to bring home the bacon—literally.
U.S. farmers are going (toma)toe to (toma)toe with imports from Mexico, and it’s not looking great.
The facts: Imports of tomatoes from Mexico are expected to double in the coming years, based on historical trends. If this happens, a new University of Florida study says American tomato growers could lose $252M annually — a 27% loss in current revenue.
Mexico dominates the U.S. tomato market, with three times more market share than the domestic industry. The Fresh Produce Association of the Americas pushed back on the study, saying the conclusions are “misleading and unrealistic.”
In the last two decades, domestic tomato growers’ market share has been escaping—much like how slippery, delicious tomato guts slide off the cutting board. Every. single. time.
Zoom out: U.S. farmers grew 1.3B pounds of fresh tomatoes last year, which is less than a third of the harvest from 2000, thanks to competition from Mexico and other complications like rising wage rates.
Florida will be hit especially hard because it shares the same harvest season with Mexico.
Soundbite: “But all may not be lost, if the U.S. fruit and vegetable industry could revolutionize the production technology. Mechanization or automation will be a game-changer and is the future for this labor-intensive industry,” said Zhengfei Guan, a UF/IFAS Associate Professor and leader of the study.