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Leanan on February 11, 2006 - 1:46am Permalink | Subthread | Comments top
Corn acres expected to decline


High fertilizer prices are shaping up to be a significant factor for lower U.S. corn acreage this year, according to David Asbridge, Doane Ag Services, St. Louis, Mo. Asbridge spoke at the National Alliance of Agricultural Crop Consultants in Tucson, Ariz., in January.

High natural gas prices are part of the reason why fertility prices are skyrocketing, although not directly, according to Asbridge. Rather, high natural gas prices are forcing U.S. nitrogen manufacturers to cut back on production, leading to more imports, which is increasing global demand in a tight supply situation.

...The United States also currently has a shortage of production capacity for natural gas, according to Asbridge. "We are actually producing less natural gas in the United States than we were producing 20 years ago. This is a real problem that Congress, or our leadership, is going to have to address.

Guess this puts a crimp in GM's Go Yellow plan...

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dipchip on February 11, 2006 - 9:41am Permalink | Subthread | Parent | Comments top
Speaking of corn acreage how will this effect corn and beef prices not to mention nitrogen fertilizer.

http://www.columbustelegram.com/articles/2006/02/10/news/news1.txt

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dipchip on February 11, 2006 - 10:17am Permalink | Subthread | Parent | Comments top
My suspicion is that many of the new ethanol plants in planning may never come on line due to cost and availability of Nit fertilizer. Without it corn production will plummet and gov. subsidies will never provide the economics to continue corn ethanol production, let alone the fuel to produce it.
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Don Sailorman on February 11, 2006 - 9:41am Permalink | Subthread | Parent | Comments top
Personally, I am delighted to see the price of fertility rising;-)
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mcgowanjm on February 11, 2006 - 10:48am Permalink | Subthread | Parent | Comments top
Along with the comment by Unplanner,
I have been trying to bring this to attention.

1-Leanan's article totally refutes the arguement that the
"Markets" will allocate and signal substitute
commodities.  

2- Farmers have been hit 3 ways by Katrina/Rita-diesel is a $ higher than last year.
Nitrates are being rationed.  Crop prices are the same.
The NO Port is still limited.
And Farmng is the only bizness where input is bought
retail and output is sold wholesale.

3-The US is in a knock down dragout fight with Europe to reduce farm subsidies.

4-Why plant?

 

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Leanan on February 11, 2006 - 11:12am Permalink | Subthread | Parent | Comments top
I think all but the most rabid of Libertarians accepts that some kind of farm subsidies are necessary.  I've no doubt that if enough farmers quit farming, the price of food will rise.  But will the customers survive until next year so they can pay the higher prices?

Globalization is doing a lot of damage, I fear. For example, Mexico used to be self-sufficient in corn.  Then NAFTA flooded the market with cheap U.S. corn, driving the farmers to the city to find work.  Mexico now must import corn.  The typical reaction to this is, "Farming is a terrible life.  They're happier in the city."  Maybe so, but it leaves them rather vulnerable if we decide to put that corn in our gas tanks instead on the open market.

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Nate Hagens on February 11, 2006 - 12:20pm Permalink | Subthread | Parent | Comments top
The subsidies should be for growing more local food, not grain for export to fish farms.

I know of at least 8 people that are drafting a reply to Science magazine blasting last months pro-ethanol research piece. We need to move beyond the idea that corn-ethanol can replace gasoline - some crops may play a role but this one won't/can't.

Even if we assume Farrel et als. calculations that ethanol is 1.2:1 EROI as correct (which I do not - they leave out many inputs, such as tractors), that would mean we would need to create 6 units of ethanol from 5 units of fossil fuel input just to net out 1 'new' unit of energy to society. Extrapolating that to US fossil fuel use of 21 mbpd, we'd need to create 120 mpbd of ethanol using 100 mbpd of oil to net out 20mbpd. Clearly we could do this on a small scale, locally, when co-products are needed by local farmers. But large scale no way. And cellulosic (presently) is even worse.

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Don Sailorman on February 11, 2006 - 12:45pm Permalink | Subthread | Parent | Comments top
In my opinion, there is exactly one good reason (and it is a VERY good reason) for subsidies for farm products. Because of weather fluctuations there will be great harvests and sometimes hardly any harvest, due to drought or something else that cruel bitch, Mother Nature throws at the farmer. Thus if you leave it to the free market, sure you'll have equilibrium, but prices will fluctuate wildly, say between $1 and $15 for a bushel of wheat. The way subsidies are set, however, has almost nothing to do with economic logic and almost everything to do with political logic.

The way political logic works is that the fat-cat agribusinesses buy (excuse me, rent) Senators and Members of the House of Representatives. For example, Senator Bob Dole, long before he became famous as a spokesman for Viagra, was known as the senator from Archer-Daniels-Midland. The system as it works is totally corrupt.

However, having said that, reflect on this: Would you rather have surpluse in most years, at considerable cost to tax payers and all sorts of inefficiency costs? Or would you rather have a loaf of bread spike to $8 every time the wheat harvest was bad? Corruption, chronic surpluses, and ineffiecient allocations of resources are not part of utopia, but they sure beat food riots.

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Magnus Redin on February 11, 2006 - 1:29pm Permalink | Subthread | Parent | Comments top
I think the least damaging of such systems is to have a government or other stockpile of food that is filled in years with abundant crops and continously emptied into ethanol and biogas production to rotate the stock. Then it do not disturb the food product market all of the time and there is massive ammounts of emergency food available.
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Don Sailorman on February 11, 2006 - 4:59pm Permalink | Subthread | Parent | Comments top
I agree 100%, and when my daughter becomes first Empress of North America and I am her economic advisor, then your plan will be implenented.

But not before then.

Economic logic almost never rules.

Politics rules.

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mcgowanjm on February 11, 2006 - 1:29pm Permalink | Subthread | Parent | Comments top
Not since the bygone days when FBI Director J. Edgar Hoover could deny the existence of the Mafia while at the same time vacationing annually at Southern California's Del Mar Race Track as the guest of Texas oil man Clint Murchison, whose part-owner in his oil company was New York Mob Boss Vito Genovese, has there been such a total disconnect between what passes for the news in America... and what really happens every day.

Aquifer under Desha County drying fast, study finds
Friday, Apr 9, 2004

The USGS study was done over several years at a cost of about $1 million. The study is different than previous ones because it developed numerous models of the entire region and determined different scenarios at various rates of water usage.

In December, the USGS released a study showing that sections of the aquifer under Arkansas, Lonoke and Prairie counties in the Grand Prairie region of East Arkansas could begin running dry in five years.
A third study, on the Sparta aquifer (the Sparta is in worse shape) which supplies water to South Arkansas, including Pine Bluff and El Dorado, is to be released in the next few weeks, said USGS spokesman Jim Peterson.

Eastern Arkansas is the #1 rice growing area in the US.
We're #4-5 in cotton and #8 in soybeans.
 http://www.arkansasnews.com/archive/2004/04/09/News/176185.html

My point-These are GM-genetically modified crops, meaning they must have water, fertilizer, RoundUp(Monsanto), at just the right times in just the right amount.

You can spiral in any direction from Ag because Ag is the Foundation of Civilization.  The fact is that the Ag Wealth has been shifted to the cities.  

My point: Farmers are miners now. Ag is doing everything it can to keep Society going.  Asking it to
also provide Energy is going to break it.

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Engineer-Poet on February 11, 2006 - 3:04pm Permalink | Subthread | Parent | Comments top
If corn is too expensive to fertilize and cultivate and energy is expensive, the obvious move is to grow something that needs much less fertilizer and cultivation and produces energy.

Pity we don't have much of a market for solid biofuels (other than wood pellets) yet.

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odograph on February 11, 2006 - 3:40pm Permalink | Subthread | Parent | Comments top
I've been reading a few stories about farmers making the switch to organic foods.  As they become more popular they become a way to both reduce some chemical costs and also sell at a price premium.
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light299 on February 11, 2006 - 2:17pm Permalink | Subthread | Parent | Comments top
There is much wisdom in what you say. I agree.
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wkwillis on February 12, 2006 - 7:21am Permalink | Subthread | Parent | Comments top
Wheat is a small part of the price of bread by the time it reaches my shopping basket. Whether the government subsidizes bread or not is irrelevant, since I pay either way.
I support stockpiles because I know that there have been times when volcanos, asteroid impacts, or wars have wiped out harvests. I would feel better with a year's stockpile of food in America. At least in terms of calories and vitamins.
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AlanfromBigEasy on February 12, 2006 - 9:36am Permalink | Subthread | Parent | Comments top
Having a Strategic Food Reserve for the US is like a Strategic Petroleum Reserve for Saudi Arabia.

We have a years worth or more of food in commercial storage already, (just look at a typical grain elevator along a rural road or in a port and consider how many people that would feed) if one excludes corn (maize to outside US).  If one is willing to eat corn as a staple, we have several years worth in storage.  And lean beef that has not been corn-feed could be slaughtered at a younger age.

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Agric on February 12, 2006 - 3:15pm Permalink | Subthread | Parent | Comments top
ATM, yes, but the US is projected to cease being a net exporter of wheat by 2025 due to demographic changes, and that is without factoring in any potential drying out of the great plains.

Back in the mid 1970s, when the early mutterings of global warming were made, tentative predictions about its effects were that the US central plains would become drier and the Russian steppes warmer and wetter, suggesting that the wheat breadbasket of the world would switch from one to t'other. I'm not sure about the exact current state of such predictions but I'm pretty sure they still expect the US plains to become drier and less productive.

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wkwillis on February 13, 2006 - 9:00am Permalink | Subthread | Parent | Comments top
I would feel much better if this was true. Do you have a citation? Any site that measures food stores in the pipeline in the US? It would take a load off my mind. I thought that the storage of crops in the US peaked in October and went down till June.
I understand that if we went vegetarian we could easily get by on half as much crops by not feeding grain to pigs and chickens, and that cows and sheep live on grass that is mostly rainfed.
We also have a reasonably large standing crop of deer and other wild animals since hunting went out of style in the last thirty years. It's not as much as our cattle/sheep production, but it would help.
I am also aware that there is a lot of irrigated land that will keep producing crops even if the rain fails due to climate change, at least for one more crop, and sometimes for years where they are producing fossil water like the Oglalla aquifer.
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Nate Hagens on February 13, 2006 - 8:06pm Permalink | Subthread | Parent | Comments top
While we do have an increased population of {deer http://en.wikipedia.org/wiki/White-tailed_Deer] of around 30 million,  it is not for lack of [hunting http://www.state.nj.us/dep/fgw/antlsv01.htm] as one source says that we annually kill 7 million.

The average meat from a deer is about 65 lbs (source: my father) that equates to 435 million pounds of meat compared to over 27 billion from [beef http://www.ers.usda.gov/news/BSECoverage.htm].

Bottom line: venison is a silver BB.

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AlanfromBigEasy on February 12, 2006 - 9:26am Permalink | Subthread | Parent | Comments top
Thee is very little farming subsidy in Canada and yet they seem to have stable production.  There is no farm program for beef cattle (unlike dairy*), and most fruits, nuts & vegetables.  Yet we seem to get enough of them, with demand shifting in response to price signals die to supply & demand.

The "$8 load of bread is a "straw man".  The cost of wheat is currently a few pennies/loaf.  If wheat became too expensive, potato bread, rye bread, etc, would gain in popularity.

* where we have had to pay too much for most of my life for the "privilege" of stable & high milk prices instead of prices that fluctuate between high & low, we just get "high")

We would be FAR better off just scrapping ALL farm subsidies (with the possible exception of the drought insurance program) and letting the market have it's way.

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Don Sailorman on February 12, 2006 - 10:17am Permalink | Subthread | Parent | Comments top
Bein' from New O'lins, y'all know about politics and corruption. Shucks, the great state of Louisiana is #1 in murder rate and #1 in corruption ever since the days of Huey Long--and I speak as one who lived under the criminally corrupt regime of Mayor Daley the First in Chicago during the mid nineteen fifties.

Take a good close look at the sugar industry in your state. Who is doing the work? Illegal Haitians with machetes--great workers, work harder than the plantation slaves ever did. Who is getting the money? You damn well know who. How does it work in Congress. You know that too.

My point is that economic logic has almost nothing to do with the way farm subsidies are set. And BTW, if the wheat crop is wiped out, say by drought, there is a good chance that corn and rye are not doing well either. Also, we grow hardly any rye in the U.S. And why? No subsidies for rye--plenty for corn, wheat, rice, cotton, sugar, soybeans, peanuts, etc. Farmers grow what is profitable to grow; they are not dumb. The best way to make money in farming is to suck at the government tit, and that is what the Fat Cats are doing.

If you want to fix the system, you will need a social movement comparable to the American Revolution, because the corruption is endemic and has been for a long time.

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step back on February 13, 2006 - 9:29am Permalink | Subthread | Parent | Comments top
Well said.

This what I love about our "free" markets.
We all have "freedom", it just happens to be freer for some than for others.

(Did Orwell use that line in Animal Farm, or was it just about "equality" and it being more equal for some than for others?)

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Leanan on February 11, 2006 - 1:49pm Permalink | Subthread | Parent | Comments top
A couple more agriculture stories.  One from the U.S.:

Ag department warns farmers of likely drop in income


WASHINGTON (AP) - Farmers will see their incomes plunge in 2006 coming off two years of unusually high prices and record crops, the Department of Agriculture said yesterday.

Rising energy costs and interest rates are gobbling up the bottom line for farmers, analysts said.

One from the U.K.:

UK fruit and vegetable producers are counting the costs of higher energy bills


Rising energy costs are already a concern this year and with higher prices expected for the foreseeable future, many UK producers are preparing to square up to this challenge.

Insiders are reporting fuel hikes of anywhere between 60-80 per cent, with energy-intensive sectors such as protected tomatoes, cucumbers and peppers, (where energy use can amount to as much as 40 per cent of the costs of production) likely to be hardest hit.

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