Thursday, September 29, 2011

This what summer...  

Should be like for kids.

As opposed to split-second over-scheduling.

Wednesday, September 28, 2011

It's not just crop reports...  

That suck.  Even the BEA is having a hard time generating good macroeconomic stats.
There’s one big reason why the current economic weakness in the US has come as such a shock. It’s not the only reason, but it’s an important one, and it hasn’t gotten nearly the attention it deserves: the state of macroeconomic data-gathering in the US is pretty weak.
In particular, the data coming out of the Bureau of Economic Analysis at the beginning of 2009 was way off. Here’s Cardiff Garcia, introducing an interview with Fed economist Jeremy Nalewaik:
The initial GDP estimate for the fourth quarter of 2008 showed that the economy contracted by 3.8 per cent. It was released on January 30, 2009 — about three weeks before Obama’s first stimulus bill passed. That number was continually adjust down in later revisions, and in July of this year the BEA revised it all the way down to a contraction of 8.9 per cent.
The BEA is happy to try to explain what happened here — but whatever the explanation, the original 3.8% figure was a massive and extremely expensive fail. It was bad enough to be able to get a $700 billion stimulus plan through Congress, but if Congress and the Obama Administration had known the gruesome truth — that the economy was contracting at a rate of well over $1 trillion per year — then more could and would have been done, both at the time and over subsequent months and years. Larry Summers warned at the time that the risks of doing too little were much greater than the risks of doing too much; only now do we know just how right he was on that front. (And even he didn’t push for a stimulus of more than $700 billion.)
So what’s being done to beef up the state of America’s macroeconomic statistics so that this kind of monster error doesn’t happen again? The BEA is doing the best it can, but it’s constrained both in terms of its budget and in terms of the quality of economists it can attract. [More]
Of course, the widely touted failure of the stimulus is anything but. It stopped the freefall and until it ran out, sustained our emergence from recession even while states were massively cutting back. But had we but known the real magnitude of the plunge in the 2008 Q4, a larger and more effective stimulus would likely have helped even conservative economists to accept a larger stimulus.
Conservative economist Douglas Holtz-Eakin has a chart he's fond of that demonstrates just how ineffective the 2009 stimulus was. Basically, it shows that the stimulus cost $260 billion and produced only an extra $268 billion in GDP. Personally, I'd take even that, but his point is that the stimulus produced no Keynesian multiplier effect at all. It was just a 1:1 replacement of revenue from one source to another.
But as you may recall, the US Bureau of Economic Analysis recently revised its GDP estimates from late 2008 and 2009, and it turns out the economy was doing much worse than we thought. And if you don't recall this, Michael Linden wants to remind you about it today. He also wants to remind Douglas Holtz-Eakin about it. Because it turns out that when you redo Holtz-Eakin's favorite chart using the corrected data, it suggests that the stimulus bill produced about $544 billion in extra GDP. In other words, a multiplier effect of about 2x. [More]

Bringing an economy from rapid deceleration to sluggish growth is an accomplishment, but anything less than a roaring boom strikes most of us as unsatisfactory. Unless we focus more on short term responses coupled with long term commitments, we will continue to muddle along in the the gray days of stagnation for far too long.

But it should be clear we really dodged a deadly bullet in 2009. Things could be much, much worse right now.

Tuesday, September 27, 2011

Junkbox, Episode II.7...  

The least I can do is share some stuff I've found curious.
If you had any doubts...  

About the attitude of at least some financial traders, this should dispel them.

[Yeah - the posting is really slow, but I sliced my thumb open on some electrical tubing and my whole hand is useless. It will pick up after harvest and construction completion. Honest.]

Wednesday, September 21, 2011

Fuel for thought...  

I have never really followed the argument that higher fuel costs were a big deal for my budget. To be sure, they rippled through input costs (especially fertilizer), but otherwise never moved my needle for cropping decisions. 

Hence my puzzlement at statements like this:
Agricultural production is sensitive to changes in energy prices, and higher energy prices could cause acreage shifts.

With higher energy related expenses from 2012 to 2018 (fuel up an average of 2.6% to 5.3% and fertilizer up 4% to 10%), total acreage for corn, sorghum, barley, oats, wheat, rice and upland cotton would decrease by an average of 0.2% (under the lower energy price change scenario) to 0.4% (higher price change scenario). [More]
Really? In my world, those figures show almost complete INsensitivity to energy prices. In fact, 0.2% strikes me as outside the error band for projections five years out.

Now add in the increased efficiency of Tier 4 engines that will start populating our farms.

But give tractor manufacturers credit. They met the EPA's January 2011 deadline for Tier 4A compliance. (Final Tier 4 compliance is due by January 2014.) Not only that, they created engines that are more powerful and more efficient than what came before. Trials at the Nebraska Tractor Test Lab confirm that.
A few months ago, CNH proudly announced that some of its Tier 4A tractors had set records for fuel efficiency during preliminary trials at the Nebraska Tractor Test Lab. [More]

I will note in passing that this boost - while expensive upfront - also demonstrates the possibility that environmental protection can prompt regulation that nudges us in a better direction.

I am not now actually using less fuel per acre the longer I farm. It's down below 4 gpa, where it has been for years.  

The more interesting energy question for me is why propane isn't dirt cheap like natural gas. The reason is the production process.

Propane is produced as a by-product of two other processes, natural gas processing and petroleum refining. The processing of natural gas involves removal of butane, propane and large amounts of ethane from the raw gas, in order to prevent condensation of these volatiles in natural gas pipelines. Additionally, oil refineries produce some propane as a by-product of cracking petroleum into gasoline or heating oil. The supply of propane cannot easily be adjusted to meet increased demand, because of the by-product nature of propane production. About 90% of U.S. propane is domestically produced.[citation needed] The United States imports about 10% of the propane consumed each year, with about 70% of that coming from Canada via pipeline and rail. The remaining 30% of imported propane comes to the United States from other sources via ocean transport.
After it is produced, North American propane is stored in huge salt caverns located in Fort Saskatchewan, Alberta; Mont Belvieu, Texas and Conway, Kansas. These salt caverns were hollowed out in the 1940s,[9] and they can store 80 million or more barrels of propane. When the propane is needed, most of it is shipped by pipelines to other areas of the Midwest, the North and the South, for use by customers. Propane is also shipped by barge and railway to selected U.S. areas.[citation needed]


So instead of propane being made from NG on purpose, it is more what you have left over after extracting the NG. This makes the economics of production a little more complicated that I thought.

Increased liquids prices can lower gas producers’ breakeven costs by $2 per million Btu, which may boost U.S. output by more than 8 percent through 2014, according to Sriram Vasudevan, a New York-based director at Macquarie Energy Markets.
Propane at the Mont Belvieu hub in Texas gained 3 cents, or 2.3 percent, to $1.36 a gallon on Jan. 10, the highest price since Feb. 3, according to DTN, a unit of Telvent GIT SA, a Madrid-based information provider. Ethane at Mont Belvieu was unchanged at 60.75 cents a gallon. Ethane fell to 43.5 cents on June 23. Butane climbed 31 percent since early July to $1.70 a gallon. [More]
(The "liquids" refer to propane, butane and ethane.)

I also think the no-till claims of drastic fuel usage decreases to be less useful than at first glance. "Rolling" fuel is a $10-15 expense, which today isn't a real biggy or subject to major savings by shifting production methods.

Another reason I think no-till will probably continue its stagnant or diminishing share of acres.

All things considered, this may be all I think about fuel for this year. There are way bigger fish to fry, economically.

Tuesday, September 20, 2011

This Bud's for you...  

Not me. I can't stand the stuff. But my feelings pale in comparison to this critic:
I don’t drink Budweiser and never have. I’ve tasted it three times (a total of about 3 ounces), first while at the University of Maryland, once again in Myrtle Beach, SC, in 1984, and then again in Seattle, in 2005, at the urging of their distributor’s rep, who - correctly - observed that tasting a thing  21 years ago wasn’t giving it a fair shake. It tasted exactly the same: like a wet piece of the cardboard that comes in new dress shirts – and that’s not an original observation. I first read it on the website of the world’s foremost beer critic, Britain’s Michael Jackson. He had almost nothing positive to say about Bud. I don’t either.
Budweiser has always been far more about marketing than beer. The founder of Anheuser Busch, Adolphus Busch, refused to drink his own brew, calling it “that slop” (he was German, of course, so it came out “dot schlop”) and stuck to wine. AB first made its massive incursion into every American beer market not because Americans were clamoring for the fantastic beer but because the uber-financed new St. Louis brewery actually paid the rent for tavern owners who agreed to sell Bud and kick out all their competitors. (The source for all this – principally, along with a ton of my own research – is an article from Chicago journalist and author Edward McCleland, writing in, which you can read here.) When AB was just  moving into its ascendance, there were over 100 small breweries making virtually the same beer as Bud, the mild, aggressively-inoffensive, watery Pilsner, a style that originated in Czechoslavakia as a ladies’ beer; a wimpy alternative for the delicate palates of proper Czech ladies who couldn’t stand the big German Alts and Lagers or the muscular Belgian ales. [More fun reading for Bud-haters]
While I do not stand with the "Over-regulation Hysterics" (more on this in my next TP column), I will grudgingly grant that beer distribution laws have to stand as one the absolute examples of bad, awful, economically perverse regulation. And it's hurting our beer choices just when things are looking up for suds-fans.

The measure is intended to limit the ability of brewers to own wholesale distributorships and restaurants. As explained by Open Market, its primary backer is MillerCoors, which claims to be trying to ward off an attempt by their main competitor, AB/InBev (Anheuser-Busch), to buy up beer distributors and squeeze out other companies’ products. But the state’s microbreweries may be the real victims of the provision.
“Wisconsin’s craft brewers are getting caught in some cross fire between MillerCoors and Anheuser Busch,” the Blue Cheddar Blog explains. If this thing goes forward, it will be much more difficult to start a new small beer brewing business with room to grow in one of the states that loves beer the most.”
“This motion was sold to the legislators by Miller/Coors and the Wisconsin Beer Distributors Association on the premise that it would protect Wisconsin from a hostile AB/InBev take over of many current Wisconsin wholesalers,” the blog continues. “This is simply a farce. Since InBev took over AB, they have had 16 opportunities to buy wholesalers and have passed 16 times. Here is the real truth….Miller/Coors and the WBDA are threatened by the growth that is happening in the craft beer industry. Craft is the only segment of beer that is growing, and it is growing by double digits.”
Wisconsin’s craft brewers, who were not consulted while the measure was being framed, account for only about 5% of sales, but their share is increasing. “Everything in this bill is designed to make it harder for small craft brewers to grow,” complained Deb Carey, a co-owner of New Glarus Brewing. “It is a slimy piece of legislation.”
“We are losing assets and we are losing control over our products,” Carey added. “This debate boils down to the fact that the wholesalers do not want a drop of beer going to market in Wisconsin without them making their 30 percent profit from it. That’s it.” [More]
You read that right - the largest chunk of profit in the lager-chain is distribution! Really makes sense, doesn't it?

Wednesday, September 14, 2011

Can't even imagine...

What being this coordinated would feel like...


[via sullivan]

Monday, September 12, 2011

Another hopeful discovery...  

Watered down.  My belief that fracking had uncovered a legitimate "bridge fuel" to replace coal is still solid, but diminished. As always there are some detail problems.
But if natural gas is, in fact, cleaner than coal, why would it accelerate climate change in the near-term? The key fact here is that burning coal emits two different types of pollutants. First, there’s carbon dioxide, which traps heat. But dirty coal plants also emit aerosol pollution — sulfates and other particles that stay in the air for a shorter amount of time and cool the planet by reflecting incoming sunlight back into space. These particles are bad for human health and cause problems like acid rain, but they do have a short-term cooling effect. (Since aerosols linger in the atmosphere for a shorter period than carbon dioxide, the warming effect eventually prevails.)
Since natural gas is cleaner and emits fewer sulfates, you’d actually get more warming in the short term. Now, since natural gas emits less carbon dioxide, you would get relatively less warming over a longer timeframe, although even then the net climate impact is fairly small. Ultimately, that’s not an argument against natural gas — after all, a slight improvement is still an improvement. Plus, reducing that sulfate pollution would lead to large public-health benefits. But the climate upside, at least, may not be as sweeping as advertised. [More]
Still, it is cheaper and easier to transport, much easier to build plants to burn, and capable of coming online remotely almost instantaneously. These advantages seem sufficient to use NG to replace coal to the maximum extent possible.

But we better still work on adapting to warmer temps and weird rainfall patterns.

Rural schools...  

Won't fit in any of the answers for America's education system. Consider this otherwise good idea for our economy and school system from Kim Manzi:
1. Deregulate schools. A publicly-funded private school is a contradiction in terms; with predominantly public funding comes the inevitable and appropriate demand for public accountability. But we need public schools to have greater flexibility in how they do their work—both in order to discover improved methods and also to tailor approaches to different kinds of students—while simultaneously exposing them to the kind of unsentimental feedback loop for school performance that markets can provide. Education is an industry representing about 4 percent of GDP that is badly in need of deregulation. 
School deregulation is much broader than “school choice,” and should have two key components. First, the federal government should establish a comprehensive national exam by grade level to be administered by all schools that are materially publicly funded. We should require each school to publish all results, along with detailed data about school budgets, performance, and so on, each year. Second, continued federal funding should be contingent on states’ passing model-schools legislation that creates simple, uniform rules for establishing new charter schools, and establishes the absolute requirement that funding follows students. 
The primary role of the federal government would be to ensure consistent, high-quality information, provide normal market regulation to allow education providers to achieve efficient scale, and sponsor rigorous basic research on educational practices. The role of education providers would be to compete entrepreneurially within this framework.
This is not a panacea. In a nation in which about 40 percent of all births occur out of wedlock, many children will be left behind. But better schools will create material improvement. And this method is not theoretical: Versions have already been implemented successfully in Sweden and the Netherlands, and a similar program is being implemented in Britain now. [More]
As always, vouchers and choice mean little when the only school for miles is the one you already have. But the teeny number of students and lack of political clout hint at even further degradation for small schools.

Nor is the idea of spending massive amounts to keep them up to the pace of city schools a good one either. Like much of our rural culture (churches, recreation, retail, etc.) demographics is the obstacle you can't finesse. As long as we continue to lose people, I see no alternative to losing local services, and Australian-like outback lifestyles.

Next up might be rural mail delivery.
I'm not opposed to small towns having a post office. I am not opposed to small, low-population counties continuing to exist as they were drawn at statehood. I am opposed to government spending money to maintain something that is inefficient and obsolete only because it is politically too painful to change it. The reality of rural America is that we've had a great deal for a long time and it's become an entitlement in our minds.
Rural Free Delivery started in 1902 across most of the United States. It cut the number of post offices by two thirds but added a lot of jobs for rural letter carriers, and a valuable service for farm families. The system worked so well that it endeared the "mail carrier" to those who saw the car or truck stop at their mail box each day. What most people don't see is the massive infrastructure behind the letter carrier and the incredible cost of transferring mail across the country so that each of us gets ours in our box, six days a week. [More]
I think Ken is right. From roads to RFD to schools, many of the elements of our wonderful way of life were heavily subsidized by urban taxpayers. That's going to stop, IMHO, regardless of who is president or Speaker.

On the outside chance...  

That House Republicans will actually consider the Obama jobs bill, there are some good things for farmers I didn't realize.

Mr Obama proposed not only extending a 2% payroll-tax cut scheduled to expire in December, but increasing it to 3.1%—half the employee’s normal contribution to Social Security. He also called for an equivalent 3.1% cut in the employer’s payroll tax for the first $5m of payroll, and elimination of the entire 6.2% tax on the wages of new hires or on pay raises for current employees. At $240 billion, those provisions account for more than half the plan’s price tag. [More]
I am assuming that self-employed would get the same breaks which would be worth a few thou to most of us who are maxed out on the SE tax. Even more valuable in the days of high farm income is the expensing continuation (although that merely postpones taxes, as many of us are being reminded).

But because it looks like it may actually help the economy, it could interfere with the GOP goal: defeat Obama. This is a tricky calculation, and if they are correct - keep the economy faltering to win the White House - I wonder that Washington will ever be able to act reasonably on economic matters in the future.

As one senior House Republican aide told Politico, “Obama is on the ropes; why do we appear ready to hand him a win?" That's a cynical question, obviously. But it's also the right question for understanding what is likely to happen next.
An ideal political process would work something like this: Congressional Republicans would take a look at the American Jobs Act and the forthcoming offsets. If they had specific concerns about some of the jobs proposals, they would propose alternatives. If they worried the offsets weren't sufficient, they would ask for more options. As the two parties agree on both the need to create jobs and reduce the deficit, this should be fertile ground for a compromise.
And maybe it will be. But that can only happen if the question is, "what's the best jobs package?" Unfortunately, as that senior House aide suggests, the question is likelier to be, "what's the best strategy for winning the White House in 2012?" And the answer to that question is to further the impression that Obama is a tax-and-borrow liberal who can't get things done in Washington and doesn't have a sound plan for the economy. Working with the president on a bipartisan jobs-and-deficit-reduction plan makes him look like, well, a good president. And good presidents often get reelected. [More]
It's not like the right has ideas that economists think will help either - tax and spending cuts are not the answer to every economic ill. But it looks like we may find that out in the next few years.
Wait - he was a cheerleader???...  

Rick Perry has done little to attract my admiration. But I may be giving him too much credit.
State and federal taxpayers financed his college education at Texas A&M, even giving him the extracurricular opportunity to be a cheerleader. Upon graduation, he spent four years on the federal payroll as an Air Force transport pilot who never did any combat duty.

Then, in 1984, Perry hit the mother lode of government pay by moving into elected office -- squatting there for 27 years and counting. In addition to getting regular paychecks from taxpayers for nearly three decades as a state representative, agriculture commissioner, lieutenant governor and governor, he also receives platinum-level health care coverage and a generous pension from the state, plus $10,000 a month for renting a luxury suburban home, a covey of political and personal aides and even a publicly paid subscription to Food & Wine magazine. [More]
This Bozo could well walk away with the nomination, as it stands today. And I will watch with interest as the only governor to request an ethanol waiver gets corn farmers to vote for him by not being Obama.

Sunday, September 11, 2011

Junkbox, Episode CMON...  

So I started surfing while supper was cooking...

As I spend almost all available time in my new workshop getting the power and water systems running and moving tools, etc., I have found I feel less guilty about posting. As if I had the time anyway.

I think Jan and I may be moving to another phase of our lives, and I'm finally letting go of a lot of the pressures to speak and write above and beyond my FJ obligations. I having more time to farm and already have my growing list of projects (furniture, mostly) for family members.

I'll probably post more this winter, as I am not speaking nearly as much. But I frankly don't know what my goals for Incoming are.

I'm keeping it open, and may surprise you and me both.

As always, thanks for reading. See you whenever...

Monday, September 05, 2011

Three engineers...  

With five degrees, and it took all we had to get this up this weekend.

It should be clear why a 64' x 30' workshop was needed to support this structure.

Sunday, September 04, 2011

Name the world's largest...  

Oil producer.

Conflict of interest...  

Dan Ariely at his best.

Helpful harvest troubleshooting aid...  

In case you had given up...  

I'm still blogging, but shut down following the last week of ProPricing and all our family coming home for Labor Day. We're using this event to get the greenhouse on the GSS.

Some random observations over the last few days.
  • I see more and more examples of business decisions driven by climate change. From the carbon footprint analysis for pork producers to the curious Chinese Icelandic "resort" that could be related to post-ice trans-arctic trade. It is influences like these, from competitors to customers that will shift many opinions.
  • Not to mention current weather trends.
  • I still think acreage for corn will be heavily affected by corn-on-corn performance (or lack) in much of the eastern Cornbelt. What if those years of just-as-good yields were the exceptions due to remarkably good weather? And the possible single-Bt failure is equally ominous.
  • Which leads me to think seed corn pricing could be a debacle, between trait value questions, another "Liberty-like" blunder, and seed supply problems.
  • Our corn is surprisingly wet - like 26%. I had assumed it had given up weeks ago, but apparently not. I am still not optimistic about yields, but our plan to start early (Tuesday) is on hold until we can get more than ear samples. BTW, the slight tendency is for NASS to overestimate the yield.
  • I can't get my mind around the concept of an early frost. Especially after this weekend.
Thanks for your patience.