Two birds with one stone...

Today is Charles Darwin's (and my 2nd favorite President) birthday, and also almost Valentine's Day, so...


[More, even sadder valentines]

Now for the tricky part...

The impact of ethanol mandates were immediately apparent for corn farmers, of course. Then it spread to soybean growers (although essentially the same group) and then began to work on every other crop in the US, for all intents.

The grain consumers began to be squeezed, and after what seems like a considerable delay (perhaps rooted in denial it was really happening) our US livestock industry is facing a massive sea change and beginning to alter course.

Nowhere is this impact going to be more profoundly felt than the cattle industry.

At the recent National Cattle Industry Convention in Reno, Nevada, all of this was being discussed at length, and it isn't necessarily a pretty picture for the future of beef producers. Consider a state like Missouri, the number-two state in terms of beef cow numbers with about 2 million head. Many of those cows graze pastures that potentially could go to row crops, particularly in the northern half of the state.

Even 30-bushel soybeans, at $12 a bushel, produce gross returns that are 50% to 100% higher than what a 500-pound calf will return (one cow/calf unit requires 2.5 or 3 acres of pasture and hay land).

Or look at it another way. Say you're the absentee landowner, and you've been renting the ground to a beef operator for $70 an acre. You hear about the price of corn and know your land could grow at least a 100-bushel crop. Which way are you going to go?

Not all beef cow states have this alternative, especially as you move farther west into range country. But they do in Missouri and sourrounding states. One cattle fieldman in Missouri worries that his state could lose 20% of its cows -- 400,000 cows! -- in the next year or two in the acreage war.

Cattle industry leaders say the industry will adjust and adapt, compete and survive. They're right, but it's going to be a smaller industry with fewer families involved. And that will be a shame. [More]

Even the glib assurance that the ethanol mandates will shift to cellulosic understates the cost to adjacent industries. The "unused" land often targeted for switchgrass is likely to be pasture or rangeland for cow-calf herds, for example.

Just as the grain markets have seen a surprising confluence of demand factors that have taken prices to unpredicted levels, I'll bet we're underestimating how these and unforeseen factors could drive meat, egg, and dairy prices as well. Of course, that will be done by constricting supply due to bleeding red ink.

[Side note: did you blink when you read MO was the #2 cow herd state? I sure did.]

Those Brits - it's more than their famous cuisine...

I've always maintained an abiding admiration for the Brits. To begin with, as I found out as a young Navy officer, they can really hold their liquor (assuming that to be a good thing). And of course, my antecedents were profoundly English.

But they are also doing some cutting edge medical research. Two examples demonstrate this:

A genetic test that identifies men most at risk of prostate cancer could be available within three years, scientists said yesterday. British doctors will use the test in screening programmes to spot the disease in its earliest stages, before it has become dangerously advanced or has spread throughout the body.

Early detection could boost the survival rate of the tens of thousands of men diagnosed with the disease in Britain every year.

Scientists began work on the test following a landmark study of nearly 2,000 cancer patients, which found seven previously unknown genetic markers that are linked to the disease. Each one raises the risk of prostate cancer by around 60%.

The findings, reported in the journal Nature Genetics, pave the way for the first reliable screening test for men at high risk of the disease, but might also lead to new drug therapies for the condition. "We are entering an era of very exciting medicine. This kind of genetic medicine will definitely happen and I definitely think it will deliver," said Dr Rosalind Eeles, lead author of the study at the Institute for Cancer Research in Sutton, Surrey.

Prostate cancer is the most common form of male cancer in developed countries and cases are rising among men under 50. Every year, more than 32,000 British men are diagnosed and 10,000 die from the disease. [More]

It may be a little late for me, but it is my hope my sons will not have to fear this gorwing nemesis of men late in life. Just as we have essentially shut down cervical cancer for women, efforts such as this increase the likelihood of a similar outcome for men.

Meanwhile, British researchers offer some very interesting advice for staying fit.

What's not to love about a country like that?

Man vs. Mountain...

Well, what an embarrassing development. My delicate little partner skied me into the snow today.


It was a perfect day - tons of snow over the last week, bright sunshine, no wind - and I like, totally overdid it.

Still, the worry about remembering how proved to be unwarranted. The concern that running (the only exercise I get other than work) doesn't really prepare you for skiing proved to be right on the money. It soon became apparent that jogging doesn't do diddly for my quads.


I think I'm gonna be hearing from my vastuses (vastusae?, vastusi?) tonight.

A different manure problem...

No, not some diatribe against CAFO's or a concern about salmonella or e coli. It seems cow manure is adding to serious arsenic problem in India.

Arsenic is poisoning millions of people in the state of West Bengal in India. Tube well water — a popular source of drinking water in the region — is often laced with toxic concentrations of the metal, which occurs naturally in the region. Because the contaminated water is used for irrigation, arsenic also makes its way into agricultural produce, including rice, a staple food in the region, and rice straw, which feeds cattle. Now scientists have discovered that arsenic also lingers in the air — a result of burning cow dung cakes as a fuel in unventilated ovens for cooking. [More]

It is improbable stories like this that help illuminate the staggering differences in daily living around the globe. It also adds weight to the concerns about potable water becoming humanity's emerging crisis.

Loan me a few trillion 'til payday, will ya?...

Politicians have fallen in love with leaving the bill for the next occupant of the office. From President Bush's tax cuts to Rep. Peterson's new Ten-Year Farm Plan scheme, this "Budgetary Time Bomb" approach is becoming the answer of choice for dysfunctional legislatures.

-- A 10-year farm bill, rather than a 5-year timeline;
-- Direct payments would cease in year 9, thereby saving $5.2 billion, but direct payments would come back in year 10 so they would be included in a new farm bill budget baseline and enable the necessary budget savings to fall within the 10-year timeline [More by subscription to ProFarmer]

I think this pattern of excusing yourself to go to the restroom when the waiter brings the bill is a direct outgrowth of the government discovery that it seems to work with seemingly limitless deficit spending.

The new $3.1 trillion federal budget that President Bush has submitted makes you wonder why Barack Obama, John McCain, Hillary Clinton or Mike Huckabee would want Bush's job.

His proposed budget is a sham, built on deceitful assumptions. For example, no costs are considered for military operations in Iraq and Afghanistan after 2009. And economic growth, despite a looming recession, is projected at a healthy 2.7 percent.

The spending plan does, however, contain a few mathematical truths that should haunt the next president.

The projected deficit for fiscal 2009, for example, is $410 billion. By the time Bush leaves office, he will have bequeathed his successor a national debt of $9.7 trillion. About $4 trillion of that was added during his fiscally reckless presidency. [More]

In fairness, there is scant political will across the spectrum, and certainly among the general populace for fiscal restraint. Lord knows, farmers don't care as long as their programs are funded. Deficit spending simply has worked like a charm for decades defying the lamentations of economists and moralizing pundits: we get what we want now, and somebody else pays for it.

Like parents who never leave home, we keep using our descendent's credit card. And while there seem to have been few serious consequences, the recent splurge could be the bale that breaks the camel's back. And since much of that debt is held be people we don't have to live with daily, why not shaft them by letting the dollar spiral downward?

Then what?

I'm betting on several years of serious inflation.

I'll post more once I get my leg cast on...

Jan and I are at Steamboat Springs to determine if we can still ski after a 12-year layoff. I plan to post when I can, but theoretically it is a vacation, ya know. But thanks to the time change, altitude and just being 60, we woke up at 5:30 local and here I am.


Since we skied last, the technology of the whole business has changed with new shorter, curved skis.

Like all skis, the original alpine "downhill" skis were little more than glorified planks of wood. Eventually metal edges were added to better grip the snow and ice of a ski trail and for durability. Downhill ski construction has evolved into much more sophisticated technologies. The use of composite materials, such as carbon-Kevlar, made skis stronger, lighter, and more durable. In the late 1980s and early 1990s, spearheaded by ELAN, manufacturers began producing parabolic "shaped" skis (when viewed from above or below, the center or "waist" is significantly narrower than the tip and tail). Virtually all modern skis are made with some degree of side cut. The more dramatic the difference between the width of the tip waist and tail, coupled with the length stiffness and camber of the ski, the shorter the "natural" turning radius. Skis used in downhill race events are long with a subtle side cut as they are built for speed and wide turns. Slalom skis—as well as many recreational skis—are shorter with a greater side cut to facilitate tighter, easier turns. Many ski manufacturers label skis with their design turn radius on the top. For a racing slalom ski, they can be as low as 12 meters (40 ft) and for Super-G they are normally at 33 meters (108 ft). However, for off-piste skis there is a trend toward wider skis to better float on top of powder snow. This means skiers have a huge range to chose from depending on individual needs and application. The ski is turned by applying pressure, rotation and edge angle. When the ski is set at an angle the edge cuts into the snow, the ski will follow the arc and hence turn the skier; a practice known as carving a turn. While old fashioned "straight skis" which had little side cut could carve turns, great leg strength was required to generate the enormous pressure necessary to flex them into a curved shape for carving, a shape called "reverse camber". Now, when one a modern, hourglass-shaped ski is tilted on to its edge, a gap is created between the ground and the middle of the ski (under the binding) as only the sides near the tip and the tail touch the snow. Then, as the skier gently applies pressure, the ski bends easily into reverse camber. Influenced by snowboarding, during the 1990s this shaping of the ski became significantly more pronounced to make it easier for skiers to carve turns. This makes skiing much easier to learn, because the skis turn with much less effort when placed on edge. Such skis were once termed carving skis, shaped skis, or parabolic skis to differentiate them from the more traditional straighter skis, but nearly all modern recreational skis are produced with a large degree of side cut. [More]

The rental folks assured us they make it even easier to manage the slopes. We'll see.

Maybe I'll post some pictures of a lovely ski bunny on the slopes as well.

(No - I'm talking about Jan, you unromantic clod)

rBST and me...

This reply from a reader:

I find your comments of Feb. 2 provocative and disappointing enough to respond to but don't know how to blog-do with this what you may. [I realize now this is not obvious. My bad. Please read the "Frequently Asked Questions" in the right sidebar]
Quoting and then responding to the blog.
"doesn't deliver much utility to the ultimate customer..."
If the premium being paid for milk produced without rbst is left intact, over the US milk production this premium amounts to the amount of money required to provide health insurance to 5 million children. [Yes, and it could be used to fund a bridge in Alaska or acquire a much needed closer for the Cubs - but it won't be. Are you saying that rBST does pay health premiums?]
We may agree that this premium is paid for no value received. To say that this does not warrant a public policy discussion is like saying that the speed limit is unconstitutional. [I believe the discussion occurred at the dairy case already]
"much of the value of rbst is captured by Monsanto..." How is this less fair than if all of the premium is captured by the processor/retailer? [Please finish the paragraph - I do not mention unfairness. My point is from what I have been told, the economic gain was not spectacular. Your results may vary.]
"other shrewd dairy operators..." equally as shrewd as the consumer who buys the product...how do these producers benefit? [Umm, a 79-cent premium?]
"causing people to go hungry is a leap..." not everyone on this planet is as wealthy as those on TV. I would venture that 80% of the people on this planet are making hard choices today caused by the price of food and fuel. I understand what you say about pricing mechanisms but ultimately cost is determined by resources consumed. Milking more cows to feed the same number of people has an economic and environmental cost. Recognizing this is called leadership. [Compared to ethanol mandates, rBST is a drop in the bucket as a food cost driver, IMHO - and I'm pretty sure I can back that up with numbers. Obviously, the gain must be less than 0.79/(farm milk price) percent or the premium would be higher. That says to me it's what, about 4% productivity gain?]
"not the end of the world either way...." rbst is an incremental part of a quantum idea-feeding the most people with the fewest resources. [True, but still incremental, not crucial]
"the dairy industry has enjoyed the support..." More so than the corn and bean growers in Chrisman, Illinois??? [I'll assume you haven't read any of my work for the last 14 years or so. I do not support the government sending me money. Or you. Click on "farm program" or "farm bill" in the Label sidebar for way too much on my subsidy position. Or watch this]

I don't want to pick a fight with my customers. I am willing to accept that the customer is always right when I can hear their voices, and they mine. The complaint is that the processors and retailers have stepped over the line and drowned out the conversation. Where choice is available, our customers have said that they would like 1 of every 50 cows to be organic. Retailers are asking us to accept that the other 49 each want their food produced without technology. [Not wanting rBST is not the same as wanting organic - this is a false comparison. I think consumers just don't want this technology.] I am not convinced. I accept the fact that I have allowed this to happen. I want strongly to change that and I will.
I am most appalled because you have directly picked a fight with your customer. When the buyer who buys your corn and beans demands that you produce it without biotech (without asking me if I care) and then collects a premium in selling it to this livestock producer( which he does not pass on a fraction of to you) how will you react? [That didn't happen, did it? Which leads me back to the point that this is perhaps a pricing error on Monsanto's part. Also remember, grain GM passes through an animal mostly rather than straight to the consumer, so the analogy is strained at best.]
Agricultural producers will not build trust with our customers if we are quietly complicit in this rip-off any more than we will when the public wakes up on the biofuel mandate debacle. [Oddly producers not using rBST seem to be winning the trust of customers, it seems to me] I grow more corn than you do but never waste a chance to admit in public that I am aware that the mandate is a crime against humanity. [Again, click on "ethanol" for my position on mandates. I am obnoxious, but try not to be hypocritical on government farm policy]
I do this(farm) for profit and for pride in delivering fair price for intrinsic value to my customers. If I do not act, the pride will be gone. A golden parachute(graceful dismount agricultural is your term) is not worth sacrificing your integrity over. [My guess is we both will be around with approximately the same amount of integrity with or without rBST, but perhaps it is the Great Litmus Test of farmer character. In which case, I fail, and you win...what, exactly? Despite which of us has the moral high ground, I see no persuasive economic evidence, especially when comparing to dairies like Fair Oaks that this controversy is a crippling blow to the dairy industry, but I could be wrong. Tell you what, I'll flag this and re-check the situation in a year.]

[My answers]

Are we safer yet?...

Job safety makes sense because of the economic costs alone. Somehow though, we forget how powerful that force is and turn instead to regulation.

Consider this analysis of the effectiveness of OSHA.

Fun facts from Kip Viscusi's article on "Job Safety" in David Henderson's encyclopedia:

Annual OSHA penalties for safety violations (2002): $149,000,000

Annual Workers Compensation Premiums (2001): $26,000,000,000

Estimated Annual Wage Premiums for Risky Activities (2004 dollars): $245,000,000,000

His point: Market incentives for worker safety dwarf legal incentives, which in turn dwarf regulatory incentives. The level of safety we see in the workplace today is about the same as the level we'd see if government just looked the other way. [More]

Of course, you'll convince few in the public or government of this phenomenon. And more than a few bureaucratic jobs with the last good benefits in America are based on not believing these numbers.

[via MR]

If I walk due southwest for a really long time...

Or for that matter, a straight line in any direction? Where would I go?

Tired to walk on the same places everyday? Everytime you go walk, you don't know where to go? So... Walk in a straight line! It's very easy and you will never get lost, because you always will arrive in the start point after walk around the whole world. :-) [More]

[OK - so the authors are from outta town - it's still a cool mashup]

(Here's the answer for my farm)

Better yet what if I dug a really deep hole?

[via InformationNation]

Is the EU on better track?...

Consider this informed comment from a loyal reader:

Hey check out this PDF on the new BMW Diesel. I found out about it from
a science show I watch and went to the website and did some further
research. I find this kind of development very encouraging as it will
serve to change the opinions about diesels which in general are far more
fuel efficient than a Gasoline engine of similar output.

I know we will see this country continue down the "too long and too the
slow road" adoption of Diesel unless someone at the government level
forces migration by some forms of motivations in the form of tax credits
or subsides to make the distribution networks change over. In contract
the European community has been moving this way for quite some time and
currently companies such as BMW see 70-80% of their new cars sold in
Europe use Diesel instead or gasoline.

One a side note for those wondering about Diesel it is actually easier
to refine than gasoline, and produces more energy per gallon thus more
efficient. It should also be noted that it would not take much effort to
distribute it (unlike Hydrogen which Rick Wagoner of GM says is at least
10 years away) since most stations have several different grades of
gasoline that are simply marketing tricks and make very little
difference to most cars.

I myself have owned cars in the past that did require a higher octane
than 87 RON and understand we need a 91 RON slot on the pump, but do we
really need all the other grades besides 87 RON (minimal RON required by
most engines) and anything else other than 91 RON (the minimal required
by most higher performance sport cars) this is to say do we really need
5 grades of gas as is the case on my local 7-11 pump. Could we replace
one of the mid grades with with E85 and the other with Diesel or
BIO-Diesel. +++ BTW E85 is about 105 RON +++.

The market dynamics argument is simply another form of the famous
"Chicken and Egg" argument ; as why would people buy a Diesel or Ethanol
burning vehicles if they simply can't find fuel. This limits the market
from the very beginning, and makes the "Market Dynamics" statement
inappropriate. If we want to give generous tax credits like "W" has to
the Oil Industry it should be for something they actually did that was a
positive thing , like building a more easily available distribution
network for Alternative Fuels of which unfortunately in the USA Diesel
apparently is considered.

I could go diesel in a heartbeat myself. But it's important to remember we are a corn nation, not an oilseed continent like Europe. Rapeseed works well in their climate and for biodiesel. But one larger problem for diesel fans is that it is the second, even if better idea, and the guys that got to the filling station first are selling ethanol. They won't cede territory easily, making the "shelf space" issue significant for fuel retailers.

Still, the inherent efficiencies of the machines (diesels) themselves will have impact, especially on the larger engine market sector. as noted in some other posts, fuel prices are roiling the whole transportation industry, and forcing big changes.

[Thanks, Butch]

I still say it's aliens. Or my neighbor...

Update on the Great Undersea Cable Cutting Conspiracy. As repair begins on the cables, a little actual information is trickling into the press.

Several of these cables have been cut over the last week, disrupting Internet connectivity in some countries in the Middle East and Asia. And this has got the conspiracy theorists working overtime. There’s some disagreement over how many cables have been cut: Beckert says it’s three; most news reports put it at four or five; this guy says it’s at least nine (although he’s also written books about alien-inhabited undersea bases, which we suppose also explains how the cables are getting cut.)

The other day we wrote that the most likely explanation was an errant boat anchor. And, indeed, we’ve just received word that Flag Telecom, which operates the cable that was cut between Dubai and Oman, found an abandoned five-ton anchor at the scene. We did allow that there was a chance – albeit slight – that the cables were cut by sharks with laser beams on their heads. But by and large, our goal was to persuade people to take off the tinfoil.

That didn’t stop BizTech readers from contributing conspiracy theories of their own. There were some obvious ones – the CIA, Mossad, Islamic terrorists – and some that we hadn’t thought of — Godzilla, Gamera and the monster from Cloverfield. Our favorite theory: “The citizens of Atlantis are pissed off about pollution, overfishing, and destruction of undersea habitat, and they aren’t going to take it any more!” [More]

Either that or the evil forces that cut my phone cable every few months. Of course, that mostly involves bored roadside mowers and hidden junction boxes.

O wad the power to giftie gie us* [Repost from 2006]...

The mobile society is one of those cultural myths so firmly entrenched in our minds that even real true facts bounce off. After reading this essay about how mobile we ARE NOT, several other facets of modern life took on a new light:

“The idea of an increasingly mobile society is a widely held, but untrue, fact,” says Douglas A. Wolf, a professor at Syracuse University’s Center for Policy Research, who published a paper on the subject in the February 2005 issue of The Gerontologist. Indeed, according to the historian Stephanie Coontz, whose books include 1992’s The Way We Never Were: American Families and the Nostalgia Trap and last year’s Marriage, a History, a person born today is more likely to remain near his birthplace than a person born in the 19th century.

This is one of those trite excuses we can set aside perhaps, I think, and start taking individual responsibility for our lives.

Above all, the mobility myth is politically expedient. Conservatives can use the notion that our society is becoming less stable because of increasing mobility to advocate programs that encourage traditional families and to push for taxpayer funding of faith-based social service organizations. Liberals can cite increasing mobility to justify funding for various social programs, including elder care and family care initiatives. Neither the right nor the left has an interest in debunking it, and so the myth endures.

Best of all, there may be more reasons to re-examine our home communities to find out what dynamics are really at work. Then we can build new ways to live together.

The first step is to "see ourselves as other see us" - not as we imagine ourselves to be.

Let's take a grain bin...

And do something like this:

Well, OK, the bridge is a real bridge. But none of the stonework on this bridge is real. The Community Bridge mural project transformed this plain concrete bridge in Frederick, Maryland, near Washington D.C., into the stunning illusion of an old stone bridge. The entire structure was painted by hand by an artist and his assistants, using advanced trompe l'oeil ("deceive the eye") techniques. What is perhaps most unusual is that the bridge contains ideas, symbols and stories contributed by thousands of people from all over the community, across the country, and around the world. These co-creators have made Community Bridge an inspiring symbol of common ground. [More]

Sure, bins are functional, but they are not attractive.

[via DumpTrumpet]

They have international tournaments?...

Bird flu is bad enough as a health problem. But now it's interfering with the sports world (and, more importantly, badminton betting).

The bird flu is not just taking a toll on chicken, it's latest victim is the sport of badminton in India.

India's preparatory camp for the Thomas and Uber Cup qualifiers, which was to begin in Goa on Wednesday, was cancelled because of a shortage of shuttlecocks.

There are no shuttlecocks to practice with because the Union Agriculture Ministry has banned the import of feathers from China after a bird flu outbreak there.

China and Chinese Taipei have the best quality of goose feathers which go into making shuttle cocks.

With all international tournaments played with these shuttles only, the Badminton Association of India has had to call off the camp. [More]

What - they're too fancy-schmancy to use the plastic ones?

At least we've got our health...

Keep that in mind, because the news is not particularly good for our market-driving ethanol biz lately. Something that we pretty much suspected but didn't want to find out:

Together the two studies offer sweeping conclusions: It does not matter if it is rain forest or scrubland that is cleared, the greenhouse gas contribution is significant. More important, they discovered that, taken globally, the production of almost all biofuels resulted, directly or indirectly, intentionally or not, in new lands being cleared, either for food or fuel.

“When you take this into account, most of the biofuel that people are using or planning to use would probably increase greenhouse gasses substantially,” said Timothy Searchinger, lead author of one of the studies and a researcher in environment and economics at Princeton University. “Previously there’s been an accounting error: land use change has been left out of prior analysis.”

These plant-based fuels were originally billed as better than fossil fuels because the carbon released when they were burned was balanced by the carbon absorbed when the plants grew. But even that equation proved overly simplistic because the process of turning plants into fuels causes its own emissions — for refining and transport, for example.

The clearance of grassland releases 93 times the amount of greenhouse gas that would be saved by the fuel made annually on that land, said Joseph Fargione, lead author of the second paper, and a scientist at the Nature Conservancy. “So for the next 93 years you’re making climate change worse, just at the time when we need to be bringing down carbon emissions.” [More]

Meanwhile, $5 corn is narrowing ethanol margins just in time for an unexpected forecast: significantly lower gasoline prices - by as much as 50 cents. This is precisely the worst thing that ethanol producers want to see.

There's some evidence to support the fiscal forecast. The U.S. government confirms supplies in the States are already at a 14-year-high because of falling demand. "Gasoline stocks are continuing to increase and it implies that people are probably cutting down on gasoline consumption - a result of the weakening economy," notes analyst Phil Flynn.

Some are touting figures that suggest demand for gas stateside is down to about one percent more than the same period in 2007. But it typically grows by 1.5 to 2 per cent a year, an indication that things may be changing.

"Something dramatic is occurring with consumer driving habits," posits Geoff Sundstrom of AAA, the American version of our CAA. "These numbers, if sustained over the next couple of weeks, should set the stage for a reversal of price forecasts." His prediction: don't be surprised to see lower per-litre rates on your marquees if the trend continues, especially with the current high costs of a fill-up.

"High gasoline prices by themselves have never altered consumer driving habits," Sundstrom advises. "Only when combined with some other factor have they fallen. In this case, it's anxiety about a recession."

He blames it on a ripple theory. Fewer people spending means less business and sales. Less business means fewer sales calls. Fewer sales calls means fewer road deliveries and fewer trips to the mall for consumers. Fewer trips means less cars on the road. And that translates to lower prices. [More]

Not to worry, ethanol has been able to pretty much steamroller any scientific objections and override any economic factors. Still the long-awaited consolidation of the ethanol industry could be triggered by the piling-on effect of multiple clouds on the horizon.

Looking ahead into 2008, analysts say consolidation activity should occur and become a significant element in the FTC’s 2008 report. Evidence of this trend became obvious when two of the largest ethanol producers—VeraSun Energy Corp. and U.S. BioEnergy Inc.—announced a monumental merger agreement one day after the 2007 FTC report was released. “To our knowledge, we haven’t seen too much consolidation outside of the U.S. BioEnergy/
VeraSun deal,” Garcia says. “So, there are no real mechanisms for the market to get further concentrated. I would guess that the concentration percentage would be going lower like it has.”

According to Alexander, on the other hand, the ethanol industry’s inherent and turbulent commodity cycle could increase concentration before the 2008 report. “I do expect the industry to become more concentrated,” he says. “The industry is a commodity business. In general, commodity businesses move toward a situation where there are several large players who can capitalize on the economics of scale to lower their marginal cost of production, and I expect that the ethanol industry will be no different.” [More]

The more interesting phenomenon is the interest in multi-power vehicles, such as the Chevrolet Volt. They seem to be commanding attention at recent car shows.

Seldom talked about two years ago, plug-in hybrids are popping up all over the auto-show circuit.

Saturn says it hopes to sell a Vue plug-in with a 10-mile electric-only range by 2010, and Toyota says it will have a few hundred plug-ins in commercial test fleets by then.

Others are trying to get in the game.

AFS Trinity Power Corp. of Bellevue, Wash., has equipped a 2007 Vue with a prototype plug-in system it says can go 40 miles on lithium-ion batteries before a 4-cylinder engine kicks in for gas/electric operation.

Estimated cost is $8,700 for the Extreme Hybrid system -- based on an automaker producing 10,000 or more cars per year (production costs go down as volume goes up).

The 40-mile electric range equals the target set by General Motors for the Chevrolet Volt plug-in it hopes to produce starting in 2010 if lithium-ion batteries are ready. Plug-ins can recharge their batteries with household current. [More]

I've had a hard time seeing any rational answer to our energy future without greater conservation and lower consumption. Depending on how bad the current slowdown eventually becomes, we could alter some old driving and energy use habits pretty quickly, I'll bet.

Even farmers have been surprised how fast the ethanol industry grew to respond to mandates. Now I wonder if we'll be equally stunned how fast other industries and consumers respond to ethanol's success.

ORD 2, JWP 1 - The battle continues...

Just like the Democratic primary, O'Hare and I fought to a draw yesterday coming home from Colorado. I got to Chicago two hours late and mushed through the snow to arrive 2 minutes before midnight.

Anyhoo - thanks for a great time at the High Plains No Till Conference! Some have asked for the file for my presentation Wednesday - The Prediction Problem: Why the future isn't what it used to be.

Find it here.

The cost of living high...

Drew Carey, a surprisingly sensible economist?

Watch this middle class malaise infect agriculture as well, even as we experience unexpected good fortune.

[via MeFi]

Hide the women...

The Vikings and coming! The Vikings are coming!

Even though it's been several centuries since my forebears in Britain lived in fear of Danish plunderers, I'm still holding a grudge.

Naah - just kidding. But my friends at DLG in Denmark have recently introduced their highly successful feed additive products (premixes) to the US market: Vitfoss.

It will be interesting to watch how this company competes in the US market while fighting currency riptides and a livestock sector under pressure. Still I have learned over the last 20 years to never, never bet against the DLG CEO, Asbjorn Borsting - the "Steven Jobs" of European agribusiness.


[Disclosure: I am serve on the corporate board of Kongskilde US, a division of a farm machinery/materials handling company owned in majority by DLG, and Asbjorn is a personal friend from waaay back]

Scary times are good...

If you are the CME.

CME Group Inc., the futures market trying to buy the New York Mercantile Exchange, said fourth- quarter profit almost doubled on record trading fueled by concern the U.S. economy will continue to slow.

Net income climbed to $201 million, or $3.75 a share, from $103 million, or $2.91, a year earlier, Chicago-based CME said today in a statement. The world's largest futures exchange was expected to earn $3.58 a share, according to a survey of 14 analysts conducted by Bloomberg.

CME under Chief Executive Officer Craig Donohue, 46, has seen volume surge as investors increased their use of futures contracts to hedge positions or speculate on how interest rates, commodities and equity indexes may move. [More]

This flight from risk and the relative boom igniting commodities have attracted a lot of attention from people who need to get a return from cash. As super-safe government paper yields even less than inflation, unsatisfied investors are agonizing about taking on more risk. Commodities seem attractive, especially since you now have to scroll back many months to find really nasty downturns.

And ditto for farmland. Consider this front-page story in USA Today.

Meanwhile the Pied-Piper of commodity index funds, Jim Rogers, is parlaying his early jump into commodities into oracle status. And investment advisers are listening.

In a recent interview with Bloomberg ( January 7, 2008 ), Jim Rogers , known by many as the world's expert on commodities investing, reaffirmed his positive outlook on commodities. He stated that ``All commodities are going to be in much shorter supply for another decade.'' Rogers indicated that in the event of a global recession, agricultural commodities may be the best investment among commodities.

The findings of the Yale study and others have triggered huge changes in the financial industry---many which affect you. Investment companies are increasingly creating new investment vehicles to enable individual investors to participate in commodity investing. Today there are easily accessible ways for you to invest in commodities and to find which investment vehicle is right for you. Anyone can now invest in commodities in low-cost and easy ways that were not available during the last commodity bull market. [More]

Perhaps more startling is the harsh outlook Rogers is broadcasting for the US economy.

"It’s going to be one of the worst recessions we’ve had in awhile because we had so many excesses going into it," Rogers, a noted commodities trader and contrarian investor, said during an interview with Bloomberg Television from Singapore yesterday (Monday). " It’s going to be bad for all of us as currencies come under more and more stress and we have more inflation in the world."

Rogers, a best-selling author and the chairman of New York-based Rogers Holdings, was particularly tough on the U.S. dollar. He said that both the United States and United Kingdom governments have been lying about inflation, which is much worse than official statistics show. And the fact that the U.S. Federal Reserve has been cutting interest rates while other central banks have been tightening credit has likely fueled inflationary pressures, weakening those currencies even more, many contrarians believe.

"I hope by the end of this year all of my assets will be out of the U.S. dollar," Rogers said. "The dollar is a currency that’s terribly flawed and it’s going to be under duress for many years to come." [More]

I am undecided on how valid such predictions could be, but celebrity status has an effect in big money arenas as well as politics. The tricky thing here is as more investors buy into this forecast - forsaking US investments, dollars and real estate - the more likely a really sharp downturn becomes.

This is why despite the underlying soundness of our economy, bad things can happen due to the breathtaking mobility of our wealth. Even though we seem to be in a good spot here on the farm, future economic turmoil will not leave us unchallenged, and our families and friends outside ag will make our relative prosperity actually uncomfortable.

Still want to "tell the farmer's story" now?

Make your blood boil?...

Well, I should say! Consider this article title: How Brazil Outfarmed the American Farmer

A classic example of this upscaling of commodities, Klinefelter says, is the bagged-salad industry. Fifteen years ago few stores sold packaged salads; lettuce was available only in heads. Today salad-in-a-bag is a $7 billion industry, the single biggest-selling fresh product in U.S. grocery stores, according to the United Fresh Produce Association. Born of high tech as surely as the iPod, packaged salad is cooled in the field, trimmed on an assembly line, triple-washed and air dried, then sealed into "equilibrium modified-atmosphere" packaging - which contains altered levels of nitrogen, carbon dioxide, and oxygen to keep the leaves looking fresh - and then quickly trucked or flown to the rest of the country. "Brazil can't do this like we can," Klinefelter says. "Growing specialized versions of food on a large scale is something that we have an advantage in," because the U.S. still has a better infrastructure and a more educated workforce.

Unfortunately, he says, U.S. agriculture is so highly subsidized that the industry is slower to move than it would be "if the market was pure - our farm programs keep excess resources in agriculture and in some cases maintain operations that are not as efficient." That delay could be dangerous. "We've had a lot of cases in which U.S. industries thought they were on top of the world," Klinefelter says, "and then suddenly they weren't." [More of a must read for anybody who thinks they will be farming in 10 years]*

We can do this the hard way or we can do it the really hard way, but consolidation is going to happen in industrial agriculture. However, in many areas agrarian farming will continue to grow to serve its particular upscale market.

And while we ignore that and fuss over subsidies, other farmers are taking the lead.

*Also consider who reads Fortune.

10 Sci-Fi Wonders we could build...

IF they weren't so damned expensive.

(I vote for the Transatlantic Tunnel.)

ORD 1, JWP 0...

Satan's Saddlebags! - what a day! Tried to get from Champaign, IL to Denver via (shudder) O'Hare Dareport. Too foggy at CMI, so I drove 3 hours through fog and thunderstorms (?) to ORD, where 300 flights were canceled.

(At least it wasn't Midway)

Finally arrived here in Greeley to speak to the High Plains No-Till Conference tomorrow and Wednesday. Should be a great group and CO is a key Super-Duper Tuesday state.

Let's all get out there and vote!

Blogging will continue when I have re-centered my cosmic essence.

Take a break...



I love it!

[via Andrew Sullivan]

We've reached the name-calling stage...

Proponents of the status quo in farm policy are now descending to ridicule:

Even the normally sane ones are insane on this issue. House Ag Committee Chairman Collin Peterson (D-Minn.) has been the best leader, thus far, in trying to get a farm bill that President George Bush can sign into law. But an obviously frustrated Peterson recently told me and others that if the Bush administration is silly enough to keep insisting on some of their must-have farm bill items, then he can be just as silly and let the current extension of the 2002 Farm Bill provisions expire March 15 and if that occurs, then without a need for any new legislation, farm policy reverts to "permanent" legislation embodied in 1949 and 1938 laws that are about as relevant to farm policy today as Hugo Chavez is to common sense. [More]

Yeah - this language is helpful. If administration efforts to enforce fiscal responsibility on legislation the author (our own Jim Weisemeyer) has himself spoken of as bizarrely conceived and funded by budgetary trickery is silly, color me silly. (But then you probably already had)

The silly thing to me is the idea of a "permanent" farm law that serves as a threat to maintain payouts to a relative handful of farmers. What - this bill can't be repealed? It's scribbled on the back of the Constitution? Let me suggest another silly idea. Maybe it's time to get rid of the permanent law. What Congress hath done, Congress can undo. That is in the Constitution.

Besides, despite legislators' best efforts industrial agriculture is growing past farm policy to operate in the real world of real economics, assuming the risks and reaping the rewards. A recent study indicates current farm policy needs to go in a whole 'nother direction to mean anything to the folks who will dominate our industry.

Past and current farm programs are focused on income transfer based on planting records, price supports, and payment limitations. But economists Boehlje and Gray say the structure of US agriculture continues to move toward industrialization, and many operations have already moved beyond farm programs, except to the dairy operation that is only taking advantage of a distortion in the marketplace created by the milk program. But what would the management of these farms really need in the way of federal farm policy to enhance their operations? Boehlje and Gray suggest:
1) Programs for transition assistance to assist farmers in finding other opportunities, should international competition or other dynamics create a need to buffer farmers from market forces.
2) Develop an institutional structure around a vertical market or supply chain that provides open access to information, prevent anti-trust issues, and help manage risk and rewards in an effort to enhance economic growth.
3) Revisit the rules about intellectual property rights to ensure that current patent and copyright laws are capable of managing the needs of the marketplace in the wake of global competition.
4) Support funding for public sector research and development to ensure that private funding of technology development does not lock it away from the marketplace.
5) Federal support for health care programs, work place safety, and improved immigration laws are needed to ensure a skilled and healthy workforce.
6) Regulations that promote food safety through traceability programs, regulation of antibiotics and additives, and market access to other nations where those issues are of concern.
7) Ensure there are entry-level management positions for young farmers in a career path to accelerate them to be an agricultural leader of tomorrow. [More of a great summary of this report]

As this trend accelerates, farm policy debates become less important to more people. If your occupation is creating, peddling, or talking about farm policy, I would assume this is a troubling development. Trivializing opposing viewpoints could signal a concern about the future of such careers.

As the outlook darkens for the US economy, it may be that public officials like the President who are focusing on spending restraint and entitlement reform won't be the ones who look silly.

Gosh, it is cold and cruel...

My father referred to the "cold, cruel world" with such regularity we began using the acronym "CCW" between us kids. His admonitions may not have been so far off the mark after all.

To get in on this fun biz click here.

'"Tis an ill wind..."

[via Curious Capitalist]

Good news! (I think)...

I have been vaguely familiar with on-line colleges - the most successful of which, the University of Phoenix, has seen explosive growth and controversy. But a small but growing number of on-line education systems are arising for younger children.

Half a million American children take classes online, with a significant group, like the Weldies, getting all their schooling from virtual public schools. The rapid growth of these schools has provoked debates in courtrooms and legislatures over money, as the schools compete with local districts for millions in public dollars, and over issues like whether online learning is appropriate for young children. [More]

Let's ponder what this could mean. On the plus side:

• It would appear to mesh with the home-schooling trend. Maybe the two forces could meet halfway.
• Rural areas would benefit wider curriculum choices.
• Could be much cheaper
  
• Schools could be becoming one of the more dangerous places children can be, despite vigorous efforts by educators. (I can't find any comparative risk stats right now)
  

And on the downside:

• Very bad news for the teaching profession
• I can't picture it in poorer homes or families who depend on school as day-care.
• Might leave schools as the last choice or last resort skewing the school population to disadvantaged children
  
• Loss of social learning and adaptation
• Impersonal

This educational possibility puzzles me. The geek in me likes the idea, but I have always been leery of home-schooling, since it denies one of the last social cauldrons in our increasingly segmented culture. (That's also one reason I favor reinstating the military draft.)

Whaddaya think, folks? What points am I missing?

Economics is too a science...

The flap over rBST is remarkable for the extreme partisanship of the two sides and the relative ignorance of the economic principles involved. Also for the profound irony.

Consider this comment from Orion Samuelson:

For whatever reasons, among them perhaps financial, dairy processors and dairy marketers at the retail level label their milk hormone-free, and then raise the price. If you check the price of milk that is labeled “free of rBST” you will find the price is considerably higher than regular milk. In the second quarter of 2007, the Farm Bureau Market Basket Survey showed the price of a half-gallon of whole milk to be $2.22, the price of a half-gallon of milk labeled rBST-free was $3.01, a 36% premium for milk that is no different. I doubt if any of that 79-cent premium reached the producers who signed the “no rBST affadavit to satisfy the demands of the processor.

Golly, I share this frustration. My bet is people who make these decisions at Wal-Mart have never milked a cow; have never been involved in food production and give little thought to what stopping the use of technology in food production will do to hungry people around the world. It will literally take food out of their mouths.

This is a wrong decision by the dairy processing industry, because if you can’t test it, how can you label it? Agriculture must come together on this one, and spend time every day educating people, both in the industry, as well as consumers that science, not emotion or financial gain must be the benchmark when evaluating the use of technology in food production. [More, albeit gated on Pioneer's website]

The use of bovine growth hormone to increase milk production is clearly safe and effective. But dairy producers seem to forget it doesn't deliver much utility to the ultimate customer. While is could be argued (feebly) that its use helps lower the cost of milk, the milk market is so perverted by arbitrary pricing mechanisms, economists would have a hard time proving the point. (Ring any bells with GM grain producers?)

But any fractional lowering of the cost of milk would be indistinguishable from a myriad of other market price factors, and hence, of no discernible value to consumers. Seriously, what's in it for me?

Moreover, from what I have learned talking to milk producers, much of the value of the efficiencies the practice generated were captured by Monsanto, similar to seed traits. I fully support this right, but in some economic lights this whole brouhaha could be little more than a mistake in pricing by Monsanto. Had they gone for a much lower margin, allowing producers to reaps more margin, adoption of this technology would have been wider and faster, and maybe could have forestalled customer rejection since the overwhelming bulk of the milk supply would have been rBST milk. (See also: soybeans, GM)

However, other shrewd dairy operators have discovered NOT using the hormone does offer a value to consumers. It looks like about 79 cents worth.

On my way to and from South Bend, I pass the ginormous Fair Oaks Dairy (mucho-cool website) on I-65. In that past few months their billboards are using the slogan, "Everything you want in your milk, and nothing you don't" (or something very close to that). Given the ferocious battle over what you can and can't say about milk, I thought this was brilliantly weaselly public communication.

It would be helpful too, if the dairy industry had more competition at the processor level instead of the arcane quasi-monopsonies maintained by our dairy program. But when your processor says X, you do X. And this appears to be the way dairy producers want it to stay. That's their call too, all though I would just as soon not fund it with tax dollars.

Bashing Wal-Mart is always a cheap thrill, but if you are also bashing Whole Foods for ephemeral organic claims, who's left? The buyer at Wal-Mart doesn't need to know what end of a cow is which. What he/she needs to know is retailing, and you can bet your bippy Wal-Mart has some pretty solid evidence this move is good for their bottom line.

Fellow AgWeb blogger Chris Galen adds a more realistic view, I think:

And the reason why? It’s the same as the answer to the question of why did the chicken cross the road? Because it can. Or, in this case, because they can. Retailers and processors have the ability to call the shots, and can push suppliers to provide the product they demand. It may not be fair to farmers using rBST, but when you’re the low man on the totem pole in the food supply chain, and when the clout of retailers is such that a mere five of them (Wal-Mart, Supervalu, Kroger, Safeway and Ahold) control more than half of the collective grocery marketplace, the decisions you have to make to keep your marketing opportunities open are sometimes not your own. [More of a thoughtful analysis and backstory]

As for not choosing to use rBST causing people to go hungry, that seems to be a reach. Wasn't milk cheaper before the days of rBST? Regardless, the dairy industry itself argues that prices are high because of unprecedented demand and ethanol-driven feed prices. At worst, we add a few cows to the herd to make up for lost production, and Monsanto loses a small cash cow (no pun intended - I think).

Not the end of the world either way. rBST is an incremental - not quantum - production leap.

Agriculture need to think carefully about lecturing consumers on their choices. Insisting on sound science should include the science of economics.

The dairy industry has enjoyed the support of taxpayers for years by exploiting the economic principle of widely distributed costs ("less than 1% of the federal budget" or "only XX cents per person per day") paying for highly concentrated benefits to a relative handful of producers.

The struggle over rBST illustrates a widely distributed good (slightly cheaper milk - maybe) is just as hard for consumers to get excited about in the face of a perceived risk - a concentrated cost. Most importantly, rBGH supporters could have done their homework on studies about what risks people will allow their children to endure (basically an irrational zero). This principle is widely accepted and it was curious marketers thought they could overcome it with any amount of advertising.

Some battles you win, some you lose. Only I think this battle is more of a hissy-fit. And maybe picking fights with customers isn't such a good idea in the first place.

Mere coincidence?...

OK, having TWO undersea cables cut a couple of days ago was startling for the results that handicapped rising outsourcing powers like India and money moguls like Dubai.

But what the heck is going on now?

A submarine cable in the Middle East has been snapped, adding to global net problems caused by breaks in two lines under the Mediterranean on Wednesday.

The Falcon cable, owned by a firm that operates one of the previously damaged cables, was snapped on Friday morning.

The cause of the latest break has not been confirmed but a repair ship has been deployed, said owner Flag Telecom.

Following the earlier break internet services were severely disrupted in Egypt, the Middle East and India.

There was disruption to 70% of the nationwide internet network in Egypt on Wednesday, while India suffered up to 60% disruption. [More]

Granted, there are lots of cables criss-crossing every major body of water, but what if this is simple test of possible techno-terrorism? (Don't worry - we bloggers are on it!) If so, it points out an interesting weakness for those countries/industries dependent on Internet connections via cables.

But probably not. First, these cables are much smaller than I imagined, and second, this happens all the time.

The lines that tie the globe together by carrying phone calls and Internet traffic are just two-thirds of an inch thick where they lie on the ocean floor.

The foundation for a connected world seems quite fragile, an impression reinforced this week when a break in two cables in the Mediterranean Sea disrupted communications across the Middle East and into India and neighboring countries.

Yet the network itself is fairly resilient. In fact, cables are broken all the time, usually by fishing lines and ship anchors, and few of us notice. It takes a confluence of factors for a cable break to cause an outage. [More]

In fact, like many things we take for granted, I'm surprised the communications network works at all most of the time.

Then again, it could be a US submarine flexing their spy powers.

A tough middle; a bad end...

We now have mounting evidence about the "U"-shaped happiness curve, which suggests the 40's for women and the 50's for men carry them through some deeply imprinted patterns of unhappiness.

So what's at the root of this depressing dip? Not sure, say authors Andrew Oswald of Warwick University and Dartmouth's David Blanchflower, both economists. But they speculate, as Oswald put it, that "something happens deep inside humans" to bring us down rather than shattering events (such as divorce or job loss), because it tends to creep up on us over time.

"Some people suffer more than others, but in our data the average effect is large. It happens to men and women, to single and married people, to rich and poor and to those with and without children," Oswald said. "Nobody knows why we see this consistency."

"What causes this apparently U-shaped curve, and its similar shape in different parts of the developed and even often developing world, is unknown. However, one possibility is that individuals learn to adapt to their strengths and weaknesses, and in midlife quell their infeasible aspirations," he added. "Another possibility is that cheerful people live systematically longer. A third possibility is that a kind of comparison process is at work in which people have seen similar-aged peers die and value more their own remaining years. Perhaps people somehow learn to count their blessings."

The good news: the data show that most people emerge from this low ebb in their 50s. And, "by the time you are 70, if you are still physically fit, then on average you are as happy and mentally healthy as a 20-year old," Oswald said. "Perhaps realizing that such feelings are completely normal in midlife might even help individuals survive this phase better." [More]

Now on the farther shore of that passage, I have time and opportunity to notice instead with increasing frequency how our last innings are played out. While late-middle-agers joke about planning to die unexpectedly at 117 after water skiing too strenuously, we know the more likely scenarios are anything but.

But the fear of possibility of a "bad death" seems to loom ever larger with each year and the march of life-prolonging technology.

And accounts like this certainly add to this natural musing.

“A bad death” is another matter. We all know those when we see them, the miserably protracted and painful affairs that overwhelm everyone — the deceased and survivors alike — with panic, guilt and bitter regrets.

And now we have a new benchmark of bad. The writer Susan Sontag’s death, as set out in this short and immensely disturbing account by her son, David Rieff, must rank as one of the worst ever described.

For starters, it took a long time. Ms. Sontag was diagnosed with breast cancer metastatic to the lymph nodes in 1975, at 42. She survived the draconian treatment and the years spent expecting her unlikely remission to end, only to develop unrelated uterine cancer in the late 1990s. Again she survived, and again she developed a new cancer: this time myelodysplastic syndrome, a virtually untreatable variant of leukemia, probably related to the treatment for the first two. She died in 2004.

Three decades of having cancer, being treated for cancer or waiting for cancer to recur might bring out the inner philosopher in some. In Ms. Sontag, an inner adolescent seems to have emerged instead, with each battle and victory strengthening her determined appetite for life and her conviction that she was immortal. Intellectually, of course, she knew otherwise, but she balanced that age-old contradiction with the insouciance of a helmetless 18-year-old on a snowboard. “She believed in her own will, and, grandiose though it may seem, in her own star,” Mr. Rieff says in his book. “My mother came to being ill imbued with a profound sense of being the exception to every rule.”

To watch that kind of arrogance and bravery succeed is marvelous; to watch it fail, dreadful. For an elderly woman with a body weakened and deformed by prior surgery and bones oozing new malignant cells, failure was pretty much a foregone conclusion. [More]

I have watched with apprehension the extravagant end-of-life care now routinely poured out for the care of pets even after unnaturally long lives. As Americans become more attached to pets, the decision to euthanize is being confronted often and with great difficulty.

I think my uneasiness arises from the inevitable transfer of ethical behavior to people: "If I did it for Fluffy..." Now couple that too-familiar example with demographic tides.

Given we have not particularly graceful during other life passages, I suspect Baby Boomers will redefine (or simply lower the bar) for "bad death". Nor will this be an inexpensive phenomenon.

Maybe we call it a U-curve simply because we Boomers haven't had enough time to add the last descender and reveal it as a "y" curve.

[via 3 Quarks]