Russia Blocks US Ag Imports

This week Russia announced, in an effort to put pressure back on sanctioning countries, that it would no longer import their Ag Products.  The US last year exported around $1.3 Billion in Ag goods to Russia.  Reports indicate that while this will hurt Ag prices for the US markets and others, this block could destroy what is left of Russia’s economy.  Russia has already seen 7%+ inflation this year and that could double very quickly after this block is implemented.

So what does this mean for the US?

While most reports did not specify the exact details of the block, here is some information I dug up on what Russia imports from the US.

Table 3: Russia’s main agricultural import products, average value in 2008-10
Import value Share in agro imports
million US$,  %
Bovine meat 2,399.1,  8.0
Beverages 2,203.2,  7.4
Pig meat 2,111.4,  7.0
Milk (equivalent) 1,539.9,  5.1
Tobacco 1,207.8,  4.0
Sugar and honey 1,172.6,  3.9
Poultry Meat 1,136.1,  3.8
Cheese 1,094.2,  3.7
Total agricultural imports 29,972.3,  100.0
Beverages: Beer, wine and spirits
Source: FAOSTAT

Another Ag import that was mentioned in another article I read was Farm Machinery.  If this is also banned, it could have quite an impact on the already tough year machinery manufacturers are having.

While this will have an impact on the US Ag markets, I’m interested to see just how long Russia plans to cripple its own citizens and make them pay for their leaders need for more power and control by attacking Ukraine.

What are your thoughts about how this will impact the US Ag markets?  What about Russia’s economy?

Ag Machinery Sales Sliding

Well if you have not heard yet, hear it now… companies like AGCO, Deere, CNH, and more are all cutting their forecasts for the year and projecting much lower than anticipated machinery sales.  Weak crop prices have caused producers and harvesters to reuse their equipment another year rather than trade-in and upgrade.  This does not mean that farmers are necessarily hurting, but rather taking a more conservative approach to spending this year with the weaker prices to ensure profitability.  

I think most farmers would prefer weaker prices and higher yields, as they can better forecast their harvest volumes and estimate their income for the year end.  Typically, high prices are a result of low yields at various places across the country or across the globe.  Low yields is bad for everyone, less food to go around, crop insurance companies paying out large sums, less predictability on income for the farmer, and uneasy markets.  The only people who benefit from high priced crops, are those fortunate enough to have had high yields during that same time period to capitalize.

The sliding machinery sales is not a bad thing for the farming industry as 2013 was the peak of the ag boom as of recent.  It is just like any other stock market pull back that we typically see.  I think the biggest trouble this time, is that machinery companies were not predicting this large of a pullback in sales, this quickly.  Many of the ag machinery companies just finished expanding, upgrading, enhancing their product lines.  Now, the markets have softened, fewer buyers are available, and the companies are overstocked with employees and large budgets.  

As always, money always finds its way… and eventually the machinery companies will get things balanced and be ready to capitalize on future market upswings.

“B Corporation” Farm in N.H.

This was a very interesting article I and across this week regarding a fairly new “B Corporation” status. According to the article this Farm, which raises chickens, has qualified.

An Organic LLC now B Corporation Certified

Here is how the farm scored…
B Corporation Score

What are your thoughts on this “B Corporation” certification? Leave your comments!