China is Bad for Our Health

Some of you are gonna disagree with some of my sentiments, and I'm okay with that. I, at least, can give you the reasons that I say it's time for us - more than ever - to say, “Screw China.” 

This is a “what is best for us as a country and as an industry, long term” assessment. 

What do SARS, H1N1, avian influenza, the Spanish influenza epidemic of 1917, and the current Coronavirus outbreak have in common? If you guessed they are viruses that had devastating impacts throughout the world and they all originated in China, you'd be right. 

“China? What are you talking about? It's the Spanish influenza.” Yeah. I don't know why they call it that. I wasn't alive in 1917, but you know, it killed more people than WWI, which was pretty damn devastating in and of itself. Mustard gas, trench warfare, trench mouth. If you don't know history, look it up, but the influenza epidemic of 1917-18 was devastating, much more than this thing that's going on right now. 

In my prediction this media-perpetuated Coronavirus won't even be in the news come May and if you asked any average American on the street in may, two months from now, “Hey, what was that devastating virus that was going around a couple of months ago?” “Yeah, man. Something like a corny…corny thing.”

I know that I'm probably sounding jaded. Let's put that in perspective. 

There are so far 22 deaths, 566 confirmed cases, which puts us in about the 4-5% death rate, which is pretty high. It was less than that over in China. Now, 4-5% is high. It's also 566 people in a country of 330 million. 

One Columbia University epidemiologist, a researcher and scientist, gave a high variant projection, and said it could be as many as 10 million people that would die in the world within a year or two of this Coronavirus, if we don't get it contained. That’s 10 million in a world of 7.6 billion. That's one out of 760. Now, wouldn’t you say that one dying out of every 760 is actually pretty small? And what if that one in 760 was probably gonna die anyhow? 

A lot of the people that are dying from this are in nursing homes. You ever been to a nursing home? Those people might feel lucky to be finally getting the hell out of there. I promise you I will never go to a nursing home. I will take a walk in the woods on a cold winter night with a bottle of whiskey and lay down to rest. I'm off-topic here, but I just want to point out that we're overreacting - but that's okay.

Right now as I'm writing this, the agricultural markets are tanking, the stock market is tanking, because of the oil war that's going on between Russia and Saudi Arabia. But you know what, once there's panic in the market, then humans show that they are emotional, overreacting, irrationally behaving little sheep. And that's exactly what's happening right now. 

Back to the bigger point about the business of agriculture and China. Why am I so anti-China? China has risen here in the last 20 years to build up its military dominance and also to throw its weight around. It’s time that we stop tiptoeing around this, because we in American agriculture go, “Oh boy, we sure gotta straighten things out with China. Oh those terrorists!” 

I've already gone on the record, and I've pissed off some of you agriculture people because I have told you a tariff did not create $9 soy beans. Global supply or even oversupply of said soy beans is what created the market price. “But if China started buying, the price would go up.” Well maybe a little bit, but are you convinced that China was fasting for the last two years? Do you think that since 2018 when the trade war started, they just stopped eating? No, they bought beans from Brazil. Which means that wherever Brazil was selling beans prior to that probably needed beans, which means they could have bought from us. Oversupply of commodities is what created the commodity prices that we have. 

We became very enamored with this idea that China is our answer, and we did this to our own detriment. We are an export-driven economy in terms of agriculture in the United States, we have 330 million people. We produce way more than 330 million people actually need. That's why we need export markets. I get that. I agree with that. In fact, that's completely fine, but there's an old saying in business: if you owe the bank $1 million, the bank owns you, but if you owe the bank $100 million, you own the bank. Now you get where I'm going with this. 

Frankly, because of our laziness as an industry, we allowed this to happen. In American agriculture, we just love to produce commodities, and we're good at it. We said, “China’s got this rapidly expanding economy and they're going to buy our stuff, so you know what? Just keep on feeding the world.” Go out and grow the commodities, produce corn, produce soybeans, produce wheat, produce pork, produce milk, by God, let's figure out a way to sell it to China. 

China very smartly let us become dependent on them. So who owns who? China thought we didn't have a choice, that we would just give in to them, and we would just have to take whatever the deal was, because they owned us. We've seen that that's not necessarily the case. And now they've got some real problems. Your manufacturing sector has slowed down a great deal because we stopped buying their crap. Also, they got the Coronavirus and they're shutting down towns and etc, etc. Then you got a slowing global economy anyhow, and you've got a whole economy has been looking for reasons to stub its toe.

It's remarkable to me. I swear to God the media does this because they know that humans are sheeple. And they realize that if we just created enough emotion, there'll be a scare and boy, oh boy, do they love to run for the exit, scream and fire. That's what's happening right now. But back to the reason China is a problem. Sonny Purdue came out and perpetuated the myth that commodity prices were because of a trade war, which is not really the case. Supply on a global level had much more to do with that than our trade war. But the big problem is we had a become dependent on China.

China, at the same time is bought our biggest pig producer here, a Murphy Brown in conjunction with Smithfield. China also has gone around and opening up all these other suppliers, realizing that they don't want to be dependent on us, that we were dependent on them. You see, what we would do well to understand and move forward with in agriculture is that we got real sloppy and we got real lazy and we only depended on China, particularly for things like soy beans, et cetera, and China doesn't want to be our customer.

China wants to be our replacement. China wants to replace the United States of America as the dominant global economic superpower and a global military superpower. There's a reason they're starting to do saber rattling and fly the jets and shoot off weaponry and all this kind of stuff. They're doing this because they want to replace us. It's pretty big order. Now when I hear people say it's probably going to happen the next few years, I say, bullshit. They are not innovative. They are a communist country still. And more importantly, they're at about 13% of the Globe's GDP right now. And it's shrinking because they've got some problems. We're about 24, 25% so we have one fourth of the Globe's economy right here in the United States of America.

China has four times the amount of population that we have and about half of our economy. So they would have to do a lot to do to catch up or overtake us. But it doesn't mean that they're not going to try. They have the long view. We tend to be to our own detriment. Shortsighted. China has a thing called the belt and road initiative going on. Are you familiar with this?

China wants us to buy their cheap shit and they're manufactured goods and then they want to use us as a supplier, but only when it works well for them economically.

Back in the days of the crusades you had Europe and Asia transferring goods. And this is a huge Chinese objective. They intend to spend about $1.3 trillion between now and 2027 on infrastructure improvements in other countries, countries that right now do business with the United States. But China wants to replace us, so they're willing to make a longterm investment and they go to these third world type countries or developing countries and say, we will bring infrastructure, we will build railroads, we will build roads, ports, airport airplanes, airport strips, whatever you landing strips, whatever helps your economy.

But for that investment, of course we want to stay involved. What's the biggest problem that Brazil has? Is it agricultural productivity when it comes to agriculture? Is it the productivity or is it infrastructure? Answer, it's the infrastructure. So China immediately buddied up with Brazil because they knew that they can play us against them and them against us. China is spending money in Brazil to build roads and railroads and ports and things like this, so they can get those soybeans from what was once the Amazon rain forest, but has been bulldozed and slashed and burned and turned into fields. They can then further their environmental degradation by putting all that stuff on a boat and getting it over to China. Okay. Why am I telling you this? Because again, China does not want to be our customer. They want to be a replacement.

They're going to use this belt and road initiative to extend their influence all throughout the world. $1.3 trillion on an airport here and a railroad there and a highway here. That gets a lot of stuff moving for China. The United States used to do this through military basis and through economic aid. China is not doing through economic aid. China is doing it by investing saying, we want to be a partner here. It's time that the business buyer culture continues to look elsewhere and bang on more doors for other business and then also double down back home on value added products.

The world has enough commodities. That's why there's $9 soybeans, $3.20 cent corn and under $5 wheat - whatever these numbers might be. Admittedly, I'm not an agricultural commodity trader.  I can tell you that whether or not we have a trade deal straightened out with China or not, we still are going to have low commodity prices because there's lots of it. Sonny Purdue just announced last week, not to count on a MFP, the margin protection plan that they gave $16 billion last year to agriculture.

He says, don't count on a third wave of it. I believe that it probably will end up happening because we're still going to be in a slow price, a marketplace here for the next several years. The bigger point here about China and what we really need to look forward to when you look forward to a future where they can rattle their sabers and it doesn't move our markets. And we do that with other trade deals. I see good things happening with Europe. I see things especially happening with great Britain has spun off and is no longer part of the whole European union because of the Brexit thing. Now “that doesn't replace China”, that's what you're going to tell me. And I know that. But Mexico, South America, the Canada U S MCA is going to help and there's probably some good to be made here out of this current crisis with Japan.

Japan and China hate each other. Japan and China have always hated each other and Japan is an ally of the USA. I think we have a real opportunity to go back into what was the TPP that China was using to dominate the Asia Pacific area. And we should do some good capitalizing on China's weakness. One of my cohorts who speaks as a host of the US farm report said that a hobbled China doesn't do the United States any good. I disagree. I believe that a hobbled China is actually good for the United States because it puts us back in a position of strength and power. And it also realigns the global economies.

They have given the world a great deal of un-health. The avian flu,  H1N1, SARS, and now the current Coronavirus economic impacts throughout the whole world. I just read this article this morning about a 0.2% decline in the economy because of what is going on with the disruption caused by China. The never gave us straight answers. That's the other reason we need to say screw China. They lie, they cheat. They're a communist country that dictates information,  that the rest of the world sees. That's the reason we have this Coronavirus outbreak being worse than it really should've been, because they stifled information.

We need to look at China with such a suspicion in every deal that we ever come into, we think this is good for us. It usually ends up being not so good for us. They bought our but our biggest pork producer, but they also gave us African swine fever.  According to agriculture.com they were at the pork conference this week and weekend talking about what we might have to do to contain African swine fever if we get the bug. I'm not sure that China would mind if we did get it, if they look at the United States as their adversary, something that weakens their food system is good for them.

In the USA we have an amazing us department of agriculture, and American veterinary medical association. We have an amazing protocol, a system in place on how we can manage this. That's why we don't have hoof and mouth disease. And that's why we eradicated things like bovine brucellosis and things like this. But if we get this, it'll be one more thing. Courtesy of China, SARS, H1N1, avian influenza, Coronavirus, African swine fever. And then let's not forget their other track record. You know, I'm a forestry guy, I've got 60 acres of woods between my farm land properties. I manage my woods for longterm timber value. And guess what? The Chinese have also given us Emerald Ash borer. If you're not from the Midwest, this may sound unfamiliar to you, but it came over on containerships with all of the packaging and the pallets from China and infested starting in lower Ontario.

And Michigan worked its way into Ohio, Indiana, Illinois. The Emerald Ash borer has eradicated the Ash tree. Now there's biological controls being released. I think it was Michigan state university that found some predators to the bore and putting it out there. But as for the here and right now, one of my chunks of woods, 25% of the species were Ash. And guess what they have as a value now? Absolutely nothing. The economic impact of the Emerald Ash borer, and I'm using this as an example because we in agriculture, we don't think as timber being agriculture, but it is every time we think that somehow we just need to patch things up with China. I can point out another problem with doing business with China doing business with Mexico. It didn't give us the goddamn Emerald Ash bore. It didn't give us SARS. It didn't, it didn't destroy our hog herd or have the threat to destroy our hog herd.

You know, China lost a third of the talks. Some estimates say half China officially said somewhere around 20 to 25% they're lying because that's what they do. Doing business with China is bad for the world's health. From an environmental standpoint. They're bad for the world's health. In China, a national geographic article from about eight years ago stated that every four months, China was bringing online an equivalent of great Britain's coal infrastructure. Yeah. So every few months they opening up a coal fired power plant. Now they're not doing that so much moving forward, but they did. Their environmental degradation is substantial.

We need to move on. They're generally a toxic relationship. About five years ago, Chinese nationals were caught in a Monsanto facility and Iowa trying to steal genetic trade secrets. These are not our friendly trade partners. These are our economic adversaries.

Go back to 2011 back when we had all that expensive commodity prices. No, that's not gonna happen for another couple of reasons. The rest of the world decided that they wanted to make money. Also, Ukraine expanded, Kazakhstan expanded Argentina, Brazil, Australia, India, all these other countries expanded into that huge commodity boom that we saw between 2005 and 2013 so a straighten out a business arrangement with China, if you can even have an honest, fair, legitimate trade arrangement with China is not going to bring those commodity prices back.

So I talked about African swine fever. Bad for us, bad for the world. You know, it wasn't necessarily bad for a while that they lost their homes cause that opened up a bit more of demand for our hogs. But what if we end up with the bug and our swine facilities and our swine industry?

It took about a year and a half to two years for China to even start to make headway against it. We would do better. We have more advancements. We're also better with information sharing but if you see it come to the United States, there's also speculation. We're gonna have to depopulate which means to eradicate, to kill off, hogs on farms. Obviously it'd be very supply reducing. But it also upsets the applecart on our industry, right when we might have an opportunity to do more on a global level. So let's hope we don't get that. The other thing, Coronavirus came from the open air food markets.

They still have open air food markets where there's live animals. Some of them are wild species that have been domesticated, that are disease ridden and that's where the bug came from. Allegedly it's transmitted from bats, from a food market in the a central part of China. The last time you were standing in the food aisle at an Albertsons or Winn Dixie or the Kroger meat counter you didn't run the risk of contracting Coronavirus. The food system here is safe and plentiful and you don't get infected with viral outbreaks by going to the grocery store. I gave you all this because I know that some folks don't look at the bigger picture of what China's end game is.

If you're interested, just go ahead and type in “China belt road investment.” The infrastructure they're doing around the globe paints a picture that their intention is to spread their own economic influence, to spread their military influence. And also to pick off countries that are currently more on a relationship with us here in the United States and in Canada, because then they'll have the influence and then they'll also have the rights to the goods and they'll also have  a money stake in those countries, they will be vested partners.

The other part of this is the bugs. China is not done infecting world markets and other economies. China is not done. Their track record going back on a hundred years is not good. So when we look at us moving forward as an industry, it's time we start calling a spade a spade. It's time we stopped tiptoeing around this. I will point out again that they are a communist, dictatorial country who manipulates their economy through various methods, somewhat underhanded. Donald Trump got in trouble when he called him the current currency manipulator, but they are and they do. And they have also signed deals that they have no intention of adhering to. This current trade agreement is nothing more than that.

When everybody wondered why the prices didn't go up, well, it’s because it's just a handshake and some paperwork, and China has never actually abided by any of the agreements they've made. 

It's time for us to wean ourselves off of China. I think it's bad for our health. I think China's bad for the world's health. That's not in popular opinion right now when agriculture is in North America with low prices. Don't think for a second that I don't understand the situation. I do, but China is not the answer. 

Remember that old business statement. When you owe the bank $1 million, the bank owns you. When you owe the bank $100 million, you own the bank. We got really comfortable. We got really complacent, almost got lazy about just allowing ourselves to become dependent on China and it was not lost on them.