It just won't die...  

The Corporate Farming Myth seems indestructible by hard data or even reason.  I was reading about how ag singles groups are shrinking and came across this paragraph:

Single farmers face an especially difficult task finding others like them. In recent years, many farm families have sold out to corporations and moved away; the rural population has been gravitating to the cities, leaving small towns to wither, cafes to close, social organizations to decline. Meeting people is harder than ever. [More][My emphasis]

Somewhere along the line the concept of large farms merged with corporate. Simply put, big must mean non-family. But this is exactly what isn't happening.

Most U.S. farms—98 percent in 2007—are family operations, and even the largest farms are predominantly family run. Large-scale family farms and nonfamily farms account for 12 percent of U.S farms but 84 percent of the value of production. In contrast, small family farms make up most of the U.S. farm count but produce a modest share of farm output. Small farms are less profitable than large-scale farms, on average, and their operator households tend to rely on off-farm income for their livelihood. Generally speaking, farm operator households cannot be characterized as low-income when both farm and off-farm income are considered. Nevertheless, limited-resource farms still exist and account for 3 to 12 percent of family farms, depending on how “limited-resource” is defined.[More]

I think what has happened is farms have been conflated with what most of us would call agribusiness. An amazing number of people I have met think ADM and Monsanto run and even own farms. They also assume large operations have deep operational ties with those links in our chain. 

How did this occur? One contributing factor, I think has been our profession's reluctance to be seen as anything other than an agrarian, diversified and nostalgic businesses. We were perhaps rightly afraid of losing public sympathy by showing enormous operations without any puppies or duckies and children bottle feeding calves.

That has changed somewhat, but we are still pretty shy about embracing the large operation as our stereotype. And we are horrified at the idea Joe Taxpayer might discover how freakin' much money we have been making.

This may prove a tactical mistake, as the above article suggest. The connection between "big" and "corporate" is now pretty well fixed in the public mind and being exploited by small farm proponents from local food to organic. The sympathy ploy may have lost its effectiveness.

Pigford stuff hits the fan...  

Boy, are we going to be hearing about this for a long time. A simmering bureaucratic fiasco is about to have its day in the media sun, I think. 

In the winter of 2010, after a decade of defending the government against bias claims by Hispanic and female farmers, Justice Department lawyers seemed to have victory within their grasp.

Ever since the Clinton administration agreed in 1999 to make $50,000 payments to thousands of black farmers, the Hispanics and women had been clamoring in courtrooms and in Congress for the same deal. They argued, as the African-Americans had, that biased federal loan officers had systematically thwarted their attempts to borrow money to farm.

But a succession of courts — and finally the Supreme Court — had rebuffed their pleas. Instead of an army of potential claimants, the government faced just 91 plaintiffs. Those cases, the government lawyers figured, could be dispatched at limited cost.

They were wrong.

On the heels of the Supreme Court’s ruling, interviews and records show, the Obama administration’s political appointees at the Justice and Agriculture Departments engineered a stunning turnabout: they committed $1.33 billion to compensate not just the 91 plaintiffs but thousands of Hispanic and female farmers who had never claimed bias in court.

The deal, several current and former government officials said, was fashioned in White House meetings despite the vehement objections — until now undisclosed — of career lawyers and agency officials who had argued that there was no credible evidence of widespread discrimination. What is more, some protested, the template for the deal — the $50,000 payouts to black farmers — had proved a magnet for fraud.

“I think a lot of people were disappointed,” said J. Michael Kelly, who retired last year as the Agriculture Department’s associate general counsel. “You can’t spend a lot of years trying to defend those cases honestly, then have the tables turned on you and not question the wisdom of settling them in a broad sweep.”

The compensation effort sprang from a desire to redress what the government and a federal judge agreed was a painful legacy of bias against African-Americans by the Agriculture Department. But an examination by The New York Times shows that it became a runaway train, driven by racial politics, pressure from influential members of Congress and law firms that stand to gain more than $130 million in fees. In the past five years, it has grown to encompass a second group of African-Americans as well as Hispanic, female and Native American farmers. In all, more than 90,000 people have filed claims. The total cost could top $4.4 billion. [More of a must read investigatory story]

There is simply nothing good in this scandal - even if you are a bitter opponent of the president or USDA or minority action efforts. The scope, political malfeasance, judicial system failure, and pandemic bad judgement will stoke outrage and justify already hardened opinions about all involved.

While credit must be given to the right-wing media for attacking this program earlier, there is one curious thing about their complaint: lack of any followup effort to prove their assertions of wrongdoing.

The article contains a lot of surprising revelations, but the article itself is a sort of surprise in that it appeared in the New York Times and not Fox News or the National Review or any of the conservative media outlets that are already champing at the bit to roast liberals who had supported Pigford for their malfeasance. The right wing has been whining about Pigford for years. But rather than do the legwork to expose the true problems underlying the program, Breitbart and his ilk were content to put out misleadingly edited videos of Shirley Sherrod to try and smear the USDA as being a haven for "reverse" racism.

Mother Jones' Kevin Drum has a good and simple lesson on why Pigford got out of hand: "You can either set a high bar for evidence of discrimination, knowing that it will unfairly deny compensation to lots of people who were treated wrongly. Or you can set a low bar, knowing that this will unfairly give money to lots of people who don't deserve it."

But that explanation won't change the fact that many will look at Pigford as further evidence that blacks are lazy takers and that federal programs intending to right America's historical and racist wrongs are always wasteful. In other words, it's going to give fuel to racists who will in turn go on discriminating against blacks and Latinos, who will in turn push for institutions to help them get ahead in a racist country. Lather, rinse, repeat. [More]

So why do I think the almost-certain celebration of vindication over this truly monumental scandal could be problematic for conservatives? I remember video loops of Jeremiah Wright and his truly awful blend of activism and religion. I think the replays of his inflammatory language soon convinced many like me the man was a fringe figure and embarrassed the overwhelming majority of minority members. Just like modern redneck reality shows, having these sterotypes rubbed in your face does not encourage rapprochement with political opponents who are trumpeting them.  I just can't imagine the right not running this non-stop for as long as possible. Efforts by Republicans to make inroads to minorities won't be helped, regardless of the justification.

For the administration it is a major failure and deserved embarrassment. For Vilsack, it should cost him his job. For the USDA, another massive piece of hard evidence of bureaucratic incompetence and political subservience. This isn't going to boost generous farm bill prospects, either, IMHO as a result of damning-by-proximity. For direct-to-farmer loan programs, this could be the death knell. (Okay, I think the last two actually pluses) 

For Republicans who supported actions to settle/fund the case years ago just to get it over, a one-note Tea Party primary opponent may suddenly appear, if they don't have one already. For trial lawyers, another stereotype is reinforced, and litigation reform gains a little steam, especially for class action suits. For a justice system as a whole, more public trust is shamefully squandered by corrupt motives and actions.

And even for claimants who rightfully, or more likely, wrongfully receive a windfall, sad experience shows few will handle it well. In the process, they may have reset racial antagonism to a point that should have distant history.

In fact, I don't see any real winners here, except the economy a teensy bit. The vast majority of the awards will be spent quickly - a micro-stimulus, if you will. Much of the legal fee, of course, will likely head to Grand Cayman. 

And perhaps, after reflection across the media spectrum,  the oft-despised NYT will begin to remind people what good investigatory journalism looks like. 

 

SA farmers still struggling...  

One of my worries from my Africa trip was for the future of South African agriculture. Given the abundance of very cheap labor and even more abundant unemployment of the unskilled, most of their farms have been built around employing large numbers as opposed to capital intensive big machinery. Much of their sector is necessarily high-labor products as well - tobacco, fruits, vegetables, grapes, etc.

But I just now found out the farm labor problem threatening the SA ag future is at least partly a political power play.

The agricultural trade association - AgriSA - argues the strike was politically-driven and the farming sector is suffering because of a political battle between the ruling ANC and the main opposition party, the Democratic Alliance.

The Western Cape region is the only province in South Africa ruled by the DA.

Carl Opperman, AgriSA’s Western Cape chairman, says the strikes were pushed there by ANC officials to destabilize the DA.

Opperman argues the national wage increase is not a solution to empower farm workers or reduce poverty. Rather, he says, the government should focus on helping the farms to be more productive by protecting them against international competition.

"The South African farmer is the only framer basically in the world that has a 100 percent free market economy," he said. "We don't get any support from our government. We have got to fight our way in a world market and in our own country. We will need support, we don't need financial support, we need policy support. We need protectionism, we can justify it, not like at the moment where it is a free fall.”

The commercial farmers’ trade union, TAU SA, says that more than 1,500 workers were laid-off in the weeks following the wage increase, in Limpopo Province alone. Whereas in the Western Cape Province, many farmers say they will not be able to hire casual farmer workers again for the winter harvest season just weeks away. [More]

It is almost refreshing to hear a clear, blatant call for protectionism instead of some euphemistic language that promotes trade barriers without seeming to. Due to the odd, pervasive spin of SA government information and data, it isn't east to pinpoint their ag imports, but appears two contentious commodities are chicken from Brazil and olive oil from the EU.  

The need for a second viable political party is IMHO absolute. The level of corruption and incompetence of the ANC can only be improved by a presence of the real possibility of loss of power by a split black African vote. 

The continued decline of SA agriculture would cripple efforts to anchor the rise of sub-Saharan economies. But the Catch-22 here is one of the most logical solutions for individual farmers is to switch to capital-intensive (machinery) methods and lose their dependence on increasingly unreliable labor. This is really bad news for nation with far too few jobs already.

Another arrow problem...  

Just as the R & R uproar in the economics community has reminded us correlation is not cause and sometimes it's really hard to see which way the causal arrow points, another landmark study receives a startling new interpretation.

From the introduction to a refreshingly contrarian article by Stephanie Stern, a law professor at Chicago-Kent College of Law:

In 2007, accompanied by a firestorm of publicity, Robert Putnam announced that residential racial diversity causes declines in social capital. Social capital is a prominent theory, popularized by Putnam, of the aggregate value of citizen participation in associations and organizations, social ties and networks, civic engagement, trust, and norms of reciprocity. In a study of forty-one U.S. communities, Putnam found that people living in racially diverse communities were less likely to work on a community project or volunteer, less likely to expect others to cooperate to solve collective problems, reported lower trust in others, had fewer close friendship ties, expressed less confidence in local government, and registered to vote lessfrequently. Most provocatively, Putnam found a strong “hunker[ing] down” effect, contrary to both the constrict and contact hypotheses of integration, where racial diversity caused residents of diverse communities to withdraw from social and civic life and report lower trust in members of other races and their own race. Unsurprisingly (to all but Robert Putnam it seems), his research provoked a torrent of political commentary and academic response. Conservative commentators argued that the findings called into question the value of racial mixing, headlines trumpeted the conclusion that “greater diversity equals more misery,” and Putnam’s research featured in a recent amicus brief as evidence against the value of affirmative action in college admissions. Sociologists and economists reanalyzed Putnam’s data and conducted their own empirical studies to assess his findings (these studies indicate that the diversity decrement is statistically significant, but small). Legal scholars accepted, albeit unhappily, the conclusion that racial diversity diminishes local social capital.

Curiously, in the handwringing about the harms to social capital and the ensuing debate, no one questioned whether the problem was social capital. From a property scholar’s perspective, one plausible interpretation of the correlation between high social capital and low diversity is that high social capital reduces the costs of excluding minorities (i.e., the non-dominant race in a community) and maintaining racial homogeneity. Holding preferences for racial homogeneity constant and positive, there may be reverse causation: high social capital, in the form of close social networks and strong tastes for organizational participation and voluntary action, may facilitate community organizing to exclude by race or class through both informal and legal mechanisms. The motivation for exclusion may be preferences for homogeneity, increased property values from exclusionary land use policies, or in predominantly minority, lower-income areas, concerns that white gentrification will make housing unaffordable. Conversely, low social capital may make it difficult for residents to organize to exclude and may result in greater racial fractionalization.

More succinctly: social capital facilitates NIMBYism.
The whole point of social capital, after all, is to facilitate collective action. It's usually bandied as a cure for commons-type problems like littered parks or crime-infested streets, but there's no reason to assume a neighborhood will deploy  its social capital only for wise and benevolent ends.  A neighborhood that is adept at organizing litter patrols and crime watches will also likely be adept at organizing opposition to real estate developments that threaten to add economic or racial diversity. If this is the case, then we should expect, rather than be surprised, to see high social capital negatively correlated with diversity. [A little more after my generous excerpt - sorry]

I find this idea plausible at least. Our automatic reaction to ascribe the logical flow of cause and effect makes our initial reactions "sticky", I guess. Being able to devise tests that can detect the chicken from the egg is crucial to preventing the establishment of false world-views and even faultier solutions for problems.

Junkbox, Episode MMXIII⚔...  

Another 1.3" (Tuesday night).  What's a boy to do?

• The rule of thirds for your Facebook photo 
• Maybe calorie menus are having some effect 
• All this economic upheaval and they changed the spelling, too 
• Windows 8: Not Vista, but not great either.
• The Big Bag O' Wine
• The continuing RFS headache
• The growing concern on the right over long-term unemployment

Looks like we might get in by midwe-... wait, what's that in the forecast?

Dead sport walking...  

John Kass, the reporter/columnist who had to follow Mike Royko, has never been a favorite of mine. But I couldn't help noticing his surprising column today.

With all that college beef on parade this week, the NFL draft is a wonder of sports marketing, a televised pageant for the multibillion-dollar American football industry.
But there's something football fans should know:
Football is dead in America.
...
Make no mistake. I loved football. I loved it desperately. Even now, four decades later, I remember endlessly damning myself for being too small to play it at a big-time college. I ached for it, for the violence of it, for the training, the salt pills and no water on hot August fields, the helmet scabs on the forehead, but mostly the collisions. And I still love it, but I can't shake the guilt of supporting the physical ruin of great athletes. My wife and I wouldn't let our sons play. We just couldn't.
Future historians may explain all this in terms of cultural change, of more information about concussions, spinal cord injuries, paralysis and brain damage, and another football killer, taxpayer liability.
Some 4,000 former NFL players have joined lawsuits against the league for allegedly hiding the dangers to the brain. This follows a rash of depression-related suicides, with some players shooting themselves in the chest so that their brains could be studied after their deaths. One of these was the great Chicago Bears safety Dave Duerson. He left a suicide note, asking that doctors examine what was in his skull after a lifetime of bashing it. College players have also filed suit.
Eventually, lawsuits will overwhelm the high schools. And high school superintendents won't be able to increase property taxes to pay for the additional cost of subsidizing the game.
"The idea that five years ago I would have forbidden my kids to play football is hard to imagine," said Joseph Siprut, a lawyer representing former Eastern Illinois University player Adrian Arrington and other athletes in federal court over the long-term effects of head injuries.
"It never would have occurred to me. Now, given what I know about the concussion issue — first as a lawyer who has litigation, but also as someone who reads the papers — for me as a parent, I don't think I would ever let my kids set foot on a football field. Ever." [More]

The NFL has decent support among younger people compared to other major sports, but I don't know how fast that would erode if fewer young men were playing in high school. Given the personality/image of Kass, the idea he would forbid his children to play is significant to me.

I also think pro football has, like other sports, suffered from public aversion to astronomical salaries, unattractive conduct on and off the field, and high ticket prices. Shorter player tenure discourages fan loyalty, and cable TV pricing shrinks coverage.

The NFL needs a major health issue like it needs a blow to the head.

Inequality in the blood...  

I have long asserted that the most relevant predictor of your success as a farmer was if your father (or father-in-law) was a successful farmer. While our profession may be an extreme due to the nature of landowning, it is not alone.

The advantages of a privileged background don’t stop at graduation. Tufts economist Linda Loury suggests that half of all jobs in the U.S. are found through family, friends, or acquaintances. Canadian economists Miles Corak and Patrizio Piraino look at how often men end up working at the same company where their father worked, finding that as many as 40 percent have done that at some point. The proportion rises to 70 percent among the top 1 percent in income distribution. This helps to explain why the relationship between the earnings of parent and child is even higher at the top end than it is across the population at large, according to Corak. One-third of successions between chief executive officers in publicly listed companies in the U.S. involves an incoming CEO related by blood or marriage to the old CEO, the founder, or a large shareholder. That’s bad news for the share price, according to Francisco Perez-Gonzalez of the NBER, but clearly good news for the newly appointed relative. [More]

The longer I look at this troubling (to me, anyway) trend the less sure I am if it is correctable (assuming we can agree on what correct looks like). There seems to be a snowball effect that can only be overcome by astonishingly poor choices of the wealthy (NBA stars, for example) or extraordinary rare coincidences of luck and opportunity - usually in a developing economy or entertainment industry.

But wealth inequality feeds income inequality to accelerate the trend. The American economy is already past the peaks we have seen historically.

[Source]

The debate rages, and rightly so, about possible cures or even the advisability of a cure. I don't see our tax system getting radically more progressive anytime soon. More to the point, I don't the the old reliable equalizer, education, packing the same therapeutic power as before as systemic changes in our workforce lower the value of many degrees, and higher education costs spiral beyond the payback threshold.

The biggest question for me is how our economy will look and work after another decade or so of lop-sided growth?

 

Gray work...  

There has always been an underground economy in the US, but most of us have thought of it as essentially illegal stuff - drugs, mob, gambling, etc. That may be the smallest part of it, as effects of the Great Recession drag on.

Another clue to the underground economy comes from government data on the percentage of Americans who forego banking services, finding other ways to handle their money. The percentage of Americans who are "unbanked" or "underbanked" rose from 25.8 percent in 2009 to 28.3 percent in 2011. Some of those people may be low-income customers getting hit with a slew of new banking fees, forcing them to reject traditional banking. But others may be choosing to keep their money out of the mainstream financial system so that nobody checks up on them.
We tend to think of the underground economy as a place where Mafiosi and other types of criminals operate. But that's more or less a constant. The new underground economy may entail a lot of people doing honest work, such as freelancers and consultants who used to be full-time professionals, computer-repair people laid off from corporate IT departments, home remodelers benefiting from a revived housing sector, people running eBay business, and retirees earning a few extra bucks by running errands for busy parents. The Internet obviously makes it easier to work from home these days, another boon for the gray market. [More]

There are many things that could be causing this, but taxes and regulations usually get most of the blame. Also employers keep hired workers in the gray market to enjoy significant advantages over the formal labor market.

The increasing importance of the gray economy isn’t only a reaction to the downturn: studies suggest that the sector has been growing steadily over the years. In 1992, the I.R.S. estimated that the government was losing $80 billion a year in income-tax revenue. Its estimate for 2006 was $385 billion—almost five times as much (and still an underestimate, according to Feige’s numbers). The U.S. is certainly a long way from, say, Greece, where tax evasion is a national sport and the shadow economy accounts for twenty-seven per cent of G.D.P. But the forces pushing people to work off the books are powerful. Feige points to the growing distrust of government as one important factor. The desire to avoid licensing regulations, which force people to jump through elaborate hoops just to get a job, is another. Most important, perhaps, are changes in the way we work. As Baumohl put it, “For businesses, the calculus of hiring has fundamentally changed.” Companies have got used to bringing people on as needed and then dropping them when the job is over, and they save on benefits and payroll taxes by treating even full-time employees as independent contractors. Casual employment often becomes under-the-table work; the arrangement has become a way of life in the construction industry. In a recent California survey of three hundred thousand contractors, two-thirds said they had no direct employees, meaning that they did not need to pay workers’-compensation insurance or payroll taxes. In other words, for lots of people off-the-books work is the only job available.
Sudhir Venkatesh, a sociologist at Columbia and the author of a study of the underground economy, thinks that many workers, particularly younger ones, have become comfortable with casual work arrangements. “We have seen the rise of a new generation of people who are much more used to doing things in a freelance way,” he said. “That makes them more amenable to unregulated work. And they seem less concerned about security, which they equate with rigidity.” The growing importance of services in the economy is also crucial. Tutors, nannies, yoga teachers, housecleaners, and the like are often paid in cash, which is hard for the I.R.S. to track. In a 2006 study, the economist Catherine Haskins found that between eighty and ninety-seven per cent of nannies were paid under the table. [More]

To be fair, I resisted for most of my career hiring full-time help largely because of the paperwork headache and liability issues employment adds. I did handle part-timers by the book (mostly).

But it is the whacking size of this hidden economy that interests me. While our economy could be doing much better, it may not be doing as badly as we think. We're just not getting the tax revenues from it we should be.

Maybe a carbon tax or other consumption type taxes (VAT) would be a better way to fund government than increasingly hard-to-track income.

Oddly soothing...  

I dunno - you just get locked on, somehow.

Saves a trip to the farm store for entertainment.

 

Junkbox, Episode MMXIII☂...  

On the bright side, the tile are working pretty well.

• The obligatory drone story: The Dehogiflier
• Maybe we should be looking at Reddit more.
• Where the poor people are.
• Old family companies
• Drawing the arrow between growth and debt just got messier
• The politics of SNAP and farm bill blowback
• The landline battle - soon in your state!
• The best short summary on H7N9 I have seen

Now up to a 90% chance of over 1" on Tuesday.  As one friend told me at church, "At least the South American seed corn had time to get here."

The good death...  

All the anti-meat fervent has me questioning if fuller disclosure would help any or not (from the perspective of the meat industry). Without a doubt, the slaughterhouses of today are much, much closer to humane than they have ever been, but is it enough for consumers to face the basic idea of killing animals for food?

The next cow, the cow I watch die, is quiet. It is black. It comes casually down a walkway. It steps into a squeeze chute, the metal hugging cage that closes in on the cows’ sides to calm them. Scott Towne, the guy in charge of the killing, hits it with a CASH Knocker, a blank shell shooting from a metal apparatus at the end of the long, wooden-handled device and into the front of the head above the eyes, denting the skull but not penetrating its brain, rendering the animal insensible. Instantly the cow’s eyes close. Its neck is lax and its mouth open, easy as a child asleep at the dinner table, or a businessman asleep on a plane.
Stopping at a bar on the way home to bourbon-gargle the lingering deathiness and nausea from the back of my throat, I ponder the cow’s existence. Whether or not farmers should torture animals, or keep them in disgusting and overcrowded and shit-filled conditions, or murder them slowly, are not even questions. Prather’s Northern California grass-munching herd is obviously as well treated as any in natural life, but “good” death is not so easily codified.
“Can you make a slaughterhouse perfect?” Grandin asked in Iowa. “No, nothing in this world that’s a practical thing can be made perfect. That’s just impossible.”
For those who kill animals for a living, making peace with those imperfections is a daily affair. Sure, Prather’s Towne looks tough enough to kill you in a bar fight, but he smiles easily, giggles sometimes, even. He tells me it makes him sad when the cows aren’t stunned on the first shot. He says that that can happen anywhere, even when a small farm hires him to kill one cow in a field. At Prather, it happens about twice each slaughter day. And the cow that was mooing on our way in isn’t the last one we hear that morning; another starts mooing in the squeeze chute. Because its skull is too old, too thick for a stunner, Towne has to use a 9 mm instead. It moos and moos until Towne yells, “Fire in the hole!” and shoots it between the eyes.
Two cows mooing and two cows having to be shot twice out of 21 is below Grandin’s standards of acceptability, and a higher percentage than at her usual McDonald’s plant audit. But even if I did believe a cow possesses a level of consciousness equal to a human, having seen Prather’s cows living and dead, the Rickerts do live up to their oft-stated goal to “Give them the best life possible.” [More worth reading]

Like most farmers of my era, I have killed animals, dogs, cats, cows, even helped my friend put his horse down, but did not come away from the process with anything but regret and a sense of duty accomplished. I have seen suffering animals as well, and those memories still haunt me more powerfully, though. Maybe there is no way to harvest other animals without an emotional toll, and maybe we ought to acknowledge this and appreciate those who process things we obviously like to eat a little more.

More humane immigration laws would be a start.

Inflation (yawn) Watch, ...  

Maybe the Great Gold Unload last Monday was an indicator, but it's getting even harder to make a case for runaway (or even ambulatory) inflation in the US and most of the developed world.

But the bigger story behind McDonald’s falling margins is that weak demand, driven by high unemployment in much of the world, means that McDonald’s feels no real ability to raise its prices, even as many of its costs are stable or rising. The reason for falling margins, said Thompson, “is because consumers are very sensitive to price. So we don’t have the inflationary environment or the consumer sentiment environment to go out and take the kind of price increases that historically we did.”
It’s no one thing driving it; rather, it is a mix of things reflecting the overall economic environment: Cash-strapped consumers buying more value items off the dollar menu for which margins are low than premium products; fixed costs like management salaries, equipment depreciation, and rents that are stable to rising; and an inability to hike prices without seeing customers flee.
“We do believe this is not a structural kind of change,” Thompson continued. “We think that it is based  upon the economy at this point.”
In other words, what McDonald’s shows is one of the central realities shaping the economy: As long as growth remains depressed and unemployment high, whether in the United States or around the world, inflation probably isn’t the thing that policymakers need to stay awake at night worrying about. [More]

That doesn't mean any end to econopocalytic predictions from those who disagree with our monetary policy. I hear the phrase, "when, not if" in virtually every economic speech to ag audiences. But if "when" is a really, really long time from now, doesn't "if" become more applicable?

I am becoming suspicious that the "hardened" fear of inflation will last much longer than we can imagine. Inflation hawks, like hard-right politicians (significant overlap there, I would suggest), do not have tools for changing their minds. Consequently there cannot be rational, useful debate on actions that could change our approach to our economic problems.

Given the simplicity of the argument, the real questions is who they are trying to convince or, to put it differently, who are the ones who have opposing views on the inflation / unemployment outlook and monetary policy. I see two set of voices that are critical of the current central bank actions. First, there are those scared of inflation, or as Evanst put it, those who are afraid of "unlocking the long-ago-vanquished inflation demons from the dungeon". Given how low inflation has now be for decades and how anchored inflation expectations are, it is difficult to understand where those fears are coming from. The second argument might sound more rational:  if you want inflation to be around 2% in the long-term and given that we know that inflation will be higher one day when the recovery gets stronger, it might be ok to see inflation below target for a significant period of time (while the recovery is weak). But this argument depends on the slope of the Philips Curve. In a world where the Philips Curve is very flat (as it is for all these countries), it is very unlike that any fast reduction in unemployment will bring any significant inflation in the future. Therefore the fear of inflation when the recovery is strong, is not supported by the data either.
The panel discussion left me with a sense that over the years we have developed an unfounded fear of inflation and a very asymmetric view on what is admissible: being below the target is ok, being above cannot even be discussed as an option. And it was refreshing to see voting members of the monetary policy committees of the US Fed, Bank of England and Riksbank saying this explicitly -- it was just the ECB that was missing. [More]

I had thought by now I would be more leery of expecting a future of low inflation, but it seems the response of too many thought leaders virtually guarantees it.

For my son...  

Whom I love but will never understand re: the following.

 

[Update: backstory here]

Seriously, Lando and Leia?  Wrong that is.

(Assuming Aaron wasn't tweeted this clip hours ago, of course.

What to do...  

When you don't "get" the Latest Thing. Let's just hypothetically say this references an elderly but still hip blogger/writer and say, Facebook, to pick a subject entirely at random. Even as his less cyber-savvy friends (and even the occasional wife) have gotten on board, he still treats it with disdain.

Well, folks, he's not the only one coping (or not coping) with this dilemma.

The fact of the matter is our professional lives now churn with change. Markets change. Technology changes. Consumers change. Channels change. Competitors change. This is an era of disruption. Not disruption as the occasional event, but disruption as the constant, chronic condition of our professional lives. You would hope that we were getting better at understanding and managing change. And sometimes we are. Too often however, our response is to ignore and forget change, to fake our way through it, to pretend an engagement and a mastery we do not have. And that's bad. That means we are not getting better at change, but steadily worse. We are denying disruption, instead of adapting to it.
We seem to adopt and adapt to something like Twitter by stages, a little like Kubler-Ross' five stages of grief. Except in this case, it's a passage from confusion to congratulation. Self-congratulation.
Stage 1. Confusion. We don't quite get it. We sign up for the new app. We give it a whirl. Not really getting it. By this time, gurus are reassuring us that Twitter is the greatest thing ever. But that doesn't help. We're still not getting it. And so we turn to Stage 2.
Stage 2: Repudiation. It turns out there are lots of people who don't get the new technology and now social life is a little like a competition to show that we're not "falling for it." At this point, there can more social capital in saying that we don't like the tech than that we do.
Stage 2 is marked by snappy one-liners. With the practiced ease of stand-up comedian, we can now be heard saying stuff like, "Twitter. What could I possibly say in 140 characters?" Or, "FourSquare? Why would I want to be mayor of my living room."
Stage 3. Shaming. This is when we are so persuaded that we're right and the new innovation is wrong that we are prepared to make fun of the credulous among us. I was on the receiving end after I gave a presentation on new media to a large advertising firm. When I finished, three planners took turns patting me on the head and telling me, "This Twitter thing. It's just a fad. Give it a couple of months and it will go away." We heard a lot of this sort of thing about Pinterest in the early days. Now it's valued at $2.5 billion.
Stage 4. Acceptance. By this time, the innovation is taking off. The middle adopters are signing on. It's clear now even to us that Twitter is here to stay. Confronted by accomplished, irrefutable fact, we cave in and sign on.
And that brings us to Stage 5.
Stage 5. Forgetting. This is where we destroy the evidence. Now we are inclined to act as if we always understood and approved of a world installed with new innovation. [Please read the rest for suggested therapy]

I'm sure this gentleman has used the described procedure before, but has altered his memory suitably to allow him to maintain his out-sized ego. The author does have some concrete steps that might help if you finish the short article. Maybe the fellow in the example should try them.

Junkbox, Episode MMXIII♆...  

Could be a while before we plant.

• For farmers, this is what hell looks like.
• Another Africa story
• Phrase of the Year: Hourglass Economy
• An obligatory link to gold
• It's official: They are now everywhere.
• Inflation Watch: Just piling on.
• Major economist admits errors. (Good macro summary)

0.5" today, so far.

Every time...  

We have satellite radio (SirusXM) in both our cars. Of course, you get the free trial subscription and then the rate goes to $15/mo.  Having had this for several years, I know the drill.  You wait for the special offer which is usually half-price for a year. Then, unless you call up and cancel just before it runs out, they automatically charge you full rate for a full year.

Sirius does send a 45-day warning, but of course, you have to remember. When you do call up to cancel, you will be plied with (wait for it) the half-price offer.  I understand all the behavioral economics going on here and do not object, but I asked the guy if there is anyway to save all of us some time without this annual dance.

Nope. So it appears not only is there no free lunch - there is no free half-price lunch either.

[Please feel free to write in with any other tactics you have found productive for XM.]

Another problem for red meat...  

While the recent salami-cancer link has been disputed, new evidence of another culprit is striking even skeptics of the red-meat-cancer linkage.

The researchers had come to believe that what damaged hearts was not just the thick edge of fat on steaks, or the delectable marbling of their tender interiors. In fact, these scientists suspected that saturated fat and cholesterol made only a minor contribution to the increased amount of heart disease seen in red-meat eaters. The real culprit, they proposed, was a little-studied chemical that is burped out by bacteria in the intestines after people eat red meat. It is quickly converted by the liver into yet another little-studied chemical called TMAO that gets into the blood and increases the risk of heart disease.

That, at least, was the theory. So the question that morning was: Would a burst of TMAO show up in people’s blood after they ate steak? And would the same thing happen to a vegan who had not eaten meat for at least a year and who consumed the same meal?

The answers were: yes, there was a TMAO burst in the five meat eaters; and no, the vegan did not have it. And TMAO levels turned out to predict heart attack risk in humans, the researchers found. The researchers also found that TMAO actually caused heart disease in mice. Additional studies with 23 vegetarians and vegans and 51 meat eaters showed that meat eaters normally had more TMAO in their blood and that they, unlike those who spurned meat, readily made TMAO after swallowing pills with carnitine. [More]

This mechanism stikes me as plausible as well. Since Jan has been shifting us to less beef and pork for years, it won't require a major change in our diets. (It doesn't hurt I've become fond of dry white wines either, I suppose.)  Mild adjustments are my kind of lifestyle changes.

I'm not alone.

Well, today I got a big challenge to that theory. Scientists have isolated what looks like a plausible mechanism by which red meat damages your heart: the gut bacteria of frequent meat eaters process carnitine, a chemical found in red meat, into something called TMAO. And TMAO is associated with a higher risk of heart attacks.  

Interestingly, this only happened to frequent meat eaters; vegans who ate a steak did not show elevated blood-levels of TMAO. Over time, their gut bacteria had changed, so they no longer had lots of bacteria that like to eat carnitine.  

I tend to discount dietary fads, but the association between red meat and heart disease is sufficiently long-standing that I'm trying to cut back to once a week. If we see more studies like this, I may cut back even further.
Of course, as many of you will no doubt point out in the comments, it's impossible to be sure. New studies could overthrow these results any time.  
But that's always a problem in this uncertain world. In this case, my best guess is that red meat probably promotes heart disease (which anyway runs in my family). And the cost of eating more poultry and fish and less steak seems relatively small. Much smaller than dying of a heart attack in my sixties. [More from a food-fad skeptic]

This furthers my guess that beef consumption will continue to decline in the US as it climbs elsewhere (areas where folks are "under-beefed). Yet another segment of agriculture with a growing steak (hee-hee) in freer trade.

Africa: On the ground - #6 Mozambique...  

This post will finish my dilatory reporting of what I discovered on my trip to Africa. The final stop was the working farm at Ruace, MZ (not on any map I could find) somewhere westish of Gurue.

(The dotted line is how we might have driven there - some uncertainty on the route.)

Here, unlike the farm in TZ, were crops actually underway. More than 3000 acres of soybeans had been planted and were in the pod-filling stage (2/28). Slightly alarming to me, the combine for the farm was still on the ocean somewhere. I found out after I got home, it had arrived (3/27) in Maputo (over 1200 miles to the south). The platform head was in container in Duban, SA - even father from the farm.

This is the land before clearing.

While I find this worrisome, it could be the upcoming dry season means you can just leave the beans standing for weeks after they ripen with few worries. (For example, in SA, the farmer told me he field dries corn to 12.5%).  I hope so.

This farm is in an area much more densely settled then TZ - at least with humans. Surrounded by subsistence farms that is the way of life for ~85% of Mozambicans, they employ a relatively (by our standards) large number of people at ReidoAgro.

In addition, as I talked about on the show, the farm has an active and successful "extension" program to help select local farmers boost their productivity by sharing equipment (4-row planter), advice, some tillage, harvesting (if the combine arrives) and a sales outlet. That humanitarian aspect of the business plan is the most attractive part of the whole enterprise IMHO.

(The free clinic below.)

Certainly the plight of the locals is compelling. We heard stories from the resident Peace Corps volunteer, Sarah Fairchild, of efforts to do minimal family planning to prevent babies from being born while mothers are still nursing a sibling, as it usually threatens the life of the older child and mother due to simple lack of nutrition. This year the previous rains meant the people were is pretty good shape food-wise, but we were just entering the "time of hunger" (just before sweet-corn stage) when  supplies are lowest.

I must admit as well to a certain uneasiness with plans at ReidoAgro for irrigation when the largest health threat to the local population is lack of clean water. It's not their job, of course, but the juxtaposition of the two situations is certainly morally unsettling.

Fuel is hauled from Gurue (about 50 awful miles away) in a ~300 gallon plastic tank almost daily. This ad hoc arrangement is one of the many obstacles to efficient operations. Working capital is limited, which also constrains possible solutions.

My impression of the farm is perhaps all frontier efforts are this challenging, but the number of clearly urgent problems (like the combine) is deeply concerning. Acquisition of land is one thing - making it produce income is another.

I am also beginning to understand why Chinese officials have been in no hurry to modernize their farms. What would they do with the hundreds of millions of small farmers who would undoubtedly be replaced by more efficient large operations? While ReidoAgro is not moving small farmers out wholesale, like a neighboring Brazilian operation, the farm will not employ as many as it displaces, I think. Even with the boost to the local economy, the bulk of the profits will flow back to outside investors. The change in local lives is unclear.

I don't have any better idea about how to develop agriculture in incredibly poor countries, but I am beginning to believe it must be done simultaneously, if not after, industrial development offers an escape from subsistence farming. Otherwise it despite the best intentions simply deepens the plight of the rural poor, although likely with some improved infrastructure (roads, etc.)

Modern agriculture is moving away from labor to technology everywhere. Expecting it to lift masses of rural poor may be unrealistic, without an enormous expansion of the extension farmer program for which funding is problematic.

In MZ, the exploitation of mineral and energy resources could at least add a government revenues, but recent history suggests much of that will be embezzled and wasted, with the remainder supporting a permanent welfare class. Again, I've got nothing to offer instead, but the Resource Curse is real, I think.

Efforts like Aslan Global may provide an example of a better way to develop agriculture in the poorest parts of the world. It may also provide some clear data on what doesn't work particularly well. Both are valuable contributions.

An ethanol solution?...  

While it becomes clearer and clearer that any market is a tricky thing to try to railroad, the byzantine economics and regulations for ethanol made a good but now apparently futile try. Scott Irwin and Darrel Good have been wading through the nested blending requirements and done some serious math to reach a recommendation on how to avoid the trainwreck.

We believe our proposal to freeze RFS2 mandates in 2014 and 2015 at 2013 levels represents a pragmatic way forward. It is realistic in that it would not force large scale adoption of E15, E85, or biodiesel. This is particularly important since it is by no means clear whether the infrastructure investments necessary for widespread E15 or E85 adoption could actually be made in this time frame. There is also uncertainty whether sufficient biodiesel production capacity would be available. However, the proposal does provides incentive for modest growth in E15 and/or E85 penetration by keeping the mandate for renewable fuels above the current E10 blend wall. Even with relatively slow growth in domestic ethanol production through 2015, the proposal would maintain a high rate of use of ethanol production capacity and would provide for modest growth in the large demand base for corn. An increasing percentage of the domestic biodiesel capacity would be utilized without straining that capacity. Similarly, requirements for biodiesel feedstock would grow, but the growth would not overwhelm those markets. Obligated parties in the motor fuel supply chain could more easily meet their blending obligations with a combination of physical blending and use of RINs stocks. Finally, implementation of the proposal would also likely reduce the price of D6 ethanol RINs and eliminate the differential impact of those high prices on obligated parties. The key for the success of the proposal is that regulators, legislators, and industry participants use the next two years to develop a mutually agreeable biofuels policy beyond 2015. [More]

I'm not so sure the renewable lobby will go along with this. Any messing with the RFS means is could be messed with more. The general knee-jerk response to rentier threats is absolute inflexibility. But doing nothing means reaching a point of near economic absurdity as the ability to produce what the law demands just isn't there. Really, really strange things could happen as blenders try to stay legal.

I kinds hope the RFA does refuse any compromise just to see what happens.

I think you need to watch this...  

I have been hearing about Aereo for a few months but when I saw this, I decided I needed to get up to speed a little more.

How worried are the owners of the major broadcast television networks about Aereo, the Barry Diller-backed digital television service they’ve been trying unsuccessfully to sue out of existence? Worried enough that at least two of them are actively entertaining the possibility of pulling their free over-the-air signals altogether.
That may sound like a doomsday scenario, but it’s happening, says Garth Ancier, a former top-level executive at NBC, Fox and WB. A Reuters story about the threats posed by Aereo and Dish Network’s ad-skipping Hopper DVR to the broadcast business model quoted Ancier making the claim that two of the Big Four networks — ABC, CBS, NBC and Fox — have for months been evaluating whether they might be better off becoming, in effect, cable channels. [More]

So some backstory.

Aereo, on the other hand, pulls broadcast signals out of the air and redirects them online to paying subscribers using a fleet of mini-antennas. The system is designed, in large part, to avoid having to pay the broadcasters any retransmission fees.
“We need to be able to be fairly compensated for our content,” Carey said on Monday. “This is not an ideal path we look to pursue, but we can’t sit idly by and let an entity steal our signal.”
Aereo quickly responded with a statement, which noted that “having a television antenna is every American’s right.”
How many Americans are currently exercising their antenna rights? According to Nielsen (NLSN) and SNL Kagan, about 100 million of the 114 million U.S. homes with TV sets subscribe to cable, satellite, or fiber-optic pay-TV systems. If News Corp. limited Fox to cable and satellite subscribers, in other words, the majority of Americans wouldn’t even notice.
The 14 million homes that do get Fox over the airwaves shouldn’t expect to lose the signal anytime soon. The legal battle between Aereo and the broadcasters is just getting going. [More]

Here is a demo of how this works.


The implications are bigger for rural Americans, of course. It basically dooms us all to getting a satellite dish, I think. (Although a vast majority already do) That wouldn't be so bad if we could have a la carte pricing.

Where does that stand? Maybe closer to reality than we think as giant Verizon stunned the TV world with a step in that direction.

The Wall Street Journal is reporting that Verizon has plans to shake up the TV industry. It simultaneously wants to offer more channels on its FiOS TV service—and only pay for the shows its viewers are actually watching.
The Journal article outlines Verizon's proposal, which amounts to paying individual channels by how many "unique views" of five minutes or more they ratchet up every month. That runs completely counter to the usual business model that Verizon currently has to play along with, paying a fixed, monthly per-subscriber fee.
But wait, it gets more controversial! Because Verizon wants to use data from its own set-top boxes—and not from the ratings body Nielsen—to calculate how much it owes each channel. Essentially, this amounts to the a la carte utopia envisioned by Apple for a TV service—and it's going to be raising plenty of eyebrows. [More]

The bottom line is things could change pretty radically pretty fast, IMHO. Despite having to crawl through the courts, if a clear outcome becomes apparent, events will run ahead of any settlement/decision.


 

Dial it down, Darrel...  

My goodness, Darrel Good, the Dean of Corn Accounting in my book, anyway, waxes almost florid in his comments about the latest WTF report from NASS.

While it should be expected that the market will not always correctly anticipate USDA estimates, the recent pattern of large and seemingly alternating direction of the surprises in the quarterly corn stocks estimates is problematic. One of the results is a pattern of feed and residual use of corn that varies considerably from quarter to quarter and from year to year. That pattern can make it difficult to anticipate future feed and residual use and can result in wide swings in projections of feed and residual use for the marketing year or estimates for the previous year in the case of the September 1 stocks estimate. A number of examples can be cited, but consider the most recent experience. The smaller than expected estimate of stocks for September 1, 2012 resulted in the estimate of feed and residual use for the 2011-12 marketing year being increased by 162 million bushels. The smaller than expected estimate of December 1 stocks resulted in the forecast of 2012-13 marketing year feed and residual use being increased by 300 million bushels in the February 2013 WASDE report. That forecast was increased by another 100 million bushels in a rare change in the March 2013 WASDE report. Presumably, the projection will be reduced sharply in the report to be released on April 10.
The difference between the USDA's March 2013 stocks estimate of 5.399 billion bushels released on March 28 and the average trade guess was about 370 million bushels, one of the largest differences in the past 30 years. Old crop corn futures declined by more than $0.80 per bushel in the initial reaction to the larger than expected estimate. The dilemma now, however, is what to expect for the June 1, 2013 stocks estimate. The implied rate of feed and residual use of corn in the first half, and particularly in the second quarter, of the 2012-13 marketing year is quite low. The slow rate of feed and residual use does not seem consistent with livestock numbers, a sharp reduction in the production of distiller's grains, and the implied negative feed and residual use of wheat during the same six month period. March 1 wheat stocks also exceeded market expectations by a large margin. Experiences over the past three years suggest that the June corn stocks estimate may "correct" for some of these apparent inconsistencies. If that turns out to be the case, the magnitude of the current price weakness may not be justified. Because the reasons for the sometimes large deviations between USDA estimates and market expectations are not obvious, the June estimate may or may not provide another surprise. [More exquisitely diplomatic prose worth reading] [My emphasis]

Problematic? For those of us who have been reading Darrel for several hundred years, this is flaming rhetoric - with which I agree. My uneducated guess is we are reaching the outer bounds of human ability to massage raw data, and would be better off if fewer cooks flavored the statistical stew. Moving to purely objective results (raw numbers assembled by computer algorithms) would at least allow others the ability to begin to analyze from consistent errors, instead of an ever-changing human input based on who was in the room and held sway. You can't apply a correction factor to an obscure, inconstant calculation. Just a guess on my part.

I don't want to beat a dead bureaucracy here, but my objections to NASS performance have been largely confined to speed (well, the lack thereof). I'm not close to being either objective or knowledgeable enough to opine about competence other than express my own astonishment at the confusing variance.

Speed may be the least of the problems, apparently.

There's no free N...  

One of the rather blatant errors made by the organic community is the idea nitrogen in manure is somehow placed there by totally natural processes. Hardly.

A further source of confusion is the misconception that animals make nutrients. Animals do not fix nitrogen or (aside from one known exception, the shipworm⁷) acquire significant amounts of nitrogen directly from nitrogen-fixing bacteria. Nor do they make other nutrients, like phosphorous and potassium, so their manure contains no more nutrients than their feed. This is a point which Dan Barber, the influential New York eco-chef, seems to miss when he urges environmentally-conscious New Englanders to eat “a lot of meat” in part to avoid dependence on synthetic fertilizers. According to Barber, it’s important to raise a lot of animals so that we’ll have enough manure, which he terms a “free ecological resource,” to fertilize our vegetable crops. This advice stands in stark contrast to the recommendations of the UN fertilizer report, which explains that “inclusion of livestock in the food chain substantially reduces overall nutrient use efficiency, leading to large pollution releases to the environment” and identifies as a “Key Action” the reduction of animal protein consumption in affluent regions.
The discrepancy is explained by considering the Stone Barns Center for Food & Agriculture, the small non-profit farm which raises meats for Barber’s Blue Hill restaurants and is, in Barber’s words, ”a replicable model for the future of good food.” At Stone Barns, the manure of pigs, chickens, geese and turkeys is largely derived from feed of corn, soy, sunflower, and flax. While sheep, the farm’s ruminants, may take in some “free” nutrients like nitrogen fixed in the roots of clover on the pasture, that pasture is fertilized in part with the manure of grain-fed animals, so even their manure is made possible by the grain inputs.
That’s important because the nutrients in grains need to come from somewhere. Manure from grain-fed animals doesn’t solve the problem of soil fertility so much as transfer that problem to the grain farm. And although animal manures are natural, they aren’t entirely benign. Like synthetic fertilizers, nutrients in manure can run off in groundwater or escape into the atmosphere. This means that growing grains for animals to produce manure for vegetables tends to increase pollution by adding another opportunity (on the grain farm) for nutrients to escape. While recycling nutrients in manure is more efficient than discarding them, the possibility of doing this does not amount to a strong argument against reducing nutrient inputs, an end that would be achieved by eating grains and legumes in place of grain-fed meats. [More - interesting throughout]

I could not find a comparison of N content for grass/grain fed cows, although did see one source that showed a range of 3-20 lb/T. I think it's safe to say the less grain in, the less N out, however.

The key here is to remember to make the point that animals cannot create nutrients when rebutting unreasonable organic claims.

Junkbox, Episode MMXIII♨...  

Off the Syracuse, NY for the last speech of the season.

• Amen
• Try to use "Arctic" and "lush" in a sentence
•  Turmoil in the legal profession (accompanied by the world's tiniest violin)
• I continue to worry about South Africa
• Depressed about corn prices? Remember the bigger picture.
• A generation of low interest rates
• Another commodity market botched by government intervention

Still no field work. Not even the crazies.