Beekeeping Boom/Bust Cycles

General Discussion of Diary Posts and Questions on Beekeeping Matters
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Countryboy
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Beekeeping Boom/Bust Cycles

Unread post by Countryboy »

I've only been beekeeping about 10 years, but I have talked to old-timers over the years. Even in my short 10 years, I saw bees go from a few weird people with bees to it being a bubble craze of everyone wanting bees.

Are we seeing the beekeeping bubble starting to burst?

Right now, bees and nucs are the most profitable aspect of beekeeping. In recent years, there has been enormous demand, and honey (and pollination) prices have been going up. If you had bees or bee products to sell, the past few years have been the 'golden age' of beekeeping. (If you can't keep your bees alive, it has been miserable. You can't get $10 packages or $3 queens to replace deadouts anymore.)

I think I heard there are more hives now than there have been in 20 years...something like 2.7 million hives.
Honey prices are getting very soft in a global slowdown. (I don't expect the global economy to recover anytime soon.)
CCD has largely faded into obscurity. Aside from a few beekeepers suffering losses (which are largely blamed on PPB), the massive die-offs are history and no longer front page news.
The price of almonds went from $2.50 to $4 in 2014. Now, almonds have dropped in price to around $3. Since the mid-2000's, we have seen almond pollination prices go up every year. If the price of almond pollination drops 20%-25% like almond prices, how many beekeepers are going to stop going to California to pollinate almonds if they can only get $140-$150?
Since 2007, beekeepers have made more money from pollination services than from honey production. Pollination has paid the bills, and any honey produced has been the bonus check. How is it going to affect commercial beekeepers if we start seeing almond pollination prices go down, in the face of a softening honey price? In addition to beekeepers going bust, many commercial beekeepers are getting pretty old, and softening prices may prompt quite a few to retire, putting a lot more bees and equipment on the market.
At the local level, farmers markets and craigslist are becoming saturated with honey from hobbyist beekeepers. There is a lot more competition, and hobbyists are starting to find it more difficult to sell their honey.
Is the new hobbyist market going to keep growing? I don't have as many people approach me about getting into beekeeping, compared to a few years ago. The people that do approach me, often get sticker shock when I tell them they can expect to pay $1000 for two hives and the suit, smoker, and stuff to take care of those 2 hives. In the softening economy, how many people are going to have the extra money to get into bees?

Personally, I think we are going to see big changes in the beekeeping landscape in the next 3-5 years, and I doubt we would recognize it in 10. At the very minimum, I expect to see a major correction of some kind fairly soon with unexpected ripple effects across all areas of beekeeping. (Honey went from $2.00 a year ago and is now about $1.50 from what I hear.) I think we are peaking or already peaked. Heck, the Flow Hive raised about $15 million. (At farmers markets, I probably have more people ask me about the Flow Hive than asking me about bees dying off.) The drought, water rights, dropping almond prices - these things are going to have an impact. Almond pollination prices can't continue to rise in the face of dropping almond revenues. Commercial beekeepers can't live forever. (What's the median age of commercial beekeepers? 60-65?)

Are we headed for a beekeeping bust? Or will the boom last forever? Is now the time to sell out if someone is considering selling? Or am I just looking in dark rooms for bears that don't really exist?
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Re: Beekeeping Boom/Bust Cycles

Unread post by Countryboy »

I just called the honey hotline. They have had the least calls in this marketing season than they have ever had. Virtually no sales to report.

A couple loads at $1.75 and one load at $1.85.

There are supposed to be a lot of bee problems and shortages in almonds this year.
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Re: Beekeeping Boom/Bust Cycles

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largely blamed on PPB
Country boy can I assume the PPB acronym is Piss Poor Beekeeping? Or does it stand for something else.
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Re: Beekeeping Boom/Bust Cycles

Unread post by Countryboy »

It depends on the company you are in. When you're in polite company, it is Pretty Poor Beekeeping.
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Re: Beekeeping Boom/Bust Cycles

Unread post by AdrianQuineyWI »

It is an interesting question. Where I am, on the outskirts of Minneapolis-Saint Paul, interest in beekeeping shows no sign of waning. Demand for local honey is still strong.
I suppose what we don't know is how profitable the almonds are - is there such a mark-up that the almond industry can still be the engine that drives the beekeeping machine or not?

Also, think about our Canadian neighbors. What if the border open to bees? How interesting would that be for the whole industry? It has become clear to me that many local beekeepers accept winter losses and are lucky to break even on their beekeeping enterprise each year, and for those folks profit is unlikely. I believe the essential component in a sustainable bee enterprise is overwintering one's own bees. Once one is able to do that a lot of things become easier.
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Re: Beekeeping Boom/Bust Cycles

Unread post by Countryboy »

Demand for local honey is still strong.
So far, demand for local honey is still good here too. However, the supply side is getting saturated. I attended a farmers market last year - there were 4 or 5 honey vendors there every week. I also attended a small farmers market in a big city that is more crafts than farmers. They had space for 25 booths. Usually there were only 12 or 13 vendors. They had one or two other honey vendors on the waiting list. They were only allowing one honey vendor at the market, and I signed up first.

There is a gift shop at a big shopping center which sells only locally (in state) made products. They have a half dozen honey vendors there. When the owner asked me to sell my honey there, they told me that honey is one of the top 10 selling items in the store, and they estimated they are paying the top honey vendor $20K a year. (I've been selling there 6 months, and sold over $2K.)

There is still strong demand for local honey. But we are starting to see saturation of the local supply.
Also, think about our Canadian neighbors. What if the border open to bees?
If the northern border is opened with Canada, the southern border would also be opened with Mexico because of NAFTA. The Mexican beekeepers would LOVE to bring their bees to the US for pollination. Do you think there is the political will to allow tons of Africanized bees from Mexico to come to the US to pollinate everywhere?

How many drugs do you think will come across the Mexican border on bee trucks. You fill the bottom half of feeders with drugs and seal it, topped off by a little syrup on top. Drug sniffing dogs aren't very good dealing with millions of stinging bees protecting the contraband. It's simply too easy to hide drugs or money in beehives. (And if only the border with Canada was opened, there would be folks sending drugs to the US from Canada in beehives.)

Simply because of killer bees and drugs, I don't see either border being opened to bees. Until NAFTA and all drug laws are repealed, I consider thinking about an open border to be unrealistic wishful thinking.
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Re: Beekeeping Boom/Bust Cycles

Unread post by AdrianQuineyWI »

I hadn't considered drug smuggling and I don't know if that by itself would prohibit/inhibit trade from the South. Neither am I sure that the Canadians removing a self-imposed ban would obligate the US to do the same to allow in more AHB.
It is worth considering what would happen for the same reason that you are pondering at what stage the beekeeping boom/bust cycle is at.
A large game-changing event can present an opportunity for those who see it coming and a disaster for those who don't.
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Re: Beekeeping Boom/Bust Cycles

Unread post by Countryboy »

The border was closed prior to NAFTA. The border closure with Canada is the excuse for the US border being closed to Mexico. If the border is opened with Canada, it opens a whole new can of worms that no one wants to deal with because of NAFTA.

Opening the border with Canada would benefit both American and Canadian beekeepers. If we didn't have NAFTA, it's possible folks could talk some sense into politicians. But with all the potential problems of Africanized bees (imagine a semi crash) and the drugs coming through Mexico, I just don't see the border being opened. It would be a legal nightmare trying to open the Canadian border while keeping the Mexican border closed with NAFTA. To me, it seems like a headache no politician wants to deal with, and it's easiest just to keep both borders closed.
A large game-changing event can present an opportunity for those who see it coming and a disaster for those who don't.
I agree completely. I suspect we are going to see a downturn which results in quite a few commercial beekeepers going belly-up or retiring. I am still undecided what impact it will have on the hobbyist market, but I believe we are likely heading into a major depression and I suspect that will kill the hobbyist market.

The sideliners and commercials who are able to survive the coming downturn/depression will be positioned for great upside potential after the contraction and cleanout of marginal producers.
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Re: Beekeeping Boom/Bust Cycles

Unread post by Allen Dick »

I apologize for not diving into this one earlier, but today's diary entry might give some insight into my thoughts, as will an examination of my decision to retire thirteen years ago when I recognized a market top.

We have had a second peak since then, and a boost in visibility and popularity due to the panic and media frenzy generated by Hackenburg's ingenious CCD chimera. There is nothing like a story where everyone can profit and which cannot be proved or disproved to attract adherents and to endure. People are suckers for a puzzle whether it is imaginary or real. If it is supposed to be everywhere, but invisible or hard to find, so much the better.

From a commercial beekeeper perspective, things could get tougher in the near future, especially for US beekeepers with a strengthening US dollar, the cause of the previous hardship years for US beekeepers and to a much lesser extent Canadians. (Our Canadian hardships were a self-inflicted wound, principally due to regulatory banning of our traditional replacement bee supplies. With our weak dollar at the time, our returns in local dollars and purchasing power were much higher than those of our southern neighbours, and even a small difference in gross income can mean the difference between profit and loss.).

For those in the sideline and hobby niches, it looks like full steam ahead for the next while since I think we are about halfway through that fad. It will end suddenly with lots of surplus equipment offered suddenly since prices are set on the margin and a slight decline in the rate of increasing interest will catch many unprepared and overextended.

I've seen this before. Guys who worked for me building bee boxes decided they were smarter than me (I would not expand) and went out and borrowed money to build a plant based on what they saw as huge demand in a year or two when beekeepers were spending after a bumper crop to avoid tax. The next year, business fell to almost zero when the border closed and crops were down. They sold everything in bankruptcy and took down one of their father's retirement savings with them.

Where do we go from here? Hard to say. Our traditional markets are aging, overbuilt and and oversupplied but if China manages to switch to a consumer economy, they will be a huge market -- and India is growing fast.
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Re: Beekeeping Boom/Bust Cycles

Unread post by Countryboy »

I agree that things are good for hobby and sideline beekeepers still. Perhaps not as good as it was a few years ago, simply due to competition from new hobbyists and sideliners, but still good. I sell my honey wholesale at stores, and some at farmers markets and shows. Last year, I averaged $5.80 a pound, including wholesale and retail sales. My goal is to expand to 150 or 200 hives. (OK, my real goal is to consistently produce and sell 10,000 pounds of honey a year at wholesale and retail prices...For my area, I expect that to be 150-200 hives.)

This chart gives some perspective into the almond situation. Almond prices are back at 2004 prices. (Almond pollination fees didn't spike until 2006.) IIRC, pollination fees were less than $100 back in '04.

Image
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Re: Beekeeping Boom/Bust Cycles

Unread post by Allen Dick »

The world economy is shifting gears.

There is always a momentary pause between gears but let's hope they don't blow the shift.

Nobody really knows what will happen in the future but it always looks obvious in retrospect.

One seemingly small event could determine the future course of history.

Last time I really paid attention, almond pollination fees were $45. Seems like yesterday.

Will pollination fees drop? Not likely, until the marginal value of bringing in hives drops below the additional crop value the bees bring in or growers simply cannot afford any inputs. Bees are too crucial to production and most orchards already are running fewer hives than studies indicate to be optimal.

A drop in almond prices will lower that ideal hives per tree ratio but until the actual count drops under that ratio, I don't expect any drop in demand.

I drove up thru the almonds a few weeks back and saw a lot of hives along the way. I was tempted to stop since i was right on time for the morning beekeeper coffee clatch at the IHOP in Bakersfield but didn't stop. I wanted to make miles.
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Re: Beekeeping Boom/Bust Cycles

Unread post by BadBeeKeeper »

Countryboy wrote:I agree that things are good for hobby and sideline beekeepers still. Perhaps not as good as it was a few years ago, simply due to competition from new hobbyists and sideliners, but still good. I sell my honey wholesale at stores, and some at farmers markets and shows. Last year, I averaged $5.80 a pound, including wholesale and retail sales.
I don't know if it's competition from the hobby/sideliners that are the worry. I go through the grocery stores and Walmart and see the relatively low retail prices, then I look at the labels and see that some of it is coming from places like Argentina and Brazil and wonder how we are supposed to compete with that.

How many small guys will stay in business if foreign imports are undercutting the prices? Will the farmer's markets/'organic'/'natural' trends be enough to support it? What will happen if the economy really goes into the crapper, will the 'natural' market get flushed too?
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Re: Beekeeping Boom/Bust Cycles

Unread post by Countryboy »

I go through the grocery stores and Walmart and see the relatively low retail prices, then I look at the labels and see that some of it is coming from places like Argentina and Brazil and wonder how we are supposed to compete with that.
I don't compete with that. My customers know the difference between my honey and Wal-Mart honey. My customers want local honey that has not been pasteurized. Wal-Mart doesn't offer that.
How many small guys will stay in business if foreign imports are undercutting the prices? Will the farmer's markets/'organic'/'natural' trends be enough to support it?

To be honest, my customer base buying at farmers markets and 'natural' stores aren't the customer base Wal-Mart has. It's a completely different clientele.
What will happen if the economy really goes into the crapper, will the 'natural' market get flushed too?
Keep something in mind. The people who had money before the Great Depression still had money during the Great Depression. It won't be any different this time.

The people with the deeper pockets will still be willing to pay a fair price for quality foods. Those are the customers I target.

The poor folks who will get hit the hardest if the economy gets flushed don't visit the farmers market or natural stores anyway. They are on food stamps getting junk food at Wal-Mart. (Research has shown that folks who earn less than $20K annually don't visit farmers markets.)
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Re: Beekeeping Boom/Bust Cycles

Unread post by Countryboy »

Revisiting this topic.

With Trump getting elected, and promising to get rid of NAFTA, will the border with Canada get opened? Will Canadian beekeepers put enough pressure on the Canadian government to reopen the border to bees? Personally, I could see an open border being a bigger benefit to Canadian beekeepers than US beekeepers. (It would grant them access to lower cost packages, grant them access to almond pollination, grant them access to warmer climates for overwintering, etc.)

I think people will be shocked by changes Trump makes. Folks have been conditioned to believe that government only makes incremental changes, like a frog in boiling water. Personally, I believe Trump will bring about changes faster than anyone expected, and far more severe than people can even imagine. I honestly believe that ANYTHING Trump wants, Congress will roll over and give him within the first 6 months of him taking office.

Folks have forgotten that Trump takes office January 20. On March 16, the US hits the debt ceiling. One of the first things Trump will have to deal with is the debt ceiling. Trump has referred to the debt ceiling as a 'nuclear weapon' for negotiating and Republicans should be getting a pound of flesh from Democrats, and he railed against past leaders for rolling over. He has also suggested defaulting on US debt too.

With Trump as President, he can veto any debt ceiling legislation Congress brings him unless it gives him everything he wants. I highly doubt Congress can muster a 2/3 majority to override his veto. If Congress doesn't give him something he is willing to sign, government goes into shutdown. I could foresee Trump getting rid of welfare, getting rid of the EPA, OSHA, Dept of Education, the Paris climate deal, Iran deal, etc. in any debt ceiling legislation.

I don't know how many US commercial beekeepers utilize foreign laborers (I heard Wilbanks uses a lot of South Americans.) but Trump has said he is going to make it harder to get foreign workers. How will that affect queen and package prices if queen and package producers are using foreign workers? How will it affect commercial beekeepers if they use foreign workers, with the already low price of honey and strong US dollar? Will commercial operations pay US workers more if they can find good workers, or downsize their operations? (or retire, as many commercial guys are starting to get older.)

What effects will a Trump presidency have on beekeeping? How do beekeepers plan ahead with a guy who is unpredictable?

And yes, I do have a little bit of a morbid curiosity in regards to how the debt ceiling negotiations will go.
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Re: Beekeeping Boom/Bust Cycles

Unread post by Allen Dick »

Too busy today to speculate, but at this point, I think it is too early to say. An open border would change things a lot. Seeing as Trump is seen as protectionist, that possibility seems remote unless there is a clear benefit to the US.
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Re: Beekeeping Boom/Bust Cycles

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After doing some thinking, I realized that NAFTA doesn't have anything to do with the border being closed. (Although it could influence things, because we would have to let Mexican bees into the US if we let Canadian bees in.)

Correct me if I am wrong, but I believe it is the Canadian border that is closed, and not the American border. It's the Canadian government which closed the border to the bees. You might end up with varroa or small hive beetle or even Africanized bees if the border were open.

So NAFTA doesn't really impact things as they stand, other than being an obstacle if the border opened again. Even if NAFTA is repealed, you'd still have to convince the Canadian authorities to reopen the border.

I don't believe you would have difficulties getting Trump to allow Canadian bees to cross the border.

An influx of a half or 3/4 of a million Canadian bees will cause almond pollination prices to come down, which will benefit almond producers. (They have a bigger voice than US beekeepers.)

The Canadians who winter bees here will either have to hire someone to manage their hives, or they will have to visit the US. That's Canadian money being spent on hotels and meals.

Sales of package bees and queens to Canadian beekeepers puts money in US beekeepers pockets.

If US beekeepers could take bees to Canada for honey production, that would help US beekeepers also.

I think it is a win-win if the border were opened. Even though Trump is a protectionist, I personally don't think he would have a problem with things that are win-win. I don't think he is only interested in US win and the other country lose.
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Re: Beekeeping Boom/Bust Cycles

Unread post by BadBeeKeeper »

I would be very surprised if anything having to do with bees is even on Trump's radar, at this point.
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Re: Beekeeping Boom/Bust Cycles

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I agree wholeheartedly, and I don't believe I ever implied any such thing, not do I understand how anyone could have gotten that impression.

The question is not what direct impacts Trump will have on beekeeping. The question is how Trump decisions on other issues can have indirect and delayed consequences on beekeeping.

It's easy to recognize the immediate and direct consequences of an action. Recognizing the indirect and delayed consequences require more effort and insight.

Trump may not have bees on his radar, but without a doubt, he will have serious impacts on beekeeping. Beekeepers had better have Trump on their radar. Trump policies will affect US trade, taxes, interest rates, and the value of the dollar. These things have a very big effect on beekeepers. If you're a big beekeeper, it affects how much your honey sells for, the interest you pay on any loan, and the taxes you pay. If you're a small beekeeper, Trump's policies will affect the economy, and how much extra money folks will have to buy your local honey at the farmer's market, and what they will be willing to pay for it.

As Chris Powell of GATA has said, "There are no free markets anymore, just interventions."
Beekeepers would be wise to have the insight to recognize how government interventions are going to impact them.
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Re: Beekeeping Boom/Bust Cycles

Unread post by BadBeeKeeper »

After a [brief] review of US and CA import laws, it appears that the border is not completely closed. The CA law forbidding bee imports from the US was set to run from 2004 to 2006, and has expired/been repealed. However, I believe that cross-border shipments would still be subject to the provisions of the Health of Animals Act. There may be other information/regulations of which I am unaware.

Likewise, the US also permits the import from CA of package bees and queens, accompanied by a health certificate and subject to inspection by an APHIS inspector (and can only be imported through a station that *has* an APHIS inspector). However, full hives and/or used hive bodies are expressly prohibited.

It appears that the regulations/laws (on both sides of the border) are concerned more with limiting the spread of disease, rather than any reason having to do with trade or the restraint thereof. As such, I see no reason to anticipate truckloads of bees crossing the border in either direction, regardless of any actions taken by Trump, or anyone else, in regard to NAFTA (as you already mentioned Countryboy).
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Re: Beekeeping Boom/Bust Cycles

Unread post by Countryboy »

Sometimes what is not written is just as important (and sometimes more important) than what is written. You are shooting yourself in the foot if you only look at what is written, and don't pay attention to reading between the lines or learning what is going on behind the scenes. If you have read Allen's diary, you will remember Allen's arguments to get the border reopened.

The border is still closed to beehives. (It is still possible to import queens into Canada from the US, but from what I understand, the paperwork can be a royal pain.) Canadian beekeepers would love to be able to pollinate the almonds, or to have access to wintering grounds in the warmer US. Pests and diseases are the official explanation for why the border is closed. It's BS, and most folks know it, as the pests and diseases have crossed the border. Small hive beetles and honeybees really can fly across the border. Varroa is widespread across Canada, so there is no stopping that.

But under NAFTA, if the US allowed Canadian beekeepers to pollinate almonds, they would also have to allow Mexican beekeepers to pollinate almonds too. The Mexican bees are highly Africanized, and the US officials don't want anything to do with Mexican bees entering the US. US officials would be more sympathetic to allowing Canadian bees in the US if they could ensure that Mexican bees did not enter. The only way that can happen is if NAFTA gets repealed.

Yes, if NAFTA gets repealed, the Canadian border will still be closed to beehives. But there would be more political will on both sides of the border to allow US and Canadian hives to cross the border for pollination and honey production, since the border could be reopened without the threat of having to open the border with Mexico and allowing the Mexican Africanized bees into the US.
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