Sunday, November 30, 2008

The automaker's dilemma...

One thing that often goes unmentioned in the lively debate over whether to bailout the Big Three, is the peculiar institution of auto dealerships - about which I knew very little until recently.  Thanks to state laws dating back to - well, the Great Depression, some of the most important and helpful steps automakers could take to get their finances in order are all but impossible.
Car dealers, with their low-production-value TV commercials and glad-handing tactics, seem like the archetypal small businessmen, and it’s hard to believe that they could sway the decisions of global corporations like G.M. and Ford. But, collectively, they have enormous leverage. Dealers are not employees of the car companies—they own local franchises, which, in every state, are protected by so-called “franchise laws.” These laws do things like restrict G.M.’s freedom to open a new Cadillac dealership a few miles away from an old one. More important, they also make it nearly impossible for an auto manufacturer to simply shut down a dealership. If G.M. decided to get rid of Pontiac and Buick, it couldn’t just go to those dealers and say, “Nice doing business with you.” It would have to get them to agree to close up shop, which in practice would mean buying them out. When, a few years ago, G.M. actually did eliminate one of its brands, Oldsmobile, it had to shell out around a billion dollars to pay dealers off—and it still ended up defending itself in court against myriad lawsuits. As a result, dropping a brand may very well cost more than it saves, since it’s the dealers who end up with a hefty chunk of the intended savings. [More]
I have been worried about our own small dealerships in Chrisman, and I have know the people involved all my life.  But while concern about the actual businesses being open is still pertinent, maybe my worries for the owners at least are overblown.

In fact, the end of some GM brands could represent a singular opportunity for small dealers to get some value for a business with a questionable financial future. In fact, under these rules, it appears to me that a GM bankruptcy would be the real nightmare, unless the dealership laws grants dealers a superior position in the credit line.

We are going to have fewer brands and fewer dealers, especially in rural America.  Which means to me the number one quality for my vehicles will be reliability.  But as we have become adapted to machinery dealers an hour or more away, perhaps this too is an adjustment we can make more easily than we think.
Holiday cards for people like me...

 [More and better]

I know - a very tiny market.

[via boingboing]
Not USFR, of course...

Having trouble finding happiness?  Turn off the TV.
Happy people spend a lot of time socializing, going to church and reading newspapers — but they don’t spend a lot of time watching television, a new study finds.

That’s what unhappy people do.
Although people who describe themselves as happy enjoy watching television, it turns out to be the single activity they engage in less often than unhappy people, said John Robinson, a professor of sociology at the University of Maryland and the author of the study, which appeared in the journal Social Indicators Research.  [More]

When you add this to the depressing vision of our depressing economy, I think the February shift to DTV could cause near-riots.

Saturday, November 29, 2008

Moving the finish line...

I turned 60 today, and like Jan, experienced for the first time since ages 16 and 21 a mental milestone of existence.  For example, I now fall into new categories frequently when answering surveys - i.e. "over 60".  And suddenly the possibility of my own mortality seems significantly higher.

The moment caused me to reflect on those of my friends who have retired or announced plans to do so.  Coupled with all the analysis and musing over the economic situation we are struggling through, I am beginning to suspect bad news may be in the offing for younger farmers.

We can't quit and even if we can reasonably expect a comfortable retirement, our confidence in that calculation has been badly shaken. The reason is simple and common: we are exposed, more so than previous generations, to economic investments other than the farm.  As the steady growth of prosperity lifted incomes all over farm country, extra funds were targeted by advisers in magazines like my own as a chance to diversify.

This was not unreasonable advice, but to our current dismay, we found even prudent equity investments like mutual funds and index funds have been big losers, while the question for farmland assets is "Has the price increase slowed?"

I tried "diversification" and promptly lost about 85% of my investment in a technology fund in 2000. I wrote it off as more proof I had no idea what I was doing owning that kind of asset. Since that time, I have tried to make the case that non-diversification for farmers - putting all your eggs in one field, so to speak - was not to be despised. Knowing about the assets you own was important, I reasoned. 

We now know how much we don't know about many equity and debt investments, and sadly it translates into dreams deferred. What I'm trying to puzzle out is where the heads of Boomers like me are right now.

That cash rents are softening is obvious. We have already witnessed high-cash renters walking on contracts for 2009 and beyond. So both asset values and returns are looking remarkably less positive than just a few months ago.

One thing I will be talking bluntly about as I begin the winter speaking season is fear. We don't like to use the word, but fear is the precise emotion controlling our thinking right now.  As we age, the power of fear increases since we know we are not getting better and stronger and wiser, and even worse, we may suspect we are going the other way. Now consider most farm assets are in the control of folks who experiencing this higher level of fear.

At the very least, innovation and risk-taking (think about how foolish the idea of taking a risk even sounds right now) will slow to a crawl, perhaps more so than other sectors. It may be vendors and customers will face a surly, suspicious business counterpart, as well. The tenor of agriculture will find a new and I'm afraid, unhelpful edge.

So here's my current thinking. We have just added a few years to the exit date for a large class of Boomers currently farming. I hear the teeth of the next generation gnashing as I say this.  Meanwhile, the last two years have encouraged sons and daughters to some home with the allure of good times and ample profits.  Their dreams of driving the bus have likely been put on hold.

These two trends will increase generational friction as they are reconciled with reality. But it indicates to me there may be no more important management skill to upgrade than talking about money and fear.

And there may be no more important business practice to adopt right now than pre-emptive trust

More on that later.
I'm not excited like some teenage nerd...

Check out the casting for the Star Trek prequel.

[The whole cast]

Live large and perspire.

[via presurfer]

Friday, November 28, 2008

Steady as a rock chicken...

Pretty cool.  I did not know this about chickens, although now that I think about it, their curious walk is another way to keep their head still in incremental segments.

(Yes, I may be "over-surfing" right now, but I've been working for 3 days to find a #&^%@ $435 discrepancy in my farm accounts and I need some time off.)
OK, let's make some rules...

About reporting the now widely hyped Looming Apocalypse in Agriculture.

Rule #1: Is the problem local or national/global?

Loyal reader Dave sent this link in from the often aggitated Daily Kos:
Last week I received a very concerned call from South Dakota farmer and agronomist Bryan Lutter.  "Neal, we're out of propane!"  I figured this was personal distress – he and his family farm over three square miles of land and I know this has been a tough year for many people. He promptly corrected my misconception when I tried to console him. "No, everybody is out, all three grain elevators, we can't get fuel for the bins, and we're coming in real wet this year."
  There are equally dramatic issues due to the bankruptcy of Verasun and the apparent insolvency of the nation's largest private crop insurance program. Payments that would have come in June or July of a normal year are still not dispersed at the end of November and this has grim implications for next year's crop. [More worth reading and parsing]
Some comments about this post.  First - the Kos, one of the most popular bloggers on the Web - tends to write in an intense style you sure won't see in Farm Journal or other ag magazines.  To begin with, he never just talks economics, but always anchors it in politics.  Notice he segues to how this purported crisis should lead to a changed agricultural system.  Due to his high readership numbers, this post may impact how some Americans think the nation's farmers are doing. [More on the consequences of non-farmers getting agitated later]

Second, what this report does is make the easy leap from a local problem to a national catastrophe. I will be in ND on Monday and Tuesday to get more firsthand data from farmers and lenders, but a few facts may help to put this in perspective:
  • ND just had a production year from heck. They were late and cool and wet.  As of this summer when I spoke to the Sunflower Assn. the crops being harvested were not particularly awful, but the chief complaint was "why did they contract wheat for $6 when it was then $14?"  So the agitation now is about the corn/bean crop largely.
  • ND is one of the smaller corn producers (and beans) and also despite some phenomenal new hybrids on the real margin of where corn can grow exactly for reasons like this season. It's also why farmers there were stunned when I told I never buy crop insurance.  They are big recipients of the $5 B in insurance subsidies even during good years.  It is hardly surprising that a corn industry built in the last ten years on such non-market factors should run into financial crunches like this.
  • ND has a strong and well-run Farm Credit System which is a much big player relative to competition than in say, IL.  Local banks deserve their day in the sun and this is one of them, since they are deposit-based, rather than credit market-sourced for funds to loan.  The Farm Credit system will work these issues out, but not without some discomfort to borrowers. Meanwhile, the demographics of ND means they essentially have few choices for credit.
  • ND was one of the first states to be headed to be corn-deficit.  Because of the powerful social capital there, farmers form cooperatives like Methodists here form committees - quickly and amiably. Trying to get an ethanol coop going in my hometown would require several fights over who get which seat in the board room and enormous legal fees.  Consequently, ND has an surprising number of ethanol plants in-state or close whose business plans don't allow for simultaneous crop problems and oil price plummeting.  This impacts the financial system locally.  Farmers are also discovering that one risk we forgot about is that whether our customer can/will do what he promises.
  • ND is a logistical problem. Their demand (for products like propane) is not large and it's spread over an enormous area compared to IL or IN.  As a result, an outlier year like this overwhelms the ability to get propane where its needed in amounts being consumed by a crop barely grown there 10 years ago.  Meanwhile, in comparison, the price for propane is dropping for me, causing great muttering among those who locked it in.
  • The fertilizer "shortage" is exaggerated, I think. The fertilizer industry has decided the demand curve can be written to their own rules.  Yields will suffer for some depleted fields, but my dealer is sitting nervously on about 60% of his normal fall spreading inventory, and I'm not buying until the hotshot CEO of Potash Corp. eats his words and develops a different attitude toward his customers.  According to my recent soil tests, I can go 4-6 years before serious drawdown begins, I think.  Put your K where the sun don't shine, Mr. Doyle. (I'm referring, of course to storage warehouses)
I do not think these stories are false or maliciously propagated, but folks in ND have always depended heavily on government  dollars and risk abatement to have any crop agriculture other than the traditional small grains/pulse industry - much more so than more temperate states.  Reports like this are a time-proven way to generate additional disaster-funding on top of our already now-permanent disaster funding on top of subsidized crop insurance on top of general corn subsidies and ethanol subsidies.  And the very high Senator-to-farmer ratio in ND assures this strategy works time and again.

In short, having crop disasters and receiving federal aid is pretty common up there.  Many of us elsewhere operate under a different business model that is currently functioning OK, if not as profitably as a few months ago.

Finally, ND is an important producer, but the loss of production being bandied about isn't the food-kneecapper Kos suggests: ND - 285 million bushels; rest of US - 11.7 billion bushels. Perversely, the drop in demand from the Verasun debacle lowers the need for most of the ND crop.

Don't get me wrong.  ND and its producers are in a world of hurt, and doubtless will need significant amouns of help.  It's another case of a production problem affecting "1% of producers, but affecting them 100%", as the saying goes.  To extrapolate that situation to a national scale is mistaken, I believe. The markets don't seem to be worried, for example.  Our grain customers should be scrambling to escape this supposed shortage, I would think.

The story of the global/national economic crisis is still unfolding, of course, and new data may lead me to other conclusions, but this aspect of our struggle doesn't warrant the word "famine".  It fact, I find it in poor taste when true famine stalks millions eleswhere.

Intemperate cries of the The End of the World are not justified for agriculture, in my opinion.  You can place your own bets. I realize it doesn't matter if the problem is merely local if it's your location.  But the idea of a meltdown in US ag production is overwrought at best, and manipulative at worst.

Thursday, November 27, 2008


These men are why I sleep soundly at night.  I don't know any of them.

[via Presurfer]
One-fourteen out of your life...

I dunno - it's not much to lose.  Besides, can you get too much 70's music?
Happy Thanksgiving from John's World!
Just in time for Black Friday...

Some excellent advice on what NOT to buy tomorrow.
TVs that are too big, or too fancy: It's a good time to buy a new TV. In 2007, manufacturers of flat-panel screens ramped up their plants in order to meet what they thought would be huge demand for big TVs during the 2008 Summer Olympics. Thanks to the flagging economy, that demand didn't materialize. Now, says Sweta Dash, an analyst at the market research firm iSuppli, flat-panel manufacturers are swamped with huge inventories. As a result you can find incredible bargains on HDTVs—32-inch sets are going for as low as $399, 42-inch units are $599, and you can get a 50-inch plasma for as little as $798.
But beware. When TVs are so cheap, it's easy to get pushed into one that's too big for your room or offers a higher resolution than you need. Succumbing to either temptation can be harmful to your wallet.
How big of a television should you buy? TV experts offer this handy rule of thumb: Measure the distance in inches between your couch and your TV, then divide by 1.5. The number you come up with is the biggest widescreen TV you should get. For instance, if you sit 6 feet away from the TV—72 inches—you shouldn't buy a screen larger than 48 inches. Anything bigger and you may begin to notice too much detail in the picture—pixilation, scan lines, and other artifacts that you wouldn't see on a smaller set.
You should also pay attention to the resolution of your new TV. There are two main kinds of HD sets: 720p and 1080p. These designations indicate the number of pixels squeezed into the picture. A 1080p screen has almost three times as many pixels as the 720p screen, which salespeople will gladly tell you translates into a substantially better picture, thus justifying the 1080p set's greater price tag.
In fact, 1080p TVs are packed with a lot of extra pixels that most of us don't really need. For one thing, because 1080p signals require a lot of bandwidth, every cable company broadcasts high-definition TV shows in 720p, so you're not getting anything more by watching Lost on a 1080p set. (Dish Network and DirecTV said recently that they'll put out some channels in 1080p, but skeptics say that their signals will be too compressed to look as good as true 1080p images.) And even if you're watching a 1080p video—like a Blu-ray disc—the differences between 720p and 1080p are nearly indistinguishable on TVs smaller than 55 inches or so. Even videophiles have a hard time telling any difference. So if you can get a lower-resolution set for less money, go for it. You won't miss a thing. [More]

I would add my own "don't-go-there's"
  • Pets
  • Cordless power tools, unless the recipient already has some with the same batteries/chargers
  • Slippers
  • Ties - unless the recipient actually wears one at work.  (Note: more people are and will be) If possible pair with the appropriate dress shirt.
  • Anything with a subscription, or which will add the recipient to a solicitation for a subscription
  • Toys that make noise.  (Actually, most kids have waaay too many to begin with, IMHO)
In counterpoint, I would say the Nintendo Wii is an outstanding gift for a whole family, albeit pricey. If you open it in time to entertain the crowd at your house, your holiday can find a different dynamic from the past patterns. Even geezers can play, and a whole crowd can watch and ridicule.

The real question is how black Black Friday will be? 

Is it me or does shopping seem a little lame this year?
Guilty as charged...

A recent e-mail regarding my apparently incendiary suggestion that US farmers might benefit from professional accreditation brought this response (one of the more polite ones, I might add):
I appreciate your articles very much, and generally enjoy them for your perspectives and insights, but you are far too enamoured of the Danish experience in constructing a society, and in dealing with life.  I was once too. My grandfather & uncles were all Danish farmers, and I have maintained active ties with all my cousins, who visit Maryland annually at Thanksgiving to go deer hunting.  My son spends several weeks each year in Denmark, in association with his professional demands.  I can speak Danish, which also gives me an advantage.  Long ago, my romance with Denmark began in graduate school, when I wrote my Master’s Thesis for an Economics MA on “A History of The Labor Movement in Denmark.” I have many relatives in business and farming in Denmark, with whom I communicate more or less regularly.  I say these things to establish my credibility in what I’m going to say next.  Denmark is a land of minimal opportunity, in terms of upward mobility, financial success, and creation of personal wealth.  The taxation structure is designed to produce an egalitarian society, in which most of the population lives a reasonably affluent life, but there is little opportunity for individuals to accumulate capital, or provide for inheritances.  It provides very adequately for the disabled and sick in society, and could teach us a lot there.  It is highly bureaucratic-for example getting a hunting license is a really formidable task, as is acquiring Danish citizenship. It furthermore can do many of the things it accomplishes because it has a homogeneous population-or did until very recently when Islamic & Turkish workers were imported.  Garrison Keillor fell in love with Denmark once-but it didn’t last long.

I have pondered long and deep ponderings after this thoughtful reply.  The author could be right.  But after studying the Viking Age and visiting both Denmark and England, I fear I may be predisposed (perhaps genetically) to the Danish lifestyle.

It is true, DK is a tiny nation of similar people, and they are just now beginning to cope with diversity. But take a look at this:


Is it any wonder a geezer like me thinks DK could teach the US a few things?
It's still early enough...

That winter pictures look charming.  My favorites:

[via presurfer]

Wednesday, November 26, 2008

Why we'll always need newspapers...

On the other hand...

I spoke yesterday of a surprising uptick in my outlook.  To be fair, perhaps I should highlight some of the waves of apocalyptic speculation pouring into the blogosphere.  Please realize, that simply reading this will change your attitude this morning.  There are just some curious themes coming out that tend to heighten my skepticism of many of these jeremiads.

For instance, this thoughtful picture of what a modern depression would look like:
By looking at what we know about how society and commerce would slow down, and how people respond, it's possible to envision what we might face. Unlike the 1930s, when food and clothing were far more expensive, today we spend much of our money on healthcare, child care, and education, and we'd see uncomfortable changes in those parts of our lives. The lines wouldn't be outside soup kitchens but at emergency rooms, and rather than itinerant farmers we could see waves of laid-off office workers leaving homes to foreclosure and heading for areas of the country where there's more work - or just a relative with a free room over the garage. Already hollowed-out manufacturing cities could be all but deserted, and suburban neighborhoods left checkerboarded, with abandoned houses next to overcrowded ones.
And above all, a depression circa 2009 might be a less visible and more isolating experience. With the diminishing price of televisions and the proliferation of channels, it's getting easier and easier to kill time alone, and free time is one thing a 21st-century depression would create in abundance. Instead of dusty farm families, the icon of a modern-day depression might be something as subtle as the flickering glow of millions of televisions glimpsed through living room windows, as the nation's unemployed sit at home filling their days with the cheapest form of distraction available. [More]
The grim economic news also helps those who are fearful (and I think fear is the primary motivator here) of the Obama presidency to hang on to their opposition.  In fact, many will be relieved when he is sworn in because the mess immediately becomes his and they can blame all manner of problems completely on someone they feel is too different from them to be trusted.

In fact, the economic crisis is based in part on a failure of simple trust between people of commerce.  By adding a new president who doesn't have many common characteristics with themselves, a significant minority of Americans have lost one more trustworthy icon. To be honest, I think many would acknowledge they didn't trust Bush's competence, but feel he at least shared their same outlook and dogma.

Finally, throw in the now-stunned Peak Oil watchmen, who have been predicting global catastrophe based on our energy consumption and you have a perfect storm pretty strong tempest of roiling doubt and blame.

And you get not-so-cheerful talk like this:
In my view -- and I know this is controversial -- a much larger proportion of the US population will have to be employed in growing the food we eat. There are many ways of arranging this, some more fair than others, and I hope the better angels of our nature steer us in the direction of fairness and justice. The prospects of a devalued dollar imply that we very shortly will not be able to get the all the oil-and-gas based "inputs" that have made petro-agriculture possible the past century. The consequences of this are so unthinkable that we have not been thinking about it. And, of course, the further implications of current land-use allocation, and the property ownership issues entailed, suggests formidable difficulties in re-arranging the farming sector. The sooner we face all this, the better.

As the fiesta of "globalism" (Tom Friedman-style) draws to a close -- another consequence of currency problems -- we'll have to figure out how to make things in this country again. We will not be manufacturing things at the scale, or in the manner, we were used to in, say, 1962. We'll have to do it far more modestly, using much more meager amounts of energy than we did in the past. My guess is that we will get the electricity for doing this mostly from water. It may actually be too late -- from a remaining capital resources point-of-view -- to ramp up a new phase of the nuclear power industry (and there are plenty of arguments from the practical and economic to the ethical against it). But we have to hold a public discussion about it, if only to clear the air and get on with other things, namely the new activites of But I would hasten to warn readers (again!) that we'll probably have to do these things more modestly too (don't count on giant wind "farms"), and that we are liable to be disappointed by what they can actually provide for us (don't expect to run WalMart on wind, solar, algae-fuels, etc). [More]
Much of this outlook arises, I believe, from the evolution of our economies over the last century from one that could be understood intuitively from local observation, and the sophisticated, complicated, and frankly bewildering structure of finance and production of today.  Poor economic education and the specialization of work means most of us struggle to imagine how today's world works, let alone how it should be fixed.

One result is an attraction to simplistic and righteously punitive ideas that would make the economy better and resolve old social, religious, and cultural grievances at the same time.  In short, many feel the economic situation is a chance to fundamentally change how we live together.

This is really, really bad news for industrial agriculture, as you read above. From almost all apocalyptic predictors comes a call for agrarianism in some form to return.  Whether the energy crowd, or the food movement, or the simpler-is-better adherents - all of them want me to grab a hoe and toss my Blackberry.  From schemes favoring more government  control to libertarian lassez faire, all have new pictures of agriculture.

Farmers and farm organizations need to be very careful which themes they embrace right now for opportunistic social changes. I haven't found one yet that doesn't lead to radically different commercial production for farmers like me.

We are the establishment, and before we think this is an opportuntity to rebuild the US (and the globe) in a new pattern, we need to make sure how our lives will be wrenched.  And we'd better hope our government gets this right.

[Thanks, Dave]

Tuesday, November 25, 2008

OMG! What if the plans work?...

Don't ask me why, but I'm getting a weird feeling we may be having an effect on slowing the downspiraling economy.   Maybe hurling trillion of dollars at the problem isn't completely futile.

So, allow me one giddy moment of lessened pessimism to speculate on what a recovery might look like.

To being with, there will be all these dollars out there earning virtually zero unless banks can get them to spenders or businesses to invest. Moreover, with the sophistication of markets these days, several eyes are likely to recognize (or think they do, anyway) some sort of bottom and start shifting unproductive funds into stocks at fire-sale prices. I think this is closer than most think.

This is somewhat similar to the spate fo money the Fed unleashed after the dot-com bubble burst. So if billions then inflated real estate over the top, what could trillions now do to other assets?
There’s always a danger the Fed and Treasury may go too far, setting the stage for a big rise in inflation or another asset bubble down the road as the economy revs up and investors get back their nerve. That’s what happened in the early part of the decade as ultra-easy Fed policy and Treasury tax cuts helped fuel a credit boom since gone bust.
Bernanke and Paulson might welcome a bit of that exuberance right now -- even at the risk of higher inflation later -- as they try to prevent the biggest credit catastrophe in decades from sending the economy into a deflationary nosedive.
“It’s true that, over the long run, too much money creates inflation,” says Lyle Gramley, a former Fed governor now at the Stanford Group Co. in Washington. “But they’re trying to keep the economy from going over the precipice and into the abyss.” [More]

 I know, I've been looking for an inflationary blowback for months now, but as the momentum grows for huge intervention and the mood brightens a teensy bit (warranted or not) because of a new set of players, the idea of a relatively brisk recovery is not out of the question.

But it will be a changed consumer population out there. And changed business leadership as well.  For example, when it finally looks safe to go in the equity water, what stocks would you buy?  I think investors who need to plump up devastated retirement accounts will be forced to move out of cash and conservative equivalents simply because the yield will be negative in real terms.  But then what?

I'd buy stuff like Fannie Mae and Citigroup.  Why?  Because they are obviously quasi-government guaranteed and cheaper than Chinese DVD's.  This extraordinary process of the last few months has added an odd premium to insitutions and corporations which were badly run but among the chosen to be saved. Foruntes could be made by those who get in early.

I think the savings rate will continue to rise, even with a recovery.  We've scared a bunch of citizens with this loss of trillions of wealth.  And too many Boomers no longer have enough to retire, so they will be socking it away for some time to come.

Would consumer spending roar back? Perhaps, but much more slowly with the exception of housing, I'd guess. In places like California, this could be the chance of a lifetime to buy a home at a reasonable price, and many programs to enable first-timers to do so will be part of the recovery packages.

But even as individuals respond cautiously as a whole, my guess is policymakers will not let up on the pump-priming until some clear momentum is seen.  That means, tolerating price increases (inflation) for some time before tightening credit by raising rates.
``The path of least resistance may be for the Fed to first communicate to the markets that the nature of the current economic woes should keep rates low for an extended period,'' Feroli said. [More]

I think this is very likely.  We are seeing deflation up close, and it's pretty scary.  Less so than a little inflation right now.  I'm still trying to figure out what all those trillions of $ we've inserted will mean as they roam around like a bufflo herd across the world economy.  And always remember inflation devalues the huge debt we are accruing.

So, a wild guess from an amateur economist: the economy stabilizes faster than currently predicted, inflation picks up, but in a different pattern than before as consumer spending is altered, and very low borrowing costs for a period of years.  The US will lead out the global recession and do so into a period of surprisingly steady growth.

No, seriously.
Born to raise corn?...

If bicycling scientists can have tattoos, what about us?


Anybody got any farming skin-ink photos they want to share?

Monday, November 24, 2008

You think you want prices to move up...

My guess is the seed industry is even more anxious to see double-digit beans and corn with a 5.  The reason:

Table 4. Net revenue from different herbicide programs.
Herbicide Resistance Trait Gross Revenue/A Net Revenue/A One POST application Net Revenue/A Two POST appilications
non-GMO $520 $415 $394
Liberty Link $450 $353 $336
Roundup Ready $450 $344 $327
Roundup Ready 2Y $450 $319 $302

We can complete the comparison by showing how much less the net revenue is for each system relative to the one with the highest revenue. The nonGMO system has the highest revenue here, and for a one-postemergence system the others are the following amounts lower: LL - $62; RR - $71; RR2Y - $96. For a two-postemergence system, the others are the following amounts lower than nonGMO: LL - $58; RR - $67; RR2Y - $92. It might be most appropriate to compare the one-postemergence system for the LL and RR soybeans to the two-postemergence system for nonGMO. The nonGMO revenue is still $41 to $75 higher for this comparison. It’s also possible to credit the RR2Y soybeans with a 6% higher yield (we have no idea whether this is actually the case – we’re just weed scientists). Doing so results in the RR2Y coming in about even with RR soybeans, because the higher seed price offsets the potential increase in yield. [More][My emphasis]

Seed pricing - currently an item of some discussion in farm country - was based on marketing meetings held before The Fall, as it were.  It's really hard to back down, too.  But unless we see some bounce in commodities soon, the hot products will be capturing all the value they deliver for the seller - not the user.
Batten down the hatches, or something, mateys...

I have been puzzling about this for several days.  How do a handful of yahoos in a rubber dinghy board and capture a gigantic oil supertanker?  I mean, I have trouble getting into a ski boat at the pier on a small lake.

So here's what I have learned to date:
Admiral Mike Mullen, chairman of the US Joint Chiefs of Staff, said the pirates were well trained.
"They're very good at what they do," he told a Pentagon briefing in Washington.
"Once they get to a point where they can board, it becomes very difficult to get them off, because, clearly, now they hold hostages." [More]

Okey-dokey, with you so far.  But how the heck do they get aboard?  Isn't this behemoth 4-5 stories tall?
The gangs’ methods vary little, even when taking a 320,000-tonne monster like the Sirius Star. Gunmen typically approach on small speedboats, opening fire on the bridge until the ship’s captain submits and allows them on board, usually throwing down a ladder. The average reaction time between spotting the pirates and being boarded is 15 minutes...
In recent months the pirates’ arsenal has grown more deadly, with rocket-propelled grenade launchers and possibly shoulder-mounted missiles used to threaten the crew. Pirate groups have hugely extended their reach from the coast with the use of “mother ships”, larger vessels from which they launch speedboats after they have identified their prey. While some known mother ships have been identified, other attacks are launched from ordinary dhows, traditional sailing boats hijacked from fishermen.[More]
Ships I'm familiar with of that size have steel storm covers for their windows and portholes. Given the electronic auto-piloting, how hard would it be to just cover up and plow on?

Obviously I'm missing something here. But this system looks like sending your kid sister through the tough part of town to deposit your lottery winnings, and then wondering what went wrong.
Tell me when it hurts...

In all the talk about bailouts, it has suddenly hit me that the phrase, "taxpayer money" or even more commonly "taxpayer's hard-earned money" really doesn't mean squat.  It's not like the money for Citigroup or GM or whoever is billed to me.  In fact, it looks like the stimulus package will probably lower my taxes.
Mr. Obama's team is putting together a new economic stimulus plan containing more than $500 billion in federal spending and tax cuts over the next two years, Obama aides and advisers said Sunday. That package would be far more aggressive than anything envisioned during the campaign. [More]
Lookit, our government is going to hand out trillions and how exactly will it cost me?  I realize our federal debt is going to balloon ot even more preposterous levels, but there has been zero effort in my lifetime - save that one shining moment in the late '90s - when anyone took the debt seriously.  Nattering about my taxpayer money as if they really took some of my money, instead of some poor guy who is in diapers right now is self-serving, to say the least.

It's not people like me who will be hosed.  The folks who lose jobs will feel real pain, and there could be many more of them than we now think as states start to go broke and (gasp!) layoff government workers along with the private sector.

But real, live taxpayer pain?  Puleeze.  Not for several more years, I'll bet.

Sunday, November 23, 2008

Lost in space...

I navigate like a girl.  Really - women tend to use "landmark" directions, and men often favor directional (NSEW) instructions.  Which is better?
According to Alycia Hund and colleagues at Illinois State University, there are two ways to give directions. One is using a so-called "route perspective", as in the example above. This adopts a first-person spatial perspective and is characterised by references to turns and landmarks. The other is a so-called "survey perspective", which gives directions as if looking down upon a map. This type of direction giving is characterised by references to cardinal directions (North, South, East and West) and precise distances.

When Hund's team used a fictitious model town made of plywood to test the ability of undergraduates to follow directions, they uncovered a curious anomaly. The students reported finding route perspective directions easier to follow and yet they steered a toy car to a destination more quickly and effectively when they were following cardinal directions. [More]

But as soon as we all have our GPS chips implanted it won't matter, I guess.
Xmas 2008 Gift Hint #2008-4...

The Smart Pen

This is hard to grasp - and I haven't used one, but it seems like a great idea.  It not only records what you hear, but what you write.

Watch a helpful video here.

(Note: Mac users need to wait for software due out Dec 08)

Buying information.  Starts at $150.

Saturday, November 22, 2008

The savior mentality...

Don't get me wrong.  I supported Obama, and voted for him.  But I am mildly disturbed by the popular mentality evinced by the "Geithner Rally" yesterday.
Second, there’s been growing anxiety (among, well, just about everyone) about the vacuum of leadership in Washington, and about the fact that we have another two months before Obama is inaugurated. And Obama’s silence this week—his failure to make a public push for Congress to pass even an interim stimulus package, and his refusal to say anything about the automakers—was making people uneasy. The Geithner appointment doesn’t solve the interregnum problem, obviously. But it does reassure Wall Street that a smart, capable person—who isn’t Hank Paulson—will be running Treasury, and that Obama is serious about bringing real stability to the markets. Obama is supposedly going to introduce his entire economic team next week, and that will also be good for the markets, since it’ll give him a chance to lay out, even if only in broad strokes, what he plans to do as soon as he takes office. Two months is too long, but markets are forward-looking, and if people get the sense that real change (major fiscal stimulus, spending the rest of the TARP, saving the automakers, and so on) will be implemented in January, it could create a sense of optimism, however fleeting. [More from the usually unflappable James Suroweiki]
The anxiety was mirrored by our own Chip Flory in an equally rare snit:
To Obama: Do what you were elected to do
— lead! I don’t care if you’re not president.
The majority wants you to be, so step up!
Announce your Cabinet picks — or at least
the Treasury Sec. — the markets want to
know. While you’re no longer a Senator... you
can still lead. There’s lots of work to do in this
country to get it back on its feet and nobody
is stepping up to get it done. [More from the latest ProFarmer newsletter, if you subscribe]

Well, I do care if he's not President.  There is a little thing we call the Constitution that, while gun lovers and others love to quote, they readily discard when their money is involved.  [Besides, our (and I suspect Chip's) problem would seem to be Verasun - which really isn't a victim of Wall Street, but their own bad business choices.]

Obama is not the President, and we don't have any provision or tradition of assuming power before inauguration.  It's worked out so far.  If you want it to change, lose the Electoral College, which is why we have this delay, remember?

I didn't think so.

Weren't any of these people paying attention during the campaign?  It wasn't Obama who suspended his campaign and flew into Washington and did ummm... nothing.  Nor did he panic as Democrats were screaming at him during the fleeting moments of Palin-fascination.  This is No-Drama Obama.  Seriously.

But the overarching mood of finding "some guy" with the answers to "do something" is absurd. To begin with, experts and the nation are split on bailouts, especially for the auto industry.  Economists are all over the board and mostly concentrating on criticizing ideas put forward with scholarly zest rather than take the blame for proposing one.

It is in such an uncertain, badly informed atmosphere as this that the free market works better than panic driven powerplays. Acting with deliberate pace and after considerable thought is not to be despised, and shrill calls for Superman to save us is merely an effort to avoid the personal agony and sacrifice of building a group solution one life at a time.

There is no White Knight nor Magic Bullet. There are only the American people and our will to carry on.  While leaders can point the way, they should do so in an example that at least resembles sober reflection and a lack of desperation.

I'm glad the stock market took heart from the simple selection of one of many qualified people to be Secretary of Treasury. But Obama could have nominated Donald Duck and it appears some folks would  say. "Yeah, he's just the cartoon we need to fix things".

Our nation needs to get a collective grip. While I do believe there is a time to panic, we missed it eight months ago or so.  Things are not going to get better.  Things will have to get fixed.  By us.

Friday, November 21, 2008

While you were sleeping...

Those wacky Europeans actually went and reformed their farm subsidy program - the infamous CAP.  The nerve of those people!  Now who are we going to compare to when we need to show how neglected we are vis-a-vis government subsidies?
The changes expand on major CAP reforms in 2003, pushing European farmers further into the world of supply and demand with a smaller safety net of subsidies linked to production levels.
The EU's farm handout system has long been an area of heated debate in Brussels and beyond, swallowing up 40 per cent of the overall European Union budget.
It was introduced in 1962 to reduce Europe's reliance on food imports but the subsidy system later helped created the infamous beef mountains and wine lakes of surplus production which reached their peak in the 1980s.
Another major CAP battle looms as the 27 member states are yet to tackle the size of the CAP budget itself, which is fixed up to 2013.
The British and the Scandinavians have already taken up their cudgels on the matter, seeking a substantial reduction of the overall farm subsidy package.
Key measures in Thursday's deal include dropping a rule that farmers must keep 10 per cent of their land fallow and a gradual rise in milk quotas until they disappear altogether in 2015.
Rome, which wanted the quotas scrapped immediately, was given special leave to introduces swifter productions rises in Italy from next year.
There was also agreement on the thorny issue of reducing subsidies directly linked to farm production and switching the funding to projects to protect the environment or revitalise rural areas. [More]
This is going to have an effect sooner or later here as well. The strength of the food movement compared to the farm lobby is growing and the new administration doesn't owe much to deeply red rural states like the old one did.

I could see - in fact, I hope for - watered down direct payments, lower insurance subsidies, and other nips and tucks to help pay for food stamps, etc.  I could also see a shift in philosophy to embrace the agrarian wing with more dollars now sent to industrial producers.

With reform in the EU, one more player at DOHA scrambles to higher moral ground.  As we seek to find a ladder out of this economic hole, the near-unanimous cry from economists against protectionist farm policies will not be lost on an administration whose overwhelming support came from farm customers.

Wednesday, November 19, 2008

This is perilously close to "happy talk"... 

But what the hey - it made me feel better for a moment.
"Agricultural commodities are best placed to outperform," JPMorgan said.

"Having reached record levels earlier this year, agricultural prices joined the rest of the commodity space in precipitous decline, but we believe several important characteristics suggest above-average price levels for corn and soybeans during the coming year."
It expects corn prices to average $4.20 (U.S.) a bushel in the fourth quarter, and rise to an average of almost $5 next year. It sees soybeans rising from $9.40 a bushel this quarter to just over $10.70 in 2009. [More]
We start defensively looking for news we want to hear, but this rare note of relative optimism came unsolicited by a relatively neutral observer.

It must be true!  It came from an investment banker.

(Just ruined the mood, didn't I?)

Tuesday, November 18, 2008

It's why I get up in the morning...

Breakfast.  It's not just a meal, it's a celebration that you have made it through another night.  And nothing makes breakfast more special than an egg.
It is time to talk about breakfast. Some of you may not eat breakfast regularly. This is insane, and reflects poorly on you. If you are currently filling out one of those working-in-the-Obama-administration forms, you should consider writing down “I skip breakfast” in the section that asks for embarrassing secrets.
Look, if breakfast was ONLY the most important meal of the day then fine, whatever, skip it. I skip lots of so-called “important” things all the time, like flossing and paying my cell phone bill and taking my keys out of the lock of the front door (just kidding, thieves!) and I’m still mostly fine. But here’s the thing: breakfast is also the most DELICIOUS meal of the day.
Why? Eggs is why. Eggs are the most magical of foods: they can be a binder, a cake ingredient, a protein to mix into salads, OR a delicious goopy yolky mess. It is in this last role that they reach their eggy apotheosis. There is NO REASON why you can’t have an egg for breakfast every single morning. Me, I prefer my daily egg in breakfast sandwich form. You might think that a breakfast sandwich is too time-consuming for a weekday breakfast, but you would be wrong! The trick is to do everything in exactly the right order. Once you get the process down, it resembles nothing more than an elegant ballet whose graceful finale is a breakfast sandwich. [More - with a fantastic, almost  engineer-quality method of preparing a great egg sandwich]
As I write, I am awaiting supper, so perhaps my perspective is skewed toward food.  But I deeply adore eggs.  Cook 'em any way you want.

Besides nothing says romance and/or congratulations like champagne and omelets.

Did I mention we finally finished harvest?
Folks are getting tetchy...

And one thing that has really set them off is the proposed auto-industry bailout.  Part of the issue is routine anti-union feeling, although I suspect much of that is simple envy.  We'd all love to have secure jobs with automatic raises and pay higher than comparable work elsewhere.

Second is the sheer inefficiency. Saving Detroit means saving it from bankruptcy. As we have seen with the airlines, bankruptcy can allow operations to continue while helping to shed fatally unsupportable obligations. For Detroit, this means release from ruinous wage deals with their astronomical benefits (the hourly cost of a Big Three worker: $73; of an American worker for Toyota: $48), massive pension obligations and unworkable work rules such as "job banks," a euphemism for paying vast numbers of employees not to work.
The point of the Democratic bailout is to protect the unions by preventing this kind of restructuring. Which will guarantee the continued failure of these companies, but now they will burn tens of billions of taxpayer dollars. It's the ultimate in lemon socialism. [More]

On the other hand, the already huge TARP bailout is widely - if incorrectly - seen as a bailout to fatcats on Wall Street, so why is helping autoworkers so wrong?

I don' think the bailout will make it through this lame-duck session and it's possible it will be too late by next February. Automakers are burning cash way too rapidly.

Meanwhile, the apocalyptic scenarios being painted of what happens if GM goes broke are flooding the media.
A GM bankruptcy could create a cascading set of bankruptcies among these part suppliers, other auto makers and suppliers. That's because a bankrupt company could take months, if ever, to pay its pre-bankruptcy bills. Such delays would put stress on suppliers that already run on thin working capital and that feed just a few end auto makers, they argue.
This spillover would most directly hit Chrysler and Ford, who have greater GM overlaps. GM officials are telling lawmakers that the failures at the parts makers would bring them down, too.
The failures could also hit Asian car makers like Toyota and Honda, say automotive experts, who estimate 20% to 25% of suppliers are shared by those two auto makers and Detroit's Big Three.
In all, as many as 5,000 parts suppliers dot North America, with combined annual sales around $150 billion to $200 billion, according to Craig Fitzgerald, a partner at accounting firm Plante & Moran, which advises parts makers.
In addition, the parts business has three times as many workers as the auto makers. There were approximately 489,500 auto-parts production workers at the end of last year, a figure which fell to 415,700 at the end of September, according to the Department of Labor. There were approximately 151,000 auto-assembly workers in the U.S. at the start of 2008, a number that slid to 127,300 at the end of September.
[On the Job]
Beyond suppliers, a collapse at GM also carries a risk to thousands of auto dealerships and to the government's pension-benefit insurance arm.
On average, auto dealerships employ 7.3% of a typical state's payroll, and 740,000 dealership jobs nationwide come from the Big Three makers. GM's 6,000-plus dealers employ about 325,000 of those people, according to estimates from the National Automotive Dealer Association.
One of the biggest fears in Washington is how a bankruptcy filing by one or all of the auto makers would affect the federal agency that insures the retirement savings of almost 44 million Americans. The Pension Benefit Guaranty Corp. ended 2007 with a $14 billion deficit, though that shortfall was expected to shrink to about $11 billion. Were GM to place its pension burden on PBGC, it would more than double the agency's current shortfall. [More]
This description is more or less the same as dozens of others I have read. Which leads me to my real point.  Assuming these are even half-right, it seems an odd time for Congress to get fiscal religion, especially after voting for the $700B financial system bailout. Three million jobs is a LOT of social unrest, folks.

Even chunk downward in our economy, every million jobs lost; every business that fails shifts die-hard conservatives involved into a new political category. When it's your recession, you can flip your thinking about what the government should do on a dime.  

And guys like Sen. Shelby can't seem to see this coming.  He may be right, but I'm not sure voters will admire his principled (and frankly geocentric, seeing as the plants aren't in his state) stand when reelection time comes around.

The political bailout genie is out of the bottle. Rightly or wrongly (and I favor the latter) it will be seen as THE answer to every hard-pressed corner. Those who don't get one, won't forget.  You can lump agriculture in there too, as I'm sure our organizational leaders are working on our own bailout requests.  (All the other kids...)

I think the best we can hope for is to slow the downward decline of the national economy until market forces reverse direction.  For example, when really sound companies are too cheap to resist buying - something that is already happening.

Nobody know what the correct path is, but my thinking is the neo-Hooverism being heard from sectors as yet unravaged by the downturn (such as economists with tenure) will produce the same lamentable results as they did in 1930.

Sunday, November 16, 2008

Why math matters...

My largest complaint with the agrarian movement, now closely linked with the Food Movement personified by Michale Pollan, is they weave brilliant logical scenarios but don't (or can't, I suspect) do the math to support their positions.

A classic example has to be the Rise and Fall of Food Miles.  Once again, operating on a seemingly unassailable logic that food grown closer is better because it appears to require less energy to transport and produce, proponents seduced the innumerate masses in the US and around the world.

While scientists around the world have been pointing out that there is no basis for this charming idea in reality, a cascade of studies may help to finally unwind this food myth.

One of the best summaries is by Ron Bailey at Reason:
In the United States, a 2007 analysis found that transporting food from producers to retailers accounted for only 4 percent of greenhouse emissions related to food. According to a 2000 study, agriculture was responsible for 7.7 percent of total U.S. greenhouse gas emissions. In that study, food transport accounted for 14 percent of the greenhouse gas emissions associated with agriculture, which means that food transport is responsible for about 1 percent of total U.S. greenhouse gas emissions.

Food miles advocates fail to grasp the simple idea that food should be grown where it is most economically advantageous to do so. Relevant advantages consist of various combinations of soil, climate, labor, capital, and other factors. It is possible to grow bananas in Iceland, but Costa Rica really has the better climate for that activity. Transporting food is just one relatively small cost of providing modern consumers with their daily bread, meat, cheese, and veggies. Desrochers and Shimizu argue that concentrating agricultural production in the most favorable regions is the best way to minimize human impacts on the environment.

Local food production does not always produce fewer greenhouse gas emissions. For example, the 2005 DEFRA study found that British tomato growers emit 2.4 metric tons of carbon dioxide for each ton of tomatoes grown compared to 0.6 tons of carbon dioxide for each ton of Spanish tomatoes. The difference is British tomatoes are produced in heated greenhouses. Another study found that cold storage of British apples produced more carbon dioxide than shipping New Zealand apples by sea to London. In addition, U.K. dairy farmers use twice as much energy to produce a metric ton of milk solids than do New Zealand farmers. Other researchers have determined that Kenyan cut rose growers emit 6 metric tons of carbon dioxide per 12,000 roses compared to the 35 tons of carbon dioxide emitted by their Dutch competitors. Kenyan roses grow in sunny fields whereas Dutch roses grow in heated greenhouses.  [More]

What this argument has suggested to me is we really don't understand our energy usage at all. Few of us really comprehend how energy dense coal and oil are compared to any other source, for example. Led astray by the vision of wind turbines capturing "free" energy, we gloss over the output compared to one stinky ol' coal plant. (Good rule of thumb: each 2 GWatt coal plant =  1000 wind turbines)

BTW, this same energy density problem is why I remain super-skeptical of cellulosic energy.

But lest we industrial farmers get smug about our hard-nosed approach to worldly energy decisions consider Bailey's closing graf:
Desrochers and Shimizu demonstrate that the debate over food miles is a distraction from the real issues that confront global food production. For instance, rich country subsidies amounting to more than $300 billion per year are severely distorting global agricultural production and trade. If the subsidies were removed, far more agricultural goods would be produced in and imported from developing countries, helping lift millions of people out of poverty. They warn that the food miles campaign is "providing a new set of rhetorical tools to bolster protectionist interests that are fundamentally detrimental to most of humankind." Ultimately, Desrochers and Shimizu's analysis shows that "the concept of food miles is...a profoundly flawed sustainability indicator."
I'm not so sure our farm policy is safe from the economic turmoil as we currently believe.  Too many other needs are now in the handout line, and liberals can change their minds.
There seems to be a pattern here...

So this time I'm reading about cutting edge surveillance techniques used to analyze video for susppicious behavior...
Human gaits, for example, can provide a lot of information about people’s intentions. At the American Army’s Aberdeen Proving Ground in Maryland, a team of gait analysts and psychologists led by Frank Morelli study video, much of it conveniently posted on the internet by insurgents in Afghanistan and Iraq. They use special object-recognition software to lock onto particular features of a video recording (a person’s knees or elbow joints, for example) and follow them around. Correlating those movements with consequences, such as the throwing of a bomb, allows them to develop computer models that link posture and consequence reasonably reliably. The system can, for example, pick out a person in a crowd who is carrying a concealed package with the weight of a large explosives belt. According to Mr Morelli, the army plans to deploy the system at military checkpoints, on vehicles and at embassy perimeters. [More]
And I realize what this department really is:

Of course, maybe I'm making fun of it because the actual goings-on in our surveillance research is gosh-darn creepy. (Read the linked article for starters)

It seems God is not the only one watching us.

Saturday, November 15, 2008

The after-effects of a wasted youth...

I was reading a scholarly article about the definition of death and how it is perplexing the organ-transplant industry...
Death in such cases is therefore based on a decision not to resuscitate, not the impossibility of resuscitation. And their hypothetical case does seem to be happening more frequently in reality. In America, data from the Organ Procurement and Transplantation Network, an organisation that matches donors to recipients, show that those classified as cardiac-dead but not brain-dead represent the fastest growing proportion of donors, having risen from zero ten years ago to 7% in 2006.

Dr Truog and Dr Miller reckon this gerrymandering of the division between life and death will continue as long as doctors have to abide by the dead-donor rule—that although a living person can consent to have a non-vital organ removed for transplant (a single kidney, for example) vital organs can be removed only from dead bodies. Instead, they propose that someone whose brain is devastatingly and irreversibly damaged, and who has previously given his informed consent, should be able to donate vital organs while still alive.

In practice, says Dr Truog, this would not differ much from what happens now, except that doctors would be released from the temptation to fudge the definition of death, or to accelerate it by, for example, withdrawing life-sustaining treatment. Indeed, the British government is considering changing the regulations in a way that would allow just that to happen. [More]

And all I could think of was this.

Seriously, I think this makes me a bad person.
Here's the deal...

Aaron's house is just about finished and we're trying to move them in. We have 100 acres of corn in the field, fall tillage about 60%, no NH3 on, and my come-to-Jesus meeting with the bank soon. I also start speaking the first week in December (ND, IA).

Something's gotta give.  

There are a million things I have stumbled across I want to post, but this addiction needs intervention until Aaron is settled, at least and the corn is in the bin.  So any posts I can get up will be the exception.

However, this winter, with a real full-time farmer around here, I will be glued to the computer, living the shallow, artificial existence I've always dreamed of.  (I'm toying with being hard-wired straight to the microprocessor, if it doesn't hurt too much)

Friday, November 14, 2008

Alternatives to more federal debt: example A...

Why not sell some assets?  It seems to work for other economic entities.
The Federal Government owns more than half of Oregon, Utah, Nevada, Idaho and Alaska and it owns nearly half of California, Arizona, New Mexico and Wyoming.  See the map for more.  It is time for a sale.  Selling even some western land could raise hundreds of billions of dollars - perhaps trillions of dollars - for the Federal government at a time when the funds are badly needed and no one want to raise taxes.  At the same time, a sale of western land would improve the efficiency of land allocation.  [More]

I like this idea.  The cattle industry likely would not, unless they suddenly decided to become landowners instead of essentially subsidized lessees.  Still, getting land into private hands always seems like a good idea to me.

Wednesday, November 12, 2008

The ACRE killer?...

Desperate for farm program stuff to write about, analysts and ag media have focused on the byzantine ACRE program for paragraphs to fill empty policy pages. Only it's not working too well.
Some pretty good writers are trying their best to explain the new revenue-based ACRE farm program option in the 2008 Farm Bill.

But it's not working. This material just does not seem to cross the barrier between the outside air and the interior of my skull.

I feel like one of the king's subjects in the children's fable about the king's new suit, which is supposedly invisible to foolish people. People refuse to admit that the king looks naked, for fear that others will think them a fool. I wonder if the same thing is happening with the ACRE program. Will people think me foolish, if I just admit that I cannot understand this program? [More]
To be fair, I have only skimmed over the ACRE concept, but stopped once the flaw for me was revealed. At least, I think it's a game-over detail.
Producers on a farm with covered commodities and/or peanuts can elect to participate in the ACRE program for all covered commodities and peanut acreage on the farm. Once they elect to participate in ACRE, producers on the farm must remain in the program for the duration of the 2008 Act. [More]

This commandment seems problematic to me.  Although you can opt IN later, you cannot opt out, apparently. But farm payments attach to acres - not producers.  That's why when tenants change they pick up (or lose) the bucks.

So my question is: if my cash rent contracts are at most 3 year terms, how the heck can I obligate someone else's acres for the full 5 years of the Farm Bull Bill?  Or do I when I sign up? If it's up to the landowner, why bother explaining it to producers?

[To be fair, the answer to this is likely out there somewhere, but either way is a deal-breaker for me.  And frankly, until I get done, I haven't got the time to do the deep research.]

[No, I still have 100 acres - thanks for asking.]

For that matter, given the horrendous range of prices and events this year, is there one farmer left standing willing to predict the next 5 weeks, let alone 5 years?

Tuesday, November 11, 2008

Reading the [Chinese] fine print...

While the world was briefly excited about the half-trillion dollar stimulus package announced by the Chinese leadership, further scrutiny might give US farmers pause.
The package earmarks 100 billion yuan of central- government spending this quarter for low-rent housing, infrastructure in rural areas, roads, railways and airports. Investment by local governments and companies may boost that to 400 billion yuan, the State Council said.

Cutting Taxes

The government will also allow tax deductions for purchases of fixed assets such as machinery to stimulate investment, a move that will reduce companies' costs by an estimated 120 billion yuan.

Grain purchase prices and subsidies for farmers will be raised, along with allowances for low-income urban households. The government also said it had scrapped loan quotas, which limited lending by banks, to help small businesses. [More]

Hmm - wonder how those domestic subsidies will increase production?

Meanwhile, better mind than mine have developed some skepicism over the whol deal.
Most of this money they would have spent anyway, so what is the net change in the stimulus?  And over how many years is this sum spent?  I think of this as mostly a public relations move.  China wants to tell other countries it is doing lots and it wants to tell its own citizens that it feels their pain and is pro-active.

Is there a gentle way to glide down from 10 to 5 percent growth?  I tend to doubt it.  Are you prepared for a China with negative economic growth for a few years (or more)?  I tend to doubt that too. [More]
Still, bless their hearts, ya gotta give 'em points for trying.  But while we are worried about hardship on our citizens, they are terrified of revolution.

Monday, November 10, 2008

I can see where this is heading...

With virtually all my buddies on Lipitor already, I had assumed my cholesterol test scores would keep me from the club but, as usual, the drug industry has an answer for stubborn healthy folks these days.
In results from an eagerly anticipated study that could dramatically change the treatment of cardiovascular disease, researchers have found that statin drugs -- now given to millions of people with high cholesterol -- can halve the risk of heart attacks and stroke in seemingly healthy patients as well.

The study of nearly 18,000 people with normal cholesterol found that the drugs, already among the most widely prescribed in the country, also lowered the risk of death from heart disease by 20%, suggesting that millions more people should be put on a daily regimen. [More]
The key is a new test for C-reactive protein [CRP] that identifies people who are likely to experience inflammation of arteries even with relatively benign cholesterol levels.
C-reactive protein (CRP) emerged as a potential measure of cardiovascular risk in the mid-1990s, as researchers were starting to think of heart attacks as being caused by inflammation of cholesterol-laden artery walls. It is only if the artery is inflamed, the argument goes, that the cholesterol bursts and causes a heart attack. Any kind of inflammation, including infections, increases blood levels of CRP, and test measurements can vary dramatically for the same person. But a large body of data now indicates that those with a CRP of greater than 2.4 mg/L have a heart attack risk of twice as much as those whose CRP is less than 1 mg/L. In the just-released Jupiter study, those who had an elevated CRP but few other risk factors saw their risk of heart attacks, strokes and procedures decrease 37%. [More from a very helpful pictorial explanation]

The test is not expensive - about $80, supposedly. 

So - lemme guess what my diminutive physician is going to suggest when I go for my annual checkup?

Sunday, November 09, 2008

This is why I nag about broadband...

Consider this news item from Bloomberg:

China's State Council said today the government will spend 4 trillion yuan ($586 billion) by the end of 2010 as part of its stimulus plans, according to a statement on its Web site. The package, of which 100 billion yuan is earmarked for this quarter, will go toward low-rent housing, infrastructure in rural areas, as well as roads, railways and airports, the State Council said. [More][My emphasis]

OK - a well-known country with a few billion citizens decides to spend a half-trillion dollars and the world finds out about it via...

The Internet.

The best investment for your farm. Period.
Another reason I don't watch soccer...


The Offsides Rule
When free traders talk like this...

You know ag exports are in for a rough time.  Larry Summers, a possible choice for Treasury Secretary, was a big fan of DE-regulation and lauded the economic activity of the wild, untamed derivatives markets, for one example.  But he's had a epiphany recently.
Second, an increased focus of international economic diplomacy should be to prevent harmful regulatory competition. In many areas it is appropriate that regulations differ between countries in response to local circumstances. But there is a reason why progressives in the early part of the 20th century sought to have the federal government take over many kinds of regulatory responsibility. They were concerned that competition for business across states, and their ease of being able to move, would lead to a race to the bottom. Financial regulation is only one example of where the mantra of needing to be “internationally competitive” has been invoked too often as a reason to cut back on regulation. There has not been enough serious consideration of the alternative – global co-operation to raise standards. While labour standards arguments have at times been invoked as a cover for protectionism, and this must be avoided, it is entirely appropriate that US policymakers seek to ensure that greater global integration does not become an excuse for eroding labour rights.  To benefit the interests of US citizens and command broad political support, US international economic policy will need to focus on the issues in which the largest number of Americans have the greatest stake. A decoupling of the interests of businesses and nations may be inevitable; a decoupling of international economic policies and the interests of American workers is not. [More]

Just the hint of considering the impact on individual workers is startling, coming from someone whose major goal was simply to increase wealth (and let the winners and losers divide it up as best they can). That free traders are seeking, finally to understand how job losses are evaluated on the micro-economic (me and you) scale instead of seeing "workers" as interchangeable inputs, reveals how weak their traditional arguments now seem to many.

Even though they were mathematically correct, it would seem the unequal distribution of benefits and costs was more important than they had calculated.  If Summers is any example, they are listening now.

It is this backlash that has propelled political windshear here and abroad, and the new suspicion of trade impact will only make ag trade improvement more daunting.

The problem this portends for farms like mine (cash grain) is the very real possibility of an abrupt demand fall, as economies stagnate and trade slows. How to cope with the impact on our farm occupies much of my thinking time.  And they aren't fun thoughts.