Left on the desk, Aug 18: Banned diesels, BRICS, and activist BS

It has been another very busy week in the world of news impacting agriculture. It’s also been a very turbulent couple weeks for farmers and consumers on the crop protection front as glyphosate and neonics have been in the news regularly.

Let’s connect some dots with all the the info, data, and fast facts “left on the desk” this week. This is week three of writing this column and I greatly appreciate your thoughts on the format.

Elon Musk, the founder of Tesla sounded like a farmer after the growing season this week as he claims to be burned out, based on a hectic work schedule, no sleep, and no end in site to the workload in front of him. When you read some of the details of his work behaviours and tendencies, it is a stark reminder that we all need a refresh from time to time. Farmers know better than anyone that sometimes you need to put in the long hours, but no holidays and working 120 hours per week since 2001 seems a bit extreme.

By now the American/global dairy glut is well documented. While demand for butter fat is strong, processors and the industry struggle to deal with much of the remaining proteins. Food companies are pushing hard to find new food innovations and anyway possible to find uses for the surplus product.  From just dumping it on fields to creative product marketing the industry is stretching do whatever it can to spark demand. My favourite is still the idea to turn surplus milk into an alcoholic beverage called VodKow. With desperation comes innovation.

You may have heard of the BRICS countries when it comes to economic growth and trade. An acronym that was coined by Goldman Sachs’ Jim O’Neill, BRICS stands for Brazil, Russia, India, China and South Africa. This group countries has gained significant economic power in the last twenty years but also criticism for not always following commitments. A recent study compared the BRICS’ performance in meeting commitments versus the G7 countries. It will be interesting to see how this changes as we are in a time of broken promises on trade, cyber attacks and a stream of problems based on national security. This bloc of countries is really the source of much frustration in terms creating a fair rules-based trading system but with its buying power, it will not be avoided by exporters.

Speaking of China, the trade uncertainty building between the U.S. and China has been very concerning for the North American economy.  What if the tension between the two world economic super powers actually involved the military? The Pentagon released a report this week that mentions concerns over China’s growing military spending and the possible skirmish over Taiwan. Although there are already concerns over cyber warfare, a military battle seems like a great summer movie blockbuster but in real life would be terrifying. On a more positive note the U.S. and China have mapped out a conclusion to their trade issues by November. How gentlemanly of them.

There has been much focus on how China’s economy has suffered in comparison to the U.S. in the trade war, but this might be overstated. The Shanghai index is down over 20% from highs earlier in the year, but in Chinese terms this does not represent the economic health of the country. Chinese investors think differently than western investors, and not in the context of 401k’s.  The Chinese equity market is regularly volatile and at the same time, China’s economic run has been historic.

Fresh off a recent bump in the wheat markets a couple weeks ago based on speculating that Ukraine was going to limit wheat exports, Russia potentially tried the same trick on Friday. Wheat was up across all contracts as the Russian Agriculture Ministry met with grain exporters. There is speculation that based on poor yields in Russia, that its desire to remain a wheat exporting powerhouse is under threat.

This week Farmers Business Network announced that they will be launching a seed brand called F2F Genetics Network: Farmers First Seed with the intent to connect farmers directly to breeders. According to FBN, there is no intent in the foreseeable future to bring the concept to Canada.

Speaking of seed, the battle over the future of dicamba is really drifting to more debate over the trait’s legal residue (see what I did there?). Coinciding with Bayer officially beginning to integrate Monsanto tis week, two U.S. based independent seed companies that sell soybean seed containing Monsanto’s dicamba-tolerance trait, Beck’s and Stine Seeds, came out pushing for changes to the dicamba label.  Reuters reports that the companies would like to see a restriction on the product to include pre-emergence only to reduce drift risk. With the high level of glyphosate resistance in some areas of the U.S., a tool like dicamba is a solution.

Interestingly enough, the changes being pushed for by Beck’s and Stine are how the product has been primarily used in Canada in the first two years of dicamba tolerant soybeans. Canadian growers have not had the drift issues that the U.S. has, comparatively.

Dicamba is not getting all the attention when you have glyphosate in the news. With the recent court decision in California, the discussion around the product’s future has come into question in the mainstream and at the farm level. There was even a story on glyphosate residues in breakfast cereals that contain oats, which was generated by an activist group.

All of this hoopla about crop protection products made me think of our Agritechnica coverage where we saw many innovations from companies essentially looking past glyphosate. Here is just one example focused on combining the power of robots and drones.  Similar to the diesel story below, European countries are keen to ban the product altogether. A complete ban of glyphosate in North America comes with grave concerns for direct tillage, an increase in herbicide applications and other impacts that go against sustainable practices.

So what happens to diesel engines in the future? A review of the 2018 Range Rover HSE Td6 in the Wall Street Journal exhibits some of the challenges faced by European auto makers as European cities attempt to reduce the future demand of the engine type. Germany is one of the EU members where this banning of diesels has the most momentum — the home of Audi, Volkswagon and BMW.  With the possible lower demand in Europe, EU automakers look to North American exports to save their investment in the technology.  This increased interest in the North American market by EU auto manufactures comes unfortunately at a time when threats of auto tariffs could kill that opportunity.  The EU negotiated a temporary reprieve from the 25% auto tariff threat when European Commission president Jean-Claude Juncker visited Washington in late July. So for the time being the EU may want to get a head start on getting models to the U.S. just in case the big U.S./EU deal falls apart.

By the way, are there not bigger concerns in this world than diesel engines?  Remember this is all happening in a year that straws have become enemy number one, glyphosate has apparently become a major liability, and we are basically scared of our own shadows.

I hope that you have a great weekend and remember to send me feedback or your thoughts at [email protected]

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