Iced coffee picked up a new meaning last week, and not in a good way.
Early in the morning on July 20, air temperatures across Brazil’s coffee belt settled at an icy 29 degrees Fahrenheit. That’s the coldest temperature the region has seen since 1994.
And just like chocolate milk does not come from brown cows, frozen coffee plants do not make iced coffee.
Farmers are still assessing the extent of the damage, but early indications are not good. One estimate pegs the damage at 4.5M bags off the 70M bag projection for 2022 exports. But the full impact won’t be known until farmers are able to determine if the plants can be saved or not.
Get in line: Like the Starbucks drive-through, the line of challenges stacked against Brazilian coffee farmers is long. Before the frost, drought conditions plagued this year’s growing season, and futures prices were already high. Following the frost, prices surged another 13%.
Dark roast coming? The coming months will be mega important to the cost of your caffeine habit. Forecasters are predicting a return of La Niña. AKA more drought.
If the forecasts come to fruition, count on prices to keep rising.
Stop us if you’ve heard this before.
African Swine Fever (ASF) is stirring up panic in the pork world.
Some viruses just won’t take a hint.
How it started: Germany has been doing everything it can to keep infections out of its hog herd. They went as far as building fences along their border in an attempt to keep infected wild boars in Poland. But last September, the game changed when the first cases of ASF were confirmed in wild animals.
Amidst its own recovery from the devastating impact of the virus, China took the news of wild German boars with ASF hard. They, among other Asian nations, immediately banned imports of German pork.
How it’s going: Germany is the newest addition to the list of countries that have now found ASF in farm-raised pigs. Two farms were confirmed to have the virus last Friday: one an organic farm of about 200 pigs, the second a small farm with only two pigs.
Most in the German pork industry do not see the news as all that concerning. They point to the fact that they have already been limited on export options, thanks to the ban on exports to Asian nations. And the EU is expected to maintain their regionalization approach to restricting trade within its borders.
The U.S. is the reigning bean queen no more: instead, Brazil is now leading the global pack in soybean production.
In the 2020-21 season, Brazil produced a record 4.99B bushels of soybeans, up 8.9% from last season’s record crop of 4.59B bushels. This year’s land harvested will break the country’s record yet again with 95.16M acres, up 4.2% from last season.
Clearing new frontiers: Brazil’s soybean crop has grown exponentially in the last two decades, with production expanding first from the Southeast up to the Midwest and now to the North/Northeast regions.
Some trees were harmed in the making of those soybeans. The soybean boom has come at the expense of millions of acres of Brazil’s forests and grasslands.
And mama’s always right: Mother Nature is seemingly warning against clearing forests and vegetation in Brazil for ag production, with signs of local and regional temperature increases.
But even with these regional weather changes costing Brazil’s soybean farmers an estimated $3B+ per year in lost productivity, profits grabbed by claiming more land for soybeans outweigh the economic harm.
Carbon credit conservator: One new initiative involving 55 growers in Maranhão and Mato Grosso states, in the heart of Brazil’s farm country, is trying to change that economic incentive by rewarding producers for their “environmental services.”
Russian sparkling winemakers are popping bottles, while the French champagne industry is fizzing in frustration.
Last Friday, Russian President Vladimir Putin signed a new law granting Russian sparkling winemakers the exclusive use of the term shampanskoe (Russian for “champagne”) on the label.
But not everybody is raising a toast: French Ag Minister Julien Denormandie said “champagne” could only be used on sparkling wines from the specific region in France.
Champagne exporters grab a sharpie: Exports of the bubbly to Russia have come to a flat stop while champagne makers decide how to add the now required “sparkling wine” in Cyrillic characters on the back of the bottle.
Russia isn’t the heaviest champagne drinker (that would be the E.U. and the U.S.). But it did account for nearly 1.4% of Champagne’s total exports in 2020 — making Russia the 13th biggest market by volume there (and the only one banning the region’s name from the bottles).
What’s ahead: It’s all hands on deck for France’s foreign affairs team as it works with Russian officials to reverse the new law. They are bringing out the big guns with escalation to the World Trade Organization if necessary.
Ever consider playing poker blindfolded?
That’s essentially how trading agricultural goods with China works.
The country of over 1.3 billion people has been doing its best to hold its ag industry cards close to its chest.
Consider the handling of its rebound from African Swine Fever.
Nine months ago China stated they were well down the road to recovery, and the country’s pork production was buzzing right along again. Then, 2020 saw China import more pork than ever before.
Sounds like someone was bluffing.
Some economists argue that’s exactly what was going on. Theories suggest China might have withheld the true state of their swine herd so they could purchase almost a billion bushels of corn at lower prices.
But signs do point to their swine herd actually growing again. That giant pile of corn they’ve been snapping up in recent weeks has to be going somewhere. The country’s been importing so much that ships have had to wait up to a month to dock and unload.
Worth noting: The USDA has estimated that China will import 26 million metric tons of corn this year, but some in the industry think that number will continue to grow.
Time will tell because China probably won’t.
Life is like a box of chocolates…and the Ivory Coast really didn’t know what it was going to get.
This year’s rainy season has been unusually dry for the past month, and it’s threatening the April-to-September cocoa mid-crop. The heavy downpours that normally characterize April to mid-November in this region are nowhere to be found, dampening farmers’ hopes for the crop. In fact, last week’s rainfall in the city of Soubre was 46.2 mm below the region’s five-year average, according to Reuters data.
In other regions, rainfall was equally MIA.
Why does the Ivory Coast cocoa matter so much? Well, the country produces about 40% of the world’s cocoa beans. And it’s not just this year’s crop in jeopardy: The dry spell could also spell a delayed crop next year.
Big picture: The world eats a lot of chocolate, to say the least (worldwide production averages about 4.7 million tons per year). But cocoa is also the Ivory Coast’s largest export, and the industry employs more than 6 million people.
The silver lining is the Ivory Coast has discovered an innovative way to utilize more of the cocoa plant. What would normally be waste is turned into renewable fuel — which not only helps produce electricity, but also sparks a new revenue stream for the 600,000 cocoa farmers in the country.
That news, at least, is pretty sweet.
The world’s number five beef exporter, Argentina, slammed the brakes on beef exports in mid-May.
Why? The country’s Agroindustrial Council suspended exports for one month with intentions to lower domestic inflation. Beef exports in Argentina have gone sky-high in recent years, and the government blames exports for the crazy inflation.
To the moon. So far, inflation is up nearly 50%. And the fear from the Argentinian government is that’s just the start…
But inflation is nothing new for the South American nation. This is their third consecutive year in a recession. During the first quarter of 2021, consumers watched their prices shoot up 17.6%. Many say they have no money left to purchase the expensive protein source.
And back on the farm… Farmers aren’t thrilled, to say the least. To argue the government’s temporary kibosh on exports, farmers held a livestock sale strike that lasted through June 2, forcing processing plant closures across the country. And they’re prepared for more: farmers have threatened a grain sale strike next.
Where this goes: Producers are upset their export market is temporarily MIA. Plus, countries worldwide will feel the pinch: China, for example, imports more than two-thirds of Argentina’s beef, and will have to find somewhere else to fulfill its demand.
As the largest exporter of coffee, sugar, and orange juice, Brazil’s weather woes should worry the world.
A rainy season just ended with hardly any rain, and many farmers have already used up water reserves they hold on to for the upcoming dry season.
To put it in perspective: “My irrigation reservoir is drying up now — that usually happens in August,” said Mauricio Pinheiro, who lives in Pedregulho in the Alta Mogiana region, in Sao Paulo. “I’m really concerned about running out of water in the coming months.”
Even irrigated areas aren’t making it rain. The outcome? Orange output is already down 31% from last season, and the USDA is predicting Brazil will have the smallest coffee crop in the past four years.
And it’s not just the run-of-the-mill coffee. It’s Arabica coffee beans, the high-end variety used by stores like Starbucks.
Where this goes: All told, Brazilian farmers are facing a perfect dry storm, and its implications go further than the country’s second corn crop.
Oh, snap. Cold snap, that is.
We noted last week that farmers in France were feeling the latest temperature drops in their bones and their fields. Unusually warm temperatures in March caused vineyards and other crops across France to bloom. Then Mother Nature said, “Au revoir,” and released below-zero temperatures.
That’s “pas bon” (translation: not good)
Devastating to budding crops, the French frost has affected every wine-producing area in France. For many winemakers, the 2021 harvest is ruined, some reporting 90% of their crop destroyed. And not only are grapes affected, but also peach trees, nectarines, apricots, and sugar beets.
A farmer told French radio, “It literally turns your stomach, when you spend the morning in the vines and see the frozen leaves, which after two or three hours in the sun have gone grey or black.”
Save the grapes!
Vineyard farmers are trying whatever they can to save their crops. Some are spraying their vines with water to form a coating of ice around the buds to try to protect them from frost, while others have lit paraffin lamps as a method of keeping the vines warm. Others even lit bales of hay on fire.
Primetime: France’s Prime Minister has declared the cold snap an agricultural disaster, prompting the need for relief funds.
But farmers are also asking for bank loan payments to be put on hold and improvements in insurance for grape growers – only a third of French winemakers are insured.
The past year has been tough for Indian farmers, and the hits just keep coming.
New farm laws. Protests. The pandemic. Low rice exports. Fertilizer price increases.
Some context: Mid-March marked four months since farmers have been protesting new farm laws that they believe will allow corporate interests to take advantage of them.
Their fear? The eventual elimination of subsidies that have been critical to Indian farmers making ends meet and helped India grow enough food for their 1+ billion population.
So to commemorate the continuation of the protests, farmers decided to picnic on India’s train tracks, blocking and delaying over 50 passenger and commodity-filled trains.
And as if battling their own government wasn’t enough, farmers were dealt new blows last week as:
- Currency woes led to a 20%+ drop in rice export prices.
- Fertilizer companies raised prices by ⅓ to offset global potash and phosphate price even though the Indian government said, “Not now.”