What I think I learned (Part I)...

Having spent last week in meetings and visits in Poland and Denmark, and several hours on planes returning, and finally all of Sunday figuring out what time it is, I can share some impressions and reactions from the whole exercise.

Poland


Poland and Polish immigrants are to the EU as Hispanic workers are to the US. They have supplied Ireland, Great Britain, Denmark, and other countries with skilled, energetic and above all cheap laborers, especially in the building trades. Hence the "Polish plumber" jokes.

That may be on the cusp of changing. As Poland's economy picks up steam, the need for such workers is rising at home, and wages are becoming more competitive. Poland has been a focus for foreign investment to capture their competitive wages and other lower costs as a result of accession to the EU. While they cannot meet the requirements to convert to the euro, the zloty has increased in value considerably (compared to the dollar).

Polish students have in past decades studied Russian as a second language, and the rising economic power of the their neighbor to the east is attracting many there for good jobs. The growing ties to Russia adds a new wrinkle to foreign affairs for both the EU and US, I believe. In the past few years a few more English speakers are common, making business easier to consider there for Western countries.

Their farming sector is struggling to adjust, but despite the enormous number of 8-10 acre farms and badly splintered land ownership, some very large operations are emerging. I toured one such farm - a former state research farm - where the previous director under the communist government somehow managed to not only continue to manage the farm, but also buy roughly half of the 6000 acres and continues to add to his share of the ownership each year. Go figure.

It's good to be high up in the Party, even as it is disappearing, it would appear.

On the road in central Poland, I was struck by the amount of maize (corn) being grown. While dry weather had taken a toll, it is obvious a growing source of corn for the Eu will be eastern Europe. However, their corn machinery technology was poor compared to ours. They still seem to be adapting small grain planting principles to corn, for example. I saw few double disk seed units such as below, mostly just old runner-type shoes.


Thanks to EU subsidies, young Polish farmers can buy a tractor for half-price, and understandably, the waiting list is about 15 month long. As you can imagine, the paperwork is considerable, but even with the bureaucratic legwork, it's good to be a tractor salesman in Poland. Looking ahead, I wonder how this injection of mechanical technology will impact farm consolidation. You can't just put far more efficient tools in farmer hands without pressure to expand. Since the land is not only chopped up into small farms, each farm can be owned by a myriad of owners, meaning either farmers must buy the land to rationalize the fields or work out some different cropping/rental schemes. My guess is this will happen over the next ten years, as producers are slowly coming to some free-enterprise solutions after years of simply doing what was ordered. We often forget how powerful "the way we do things" is for retarding even profitable change. The availability of alternative employment in the country is also an issue.

The arrival of CAP checks from Brussels has also frozen many producers into simply enjoying the good times, but the rewards to early, ambitious consolidators could be immense. Poland could lend itself easily to large scale agriculture, and I think it will not be as long in coming as many there feel.

We will doubtless be hearing more about about Poland in ag news, as their potential to rival France and the top EU ag producer is clear. But to me the more interesting comments concerned where the "next Poland" might be.

More anon.

Medium tough for me..

Jan was fixing supper when she asked me what "Select" meant on the steaks she had bought. I didn't even know that was a category, so I googled around and found this jewel in the High Plains Journal:

Recently, while in one of the Front Range cities, a couple of friends and I decided to enjoy one of the "fine dining" experiences that city folk are always bragging about. After a lengthy stay in purgatory waiting for a table to become available; we were finally escorted through the steakhouse, seated, and offered a menu. An exhaustive search of the eight-page steakhouse menu revealed a section with seven steak items (if you include the pot roast, the kabob, and the hamburger steak). As if it had been said at another table, I remotely caught the conversation between one of my dining companions and the waitress. My friend was debating between the New York Strip and the Filet Mignon, so she asked our waitress which she preferred. Normally, I would have quickly noted the irony when the steakhouse waitress announced that she was a vegetarian and began to expound upon her beliefs in her chosen lifestyle. However, I was already absorbed in perplexity by a statement that I had just read above the steak section of the menu.

I had seen similar statements before in restaurants and grocery stores and it had always annoyed me. Yet, on this particular evening it really began to scratch at the surface of my skin. Across the top of the page was the marketing line, "Our steaks are cut in house from USDA Choice Select Beef." Considering my newly adjusted mood, when it was my turn to order I asked for the Ribeye and requested that I get one from the choice side of their marketing campaign, as opposed to the select side. My request solicited an obligatory lecture from our vegetarian hostess about how all USDA Choice Select Beef was of one standard and that each piece of beef would be the same as any other in their cooler; as this was the beauty of the USDA's "mandatory meat certification labeling system." I politely stated that I disagreed and our waitress was off; apparently in fear of not receiving a tip. This assumption is based on the fact that the manager magically appeared to reiterate the beef grading lesson which I had just received. [More - highly recommended]

Suffice to say that with food inflation where it is and meat prices needing to rise to recover feed costs, "Select" may become the pinnacle of our protein intake.

Don't ask me why...

But I find this guy harmlessly appealing. Where the hell is Matt?



Imagine what he's seen.

[via Presurfer]

No occupation is exempt, perhaps...

The increasingly common bimodality of income is not just limited to blue-collar jobs and middle managers, apparently. Consider starting salaries for lawyers, for example.



[via Mankiw]

For this profession there are some implications.

* For law firms. The second mode keep moving to the right because too many law firms refuse to reconsider their business model in light of a continuing surge in demand for corporate legal services. All these firms want Harvard, Columbia, Chicago graduates, etc. and, if necessary, Illinois (top 25%), Indiana (top 15%), Marquette (top 10%), etc. If legal education worked like any other market, Northwestern would be merging with Cardozo, exploiting Cardozo's capacity and location and leveraging Northwestern's brand. But law schools are maximizing prestige, not output or profit. Such a merger would be dilutive or break-even at best for the higher ranked school.

There is a lot of commodity corporate legal work on there; why not bow out of the salary wars, ratchet down the hours to 1800, take work on a flat fee arrangement, focus on better/faster service (thus increasing margins on the flat fees), and literally feast on the human capital willing to take a job in the "death valley" range (i.e., ~$80,000 per year), especially if the hours are sane. The client gets quality and cost predictability, and the well-managed firm can make a lot of money. This is a great opportunity for a firm willing to rethink its business model. Larry Ribstein's publicly held law firm would be all over this. But any established large firm willing to think outside the box could do it. [More]

What are the wider consequences of such divergent income distributions? First reactions of a dysfunctional system I think are triggered by our hardwired affinity for fairness. Only a "rigged" system of reward would produce wildly disparate differences in pay like this we reason.

There may be valid causes for such unequal compensation, but as more people are lumped on the left side of income/compensation distribution curves, it is hardly surprising that they perceive our economic apparatus as less than satisfactory. More importantly, if such wide differences between winners and losers are the rational outcome of free enterprise, capitalism needs to recognize political power will not quietly endure this result.

My friends in Denmark were surprised at my possible support for Obama, given my conservative history. After all, they point out, Obama will raise taxes [especially on the successful]. But the one-note economic policy of the right - cut taxes - fails to address the above problem in wealth and income distribution, fostering a climate for wrenching political and social upheaval.

And since nobody in the US can control spending, redistribution by taxation be part of an effort to at least come closer to paying our own bills.

I miss Westerns...

Sometimes a man's gotta do...



Never underestimate the importance of a vestibule.

And the pedals are where?...

I'm always skeptical of these something-for nothing ideas. Consider this: the cardboard bike. Not to be a party-pooper, but how do you make this thing, you know, ...move?


Still, ya gotta admire the ingenuity.

[via Neatorama]

Perhaps this could be the new Illinois mascot...


Link: sevenload.com

Nature: it's just like the movies.

[via Neatorama]

Rover no more...

Keep track of your pooch the easy way.

It's designed for hunters, of course. Most of us don't need a $200 collar and a $650 GPS unit to let us know that, yup, the dog's still in on the couch drooling all over a copy of Field & Stream. [More]

Can husband collars be far behind?

If it's worth doing...



It's worth doing well.  Take a nap, for example.  Please.

[Click to enlarge]



[via 43 folders]

Color me seduced...



I have posted a few times about brain research, almost always based on some new study where people were laying inside an fMRI machine while experimenters poked and prodded their minds with various stimuli.  It all seemed so revelatory and "hard-sciency", especially to an engineer.



But we could be reading too much into these pretty pictures.

Psychologists can be heard grousing that the only way to publish in Science or Nature is with pretty color pictures of the brain. The media, critical funding decisions, precious column inches, tenure posts, science credibility and the popular imagination have all been influenced by fMRI's seductive but deceptive grasp on our attentions. It's a pervasive influence, and it's not because the science is better.



Why does it affect us so? Probably because fMRI seems more like real science than many of the other things that psychologists are up to. It has all the trappings of work with great lab-cred: big, expensive, and potentially dangerous machines, hospitals and medical centers, and a lot of people in white coats. In a recent study, Deena Skolnick, a graduate student at Yale, asked her subjects to judge different explanations of a psychological phenomenon. Some of these explanations were crafted to be awful. And people were good at noticing that they were awful—unless Skolnick inserted a few sentences of neuroscience. These were entirely irrelevant, basically stating that the phenomenon occurred in a certain part of the brain. But they did the trick: For both the novices and the experts (cognitive neuroscientists in the Yale psychology department), the presence of a bit of apparently-hard science turned bad explanations into satisfactory ones.  [More]

Perhaps it's just a by product of having a whole bunch fMRI machines in this country...

...(or the fact that House orders an MRI for patients with hangnails) but easy access to these expensive research toys is producing a mountain of results that may or may not be useful.

Last November, the op-ed page of the New York Times, which typically airs political controversies, managed to create one of its own. It published a column describing a study in which 20 undecided voters had their brain activity scanned by functional magnetic resonance imaging (fMRI) while viewing photographs and videos of the major candidates in the upcoming U.S. presidential election. The findings revealed "some voter impressions on which this election may well turn," according to the authors, who included a political scientist, a neuroscientist, and several people affiliated with FKF Applied Research, a company based in Washington, D.C., that sells fMRI-based marketing studies.



The column infuriated some neuroscientists and ignited an animated discussion in the imaging field. "It was really closer to astrology than it was to real science," says Russell Poldrack of the University of California, Los Angeles (UCLA), who drafted a letter to the newspaper that was signed by 16 other cognitive neuroscientists and published 3 days later. "It epitomized everything that a lot of us feel is wrong about where certain parts of the field are going, which is throw someone in a scanner and tell a story about it." [More]

Still there is something fascinating about seeing our minds work - anchoring the weirdness of conscious thought to blood flows and brain regions. But this engagement needs to be tempered with a realization that the experiments still have to be well-designed and causality proven by more than colorful lights on a computer screen.

Origami for farmers...

Ah, yes - the cerebral, sublime art of origami. This Japanese art form centers on the ingenious folding of special paper to make astonishing works of art.

But it's really hard and time consuming.

This is more like it.

My favorite - the boat.

Always check the forecast first...



Amazing street art.

[More]



[via ps]

Boy! I didn't see this coming...

Apparently, we just maybe have been over-emphasizing self-esteem a teensy bit too much in our parenting approach.

Our child-centred society means we fret over what our kids eat, what they wear, their friends, their exam grades and their safety. A US academic has coined the term kindergarchy – a new (affluent) world order in which children rule.

“Children have gone from background to foreground in domestic life with more attention centred on them, their upbringing [and] their small accomplishments,” wrote Joseph Epstein, a recently retired lecturer at Northwestern University, in The Weekly Standard, a US magazine.

“On visits to the homes of friends with small children, one finds their toys strewn everywhere, their drawings on the refrigerator, television sets turned on to their shows. Parents seem little more than indentured servants.”

Epstein’s recollections of his own childhood evoke an utterly different world. Parents didn’t feel the need to micro-manage their children’s lives. He doesn’t remember his parents reading to him, or turning up to watch him compete at athletics. They left it to him to decide which foreign language to study at secondary school and weren’t much bothered that he was a mediocre student.

Now, he says, it’s a wonder more teachers aren’t driven out of the profession by parents bombarding them with e-mails, phone calls and requests for meetings. “Students told me what they ‘felt’ about a novel,” he recalled. “I tried, ever so gently, to tell them no one cared what they felt. In essay courses, many of these same students turned in papers upon which I wished to – but did not – write, ‘Too much love in the home’.”

In Britain, too, there has been a seismic shift in parenting. “At the weekends, the kids are saying to us, ‘What are we doing today?’ – in other words, ‘You are going to entertain us, aren’t you?’ ” said Appleton, who works part-time for Netmums, an online network for mothers.

It is becoming a worldwide trend. A recent production of Snow White at a primary school in Japan featured 25 Snow Whites, no dwarfs and no wicked witch, as parents objected to one child being picked out for the title role. In Sweden a boy was prevented from handing out invitations to his birthday party at school because he was “discriminating” against the two classmates he did not invite. [More]

This is not a new development, but the degree is recognizable to many grandparents.  However, unlike many who lament the virtue of upbringing styles of yesterday, I tend to believe children, like well-built ships, will right themselves.  More importantly, they will naturally rebel against their own past and probably resurrect Dickensian childhoods for our great-great-grandchildren.

The answer without a question...

I don't want to know how many people really need this device.

Remote Buddy Stylish vertical remote holder has four seats to store your most used remotes in one convenient location. Also has a handy cup holder for one drink. Color coded, one touch buttons work in conjunction with specific remotes to help you locate lost remotes. Just push the button on the base to signal lost remote. Modern design adds a futuristic touch to any decor. [My emphasis]

Well, my anniversary shopping is done.

High oil prices change everything...

As energy cost spiral upwards strange reactions become commonplace. Consider the allure of (gasp!) coal.

As odd as the idea may seem, coal power in the gulf is just one more outcome of skyrocketing oil prices. In a world with dramatically disparate ideas on how or even whether to address the risks of global warming, demand for coal plants across the globe is growing rapidly to the detriment of efforts to increase the production of renewable energies such as solar, hydro and wind.

Nowhere is that demand more paradoxical than in the oil-rich Middle East. At the end of April, for example, the state-owned Oman Oil Company signed a memorandum of understanding with two Korean companies on the construction and operation of several coal-fired power plants. Dubai, for its part, is initially planning to build at least four large facilities with a cumulative output of 4,000 megawatts. Abu Dhabi also wants to get into the act. Even Egypt is thinking of constructing its first coal-fired plant on the shores of the Red Sea. [More]

People don't just whimper about high gas prices.  They look for alternatives. One is energy-dense coal. Now think about where it could come from.

Is it any wonder US railroads rank coal before transporting ethanol or grain?

I don't duvets...

I made it to Poland via a planeful of tourists and children and despite the best offorts of O'Hare airport.  The first day coming across is always weird, but I made it to evening without crashing (barely) and seem to be functioning within normal parameters.

Until I saw the markets, and found oout we has another 2"+ of rain.

I admire many things European, but one I do not is the popularity of duvets (pronounced "du" as in "doofus", and "vet" as in "no vay, Jose") instead of honest, Christian covers on beds.  In this I am not alone, nor the first.

"There is one thing very particular to them, that they do not cover themselves with bed-cloaths, but lay one feather-bed over, and another under. This is comfortable enough in winter, but how they can bear their feather-beds over them in summer, as is generally practised, I cannot conceive." — Thomas Nugent, The Grand Tour 1749, vol II. p. 66 [More]

It's like having a car with two speeds, 15 and 95 mph.  So I have developed a system of alternately spending sleep too cool and too warm.  The night just flies by...

More anon.  Meanwhile, somebody take charge over there in the grain pits, willya?

Put that razor down...

It's not like we wanted to spend 10 minutes a day scraping our face with sharp steel.  Now they tell us.

The pictures were shown to 76 women who were asked to rate them for masculinity, aggression, dominance, attractiveness, age, and social maturity. They were also asked how desirable each man would be as a short-term or long-term partner. Faces with full beards were judged to be the most masculine, aggressive and socially mature. They were also thought to look five years older.

They were rated the least attractive and the worst choice for a short-term relationship. Men with light beards were considered the most dominant. Those with light stubble were rated the most attractive and as the ideal romantic partner for the short or long term. Clean-shaven men finished bottom for masculinity, dominance, aggression, and social maturity, and they were the least favoured choice as a long-term partner. They came second-to-last for attractiveness.  [More]

I think I'll get Scott to try it first.  Don't miss the next episodes on US Farm Report.

You, farmerobot...

I'm probably imagining it, but I seem to be running into more references and articles about robots. For example, the falling costs for robots (and doubtless the movie "WALL-E") have reawakened suspicions as well as hopes about humanity and robots.

 As different as these two machines are, they share a common ancestor: the industrial robot. The first factory robots appeared in the 1960s. They could do only simple, monotonous and mundane things, like moving objects from one production line to another—they were drudges, like the slaves Karel Capek described in 1920 in the play that coined the term from the Czech word robota, or “forced labour”. By the 1990s factory robots had become adept at cutting, milling, welding, assembling and operating warehouses. The cost of industrial robots has also fallen sharply against the cost of people (see chart), which has helped to boost their numbers to more than 1m worldwide. Most of them are built in Europe and Japan, with about half at work in Asia.

Today, thanks to the relentless increase in the power of computing, the latest robots are being fitted with sophisticated systems that enable them to see, feel, move and work together. Robot engineers call this “mechatronics”: the union of mechanics, optics, electronics, computers and software. Some factory robots are now smart enough to be released from their safety cages to work among humans. And as they become cleverer and more dexterous, they are starting to move from factories to offices and homes. [More]

The Chicago Tribune offers this list of Ten Things You Might Not Know About Robots.  My favorite:

7. The "Uncanny Valley" is a theory by Japanese roboticist Masahiro Mori suggesting that as robots become more humanlike, people's empathy with them increases. But Mori sees a drop-off--a valley--when the robot is not perfectly human but is alarmingly close and seems creepy, like the living dead. Filmmakers and critics have cited the Uncanny Valley as the reason some animation fails: It is neither close enough to reality nor far enough away to be comfortable to the viewer. [More]

Meanwhile, the growth of robotics in agriculture is the subject of much speculation.  One good way to explore this possibility more could be the annual Purdue Top Farmer Crop Workshop (July 20-23).

11:15  How Feasible is Robotic Agriculture?   Simon Blackmore, Project Manager of FutureFarm Europe and Director, UniBots Ltd  Simon has a worldwide reputation in developing intelligent machines and processes for crop production, and now he is running EU’s farm of tomorrow. With guidance, advanced monitoring and precision control systems becoming commonplace on farm equipment, what next steps will automation tackle in improving production or efficiency? [Whole agenda - and yes, I'm on it, so this is BSP - blatant self-promotion)

This is an excellent event (and relatively cheap), although I think the organizers overdo content density (the pace is brutal) and underestimate the value of producer interaction as a spawning ground for inspiration or propagation of knowledge. It hearkens back to an outdated (IMHO) view of farming as an almost purely technical exercise, and colleges as the origin of most innovation.

Nonetheless, it is well attended and the breadth of information unparalleled.  It also tends to have more early career farmers than any other I attend.  So if you want to test our your theories on how robots could impact your part of the economy, this might be a good place to start.

Real farm problems...

We don't know what they are.  Our colleagues in India do, and it could be dragging this vibrant emerging country down.

Global circumstances—soaring oil prices and the subprime crisis that dried up the flow of foreign funds—are certainly to blame. But so is New Delhi. Much of the crisis India faces today could have been avoided by skillful planning. India imports 75% of its oil to meet demand, which have grown exponentially as its economy expands. The government also subsidizes 60% of the price of such fuels as diesel. In 2007, when inflation was a low 3%, economists such as Standard & Poor's Subir Gokarn urged New Delhi to start cutting subsidies. Instead, the populist ruling Congress government spent $25 billion on waiving loans made to farmers and hiking bureaucrats' salaries.

Now those expenditures, plus an additional $25 billion on upcoming fertilizer subsidies, is adding $100 billion a year—or 10% of India's gross domestic product, or equivalent to the country's entire collection of income taxes—to the national bill. This at a time when India needs urgently to spend $500 billion on new infrastructure and more on upgrading education and health-care facilities. The government's official debt, which dropped below 6% of gross domestic product last year, will now be closer to 10% this year. "Starting last year, the government missed key opportunities" to fix the economy, says Gokarn. In fact, he adds, "there has been no significant reform done at all in the past four years"—the time the Congress coalition has been in power.

Even the most bullish on India are hard-pressed to recall any significant economic reforms made in the recent past. A plan to build 30 Special Economic Zones is virtually suspended because New Delhi has not sorted out how to acquire the necessary land, a major issue in both urban and rural India, without a major social and political upheaval. Agriculture, distorted by fertilizer subsidies and technologically laggard, is woefully unproductive. Simple and nonpolitical reforms, like strengthening the legal system and adding more judges to the courtrooms, have been ignored.

A June 16 report by Goldman Sachs' (GS) Jim O'Neill and Tushar Poddar, Ten Things for India to Achieve Its 2050 Potential, is a grim reminder that India has fallen to the bottom of the four BRIC nations (Brazil, Russia, India, and China) in its growth scores, due largely to government inertia. The report states that India's rice yields are a third those of China and half of Vietnam's. While 60% of the country's labor force is employed in agriculture, farming contributes less than 1% to overall growth. The report urges India to improve governance, raise educational achievement, and control inflation. It also advises reining in profligate expenditures, liberalizing its financial markets, increasing agricultural productivity, and improving infrastructure, the environment, and energy use. "The will to implement all these needs leadership," points out Poddar. [More]

India is, of course, one reason fertilizer prices have detonated. But it is also, unlike China, the one country where liberal democracy means farmers have enormous political clout.  Like farmers tend to do, they seem to be intent on choosing actions that exacerbate their problems, rather than fix the underlying causes.

Farmers were handed over loan-waiver certificates, along with a letter signed by Prime Minister, which stated: " Agriculture is the lifeline of our economy... I assure that government will stand by you and other farmers while you continue to engage in agriculture."

Under the debt waiver scheme, government has waived all outstanding farm loans of small and marginal farmers having up to two hectares of land that were overdue on December 31, 2007.

Meanwhile, other farmers will get up to 25 per cent of the due amount under one-time settlement scheme by paying the rest of amount. [More]

I think India will labor to escape the agrarian trap, while Chinese farmers migrate rapidly to the city for other work.  In fact, a pronounced two-part economy seems to be developing there with knowledge workers (consulting, medicine, information technology, etc.) making rapid gains in income and living standards, but the vast majority stagnating.

For Moët and other luxury purveyors, India is a land of enormous promise. Sure, two-thirds of India's 1.1 billion population lives in the hinterland with little access or means to such luxury, but there are almost 100,000 dollar-millionaires in the country. American Express (AXP) predicts that India's millionaire brigade will balloon by 12.8% a year for the next three years. Its nouveau riche could spend $30 billion on high-end goods by 2015, according to consulting firm A.T. Kearney. They now spend about $4 billion, while the Chinese spend more than $5 billion. A survey by by A.C. Nielsen early this year shows that India is the third most brand-conscious place in the world after Greece and Hong Kong.  [More]

Given the current food crisis, how India approaches their agricultural problems will have enormous impact around the globe. But their bloated and unimaginative government does not give much reason to hope.

Pushback momentum...

Regardless of your position on the food-fuel debate, it would appear that the anti-biofuel forces have got game.  Newer studies are underlining what first glances imply - you can't divert agriculture to fuel without adverse consequences for food.

"Without the increase in biofuels, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate," says the report. The basket of food prices examined in the study rose by 140% between 2002 and this February. The report estimates that higher energy and fertiliser prices accounted for an increase of only 15%, while biofuels have been responsible for a 75% jump over that period.

It argues that production of biofuels has distorted food markets in three main ways. First, it has diverted grain away from food for fuel, with over a third of US corn now used to produce ethanol and about half of vegetable oils in the EU going towards the production of biodiesel. Second, farmers have been encouraged to set land aside for biofuel production. Third, it has sparked financial speculation in grains, driving prices up higher.  [More]

[Update: Tyler Cowen mirrors my response about the 75%-3% swing in effect.  Both are probably wrong.]

As ethanol proponents activate their own expert responses, the ensuing debate carefully sidesteps the issue that is life-or-death for too many global citizens: How can we afford food?

As troubled as I am about our choice to subsidize a dubious substitute energy source,  I am equally heartened to see the vigor with which advocates of a more rational energy policy are entering the fray.  We may yet find a path that allows most people to make decisions to comprise a market that overrides fatuous government policy.

More than you want to know...

I am off to visit Poland and Denmark this week. I have no idea how much time I will have to post, so don't be surprised if you see gardening advice from Jan.

I hope to master the art of posting video, but I wouldn't count on it.  So if staggeringly important things happen in US agriculture while I'm gone, you guys are in charge.

Revolution unnoticed...

Although the last 21 months in agriculture have sparked much wondering and wider questions than ever before, we still don't embrace the idea of a revolution occurring in our profession.  Maybe we should consider it.

Sex before marriage. Bob and his boyfriend. Madame Speaker. Do those words make your hair stand on end or your eyes widen? Their flatness is the register of successful revolution. Many of the changes are so incremental that you adjust without realizing something has changed until suddenly one day you realize everything is different. I was reading something about food politics recently and thinking it was boring.

Then I realized that these were incredibly exciting ideas—about understanding where your food comes from and who grows it and what its impact on the planet and your body are. Fifteen or twenty years ago, hardly anyone thought about where coffee came from, or milk, or imagined fair-trade coffee. New terms like food miles, fairly new words like organic, sustainable, non-GMO, and reborn phenomena like farmers’ markets are all the result of what it’s fair to call the food revolution, and it has been so successful that ideas that were once startling and subversive have become familiar en route to becoming status quo. So my boredom was one register of victory.

Although we typically associate revolution with the sudden overthrow of a regime, the Industrial Revolution was an incremental change in everyday life and production that began a little over two centuries ago and never ended. It’s a useful reminder of what else revolution is. [More]

I have been blundering in the dark (along with more than few others) to find precedent or analog to this incredible time, and have been inching toward the preposterous idea I am living through history every bit as world-changing as WWI or Sputnik. 

The failure of our reliable tool of comprehension - technology - to provide insight and understanding to this rapid and pervasive change in our lives has left us with under-developed philosophical skills to deploy ineffectively for understanding.  We are not merely experiencing history, we care creating it more than ever by good choices and bad.

Is this an Agricultural Revolution?  Like a recession, the label will probably be applied long after we in it are gone.  But if you have ever longed for a chance to live during times of crucial human development, to have at least the chance to alter the flow of human events, however slightly, or to simply witness firsthand moments of long-lasting consequences, I think your wish has been granted.

And I do not believe we have much to lose by acting as if this is true despite our doubts.  Even extravagant pretentiousness or overly dramatic gravity as we move ahead in 2008 will look years from now less foolish than lazy or feckless indifference.

One more for the collection...

[My Independence Day post from last year]

The Stars and Stripes. And Stars. And Stripes. Forever...

For men.

For a choir with one honkin' great soprano.

For girls on tromobones.

For guitar.

For organ.

For piano. (Nobody messes with Horowitz. Un-freakin'-believable!) [Update - I've listened to this several times now. The only possible explanation is he grows an extra hand halfway through]

And now add this version:




Happy Independence Day!

How 2008 will be remembered...

Consider these two unrelated events.

Exhibit A:  an e-mail from a friend

Its the fourth of July and the corn is "knee high".  How it has achieved this stature is truly a miracle and a testament to genetic engineering and the tenacity of determined farmers.  There are a half dozen factors that identify "ideal conditions"  to begin and complete a crop growling year.  To date, this crop has experienced none of those factors.  But as I look out my kitchen window it is begriming to look like a corn crop.  I must guard getting too optimistic because some serious stages are ahead of us and the way weather patterns are behaving we are not out out of the woods yet, but I have completed my 10% of this growing cycle and the rest is in the hands of the big guy upstairs.

Soybeans are another story.  From my kitchen window they have yet to show me much.  In fact, there are several spots in the fields that they show me nothing.  From a few years experience I have learned to never rate a soy crop until you  see them in the combine tank. 

I suppose the market should be mentioned in a comprehensive crop report.  If I could make any sense of it at all I would mention it.  From a producer  who has forward contracted 20% of his expected production at a price that is currently $3 out of the market, it is best that he sit quietly in the corner and lick his wounds.

I spend a lot of time looking out the kitchen window as you may have noticed.  The reason being that I am not very mobile as yet.  Knee replacement went well but recovery has been a drag.  For those of you who promised me that it is a simple procedure and a piece of cake I can only say-----"YOU'RE FULL OF CRAP"

 Exhibit B: My neighbor Don asked me if I could remember the two days at the end of May when we were able to plant some beans.  He needed the date to get his FSA reporting done.  We struggled to recall when in this 2+ months of planting we had done what where, and then he brightened and said, "Wait - I took photos of The Flood on my cellphone.  It should have the date and I can work backwards."

I think these two events capture perfectly my spring.

Levees aren't the only thing about to burst...

Many companies have been reluctant to pass on recent input price increases. They may be running out of time and choices, but a surprising number feel they cannot.

A startling proportion of the executives aren’t sure what pricing policy their companies will follow, suggesting that energy costs and the ongoing credit crunch have made even short-term planning difficult. Fifteen percent of all respondents say that they don’t know if their companies will raise prices during the next six months. Among respondents at public companies and the largest companies,2 the uncertainty is even more acute: 22 and 21 percent, respectively, are not sure if they can raise prices in the near term. Nearly a quarter of those who expect inflation to rise by three percentage points or more aren’t sure if the prices their companies charge will keep pace. [More - with free subscription]

The lack of pricing power means companies erode their profits, something that could show up in the next round of earnings reports. Like it or not, those costs will have to be recovered eventually.

Which leads me to suspect we are witnessing a protracted delay in food price boosts as well. If current economic patterns are any indicator, we will resist price increases until costs simply force them, and then they will continue for much longer than we expect.

What this suggests to me is the food-fuel data will be greatly altered by this time next year.

Why it's not just about acres...

From John Roach's excellent market e-newsletter.


Sometimes I imagine problems that aren't really there. This one is.

Problem solved...

Pat Buchanan can pause for breath. The wave of Hispanic immigrants is slowing.

Unfortunately, the cost may be a vibrant, expanding economy.

Such figures miss those who cross successfully and recount those detained several times, but they show a clear trend. So does evidence from remittances. Mexico’s central bank reports that, after years of eye-popping growth, the amount of cash sent home by migrants inside America is falling. Last year such flows were worth $24 billion—more valuable than tourism. But in the first quarter of this year the year-on-year figure was down 2.9%, according to a new report by Goldman Sachs.

Better scrutiny of flows across borders after 2001 probably exaggerated the real rate of growth, so it was bound to taper eventually. But even with that in mind, it is clear that migrants really are sending less money home. A poll of migrants across America published by the Inter-American Development Bank in April confirmed that fewer are sending money back regularly: in 2006 three-quarters of migrants did, this year only half report doing so. Nor is it only Mexico; Brazil, the second-largest recipient of remittances in the region, saw them slide by 4% last year, to $7.1 billion.

Two factors, each as ugly as the other, probably explain the double downturn in flows of people and money: hostility to migrants, especially illegal ones, and America’s deepening economic gloom. The impact of the former is plain: state-level laws that make it illegal to employ migrants without documents, ever more aggressive raids on businesses that hire such workers, and better technology to share information that will lead to catching them. [More]

Of course it is not so simple as to suggest we scuttle our economy to keep outsiders from wanting to come in. But oddly enough, that thinking could be completely wrong. It was the influx of cheap labor that fired the engines of our economy according to some.

Letting in a low-skilled immigrant to mow my lawn will indeed lower average productivity in this country. But I will be better off.

To the extent that low-skilled immigrants are significant, standard productivity indicators can be misleading. For example, suppose that France lets in a bunch of low-skilled immigrants and puts them on welfare, while we let in a bunch of low-skilled immigrants and put them to work. Then our GDP per capita will be higher, but France's GDP per worker will be higher and their GDP per hour of work will be higher. If you use the latter as a measure of productivity, you would say that France is following a brilliant strategy, and we should copy it.

To get closer to a relevant measure of national economic performance, you might invent something like endowment-adjusted consumption per working-age adult. By adjusting for endowment, you correct for the lower skills of immigrants. By using consumption, you get a measure that is closer to the quality of life. And by using working-age adults, you don't treat high unemployment of low-skilled workers as a good thing.

But it's important to remember that you personally don't get to consume GDP per capita. You get to consume based on the purchasing power of what you produce. If immigrants lower the cost of goods and services for us, then bully for immigrants. [More]

The "rise of the rest" could very well solve our illegal immigration problem. And we may miss it.

Bad news travels fast. Word from communities south of the border is that a life-gambling trip to the United States in search of work is not worth the effort.

America's weak economy and its strong communication system have done more to stem the flow of immigration than Lou Dobbs and could have ever imagined. The question becomes, do we really need a wall? There will be fewer immigrants coming our way, and with fewer workers, who'll build it? It turns out that bad news through word-of-mouth is stronger than the Patriot Act.

And here's the greatest irony: if the wall is scrapped because of a lack of need, we could thank the immigrant grapevine for saving the Constitution from decimation. Granted, our Constitution won't be safe until the Patriot Act and those who hide behind it to propagate their fear, are gone. But until that happens, our weak economy seems to be doing yeoman's work along the border. [More]

Let's hear it for recession.

Is it me or is it hungry in here?...

Fantastic pictures of food around the world.

Homemade Chocolate PB Decadence with Warm Ganache


Eggs, nearly scrambled.


Banana treats

[More]

In the food versus fuel fight, I know which side I'm on.

If an economist falls in the forest...

Will people still ignore her? Ah, the age-old riddle: as economists gain powerful new data tools and vastly wider audiences, why don't they have any noticeable effect on economic decisions, especially at the government level?

Seriously, never have more bright minds outlined more reasonable solutions to today's problems only to serve as background mumbling for seemingly uninformed policy decisions. Consider these examples:

• The carbon tax - clearly the better way to deal with carbon emissions. Not a prayer.
• Free trade - without a doubt essential to continued prosperity here and abroad, and it could likely cost the election for Sen. McCain
• Farm subsidies - nearly uniform repugnance across the economic community, and lawmakers couldn't ignore them more.
• Speculation - the consensus of economists point out speculators cannot change prices long term, but regulators are aiming for them anyway.
• Energy independence - the fool's gold of energy policy, and a the same time a standard campaign promise.

With economists blogs and quotes filling the media, why doesn't this profession get more credence? I'm baffled, but some thoughts.

First, many leading economists are unable to articulate issues in language other than academic. They are speaking in a foreign language to consumers. In the quest for precision of expression, they write abstruse, desperately-in-need-of-a-mean-editor prose that reads like mathematical Proust.

Second, habitual professional detachment when discussing economic issues tends to make them sound aloof and uncaring. (Giving the benefit of the doubt here) Indeed, many of their arguments seem to be about the arguments, not the problems of people.

Third, tenure isolates most economists from the emotional impact of bad economic news. I find myself more likely to listen to private sector economists even though they have a possibility to bias.

Fourth, and most alarming: they have no palatable answers. These guys are Bad News Incarnate - at least the competent ones. We've tried all the fun solutions already.

I am sure there are other factors, but it is clear to me that any innovative and helpful guidance from the economic community will be the exception, and will mostly exist within private business. Meanwhile they have great blogs.

Just nothing much to show for it in the real world.

It's not speculators...

Driving the market up. It's demand, voluntary and mandated. In fact, the speculators could be helping the market through this incredible and wrenching transition.

The results suggest that after an initial surge from early 2004 through mid-2005, index fund positions have stabilized as a percent of total open interest. Traditional speculative measures do not show any material changes or shifts over the sample period. In most markets, the increase in long speculative positions was equaled or surpassed by an increase in short hedging. So, even after adjusting speculative indices for index fund positions, values are within the historical ranges reported in prior research. One implication is that long-only index funds may be beneficial in markets traditionally dominated by short hedging. Attempts to curb speculation through regulatory means shoclass of speculators. [More]

Economists all all kinds are lining up behind the same conclusion. But the problem is the old hammer-nail syndrome. Congress only has a hammer and speculators are the only thing faintly resembling a nail. We can't do much about Chinese demand for steel, for example. But it would make good political theater to regulate spec money, many reason.

Some of the best minds in academia, to say nothing of blogging, have been probing the question of the extent to which financial speculation has influenced oil prices. The conversation has been long and detailed, so I'll just suggest that if you're interested, you should read this post, by Mark Thoma, and this one, by Tyler Cowen, and follow every link. I'll also give Mr Cowen the last word, for now:

The bottom line is that when it comes to the key substantive questions about the oil market - why are prices so high -- the correct answer is the Lachmannian one: "expectations." If you push one step further on that, and try to evaluate or "source" those expectations, the correct answer is "we don't know."

The ravaging effects of a soaring prices are starting to be felt keenly on hog farms and in grain-consuming developing countries. So, the blame machine is getting wound up as well.

The target is too easy to find, unfortunately. Index funds certainly fit the stereotype but an even easier-to-attack scapegoat worked too hard to hog the spotlight to hide now.

The human cost of the global biofuel switch was put in stark terms today by international advocacy group Oxfam, which released a report saying biofuels are responsible for pushing 30 million people into poverty (International Herald Tribune, Reuters and BBC coverage). The widely noted report asserts that the increasing use of grains as biofuel feedstocks is responsible for 30 percent of the increase in food prices, and that’s hitting the world’s poorest hard.

The report, written by Oxfam biofuel policy adviser Rob Bailey, urges developed nations to abandon their biofuel mandates and get rid of the subsidies and tariffs on biofuels that are destroying the ability of the market to appropriately adjust biofuel and food supply and demand. These economic hurdles have lead to an all-time low in grain reserves, the report says, and pushed food prices to record highs. [More]

The floods in Iowa have created a perfect visual aid for biofuel opponents. Along with a meat industry meltdown, grain farmer windfall profits, and mediocre E-85 experiences, it would seem like ethanol especially might be in for a rough time.

I don't think so. As long as oil prices hold or advance, it will be livestock and people who cut back, regardless of government action.

This runaway train has too much momentum.

At least it will be a quieter world...

Albeit more expensive. I had imagined plug-ins to be the eventual compromise our energy situation would force, just not this fast.

In less than 7 years, Mercedes-Benz plans to ditch petroleum-powered vehicles from its lineup. Focusing on electric, fuel cell, and biofuels, the company is revving up research in alternative fuel sources and efficiency. [More]

Still, as a proponent of using less oil as a solution to our increasingly snarled energy-political-economic problems, this classifies as hopeful news.

I'm still trying to dope out what combines will look like, though.

Just one more reason...

Why I think NASS is one of the worst bureaucracies in government. While information systems are being unveiled every day that provide depth, scope and real-time data, NASS turns out the same reports for more money at a speed no faster than 1956.

Compare and contrast with this import data website.

ImportScan is the world's most powerful competitive intelligence tool for the import-export business.

You get unlimited access to the entire ImportGenius database for your industry vertical, providing detailed information on every shipment entering the United States since 2006.

You can search by product type, importer, exporter, date of entry, port of entry, loading port, importer's address, exporter's address and more. Or combine searches to further refine your results. ImportScan then returns in-depth information about every shipment matching your query.

The results will include contact information for both the exporter and importer of the shipment, so you can find out where your competitors are sourcing their products overseas and where your overseas suppliers are selling in the U.S. The results can be easily exported to Excel or CSV format, downloaded or e-mailed to any address.

Your bosses will think you're a genius when you provide them with a detailed list of contact information for all of your competitor's suppliers! [More]

We should have weekly crop reports, with 12 hour-old data. And daily crop conditions from satellite and remote sensor technology.

Government should get better. Or be outsourced.

It's good enough for the Pentagon, isn't it?

The essential guide to China and the global economy...

We all have some ideas about what the motives and goals of the Chinese people and leadership are as they power themselves into a global economic and political force. We don't know the half of it.


James Kynge has written a guidebook for revising our thinking and prejudices of China. Early into China Shakes the World, I was struck by the depth of his familiarity with ordinary people and their lives as well those in positions of surprising power. His fluency in Mandarin, his long years living in China, and his impressive journalistic skills honed at the Financial Times combine for a book that is remarkable readable and insightful.

For example, most of us think the China success is simply the product of extremely cheap labor, but Kynge shows how Chinese business models drive their manufacturing processes far past equilibrium points that would cause Western managers to rethink. The strange and inconsistent government policies also are driven by a fixation on creating 25 million jobs a year - a formidible task. Employment, not profit is the first priority.

As eye-opening as the first part of the book is, it is his views on China's future that are most insightful. The intrinsic problems of socialist, one-party rule constitute a huge hurdle for continued growth, and China's hunger for raw materials shapes their foreign policy.

Kynge offers a clear set of choices China faces when dealing with the West, all of them problematic. He also details in stark terms the threats China may pose to our way of life.

It is the best geopolitical book I have read in years, remarkably free from ideology and rich in detail rarely available about this country and its people.

Better reviews here and here.

The "Supremes" save the day...

For Lego weapons.



Assemble your Second-Amendment hardware from your kid's toy box.

The human face of demand destruction...

I think we have reached the tipping point for the pork industry. And it is worse than I feared.

I received this e-mail from a hog producer who won't be buying any more $7 corn.

My wife and I are in our Mid 40's with two garde school boys that work on the farm as much as we do. After graduating from college I worked in Ag Business for 10 years before returning to the farm full time. During our 21 years of marriage we have purchased 387 acres and paid it off. We were able to build swine contract grower facilities and paid them off. Two years ago we started a 1200 sow unit, Mortgaged our other assets and secured a contract with a farm family two counties away to finish the pigs. On June 12, 2008, we were notified not to ship pigs on Friday as they could no longer pay for them. Now we are faced with a cash price of $10-$12 per head instead of the contract price of near $50. Working capital ceased to exist. As I have been up front with our Cooperative Lending Firm, I notified our lender of our inability to make our monthly payment. We have never missed a payment in 21 years. His suggestion was to sell all of our land, liquidated our sows and seek off farm employment. 30 Days earlier he told up " they're in it for the long haul." To bad our Cooperative Bank is no longer interested in livestock loans. We are looking at liquidation. My youngest son is in the first year of 4-H and doesn't want to attend the fair next week because he is afraid this lender will repo his garden and puppy. We are hearing of generational livestock family farms in our community that do not know if they will survive the summer. The loan officer has a FSA guarantee on our loan, the crop farmers have the LDP safety net, and we have nothing but speculators driving us off the farm. We need action now as we can't wait for congress to deliberate for weeks. The war between hog farmers, crop farmers and loan officers has begun. It is to bad we are the first casualty.

This is only one anecdotal data point, of course. [If any of you have other stories , please forward them to me] But my early read is lenders are panicking and leaping to harsh financial triage that at the very least seems at odds to the words of commitment and trust that have flowed at annual meetings and customer appreciation days where I have spoken.

Meanwhile, another front is becoming more active in our battle with our best customers.

A debate is raging within the state and nation's agriculture industry about the high costs of food and how much ethanol is contributing to it.

With Nebraska feedlot owners facing feed costs of as much as $300 per head, Nebraska Cattlemen is asking the U.S. Environmental Protection Agency to reduce the nation's renewable fuel standard (RFS) within the Clean Air Act to 4.5 billion gallons.

On the other hand, Nebraska Farm Bureau is urging EPA to deny the recent request from the State of Texas for a waiver of the Renewable Fuels Standard (RFS). [More]

Grain farmers are not only getting rich, they have effectively decided to join with food critics and lower our meat consumption.

The drainage premium...

With all the flooding in the Midwest (and the persistent drought elsewhere) researchers are reminding us their could be a link between a warmer world and precipitation patterns.

This year’s remarkable floods could well be just as rare, but normal, as the great Midwestern floods of 1993. But it is clear to climatologists that the conditions driving this year’s rising waters — periods of heavy rain — are more likely in a warming world because warmer air holds more water vapor. Kevin Trenberth, a longtime contributor to the reports of the Intergovernmental Panel on Climate Change and an expert at the National Center for Atmospheric Research, explained things a bit this morning in a couple of e-mails.

He cited a recent analysis by scientists from the National Climatic Data Center that confirmed earlier studies showing a substantial increase already in the intensity of precipitation across the United States, interspersed by longer dry spells.

“The greater intensity comes mostly from the increased water vapor in the atmosphere: overall up about 4 percent since 1970, a bit less over land and dry regions,” Dr. Trenberth wrote. “The general rule of thumb on this is that ‘the rich get richer and the poor get poorer’ — i.e., the wet areas are apt to get wetter and dry areas drier. This assumes that the main atmospheric circulation patterns don’t change much (or is second order, as seems to be the case) and so the moisture that is evaporated into atmosphere and is lying around gets transported to where it already rains and away from the areas where it doesn’t.” [More]

Weathermen have often mentioned the feedback loop from saturated ground where as it dries it simply reloads the atmosphere above it for the next deluge. Meteorologist Cindi Clawson brought up another good point this week on US Farm Report: saturated ground keeps the temperatures cooler as it dries, so crop development will likely also be retarded by temperatures as well as moisture.

The ground-truth (heh) for me is I finally got some payoff on expensive drainage system tiles I have installed over the last decade (although now I just as soon have not). Of course, it helps me get in the field earlier in spring and aids at harvest, but getting water off a field in 24 hours can mean the difference between a crop and none.

If we do see a climate trend that pumps more water into particular areas each season, soils like mine will experience an increasing benefit from drainage upgrades. In fact, it could be an even bigger factor in land prices, with drainage system maps and data touted more than soil maps and yields.

The bummer: tile is, of course, drived from petroleum and guess where prices are going?

Assorted, belated answers...

In my travels this week and in previous posts I have promised to provide links and other info to substantiate what I'm talking/writing about.

Here are the ones I can remember:

1. For those who wanted more information on my presentation on risk, click here for the .ppt (PowerPoint) file.
2. Two books I have raving about:

• China Shakes The World by James Kynge (review this weekend in JWorld)
• The Post-American World by Fareed Zakaria (review soon)

3. Since some of the missing beans I no-till replanted now have shown up and I have some wildly overpopulated areas, I think I may look into these crop lifter fingers (admittedly designed for pulse crops) that a the inventor showed me in SD.


....I'll think of the others after I post this, of course. Thanks for your patience.

Listen...

As corn growers mount a vigorous response to ethanol critics, they tend to identify them with as many buzzword labels as possible to disguise the fact that most are simply old customers who buy most of our product and have for generations.

What they are not doing is listening. They're incessantly telling THE FARMER'S STORY. Of course, only the corn farmer story. If they stopped to listen, they might reach some other conclusions.

Consider this comment from a feed buyer regarding my earlier post:

Mid-level livestock operations are in the cross-hairs. A multigenerational
NC Indiana hog operation (XXXX) is reported to have declared
bankruptcy this week, leaving a lot of contract growers holding the bag.
They were a well thought-of, concientious, hard working, dead honest
company to deal with. Apparently they were just a little lite on the risk
management and that was fatal this time around.

Many of us feed buyers have to paste on that (frozen) professional smile as
farmers complain about our wide basis while selling us $7.30 cash new crop
corn. The taste of ashes is what you may taste, but whatever it is, it is
very, very bitter. [my editing]

Perhaps most corn farmers are right and sacrificing livestock customers to ethanol production is the shrewd decision to make right now. I just can't get those numbers to work. We are about to engage in serious demand destruction just as ethanol (fairly or not) falls out of popular favor. This looks to me like trying to shoot both feet at once.

I think we will look back on what is about to unfold, and if nothing else, wish we had dropped the subsidies and mandates if for no other reason than to avoid the blame about to roll over us. If the markets were truly able to re-allocate this short crop, we could concentrate on growing corn, not argue about economic sensitivities.

It's a duck...

After a while, some arguments are resolved by unfolding evidence that rides rough over all disputed nuance.

It just quacked. It just waddled.

Houston, we have a duck probem.

Deep in the heart of every corn grower, we really really knew we were pushing the system to its limits. Only we thought the limit was the giddy heights of maybe (giggle) $5. [See also: oodles of tear-stained 08 fall delivery contracts for $4.25 or less]. But even those of us who lived through 1980 or 1983 staunchly avoided imagining that type of weather-driven scenario.

“The whole corn crop boils down to what Iowa and Illinois will do…. If you have any problem with those two states, the market will explode…It’s going to take extraordinary circumstances to get through this year without major interruptions in corn production… We’ve got a mess on our hands,” added Al Dutcher, a state climatologist for the University of Nebraska, in response to questions about the possible impacts of the excess water weather disturbances. [More]

Combined with demand absolutely NOBODY predicted, you can't write a story about corn today without alluding to a "Perfect Storm". We're going to get tired of that lede in hurry.

One reason for the wrenching aftermath looming from this year's production problems could be the corn industry pattern of carefully slicing and aligning data to offer a perspective that was at odds with the larger picture. While hog producers can't sleep, corn farmers prate on about cornflakes, where all of maybe 22 bushels are used annually.

Here in SD, it seems every other slide at the National Sunflower Association meeting referred to the battle to remain competitive with ever-more lucrative corn for acres. When food processors like Frito-Lay announced a total switch to healthier sunflower oil, the industry was ecstatic only to discover they could not revise contracts upwards fast enough to entice growers.

The result: I was told this morning to read the Fritos bag now. It says "sunflower OR corn oil". I suppose corn growers could see this as a win-win, but it belies their studied overlooking of the effects high corn prices have on other commodities due to a fixed land base. This rather obvious part of the economic analysis has been pointed out by other observers, but the duck everyone else saw is now swimming in our own cornfield, so to speak.

I am encouraged by the comments by NCGA President Ron Litterer indicating at least the possibility of recognition of a problem, but that was two weeks ago and things have gone downhill. In the meantime, the scent of blood is in the water for ethanol subsidization critics.

Citigroup's Driscoll slapped sell rating on ethanol producers BioFuel and VeraSun. He said that surging corn prices will hurt profits at both companies. Corn is the major raw material used to make ethanol, and prices for the grain have surged to record highs lately.

In addition, the analyst speculated that the rally in corn prices will force some small and midsized ethanol producers to shut down production at plants over the next few months. At least five ethanol plants have been shut down as costs to run the plants are far outweighing profits, according to Driscoll. He didn't name the plants in his report. [More]

I think this may be overstated logic, but I wouldn't buy ethanol stock right now either. The point is we skated very close to our production edge and it looks like we may wreak serious havoc on our livestock industry, and for the first time it appears even oil prices cannot protect the ethanol industry completely from red ink.

This is the problem of seizing control of a market by government fiat . Certainly it was not the intention of corn farmers to literally starve our oldest and best customers, but without a free market to allocate a now scarce resource by millions of individual decisions, this act of hubris will leave ashes in our mouths even as we cash really big grain checks.

Maybe I could tell folks...

My fields are abstract art - with different sizes of corn and random missing shapes. After all, some farmers use their crops as a canvas.


[More Japanese rice art]