Thursday, July 31, 2008

A little beefcake...


Cakes that look like steak.

No, I don't know why.

[via info nation]
Sounds pretty simple to me...

Lest anyone think ethanol mandates are bureaucratic paperwork hassles with significant economic deadweight this straightforward explanation of how they work from the EIA:
All obligated parties (refiners and importers of refined fuel products) must satisfy their "renewable volume obligation" (RVO) which is essentially their share (based on how much fuel they produce or import) of the total renewable fuel that must be used (this year 9.0 billion gallons). Volumes of blended renewable fuel are assigned RINs (renewable identification numbers). If a particular party cannot blend their share, they may buy these RINs from parties that have over complied on their RVO (though some alternatives exist such as carrying a RIN deficit for one year or using one's own excess RINs from the previous year). In any case, every year every obligated party is required to document its RINs and show that they have the same or more than their RVO to the EPA. If they don't, they can carry a deficit as mentioned earlier or they will be penalized by the EPA. [More, with a great translation by The Oil Drum]
It could be that the drop in corn prices will buy a reprieve for setting aside the mandates, but only up to a point.  And that point looks like next year, simply because we could have falling gasoline demand to mix it with at the 10% level.  I expect increasingly pitched rhetoric from ethanol proponents who are looking at that wall.
The immediate problem is not that there will be enough gasoline to absorb the ethanol in 2008, 2009, and probably 2010; in these years the questions are "Is there enough infrastructure to send the ethanol to (and blend with gasoline in) as-of-yet untapped regions, esp. the southeast?" or "Will mounting political pressure over food/grain costs force the EPA to lower the mandate?" (witness Texas's recent waiver application).

After 2011 EIA projects there will not be enough gasoline sold to absorb the ethanol as E10; then the big question becomes how does the U.S. absorb the excess; as E85? (currently the only legal option) or as E15/E20? (as of yet not fully tested). Can the EPA lower the mandate if the E85 infrastructure is inadequate or too costly and the E15/E20 option is not available? Yes, but again this probably would not happen until after the "blend wall" (i.e., saturated E10 market) has occurred. [Same source]
As foot-dragging construction of new plants perks up with corn back in the $5 range, the very real possibility of ethanol sloshing around unblended - forcing the price down - could become the core issue for the industry.
Where great ideas come from...

I love finding out how our brains (possibly) work, and one of the most intriguing problems is where inspiration comes from, and how to make it happen more than twice a decade or so.  In a fascinating article in the New Yorker, we get some insight into insight.
The resulting studies, published in 2004 and 2006, found that people who solved puzzles with insight activated a specific subset of cortical areas. Although the answer seemed to appear out of no- where, the mind was carefully preparing itself for the breakthrough. The first areas activated during the problem- solving process were those involved with executive control, like the prefrontal cortex and the anterior cingulate cortex. The scientists refer to this as the “preparatory phase,” since the brain is devoting its considerable computational power to the
The various sensory areas, like the visual cortex, go silent as the brain suppresses possible distractions. “The cortex does this for the same reason we close our eyes when we’re trying to think,” Jung-Beeman said. “Focus is all about blocking stuff out.”
What happens next is the “search phase,” as the brain starts looking for answers in all the relevant places. Because Jung-Beeman and Kounios were giving people word puzzles, they saw additional activity in areas related to speech and language. The search can quickly get frustrating, and it takes only a few seconds before people say that they’ve reached an impasse, that they can’t think of the right word. “Almost all of the possibilities your brain comes up with are going to be wrong,” Jung-Beeman said. “And it’s up to the executive- control areas to keep on searching or, if necessary, change strategies and start searching somewhere else.” But sometimes, just when the brain is
about to give up, an insight appears.

“You’ll see people bolt up in their chair and their eyes go all wide,” Ezra Wegbreit, a graduate student in the Jung-Beeman lab who often administers the C.R.A. test, said. “Sometimes they even say ‘Aha!’ before they blurt out the answer.” The suddenness of the insight comes with a burst of brain activity. Three hundred milliseconds before a participant communicates the answer, the EEG registers a spike of gamma rhythm, which is the highest electrical frequency generated by the brain. Gamma rhythm is thought to come from the “binding” of neurons, as cells distributed across the cortex draw themselves together into a new network, which is then able to enter consciousness. It’s as if the insight had gone
incandescent.  [More of a great read. If you are under 40, be sure to read about caffeine]
But the key finding for me was why I get my only good ideas at times when I can let them slip away: running, driving down the road/field, day-dreaming, etc.  They have a theory on that too.
 But, once the brain is sufficiently focussed, the cortex needs to relax in order to seek out the more remote association in the right hemisphere, which will provide the insight. “The relaxation phase is crucial,” Jung-Beeman said. “That’s why so many insights happen during warm showers.”
Another ideal moment for insights, according to the scientists, is the early morning, right after we wake up. The drowsy brain is unwound and disorganized, open to all
sorts of unconventional ideas. The right hemisphere is also unusually active. Jung-
Beeman said, “The problem with the morning, though, is that we’re always so rushed. We’ve got to get the kids ready for school, so we leap out of bed and never give ourselves a chance to think.” He recom- mends that, if we’re stuck on a difficult problem, it’s better to set the alarm clock a few minutes early so that we have time to lie in bed and ruminate. We do some of our best thinking when we’re still half asleep.
Richard Feynman, the Nobel Prize-winning physicist, preferred the relaxed atmosphere of a topless bar, where he would sip 7 UP, “watch the entertainment,” and, if inspiration struck,
scribble equations on cocktail napkins.
One of the problem we may be having is over-scheduling our lives and hence, our brains. With little free-wheeling time, we are denied the maximum possibility for great thinking. It could be something as simple taking Sunday off, shutting down the cell phone, or setting aside a few minutes of quiet thought could reap huge rewards in the way of new solutions or outright innovation for the problems of our lives.

While I'm pretty sure Jan would not buy the Feynman method, I could probably peddle a little more goofing-off.

In fact, I'm going to waste some time right now.

[via mefi]

Wednesday, July 30, 2008

I gotta read those memos...

I probably should have known this but we will be taping the Roundtable discussion for USFR at the Corn College.  If you haven't signed up, it's not too late.

Aaron and I will be at the first session, and I will speak at the banquets on Tuesday and Thursday evenings.  Given my experiences with Ken Ferrie I can be sure of two things:
  • It will likely be the hottest days of the summer during the event
  • I will be amazed at all the things I don't know about growing corn after 35 years of trying.
 I think it will be a great time to visit with you all - I'll see you there.
All the cool jobs are taken...

This was the one I wanted (not the clown, the director).

Here's how they did it.
Please let me know...

We're trying to determine the penetration of podcasting among farmers.  Please take a second to check a box in the poll in the right sidebar.


FWIW:  Got my iMac back and the world is returing to normal.  Serious posting to follow.
A sad day for young Americans...

The collapse of the Doha round of trade negotiations over farm subsidies will likely stand with the Smoot-Hawley tariffs as one of the major blunders in US trade policy.  To be sure we protected the right to send millions of dollars to US farmers regardless of income or need, but we almost certainly lowered the possibilities for the 99.9% of Americans working in other industries.
U.S. subsidy payments fell in 2007 as commodity prices rose. Congressional mandates for ethanol, which uses corn, have also contributed to the higher prices. Boondoggle that those requirements are, U.S. negotiators could have at least taken advantage of them to make their lower subsidy offer last year. America's trading partners might have been impressed back then; now, not so much.

The U.S. also seems to have erred in insisting on farm-market access (i.e., lower tariffs on food products) to match its cuts in trade-distorting ag subsidies, rather than asking for lower tariffs for manufactured goods and better access for services. The U.S. farm lobby may be strong -- strong enough to muscle Congress in May into passing the new $300 billion farm bill over President Bush's veto. But Americans were always going to benefit far more from a Doha deal that gave their industrial goods and services better access to emerging markets.

The Bush Administration was calling the shots on this negotiation, but Democrats in Congress have also spooked the rest of the world with their protectionist talk -- from their farm-bill veto override to their refusal to ratify a bilateral trade deal with U.S. ally Colombia. For all their talk about listening to America's partners, Democrats have their fingers in both ears on trade. [More]

We have also added an irritating complication for future relations with the emerging economic giants, China and India. Most crucially, it is the products that will comprise our future prosperity - services and technological innovation that will he hamstrung the most.  It is also an ominous sign that countries like China are looking forward to unilaterally imposing trade rules similar to what the West became used to.  I think we are in for a rude shock when governments representing the growing markets of the world decide they can dictate trade terms now.
 "In the long term the debacle in Geneva marks a break of immense importance. The rules governing trade will become more inscrutable, because agreements between individual states will replace the framework that had been globally accepted up to now. The WTO will lose its influence as the referee in disputes. The price will only gradually be perceived by businesses, but it will be high. The trade system is losing the dependability that exporters urgently require."

"Above all the failure of the WTO talks reflects the changing power relations in the world. Gone are the days when the US and Europe could set the tone and largely draw up the world trade agreements amongst themselves. China and India took a tough stance. They fight hard for their interests and only support free trade when it suits them. The old industrial powers will slowly realize the bitter truth of this. Geneva was just a foretaste." [More]
While a Doha would have taken considerable time to fully engage, the benefits of freer trade that could change the world for my sons and grandchildren may be postponed for another generation.  Or at the least, until stark economic conditions force trade reality upon narrow minds.

Tuesday, July 29, 2008

Being a know-it-all just keeps getting harder...

Shoot - I had used this pretentious bit of trivia for years...
It is well known that panes of stained glass in old European churches are thicker at the bottom because glass is a slow-moving liquid that flows downward over centuries.

Well known, but wrong. Medieval stained glass makers were simply unable to make perfectly flat panes, and the windows were just as unevenly thick when new.

The tale contains a grain of truth about glass resembling a liquid, however. The arrangement of atoms and molecules in glass is indistinguishable from that of a liquid. But how can a liquid be as strikingly hard as glass?

“They’re the thickest and gooiest of liquids and the most disordered and structureless of rigid solids,” said Peter Harrowell, a professor of chemistry at the University of Sydney in Australia, speaking of glasses, which can be formed from different raw materials. “They sit right at this really profound sort of puzzle.” [More]
It was such a quaint, arcane tidbit of information, which left the impression of deep knowledge.  Sort of like obscure facts commodity market gurus leverage to suggest thorough understanding of essentially unknowable processes.  Then stupid ol' science had to butt in.

I know - I'll shoot for being a "know-it-some".
No creative act goes unpunished...

As a writer and professional idea-hamster, this is a fair depiction of what happens to a good idea these days.

Clients: if it weren't for their money, I'd bury them all alive.  

With their cellphones.

(Just kidding, of course.  Heh, heh....)

[via locusts and honey]

Monday, July 28, 2008

I don't know art, but...

But if it needs batteries, can it really be all that timeless?

And you thought Etch-a-Sketch was tough. Ian Cook made this portrait of a Chevy Camaro by soaking the wheels of remote controlled cars in paint and then painstakingly driving them around on his canvas. He also uses full-size tires to fill in large blocks of color, but still, the results are pretty amazing—if you've ever tried to ambush your unsuspecting cat with an RC you know how tricky precision maneuvering can be. He's currently camped out at the London Motor Show doing portraits of cars (meta!). [More]
[via andrew sullivan]
After the blame has fallen...

Well, the party is about over, and the maitre d' is looking for the host.  Our budget deficit is going to be a record, even though we aren't sure how huge it truly is.

It may be our ability ot soak up the savings of the world has overrun the ability of others to save.  Not only that, people who have been buying our debt are beginning to think about spending some instead.

For once, a consensus seems to be emerging there is little upside in shortfall.  If the economy were galloping along, a deficit is a regrettable but manageable problem.  But our current situation is far from that.
It’s bad, really bad. The worst part is that we don’t even know how bad it is.

The 2009 unified budget deficit is estimated now at $490 billion. Some of that number is expected and fine - during a recession taxes fall and certain expenses like unemployment benefits rise.

It’s still a really big number - and it turns out that the real deficit is much, much higher.

First, the number doesn’t account for $80 billion in war costs.

Next, the number is for the “unified” budget deficit. “Unified” in federal budget speak means the cash in, cash out budget. This ignores serious obligations the government has taken on this year - veterans benefits to the hundreds of thousands of troups serving overseas, Medicare and Social Security payouts to the baby boomers etc etc.

The real government budget deficit is the number that takes into account all these future liabilities. It is *probably* $200 billion higher than the fictional unified budget deficit, but no one really knows. [More]

While I understand the relationship between our enormous economy and the debt we can reasonably carry, I think we have passed the point of rational leverage. The test of this problem will be sales of our debt, and what interest rate is necessary to attract foreign buyers.

When farmers lobbied for a huge Farm Bill, we did not care where the money would come from. Ditto every other special interest.  Ergo - a record deficit with no end or turning in sight.

In the meantime, look for these tried and true rebuttals:
  1. The deficit is small relative to the size of the economy.  Or in other words, "Deficits don't matter until they approach 5-6% of GDP".
  2. Waste and fraud, fraud and waste, etc.  We somehow magically ferret out all the misspent dollars and apply them to the deficit without cutting programs or raising taxes.  Amazingly, I guess we've never thought about doing this before, or we have never had anyone in Washington who was able to even begin the process. But our problems will be solved simply by taking this obvious step.
  3. I don't want to talk about it.
Folks, there is only one politically realistic way out of this disastrous fiscal impropriety: inflation.  While it will destroy the futures of those who swallowed the Horatio Alger mythos of America, and reduce our currency to laughingstock, it will make our enormous debt less of a problem for this generation.

This suggests zooming prices with matching interest rates, and cash as a poor investment choice.
No wonder lottery tickets sell...

The lamentable state of math education in the US has made the category of "intellectual" somewhat contradictory, considering how few educated folks can add up the tab at the bar, let alone understand tax policy.
I'm not exaggerating when I say that I think the lack of respect for math and science is one of the largest unacknowledged problems in today's society. And it starts in the academy-- somehow, we have moved to a place where people can consider themselves educated while remaining ignorant of remarkably basic facts of math and science. If I admit an ignorance of art or music, I get sideways looks, but if I argue for taking a stronger line on math and science requirements, I'm being unreasonable. The arts are essential, but Math Is Hard, and I just need to accept that not everybody can handle it.

This has real consequences for society, and not just in the usual "without math, we won't be able to maintain our technical edge, and the Chinese will crush us in a few years" sense. You don't need to look past the front section of the paper-- our economy is teetering because people can't hack the math needed to understand how big a loan they can afford. We're not talking about vector calculus or analytical geometry here-- we're mired in an economic crisis because millions of our citizens can't do arithmetic. And that state of affairs has come about in no small part because the people running the academy these days have no personal appreciation of math, and thus no qualms about coddling innumeracy. [More]
Still, innumerate people are still people.  But it does help to remember why mathematical evidence seems to carry very little weight in policy debates.
China: another view...

I posted about James Kynge's China Shakes the World - a sobering look at the power of this huge country now and in  the future.  Consider this counter-argument about why China will struggle to continue its rise to superpower status.
But there's a hitch: China's demographics stink. No country is aging faster than the People's Republic, which is on track to become the first nation in the world to get old before it gets rich. Because of the Communist Party's notorious one-child-per-family policy, the average number of children born to a Chinese woman has dropped from 5.8 in the 1970s to 1.8 today -- below the rate of 2.1 that would keep the population stable. Meanwhile, life expectancy has shot up, from just 35 in 1949 to more than 73 today. Economists worry that as the working-age population shrinks, labor costs will rise, significantly eroding one of China's key competitive advantages.

Worse, Chinese demographers such as Li Jianmin of Nankai University now predict a crisis in dealing with China's elderly, a group that will balloon from 100 million people older than 60 today to 334 million by 2050, including a staggering 100 million age 80 or older. How will China care for them? With pensions? Fewer than 30 percent of China's urban dwellers have them, and none of the country's 700 million farmers do. And China's state-funded pension system makes Social Security look like Fort Knox. Nicholas Eberstadt, a demographer and economist at the American Enterprise Institute, calls China's demographic time bomb "a slow-motion humanitarian tragedy in the making" that will "probably require a rewrite of the narrative of the rising China."  [More]
I suspect we will be having this discussion for a long time, as even the Chinese have only questionable information and precedents to make forecasts. For the foreseeable future, however, China's economic clout will be a major driving force shaping my farm business plan.
It hard to be pessimistic...

About humanity when you see accomplishments like this.

It makes you wonder what he could do with  a banjo.

[via arbroath]

Sunday, July 27, 2008

Suicide = prostate cancer...

Other surprises from how American men die:

[via dumptrumpet]
On whining...

Thanks to Phil Gramm, whining is much in the news.  Lord knows many of my posts could fall into that category.  But Tyler Cowen points out whining is relative.
Some on the right wing will stress "individual responsibility" as a value when it lowers the status of the whiners (why whine when it was the victim's own fault?).  Some on the left wing will stress "individual responsibility" when it is time to punish corporate wrongdoers and thus lower their status.  Not everyone applies (or rejects) this value consistently.

Given this difference in rhetoric, the right wing will be identified with the monied class, even when the left often has more money.  And the left wing will be identified as the whiners, even though the right at times whines as much or more.  You might say that both sides are monied, high human capital whiners, on the whole.  And if you compare them to Burmese rice farmers, the two sides seem somewhat alike. [More]

Whining is a "loaded" word, of course, and is often applied to farmers during subsidy debates. As much of the grain farming sector continues to prosper immensely compared to colleagues, I could see the "whiner" accusation become a recurrent thread in farm policy discussions.
Right from the beginning...

For writers, coming up with that perfect opening sentence is a signal achievement, whether you are penning a blog entry or a novel. As a fan of science fiction, I found this list of great opening sentences illustrates this art form.  These are my favorites from the list:

"He woke, and remembered dying." — Ken MacLeod, The Stone Canal. I don't really think I need to explain why this is a great opening. It's spare and intriguing. And no adjectives or adverbs. Yay!

"In the summer of his twelfth year — the summer the stars began to fall from the sky — the boy Isaac discovered that he could tell East from West with his eyes closed." — Axis, Robert Charles Wilson. It's got so much going on, what with the coming-of-age thing and the stars falling. But then you get that human-compass thing, which is intriguing and fascinating. And this is a nice, spare sentence, with no excess clutter. It's snappy!

I think my best opener was actually two sentences:
"Nature abhors a vacuum.  It's not my favorite appliance either." [More]

Sadly, you don't think of stuff like that often enough.

Saturday, July 26, 2008

It's not easy being green rich...

It is one of those articles you read and then realize how widely the researchers missed the point for most readers.  On the subject of income inequality, economists analyzed spending patterns to arrive at the cheerful conclusion the poor are doing just fine compared to the hard-pressed rich.
A challenge to the conventional wisdom is set out in a recent research paper* by Christian Broda and John Romalis, both of the University of Chicago’s business school. They argue that standard measures of inequality do not reflect differences in the way that the rich and poor spend their money. A person’s demand for a particular good or service does not rise in exact proportion to his income. As he grows richer, the pattern of his spending changes, as well as the amount. In particular, high-wage households spend a greater share of their income on services and a smaller share on “non-durable” items, such as food, clothing, footwear and toiletries.

For most of the past three decades, the price of non-durable goods has been falling relative to the price of the services—investment advice, personal care, domestic help and so on—that the rich spend more of their money on. If these differences between the inflation rates faced by the rich and the poor are taken into account, the rise in inequality is reduced and may even vanish.  [More]
Let me offer my interpretation. Comparing the cost to maintain a comfortable lifstyle to one where you live paycheck to paycheck may be an interesting experiment for tenured economists, but it does not address the issues of income and wealth inequality in the US.

So financial planners are more expensive - does this imply being wealthy is tough? Consider the fact that well-to-do citizens could (gasp!) shop at Chinese-supplied Walmarts and reap the same savings. They could plan their own finances!  Or care for their own children.

Compare those options with the poor.  If you are already dependent on low-priced necessities what choices do they have?

Perhaps it is a clever thought-problem that challenges "conventional wisdom", but it is a callous disregard of actual life circumstances to suggest the rich are struggling like the poor.
Double fault...

I can't believe it.  I got my iMac back - they replaced the motherboard (logic board) and it was working fine last night when I went to bed.

This morning - nothing!  I think I may have a problem with my backup USB drive, but regardless, I'm still working one-handed so to speak.

Posting will be sparse, I'm afraid.

Thursday, July 24, 2008

Market 155, Elwynn 148...

Just a quick note to demonstrate how we hear what we want to after we have made a decision (consciously or not).  At the Top Farmer Crop Workshop, I followed the omnipresent Elwynn Taylor who stood firm in his prediction the most probable yield was around 148 for corn.  He based this on the pattern of degree days, along with other factors.

He also pointed out if we do have a good crop it is likely to be wet.  One more cool week and he's gonna make us forget the 800-year drought record he has been flogging for 3 years just was broken.
No small miracle...

While we were absorbed in rains ands markets, the farmers of Argentina changed the course of their country's history.  After I spoke at the Top Farmer Crop Workshop, where I rattled on about living in unprecedented times and the responsibility we have to succeeding generations, a gentleman from Argentina came up and spoke excitedly to me about the recent farmer's strike and what it meant to their future.

I had followed half-heartedly the last few months and the battle between the president and the producers, but frankly didn't think the farmers had a chance of holding outThen last week, decades of political history was redirected.
Ms Fernández clearly underestimated the pressures on her party’s legislators from Argentina’s interior provinces, whose districts were staunchly opposed to the taxes. Despite holding comfortable majorities in both houses, her Congressional block had to establish a costly rebate scheme for small farmers in order to win a very close vote in the lower house. The bill then passed to the Senate, where a torrent of defections from Ms Fernández’s supporters produced a 36-36 draw.

The decision thus fell to Mr Cobos, whose relationship with the president has become frosty. Ms Fernández had barely spoken to him in a month, presumably because she felt he had acted too independently during the conflict. The beleaguered vice-president all but apologised to her as he cast his deciding vote. “The Argentine president will understand me,” he said, “because I don’t think a law that doesn’t provide a solution to the conflict will achieve anything…I ask forgiveness if I'm wrong.” When Ms Fernández spoke the following evening, forgiveness was not on the agenda: “Let’s hope that those who didn’t understand what we said to the people in October [when the election was held] understand some day,” she said, leaving little doubt about to whom her words were addressed.

Ms Fernández’s stunning defeat shatters the aura of invincibility that she inherited from her husband, who won a series of contentious political battles during his four years in office. Mr Kirchner regarded dissent as virtual treason, and used his control over spending to keep legislators and local officials in line. But while his approval ratings reached 70%, his wife’s are barely above 20%. And while he enjoyed an ample budget surplus, her treasury has been depleted by last year’s pre-election spending binge and by rising costs for fuel and transport subsidies. Ms Fernández actually campaigned as a moderate consensus-seeker; she will have to start governing like one if she hopes to salvage her presidency. [More]

For Americans this would hardly be earth-shattering news. But this break in Peronist influence is a sign that the powerful executive model that has dominated Argentine politics since the days of Juan Peron coulf finally be shifting.  The farmers were not alone in their protest of executive over-reach.
``This was a historic cry for a federal country,'' Eduardo Buzzi, president of the Agrarian Federation, told crowds early this morning in Buenos Aires. ``We can't accept authoritarianism as a form of management.''

Fernandez and her husband had gotten used to a compliant legislature.

During his term, Kirchner persuaded Congress to grant so- called ``super powers'' to the executive branch that allows it to alter budgeted spending without lawmakers' approval. The powers also enabled Kirchner to restructure the country's $95 billion in debt in 2005 without having to go to Congress.

``Congress is showing that it is now recovering its faculty to legislate,'' Fraga said.

When inflation started to accelerate in late 2005, then- President Kirchner pressured industries and retailers to freeze prices.

In January 2007, he replaced personnel in charge of calculating the consumer price index at the National Statistics Institute to ``improve operations.'' Kirchner's former Economy Minister Roberto Lavagna and other economists said the move was aimed at tampering with the data.   [More]

The cost for Argentine farmers was considerable, and perversely US producers benefited as this major exported was absent from the global supply market. All the more reason to admire fellow producers who had the courage to lift their nation on their shoulders and reclaim basic rights from the government.  It would also appear they wisely planned ahead.
Despite the recent headline drop in monthly growth rates for agricultural exports, the strike seems to have had little impact on the total size of agricultural exports. Indeed, with the exception of wheat exports, we have seen no meaningful downturn in Argentina’s exports of agricultural goods. Corn and soy have escaped largely unscathed. Even in the case of wheat, the monthly decline in March-May appears to be simply ‘payback’ after exports were front-loaded to comply with new regulatory changes.
The farmers’ strike has had limited impact on agricultural exports – a key driver for economic activity. In contrast, the greatest casualty may have been in the political arena. The administration has seen its approval rating fall from 55% in January to 19% in June according to local pollster, Poliarquia Consultores. The good news is that in the near term, we suspect that the authorities are likely to continue to see strong fiscal and trade surpluses and be able to effectively manage the currency – an economic variable that is often highly sensitive to expectations. However, until the authorities address the issue of elevated and rising inflation, we suspect that Argentina’s policy mix will continue to raise serious questions. [More]
I want to believe such a spirit still lies latent in our own agriculture, but we have chosen too often to adopt a strategy of needy pathos rather than defiance to defend our rights to free markets and free enterprise. It is interesting to speculate on what actions - if any - US farmers would take to battle unfair economic or political policies. Perhaps the size and integration of our system precludes such protest tactics, or it may be that our response would be individual, rather than collective. 

Regardless, what would you do if our government suddenly added a 50% export tax on ag products? Or more likely some sort of consumption tax that began at the farm?

Given that many meekly yielded the right of habeus corpus in the name of security and protested instead the Supreme Court defense of same, the answer would likely be: not much.
When Uncle John babysits...

Oddly, I don't get that many requests any more.

[via Arbroath]

Wednesday, July 23, 2008

Disaster, mayhem, despair!!...

My iMac died.  I am rushing it to the semi-local repair center for triage.  I will post sparingly using Jan's computer and my laptop, but don't expect the high-quality, low-cost insight that has become the unreached goal in this space.

Dang thunderstorms!

Monday, July 21, 2008

China's other people problem...

Too many of them are males. I posted about this long ago, I think, but here is an update.
By the time these newborns reach puberty, war games may seem like a quaint relic. In the 2020s, Chinese Academy of Social Sciences researcher Zheng Zhenzhen, estimates in a People's Daily interview that 10 percent of Chinese men will be unable to find wives, which could have a huge impact on Chinese society. Historian David Courtwright suggests in Violent Land that sexually segregated societies in the United States--frontier towns flush with unmarried men, immigrant ghettos in early twentieth-century cities, mining camps--are behind our propensity toward violence. The immigrants and westward migrants who shaped early America, Courtwright says, were largely young single men, who are-- today as well as then--disproportionately responsible for drug abuse, looting, vandalism, and violent crime. A long-term study of Vietnam veterans in 1998 may explain exactly why: The subjects' testosterone levels, which are linked to aggression and violence, dropped when they married and increased when they divorced. Eternally single men, by extension, maintain high levels of testosterone--a recipe for violent civil unrest.

The one-child policy was instituted in an attempt to hamper the wild growth of the Chinese population. But, in the process of plugging one hole, the government may have left another open. The coming boom in restless young men promises to overhaul Chinese society in some potentially scary ways.

Lianyungang, a booming port city in a Jiangsu province economic belt, is ground zero for some of these changes. According to the China Family Planning Association, it's the city in China with the most extreme gender ratio for children under four--163 boys for every 100 girls. One sunny Saturday morning at verdant Cangwu Park, I count six boys and three girls bouncing on the inflatable castle. Near the ice-cream stand are a dozen sticky-faced kids, seven boys and five girls, feeding pigeons. The children running after kites adorned with Olympics mascots and China's Shenzhou VII spaceship: three and two. The drivers of the cheerful little tanks circling an electric track: three and one.

These numbers work fine on the playground, but, for China's many match- making services, they may prove troublesome. At the Good Luck Marriage Introduction Agency, in a town a few hours' drive west from Liangyungang, two whiteboards mounted on the wall advertise the age, height, and income of available singles. On the day I visit, founder Tao Hui, a fortysomething woman with a bouffant, is watching soap operas in her sweatpants. She hasn't felt the shortage yet, she says. On the whiteboards, a few dozen nameless men line up nicely to a few dozen nameless women. For now, many in the early wave of surplus men are marrying younger women.

"We'll see real problems in eight or ten years," Tao predicts. Her 17-year- old son, she assures me, has good prospects. But she already turns away a lot of single males from outlying villages with no money or education. "If they're ugly and can't find work, there's nothing I can do. No one wants them." [More]
My first reaction to this article was "Marriage lowers your testosterone??"

But enough about me. 

It would not be good to be a neighbor to China in the next few decades.  It also sheds new light on their aggressive foreign worker program in Africa and Italy for example.  While we see it as leaving home, they may see it as a chance for a wife.
What if something actually happens?...

I haven't posted about the WTO process in many moons, as it had exceeded my attention span, but perhaps some reference to still existing is warranted this week. As usual it takes a deadline or deadline missed to generate much measurable progress, but at least we have some interesting aspects to mention.

First, the EU is sending all kinds of mixed signals.  Last week, f'rinstance, the French administration was adamant holding the line on concessions.  Today the EU upped their offer.
The European Union (EU) has offered to cut its farm tariffs by 60% to kick-start trade talks in Geneva.

EU trade commissioner Peter Mandelson said this was the best offer yet from Brussels on the crucial farming issue.

Mr Mandelson urged emerging economies such as Brazil, India and China to reciprocate by slashing their industrial tariffs.

Meanwhile, the US trade chief vowed to help make the talks succeed if emerging nations made a contribution.

Rich versus poor

"When it comes to trade negotiations, the vast overwhelming contribution has to come from market liberalisation rather than the subsidy side," US trade representative Susan Schwab said. [More]

Meanwhile, the US is pinning much of their hopes on the power of China to bring emerging economies along to agreement.
    US Trade Representative Susan Schwab said she was heading to the talks under the auspices of the World Trade Organization in Geneva "cautiously optimistic."

    "Many of us feel a real sense of momentum," she said at a news conference, citing discussions with officials as they work to break the deadlock on the Doha Round, launched in the Qatari capital in November 2001.

    But, she cautioned, "it's not the first time," recalling feeling the same way just before a similar effort -- talks between the US, the European Union, Brazil and India -- collapsed a year ago.

    Schwab, who will lead the US team at a gathering of 30 ministers opening Monday, said the United States has "the intent and hope and expectations that there is a deal to be had."

    "I think a deal is eminently doable ... it is doable next week," she said.

    Still, emerging market economies must make "meaningful market-opening contributions" to achieve a successful outcome of the Doha Round, she said.

    China, which joined the WTO in December 2001, just after the launch of the Doha Round, and has seen its exports explode under free trade, needs to show more leadership, Schwab said.

    "China has a particular obligation to give back to the Doha Round" of WTO negotiations, she said, noting that China has reaped "hundreds of billions of dollars" since opening their trade system. [More
While there could be a breakthrough many doubt our own Congress would approve it, especially if it requires as it almost certainly will, substantial subsidy reductions.  I am less pessimistic about this outlook.  With prices still pretty good and immense pressure from sectors in our economy like finance and manufacturing who badly need this agreement, the farm lobby may meet its match.

It doesn't help that the recent Farm Bill left a bad taste in many mouths. Or that a food crisis has erupted in its wake, regardless of causes. Finally, the farm lobby here is badly splintered as a result of the ethanol/feed price controversy. The meat folks have nothing to lose by pushing for freer trade and much to gain.

I continue to be suckered into hoping for a WTO farm agreement.  If it comes to pass, I think we will approve it over the outcry from subsidy proponents.
Beethoven for Monday...

Ludwig would be proud.

[via Fark]

[Thanks, Aaron]

Sunday, July 20, 2008

When the accountants run the business...

Dan Anderson - who has been doing some of the best blogging around lately - touches a nerve about paying for advice from your dealership service people.
At the dealership where I work I have to account for every minute of my day. On a perfect day, every minute is billable to repairs on a specific machine for a specific customer.

But on most days, I get phone calls from customers asking my advice or opinion about repairs or problems with their equipment. Sometimes customers stop by the shop to ask questions. The questions usually take 5 or 10 minutes to answer, but sometimes stretch to 20 or 30 minutes. The customer hangs up the phone or leaves the shop satisfied with the answers he sought, but I turn around and ask myself, "How do I account for that time?" [More]
For my part, I think this is a typical result from letting MBA's at the company decide how to organize everything. The entire problem centers on the mandate to ascribe costs to customers - not provide service. This decree allows management to make decisions with the appearance of more, even better, data.  The conviction is such scientific management tools will maximize profit.

The result is arbitrary and unhelpful work rules that strike me as obstacles to good customer results.  Some ways around this are out there already:
  • A "miscellaneous" category for allocating such time.  Just as we have a catch-all account for expenses that can't be allotted to a particular field, enterprise, etc. general overhead is one choice. Accountants as a rule hate this, and usually for sound reasons, but even their wish for a "place for everything" must be secondary to enhancing customer relations.
  • Phone trees.  I know - we hates 'em, we does. But the doofuses who call rather than read deserve to cool their heels.  Actually, calls from guys who won't read probably aren't "very important to us".
  • FAQ's.  My wild guess is 90% of such queries can be anticipated by a frequently updated FAQ section on the company website with good - as in Google - search tools.  As more and more of us acquire mobile Internet capability (and you will), those who need verbal hand-holding can be trained to find their own answers.
  • Different levels of service.  Just like airlines, "Premium Service" could include full phone support.  The cost could either be bundled into frequent buyer profits (for instance, guys who trade every year would get it thrown in the deal) or stand-alone subscriptions.  Some of us would pay for the service Dan is handing out for free or on someone else's nickel.
The underlying problem here is to decide which business you are in: selling service to customers or creating neat account printouts.
This would explain Iowa, maybe...

The recent assertion that we make up our minds and then think about it, has provoked some interesting studies about our lack of rationality. While more than a little depressing, civilized history somewhat demonstrates that thinking rationally may not be a necessary component of progress.

What this idea will undoubtedly cause is a flood of exit polling this fall.
The problem, as political scientist Larry Bartels notes, is that people aren't rational: we're rationalizers. Our brain prefers a certain candidate or party for a really complicated set of subterranean reasons and then, after the preference has been unconsciously established, we invent rational sounding reasons to justify our preferences. (Some voters, of course, probably do chose their candidate for "rational" reasons, but I have yet to meet very many of them.) This is why the average voter is such a partisan hack and rarely bothers to revise their political preferences. For instance, an analysis of five hundred voters with "strong party allegiances" during the 1976 campaign found that, during the heated last two months of the contest, only sixteen people were persuaded to vote for the other party. Another study tracked voters from 1965 to 1982, tracing the flux of party affiliation over time. Although it was an extremely tumultuous era in American politics - there was the Vietnam War, stagflation, the fall of Richard Nixon, oil shortages, and Jimmy Carter - nearly 90 percent of people who identified themselves as Republicans in 1965 ended up voting for Ronald Reagan in 1980.

That said, when our preferences in the voting booth can be influenced they are often influenced by completely arbitrary factors. (In a 2004 paper, Bartels argued that "2.8 million people voted against Al Gore in 2000 because their states were too dry or too wet" as a consequence of that year's weather patterns. In other words, these climatic acts of god cost Gore the election.) [More]
So my question is, if Iowa gets any more rain, will it go for Nader or Barr?

Thursday, July 17, 2008

Why we will not "produce" ourselves...

Out of the energy crisis.  The reasons are simple:
  1. Finding and processing fossil fuels (or any type of energy) has to occur somewhere.
  2. That somewhere isn't in the US any more, if local citizens have anything to say about it.
One reason we are short on gas is aging refineries.  But try to build a new one.
 But while the county as a whole favored the project by a 58 percent majority on June 3, most of the rural voters whose land would be affected by the refinery said no.

"I'll keep fighting it," said farmer Dale Harkness, whose front yard could one day face the refinery, which would also need a pipeline to be built.

He and his wife, Carol, vow to fight in the courts to prevent a project they say is speculative at best, and at worst will pollute the land, creeks and skies of this tiny town for generations to come.

"They will never build here. 150 years from now someone will be enjoying that land and this land," Harkness said, pointing to the property around him.  [More]

The big problem with wind farms is access to the gridBut try to string some hi-voltage wires.

We're sitting on umpty-squat bazillion tons of coal. But try to dig it up.
The United States is rich with coal, and mountaintop removal has begun to replace underground mining in Appalachia as the preferred method of extraction because of its efficiency and lower cost. Mountaintop removal involves leveling mountains with explosives to reach seams of coal. The debris that had once been the mountain is usually dumped by bulldozers and huge trucks into neighboring valleys, burying streams.

The coal industry asserts that mountaintop removal is a safer way to remove coal than sending miners underground and that without it, companies would have to close mines and lay off workers.  [More]

We know nuclear power has the best environmental record and operating history.  But try to build a new plant.
I am not saying this opposition is wrong-headed.But these are the reasons we are building our 40 Year Farm Plan based on increasingly expensive energy of all kinds.  (I dunno - 40 years sounded kinda biblical)

While we lightly dismiss the NIMBY syndrome in the US, until another generation is in control who can glimpse a greater good, all the red-faced arguing in the world about energy dependence and gas prices is futile.  It doesn't matter we could produce more.  

What matters is we won't.

*Even though we all know the right answer.
Finally helping the groupless...

One of the significant challenge facing many farmers (like other self-employed persons) is getting health insurance coverage. Often something as seemingly trivial as hay fever will cause an individual application to be declined.  Plus when you apply somewhere else, you then have to check the box "Have you ever been refused health insurance coverage by another company?" - a real red flag to underwriters.

Don't get me wrong.  I support the right of insurers to not buy a sure loss, but comparing that outcome to those who are automatically covered because of employment in a group at least demonstrates a major flaw in how we allocate health care in the US.

This presidential campaign may bring some relief, or at a minimum highlight this problem better.
Among recent developments:

• In the past few months, regulators in California, Connecticut and several other states have fined or taken other action against insurers who revoked individual coverage after policyholders fell ill, leaving them with thousands of dollars in unpaid medical bills.

• In Congress, Sens. Ron Wyden, D-Ore., and Bob Bennett, R-Utah, are pushing the first sweeping, bipartisan health care proposal in years, one that could shift many workers from getting coverage through employers to buying their own insurance. Breaking the link between employment and insurance, they say, would let people keep their coverage when they lose or switch jobs. The proposal requires everyone to have coverage and forces insurers to sell to all applicants.

• Both presidential candidates say they want to improve options for people who buy their own coverage. Democrat Barack Obama says he would create ways for individuals to buy insurance in groups and would require insurers to sell to everyone.

That would allow "individuals and small firms to get all the benefits of the purchasing power of big firms," Obama adviser David Cutler says.

Republican John McCain has made individuals the centerpiece of his health plan. He proposes $2,500 to $5,000 tax credits to all Americans to purchase their own coverage and would end the tax breaks workers get for job-based coverage.

McCain says that would even the playing field between those who get coverage at work and those who buy their own.  [More]
I cannot imagine a goverment action that could improve farm life more.  Thousands of women especially commute to jobs they may not particularly enjoy simply to provide a farm family with health coverage.  Many do without coverage.

I do not advocate first-dollar health coverage (for anyone).  But divorcing health insurance from employment would strengthen employee leverage by being compensated for what they can do on the job, rather that coerced to stay even with lower pay because of a sick child.

[Blogger note:  Today is why I love publishing on Blogger from Google.  Today I sat down to post as found they had added a way to change the background color for text (so I can more clearly differentiate direct quotes from my own words) and the beloved do-over arrows (undo and redo).  And I now have strikethrough capability - which I will use to amend my multiple errors without hiding the original blinder blunder.  All this was free!  I love this country!!]
It's not ethanol - it's Iraq!...

Good news for ethanol defenders.  Since they are adamant in their assertion that energy is inflating food, not biofuel land use, the real culprit is the war in Iraq.  This brilliant post on The Oil Drum (read the comments too) offers the most cogent attempt to wrap logic around this cost of the war.
National Security Network took a look at the issue as well, with a focus on the risk premium. They comment that "some experts estimate" a risk premium of $30 to $40 barrel due to tensions with Iran/etc. That is what my 'off the top of the head' figure would have been for risk premium. But, guess what: even the best analysts, when pushed away from reporters, seem call this a guess, a swag or, at best, an "educated" or "informed" estimate. And, of course, the risk premium doesn't address the question of whether there would be more oil produced absent the US invasion and occupation of Iraq and sanctions against Iran. Nor does it address the question of how much of dollar's fall is due to conflict in Iraq and tension with Iran.

Back to a swag:

These, however, don't clearly answer the questions. Is the Iraq war premium $3?$2.30? $2? A buck? Twenty cents? Or, is there no premium at all? I find a $3 per gallon assertion absurd, just as I would find it absurd to assert that there is no premium at all. But, in terms of defensible analysis, in scratching my head, I return to the short answer:

    Two dollars a gallon is, perhaps, as good a swag as anyone's.* 

OK, what this suggests to me is those who support the war (as opposed to supporting the troops) thereby accept a significant price premium for gas.  And from that follows the possibility that ending our intervention could change the economics of oil.

Given the strong linkage of ethanol profits to oil  prices, foreign policy for corn growers gets a little murky, then.

*swag = scientific wild-*ss guess

Wednesday, July 16, 2008

What if raised awareness is the problem?...

In one of the most discouraging discoveries of my writing career, I ran across this study that seems to demonstrate "educating the public" will only harden attitudes - not aid in the search for compromise.

In his book "Unequal Democracy" author Larry Bartel illuminates the propensity we seem to have for reinforcing positions - not re-examining them. I think this manifests itself in lip-curling charges of "flip-flopping" and our growing cultural divisiveness.

It shows how different levels of political information affect conservatives’ and liberals’ beliefs over whether income inequality between rich people and poor people has increased. The facts are unambiguous - economic inequality between rich and poor has increased very substantially. Yet, as Bartels describes it, increased political awareness (as measured by correct answers to the usual kinds of questions about which party had more members in the House, which party was more conservative etc) has different effects on conservatives and liberals. In Bartels’ words (p.155):

At low levels of political information, the figure shows that conservatives and liberals were about equally likely to recognize that income differences had increased over the past 20 years. However, the perceptions of better-informed conservatives and liberals diverged significantly. Among liberals, recognition of increasing income inequality rose markedy with general political awareness, to 86% for people of average political awareness … and a near-unanimous 96% at the highest information level. However, the proportion of extreme conservatives who were willing to admit that economic inequality had increased actually decreased with political information, from 80% among those who were generally least informed about politics to 70% for people of average political awareness to a little less than 60% among those at the top of the distribution of political information.

Now consider how ardently we engage in public relations campaigns and respond to information broadcast in opposition. Those most informed will work hardest to filter information that could challenge their beliefs.

This graph dovetails with recent research that suggests we make decisions first in our emotional (old) brain and instantly justify them with our logical (new) brain. While a crude oversimplification, it would seem we have long way to go to rational living.

I think the finding also could be taken as suggesting the more informed one is the more skeptical we are of the existence of impartial information. Any contradicting evidence is obviously slanted, and shrugged off. Meanwhile, we duplicate the same techniques for supporting evidence. One need not look farther than the food-fuel debate for an example.

I am sure I engage in this behavior. In fact, one of the surprising results of writing so much of my thinking down where it can be searched accurately - rather than misremembered - is the brutal confrontation of my own changed mind, and how traitorus that initially strikes me. I've gotten used to it, but I think we all struggle to overcome our inborn love of unchanging beliefs.
Absolutely. Their. Best. Yet...

I'm a big JibJab fan, but this one is Smithsonian stuff.

Send a JibJab Sendables® eCard Today!
I think America may be ready to regain their sense of humor.

(This video has been all over TV, so this is just in you missed it.)
Best, worst, whatever...

Yet another list from arbitrary aesthetic and taste mavens about what is out and what is cool: The Best and Worst Designed Websites.

However, curious to me was how some sites made both lists. Maybe one of the attractions of the Web is it has something for everybody.

Nonetheless, some very cool sites.

Tuesday, July 15, 2008

The perfect gift for a wet season...

The unbreakable, self-defense umbrella.

I didn't know watermelons were such a security hazard.

Of course, when you leave the Farm Bureau meeting, you'll either forget it or pick up the wrong one.
Remember, they are starlings...

[Link to video]

There is a fun video currently blitzing the blogosphere of a large flock of starlings swooping over a cornfield. Perhaps many of us in the country are jaded because it's a common sight on late summer evenings. Then too, having a gazillion starlings in your yard isn't quite the uplifting experience as witnessing their effortless group aerodynamics.

But the "miraculous" group action observers gush over could be explained more simply than we want. Emergent group behavior demonstrates how seemingly complex group interection can be the result of a relativley few simple rules.

The trouble is we don't want that answer in a world that becomes more mundane and mechical with every research project.
The human tendency to see the whole as a coherent, willful entity has been misleading, Dr. Hamner said. The coordinated motion of a school or flock does not imply purposeful coordination on the part of individuals, and the feeling of purpose may be deceptive.

Looking down at freeway traffic from atop a skyscraper, Dr. Hamner said, with cars smoothly weaving in and out, one has to fight the illusion that all the cars are cooperating. On a more intimate scale, traffic does not seem quite so well planned.

''Flocks form patterns and the patterns entrain our brain,'' Dr. Hamner said. ''We like patterns - we like patterns in waves, and we like patterns in a fire, and we see a flock of birds in the sky and we see a pattern in the overall movement. That's the beauty of the whole system, but it's also the thing that screws up human investigators.'' [More]

We seem to need some myth in our lives.

Even if it's starlings that communicate telepathically or that tax cuts pay for themselves.
Happy talk...

It is hard not to notice a definite change in tone for some hog industry analysts. Consider one of the best, Chris Hurt at Purdue. This is last March:
Most pork producers who take the market risk are in the midst of another financial disaster. The North American industry remains on pace to suffer the most damaging financial year ever due to a period of twin horrors. They face a period of excessive pork production while also battling feed price escalation of historic proportions. There seemingly is no cure until the financial carnage is sufficient to decisively reduce the size of the breeding herd. [More]
Now contrast with this from Chris just last week:
Pork is cheap in the U.S., but it is “dirt cheap” for many of our foreign buyers since the strength of their currencies effectively lowers the price even more. Pork is at bargain basement prices when you realize that U.S. producers are producing and selling hogs at huge losses. In essence, U.S. producers are providing huge subsidies to U.S. and foreign consumers. Why wouldn’t the world’s pork buyers be banging at our door for these bargains? Why would foreign pork producers want to try to compete with U.S. producers? All this indicates that U.S. pork prices will explode to the upside like other commodities have done. The question is when?


So when does the boom in pork and hog prices come? Based on projections of U.S. slaughter supplies, prices will improve very late this fall and winter and go wildly higher by next spring and summer. When one adds the trade boom, this advances the price escalation. Trade data lags about two months so we are always slow to see those impacts. Trade will likely continue to accelerate and this will encourage even stronger prices than the supply reductions expected for late this year and 2009.

The movement upward has begun for cattle, where prices have been up nearly $10 per hundredweight in the last three weeks. Given the coming declines in pork supply and the more than vigorous export growth, hog prices should not be far behind. If U.S. consumers don’t want to buy up the last of the cheap pork, the world is anxious for the opportunity.

The issue for individual pork producers is whether they can hang on long enough for hog prices to catch up with costs. Expectations now are for live hog prices to trade in the lower-to-mid $50s for this summer and fall then move into the low $60s by winter and on to the higher $60 to mid $70 by next spring and summer. Given prices of corn and soybean meal on July 7, costs of production for farrow-to-finish producers is estimated to be in the low $60s.

The extraordinary losses of 2008 may be offset by extraordinary profits in the last-half of 2009 and 2010. This will especially be true if CRP land is released in 2009, if ethanol receives less support, if 2009 weather is favorable, and if crude oil prices don’t keep moving higher. There are still plenty of uncertainties and most won’t feel relieved about “better times” until they arrive. [More]
Nor is Chris alone in his surprisingly upbeat outlook for hog farmers currently bleeding red ink. These guys know what they are doing, so why they relatively sudden optimism? Especially when you consider the prices for corn/meal in March versus last week.

Some guesses on my part:
  • Analysts truly see a recovery led by exports. Forecasts change, and expecting monthly outlooks to be written in stone is unreasonable. Still, hog producers are in the middle of the swamp - not finding firm ground. While forecasts of happy days may be right, and they are laden with caveats, the change in tone strikes me as notable, if nothing else.
  • The dollar can't find a bottom, so exports could continue to expand and support prices. Just when we think we have a grip on the credit crisis, another bank/investment house/mortgage company raises its hand to share with the class. A sinking dollar is keeping US pork in the driver's seat for world pork prices.
  • Other countries are doing the liquidation for us. On Friday in Denmark, a major pork production country, their "hogs and pigs" report showed a 14% drop year-to-year in hog numbers. It was a big surprise, but confirmed what feed compounders already feared: hog producers were folding up shop big time in DK.
It is also possible that commenters with the horsepower of Chris Hurt are more sensitive to tone and nuance in their communications than ever. Instead of speaking of "horrors" [March] he alludes to better times if you can hang on. A demoralized industry may need this type of encouragement.

But who really needs it are demoralized lenders. Ag lenders have been largely spared the carnage of the rest of their industry, and I bet more than a few boards want to keep it that way. Although institutions panic with a little more gravity than individuals, I suspect many are on the verge of pulling the plug not only on operations operating underwater, but those who still haven't burned through their equity. I don't doubt Chris's words were printed out and taken to loan offices around the country.

Just as grain analysts carefully reassured a hyperventilating grain market after the last crop report, it is not impossible that even the most impartial experts are sensing a need to calm everybody down, and avoid speculation on what an early frost would mean, for example.

This neither duplicitous nor irresponsible. However, it carries larger than normal risks for Chris and others in his profession. Hog producers who do choose to hold on are unloading equity with every truck to the market, and hanging on slows the necessary liquidation.

I don't know where the greater good is served, and I think analysts of note do need to think carefully before speaking or writing. But they are struggling as are we all with the limitations of our forecasting abilities. When you are in new market territory, with new rules and much larger numbers this adventure in agriculture is more likely to be accomplished by trial and error in the dark.

What I am not suggesting is "spin" by Chris and his colleagues. But just as Sec. Paulson and Chmn. Bernanke are trying to calm troubled waters with "jawboning" I see hints that concerned leaders in agriculture are hoping to do the same. I just don't think it will be very effective.

As a culture we are more cynical than ever, and alert to shifts in emphasis. I am an example of parsing reports word-by-word to uncover subtext. Helpful or not, it is a fact of modern communications. At the same time, information flows in cataracts around us, instead of proceeding by the "mouths of elders" (or Cabinet officers, for that matter).

The power of prediction to aid may be one casualty of modern communications.

Monday, July 14, 2008

What I think I learned (Part I)...

Having spent last week in meetings and visits in Poland and Denmark, and several hours on planes returning, and finally all of Sunday figuring out what time it is, I can share some impressions and reactions from the whole exercise.


Poland and Polish immigrants are to the EU as Hispanic workers are to the US. They have supplied Ireland, Great Britain, Denmark, and other countries with skilled, energetic and above all cheap laborers, especially in the building trades. Hence the "Polish plumber" jokes.

That may be on the cusp of changing. As Poland's economy picks up steam, the need for such workers is rising at home, and wages are becoming more competitive. Poland has been a focus for foreign investment to capture their competitive wages and other lower costs as a result of accession to the EU. While they cannot meet the requirements to convert to the euro, the zloty has increased in value considerably (compared to the dollar).

Polish students have in past decades studied Russian as a second language, and the rising economic power of the their neighbor to the east is attracting many there for good jobs. The growing ties to Russia adds a new wrinkle to foreign affairs for both the EU and US, I believe. In the past few years a few more English speakers are common, making business easier to consider there for Western countries.

Their farming sector is struggling to adjust, but despite the enormous number of 8-10 acre farms and badly splintered land ownership, some very large operations are emerging. I toured one such farm - a former state research farm - where the previous director under the communist government somehow managed to not only continue to manage the farm, but also buy roughly half of the 6000 acres and continues to add to his share of the ownership each year. Go figure.

It's good to be high up in the Party, even as it is disappearing, it would appear.

On the road in central Poland, I was struck by the amount of maize (corn) being grown. While dry weather had taken a toll, it is obvious a growing source of corn for the Eu will be eastern Europe. However, their corn machinery technology was poor compared to ours. They still seem to be adapting small grain planting principles to corn, for example. I saw few double disk seed units such as below, mostly just old runner-type shoes.

Thanks to EU subsidies, young Polish farmers can buy a tractor for half-price, and understandably, the waiting list is about 15 month long. As you can imagine, the paperwork is considerable, but even with the bureaucratic legwork, it's good to be a tractor salesman in Poland. Looking ahead, I wonder how this injection of mechanical technology will impact farm consolidation. You can't just put far more efficient tools in farmer hands without pressure to expand. Since the land is not only chopped up into small farms, each farm can be owned by a myriad of owners, meaning either farmers must buy the land to rationalize the fields or work out some different cropping/rental schemes. My guess is this will happen over the next ten years, as producers are slowly coming to some free-enterprise solutions after years of simply doing what was ordered. We often forget how powerful "the way we do things" is for retarding even profitable change. The availability of alternative employment in the country is also an issue.

The arrival of CAP checks from Brussels has also frozen many producers into simply enjoying the good times, but the rewards to early, ambitious consolidators could be immense. Poland could lend itself easily to large scale agriculture, and I think it will not be as long in coming as many there feel.

We will doubtless be hearing more about about Poland in ag news, as their potential to rival France and the top EU ag producer is clear. But to me the more interesting comments concerned where the "next Poland" might be.

More anon.