This chicken isn't playing...

Someone (Google let me down here) once said. "A chicken is just an egg's way of producing another egg". In other words, in every chain of life or production, a tendency to think of downstream links as simply tools often develops.

That's who we are becoming to our suppliers, I am beginning to suspect. A farmer is a chemical/fertilizer/seed/machinery company's way to get money from Cargill/Bunge/ADM. With skyrocketing grain prices, the impression I have from those who sell to me, is "I want some of that." even as question of "Did you earn some of that?" goes unanswered.

Fair enough. It is their right and obligation to their stakeholders to adopt the "whatever the market will bear" position. And boy, have they. (Frankly, farmers are, in their own way, doing the same thing.) Consider the formerly backwater potash industry.

It came up again in Potash Corp.'s first-quarter numbers, which broke the company's prior quarterly record by more than 50 per cent. Net income was $566 million, or $1.74 a share, up from $198 million, or 62 cents a share, in the year-earlier period. The company also hiked its full-year profit guidance by about 50 per cent.

"These conditions have us very excited for the future. This is the environment we have anticipated for two decades," Doyle said.

With a capacity expansion of almost 50 per cent expected by the end of 2012, Potash Corp. expects to seize a bigger chunk of global demand going forward, as it is the only potash producer with a significant expansion in the next few years. Other companies are also rushing to increase production capacity, but it will take years to bring it online.

That is expected to contribute to chronic under-supply in potash, which many analysts figure will keep Potash Corp. flying high well into the future. [More]

Sources tell me fertilizer companies are assuming that record profits for corn growers especially will make them perfect bagmen for grain customer/speculator extortion. The gist is farmers are looking at their spreadsheets and seeing they can pay much more for inputs and still make higher returns. Ergo: we'd be fools not to pour on the inputs with $7 corn.

Permit me to suggest other possible farmer reactions which might indicate what the market won't bear:

• Good gravy! I'm going to scatter 3 times as much money on the ground before I get any return. While the computer says it should work out OK, I'm the dude who eats those expenses if something funny happens in the corn pit. Tell me again what the CFTC report is going to recommend.
• There is a growing interval between when I fork out for inputs (prepaying 2009 fertilizer in Feb 2008, for example) and when the payback arrives in my bank account (summer 2010). Not only can much go wrong in that time period, I seem to be financing my suppliers - not really the business I intend to be in.
• It is actually possible the dollar could not drop to worthless. To be fair, I don't see this happening anytime soon, but when it does the effect on grain prices and foreign inputs will be a double whammy. Fertilizer could get cheaper for me without any demand change.
• Grid soil testing is now a relative bargain. Ditto with variable rate application. I'm getting as much of my ground as possible sampled to make sure every pound of fertilizer is needed.
  
• Wait a minute. If 0-0-60 and DAP are $1000+/T, I can save more than I used to net per acre by simply applying the minimums. My soil is is pretty good shape, why not take enormous profits for a year or two instead of just huge profits? That's what not ponying up for expensive inputs looks like on my Excel model.
• Is their any doubt input prices will be sticky?
  
• If I strip-till and fertilize, maybe I could cut back on fertilizer big time. I could even be claiming to to it for humanitarian reasons to help out developing country producers.
  
• While hot new hybrids may yield X% more, that could also be a phenomenon that comes about most noticeably in dry years. This ain't one of them. What if for my farm the climate turns wetter for a time - or longer - as the climate changes?
• As everybody shifts to FipleStacked corn, I cannot help but notice the premiums for non-GMO corn are going up. Three years ago these hybrids were all the buzz and it represents a significant savings in inputs. Another dollar I can keep and yield I can live with.
  
• If I can't forward price easily, I could be hung out to dry on huge input costs. And one year like that could erase several years of those modestly higher margins input suppliers are pointing out to me.
  

In short, despite what our suppliers think, we didn't just fall off the turnip truck. That's just the image we use to panhandle for subsidies. While massive profits may be possible by investing in every new input offering, the odds of actually receiving them can vary. I would suggest these next two years or so is the time to control expenses and bank the profits. Instead of getting into a bidding war, settling for slightly lower possible returns and significantly lower input costs is not a strategy to be despised.

Buying machinery when you have to stand in line should set off alarm bells as well. The return to good maintenance and careful operation is now higher than ever.

So my strategy is to apply inputs with a teaspoon for the next two years. Plant last year's hot numbers. Forward sell. (Sooner or later it's got to work!) Cherish the machinery. BTW, brace yourself for some eye-popping machinery price increases soon (just a guess, but I've heard it from several folks).

In short, I'm going to farm like times are hard. What suppliers seem to overlook is for producers when input prices accelerate, cutting back yields more and more "found money". To be sure this is a short term tactic, but we are all placing bets on how long grain prices can defy gravity. I won't be that much worse off if I have to return to normal rates/choices three years from now as I would be if I lavished inputs on my fields. In short, I think there is limited downside as compared to rapidly escalating risks for marching up the higher variable cost ramp.

Of course, I'll then turn around and bid too much for land, most likely. But long after I'm gone it will still be here, earning income. Inputs won't.

Worst. Planting. Season. Ever...

With the arrival of 5.5" of rain this morning on top of (almost literally) 4.5" earlier this week, my guess for fieldwork is now a week away at the earliest. Three hundred acres of beans to plant, ?? acres of beans to replant and maybe spot in some corn.

Then there is spraying to do.

No trend line yields around here, methinks.

On the other hand I told Aaron how lucky he was to get this one out of the way on his first season as a farmer. For him it can only get better.

You knew they could raise barns...



But they can also raze silos. One Amish man drops a concrete block silo. His name is Reuben Zook from near Rockville, IN. The silo was about 3 miles from my home - just happened to be driving by.

OK - this is my first video attempt, and I did get a little jumpy when it came down...

Some crops are pretty good this year...

The wet weather really stinks (no kidding - where the water stood this week in our yard, it's really rank!) but the strawberries are phenomenal. These are the red-all-the-way-through-no-sugar-needed kind, too.

Let's hear it for llama-poop compost!



[Note: I parked our lawnmower on them for scale]

This is for other people, of course...

From the National Study Group on Chronic Disorganization (Yeah, I know - there is an organization for the disorganized?) some surprisingly helpful tips we can all use. Some of my favorites from The Time Management Fact Sheet:

4. Schedule the most difficult tasks during your “prime time” when you are at
peak energy level.

5. When planning errands, be realistic about the amount of time each errand
will take. Add at least 15 minutes to the time you think it will take. This way
you will learn not to overschedule and continually work under pressure.

6. Maintain a family message center and a perpetual shopping list.

Also good: The Self-Test for chronic disorganization.

[via 43 Folders]

OK - here they come...

Just in time for a mess of Boomers to exit the business, well-heeled buyers for all levels of farm production are at hand. We've successfully poured ethanol on the fires of consolidation, and I believe new entities at the production level will soon emerge. Until now there has been only modest interest in owning production and origination capacity as an investment, but as farmers fret whether the good times can last, investors with longer vision are voting with their checkbooks.

But a few big private investors are starting to make bolder and longer-term bets that the world’s need for food will greatly increase — by buying farmland, fertilizer, grain elevators and shipping equipment.

One has bought several ethanol plants, Canadian farmland and enough storage space in the Midwest to hold millions of bushels of grain.

Another is buying more than five dozen grain elevators, nearly that many fertilizer distribution outlets and a fleet of barges and ships.

And three institutional investors, including the giant BlackRock fund group in New York, are separately planning to invest hundreds of millions of dollars in agriculture, chiefly farmland, from sub-Saharan Africa to the English countryside.

“It’s going on big time,” said Brad Cole, president of Cole Partners Asset Management in Chicago, which runs a fund of hedge funds focused on natural resources. “There is considerable interest in what we call ‘owning structure’ — like United States farmland, Argentine farmland, English farmland — wherever the profit picture is improving.” [More]

While most farmland is in strong hands, it is also subject to continuous turnover. The presence of top-bidding buyers in any local market is already one reason we try so hard to hear about land for sale before anyone else. Any tenant who hasn't asked his landowners to be told first is taking a whacking chance, IMHO.

The increased capital needs, significantly higher profit levels, and escalating risk in production agriculture will encourage the same forms of business as other sectors. We may look back a generation from now and date the disappearance of the traditional family farm from the 2006 October price explosion.

Things begin, things end. And to expect one business model to succeed in every business climate is unrealistic. Family farms are a relatively recent idea when you look at our 10,000 year history. While many see them not just as a good economic answer, but as the most moral form of agriculture, there is no reason to believe other forms could not keep or even lift such standards. People and their actions determine such qualities, not business plans.

How many Bolsheviks does it take to screw in a light bulb?...

From Hammer and Tickle, the history of communism in jokes.

A man dies and it is judgement day. "I am afraid you have not made it to heaven. But you can, as a special favour, have a choice of hells".

"What do you mean, a choice of hells?" "You can go to the capitalist hell or the communist hell".

"Ok, fair enough, but what's the difference between them?" "Well, the capitalist hell has fire and brimstone and torture." "And the communist hell?" "That has brimstone and torture and fire".

"I don't understand. They sound exactly the same. Which should I pick?"

"If I were you I'd choose the communist hell."

"Why should I do that?"

"Well, you know what these socialist places are like. Sometimes there's no fire, sometimes there's no brimstone, sometimes there's no torture........."
[Rimshot]

Try the veal.
Tip your waiter.

[More]

A good place to start...

Ron Bailey at Reason has a remarkable concise and helpful outline of the hard-to-grasp Cimate Security Bill. It is definitely worth reading in its entirety, along with his links as well if you are unsure how this bill will change things for America.

This week the U.S. Senate is debating the Climate Security Act, a piece of legislation which would require the country to cut its greenhouse gas emissions by 4 percent in 2012, 19 percent in 2020, and 71 percent in 2050 below what they were in 2005. The act rations the emission of greenhouse gases produced by burning fossil fuels by issuing an ever declining supply of emissions allowances. Emitters such as electric power generators, coal, oil and natural gas companies, and energy intensive industries like steel and cement manufacturers will be able to buy and sell the government-issued permits. This trading puts a price on greenhouse gases. The idea is that as energy produced from climate-damaging fossil fuels becomes increasingly expensive, industries, researchers and entrepreneurs will be encouraged to develop new climate-friendly, low-carbon and no-carbon energy technologies. But will this happen? [More]

We have a tendency in agriculture to focus strictly on ag legislation and science from the USDA, but this huge legislative initiative will roil the waters on our farm ponds (which are much larger lately around here). But most of the sporadic coverage I have seen in the farm media has somehow drifted around to the happy scenario of getting a payment for sequestering carbon.

This misses the whole idea of the bill and the climate change response. A better summary of the impact can be found in a study done for The Fertilizer Institute.

Rising energy prices will continue to result in rising crop production costs and potential climate change legislation will add significantly to this rate of increase. Using USDA’s 2017 expected crop acres, the Lieberman-Warner Climate Security Act will add $6 to $12 billion to total production costs for corn, soybeans, wheat, cotton, rice, sorghum, oats and barley in 2020.

Some growers may have an opportunity to receive payments for sequestering carbon if they use specific farming practices. According to the Chicago Climate Exchange (CCE), farmers in 17 states could potentially receive a credit of 0.6 metric tons of carbon/acre/year for using no-till. Specified rates in the remaining states are either lower than 0.6 or are currently not available from the CCE. At an assumed future carbon price of $30 per metric ton, which is well within the range of prices being proposed as likely by climate change modelers, farmers could potentially receive $18 per acre for sequestering carbon. However, this is well below the projected crop production cost increases resulting directly from S. 2191 for corn and significantly below the total increase in corn production costs of $100.47 - $138.94 projected in 2020. Consequently, this potential legislation will place a severe burden on U.S. crop farmers by driving operating rates even higher for growers who are already experiencing the highest production costs on record, and will result in a significant decline in farm income. [More]

Of course, at this point any right-thinking (and leaning) producer should be amply horrified, but our knee jerk reaction to a possible cost increase begs the question: Did we think reducing our carbon footprint was going to be free or even an income generator?

To reduce carbon emissions farmers (along with every other energy user) have to change what we do. If we don't have a financial stimulus, we keep on doing what are doing now. Our sense of entitlement will have most farm leaders demanding special treatment for farmers, even exemption from the burden of participating. [Now that we have divorced commodity prices from food costs, it will be interesting to see how we re-flip the argument to stress food supplies are in jeopardy if we have to pay our share of carbon expenses.]

I favor a carbon tax, but it's likely that even a cumbersome cap-and-trade system will look the same at our level, i.e. expensive energy.

So wait by the mailbox for your $18/A sequestration payment, but you'll sort through a lot of bills to find it. Regardless of how you feel about government action on climate change, I think the safer outlook is to anticipate astonishing energy price increases. This is the reason I don't see commodity prices falling much. It will simply be too expensive to plant if they do.

You can tell...

I don't live anywhere near an ocean. I am fascinating by pictures of boats and water.


[More]

All dressed up...

And nowhere to sail. The improbable navies of landlocked countries:


(I looked for Switzerland, too)

Ideology first, then the science...

I've noticed global warming skeptics usually have a handful of data points upon which they build their case. Fair enough. These facts and arguments are often taken from science authors who work to debunk environmental issues.

Now we know where those authors get their support: conservative think tanks.

Our analyses of the sceptical literature and CTTs indicate an unambiguous linkage between the two. Over 92 per cent of environmentally sceptical books are linked to conservative think tanks, and 90 per cent of conservative think tanks interested in environmental issues espouse scepticism. Environmental scepticism began in the US, is strongest in the US, and exploded after the end of the Cold War and the emergence of global environmental concern stimulated by the 1992 Earth Summit. Environmental scepticism is an elite-driven reaction to global environmentalism, organised by core actors within the conservative movement. Promoting scepticism is a key tactic of the anti-environmental counter-movement coordinated by CTTs, designed specifically to undermine the environmental movement's efforts to legitimise its claims via science. Thus, the notion that environmental sceptics are unbiased analysts exposing the myths and scare tactics employed by those they label as practitioners of 'junk science' lacks credibility. Similarly, the self-portrayal of sceptics as marginalised 'Davids' battling the powerful 'Goliath' of environmentalists and environmental scientists is a charade, as sceptics are supported by politically powerful CTTs funded by wealthy foundations and corporations. [More via Framing Science]

Of course, the lack of independent confirmation by non-aligned scientists does not invalidate their points of view. But it does call into question how widely held their views are in the independent science community.

After the storm...

In my hundreds of posts are literally thousands of opinions, a few of which may actually be valuable to some readers. But what are not valuable are rants - angry diatribes spraying venom that I recoil from in the blogosphere myself.

But that's exactly the description that best fits my previous post about my new Apache AS710 sprayer. To be sure, I have issues with the operation and design, but there is no excuse not to raise them civilly. I offer none, but do apologize to my readers and the folks at Apache. It was bad writing and bad judgment in one ugly package.

Readers noted the tone of the post and their feedback helped me see my language as both extreme and confusing. Thanks to those who commented. While I have occasionally experienced "blogger's lament" before, I think this one will stay in my memory a little longer. It was unprofessional and childish. Tough seasons and work pressures exaggerate irritations, but I should be way past those days.

My Apache dealer contacted me and we discussed my problems a little more conversationally, and there may be some solutions possible. But is also very possible, that with many other satisfied Apache owners, I am the problem with the machine.

Big problems call for big solutions...

No sooner than the UN had issued a report of food demand in the future than one big effort appears to address the challenge.

World food production must rise by 50 percent by 2030 to meet increasing demand, U.N. chief Ban Ki-moon told world leaders Tuesday at a summit grappling with hunger and civil unrest caused by food price hikes.

The secretary-general told the Rome gathering that nations must minimize export restrictions and import tariffs during the food price crisis and quickly resolve world trade talks. [More]

Although I dispute the higher population forecasts being bandied about by environmentalists and demographers, the recent upsurge in food demand certainly points out even without more people, we need more food.

At the same time, I am optimistic that we have only begun to apply technology to this need. (Sounds like an engineer, doesn't it?) Now we have strong incentives via millions of newly economically empowered consumers, we could be poised for sharp jump in the productivity curves. And not coincidentally, agriculture's "toolmakers" are one step ahead.

Monsanto, the leader in agricultural biotechnology, pledged Wednesday to develop seeds that would double the yields of corn, soybeans and cotton by 2030 and would require 30 percent

The announcement, coming as world leaders are meeting in Rome to discuss rising food prices and growing food shortages, appears to be aimed at least in part at winning acceptance of genetically modified crops by showing that they can play a major role in feeding the world.

Much of what is in the commitment are things the company was doing anyway, though it now becomes a formal goal.

Monsanto said it had developed its new commitment after consulting farmers, political leaders, academics and advocacy groups as to what needed to be done to increase food production to cope with a rising population and the demand for biofuels without converting more forests into farmland.

“In short, the world needs to produce more while conserving more,” the company’s chief executive, Hugh Grant, said in a statement. [More]

When I first read the goals I imagined corn at 400 bu. and beans at 120, etc. But if you dig down into the later paragraphs, the idea is to double global yields to about 220 for corn, for example. To be sure, there will no doubt be some guys growing 400-bushel corn and making life miserable for the rest of us, but the way to raise global yields is to lift the lowest producers to moderate yields.

Norman Borlaug pointed this out over a decade ago.

Yields can still be increased by 50-100% in much of the Indian sub-Continent, Latin America, the former USSR and Eastern Europe, and by 100-200% in much of sub-Saharan Africa, providing political stability is maintained, bureaucracies that destroys entrepreneurial initiative are reigned in, and their researchers and extension workers devote more energy to putting science and technology to work at the farm level.

Yield gains in China and industrialized North America and Western Europe will be much harder to achieve, since they are already at very high levels. Still, I am hopeful that scientific breakthroughs - particularly from genetic engineering, will permit another 50% increase in yields over the next 35 years.

The most frightening prospect of food insecurity is found in sub-Saharan Africa, where the number of chronically undernourished could rise to several hundred million people if current trends of declining per capita production are not reversed. Sub-Saharan Africa’s increasing population pressures and extreme poverty; the presence of many human diseases, e.g., malaria, tuberculosis, river blindness, trypanosomiasis, guinea worm, AIDS, etc.; poor soils and uncertain rainfall; changing ownership patterns for land and cattle, inadequacies of education and public health systems, poorly developed physical infrastructure, weaknesses in research and technology delivery systems will all make the task of agricultural development very difficult. [More via MR]

I think this will be done best by example, patience and farmer-to-farmer conversation rather than regulation and courts. Here in the US we have an obligation to lead, not herd others to better solutions.

However, one big holdup will be allowing our farm program to continue to frustrate global trade improvement. Trade in badly needed biotechnology for poorer producers could be hamstrung for the sake of my $25 DCP. More specifically, the new ACRE program definitely looks like a target for WTO opponents.

Trade implications. But since the ACRE program is based on planted and considered planted acres and an average of actual prices and yields, Conner lamented, "The implications are dramatic and are as great as anything we've ever done relative to trade implications. Like I said, I've lost sleep over this."

Given those program parameters, the ACRE payments would almost certainly end up in the amber box relative to U.S. WTO commitments, Conner said. [More]

The effort outlined by Monsanto is commendable and pretty dang ambitious, IMHO. Still it is refreshing to see a member of our industry looking at the future and aiming high rather than concentrating on what could go wrong.

Our tiny future...

A couple of comments below about Asian minitrucks ties in with some chatter I have heard here in central IL. It seems a few farmers are opting to scoot around in one of these rather than climb into the old Ram and burn a few gallons of $5 diesel.

Each Japanese Mini Truck may have some slight variation (with respect to mileage or features) however here are the most common characteristics of a vehicle:

* Dimensions: 10 feet long, 5 feet high, 4 feet wide
* Weight: 1800 lbs
* Truck Bed: 4’ x 6’ with fold down sides.
* Bed capacity: 880 lbs
* Engine: 550-660cc, Liquid Cooled, 2, 3, or 4-Cylinder, Gasoline-powered, with approximately 40 Miles per Gallon
* Transmission: 4 or 5-Speed manual transmission, Low/High range
* 4x4, 12” All Terrain Vehicle tires, some trucks with differential lock or axle lock
* Standard heat, defroster, windshield wipers, headlights. Some units have A/C.
[More]

I had heard of a guy around here driving one after he ...umm, lost his license to drive. But then I saw one on Route 41 in Indiana last Friday. I'm pretty sure these vehicles are not sanctioned for road use, but debate continues about that.

Oddly, for $5K, it might be an answer for me. I gave Aaron my Colorado pickup to drive when he came back, and rather than plunk down for a Gator-type ATV, one of these babies would suffice to zip around our farm. It would also keep my commuting car - a studly Pontiac Vibe - clean and uncluttered with tools, parts, etc.

Sooner or later fuel costs make all kinds of formerly silly choices reasonable. When all you want to do is travel 3 miles to see if a field is dry (which after last night could be a week or so...) a minitruck could be ideal. I like the dump feature too.

How about it? Any experience/recommendations?

The next place to be...

Look at the advantages:

• Highest social capital of any state in the US
• More native Congresspersons per capita
• More people over 85 per capita

And now, just in time to mess with all these economic and demographic trends, it appears there is a fair bit of oil under those semi-arid plains.

His new wealth springs from the Bakken formation, a sprawling deposit of high-quality crude beneath the durum wheat fields of North Dakota, Montana and southern Saskatchewan and Manitoba. The Bakken may give the U.S. -- the world's biggest importer of oil -- a new domestic energy source at a time when demand from China and India is ratcheting up the global competition for supplies and propelling average U.S. gasoline prices to almost $4 a gallon.

And unlike the tar from Canada's oil sands, Bakken crude needs little refining. Swirl some of it in a Mason jar and it leaves a thin, honey-colored film along the sides. It's light - -almost like gasoline -- and sweet, meaning it's low in sulfur.

Best of all, the Bakken could be huge. The U.S. Geological Survey's Leigh Price, a Denver geochemist who died of a heart attack in 2000, estimated that the Bakken might hold a whopping 413 billion barrels. If so, it would dwarf Saudi Arabia's Ghawar, the world's biggest field, which has produced about 55 billion barrels. [More]

Even if this estimate is optimistic, it looks to me like a far better bet than ANWAR. Now reduced to a flag-pin political litmus test, drilling in the Arctic strikes me as enormously more problematic than turning North Dakota into the next Texas.

While energy development will not re-establish hundreds of small towns and rural social structures, developing resources in places like ND seems to meet every criteria used to measure a solution to our spiraling energy costs.

Would it change the culture of ND? I would think so, but I'm not too sure that hasn't already been irreversible shifted from its old trajectory by population mobility and fertility changes, farm policy, ag technology, and warmer climate (for whatever reason).

Perhaps ND is on it's way to being renamed "New Dakota".

Dan Leibert's been at it again...

[More]

Learning to love home more than ever...

We could be approaching a significant period where air travel is an enormous luxury. After yammering about everything from telecommuting and video conferences, they may be our only economically feasible choices.

In order to make any money, airlines will have to fly fewer people for higher prices. And there will likely be other changes as well.

This consolidation will come with a cost: Experts believe that for the U.S. industry to shrink to a size that would allow the surviving carriers to earn a profit will require hefty fare hikes and a 20%-to-25% cut in capacity. That means fewer routes, fewer flights, and even more crowded planes. The biggest losers would be smaller cities like Cedar Rapids, Iowa, and Baton Rouge, La., that became accustomed to dozens of daily flights, usually on 50-seat jets that the majors use to feed traffic to their hubs. But oil priced near $130 has rendered those smaller jets uneconomical, meaning that carriers are likely to fly one much larger plane on marginal routes each day, but no more. "We might keep one flight just to keep Congress off our back," muses one industry executive. Coast-to-coast flights will change, too. With roughly 30% of the weight of any transcontinental flight consisting of the fuel alone, meaning airlines are burning fuel just to carry fuel, carriers can be expected to replace many of those longer nonstops with one-stop flights, intended largely for refueling. The era of cheap fares will end, too. Since deregulation in 1978, fares have fallen by more than 50% in real, inflation-adjusted terms. Prices will rise, and airlines will become even more creative in how they set fares. Some experts like Mann wonder if carriers won't begin charging passengers by weight, as air-freight companies do to transport goods. "There's a huge cost difference between flying a grown man and a 50-pound child," Mann notes. Industry executives say they can't see that happening any time soon—"too politically incorrect," as one notes. Adds Southwest's Kelly: "I just don't think it makes a lot of sense." [More]

I travel more than I really want to speak to groups and I'm not looking forward to this scenario. More than a few CFO's are probably rewriting travel policy to compensate for soaring costs.

Costs are not the only problem. Just as worrying is that passenger numbers look vulnerable to a slowdown in the world’s big economies. According to IATA, global passenger numbers grew by a seemingly healthy 4% in the first four months of the year. But that compares badly with a 6.7% increase in the same period last year. Of greater concern is that fewer lucrative business and first-class flyers are taking to the air. Their numbers fell by 3.9% worldwide in March compared with a year before and by a staggering 8.5% in North America. [More]

Jut as our fuel costs have awakened a re-examination of tillage, more of us could soon be asking, "Is this trip really necessary?". And I'll bet we find out the answer is often "NO".

One possible side-effect for farmers could be a revision of our preference for face-to-face, oral communication. While we have taken to cell phones like ducks to an Illinois cornfield, there may be even more benefits awaiting those who can conduct the vast majority of their business without jumping into a pickup truck. (Of which there will be fewer, it seems.)

All the more reason to seriously consider broadband, balancing the cost against gas expenses.

If our votes fall in the forest...

Will they make any noise? Like I have been speculating, Sen. McCain's adamant opposition to farm and ethanol subsidies is turning red voters blue, or at least purple. And the process for some is more than a little uncomfortable.

But it seems almost assured that the choices will be John McCain and Barack Obama, neither, from the standpoint of farmers and many white rural voters, good.

McCain is burdened among these constituencies by close association with Bush. More specifically, he has railed against subsidies for farmers and he was in lock step with Bush's recently overridden veto of a major farm bill that, while capping subsidies, left those subsidies sufficiently intact to mollify Arkansas farmers.

McCain's war record and maverick independence overcome quite a bit with these voters. But it is always problematic for a politician if he is perceived as a threat to livelihoods.

It takes an unusually altruistic voter to support a political candidate who wants to cut that voter's income. A man running for office while saying newspaper columnists ought to get paid less is going to be a hard sell with me, all other issues and factors notwithstanding.

That leaves Obama, who supported the farm bill and the override, but who is an African-American.

I am not saying all East Arkansas farmers are racists. I am not saying all conservative white rural voters in Arkansas are racists. I'm saying remnants of a racist culture stubbornly persist in some parts of rural Arkansas. [More]

But even if they can bring themselves to vote for Sen Obama will they keep the system of payouts they have fought for? I'm not so sure. I think stronger payment limits/means testing will be back, in that case.

Both Democratic candidates, Sens. Obama and Hillary Clinton of New York, voted for the legislation when it first went through the Senate but weren't present for the vote overturning Mr. Bush's veto. Both campaigns said they supported the override. Because of a clerical error, a section of the bill was omitted for the override vote, and lawmakers are expected to deal with that this week.

The legislation begins shifting the direct farm subsidy from one that all farmers receive to one paid only when times are bad. While there is still an element of the payment formula involving a direct subsidy, it is decreasing.

"Sen. Obama is a supporter of that concept," said Jon Doggett, vice president of public policy at the National Corn Growers Association.

The Illinois senator has also advocated cutting support for large commercial farmers and transferring it to small and medium-size family-owned farms.

Sen. McCain, on the other hand, has opposed farm subsidies regardless of their structure, Mr. Doggett said. [More]

But the largest problem of all is whether our tiny handful of votes really amount to any political clout. One thing does seem reasonable is the farm vote could be farm more divided than we have seen for along time. And if the split is roughly 50-50, it's like we didn't vote at all, in some sense.

This outcome will not go unnoticed by political analysts.

For all those whose voices changed late [JWorld Rerun]...



The performance does not have the power and finish of a true coloratura, but still is remarkable.

(See what you can miss if you don't rummage through the archives or pick a label?)

The acronym needs work...

Is fertilizer controlled by a cartel every bit as fiendish as OPEC? Well, obviously - according to some observers. Although I have a hard time equating Canadians with Arab sheiks, the concentration in this industry certainly makes the concept of an "OFERTEC" possible, if not likely.

Those who oppose industrial agriculture think this is yet another reason to question our agricultural system. And frankly, looking at fertilizer costs for 2009, I think a few more farmers will be listening to this kind of populist advocacy.

I can think of few things more taken for granted in modern post-industrial society than fertilizer. Few people know people know what fertilizes the fields that produce the food they eat -- fewer, I'd bet, than know the source of their drinking water or electricity. To modern consumers, all of these things appear as if by magic.

But with food prices hovering at elevated levels and hunger protests simmering in the global south, stuff like fertilizer is suddenly front-page news. The Wall Street Journal uncorked a doozy the other day. Did you know that dominant fertilizer giants like Mosaic and Potash Corp. of Saskatchewan -- the ones I'm always writing about -- are organized into OPEC-style cartels and legally allowed to collude on price? I didn't. [More]

As more of us contemplate the amount of money we are going to scatter on our acres, even high prices (which we fear could disappear overnight) seem barely enough reward to climb that risk mountain. For farmers in the developing world, the anger is intense, as they have just arrived at the blast-off point for ag production only to see apparent price-gouging.

With the prospect of earning record prices for corn, wheat and soybeans, farmers globally are trying to increase output. To do that, they need more fertilizer.

But high prices and record profits have exposed serious tensions. Indian leaders this week accused suppliers of acting in tandem to drive prices abnormally high. Rising fertilizer prices, they allege, will imperil global food security.

It is a devastating charge. Fertilizer, after all, is a commodity like no other. Without it, there wouldn't be enough food to feed 40% of the world's people.

"You can wait for steel, you can wait for aluminum, you can wait for power," says Dr. U. S. Awasthi, managing director of Indian Farmers Fertilizer Co-operative, who alleged "cartelization" by suppliers this week. "But can you wait not to have your meal?" [More]

It looks to me like about 3-4 tense years before supply begins to catch up to demand. More investment is puring into fertilizer production and the profits are certainly high enough to induce supply boosts.

Cartels are eventually self-defeating, but the "eventual" part can seem like forever if you're stuck on the other end. And the politics of the day likely ensures official scrutiny.

But c'mon - being scammed by a Canadian? Aren't there any good guys left?

Suddenly, it is real...

I have written in Top Producer about our son Aaron coming back to the farm. It has been an interesting evolution, fraught with unexpected emotion and dramatic (to us, at least) plot twists.

Aaron has been working here since March, and good thing too. Without his labor, Jan and I would be in a huge hole. As it is we still have 300 acres of beans to plant when it dries up enough. Here in central Illinois, that isn't a bad position this year. Our corn is all up - although some took 4 weeks to make an appearance.

Meanwhile, I had planned on relatively normal schedule and had booked speaking and meeting events for ...well, this week - and much of June. So all things considered we're in better shape than we deserve.

But tonight we had Aaron and Kris and John (our grandson) for an impromptu dinner and on a whim I asked John (4) if he would like to sleep over at grandpa's tonight. The reply, "Sure!" I don't know who was more surprised - me or his parents.

So I just finished splashing and squirting the bathroom during his tubby, and Jan is inserting the little rascal into bed for (no doubt) the first time. And an occasion we had dreamed about has become real.

Like many farm parents we encouraged our children to get educations and see the "rest of the world". No problem - they couldn't get off the farm fast enough. But when Aaron and Kris began considering returning, it took some time for us to accept it as really possible.

Judging from responses I have had from other surprised farmers, unexpected boomerang offspring may be the rule - not the exception. And our happy financial situation in grain farming right now seems to offer an opportunity to make a return possible. Anyhoo, that's our aim.

But forget the crop and prices and farm program. My son, who has been gone for 15 years is home. And my grandson sleeps in his old bed.

And if you think I am being mawkish, you should see Jan.

Not the ideal sponsor...

Sen. Joe Lieberman may become an anvil around John McCain's neck. He manages to wind up on the losing side of way too many battles.

An influential coalition of Fortune 500 companies and environmental groups that was formed to support climate-change legislation has splintered over the Lieberman-Warner bill that is headed next week to the Senate floor. [More]

Ag groups have been interested in carbon-trading legislation largely I think of our Pavlovian reaction to the scent of a payment in the wind. This is assuming we are really sequestering some carbon. How the payments are structured and what operational changes would be required are also deal-breakers.

Carbon credits contracts are indeed binding, and producers need to read the fine print to ensure they know what they're getting into, says Gordon Smith, director of EcoLands Program of the Environmental Resource Trust. “Future carbon prices are very uncertain, and all the rules have yet to be written,” he says. “Some producers are willing to take the cash now, while others might think there is a future value and only want a relatively short contract. Most sales are on delivery, and a lot are favoring deals where they can get certain guaranteed payments and share if the price moves higher.

“As carbon sequestration and emission reduction projects are implemented and made public, everyone gets to see how credits are counted,” Smith continues. “Some counting methods are more reliable than others, and the market is sorting out when inexpensive indicators can be used to calculate amounts of carbon credits and when more expensive site-specific measurements are needed. For some aspects of carbon accounting, standard methods are becoming accepted. For other aspects, particularly setting project baselines, no consensus has emerged about what is the proper way to count.” [More]

The larger benefit, however, may be a sharper price difference between biofuel and petroleum prices. Such regulation would cement another advantage for biofuel.

Of course the downside is considerable. A well-designed cap-and-trade system (assuming that's not an oxymoron) would have the same effect as a carbon tax, and we are voracious energy consumers. Hence our input prices would see hefty jumps. Electricity cost would be the big impact.

Farmers may not have the patience or interest to sort out the pluses and minuses, especially when they are pretty foggy. At best, our fairly thin environmental commitment in the area of climate change (I think most are politically biased skeptics) will likely prove to be insufficient to prompt us to take any economic risk or cheerfully change our energy habits.

America's slow approach to carbon-trading is definitely crimping global carbon markets. In fact, the buzz for that effort seems to be dwindling.

Despite all the glitz, however, the future of the industry looks parlous. The World Bank warned that the coming years look leaner. There are already enough projects underway to provide all the offsets needed by the rich countries under the Kyoto treaty, which expires in 2012. The market for voluntary offsets, although growing fast, remains small.

And although America seems more inclined to accept emissions caps these days, it will take a long time to legally mandate them. Besides, there is no guarantee that the world will agree on a replacement to Kyoto, or that a new deal will preserve the CDM. No wonder there was a giddy, fin-de-siècle atmosphere among the stalls at the Expo. Carbon trading has either a very rosy future, or none at all. [More]

Besides, given the recent history of Congress, the likelihood of a compromise that would produce action is optimistic. The safer prediction may be a "solution" that simply hands out permits or credits like Christmas candy, leaving future generations to endure the environmental and economic consequences.

Kinda like that other bill that passed recently...

The solution to all our problems...

$8 gasoline. No, seriously.

6. An antidote to sprawl

The recent housing boom sparked further development of antiseptic, strip-mall communities in distant outlying areas. Making 100-mile-plus roundtrip commutes costlier will spur construction of more space-efficient housing closer to city centers, including cluster developments to accommodate the millions of baby boomers who will no longer need their big empty-nest suburban homes.

Sure, there's plenty of land left to develop across our fruited plains, but building more housing around city and town centers will enhance the sense of community lacking in cookie-cutter developments slapped up in the hinterlands. [More]

There is, of course a smattering of truth in this idea, methinks. But the problem is making the change.

I think it would be easier to leave it until I'm sorta dead, or similarly useless.

(I heard that!)

48 states in 106 hours...


The Great American Roadtrip.

By my calculations they could have saved about $4713 in gas if they had done this two years ago.

[via Presurfer]

A competition where everyone wins...

China is embracing education with vigor. And as usual with China the numbers tend to overwhelm at first glance.

University education in China is skyrocketing. In 1996 China had less than 1 million freshmen, in 2006 there were over 5 million freshmen. The freshman class is continuing to grow and university graduates, of course, are just 4 years behind. About half of the entering students are in a hard science or engineering program. As a result, China today produces 3 times more engineers than the United States and will quickly overtake the U.S. in total graduates. [More]

I agree with Alex's optimism about seeing people as brains who lift us all rather than stomachs who burden us. The tendency to underestimate the importance of a growing population is essentially the mindset of a wealthy society, which views others as those who can only take what I have, rather than people who can help me have more or better things. So while China is struggling to find enough oars for all who want to row their economic ship, places like Iowa can't come up with job recruits.

Iowa’s surplus arises from colliding trends: the exodus of young college graduates, a state economy that adds 2,000 jobs a month, low immigration and birth rates, and an image problem that makes it difficult to recruit workers from out of state. Iowans’ median age is nearly two years above the national figure, and the state is near the top in the rates of women in the workforce and workers with multiple jobs — further shrinking the pool of people who might be drawn into the market.

“It’s really a perfect storm,” said Elisabeth Buck, director of Iowa Workforce Development. Over the next decade, more than 70,000 workers a year will become eligible for retirement, with school enrollment — potential replacement workers — dropping by 20,000 since 1998, while the nationwide housing crisis makes it harder for companies to recruit from out of state, because potential employees cannot sell their homes.

Last year, the state added nearly 13,000 nonfarm jobs, in part because of growth in ethanol and wind energy, and lost 3,300 people from the workforce. With statewide unemployment at 3.5 percent, compared to a national rate of 5 percent, nearly everyone who wants to work and can work has a job. “We’re looking for ways to grow our population,” Ms. Buck said. [More]

What does this do to the argument for ethanol plants which will bring "badly needed jobs" to places like Iowa? Looks to me what they badly need are "job-fillers".

[Blognote: I have discovered from conversations with "loyal" readers, that few of you bother to read the source material I link to. Bad readers, bad! No biscuit! If you read the above, you might come to the same "well, duh!" conclusion I did: raise wages.]

The other curious linkage is the way China is investing wealth and talent in Africa.

While rising demand for commodities is one way that Asia’s economic boom helps to raise African living standards, China’s economic involvement in Africa now goes far beyond arms-length imports and exports. Chinese firms have begun investing directly in African oil and mineral producers and in roads, dams, and telecommunications infrastructure. It is estimated that annual Chinese foreign direct investment in Africa surpassed the one billion dollar mark in 2005 and has continued to rise since. Shuttered factories and mines have been brought back to life and severed roads restored. The spread of cell phone technology has allowed rural African grain markets to function more efficiently, probably improving the lives of consumers, farmers, and traders alike.

No one knows the exact figures, but hundreds of thousands of Chinese workers and entrepreneurs have also migrated to Africa in search of their fortunes. This new Afro-Chinese community—from telecom engineers to owners of small Asian restaurants and medicine shops—has been a striking new presence in my own recent travels in both West and East Africa.

Why have Chinese individuals and firms dived in when European and U.S. investors have largely shied away? In discussions with Chinese investors, it seems the key motive is simple: profit. Africa provides bountiful profit opportunities across multiple economic sectors for Chinese firms flush with cash from their boundless growth at home. Chinese investors also have a major advantage over their Western counterparts in that they know how to make money in a developing–country business environment where the rule of law is optional, corruption and bribery are the norm, and infrastructure is patchy. Their experiences at home give them a big leg up on the competition. [More]

Much of China's educational effort is pointed at biotechnology. Like here in the US, the big payoffs appear to be in medical adaptations, but the immense educational and research effort should spill over into agricultural biotech as well. It could be the eventual Monsanto competitor will be Chinese.

China's biotechnology sector will continue to grow, driven by domestic demand and global investment. There is currently a less skilled and experienced workforce for applied sciences, but with a large student population intensely interested in learning about biotechnology, the requisite skills can be learned quickly. Collaborative efforts by Chinese universities and companies will ensure a steady supply of well-trained workers for more homegrown innovation for China to join the global biomedical sector. Great opportunities are present for both US and European-trained scientists who will be essential for accomplishing the task of training and developing a biotech workforce to meet the demand in China. [More]

Coupled with their growing influence in the second largest continent and people most Americans rarely think about, it is hard not to root for a people willing to sacrifice today for a better world they will probably not live to see.

To be sure, Chinese entrepreneurs are every bit as avaricious as Western counterparts, but the billions struggling up from day-to-day existence lends this emerging power with a vitality that will add to the world of the future just as the United States did for centuries.

I imagine there will be a great deal of verbiage spilling out from media about (but not naming) the new "Yellow Peril", but I for one think it is a positive development to see imperialism (if that is the supposed threat) based on economic rather than military power.

Feel free to compare to our strategy in Iraq with China in Africa.

Even though I saw it coming...

It's worse than I imagined. The tragic fallout from closing horse slaughter plants and the collision with feed costs and the housing crisis is becoming a big problem.

The global food and fuel crisis is resulting in more than just people going hungry. Rising grain and gas prices, as well as the closure of American slaughterhouses, have contributed to a virtual stampede of horses being abandoned — some starving — and turned loose into the deserts and plains of the West to die cruel and lonesome deaths. Horse rescue projects, which are mostly small, volunteer operations with limited land and resources, are feeling the consequences of this convergence of events. In the meantime, many now unaffordable horses are being sold to abbatoirs south of the border where inhumane methods of slaughter are practiced. [More]

Don't get me wrong, there is no I-told-you-so scheudenfraude here. Just a sadness that animal welfare advocates don't face end-of-life issues for companion animals any better than we do for our own species. And we are just beginning to see the consequences, I think.

So unwanted US horses, if not abandoned to die a lingering death or wander onto a motorway, are being shot and dumped illegally. how humanely one doesn't wish to think. Being slaughtered for meat would probably be a lot more humane. And some US horses still are - except this now entails being painfully trucked to distant slaughterhouses in Canada and Mexico. The US Humane Society wants to stop even the export of horses for slaughter; some animal scientists predict an "equine tsunami" if they succeed.

I think most of us hate the idea of cruelty to animals, especially intelligent domesticated creatures like the horse. But efforts to protect animal rights should lead to less cruelty, not more of it. It seems the animal rights people have shot themselves in the foot.

It reminds me of when activists liberated all those mink from European fur farms, helping the bloodthirsty little weasel, an American native, destroy yet more European wildlife. [More]

This outcome is not simply irresponsible. It is immoral. And it will set back animal welfare advocacy efforts immensely.

Blog Wars...

One of my favorite comics has nailed the blogosphere with a series of great send-ups.

The series starts here and is continuing.

We need a better marketing plan...

The food-fuel debate may be over before corn farmers realize it. With the exception of a few in-house economists, the overwhelming consensus of Big League Economists [plenty more examples] is exactly what common sense is leading many consumers to conclude: ethanol takes corn acres away from food production, and the effect hits the world's poor the hardest, because they consume mostly grain.

Even one of agriculture's oldest stalwarts and Past Master Diplomatic Justifier of Farm Policy, Keith Collins is stating the obvious:

The Agriculture Department’s own longtime chief economist, Keith Collins, who retired in January, said that ethanol was the “foot on the accelerator” of corn demand — an essential feed for animals, as well as a part of many diets — and merited renewed debate. He said Congressional mandates for ethanol would require farmers to grow more corn for conversion to biofuel, at the expense of feed corn and other food crops.

“You’re building in tremendous increase in demand,” said Mr. Collins, who emphasized that he was not necessarily against ethanol. “It’s an increase that is going to feed into food prices.”

The United Nations report, the global agriculture outlook through 2017, said prices for farm crops will remain substantially higher over the next decade because of fundamental changes in demand, though they will gradually decline from current highs.

Because the recent spike in crop and food prices has been caused in part by temporary factors like drought, the report predicted that prices should decrease as weather conditions return to normal and crop yields improve.

“At least we hope they are temporary,” said Angel Gurria, secretary-general of the O.E.C.D., alluding to the potential impact of lasting climate change on agricultural production.

In addition to reviewing ethanol policies, the report said governments should reconsider trade policies like export bans that do not allow farmers to take advantage of higher global prices for agriculture commodities. [More]

I think we are just starting to see the effects of $6 corn on food prices here due to the longer response time from the meat industry - especially beef. In high-grain-consuming countries, the results are in your face right now. One clue will be to watch the tenor of the debate at the World Pork Expo this week. It is crucial to remember that the lion's share of the economic good ethanol does for farmers is restricted to grain farmers (and more especially, grain farmowners) - not all farmers.

The debate will also be roiled, oddly enough, by growing consumer experience with higher blends of ethanol. Consider this e-mail I received last week responding to our Roundtable on US Farm Report.

I am a central IL farm wife who talked her husband into buying a 2008
Chevy Impala which is a flex fuel car. Our first few tanks of gas we got

28 mpg. we then tried 2 tanks of ethanol which dropped our mileage to 17

mpg. That was about 15000 miles ago and the best we have done with
regular gas since the ethanol is 23 mpg. I have tried working with the
dealer who tells me that unless the computer on the car shows an error
message there is nothing they can do. I then contacted GM and was told
the same thing. I am a farm wife who would really like to support
ethanol but frankly for us it has not worked out well at all. Could you
tell me how I can contact Beth Lowry? I am at my wits end with this car
and at this point don't have much good to say about ethanol or GM. I am
constantly being told that no one has seen a mileage drop like we have
experienced. Our last two cars have been Impala's but the next one won't

be and if we can't find someway to improve the mileage on this gas hog
we won't consider ethanol again.

It has been a mistake, IMHO for the biofuel industry to downplay the reduced mileage of E-85, and highlight those few outlier examples of nearly equivalent, or physics-defying better mileage of higher ethanol blends. The stuff on has 70% of the energy of gasoline, fer cryin' out loud. When consumers like the lady above run into reality, telling them, "Who ya gonna believe - me or your own eyes?" seriously undermines any shred of credibility the ethanol industry has left. Pushing to install E-85 pumps will only replicate such experiences, I suspect. In the end, those pumps will serve mostly those who buy the stuff for non-economic reasons, like reducing Mideast oil imports (snicker).

But the real detonation could be caused by this springs wet weather which prompts the loss of a few million corn acres and a couple of bu/A in yield to produce a little too little corn for all our current customers.

That's when things will get moving. And if Hillary is playing the I-told-you-so game in preparation for 2012, and McCain steps into the White House, the current administration's precedent of unilateral executive action could allow the old subsidy foe the opportunity to change the rules of this rigged market.

All that could be avoided. Let go of the tariff and blender credit, and shift the blame to the market, which will sort out winners and losers more fairly than any legislator. The risk is low and the defense gains for the corn industry immense.

Don't pay the ransom...

I've escaped. Not only have we been struggling to plant some beans, we bumped into a strange computer problem this week and I haven't been posting nearly enough to satisfy my compulsion.

Apple has automatic upgrades for their programs (similar to Microsoft), which generally run unseen in the background and work great. But when they released a whopping new upgrade to the operating system software - Leopard - it weighed in at 420 MB. Along with some other smaller upgrades our two computers had some heavy lifting to do - and some bandwidth to occupy.

Only on satellite like Hughesnet, they frown on bandwidth hogs. Fair enough. (In fact, it's called Fair Access Policy]. I don't download movies so it was no biggy. But when you do suck up too much time on the system you get a "timeout": for 24 hours your max speed is about the same as dialup on a bad phone line. It took me minutes to open AgWeb, for example.

So when my Mac tried to download the elephantine file, it tripped the penalty and we could barely get our mail on Thursday. Before I could figure out what the *&%$^ was going on, Jan's computer tried the next night and locked us up again. I've canceled the auto update for the time being, and if I get up at 3 AM and manually download the files, I can workaround the FAP limits (no restrictions from 3-6 AM).

We come out of the penalty box this morning sometime, and with the gentle floods we received last night, I seem to have some time to get some serious posting done, so check back later today.

Thanks for reading.

As for the beans, the news is less good...

Why Calculus III classes still suck...

I went to an all-male engineering college. In fact, to this day, I cannot understand how serious learning can go on with women of the opposite sex actually in the same room as testosterone-afflicted young men. Maybe it isn't.

Anyhoo, that was back in the Dark Ages of Engineering, and women of all genders are now welcome - nay, urged, begged, dragooned - to enlist in our pocket-protector profession.

But they aren't.

Now two new studies by economists and social scientists have reached a perhaps startling conclusion: An important part of the explanation for the gender gap, they are finding, are the preferences of women themselves. When it comes to certain math- and science-related jobs, substantial numbers of women - highly qualified for the work - stay out of those careers because they would simply rather do something else. [More]

Well, I never! After all we've done for them!

There is a flip side to this discovery. Those women who are drawn to science and technology remain a departure from the norm. While this can be a challenge, it can also be an advantage.

These things will work themselves out over generations, not months. The start we have made to open all careers to all people will doubtless prove wonderfully wise long after we have struggled to understand.

So, how was your Tuesday?...

Mine went something like this.



They say the sun may shine tomorrow...

[via RGS]