Monday, June 30, 2008

It's not speculators...

Driving the market up. It's demand, voluntary and mandated. In fact, the speculators could be helping the market through this incredible and wrenching transition.
The results suggest that after an initial surge from early 2004 through mid-2005, index fund positions have stabilized as a percent of total open interest. Traditional speculative measures do not show any material changes or shifts over the sample period. In most markets, the increase in long speculative positions was equaled or surpassed by an increase in short hedging. So, even after adjusting speculative indices for index fund positions, values are within the historical ranges reported in prior research. One implication is that long-only index funds may be beneficial in markets traditionally dominated by short hedging. Attempts to curb speculation through regulatory means shoclass of speculators. [More]
Economists all all kinds are lining up behind the same conclusion. But the problem is the old hammer-nail syndrome. Congress only has a hammer and speculators are the only thing faintly resembling a nail. We can't do much about Chinese demand for steel, for example. But it would make good political theater to regulate spec money, many reason.
Some of the best minds in academia, to say nothing of blogging, have been probing the question of the extent to which financial speculation has influenced oil prices. The conversation has been long and detailed, so I'll just suggest that if you're interested, you should read this post, by Mark Thoma, and this one, by Tyler Cowen, and follow every link. I'll also give Mr Cowen the last word, for now:

The bottom line is that when it comes to the key substantive questions about the oil market - why are prices so high -- the correct answer is the Lachmannian one: "expectations." If you push one step further on that, and try to evaluate or "source" those expectations, the correct answer is "we don't know."

The ravaging effects of a soaring prices are starting to be felt keenly on hog farms and in grain-consuming developing countries. So, the blame machine is getting wound up as well.

The target is too easy to find, unfortunately. Index funds certainly fit the stereotype but an even easier-to-attack scapegoat worked too hard to hog the spotlight to hide now.
The human cost of the global biofuel switch was put in stark terms today by international advocacy group Oxfam, which released a report saying biofuels are responsible for pushing 30 million people into poverty (International Herald Tribune, Reuters and BBC coverage). The widely noted report asserts that the increasing use of grains as biofuel feedstocks is responsible for 30 percent of the increase in food prices, and that’s hitting the world’s poorest hard.

The report, written by Oxfam biofuel policy adviser Rob Bailey, urges developed nations to abandon their biofuel mandates and get rid of the subsidies and tariffs on biofuels that are destroying the ability of the market to appropriately adjust biofuel and food supply and demand. These economic hurdles have lead to an all-time low in grain reserves, the report says, and pushed food prices to record highs. [More]
The floods in Iowa have created a perfect visual aid for biofuel opponents. Along with a meat industry meltdown, grain farmer windfall profits, and mediocre E-85 experiences, it would seem like ethanol especially might be in for a rough time.

I don't think so. As long as oil prices hold or advance, it will be livestock and people who cut back, regardless of government action.

This runaway train has too much momentum.
At least it will be a quieter world...

Albeit more expensive. I had imagined plug-ins to be the eventual compromise our energy situation would force, just not this fast.
In less than 7 years, Mercedes-Benz plans to ditch petroleum-powered vehicles from its lineup. Focusing on electric, fuel cell, and biofuels, the company is revving up research in alternative fuel sources and efficiency. [More]
Still, as a proponent of using less oil as a solution to our increasingly snarled energy-political-economic problems, this classifies as hopeful news.

I'm still trying to dope out what combines will look like, though.
Just one more reason...

Why I think NASS is one of the worst bureaucracies in government. While information systems are being unveiled every day that provide depth, scope and real-time data, NASS turns out the same reports for more money at a speed no faster than 1956.

Compare and contrast with this import data website.
ImportScan is the world's most powerful competitive intelligence tool for the import-export business.

You get unlimited access to the entire ImportGenius database for your industry vertical, providing detailed information on every shipment entering the United States since 2006.

You can search by product type, importer, exporter, date of entry, port of entry, loading port, importer's address, exporter's address and more. Or combine searches to further refine your results. ImportScan then returns in-depth information about every shipment matching your query.

The results will include contact information for both the exporter and importer of the shipment, so you can find out where your competitors are sourcing their products overseas and where your overseas suppliers are selling in the U.S. The results can be easily exported to Excel or CSV format, downloaded or e-mailed to any address.

Your bosses will think you're a genius when you provide them with a detailed list of contact information for all of your competitor's suppliers! [More]
We should have weekly crop reports, with 12 hour-old data. And daily crop conditions from satellite and remote sensor technology.

Government should get better. Or be outsourced.

It's good enough for the Pentagon, isn't it?
The essential guide to China and the global economy...

We all have some ideas about what the motives and goals of the Chinese people and leadership are as they power themselves into a global economic and political force. We don't know the half of it.


James Kynge has written a guidebook for revising our thinking and prejudices of China. Early into China Shakes the World, I was struck by the depth of his familiarity with ordinary people and their lives as well those in positions of surprising power. His fluency in Mandarin, his long years living in China, and his impressive journalistic skills honed at the Financial Times combine for a book that is remarkable readable and insightful.

For example, most of us think the China success is simply the product of extremely cheap labor, but Kynge shows how Chinese business models drive their manufacturing processes far past equilibrium points that would cause Western managers to rethink. The strange and inconsistent government policies also are driven by a fixation on creating 25 million jobs a year - a formidible task. Employment, not profit is the first priority.

As eye-opening as the first part of the book is, it is his views on China's future that are most insightful. The intrinsic problems of socialist, one-party rule constitute a huge hurdle for continued growth, and China's hunger for raw materials shapes their foreign policy.

Kynge offers a clear set of choices China faces when dealing with the West, all of them problematic. He also details in stark terms the threats China may pose to our way of life.

It is the best geopolitical book I have read in years, remarkably free from ideology and rich in detail rarely available about this country and its people.

Better reviews here and here.

Sunday, June 29, 2008

The "Supremes" save the day...

For Lego weapons.



Assemble your Second-Amendment hardware from your kid's toy box.
The human face of demand destruction...

I think we have reached the tipping point for the pork industry. And it is worse than I feared.

I received this e-mail from a hog producer who won't be buying any more $7 corn.
My wife and I are in our Mid 40's with two garde school boys that work on the farm as much as we do. After graduating from college I worked in Ag Business for 10 years before returning to the farm full time. During our 21 years of marriage we have purchased 387 acres and paid it off. We were able to build swine contract grower facilities and paid them off. Two years ago we started a 1200 sow unit, Mortgaged our other assets and secured a contract with a farm family two counties away to finish the pigs. On June 12, 2008, we were notified not to ship pigs on Friday as they could no longer pay for them. Now we are faced with a cash price of $10-$12 per head instead of the contract price of near $50. Working capital ceased to exist. As I have been up front with our Cooperative Lending Firm, I notified our lender of our inability to make our monthly payment. We have never missed a payment in 21 years. His suggestion was to sell all of our land, liquidated our sows and seek off farm employment. 30 Days earlier he told up " they're in it for the long haul." To bad our Cooperative Bank is no longer interested in livestock loans. We are looking at liquidation. My youngest son is in the first year of 4-H and doesn't want to attend the fair next week because he is afraid this lender will repo his garden and puppy. We are hearing of generational livestock family farms in our community that do not know if they will survive the summer. The loan officer has a FSA guarantee on our loan, the crop farmers have the LDP safety net, and we have nothing but speculators driving us off the farm. We need action now as we can't wait for congress to deliberate for weeks. The war between hog farmers, crop farmers and loan officers has begun. It is to bad we are the first casualty.
This is only one anecdotal data point, of course. [If any of you have other stories , please forward them to me] But my early read is lenders are panicking and leaping to harsh financial triage that at the very least seems at odds to the words of commitment and trust that have flowed at annual meetings and customer appreciation days where I have spoken.

Meanwhile, another front is becoming more active in our battle with our best customers.
A debate is raging within the state and nation's agriculture industry about the high costs of food and how much ethanol is contributing to it.

With Nebraska feedlot owners facing feed costs of as much as $300 per head, Nebraska Cattlemen is asking the U.S. Environmental Protection Agency to reduce the nation's renewable fuel standard (RFS) within the Clean Air Act to 4.5 billion gallons.

On the other hand, Nebraska Farm Bureau is urging EPA to deny the recent request from the State of Texas for a waiver of the Renewable Fuels Standard (RFS). [More]
Grain farmers are not only getting rich, they have effectively decided to join with food critics and lower our meat consumption.

Saturday, June 28, 2008

The drainage premium...

With all the flooding in the Midwest (and the persistent drought elsewhere) researchers are reminding us their could be a link between a warmer world and precipitation patterns.
This year’s remarkable floods could well be just as rare, but normal, as the great Midwestern floods of 1993. But it is clear to climatologists that the conditions driving this year’s rising waters — periods of heavy rain — are more likely in a warming world because warmer air holds more water vapor. Kevin Trenberth, a longtime contributor to the reports of the Intergovernmental Panel on Climate Change and an expert at the National Center for Atmospheric Research, explained things a bit this morning in a couple of e-mails.

He cited a recent analysis by scientists from the National Climatic Data Center that confirmed earlier studies showing a substantial increase already in the intensity of precipitation across the United States, interspersed by longer dry spells.

“The greater intensity comes mostly from the increased water vapor in the atmosphere: overall up about 4 percent since 1970, a bit less over land and dry regions,” Dr. Trenberth wrote. “The general rule of thumb on this is that ‘the rich get richer and the poor get poorer’ — i.e., the wet areas are apt to get wetter and dry areas drier. This assumes that the main atmospheric circulation patterns don’t change much (or is second order, as seems to be the case) and so the moisture that is evaporated into atmosphere and is lying around gets transported to where it already rains and away from the areas where it doesn’t.” [More]
Weathermen have often mentioned the feedback loop from saturated ground where as it dries it simply reloads the atmosphere above it for the next deluge. Meteorologist Cindi Clawson brought up another good point this week on US Farm Report: saturated ground keeps the temperatures cooler as it dries, so crop development will likely also be retarded by temperatures as well as moisture.

The ground-truth (heh) for me is I finally got some payoff on expensive drainage system tiles I have installed over the last decade (although now I just as soon have not). Of course, it helps me get in the field earlier in spring and aids at harvest, but getting water off a field in 24 hours can mean the difference between a crop and none.

If we do see a climate trend that pumps more water into particular areas each season, soils like mine will experience an increasing benefit from drainage upgrades. In fact, it could be an even bigger factor in land prices, with drainage system maps and data touted more than soil maps and yields.

The bummer: tile is, of course, drived from petroleum and guess where prices are going?
Assorted, belated answers...

In my travels this week and in previous posts I have promised to provide links and other info to substantiate what I'm talking/writing about.

Here are the ones I can remember:
  1. For those who wanted more information on my presentation on risk, click here for the .ppt (PowerPoint) file.
  2. Two books I have raving about:
3. Since some of the missing beans I no-till replanted now have shown up and I have some wildly overpopulated areas, I think I may look into these crop lifter fingers (admittedly designed for pulse crops) that a the inventor showed me in SD.


....I'll think of the others after I post this, of course. Thanks for your patience.
Listen...

As corn growers mount a vigorous response to ethanol critics, they tend to identify them with as many buzzword labels as possible to disguise the fact that most are simply old customers who buy most of our product and have for generations.

What they are not doing is listening. They're incessantly telling THE FARMER'S STORY. Of course, only the corn farmer story. If they stopped to listen, they might reach some other conclusions.

Consider this comment from a feed buyer regarding my earlier post:
Mid-level livestock operations are in the cross-hairs. A multigenerational
NC Indiana hog operation (XXXX) is reported to have declared
bankruptcy this week, leaving a lot of contract growers holding the bag.
They were a well thought-of, concientious, hard working, dead honest
company to deal with. Apparently they were just a little lite on the risk
management and that was fatal this time around.

Many of us feed buyers have to paste on that (frozen) professional smile as
farmers complain about our wide basis while selling us $7.30 cash new crop
corn. The taste of ashes is what you may taste, but whatever it is, it is
very, very bitter. [my editing]
Perhaps most corn farmers are right and sacrificing livestock customers to ethanol production is the shrewd decision to make right now. I just can't get those numbers to work. We are about to engage in serious demand destruction just as ethanol (fairly or not) falls out of popular favor. This looks to me like trying to shoot both feet at once.

I think we will look back on what is about to unfold, and if nothing else, wish we had dropped the subsidies and mandates if for no other reason than to avoid the blame about to roll over us. If the markets were truly able to re-allocate this short crop, we could concentrate on growing corn, not argue about economic sensitivities.

Thursday, June 26, 2008

It's a duck...

After a while, some arguments are resolved by unfolding evidence that rides rough over all disputed nuance.

It just quacked. It just waddled.

Houston, we have a duck probem.

Deep in the heart of every corn grower, we really really knew we were pushing the system to its limits. Only we thought the limit was the giddy heights of maybe (giggle) $5. [See also: oodles of tear-stained 08 fall delivery contracts for $4.25 or less]. But even those of us who lived through 1980 or 1983 staunchly avoided imagining that type of weather-driven scenario.
“The whole corn crop boils down to what Iowa and Illinois will do…. If you have any problem with those two states, the market will explode…It’s going to take extraordinary circumstances to get through this year without major interruptions in corn production… We’ve got a mess on our hands,” added Al Dutcher, a state climatologist for the University of Nebraska, in response to questions about the possible impacts of the excess water weather disturbances. [More]
Combined with demand absolutely NOBODY predicted, you can't write a story about corn today without alluding to a "Perfect Storm". We're going to get tired of that lede in hurry.

One reason for the wrenching aftermath looming from this year's production problems could be the corn industry pattern of carefully slicing and aligning data to offer a perspective that was at odds with the larger picture. While hog producers can't sleep, corn farmers prate on about cornflakes, where all of maybe 22 bushels are used annually.

Here in SD, it seems every other slide at the National Sunflower Association meeting referred to the battle to remain competitive with ever-more lucrative corn for acres. When food processors like Frito-Lay announced a total switch to healthier sunflower oil, the industry was ecstatic only to discover they could not revise contracts upwards fast enough to entice growers.

The result: I was told this morning to read the Fritos bag now. It says "sunflower OR corn oil". I suppose corn growers could see this as a win-win, but it belies their studied overlooking of the effects high corn prices have on other commodities due to a fixed land base. This rather obvious part of the economic analysis has been pointed out by other observers, but the duck everyone else saw is now swimming in our own cornfield, so to speak.

I am encouraged by the comments by NCGA President Ron Litterer indicating at least the possibility of recognition of a problem, but that was two weeks ago and things have gone downhill. In the meantime, the scent of blood is in the water for ethanol subsidization critics.
Citigroup's Driscoll slapped sell rating on ethanol producers BioFuel and VeraSun. He said that surging corn prices will hurt profits at both companies. Corn is the major raw material used to make ethanol, and prices for the grain have surged to record highs lately.

In addition, the analyst speculated that the rally in corn prices will force some small and midsized ethanol producers to shut down production at plants over the next few months. At least five ethanol plants have been shut down as costs to run the plants are far outweighing profits, according to Driscoll. He didn't name the plants in his report. [More]
I think this may be overstated logic, but I wouldn't buy ethanol stock right now either. The point is we skated very close to our production edge and it looks like we may wreak serious havoc on our livestock industry, and for the first time it appears even oil prices cannot protect the ethanol industry completely from red ink.

This is the problem of seizing control of a market by government fiat . Certainly it was not the intention of corn farmers to literally starve our oldest and best customers, but without a free market to allocate a now scarce resource by millions of individual decisions, this act of hubris will leave ashes in our mouths even as we cash really big grain checks.
Maybe I could tell folks...

My fields are abstract art - with different sizes of corn and random missing shapes. After all, some farmers use their crops as a canvas.


[More Japanese rice art]

Wednesday, June 25, 2008

The agroblogosphere evolves...

[Dibs on the word "agroblogosphere]. Thanks to some fellow reader-bloggers, John's World has been added to an aggregation of international farm blogs. As soon as I'm done traveling, I'll dig deeper into Farmblogs - or you can go on ahead.
Hi there John, from Ian in France,

Sorry to be a bit off topic here but.....

The reason I’m writing is because I am a big fan of farmers’ blogs, and I got frustrated at spending too much time trying to find good ones and then forgetting to bookmark them.

So, I’ve started http://www.farmblogs.blogspot.com

The idea is simple. I ask farm bloggers I like to recommend bloggers they like; I then write to those that they have recommended, as I am writing to you, and ask you to send me a brief description of your blog, and the farm blogs that you recommend.

You were recommended by Marianne at Northview Diary.

I’ve put a link to you on http://www.farmblogs.blogspot.com. (If you can do the same for http://www.farmblogs.blogspot.com that would be great.)

All I ask is that you send me a brief email to info AT ianwalthew.com with a few words about your farm, your blog AND your own favorite farmers’ blogs.

I then make a brief posting, add your recommendations, contact the blogs you recommend, and so it goes.

Looking forward to hearing from you.
Kind regards,
Ian

P.S This is a no-advertising, entirely for fun, world-wide community driven blog. I also do regular news postings on world agriculture of all types.
http://www.aplaceintheauvergne.blogspot.com
http://www.ianwalthew.com
http://www.farmblogs.blogspot.com

One reason I like to link often to my info sources is this phenomenon - the weaving of an information net that multiplies our abilities.

More later - but now off to ORD and South Dakota to talk to Sunflower Growers.

[Thanks, Marianne]

Tuesday, June 24, 2008

Memo to US Dairy Industry...

Call Finland re: butter advertising.



[via blort]
Whom the gods would destroy...

They first subsidize. Big Sugar may be about to lose a Big Player. Although ostensibly for environmental reasons, the current tenuous hold sugar has on its highly protected trade status likely played a part in the ending of a major sugar producer.
At a news conference Tuesday, scheduled for 10:30 a.m. near the imperiled "River of Grass", Governor Crist is expected to announce a $1.75 billion deal to essentially buy the U.S. Sugar Corporation, including 187,000 acres of farmland that once sat in the northern Everglades. If the deal goes through (and though the announcement will be taking place, the deal isn't set in stone), it will extinguish a powerful 77-year-old company with 1,700 employees and deep roots in South Florida's coal-black organic soil. It will also resurrect and reconfigure a moribund 8-year-old Everglades replumbing effort that is supposed to be the most ambitious ecosystem restoration project in the history of the planet.

"It's mind-blowing," said Kirk Fordham, the executive director of the Everglades Foundation. "Who would have thought we'd see this in our lifetimes?"

The purchase would give the state control of nearly half the 400,000 acres of sugar fields in the Everglades Agricultural Area below Lake Okeechobee, although sources said U.S. Sugar would lease back its land for several years. Environmentalists hope that eventually, the area will become storage reservoirs, treatment marshes and perhaps even a flowway reconnecting the lake to the Glades. This could help recreate the original north-to-south movement of the "River of Grass", and eliminate damaging pulses of excess water into coastal estuaries. That would be good news for panthers and gators, dolphins and herons, ghost orchids and royal palms. [more]
While this may seem like a good thing for remaining producers like the sugar beet industry in the northern Plains, I think this will deeply reduce the political clout of sugar just when it is under increased fire from trade and subsidy critics.

It is also interesting to me to see the political realignment evident here. A Republican environmental governor??

Monday, June 23, 2008

Must...check...Blackberry...

Like British comedy and $5 Cabernet, I have become (nearly) addicted to e-mail. My son Jack, however, works for a more enlightened company, US Cellular, that has a one-step program: no e-mails on Fridays.
Ellison says the idea is for employees to talk to one another and collaborate more. Along the way, some staffers, like executive John Coyle, have made some amazing discoveries.

Coyle says that one Friday, he was about to send an e-mail to a colleague in the finance department whom he had never met. But he called him instead.

That's when the two realized they had similar phone numbers — meaning that not only were they in the same town, but in the same building.

"I'm like, 'Oh, really, where?' He said, 'On the fourth floor,' " Coyle remembers. "And I said, 'I'm on the fourth floor.' "

After more details were exchanged, "I literally got up, walked around the corner and there he was. I had no idea."

U.S. Cellular employees say that e-mail does have a critical place in their work — after all, they are in the business of selling wireless communications, including e-mail.

Just don't e-mail them about that on a Friday. [More]
Are they still part of the Collective?
I give 'em a 9.3 on artistic impression...

Although the shark is an original touch.

For fans of synchronized swimming who are afraid of water and waterproof makeup: office synchronized swim.



As usual, the Russians lead the way in new sports.
No doubt about machinery prices now...

In case you had hoped high machinery prices would cool demand and soften the market, think again. My take is they will be unable to absorb even a small part of the raw materials cost pressure without getting beat up by shareholders.
Rio Tinto Group, the world's second- biggest iron-ore exporter, said China agreed to a record price increase as mining companies struggle to keep pace with surging world demand. Baosteel Group Corp. will pay $144.66 a dry metric ton for so-called Pilbara blend fines in the year that began April 1, up 80 percent from a year ago, Rio said today in a statement. Pilbara blend lump will rise 97 percent to $201.69 for the Shanghai-based steelmaker. The contract marks the first time Chinese buyers have agreed to pay more for Australian ore than supplies from Brazil, which are costlier to ship. Chinese mills have so far failed to arrest six years of increases in the cost of the steelmaking raw material. The higher prices for iron ore will help Rio defend itself against a $171 billion hostile bid from BHP Billiton Ltd., the world's largest mining company. [More]
What I'm waiting for is if farm machinery manufacturers will be asked to prepay next year's steel to protect against even more price increases.

(Snicker)
Loose ends...

A loyal reader asked for an update on my farm and farms I have been traveling through, so...
  • We finished (or at least stopped) Friday night. I decided against spotting in corn wetholes - too much damage, too little gain.
  • We replanted about 130 acres of 800 of soybeans. Around here, no-till for beans was a difficult mission this year. The replanting was even more nerve-wracking: "Is this part thick enough? What about this part?"
  • When I was traveled to Ames last Thursday, the view from I-80 was deceptive. Things didn't look all that bad until you noticed:
    • It's June 19 - not May 19.
    • At first glance you might form the impression IA farmers only plant the tops of the hills. The sides and bottoms were bare.
  • When I flew into Des Moines this morning, I had a clear view. Immediately you are struck by the absence of green and the dominance of brown. Too much brown. The entire state appears late - very late.
  • Surprisingly, the attitude of farmers I spoke to Thursday evening was relatively calm. Some will continue corn planting today, they hope. I guess some were pretty late last year and got decent yields anyway. Still, this far north I was surprised they were still going with corn, although many already had atrazine down.
  • I'm currently going through the second adjustment stage emotionally. I recognize these now. Up until Friday, all I could focus on was "GET DONE". Now I've been out on the cultivator trying to open up the ground and seeing the corn crop up close and personal. The scope of the loss is now slightly clearer.
  • The corn stand is better than I thought. The condition is worse. Much will come out of it, I think, but my current figure for overall yield is 80% trendline corn; 75% beans.
  • I think the hay market will be chaotic. What little got baled around here is umm, crap. Rank, overgrown, nasty stuff. Livestock, and especially horse owners just added another challenge..
I will be in IA and SD this week. I'll try to post a bunch.

Sunday, June 22, 2008

Money is only one asset choice...

I have never been a fan of money as a form of wealth. Much of its allure has been the easy comparability with other's pile of money. It also seemed to "hold value" and was "safe". Maybe it was the inflation of the '70's that formed my instinct, but a preference to other assets over money is paying off big time - and has for several years.

Conversely, carefully considered debt is not to be despised out of hand either.
Max Weber argued convincingly in his famous book The Protestant Ethic and the Spirit of Capitalism that the frugality and industriousness promoted by the early Protestants in opposition to the opulence of the Roman Catholic Church were values conducive to and perhaps critical in the rise of commercial society. Protestants who believed in predestination wanted to show by their modesty, austerity, and avoidance of lavish display that they were predestined for salvation.

But saving plays a less important role in economic progress today than it did in the sixteenth century. Its role in powering economic growth has been taken over, to a large extent, by technology. The great rise in standards of living worldwide is due far more to technological progress than to high rates of savings, that is, to deferring consumption.

At the same time, now that we have efficient debt instruments that in former times did not exist or were extremely costly, the role of personal debt (Brooks does not criticize corporate or government debt) in human welfare is more apparent than it was. Apart from its role in solving short-term liquidity problems resulting from delay in the receipt of income, debt enables consumption to be smoothed over the life cycle. Without debt, a family might have to wait 20 years before it could afford to buy a house. Of course, debt creates risk for both lender and borrower, as the subprime mortgage crisis has dramatically illustrated. But if the risks are understood, it is unclear why the assumption of them should be thought harmful to personal or social welfare. At worst, debt leads to bankruptcy, but bankruptcy is not the end of the world either for the borrower or for the lender. [More]
Holding corn instead of paying off operating loans is a winning strategy and has been for two years. Borrowing to buy a tractor last year means you'll save far more than the cost of the interest. The list of examples goes on.

But financial advisers and economists love the neat countability of money. They worship its liquidity and in some cases only generate revenue when moving money around. Owning land doesn't give them much chance to churn the account when they need income, for example.

Many other assets now approach cash in liquidity, especially for farmers. Have any trouble selling your corn? How about a used combine? Now imagine the rush to your door if you decided to part with an 80.

Even that most loathsome economic vice - borrowing for consumption - is subject to unfair, and often outdated prejudice. Derived largely from the intertwining of finance and morality by smug hypocrites, current economic conditions are proving these near biblical maxims less than logical.
My friends who study humanities are shocked and do not believe me when I, a pension economist, tell them they should not be saving. Prudent advice has become: You should always save some fraction of your income. You should save not only for retirement, but also for adverse income shocks. But, Mr Becker points out, these new lines of credit help workers cope with income shocks.

Young consumers who take on debt are often classified as impulsive and irresponsible. Some deserve that label—for example, people who take on massive amounts of credit card debt to finance the purchase of multiple flat-screen TVs. But saving does not necessarily make sense for everyone at every age. For some, higher rates of debt are appropriate in order to smooth consumption and, ultimately, increase welfare. [More]
So as the pages of farm media are overflowing with advice on what to do with our current windfall profits (oh yeah - they are real), every other sentence is to pay down debt and build cash reserves.

Well, here's an alternative strategy. Reinvest. Buy land close to you, build infrastructure (bins, buildings, tile, etc.). Start two years ago when the same advice filled the pages.

And then consider what form you want your wealth to be in if the looming inflation takes off.
Think you know them all?...

Road signs. Take the test.

As usual, feel free to post your score.

(We all believe you)

Thursday, June 19, 2008

The argument runs into the BIG ISSUE...

Following an interesting string of posts by Andrew Sullivan based on comments by Jim Manzi about the current stage of the anthropogenic global warming debate (AGW) who points out that while likely true we are basically incapable of doing anything about it.
Almost a year ago to the day, National Review published what turned out to be a somewhat controversial cover story on global warming in which I argued three things: (1) anthropogenic global warming (AGW) is real, (2) current projections of its expected impact are wildly uncertain, but are not sufficient to justify the costs of an aggressive emissions reduction program, and (3) conservatives have an unseen political opportunity to win on the issue by pointing this out. [Much more, well wading through. Also responses here, here, and here]
To my dismay, I too found much to agree with. While the idea of being economically and culturally incapable of dealing with our own messes is shameful, even crude calculations verify what many of us had been trying to find other answers to.
First, let's consider just how big a technological challenge it will be to cut greenhouse gases by 70 percent. Former General Electric executive Don Dears provides some sense of the size of the challenge when he points out that an 80 percent cut means reducing U.S. carbon dioxide emissions from about 6 gigatons (1 gigaton = 1 billion tons) today to 1 gigaton by 2050. One gigaton is the amount the U.S. emitted around 1920, when there were just 100 million Americans.

Now let's widen the focus to include cuts that the whole world will need to make in order to stabilize concentrations of greenhouse gases in the atmosphere. Currently, the world emits about 26 gigatons of carbon dioxide. In 2007, the International Energy Agency (IEA) projected that by 2030 carbon dioxide emissions will rise by 57 percent to 42 gigatons per year. Climate researchers estimate that in order to stabilize atmospheric concentrations of carbon dioxide at 450 parts per million (ppm) (where there's a good chance that average temperatures would increase by less than 2 degrees Celsius) emissions must be cut by 80 percent from current levels by 2050. This means that the world will have to produce considerably more energy while emitting only 5 gigatons of carbon dioxide annually. If IEA estimates of future energy demand are accurate, this implies that the world would have to find the equivalent of 37 gigatons of carbon-free energy by 2030.

So just how big is a gigaton? Cutting a gigaton of carbon dioxide is equivalent to replacing 1,000 conventional 500-megawatt coal-fired electric generation plants with zero-emission plants. Zero-emission might mean coal-fired plants using carbon capture and sequestration (CCS) technologies, perhaps costing as much as $80 per ton. By some estimates, CCS would increase the cost of producing electricity by 25 to 40 percent. Cutting another gigaton would be equal to building 500 one-gigawatt nuclear power plants. The world currently has 439 nuclear plants in operation. One gigaton more would require increasing the number of windmills operating in the U.S. by 150-fold, or increasing solar photovoltaics by 10,000-fold. It would take farming an area 15-times the size of Iowa to produce the biomass to replace 1 gigaton of carbon dioxide emissions. [More]
We've likely gone too far down this road, and can only prepare for the consequences. Of course, given our location and wealth, the US will not be on the front lines of the battle, but our lives will be changed.

I'm thinking my energy cost suspicions are being confirmed - irrespective of any government action. But as warming accelerates, our growing conditions will change as well.

I'll try to track down some ideas about whether our weather could get even screwier.
It's all about the economy...

Beer sales are flat (heh) while wine and spirits are rising. Some think American drinkers have changed their tastes, but the reason could be more straightforward.
A new study shows that alcoholic drinks served in bars and restaurants are often larger than the standard size and contain more alcohol. The study, published online this week in the journal Alcoholism: Clinical and Experimental Research, examined 480 drinks poured in 80 establishments in 10 Northern California counties. The average glass of wine was 43% larger than standard, and the average mixed drink was 42% larger. The average draft beer was 22% larger. The authors, from the Alcohol Research Group at the Public Health Institute, also found that the alcohol content varied widely in drinks. Those who think they have had four drinks may, in fact, have had six, they noted. [More]
Another solid indicator of how bargain conscious consumers are becoming.
Another trend just ran over me...

I talked last March about prepaying fertilizer for 2009, and as you recall, took a pass on the advice of my Agrium representative.
· Nitrogen – huge market with hundreds of players – it only takes one of them to run out of space to store ammonia to prompt a selling spree – again I think this would be a short-term impact but could create some summer buying opportunities (as has been the case in most – if not call other years). (One misconception that seems to be out there is that with $100 oil – we should be scared that more price increases are coming – but today – the price of oil has virtually nothing to do with the price because of the supply/demand picture)…
I’m worried that our growers are getting talked into prepaying fall fertilizer at historically high prices and not being given the full picture. In addition, I’m not sure I believe the claims that this is the only way to ensure supply. In my experience, proper planning and good communication between growers and retailers does a lot more to ensure supply than giving prepay money to retailers who may or may not be in good financial shape (c.f. our discussion on that subject the other day) [More]
As I was frantically loading chemicals Sunday, my dealer said the word came down from on high the outlook is now certain that N prices (along with P & K) will definitely be jumping 30-40%. And because they remembered my concerns (and he wisely made notes) they are helping me protect that expense.

All I have to do is come up with $110,000 or so!

Other bloggers have belatedly decided this is an issue as well, and opens up a whole new can of financial worms for producers: we are now the financiers for our suppliers.
Adam, you're on target with your worries. I've been talking with Allen Lash, a farm financial consultant in Illinois, who is voicing the same reservations. "When an input supplier asks you to prepay $100,000 to $500,000 for 2009 fertilizer or fuel, it's no different than if you were making him an unsecured loan," says Lash. You have a right to ask for the supplier's financials, but even that may not protect you. The real outcome is that bigger operators need to "insure" themselves by taking delivery if they prepay--and that means you'll need to finance more on-farm fuel and fertilizer storage or rentals. By the way, Lash says he expects more prepay demands on chemicals, too. [More]
So my question is this: with historically high prices and (even though we are desperate to keep this secret) profit margins, why are we experiencing all the market power of a schoolyard lunch-money extortion victim?

Now of course, I suppose it is possible for inputs to continue their steady march until our raw material inflation looks like Zimbabwe, but what happens when prices flat out or (gasp!) even decline. Will our suppliers be able to go back to funding themselves? Is there any doubt producers will start buying at the last second?

This shift is building a resentful backlash, I think. I'm already a cranky customer. Use me now to build your financial results for your shareholders, but vendors better hope this trend doesn't turn. Because an historically bad planting season isn't all that's being seared into my memory from 2008.
Truly an upgrade...

I took some time to download the much-anticipated new version of Firefox - my web browser. At least the Mac version is faster, easier and more user friendly. I haven't had much time to fool around with it a lot, but it seems like a natural extension of the earlier software, only more powerful.
Instead, they built a better history function: You don't have to remember a site's address; you have to recall only its title -- or just a word or two of it. As you start typing, Firefox will present a list of all the sites that match, then narrow that list as you continue.

If, however, you're a bookmark-tending type, Firefox 3 can help you make more sense of your Web favorites. You can tag them for easier reference, then sort through to see which ones you visit most and which ones collect dust.

Firefox 3 also brings a performance upgrade. Older releases could hog memory over time, eventually forcing a browser restart. Firefox 3 needs a little less memory and doesn't keep nibbling away at your computer's resources over the day. [More]
Don't you love a business model that gives products away free?

Wednesday, June 18, 2008

Why we don't do US Farm Report live...



Not that Scott couldn't handle him, mind you.

[via Andrew Sullivan]

Tuesday, June 17, 2008

One last push...

Here's why the posts are slow.
1. The Options Webinar in about an hour. I've discovered those who fail to prepare are worth two in the bush. Or something like that. And we had about 250 signed up at last count!
2. I speak tomorrow night [Update: that would be Thursday night, 6/19] for the West Central IA Coops. My original presentation I planned may need some tweaking to be pertinent to the historic challenge facing them.
3. We're trying to spray and - dare I say the word? - plant the last 300 acres of beans. The tricky part here is how dry can we let it get. Guessing the next rain has not been our most successful exercise this spring.
4. Most of you guys are coping with much the same and likely aren't reading.

I'll be in touch - thanks for reading!

Monday, June 16, 2008

First things first...

Second only to gun control (don't get me started) posts about climate change provoke the most impassioned responses. It is understandable. We are working with imperfect, incomplete data on a problem that could well be disastrous for humankind.

However, I don't think the gravity of the issue should deter us from using the same methodical tools that got us here today. So when Ron Bailey at Reason posted this story about the Copenhagen Consensus Project, I thought it worth passing along.
What follows are short discussions about how to deal with 10 areas, ranging from air pollution to global warming to women and development. Each topic section includes two options to ameliorate the situation. Each solution has been assigned a benefit-to-cost ratio (BCR) by researchers commissioned by the Copenhagen Consensus Project 2008. For information about the researchers for each section, please go here.

reason online readers are invited to rank which areas of concern they think are most important and which solutions you prefer. You may submit your rankings here. The results will be tabulated and announced on the site next week. [More]
Please visit the link and read the list of concerns. Make your choices known.

[Note the cost-benefit ratio for trade liberalization and subsidy reform.]
I'm no tax expert...

But I've got some theories and I enjoy the game. And I have done my own taxes for 40 years without indictment or incarceration. So, as Aaron and I discuss how to transfer the farm business, one idea has been an installment loan for some assets. It seems we're not the only family considering this approach.

It's a nice problem to have: enough money that you need to think about lessening estate taxes for heirs. And this is a good time to start estate planning, since the interest rates the government sets for one strategy, called installment sales, make it particularly attractive right now.

The strategy is called a sale, but it's more like a loan.

It lets you temporarily transfer, or "sell," an asset to an heir. The asset could be cash, real estate, or a share in a family business, among other things. As long as the heir signs a promissory note, eventually returns the asset, and pays you a government-set interest rate—3.2% in June for three- to nine-year notes—they can keep what they've earned on the asset above that rate.

That benefits both you and your heirs, says Holly Isdale, managing director at Lehman Brothers (LEH). Since the appreciation on the asset above 3.2% goes to the heir, rather than into the estate, it lessens potential estate tax and lets the heir benefit from the wealth now.

What's key to the deal—aside from smart investing and, with real estate, asset valuations that may be low today—is the 3.2% rate, known as the Applicable Federal Rate. The AFR changes monthly but applies to the life of a note and is based on the one-month average of a basket of short-, medium-, or long-term Treasuries. June's rate of 3.2% for mid-term notes, while low, is up from May's 2.74%, the lowest rate since July, 2003. For notes of less than three years, the current rate is 2.08%. [More]
Of course, we would not be expecting the machinery, etc. to be returned, but for the loan to be paid off. I knew there was an official lowest rate allowable, but this helped me understand how it could be used.

Even as we struggle with production problems, our assets are increasing in value. And 2010 - which looked so far away a few years ago - is bearing down on us. Solid predictions on what the politics of estate taxes will look like then are not widely available. This one sounds very appealing:

The estate-tax repeal could find new life in an election-year compromise between a Republican in a Democratic state and a Democrat in a Republican state.

Republican Senator Jon Kyl of Arizona has been talking with Montana Democrat Senator Max Baucus. Baucus is the top Democrat on the Senate Finance Committee. New York Democrat Senator Charles Schumer is taking part in the talks, as well. Aides say that a deal should be reached in the next couple of days.

The senators are working on legislation that would exempt all taxpayers, except the very wealthy, from paying taxes on their estates. This could exempt estates up to $10 million. The senators are also discussing lowering the tax rates that individuals pay on the value of their estates when they die. [More]
We could be facing a pretty serious wealth transfer problem without some action, and a bi-partisan approach offers some glimmer of a solution.

Or an enormously lucrative estate planner's full employment future.

Sunday, June 15, 2008

In case you have some spare time...

Try this seemingly simple game. Feel free to post your score.


It's called "Unique"

[via RGS]
What we are learning about you...

While you read this blog.
This is a very rapidly declining curve. On an average visit, users read half the information only on those pages with 111 words or less.

In the full dataset, the average page view contained 593 words. So, on average, users will have time to read 28% of the words if they devote all of their time to reading. More realistically, users will read about 20% of the text on the average page. [More of an interesting study]
The powerful advantage of web publishing over print is the two-way exchange of information. How long you look at what, where you come from or go to, what you click - all these things give us immediate feedback on what's working or isn't.

We're just not sure what some of this information means...
Climate change ideologies are becoming a chorus...

Whether more folks are embracing the belief that climate change poses a problem or simply an opportunity to make a buck, there are vague factions emerging from the voices of debate.

One is the "technology will save us" group. These strike me as hoping against evidence they won't have to change much of their consumption and living standards because and ingenious "something" will neatly reverse alarming trends. While this faith in applied science and human ingenuity is certainly inspiring, it is also a risky approach.

As indicators accelerate, there could develop in such adherents a tendency to seriously consider some pretty flaky "solutions". I think we're starting to see them emerge.
Scientist Tim Flannery has proposed a radical solution to climate change which may change the colour of the sky.

But he says it may be necessary, as the "last barrier to climate collapse."

Professor Flannery says climate change is happening so quickly that mankind may need to pump sulphur into the atmosphere to survive.

Australia's best-known expert on global warming has updated his climate forecast for the world - and it's much worse than he thought just three years ago.

He has called for a radical suite of emergency measures to be put in place.

The gas sulphur could be inserted into the earth's stratosphere to keep out the sun's rays and slow global warming, a process called global dimming.

"It would change the colour of the sky," Prof Flannery told AAP. [More]
Another choice is to adapt to the new climate - which if you think about it is what we will all do to some degree in the end, I suppose. To accomplish that, however, may mean reversing our thinking on things like cities, farming and cars.
To many Americans, ecological nirvana is a bucolic existence surrounded by wilderness. But the Thoreauvian desire for more elbow room has led to sprawl, malls, and cougar attacks. The edge-city upshot is a national cadre of 3.5 million "extreme commuters," who spend more than three hours a day in transit, many of them spewing carbon dioxide between exurb home and city office. Automobile exhaust in the US contributes roughly 1.9 billion tons a year to the global carbon cloud, more than the emissions of India, Japan, or Russia. Even worse are the 40 million lawn mowers used to tame the suburban backcountry: Each spews 11 cars' worth of pollutants per hour. [More]
One thing is certain: we are accumulating more data every second, and therefore these positions need to be fluid to accommodate new data and hitherto undiscovered causes. But as I have written our current personal ethic of stubbornness as proof of moral courage and intellectual honesty will complicate this evolution.

The result is a few of us will be somewhat right about the future, many of us will be wrong, and the vast majority will try every excuse to resist joining any camp until the winners are evident. This reluctance to try to participate seems to me to be a serious impediment to any solution, leading me to lean toward the adaptation camp.

Currently, that means preparing for very expensive energy, whether due to supply and demand or regulation. More important for farmers, I think we will shoulder much more of the costs of maintaining our standard of living, as opposed to the rest of the country picking up the tab. I can see our farms being off the grid, for example.

I know - that sounds pretty agrarian to me too. But the movement to rural America for quality of life may have peaked. At some point, the only folks in places like my township could be farmers, for a variety of economic reasons. And when that happens, subsidizing things like landline phones, electricity and paved roads will seem pretty expensive the the other taxpayers.

Saturday, June 14, 2008

When old becomes obsolete...

Just as Sen. Obama has released a remarkably effective and politically explosive position to stabilize Social Security, I read this fascinating (albeit slightly over my head) article about actuarial escape velocity:
The escape velocity cusp is closer than you might guess. Since we are already so long lived, even a 30% increase in healthy life span will give the first beneficiaries of rejuvenation therapies another 20 years—an eternity in science—to benefit from second-generation therapies that would give another 30%, and so on ad infinitum. Thus, if first-generation rejuvenation therapies were universally available and this progress in developing rejuvenation therapy could be indefinitely maintained, these advances would put us beyond AEV. Universal availability might be thought economically and sociopolitically implausible (though that conclusion may be premature, as I will summarise below), so it's worth considering the same question in terms of life-span potential (the life span of the luckiest people). Figure 1 again illustrates this: those who get first-generation therapies only just in time will in fact be unlikely to live more than 20–30 years more than their parents, because they will spend many frail years with a short remaining life expectancy (i.e., a high risk of imminent death), whereas those only a little younger will never get that frail and will spend rather few years even in biological middle age. Quantitatively, what this means is that if a 10% per year decline of mortality rates at all ages is achieved and sustained indefinitely, then the first 1000-year-old is probably only 5–10 years younger than the first 150-year-old.

The third oversight that I observe in contemporary commentaries on life extension, among which Coping with Methuselah is representative, is the most significant because of its urgency. First-generation rejuvenation therapies, whenever they arrive, will surely build on a string of prior laboratory achievements. Those achievements, it seems to me, will have progressively worn down humanity's evidently desperate determination to close its eyes to the prospect of defeating its foremost remaining scourge anytime soon. The problem (if we can call it that) is that this wearing-down may have been completed long before the rejuvenation therapies arrive. There will come an advance—probably a single laboratory result—that breaks the camel's back and forces society to abandon that denial: to accept that the risk of getting one's hopes up and seeing them dashed is now outweighed by the risk of missing the AEV boat by inaction. What will that result be? I think a conservative guess is a trebling of the remaining life span of mice of a long-lived strain that have reached two-thirds of their normal life span before treatment begins. This would possess what I claim are the key necessary features: a big life extension, in something furry and not congenitally sick, from treatment begun in middle age. [More]
In short, what if new therapies (doubtless expensive) keep moving the end of life faster than 1 year per year. We're already adding 4 months per year. That's gonna mess with Social Security repair plans!

[More]

And we're only #29 in the world for life expectancy.

I have always viewed extreme-lifespan proponents with wariness. The current method of choice is restricted caloric intake. It's hard for many of us to view that future as worth the effort. But the studies in caloric restriction could identify the physiological responses that could then be prompted not by eating less, but by drugs.

While this is a bright promise for pharmaceutical companies, it poses some enormous problems for humans as a group. And we're not very good at those.

It is easy to envision a thin layer of wealthy (and healthy) very old people atop all facets of society. In fact, it is hard for me not to see that happening. Wealth tends to get the good stuff. But as many of us grit our teeth and assume bad guys like Robert Mugabe will at least eventually exit, what would it mean when a "President for Life" means decades more than we now think?

Of course, we're not near this point, but I must admit we're approaching it faster and more people and giving it a hard ponder.

Think of our profession. The oft-quoted statistic that "geezers own 126% of all farmland" (or does it just seem like that?) would only become more entrenched. In fact, one of the biggest factors is our misunderstood "lack" of young farmers, may just be longevity. When taken to the extremes imagined above, we're looking at a permanent landed "agristocracy".

Always remember that land is power. Nothing else comes close for us.

Friday, June 13, 2008

Try keeping them out...

To get some perspective on what a professional investor sees when she looks at agriculture consider these two items from today's Bloomberg.com

[Update: The vertical axis is percent change in price. (thanks, brian)]

What caught my eye (I visit here daily) was the possibility of corn (yellow) overtaking oil (blue). Other lines are gold (umm, gold-orange) and wheat (pinkish-red)

[Look, I'm an engineer, not an interior decorator.]

And one click away, this story:
TIAA-CREF, the largest U.S. manager of retirement funds, bought $340 million of farmland in seven states in December. George Washington University plans to earmark $100 million for agricultural investments during the next year.

Farmland is having its biggest revival in almost 30 years as demand for corn and soybeans from Asia and the ethanol industry drive commodity prices to record highs. From Iowa to South Dakota to Wyoming, gains in rural land prices have ranged from 78 percent to more than 200 percent, according to farmers and data from Farm Credit Services of America in Omaha, Nebraska.

Farm values probably will rise at an annual rate of 6 percent to 10 percent in the next five years, said Murray Wise, the chief executive officer of Westchester Group Inc., a Champaign, Illinois-based manager of $550 million of global farm tracts. The median U.S. home is forecast to gain 1.2 percent through 2010 and stay below the 2006 peak of $221,900, the Mortgage Bankers Association in Washington said. [More]
New York knows where you live and how you're doing.

Thursday, June 12, 2008

We need more graphs...

song chart memes


song chart memes



song chart memes



song chart memes

GraphJam



[via Andrew Sullivan]
The Perfect Pothole Storm...

The 12" of rain we had in the last few days not only took a toll on our crops (and our spirits), but also our rural roads. Which led me to think about how the rural infrastructure was going to be maintained.

Here are some factors that seem to be all pushing the wrong way for rural roads in the US.
  • Farmers: we're using equipment that loads rural roads way beyond anyone imagined when they were designed. Semis are bad enough, but loaded grain carts are way past specs for our roads. And since so many of us farm all over several counties, we don't have a vested interest other than being able to get to our field and get gone. It's showing.
  • Oil prices: asphalt is derived from petroleum. My township road commissioner told me "cold patch" has tripled. So for starters, we won't begin to have enough resources.
  • Weather: I think we got lulled by several fairly benign winters and especially, springs. This one, with multiple freeze-thaws really busted up blacktop in my area.
  • Storage: as farmers store more on-farm and take less in the fall to the elevator, it doubles the trips that weight has to make over your farms access roads.
  • More corn: with more or all corn in our rotation, 3-4 times the weight must be hauled over the same roads. Now add in increasing yields.
  • Motor fuel tax shenanigans: not only do we have the ludicrous idea of a gas tax "holiday" floated at by presidential candidates (even while being shouted down by economists) but legislators at every level would love to redirect those funds to their own ends.
I am not optimistic we will be able to have good roads in places like rural Edgar County in the future. For too long, there has been a general acceptance by urban citizens to pay the majority of the cost for rural amenities. But expensive energy is going to change all that. The level of urban largess will drop like a rock as the spotlight shines on farmers making record income while wages stagnate elsewhere.

Meanwhile, urban transplants will be rethinking their country homes as the commute becomes an intolerable expense. The result is very few votes for directing tax money to roads only a handful benefit from.

I think it's time for farmers to take a page from Brazil and pay for our own roads. Heck, even make them tollways, in exchange for paying for the upkeep. This would be especially useful to price in the externalities BTO's escape by farming where they don't live. Imagine if they needed a township or private road sticker for every field they roar in and out of.

Meanwhile local residents could have the roads they pay for. This would place a premium on farming local, provide a strong case for renting local, and make many of us think twice about rolling out an overloaded tandem in a squishy spring blacktop.

Local Road Privatization - if it's good enough for the Skyway, it's good enough for 2100 E.

Wednesday, June 11, 2008

This means something...

China now has more broadband subscribers than the US.
China has overtaken the US as the largest fixed broadband subscriber market, ending the quarter with 71.6 million subscribers, according to market research firm Dittberner Associates.

In the first quarter China added 4.8 Million subscribers, surpassing the United States by 1.4 million. Sub- scriber growth in the United States was 12 percent over the first quarter of last year. Overall, global fixed broadband subscribers increased 5 per cent in the first quarter of 2008 to reach 355 million. According to Dittberner, following China and the United States, the remainder of the top 10 largest broadband subscriber bases are Japan, Germany, United Kingdom, France, Korea, Italy, Canada and Spain. [More]
I know, they have four times the possible subscriber base. But given the huge disparity in per capita income, I think this event demonstrates which country is looking ahead and which country is holding on.

The political rule of conservatism is based in the resistance to change (be sure to watch USFR this weekend and all the mail I got about the switch to digital TV) and has gripped the US for two decades. Americans tend to view the future as a chance to lose accumulated gains, while peoples like the Chinese look to finally gain a piece of the pie.

The dynamic difference between these two viewpoints are contained in the above statistic.