Monday, May 31, 2010

Our underutilized third drive...

Doing the right thing simply for the sake of it reeks of simplistic idealism.  And it certainly will not get you ahead in the cashrenter-eat-cashrenter world of American crop farming, right?

So why does it persist?  I have known farmers  - too few, to be sure - who ignored the obvious commands of self-interest and social status to work for a goal that was, as far as my skeptical eye could discover, completely altruistic.

Maybe they aren't as loony as we think.
We have a biological drive. We eat when we’re hungry, drink when we’re thirsty, have sex to satisfy our carnal urges. We also have a second drive—we respond to rewards and punishments in our environment. But what we’ve forgotten—and what the science shows—is that we also have a third drive. We do things because they’re interesting, because they’re engaging, because they’re the right things to do, because they contribute to the world. The problem is that, especially in our organizations, we stop at that second drive. We think the only reason people do productive things is to snag a carrot or avoid a stick. But that’s just not true. Our third drive—our intrinsic motivation—can be even more powerful. [More of a very interesting interview]
I hesitate to use this blog as an example other than to suggest it satisfies that third drive for me - it feels like one right thing to do. Perversely, this satisfaction does not arise from being right in every instance (heh), but from making the effort to communicate and idea or opinion.

The Internet has allowed many of us to engage in this increasingly collaborative adventure, and as mentioned in the interview, much of the time has been taken from thoughtless TV viewing.  This is the miracle of the cognitive surplus.

Agriculture may be poised on the brink of a considerable cognitive surplus of our own.  We need to examine how we spend our time, and what we could be doing for ourselves and our profession.

More importantly, the insights Shirky shared above gives pause for those of us in the ag media.

I know I'm listening. And I think the decisions by viewers/readers will be self-evident sooner than we think.
The European Crisis: Lightning Round....

For those of you slightly mystified by PIIGS, etc. this helpful discussion.

[via free exchange]
We've been financialized...

Just before I left the TV station on Friday morning after taping USFR, the producer asked what I thought Al should ask the market dudes when the roundtable was taped that afternoon.  (We tape in separate sessions for complicated reasons).  At that time the CBOT had just opened on Friday.

My answer, "Why are corn prices so strong in the face of bearish fundamentals?"

And of course, Friday happened.

Here's one explanation.
The disconnect between the Baltic Dry and commodity prices is unusual. So too is the way that commodity prices have been moving in sync with each other in recent years. A  recent paper by economists Ke Tang at Renmin University in China and Wei Xiong at Princeton University documents how commodity prices have become increasingly correlated with one another and with stock prices.
The reason, the economists argue, is that commodities have become increasingly “financialized” by the creation of exchange-traded funds that allow investors to easily trade in and out of them. So when investors get worried by things like what’s going on in Europe, commodity prices can fall sharply even though actual demand for commodities may be running higher. [More]
Of course, we have been noticing this for a few years now, but this trend has deepened and extended to a durable phenomenon.  It's complicating traditional timing schemes like moving averages, I have noticed. Often the sales "signals" last a few minutes at the open, or are wildly superseded shortly after being lost.

My own rudimentary efforts are increasing centered on trigger prices I can live with and forward sales. Also passive marketing to shoot for the average. Selling inventory in hand can become harder to execute in widely fluctuating daily markets. At least, I can look back to proof I freeze more often than I should.

Nor will the effort to fully comprehend all the forces at work and develop a grand theory of prices be a good investment of time, I think. These days weird stuff just happens, and we often can't decipher why post mortem, let alone real time.

Life's too short to become a slave to tick-by-tick randomness.

Saturday, May 29, 2010

One of these things...

Is not like the other (too much Sesame Street when the boys were young).

[More worth wasting time on]

Friday, May 28, 2010

Things that are more expensive...

Than glyphosate.
Here's why.

In its fiscal year ended Aug. 31, 2009, Monsanto's glyphosate-based herbicide business generated $1.8 billion in gross profit on sales of $3.5 billion. But with the influx of generic glyphosate, Monsanto, whose patent on the molecule expired in 2000, expects Roundup's contribution to its gross profit to tumble to between $250 million and $300 million annually.
Its pullback on Roundup increases pressure on Monsanto's seed-and-crop biotechnology business to make good on Mr. Grant's April guidance to investors that the company will be able to generate earnings growth at a mid-teens percentage rate.
On Thursday, Monsanto cut its earnings target for its fiscal year ending in August by 70 cents to between $2.40 and $2.60 a share.
The company also projected profit for the quarter ending Monday of 75 cents to 80 cents a share, well below the $1.32-a-share average predicted by analysts polled by Thomson Reuters.
In 4 p.m. composite trading on the New York Stock Exchange, Monsanto's shares, which have lost nearly 40% of their market value since the start of the year, were down $2.39, or 4.5%, on Thursday at $50.27.
Prices for glyphosate have been hurt by a sustained glut, fueled by China, which has the capacity to make twice as much of the herbicide as the world needs. Mr. Grant said "antidumping actions" might be needed to preserve the industry in the U.S., Argentina and Brazil. Dumping is exporting goods at below the cost of production.
According to Monsanto, the retail price of a gallon of generic glyphosate has dropped to the $10 to $12 range, as much as $4 below what farmers had been paying for nearly a decade. Monsanto said it expects glyphosate prices to settle at between $8 and $10 a gallon. [More]
Well, this helps pay for the residual I have to use now.

Thursday, May 27, 2010

Wasn't that corn green yesterday?...

Just when I thought we had handled all the challenges this season, corn 'round here started getting funky. Streaks of yellowed corn following anhydrous applicator patterns - a familiar issue - but this time it  seems more pronounced.  Maybe the good corn is just getting greener by contrast.

I know we have been here before, but many fields that were just disked before going back to corn are pretty ragged after looking fine the last two weeks.  I kinda remember cool weather and nutrient uptake issues can cause this.

Somebody tell me it'll be OK.

[This is where a photo would be if I could remember my phone takes photos.]

Meanwhile, we're having some of the most localized downpours I have ever seen.  You can watch your neighbor get an inch in minutes while sizzling in dust.
OK, now I'm confused...

Apparently the National Corn Growers Association has embraced the idea of anthropogenic climate change.  I say this because their snappy new ads feature this statement:


But oddly, their website doesn't even list AGW as an issue.   And I'd bet good money (assuming there is any) a poll of their members would not find many AGW proponents.  Just a hunch, based on the shellacking I get anytime I mention it around crop farmers.

Let's review.

Greenhouse gases don't matter if they don't cause the greenhouse effect (global warming). So if removing greenhouse gasses is something to be celebrated, then greenhouse gasses must be bad.

Jeez - pick a side, guys.  But only one.

Tuesday, May 25, 2010

Phrases only a cowboy could write...

From Steve Cornett, who should know better.
This is a “self-tenting” syringe and we think it worked just like they said it would. Except it didn’t actually “tent,” we think. It just did the subcutaneous injection without tenting. So it’s as easy as giving an intramuscular shot.
I heard about it in a news release from Elanco last week.  
The gizmo was invented in New Zealand,
Elanco likes it, I suppose, because their Micotil product is dangerous if you shoot it into yourself, and that can be done if you’re pinching up skin with your left finger and shooting a nervous calf with a long needle in your right, and especially if you’re trying to hold onto a beer, too.
One more reason, I don't heart cowboys (pdf).
Even as both professions evolve, the images endure. I have noticed that in a neutral setting, with no visual clues, people are often surprised they didn't realize I was a farmer. When told, they speak more slowly and slightly louder, especially women. With cowboys, however, they tend to titter nervously, as if expecting an outlandishly manly incident at any second. 
Not like I'm jealous...
Junkbox, Episode MMM...

Brace yourself.
One field to go planting.  Pop-up thunderstorms just missed by inches last night.

    Monday, May 24, 2010

    A story problem...

    How long should it take two engineers with three degrees and every known power tool Dewalt has made to assemble this playset?


    Answer: we have no idea.
    Meanwhile, back at the African ranch...

    While we can't take our eyes off China, except maybe to glance at India, something is happening in Africa.  Something very good, I think.


    The cause is anybody's guess, but China's hunt for commodities (especially metals/minerals) is a top candidate. I think we need to keep in mind that growing demand for commodities does not guarantee that demand will show up here alone, or even mostly.
     Obviously the question becomes how sustainable this boom is. Traditionally the problem for countries that are commodity-exporting their way to prosperity is two-fold. One is that your commodity exports drive up the price of your currency, which reduces the competitiveness of your industries in other tradable sectors. You become a country that sells copper (say) abroad to finance imports of all other kinds of things. Second is that while in the initial phase rising commodity prices make your country more prosperous and in the second phase continued price growth drives investment that further drives prosperity, sooner-or-later the increase in investment tends to drive the price of the commodity back down to earth and then where are you? So what you’ve normally seen is countries riding a commodity price boom-bust whipsaw and never achieving any kind of sustainable development. Will we see that again, or will China manage to keep moving up the value chain to the extent that eventually Africa and other poor places start to take its place as low-cost manufacturing hubs and so forth? [More]
    Still, because we grow commodities that flow like water through the markets, demand anywhere is a good thing. And what this chart suggests is Africa could begin contributing mightily to that demand as GDP soars.

    Sunday, May 23, 2010

    It's officially thirty-something...

    The end of adolescence, that is.  I have used this as a laugh line in presentations, but notice people laugh a little uncomfortably anymore. And the anecdotal evidence for delayed maturity is piling up.

    But parents shouldn't look at their basement-dwellers and wonder where they went wrong. The transition to adulthood is a long and winding road that can stretch into the early 30s, say some of the country's most prominent researchers, who spent two years analyzing data on what it means to be a grown-up in modern America.

    "The world has changed … and it's just a lot more difficult to establish an independent household," said  Mary Waters, a sociology professor at Harvard University and one of the contributors to the recently released "Transition to Adulthood," a collaboration of the Brookings Institution and Princeton University's Woodrow Wilson School of Public and International Affairs.

    In 1960, 77 percent of women and 65 percent of men had acquired certain traditional markers of maturity by age 30: leaving home, completing school, full-time employment, marriage and family. In 2005, the figure had plummeted to 27 and 39 percent, respectively, according to the MacArthur Research Network.

    Given the economic realities, it can take up to age 34 to step into those adult roles, said Waters, citing the "ratcheting up of everything" – from academic requirements to the labor market to explain the lag. The provision in the new health care law extending coverage to children beyond age 22 is an example of government addressing this revised timetable. Compared to some other countries, the United States invests little in this demographic [More]

    The change in health care will exacerbate this prolonged attachment, to be sure. This does not make it a bad idea, but certainly is one more drop of glue making this trend less than temporary. The real eye-popper from the same article is this, however:
    It's not the script she envisioned, but the stigma has faded. The job site's online poll reports that 64 percent of 2009 college graduates are back in the nest.
    That's not a lot of percent, fellow parents.  While it strikes me as largely a function of economics - few entry jobs even for college grads, parents who can afford to support them, health care costs, etc., other experts suggest surprising factors at work.

    "Why does my young adolescent have such wandering attention?" "Why is my 23-year-old taking so long to act grown up?"
    Many parents wrestle with these questions, and as a counselor working with these families so do I. Sometimes I speculate about one common cause that may connect the two: the age of electronic entertainment in which young people live.
    Why do I call it "the age?" Consider the following news report. If a recent Nielsen survey (see NYT, 10/2/09, p. B4) is to be believed, "children ages 2 to 5 spent nearly 25 hours a week watching television, the highest figure on record. They spent an additional seven weekly hours watching DVD's, playing video games, and watching TiVo-style time-shifted television."
    Of course, this doesn't take into account recreational time spent on the computer, adolescents much more active in this virtual world than children.
    I believe such a high investment of time and energy in elecronic entertainment can have problematic effects on a young person's growth.  [More]
    To substantiate this as more than a passing cultural curiosity, consider how Boomerang Offspring are now a staple of comedy, such as the comic strip Dustin.


    And before you younger parents scoff at the idea this could be in your future, give yourself some room to be wrong.  About the only successful defense is to be simply unable to help grown children financially, as far as I can tell.

    While we have seen middle generations supporting both older and younger cohorts - taking care of Grandpa and doing Junior's laundry - for some time, the new economics of retirement suggests this picture could be pretty discouraging looking ahead.  One thing seems certain however. The ideal of relatively enjoyable years when the kids are off to college and earnings peak, followed by active grandparenting and a slide into secure retirement won't be as common as it was for many.

    This altered schedule for maturity will have effects here on the farm as well. If you stop and think about it, one reason we're all wringing our hands about average farmer age rising could be young people are not even thinking about settling into a career until 30-something.  That alone would skew the mean age upward, compared to starting right after high school.
    OK, it's alive!...

    We get it.  The announcement of synthetic life (the jury is still out on this label) by bioengineering pioneer Craig Ventner has sparked more intensity in a debate already in long in progress.

    [So before we go any further, the monster was not named Frankenstein. His name was The Monster.]

    Having cleared up that particular personal obsession, what does this tiny little dot of bioengineering amount to anyway?
    The experiment involved creating a strand of DNA as specified by a computer in a sequencing machine, and inserting it into a dead cell of M. capricolum, and then watching it revivify and express the artificial markers and the M. mycoides proteins. It really is like bringing the dead back to life.
    It was also a lot more difficult than stitching together corpses and zapping it with lightning bolts. The DNA in this cell is over one million bases long, and it all had to be assembled appropriately with a sequencing machine. That was the first tricky part; current machines can't build DNA strands that long. They could coax sequences about a thousand nucleotides long out of the machines.
    Then what they had to do was splice over a thousand of these short pieces into a complete bacterial chromosome. This was done with a combination of enzymatic reactions in a test tube, and in vivo assembly by recombination inside yeast cells. The end result is a circular bacterial chromosome that is, in its sequence, almost entirely the M. mycoides genome…but made from a sequence stored in a computer rather than a parental bacterium.
    Finally, there was one more hurdle to overcome, getting this large loop of DNA into the husk of a cell. These techniques, at least, had been worked out last year in experiments in which they had transplanted natural M. mycoides chromosomes into bacteria.
    The end result is a new, functioning, replicating cell. One could argue that it isn't entirely artificial yet, since the artificial DNA is being placed in a cell of natural origin…but give it time. The turnover of lipids and proteins and such in the cytoplasm in the membrane means that within 30 generations all of the organism will have been effectively replaced, anyway. [More]
    And that was the simplest explanation I read, just for the record. (Yet another reason I avoided life-sciences).  I think it is a very, very big deal, and will eventually find its way into the realm of politics, albeit too late to really affect an explosion in innovation in synthetic life.  See also: GM crops. In fact, I'm still waiting for farmers to discover what Tea Partiers think about GMOs right now.  Throw in folks with religious objections to GMOs and you could throw a real wrench in "small government" politics.  The only way to stop this is more government regulation, right?

    But this new field of creation or manipulation of living material hints at some real possibilities that could show up on the farm.
    Synthetic biology, as the field of man-made biological components such as Venter's is called, is a promising new field that raises as much concern as it does excitement. It's basically genetic engineering writ on a larger, more profoundly amped-up scale. That process could generate valuable new species that can produce vast amounts of much-needed food or pharmaceutical products, and Venter is already at work on such projects. Collaborating with Novartis, he is building a bank of man-made versions of every known influenza strain so that if a new strain, such as H1N1, begins to circulate during flu season, vaccine makers can simply pull the appropriate synthetic segments off the shelf and begin the vaccine making process, cutting the months-long job of sequencing the appropriate strain down to a single day.
    Working with Exxon, Venter's team is investigating ways to harness algae to convert carbon dioxide into a hydrocarbon source for biofuel on a scale that would finally make such alternative energy options worth pursuing. "No natural algae we know would do this on the scale needed," he says. "So we have to use a synthetic genome technique to either heavily modify existing algae or devise whole new ones." And the same strategy can be used to build organisms that can clean up pathogens in water or boost nutritional content in foods such as wheat crops. [More]
    Regardless of the marketable products that emerge from this research I think corn (maize) will be an easy choice for acting as a vector or host if possible.  Having a long history of similar genetic modification, public and professional resistance would likely be lowest. With millions of acres - often wall-to-wall, isolation or at least dilution could be more feasible.  And our industry certainly has the infrastructure (plenty of white lab coats, etc.) to support such breeding.

    I am not talking about the over-ballyhooed "farmaceuticals".  If Big Pharma develops say, a cancer vaccine grown in soybeans they are not going to pay a farmer to grow it on land rented from someone else.  Extremely high value crops will be grown on company owned land by company employees.

    But it could be some other bug or biological product could be extracted during the corn milling process, for example and have a large enough market to prompt interest in the millions of acres of corn that could be doing double duty.  This is wild speculation, but I think the premise is sound. The end product must be something compatible with commodity production for any dollars to be showing up in our pockets.

    At the very least, the idea of synthetic life sliding from science fiction to newspapers is to be noted.

    [Update: Carl Zimmer has added his own commonplace brilliant touch to this story, noting that the minute the cell was formed, evolution took over and began to reshape it.
    The scientists who produced the new synthetic cell copied the genome of a microbe, letter for letter, and then inserted the synthetic version into a host cell. To determine that their experiment worked, they needed a way to tell the genomes of their synthetic cells from the natural genomes that were their model. So they inserted “watermarks” into the artificial genome. These sequences of DNA (which spelled out the work of Joyce and others through the genetic code) sit in non-coding regions of the microbe’s DNA. As a result, these watermarks cannot disrupt any essential protein-coding genes or stretches of DNA that are vital for switching genes on and off.
    It turns out that the genome of the synthetic cell is not identical to its original, even if you ignore the watermarks. Mutations slipped into its sequence during its synthesis. Yet those mutations caused no harm to the microbe, presumably because they didn’t disrupt an essential function encoded in its DNA. Once the synthetic cell came to life and began to grow and divide, it copied its entire DNA, including Joyce’s words. But as lovely as those words may be, and as important as they may have been to the scientists during their experiment, they mean nothing to the microbe. Every time an organism replicates, each spot in its DNA has a tiny chance of mutating.
    In the growing colony of synthetic cells, now numbering in the billions, it’s almost certain that Joyce’s watermark has already been defaced by a mutation. The bacteria that carry these degraded versions of Joyce presumably do not suffer from these mutations, since the watermarks don’t matter to them anyway. So they can keep replicating.By contrast, the DNA in the really useful parts of their genome is changing very little over the generations, thanks to selection. [More]
    Like glyphosate resistance, the implacable forces of evolution keep us changing and moving toward a future to be chosen by the rules we uncover through research such as this.]

    Saturday, May 22, 2010

    What if they had a stock market...

    And nobody came. I'm beginning to wonder if the flash crash, allegations (strong) of corruption, and unsuspected linkages to other economic events aren't taking an enormous toll on stock market investor enthusiasm.  Part of the reason could be new questions about the presumption of a risk premium: riskier assets will generate higher returns.  Stocks are riskier than bonds, ergo stocks will pay off better in the long haul.
    EQUITIES just aren't what they used to be. It was once gospel that equities out-perform low-risk bonds. But if you invested in the stockmarket around 1999 the balance of your portfolio probably suggests otherwise. During the post-war era equity returns have been positive. Enough so that the equity-risk premium, the return equities generate in excess of the risk-free rate (which is normally short-term Treasuries), is often assumed to be between 5% to 8%. In my experience risk managers go silent when asked where exactly this number comes from. Usually it is based on some historical data with a dose of "sensible judgment". Clearly, the size of the expected equity premium depends on the timeframe you use and the manager.
    I recently spoke to an auditor who described the difficulty involved in calculating today's equity premium. If you use recent history in your estimation, you may end up with a zero or negative equity premium. No one wants to use this in their forecasts; otherwise projections look pretty dismal. If you're selling a financial product or strategy that involves equity investment, a zero equity premium will not entice investors. [More]
    In fact, discovering that most stock markets are largely made up of computers tossing equities back and forth very quickly doesn't make them particularly attractive to me, for one.  And I know relatively little about portfolio theory.  Felix Salmon knows lots, and he is offering a sobering prediction for equities.
    This is the heart of my case against investing in stocks. For one thing, you have no good reason to expect an equity premium going forwards, and if there isn’t an equity premium, then your allocation to stocks should be tiny: you’re not being compensated for the extra risk you’re taking. On top of that is the question of volatility, which is not exactly the same as risk, but which again should be compensated for with higher returns, and isn’t.
    My feeling is that people like to invest in stocks because they like knowing that there’s a chance that the stock market will solve all their financial problems when it rises. Think of it as a three-pronged strategy: buy a house, invest in stocks, and work hard. Any one of these three things can pay off with lots of money at retirement, in the way that investing in TIPS won’t.
    What’s more, an entire generation of Americans started working and saving and buying a house in the early 1970s — and millions of them hit the trifecta, becoming successful in their careers even as their stocks rose and the value of their real-estate soared. I doubt that particular combination is going to happen again in the U.S., but the experience of that generation is so powerful as to give a lot of people a lot of hope. Even if that hope isn’t particularly rational. [More]
    The idea of hitting the trifecta seemed vaguely familiar.  Who else in the US has seen their income rise steadily (occasionally spectacularly), has seen their major real estate investment soar, and also their retirement income projections rise smartly?

    No, no - don't tell me - I know this one.

    Given the widespread  - and still growing - disillusionment with investor choices, maybe the love affair with farm investment is just beginning. If so, our tiny asset base could trigger even more outlandish results than we have seen.

    Do the income fundamentals justify current land prices?  Not even when you squeeze all the cash rent you can, IMHO. Yet the march upward continues.

    Amateur science prices dropping...

    One amazing and often-overlooked aspect of the information explosion is how it is bringing down the price of stuff needed for experiments, while enormously increasing the availability of knowledge useful to backyard tinkerers.

    I remember sending off for bizarre catalogs from ads in the back pages of Popular Science, and evn then finding it hard to buy electronic components for my gadgets.  Much of that is due to living in the country, of course, and not knowing older nerds who could tell me where to buy transformers, for example. (Not the toys - the heavy electronic things).

    One time I needed a way to cast clear plastic to enfold a circuit board for a pretty silly science project I saw in some electronics magazine.  I must have worked on finding someplace to source that for months.  Anyhoo, things are looking up today.
    The DIY movement in science and technology is demonstrating that it can do inexpensively what large companies and even Big Science have spent millions doing. I call them "make-offs," low-budget knock-offs of scientific and industrial technology built with off-the-shelf components. It is a version of what China has been doing to America, benefiting from the R&D that goes into refining the specifications, developing prototypes and building a finished product. Only now, with new digital fabrication techniques and open source hardware and software, individuals and small companies are in a position to compete globally with a distinctly DIY approach to innovation. It's a new independent source of creative work, similar to what indie films are to Hollywood films developed in-house. It's open, collaborative and done on the cheap. And almost anyone can play, as you can see this weekend at the 5th Annual Maker Faire Bay Area.
    In Mountain View, Calif. last September, Greg Klein, who was about to go off to college, designed and built a high-altitude space balloon with two other students. Like a lot of Silicon Valley startups, the idea was first sketched out on a napkin. Named Apteryx, the balloon was launched with a 4-lb. payload consisting of sensors, an open-source microcontroller called Arduino and consumer-grade cameras. After about five hours, the balloon had reach 90,000 feet, which is considered near-space. The team used an amateur radio to send telemetry data and later tried using a prepaid cellphone as a tracking device. They were successful in locating the payload when it returned to earth. The bill for the project's materials was about $800, a bit high for college students but a lot less than you might expect for something so amazing. [More]
    Ah - the smell of resin-core solder on a cold morning...

    (No, I didn't date much in high school - why do you ask?)

    Friday, May 21, 2010

    Take a breath, dude...

    Population hysteria is all the rage, but this one tops any I have seen to date.
    To meet the food and fiber needs of a world population projected to double just 20 years from now will require a more productive agriculture and an increased utilization of technology, says Russ Green.
    “By 2030, we’ll have to feed twice as many people as today,” the president of Claas of America, Inc., said during a recent Mid-South visit. “We’ve broken about all the land we can — which means we’ll have to do better with what we have, using technology and science to produce more on available land.” [More]
    First, let's examine the assertion here.  No matter how I read it, Mr. Green seems to be under the impression that in 2030 our population will be over 13 billion people.  (Today = 6.8B, 2X = 13+B)


    Let's look at some other population projections for perspective.

    First, from the UN 2004 Estimates and the US Census Bureau.

    Notice that 13B by 2030 is mildly off the map of even the highest expert estimate.

    OK, maybe those UN lefties are low-balling the chart.  Let's see what our own Yankee-Doodle Demographers estimate.

    I could go on, but you get my point. The central point of Mr. Green's remarks, I think, was to blast the HSUS, but while that always plays well with farmers, doing it with fatuous numbers won't cut it in the Google information universeEither the guy is badly misinformed, or the reporter didn't bother to research and ask the obvious question, "What do you base that statement on?"

    Either way it is a shabby performance all 'round, IMHO.

    Yo - Penton. Hire a fact-checker.
    Some new budget deficit thoughts...

    It is all very well to carp and whine about what others are saying about our federal deficit problem, but sooner or later, folks like me have to demonstrate what we would do if we were kings. I had a vague idea about what budget cuts and new taxes(you heard me) I would order, but no good way (or at least easy way) to calculate the effect of my wise and beneficent rulings.

    Taa-daa!  Behold the DIY Federal Budget Calculator.

    Seriously, take a few minutes and wander through the choices to get an idea of what helps and hurts the most.  I got to the goal and then some, but probably should have spent more time analyzing each item.  My results:

    But time may be shorter than even pessimists think. Bruce Bartlett starts the countdown, which he thinks hinges on ratings agencies.
    What might trigger such a downgrade? The rating agencies have already told us what it will be: a rise in the federal government's interest payments to 20% of revenue, not spending. That is the limit of what the agencies view as acceptable. As noted earlier, given the status of federal interest payments as superior to all other spending, this is the logical position for the rating agencies to take. Whether they are right about 20% of revenue being the cutoff between manageable and unmanageable interest payments is an empirical question that their experience presumably informs.
    So when might we reach the 20% threshold? According to the Congressional Budget Office's forecast based on the administration's budget, that will come in about 10 years. Interest as a share of projected revenues will rise from 8.9% last year to 9.9% this year, 14.8% by 2015, 19.8% in 2019 and 20.8% in 2020. [More]
    Although the recovery and unemployment are still the foremost concern, getting some ideas about how to reduce the deficit is clearly the most pressing need of government. At least being able to talk coherently about the numbers will require some homework, to say the least.

    Feel free to share your plan.
    USFR Mailbag Links...

     Do tax cuts pay for themselves?

    Nope, not even the Reagan "cuts".
    Nope, even Laffer agrees.

    Thursday, May 20, 2010

    Where DNA testing is taking us...

    I have opined that cheap, ubiquitous DNA testing (once retailers get over the heebie-jeebies about selling them) will produce some odd consequences.  I think we are getting there and would offer these two events as evidence.
    The university said it would analyze the samples, from inside students’ cheeks, for three genes that help regulate the ability to metabolize alcohol, lactose and folates.Those genes were chosen not because they indicate serious health risks but because students with certain genetic markers may be able to lead healthier lives by drinking less, avoiding dairy products or eating more leafy green vegetables. [More]

    I don't know if this test results would be useful for identification in a student assault case, for example.  But if getting a swab becomes just another college entrance requirement, we are looking at a pretty solid ID program.

    Another slightly more arcane use of DNA testing is proposed to deal with an equally important social problem, dog poop.  And the owners who don't take care of it.
    Someone of the canine persuasion has been leaving his business all over the ritzy Scarlett Place condominium near the Inner Harbor. And the condo board says the only way to find the culprit: mandated DNA tests for every dog in the building.
    "We pay all this money, and we're walking around stepping in dog poop. We bring guests over and this is what they're greeted by. It's embarrassing for me as a dog owner and as someone who lives in this building," says Steve Frans, the board member who raised the idea of hiring a lab to identify which of the dozens of dogs in the luxury building is behind the droppings. [More]
    I will forego all the too-easy punchlines here to merely point out this is how science becomes interwoven into our lives - it becomes harmless-seeming to the point of ridicule and sarcasm.

    In the same light, it also makes inroads toward acceptability because like now, we can't seem to work up much sense of threat or fear about such testing.  But like Facebook, it is one more slight shifting of the line between what is private and what is public.

    Wednesday, May 19, 2010

    Equal species time...

    Steve has been wandering a bit much in the food aisle pondering the future of beef eating, and I have been happy to support and benefit from his musings.

    But there are other protein sources, ya know.  Unfortunately, it seems the pork culinary tradition is a little less, umm...genteel.
    Last night’s Cochon 555 event, an epic gustatory battle where five local chefs prepare eats from five different heritage pig breeds, boasted a little bit of everything, from pig-ear coleslaw and pig-heart ravioli to drunken head-butts, a chef being ejected from a local bar and a pair of food-industry pros being arrested by the cops after a brawl over local vs. out-of-state pigs. [More good food and pugilism readin']
    I dunno, maybe these chef shows are crossing over into WWF territory.
    A prophet for me...

    This is a prediction I can buy into.
    “Prosperity spreads, technology progresses, poverty declines, disease retreats, fecundity falls, happiness increases, violence atrophies, freedom grows, knowledge flourishes, the environment improves and wilderness expands.”
    If you’re not ready to trust an optimist, if you still fear a reckoning is at hand, you might consider the words of Thomas B. Macaulay, a British poet, historian and politician who criticized doomsayers of the mid-1800s.
    “We cannot absolutely prove,” he wrote, “that those are in error who tell us that society has reached a turning point, that we have seen our best days. But so said all who came before us, and with just as much apparent reason.” [More]
    While much of what is mentioned above seems logical to me, the core of my optimism is based on having a growing number of brains working on the solutions to our always-numerous problems, instead of a few million in the West. I think we will see an outpouring of innovation in a wide scope of human endeavor simply because more people have more information - and information inevitably leads to freedom.

    Also, after listening to too lectures about the Middle Ages - which were badly mislabeled "Dark" - I realize progress continued albeit fitfully even then.  Humanity was largely held back by religious orthodoxy and plague, from which we bounced back with surprising power.

    I see little facing us that is beyond a conceivable human solution.
    Hyperinflation Warning!!...

    Just kidding.
    The cost of living in the U.S. unexpectedly dropped in April for the first time in more than a year, reinforcing forecasts that the Federal Reserve will keep interest rates near zero for much of 2010.
    The 0.1 percent fall in the consumer price index was the first decrease since March 2009, figures from the Labor Department showed today in Washington. Excluding food and fuel, the so-called core rate was unchanged, capping the smallest 12- month gain in four decades.
    Retailers such as Wal-Mart Stores Inc. are cutting prices to bolster sales as customers face almost 10 percent unemployment and rising foreclosures. The European debt crisis, which has pushed up the value of the dollar and may restrain global growth, will probably further depress prices at a time when inflation is already running below Fed policy makers’ projections.
    “There simply isn’t any kind of price pressure of any consequence,” said David Resler, chief economist at Nomura Securities International Inc. in New York, who accurately forecast the decline. “This puts the Fed firmly in place for the foreseeable future.” [More]
    I probably shouldn't ping on this too much, but virtually all Deficit Doomsday scenarios depend on a plummeting dollar and runaway prices for their scariness.  What seems to keep happening is the US economy manages to look slightly less ugly than the other choices, and the scare talk may actually reinforce the flight to US-denominated safety.

    This doesn't mean inflation isn't a threat, but it sure isn't going to catch us by surprise.
    When I was a boy, Ctd...

    The entire original article about the Tea Party can be read ungated here.  Besides a fuller explanation of declinism, it introduces another theme: producerism.
    Simmering economic frustration also accounts for the final historical strain that defines the Tea Parties: They are part of a tradition of producerism that dates to Andrew Jackson. Jacksonian Democrats believed that workers should enjoy the fruits of what they produce and not have to share them with the merchants and bankers who didn’t actually create anything. The Populists of the late nineteenth century invoked this ethic in denouncing the Eastern bankers who held their farms hostage. Producerism also underlay Roosevelt’s broadsides against economic royalists and Bill Clinton’s promise to give priority to those who “work hard and play by the rules.”
    During the 1970s, conservatives began invoking producerism to justify their attacks on the welfare state, and it was at the core of the conservative tax revolt. While the Jacksonians and Populists had largely directed their anger upward, conservatives directed their ire at the people below who were beneficiaries of state programs—from the “welfare queens” of the ghetto to the “illegal aliens” of the barrio. Like the attack against “big government,” this conservative producerism has most deeply resonated during economic downturns. And the Tea Parties have clearly built their movement around it.
    This idea as well I hear often in rural America, since we clearly belong in the camp of "producers" and can point to tangible output.  It is a tricky mindset going forward since most of working America will not be making things, but performing services. 

    Regardless, the whole article is very illuminating information, I think.

    Monday, May 17, 2010

    When I was a boy...

    Everything was better. In a nutshell, this seems to be one of the prevailing winds in American sentiment today.  Luckily we have given it a name: declinism.
    Judis identifies three strains of American thinking that help to define the Tea Party movement:
    The first is an obsession with decline. This idea, which traces back to the outlook of New England Puritans during the seventeenth century, consists of a belief that a golden age occurred some time ago; that we are now in a period of severe social, economic, or moral decay; that evil forces and individuals are the cause of this situation; that the goal of politics is to restore the earlier period; and that the key to doing so is heeding a special text that can serve as a guidebook for the journey backward.
    I’ve offered a dissent from the common libertarian perception that we have declined from a golden age of liberty, but declinism is certainly a strong theme in conservative thought. (Not to mention in Club of Rome environmentalist thought.) Judis suggests that declinism often takes conspiratorial form and wonders “how could a movement that cultivates such crazy, conspiratorial views be regarded favorably by as much as 40 percent of the electorate?” [More*][Note the shameless end-around to gated (subscription) material I am using here]
    This world-view is in vogue for unhappy citizens of lots of countries, but I think especially pronounced here as we seek to reconstruct a past that probably didn't really exist. In fact, there is an entire 1984-ish cottage industry set up to manufacture a past to fit these desires.

    It even affects our thoughts about food, as Steve Cornett wanders again where only the the brave or foolish go.
    Steaks don’t taste as good as they used to.
    That’s what Mark Schatzker thinks, and it’s what I think, too.
    And, yes, I’m aware that there is more Choice and Prime beef today than there was a few years ago. But we’re agreed that USDA quality grade is not a precisely precise indicator of eating quality.
    But we have our differences. I think USDA grades are the best measure we have in a commodity-graded industry. I wish we had something better, but I’m not sure we ever will.
    He seems to blame corn feeding.
    I am compelled to revisit Mark’s book, Steak: One Man’s Search for the World’s Tastiest Piece of Beef, because I did a short blog last week that seems to have been misunderstood. To the point that one responder accused me of not having tastebuds. [More worth reading if you eat beef]
    My first reaction is starting from a perspective of decline can be a debilitating handicap in the pursuit of satisfaction. I am not immune, I must admit, but my looking backward takes a more bizarre countenance: I like paintings by Robert Hubert Hubert Robert (Always have trouble with that name!)

    No kidding.  I can stand for long periods looking at depictions of places that never were, but should have been.  In fact, tomorrow, Jan and I are escaping to Chicago and I will go the the Art Institute to view my favorite work.

    Okay, given my other strange predilections, why am I mesmerized by very large oil paintings of non-existent ruins?

    Man, I have asked myself that a million times.  So far, I have come up with these possibilities:

    First, I had a pretty happy, clueless childhood.  I think romanticizing the past comes easily to those of us who don't have many sad chapters to recall. Hence, the idea of a better, more-everything yesterday is at hand to embrace.

    Second, melancholic nostalgia must be a common human trait.  I say that because it sells like crazy.  It must evoke some emotional rewards that cannot be duplicated by other stimuli.  From collectors to re-enactors, people love to rebuild a past to their own specs.

    Third and most powerful perhaps, our memory is the worst possible source of data about the past, so much of the time we are misremembering a past that did not really happen.

    Given the restless dissatifaction of many today, escaping to a "past", or deciding we should reverse course is understandable. Even if it is infeasible or chimerical.

    Like the way steaks used to taste.

    But the growing belief our culture and lives are going downhill is far from harmless. Mostly because the folks deciding which way is "downhill" seem to be convinced they alone know the slope. 

    * Link fixed - sorry.

    This is my 3002nd post since John's World/Incoming shifted to Blogger (4/6/2006). That's right at 2 posts per day for those 4+ years.

    To say I have enjoyed it is self-evident.  I must have done, because since it doesn't doesn't generate income (not even Google ads), this activity is clearly a hobby.  But more and more it seems to me it is a problem.  Aside from the time absorbed, there is the rising concern too much screen-time is changing who we are, or can be an addiction.
    The problem with the addiction metaphor, which as these quotes show is easy to indulge in, is that it presents the normal as abnormal and hence makes it easy for us to distance ourselves from our own behavior and its consequences. By dismissing talk of "Internet addiction" as rhetorical overkill, which it is, we also avoid undertaking an honest examination of how deeply our media devices have been woven into our lives and how they are shaping those lives in far-reaching ways, for better and for worse. In the course of just a decade, we have become profoundly dependent on a new and increasingly pervasive technology.
    There's nothing unusual about this. We routinely become dependent on popular, useful technologies. If people were required to live without their cars or their indoor plumbing for a day, many of them would probably resort to the language of addiction to describe their predicament. I know that, after a few hours, I'd be seriously jonesing for that toilet. What's important is to be able to see what's happening as we adapt to a new technology - and the problem with the addiction metaphor is that it makes it too easy to avert our eyes.
    The addiction metaphor also distorts the nature of technological change by suggesting that our use of a technology stems from a purely personal choice - like the choice to smoke or to drink. An inability to control that choice becomes, in this view, simply a personal failing. But while it's true that, in the end, we're all responsible for how we spend our time, it's an oversimplification to argue that we're free "to choose" whether and how we use computers and cell phones, as if social norms, job expectations, familial responsibilities, and other external pressures had nothing to do with it. The deeper a technology is woven into the patterns of everyday life, the less choice we have about whether and how we use that technology.
    When it comes to the digital networks that now surround us, the fact is that most us can't just GTFO, even if we wanted to. The sooner we move beyond the addiction metaphor, the sooner we'll be able to see, with some clarity and honesty, the extent and implications of our dependency on our networked computing and media devices. What happens to the human self as it comes to experience more and more of the world, and of life, through the mediation of the screen? [More]
    To be fair, I can point to some benefits that spill over into my writing and speaking. Posting is essentially my research effort to surface material to present, assemble facts to support my assertions, and exposure to ideas I likely would not have encountered otherwise.

    But blogging has crowded out other good things in my life, and isolated me from activities that could reduce stress and boost satisfaction, I now suspect. Oddly, over the last few months I have watched several bloggers "burn out" - so I am wondering if this 4-5 year mark is some kind of threshold.

    So I am trying to take a slightly more objective view of this peculiar activity, and how I can make it better fit into my life, and still provide something others find useful.  Nothing may change, but much could.

    Sunday, May 16, 2010

    Here's one to throw under the bus...

    For farm program fans who are getting nervous about where to cut the USDA budget other than their payments, how about the USDA Office of Communications?

    Here’s an example: the Department of Agriculture’s $10 million Office of Communications. Of the total, $9 million is spent on wages and benefits for its 77 employees, which equals $116,333 per employee. This almost matches perfectly the overall average annual federal employee compensation of $120,000, which is twice the average in the private sector
    So federal workers in a PR office are worth twice the average worker in the private sector? And I’m sure they’re all nice people, but do they really add anything to the nation’s GDP?
    This program can be summed up in one word: propaganda. The program’s mission statement makes this clear: 
    The mission of the Office of Communications is to provide leadership, expertise, counsel and coordination for the development of communications strategies which are vital to the overall formulation, awareness and acceptance of U.S. Department of Agriculture programs and policies, and serves as the principal USDA contact point for the dissemination of consistent, timely information. 
    The operative phrase is “awareness and acceptance” of USDA programs and policies. Taxpayers are being forced to pay for a not-so-subtle effort by the USDA to get them to “accept” a $116 billion bureaucracy that subsidizes wealthy farmers and promotes government dependency through food subsidies.  [More]
    This may seem like just a cheap shot at a relatively tiny piece of government, but until it dawns on us how we will really have to reduce spending - i.e. eliminate thousands of tiny bureaucracies/programs for penny-by-penny savings - we won't make any progress at all.

    [Update:  Wes Mills the producer for USFR and AgDay reminds me we routinely use releases from the USDA OC for the shows. This illustrates another aspect of cutting the budget - almost every program/activity funded by tax dollars has constituents who do not want to see it cut. There are very few easy spending cuts.]

    Saturday, May 15, 2010

    Obviously not a vote...

    In favor of our current farm policy.  It seems some folks are getting worried that we farmers will let them down in the fast approaching apocalypse.

    The Colbert ReportMon - Thurs 11:30pm / 10:30c
    Survival Seed Bank
    Colbert Report Full EpisodesPolitical HumorFox News

    But wait - there's more!
    What’s so special about these seeds, you may ask? I’ll let them tell you:
    ·    “Non-hybrid seeds can be grown practically anywhere and have the ability to assimilate mineral and trace elements from the soil that man made plants just don't seem to have.”
    ·    “Each seed package is sealed in a special foil packet with a very expensive desiccant designed to keep seeds fresh for 20 years at 70 degrees.”
    ·    “More valuable than silver or gold in a real meltdown.”
    ·    “Hundreds of pounds of food for $.01 per pound.”

    Let’s tackle these claims, shall we? We’ll start with the “non-hybrid” claim, which is the only one with any potential validity. Like all good scams, there’s a grain of truth to it, since hybrid seeds can’t be saved after harvesting and grow true to type next year, and heirloom seeds do contribute to sustainability in that way. And I can’t totally disagree with a point made by one of the most rabid seed survivalists, who bluntly claims, “Monsanto hates you.” But “man-made plants”? Give me a break. Don’t tell that to the birds and bees that have been cross-pollinating plants since the beginning of time, to poor Gregor Mendel rolling over in his grave, or even to the folks at Johnny’s Seeds who do such a fine job with F1 plant varieties.

    Most of these companies don’t bother to explain why “non-hybrid” seeds are even potentially advantageous, and the whole thing is clearly marketed to the average American consumer in an attempt to profit from a combination of fear in this dreary economy and the home gardening trend. This is best exemplified in the generic selection of seeds for anywhere in the country. Sorry sweetheart, but if anything, heirloom seeds are most valuable when grown in their native climate. The one-size-fits-all tack taken by seed survivalists belies the low opinion these companies have for their customers. Nowhere on these websites are growing zones or germination rates mentioned. Someone planting that spinach in Georgia is in for a rude awakening when it bolts in the span of a week, and some guy in Minnesota isn’t going to have great luck with cantaloupe. [More of a great post]
    I know I'm  looking forward to bartering my kernels for insurance and deodorant.  Wait - I forgot!  I'm growing "man-made" plants, which are only good for...the same thing as non-hybrid plants.

    Friday, May 14, 2010

    I think about this every day...

    Whatever happened to shaving cream ads?
    So when I switched from electric to blade shaving, I naturally bought cans of shaving cream and used the stuff daily for years. Then, due to circumstances I forget (did I run out of it one day?), I simply put warm, soapy water on my face and the shave I got seemed just as good as one using the shaving cream. I stopped buying shaving cream and haven't used it since.
    Because I seldom watch TV, I don't know how heavily shaving creams are advertised these days. But I haven't seen a shaving cream ad in a long, long time. Can others be abandoning the product too? Only your friendly neighborhood marketing mega-database knows for sure. [More]
    I think my sons both use electric razors, while my experince is shaped by sharing a stateroom/wash basin with three other junior officers on a smallish submarine, where the buzz of an electric razor was unwelcome.

    Long, long ago.

    After reading this I am tempted to forego the foamy/gel products and see if soap works.

    A climate of our own...

    One reason many Midwestern producers don't buy anthropogenic global warming (AGW) is what they experience when they walk out the door.  The availability bias makes the last few summers (cool and wet) weigh more heavily in their estimates of what is really going on.

    One guy thinks it's possible we have made our own microclimate all by ourselves.
    In place of those dry, 90-degree scorchers are the kind of lingering 80-degree days with higher humidity that don't cool down much at night. Climate scientists say the cause is rising dew-point levels — the measure of water vapor in the atmosphere.
    These high dew-point levels are important, said David Changnon, a climate scientist at Northern Illinois University who helped pioneer this research, because even though the temperature is lower, the heat index is higher. And that's bad news for many city dwellers, since those conditions contributed to the deadly heat waves that hit Chicago in 1995 and 1999.
    Already, these cooler but muggy late-summer days are likely to be producing more powerful thunderstorms and periods of heavier rain that bear watching, Changnon said.
    "While we're seeing fewer really hot days, we've created dew points in Chicago and around the Midwest that are unheard of," Changnon said. "And it begs the question, 'How the heck can we do that?'"
    Changnon's theory, backed by more than a decade of research, is that more densely planted corn and soybean fields scattered across the Midwest are changing the regional climate by releasing more water vapor into the atmosphere. The more water vapor that reaches the atmosphere, the higher the dew point, and the fewer extremely hot summer days.
    In other words, while some still question whether people are to blame for changing weather patterns around the globe, farmers around the Midwest are already altering the region's climate in significant ways, Changnon said. [More]
    Coupled with predictions of altered storm paths, this adds to the growing uneasiness that cool and wet maybe the norm for a while.  The time frames involved are too short to verify any of this, but waiting until we do find out offers little chance for big rewards.

    Thursday, May 13, 2010

    Junkbox, Episode IVY...

    Some assorted jewels.

    Wednesday, May 12, 2010

    Cash is a dead king...

    Actual currency, that is.  You know, the greenish paper stuff wadded into your pockets.  Because if you have a smartphone you can take credit cards easily now.

    Square, which launched Tuesday with iPhone and Android support, is a small, plastic cube about the size of two Chiclets. From its bottom side an audio connector plugs into the headphone port on your phone. A slot in the cube lets you pass a credit card through. When you do, a reader converts the data from the magnetic strip into an audio signal and passes it on to software on the phone.
    Wired got its hands on a test unit earlier this year and put it through the paces. Based on our early look, Square appears to be a great option to let anyone with something to sell accept credit cards as payment. [More]
    So if you run into a buddy who owes you $50 from last week's road trip, and he claims to be a little short - whip out your phone and let VISA handle the debt.
    Is non-GMO corn possible?...

    If I'm growing it - apparently not.  Despite having large fields - 80-200 acres - none of our non-GMO contracted corn has passed the quick GM test.  Lab tests showed several loads just over 1%, which is the mimimum.

    My question is this: if we didn't screw up the seed, why can't we get below the same threshold we seem to have passed last year?  Some obvious points we have considered:
    • We use smart boxes of seed, so it would have been virtually impossible to have accidentally let one bag contaminate our planter.  Let alone have done so for repeated fills.
    • The fields were not 20 acre patches surrounded by GM corn.
    • We harvested the required border rows and sold them as regular corn.
    • Could the seed itself carry a small GM contamination level that replicates into the product?
    I'm chalking this mystery up to just one last cheap shot from a really crummy year.  Since the non-GMO market is all but gone, this is not an issue for the future, just 65¢ I really miss.

    Feel free to pile on, but is anyone else having trouble growing non-GMO corn?
    Now I know why there 50 in the package...

    I have always done my own taxes (with mucho help from TurboTax) but one thing that griped me was the only way to get 1099's for my landowners (other than remember to order them from the IRS, of course) was to buy them in Staples, etc. The minimum choice was fifty for about $25 or so - a real ripoff, IMHO.

    The good news is I won't be wasting as many in the future.  The BAD NEWS is, as a small business, I now will soon have to report payments of over $600 not just to service providers, but dang near everybody.  You heard me - my JD dealer, Lowes, corporations, you name it.
    I read on FatWallet that a hidden gem in the new health care reform law will require a business to issue a 1099 Form to all vendors starting in 2012 if the business purchases $600 or more in goods or services in a year from that vendor.
    Currently a business is only required to issue 1099s for payments for services, not goods, purchased from individual persons, not corporations, if the total payments to that person exceed $600 a year.
    I find this quite unbelievable. Small business owners buying from Costco will have to send a 1099 to Costco at the end of the year. Because chain stores are often owned by different entities under a franchise agreement, a business buying from one store versus another under the same chain will have to track the corporate entities behind each one separately. What a nightmare.
    Because it’s so unbelievable, I had to look up the laws myself. It’s amazing but true. Section 9006 of Patient Protection and Affordable Care Act says (the key phrases are in bold):
    (a) IN GENERAL.—Section 6041 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsections:
        "(h) APPLICATION TO CORPORATIONS.—Notwithstanding any regulation prescribed by the Secretary before the date of the enactment of this subsection, for purposes of this section the term ‘person’ includes any corporation that is not an organization exempt from tax under section 501(a).

    … …
    (b) PAYMENTS FOR PROPERTY AND OTHER GROSS PROCEEDS.— Subsection (a) of section 6041 of the Internal Revenue Code of 1986 is amended—
        (1) by inserting "amounts in consideration for property," after "wages,",
        (2) by inserting "gross proceeds," after "emoluments, or other", and
        (3) by inserting "gross proceeds," after "setting forth the amount of such".
    (c) EFFECTIVE DATE.—The amendments made by this section shall apply to payments made after December 31, 2011.
    After all the insertions, the amended Section 6041(a) of the Internal Revenue Code becomes (the inserted words are in bold):
    (a) Payments of $600 or more
    All persons engaged in a trade or business and making payment in the course of such trade or business to another person, of rent, salaries, wages, amounts in consideration for property, premiums, annuities, compensations, remunerations, emoluments, or other gross proceeds, fixed or determinable gains, profits, and income (other than payments to which section 6042(a)(1), 6044(a)(1), 6047(e), 6049(a), or 6050N(a) applies, and other than payments with respect to which a statement is required under the authority of section 6042(a)(2), 6044(a)(2), or 6045), of $600 or more in any taxable year, or, in the case of such payments made by the United States, the officers or employees of the United States having information as to such payments and required to make returns in regard thereto by the regulations hereinafter provided for, shall render a true and accurate return to the Secretary, under such regulations and in such form and manner and to such extent as may be prescribed by the Secretary, setting forth the amount of such gross proceeds, gains, profits, and income, and the name and address of the recipient of such payment. [More - with especially helpful Q & A in the comments]

    This gem was buried in the Affordable Care Act, so be sure to add that to your list of grievances with health care reform. Only it is exactly the same concept the Bush administration tried to get passed to close the "federal tax gap.

    For many years I have been hearing about the “federal tax gap”.  The tax gap is what the federal government believes should be paid in taxes versus what is actually paid in taxes.  The tax gap is estimated to be approximately $350 billion annually.  The tax gap comes primarily from three areas of noncompliance with the tax law: under reporting of taxable income (by under reporting revenue or over reporting expenses), underpayment of taxes, or non-filing of returns.  A significant majority of the tax gap is created by those that under report their taxable income. 

    The federal government is running a $1.6 trillion deficit in the current fiscal year.  Additionally, the new healthcare entitlement program will create huge cash drains on the federal budget in future years.  To help close the tax gap and fund this deficit spending, the federal government has expanded informational reporting requirements of businesses. Under current tax law, if a business makes payments in excess of $600 to a person or a business over the course of a year, it must file Form 1099 to report those payments. One copy of the form is sent to the IRS, and another copy is sent to the person to whom you made the payments.  Payments made to a corporation and payments made in exchange for merchandise are not required to be reported on a 1099. [More]
    This could be good news for credit card companies and accountants, of course.  Card companies could do this automatically for a modest fee, and accountants could nag you even more about your record-keeping.  Farmers/spouses with accounting backgrounds might have more opportunity for a second income, especially if they get out ahead of this in their community.

    It is just one consequence of the screams for eliminating waste and fraud in the federal budget.  This is one tactic stop some well-documented fraud.  Unless objectors have a better way to cut down the "tax gap" we'll have to adjust.  I agree with the aim, but many probably had hoped a "W & F" fairy could just make it go away if we closed our eyes and wished really hard. This seems like a logical, albeit onerous answer to the concerns anyway.

    But it also, I believe is another load for small business and a powerful incentive to merge into larger farms that can dedicate personnel to bookkeeping/accounting full-time - rather that when it rains. I don't see much hope of letting small businesses skate on this one.  We probably have our fair share of under-reporting (heh).  It will also be a selling point and price booster for accounting/tax software, I would guess.

    And of course there will be merely oodles of pages in farm mags about this, as well.

    Update:  I have been pondering the implications of this regulation since I posted. I gotta believe this will be non-paper reporting - online/electronic submission of information to the IRS. There's just no way in Hades that many 1099's are going to be mailed to Kansas City, etc., dontcha think?