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USA- HONEY MARKET REPORT

Thursday, 23 June 2011 09:16 Written by

By Ron  Phipps, CPNA International, Ltd. Dtd june 2011

 

U.S.A

The American honey market during the first quarter of 2011 began a substantial recovery.  The two-tiered market, which was created by circumvention, plagued the international honey market for over 5 years.  While the recovery allowed for a more level playing field, honest beekeepers, honest importers, responsible packers and honest exporters felt a fresh breath of spring air.  The market stabilized, prices were firm, beekeepers could sell their honey and the ability of American beekeepers to provide the pollination services essential to American agriculture interests, including almond, blueberry, cranberry and apple growers was restored.

The recovery of the American honey market is a clear result of the government’s action to curtail circumvention and transshipment of Chinese honey via third countries.  This success began in the Alfred Wolff case in Chicago, which led to several arrests and confessions in Chicago, Seattle and Los Angeles.  While these efforts began to bear fruit about 5 years ago, it was in the fourth quarter of 2010 and the first quarter of 2011 that these efforts led to a sharp reduction of imports from Malaysia and a virtual elimination of “Indonesian Honey.”  Events in the second quarter of 2011, however, have put in jeopardy the recovery of the market.

Argentina

Argentina’s 2010/2011 honey crop is now confidently estimated to be 75,000 metric tons.  Of that total, about 36,000 metric tons, valued at US$111 million have already been exported from January to May, 2010.  An additional 15,000-20,000 metric tons has been sold as of June, 2011.  Argentina has only 20,000 metric tons to sell and ship to the world market during the 2nd half of 2010.  Argentina’s new 2011/2012 honey crop will not be available until January, 2012 which means arrival beginning February and March 2012.  In contrast in 2010 Argentina shipped 55,000 metric tons for the entire year.

U.S. demand for Argentina’s excellent quality honey dramatically increased in the first half of 2011.  The U.S.A. market accounted for 45% of Argentina’s honey exports, Germany 26% and Italy 9.5%.  Hence, approximately 80% of Argentina’s honey exports went to those 3 countries with the balance to Japan, France, the U.K, Australia, the Middle East, Indonesia, etc.  Prices were firm.

At the same time, it is important to note that Argentina’s total honey crop has stopped increasing and begun a steady decline.  This parallels the U.S.A.’s situation in that the global demand for grains, corn and soybeans has resulted in a significant decline in the raising of cattle and the size of the dairy industry in Argentina.  China and India have become huge, steady and strategic sources of demand for Argentina’s soybeans resulting in reduction of alfalfa fields and clover rich pasturelands.  As a corollary phenomenon, China has been attempting to buy huge tracts of land in Brazil for soybean production.  This is part of China’s effort to reduce purchases of U.S. Treasury Bonds in favor of purchasing international hard assets such as mines, factories, petroleum fields and farmland.  There are credible reports from Europe and South America that such purchases of hard assets may include honey factories giving the Chinese vertical and horizontal integration.

In any case, the vociferous appetite in India and China for soybeans and grains to feed their combined real population, that rapidly approaches 3 billion people, has led in Argentina to the conversion of alfalfa fields and pasture lands to soybean production, with extensive and expansive irrigation systems already in place.

 

Germany

The German honey market has recently raised issues that are affecting the Argentine honey market.  German beekeepers have examined honey produced in Germany from pollination of Genetically Modified Organisms (GMO).  These beekeepers have petitioned their government not to allow sales of honey, which may contain pollen from GMO.  Since such plants are common throughout Europe, North America and South America, this new proposal, if adopted, would jeopardize the adequacy of the honey supply available to Europe.  As demand for non-GMO honey picks up in Europe, coupled with impending crop shortages in other major producing countries, both prices and demand are expected to rise in Germany.

Brazil

Brazil is producing predominantly light amber honey in June through August.  Honey production in the northeast of Brazil has been vigorous.  White honey and orange blossom will commence in September.

In subsequent market reports, I will provide an update on honey production in Mexico. 

Vietnam

Vietnam’s 2011 crop of LA, ELA and Amber honey is largely over and is reported to have reached about 20,000MT.  The Vietnamese Beekeepers Association and Vietnam’s Ministry of Agriculture have been cooperating with the U.S. government to establish a traceability system and provide samples from all regions and all major Vietnamese floral sources.

U.S.A. Crop

The 2010 U.S. honey crop was about 176 million pounds, once again significantly below previous crop averages that ranged from 200-220 million pounds per year.  The decline is attributable to adverse weather, stress on the bees, reduction of pasturelands and 5 consecutive years of non-remunerative honey prices for American beekeepers.

Several of these factors began to improve in 2011 and hope for a sustained recovery of the market, the sustained creation of a level playing field and remunerative honey price levels emerged.  The year began with better moisture conditions in California and hopes were high for a good crop.  However, cold, excessive and poorly timed rain and wind played havoc with the normally large California honey crop.  The orange honey crop was nothing short of a disaster.  Sage honey is yielding a poor crop in respect to both quantity and quality.  As the end of June arrives, only California buckwheat honey holds hope for a decent yield.

By mid-May, the hives should have been brimming with bees.  Such was not the case in California as many boxes of bees were merely half full.  Prices, however, were very firm until an unexpected and unprecedented surge of imported honey entered the market, filled the pipeline and dampened demand. 

Conditions in the Dakotas as June ended were of great concern.  There was too much rain and temperatures were in the 60’s F.  Clover was in bloom in various areas, but the heavy rains—in some places 8 inches in a day—created fields that were so muddy that feed trucks could not get into the bees which, by and large, were in much better condition than the bees in California.  In mid June, as the river rose in North Dakota City, there was a second wave of evacuation and fears of calamity.

Honey production in Florida and other areas suffered from the opposite extreme, i.e., conditions that were too dry and too hot.  Texas and Arizona have suffered massive forest fires.  Parts of southwestern Texas have received less than 1” of rain over the past 10 months.

However, many beekeepers were not moving their bees north to the Dakotas.  To move 400 hives from California to the Dakotas was costing $5,000-$6,000 per truck, the road trip costing over $10,000 per truck.  Given the questionable weather conditions in the Dakotas, numerous beekeepers declined to make the trek.  Due to the high subsidies for ethanol production, many Dakota pasture lands and alfalfa fields were converted to corn production.  All of these factors point to a non-bumper honey crop in the Dakotas.  This article includes a photo from the University of the June excessive rains that have covered pasture lands in South Dakota.



Flooding streams and rivers covered thousands of acres of bee pasture
in the Upper Midwest this spring and early summer. The flooding
not only made beeyard placement difficult, but ruined a lot of bee
pasture where clover and alfalfa normally grow. This photo was taken
in South Dakota in May of 2011.

Given the above factors, the USDA National Honey Report of June 15, 2011 listed honey prices as follows:



There also have been quantitative changes in imported honey during the second Quarter of 2011 that are very strange and in some cases alarming.  Various reports from beekeepers and international exporters point to colossal surges which neither historic production patterns nor prevailing weather conditions justify. Demand and prices softened in the U.S. as a consequence of the unexpected monsoon of honey from Asia.

It appears unlikely that national US honey production in 2011 will reach even the modest levels of 2010.  Everything would need to take a dramatic and sustained turn for the better.

Canada

Canada is suffering similar conditions to North and South Dakota. Canadian beekeepers and brokers report that Canada is waterlogged throughout the southern Prairie Provinces, Alberta, and all the way to the Ontario border.  Some areas are 350% above normal precipitation for the year.  Areas to the west of the Prairie Provinces are even more waterlogged.  Flowers are about 3-4 weeks late.  Canadian beekeepers are hoping as summer commences that this will allow the bees that suffered severe winter losses to catch up.  The recovery of bee losses was slowed by a cold and damp spring.  The highly productive Peace River Valley in northern Alberta, in contrast, has been very dry.

Macro-Economic and Macro-Environmental Factors

The international honey market exists within a macro-economic environment.  That environment is currently deeply plagued by unprecedented national cumulative debts and surging annual budgetary deficits.  This debt characterizes both Europe and the U.S.A. where the national debt approaches a colossal $15 trillion.  Such magnitudes of debt inevitably erode the value of currencies whose de-valuation is exacerbated, not reduced, by the undisciplined printing of money and increase in money supply.  At present, the question is which is more vulnerable to de-valuation, the EURO or the U.S. Dollar.  Already we have seen over the past few years a significant appreciation of the Canadian dollar relative to the U.S. Dollar.  The underlying value of currencies will play an increasing and continuing role in influencing honey prices.  Like rising petroleum prices falling values for currency tend to increase prices for commodities.

Of similar import will be global environmental conditions.  The past decade or two have seen comparatively benign environmental global weather patterns.  This is a consensus opinion among meteorologists.  There is also a growing concern among climate scientists that the world may be facing a decade or more intensive weather patterns, such as the gigantic 2010 floods suffered in Pakistan and Australia, the wild fires in Texas and Arizona, the recent floods of the Mississippi and Missouri Rivers and the massive droughts in Russia in summer 2010.  While scientists and politicians debate the causes of these emerging weather patterns and the role of “the hand of man” thereupon, there is a wide-spread conviction that extreme weather patterns will invariably and unpredictably influence global agricultural production, the adequacy of the food supply and global food inflation.

The New York Times reported in June, 2011, Scientists See More Deadly Weather, but Dispute the Cause by John M. Broder:

"….The United States experienced some of the most extreme weather events in its history this spring, including deadly outbreaks of tornadoes, near-record flooding, drought and wildfires.

Damages from these disasters have already passed $32 billion, and the hurricane season, which is just beginning, is projected to be above average….

…."Looking at long-term patterns since 1980, indeed, extreme climatological and meteorological events have increased….there was also a tendency for more extreme events followed by a quiet couple of decades.

….He also said models suggest that as carbon dioxide builds up in the atmosphere and heats the planet, droughts will increase in frequency and intensity.

….Kevin Trenberth, distinguished senior scientist at the National Center for Atmospheric Research, a university-sponsored institute in Boulder, Colo., said that when the greenhouse effect caused by burning fossil fuels is added to the natural variability of climate, weather disasters can be expected to occur more frequently.….Dr. Trenberth said in a telephone interview Wednesday, “Records are not just broken, they are smashed.

….April was a particularly devastating month for tornadoes and rainfall, with 875 tornadoes reported during the month and heavy rain and snowmelt contributing to Mississippi River flooding later in the spring that surpassed the historic floods of 1927 and 1937, NOAA reported.”

Senate Finance Committee Hearings on Transshipments
In May, 2011, the Senate Finance Committee held important hearings on the persistent and massive circumvention of numerous Chinese products, including honey and steel, which are subject to high antidumping duties.

The hearing was chaired by Senator Wyden of Oregon and the Ranking Minority Member, Senator Thune of South Dakota. Senators Brown of Ohio, Rockefeller of West Virginia, and Claire McCaskill of Missouri all participated.  The hearing was vigorous.  Richard Adee was a lead witness representing the American Honey Producers Association.  Leaders from the U.S. Department of Commerce and Homeland Security were questioned by the Senate.

Senator Wyden pointed out that only 1 ½% of the duties assessed by U.S. Customs for antidumping orders have been collected.  The Senators pointed out that this failure is not only costing the Government substantial revenue, but it is threatening the survival of American companies and causing American workers throughout the land to lose their jobs due to illegal and fraudulent imports.

The powerful Senators of this important Senate Committee were “hot and ready to trot”.  A second Senate hearing that discussed circumvention of honey was held by another Senate Committee.  The Administration representatives heard from the Senate loud, persistent and clear demand to take action to prevent continuation of circumvention.

Ironically, on the very heels of the Senate hearing regarding circumvention of Chinese goods, the Internet was filled with stories and photos of a massive shipment of “two honey trains” carrying, in one day, 180 containers of honey from India to the port for export.  Honey exporters from Europe, Asia and South America were also startled by those quantities.  American beekeepers, who directly know how hard it is to produce a truckload of honey, were alarmed by those quantities from a country, which a decade ago shipped virtually no honey to the world market.

Honey Science
There have also been numerous reports from Europe and/or the U.S.A. of:  1) honey that was ultra-filtered to remove pollens and residues and 2) adulterated with sophisticated, hard-to-detect and inexpensive rice sugars.  Rice syrups can be produced in great abundance and for about USD0.20/lb. providing great temptation to some to adulterate pure honey.  Given the limitless supplies of inexpensive rice syrups, this mode of adulteration may create not “honey trains,” but “super tankers of honey” bringing adulterated honey either directly or indirectly to western markets.  It should be noted that while ultra-filtration has been used to mask country of origin and transshipment, selling ultra-filtered honey as “honey” is illegal in both Europe and the U.S.A.

Members of the UK honey industry, who have visited honey factories in China and India, report being startled by the expensive equipment and sophisticated machinery that they found.  Some of that machinery is associated with ultra-filtration and production of sophisticated adulterants.

Given the vulnerability of international honey supplies, the need to protect the health of bees vulnerable to a variety of diseases and stresses, the need to ensure the safety of the food supply and our nation’s WTO commitment to avoid non-tariff trade barriers, the international honey trade needs to:
1) prevent both circumvention and criminal customs fraud and
2) establish international science-based standards for honey.

It is worth noting that other food industries whose annual per capita consumption is much higher than honey’s 1 pound/person per year have effectively argued for a realistic and reasonable approach.  Writing to The New York Times in June 2011, Liz Wagstrom, Chief Veterinarian, National Pork Producers Council, writes:

"….Mr. Kristof seems to have a problem with modern production facilities and animal health programs…Mr. Kristof also suggests that antibiotic use in livestock production is leading to antibiotic-resistant pathogens that are killing people.

….The risk to public health from overuse or misuse of antibiotics comes overwhelmingly from human medicine, not livestock production.  And curtailing antibiotic use in food animals, as Mr. Kristof advocates, could endanger human health by jeopardizing the health of animals."

The need for more advanced scientific tools, such as testing methodologies, an international data base of primary honey samples and reasonable and realistic tolerance and testing levels, as other industries have established to govern international trade, has become a clear imperative.  But most urgently, the industry needs a level playing field and maintaining such is inconsistent with tolerance of illegal circumvention of honey within the world honey market.

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