Psst, buddy - want some mangos?...

As horrified tequila, gin, and guacamole consumers are discovering, the price of limes has quadrupled due to disease, drought, and...organized crime.

As a result of high prices and rampant lawlessness in some Mexican regions, criminals who may be linked to drug gangs are plundering fruit from groves and hijacking trucks being used for export, said Bill Vogel, president of Vision Produce, a Los Angeles-based importer. A truck headed for Vision’s sister company in Texas was hijacked two weeks ago in Mexico, he said, and growers and shippers now are hiring armed guards to protect their green gold.The produce wars on the ground are not limited to limes. Criminal cartels now control, to a shocking extent, the growing and packing of much of the Mexican produce on which United States consumers depend. An article last November in the Mexican newspaper Vanguardia reported that the Knights Templar drug cartel has used kidnapping, murder, money laundering and terror to take over the lucrative avocado business in Michoacán, the top state for production and export of the fruit.Criminal elements also have significantly infiltrated the Mexican mango industry to launder money, said Richard Campbell, a horticulturist and mango expert who travels to Mexico several times a year as a consultant. “Many growers don’t go to their fields because they’re afraid,” Mr. Campbell said. “I’m sure that this has lowered the quality of the mangoes, because it’s harder to control quality.” [More]

As bizarre as it looks in print, US drug enforcement success is pressuring cartels to find new things to extort money from. But seriously, mangos and avocados?

The green citrus fruits are largely grown in one specific region: the state of Michoacán in the country's southwest. And that's where a cartel called the Knights Templar has been elbowing in.
Gustavo Arellano, a syndicated columnist and author who writes about Mexican cultural issues, says the Knights Templar have been making their presence known in an area called La Tierra Caliente for a few years now. 
"So what they've done over the last couple of years, is that, if they're nice, they put humongous taxes on the farmers. If they're not nice, they just kill farmers and take the land and take over lime production themselves." [More]

First off - Knights Templar Cartel???

There are all kinds of guessing as to the effect of creeping legalization in the US on the cartels' income. They don't exactly provide press release balance sheets, but all the models show significant losses.

However, experts and studies note that legalization in two U.S. states -- even if the federal government allows it -- probably won't put Mexico's drug cartels out of business.In the lead-up to the referenda in Mexico and Colorado, the Mexican Competitiveness Institute released a study estimating that Mexico’s cartels would lose $1.425 billion if the initiative passed in Colorado and $1.372 billion if Washington voted to legalize. The organization also predicted that drug trafficking revenues would fall 20 to 30 percent, and the Sinaloa cartel, which would be the most affected, would lose up to 50 percent. [More]

If legalization were to become national - which is increasingly being seen as inevitable -  I can't see Big Tobacco simply stepping aside from this lucrative business. Most experts disagree, but I think they underestimate the ability to of our domestic tobacco industry to change course and compete even with illegal challengers.

The only feasible way for Altria, Reynolds American, and Lorillard to compete against lower-priced competitors is to build premium brands that deliver consistent quality. Marijuana comes in all different varieties and potencies; the average consumer of legal marijuana may not want to get a surprise every time he or she inhales a new purchase. Big tobacco companies are in position to provide large-scale, consistent-quality marijuana cigarettes to an American public that wants to take the edge off.For instance, Altria's Marlboro brand already has a strong following of loyal cigarette smokers. Marlboro has a 43.7% share of the tobacco market. Reynolds' Camel and Pall Mall brands have a combined 17.8% market share. Lorillard's retail market share is nearly 15%, thanks to Newport's 12.6% market share. Although not all tobacco smokers will smoke legal marijuana, those that do may stick to their cigarette brand. So Newport marijuana cigarettes will have an advantage over some upstart brand. This gives tobacco companies a built-in advantage in the nascent market.Moreover, tobacco companies can leverage their current infrastructure and distribution channels to dominate the marijuana market. Altria lists $4.7 billion in land, machinery, buildings, and equipment on its balance sheet (before depreciation). Reynolds' fixed assets exceed $2.5 billion and Lorillard's cost nearly $800 million. Tobacco companies have already made the huge investments in infrastructure required to manufacture and distribute cigarettes; all they would have to do to enter the marijuana market is change the ingredients. No other group of companies in the U.S. is better-suited to dominate the marijuana market, which is why Altria, Reynolds, and Lorillard can do so if and when it makes sense.  [More]

But meanwhile, back in the orchards, how serious could this problem become if the drought continues in the Southwest? Mexico is already gaining serious market share of produce - thanks to NAFTA and the CA shift to tree nuts.

[Source]

Also this excerpt from a supporting chart (same source):

[Click to enlarge]

I find myself growing more uneasy with the trends toward concentration of ag production - whether it's the corn monoculture in the Midwest or almonds in CA. This seems to be asking for a catastrophic failure. I think it is tied to what happens with capitalism after years of success: concentration of wealth. The problem with discussing this of course, is the economist who first postulated this problem. Recently, Marx has gotten some respect despite his failure to see the problems of communism. Free markets are a great answer for growing economies, but seem to have some problems with mature ones.

We may be about to see those problems face-to-face.

Free trade lives!...

I think this development in Japan is a pretty good indicator that agriculture has lost its untouchable status in global trade policy. 

Japan and 11 other nations including the U.S., Australia and Vietnam are in talks for the TPP. The U.S. and Australia are ranked first and seventh for coarse-grain exports while Vietnam is the second-largest rice shipper, U.S. Department of Agriculture data show.The Agriculture Ministry will halve gentan subsidies starting in the fiscal year from April 1, 2014, and end all payments by March 31, 2019, said Takashi Amou, a director of the policy planning division. Farmers who grow rice for livestock feed will receive subsidies that increase by as much as 31 percent under the changes announced today, according to Amou.“Ending the gentan policy is a first step in making Japanese rice farming efficient,” said Takaki Shigemoto, a commodity analyst at research company JSC Corp. in Tokyo. “The government has more to do if it wants Japanese farmers to be competitive against agricultural exporting countries.”Wholesale prices of the locally grown cereal averaged 276 yen a kilogram in the nine months through May, compared with 181 yen paid for milled short-grain rice from the U.S. and 152 yen for the same variety from Australia in import tenders last month. These prices included shipping and inspection costs. [More]

The Japanese defense of rice farmers was formerly considered rock-solid, but perhaps the combination of elderly farmers and pressure from manufacturers desperate for a stronger economy prompted the government to re-rank priorities. 

While as the numbers above indicate, it may not help US producers directly - we're still too expensive - it does make the international rice market a little more open, and could trigger more countries to rethink protectionist barriers.

All in all, while the economic outlook seems to be overcast by gloom, trade talks around the world are grinding out grudging reform toward freer trade. Maybe it is the dire forecasts that are propelling it, but for whatever reason, agreements are inching forward.

In case things are going too well for you...  

A possible headache on the horizon.

Farmers across the Northwest and Midwest are watching nervously as longshoremen and grain terminal operators start negotiations with far higher stakes than in the disputes that caused chaos at the Port of Portland this summer.

The disputes diverted ships and clogged cargo as far away as Idaho and India but affected a relatively small container port. The grain talks involve a couple of Puget Sound terminals and, most importantly, operations on the Columbia River, which is the nation's top wheat export outlet.

If the talks fail to replace a contract expiring Sept. 30, wheat, corn and soybeans would back up across the U.S. grain belt, affecting billions of dollars in exports and tens of thousands of jobs.

No one predicts failure. But the negotiators, who occupy the narrow end of a gigantic U.S. grain funnel, face unprecedented pressure.  
...
Mike Steenhoek, executive director of the Soy Transportation Coalition, an Iowa-based soybean industry group, said a shipping stoppage caused by any problems with the longshore grain negotiations would hurt the Midwest economy. But he also noted that a threatened strike by Atlantic and Gulf Coast longshoremen, who also coincidentally face a Sept. 30 negotiating deadline, would hurt the national economy.

Such a stoppage by the International Longshoremen's Association, halting container movement at 36 ports from Maine to Texas, would dwarf the Portland, Longview and Columbia River/Puget Sound situations. Shippers would shunt cargo through West Coast ports, unless Pacific Coast longshoremen refused to handle it in solidarity with their East Coast counterparts. [More]

Longshoremen strikes are something we normally associate with Argentina, and I am not predicting one here. But It is a real blast from the past to ponder the effect of a strike.

Problem solved...

Just bill Uncle Sam. In a rather typical fashion Big Seed (I think I just made that up, BTW) has found a way 'round those pesky Brazilians who won't pay tech fees.

On February 18, Republicans in the House of Representatives defeated an obscure amendment to the House Appropriations bill by a 2-to-1 margin. The Kind Amendment would have eliminated $147 million dollars that the federal government pays every year directly to Brazilian cotton farmers. In an era of nationwide belt tightening, with funding for things like education and the U.S. Farm Bill on the chopping block, defending payments to Brazilian farmers may seem curious.
In order to understand this peculiar political move, one has to look all the way back to 2002, when Brazil filed a case in the WTO challenging U.S. cotton subsidies. In 2004, the Dispute Settlement Body of the WTO found in favor of Brazil, ruling that government subsidies afforded U.S. cotton producers an unfair advantage and suppressed the world market price, which damaged Brazil's interests. After multiple appeals the WTO upheld the original ruling, and by 2009 the U.S. still had not reformed its cotton programs. Brazil then asked the WTO for permission to retaliate against the U.S. by imposing trade sanctions. The WTO decided that Brazil was entitled to impose 100-percent tariffs on over 100 different goods of U.S. origin. Even more importantly, however, Brazil was entitled to suspend intellectual property rights for U.S. companies, including patent protections on genetically engineered seeds.
In WTO language, Brazil was allowed to suspend its obligations to U.S. companies under the Trade-related Aspects of Intellectual Property Rights (TRIPS) agreement. This constituted a major threat to the profits of U.S. agribusiness giants Monsanto and Pioneer, since Brazil is the second largest grower of biotech crops in the world. Fifty percent of Brazil’s corn harvest is engineered to produce the pesticide Bt, and Monsanto’s YieldGard VT Pro is a popular product among Brazilian corn farmers. By targeting the profits of major U.S. corporations, the Brazilian government put the U.S. in a tough spot: either let the subsidies stand and allow Brazilian farmers to plant Monsanto and Pioneer seeds without paying royalties, or substantially reform the cotton program. In essence, Brazil was pitting the interests of Big Agribusiness against those of Big Cotton, and the U.S. government was caught in the middle.
The two governments, however, managed to come up with a creative solution. In a 2009 WTO “framework agreement,” the U.S. created the Commodity Conservation Corporation (CCC), and Brazil created the Brazilian Cotton Institute (BCI). Rather than eliminating or substantially reforming cotton subsidies, the CCC pays the BCI $147 million dollars a year in “technical assistance,” which happens to be the same amount the WTO authorized for trade retaliation specifically for cotton payments. In essence, then, the U.S. government pays a subsidy to Brazilian cotton farmers every year to protect the U.S. cotton program—and the profits of companies like Monsanto and Pioneer.  [More]

This is why I get peeved with the NCGA occasionally. Why can't they get the CCC to pay my tech fees?

Now let's talk about how farmers hate on the deficit some more...

Real headaches...

Many of US ag complaints about exchange rates are, in fact, solving themselves via the old economics school theories of foreign trade. Our comparatively (and absolutely) low interest rates and trade imbalance has put pressure on the Chinese currency especially and I think with implicit cooperation of Chinese central bankers, the yuan has drifted significantly higher.

But while we are watching that, another story unfolds south of us.

What's happening in Brazil? A big story is the country's high interest rates. These have landed the country in an extremelydifficult position. Inflation is high and rising, and so the central bank has responded by raising rates. But higher rates attract inflows of capital, which both bid up the value of the currency and support inflation. Because Brazilian rates are high, companies often opt to borrow abroad and repatriate the cash, essentially engaging in carry trade investments like big international investors and pushing up the value of the real.Meanwhile, Brazil's leaders find themselves facing an uncomfortable choice vis-a-vis cheap Chinese manufacturing imports. Cheap Chinese imports offer one source of disinflationary pressure in an overheating economy. But domestic producers are growing increasingly frustrated, and the government is concerned that appreciation is reducing competitiveness and undermining balanced growth. On the other side of the relationship, hunger for Chinese products continues to boost resource and labour demand in China, fueling inflation in the absence of a real Chinese appreciation. [More]

This complicates things for Brazilian farmers who have become quite the currency arbitrageurs. This from last year:

Soybean farmers in Brazil, the world’s second-largest grower, are withholding supplies of the oilseed as they bet the real’s drop will boost revenue from dollar-denominated sales abroad, the head of the nation’s biggest producer said.“It looks like the real will devalue a little bit more, so we are holding sales and waiting for the right moment to sell,” said Erai Scheffer, president of Grupo Bom Futuro, Brazil’s top soybean grower. The group has 230,000 hectares (568,000 acres) of soybeans, an area more than twice as big as San Antonio.The Brazilian real has lost 5.5 percent against the dollar this month, the worst performance of the seven most-traded Latin American currencies. Farmers don’t expect the real to rebound any time soon amid concern that the debt crisis in Europe may slow the global economic recovery, Scheffer said. [More]

Corn Belt growers are wallowing in an embarrassment of riches: record grain prices, record land prices, pitiful interest rates, and now, a currency tailwind.

If only we could get into the fields to plant a crop....

This is "leading the way"?...

Much has been made about our booming (relatively speaking) ag exports. So much so that surprisingly knowledgeable observers are touting ag as the engine of our recovery.

One small problem: ag exports are not a big part of our total export picture. Try this test.

Estimate our ag exports in $.  If you guessed a number around $100-130B, congratulations!

But now for extra credit tell me what total US exports are?*  Anyone? Anyone? Bueller?

I've never met a farmer who could put our share of any economic number in perspective to the whole picture, and hence I think we fall prey to flattery that essentially whispers "It's all about you" in our ears.

Anyhoo, here is where the "boom" fits in with the whole export picture for the US.  This is the growth in exports since 2009.

[Source]

(We're the 'Food" sliver at the bottom, BTW)

Lookit, we're an important part of a huge economy. That's a reality we should be able to live with without making all about us.


*About $1.3T.

I can't wait to read...

The accolades from the Truthers about this.

China has agreed to lift its extensive limits on the import of U.S. beef, lower restrictions on imports of wind turbines and telecommunications equipment, and take an array of other steps that U.S. officials say could lead to a substantial boost in U.S. exports to the world's second-largest economy. [More]

This is a big deal for corn farmers as well.  Not only could this support beef prices high enough to keep from destroying demand, as the yuan slowly but inexorably increases in value, the beef price could anchor the whole protein complex.

It is mixed news for consumers. Beef will get more expensive as we increasingly have to compete with Chinese consumers. Given the grim health news that assuredly is linked in part to our poor dietary habits, maybe sharing our abundance of beef (for profit, of course) and eating smaller portions could actually help ourselves, while not hurting the cattle industry.

At the very least, this demand boost makes the battle for acres to supply enough corn ratchet up one more notch, IMHO.

Of course, this breakthrough is the product of hard work by many despised bureaucrats and diplomats, not directly due to presidential effort.  But as the pattern is to blame the top for all the failures on the watch, Obama should be given some credit.

Now it will be interesting to see if along with whacking land value increases, massive income tax breaks, estate tax relief, guaranteed access to health insurance, etc. this trade boost will cause any rethinking about our political affinities in farm country.



C'mon, it could happen...

Those silly Truthers...

A few days ago I read Tim Burrack's contempt-riddled rant about the failure of the Korean FTA while Obama was in Korea.  In their modestly labeled blog - THE TRUTH (which amazingly always seems to align with Big Biotech corporate PR) - several of my ex-NCGA buddies relentlessly expound one narrow view of all the news they deem important. And all of it seems to boil down to: there is no problem biotech can't solve.

It almost makes me wonder where their funding comes from.

Anyhoo, Tim was grasping for language of sufficient outrage  to outline the scope of the disaster in Korea.

First President Obama was defeated at home. Then he toured Asia and was defeated abroad.

 

His inability to secure a trade agreement with South Korea represents a major setback for a White House that had staked a lot on the successful completion of the accord. It also raises serious questions about the president’s comprehension of the challenges to achieve trade agreements and the importance of America’s economic engagement with the world.

 

On free trade, the president has over-promised and under-delivered.

 

...
 

The pacts with Colombia and Panama remain important, but they’re also dwarfed by the deal with South Korea, our seventh-largest trading partner. A successful agreement with Korea would become America’s biggest trade accord since NAFTA--a pact finalized by Bill Clinton, Obama’s Democratic predecessor--and mark a significant step toward the goal of doubling exports.

 

Obama said he would get it done. In June, he gave himself the deadline of last week’s G-20 summit in Seoul. This seemed like a reasonable date because it pushed the issue beyond the midterm elections, safeguarding it from demagoguery.

 

On the Sunday after the elections, Obama contributed an op-ed to the New York Times. He offered a powerful argument for free trade.

 

"The great challenge of our time is to make sure that America is ready to compete for jobs and industries of the future." he wrote. "It can be tempting, in times of economic difficulty, to turn inward, away from trade and commerce with other nations. But in our interconnected world, that is not a path to growth, and this is not a path to jobs."

 

Obama also singled out the specific opportunity with South Korea. "President Lee Myung-bak and I will work to complete a trade pact that could be worth tens of billions of dollars in increased exports and thousands of jobs for American workers. Other nations like Canada and members of the European Union are pursuing trade pacts with South Korea, and American businesses are losing opportunities to sell their products in this growing market. We used to be the top exporter to South Korea; now we are in fourth place and have seen our share of Korea’s imports drop in half over the last decade."

 

What happened to the man who wrote these words? Well, he didn’t seal the deal. The president’s self-imposed deadline has come and gone and he has done nothing tangible to increase trade –just more words.

 

This is what kids call an "epic fail."

 

Right after the elections, Obama confessed to a "shellacking" by voters. His failure in Korea is a variation on the same theme--a shellacking suffered at the hands of Big Labor, which rigidly opposes just about any trade policy that doesn’t involve economic isolationism. [More]

Well, guess what, Tim? By taking some time (all of two weeks) and doing the hard work while ignoring right-wing critics who can't imagine letting trade negotiators pass up political photo ops to nail down details, the administration got a fair deal not just for Tim and his friends but the American car industry.

According to what is known so far, the South Korean side has made big concessions in the automotive sector, agreeing to postpone for five years the abolition of the 2.5 percent US tax on South Korean auto imports and at the same giving the green light for more US made cars to be exempted its safety standards. Now, any automaker can bring into South Korea 25,000 vehicles, compared to 6,500.

The American automotive industry sees the FTA as a major success, with GM being among the first to express its satisfaction. In a statement released today, the car maker says it now has time to “assess whether Korea's market has opened as negotiated before reducing its tariffs.” [More]

In  other words, the tightly controlled Korean car market now represents an opportunity for people who depend on that industry for their future. But since there is no biotech involved, Tim didn't seem to care about that particular group of Americans.

So wipe the spittle off your monitor, Tim, and come up with some other niggling issue with this accord so you won't have to acknowledge THE TRUTH of an Obama success.

 

I would suggest using the words "epic success". 

 

And "gnarly".

The practicalities of protectionism...

It's hard enough to get buy-in for open markets when things are humming along economically.  Remember the drawn-out disappointment as ag stalled the WTO talks.  But expecting any career-minded pol to even consider exposing his dstrict to foreign competition is pretty unrealistic.

I think this illustrates one of the reasons why conventional, market-oriented neoliberal types ought to be more concerned about the labor market situation. If you convince people that it’s not possible for monetary authorities to boost employment, and that it’s unwise to use fiscal policy to boost employment, then it starts to look irresponsible for politicians not to use trade restrictions to protect the jobs of people in their state/district. When an economy is near full employment you can say trade makes the pie bigger and people who lose their jobs will get new jobs. But we’re years away from full employment—which both the Fed and the White House seem to think—then getting laid-off is catastrophic.

The trade restrictions put in place as a response to the Depression exerted a small-but-meaningful drag on growth year after year after year for decades. Going back in that direction would have very deleterious long-run consequences. But it’s going to be extremely difficult to avoid if we can’t produce a healthy labor market. [More]

It could be even if you really study history and think you understand what folks did wrong previously, there are powerful forces pushing you to repeat anyway.

What if the dollar gets so weak...

McDonald's closes shop?

Hey - it happened in Iceland.

We sort of assumed that McDonald's could be profitable almost anywhere — perhaps even the surface of the moon — but apparently Iceland's economic problems are too much for the world's largest fast food chain to handle.

Bloomberg is reporting that all of Iceland's McDonald's will close at the end of the month due to the collapse of the country's currency. In order to remain open, the restaurants would have had to start charging the equivalent of $6.36 for a Big Mac. According to the Economist's Big Mac Index, the world's most expensive Big Macs are currently located in Switzerland and Norway — where they cost about $5.75. [More]

The puny dollar strikes most farmers as a great thing, since our world trade is essential to profits. I agree, but with some caveats.

• No whining about oil prices as the buck plumments.
• There will be some inflation costs on the consumer level, but harder to see on the farm input scene other than...
• Fertilizer could become very painful again.  In fact, I'd be putting more on right now it I had the umm, cash and it could actually be applied.
  

Could this ultimately lead to the end of the greenback (are they still truly green?) as the reserve currency?  This is likely already in progress, and I'm not sure there is much we can do about it unless the recession takes a double dip and every other currency look even uglier.

IN SHORT, the dollar-reserve system is already fraying. The question is, what will happen next? Economists are not good at predicting timing—when will all of this happen? And things don’t always move smoothly. During the crisis, the dollar actually strengthened. With the U.S. government providing guarantees on money markets and other deposits—and a U.S. government guarantee having more credibility than that of many developing countries—money sought a safe haven. America, from where the crisis originated, seemed safer than those countries that were the innocent victims.
And the dollar may continue to be strong for some time because what is happening elsewhere could be worse: worries about inflation are also arising in other countries. There may be even less confidence in, say, Europe’s ability to manage its affairs, and if so, the dollar may strengthen further, not because of confidence in the United States, but because of a lack of confidence in other markets. No wonder that, with all these uncertainties, almost the only thing we can be certain of is that markets will be marked with volatility.
As we move (hopefully) toward a global reserve currency, there will be inevitable bumps in the transition along the way. There are, of course, alternatives to the SDRS approach. We may create a multiple-exchange-rate system, in which countries diversify their reserve holdings between the dollar, euro and yen. Over the long run, this system could be highly unstable, as in one period the euro will appear stronger, and funds will shift there, weakening the dollar and strengthening the euro. In another, just the opposite may happen.
Or we may begin to form regional reserve systems. They also manage and dole out reserves for a group of countries but on a smaller scale (along the lines of the Chiang Mai Initiative in Asia, which has been greatly expanded during the crisis). Latin America is discussing doing something similar. One of the ways of creating the global reserve system is through developing and then interlinking these regional efforts.

Whichever path we take, like it or not, we will be moving away from current arrangements, the dollar-reserve system. There are only two questions: will the movement away be orderly or disorderly, and will America play a part in shaping the new system that will emerge? I believe that the transition to the new system will be smoother and that both the United States and the world will benefit if we stop putting our heads in the sand and help create the worldwide reserve system that the globalization of financial markets requires. Keynes recognized the need for such a global reserve currency seventy-five years ago. At the Bretton Woods meeting of 1944, in a costly act of self-interest, the United States blocked the full implementation of Keynes’s scheme. This is an old idea whose time has finally come. [More]

Compared to the 2009 harvest - a work still in progress - the strength of the dollar will remain further down my worry list.



[via free exchange]

More home cooking...

The effort to re-invigorate home cooking is reverberating around the blogosphere.  Frankly they don't sound all that hopeful this idea is the magic bullet for obesity, due to several very sound reasons.  However, in the midst of the debate, one useful fact appeared:

Oliver wants to change the way low-income communities approach meals. The problem is that the evidence suggests meals aren't driving the rise in obesity -- snacks are. A 2003 paper by economists David Cutler, Ed Glaeser and Jesse Shapiro looked at an array of different ways to measure caloric intake, and found that most meals aren't getting much bigger. Dinner, in fact, might be getting a bit smaller. The big increase in caloric intake actually came between meals. In 1977, Americans reported eating about 186 calories outside of mealtimes. By 1994, that had rocketed to 346 calories. It's likely even higher now. That difference alone is enough to explain the changes in our national waistline. And it won't go away if we begin cooking dinners but still are purchasing 20-ounce bottles of Coke at the office. [More]

It is this incremental and oblique attack on HFCS (note it is not mentioned, but is nonetheless irrevocably linked to soda) that could bend the demand curve for this corn product.  Although the current high prices for sucrose here in the US (thanks in large part to our protectionist sugar policy) most all have added demand for HFCS, longer term is more problematic, I think. Snacks are big sources of calories and big users of HFCS.

More ominous is the tiny but growing sector seeking out cane sugar-sweetened soda as either a matter of taste (it really does taste different, as I discovered on our cruise to Mexico) or style.

The very properties of HFCS - low-cost, calorie dense, and abundant - all suddenly look less like good things and more like razor blades to a few people. Farmers need to understand that food demands change when people are better fed.  And, boy - are we overfed!

Americans are consuming more calories than they did 30 years ago, and the rate of increase is three times greater in women than men, according to the latest analysis of the diet of the U.S. population published in the February 6 issue of Morbidity and Mortality Weekly Report.
The study finds U.S. women increased their daily calorie consumption 22 percent between 1971 and 2000, from 1542 calories per day to 1877 calories. During the same period the calorie intake for men increased 7 percent from 2450 calories per day to 2618 calories.
The increase in calories is mainly due to an increase in carbohydrate consumption. Men increased the percentage of their daily calorie intake resulting from carbohydrates from 42.4 percent to 49 percent. Women increased their carbohydrate consumption from 45.4 percent of daily calorie intake to 51.6 percent.
The study also finds that the percent of calories Americans take in from fat has decreased, with most of the drop in saturated fat intake. However, the actual number of fat grams consumed per day has changed little since 1971 due to the increase in overall calories consumed daily. Protein consumption for both men and women remained about the same from 1971 to 2000. [More]

The standard answer from agriculture is folks aren't exercising enough.  Fair point, but that does not address the consumption increase in carbs at all.

The economic feedback loop from health care costs via obesity remedies could provide a mechanism to change both sugar and corn policies.  Maybe not much, but the much large pressure for deficit reduction could pose an even sterner test at the same time.

Free-ish trade...

Free trade is no longer seen as a good thing, except for stuff you don't grow or make. An revealing test is upcoming with Ireland's vote on the Lisbon Treaty.  Even by EU standards, this document is a bureaucratic masterpiece, reallocating the power of decision between member states and the Union.  When Ireland rejected the treaty last year, full implementation ground to a halt.

The treaty is vastly comprehensive, but the fear among Irish farmers is competition on ag products from other members and the Global Fear of the Moment: Big Government.

"I don't want to sign something that is going to send my two boys out to war. We're probably fine for our generation but I don't know about theirs."
Her husband, Michael, didn't vote last time but will be supporting the Yes side on Friday, mainly for economic reasons.
He says: "I've no reason to vote No and it's not going to do any harm to the country. Why not give it a shot and see what happens."
The Fianna Fail-Green coalition is so unpopular that farmers, like other voters, don't believe it and want to punish politicians.
And yet at the same time they're frightened of the consequences of voting No and being seen to reject the European Union for a second time in 16 months.
Geraldine Langan, an organic farmer with three acres, from Ballydesmond in Co Kerry in the southwest, didn't vote last time but is reluctantly edging towards a Yes this time.
"Ireland voted No the last time and it puzzles me why we're going back to the polls again and we're more or less being forced to vote Yes," he said.
"What I've picked up in the last little while on it is that it could possibly be in our favour to vote Yes this time because of jobs and keeping in with the European Union."
One poll suggest that farmers will vote by a margin of four to one in favour of Lisbon on Friday.
That is almost certainly an exaggeration, but it does seem as though rural Ireland is moving from a No to a Yes position.

As for the Republic as a whole, we should have a fair indication of what way the country voted by mid-morning Saturday. [More]

In this atmosphere of distrust, negotiating anything is difficult, but the stakes for free trade are high - even higher than another great issue, cap-and-trade.

Yet the real tragedy is that, by exaggerating the threat of global warming, we have awoken the beast of protectionism. There are always forces in society that demand that politicians create more barriers to trade because they cannot compete on an even, fair playing field. Global warming has given them a much stronger voice.

Already, politicians are responding -- and using the fear of global warming to create "green fences" against free trade. The U.S. House has passed the Waxman-Markey climate change bill with clear provisions to impose new trade tariffs on countries that don't agree to emission reductions. Eyes are on the Senate, where John Kerry sees these as "sanctions" against "renegade countries."

French President Nicolas Sarkozy has repeatedly called for a Europe-wide tax on imports from nations whose global warming efforts do not measure up to Europe's. German Chancellor Angela Merkel recently backed the idea.

There is a real and growing prospect of an all-out trade war being waged in the name of climate change.

The struggle to generate international agreement on a carbon deal has created a desire to punish "free riders" who do not sign on to stringent carbon emission reduction targets. But the greater goals seem to be to barricade imports from China and India, to tax companies that outsource, and to go for short-term political benefits, destroying free trade.

This is a massive mistake. Economic models show that the global benefits of even slightly freer trade are in the order of $50 trillion -- 50 times more than we could achieve, in the best of circumstances, with carbon cuts. If trade becomes less free, we could easily lose $50 trillion -- or much more if we really bungle things. Poor nations -- the very countries that will experience the worst of climate damage -- would suffer most. [More]

Lomborg has a strong point.  As leading voice against mitigation of AGW, he could be right about welding two unfortunate political efforts together: unwieldy C&T programs and economy crippling tariff walls.

In fact, I could see some protectionists hold their noses and accept climate change legislation after holding out for industry-specific and (economy-burdening) trade barriers.  Agriculture could be one such sector, both here and abroad. 

Must...not...abandon...hope...

In the comments from time to time is frankly skeptical chiding about my naive belief that government can be improved and decisions made to aid our economy or people.  Then stuff like this happens.

First, the conservative WSJ sounds the alarm on protectionism over the emerging sugar import battle.

The costs have been a sticky issue for years. According to a 2006 study by the U.S. International Trade Administration, each sugar job saved by propping up domestic producers costs three jobs in manufacturing, with many companies relocating to countries such as Canada and Mexico where the price of sugar can be one-half to two-thirds the rate in the U.S. So instead of importing sugar, the U.S. brings in more sugary finished products, with imports rising to $18.7 billion in 2004 from $6.7 billion in 1990.
The Administration's reluctance to take on the sugar lobby comes in the context of what is beginning to look like a slow roll by the President on free-trade principles. In September, the Administration must also decide whether to allow tariffs or quotas on imported car tires from China. Standing for free trade would require the administration to stand up to some powerful unions. So far, no evidence of that.
In a recent Pittsburgh speech, U.S. Trade Representative Ron Kirk spoke primarily about trade enforcement issues, but the Administration has quietly encouraged protectionist policies. According to U.S. Chamber of Commerce Vice President John Murphy, the "Buy American" requirements of the stimulus package are stalling projects in some states and municipalities struggling to comply.

Challenging the status quo may be tough for President Obama, but a commitment to embrace standards of free trade early in his Presidency would be a boon to U.S. trade leadership. Big Sugar has long been the recipient of one of Washington's most destructive policies, and the continued price manipulation has no place in a recession. President Obama should increase the quotas and end American sugar's sweet deal. [More]

And sadly, I cannot help but recall, the previous administration hardly was stalwart in defense of free trade on this very issue.

Then the very conservative Cato calls out the stunning political duplicity of Republicans on the Medicare problem.

Yet Republican National Committee chairman, Michael Steele, takes to the Washington Post today to defend Medicare against any cuts, while at the same time criticizing the Democrats as “left-wing ideologues:”

• “Under the Democrats’ plan, senior citizens will pay a steeper price and will have their treatment options reduced or rationed.”
• “Republicans want reform that should first, do no harm, especially to our seniors.”
• “We also believe that any health-care reform should be fully paid for, but not funded on the backs of our nation’s senior citizens.”
• “First, we need to protect Medicare and not cut it in the name of ‘health-insurance reform.’”
• “Reversing course and joining Republicans in support of health care for our nation’s senior citizens is a good place to start.”

Steele uses the mushy statist phrasing “our seniors” repeatedly, as if the government owns this group of people, and that they should have no responsibility for their own lives.

Fiscal conservatives, who have come out in droves to tea party protests and health care meetings this year, are angry at both parties for the government’s massive spending and debt binge in recent years. Mr. Steele has now informed these folks loud and clear that the Republican Party is not interested in restraining government; it is not interested in cutting the program that creates the single biggest threat to taxpayers in coming years. For apparently crass political reasons, Steele defends “our seniors,” but at the expense of massive tax hikes on “our children” if entitlement programs are not cut. [More]

OK - that leaves ummm, who in Washington to put faith in?

Or in other words, all those export figures in the S&D tables for meats especially, but for grain too, will have to be effected with little help from forward thinking political leaders.

And any issue where we can stampede oldsters with media confusion will sacrifice the future of younger folks who still don't get how important it is to vote.

Intelligence from Canada...

[Insert your joke here].

I spoke today to a remarkable group of Canadian producers at a ski resort near Calgary.  It was 8°. (You do the math.) 

Some impressions:

• Saskatchewan is about as far from the perils of the global recession as The Shire is from Mt. Doom. Seriously, the stunning change of political power in 2007 has unleashed a torrent of entrepreneurial output and is propelling the province forward like a miniature China.
• Of course, oil, uranium and potash revenues don't really hurt either. Also, even Canadians admit potash prices are way outta line.
  
• I'm pretty sure these guys could hand us our heads as technology users if they only had a few more years of global warming and the Canadian Wheat Board disappeared.  I was tres impressed with the sessions I sat through.
• I drove to the Kananaskis resort area in the rain, but coming back today, it was one of the most dazzling mountain vistas this flatlander has ever beheld.
• I'm going to get some of the files from the presentations I saw.  The one on fertilizer was truly impressive with one chart that really captures this bizarre market. (Pure tease)
  
• As the new administration works to undo years of unproductive socialist programs they are racking up impressive economic gains that will be harder to sustain long-term, I think.
• Canada's livestock industry is already hurting - especially hogs. Any hint of more protectionism from the US (and I think it's coming) will not be good news for this cattle-intense province.
• I now know more about Falling Numbers than I want to.
  

No pictures, but I'm getting a new Blackberry in August. (It's amazing how our lives revolve around cell-phone contracts.)

Grain, hold the ice...

Even if you think global warming is hogwash, this might be a good time to clean the pig.  Big $$ are being bet on the possibility of drilling for oil under the former ice-cap as it simply melts away.

In fact, lines in the sea are already being drawn to see who can create the most outlandish undersea geological argument for territorial claims.  Note some the of the big players are the descendants of the Vikings.

[More]

More surprisingly the estimate of reserves is climbing.

In new findings, the U.S. Geological Survey estimates the Arctic may be home to 30 percent of the planet's undiscovered natural gas reserves and 13 percent of its undiscovered oil.

A team of scientists at the USGS collaborated with international researchers to conduct the first-ever comprehensive assessment of undiscovered oil and gas reserves within the Arctic Circle.

"We tried to put some boundaries on the range of possibilities and resources available in the Arctic," said geologist Donald Gautier, lead author of the survey, which is published this week in the journal Science.

Using geological analysis and probability modeling, researchers mapped out sedimentary rock deposits to estimate the amount of undiscovered oil and gas beneath undersea continental shelves. This survey, the first of its kind, could help oil and gas companies locate new troves of fossil fuels. [More]

But it is the map showing a real honest-to-goodness Northwest Passage that intrigues me.  What will this route mean to global shipping?  What will to mean to Canada?  Above all, could we realign grain shipping patterns in unexpected ways?

As environmentalists and scientists debate the effects of global warming and sea ice melting in the Arctic, shipping experts are quietly weighing how quickly — and how dramatically — international commerce might see a silver lining.

The Arctic has become a lighting rod of debate as Arctic nations, including Russia, Denmark, Canada and the Untied States, jockey to take advantage of highly lucrative natural resources beneath the fast-melting ice. About 90 billion gallons of oil and 1,670 trillion cubic feet of natural gas are buried underneath ice north of the Arctic Circle, according to the U.S. Geological Survey.

But melting sea ice would open new, previously treacherous and non-navigable passageways over Asia and North America, shortening some routes by thousands of miles. For example, access to the currently blocked Northwest Passage over North America would reduce a trip from Yokohama, Japan, to Rotterdam in the Netherlands to just 5,618 miles, according to Scott Borgerson, an ocean governance expert at the Council on Foreign Relations, a New York-based think tank.

That's a far cry from the popular 11,209-mile trip that requires ships to pass through the Panama Canal.

"It's not a matter of if but when," Borgerson said last week. "It's going to be sooner than later." [More]

Since the ice disappearance has overtaken all estimates to date, "sooner" may be much sooner. Throw in oil money to spur the development of special ships and equipment for navigating the Arctic, million of acres with more degree-days from climate change, and suddenly Canada is building a railroad north to load wheat, corn, oats, canola, bananas*, etc.

*Checking to see if you're paying attention.

Really good news...

I think. The staggering ineffectiveness of Indian government is partially due to the standard curse of its parliamentary system and the lack of a single party majority to enable action.  As a result, the world's largest democracy makes single-party rule in China look like a brilliant idea in comparison. 

But the election recently concluded handed the Congress Party a sweeping victory and hopes India might begin to reach toward its potential are rising.  The election certainly was welcome news on Wall Street.  One reason is a glimmer of hope for freer trade.

Other good news out there: The communists were put to rout in the Indian elections. This suggests that India will take new steps to liberalize its economy, including foreign investment, free trade, privatization, and tax cuts. This is a big plus for global economic recovery. And the Indian elections may well have triggered the stock rally right from the opening bell this morning. [More]

But along with a more accommodating approach to trade, the bigger economic impact for farmers here will be efforts to encourage industrial development and emancipate some of the 600 million subsistence farmers.

In Singh’s first term, Communist resistance stalled a bill to raise the foreign investment ceiling for insurers to 49 percent from 26 percent. He also failed to pass a bill aimed at removing a 10 percent cap on the voting rights of foreign investors in non-state banks. His plan to permit global retailers into India also foundered.
Kamal Nath, a Congress lawmaker and India’s trade and industry minister, said in an interview last week that the government will continue its focus on “stimulating the rural economy” as a means to spur growth. More than three-fifths of Indians live in the countryside.
Congress has introduced a rural jobs program, written off farmers’ loans, and created economic zones, many of them located in the countryside, to create employment, boost consumer demand and win popularity. [More]

We often look at rural poor in other countries as cheap-labor competitors.  Too often our response is to prod the US government for protection or subsidies from low-priced commodities they produce, such as cotton and sugar.  What might be a better strategy is to encourage and even support efforts to raise per capita income to the point where the vast majority of citizens can add more protein to their diet.

Another qualitative aspect of food production has been India's efforts to identify, evolve, and propagate food-grain varieties with more-than-average nutrient content. Protein and lysine have received special attention. High protein/high lysine lines of cereals and millets have been identified, but have often been found not to breed true, for reasons not fully understood. Improving protein content and quality of staples was conceived as a method of improving the quality of diets, at a time when habitual Indian diets were considered to be protein-deficient. This concept has changed and the primary bottleneck is now believed to be energy. Cereal-pulse based diets have been found to be capable of meeting protein needs, when consumed in amounts that satisfy energy needs. The relevance of efforts to improve protein quality, therefore, needs re-evaluation.
At the national level, food production appears to be adequate to meet demands, provided there is equitable distribution. In actual practice many households do not get enough food because of poor purchasing power Among families whose daily per capita income is below Rs 3/-, over one half consumes an energy-deficient diet. A proportion of such households do not get enough protein either - a finding that explains the widespread childhood energy-protein ma/nutrition. The impressive buffer stocks of food grains held in recent years is a reflection of this low consumption. They would disappear should the purchasing capacity improve. Current levels of production under such circumstances would not be enough to build reserves.
Due to increased agricultural production, food-grain import has, normally, all but stopped. What has been achieved in the Indian agricultural situation has been the prevention of serious famines, which occurred in earlier years. But it does not appear to have made much impact on the widespread chronic malnutrition. To be able to reduce chronic malnutrition, increase in food production has to be of a magnitude larger than that seen at present. This alone will not suffice. Food grains have to be within the price range of the great majority. Also, national nutrition policy and national agricultural policy will have to be more compatible. [More]

Of course, this won't do us (grain farmers) much good if we allow our livestock industry to languish or even decay by focusing solely on ethanol. With opportunities like India on the horizon, rethinking our obsession with corn prices and the expense of demand might be in our best interests.

Peddling socialism from the right...

The election of President Obama has triggered a standard response by opponents to practically every idea coming from the White House: Socialism!

I disagree with the overuse of this label, seeing our political situation as constantly moving between extremes that favor the individual and those that favor society.  We are constantly rebalancing the allocation of rights to wealth, income, personal actions, government protection and aid, etc.

But if we are sliding down a slippery slope to profound socialism (which I strongly dispute) we seem to be getting a few things done along the way.  

Consider the Eternal EU Beef Dispute.

The arrangement is designed to allow U.S. beef producers to benefit economically more directly than they would from tariffs on EU goods. Obama administration officials said they simply decided to table the long-running hormone dispute in exchange for an enlarged EU market for hormone-free U.S. beef. An official at the U.S. Trade Representative's office said it was too early to say if the administration would seek to revive the dispute later.
"We still believe that the EU's hormones ban is not scientifically justified," said USTR spokeswoman Nefeterius McPherson. "However, for the past 20 years, our beef industry has been virtually shut out of the European market. We therefore decided to set aside our differences, for the time being."
The deal must still be approved by officials from EU countries.
"This does not resolve the [World Trade Organization] case. It pushes it down the road for four years, with a sweetener for the U.S. beef industry," said Timothy Josling, professor emeritus at Stanford University's Food Research Institute in Palo Alto, Calif.
"We call this a first step," said Gregg Doud, chief economist of the National Cattlemen's Beef Association, which wants the administration to keep pushing the EU to drop the ban on hormone-treated beef. [More]

While it's hard to see any hint of socialism in that plug-ugly compromise, I'm pretty sure someone will make a abstruse linkage, if only to an overall Master Plan. However, even critics must admit something got done (which is a startling change in itself).  I believe the American beef industry is marginally better off because of it. A baby step? Sure. But a step, nonetheless.

Moreover, the more overt threat of "socialized" medicine - which, as best I can tell, is what people who currently have good insurance coverage automatically call efforts to help everyone get coverage - is also causing some rethinking by the health insurance industry.

Here's what's putting the fear of God in them:

Senators are considering three different designs for a new government health-insurance plan that middle-income Americans could buy into for the first time, congressional officials said Friday.

Officials familiar with the proposals said senators plan to debate them in a closed meeting next week. The officials spoke on condition of anonymity because details of the controversial plans have not been released.

Creating a public plan is one of the most contentious ideas in the debate over how to overhaul the nation's health-care system to cover the uninsured and try to restrain costs. [More]

And behold, the threat seems to be working:

In effect, insurers said they were willing to discard an element of their longstanding business model, under which insurance policies are priced, in part, on the basis of a person’s medical condition or history.
In the past, insurers have warned that if they could not consider a person’s health in setting premiums, the rates charged to young, healthy people would soar, making coverage unaffordable.
But Karen M. Ignagni, president of America’s Health Insurance Plans, a major trade group, told lawmakers on Tuesday that insurers were exploring ideas to prevent such increases by spreading the risks and costs across a larger population of both healthy and unhealthy people.

Insurers said that they could accept more aggressive regulation of not just their premiums but also their benefits, underwriting practices and other activities. Such strict regulation, they said, would make a new public program unnecessary. [More]

and this surprising offer as well:

The health insurance industry offered yesterday to end its practice of charging higher premiums to women if all Americans are required to get coverage, its latest concession as it tries to head off creation of a government insurance plan that would directly compete with private insurers.

Health insurers have offered to submit to a series of restrictions they contend would add up to a fairer marketplace and cut into the ranks of the 50 million uninsured. Last year, insurers offered to end the practice of denying coverage to sick people, and earlier this year they went still farther by offering to stop charging sick people more. [More]

Now humor me for a minute.  If we end up with some admittedly bastardized (which is what our political process specializes in) health insurance system which essentially gets some minimal health insurance coverage to all of us, and weakens the shackles between your job and your access to health care, would most Americans really care which political label it best fit under?

This risk inherent in labeling everything the Obama administration does as socialism is perhaps larger than critics think.  What if the efforts succeed - evenly partially?  It is not impossible that more Americans will look at such effective policies that are actually far more pragmatic (like the beef agreement) than socialist and say, "Whoa - if this is socialism, sign me up."

This would be an outcome I would find ominous.  By crying "socialist-wolf" every twenty minutes, the power of the word to instill fear is diluted, I think.  It is already about to jump the shark for younger folks.

 A somewhat surprising poll was just released showing that only 53% of Americans “believe capitalism is better than socialism.” Amongst the under-thirty set, the two enjoy almost equal support, 37% prefer capitalism, 33% socialism, and 30% are undecided.

Despite this striking number, however, I’m disinclined to think that the Workers World Party will pick up any seats in Congress anytime soon.  Had the question been phrased “do you support nationalizing the means of production and requiring government to distribute the spoils of labor?” I doubt that actual socialism would have fared particularly well.

Rather, I see this poll as even more evidence of how widespread the American people’s rejection of conservative values has become.  Ever since Sarah Palin ceased to be an attractive-but-unknown face from Alaska, conservatives have railed against any attempt to use government spending to mitigate the present economic downturn, labeling it “Socialism!”  The alternative, they say, is to double-down on George W. Bush’s policies, cut taxes on the super-rich, and rely on the invisible hand of the market to make everything all better again.

In other words, the American people have been subjected to a months-long campaign which defines President Obama’s popular policies to improve the economy as “socialism,” and George W. Bush’s disastrous policies as “not socialism.”  Is it any shock, then, that many Americans no longer find the word “socialism” very scary? [More]

Why not judiciously save that warning accusation for programs and policies have demonstrably put the control of industries and individuals in the hands of government officials?

Like the farm program, for example.

No wonder there are so many combines...

In inventory right now.

Agco’s sales are “dramatically reduced” in the region, because borrowing for a foreign tractor is now almost impossible, Greg Peterson, Agco’s head of investor relations, said in a telephone interview.
In its first-quarter earnings announcement in February, Moline, Illinois-based Deere said sales will decline in Central Europe and the Commonwealth of Independent States for the year. Ken Golden, a spokesman for Deere, declined to comment.
“Our main problems have been the lack of state subsidies on loans combined with insufficient operating cash and the general economic downturn, not the import tariffs,” Alexander Altynov, the general director of AgroSnab, an official John Deere dealer in Russia, said in a telephone interview.
Market Decline
Altynov predicted the foreign machinery market in Russia will decline as much as 75 percent this year.
Deere was expected to post second-quarter profit excluding certain items of $1.08 a share, the average estimate of 17 analysts in a Bloomberg survey. [More]

While I don't think this means we'll wring huge discounts from our salesperson, it does indicate the "take-a-number-and-wait" buying experience may be in hiatus for a while.

I also wonder if having geared up to provide big machines for the Eastern European market will be one more factor in what I see as accelerated consolidation here in the US.  I do know large HP tractors seem pretty cheap per HP lately.  

This is also a reminder why many in the US have a big stake in preventing protectionism from growing. 

Why we need bigger pages in farm magazines...

Mike Wilson's latest editorial on protectionism is right on, only the same dang thing happened to him as happens to me.  The editor obviously removed an important paragraph.

No - wait.  He IS the editor.

Anyhoo, Mike carefully points out the dangers of rising protectionist sentiment in the US and elsewhere.

Protectionism is rooted in populism, and politicians feed on populism like ravenous dogs. But protectionism takes away competition, which forces Americans to pay more for any given product touched by a protected industry.  “If we do this at home, we just raise costs for all those things,” notes Ross Korves, trade policy analyst for Truth About Trade and Technology, a nonprofit farmer-driven advocacy group. “If our goal is to repair more bridges, then what we’re telling ourselves with this ‘Buy American’ measure is we’re not going to repair as many bridges because it’s going to cost more money because we’re forced to use more expensive inputs.” [More]

And the faithful all say "amen".

But at some point, his intimate knowledge of farm policy fails, because the paragraph on protectionist ag policy doesn't appear.  For starters, he does not mention the sugar program, which would have made both Hawley and Smoot smile. And where was the line or two about the ethanol tariff?

More to the point, our trade partners (and the vast majority of economists) think our farm subsidy program is de facto protectionism, equally as powerful for trade-killing as outright tariff barriers.

But these defences may not be strong enough. Multilateral agreements provide little insurance against domestic subsidies, fiercer use of anti-dumping or the other forms of creeping protection. Most countries are able to raise tariffs, because their applied rates are below the maximum allowed by their WTO commitments. They may choose to do so despite the possible disruption to global supply chains. And because global sourcing amplifies the effect of tariff rises, even action that is permissible under WTO rules could cause a lot of damage. The subtler variants of protection may be similarly disruptive. [More]

 Well, never mind, those protections are fair because they protect the "right people".

Oddly, this is what steelworkers think as well.

Omission is the easy way out, and too often the choice for ag media today, IMHO.  We practice selective logic and narrow criticism that tiptoes around sacred cows.  I understand not getting in faces every day, but failing to mention even in passing our own warts leaves a false impression, and presumes a moral highground that we really do not occupy.

A Big Mac per month...

Back in the day, when American farmers suddenly discovered some of their grain and livestock checks were written in yuan, it was fashionable to multiply stuff by 9-zero-numbers and become infatuated by the profits represented in the figures.  One these rural myths ran something like this: If every Chinese were to eat just one Big Mac per month, we would have to double the size of the US cow herd to supply it. (I always wondered what this speculation implied for pickle producers, not to mention the "Special Sauce" industry.)

I actually scribbled through some rough calculations and the statement is roughly within the ballpark, but is still nonsense, as we have discovered.  Why would the source be US meat, and how do you plan to get rural Chinese anywhere close to a Mickey D's and possessing the necessary funds and desire?

It seems we're back at this game only from a different angle.

Global grain markets are facing breaking point according to new research by the University of Leeds into the agricultural stability of China.
Experts predict that if China's recent urbanisation trends continue, and the country imports just 5% more of its grain, the entire world's grain export would be swallowed whole.
The knock-on effect on the food supply - and on prices - to developing nations could be huge.
Sustainability researchers have conducted a major study into the vulnerability of Chinese cropland to drought over the past 40 years, which has highlighted the growing fragility of global grain supply. Increased urban development in previously rich farming areas is a likely cause.

"China is a country undergoing a massive transformation, which is having a profound effect on land use," says Dr Elisabeth Simelton, research fellow at the Sustainability Research Institute at the University of Leeds, and lead author of the study. "Growing grain is a fundamentally low profit exercise, and is increasingly being carried out on low quality land with high vulnerability to drought."[More]

To be fair, this premise may have more legitimacy than the hamburger fantasy, as land conversion in China is definitely occurring and the switch to high values crops from grain also commonplace.  But in the same breath, it is obvious China cannot simply expropriate the entire global grain trade.

Recently China has been skipping the part of grain stage of the value chain and importing mucho meat. This cancels the need for a lot of grain. Moreover, China will be the beneficiary of grain yield advancements just like Western producers.  Some of them they might actually not steal, but develop themselves in their own massive biotech industry.

Lining up all the variables in one direction can produce some dramatic answers to economic questions. But between a global recession and commons sense, I'm not holding my breath waiting for an instant grain shortage due to Chinese demand or their faltering production.