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1808 PD: 2008 year-in-review: Events that impacted dairy producers

Ryan Curtis Published on 09 December 2008

$174 a barrel oil

• Oil sold as high as $147.96 a barrel in 2008.

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• Oil sold as low as $49.75 a barrel in 2008 as of December 2, 2008.

• Oil is forecast to be $60 a barrel next winter.

• Gas is as low as it was in January 2005, $1.82 as of December 2, 2008.

• Gas was most expensive in July 2008 at $4.11 a gallon, national average.

Every farmer in America felt the squeeze as oil jumped up in price and made everything from fuel to fertilizer more expensive. Many producers looked into alternate means to accomplish the same job, such as using propane-powered trucks to compost manure for fertilizer. Oil was one of the reasons for higher input costs for dairymen all over the country.

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$7 a bushel corn & ethanol production

• In western Iowa, corn sold for as much as $7.25 a bushel on July 3, 2008.

• Corn sold as low as $3.07 a bushel in northern Iowa on November 5, 2008.

• Corn in Stockton/Modesto California sold as high as $15.57 a bushel on June 26, 2008.

• Corn in Stockton/Modesto California sold as low as $8.85 a barrel on November 13, 2008.

The government-subsidized ethanol program gave corn a boost in value all over the country. It didn’t just affect corn growers, because it also meant that other crops would also increase in value since some growers started planting corn instead of other crops (supply falls and demand raises prices). Commodity prices caused profit margins to shrink. Some dairymen made changes to their feed rations, while others tried to increase efficiency.

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Economic slump/credit crisis

• Dow falls below 8,000 (7,997.28 on November 19, 2008) for the lowest level in six years (March 31, 2003 at 7,992.13).

• Credit crunch turns into Wall Street crisis in fall of 2008.

• Hundreds of billions in mortgage investments evaporate.

• Nation’s largest insurance company (American International Group – AIG) and largest saving and loan company (Washington Mutual) are seized by the federal government in hopes of staving off a national depression.

• Government issues a $700 billion bailout plan to start credit flowing.

Although the reasons for the credit crisis didn’t start this year, it was the year the straw was added that crushed the donkey’s back and our economy fell hard. Investors saw mortgage-backed investments collapse, and banks had a hard time finding money to fund their loans. The federal government handed out bailout plans to Fannie Mae, Freddie Mac, AIG, Washington Mutual and passed a $700 billion bailout they hope will save the falling economy. The big three auto makers are also asking for bailouts.

Farm Bill passes in U.S. Congress and Senate

• Country of Origin Labeling is required.

• $10.361 billion increase in nutrition programs

• Corn ethanol tax credit was reduced and redirected to incentives for cellulosic ethanol.

• The bill includes budgeted standing disaster assistance for catastrophic natural disasters.

• The bill doubled funding for the Farm Protection Program – protects agricultural lands from urban and suburban development.

Creating a bill to encompass all of agriculture is a difficult task, and understanding the bill when it’s done is equally challenging. On the U.S. House Committee on Agriculture website (http://agriculture.house.gov/hearings/index.html), you can find complete bulleted lists about what is included in the bill for dairymen and an explanation of each aspect.

Obama elected president of U.S.

• Barack Obama claims to ensure economic opportunity for family farmers.

• He supports $250,000 payment limitations.

• He encourages creation of value-added enterprises.

• He wants to improve health care.

• He supports improvements in education and infrastructure in rural areas.

• He also will encourage organic and local agriculture.

The information above was pulled from his website. These are his claims but only time will tell whether he will follow through with his promises. The ideas he champions are good, but how they are implemented will be the difference between rhetoric and results. One certain positive from the elections was the number of people that casted a ballot on November 4, 2008.

HSUS gives animal agriculture a black eye

• The CNN video link on YouTube has had over 170,000 views

. • The video was first added on January 31, 2008.

• Hallmark Meat Packing Company closed due to the coverage.

• USDA orders recall of 143 million pounds of beef, largest in U.S. history.

• The video prompts consumer mistrust and hundreds of negative blogs on animal agriculture.

The damage the video did to the dairy and livestock industry in less than three minutes was huge. The press it received and the following efforts by other activists to try and “uncover the truth” will continue to be a thorn in the side of the dairy industry for a long time unless the dairy industry can do something more to refute the claims made by these organizations. Proud to Dairy, AFACT and the National Dairy Animal Well-Being Initiative are examples of ways dairy producers can unite and show their honest, wholesome work ethic. HSUS gives animal agriculture a black eye.

Monsanto sells Posilac to Eli Lilly

• August 20, 2008, Monsanto announces sale of Posilac to Elanco Animal Health, a division of Eli Lilly and Company.

• The sale totaled $300 million for the rights to Posilac.

• When the sale was announced Monsanto’s stock rose $5.22, or 4.6 percent, to $118.08.

• When the sale was announced Eli Lilly stock fell 39 cents to $47.41.

• The FTC has rejected efforts by Monsanto and AFACT to remove rbST-free labeling, but has mandated that labels say it is no different from rbST milk.

Over the course of the year, many states have made rules and regulations about what labels have to say in order to be fair. Many processors across the country have mandated that producers sign agreements that state they will not use rbST, even though it is approved by the FDA. The struggle over labels and use have died down in the media, but that may be a result of the economy and presidential elections taking the limelight more than lack of interest.

Chinese milk tainted with melamine

• More than 294,000 children sick and at least six dead from consuming melamine-tainted milk products, according to official Chinese records.

• 15 lawyers filed a class-action lawsuit against the offended dairy on behalf of 100 families that were affected.

• Some surrounding countries cease exports of milk products

. • The melamine scare causes worldwide concern about safety of food.

• Investigations led to recalls of formula, chocolate, yogurt and other products with dairy ingredients.

We don’t live in China, but consumers worry when they hear about problems like tainted milk in other countries, especially since this case involved small children. The AP news has released a story about melamine being found in U.S.-made infant formula, but at much lower levels. It is unknown how this will affect our imports and exports and what it will do to consumer trust. PD

Ryan Curtis
Assistant Editor
Progressive Dairyman

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