No-Till Veggies in Permanent Cover Crops

7. April 2008 by P. Leslie Riley.

I like real life farm success stories much more than university research . . .
Check this out :
http://cedarmeadowfarm.com/default.html

Steve Groff and his family, farm 200 acres of vegetables and crops on hilly land in Lancaster County, Pennsylvania. He has pioneered the “Permanent Cover Cropping System”, which includes no-tillage, cover crops, and effective crop rotations as a way to increase profits, enhance soil and water quality, and reduce pesticides.

The cornerstone of this system is a unique emphasis on maintaining a permanent cover of crop residues and cover crops on the soil surface and having something living in the soil at all times. All vegetables and crops are then seeded or transplanted into the organic mulch. This permanent cover aids in weed control, has virtually eliminated soil erosion on the farms 3-17% slopes, and has increased soil and water quality.

A passionate advocate for sustainable agriculture soil conservation, soil health, and food quality, Steve started no-tilling in the early ’80s. He later began using cover crops as another soil conservation measure and now plants cover crops based on the succeeding crop that will planted the next year. Some fields have not been touched by any tillage equipment for over 30 years!

Posted in Soil & Fertility, Alternative Crops & Enterprises, Organic vs Conventional Faming, Agrarianism, Family farm Opportunities | Print | No Comments »

Japan to Make Ethanol From Rice ?

29. February 2008 by P. Leslie Riley.

An opportunity for the Delta or the best example of the Food vs Fuel Debate ?

http://nextenergynews.com/news1/next-energy-news2.22a.html

Japan to Make Ethanol From Super-Harvest Rice

Japan’s first commercial plant to produce ethanol for cars from locally grown rice will reach full capacity of 1,000 kilolitres a year by March 2009, a few months behind schedule.

The project in Niigata, central Japan, for which the Japanese government is paying half the plant construction cost of 1.6 billion yen (US$15 million), is one of Japan’s three such government-backed commercial production schemes.

It is managed by the National Federation of Agriculture Co-operative Associations (Zen-Noh) and will use non-food rice.

Ippei Koike, general manager of Zen-Noh’s farming planning department, said the delay is partly due to paperwork for construction approval.

He said farmers were planting two types of super-harvest rice in more areas than planned this year after the 2007 harvest of one type gave a lower-than-expected yield of 602 kg of brown rice, excluding broken rice, per 10 ares.

An are is 100 square metres (1,076 sq ft).

In Japan, the average rice farming household cultivates a rice area of 107 ares, or 1.07 hectares, with an annual revenue of 1.8 million yen (US$17,000).

“We had expected this type to consistently harvest 800 kg per 10 ares — 30 to 40 percent more than that of ordinary rice. But last year’s experience made us realise that’s hard to achieve,” Koike said in an interview.

“We won’t give up. Japanese farmers are accustomed to much tougher conditions,” Koike said, referring to unusually low temperatures in July last year that thwarted the development of rice kernels.

RICE PLANTING

The Niigata project involves engineering company Mitsui Engineering & Shipbuilding Co and Satake Corp, a food processing machinery maker based in Hiroshima, western Japan.

Japan lacks competitive farm produce to make enough ethanol to mix with gasoline and cut greenhouse gas emissions.

But the project aims to use non-food rice planted in abandoned farmlands. A fall in domestic consumption of rice every year results in the Japanese government’s plan to reduce planting for food rice by some 100,000 ha in 2008 from 2007.

Zen-Noh has said it will buy rice from farmers at 20 yen a kg to make its auto fuel competitive with regular gasoline.

Ordinary food-quality rice costs well above 100 yen a kg and harvests 500 to 600 kg per 10 ares.

“Despite the loss-making process, farmers now think that the rice for ethanol is one of the forward-looking options to make the best use of the abandoned fields,” Koike said.

Zen-Noh, which retails gasoline mainly for farmers, plans to sell gasoline directly blended with 3 percent of the rice-origin ethanol at its 40 gas stations in Niigata.

Posted in Foriegn Agriculture, Alternative Crops & Enterprises, Biofuels from Farms, Rural Development, Alternative Energy | Print | No Comments »

40¢ a Gallon - Fuel From Crop Waste !

29. February 2008 by P. Leslie Riley.

http://nextenergynews.com/news1/next-energy-news2.18c.html 

Syntec Biofuel to Make Biomass Ethanol for 40¢ a Gallon

Syntec Biofuel Inc., a company developing biomass to fuel conversion technologies, is pleased to announce that it has achieved a yield of 105 gallons of alcohol per ton of biomass (making the fuel cost about 40¢ a gallon to produce). This marks a major milestone for Syntec as this yield is equivalent to revenues in excess of $27 million per year for a 300 ton per day biomass processing facility.

“We are consistently seeing monthly improvements in our Biomass to Alcohols (B2A) Process,” says Michael Jackson, President of Syntec Biofuel Inc. “This level of achievement makes the B2A process profitable in relatively small scale facilities using a wide variety of waste biomass feedstocks in any combination.”

The Syntec B2A technology, initially developed at the University of British Columbia, is focused on second-generation cellulosic ethanol production. The Syntec process parallels the low-pressure catalytic synthesis process used by methanol producers. Syntec’s innovative technology uses any renewable waste biomass such as hard or soft wood, sawdust or bark, organic waste, agricultural waste (including sugar cane bagasse and corn stover), and switch-grass to produce syngas. This syngas, comprised of carbon monoxide and hydrogen, is then scrubbed and passed through a fixed bed reactor containing the Syntec catalysts to produce ethanol, methanol and higher order alcohols. The Syntec technology can also produce alcohols from biogas (sourced from anaerobic digestion of manure and effluent), landfill gas or stranded methane.

Recent media coverage on ethanol produced from food crops, such as corn, and the use of agricultural cropland for biofuel production, has prompted an international questioning of the ethics and “hidden costs” behind the production of such alternative fuels. “Syntec’s technology only uses sustainable waste biomass to produce its biofuel,” explains Mr. Jackson. “We believe strongly that fueling the worlds energy needs can be achieved without further impact to our environment, and that we possess the best and most ethical solution to bio-ethanol production.”

Posted in Alternative Crops & Enterprises, Biofuels from Farms, Rural Development, Alternative Energy | Print | No Comments »

“Super Synthetic Corn”: I’m not sure this is good news

29. February 2008 by P. Leslie Riley.

For what it’s worth :

http://nextenergynews.com/news1/next-energy-news2.27a.html

Research Breakthrough Could Lead to Super Synthetic Corn

Iowa State University researchers helped write the first draft of the corn genome sequence that will be announced Feb. 28, at the 50th Annual Maize Genetics Conference in Washington, D.C.

Patrick Schnable, a Baker Professor of Agronomy and director of the Center for Plant Genomics and the Center for Carbon Capturing Crops, and Srinivas Aluru, a Stanley Chair in Interdisciplinary Engineering and a Professor of Electrical and Computer Engineering, led the work at Iowa State and provided the project with expertise in corn genomics and supercomputing.

Schnable and Aluru led Iowa State’s work to refine assemblies of the genomic sequences generated by researchers at Washington University. In addition, they identified almost 100 genes which have nearly identical copies in the genome. Schnable said these nearly identical paralogs may have played important roles during the evolution and domestication of corn and may have contributed to the ability of breeders to mold this important crop species to meet human needs. The Schnable and Aluru teams also discovered several hundred new corn genes that are not present in other plants. Some of these genes may be responsible for unique attributes of corn.

The corn genome is an especially difficult jigsaw puzzle to put together, Schnable said. There are some 2.5 billion base pairs that make up the double helix of corn DNA. The corn genome also has long lines of repetitive code. And corn has 50,000 to 60,000 genes to identify and characterize. That’s about twice the number of genes in humans. Plus, 50 percent or more of the corn genome is made up of transposons or jumping genes. Those are pieces of DNA that can move around the genome and change the function of genes.

Solving all those assembly challenges took a lot of computing power and some new software technology. Aluru and his research team developed software called “PaCE” and “LTR_par” that runs on parallel computers — including CyBlue, Iowa State’s IBM Blue Gene/L supercomputer capable of 5.7 trillion calculations per second. PaCE can generate draft genome assemblies in hours or days instead of months. LTR_par identifies retrotransposons, another mobile genetic element that can cause genome changes such as mutations, gene duplications and chromosome rearrangements.

Implications

Schnable said the resulting draft of the corn genome provides plant scientists with a lot of data to work with. He said it’s a lot like the collection of maps, diary entries, dried plants and animal specimens brought back by the Lewis and Clark expedition to the Pacific. The explorers gathered and assembled a great deal of basic information about the Louisiana Purchase that required years of subsequent analysis and study.

“This will enable so much exciting corn research,” Schnable said. “This will raise questions about the biology of corn and provide great tools to answer them.”

Those answers could help scientists modify and improve corn plants, Schnable said. The genome, for example, could help scientists:

• develop crops that can withstand global climate change
• add nutritional value to grain
• sequester more atmospheric carbon in agricultural soils
• or boost yields so crops can meet growing demands for food, feed, fiber and fuel.

“In addition, what we learn from the corn genome will allow us to better understand other grasses,” Schnable said.

The genome of corn is very similar to the genomes of rice, wheat, sorghum, prairie grasses and turf grasses. Therefore, Schnable said the draft of the corn genome can help researchers improve the other cereals and grasses.

Posted in Corn Soybeans & Wheat, Alternative Crops & Enterprises, Biofuels from Farms, Agrarianism, Difficult Issues in Agriculture & Rural Life, Alternative Energy | Print | No Comments »

Super Synthetic Corn: I’m not sure this is good news (?)

29. February 2008 by P. Leslie Riley.

For what it’s worth :

http://nextenergynews.com/news1/next-energy-news2.27a.html

Research Breakthrough Could Lead to Super Synthetic Corn

Iowa State University researchers helped write the first draft of the corn genome sequence that will be announced Feb. 28, at the 50th Annual Maize Genetics Conference in Washington, D.C.

Patrick Schnable, a Baker Professor of Agronomy and director of the Center for Plant Genomics and the Center for Carbon Capturing Crops, and Srinivas Aluru, a Stanley Chair in Interdisciplinary Engineering and a Professor of Electrical and Computer Engineering, led the work at Iowa State and provided the project with expertise in corn genomics and supercomputing.

Schnable and Aluru led Iowa State’s work to refine assemblies of the genomic sequences generated by researchers at Washington University. In addition, they identified almost 100 genes which have nearly identical copies in the genome. Schnable said these nearly identical paralogs may have played important roles during the evolution and domestication of corn and may have contributed to the ability of breeders to mold this important crop species to meet human needs. The Schnable and Aluru teams also discovered several hundred new corn genes that are not present in other plants. Some of these genes may be responsible for unique attributes of corn.

The corn genome is an especially difficult jigsaw puzzle to put together, Schnable said. There are some 2.5 billion base pairs that make up the double helix of corn DNA. The corn genome also has long lines of repetitive code. And corn has 50,000 to 60,000 genes to identify and characterize. That’s about twice the number of genes in humans. Plus, 50 percent or more of the corn genome is made up of transposons or jumping genes. Those are pieces of DNA that can move around the genome and change the function of genes.

Solving all those assembly challenges took a lot of computing power and some new software technology. Aluru and his research team developed software called “PaCE” and “LTR_par” that runs on parallel computers — including CyBlue, Iowa State’s IBM Blue Gene/L supercomputer capable of 5.7 trillion calculations per second. PaCE can generate draft genome assemblies in hours or days instead of months. LTR_par identifies retrotransposons, another mobile genetic element that can cause genome changes such as mutations, gene duplications and chromosome rearrangements.

Implications

Schnable said the resulting draft of the corn genome provides plant scientists with a lot of data to work with. He said it’s a lot like the collection of maps, diary entries, dried plants and animal specimens brought back by the Lewis and Clark expedition to the Pacific. The explorers gathered and assembled a great deal of basic information about the Louisiana Purchase that required years of subsequent analysis and study.

“This will enable so much exciting corn research,” Schnable said. “This will raise questions about the biology of corn and provide great tools to answer them.”

Those answers could help scientists modify and improve corn plants, Schnable said. The genome, for example, could help scientists:

• develop crops that can withstand global climate change
• add nutritional value to grain
• sequester more atmospheric carbon in agricultural soils
• or boost yields so crops can meet growing demands for food, feed, fiber and fuel.

“In addition, what we learn from the corn genome will allow us to better understand other grasses,” Schnable said.

The genome of corn is very similar to the genomes of rice, wheat, sorghum, prairie grasses and turf grasses. Therefore, Schnable said the draft of the corn genome can help researchers improve the other cereals and grasses.

Posted in Uncategorized | Print | No Comments »

On Site Processing of Timber Waste Bio Fule ???

6. February 2008 by P. Leslie Riley.

Could this be an opportunity for botom-up economic development ?

http://www.nextenergynews.com/news1/next-energy-news2.5c.html

New Chemical Process Turns Forest Waste into Bio-Crude

CSIRO and Monash University have developed a chemical process that turns green waste into a stable bio-crude oil.The bio-crude oil can be used to produce high value chemicals and biofuels, including both petrol and diesel replacement fuels.

“By making changes to the chemical process, we’ve been able to create a concentrated bio-crude which is much more stable than that achieved elsewhere in the world,” says Dr Steven Loffler of CSIRO Forest Biosciences.

“This makes it practical and economical to produce bio-crude in local areas for transport to a central refinery, overcoming the high costs and greenhouse gas emissions otherwise involved in transporting bulky green wastes over long distances.”

The process uses low value waste such as forest thinnings, crop residues, waste paper and garden waste, significant amounts of which are currently dumped in landfill or burned.

“We’ve been able to create a concentrated bio-crude which is much more stable than that achieved elsewhere in the world.”Dr Steven Loffler

“By using waste, our Furafuel technology overcomes the food versus fuel debate which surrounds biofuels generated from grains, corn and sugar,” says Dr Loffler.

The plant wastes being targeted for conversion into biofuels contain chemicals known as lignocellulose, which is increasingly favoured around the world as a raw material for the next generation of bio-ethanol.

Lignocellulose is both renewable and potentially greenhouse gas neutral. It is predominantly found in trees and is made up of cellulose; lignin, a natural plastic; and hemicellulose.

Posted in Alternative Crops & Enterprises, Biofuels from Farms, Rural Development, Family farm Opportunities, Alternative Energy | Print | No Comments »

Cleaning up Toxic Waste with Trees ???

2. February 2008 by P. Leslie Riley.

More godless genetic manipulation & short-sighted ecological irresponsibility ?
Cutting edge renewable solution to a growing problem ?

Both ?

Is there an opportunity for Agriculture to play a role in cleaning up modern ecological messes ?

http://www.nextenergynews.com/news1/next-energy-news1.31c.html

 Transgenic Poplar Trees Being Used to Leach Toxins form Soil

Purdue University researchers are collaborating with Chrysler LLC in a project to use poplar trees to eliminate pollutants from a contaminated site in north-central Indiana.

The researchers plan to plant transgenic poplars at the site, a former oil storage facility near Kokomo, Ind., this summer. In a laboratory setting, the transgenic trees have been shown to be capable of absorbing trichloroethylene, or TCE, and other pollutants before processing them into harmless byproducts.

Richard Meilan, a Purdue associate professor, is currently at work to transform one variety of poplar suited to Indiana’s climate; cold-hardy poplars are generally more difficult to alter than the variety used in a laboratory setting.

“This site presents the perfect opportunity to prove that poplars can get rid of pollution in the real world,” Meilan said.

In a study Meilan co-authored, published last October in Proceedings of the National Academy of Sciences, poplar cuttings removed 90 percent of the TCE within a hydroponic solution in one week. The engineered trees also took up and metabolized the chemical 100 times faster than unaltered hybrid poplars, which have a limited ability to remove and degrade the contaminant on their own, he said.

The transgenic poplars contain an inserted gene that encodes an enzyme capable of breaking down TCE and a variety of other environmental pollutants, including chloroform, benzene, vinyl chloride and carbon tetrachloride.

Meilan said he believes the transgenic poplars will be able to remove the TCE from the site, named Peter’s Pond, which was contaminated by tainted oil stored there in the 1960s. The chemical, used as an industrial solvent and degreaser, lies within 10 feet of the surface, making it accessible to poplar roots, he said.

TCE, the most common groundwater pollutant on Superfund sites, is a probable human carcinogen and causes various health problems when present in sufficiently high levels in water or air.

Meilan said planting transgenic trees in the field remains controversial, primarily due to concerns that inserted genes, or transgenes, might escape and incorporate into natural tree populations.

“It is legitimate to be concerned about transgenic plants, but we are taking comprehensive steps to ensure that our transgenes don’t escape into the environment,” Meilan said.

Meilan has applied for a permit to grow transgenic poplars in a field, or non-laboratory, setting from the Animal and Plant Health Inspection Service, the government organization responsible for regulating such research activities, he said.

In order to comply with permit guidelines and to protect the environment, Meilan’s team will take measures to prevent any plant material from leaving the site and will remove the trees after three years, short of the five it takes for poplars to reach sexual maturity, he said.

“Three years should be enough time for them to grow up, send down roots to suck the pollutants up and break them down,” Meilan said. “Then we’ll cut them down before they have the chance to pass on their genes to the environment.”

Besides their utility in phytoremediation, or pollution removal, poplars have promise as a feedstock for cellulosic ethanol. To investigate their potential in this area, the U.S. Department of Energy awarded a $1.3 million grant to Meilan and two colleagues, professors Michael Ladisch, agricultural and biological engineering, and lead researcher Clint Chapple, biochemistry.

They are currently investigating ways to alter the composition of poplar lignin, which provides rigidity to the plant cell wall by binding to strands of cellulose, a complex sugar that can be converted into ethanol.

Chrysler will fund the Kokomo project and said that the TCE is contained within an isolated water table at Peter’s Pond and presents no public hazard.

The original study, led by University of Washington professors Stuart Strand and Sharon Doty, revealed that the transgenic poplars also were able to absorb TCE vapors through their leaves before metabolizing the chemical. Tree cuttings removed 79 percent of the airborne TCE from a chamber within one week. This suggests poplars could one day help mitigate air as well as water pollution.

If the project succeeds, poplars may be used for phytoremediation elsewhere. Poplars grow across a wide geographic range and in many different climates, Meilan said.

Posted in Uncategorized | Print | No Comments »

Mexican farmers protest NAFTA

2. February 2008 by P. Leslie Riley.

So who is it again who likes NAFTA ?
You can thank the “leaders” of the Democrat & Repiblican parties for :
a) making messes
b) not learning from them
c) repeating/ expanding them

http://www.cnn.com/2008/WORLD/americas/02/01/mexico.farmers/index.html

Mexican farmers protest NAFTA

MEXICO CITY, Mexico (CNN) — Hundreds of thousands of farmers clogged central Mexico City Thursday with their slow-moving tractors, protesting the entry of cheap imported corn from the United States and Canada.

Farmers protest in Mexico City Thursday against the removal of import tariffs on U.S. and Canada farm goods.

On January 1 Mexico repealed all tariffs on corn imported from north of the border as part of a 14-year phaseout under the North American Free Trade Agreement, or NAFTA.

The farmers want the government to renegotiate the 1994 free trade agreement, which removed most trade barriers among Mexico, Canada, and the United States, saying livelihoods are at stake.

“NAFTA is very bad, very bad for Mexican consumers and for Mexican producers,” said Victor Quintana, head of Democratic Farmers Front, which organized the protest.

The farmers complain that U.S. and Canadian grains are heavily subsidized and therefore undermine Mexican products.

“The NAFTA agreement is in place and that’s that,” said farmer Armando del Valle. “But all producers should be under equal conditions, and as Mexicans, we are not working under the same terms as our neighbors up north.” Watch a tractor go up in smoke, as farmers plead their case »

Ramon Garcia, who grows corn just outside Mexico City, said he couldn’t afford to fertilize his crop this year and had to rent a tractor to till his field. The work is too much work for too little return, he said.

“Corn is too cheap,” Garcia said. “For me to make a profit, it has to bring in 15 pesos ($1.4) a kilo, and I can barely get 10.”

The farmers say their pleas have fallen on deaf ears in the Mexican government, forcing them to take their protests to the streets.

The government has said NAFTA is working fine and won’t be renegotiated but promised to negotiate with farmers to find ways to increase their subsidies.

Grain prices in Mexico have been stable since subsidized U.S. and Canadian grains appeared on the market in January, Mexican officials said — but still too low for many farmers

Posted in Uncategorized | Print | No Comments »

NZ Economy Helped by Dairy Farms — Thriving, Subsidy Free, Grass Based

4. January 2008 by P. Leslie Riley.

Mississippi’s once prosperous dairy industry is at crisis levels & may not exist much longer. Commissioner Spell in the Mississippi State Debate said this was a natural consequence of market forces.

Conventional “wisdom” big governement/ big corporation/ big land grant-USDA “experts” agree with this. The belief that they share with all is :
1) Dairy farms must be on a mega scale, confinment oriented, in dry climates, corporate owned heavily financed & with heavy inputs. And that there will be fewer and fewer.
Because of this, Mississippi cannot compete with new non-traditional dairy areas like California, Arizona, Wesr Texas, and Idaho where the arid conditions are “ideal” to put 4000 or 5000 head confinement dairy operations on 40 to 100 acres. Hire lots of help & “efficiently” run it like a factory.
2) This same folks also push for heavy subsidies on milk to “help” family farms ( they never quite say why the number of farms has decreased in direct proportion to the size/ number of dairies)
3) And, “conventional wisdom” is that Agriculture is at worst an impediment and at best a afterthought/ minor component of a healthy & growing economy.

Turning this “conventional wisdom” on it’s head with facts is New Zealand.
New Zealand’s dairy farms are almost exclusively grass based/ family owned
New Zealand got rid of subsidies 10 years ago — and are thriving.
And, according to the article below, New Zealand’s economy is in a slow down, but it being proped up by : the dairy industry.  Go Figure.

There is no reason that Mississippi can’t have a thriving dairy industry again that offers prosperity for hard working family farmers; produces healthier milk, cheese, butter, etc. for  Mississippians (which would, in turn, drive health care cost down); provides better Stewardship of God’s Creation; and is a vital part of economic growth for rural communities.

BUT, as we all know, one definition of insantiy is to continue doing the same thing, the same way, and expecting different results.

 http://www.nzherald.co.nz/topic/story.cfm?c_id=195&objectid=10484890

 Dairy bonanza likely to soften slowdown

5:00AM Tuesday January 01, 2008
By Brian Fallow 

The housing market is at a standstill.

The country ended 2007 with some respectable numbers on its economic report card.

The economy expanded 3.3 per cent in the year ended September, while inflation over the same period was 1.8 per cent.

The unemployment rate is 3.5 per cent, a record low.

The terms of trade - relative prices of the kinds of things we export compared with the kinds of things we import - are the most favourable since 1974.

The Government’s coffers are overflowing.

But the outlook is less rosy than these numbers would suggest. On a quarterly basis growth peaked back in March.

The economy expanded as much in the first half of 2007 as it had over the previous year and a half.

But it has slowed markedly since then as households, whose consumption represents more than 60 per cent of economic activity, battle higher mortgage rates and global inflation in oil and food prices.

The consensus among economic forecasters is that private consumption growth will run around 1.6 or 1.7 per cent through 2008 and 2009, the weakest rate since 2000.

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That is in spite of household incomes being underpinned by brisk wage growth, the prospect of tax cuts and a tsunami of dairy cash.

The problem is that the necessities of life - housing, food and energy - are gobbling up a larger share of people’s incomes, leaving less to spend on other things.

The housing market has flipped from one in which house prices were climbing and borrowing costs were low to one where house prices are flatlining but borrowing costs are rising.

After doubling over the the previous six years house prices, as measured by the Real Estate Institute’s national median, have been going sideways since May.

But the long boom has pushed the average house price to six times the average household disposable income, nearly twice its long-term average.

Households with mortgages are consequently carrying much more debt relative to their incomes than they used to and are more exposed to interest rates.

And with fear and suspicion now the dominant sentiment in international credit markets, the days when New Zealand banks could tap cheap money offshore to fund home loans are over.

Two-year fixed mortgage rates are now the highest they have been for nearly 10 years.

The average mortgage rate being paid is around 8 per cent, the highest since October 1998, and the Reserve Bank expects it to approach 9 per cent by 2009.

About 30 per cent of all fixed-rate mortgages, representing a quarter of all mortgage debt, come up for an interest rate reset over the next 12 months. At currently available mortgage rates these borrowers will face increases of 0.7 to 1.5 percentage points.

Meanwhile the plateau in house prices is expected to turn off a phenomenon which has turbocharged the domestic spending side of the economy in recent years: the wealth effect.

That is when people borrow and spend some fraction - a few cents in the dollar - of the increase in the value of the equity in their homes, allowing spending to grow faster than incomes.

The biggest new factor on the positive side of the income ledger is the prospect of a bumper dairy payout.

It will pump about $4 billion more cash into the economy than last season, says Westpac chief economist Brendan O’Donovan. And it will all get spent, he believes.

While some farmers will take the opportunity to reduce their debt, others will borrow to expand their operations. Rural land prices have already risen sharply as farmers do what they always do and capitalise improved returns, O’Donaovan says.

“In aggregate they won’t be paying down debt, they will be leveraging up.”

But it takes time for higher farm incomes to flow through the rural towns to the big cities.

And every silver lining has its cloud.

The global “agflation” that is boosting dairy farmers’ incomes is also making trips to the supermarket an increasingly expensive business.

Likewise the tightness of the labour market underpinning wage growth is partly because of a dwindling of net migration inflows as a widening income gap lures more and more New Zealanders across the Tasman.

The Reserve Bank forecast inflation to be above 3 per cent all through this year.

Crucially, it also expects it to remain in the top quartile of its target band of 1 to 3 per cent through 2009 as well, even with interest rates and the dollar remaining at their current elevated levels.

Those projections assume $1.5 billion worth of tax cuts, which may well prove to be on the low side, and do not include the impact of the emissions trading scheme on transport fuel costs from the start to 2009.

This makes for an environment in which the central bank has little”headroom” to accommodate further upward pressure on inflation.

Yet the international environment might deliver just that.

The global credit crunch could well get worse before it gets better.

If 2007 is anything to go by, when global risk aversion goes up the kiwi dollar goes down and investors lose their appetite for the carry trades which underpin the exchange rate.

That might be blessed relief for exporters but it pushes up the cost of imported goods.

The biggest uncertainty overhanging the economy in 2008 is how the global credit crunch, arising from the US sub-prime mortgage crisis, will play out. Rising global interest rates would be bad news for us, a country up to our neck in debt.

---

This story was found at:
Copyright ©2007, APN Holdings NZ Limited

Posted in Foriegn Agriculture, Alternative Crops & Enterprises, Organic vs Conventional Faming, Over Regulation of Agriculture, Sale of Meat Direct to Consumers, Lester Spell, Mississippi Politics, Grass Farming, Dairy Farming, How Agriculture affects Everything else, Smaller Government, Freedom in Agriculture, Rural Development, Farm Subsidies, Difficult Issues in Agriculture & Rural Life, Agrarianism, Big vs Small Farms, Mississippi Agricultural News, Family farm Opportunities | Print | No Comments »

Farmland Price — Bubble ?

31. December 2007 by P. Leslie Riley.

We can hope that we are wiser than we were in the boom of the 70’s & 80s, but . . . . .

Quite a Cash Crop: The map shows changes in farmland prices in the U.S. from the end of 2006 through August 2007. The states shaded darkest are those with the largest gains. Above, a snapshot of rising farmland and pastureland prices in less than decade. The cropland chart combines both categories of land.   Midwestern agriculture is on the cusp of unprecedented profitablility, or the brink of disaster. You pick. We still have 7 million ‘good’ acres of CRP that ‘could’ be released for cellulosic, or grain, production. Perhaps that would buy the Presidents farm bill signature.   BARRON‘S COVER       Don’t Bet the Farm Farmland prices have soared, and bulls say underlying trends will keep the boom going. Sound familiar? By JIM MCTAGUE YOU’VE LIVED THROUGH THE TECH-STOCK BUBBLE. The dot-com bubble. The residential-real-estate bubble. Now, get ready for the cropland bubble. - At year-end 2007, farms — the latest count shows that the U.S. has 2,089,790 — are what Miami condos and San Diego McMansions were at year-end 2004: properties so hot that they’re likely to have a meltdown in their future. As city slickers in many parts of the nation see the market prices of their homesteads deflate faster than a New Year’s party balloon, farmers are watching the values of their land swell by annual double-digit percentages. Nationwide, farmland prices skyrocketed 50% over the past three years, to an average of close to $2,200 an acre through August, according to the U.S. Department of Agriculture. While that’s the latest month for which federal data are available, there’s no doubt that prices are still sprinting ahead. - Ground zero for the phenomenon could very well be Iowa, which, like a newly active volcano, sits at the center of a massive dome of rising farm and pastureland prices stretching across America’s heart and beyond, from Ohio to the Dakotas. Bidders for Iowa farmland have become almost as eager as the politicians scurrying around the Hawkeye State desperately stumping for next month’s presidential caucuses. Mike Duffy, an economics professor at Iowa State University, calculates that the average year-end farm price in the state will be a record $3,908 an acre — $508 higher than the USDA’s August estimate (see map). Prices will have jumped an average 22% this year, he estimates. THE PHENOMENON ISN’T confined to the Midwest. In some Eastern states, where residential development has squeezed farmland supply, prices have doubled over the past five years. (The costliest U.S. farms are in Rhode Island, averaging $12,500 an acre.) And in the West, states like Montana and Wyoming have seen prices of both farm- and pastureland soar. Virginia Benz, a broker at Prairie Rose Real Estate in Steele, N.D., says that good, productive farmland is up 30% this year in her state, to the highest level she’s seen in her 30 years in the business. Even “the poorest, most unproductive land is selling for $600 an acre,” she marvels. Some purchasers are from Minnesota, where rural land is even pricier. All bubbles have catalysts, real or perceived. The tech-stock boom was driven by the belief that technology was changing both our lives and investment realities. And the residential-realty boom was driven by faith that interest rates would stay very low and that the baby boomers’ wealth would keep the new, second- and vacation-home markets robust for decades. The catalysts in the farmland bubble are federal subsidies to ethanol producers and the belief that ethanol demand will keep rising and that China’s and India’s new wealth will keep boosting global commodity prices. Indeed, U.S. farmers are switching to corn from other crops, curbing supplies of food grains. Nationwide, from 2002 to 2007, the number of acres on which corn was planted rose 24%, to 86.1 million. And the energy bill recently signed by President Bush and strongly backed by both parties mandates that oil refiners eventually boost ethanol use as a gasoline additive to 36 billion gallons a year from the current seven billion gallons. Aided by a drought that reduced food exports from Australia, net U.S. farm income will hit a record $87.5 billion this year. Americans spent $642.5 billion on food in 2006, up 4.5%. And warnings have begun appearing in print — see the Dec. 8 issue of The Economist — on TV and online about the end of “cheap food.” Farm rents also are climbing, up more than 16% since 2003. Even so, an investor who buys land will have no problem finding tenants to work it for him, says agricultural-property auctioneer Rex D. Schrader of Fort Wayne, Ind., because, with commodity prices high, they believe they will still be able to make fat profits. Rising rents appeal to Wall Streeters who want a piece of the hot action but don’t know a corn stalk from a pole bean. Schrader, who auctions off 50,000 acres a year in 38 states, says that 10% of his customers are investment groups of five or six people who want in on the current boom. Farming has become so lucrative that households with more than $1 million in investable assets rose by 17% in both Dakotas from 2005 to 2006, versus 9% in New York and 10.5% in California, reports the Phoenix Affluent Marketing Service in Rhinebeck, N.Y. Nebraska’s ranks of millionaire households’ rose 16% in that span. MANY FLUSH FARMERS are reinvesting their gains in additional acreage. This means that the market isn’t nearly as leveraged as was residential real estate, says Iowa State’s Duffy, and so is less prone to becoming a bubble. Furthermore, farmers can lock in profits on futures exchanges at current prices going out two or three years. Indeed, 2008 futures for corn, soybeans and wheat reached new highs in late-fall and early-winter trading. Investors are so sold on this story line that they still are buying farmland in water-starved areas of Georgia. “People still strongly believe that land is a good investment,” says Ben Hudson of Hudson and Marshall Auctioneers in Atlanta. “The drought had no adverse impact on prices.” Bruce Babcock, another Iowa State economist, e-mailed Barron’s that the passage of the ethanol provisions in the just-signed energy bill assured him that there is no bubble building. He went out and bought some corn acreage himself. But the case for farmland isn’t airtight. In fact, some smart money that invested in Iowa farmland in 2000 is bailing out, happy to have made a profit. According to Duffy, 56% of Iowa farmland was owned by farmers from 2000 to 2005. The other 44% was owned by investors. The split today is 60% farmers and 40% investors. Steve Leuthold no longer owns farmland he picked up for a song in the last bust. Leuthold, chief investment officer of Leuthold-Weeden Investment Capital in Minneapolis, sees ominous parallels between today’s boom and those of the 1970s and 1980s, which saw farm prices soar. In Barron’s Aug. 9, 1982, issue, he wrote a cover story entitled “Grim Reapers,” which called the farmland market’s top. His prediction of a 50% correction was overly optimistic; he ended up buying two Iowa farms at $600 an acre, 75% below their peak prices. THAT BOOM WAS TRIGGERED in 1972 when President Nixon signed a wheat deal with the former Soviet Union and also improved relations with China. The subsequent rise in U.S. farm exports lasted until the Soviets invaded Afghanistan in 1979 and President Carter canceled the wheat deal in protest. This couldn’t have occurred at a worse time, coming as it did in an era of fuel shortages and gas lines, inflation and soaring interest rates. Nonetheless, farm prices continued to rise, aided by easy financing. Few saw disaster arriving…until it arrived. This time around, Leuthold sees a more moderate pullback — 15% to 20% in three to five years — because buyers are employing less leverage and interest rates are lower. His main concern is that the ethanol boom rests on shaky economic underpinnings. Without government subsidies, ethanol makes no sense, he maintains. And the subsidies could disappear because of a backlash against costs of producing the fuel — higher supermarket prices and huge demand on water supplies. The measure was opposed by groups representing the world’s undernourished and by competing agricultural interests like the National Cattlemen’s Beef Association. Big Oil dislikes the program, too, and Big Oil has deep pockets to lobby Congress. The rush for ethanol is easily the biggest factor behind rising farm prices. And a glut of ethanol could develop quickly as more and more farmers try to get rich quick by switching production to corn. In fact, the glut may be here. More than 130 ethanol plants now operate in the U.S., up from around 80 three years ago, while the number of gas stations selling ethanol is as underwhelming as the number of drivers demanding it. Recently, construction on three proposed U.S. plants was halted amid a growing oversupply of the fuel. Hart Energy Publishing reports that U.S. ethanol inventories climbed 12% from August through September, while average prices had slid from $1.91 a gallon to $1.67. ETHANOL ENTHUSIASTS DISMISS such setbacks as temporary blips that will disappear with the help of the new mandate for greater use of ethanol. But the fuel does face major challenges. For one thing, while cheaper than gasoline, it contains less energy than that fuel, producing lower mile-per-gallon readings and forcing motorists to refuel more frequently. In addition, the oil industry sees problems getting that corn crop to the distilleries and the resulting product from the distilleries to refineries. Because ethanol is more corrosive than gasoline, it can’t be shipped through gasoline pipelines. What else could spoil the ethanol story? Ken Green, a scholar at the American Enterprise Institute, says a significant decline in oil prices would burst the bubble. Scientific breakthroughs could hurt, too. Duffy says the $64,000 question is whether efforts to produce ethanol from seaweed will succeed. Ethanol, of course, isn’t the only force pushing up farm prices. A global commodities boom has been under way for several years now, lifting prices for a broad variety of foods. But contrary to the assurances of farmland promoters, demand for food isn’t endlessly elastic. Food expenditures in the U.S. dropped three times since World War II — in 1974, 1981 and 1992, years when consumers were pinched. At some point, possibly soon, rising prices for some crops will trigger declines in per-capita consumption. Meanwhile, other countries are providing more and more competition for American farms. The U.S. share of the global corn market, now about 60% or 70%, is headed to 55% or 60%, says the USDA. And high prices encourage farmers to keep ramping up production, ultimately leading to a glut of whatever crop is hottest — and lower prices. Marc Faber, a Barron’s Roundtable member who manages investments from Hong Kong, bought farmland in New Zealand some years back in anticipation of growing global food demand. But he considers U.S. farmland wildly overpriced and, as a result, sees arbitrage opportunities in farmland-rich Russia, Paraguay and Uruguay. The Russian embassy in Washington says that farmland around Moscow sells for about $1,000 an acre, while in the hinterlands the price is about $400. Peer Voss, a farmland broker in Uruguay and Paraguay, says prices are still relatively low in those countries despite rapid appreciation in the past two years. He says land in Uruguay has risen 250% and now ranges from $800 an acre in the least desirable areas to $1,700 in the best. The most imminent threat is the housing meltdown. Leuthold says that, historically, a convulsion in one part of the realty market eventually has affected all others. In the agricultural sector, ranchland and recreational farmland already have been quietly hit, having peaked in 2006, according to brokers. Jack Horton of Vale, Ore., who has been selling rangeland for 36 years, says prices are down 10% on average, and as much as 20% to 30% in some areas of his state. Recreational plots, bought by sportsmen, have also tanked, he adds. The drought in the West also is hampering demand for working ranches, as is the high cost of cattle feed, resulting from — what else? — the ethanol boom. BROKERS TOOK HEART WHEN Louis Bacon of Moore Capital Management spent $175 million recently on the 250-square-mile Forbes Ranch in Southern Colorado for a holiday retreat. “It’s the American dream to own part of the West,” Doug Hall of Hall & Hall a multi-state brokerage company located in Billings, Mont., says. “There are an awful lot of people who made a lot of money who want to enjoy it while they have it.” But smaller places — under 5,000 acres — away from the mountains are harder sells, he acknowledges. John Stratman, a broker for the Mason & Morse Ranch Co. in Glenwood Springs, Colo., concurs that the lower end of the market has slowed. “I don’t think the buyers have gone away. They’re on the sidelines because of all the negative publicity about the residential and subprime markets; and they’re sitting there waiting to see which way the economy goes.” If the economy does teeter into a recession, that would make continuation of the farmland boom all the harder. At this stage, any investor should be wary of betting the farm on a farm. A Miami condo might be a better deal. After all, you can buy a nice one now for just 60% or so of what you would have had to shell out three years ago.

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