Good morning.
This is one of our favorite weeks of the year.
No, not National Jell-O Week (that was last week, apparently).
It's National FFA Week! The week, which celebrates youth in agriculture, has been running since Sunday, and will close out tomorrow. So to celebrate, make sure you go thank an ag teacher today!
The News:
- Trade Tensions
- Ukrainian Ag Struggles as Second Year of War Begins
- GrainChain Links Together More Funds
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The relationship between China and the U.S. would have already been listed as "It’s complicated" on Facebook (and that was before the Chinese sent a spy balloon…)
Tensions are high: When it comes to trade, the two countries are what we’d call co-dependent. So much so that the two-way trade between the U.S. and China set a record in 2022, at $690B. But now major trade organizations suggest that relying so heavily on China might be risky if post-balloon tensions escalate.
Traits of the trade: Ag exports specifically reached a record high of $213B last year. A large portion of those ag exports go to China—19.2%. It’d be a no good, very bad day for American farmers if the idea of breaking up with China on trade were to happen.
"I think decoupling from China would be a terrible mistake," John Bode, president & CEO of the Corn Refiners Association and a member of the Farmers for Free Trade Coalition, told reporters. "What needs to happen is a strategic approach to managing the relationship so that strategically sensitive information is protected."
Putin up with Russia: Another factor in the complicated relationship is China’s support of Russia. Today marks one year since Russia’s invasion of Ukraine. China already gives "non-lethal support" to Russia but is expanding its military capabilities.
The U.S. has warned China that if their support changed to include "lethal support," things could go from bad to worse, citing "serious consequences" without going into detail.
Sidebar to make it ag: Before the war, Ukraine exported enough to feed 400M people. The Russian invasion halted exports completely for more than four months. A large part of Ukraine’s economy relies on ag exports.
It’s trading season, and all the farmers be needing: We need a big agenda. Big trade agenda. It’s reported that farm groups aren’t too happy about Joe Biden’s lack of "Trader Joe" priorities.
But the administration finally made some key trade leadership appointments at the end of 2022. Here’s some of the work they’ve done so far:
- Reopened pork exports to Ghana.
- Signed a new Tariff Rate Quota agreement with the EU after Brexit.
- India dropped its tariff on U.S. pecans by 70% and canceled the tariff on industrial ethanol.
- The administration also says they’re working on more and better markets, like one with Mexico to export potatoes. French fries go south.
Up in the air: Other than spy balloons, which the U.S. shot down, there’s a lot unknown about what happens next—especially in the Russian/Ukrainian war, China’s role in the war, and trade implications. Things change fast, but Ukraine’s president says he welcomes a meeting with China.
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→ New bug, who dis? A corimelaena palmeri found its way onto a shipment of fresh flowers from Mexico to San Diego, making it the first time the bug has been discovered in the U.S.
→ Earthquake aftermath. The UN’s Food and Agriculture Organization is assessing the impact on ag, the food supply, and rural communities after the recent earthquake in Turkey and Syria.
→ Stressin’. There are so many unique stressors on today’s producers, the American Psychological Association has given the burnout that farmers experience its own name.
→ Bird flu flying out of control. With more than 58M birds culled from the current bird flu outbreak, the cost of the crisis has reached more than $660M.
→ High seas back to low costs. Ocean freight rates are way down, and are at their lowest since June 2020.
→ Farmer fees. The government in Denmark is contemplating an emissions tax on farmers, as the country hopes to reach its climate targets and reduce CO2 emissions by 70%.
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Ukrainian Ag Struggles as Second Year of War Begins |
It’s officially been a year. A full year.
Since Russia invaded Ukraine on Feb. 24, 2022, farmers in the nation have suffered $7B in losses.
84,200 pieces of farm machinery have been destroyed.
10M metric tons of grain storage capacity has been demolished.
And all of that pales in comparison to the thousands who have been killed in the war or are dying of starvation due to its fallout.
Bleak outlook: Current estimates show that this coming growing season, planted acres in Ukraine will be down 22% from last year (that’s down 45% from 2021).
Fertilizer applications are expected to be down over 50%, and that will translate into decreased yields and a projected harvested grain volume of only 34M tons… that’s 60% less than in 2021.
Blackouts, lack of capital, and input shortages will all contribute to the problem.
But that’s not all.
Market mayhem: Currently, farmers can export their products via the Black Sea. But the Black Sea Grain Deal is set to expire on March 18. Ukraine wants to extend the agreement, but Russia is signaling a fight to get it renewed.
The uncertainty is playing games with grain markets, and global food security is, again, at risk.
Where this goes: Ukrainian farmers (and the world) are adjusting, but another growing season will likely go by with only worse outcomes for ag. On top of that, the Biden Administration fears the worst and is "very concerned that China is considering supporting Russia’s war effort in Ukraine…"
Here’s to a quick and lasting end to the conflict.
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Grapes are one of the most popular fruits in the produce section. And with big supplies of grapes coming in from Peru and Chile, you can expect some grape promotions over the next month.
What percent of customers walk into the produce section with the intent to purchase grapes?
- 5%
- 25%
- 65%
- 80%
Answer at the bottom of the email.
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GrainChain Links Together More Funds |
your_photo from Getty Images
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Texas-based commodity blockchain platform GrainChain announced it’s linked together an additional $29M of new funding, which brings the total raised to $39.7M. Notable contributors include Overstock.com Inc., Pelion Venture Partners, and Brigham Young University (BYU Cougar Capital).
What’s a GrainChain? The company uses blockchain and IoT technology to achieve its goal of supply chain efficiency. They offer faster and more secure payments to farmers, immediately tradable titles to buyers, and priority payments to lien holders.
The platform includes a suite of tools designed to help collect, store, and market commodity data, from preharvest through transaction. The IoT allows farmers to collect and cash in on commodity characteristics, like being sustainably produced.
Blockchain on a coffee buzz: In 2022 GrainChain got an espresso shot of growth in Central and Latin America, making waves in the coffee industry. The company partnered with Exportadora de Café California, one of the largest coffee exporters in Mexico, and has worked with thousands of smaller coffee producers throughout Central America.
Using the blockchain, farmers are able to track crates all the way to the shelf. The blockchain also provides an avenue for commodities to be bought and sold. In this way, GrainChain offers faster payments and more transparency, as the blockchain ledger can be used to verify that data hasn’t been tampered with.
Soundbite: "We saw explosive growth as our transaction platform, Trumodity, became fully integrated with banking systems in Latin America and when we launched liquidity programs with coffee producers in Mexico and Central America." — GrainChain CEO and Co-Founder Luis Macias.
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C. 65%, with red and green seedless grapes being the most popular.
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Written & Edited by Sheridan Wimmer, Kevin Cross, Jen Hill, Amelia VanLandegen, and Ashley Scoby
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