Slouching toward legality...

Every now and then I see the claim marijuana is the "most valuable US crop".

Reuters reported Dec. 18 that public-policy analyst Jon Gettman estimated the value of the U.S. marijuana crop at $35 billion annually, with California, Tennessee, Kentucky, Hawaii and Washington each producing more than $1 billion worth of the illegal drug each year. Gettman estimated the annual California marijuana crop to be worth $13.8 billion.
The estimates were based on previous federal reports showing that the U.S. produced more than 10,000 metric tons of marijuana each year.  At $1,606 per pound, that makes the crop worth at least $35 billion, compared to $23.3 billion for U.S.-grown corn, $17.6 billion for soybeans, and $7.4 billion for wheat. [More]

First, this was 2006, so the commodity numbers are much lower than current prices, and it also uses street value - not "farmgate" - prices for weed. Finally, the estimate comes from a partisan source, not disinterested economists. Something smells funny about this claim (heh).

So as the nations moves fitfully toward legalizing cannabis, what are some better numbers to estimate the importance of this ag product and its possible effect on the economy?

Well, that turns out to be a tough question. I started by trying to find out large US consumption is. As you might guess, the estimates are even worse than NASS on the soy crop.

Consequently, all the data presented above suggests the most reliable estimate of annual supply is one that takes each of four most prominent estimates into consideration: 1) the 21,865 mt estimate based on seizures and domestic production; 2) the 17,000 mt estimate reported by the Library of Congress; 3) the 8,700 mt estimate generated by combining State Department and NDIC reports; and 4) the 9,830 mt consumption estimate above derived from National Survey data. The average of these four estimates of supply is 14,349 mt of marijuana available in the US on an annual basis. [More]

But a more recent (2010) Rand study refutes this number.

The $20 billion figure appears to come from multiplying a $525-per-pound2 markup by an estimate from the Mexican government that 35 million pounds were produced in Mexico and then rounding up. However, no data support the claim that U.S. users consume 35 million pounds (~16,000 metric tons [MT]) per year, let alone that they consume this much marijuana from Mexico. (This point is addressed in detail in Chapter Three.) This is three times the United Nations Office on Drugs and Crime’s (UNODC) (2009) upper bound for total U.S. consumption and nearly four times the amount estimated by the Drug Enforcement Administration (DEA) (DASC, 2002). [More]

Note the ~15,000 MT estimate is from the same guy who made the previous value estimate. His estimate that we import about 50% of consumption is also echoed by other sources, but that claim seems to be more widely accepted as a reasonable guess. Perhaps a better estimate:

No one can know the actual value of the domestic marijuana crop with any certainty, as most cultivation is hidden in the shadows, all the more since federal prosecutors began cracking down in states that have legalized medical marijuana. The authors' best guess is that it’s worth about $2.1 billion to $4.3 billion.How legalization would affect the value of domestic pot production and potential tax revenue is another complex question the authors attempt to untangle.While legalizing marijuana could double or triple consumption, the authors point out that it also would dramatically lower the cost of production, with growers adopting highly mechanized, large-scale techniques used by big agricultural companies.Under this scenario, marijuana could become the cheapest legal intoxicant, far cheaper than alcohol. The authors suggest a legal market dominated by high-potency marijuana would produce annual tax revenues of a few billion dollars nationwide.By comparison, alcohol and tobacco each bring in $10 billion or more per year, according to the book.So what about California, where the pot industry is a fixture in some counties and growers boast of producing the most potent and most valuable strains in the country?The authors don’t speculate. However, 2010 figures from the U.S. Department of Agriculture, the most recent available, rank grapes at the top in California, worth $3.2 billion annually, followed by almonds ($2.8 billion), strawberries ($1.8 billion) and lettuce ($1.6 billion).That means that if one values the nation’s marijuana crop at the high end of the authors’ estimate, about $4 billion, California would need to account for more than 75 percent of domestic production in order for pot to rank as the state’s top cash crop.Inflated valuations are not the sole domain of marijuana advocates. The authors suggest that there are incentives for law enforcement officials to pump up the potential value of marijuana to present their seizures in the most favorable light. [More]

By this time I have reached the conclusions that 1) any economic analysis regarding farm income, tax revenue, or economic  impact from legalization should be viewed with great skepticism, and 2) marijuana today probably is not close to being our most valuable crop. 

Junkbox, Episode MMXIII ⨸...

 Group 2 beans are pushing toward harvest next week. Or being pushed...

• Great series from James Fallows on mid-American towns. If you have a connection to Holland, MI or Sioux Fall, SD, please check out his posts. If you don't, you'll still enjoy them.
• Squirrels - we hates them!
• Why I am bearish on interest rates.
• How to tell your pilcrow from your diple.
• Darrin Newsome does some Broadway re: soybean prices. (Wait for it...)
• The remarkable end of East Germany. Well done, indeed.
• Why demographers get gray. And is Lincoln now a girl's name?
• Ya gotta be careful dealing with guys from "Sern" Illinois

If you don't have a camera on the back of your combine or grain cart, please cough up the $200 to prevent a tragedy.

Just not funny...

Believe it or not, I never could understand the joke about "cow tipping". Mostly, I knew it to be absolutely impossible and failed the test of humor for sheer illogic.

But obviously this fable is alive and well.

Let's get this out of the way: Cow tipping, at least as popularly imagined, does not exist. Drunk young men do not, on any regular basis, sneak into cow pastures and put a hard shoulder into a cow taking a standing snooze, thus tipping the poor animal over.While in the history of the world there have surely been a few unlucky cows shoved to their side by boozed-up morons, we feel confident in saying this happens at a rate roughly equivalent to the Chicago Cubs winning the World Series.The evidence against cow tipping is immense, and backed up by both farmers and the laws of physics (more on that later), but the simplest bit of proof we can point to: YouTube.

It even includes some serious math to back this up.

I'm sure this will put an end to all those tremendously un-funny jokes.

Junkbox, Episode MMXIII ⨳...

 Our annual trip with our dinner club to the local lake for boating, overeating, and highly-disciplined wine consumption. And home before 10 pm.!

• After we explored the problems of Syria, and South African gold strikes, the conversation turned to nature, such as: Why do buzzards urinate on their legs?
• Digital drive-in doubts
• Is a two-year extension the next farm bill outcome favorite?
• I vote for the portable body scale and the silicone wine glasses.
• Wait - Asians in California conspire to take over public schools? WTF? (about 2/3 way down)
• Very cool population distribution graph
• Are orchestras over?

Cut beans in two weeks. No idea about yields. Meanwhile winds keep blowing the corn over.

Does this really happen?...

 Part of an e-mail from a friend:

On the grain front, got a call from my closest grain dealer, asking me to change delivery of my remaining August corn to his elevator in southern Lancaster County. He is loading trucks to go to Georgia with corn and does not have enough in the bins to fill the trucks!!! Apparently there is an area that needs corn and likely does not have rail access. The trucks are hauling wheat to the flour mills in this area and taking corn back. Can you say 'long haul'. The story is there is corn nearby, but rain is delaying harvest, so they are coming to Pa, an already corn deficit state for 'surplus' corn.
There are stories of some 1 million bushels still in bins in Pa however. I talked to a trucker who was loading corn out of a bin that the producer told him was 4 years old. I just wondered where he has been the last 2 years with an opportunity to sell in the last 14 months at 9.69 a bushel. I also realize that the truth sometimes can get in the way of a good story.

Man, I have trouble keeping corn until June.  I can't imagine 4-year old corn, but I've hear these stories all my life.  We had trouble with bins picking up moisture this spring, so Maybe they dry it to 12% or something.

Meanwhile, I have always needed to turn grain into money to like, buy groceries, and pay off loans, so maybe I never really had the right circumstances.

FWIW, we had a storm last night to boost our August rain total to .51", which means it won't be a new record low. While there was modest wind, it sure broke a lot of corn over. Is it me or are new hybrids remarkably wind-sensitive?

Junkbox, Episode MMXIII ∀...

 I'm having drought-flood whiplash. This month could be the driest on record for our farm.

After receiving more rain in the first seven months than all of last year. FWIW, I think corn, and especially soy yields are literally evaporating.

• Look for more on this from me after I have done more research. 
• Discovery Channel sells out
• I think this idea's time has come
• Finally, a genre ready-made for me: farm-lit
• Nothing in his career became him like the leaving of it (Apologies to Will)
• Fuel cells - alive and pushing ships
• More than you want to know about cashews

I have switched from Firefox to Chrome as my default browser. FF suffered several speed and hangup issues. Very happy with Chrome.  

Beats buying a new computer.

Almond juice?...

 Apparently, soy milk is soooo yesterday.

Something is clearly dampening enthusiasm for drinkable soy. WhiteWave claims that across the plant-milk industry, soy now represents just 35 percent of sales; almond milk, by contrast, has surged to more than 55 percent of the market. Research firm Euromonitor International expects U.S. retail sales of soy milk to falla further 11 percent this year.What gives? Well, almond milk contains no saturated fat, has fewer calories than soy, and is rich in vitamin E. Another factor: Soybeans just aren’t hip, says Larry Finkel, director of food and beverage research at Marketresearch.com. “Nuts are trendy now,” he explains. “Soy sounds more like old-fashioned health food, like tofu, and could probably benefit by a reinvigoration of their brand.”It’s also possible that some consumers remain concerned about research linking soy and breast cancer, even if those claims may be unfounded. The American Cancer Society says soy is fine in moderation. [More]

I wonder if anti-GMO is playing a part in this. 

Two years ago, Dean Foods, owner of Silk Soymilk, was heavily criticized  for switching from organic to conventional soy beans without clearly labeling the change with different packaging. For many years, Silk soymilk was certified organic. In 2009, they introduced a “natural” line where the soymilk was made from conventionally grown soybeans (where pesticides are used along with GMOs), but the packaging was identical to the organic line. Even the price retailers charged was the same. [More]

Meanwhile, my local elevator, AC Grain - now a joint venture between Cargill and Mitsubishi - has been surveying local famers to find out what premium it would take to source non-GMO beans. What was entertaining was trying to explain to Aaron how you can grow beans without glyphosate. He found it hard to believe, but looking at our fields, we may have to relearn.

Continuous shrimp...  

This problem sounds vaguely familiar.

Prices for the tiny crustaceans are soaring because of a disease that’s crimping supplies in Thailand, Vietnam and China, the three largest producers of shrimp in the world.
“Production is down substantially,” said Paul Brown, president of Urner Barry, a food industry market research firm that tracks shrimp prices.
The popular shellfish is now approaching a record $6 per pound, up one-third from the beginning of the year. In 2010, a pound of shrimp set consumers back $3.
Producers are blaming a disorder called Early Mortality Syndrome, which thrives in the warm waters of Southeast Asia. The disease is not believed to be communicable to humans and has been gradually worsening in the last few years.
More than one-third of U.S. shrimp imports came from Thailand last year, worth about $1.1 billion. Imports from the country are down 31% this year, Brown said.
Exporters are hopeful the disease can be treated in the near term.
Until then, analysts say the crisis will open opportunities for other shrimp-producing nations to fill market share.
“After a decade of explosive growth, the global farmed shrimp industry has reached a turning point,” said Rabobank analyst Gorjan Nikolik. “However, regions unaffected by the disease are emerging to fill the supply void and are benefiting from this high price situation. Producers in Ecuador, Indonesia, India, Bangladesh and Myanmar are rapidly expanding production.” [More]

Like tobacco in the early US, to perhaps corn today, it seems to me natural forces make intensive continuous production in the same place difficult in the long run.

If we have one more year of below trendline corn yields will this idea get more credence?

Political debate at its best...  

I urge you to take the time to follow this TED talk (20 min.) and then note if your opinions on one-party rule vs. democracy have changed at all.


 

Then read this careful response [also worth your time]. An excerpt:

Like Li, I do not like the messianic tone some have invoked to support democracy. I support democracy on pragmatic grounds. The single most important benefit of democracy is its ability to tame violence. In The Better Angels of Our Nature, Pinker provided these startling statistics: During the 20th century, totalitarian regimes were responsible for 138 million deaths, of which 110 million occurred in communist countries. Authoritarian regimes caused another 28 million deaths. Democracies killed 2 million, mainly in their colonies as well as with food blockades and civilian bombings during the wars. Democracies, as Pinker pointed out, have trouble even bringing themselves to execute serial murderers. Democracies, Pinker argued, have “a tangle of institutional restraints, so a leader can’t just mobilize armies and militias on a whim to fan out over the country and start killing massive numbers of citizens.”
Contrary to what he was apparently told when he was a Berkeley hippie, the idea of democracy is not that it leads to a nirvana but that it can help prevent a living hell. Democracy has many, many problems. This insurance function of democracy — of mitigating against disasters — is often forgotten or taken for granted, but it is the single most important reason why democracy is superior to every other political system so far invented by human beings. Maybe one day there will be a better system than democracy, but the Chinese political system, in Li’s rendition, is not one of them. 

To have the opportunity to balance these two views is also a more common event in democracies I would think. But to see political debate done well and persuasively can only remind us of what we have lost in our public sphere. I found Li's suggestions persuasive until the critique jolted my memory of what our democracy has been and could be again. In fact, upon reflection I think the our two political systems could pass each other going opposite directions. Not a strong chance, but a real one.

[via Mankiw]

FWIW...  

A fascinating (and seemingly endless) stream of "dirty secrets" from  people who work in various industries that they think consumers have no idea about. All this must be taken with a barrel of salt , but a few of my favorites:

I work at a US lobbying firm, and I'm sure no Redditor would be shocked to hear that US legislators are ignorant. You might be surprised just HOW ill-informed a lot of them are, though. Like the Congressman who believed David Cameron was a member of the Socialist party. Or the one that asked me why we called it Russia now, not the USSR. Or the Senator who told me he'd grown up drinking sea water, and it was healthier for you. Or the governor who thought all Jews were killed by Hitler. The list could go on.
 ...
75% of people on twitter are fake. I used to work for a social media company, and spent all day creating and acting like people online to connect people to our clients and make them fans of their music/food/whatever. We also had a "blast" program where we could tweet stuff out from accounts to create trending topics. So most of that stuff is organized.
...
Former paramedic here. I've never once checked, judged, or cared whether you had on clean underwear. Your parents lied.  
...
ex-Panera Bread employee here. EVERYTHING is microwaved, all soups and pastas come in frozen bags, reheated for the customer. pastries and breads come in "half-baked", bakers just slap on some frosting/fruit, and heat it up. it's all fast-food quality food, but with a good reputation. plus it was terrible to work there.  (*see below as well)
...
 Video editor here for reality TV. It's fake for the most part. They usually do multiple takes of the "reality" scenes that are staged beforehand. The most recent egregious use of this is Duck Dynasty. They pass the show off as reality tv and they actually have table readings for that show before shoots. Not saying that reality TV isn't sometimes entertaining. I'm just saying that you shouldn't be fooled into thinking that this is actually reality and the camera just happened to be there when these people were doing what they normally do.

My takeaway is not horror at the idea of such atrocious behavior behind my back. Indeed, it's amazement that the economy and culture that is America can absorb and overcome all these outrages.

*Restaurant food: not what you think. Even in France.

If you’ve ever wondered why French classics such as a “moelleux au chocolat” or a “tarte tatin” tastes suspiciously the same in Paris restaurants, it’s probably because it is. About a third of French restaurants say they use industrial food, and Fasquelle and other officials fear declining standards at the nation’s 150,000 restaurants threaten a tourism industry that represents 7 percent of France’s $2.8 trillion economy.
“The odds are sadly good you’ll be eating a pre-prepared dish or two if you dine out at the low to mid-level of the Paris food chain,” said Alexander Lobrano, author of “Hungry for Paris” and former European Editor of Gourmet. “I fervently hope that a law with real teeth will be passed in France, since it would not only go a long way to preserving the country’s distinguished gastronomic reputation but also reward those chefs who work so hard to prepare ’real’ freshly cooked food from quality ingredients.” [More]

Does it really matter, anyway? If the consumer is unharmed and satisfied, doesn't that imply that our internal standards don't match up with our external pretenses?

Maybe life is more like pro-wresting than we think. At every level, we just decide to believe. More and more, truth has become subjective, and something we manipulate to achieve our desires.

Whatever, it seems to work.

Junkbox, Episode MMXIII✤...  

New pastor, news issues. My prayers to all church committee members. As a trustee, I'm just dealing with bats literally in the belfry.

• The science of the "old, weird trick"
• Fracking doesn't help droughts
• The emergence of the "Total Hawk"
• Another argument for just giving cash to the poor
• Update on the helium problem
• Is religion just a form of signaling trustworthiness?

Hot Corn Rumor of the Day: Cool weather is causing tipping back.

Think of the fence contract...  

While this could almost classify as a frivolous post, it's becoming clearer that wild rhinos and even elephants could become effectively extinct very soon. Is the idea of a rhino farm so outlandish?

South Africa, where 75 percent of the world’s rhinos live, is also at the forefront of a counterintuitive move to legalize the rhino horn trade. If adopted, the new policy would promote safer rhino-horn farming: rhinos could be sedated while parts of their horns were cut off, and then the horns would grow back. A team of Australian conservationists signed on to the idea in March. As Kevin Charles Redmon explained at the time on Pacific Standard, lifting a trade ban would ideally increase the supply and lower the price, and thereby lower the incentive for poachers to slaughter the animals. However, Redmon wrote:

The black market will only collapse when legal horns are cheaper and easier to obtain than ill-gotten ones and penalties for operating outside the ‘central selling organization’ are severe. DNA signatures and radio chips will help trace licit horns, and exporters will be subject to regular audits. At the same time, buyers must demand cruelty- and conflict-free wares (think of efforts to demonize blood diamonds).

Legalization remains highly controversial among animal rights activists and wildlife conservationists. The World Wildlife Fund, the Environmental Investigation Agency, and the International Fund for Animal Welfare have all been critical of the idea. What if lifting the ban increases demand, as it did in fact following similar, previous experiments with the ivory market? Or what if a legal trade simply establishes a parallel but separate market, while illegal (whole) rhino horns and heads continue to sell underground?
Likewise, would legitimizing the sale of rhino cups encourage and validate the baseless myth that they actually have medicinal properties? Perhaps conservationists’ and governments’ efforts would be better directed toward fighting the very misconception that drives the demand in the first place. [More]

This free-market approach, however, does not have a good track record in products where demand is so irrational and lucrative. There are strong countering arguments.

South Africa reportedly will not seek a full legalization of all rhino-horn trade but a one-time sale of current stockpiles. The South African government has stockpiled more than 16,400 kilograms of rhino horns—mostly confiscated from poachers—while private owners possess about 2,000 kilograms more—ironically, mostly horns that have been removed from live animals to make them less attractive to poachers. With rhino horns fetching anywhere from $10,000 to $40,000 a kilogram, the South African government could net half a billion dollars or more from the proposed sale. Private ranchers, who own much of South Africa’s rhino population, would also benefit from this windfall. In fact, many ranchers have been pushing for a sale like this.
South Africa’s deputy director general for biodiversity, Fundisile Mketeni, said monies from the one-off sale “should go to conservation”—note that he didn’t say it would—but experts and conservation organizations say the sale would do little more than feed the growing desire for rhino horns and make the situation much, much worse in the long run.
History backs them up on this point. Similar one-off sales of ivory to Japan in 1999 and China in 2008 have been linked to the resultant increased demand for ivory in Asia, which has driven elephant poaching across Africa to crisis proportions in the past decade. At the time, proponents of those sales said flooding the market with stockpiled ivory would lower prices and therefore eliminate the incentive to poach more elephants. The opposite happened and prices soared. South Africa now argues that putting more than 18,000 kilograms of rhino horn up for sale would glut the market, lower prices and save more rhinos. This is an argument we have heard before. [More]

The wild rhino population is hard to nail down, with mixed prospects. Some subspecies have disappeared although there are some successes.

While most subspecies of Africa’s two rhinos, the black and white rhino, continue on the road to recovery, this is not true for two of Africa’s most threatened rhino subspecies: the West African black (Diceros bicornis longipes) and the Northern white (Ceratotherium simum cottoni). The West African black rhino is now feared extinct and numbers of the northern white rhino have reached an all time low in the wild. In both cases, poaching for rhino horn is the main cause of their demise.

This is according to new estimates announced by the African Rhino Specialist Group (AfRSG) of the IUCN’s Species Survival Commission. A recent survey of the West African black rhino by a French-based survey group has failed to locate any sign of their continued presence, despite an intensive survey earlier this year throughout its last refuges in northern Cameroon.
“As a result this subspecies has been tentatively declared as extinctm,” says Dr. Martin Brooks, AfRSG chairman. “Also the northern white rhino is on the very brink of being lost. Restricted in the wild to Garamba National Park in the Democratic Republic of Congo, recent ground and aerial surveys conducted under the direction of African Parks Foundation and the AfRSG have only found four animals. Efforts to locate further animals continue, but we must now face the possibility that the subspecies may not recover to a viable level,” he continued
On a more positive note, continental black rhino numbers of the remaining three subspecies have increased to 3,725 as a whole, a rise of 3.2% over the last two years: this from an all time low of 2,410 in 1995. The ultimate conservation success story continues for the other white rhino subspecies, the southern white. Down to less than 50 animals a hundred or so years ago, numbers have increased to 14,540. [More]

I wondered if there was some bizarre preference for horns from the species under strongest poaching pressure, but it demand does not appear to be species-dependent but rather linked to horn size.  This burgeoning demand is the result of rapid income growth in areas where traditional (and totally unscientific) medicine sill holds sway. Thus curbing demand could be a generational challenge, not an education process, I would think.

Maybe the first thing poor people want to buy as they get more income isn't better food, but a cure.

Tell me again...  

How industrial agriculture is going to work in Sub-Saharan Africa. I think it is an ill-advised repeat of the same condescending colonialism, however well-intentioned, that delayed African development for a century of more. 

I saw Maasai herders in Tanzania, but had failed to learn more about their lives. This article was a revelation.

And day by day, I saw more of the world of the Maasai of Maji Moto. There was the bustling weekly livestock market in the nearby town of Ewaso Nero where Maasai herders filled a dusty corral half as large as a football field with sheep, goats and cows, selling them mostly to meat merchants from Nairobi. I bathed in the Maji Moto hot springs with the locals and was led on guided hikes into the easily climbed Loita Hills, where it seemed as if everything that grew had some medicinal, nutritional or spiritual significance. The leaves of the sagelike compa bushes, for instance, are rubbed under the armpits like deodorant; twigs from the leafy olkisikongu tree are used as natural toothbrushes; and the sacred oreteti trees, under which the Maasai pray to their god, Enkai, are said to have the power to dispel bad energy and instill peace.

A couple of hundred yards behind the Cultural Camp is the “widows’ village.” In Maasai communities, women often outlive their husbands but are forbidden from remarrying. Some of these widows, and their children, are left destitute, with no livestock (the traditionally favored currency of the Maasai). Urged by his mother to address this problem, Salaton built a manyatta where poor widows live together like a family, earning money by working at the camp and selling beautifully beaded jewelry to tourists; the camp also pays for their and their children’s medical expenses. When I first went to their manyatta, the widows performed traditional welcoming songs and dances, but subsequent visits were less formal; they were happy to show me how they lived and were comfortable being photographed in their homes.

Meanwhile, I got to know the Maasai who were working and volunteering at Salaton’s camp, especially those who spoke English. There was Rose, a teenage seamstress with a hair-trigger smile, who teaches the widows how to sew when she isn’t working with tourists; Joyce, a college graduate in her early 20s recently hired to help Salaton with the business side of the camp; and Meeri, who was in her last year of high school in Maji Moto after fleeing her own village a few years earlier to escape a marriage her parents were arranging for her. “I’d heard that the leader here helped girls like me,” she said, and described her three-day walk alone across the bush, sleeping in the branches of trees at night.

Our rapport was easy as we asked and answered questions about our cultures. Among our many conversations, we compared differences between Maasai and American marriages; when I explained that we don’t have dowries, don’t practice polygamy and get to choose our spouses, they liked the way all of that sounded. But they didn’t immediately embrace the idea that a wife might be older than her husband. “That would never happen here,” Joyce said, laughing at the thought. [More of a short travel story]

 I have become more firmly convinced that applying our brand of agriculture to Africa will not help many Africans, even if it makes foreign investors rich. It is simply another form of an extractive industry, and absent any industrial development that provides jobs to displaced subsistence farmers will worsen the plight of the vast majority of locals.

Instead we need ways to promote better small farms to increase their productivity and allow them access to markets, which will allow them to develop economically on a path similar, but not identical the the US.

For those of you...  

Who couldn't make it to the fair.

Great write-up as well of the culinary delights.

Junkbox, Episode MMXIII‡...  

Great crops, but no GDUS's.

• The dairy marketing map
•  Surprise! Americans sobered up their finances
• Felix unravels my case for the the payday loan issue.
• Don't count egg producers out just yet.
• Maybe the EPA move isn't as bad as corn growers fear
• Town hall meetings may be over
• The jobs we're making aren't the ones we need

New tile main installed through a cornfield. My contractor noted it began running immediately. Jeez - 18" gets spendy in a hurry!

 Corn looks like the best in years, but it felt like September and looked like July corn.

Update: Links repaired - Thanks, Steve.

What an answer...  

Could look like. Will Wilkinson, one of my favorite libertarian writers responds to a one-sided post by Jonathon Chait and near the end hits a nerve with me.

That said, it remains that egalitarian anti-corporatism is a genuinely excellent, genuinely egalitarian idea. I would prefer to see it combined with a really solid scheme of social insurance. But we never see this combination because neither party is interested in it. Many Democratic partisans are even less interested in anti-cronyism than many Republicans, unless they think it will hurt Republican fund-raising, and that just goes to show that Democratic egalitarianism is as opportunistic and superficial as the Republican love of liberty. The Democratic Party is as bound up with corporate interests no less, or not much less, than the GOP. Yet Mr Chait says that "Pretending Democrats are actually succoring elites is a handy way for [advocates of conservative populism] to avoid grappling with the central issue", which is that Republicans don't like downward redistribution. Mr Chait apparently cannot see that Democrats do succor elites, that our political system is finely tuned so that the succoring will continue no matter who is in power. Moreover, all the deeper mechanisms that generate and reproduce America's peculiar patterns of income and wealth—the definition of intellectual-property rights, the structure and governance of corporations, the marginalisation and persecution of undocumented workers, the de facto apartheid of America's systems of criminal justice and public education, the evolution of family structure—seems to lack reality in Mr Chait's mind, perhaps because none affords an obvious angle for partisan electoral advantage. Rather than get bogged down in all this tricky stuff, Mr Chait prefers to reduce the whole question of inequality, of economic populism—of American politics altogether!—to a single issue, progressive redistribution, on which Democratic electoral interest and moral self-satisfaction happen to comfortably intersect. Democrats most certainly do succor elites, and this sort of glib self-righteousness about inequality is one of the ways they do it. [More]

This is where the gap between what I used to believe 10 years ago and today probably is the greatest. I have come to the realization that our system inherently marches toward lop-sided wealth and well-being distributions if left unsupervised, so to speak.

Reversing our slide to near feudal wealth distribution will be difficult, I fear. And while I find that condition morally repugnant, the bigger issue could be it causes our USA-type economy to breakdown. 

It appears there are many ways to categorize the two main lumps in our current wealth/income distribution accounting:

• Takers - makers
• Spenders - savers
• Consumers - investors

It is this last dichotomy that uncovers the issue for me. Even if we simply stipulate that the wealthy are entitled to the fruits of their labor, or more likely their capital, when the returns come rolling in they invest, not spend. After all, they can only spend so much and can only marginally improve an already comfortable lifestyle.

This is why, unlike many ag economists, I don't see land prices swooning. Even with lower income from farming, there is little reason to shift these illiquid assets into something else, and even less urgency. Farmland sales will slow to a crawl perhaps, but there is so much wealth in the hands of investors vs. consumers that any quality asset will hold and even attract more. 

Wealth is piling up in the hands of non-spenders. While I agree saving is a virtue, postponing consumption for a greater benefit in the future is clearly more virtuous for those in the middle or lower levels than it is for the rich. Saving for them is merely not troubling to do anything else.

But without consumers/spenders won't our economy slog along? That seems to be what we're seeing. Companies are not hoarding cash because of Obamacare, regulations, or taxes. The simply don't see enough demand to warrant a new factory or more workers.

Meanwhile, trillions rush into any investment that seems to offer non-zero returns. If you think it's bad now wait until the income/wealth ratios get even more extreme. 

My view on wealth distribution amazingly is not a particularly extreme position because most Americans 1) don't know how lop-sided things are and 2) agree it should be less so.

 But danged if I can discover any reliable mechanism to alter the trends. The last time we saw a "great leveling" was WWII, and that seems to a rather drastic option. Hence my lesser of evils is to see a stronger safety net, which should resonate with farmers, I would think.

Wilkinson apparently agrees, which comforts me I haven't drifted too far off the planet in my fantasies. But like me, he stuggles to see how our political system and economic obliviousness will make changes possible.

Hints of a new economy...  

I have become convinced by several disparate factors that business will not necessarily be "as usual"going forward, and our global economy is evolving new institutions and mechanisms to compete with and perhaps replace (eventually) known agents of finance.

One of these situations our current system is handling badly is lending to the lower income people of the world. Even with risk factored in, the rates demanded strike me as, well, usurious. Could there be a better solution?

THE Archbishop of Canterbury, Justin Welby, has resolved to set up new not-for-profit credit unions to compete with pay day lenders, companies who offer short-term loans at very high levels of interest. The FT has some more detail on the proposals here. The Archbishop has a clear message for the pay day leders: “we're not in the business of trying to legislate you out of existence; we're trying to compete you out of existence." A new paper by Luigi Pascali, an economist at the Barcelona Graduate School of Economics, suggests he might have the right approach.
As Ecclesiastes 1:19 tells us, there’s nothing new under the sun. 15^th Century Italy had its own pay day loan problem. A doctrinal change at the end of the 14^th century had prohibited the Catholic laity from lending money to make a profit. But by the late 15^th century Italy was in severe recession due to constant wars and many had to resort to pawnbrokers. (My colleague wrote about how this type of short-term lending against assets is on the up in Britain a few weeks ago). The only way in which Italians could borrow money was from Italy’s Jewish population who were absolved from the ban.
Franciscan monks resolved to compete the money lenders away. The Franciscans set up new lenders, the Monti de Pieta. The name means “mount of piety”, referring to the initial capital used to set up the bank. These not-for-profit credit unions would replace the Jewish pawn shops and eventually evolved into modern banks. The monks combined this with sermons on the evils of money lending, pushing borrowers into their arms. [More]

The rest of the short post is worth reading but the spoiler is research indicates this could work.

We are allowing our global economy to pull up many of the ladders of economic progress. This is a bad idea on many levels but what I think hasn't sunk in yet is that without ways to progress (and yes, regress) by our own merits we doom all levels to just what we are seeing now: billions of people trapped in poverty and billions trillions of dollars sitting essentially idle.

Such ideas are alarming to many who have struggled to achieve a reasonably comfortable place in life, but I see everyday those same comfortable people grappling with the grim futures facing their children or grandchildren.

The Great Stagnation seems to be an apt label for our times, and even if we've made it safe to the finish line, the path for the same end looks much harder for those who follow.

I'll be posting more about some hopeful innovations like this that can turn our expectations from government to other agents to solve this growing dilemma.

The oatmeal-Obamacare connection...  

In what may be one of his best columns ever, Rex Huppke at the Chicago Tribune connects two widely spaced dots to sound the alarm for "rill 'Mericans":

Fortunately, there's something we can do about this desecration of an American breakfast tradition. And it can be done while also trying to prevent millions of people from getting health care, thus killing two — or possibly 30 million — birds with one stone.
A brave group of tea party Republicans has decided that the best way to get rid of Obamacare — since voting to repeal it 39 times doesn't seem to be working — is to not fund the law. Heroes like Sen. Mike Lee of Utah, Sen. Marco Rubio of Florida and Sen. Ted Cruz of Hateseverythingistan say they'll oppose any budget that gives money to the health care law, even if that means risking a government shutdown.
This is similar to when Abraham Lincoln famously avoided an American civil war by holding his breath until the South agreed to free the slaves.
The tactics of Cruz and company have been praised by many Republicans, including North Carolina Sen. Richard Burr, who called it "the dumbest idea I've ever heard."
In a recent speech, Cruz said that the Obama administration's tactic is to "get everyone addicted" to Obamacare, thus making it impossible to abolish. He's right. Outside of caffeine and cocaine, there are few things more addictive than access to affordable health care.
My guess is this is the same trick Jamba Juice has up its hemp sleeve. The company — clearly a radical left-wing group of nutrition Nazis — has co-opted something all Americans want (oatmeal) and is using it to get us hooked on smoothies that will turn us into dope-smoking pacifists.
So today I call on Sens. Cruz, Rubio and Lee to not just demand the defunding of Obamacare, but to hold the country's budget hostage until Jamba Juice promises to take its mitts off our oatmeal.
Because if there's one thing that's worth risking the full faith and credit of the United States over, it's anything that might possibly make us healthier. [Read the whole thing to start your day right in multiple ways]

The defund movement has gathered enough big names (all the assumed GOP presidential timber - which says something about the field) to make it newsworthy for that fact alone. But saner voices are coming forward to point out some flaws with this strategy. Like lowering expectations.

SK: What do you expect the Obamacare rollout to be like this October?

TC: I don’t know. What I do know is if you do say it;s going to be terrible, terrible, terrible as Republicans have been saying, and it’s only one terrible, it’s going to look good. We shouldn’t overhype things. We should just watch. The fact that they’re going to do everything they can to get as many people as possible to participate matters. [More]

I have a sad suspicion we are heading toward a total meltdown on the right as the divisions in the GOP make any legislative action impossible.

This includes a farm bill, BTW.

One day more...  

Before I can go back to being a smartphone user. I sorta drowned my iPhone in the pool two weeks ago, and...it's a long sad story soon to be a FJ John's World.

Anyhoo, I find myself singing.

 

(Boy, Russell Crowe really can't sing, can he?)

The difference between DOC and DOA*...  

Is that the Department of Commerce works to get better, unlike the Dept. of Ag (NASS - I'm talking at you).

The big picture is this: Recalculating the treatment of all “artistic originals” that fit the bureau’s definitions would have increased the economy in 2007 by about $70 billion, or 0.5 percent. And R.& D., particularly in the field of biotechnology, would have added more than $200 billion. Combined, these two changes would have swelled G.D.P. by almost 3 percent, Mr. Kornfeld said. How it will affect G.D.P. this year and in the restatement of past numbers was being calculated as we spoke. Brent R. Moulton, the bureau’s associate director for national accounts, said the statistics would be out this week. He noted that other nations had been making such shifts as well.

The changes could have profound implications. R.& D. and the creation of entertainment originals have generally been treated as a cost of doing business, reducing G.D.P. Now they will be recognized for their potential to add economic value for years to come. Business software has been treated this way since the 1990s. “It makes sense to expand our definitions,” Mr. Landefeld said. “That’s something the bureau has done for decades.”

But the bureau’s changes will widen the gap between corporate and national economic accounting, said Baruch Lev, a professor of accounting and finance at New York University. Despite the change in G.D.P. accounting, he said, R.& D. is still generally treated as an expense, not as an investment, in calculating profits and tax liability.

“National accounting — G.D.P. accounting — is giving us a more accurate picture of the world,” he said, adding that various intangibles might constitute as much as 50 percent of the value of publicly traded companies. These assets don’t show up on corporate balance sheets, he said, keeping investors “in the dark about the true value of many of the companies traded in the stock market.” [More]

I would offer that even our ancient sector is subject to changes in wealth creation and structure. Yet doing things we've done them since we used pencils (and no faster!) is ingrained in our government monitor. 

As more of our economy arises from intellectual and seemingly ephemeral goods/services, better acknowledgment of this change in the statistics will guide policy toward better outcomes. It also prevents undue emphasis remaining on tangible production as "real" and deserving more favorable treatment.

*I think I'm going to use this apt acronym for the Department of Ag more often.

Congress-killer-app...  

I think this beats those FB, NCGA, et al pre-written e-mails, letters, cards, etc. all hollow.


Capitol Bells Demo from Ted at Capitol Bells on Vimeo.

A line in time...  

 Animal ag is still fumbling for a workable answer to animal welfare activism and more importantly customer concerns reflected in their markets. I had not thought about it much, other than noting there seems to a tide of sorts in consumer opinion and it is not flowing the direction the protein sector necessarily wants.

One repetitive argument was to charge welfare activists with hypocrisy if they used bug spray, for example. While most of these are reductio ad absurdum assertions denying our baility as a culture to achieve any sort of balance in controversies, I have not seen as good and simple an answer as this by Nicholas Kristof:

Look, I confess to hypocrisy. I eat meat, albeit with misgivings, and I have no compunctions about using mousetraps. So what? We have the same inconsistencies, controversies and hypocrisies in dealing with human rights. We may disagree about waterboarding terror suspects, but almost everyone shares a revulsion for genocide, the use of poison gas or the torture of children.

Now we are plodding along a similar controversial, inconsistent, hypocritical — and progressive — path on animal rights. We may disagree about eating meat, but growing numbers share a disgust for extreme behavior, like the force-feeding of geese (now banned in California) to produce pâté.

We as a global society have crossed the Rubicon. We disagree about where to draw the line to protect animal rights, but almost everyone now agrees that there is a line to be drawn.

May our descendants, when, in the future, they reflect uncomprehendingly on our abuse of hens and orcas, appreciate that we are good and decent people moving in the right direction, and show some compassion for our obliviousness. [More]

I think he has nailed one thing: we have turned a corner and are now engaged in where, not whether to draw the lines. I also believe we are beginning to get some ideas in the protein sector of how to coexist with such limitations. Smithfield is still producing hogs even as crates are disappearing. It is similar for enhanced cages for layers.

Critics see this as the nose of the camel, but I think that analogy has become useless. Such actions are the exact response a free market generates to maximize outcomes for all.

This would explain...  

The heightened sense of entitlement by farmers obvious in the current farm bill debate.



There is no way 'round the realization we commercial grain farmers  are in the economic elite and have been for a few years. I'm sure these attitudes are pervasive in our ranks as we speak.

But my neighbors are worse than I am, of course.

BTW, this attitude drops away as farm programs disappear.

Glad USFR is not competing...  

With this farm program. 

 

 Over 10 million viewers per episode - better than all but a handful of US programs, such as Big Bang and NCIS Topeka, etc.  But unlike our reality TV, it shows people NOT at their worst, so breaking with our tired reality formula.

To keep audience attention, the hosts like to goof around — doing little dances, teasing each other, running around in the pig pen. Nobody is yelling; smiles abound.
After each episode, you can text the show’s creators and request a brochure on any topic covered. Four to six thousand brochures are now sent out each week, with numbers steadily increasing.
To maximize viewership, each episode is produced in English and Swahili. Shamba Shape Up is currently shown in three countries — Kenya, Tanzania and Uganda — but Campbell says 17 others have expressed interest. Still, no one has reached out from the developed world. Campbell suspects this may have something to do with Shamba‘s format. “It’s all very innocent,” he says. “It might not play well in the States.” [More]

IMHO, this effort will do more for the poorest Africans than dozens of industrial farming efforts to make Africa another Brazil.

Junkbox, Episode MMXIII‽...  

Nothing like a cool, crisp late July afternoon...

• This is a book review (Yikes!)
• One more reason I am hopeful about Millennials
• Is this libertarianism's high water mark or just a Rand Paul failure?
• Accidents happen.  But a lot more often in the country.
• Can we get labor markets tight enough to finally lift wages?
• Will share rent make a comeback? I say no.

Big excitement today - new blades on the batwing mower!

In transition...  

For my handful of loyal readers, this explanation of what is going on here at Incoming.  Basically, I am dealing with a confluence of several transitions in my life and career(s). These include:

1. Shifting the farm operation to Aaron.  This has proven mildly complicated but we are moving forward with rental ground renewing under his name, experimenting with machinery transfer/rental schemes, and getting a handle on what my contribution needs to be.
2. Forming a joint operation with a neighboring family with a similar family structure. Begun this year, it has exceeded all my expectations and we are rapidly finding ways to exploit more efficiencies and adapt.
3. Preparing for retirement economics.  Our goal is to have minimal income but still be able to backstop Aaron with cash rent adjustments on our own ground to help him to weather difficult times or take advantage of unexpected opportunities. Our effort to transfer assets and income to our sons has been in place for some time, but I'm still trying to get my head around how to adapt to a new leaner economic status. Profligacy turned out to be one of my core skills.
4. Completing the income tax hangover cure as my farm income drops and depreciation becomes a thing of the past. See also "machinery" in #1. One more year should get me past this economic time-bomb. $4 corn doesn't help, BTW.
5. Slight adjustments at US Farm Report - I'll be taking more time off  - as well as fewer speaking engagements (maybe 4-5 per year). Bluntly put, I'm tired of the road, even with clearly generous compensation. FJ has been very kindly flexible, and I'll still be writing for TP and FJ as usual.
6. Get maybe one more major trip/cruise with friends accomplished before any or all of us no longer are capable or interested in traveling. This can happen much sooner than we want or expect, I have learned this year.
7. Free up more time for woodworking, church, supporting friends and family during tough times like illness, and doing more Grandpa stuff. Plus Jan and are both more keenly aware the time we have together in good health may not be as unending as we had always assumed. This year has seen a spate of heartbreaks for couples we care for and we are rethinking our own time allocations. Like most farm couples, we have gotten used to enormous chunks of time together, and we no longer take them for granted.
8. I will be participating in the Good Judgment Project this year.  It will take considerable research time on my part. This will affect Incoming, of course. I will share my results and more info on the blog.
9. Maybe collect and self-publish my columns - humor for sure, but perhaps the commentary as well.

While I sorta saw all this stuff coming, the social and economic context keeps shifting even as we work through the issues. Many of the these developments were unexpected and the future undoubtedly holds more surprises we can't imagine right now.

Here is the deal for you guys. Looking at December 2014 (when I turn 66, hint, hint) as a major milestone, I will try to post at least 1-2 times per week until then. But I love blogging and once I'm home more will target about then to return to 1-2 posts daily. I have yet to decide how to handle the growing paywall problem for bloggers at WaPo, NYT, WSJ, Sullivan, The Browser, etc. I think it is reasonable for me to expect to invest a chunk to have full access, but you guys should be able to follow the links for free.

Bottom line is I will continue to post fitfully for a few months with a return to full-blown blithering around the end of next year. Thanks for reading and your friendship over the years, and I look forward to your inputs and put-downs as I opine on just exactly how the world would be if I were King.

The American Dream...  

Has moved to the city. Numerous economic mobility studies seem to be pointing toward a clear conclusion: If you want to get ahead in the US, move to town - or better yet a dense city.  The effect is so pronounced it shows up in sprawling suburbs as well.

There's an old vision of the American Dream that is obsolete, and has been for quite awhile. That's Thomas Jefferson's idea of a nation of self-sufficient farmers -- an agrarian republic. Over time, as people left the countryside for the cities during the Industrial Revolutions, this vision morphed: it became a nostalgia for (and even snobbery of) small towns. It's a vision that Republicans still cling to. Remember when Sarah Palin talked about "real America"? Or when Republicans warned that high-speed rail and bike lanes were some kind of socialist plot? It's a vision of America at odds with the American Dream today.
It turns out the best place to pursue happiness -- and a career -- is in the city. [More]

The reason this is more than a cultural curiosity is the political impact. Part the the mantra of the right is "takers" simply won't get off their butts and climb the ladders of success by working hard and sacrificing.  There is an element of truth in this, but it ignores the fact there are few ladders left in many parts of America.

Still, earlier studies have already found that education and family structure have a large effect on the chances that children escape poverty. Other researchers, including the political scientist Robert D. Putnam, author of “Bowling Alone,” have previously argued that social connections play an important role in a community’s success. Income mobility has become one of the hottest topics in economics, as both liberals and conservatives have grown worried about diminished opportunities following more than a decade of disappointing economic growth. After years of focusing more on inequality at a moment in time, economists have more recently turned their attention to people’s paths over their lifetimes.

Polls show that Americans are worried about whether living standards will rise for most people in coming decades, as they have for nearly all of the nation’s history. In interviews in Atlanta and its suburbs, residents reflected many of the national concerns and many of the patterns in the study.[More]

This theme that The Great Stagnation means life is about as good as it's gonna get for the vast majority of us informs every decision we make to some degree, shapes our political expectations and transmits a questionable message to children. But more and more, I think it's not wholly unfounded.

Overall economic growth faces some powerful headwinds.

 

In fact, if the long-suffering doomsayers of agriculture finally hit it right over the next few years, and income and land prices plummet, farmers may be among the pessimists more so than today. Our industry and profession has pulled up many of the traditional ladders by which farmers climbed in the ranks.

Remember hogs as the great mortgage lifters? It was a way to increase income without having to expand your land base. I think I am not far off in suggesting that path has at least narrowed significantly. As for renting more land, good luck to those who can't bankroll the cash rents with equity or other ground. Moreover as tracts become larger due to consolidation with adjacent land buyers, the chunks won't be as digestible as an 80 here or there.

Other sheer good fortune, which cannot be ruled out, there are few obvious strategies to enable ambitions to be fulfilled in farming. The one emerging possibility could be working at entry level for a large farming operation and climbing up an internal ladder similar to any other large corporation.  Perversely enough, this could be the most powerful argument for large farms: they offer the greatest hope to young aspiring producers - just not a traditional independent career.

Finally, we're not about hard physical labor as much anymore. Ag is about capital and technology.  Especially on the upcoming retrenchment, access to capital won't be east for climbers, and will be met with fierce competition by those they would replace.

In short, while there may be some culling of the farmer herd on the backside of this boom, our lack of upward mobility means it's likely few of the survivors a decade from now will be anyone but a scion of those already in the upper ranges of income and size.

Just like, if not worse than the rest of America.

Junkbox, Episode MMXIII☼...  

Re-sculpted my thumb on my table saw Saturday. Nothing horrible, but healing does not go quickly anymore...

• Yes, Iowa is really like that.
• This is almost worth buying a gun for.
• Maybe I could finally watch hockey. OMG - think what this will do for golf!!
• All that NG, and nowhere to go.
• Even the best conservatives seem to try to embarrass us.
• Actually, Farm Journal has been in front of this problem, and is doing well.
• Cash rents may be too high? Who knew?
• Good global warming data video

The end of the Glyphosate Era is at hand, I predict. 

OK, I was wrong...  

Perhaps it was wishful thinking, but my previous conviction concerning global population growth just isn't panning out. I was convinced continued economic growth would trigger lower fertility rates pretty much everywhere, but it's looks like Africa remains the exception.

This just in: Humanity is growing faster than we thought.
In advance of World Population Day, United Nations demographers have once again revised official projections -- upward. This meticulous band of number crunchers doesn’t mean to be alarmist, but its statistics can be startling:
--Nigeria, the West African nation slightly larger than Texas, is on track to surpass the United States as the world’s third-most populous country by 2050. The size of its population may rival that of China by the end of the century, unless something dramatic happens.
--The number of people living on the African continent is set to nearly quadruple by the end of the century, rather than merely tripling, as previously projected.
--The world’s population is on track to reach 9.6 billion by midcentury and nearly 11 billion by 2100, which is 700 million more than was projected two years ago.
The reason for the higher figures? A slew of recent household surveys in African countries revealed the average number of children per woman was higher than previously estimated, said Francois Pelletier, chief of the U.N.’s population estimates and projections section.
In some countries, “a high level of fertility appears to have risen even higher,” Pelletier said. In others, “we realized the earlier estimates were too low.”
A seemingly modest change from an average of four children per woman to five, he said, can produce a dramatic upswing in coming decades due to the power of compound growth.
The prospect of Africa’s population of 1.1 billion exceeding 4 billion has surprised some demographers, because Africa is not following the pattern of falling fertility around the world.  Women on average around the globe have half as many children as they did in the 1960s. [More]

To put it graphically:

[Source, with the mislabeling]

After yet another "demographic surprise", I doubt this is the last word, but still the evidence points to a much higher number for the end of the century that we now expect.