I owe the IHB an apology, and accurate current milk pricing - IMPORTANT

NEW -> Contingent Buyer Assistance Program
And next time you're in the grocery store complaining about the plethora of 2 -for- $5 milk deals, consider this.



The Farmer sees $.13 a gallon (or $0.54) of your $5. That's actually pretty good considering what a cotton grower sees as a % of finished textiles, or a grain grower sees as a % of a box of Corn Flakes.
 
[quote author="no_vaseline" date=1249110968]And next time you're in the grocery store complaining about the plethora of 2 -for- $5 milk deals, consider this.



The Farmer sees $.13 a gallon (or $0.54) of your $5. That's actually pretty good considering what a cotton grower sees as a % of finished textiles, or a grain grower sees as a % of a box of Corn Flakes.</blockquote>
So where does the rest of the money go??? Transportation and storage costs???
 
[quote author="usctrojanman29" date=1249119819][quote author="no_vaseline" date=1249110968]And next time you're in the grocery store complaining about the plethora of 2 -for- $5 milk deals, consider this.



The Farmer sees $.13 a gallon (or $0.54) of your $5. That's actually pretty good considering what a cotton grower sees as a % of finished textiles, or a grain grower sees as a % of a box of Corn Flakes.</blockquote>
So where does the rest of the money go??? Transportation and storage costs???</blockquote>


And processing and other value adding. Everybody takes a cut in the "value added" channel. But remember, if the first guy in the channel doesn't get a proper cut........nothing happens.



Romas are $1.99 a pound retail. He is contracted for $85/ton which will gross like $5600 an acre to the grower. Given my dad's current production estimates, he'll have something like $37 million dollars an acre at retail prices.



Who's getting screwed now?



The harvester is coming tonight. No pics this week. I have like sixty pounds of romas. First come, first served, I deliver, no whining!
 
[quote author="no_vaseline" date=1249257771][quote author="usctrojanman29" date=1249119819][quote author="no_vaseline" date=1249110968]And next time you're in the grocery store complaining about the plethora of 2 -for- $5 milk deals, consider this.



The Farmer sees $.13 a gallon (or $0.54) of your $5. That's actually pretty good considering what a cotton grower sees as a % of finished textiles, or a grain grower sees as a % of a box of Corn Flakes.</blockquote>
So where does the rest of the money go??? Transportation and storage costs???</blockquote>


And processing and other value adding. Everybody takes a cut in the "value added" channel. But remember, if the first guy in the channel doesn't get a proper cut........nothing happens.



Romas are $1.99 a pound retail. He is contracted for $85/ton which will gross like $5600 an acre to the grower. Given my dad's current production estimates, he'll have something like $37 million dollars an acre at retail prices.



Who's getting screwed now?</blockquote>


All the more reason to buy direct from the grower, if possible.
 
[quote author="IrvineRenter" date=1249089540]<a href="http://articles.moneycentral.msn.com/Investing/Dispatch/market-dispatches.aspx?post=1210233&_blg=1,1210233">Prepare for higher milk prices</a>



The Agriculture Department will increase prices on milk and cheese to help dairy farmers.

Posted by Elizabeth Strott on Friday, July 31, 2009 10:56 AM



Rising production costs and falling milk prices have slammed dairy farmers in the U.S. during the recession, but today the United States Department of Agriculture said it will help.







The USDA will increase the price paid for milk and cheddar cheese, which will provide immediate relief, Agriculture Secretary Tom Vilsack said this morning. Vilsack said the program should help dairy farmers wade through "one of the worst dairy crises in decades."







The USDA sets the price paid by dairy processors based on commodity markets, which rise and fall with global demand.







Dairy farmers will get a revenue boost of $243 million because of the price increases, the USDA predicted. The price increases will be in place until October.







Last week, Pennsylvania Gov. Edward Rendell asked the federal government to help. "The dairy industry is in a desperate situation and we are seeking ways to bring immediate aid to keep our farmers in business, here in Pennsylvania and throughout the Northeast," Rendell said in a press release.



* Video: Dairy farms in crisis



In March, the Agriculture Department released 200 million pounds of excess powdered milk to schools, food banks and needy countries to help reduce U.S. supply.







Dairy farms boosted milk production last year, because of a surge in demand for U.S. milk exports. Then the recession kicked into high gear, and demand plummeted, leaving farmers with too much milk and too many cows. Prices tumbled as a result. In fact, milk prices have fallen by about 50% over the past year, and cheese prices have tanked 43%.







In June, the National Milk Producers Federation said it will pay dairies to slaughter 103,000 U.S. cows in the next few months to help boost prices.







The USDA, which sets the price paid by dairy processors to farmers based on commodity markets, is forecasting butter, cheese, and milk prices to surge in 2010. Retail butter prices may rise above the record of $3.937 a pound and cheddar cheese may top $5.097 a pound, Jerry Dryer, the editor of the industry newsletter Dairy & Food Market Analyst, told Bloomberg News in June.







Experts say that farmers are culling the cows because exports have fallen 26% in the first quarter, while feed remained costly. "No one is making money producing milk," Michael Swanson, chief economist at Wells Fargo, told Bloomberg. "The milk price remains well below the total cost of production."







One expert said the government should stay out of the issue. Congress should "avoid the temptation to put a Band-Aid on an old system and look at long-term approaches that get us to grow and innovate as an industry," Paul Kruse, the chief executive of Blue Bell Creameries, said at a congressional hearing on July 14. Kruse was testifying for the International Dairy Foods Association, a group that includes milk buyers like Kraft Foods (KFT), ConAgra Foods (CAG) and Safeway (SWY).







California is the largest milk-producing state, followed by Wisconsin.</blockquote>


Wow... we haven't had price supports since the Nixon administration. (I think. I know we had them during the Nixon admin, but has any admin since then instituted price supports? I don't think so.)



Of course, all of this assumes that producing and consuming that many dairy products is good. I read something the other day indicating that if every American ate the recommended servings five a day of fruits and veggies, the US would have to import fruits and veggies to meet the demand. Maybe the dairy farmers should opt for another "crop?"
 
[quote author="SoCal78" date=1249274028]No Vas - do you have any plans to move back and run the family farm in the future when your dad becomes elderly?</blockquote>


Sooner or later that's exactly what's going to happen. My SoCal residency is now on a clock with an unknown amount of time left. The only thing that might change it is if I get super lucky and they put that high speed choo choo in earlier.
 
[quote author="EvaLSeraphim" date=1249368246]I dunno. You could be like the late great Boswell and have operations in the Central Valley run by very loyal people and live in Pasadena. :)</blockquote>


When I lived in Corcoran, I was the only one in the whole town with a Masters degree who didn't work for the school district, the prision, or Boswell. The ammount of wealth concentrated in the hands of very few is a little unconfortable, even though I knew every one of those folks (save Boswell) on a first name basis.
 
Since this is the go to thread for all things farming, aka the thread that no_vas knows more about than we would ever care to know about farming, but since we act like we car about no_vas... <a href="http://www.calculatedriskblog.com/2009/08/farmland-values-decline.html">I thought he might like to know that even CR is posting about the declines in farm land</a>.



<a href="http://online.wsj.com/article/SB124942941621806181.html">From the WSJ: Farm Real-Estate Values Post Rare Drop</a>



<blockquote>The U.S. Agriculture Department said in its annual report that the value of all land and buildings on U.S. farms averaged $2,100 an acre Jan. 1, down 3.2% from last year. The decline in farm real-estate values was the first since 1987, the agency said.</blockquote>


The Chicago Fed had a similar report a couple of months ago: <a href="http://www.chicagofed.org/publications/agletter/may_2009.pdf">Farmland Values and Credit Conditions</a>



<blockquote>There was a quarterly decrease of 6 percent in the value of ?good? agricultural land?the largest quarterly decline since 1985?according to a survey of 227 bankers in the Seventh Federal Reserve District on April 1, 2009. Also, the year-over-year increase in District farmland values eroded to just 2 percent in the first quarter of 2009.</blockquote>


And here was a graph I posted in May based on the Chicago Fed report:



http://i26.tinypic.com/21desjl.jpg



This graphs shows nominal and real farm prices based on data from the Chicago Fed.



In real terms, the current increase in farm prices wasn't as severe as the bubble in the late '70s and early '80s that led to numerous farm foreclosures in the U.S.



And as I noted in the earlier post, it was not surprising that John Mellencamp wrote "Rain On The Scarecrow" in 1985 after the farm bubble burst.



<object width="325" height="250"><embed src="http://www.youtube.com/v/youtube" type="application/x-shockwave-flash" width="325" height="250"></embed></object>
 
It's super hard to make any money in farming with much leverage.



It's even harder to justify holding land worth 10M that has free cash flow of $200K.
 
Apparently, it's not for dinner after all.



<a href="http://www.latimes.com/news/local/la-me-beef-recall7-2009aug07,0,2133979.story?track=rss">Fresno beef recalled after salmonella outbreak.</a>
 
[quote author="EvaLSeraphim" date=1249599373]Apparently, it's not for dinner after all.



<a href="http://www.latimes.com/news/local/la-me-beef-recall7-2009aug07,0,2133979.story?track=rss">Fresno beef recalled after salmonella outbreak.</a></blockquote>


This is really sad, but I kind of know those guys.



<img src="http://www.stevehardin.com/jpg/LASOS9-5.JPG" alt="" />



We aren't in each others autodialers or anything but I know them. I think it's Dennis and/or Ed Roth.
 
<a href="http://latimesblogs.latimes.com/money_co/2009/08/the-hottest-investment-of-the-summer-is-in-your-cupboard-sugar-prices-have-reached-28-year-highs-today-continuing-a-bull.html">Hold on Goose! Sugar prices go ballistic on shortage concerns.</a>



<blockquote>The hottest investment of the summer is in your cupboard: Sugar prices have reached 28-year highs today, continuing a bull market surge that has lifted the commodity 88% since Jan. 1.



With too little rain in India and too much in Brazil, sugar production forecasts for those countries have been slashed, deepening concern about global shortages.



Prices have been rising steadily since early April, but now they?ve gone vertical: Near-term sugar futures in New York have rocketed to 22.2 cents a pound today, up 6.7% since Friday and up 20% in the last two weeks.</blockquote>


This - right here - is why you have subsidies. It's good to keep a little domestic production in case your international vendor can't delever. Lots of complaining in the article about not being able to get "cheap" sugar. Could be a good year for domestic sugarbeet growers.
 
An update on the Beef Packers recall: my buddy from San Dimas wife works for USDA and handled the coordination. It was like an 80 hour work week for a while there.



In other news - after successfully fighting off the glassy winged sharpshooter and Pierce's disease, citrus has a new, bigger, and meaner enemy.



<a href="http://www.latimes.com/business/la-fi-citrus18-2009aug18,0,1556677.story">http://www.latimes.com/business/la-fi-citrus18-2009aug18,0,1556677.story</a>



<blockquote>Deadly citrus disease reaches Mexico, threatens California

Citrus greening disease, described by one expert as 'a citrus grower's worst nightmare,' is spread by an infestation of the Asian citrus psyllid.</blockquote>


Okay, citrus greening desease, yadda yadda.....



<blockquote>The disease has killed tens of thousands of acres of trees in Florida and threatens to put the Sunshine State out of the orange juice business, according to the state's Department of Citrus.



Since its discovery in Florida in 2005, the disease has quickly spread to every citrus-growing county in the state, contributing to the death of about 5% of its trees every year. It has wiped out much of the citrus industries in China, India, Saudi Arabia and Egypt, and has ravaged parts of Brazil.</blockquote>


World wide pandemics FTW!



<blockquote>California had an exceptionally close call last month. Only the smart work of Chelsea, a Labrador retriever that sniffs out contraband plant material, kept diseased psyllids from escaping into some of the state's prime citrus-growing areas.



While working with agricultural inspectors at a FedEx depot in Fresno, Chelsea pointed to a duffel bag that had arrived from India. A plastic bag of curry leaves inside the duffel contained one dead adult psyllid and nine live juvenile insects, or nymphs. Tests subsequently found that nymphs were infected with Huanglongbing.</blockquote>


Wow. Way to go Chelsea.
 
I heard about the CGD awhile ago, and the first thought that I had was how to use it to jeopardize the entire citrus industry. This is much easier to work with than anthrax, and the economic damage should be in the billions of dollars.
 
And now they are here!



<a href="http://www.latimes.com/business/la-fi-psyllid27-2009aug27,0,6970906.story">http://www.latimes.com/business/la-fi-psyllid27-2009aug27,0,6970906.story</a>



<blockquote>Just a day after state agriculture officials started setting hundreds of traps in Orange County for an insect that endangers California's $1.6-billion citrus crop, sources say they have found the insect in Los Angeles County.



Routine traps captured a single Asian citrus psyllid on a citrus tree at a home in Echo Park on Monday. The insect was identified as a psyllid today.



Agriculture officials are on high alert for psyllid populations because they typically carry a disease has ravaged orange groves in Florida and elsewhere. Officials plan to start setting hundreds of traps in Echo Park today in an attempt to learn the extent of the infestation.</blockquote>


I'm not ready to call "game over" just yet..........but fellow IHB'ers might want to eat all the citrus they can while they still can.
 
<a href="http://www.latimes.com/business/la-fi-dole8-2009sep08,0,7564047.story">http://www.latimes.com/business/la-fi-dole8-2009sep08,0,7564047.story</a>



<strong><span style="font-size: 16px;">

Dole out to raise some green</span></strong>

The heavily leveraged fresh produce company hopes a $500-million stock sale bears fruit.



<blockquote>Plans by Dole Food Co. to sell shares to the public were triggered by a cash crunch for the nation's largest fresh produce business and its owner, billionaire David Murdock.



A review of Securities and Exchange Commission documents filed by the company and public statements by the 86-year-old Murdock reveal a combination of interlinked loans and heavy spending that threaten the heavily leveraged Dole's solvency.



"Our substantial indebtedness could adversely affect our operations, including our ability to perform under our debt obligations, and we may incur significant additional indebtedness," Westlake Village-based Dole said in an Aug. 14 regulatory filing. "We may be unable to generate sufficient cash flow to service our substantial debt obligations."



The company, with about $7 billion in annual revenue, has nearly $2 billion in debt and a high-risk credit rating.



Murdock has used the company to guarantee $205 million in loans to the tycoon's pet projects, including a luxury health resort in Westlake Village that suffered what he once described as "several hundred million dollars" in cost overruns during construction.



In recent years, he has spent $80 million refurbishing and rebranding two resorts on Lanai. He owns 98% of the Hawaiian island through his Castle & Cooke real estate company but has told reporters that he is losing upward of $20 million a year on his Lanai tourism and luxury home sales businesses.



"With all the projects he has going, it is probably a good analysis that he needs the money," said Scott Mushkin, an analyst with Jefferies & Co. in New York.</blockquote>


I have comments but I have a new puppy that is otherwise occupying my time for the next several days.
 
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