The agroblogosphere evolves...

[Dibs on the word "agroblogosphere]. Thanks to some fellow reader-bloggers, John's World has been added to an aggregation of international farm blogs. As soon as I'm done traveling, I'll dig deeper into Farmblogs - or you can go on ahead.

Hi there John, from Ian in France,

Sorry to be a bit off topic here but.....

The reason I’m writing is because I am a big fan of farmers’ blogs, and I got frustrated at spending too much time trying to find good ones and then forgetting to bookmark them.

So, I’ve started http://www.farmblogs.blogspot.com

The idea is simple. I ask farm bloggers I like to recommend bloggers they like; I then write to those that they have recommended, as I am writing to you, and ask you to send me a brief description of your blog, and the farm blogs that you recommend.

You were recommended by Marianne at Northview Diary.

I’ve put a link to you on http://www.farmblogs.blogspot.com. (If you can do the same for http://www.farmblogs.blogspot.com that would be great.)

All I ask is that you send me a brief email to info AT ianwalthew.com with a few words about your farm, your blog AND your own favorite farmers’ blogs.

I then make a brief posting, add your recommendations, contact the blogs you recommend, and so it goes.

Looking forward to hearing from you.
Kind regards,
Ian

P.S This is a no-advertising, entirely for fun, world-wide community driven blog. I also do regular news postings on world agriculture of all types.
http://www.aplaceintheauvergne.blogspot.com
http://www.ianwalthew.com
http://www.farmblogs.blogspot.com

One reason I like to link often to my info sources is this phenomenon - the weaving of an information net that multiplies our abilities.

More later - but now off to ORD and South Dakota to talk to Sunflower Growers.

[Thanks, Marianne]

Memo to US Dairy Industry...

Call Finland re: butter advertising.



[via blort]

Whom the gods would destroy...

They first subsidize. Big Sugar may be about to lose a Big Player. Although ostensibly for environmental reasons, the current tenuous hold sugar has on its highly protected trade status likely played a part in the ending of a major sugar producer.

At a news conference Tuesday, scheduled for 10:30 a.m. near the imperiled "River of Grass", Governor Crist is expected to announce a $1.75 billion deal to essentially buy the U.S. Sugar Corporation, including 187,000 acres of farmland that once sat in the northern Everglades. If the deal goes through (and though the announcement will be taking place, the deal isn't set in stone), it will extinguish a powerful 77-year-old company with 1,700 employees and deep roots in South Florida's coal-black organic soil. It will also resurrect and reconfigure a moribund 8-year-old Everglades replumbing effort that is supposed to be the most ambitious ecosystem restoration project in the history of the planet.

"It's mind-blowing," said Kirk Fordham, the executive director of the Everglades Foundation. "Who would have thought we'd see this in our lifetimes?"

The purchase would give the state control of nearly half the 400,000 acres of sugar fields in the Everglades Agricultural Area below Lake Okeechobee, although sources said U.S. Sugar would lease back its land for several years. Environmentalists hope that eventually, the area will become storage reservoirs, treatment marshes and perhaps even a flowway reconnecting the lake to the Glades. This could help recreate the original north-to-south movement of the "River of Grass", and eliminate damaging pulses of excess water into coastal estuaries. That would be good news for panthers and gators, dolphins and herons, ghost orchids and royal palms. [more]

While this may seem like a good thing for remaining producers like the sugar beet industry in the northern Plains, I think this will deeply reduce the political clout of sugar just when it is under increased fire from trade and subsidy critics.

It is also interesting to me to see the political realignment evident here. A Republican environmental governor??

Must...check...Blackberry...

Like British comedy and $5 Cabernet, I have become (nearly) addicted to e-mail. My son Jack, however, works for a more enlightened company, US Cellular, that has a one-step program: no e-mails on Fridays.

Ellison says the idea is for employees to talk to one another and collaborate more. Along the way, some staffers, like executive John Coyle, have made some amazing discoveries.

Coyle says that one Friday, he was about to send an e-mail to a colleague in the finance department whom he had never met. But he called him instead.

That's when the two realized they had similar phone numbers — meaning that not only were they in the same town, but in the same building.

"I'm like, 'Oh, really, where?' He said, 'On the fourth floor,' " Coyle remembers. "And I said, 'I'm on the fourth floor.' "

After more details were exchanged, "I literally got up, walked around the corner and there he was. I had no idea."

U.S. Cellular employees say that e-mail does have a critical place in their work — after all, they are in the business of selling wireless communications, including e-mail.

Just don't e-mail them about that on a Friday. [More]

Are they still part of the Collective?

I give 'em a 9.3 on artistic impression...

Although the shark is an original touch.

For fans of synchronized swimming who are afraid of water and waterproof makeup: office synchronized swim.



As usual, the Russians lead the way in new sports.

No doubt about machinery prices now...

In case you had hoped high machinery prices would cool demand and soften the market, think again. My take is they will be unable to absorb even a small part of the raw materials cost pressure without getting beat up by shareholders.

Rio Tinto Group, the world's second- biggest iron-ore exporter, said China agreed to a record price increase as mining companies struggle to keep pace with surging world demand. Baosteel Group Corp. will pay $144.66 a dry metric ton for so-called Pilbara blend fines in the year that began April 1, up 80 percent from a year ago, Rio said today in a statement. Pilbara blend lump will rise 97 percent to $201.69 for the Shanghai-based steelmaker. The contract marks the first time Chinese buyers have agreed to pay more for Australian ore than supplies from Brazil, which are costlier to ship. Chinese mills have so far failed to arrest six years of increases in the cost of the steelmaking raw material. The higher prices for iron ore will help Rio defend itself against a $171 billion hostile bid from BHP Billiton Ltd., the world's largest mining company. [More]

What I'm waiting for is if farm machinery manufacturers will be asked to prepay next year's steel to protect against even more price increases.

(Snicker)

Loose ends...

A loyal reader asked for an update on my farm and farms I have been traveling through, so...

• We finished (or at least stopped) Friday night. I decided against spotting in corn wetholes - too much damage, too little gain.
• We replanted about 130 acres of 800 of soybeans. Around here, no-till for beans was a difficult mission this year. The replanting was even more nerve-wracking: "Is this part thick enough? What about this part?"
• When I was traveled to Ames last Thursday, the view from I-80 was deceptive. Things didn't look all that bad until you noticed:
• It's June 19 - not May 19.
• At first glance you might form the impression IA farmers only plant the tops of the hills. The sides and bottoms were bare.
• When I flew into Des Moines this morning, I had a clear view. Immediately you are struck by the absence of green and the dominance of brown. Too much brown. The entire state appears late - very late.
• Surprisingly, the attitude of farmers I spoke to Thursday evening was relatively calm. Some will continue corn planting today, they hope. I guess some were pretty late last year and got decent yields anyway. Still, this far north I was surprised they were still going with corn, although many already had atrazine down.
• I'm currently going through the second adjustment stage emotionally. I recognize these now. Up until Friday, all I could focus on was "GET DONE". Now I've been out on the cultivator trying to open up the ground and seeing the corn crop up close and personal. The scope of the loss is now slightly clearer.
  
• The corn stand is better than I thought. The condition is worse. Much will come out of it, I think, but my current figure for overall yield is 80% trendline corn; 75% beans.
• I think the hay market will be chaotic. What little got baled around here is umm, crap. Rank, overgrown, nasty stuff. Livestock, and especially horse owners just added another challenge..

I will be in IA and SD this week. I'll try to post a bunch.

Money is only one asset choice...

I have never been a fan of money as a form of wealth. Much of its allure has been the easy comparability with other's pile of money. It also seemed to "hold value" and was "safe". Maybe it was the inflation of the '70's that formed my instinct, but a preference to other assets over money is paying off big time - and has for several years.

Conversely, carefully considered debt is not to be despised out of hand either.

Max Weber argued convincingly in his famous book The Protestant Ethic and the Spirit of Capitalism that the frugality and industriousness promoted by the early Protestants in opposition to the opulence of the Roman Catholic Church were values conducive to and perhaps critical in the rise of commercial society. Protestants who believed in predestination wanted to show by their modesty, austerity, and avoidance of lavish display that they were predestined for salvation.

But saving plays a less important role in economic progress today than it did in the sixteenth century. Its role in powering economic growth has been taken over, to a large extent, by technology. The great rise in standards of living worldwide is due far more to technological progress than to high rates of savings, that is, to deferring consumption.

At the same time, now that we have efficient debt instruments that in former times did not exist or were extremely costly, the role of personal debt (Brooks does not criticize corporate or government debt) in human welfare is more apparent than it was. Apart from its role in solving short-term liquidity problems resulting from delay in the receipt of income, debt enables consumption to be smoothed over the life cycle. Without debt, a family might have to wait 20 years before it could afford to buy a house. Of course, debt creates risk for both lender and borrower, as the subprime mortgage crisis has dramatically illustrated. But if the risks are understood, it is unclear why the assumption of them should be thought harmful to personal or social welfare. At worst, debt leads to bankruptcy, but bankruptcy is not the end of the world either for the borrower or for the lender. [More]

Holding corn instead of paying off operating loans is a winning strategy and has been for two years. Borrowing to buy a tractor last year means you'll save far more than the cost of the interest. The list of examples goes on.

But financial advisers and economists love the neat countability of money. They worship its liquidity and in some cases only generate revenue when moving money around. Owning land doesn't give them much chance to churn the account when they need income, for example.

Many other assets now approach cash in liquidity, especially for farmers. Have any trouble selling your corn? How about a used combine? Now imagine the rush to your door if you decided to part with an 80.

Even that most loathsome economic vice - borrowing for consumption - is subject to unfair, and often outdated prejudice. Derived largely from the intertwining of finance and morality by smug hypocrites, current economic conditions are proving these near biblical maxims less than logical.

My friends who study humanities are shocked and do not believe me when I, a pension economist, tell them they should not be saving. Prudent advice has become: You should always save some fraction of your income. You should save not only for retirement, but also for adverse income shocks. But, Mr Becker points out, these new lines of credit help workers cope with income shocks.

Young consumers who take on debt are often classified as impulsive and irresponsible. Some deserve that label—for example, people who take on massive amounts of credit card debt to finance the purchase of multiple flat-screen TVs. But saving does not necessarily make sense for everyone at every age. For some, higher rates of debt are appropriate in order to smooth consumption and, ultimately, increase welfare. [More]

So as the pages of farm media are overflowing with advice on what to do with our current windfall profits (oh yeah - they are real), every other sentence is to pay down debt and build cash reserves.

Well, here's an alternative strategy. Reinvest. Buy land close to you, build infrastructure (bins, buildings, tile, etc.). Start two years ago when the same advice filled the pages.

And then consider what form you want your wealth to be in if the looming inflation takes off.

Think you know them all?...

Road signs. Take the test.

As usual, feel free to post your score.

(We all believe you)

The argument runs into the BIG ISSUE...

Following an interesting string of posts by Andrew Sullivan based on comments by Jim Manzi about the current stage of the anthropogenic global warming debate (AGW) who points out that while likely true we are basically incapable of doing anything about it.

Almost a year ago to the day, National Review published what turned out to be a somewhat controversial cover story on global warming in which I argued three things: (1) anthropogenic global warming (AGW) is real, (2) current projections of its expected impact are wildly uncertain, but are not sufficient to justify the costs of an aggressive emissions reduction program, and (3) conservatives have an unseen political opportunity to win on the issue by pointing this out. [Much more, well wading through. Also responses here, here, and here]

To my dismay, I too found much to agree with. While the idea of being economically and culturally incapable of dealing with our own messes is shameful, even crude calculations verify what many of us had been trying to find other answers to.

First, let's consider just how big a technological challenge it will be to cut greenhouse gases by 70 percent. Former General Electric executive Don Dears provides some sense of the size of the challenge when he points out that an 80 percent cut means reducing U.S. carbon dioxide emissions from about 6 gigatons (1 gigaton = 1 billion tons) today to 1 gigaton by 2050. One gigaton is the amount the U.S. emitted around 1920, when there were just 100 million Americans.

Now let's widen the focus to include cuts that the whole world will need to make in order to stabilize concentrations of greenhouse gases in the atmosphere. Currently, the world emits about 26 gigatons of carbon dioxide. In 2007, the International Energy Agency (IEA) projected that by 2030 carbon dioxide emissions will rise by 57 percent to 42 gigatons per year. Climate researchers estimate that in order to stabilize atmospheric concentrations of carbon dioxide at 450 parts per million (ppm) (where there's a good chance that average temperatures would increase by less than 2 degrees Celsius) emissions must be cut by 80 percent from current levels by 2050. This means that the world will have to produce considerably more energy while emitting only 5 gigatons of carbon dioxide annually. If IEA estimates of future energy demand are accurate, this implies that the world would have to find the equivalent of 37 gigatons of carbon-free energy by 2030.

So just how big is a gigaton? Cutting a gigaton of carbon dioxide is equivalent to replacing 1,000 conventional 500-megawatt coal-fired electric generation plants with zero-emission plants. Zero-emission might mean coal-fired plants using carbon capture and sequestration (CCS) technologies, perhaps costing as much as $80 per ton. By some estimates, CCS would increase the cost of producing electricity by 25 to 40 percent. Cutting another gigaton would be equal to building 500 one-gigawatt nuclear power plants. The world currently has 439 nuclear plants in operation. One gigaton more would require increasing the number of windmills operating in the U.S. by 150-fold, or increasing solar photovoltaics by 10,000-fold. It would take farming an area 15-times the size of Iowa to produce the biomass to replace 1 gigaton of carbon dioxide emissions. [More]

We've likely gone too far down this road, and can only prepare for the consequences. Of course, given our location and wealth, the US will not be on the front lines of the battle, but our lives will be changed.

I'm thinking my energy cost suspicions are being confirmed - irrespective of any government action. But as warming accelerates, our growing conditions will change as well.

I'll try to track down some ideas about whether our weather could get even screwier.

It's all about the economy...

Beer sales are flat (heh) while wine and spirits are rising. Some think American drinkers have changed their tastes, but the reason could be more straightforward.

A new study shows that alcoholic drinks served in bars and restaurants are often larger than the standard size and contain more alcohol. The study, published online this week in the journal Alcoholism: Clinical and Experimental Research, examined 480 drinks poured in 80 establishments in 10 Northern California counties. The average glass of wine was 43% larger than standard, and the average mixed drink was 42% larger. The average draft beer was 22% larger. The authors, from the Alcohol Research Group at the Public Health Institute, also found that the alcohol content varied widely in drinks. Those who think they have had four drinks may, in fact, have had six, they noted. [More]

Another solid indicator of how bargain conscious consumers are becoming.

Another trend just ran over me...

I talked last March about prepaying fertilizer for 2009, and as you recall, took a pass on the advice of my Agrium representative.

· Nitrogen – huge market with hundreds of players – it only takes one of them to run out of space to store ammonia to prompt a selling spree – again I think this would be a short-term impact but could create some summer buying opportunities (as has been the case in most – if not call other years). (One misconception that seems to be out there is that with $100 oil – we should be scared that more price increases are coming – but today – the price of oil has virtually nothing to do with the price because of the supply/demand picture)…
I’m worried that our growers are getting talked into prepaying fall fertilizer at historically high prices and not being given the full picture. In addition, I’m not sure I believe the claims that this is the only way to ensure supply. In my experience, proper planning and good communication between growers and retailers does a lot more to ensure supply than giving prepay money to retailers who may or may not be in good financial shape (c.f. our discussion on that subject the other day) [More]

As I was frantically loading chemicals Sunday, my dealer said the word came down from on high the outlook is now certain that N prices (along with P & K) will definitely be jumping 30-40%. And because they remembered my concerns (and he wisely made notes) they are helping me protect that expense.

All I have to do is come up with $110,000 or so!

Other bloggers have belatedly decided this is an issue as well, and opens up a whole new can of financial worms for producers: we are now the financiers for our suppliers.

Adam, you're on target with your worries. I've been talking with Allen Lash, a farm financial consultant in Illinois, who is voicing the same reservations. "When an input supplier asks you to prepay $100,000 to $500,000 for 2009 fertilizer or fuel, it's no different than if you were making him an unsecured loan," says Lash. You have a right to ask for the supplier's financials, but even that may not protect you. The real outcome is that bigger operators need to "insure" themselves by taking delivery if they prepay--and that means you'll need to finance more on-farm fuel and fertilizer storage or rentals. By the way, Lash says he expects more prepay demands on chemicals, too. [More]

So my question is this: with historically high prices and (even though we are desperate to keep this secret) profit margins, why are we experiencing all the market power of a schoolyard lunch-money extortion victim?

Now of course, I suppose it is possible for inputs to continue their steady march until our raw material inflation looks like Zimbabwe, but what happens when prices flat out or (gasp!) even decline. Will our suppliers be able to go back to funding themselves? Is there any doubt producers will start buying at the last second?

This shift is building a resentful backlash, I think. I'm already a cranky customer. Use me now to build your financial results for your shareholders, but vendors better hope this trend doesn't turn. Because an historically bad planting season isn't all that's being seared into my memory from 2008.

Truly an upgrade...

I took some time to download the much-anticipated new version of Firefox - my web browser. At least the Mac version is faster, easier and more user friendly. I haven't had much time to fool around with it a lot, but it seems like a natural extension of the earlier software, only more powerful.

Instead, they built a better history function: You don't have to remember a site's address; you have to recall only its title -- or just a word or two of it. As you start typing, Firefox will present a list of all the sites that match, then narrow that list as you continue.

If, however, you're a bookmark-tending type, Firefox 3 can help you make more sense of your Web favorites. You can tag them for easier reference, then sort through to see which ones you visit most and which ones collect dust.

Firefox 3 also brings a performance upgrade. Older releases could hog memory over time, eventually forcing a browser restart. Firefox 3 needs a little less memory and doesn't keep nibbling away at your computer's resources over the day. [More]

Don't you love a business model that gives products away free?

Why we don't do US Farm Report live...



Not that Scott couldn't handle him, mind you.

[via Andrew Sullivan]

One last push...

Here's why the posts are slow.
1. The Options Webinar in about an hour. I've discovered those who fail to prepare are worth two in the bush. Or something like that. And we had about 250 signed up at last count!
2. I speak tomorrow night [Update: that would be Thursday night, 6/19] for the West Central IA Coops. My original presentation I planned may need some tweaking to be pertinent to the historic challenge facing them.
3. We're trying to spray and - dare I say the word? - plant the last 300 acres of beans. The tricky part here is how dry can we let it get. Guessing the next rain has not been our most successful exercise this spring.
4. Most of you guys are coping with much the same and likely aren't reading.

I'll be in touch - thanks for reading!

First things first...

Second only to gun control (don't get me started) posts about climate change provoke the most impassioned responses. It is understandable. We are working with imperfect, incomplete data on a problem that could well be disastrous for humankind.

However, I don't think the gravity of the issue should deter us from using the same methodical tools that got us here today. So when Ron Bailey at Reason posted this story about the Copenhagen Consensus Project, I thought it worth passing along.

What follows are short discussions about how to deal with 10 areas, ranging from air pollution to global warming to women and development. Each topic section includes two options to ameliorate the situation. Each solution has been assigned a benefit-to-cost ratio (BCR) by researchers commissioned by the Copenhagen Consensus Project 2008. For information about the researchers for each section, please go here.

reason online readers are invited to rank which areas of concern they think are most important and which solutions you prefer. You may submit your rankings here. The results will be tabulated and announced on the site next week. [More]

Please visit the link and read the list of concerns. Make your choices known.

[Note the cost-benefit ratio for trade liberalization and subsidy reform.]

I'm no tax expert...

But I've got some theories and I enjoy the game. And I have done my own taxes for 40 years without indictment or incarceration. So, as Aaron and I discuss how to transfer the farm business, one idea has been an installment loan for some assets. It seems we're not the only family considering this approach.

It's a nice problem to have: enough money that you need to think about lessening estate taxes for heirs. And this is a good time to start estate planning, since the interest rates the government sets for one strategy, called installment sales, make it particularly attractive right now.

The strategy is called a sale, but it's more like a loan.

It lets you temporarily transfer, or "sell," an asset to an heir. The asset could be cash, real estate, or a share in a family business, among other things. As long as the heir signs a promissory note, eventually returns the asset, and pays you a government-set interest rate—3.2% in June for three- to nine-year notes—they can keep what they've earned on the asset above that rate.

That benefits both you and your heirs, says Holly Isdale, managing director at Lehman Brothers (LEH). Since the appreciation on the asset above 3.2% goes to the heir, rather than into the estate, it lessens potential estate tax and lets the heir benefit from the wealth now.

What's key to the deal—aside from smart investing and, with real estate, asset valuations that may be low today—is the 3.2% rate, known as the Applicable Federal Rate. The AFR changes monthly but applies to the life of a note and is based on the one-month average of a basket of short-, medium-, or long-term Treasuries. June's rate of 3.2% for mid-term notes, while low, is up from May's 2.74%, the lowest rate since July, 2003. For notes of less than three years, the current rate is 2.08%. [More]

Of course, we would not be expecting the machinery, etc. to be returned, but for the loan to be paid off. I knew there was an official lowest rate allowable, but this helped me understand how it could be used.

Even as we struggle with production problems, our assets are increasing in value. And 2010 - which looked so far away a few years ago - is bearing down on us. Solid predictions on what the politics of estate taxes will look like then are not widely available. This one sounds very appealing:

The estate-tax repeal could find new life in an election-year compromise between a Republican in a Democratic state and a Democrat in a Republican state.

Republican Senator Jon Kyl of Arizona has been talking with Montana Democrat Senator Max Baucus. Baucus is the top Democrat on the Senate Finance Committee. New York Democrat Senator Charles Schumer is taking part in the talks, as well. Aides say that a deal should be reached in the next couple of days.

The senators are working on legislation that would exempt all taxpayers, except the very wealthy, from paying taxes on their estates. This could exempt estates up to $10 million. The senators are also discussing lowering the tax rates that individuals pay on the value of their estates when they die. [More]

We could be facing a pretty serious wealth transfer problem without some action, and a bi-partisan approach offers some glimmer of a solution.

Or an enormously lucrative estate planner's full employment future.

In case you have some spare time...

Try this seemingly simple game. Feel free to post your score.


It's called "Unique"

[via RGS]

What we are learning about you...

While you read this blog.

This is a very rapidly declining curve. On an average visit, users read half the information only on those pages with 111 words or less.

In the full dataset, the average page view contained 593 words. So, on average, users will have time to read 28% of the words if they devote all of their time to reading. More realistically, users will read about 20% of the text on the average page. [More of an interesting study]

The powerful advantage of web publishing over print is the two-way exchange of information. How long you look at what, where you come from or go to, what you click - all these things give us immediate feedback on what's working or isn't.

We're just not sure what some of this information means...

Climate change ideologies are becoming a chorus...

Whether more folks are embracing the belief that climate change poses a problem or simply an opportunity to make a buck, there are vague factions emerging from the voices of debate.

One is the "technology will save us" group. These strike me as hoping against evidence they won't have to change much of their consumption and living standards because and ingenious "something" will neatly reverse alarming trends. While this faith in applied science and human ingenuity is certainly inspiring, it is also a risky approach.

As indicators accelerate, there could develop in such adherents a tendency to seriously consider some pretty flaky "solutions". I think we're starting to see them emerge.

Scientist Tim Flannery has proposed a radical solution to climate change which may change the colour of the sky.

But he says it may be necessary, as the "last barrier to climate collapse."

Professor Flannery says climate change is happening so quickly that mankind may need to pump sulphur into the atmosphere to survive.

Australia's best-known expert on global warming has updated his climate forecast for the world - and it's much worse than he thought just three years ago.

He has called for a radical suite of emergency measures to be put in place.

The gas sulphur could be inserted into the earth's stratosphere to keep out the sun's rays and slow global warming, a process called global dimming.

"It would change the colour of the sky," Prof Flannery told AAP. [More]

Another choice is to adapt to the new climate - which if you think about it is what we will all do to some degree in the end, I suppose. To accomplish that, however, may mean reversing our thinking on things like cities, farming and cars.

To many Americans, ecological nirvana is a bucolic existence surrounded by wilderness. But the Thoreauvian desire for more elbow room has led to sprawl, malls, and cougar attacks. The edge-city upshot is a national cadre of 3.5 million "extreme commuters," who spend more than three hours a day in transit, many of them spewing carbon dioxide between exurb home and city office. Automobile exhaust in the US contributes roughly 1.9 billion tons a year to the global carbon cloud, more than the emissions of India, Japan, or Russia. Even worse are the 40 million lawn mowers used to tame the suburban backcountry: Each spews 11 cars' worth of pollutants per hour. [More]

One thing is certain: we are accumulating more data every second, and therefore these positions need to be fluid to accommodate new data and hitherto undiscovered causes. But as I have written our current personal ethic of stubbornness as proof of moral courage and intellectual honesty will complicate this evolution.

The result is a few of us will be somewhat right about the future, many of us will be wrong, and the vast majority will try every excuse to resist joining any camp until the winners are evident. This reluctance to try to participate seems to me to be a serious impediment to any solution, leading me to lean toward the adaptation camp.

Currently, that means preparing for very expensive energy, whether due to supply and demand or regulation. More important for farmers, I think we will shoulder much more of the costs of maintaining our standard of living, as opposed to the rest of the country picking up the tab. I can see our farms being off the grid, for example.

I know - that sounds pretty agrarian to me too. But the movement to rural America for quality of life may have peaked. At some point, the only folks in places like my township could be farmers, for a variety of economic reasons. And when that happens, subsidizing things like landline phones, electricity and paved roads will seem pretty expensive the the other taxpayers.

When old becomes obsolete...

Just as Sen. Obama has released a remarkably effective and politically explosive position to stabilize Social Security, I read this fascinating (albeit slightly over my head) article about actuarial escape velocity:

The escape velocity cusp is closer than you might guess. Since we are already so long lived, even a 30% increase in healthy life span will give the first beneficiaries of rejuvenation therapies another 20 years—an eternity in science—to benefit from second-generation therapies that would give another 30%, and so on ad infinitum. Thus, if first-generation rejuvenation therapies were universally available and this progress in developing rejuvenation therapy could be indefinitely maintained, these advances would put us beyond AEV. Universal availability might be thought economically and sociopolitically implausible (though that conclusion may be premature, as I will summarise below), so it's worth considering the same question in terms of life-span potential (the life span of the luckiest people). Figure 1 again illustrates this: those who get first-generation therapies only just in time will in fact be unlikely to live more than 20–30 years more than their parents, because they will spend many frail years with a short remaining life expectancy (i.e., a high risk of imminent death), whereas those only a little younger will never get that frail and will spend rather few years even in biological middle age. Quantitatively, what this means is that if a 10% per year decline of mortality rates at all ages is achieved and sustained indefinitely, then the first 1000-year-old is probably only 5–10 years younger than the first 150-year-old.

The third oversight that I observe in contemporary commentaries on life extension, among which Coping with Methuselah is representative, is the most significant because of its urgency. First-generation rejuvenation therapies, whenever they arrive, will surely build on a string of prior laboratory achievements. Those achievements, it seems to me, will have progressively worn down humanity's evidently desperate determination to close its eyes to the prospect of defeating its foremost remaining scourge anytime soon. The problem (if we can call it that) is that this wearing-down may have been completed long before the rejuvenation therapies arrive. There will come an advance—probably a single laboratory result—that breaks the camel's back and forces society to abandon that denial: to accept that the risk of getting one's hopes up and seeing them dashed is now outweighed by the risk of missing the AEV boat by inaction. What will that result be? I think a conservative guess is a trebling of the remaining life span of mice of a long-lived strain that have reached two-thirds of their normal life span before treatment begins. This would possess what I claim are the key necessary features: a big life extension, in something furry and not congenitally sick, from treatment begun in middle age. [More]

In short, what if new therapies (doubtless expensive) keep moving the end of life faster than 1 year per year. We're already adding 4 months per year. That's gonna mess with Social Security repair plans!

[More]

And we're only #29 in the world for life expectancy.

I have always viewed extreme-lifespan proponents with wariness. The current method of choice is restricted caloric intake. It's hard for many of us to view that future as worth the effort. But the studies in caloric restriction could identify the physiological responses that could then be prompted not by eating less, but by drugs.

While this is a bright promise for pharmaceutical companies, it poses some enormous problems for humans as a group. And we're not very good at those.

It is easy to envision a thin layer of wealthy (and healthy) very old people atop all facets of society. In fact, it is hard for me not to see that happening. Wealth tends to get the good stuff. But as many of us grit our teeth and assume bad guys like Robert Mugabe will at least eventually exit, what would it mean when a "President for Life" means decades more than we now think?

Of course, we're not near this point, but I must admit we're approaching it faster and more people and giving it a hard ponder.

Think of our profession. The oft-quoted statistic that "geezers own 126% of all farmland" (or does it just seem like that?) would only become more entrenched. In fact, one of the biggest factors is our misunderstood "lack" of young farmers, may just be longevity. When taken to the extremes imagined above, we're looking at a permanent landed "agristocracy".

Always remember that land is power. Nothing else comes close for us.

Try keeping them out...

To get some perspective on what a professional investor sees when she looks at agriculture consider these two items from today's Bloomberg.com

[Update: The vertical axis is percent change in price. (thanks, brian)]

What caught my eye (I visit here daily) was the possibility of corn (yellow) overtaking oil (blue). Other lines are gold (umm, gold-orange) and wheat (pinkish-red)

[Look, I'm an engineer, not an interior decorator.]

And one click away, this story:

TIAA-CREF, the largest U.S. manager of retirement funds, bought $340 million of farmland in seven states in December. George Washington University plans to earmark $100 million for agricultural investments during the next year.

Farmland is having its biggest revival in almost 30 years as demand for corn and soybeans from Asia and the ethanol industry drive commodity prices to record highs. From Iowa to South Dakota to Wyoming, gains in rural land prices have ranged from 78 percent to more than 200 percent, according to farmers and data from Farm Credit Services of America in Omaha, Nebraska.

Farm values probably will rise at an annual rate of 6 percent to 10 percent in the next five years, said Murray Wise, the chief executive officer of Westchester Group Inc., a Champaign, Illinois-based manager of $550 million of global farm tracts. The median U.S. home is forecast to gain 1.2 percent through 2010 and stay below the 2006 peak of $221,900, the Mortgage Bankers Association in Washington said. [More]

New York knows where you live and how you're doing.

We need more graphs...














GraphJam



[via Andrew Sullivan]

The Perfect Pothole Storm...

The 12" of rain we had in the last few days not only took a toll on our crops (and our spirits), but also our rural roads. Which led me to think about how the rural infrastructure was going to be maintained.

Here are some factors that seem to be all pushing the wrong way for rural roads in the US.

• Farmers: we're using equipment that loads rural roads way beyond anyone imagined when they were designed. Semis are bad enough, but loaded grain carts are way past specs for our roads. And since so many of us farm all over several counties, we don't have a vested interest other than being able to get to our field and get gone. It's showing.
• Oil prices: asphalt is derived from petroleum. My township road commissioner told me "cold patch" has tripled. So for starters, we won't begin to have enough resources.
• Weather: I think we got lulled by several fairly benign winters and especially, springs. This one, with multiple freeze-thaws really busted up blacktop in my area.
• Storage: as farmers store more on-farm and take less in the fall to the elevator, it doubles the trips that weight has to make over your farms access roads.
• More corn: with more or all corn in our rotation, 3-4 times the weight must be hauled over the same roads. Now add in increasing yields.
• Motor fuel tax shenanigans: not only do we have the ludicrous idea of a gas tax "holiday" floated at by presidential candidates (even while being shouted down by economists) but legislators at every level would love to redirect those funds to their own ends.

I am not optimistic we will be able to have good roads in places like rural Edgar County in the future. For too long, there has been a general acceptance by urban citizens to pay the majority of the cost for rural amenities. But expensive energy is going to change all that. The level of urban largess will drop like a rock as the spotlight shines on farmers making record income while wages stagnate elsewhere.

Meanwhile, urban transplants will be rethinking their country homes as the commute becomes an intolerable expense. The result is very few votes for directing tax money to roads only a handful benefit from.

I think it's time for farmers to take a page from Brazil and pay for our own roads. Heck, even make them tollways, in exchange for paying for the upkeep. This would be especially useful to price in the externalities BTO's escape by farming where they don't live. Imagine if they needed a township or private road sticker for every field they roar in and out of.

Meanwhile local residents could have the roads they pay for. This would place a premium on farming local, provide a strong case for renting local, and make many of us think twice about rolling out an overloaded tandem in a squishy spring blacktop.

Local Road Privatization - if it's good enough for the Skyway, it's good enough for 2100 E.

This means something...

China now has more broadband subscribers than the US.

China has overtaken the US as the largest fixed broadband subscriber market, ending the quarter with 71.6 million subscribers, according to market research firm Dittberner Associates.

In the first quarter China added 4.8 Million subscribers, surpassing the United States by 1.4 million. Sub- scriber growth in the United States was 12 percent over the first quarter of last year. Overall, global fixed broadband subscribers increased 5 per cent in the first quarter of 2008 to reach 355 million. According to Dittberner, following China and the United States, the remainder of the top 10 largest broadband subscriber bases are Japan, Germany, United Kingdom, France, Korea, Italy, Canada and Spain. [More]

I know, they have four times the possible subscriber base. But given the huge disparity in per capita income, I think this event demonstrates which country is looking ahead and which country is holding on.

The political rule of conservatism is based in the resistance to change (be sure to watch USFR this weekend and all the mail I got about the switch to digital TV) and has gripped the US for two decades. Americans tend to view the future as a chance to lose accumulated gains, while peoples like the Chinese look to finally gain a piece of the pie.

The dynamic difference between these two viewpoints are contained in the above statistic.

Up until a couple of months ago...

We used to have a different name for folks (read the whole list) who now are labeled anti-ethanol.

We called 'em "customers".

Call me naive, but mounting a nasty public battle against our largest user segments strikes me as senseless, and possibly disastrous. Especially since high oil prices have given us a way to appear magnanimous and fair with little cost.

Even more noteworthy to me is how the farm media is now clearly divided between animal and grain sectors. We are separating our tiny economic sector into political and economic opponents.

I see very little good coming from this refusal to negotiate mandates and subsidies to ethanol. and as the 08 crops get smaller and more expensive, the consequences for grain farmers rise with the flood waters.

Are those real?...

Like most men, I have asked that question often: Are those real ducks or not?


How to spot a fake photo.

(As usual, they are not real.)

[via Optical Poptitude]

Question 37: Compare and contrast...

We're running out of oil.

With production running at 86 million barrels per day, that means we are consuming 31 billion barrels of oil every year. It is a sobering thought that by the time the Sun sets upon the whole of the North Sea, it will have produced enough oil to fuel planet Earth for just 2 years. To keep the oil party going we need to discover a "new North Sea" every two years and the last time we managed that rate of discovery was in the late 1980s, 20 years ago. We have been living off savings since then, and the bank balance is running down. It is not possible to get an oil overdraft or to create an energy instrument to magic oil and energy out of nothing. There is no choice other than to reduce our oil consumption and it is much better that we do this in a controlled way than to let high energy prices and inflation rip through our economies - which is exactly what is happening now. [More]

No, we're not.

There is more than twice as much oil in the ground as major producers say, according to a former industry adviser who claims there is widespread misunderstanding of the way proven reserves are calculated. [More]

Well, my goodness, what's a farmer to think?

Pretty much anything you want. I have discovered in conversations and on this blog, people make up their minds first and justify it with cherry-picked facts later. Actually, we really do.

As a consequence, we rarely have conversations or public discourse that change minds. Instead, my guess is most of you responded positively to one example above and negatively to the other instantly.

Consider the great issues facing us today: climate change, income inequality, religious fanaticism, resource allocations, etc. Thanks to information technology, bozos like me can marshal facts and graphs to persuade and contradict. But I am not sure anyone is affected anymore.

My great worry about the future of this country - and even the world- is the decreasing number of people who can and will change their minds, and the unworkable society such reluctance creates.

So did anybody change their mind about the future of oil?

Blogging is easy...

Just learn the seven basic posts.

[via Andrew Sullivan]

Where did the other $4 come from?...

A reader sends this story - which I have not been able to source, but have found the quotes in other places.

ECONOMISTS DISPUTE U.S. CONTENTION ON IMPACT OF BIOFUELS ON FOOD Agricultural economists are disputing the contention of USDA and President Bush’s Council of Economic Advisers (CEA) that the federal policy of encouraging the use of corn for fuel contributes only a very small amount to food inflation. They have concluded that the government’s analysis is flawed and incomplete. USDA and the CEA have stated that the federally subsidized ethanol program, which took more than a quarter of the corn crop in 2007-2008, contributed only two or three percent of the rising cost of food. “I think what has happened here is that a limited, partial analysis has been conducted,” said Dr. Keith Collins, who was until recently the chief economist at USDA. He said that the study, conducted by White House Council of Economic Advisers, failed to take into account the fact that the corn boom has also affected other commodities. (Feed ingredient buyers spotted that flaw in an instant. Corn does not trade in a vacuum is a well known fact with anybody who has shadow pricing capabilities in formulation software.) The Council of Economic Advisers currently has only one member, Edward P. Lazear, a labor economist. “The increase in corn prices due to biofuels clearly affects the price of sorghum and barley and oats and other feed grains,” Collins said. “The price increase of corn has increased the price of soybean oil, and cotton seed oil, and rapeseed oil, and canola oil, and animal fats, and tallow, and grease, and dried beans, and peas, and lentils, and edible peas,” Collins said at a meeting with reporters. “It probably has increased the price of hay. None of those commodities other than corn are part of the CEA analysis,” he said. (John, explain how they justified NOT including these other ingredients). Independent economist Thomas Elam, president of FarmEcon LLC, pointed to other deficiencies in the study, noting that it covers, a relatively small part of the overall usage of corn. (that's like having big-oil claim that the price of crude only has a small impact in your diesel fuel price because "nobody burns crude") By far, the most corn in the United States and in other countries is used in livestock and poultry feed and is thus consumed by humans indirectly in the form of meat, poultry, eggs, and dairy products. “The analysis of the U.S. government greatly understates the role of corn in food production and therefore significantly understates the contribution of the skyrocketing cost of corn and other feedgrains to the explosion in food prices,” Elam said. “Crops that used to be grown for food production are now being priced at their value as a fuel supplement, with unpredictable and very negative consequences for the food economy,” he added. “The costs of those crops to the U.S. food production system are also being significantly increased by federal biofuels policy.” [His comments]

I too have found the 2-3 percent number unbelievable. The point about shadow pricing is why my budget for this year needed new width to the columns on the spreadsheet. We are constrained by acres, and when corn is the high bidder, other crops must rise to compete.

First, it is fair to note that Mr. Elam produced the report for the National Chicken Council. It doesn't make it faulty, but since I am wary of in-house economists like John Urbanchuk and the NCGA, due disclosure is needed.

Keith Collins, however can fairly be described as both expert and unbiased. I find his criticism compelling, and also a better answer to the the question: How can ethanol NOT have a significant impact on food prices?

Above all, where is the extra money coming from in my budget? My corn is almost exclusively destined for SE poultry/hog operations, human consumption, and specialty starches (also in foods). They are paying me much more for it because ethanol plants have added new demand. And I know these customers are raising prices to recoup their costs.

The delay factor in the meat chain is perhaps delaying the onset of even more food inflation. At any rate, these emerging price pressures will only become more apparent, I suspect. We can keep coming up with clever blame-allocation arguments, but the elephant in the room will soon overcome any carefully constructed studies.

The sound of one piston firing...

If you haven't been around an electric or hybrid vehicle, there is one curious aspect that frankly creeped me out: they don't make any noise. We had friends over for dinner who had just bought a Prius and we all went out to look at it when they left.

The car just sort of rolled back out of the driveway like the brake had slipped or something, the only sound was the crunching of gravel. It got me to thinking (and maybe some of you hybrid owners can help) about knowing the car was working when it doesn't make any noise. For example, you're waiting to turn left on a busy road or pull out into a crowded oncoming stream of traffic. The last thing to boost my confidence would be a silent, unvibrating car. That's what a dead car sounds like. It would take a long time to have the confidence, I think, that when I mash on the accelerator, something would happen.

Of course, another problem is we have come to depend on noise to remind us cars are around.

Hybrid and electric vehicles are potentially silent killers thanks to their stealthy electric engines that do not warn pedestrians they are coming. So goes the argument for making them produce some kind of warning noise, a proposal strongly backed by the National Federation for the Blind.

A bill backed by 16 US members of Congress would require the Department of Transportation to establish minimum sound levels for all hybrid and electric vehicles. And just last month, a mother whose son was hit by a Toyota Prius raised concerns over the stealthy nature of such cars. [More]

Am I the only one who can imagine a individual "car-tone" download industry arising, similar to ringtones?

If we could foresee the future...

It would only break our hearts. For instance, take this set of predictions from Ray Kurzweil.

· Within 5 years the exponential progress in nanoengineering will make Solar power cost-competitive with fossil fuels
· Within 10 years we will have a pill that allows us all to eat whatever we feel like and never gain any unwanted weight
· In 15 years, life expectancies will start rising faster than we age
· In about 20 years 100% of our energy will come from clean and renewable sources, and a computer will pass the Turing Test by carrying on a conversation that is indistinguishable from a human’s. [More]

I know - guys like these make a living with outlandish predictions. But think about what farming would be like then. Suppose technology serves up significantly cheaper energy (when you count in environmental assessments that I think are coming) than fossil fuels.

Electricity will be the way to do things - not internal combustion. while perhaps our fuel costs could drop, so would our market for ethanol. One reason I worry about the protected nature of our ethanol industry is being insulated from market signals arising from new technologies. Despite what we say about food prices, etc. farming would be different without the energy future.

Really, really different.

Miles matter more now...

As we stumble into what I think will be a new era of very expensive energy, no sector will be more changed than transportation. Ask the airline industry. And if transportation changes, many of the current trends in globalization will have to change in response.

The world seems to be becoming less flat. Shipping costs between Asia have risen so much that they have eclipsed tariffs as a barrier to global trade, according to a new report that calls the cost of moving goods "the largest barrier to global trade today."

The impact of rising transportation costs, driven significantly by high oil prices, is already being seen in capital-intensive manufacturing that carry a high ratio of freight costs to the final sale price. But a new report has determined that higher energy prices are affecting transport costs at such an unprecedented rate that "the cost of moving goods, not the cost of tariffs, is the largest barrier to global trade today."

The report, released by CIBC World Markets last week, concludes that the continuing increase of energy prices poses a major threat to price stability and overseas manufacturing — to the point that such forces "may reverse the impact of globalization."

"Exploding transport costs may soon remove the single most important brake on inflation over the last decade — wage arbitrage with China," says Jeff Rubin, chief economist and chief strategist at Canada-based CIBC World Markets. "Not that Chinese manufacturing wages won't still warrant arbitrage. But in today's world of triple-digit oil prices, distance costs money." [More via Free Exchange]

For example, remember when we found out chicken was being shipped to China to be processed into prepared foods and then shipped back to us? What if shipping costs make such schemes a non-starter?

Similarly is the argument for food-miles, which was largely discredited for some higher-value fruits and vegetables, at least. But the more costly the mile, the more the productivity gain/labor savings have to be to make the trip worth it.

This will likely affect commodities, although they seem to be in lockstep with energy prices, so the value shipped still overcomes the cost of shipping, but I'm not so sure that is a reliable indicator of the future.

But the underlying reliance on cheap transportation to help speed globalization could be in jeopardy. At the very least, a higher return for local products and services, or those which can be delivered electronically may provide some counter-balance many have been hoping for. Unfortunately, it will be an expensive counterbalance, forcing some harder consumer choices.

I'm not sure betting the farm on shipping commodities across the globe is wise.We need to transport ideas and services and eliminate transportation costs.

How quietly, how quietly...

Major changes in our lives sometimes come with little fanfare. The globalization of information flow means many of us will check the e-CBOT prices on Sunday evening. Meanwhile, as Europe and the rest of the developed world wakes up before us, oil prices, stock markets, and business begins while we are still on our weekend break.

We have become citizens of a larger world - voluntarily. It matters what happens in Beijing and Warsaw and Wellington, and thanks to modern communications we can have it at our fingertips. While many farmers find this TMI (Too Much Information) , we nonetheless have unconsciously adapted to this connectedness, I believe. Farmers reach for cell phones at their belt now as unconsciously as they do pliers.

News from a far country is no longer a novelty. In fact, many of us are startled to learn the latest local developments, since new information streams often crowd out the old. I know I am unsurprised when producers speak knowledgeably of economic and financial affairs from other sectors and other nations.

But we didn't and aren't preparing for this aspect of our career. That's what Joe Prochaska discovered.

Where do they expect to get this information? Formal management education or training is all over the board with this group, and even a couple with college business degrees noted this took place so long ago it doesn’t seem to give them the tools to deal with today’s management issues. What is the issue? The biggest one mentioned is that farming is becoming very complex and they sense an operation has to be brought to a business level with financing and marketing issues in the drivers seat. Any new production technologies are adopted only when they complement the business objective, not the other way around as it used to be. [More]

Somehow, somewhere this educational need will be met. And my feeling is it will occur outside our own profession - either business schools will develop short courses or on-line educators will provide similar training. Ag colleges will be hard pressed to stretch into information management, for example.

Meanwhile, the solution may occur organically, as producers discover what the rest of the world is discovering. You can do it on your own now. Concerted effort online can provide all kinds of information, experts to follow, and bloggers who help explain. This diversity of responses could be the optimal answer for a profession facing a wild array of challenges.

Father's Day looms...

And I am here for you.

First, for fathers who read. The Amazing Kindle.

You are looking at the future of books, IMHO. I want.

And for those who eat. The Condiment Gun.



I think that covers the spectrum.

[via Presurfer]

Nothing new under the sun...

Got a brilliant new idea that with a patent could make you rich?

Probably not, because, judging by these, we've not only already thought up the good ideas, we've patented some pretty bizarre ones.

Dummy Chicken Farmer
US Patent Issued In 1981

Back in 1981, before growth hormones were introduced to pro sports leagues and our food chain, farmers were trying to figure out a way to get their chickens to fatten up fast. Why? Because faster fat fowls favor phat finances for farmers. So our poultry patron did a little study and came to this conclusion; chickens that are stimulated every few hours will eat more. His solution? The Dummy Chicken Farmer, a stuffed humanoid that hangs from a hook in his hat! This fake farmer is programmed to march around the chicken coop every 3.5 hours, with streamers streaming and audio blasting from his mechanical chest, stimulating the birds to chow down NOW!

Totally Absurd Inventions