Monday, February 25, 2013

Junkbox, Episode XIII⚗...  

(Pre-loaded for your Monday morning pleasure)
Meanwhile, on the plains of Africa...

Saturday, February 23, 2013

Africa: On the Ground #1...  

We've been in Africa for several days, but really busy. Most of my computer time has been trying to get my mail and downloading video from cameras.

South Africa was eye-opening. While I was prepared for the security measures, the reality of the fences is overwhelming. (Rats uploading photos doesn't work).

There is a semi-Gold rush sense when talking to ag industries and farmers here, as they all talk about "going north".  The hot spot is Zambia - the former Northern Rhodesia.  Good soils and some of the best infrastructure due to not having a civil war, but other countries are definitely in play. SA farmers are discreetly researching "escape plans" in case of government redistribution of their farms.

Now we're in Tanzania. One big hurdle is getting past customs without being fleeced according to warnings from our hosts in SA. The other challenge is to you kidneys on the roads. If you imagine the worst sections of your worst roads, then narrow it to one lane, you get the idea of our trip to Morogor, although there is a section of good two-highway, albeit extremely heavily traveled.

You have to be here, I think to grasp the intractability of the poverty problem. There other reality is running into Chinese everywhere. FWIW, don't get in their way at the airport, bus, etc.

Amazingly cell phones sort worked, but gmail won't here. Not sure why.

More from Nampula.

Thursday, February 21, 2013

Measure it...  

And you will game it. Thanks to this app, I check the wind like an 18th century sea captain before driving anywhere. It can mess with mileage ± 2-6 mpg. on an Equinox.

When I start postponing trips, we'll know I've gone over the edge.

Wednesday, February 20, 2013

Say what?...  

Ponder the highlighted sentence.
Because of its dismal fertility rate, Japan's population peaked in 2008; it has already shrunk by a million since then. Last year, for the first time, the Japanese bought more adult diapers than diapers for babies, and more than half the country was categorized as "depopulated marginal land." At the current fertility rate, by 2100 Japan's population will be less than half what it is now. [More]
The mind boggles.

Africa 8:...  

I believe it was Confucius who said, "A journey of a thousand miles begins with airport security".  Wise man.

Anyhoo, Jim and I got launched from ORD in a timely manner for the first leg of our trip. Random observations:
  • Due to a massive scheduling blunder, I booked our outbound flight for 0845, thinking it was an evening flight. Duh. Nonetheless, it was the first time in a long time I was on a half-full plane. I may due the day flight again just for the hassle decrease.
  • Our 18-hour layover was eased greatly by checking into the Yotel in LHR terminal 4. The airport was virtually empty when we arrived (2300 local) and 5 minutes of train got us from T3 to T4. 
  • I'm going to try to post a video of the accommodations - no promises.
  • Only partially successful with my electrical adapters. Luckily most of the electronics can be slowly recharged through the laptop USB and I did have a UK adapter for that power supply.
We used this morning to do the tourist thing at Hampton Court Palace. It was really good, and with light winter crowds the guides in the rooms were happy to chat (at length) with us.  The gardens must be spectacular in season. 

With it only about 15 min. from LHR, I highly recommend it if you find yourself with time to kill around the airport.

The "Bladerunner" trial is BIG news over here - everybody is following it and has an opinion. Seems like OJ all over again. Only in super-speed. Didn't it just happen last week?

How are the lawyers gonna come up with billable hours?

Monday, February 18, 2013

An honest count...  

I have always been perplexed by our profession's obsession with over-counting our numbers. Take the ubiquitous "2%"That's 6,200,000 people!

That's also ridiculous.
In 2010, there were 1,202,500 farmers, ranchers and other agricultural managers and an estimated 757,900 agricultural workers were employed in the US. Animal breeders accounted for 11,500 of those workers with the rest categorized as miscellaneous agricultural workers. [More]
That's a pretty reliable number, I think. But there are some issues with it as well.
  • The farmer number is based on the old USDA "$1000 gross" rule. In fact, 60% of the 1.2M "farmers" are retirement and lifestyle farmers who like the many advantages of Schedule F, I would suggest. So at best - even counting very small farms - the number of what most people would call farmers is around 500,000 AT MOST.
  • The balance of the 2% seems to be "others living on farms". The best number I can find is 4.6M which in some Alternate Arithmetic Universe gets rounded up from 1.48% to the Magic 2%.
  • Even the above number is questionable because:
In 1993 the Census Bureau stopped counting the number of Americans who live on farms. "Farm residence," it reported, "is no longer a reliable indication of whether or not someone is involved in farming. ... The cost of collecting and publishing statistics on farm residents and farmers in separate reports could no longer be justified." [More]
  • So if your wife is a teacher, nurse, plumber, truck driver, or nuclear physicist, we somehow still get to count her among our ranks.
  • Your kids count too.
In short, Jack Nicholson was right - we can't handle the truth. And we go to remarkable extremes to distort the data.

One of the most egregious truth-masseurs is Farm Bureau. I remember from my days as a county president (admittedly in the Paleolithic era) the hushed mumbles that accompanied membership numbers. Because FB is a well-funded, expertly-staffed auxiliary unit of an insurance conglomerate (which any Wall Street analyst would conclude from looking at their books), they have concocted unique euphemisms to describe their members as farmer-like entities.
Farm Bureau’s national membership rose to 6,279,813 member families in 2010, marking 50 consecutive years of membership growth. State Farm Bureaus overall reported a total 2,149 more member families this year than in 2009. [More]
Member families? A more accurate label would be "insurance customers who are required to become members of the FB". The fact that TN is the largest membership state should be a clue these numbers say little about actual farmers. Somehow this distinction is skirted when FB testifies before Congress, allowing the organization name to imply a vast base of voluntary dues-paying members.

But aside from the embarrassing lameness of such efforts to inflate our numbers is the question, "Why bother?" Why can't we be OK with an accurate count of our group's ranks?

We're not the only minority struggling with this anxiety.
We’re slowly getting a sense of how many TGBQLX people there are in America. I.e. how many homosexuals, lesbians and transgenders there are in the population. When I was a newbie gay, the mantra was 10 percent. We were “one in ten”. Seriously.
This immediately struck me at the time as a) obviously propaganda and b) ridiculously insecure. There was no way to know for sure, given the ubiquity of the closet back in the 1980s, but ten percent is a hell of a lot of people: 30 million. Why did I keep bumping into faces I recognized wherever I was in the US? If it were really ten percent, where were they all?
And why on earth does it matter if we make up 10 percent or 1 percent? A minority’s civil rights are not dependent on how many of them there are or how large a segment of society they form. Do we say: sorry, guys, you only form 2 percent, you don’t meet the minimal bar for becoming a minority? It’s not like running for the Knesset. It struck me then and now as part of a wearying tendency among some gays to think that every straight dude is just a few beers away from being gay (that’s not how it works); or a desperation to feel somehow more significant because of larger numbers.
Which simply make it all the more of a relief to see that Gallup has finally come up with a believable number of around 3.5 percent. (Check how gay your state is here.) DC is the super-gayest “state” – but that is a little distorted since DC is really the inner city of a larger metropolitan area and the gays tend to congregate there. But there’s also the attraction of politics for gay men. If you’ve ever spent much time among the staffers on the Hill, you’ll know what I mean: the US capitol makes the Vatican look straight. [More]
Sullivan is right: why does it matter? We don't get subsidies because of block voting - we were heavily against Obama and he is our best hope to continue the handouts, especially the ethanol mandate. Clearly government money messes with your mind.

I've always thought minimizing our numbers would have a bigger PR wow-factor. "Only 50,000 farmers produce 87% of the ag products [totally made up example]" seems more impressive to me. If farm payments are slipping away, why not change our thinking to at the very least make sure we actually know how many we are?

Farmer numbers need to come out of the closet.

Junkbox, Episode XIII♞...  

Last one before leaving. (Maybe I can cache one for next Monday posting.)

Sunday, February 17, 2013

Africa 7:...  

Background geography

[Click to enlarge any of them] Best views IMHO are on Google Maps.

First the global view. Some things to note:
  • All of the area I will be visiting is above the Tropic of Capricorn
  • Compare the latitude with the US production areas
  • Tanzania is extremely close the the equator
  • Check out the proximity to India and China
  • Although this is still size distorted note the immense area still available for farm development

 For South Africa:
  • I will be in the area around Johannesburg - grain & livestock
  • Most of the area is grazing ground
  • Wine in the Cape area is huge industry
  • Sugar cane around Durban is an important crop

For Mozambique:
  • The old description of Sub-Saharan Africa (SSA) is an "inverted soup bowl" with a narrow lowland rim escalating to high plateaus is apt
  • No glaciers means very little topography like prairies or Midwestern wet savannahs
  • I will be west of Nampula near Gurue
  • Note the relationship to Zimbabwe - I think it will play an important role for better or worse in all these countries, but especially Mozambique

Finally, Tanzania
  • The Rift Valley in the north is the birthplace of humanity
  • The big lakes are big tourist draws, along with game parks
  • I will be in the Morogoro area

I'm hoping to give lat/long coordinates to mark my progress and allow you to zoom in from the Google Earth satellite maps. Should have gotten a GPS thingy.

The honey smuggling solution...  

Everything's better with lasers. We talked about Chinese honey-running and contamination on USFR recently. Scientists are on it.
By training the appropriated isotope ratio-meter on the carbon dioxide emitted from burning a bit of honey, Weidmann and company are able to use isotopic fingerprints to compare samples from all over and determine their origins. The same process works for other foods, too, which means better regulation could be coming to the chocolate and olive oil industries as well.
Let this be a lesson to all would-be food counterfeiters. We built a laser for Mars, but instead, we’re aiming it at you. [More]
I would also suspect the price of honey is about to jump as well.

Africa 6:...  

Doing my South Africa homework, and it appears I'm arriving at a pivotal moment for SA farmers.

Government is to drop the "willing-buyer, willing seller" principle with regard to land reform and restitution, President Jacob Zuma confirmed on Thursday.
"We must shorten the time it takes to finalise a claim. In this regard, government will now pursue the 'just and equitable' principle for compensation, as set out in the Constitution," he announced in his state-of-the-nation address on Thursday
Telling MPs that the land question in South Africa was a "highly emotive matter", Zuma said the willing-buyer, willing seller principle previously applied had forced the state to pay more for land. [More]
This method of land redistribution did not fare well in Zimbabwe, either. 
As of 2012, much of the seized land remains in large plots in the hands of Mugabe's cronies and produces little, but the small plots remaining in the hands of ordinary black farmers are now producing quite well. Their productivity does not match that of the previous large industrial farms that were displaced, but the profits are much more widely distributed and collectively these micro-entrepreneurs are one of the best performing sectors of the Zimbabwe economy.[24]
Before 2000 land-owning farmers had large tracts of land and utilized economies of scale to raise capital, borrow money when necessary, and purchase modern mechanized farm equipment to increase productivity on their land. As the primary beneficiaries of the land reform were members of the Government and their families, despite the fact that most had no experience in running a farm, the drop in total farm output has been tremendous and has even produced starvation and famine, according to aid agencies.[28] Mostly crops for export have suffered severely, e.g. Zimbabwe was the world's 6th largest producers of Tobacco in 2001.[29] It produces nowadays less than 1/3 of the amount produced in 2000,[30] the lowest amount in 50 years.[31] Zimbabwe was once so rich in agricultural produce that it was dubbed the "bread basket" of Southern Africa, while it is now struggling to feed its own population.[32] About 45 percent of the population is now considered malnourished.

Combined with the recent rise in minimum farm wage, this strikes me as utterly unsettling, and one reason many economists are pessimistic about the SA economy in 2013.


Saturday, February 16, 2013

The wealth enigma...  

I remain convinced one of the biggest problems farmers have understanding global economics (into which we have been merged) is the sheer size of the mountains of wealth in the world. As I work to get some sense of scale, there are surprises that stagger me still.

Like this:


After you try to wrap your mind around $200T, remember - this does not include real estate or other hard assets, just financial assets. And it's not some exaggerated measure of derivative leverage either.

Is it any wonder our corn market can be messed up so fast and easily by a tiny splash of liquidity from this ocean?
Here to stay...  

But maybe not in its present form. While opponents of Obamacare still rage about its existence, the work of learning to live with it is picking up speed.  While it might seem this kind of debate/compromise could have occurred at the outset, I'm convinced that is a pipe dream. But with deadlines looming when the BIG milestones such as universal acceptance will really, really happen, the health care industry and government are moving to comply, even if grudgingly. Moreover, I'm betting we kludge this thing around to workability pretty fast.

In the process, thoughtful ideas and experiments could ease many of the most inefficient aspects of the law.
Of all the companies worried that the Affordable Care Act will be bad for business, H&R Block may lay claim to the most unique gripe.
The firm prepares millions of tax returns, one of every seven that gets filed to the Internal Revenue Service. The vast majority of its consumers receive a refund; all told, their 26.5 million customers received $50 billion in refunds in 2012.
The Affordable Care Act could change that: It charges a tax penalty to Americans who do not carry health insurance coverage. And that has H&R Block worried that some of those refunds will get eaten up – with a lot of angry customers pointing a finger at them.
“Eighty-five percent of our customers get a refund,” Kathy Pickering, who directs the H&R Block Tax Institute, says. “That refund could be offset by the penalty. And if that happens, they’re going to be understandably angry.”
Last year, the company started thinking about how to curtail those types of surprises; they did consumer research to understand how much people knew about the law, what they liked and what they didn’t.
Now, during this tax season, H&R Block is rolling out a Health Care Review product, a no-charge assessment of the subsidies and penalties they will likely face in 2014.
The health law’s subsidies for insurance coverage and penalties for not carrying a plan don’t start in 2014. But the income that will determine how big of a subsidy an individual or family will receive — that’s the income that’s being filed right now, in 2013. [More]
Given the intense tax-prep warfare being waged now, I don't see that being a stand-alone strategy got Block.  Meanwhile, governors are analyzing the new laws to see how best to respond. While this could simply gaming the system, it represents how we can best implement admittedly imperfect rules to get better results.
Wisconsin’s Scott Walker recently became the 13th governor to turn down federal money to expand Medicaid, opting instead to move Wisconsinites between 100% and 200% of the poverty line into the ACA health care marketplaces. [More of good two-sided coverage of this effort]
This reminds me of all the work by seed companies, land investors, and farmers to manage climate change on their own microeconomic level even as they deny much of the evidence for it.

People deal with reality, but they are not required to acknowledge they might have been mistaken or even cease to be irritated. Obamacare seems to be more permanent as an idea every day, but like the rest of our social safety net, it will constantly be evolving.

I still say opponents will rue the day they attached the President's name to it to capitalize on the antipathy toward a person. Universal health coverage will become as strong an entitlement in the public mind as Medicare or SS.  

Or crop insurance. We all demand a little socialism just for us.
After all my bad-mouthing...  

Apple Maps comes up with a cool view of my farm.

If you have anything with iOS6 (iPhone, iPad, etc.) and have upgraded to iOS6 enter my address:

23957 N 2100th. St.
Chrisman, IL 61924

Then select "Satellite" view.  

If you magnify down you can see my house, our farm to the NNE about 1/2 mi. and our combine in the field cutting beans just east of the house.  At the north end of the field is the grain cart half-full, with me likely sleeping in it. The date was September (?) 2011.  The weird patchwork to the east of the combine is a Pioneer Impact plot. The pattern in the field to the north was down corn from a wind in August.

I would have waved had I known...


They're like, everywhere!
Nothing good has ever come of chemistry. From the toxic gases that slaughtered billions in World War I, II and III, to the toxic liquids pumped into our innocent, crying children daily under the pretence of “vaccination” and “public health”, we’re surrounded by chemicals. Chemicals are toxins. Chemicals are evil.
Sadly, no matter how vigilant you feel you are, it’s likely that chemicals have infiltrated your home. This is partly the government’s fault: with their engorged wallets bursting at the seams with cash “donations” from Big Chemistry, it’s no wonder politicians turn a blind eye to the blatant poisoning of their citizens. But you’re also to blame. Your ignorance of basic science is probably killing your family.
But luckily, with a few easy modifications and substitutions to your way of living, you can begin an effective physical (and spiritual) detox and be rid of 6 of the major sources of household chemicals.


It’s no secret that chemists love to read, so it’s no surprise that many, if not all, books contain some truly deadly chemicals. You may not have been taught this in school, but paper (the primary component of books) is made out of cellulose, a substance so foreign to our bodies that our own digestive system refuses to break it down, much like chewing gum. Cellulose, in turn, is made of glucose, which has been implicated in numerous diseases, including (but surely not limited to) diabetes. Glucose is also the main fuel for cancer, which makes a whole lot of sense considering 99.5% of cancer patients read, on average, one to eight books prior to their diagnosis. Coincidence? There are no coincidences when dealing with chemicals.
Chemical-​​free replacement: Ancient scrolls. It’s safe to read any text printed before the discovery of the structure of cellulose, but make sure you wear gloves. [More shocking news]
Those wacky Aussies...

Wednesday, February 13, 2013

Into Africa 5:...  

Another farmer heads to Africa from the opposite direction.

[via realagriculture]

Note the side reference to western Canada as another place to be.


Tuesday, February 12, 2013

Into Africa 4:...  

In researching my trip, I was surprised to find this chart about who the big players in African agriculture are.  I thought the Chinese and Indians were the dominant players.

Allowing for the POV of the source article, I will assume the numbers are correct because the original study source is gated and costs.

There are several noteworthy funds investing in Africa, but one name that caught my eye was Bruce Rastetter.


His name pops up occasionally in IA politics, such as here:
In a letter to the university, Harkin wrote that concerns about restrictions on research led him to make the decision, despite the appeal of leaving his papers at ISU where he learned “the force of ideas” and was exposed to diverse opinions.
“But after a time, it became evident that the university would not grant the Institute the very freedoms that I learned to cherish at Iowa State,” wrote Harkin, a Democrat who is not seeking re-election in 2014.
The institute has been a source of political controversy since the Iowa Board of Regents, which governs the state’s universities, voted to create it in April 2011. Republicans have questioned the ethics of naming the institute after a sitting senator. The institute’s advisory board and regents leaders also battled over guidelines for agriculture research.
State Sen. Joe Bolkcom, D-Iowa City, on the Senate floor Wednesday, decried the circumstances that resulted in Harkin’s decision. Specifically citing Regents Craig Lang and Bruce Rastetter for “unnecessary meddling,” Bolkcom said he was disappointed in what had occurred and described it as a threat to academic freedom. [More]
I realize this type of investing attracts the umm, more speculative investors at first, and many of them tend to mingle politics and profits. But I'm getting a nervous feeling too much of what passes for legitimate business practice in the world of global farmland is only our version of LIBOR rules.

More to learn...
The curious case of guns and hunters...  

President Obama has been a godsend to the gun industry, with sales booming after each conspiracy myth is rolled out. But at the same time, fewer homes have guns.
 Second, for all the attention given to America’s culture of guns, ownership of firearms is at or near all-time lows.  Since 1973, the GSS has been asking Americans whether they keep a gun in their home.  In the 1970s, about half of the nation said yes; today only about one-third do.  Driving the decline: a dramatic drop in ownership of pistols and shotguns, the very weapons most likely to be used in violent crimes. [More]

So it would appear we have a smaller number of citizens with a larger number of guns. Not sure what that means.

But at the same time, the popularity of hunting is dropping almost as fast. Take ducks, for example.
The annual duck hunting season in the United States is traditionally big business, but while bird numbers are rising faster than they have for decades, the number of hunters continues to fall. Far from being good news for ducks a new study in the Wildlife Society Bulletin shows how the loss of revenue from ‘duck stamps’ could result in millions of lost dollars for vital conservation work.

“The last 15 years have brought hunting opportunities not seen since the turn of the last century,” said Dr Mark Vrtiska from Nebraska Game and Parks Commission. “The waterfowl population has passed 40 million six times since 1995, something only seen nine times since records began. These should be the glory days for duck hunting.”

However, in stark contrast, the annual sales of the ‘duck stamp’, the Federal licence needed to hunt, are declining. While over 2,100,000 stamps were sold annually in the 1970’s, between 2004 and 2008 this declined to 1,300,000. This fall is continuing with an annual decline of 36% in duck stamp sales. [More]
Or deer.
The fact is, hunter numbers peaked nationwide in the late 1970s and then started sliding. By the 1990s they were plunging across America as the percentage of hunters in the population declined.
Wisconsin dodged that 1990s plummet, insulated by a large rural population that embraces hunting and has easier access to hunting land. From 1991 through 2000, Wisconsin averaged 675,185 gun-deer licenses annually, up 2.6 percent from 658,257 during 1981-1990.
But as more urbanites built homes and planted lawns where cows, steers, deer and farmers once roamed, our hunting population was destined to drop. From 2001 through 2010, annual gun deer licenses averaged 642,466, down 5 percent from the '90s. [More]
The decline of hunting could be a real game changer as fewer of us are familiar with firearms and probably more likely to be averse to ownership as a result. Nor is it a sport you "take up" like golf, I would think. It seems more like something you grow up with, as a rule.

This is one reason I don't waste much time debating gun issues - it's slowly going the right direction without all that vitriol in my life. I'd like to be able to prevent another Newtown, but that looks like tilting a windmill. Pretty pathetic I know, but anything else just seems to add fuel to a dying fire.

Monday, February 11, 2013

Junkbox, Episode XIII∻...  

Two more shots to go for Africa and I start malaria pills Wednesday.
See you at the Louisville Farm Machinery Show.

Sunday, February 10, 2013

Am I the only one...  

To see a market opportunity for US beef in Europe right now? The Great European Horsemeat Scandal could just be beginning.
The source of the horsemeat that ended up in beef factories in Ireland and France before being processed into food for British and Irish supermarkets is still unclear. ABP told us it had never knowingly imported horsemeat to its factory and was cooperating with investigators. It initially blamed its continental European suppliers and denied that any of the suspect material came from its own factory in Poland, pointing the finger at other Polish suppliers. Tests on meat from five Polish abattoirs identified from paper records as part of the ABP supply chain came back negative, however, and official Polish veterinary staff suggested the British and Irish look closer to home.
The trail moved rapidly through the week from Poland, back to a cold store for frozen meat in Newry, Northern Ireland, called Freeza Meats, where a large consignment, already quarantined and removed from the food chain by the authorities for irregularities, was found to contain 80% horsemeat.
A spokesman for Freeza Meats' owners told us they had refused to buy the meat because they were suspicious of its state and the accuracy of its labelling with Polish healthmarks, and were merely holding it in store as a "goodwill" gesture for the company that had sent it to them, McAdam Foods.
ABP acknowledged that it had on occasion bought Polish meat "in good faith" for the factory that made the dodgy burgers for Tesco, Burger King and other retailers, from McAdam Foods. But ABP and McAdam could not agree what had been bought when. McAdam in turn passed the blame for the horsemeat to one of its suppliers, saying it had sourced the 80% horse consignment which ended up in Freeza Meats from a Hull-based company called Flexi Foods, which in turn has operations in Poland.
Neither McAdam nor Flexi Foods were answering their phones when the Guardian made repeated attempts to contact them. The French manufacturer Comigel did not respond to requests for comment.
With the next vast round of new tests due in next week, few expect the horse meat scandal to end here. [More]
Of course, we're not so much a ground beef exporter as higher level cuts, but still, the marketing campaigns almost write themselves:
  • All the hormones, but none of the horse
  •  Beef from America, from American cows. Only.
Then again, it's not like we're doing DNA testing on lasagna here at home. Meanwhile, the enormous problem of disposing of unwanted horses - who happen to be made of edible stuff, remember - is bringing pressure to alter the emotionally-driven ban on horse slaughter.
 Rural U.S. lawmakers with ties to the cattle industry and economically-strapped horse breeding registries have been pushing to reopen horse slaughterhouses since the last three plants shut down in 2007 (two in Texas, one in Illinois).
On Tuesday, February 5, 2013, they're poised to try again in Oklahoma when a new bill sponsored by state Senator Mark Allen (SB375) is scheduled for a second reading in the state's Agriculture and Rural Development Committee. Allen's bill would overturn Oklahoma's existing 1963 ban on selling and producing horsemeat.
Representative Skye McNiel is also pushing to overturn the ban with another bill, HB1999.
What's behind it are 140,000-150,000 U.S. horses that are now being slaughtered in Canada and Mexico for the EU and Japan plus about 45,000 mustangs unwisely removed by the Bureau of Land Management (BLM) from public lands and warehoused at taxpayer expense, many in long-term holding pens in Oklahoma.
Quite a few people in the meat trade are pushing to weaken laws that would allow them to legally buy and sell these protected wild horses at a large profit to slaughter plants. (In fact, they've been doing this illegally for some time, as revealed in the National Journal article, "Is the U.S. Government Complicit in the Killing of Over 1,000 Wild Horses?" as well as in an investigation reported on in The Desert Independent).
They also want to slaughter horses disposed of by racetracks, rodeos, horse breeders and owners struggling in the recession -- a surplus market that has made the actual raising of horses as meat animals (the way cattle are) completely unnecessary in the U.S. for decades.
Sen. Allen's and Rep. McNiel's bills are trying to harness that business for their home state, which ranks fourth in the nation in horse ownership per capita and bills itself as the "horse show capital of the U.S."
It also happens to have several struggling racetracks as well as a large cattle industry--same as in Ireland and the UK. They don't raise horses for meat over there, either. [More]
The above source is mildly slanted, IMHO, to be sure, but I'm sure legislators and the equine industry trying to solve this problem were just thrilled to see this blunder across the pond. Great timing, you bozos!

But this fraud does help in one very perverse way: it reinforces the truth that horses are edible. In a protein-short world, burying and burning enormous amounts of nourishment derived at great environmental expense is absurd. Especially when there are people willing to eat it.

There was no health hazard involved, just straightforward substitution larceny. The
bigger question for me is how much expansion this scandal has left.

But it may be a problem for US cattlemen to benefit from the fiasco simply because of our domestic shortage of lean beef needed to mix with corn-fed trimmings to get to the modern standard for hamburger - 80/20. That's one of the reasons we came up with LFTB, after all. (It is ~ 95% lean) It could also be a small factor for the mixing in Europe as horsemeat is generally leaner than beef.

Then there is the whole EU-beef trade battle whichwill outlive me. And the latest on antibiotic use in animals isn't really a selling point either.

[Source] [Click to enlarge]

DNA-testing - it's not just for paternity tests anymore.


Friday, February 08, 2013

Junkbox, Episode XIII⊪...  

I think the sun accidentally came out the other day.
I think the 9 vaccinations for Africa are working.  Germs bounce right off me.
My boss's concept of me...  

In Africa later this month.


Hey, maybe I could wind up in the Senate.

No, I forgot - you need to be able to do this.

Thursday, February 07, 2013

Why the USPS could be overruled...  

One test of whether Congress is even capable of reducing spending will be the unilateral action by the USPS. It is unusual - think about the USDA cutting its own budget all by itself. (Of course - the USDA is not independent like USPS, but stay with me.) If Congress reacts as I expect, you can narrow the already slender portion of the budget that is "cuttable" even more.
The fight between the Post Office and Congress is a very peculiar one. Normally, when the government owns some incredibly profligate business, it’s Congress which tries to impose efficiency gains and fiscal discipline, while the business insists that all of its spending is absolutely necessary and that it has already cut to the bone. In this case, however, the roles are reversed: the Post Office wants to change, and it’s Congress which is stopping it from doing so.
The latest move from the Post Office is a bold one: to abolish Saturday delivery unilaterally, starting August 1. This is a bit like Citicorp announcing that it was merging with Travelers: it’s illegal, but that’s not going to stop them, and the clear expectation is that somehow Congress will make it legal, before or shortly after it happens in reality.
As Jesse Lichtenstein details in his amazing 10,000-word Esquire story about the Post Office, the organization does actually have a detailed plan for becoming fully self-reliant over the next few years. Abolishing Saturday delivery is just one small part of that plan; all of it, by law, requires Congressional buy-in. The plan may or may not be successful, but, as they say, plan beats no plan. The big problem is simple, but huge: Congress isn’t playing along, and instead is just making matters worse, unhelpfully micromanaging everything from postage rates to delivery schedules to health-care contributions.
That’s why I love the idea of the Post Office doing something that’s clearly illegal, putting the ball squarely in Congress’s court. The idea is both delicious and dangerous: go ahead an implement the plan whether Congress likes it or not. And then dare them to bring down the hammer, or simply capitulate to the inevitable. They might not like the latter option, but the former would surely be worse for all concerned. [More]
This action could also attract some unwelcome attention to the rural/urban divide, both cuturally and economically. With less access to broadband, I expect strong arguments for continued mail delivery in the country will emerge from rural state Senators.
But the monopoly has become less lucrative and that's not going to change in the future. That's squeezed the budget, squeezed postal workers' compensation packages, and is now squeezing the quality of nationwide mail service. As a country, we need to ask ourselves whether providing subsidized mail delivery to low-density areas is really a key national priority. Without the monopoly/universal service obligation, it's not as if rural dwellers wouldn't be able to get mail, it's just that they might need to pay more in recognition of the fact that it's inconvenient to provide delivery services to low-density areas. Nostalgia-drenched Paul Harvey Super Bowl ads aside, it's not the case that rural Americans are unusually hard-pressed economically or are disproportionate contributors to the economy. They are, rather, the beneficiaries of numerous explicit and implicit subsidies, of which the Postal Service's universal service obligation is one. [More]
While everyone in farm country is thrilled by the now-famous commercial, frankly it makes me uncomfortable. Not only was it cloyingly flattering to farmers, it was based on a way of life that is much less common, and mostly on smaller farms.  Didn't see many pictures of CAFO's or 120' boom sprayers. Or my neighbors in Naples, FL on the golf course. The commercial looks like a lead-in to Big Ag subsidy pitch to me.

I'd rather earn respect for who I really am and what I really do.

Wednesday, February 06, 2013

Junkbox, Episode XIII...  

Surf's up. Bonus edition.
Check out Mike's long-range forecast on USFR. He's often right.
Talking ourselves into it...  

There's gotta be a bond bubble! If not tomorrow, then certainly within the next 200 years. Bet on it.

Don’t be surprised if someone soon creates an ETF to track the verbiage expended by traders, investors, and the financial press about a bond bubble.
In the trading pits and on fixed-income desks, there’s a general appreciation that bonds today, with their puny yields and vastly appreciated values, seem rich. The press and brokerage firms, having remembered how they (we) whiffed on calling the bubble in subprime and financial engineering, can’t help declaring that bonds at these levels are a ticking time bomb, so run—don’t walk—away!
But bond mania, and the attendant hand-wringing over it, could go on for a while. There’s a lot—institutionally, generationally, situationally—driving that seemingly indefatigable bull.
Look at the (above) chart from Birinyi & Associates, which shows how many cautionary, even alarmist, headlines have overlayed the run of the past six months, amid a record year for bond issuance and buying. [More]
There is nothing wrong with being bearish on asset X, but permanently bearish makes no sense.

Speaking of land prices...
How we'll get...  

To the new EPA mileage requirements. With luck, I'll be dead.

 It won't be nearly as scary on the right side of the road, of course.
This is a bubble?...  

Maybe not. Student debt is a monstrous problem but can a liability be a bubble?
An economic bubble (sometimes referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, a speculative mania or a balloon) is "trade in high volumes at prices that are considerably at variance with intrinsic values".[1][2][3] It could also be described as a trade in products or assets with inflated values.
While some economists deny that bubbles occur,[4][page needed] the cause of bubbles remains a challenge to those who are convinced that asset prices often deviate strongly from intrinsic values.
While many explanations have been suggested, it has been recently shown that bubbles appear even without uncertainty,[5] speculation,[6] or bounded rationality.[7] It has also been suggested that bubbles might ultimately be caused by processes of price coordination[8] or emerging social norms.[7]
Because it is often difficult to observe intrinsic values in real-life markets, bubbles are often conclusively identified only in retrospect, when a sudden drop in prices appears. Such a drop is known as a crash or a bubble burst. Both the boom and the burst phases of the bubble are examples of a positive feedback mechanism, in contrast to the negative feedback mechanism that determines the equilibrium price under normal market circumstances. Prices in an economic bubble can fluctuate erratically, and become impossible to predict from supply and demand alone. [More]
Well, that cleared that up!

I suppose those holding student debt financial instruments such as Sallie Mae bonds, are susceptible to "bubbleconomics".  "Not so" says the boss.
SLM, known as Sallie Mae, boosted its originations of non- government-guaranteed education loans to $1.2 billion in the first quarter, up from $940 million in the year-ago period, according to a statement yesterday. The Newark, Delaware-based company is forecasting $3.2 billion of originations in 2012.
While rejecting claims that a bubble is forming in the student-loan market, Lord said that the $200 billion in new loans taken out during the past two years was surprising.
“I confess to being a bit wide-eyed myself at the $200 billion number,” he said.
Less than $20 billion of that debt was private, or non- government guaranteed, he said. Sallie Mae is increasing private loan originations after legislation passed in 2010 cut companies out of the market for government-backed lending. [More]
Certainly the hysteria is bubble-like. And it seems to me to have some justification.


Also, the introduction of asset-backed securities in this market (which worked out so well for mortgages) is an ominous sign.
As Business Insider noted in the summer of 2012, federal student loan debt is only part of the equation. According to a report by the Consumer Financial Protection Bureau dated August 29, 2012, U.S. consumers have in excess of $150 billion in private student loans on their books. The report notes that the market for private student loans grew alongside investors' demand for asset-backed securities and between 2005 and 2007,
...the percentage of [private] loans to undergraduates made without school involvement or certification of need grew from 18% to over 31%...[as lenders] originated loans to borrowers with low credit scores...[making] private student loans riskier for consumers."
The private loans were securitized and those doing the securitizing could realize a 5% profit upon the sale of student loan asset-backed securities (hilariously called 'SLABS') to investors. Of course, the SLABS effectively transferred the risk of default to the investors and as such, it made little difference to the originators of the loans or to those doing the securitizing whether the borrowers ever intended to repay the debt or not. All of this changed when the credit bubble burst of course and as the demand for asset-backed securities declined, so too did the amount of private student loan originations. [More]
Seriously, SLABS? For the most part I feel scant sympathy for investors who would buy a product with this name. Meanwhile, this reinforces my opinions of most in the financial community who will sell you anything if the pass-through fee works for them.

Still, this whole debacle reinforces my belief that we do not truly understand how much idle wealth there is available for chasing even dubious investments. The predicted collapse will affect far fewer of us than the oft-compared mortgage bubble because they cannot evict you from your education. They can cripple your credit rating for life, but at some point, that becomes a problem for the credit rating agencies.

The investment class will feel this far more painfully than the consuming class. As long as we don't bail them out, it works for me. 

This will also deliver a clear market signal to higher education, something that is badly needed.


Another reason...  

Farmers overwhelmingly supported Obama. [Not]
The biggest difference between previous estimates and the final figures from OMB is crop insurance subsidies.  While the sequestration statute exempts “prior legal obligations” of the Federal Crop Insurance Corporation from sequestration, OMB opts to exempt nearly all crop insurance subsidies from automatic cuts, reducing the total hit on the farm bill by at least $5 to 6 billion, and possibly more if crop insurance subsidy costs continue to climb.
This decision to call all future crop insurance obligations “prior” would appear to be a political decision, not a legal one.  Indeed, based on personal communications over the course of many months with budget staffers, it appeared to us that the decision on crop insurance premium subsidies had gone the other way during earlier OMB technical reviews.  Whether any further explanations will be provided by the Administration remains to be seen, though we tend to doubt anything more will be said or revealed. [More]
Even with Sen. Thad Cochran in a key position to help Southern interests, the move to an all-insurance type farm entitlement seems to gather momentum. Being protected from an increasingly likely sequestration certainly greases the skids, it seems to me.

I continue to be amazed at how the administration goes to bat for economically perverse farm subsidies when doing the opposite costs them little politically.

Of course, I am equally puzzled by subsidy proponents calling themselves fiscal conservatives.
Into Africa: 3... 

This might come up when I talk with South African farmers.
The new minimum wage comes into effect on March 1.
The job losses could spark a repeat of the violence in which police had to use rubber bullets and stun grenades to disperse protesting farm workers blocking highways and torching vineyards and warehouses in the agricultural belt east of Cape Town.
Trade union federation COSATU said the job losses were expected but blamed them on commercial greed.
"This is just the backlash we expect from the reactionary farmers," regional COSATU leader Tony Ehrenreich said. "That is why we are saying government must pay them out and take the land to give it to farmers that are serious about farming." [More]

One thing I'll be asking about is if there are any farms with Midwestern machine efficiency - reliant more on ever-larger machines and decreasing amounts of labor.

But in a wildly unequal pay setting, with labor extremely cheap, why would you spend big bucks to machine up? This was pretty common around me as lots of us liked just having operators and no hired labor. The paperwork was drastically lower, if nothing else.

Such a business strategy is expensive, but limits your exposure to this phenomenon. You can't have labor unrest with no labor.

The last line about "pay them out" is better read as "go Zimbabwe on them". 

I fear this will not end well.

Tuesday, February 05, 2013

Cutting foreign aid...  

Not. Gonna. Happen. 

This budget item always tops the list for what to cut when deficit arguments start between ordinary citizens. It will never happen - at least to a significant degree, and this week just showed why.

First, how much are we talking here?
The 2010 United States federal budget spent $52.7 billion out of $3.55 trillion (1.5%) on foreign aid. $15.0 billion was military; $37.7 billion was economic aid (of which USAID received $14.1 billion).[1]  [More]
So, still less than farm bill costs. Next, who gets the money?
Israel is currently the largest cumulative recipient of U.S. foreign aid since World War II. Although aid to Israel began in 1949 with a $100 million bank loan, large-scale U.S. assistance for Israel increased dramatically throughout the several Arab-Israeli wars in the 1960s and 1970s.
A 2012 report by the Congressional Research Service, “U.S. Foreign Aid to Israel,” characterizes the historical financial relationship, types of military spending and current trends.
Among the highlights of the report are:
  • To date, the United States has provided Israel $115 billion in bilateral assistance. It is currently the second largest recipient of aid worldwide, with Afghanistan now first.
  • The fiscal year 2013 budget request “includes $3.1 billion in Foreign Military Financing [FMF] for Israel and $15 million for refugee resettlement. Within the U.S. Department of Defense, the U.S. Missile Defense Agency’s FY2013 budget request includes $99.8 million in joint U.S.-Israeli co-development for missile defense.”
Now let's look at the Hagel confirmation hearing.


In fairness, Democrats are only mildly less obsessed.  But it seems clear to me what and whom our Senate thinks of first. It's not ending the longest war in our national history in Afghanistan and saving troops.

Any effort to cut foreign aid will be overwhelmed by the Israel lobby. I'm not saying this is right or wrong, but injecting a note of realism for budget hawks.

The second item on most budget cutting lists is ag subsidies, and I don't the Israel gives a hoot about them.

Another hint...  

Some new climate change converts:
Blake Freking, a musher who trains Siberian huskies on the north shore of Lake Superior in Minnesota, said he planned to compete in the Beargrease race in January. “With global warming, it’s hard to deny that there are some big changes going on right now,” he said. “We’re in it. It isn’t looking good.”
During last year’s snow season, defined as July 1, 2011, to June 30, 2012, Anchorage had 134.5 inches of snow, according to Jake Crouch, a climate scientist with the National Climatic Data Center. This season’s tally in Anchorage was 39.2 inches, through Wednesday. North of Fairbanks, another area where mushers train, snowpack is 21 percent of average.
“This is a pretty big deal,” said Crouch, who is among the climate experts who attribute the conditions to global warming. He said climate change had resulted in warmer temperatures for Alaska over the last century.
“One of the things we’re seeing with climate change is that the high latitudes are experiencing the brunt of it,” he said. “They’re very vulnerable.”
Mushing in Alaska originated with Native American settlers and pioneers who traversed the chilly landmass using dog sleds out of necessity. Canine-powered transit was a practical option for transporting fur, medicine, freight, mail and passengers in the snow. Even as airplane travel diverted much from mushers’ daily business, the culture endured along with the Iditarod trail, which stretches about 1,000 miles from Anchorage to Nome.
“It definitely has us concerned,” Erin McLarnon, a musher and spokeswoman for the Iditarod, said of the long-term effects of the weather. She is among the mushers breeding dogs with thinner coats, more suitable for warmer weather. [More]
When I was in Green Bay recently, a snowmobiler told me if it weren't for mud races, they wouldn't be getting much time in the saddle. 

Do they do that?
Into Africa: 2...  

Mining of platinum, gold and diamonds is a major component of the South African economy. To my mind, the mining companies have made a grave misjudgment in depending on enormous amounts of migrant labor. That dependence is contributing to the current economic meltdown in SA.

"Migrant" in this case means something far different than we are used to here.
Africans went to work in the Kimberley mines for a variety of reasons. Many went to earn cattle for bridewealth or ploughs to improve their farming for the market. Others went to earn guns on the instructions of chiefs and elders. Take, for example, the Pedi, a Sotho people who lived in the north-eastern Transvaal and dominated the Kimberley labour market in the 1870s. Before the discovery of diamonds the Pedi had been travelling to the Cape Colony for some forty years or more to work as migrant labourers. They earned money because their chiefs understood the importance of acquiring guns to protect themselves against white settlers, who had begun to move into the Transvaal region in the 1830s and 1840s. The Pedi sold their labour to buy guns because they did not have easy access to commodity markets for agricultural produce. In this respect the Pedi differed from other African peoples, who were able to sell produce rather than labour for guns. In the 1870s the need for guns grew as the pressure of white settlers on African land increased. Consequently, the discovery of diamonds was opportune for Pedi; Kimberley was a shorter distance than the eastern Cape, wages were higher and less time was spent in working for a gun and/or bridewealth.
The diamond mines provided the largest and most accessible labour and gun markets for Africans from 'the interior of southern Africa. Africans went to do a spell of minework, which became culturally institutionalised as a rite of manhood. They left at the command of their chiefs and were subject to headmen in the mining camps. They commonly worked between three and six months in the mines, bought guns or other commodities and then left for home. Some never returned, others made it an annual affair. Yet, in the early days, they remained cultivators and pastoralists who complemented their primary activities with a stint in wage labour.
Such Africans were not ideal mineworkers. They were unaccustomed to the heavy work of digging and loading, but more importantly, most did not stay long enough to learn industrial discipline. Mine- owners tried to control the supply of labour to the mines through recruitment, government sponsored schemes to protect the labour routes to the mines and the informal system of labour touting. They were not as successful as they would have liked. [More]
At the same time, with unemployment around 25%, had mine operators invested in technology more to replace labor, the problems facing them today would only have been worse. The future for SA mining appears to be less about precious minerals than coal.
Diamond and gold production may now be well down from their peaks, though South Africa is still no. 2 in gold[1] but South Africa remains a cornucopia of mineral riches. It is the world's largest producer[2] of chrome, manganese, platinum, vanadium and vermiculite. It is the second largest producer[3] of ilmenite, palladium, rutile and zirconium. It is also the world's third largest coal exporter.[4] South Africa is also a huge producer of iron ore; in 2012, it overtook India to become the world third biggest iron ore supplier to China, who are the world’s largest consumers of iron ore.[5]
I wonder if, along with demand, the relatively lower labor requirements for coal mining  - especially open pit - are driving the switch.
Demand for coal is set to increase due to the increasing demand from the domestic power and synthetic fuels sectors. It is estimated that, over the next decade, state power supplier Eskom alone will require an average of more than 200 million tons of coal annually.
In order to meet demands from India and China, which have rapidly growing industrial markets, coal production is expected to increase to reach a capacity of more than 350 million tons by 2015.
The Richards Bay Coal Terminal, the largest coal exporting terminal in the world, expanded its coal capacity to 91 million tons per annum at the end of 2010 to meet demand, an increase of almost 20 million tons of coal annually.
Coal is the largest category in the South African mining industry in terms of production, contributing over two-thirds of the total production volume in 2009. The metallic mineral category accounted for almost a fifth share of total mineral production in the same period, while the non-metallic mineral category held the remaining 13% share. The growth of the metallic minerals category in will be driven by iron ore, which accounts for more than three-fourths of metallic mineral production. [More]
It also looks like agriculture will be profoundly affected.
South Africa has increased the basic daily wage of farm workers by 52% following a violent strike in the wine-producing Western Cape region, the labour minister has said.
Mildred Oliphant said the new minimum wage would be $12 (£8) - up from $8 but less than the $17 the workers had demanded.
At least one person was killed during January's two-week strike.
The strike was suspended after the government promised a wage review.
Most of the Western Cape's 3,000 farm workers are not employed on a permanent basis - despite working on the farms for many years. [More]
The bets are off on what 2013 will mean to Africa's largest economy.