Monday, December 31, 2012

Africa and aid...  

My monitoring of African news uncovered this interesting debate in the German magazine Der Spiegel. (James Shikwati is a Kenyan economics expert)
Mr. Shikwati, the G8 summit at Gleneagles is about to beef up the development aid for Africa...
Shikwati: ... for God's sake, please just stop.
SPIEGEL: Stop? The industrialized nations of the West want to eliminate hunger and poverty.
Shikwati: Such intentions have been damaging our continent for the past 40 years. If the industrial nations really want to help the Africans, they should finally terminate this awful aid. The countries that have collected the most development aid are also the ones that are in the worst shape. Despite the billions that have poured in to Africa, the continent remains poor.
SPIEGEL: Do you have an explanation for this paradox?
Shikwati: Huge bureaucracies are financed (with the aid money), corruption and complacency are promoted, Africans are taught to be beggars and not to be independent. In addition, development aid weakens the local markets everywhere and dampens the spirit of entrepreneurship that we so desperately need. As absurd as it may sound: Development aid is one of the reasons for Africa's problems. If the West were to cancel these payments, normal Africans wouldn't even notice. Only the functionaries would be hard hit. Which is why they maintain that the world would stop turning without this development aid.
SPIEGEL: Even in a country like Kenya, people are starving to death each year. Someone has got to help them.
Shikwati: But it has to be the Kenyans themselves who help these people. When there's a drought in a region of Kenya, our corrupt politicians reflexively cry out for more help. This call then reaches the United Nations World Food Program -- which is a massive agency of apparatchiks who are in the absurd situation of, on the one hand, being dedicated to the fight against hunger while, on the other hand, being faced with unemployment were hunger actually eliminated. It's only natural that they willingly accept the plea for more help. And it's not uncommon that they demand a little more money than the respective African government originally requested. They then forward that request to their headquarters, and before long, several thousands tons of corn are shipped to Africa ...
SPIEGEL: ... corn that predominantly comes from highly-subsidized European and American farmers ...
Shikwati: ... and at some point, this corn ends up in the harbor of Mombasa. A portion of the corn often goes directly into the hands of unsrupulous politicians who then pass it on to their own tribe to boost their next election campaign. Another portion of the shipment ends up on the black market where the corn is dumped at extremely low prices. Local farmers may as well put down their hoes right away; no one can compete with the UN's World Food Program. And because the farmers go under in the face of this pressure, Kenya would have no reserves to draw on if there actually were a famine next year. It's a simple but fatal cycle. [More]
This opinion parallels the argument made by GiveDirectly and several other economists. It also rings true to me with my meager grasp of sub-Saharan economic development and history. But if we have learned nothing else in the last few years is policy is not about data or logic.
To my surprise...  

The estate tax is a center-front issue in the fiscal cliff talks.
Under the Republican proposal, 3,800 people would pay the estate tax year, also near an average of $3.3 million. The GOP proposal would raise $182 billion for federal tax coffers over the next 10 years.
Under Obama’s proposal, 6,500 people would pay the estate tax next year, with an average payment estimated at about $3 million. The president’s proposal would raise $284 billion in tax revenue over the next 10 years. [More]
While this is all completely fluid, I think it is reasonable to expect the outcome somewhere between these two: $4.5M/35% versus $3.5M/45%, respectively.

In fact, "4 and 40" has kind of an almost Biblical ring to it, no?

Now if the income limit for tax cuts comes in at say $400,000, the chained-CPI phased in over 40 years, and the sequester cuts debate extended for forty days, we could manufacture a miracle that could get even religious-right hardliners on board.

Anybody have Biden's number?

Saturday, December 29, 2012

Africa Trek I...  

As I think I have mentioned before, I'm schlepping off to Africa with a buddy in February to have one last great adventure before my kids put me in the home. Also to tell what is looking like a fantastic story.
Wallie Hardie's family has been farming successfully in the Red River Valley since his great grandfather settled here. His operation has done well growing corn, soybeans and grains, and now he wants to extend that success.
So he's investing time, effort and money in Mozambique, some 9,000 miles away.
Betting that Africa will be a big player in future world food production, Hardie and others are part of Aslan Global Management, a for-profit corporation investing millions of dollars to develop farmland there.
The organization has gotten a lease from the Mozambique government on 25,000 acres and expects to have all the land in production within five years, growing primarily soybeans and corn. [More background]
I will start in South Africa and plan to visit with some farmers there, who are struggling with a nation in turmoil. Then on to Tanzania and Mozambique to see Wallie's farms.

If I can get decent data-streaming, I'll be posting pics or at least a narrative of my journey.

Meanwhile, I'll share all the background research I'm doing.

Wednesday, December 26, 2012

Now we're giving somewhere...  

I am intrigued by the new charity effort started by economists, GiveDirectly. It appears to me serious economic and behavioral research is finally being applied to update what have been quite frankly outdated charity operational models.

The effort has received very good reviews.
Three years later, the four economists expanded their private effort into GiveDirectly, a charity that accepts online donations from the public, as well. Ninety-two cents of every dollar donated to GiveDirectly is transferred to poor households through M-PESA, a cell phone banking service with 11,000 agents working in Kenya. GiveDirectly chooses recipients by targeting homes made of mud or thatch, as opposed to more durable materials, such as cement or iron. The typical family participating in the program lives on just 65 nominal cents-per-person-per-day. Four in ten have had a child go at least a full day without food in the last month.
Initial reports from the field are positive. According to Niehaus, GiveDirectly recipients are spending their payments mostly on food and home improvements that can vastly improve quality of life, such as installing a weatherproof tin roof. Some families have invested in profit-bearing businesses, such as chicken-rearing, agriculture, or the vending of clothes, shoes, or charcoal.
More information on GiveDirectly's impact will be available next year, when an NIH-funded evaluation of the organization's work is complete. Yet already, GiveDirectly is receiving rave reviews. In November, it became one of just three charities to earn a coveted recommendation from GiveWell, a web publication that conducts exhaustive, on-site research of philanthropies. This month, Google awarded GiveDirectly a $2.4 million grant to expand beyond Kenya. Facebook cofounder and media wunderkind Chris Hughes joined the group's board in August. Nevertheless, GiveDirectly remains an outlier in the development arena, perhaps the only organization that distributes private donations, made online, directly to the poor with no strings attached--no requirement to launch a business or to immunize one's child; no distribution of bed nets, solar lanterns, or goats.
The economics might be sound. But the politics within the non-profit world are more complicated. Niehaus, now a professor at the University of San Diego, says other development experts who have tested unconditional cash transfers are enthusiastic about the approach. The trouble is convincing NGOs to invest in such programs beyond the pilot stages.
"We had conversations with people [in the non-profit sector] who said there was a lot of internal resistance to unconditional transfers," Niehaus told me. "If this works, what are we all here for? Why do we have jobs? There's an industry that exists that tries to make decisions for poor people and determine what's best for them. In some ways, that's the industry I came from. But the value of that hasn't been proven."[More]
The last paragraph may be the most important - what if technology and extreme inequality are teaming to make many current philanthropy efforts obsolete? This idea will not be viewed kindly in the vast charity industry.

Much of the resistance is also rooted in our desperate clinging to  Just World view: People are poor for a good reason. Otherwise, we would be wealthy for no good reason as well.
More recently, researchers have explored how people react to poverty through the lens of the just world hypothesis. High belief in a just world is associated with blaming the poor, and low belief in a just world is associated with identifying external causes of poverty including world economic systems, war, and exploitation.[26][27] [More
We also struggle to give up the idea that strings should be attached to charity. Whether repentance, sobriety, employment, etc., all such "riders" assume a "just world" for which there is no evidence whatsoever.

Consequently, the early results, and the later ones this year I hope, seem to substantiate more modern economic theories of development. In fact, economists all over are getting excited about the possibilities that were unimagined before cell-phone service in very poor areas of the globe. 

Marginal Revolution's Tyler Cowen, one of the best-read econobloggers on the Net, has worked on similar premise.
My new book Discover Your Inner Economist: Use Incentives to Fall in Love, Survive Your Next Meeting, and Motivate Your Dentist offers a chapter on how to help other people.  In the book I suggest several principles:
1. Cash is often the best form of aid.
2. Give to those who are not expecting it, and,
3. Don’t require the recipients to do anything costly to get the money.
Inequality actually works sort of perversely in our favor for this effort. Our wealth is so much greater than the recipients that even a tiny slice we will barely feel can make enormous quality-of-life changes in lives of absolute poverty.

While it flies in the face of our relatively puritanical fiscal instincts (you can't just hand them money!!), the truth appears to be the opposite. Unlike food aid, the money does not displace local farmers or tradesmen, it multiplies through them. With new microfinance technology, transfers are almost instant and inexpensive.

Best of all, I think, we create more economic actors on the global stage, who act to mitigate via the power of large numbers the concentration of wealth and decision-making by the ultra-rich. We see this happening as China's middle class suddenly exerts enormous sway on markets of all kinds. The effect of the leap to fuller economic participation is even more amazing when starting at the very bottom.

I will monitor the news about these types of efforts, but I think the economists are on to something here. And I think I want to be part of it.

Monday, December 24, 2012

Junkbox, Episode YOOL...  

Best wishes for your Christmas!
Pass the sugar plums.
O Holy Night...  

A story too close to home...
Finbar Wright has sung Christmas concerts all over the United States for 12 years as part of the Irish Tenors. One night in Houston, things went a bit wrong.
"We had a slightly older guest conductor and he had this kind of thing where he would sing very quietly with the singers," he said, laughing at the memory. "Over the general clatter of an orchestra and three tenors the audience usually couldn't hear it, but it just so happened on this night that the first violinist's microphone was very close to the conductor. He really loved 'O Holy Night' and started getting carried away, slightly out of tune and not quite hitting it. He got louder and louder until the first violinist broke down laughing. Then her neighbor started and next thing you know, the whole thing ground to a halt.
"Everybody took it in a great spirit. The conductor was very apologetic, and we just started it again. The funny thing is that the resumed performance had taken on a completely different life because suddenly it seemed like a special emotion had been injected into the whole thing. The humanity had been brought back into the divine." [More]
Sang it myself, way back in the day, and listened to a remarkable tenor and friend sing it throughout my life Christmas Eve. I still struggle not to not breathe at the crucial moments - which is the key to doing it well.

It ain't easy, so let performers know when it's done well.


A little help from my friends...  

The mini-blizzard in the Midwest knocked down out Internet towers, and it was kinda sad how Jan and I clutched our backup access (via smartphones) while it was being fixed. Meanwhile the computerized mixer on the church sound system also crashed and that is my responsibility, so I've been occupied.

Christmas cookie consumption also played a part.

But some readers offered these interesting tidbits.

From Kevin in Ontario, this bizarre story of gaming the Canadians!!
Bioversel Trading hired CN Rail to import tanker loads of biodiesel to the U.S. to generate RINs, which are valuable in the U.S. because of a "greening" policy regulating the petroleum industry. The EPA's "Renewable Fuel Standard" mandate that oil companies bring a certain amount of renewable fuel to market, quotas they can achieve through blending biofuel with fossil fuel or by purchasing RINs as offsets.
Because RINs can be generated through import, the 12 trainloads that crossed into Michigan would have contained enough biodiesel to create close to 12 million RINs. In the summer of 2010, biodiesel RINs were selling for 50 cents each, but the price soon fluctuated to more than $1 per credit.
Once "imported" to a company capable of generating RINs, ownership of the biodiesel was transferred to Bioversel's American partner company, Verdeo, and then exported back to Canada. RINs must be "retired" once the fuel is exported from the U.S., but Bioversel says Verdeo retired ethanol RINs, worth pennies, instead of the more valuable biodiesel RINs. Bioversel claims this was all perfectly legal.
However, one of the companies Bioversel approached to be the ‘importer of record’—Northern Biodiesel Inc. of Ontario, N.Y. — discovered that the same fuel was going back and forth across the border and the same gallons were being used to repeatedly generate new RINs under their company’s name. The company called the EPA and also sent a letter that would become an open letter to the biodiesel industry, accusing Bioversel of “trying to perpetrate a fraud against NBI and the Renewable Fuel Standard program.”
The EPA, which has a buyer beware policy for oil companies that buy RINs, did not act immediately, and the industry has been begging for it to play the role of sheriff on this case and others. The EPA won’t comment on continuing investigations, but insiders said the case is still under investigation. [More of a great investigative story]
Ah yes, ethanol - The American farmer's ACORN. What can I say, except I am shocked - shocked, I tell you - our mild-mannered neighbors to the north would take advantage of a dismally market-distorting subsidy program just like they were 'Mericans.

However, due to changes in the RFS, there may be more "Dakota shuffles" in the future.
The 2012 drought led to significant increases in corn prices and a slowing in domestic ethanol production and exports. For the first time since the RIN system was established, it is estimated that 2012 net RIN generation will not exceed the non-advanced ethanol mandate, and RIN stocks carried over from previous years will be used for mandate compliance. This was reflected in 2012 ethanol RIN prices, and illustrates how the design of the system can be used by obligated parties to respond to variability in the economics of ethanol blending. Current estimates indicate continued flexibility for corn-for-ethanol demand to meet the 2013 non-advanced mandate, but at lower levels than in previous years due to estimated stock use in meeting the 2012 mandate. [More]
They are not the only neighbor to benefit from this intricate mandate.
So what is driving the large ethanol imports from Brazil? The answer is found in the details of the U.S. Renewable Fuels Standards (RFS). Brazilian sugarcane ethanol production qualifies as an "advanced" biofuel under the RFS greenhouse gas (GHG) calculations. (See our earlier post for further details.) This means that the relevant economic comparison is between Brazilian ethanol and other biofuels that qualify for the advanced component of the RFS. Since the corn-based ethanol has a less favorable GHG reduction rating, it only qualifies as a "renewable" biofuel, and therefore, cannot compete with Brazilian ethanol or other advanced biofuels to fulfill the advanced mandate. To date, the only other biofuel that has been produced in quantity and qualifies to meet the advanced component of the RFS is biomass-based biodiesel. This means the relevant economic comparison is whether U.S. produced biodiesel or Brazilian produced sugarcane ethanol is the cheapest source for fulfilling obligations under the advanced RFS.
Recent price data reveals that Brazilian ethanol is by a wide margin the cheaper of the two alternatives. For example, consider a U.S. energy producer that is faced with this data on gasoline and diesel blending economics on November 29, 2012:
where CBOB is conventional gasoline blendstock, E100 is 100 percent anhydrous ethanol shipped to a Gulf terminal from Brazil (same as before), ULS is ultra low sulfur diesel, and B100 is 100 percent biodiesel. One final conversion must be done to make a fair comparison. Since biodiesel is worth 1.5 gallons of ethanol in the RFS math, we need to divide the net profit for diesel blending by 1.5 to arrive at a net profit of -1.05/1.5 = $-0.70 per gallon. This makes biodiesel almost twice as expensive as imported Brazilian ethanol when it comes to meeting the advanced RFS mandate. And that is the reason why Brazilian ethanol imports are surging into the U.S. during recent months. They will continue to do so until the non-biodiesel part of the 2012 advanced mandate is met (about 500 million gallons total) but will not be higher since blenders are still taking a loss on each gallon of Brazilian ethanol imported. [More]
Meanwhile, back here in the home country, the impact of our inability to spin straw into ethanol means we have only piddling amounts of advanced biofuels to meet the mandate. But what about biodiesel, the Great Hope of soybean producers?
The biofuels era that began in 2006 helped propel corn and other crop prices to a new higher level that has been sustained for nearly six years. One might be tempted to conclude that this new era is coming to an end as corn consumption for ethanol levels out and corn production begins to catch up. Instead, it actually appears that the new era of higher crop prices could be extended well into the future as a result of the RFS for advanced biofuels that in all likelihood can only be met with a rapid expansion in biodiesel production. To gain some perspective on the potential size of this expansion, consider our projection of 3.113 billion gallons of biodiesel production in 2015. This would require about 23.5 billion pounds of feedstock when total consumption of fats and oils in the U.S. currently totals about 28 billion pounds annually. Consumption of tallow and grease, another biodiesel feedstock, is thought to be near 10 billion pounds per year. At the projected level for 2015, biodiesel would account for over 60 percent of fats and oils consumption from all sources. This compares to about 20 percent in in 2012. The new price era, then, would not be extended by rising corn demand, but by rising vegetable oil demand. Whether this scenario actually is realized depends crucially on the evolution of biofuels policy here in the U.S. and energy policies in Brazil. We will be monitoring these issues closely in the future. [More]
But if we make much of that from soya, what about the rising global demand for soyoil?
Global demand for vegetable oils for food and biofuel use is expected to increase by an additional 23 million tons by 2016; however supply is expected to struggle to keep up with the demand, according to a new report from Rabobank.
According to the report, “Finding the Food-Fuel Balance," vegetable oil stocks reached a 38-year low in 2012 due in large part to constraints, such as land availability and adverse weather. For the past four years, the world’s stock-to-use ratio for vegetable oils has been on a declining trend and will reach a low of 7.5% in 2013, a level not seen since the mid 1970s. The decline is largely down to supply’s inability to keep up with rising demand. Production shortfalls in recent years have resulted in a draw-down of stocks that is unlikely to be reversed in the near future. [More]
Now add in the migration of the Corn Belt north, and maybe the smart move in my part of the world is to plant a heckuva lot of beans on those CoC acres instead of continuing to pound our head against the production barriers that are more serious than we thought when triple-stacks gave us a couple of penalty free yields.
[From Ron]
Corn’s new appeal to Canada’s prairie farmers is based on two things: climate change and price. Growing seasons in the prairie provinces—which border Minnesota, North Dakota, and Montana—have lengthened about two weeks to up to 120 days in the past half-century. The mean annual temperature is likely to climb by as much as 3C (6F) in the region by 2050, according to Canadian researchers.
A temperate climate and longer growing season are ideal for corn. An acre of farmland produces more corn than wheat, making corn the more profitable grain, while the higher yields drive up land values as well.
Corn has long grown in southern Ontario’s mild climate, but for Canadians to be big players in the crop at a new order of magnitude, they must plant in the vast farmland of the prairie provinces. Farmers planted a record 121,400 hectares (300,000 acres) of corn in Manitoba, Saskatchewan, and Alberta this year.
Global corn demand has outstripped supplies three of the last four years. That shortfall, along with the more hospitable growing weather and the introduction of seed varieties from Monsanto (MON) and DuPont (DD) that make plants mature faster, is transforming Canada’s grain mix, says Danny Blair, a professor of geography at the University of Winnipeg. “The winters have warmed and shortened dramatically,” accompanied by more rainfall that allows for earlier planting and greater soil moisture that helps crops.
Global warming will increase the frequency of drought and erratic rainfall even in Canada, says Blair, who notes that the weather creates more opportunities for Canadian agriculture, despite the risks. The anticipated boom in corn is encouraging U.S. agribusiness giant Cargill to invest in grain storage in Canada, according to Chief Executive Officer Gregory Page. The prospect of new demand from Canadian corn farmers is pushing DuPont Pioneer, a seed division of DuPont, to improve its short-season crop varieties, says John Soper, the company’s vice president of crop genetics research and development. [More]
It is in-your-face developments like new yield patterns that will change attitudes about global warming, certainly not mere science. And I think those minds who have the freedom to actually to contemplate the implications without cognitive dissonance from their political catechism will enjoy a distinct business advantages.

Rolling all these ongoing developments into 2013, add the incredible political turmoil in the US, include the ongoing drought, and we have the possibility of a year that makes 2012 seem tame.

This also mean incredible rewards for those who step up to the challenges, IMHO.

Just hope they don't farm near me...

Wednesday, December 19, 2012

Why the University of Illinois...  

Is an embarrassment to me and a few other residents.  No, not the routine administrative malfeasance.  Not the football team.

It's the quality of scholarship in which they should excel: agriculture.

Exhibit A


It is not nitpicking to expect published work to be edited by people who can spell.  This is not a tweet or e-mail, it is an widely distributed study purporting to show the level of serious analysis our state's major university is capable of.

Seriously, how many spelling errors can you spot?

Man up, Illini.  Purdue is giggling.
No mood at all...  

I am a gun agnostic. Don't own any. Don't want to. Don't care if you do.

While I would cheer European level gun ownership restrictions, I will not invest any effort to tilt that windmill. It is futile to debate those to whom firearms provide an element in their lives I cannot comprehend. This should be clear to gun control advocates.

But mostly, I think we will outlive this issue as a culture, perhaps in my grand-children's lifetime. 

Consider these trends:


And this one:


 And this one:
 The ownership rate reported is the average estimate taken from "Annexe 4: The largest civilian firearms arsenals for 178 countries. That table gives also the minimum and maximum estimates. Note that for some countries, this margin of error is considerable. E.g. Yemen, ranked near the top with an ownership rate of 54.8, has a low estimate of 28.6 and a high estimate of 81.1. While the United States is ranked for the highest gun ownership rate unambiguously, Yemen based on the margin of error may rank anywhere between 2nd and 18th, Switzerland anywhere between 2nd and 16th. [More]

My conclusion is it will be hard to stuff more guns into the closets of America. The firearms industry will either have to sell innovation (which can only be bad for people) or sell to places where they still don't have "enough" guns. It reminds me distantly of the beef marketing problem.

The US will continue to have a powerful gun lobby and constituency convinced they are protecting some facet of American character that can only be flourish with firearm protection. They will, however, slowly diminish in both number and relevance, it seems.

Like farmers.

No one will take their guns away. Somebody will just sell them after they die. And guns won't make those deaths any less unlikely.

Tuesday, December 18, 2012

Oil's not well...  

I use synthetic oil and change every 10,000 miles in my cars. It's my own regimen based on the example of the big engines on  my farms, operating in extreme environments, and manufacturer recommendations of 250-500 hours.

The idea a small car like my Equinox needs new oil every 3000 is absurd.

It turns out there is a tug-of-war between oil companies and the auto industry over this bad habit.
Our oil change addiction also comes from the erroneous argument that nearly all cars should be serviced under the "severe" schedule found in the owner's manual. In fact, a quiz on the Web site maintained by Jiffy Lube International Inc. (owned by petrochemical giant Shell Oil Company) recommends the severe maintenance schedule for virtually every kind of driving pattern.
The argument that most people drive under severe conditions is losing its footing, however. A number of automakers, including Ford and GM, have contacted Edmunds data editors to request that the maintenance section of Edmunds' site substitute the normal maintenance schedule for the severe schedule that had been displayed.
About the only ones that really need a 3,000-mile oil change are the quick-lube outlets and dealership service departments. In their internal industry communications, they're frank about how oil changes bring in customers. "Many people...know when to have their oil changed but don't pay that much attention to it," said an article in the National Oil and Lube News online newsletter. "Take advantage of that by using a window sticker system [and] customers will be making their way back to you in a few short months."
Another National Oil and Lube News article tied the frequency of oil changes to success in pushing related products and services. For a midsize SUV, the stepped-up oil change intervals will bring in $1,800 over the life of the car, the article says. "A few extra services [or oil changes] can go a long way toward increasing the amount of money a customer will spend during the lifespan we estimated here," the article concludes. [More]
I use an app to track mileage and service intervals. It has become habit to enter the odometer readout and gallons each fill up. I set my service interval at 10K. Warranty be damned.

What's weird is how diligently I watch the mileage now.

(27.7, in case you were wondering)

Monday, December 17, 2012

First, the brontosaurus...  

Now the white tiger. Is nothing real in my mental zoo?
 This level of misinformation should not come as a surprise. Many of the venues that display white tigers have a long history of shading the truth about their mutants. The Cincinnati Zoo, an otherwise respectable institution, labels their white tigers as a “species at risk!” Nowhere on the zoo’s website or at its tiger enclosures does it point out that this species at risk is in fact an ecologically useless hybrid of Bengal and Siberian strains, inbred at the zoo’s own facility for big money. The Cincinnati Zoo repeatedly bred closely related animals over the past few decades to produce more of the white tigers, which they sold for around $60,000 each. [More
I have long been uneasy with where the line should be drawn for artificial breeding programs. What we do to dogs long since passed bizarre to border on inhumane, IMHO, but taking species to extremes seems to be part of our human culture. Nor do I have any profound suggestions as to how/whether to correct this tendency.

 But it seems to me to be one more negative influence that alters how we see our relationship with other animals, and one more background thought that will push us toward different attitudes regarding meat consumption. Not a biggy on its own, but part of the growing drift away from old, perhaps even instinctive disregard for other species. 

Add in the shrinking population of hunters, and you accelerate the drift toward nontraditional views of humans and wildlife in our culture as a whole.
States that rely on tens of millions of dollars in hunting license fees annually to pay for environmental conservation are trying to boost a population they had never thought of protecting: the endangered American hunter.
The number of hunters has slid from a peak of 19.1 million in 1975 to 12.5 million last year, according to the U.S. Fish and Wildlife Service. [More]
While the protein industry has rightly been concerned about who shapes American attitudes about eating meat, I think the currents are far deeper and stronger than just YouTube videos from slaughterhouses. Not am I sure the industry should seriously think they can guide the evolution of how our population thinks about food animals. There has been too much crossover emotion from pets, too much reliance on obscurity of our activities and apathy among consumers, and now too much continual revelation of husbandry practices that activate what moral psychologists lable the sanctity/purity moral foundation

These nudges yield proscriptions like kosher law and similar cultural taboos concerning food. Once established to address some hard-to-define uneasiness, they become difficult to modify. I think we are in the middle of modifying our moral attitudes toward other species, and it not just foodies doing the questioning.

Sunday, December 16, 2012

Junkbox, Episode XXI (Mayan)...  

I just received the coolest present from a friend in our dinner club. It's for 14+, so right up my alley.
Denial is getting harder...  

And it's not just this record-setting year.

Check out this graphic:

So let this be clear: There is no scientific controversy over this. Climate change denial is purely, 100 percent made-up political and corporate-sponsored crap. When the loudest voices are fossil-fuel funded think tanks, when they don’t publish in journals but instead write error-laden op-eds in partisan venues, when they have to manipulate the data to support their point, then what they’re doing isn’t science. [More]
 OK, then.

The "survival rate" scam...  

As you wearily know, I am in the camp with those who think we are over-diagnoed, and over-treated especially when it comes to cancer. (I'm also recently dubious about hypertension). More and better ways of explaining this fundamental logic error are being found. Here's a good one:
Mortality rates define the number of people who die of a certain cause in a year divided by the total number of people.  For instance, the mortality rate for people with lung cancer in the United States is 53.4 per 100,000 people.
Survival rates are something else entirely.  They calculate the percentage of people with a disease who are still alive a set amount of time after diagnosis.  The five year survival rate for people with lung cancer in the US is 15.6%.
But here’s the thing.  You can only decrease the mortality rate by preventing death, or curing the disease.  That’s really it.  That’s a cure or a life extension, and both are unequivocally good.  Survival rate, however, can be increased by preventing death, curing the disease, or making the diagnosis earlier.
And there’s the rub.  Let’s say there’s a new cancer of the thumb killing people.  From the time the first cancer cell appears, you have nine  years to live, with chemo.  From the time you can feel a lump, you have four years to live, with chemo.  Let’s say we have no way to detect the disease until you feel a lump.  The five year survival rate for this cancer is about 0, because within five years of detection, everyone dies, even on therapy.
Now I invent a new scanner that can detect thumb cancer when only one cell is there.  Because it’s the United States, we invest heavily in those scanners.  Early detection is everything, right?  We have protests and lawsuits and now everyone is getting scanned like crazy.  Not only that, but people are getting chemo earlier and earlier for the cancer.  Sure, the side effects are terrible, but we want to live.
We made no improvements to the treatment.  Everyone is still dying four years after they feel the lump.  But since we are making the diagnosis five years earlier, our five year survival rate is now approaching 100%!  Everyone is living nine years with the disease.  Meanwhile, in England, they say that the scanner doesn’t extend life and won’t pay for it.  Rationing!  That’s why their five year survival rate is still 0%.
The mortality rate is unchanged.  The same number of people are dying every year.  We have just moved the time of diagnosis up and subjected people to five more years of side-effects and reduced quality of life.  We haven’t done any good at all.  We haven’t extended life, we’ve just lengthened the time you have a diagnosis.
Think this is far fetched?  In England women are screened by mammography every three years starting at age 50, yet in the United States the American Cancer Society recommends women are screened by mammography every year starting at age 40.  For a woman diagnosed with breast cancer in 2001, the five year survival rate in the US was 89.1%; in England it was 80.3%.
The mortality rates?  The American Cancer Society’s Cancer Facts & Figures 2009 reports it’s 25.0 per 100,000 women in the US and Cancer Research UK reports it’s 26.7 per 100,000 women in England.  That’s not as big a difference.  Hard to believe we’re spending almost two and a half times per person for health care what they do over there. [More]
Or to put it in picures:

We are going to do some dumb, well-intentioned things to deal with health care costs. We have to. But there are better ways of making these decisions. Dealing with real numbers would be a start.

Saturday, December 15, 2012

We know predictions are worthless...  

But then you aren't paying for  mine anyway.  So here's one. I think we're going over the cliff. I'm not alone.
1. The Politics Have Become Worse, Not Better. The House GOP is digging in its heals even further in spite of the fact that the polls all show public opinion -- including among Republicans -- being firmly against it. Meanwhile, the White House, no doubt strongly encouraged by the president's high job approval rating and the polls showing that it's position on taxes is very popular, apparently -- and understandably -- sees no reason to compromise.
2. The GOP Has Little To Lose At This Point By Letting The Cliff Happen. With their polling numbers already in the tank, it's hard to see what Republicans will gain politically by voting to increase taxes in incomes above $250,000 a year other than the lasting enmity of the most anti-tax members of their base and Grover Norquist.
3. Boehner Really Can't Cut A Deal With The White House Before January 3. My  prediction that this would happen was scoffed at by some when I made it months ago, but it's now become a mainstream story. The fiscal cliff hits January 1 and  Boehner's formal election as speaker is January 3. Any deal with the White House and especially a deal that includes the tax increases the White House wants, could cause Boehner to lose enough votes at least on the first ballot on January 3 to prevent him from being speaker. Even if he subsequently wins on a later ballot, he will be seriously weakened. Note: The fact that Boehner has been openly asked this week if he's concerned about being reelected is a sign that the possibility has become more real than anyone but me previously was willing to consider.
4. It's Still Not Clear That A Boehner-Obama Deal Would Be Agreed To Before January 1. Very simple: The political work needed to get the votes in the Democratic and Republican caucuses in the House and Senate hasn't yet occurred and that makes the vote count very dicey. A tax cut that's acceptable to Boehner may not be to his caucus, and larger-than-expected changes in Medicare and Medicaid that's acceptable to the White House may not be acceptable to Senate Democrats. In addition, it's not clear how many of the lame duck members of Congress will even show up to vote a week before their term is over [More]
I'll leave it as an open question in which I'm not deeply invested, but I do think I'll imagine how it could affect the farm.

This post will be about changes to depreciation and machinery sales.

It dawned on me Aaron has never even had to depreciate any of his machinery - he's been able to write it off annually under the bonus-extra-accelerated-bonanza tax breaks we've gotten very used to the last few years.

What happens when we go back to 7+ year drip-by-drip depreciation? Some speculation:
  1. Capital purchases don't just slow - they dang near stop.  Farmers will hold their breath for a long time expecting some retroactive fix to this quantum change. No spending will occur during that time. Secondly, we've been pretty active adding new paint. We really can go for considerable time before anything wears out. Add to that the fact that the newer stuff doesn't wear out as fast. We've been buying new features, not replacing worn iron.
  2. Leasing could come back big-time. If you really have to get new stuff, it might maximize your write-off.
  3. Some pretty serious machinery upgrades will be deemed maintenance rather than depreciated. Heck, we do this already, but if machinery dealers can repackage new technology in a way accountants can wink at it, they could sell more.
  4. Tiling, drainage work will come to a halt. Going back to long-term depreciation schedules instead of instant write-offs will end the drainage binge. Imagine how you would feel if two years from now they do increase the expensing amount again and you've locked a big project in for 15 years. Better to wait and see for a couple of years or the next election. Net impact: the longer the depreciation term, the deeper the cutback. Besides new tile won't help much during next year's drought (heh).
  5. There will be some serious lobbying on this issue because it isn't that expensive - about $33B per year, and is not exclusively for farmers. In fact, I think this is more likely than restoring farm program cuts.
  6. There will be some whopping tax bills in rural America for 2013. Many of us have zero depreciation left. New paint won't help much either. My guess is we've already moved all the income we can to the following year so it won't be pretty 1 March 2014.
As I said, just some idle thoughts for a mind that should be doing our Christmas letter and two FJ articles.

Plenty of time for those...

Thursday, December 13, 2012

Sugar stuff, ctd...  

In answer to Troy who comments below:
"I understand her point and agree with it, but the numbers she is using are ridiculous.
She states that the sugar quota costs the U.S. $3 billion/year.
She then claims that each sugar farmer gains $3 million/year from the artificially inflated prices.
Using those numbers suggests that there are roughly 1,000 sugar farmers in America.
There are somewhere in the neighborhood of 10,000 sugar beet growers in the country not to mention all of the cane growers.
If one of her numbers is off by at least a factor of 10, it makes your question the validity of her other information. "
First, how many sugar producers are there?  Well, as usual we can only know numbers from the distant past, thanks to the split-century work of the USDA.
The number of farms growing sugarcane and sugar beets declined from 2002 to 2007, but the average area harvested per farm increased. According to the 2007 Census of Agriculture, the number of farms growing sugar beets and sugarcane decreased from 5,980 in 2002 to 4,714 in 2007. The number of farms growing sugar beets declined from 5,027 to 4,022, while average area harvested per farm rose from 272 to 312 acres. The number of sugarcane farms dropped from 953 to 692, while average area harvested grew from 1,027 to 1,224 acres per farm. [More]
As for the amount, the economist in the video isn't too far from other estimates.
U.S. sugar policy costs taxpayers millions of dimes per year. According to the U.S. International Trade Commission, the sugar program imposes a $49 million net cost on the economy.[9] According to a study commissioned by the Sweetener Users Association, the program costs consumers $2.9 billion to $3.5 billion.[10] According to a study by the American Enterprise Institute, the program costs consumers $2.4 billion per year, with a net economic cost of $1 billion per year.[11]
Sugar policy costs taxpayers by making them pay a little extra every time they buy a box of Lucky Charms, a Honey Bun, a package of Twizzlers, or anything else that contains sugar. [More]
So, doing some quick and dirty engineer math (we're trustworthy, remember?), if there are today, say, 3500 beet and 500 cane growers, and the program costs consumers $2.4B then the average benefit to a grower is $400,000. But cane constitutes 45% of the output with only 12% of the producers so their average returns would be markedly higher.

On the whole, I don't find her numbers way out of line, given the uncertainty of the numbers. But beet growers especially may feel it over estimates their benefits simply because of the lopsided distribution. I have read there are some really rich cane growers.

Finally, the argumentation method of using one questionable number as disqualifying the whole assertion is invalid, IMHO. Maybe one number unravels the whole chain of logic and maybe it has little effect.  Unless any number can be refuted with better information or logic, there is no contagion factor. I guess this is my takeaway from the climate change rancor.

Star Wars VII (?)...  

Can't come soon enough in Britain.

About a quarter of a million people ticked the “Other religion” write-in box. Among them, 56,620 wrote Pagan, while Agnostics and Atheists claimed around 30,000 adherents apiece. Rastafarianism, Zoroastrianism and Shamanism made the list, while the most common was Jedi Knight, by 176,632 Star Wars fans.

And the census results?


And guess who else is stoked?

I think I'd sooner have Jar-Jar...

Wednesday, December 12, 2012

Seeing more stuff like this...  


The drip-drip of subsidy reform efforts might actually work eventually.
How to define good government...  

Ask not what you can do for America...or something like that.

The lede says it all:

"Farmer-friendly state tax exemptions, credits illustrate the good government can do"


I saw this coming...  

Philip Tetlock, whose seminal work on the "prediction problem" has shaped my views about punditry has written an amazing follow-on article for The Edge (well worth the reading).
This is a recurring theme in the psychological literature–the tension between human based forecasting and machine or algorithm based forecasting. It goes back to 1954. Paul Meehl wrote on clinical versus actuarial prediction in which clinical psychologists and psychiatrists' predictions were being compared to various algorithms. Over the last 58 years there have been hundreds of studies done comparing human based prediction to algorithm or machine based prediction and the track record doesn't look good for people. People just keep getting their butts kicked over and over again.
We don't have geopolitical algorithms that we're comparing our forecasters to, but we're turning our forecasters into algorithms and those algorithms are outperforming the individual forecasters by substantial margins. There's another thing you can do though and it's more the wave of the future. And that is, you can go beyond human versus machine or human versus algorithm comparison or Kasparov versus Deep Blue (the famous chess competition) and ask, how well could Kasparov play chess if Deep Blue were advising him? What would the quality of chess be there? Would Kasparov and Deep Blue have an FIDE chess rating of 3,500 as opposed to Kasparov's rating of, say, 2,800 and the machines rating of, say, 2,900? That is a new and interesting frontier for work and it's one we're experimenting with.
In our tournament, we've skimmed off the very best forecasters in the first year, the top two percent. We call them "super forecasters." They're working together in five teams of 12 each and they're doing very impressive work. We're experimentally manipulating their access to the algorithms as well. They get to see what the algorithms look like, as well as their own predictions. The question is–do they do better when they know what the algorithms are or do they do worse? [More]
I am intrigued by the early results. While it seems reasonable that political predictions are inherently impossible, despite our relentless desire to believe, the idea that we could harness the best of human insight and mechanical advantage (algorithms) is slightly disconcerting. It's like all those time-travel/foreknowledge paradoxes in science fiction or Calvinist theology: if we could foretell the future what would it mean?

BTW, I applied to be on the team, but didn't make the cut.

Put your name in.


Tuesday, December 11, 2012

Junkbox, Episode NOEL...  

Monitoring the many ongoing debates in Washington re: the fiscal cliff.
All in all, much to lose" in farm country because we enjoyed so many perks.

Sunday, December 09, 2012

This is unexpected?...  

Ag Secretary Vilsack's blunt criticism of rural voter political tactics received a lot of headlines in the press.
Exit polls conducted for The Associated Press and television networks found that rural voters accounted for just 14 percent of the turnout in last month’s election, with 61 percent of them supporting Republican Mitt Romney and 37 percent backing President Barack Obama. Two-thirds of those rural voters said the government is doing too many things better left to businesses and individuals.
Vilsack criticized farmers who have embraced wedge issues such as regulation, citing the uproar over the idea that the Environmental Protection Agency was going to start regulating farm dust after the Obama administration said repeatedly it had no so such intention.
In his Washington speech, he also cited criticism of a proposed Labor Department regulation, later dropped, that was intended to keep younger children away from the most dangerous farm jobs, and criticism of egg producers for dealing with the Humane Society on increasing the space that hens have in their coops. Livestock producers fearing they will be the next target of animal rights advocates have tried to undo that agreement. [More][My emphasis]
I'll grant that Visack is not a charmer at his most congenial, but while his assertion has some validity, I suspect the larger problem is the intense gerrymandering that has created rural districts so heavily Red that representatives can get away with anything secure in the knowledge that ideology will trigger an automatic response in the voting booth.
Democrats have been packed into three uncompetitive seats around Philadelphia, an uncompetitive seat in the Lehigh Valley, and a safe seat in Pittsburgh. The state's suburbs, exurbs, and rural areas have been rigged to be just outside the range where Democrats might win them. [More]
Note also the cognitive dissonance in demanding a new farm bill with an indisputably lavish safety net for grain producers and the emphasized statement above. If I were a rural legislator in a blood-red district all I would fear is an even redder primary opponent. The irony here is the far, far right is the biggest threat to farm subsidies.


Saturday, December 08, 2012

No wonder marketing is harder...  

The other side is using more educated people.

At the very least it seems as if more employers are using bachelor’s degrees as a signal of drive or talent, regardless of of the relevance of the skills actually learned in college.
That is one implication of an analysis from Burning Glass, a company that analyzes job ads from over 20,000 online sources ranging from major job boards to small and midsize employer sites. The company’s chief executive, Matthew Sigelman, says that employers are increasingly requiring college degrees for positions that did not traditionally require higher education.
I asked his company to compile a list of occupations that have shown the most “up-credentialing” in the last five years — that is, occupations whose job ads were significantly more likely to name college diplomas as a prerequisite in 2012 than they were in 2007.
Here is a look at the 10 occupations with the biggest percentage increases in requiring a college degree.
Occupation title 2007-12* Growth in % of Posted Jobs Advertising for a Bachelor’s Degree 2007 % of Ads Requiring Bachelor’s Degree 2012* % of Ads Requiring Bachelor’s Degree
Dental Laboratory Technicians 175% 12% 33%
Chemical Equipment Operators and Tenders 83% 6% 11%
Medical Equipment Preparers 55% 11% 17%
Buyers and Purchasing Agents, Farm Products 43% 54% 77%
Electronics Engineering Technicians 38% 21% 29%
Dental Hygienists 38% 40% 55%
Architectural Drafters 37% 41% 56%
Cargo and Freight Agents 36% 33% 45%
Photographers 36% 25% 34%
Claims Adjusters, Examiners and Investigators 35% 48% 65%
*2012 data is from Nov. 1, 2011, to Oct 31, 2012 
(I am assuming that the "Buyers and Purchasing Agents, Farm Products" would be Cargill marketing reps or similar jobs. Maybe Monsanto field reps?)

If you wander through the comments, you'll notice several possible implications from this report. I agree a tough employment market makes "up-credentialing" an easy way to winnow, but also agree that more jobs simply need better education levels than high school seems to be providing. 

With some exceptions, I am not persuaded that college degrees certify the same level of education as they used to. Dumbing down is a crude way of putting it, but it could also be the relative rigor in key academic areas I associate with college degrees from my own era is unnecessary given the compensatory power of computers. Why master any topic when you can google the info you need when you need it?

My Dad used to bemoan the fact I didn't learn the multiplication tables all the way to 25x25 as he did, so I'm guessing my lament is just geezer harrumphing. When skills can become obsolete almost overnight (floor traders), what exactly should colleges teach?

Meanwhile, in our own ranks, the percentage of college graduates seems stagnant.


Of course, this is before the Great Return that started in 2008 as farm incomes suddenly made going back home more attractive to graduates. We'll have slightly less dated info from the 2012 Census of Ag in a couple of years when USDA gets around to it with their usual alacrity.

Sunday, December 02, 2012

We're not going to 10...  

We may not make 9 billion. And we'll peak sooner than expected.
I write about this every now and then, because human fertility is falling faster then most demographers expect.  Using the CIA Factbook for data, the present total fertility rate for the world is 2.47 births per woman that survives childbearing.  Last year it was 2.50, and in 2006 it was 2.90.  2.10 is replacement rate.  At the current trend, the world will be at replacement rate in 2022.  That’s a lot earlier than most expect, and it makes me suggest that global population will top out at 8.5 Billion in 2030, lower and earlier than most expect.
Have a look at the Total Fertility Rate by group:


This is more evidence we are throwing the "9 billion by 2050" around in agriculture too casually. As wonderfully explained by this chart and better by this video.

I would suggest not only will we have enough land and water, less intensive diets in the developed world will ease the food squeeze on poorer countries. A little less waste and presto the food shortage hysteria is revealed as overhyped. One caveat: I hope Canada and Siberia can gear up to be the new grain producing centers as the climate changes.

It is hard for us to imagine a falling population in the US, but we farmers can kinda sense it as rural America depopulates. My sons and grandchildren could experience it in a completely new kind of world - a demographically top-heavy world of too many geezers and too few teenagers.