What a week for agriculture.
At this point, with the COVID-19 pandemic in full swing, weeks feel like months in many regards. Our team at RealAgriculture has done a fantastic job of trying to cover all of the angles of this crisis. From pork, to potatoes, and everything in between, farmers are being impacted and in most cases it’s more adversity than opportunity, unfortunately.
As usual this week’s “Left on the Desk” features a scattering of tidbits, slices of data, and the things that caught my attention this week which may or may not have been covered on the website or radio show. It is really my way of giving you a peek in to the broad swath of things I have been reading and following this week.
With all of the COVID-19 hardballs being thrown at agriculture this week, one of the bright spots is pulse crops, specifically lentils.
Cdn lentil exports top 250kt in Feb. And that’s before the latest “excitement”. pic.twitter.com/25tVyq7pwk
— Chuck_Penner (@LeftFieldCR) April 3, 2020
Prices for lentils have enjoyed a nice bounce while exports also look strong. Lentil exports in February were ahead of the five-year average and the 2018/19 crop exports. It’s nice to be able to talk about some positive in the darkness of all the negative COVID news.
When we think of pulses, we think of India and the Globe and Mail had a very interesting piece on how one of the most crowded nations in the world is battling against the pandemic spreading. The challenges are best summed up in these three paragraphs:
Even without the mass migration, the pandemic would have presented a massive challenge for India, a country crowded with 455 people per square kilometre, compared with just four per square kilometre in Canada. In India’s jammed urban areas, social distancing is simply unachievable for most.
The country’s health-care system also lags those of other economies its size; health spending accounts for just 1.5 per cent of gross domestic product, creating shortages of doctors, nurses and critical equipment, particularly in rural areas.
The rigorous sanitation that is the best defence against COVID-19 is impossible in villages that lack running water.
If developed countries like the U.S. and Italy are facing challenges to keep the pandemic under control just imagine what could happen in a country like India. And by the way, India is not alone in being very susceptible. According to a piece in The Economist, the COVID-19 breakout could devastate poor countries in the worst way. You would think that as countries like Canada get through its own outbreak, pressure will quickly switch to supporting the poorest or the poor country’s in fighting the pandemic. Canada will no doubt want to aid in this humanitarian effort but will want to ensure stocks of PPE are adequate in case of a second COVID-19 wave in the fall.
This week there was a U.S. intelligence report that China was concealing its COVID-19 issues early on which may have contributed to the lack of domestic responses from following countries. The Canadian health minister, Patty Hajdu came out in defence of China and their sharing of information.
— Gordon G. Chang (@GordonGChang) April 2, 2020
Canada is in this awkward spot with China as they attempt to use COVID-19 as a way to soften the relationship between the two countries. Canada has been the China whipping boy for 18 months since the Huawei CFO extradition arrest. I do not agree with Hajdu, but I think I see the strategy with two Canadians still detained in China. Canada was able to extend its shipping agreement with China on dockage but getting back the export licenses for Richardsons and Viterra is still elusive.
Trump treating Canada like China again. https://t.co/gh8rRLlwWB
— Shaun Haney (@shaunhaney) April 3, 2020
I love when innovation comes from unexpected places. This may very well be the case in terms of the hunt and race for a COVID-19 vaccine. As universities and pharmaceutical companies from around the would be expected to be researching a vaccine, so is big tobacco. That’s right — big tobacco is working on COVID-19 vaccine development as well. In a story by Bloomberg, “Philip Morris’s Medicago uses a virus-like particle grown in a close relative of the tobacco plant. Plant-based vaccines mimic viruses and allow the body’s immune system to recognize them and create an immune response, without being able to infect or replicate.”
At this point, I am not sure that anyone would care if the vaccine came from tobacco, Phillip Morris, or Penthouse magazine, this is a global crisis that needs a viable vaccine.
In both Canada and the U.S. due to quickly shifting demands, milk had to be dumped.
We are dumping milk in South Florida because there is no home for it. We still have to feed and care for our cows, and our farmers are still milking cows, in hopes that we can sell that milk in the future… #stillfarming pic.twitter.com/tn4dpUBuUa
— Ben Butler (@BenLButler) April 3, 2020
Fortunately for Canadian producers they will still be paid, while U.S. producers are likely throwing hard work down the financial drain.
Last week I mentioned how the energy industry being crushed was impacting the gasoline and ethanol business. This steep decline is not due all to COVID-19 but the addition of Russia and Saudi Arabia getting into a race to the bottom on pricing. The Globe and Mail dug into what initiated this fight and how its starts and ends with the U.S. shale industry.
Drilling shale wells is a costly business and no shale company is making money at US$20 a barrel. Some analysts put the break-even price at somewhere between US$40 and US$50. At current prices, their business model – drill often and sell junk bonds to pay for it – breaks down fast.
The weakest shale companies will go bankrupt and others will curtail production. With junk bond investors heading for the hills, it might be a long time before the industry gets off its knees. And don’t forget that prices for natural gas, another shale product, have plummeted, too. Energy investors might gravitate instead to renewable power, whose returns tend to be more reliable.
And you thought the drop in oil was only a Canada problem? As U.S. shale companies begin to file for bankruptcy, it is has Canadian energy firms on full alert. Oil did bounce back this week but with the kind of volatility in the market who knows what next week brings.
The best thing this week is that in some areas we have some field work happening and quite honestly that is great to see. Have a great weekend everyone and stay safe. If you have any feedback or comments you can email me at [email protected] or call the RealAg listener line 855.776.6147.
It’s always good to start in the field near the shop and directly across from the bosses kitchen window.. That way when your learning curves show up everyone can remind you what you did wrong.. Maybe I’ll leave a check just to see if anyone is paying attention…? pic.twitter.com/vsrjxg2Qlb
— Mark McLean (@MdMcLean1) April 3, 2020
— SmittyNHRob (@nh_smitty) April 2, 2020