December 2007
S	M	T	W	T	F	S
« Nov		Jan »
	1
2	3	4	5	6	7	8
9	10	11	12	13	14	15
16	17	18	19	20	21	22
23	24	25	26	27	28	29
30	31

Archive for December 2007

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.

Posted in Farmland Prices, Difficult Issues in Agriculture & Rural Life, Farm Subsidies, Alternative Energy | Print | No Comments »

Researchers May Prove Campaign Claims Right about Farm Scale Ethanol Production

22. December 2007 by P. Leslie Riley.

During the Campaign I talked a good bit about a decentralized system for Biofuel prodction that would provide maximum benefit for farmers & rural communities & maximum independence from foriegn oil/ big government/ big business.
This was built upon a market based, bottom up approach and centered on the production and farm level processing of sugar/ sweet sorgum based fuel.

This idea was detailed in this post :
BioFuels #2 - Ethanol Produced on Farms
Farm Scale Fuel Production would mean economic boom for rural communities and less dependance on oil from the Middle East

And was met with some skecticism. However, according to this piece in Next Energy News researchers agree with the basic premise — that Sugar is a much better source of biofuels than what is currently being pursued . . . .

“Production of energy, such as ethanol, from sugar is more efficient than production from grains in both cost per unit and energy efficiency,” Da Silva says. “Sugarcane is ranked first among all other crops for biomass production and can be a key component of biomass supply. Technology for producing ethanol from sugarcane is well established in tropical countries such as Brazil, where energy independence has been achieved.”

Why is such a strategy not being pursued ?

Likely because it doesn’t offer more power/ controll to politicians & more $$$ in the hands of the multinational corporations that feed them . . .

The election is over, but our fight for family farmers & more freedom has only begun

The entire article is here :

http://www.nextenergynews.com/news1/next-energy-news10.30a.html

Researchers Search for Perfect Crop for Biofuel Researchers have been studying fuels from biomass for years. Now, with growing dependency on foreign oils and an energy-conscious society emerging, biofuels are fast becoming part of a fuel revolution that could reach pumps all across America. Ethanol blends are already available at some gas stations. However, their availability varies from state to state, depending on the volume of ethanol produced. Sources of biomass for biofuel production in each state also vary widely.”To see it everywhere, we have to make more of it on a regional basis,” says Dr. Bill Rooney, professor of plant breeding and genetics, Soil and Crop Sciences Department, Texas A and M University. “The best source for biofuel in a region is contingent on the environment, growing season, water and fertility availability, stress resistance, and processing and conversion techniques. In any location, there will be several species grown for biomass.”Approximately 20 percent of grain sorghum is now used for ethanol production. Rooney is currently developing sorghum varieties specifically for bioenergy. He will discuss this topic on Wednesday, Nov. 7 during his talk, “Sorghum Breeding for Bioenergy Traits,” at the International Annual Meetings of the American Society of Agronomy (ASA), Crop Science Society of America (CSSA) and Soil Science Society of America (SSSA). He will speak at 2:30 pm during the symposium “Breeding and Genomics of Crops for Bioenergy” at the Ernest N. Morial Convention Center in New Orleans, room 207.Another presentation related to biofuels, “Sweet Fuel for the U.S.”, will be given by Dr. Jorge Da Silva, associate professor of molecular genetics and plant breeding, Soil and Crop Sciences Department, Texas A and M University, on Tuesday, Nov. 6 at 10:15 am. His presentation will be during the symposium “Agronomic Aspects of Biofuel Crop Production” in room 214 of the Convention Center.

Although there is no finite development timeline, there is clearly a race for biofuels as the cost of petroleum reaches previously unimaginable levels, reserves diminish, and environmental concerns soar. If won, this race could bring about a revolution as significant as Henry Ford’s creation of the Model T car.

Posted in Sweet Sorgum & Sugar, Biofuels from Farms, Rural Development, Family farm Opportunities | Print | No Comments »

Could Algae become the Ultimate Alternative Crop for Family Farms ?

22. December 2007 by P. Leslie Riley.

33000 gallons of oil per acre — sounds like a profitable farm enterprise for some enterprising farm family . ..

http://www.nextenergynews.com/news1/next-energy-news12.17c.html

High Density Algae Test Delivers 33,000 Gallons of Oil Per Acre
The Vertigro Joint Venture has released initial test results from its high density bio mass (algae) field test bed plant located at its research and development facility in El Paso, Texas.

During a 90 day continual production test, algae was being harvested at an average of one gram (dry weight) per liter. This equates to algae bio mass production of 276 tons of algae per acre per year. Achieving the same biomass production rate with an algal species having 50% lipids (oil) content would therefore deliver approximately 33,000 gallons of algae oil per acre per year.

The primary focus of the 90-day continuous production test was determining the robustness of the field test bed. Other secondary tests were also conducted including using different ph levels, CO2 levels, fluid temperatures, nutrients, types of algae, and planned system failures. It is important to note that the system has not been optimized for production yields or the best selection of algae species at this time.

The next phase of development will include increasing the number of bio reactor units from 30 to 100 and then continuing a number of production tests that may further increase production as well as initiating various extraction tests. The results released today are in keeping with data previously announced from the Joint Venture’s laboratory proof of concept test bed. Subsequently, the joint venture intends to build out a one acre pilot plant with engineer design work underway at this time.

As a comparative, food crop such as soy bean will typically produce some 48 gallons oil per acre per year and palm will produce approximately 630 gallons oil per acre per year. In addition, the Vertigro Bio Reactor System is a closed loop continuous production system that uses little water and may be built on non arable lands.

Glen Kertz and Dr. Aga Pinowska, who head the research and development program, commented, “This is a major milestone for us as we have demonstrated the robustness of the Bio Mass System with satisfactory production results from a system that has not yet been optimized for algae production, which will become part of the next phase of testing.” They also noted, “We have learned how to produce a very large algal bio-mass under varying environmental and operating conditions in our continuous process photo bioreactors. We believe these initial results are amongst the best achieved to date, and we are confident we can now increase the productivity.”

“We are extremely pleased with the robustness and performance of the Vertigro technology in sustainably producing commercial quantities of algae biomass,” states Doug Frater, Global Green Solutions CEO. “Over the coming months we will further optimize the technology and demonstrate economic algae production for biofuel feedstock purposes.”

The Vertigo system may be a solution to the renewable energy sector’s quest to create a clean, green process which uses mainly light, water and air to create fuel. The Vertigro technology employs a proprietary high-density vertical bio-reactor that produces fast growing algae which may yield large volumes of high-grade algae oil. This oil can be refined into a cost-effective, non-polluting diesel biofuel, jet fuel and other applications. The algae derived fuel may be an energy efficient replacement for fossil fuels and can be used in any diesel powered vehicle or machinery. In addition, 90% by weight of the algae is captured carbon dioxide, which is “sequestered” by this process and so contributes significantly to the reduction of greenhouse gasses.

Posted in Rural Development, Family farm Opportunities, Alternative Energy | Print | No Comments »

Fuel from Timber Wastes

22. December 2007 by P. Leslie Riley.

Mississippi researchers at USM & MSU have been working on similar concepts. It would be nice to see someone in the private sector come up with model that could be profitable for family businesses in rural areas of our state.

http://www.nextenergynews.com/news1/next-energy-news12.21a.html

Quote:

Biomass Harvester Eats Trees to Make Bio-diesel A new machine to harvest forest underbrush for use as fuel had its first public demonstration Wednesday in woods east of New Bern.

About 50 people in hard hats watched as the machine gobbled trees in the forest off County Line Road. Those watching the one-of-a-kind bush eater represented the gamut of public and private forest-related industries and service in North Carolina.

The big red processor, pushed by a tractor on treads, uses carbide teeth to pulverize everything in its six-foot path. As the 56,000-pound behemoth cuts a trail, a belt-driven vacuum sucks the ground-up cuttings through an extended chute over the cab and into an agricultural silage wagon hitched to the tractor.

Despite its weight, the machine produces ground pressure of only 7.1 pounds per square foot, so it moves easily over soft forest bed and pocosin.

The biomass harvester is being developed by North Carolina State University for Fecon Inc., manufacturer of the heavy equipment and attachments including Bull Hog commercial mulchers, in cooperation with Tim Tabak, a Craven County forestry management consultant.

The new harvester allows more of the forest’s organic products — bushes, leaves and needles, and trees under 6 inches in diameter — to be used for bio-diesel and ethanol in addition to its present market in steam-generated electric production, Roise said.

“It is powerful,” he said. The machine has a 440-horsepower engine.

When perfected, it is expected to be used mostly for plantation thinning in tree farming, for clearing between the rows, and for forest management, said Roise.

Roise has been working since the summer with Tabak and NCSU Forestry graduate students Lindsay Hannum and Glen Catts to correct design flaws.

But Roise said the work thus far has produced “results much better than we ever thought. It’s done remarkably.”

Croatan National Forest District Ranger Lauren Hillman sees potential for forest management in fire prevention and habitat preservation or restoration.

Camp Lejeune’s efforts to restore habitat for red-cockaded woodpeckers might be able helped by the machine, said Danny Marshburn, base forest manager.

John Duff of Rankin Timber Company in New Bern said, “I think it will be useful tool on a lot of forest land that is tough to manage.”

The machine can now harvest between two and four tons of forest bulk an hour and it’s real profitability lies in harvesting brush for bio-diesel and ethanol. Its advantage for that use is that it blows underbrush upward without picking up the dirt.

The product saved from just being mulch on the forest floor contains both oil and sugar, said Roise and fellow NCSU professor Dennis Hazel.

The oil would be used for bio-diesel or the sugar for ethanol. The professors are already debating which element of the biomass grabbed by the harvester will make it pay off first.

_________________

Posted in Rural Development, Family farm Opportunities, Alternative Energy | Print | No Comments »

WTO Rules Against Cotton; Other Subsidies

19. December 2007 by P. Leslie Riley.

Two pieces on the WTO ruling against US subsidies for cotton & other crops follow.

Couple of thoughts :
1) As you know I think subsidies harm agriculture & the quicker we can move to a more free market system the better it will be.
2) The ruling against cotton will be particularly harmful — short term — to Mississippi agriculture and rural communities that depend upon cotton/ gins for a big portion of their economic activity. But, again, eliminating subsidies should have a long term posititve impact on rural Mississippi.
3) WTO is bogus. Globalist bodies have no right to be dictating our trade policies and the politicans that enacted this should be tried for treason. ( Their oath is still to the Constitution).

WTO releases official ruling against US cotton subsidies

Turkish Press : World Trade Organisation to rule on US farm subsidies: sources

Posted in Cotton, Mississippi Agricultural News, Difficult Issues in Agriculture & Rural Life, Farm Subsidies, Smaller Government, Freedom in Agriculture | Print | No Comments »

Half the World Soon to Be in Cities - What does this mean for Ag ?

18. December 2007 by P. Leslie Riley.

A while back I posted this article on the Growing Rift between Rural & Urban interests.

According to the article below. The growth in urban populations is going to continue to outpace rural increases to the point where within a couple of decades, over half the world’s population will live in cities and a huge percentage of them will be poor.

How should agriculture respond to these needs ? What are the implications for rural Mississippi ? Demographics mean everything.

http://www.nytimes.com/2007/06/27/world/27cnd-population.html?_r=2&hp&oref=slogin&oref=slogin

Half the World Soon to Be in Cities

By CELIA W. DUGGER
Published: June 27, 2007

By next year, more than half the world’s population, 3.3 billion people, will for the first time live in towns and cities, a number expected to swell to almost 5 billion by 2030, according to a United Nations Population Fund report released today.

The onrush of change will be particularly extraordinary in Africa and Asia, where between 2000 and 2030 “the accumulated urban growth of these two regions during the whole span of history will be duplicated in a single generation,” the report says.

This surge in urban populations, fueled more by natural increase than the migration of people from the countryside, is unstoppable, said George Martin, author of the report, “State of World Population 2007: Unleashing the Potential of Urban Growth.”

Cities will edge out rural areas in more than sheer numbers of people. Poverty is now increasing more rapidly in urban areas as well, and governments need to plan for where the poor will live rather than leaving them to settle illegally in shanties without sewage and other services, the United Nations says.

In Latin America, where urbanization came earlier than in other developing regions, many countries and cities ignored or fruitlessly tried to retard urban growth. “Now the levels of insecurity and violence are a product of this approach,” said Mr. Martine, a demographer and sociologist. “People have been left to fend for themselves and have created these enormous slums.”

A billion people, a sixth of the world’s population, already live in slums, 90 percent of them in developing countries. In sub-Saharan Africa, more than 7 in 10 urban dwellers live in a slum. The region’s slum population has almost doubled in just 15 years, reaching 200 million in 2005. Its urban population is already as large as North America’s.

China, the world’s most populous nation, is now at the peak of its urban transition, the report says. Urbanites will outnumber peasants within a decade. China will then have 83 cities with more than 750,000 residents, but only five with a population of more than five million, according to the report.

In fact, the report predicts that the bulk of the urban population growth is likely to be in smaller cities and towns, not the 20 mega-cities that dominate the public imagination. The future lies in places like Gabarone, Botswana, whose population is projected to rise to 500,000 in 2020 from 18,000 in 1971, as much as it does in chaotic, sprawling metropolises like Lagos, Nigeria.

Among the mega-cities with populations of more than 10 million, only Lagos and Dhaka, Bangladesh are expected to grow at rates exceeding 3 percent over the coming decade. Such super-sized cities today contain 9 percent of all urban inhabitants, while smaller cities and towns account for more than half.

“Many of the world’s largest cities — Buenos Aires, Calcutta, Mexico City, Sao Paulo and Seoul — actually have more people moving out than in, and few are close to the size that doomsayers predicted for them in the 1970s,” the report says.

The report notes that while rates of urban growth have slowed in most regions of the world, the story now lies in the scale of growth in the sheer numbers of people.

The first great wave of urbanization unfurled over two centuries, from 1750 to 1950, in Europe and North America, with urban populations rising from 15 million to 423 million.

The second wave is happening now in the developing world. The number of people living in urban areas will have grown from 309 million in 1950 to 3.9 billion in 2030. By 2030, the developing world will have 80 percent of the world’s urban population.

If the coming population growth is helter skelter, with inadequate services and sprawling slums, it could pollute urban water sheds with untreated sewage and contribute to rising crime and violence, Mr. Martine said. The result of that approach is already apparent in existing slums.

“The poor settle in the worst living space, on steep hillsides or river banks that will be flooded, where nobody else wants to live and speculators haven’t taken control of the land,” he said. “They have no water and sanitation and the housing is terrible. And this situation threatens the environmental quality of the city.”

But cities are also engines of economic growth, the report notes more optimistically. “Cities concentrate poverty,” it said, “but they also represent the best hope of escaping it.”

Posted in Difficult Issues in Agriculture & Rural Life | Print | No Comments »

Subsidies — Their cost & my head scratching ?????

18. December 2007 by P. Leslie Riley.

I have spoken out strongly against the USDA & for the elemination of subsidies.
It is no secret that I believe federal subsidies paid to farmers are a bad idea. There is a two fold reason for this.

1) They violate nearly every principle I believe about limited government — I think subsidies not only violate the Constitution, but also God’s Law and the lessons of history & economics. Beyond that they are Marxist to their core and represent an intrusion and an affront to liberty.

2) I am convinced that subsidies are immeasurably harmful to the very farmers & rural communites they profess to want to help on more fronts than I care to list here ( a different post maybe ?)

That being said, while I have some ideas, I cannot completely explain the level of opposition they get from much of the mainstream press, liberals, neo-conservatives & city folks in general.

It is certainly not that the folks at the New York Times, the Enviormental Working Group, and other liberal media. non profit “think tanks” , and Democratic politicians have suddenly become doctrinare libertarian advocates of smaller government.

For Big government, balanced budget neo-cons who are likewise not concerned about too much government controll of our lives or aren’t hindered by questions about whether or not something is a legitimate function of government, but just seek for government micromanagement to be more efficient & business like are really confusing because of the following :

The TOTAL “Farm Bill” is less than 1% of the Federal Budget. ( not much fat would be cut out if it were eleminated entirely).
Of this 1% — roughly $88.8 Billion USDA Budget in 2007 the following closer breakdown shows that most of this does not go to farmers in the form of subsidies but rather to things like food stamps, foriegn aid, even “rural development” includes things like grants to buy police cars & remodel government buildings in small towns.

Here are some particulars :
“Farm Programs” : $12.4 Billion or 13.9% of the total
* That means that 86% of the “Farm Program” is not subsidies paid to “rich farmers” at the expense of “poor farmers in developing nations”. Or, put another way, the farm subsidies represent slightly over 1/100th of 1% of the Federal Budget or .00139 %. I am fairly certain that even someone as dumb as me could find a whole list of other boondoggles that are much more costly.
Domestic Food Programs ( i.e. welfare, food stamps, etc): $51.4 Billion or 57.8%
That’s right, government welfare makes up almost 60% of the “Agriculture” budget
Other areas that fall under the “Farm Bill” heading include $2.4 Billion in “Foriegn Ag Service”, $3.0 Billion for “Rural Development”, $2.5 Billion for “Food Safety Inspection” and $ 5.1 Billion for “Conservation Programs”.
I wonder how many of the neocons would be in favor of cutting out the Foreign Aid or liberals at the Enviormental Working Group would want to drop off the 5 billion of Conservation Programs ? ( I think we all know the answer).

So again, I am not defending farm subsidies — FAR from it –, I just wonder why they are so derided by people who otherwise never met an increase in government spending or power that they didn’t like.

I have some ideas, but I’ll save them for later . Any of you have any thoughts that you’d like to share, please feel free to.

Posted in Difficult Issues in Agriculture & Rural Life, Cotton, Farm Subsidies, Smaller Government, Freedom in Agriculture, Rural Development | Print | No Comments »

Jimmy Carter vs Cato & a Midwest Grain Farmer on Subsidies

13. December 2007 by P. Leslie Riley.

Here are three opposing pieces on Farm Subsidies by former President liberal former president, globalist agitator and sometime humanitarian Jimmy Carter — the somewhat libertarian Cato Institute — and Midwest Grain Farmer/ Agri Journalist John Phipps ( in that order)First Carter’s piece for the Wall St Journal:
( if you follow the link to the originall article, there are lots of good hyperlinks to follow for more info)

http://www.cato-at-liberty.org/2007/12/10/does-jimmy-carter-really-speak-for-african-farmers/

Quote:

Subsidies’ Harvest Of Misery
By Jimmy Carter
Monday, December 10, 2007; Page A19Congress can still act decisively this year to right a wrong that is hurting both small American farmers and the poorest people on the planet. A long-overdue debate is taking place on reform of the 1933 farm bill, passed during the Great Depression to alleviate the suffering of America’s family farmers. I was a farm boy then, and the primary cash crops on my father’s farm were peanuts and cotton. My first paying job was working for the U.S. Department of Agriculture, measuring farmers’ fields to ensure that they limited their acreage and total production in order to qualify for the life-sustaining farm subsidy prices.

Tragically, in its current form this legislation does not fulfill its original purposes but instead encourages excess production while channeling enormous government payments to the biggest producers. This product of powerful lobbyists now punishes small-scale farmers in the United States and is devastating to families in many of the world’s least affluent countries.

It is embarrassing to note that, from 1995 to 2005, the richest 10 percent of cotton growers received more than 80 percent of total subsidies. The wealthiest 1 percent of American cotton farmers continues to receive over 25 percent of payouts for cotton, while more than half of America’s cotton farmers receive no subsidies at all. American farmers are not dependent on the global market because they are guaranteed a minimum selling price by the federal government. American producers of cotton received more than $18 billion in subsidies between 1999 and 2005, while market value of the cotton was $23 billion. That’s a subsidy of 86 percent!

The Carter Center works primarily among the world’s poorest people, including those in West Africa whose scant livelihood depends on cotton production. For instance, in 2002 Burkina Faso received 57 percent of its total export revenue from cotton, while Benin depended on cotton exports for more than 75 percent of its national export revenue. Overproduction in the United States leads to the dumping of U.S. cotton on global markets, which drives prices down. In recent years, cotton exported from the United States has been sold 61 percent below its cost of production.

Fragile African economies that depend on agricultural exports, especially cotton, are sometimes devastated by these practices. A 2002 report by Oxfam International estimates that in 2001 sub-Saharan Africa lost $302 million as a direct result of U.S. cotton subsidies, with two-thirds of the loss sustained in eight countries — Benin, Burkina Faso, Mali, Cameroon, Ivory Coast, Central African Republic, Chad and Togo. Compared with American humanitarian assistance, the subsidies to U.S. cotton farmers amount to more than the U.S. Agency for International Development’s total annual budget for all of sub-Saharan Africa.

Two amendments being proposed in the Senate represent the best hopes for fixing what’s wrong with the system of crop subsidies. Sens. Richard G. Lugar (R-Ind.) and Frank Lautenberg (D-N.J.) have proposed the Farm, Ranch, Equity, Stewardship and Health Act of 2007 as an amendment to the farm bill; it would replace the subsidies with an insurance program protecting farmers from excessive losses and catastrophes such as flooding or drought. This approach would correct many of the flaws I’ve noted in the current farm bill. An amendment being circulated by Sens. Byron Dorgan (D-N.D.) and Charles E. Grassley (R-Iowa) would place a $250,000 cap on annual subsidy payments to a farmer. Various schemes under the present law allow these limits to be grossly exceeded, with some big farmers receiving several million dollars annually. Both amendments would go a long way toward making the farm bill fair for farmers at home and abroad.

I am still a cotton farmer, and I have been in the fields in Mali, where all the work is done by families with small land holdings. Cotton production costs 73 cents per pound in the United States and only 21 cents per pound in West Africa, so American farmers do need protection in the international marketplace. But Congress has a moral obligation to protect American agriculture with legislation that will serve our national interests, that will feed hungry people and that does not suppress the ability of the poor to work their way out of poverty.

Former president Jimmy Carter founded the not-for-profit Carter Center, an international nongovernmental organization based in Atlanta.

Second, Cato :

http://www.cato-at-liberty.org/2007/12/10/does-jimmy-carter-really-speak-for-african-farmers/

Quote:

Does Jimmy Carter Really Speak for African Farmers? by : Daniel Ikenson

Jimmy Carter’s grasp of economics apparently hasn’t sharpened in the 27 years since he imparted a wretched U.S. economy to his successor. Or perhaps his poor-man-advocate bona fides should be scrutinized more closely.

In a Washington Post op-ed today, the former president rightly protests the egregious U.S. farm bill for its continuation of lavish subsidies to American commodities’ producers. Carter explains how subsidies breed overproduction, which suppresses world commodity prices, thereby reducing the incomes of poor farmers in countries where commodities dominate the economy.

Carter favors proposed amendments to the current farm legislation that would replace subsidy programs with crop insurance programs to protect farmers against excessive loss, which is an improvement, though not a solution.

But, in the last paragraph of his article, Carter contradicts everything he writes before that, revealing himself to be no friend of poor farmers abroad or simply ignorant of economic processes. He writes:

Now wait a second. This is a very curious statement. If cotton production is so much cheaper in West Africa than in the United States, then more production should happen there and less should happen here. If Carter is really interested in the well-being of West African farmers, “whose scant livelihood depends on cotton production,” he should advocate free trade in cotton. Why instead does he advocate that U.S. farmers be protected in the international market place? West African incomes will continue to suffer if U.S. subsidy programs are replaced by U.S. tariffs, which is what Carter seems to be advocating. How does it help Malian farmers lift themselves out of poverty if they can’t effectively compete on their advantages? Higher U.S. tariffs would only drive down the world price (as subsidies do) and likely compel other importer nations to raise tariffs to protect their own producers, shrinking the market further for Malian farmers.

Meanwhile, does Carter have any empathy for America’s lower income families?Apparently, not enough. Protection of U.S. cotton farmers artificially raises the prices of textiles, which means that clothing and shoes are more expensive than they would be otherwise. Expenditures on necessities, like clothing and food, account for a higher proportion of the budgets of lower income families. Thus, artificially raising the prices of those products is akin to a regressive tax – it burdens those with less income disproportionately.

Perhaps Carter is not writing as the founder of the Carter Center, an international NGO, as the byline indicates, but as a small cotton farmer from Plains, Georgia, who believes the current subsidy system unfair because the big farms get most of the largesse.

Finally Grain Farmer/ Agri Journalist John Phipps’ comments :
(Phipps takes subsidies, but thinks they’re a really bad idea)

http://johnwphipps.blogspot.com/

Quote:

Sunday, December 09, 2007
This explains the single term, maybe…Former President Jimmy Carter, whose accomplishments after his presidency dwarf the actual tenure in office (much like Herbert Hoover, whom I also admire), demonstrates why his grasp of economics didn’t help him in office.

In an editorial in the WaPo this week, he concludes with this astonishing bit of illogic.

Mr. President, the fact that your production costs are way above your competitors does not automatically create an entitlement. Otherwise there would be no reason to control costs. What is does mean is you should not be in the cotton business.

I know, I know- “This will mean the end of all cotton farming in the US!!!”. I think not. We grow about 16% of the world’s cotton and use a quarter of it here, exporting the rest. In fact, the US ships 40% of the world’s exports. If we stopped subsidizing cotton today, where would cotton futures open tomorrow? I’m guessing significantly lower than the current US supported price, but high enough to get the acres needed to supply the world.

Oddly, this seems to be the case for other commodities.

Posted by John Phipps

Posted in Difficult Issues in Agriculture & Rural Life, Farm Subsidies, Smaller Government, Freedom in Agriculture, Rural Development | Print | No Comments »

Agriculture of the Middle — Why should you care ?

3. December 2007 by P. Leslie Riley.

There is a fairly new project/ web site called “Agriculture of the Middle” that anyone who cares about farm policy of rural culture should check out.

This piece is particularly worth checking out —

Why Worry About the Agriculture of the Middle?

Posted in How Agriculture affects Everything else, Agrarianism, Big vs Small Farms, Difficult Issues in Agriculture & Rural Life, Rural Development | Print | No Comments »

Family Dairys vs Industrial, Globalist “MegaFarms”

3. December 2007 by P. Leslie Riley.

During my 2007 campaign for Ag Commissioner , two themes that repeatedly came up were how to best help Mississippi’s family farms & the possibly pending disapperance of the Dairy industry in Mississippi

I found the piece below on John Phipps’ excellent blog; is this just market forces at work ? Is the consolodation & even globalization of dairy farming a market-driven inevitability ? For at least two dozen reasons, I sure hope not.

You call that big?…

The injection of enormous new profits into agriculture should be the answer to the survival of small farms, right? I’m not so sure.

We’re just beginning to grasp that the economies of scale for industrial ag are over the horizon. From new module-building cotton pickers, to Class MMDXVL combines, fewer actual people are needed to reap those higher profits.

While smaller agrarian farms will flourish, the middle cannot hold, I believe. It cannot occur overnight, because of land ownership patterns, but the trend to consolidation is immune to government policy. The economics are simply too powerful to tolerate irrational business models.

Proof #16 - This announcement from EU dairy giant Danone:

Quote:

Danone is mulling the creation of several giant dairy farms around the world in order to secure supplies amid rising milk prices.The farms could be similar to that run by Al Safi, its partner in Saudi Arabia.

Al Safi runs reputedly the biggest dairy farm in the world, situated 40 kms from Riyadh with a herd of 32,000 cows imported from Europe and the US. Danone uses milk from the farm to produce yogurts.

I will be in Las Vegas this week talking to the top of our dairy industry at the Elite Producers Conference. Those guys can teach the grain industry a few things, I’ll bet.

Posted in Agrarianism, How Agriculture affects Everything else, Big vs Small Farms, Difficult Issues in Agriculture & Rural Life, Rural Development, Family farm Opportunities | Print | No Comments »