Drought and the Supply Chain: Dairy
The dairy industry, so intrinsically tied to the agricultural and farming industries, will not be excused from feeling the effects of the 2012 drought. With more than 55 percent of the country in a state of moderate to extreme drought, according to the National Climatic Data Center, many farmers crops are completely wiped out for sale or for the use of feeding their livestock – and that’s not to mention the water supply some cattle farmers rely on.
Cows are ruminants and have four stomachs that digest hay and grass. Farmers report that their grass fields have, in part, browned and become thus unappealing to cattle. Cattle are sensitive to heat, and the 100-degree-plus temperatures in some areas of the country have dissuaded cattle to walk to their feeding stations. Additionally, the cost of bringing in water to nourish cows can be one of the largest expenses of all.
Without healthy, well-fed and watered cattle, milk production dwindles and prices have the potential to skyrocket. In an interview with the USDA, Cornell University dairy farming expert Tom Overton said because feed availability and cost are the most affected by the drought, dairy farming will be directly impacted.
“Dairy cows have a tough time with heat, and that relates to how they digest and process feed,” Overton said. So, even with a plethora of hay, cattle would still be remiss to eat in the blistering temperatures ravishing the majority of the United States. “Farms see that impact relative to reduce milk yield,” Overton said.
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While many farmers have decided to send their cattle early to slaughter or are simply suffering through this brutal heat, there are solutions to help cool cows and encourage them to eat to keep healthy and milk-producing. Overton referenced shade, ventilation, and evaporative cooling with fans and water mist as excellent tactics to cool down cattle.
Although times are tough for dairy cattle and their farmers, Roger Hoskin of the Department of Agriculture’s Economic Research Service says he can’t foresee that the drought will end with people fighting in line at the grocer’s for a few gallons of milk. However, he said, “they might not want [milk] at the price it’s selling at.”
Ironically, milk is currently at its lowest price in nearly two years due to surpluses during mid-winter and spring, at $16.10 per hundred pounds. Hoskin warns that the dairy farming effects will trickle through to the consumer, rising by a possible 40 cents per hundred pounds by Christmas. These prices mean the cost of cheese and other milk products will also increase as the drought continues.
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”