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Goodbye Petrodollar, Hello Agri-Dollar?
When it comes to firmly established, currency-for-commodity, self reinforcing systems in the past century of human history, nothing comes close to the petrodollar: it is safe to say that few things have shaped the face of the modern world and defined the reserve currency as much as the $2.3 trillion/year energy exports denominated exclusively in US dollars (although recent confirmations of previously inconceivable exclusions such as Turkey's oil-for-gold trade with Iran are increasingly putting the petrodollar status quo under the microscope). But that is the past, and with rapid changes in modern technology and extraction efficiency, leading to such offshoots are renewable and shale, the days of the petrodollar "as defined" may be over. So what new trade regime may be the dominant one for the next several decades? According to some, for now mostly overheard whispering in the hallways, the primary commodity imbalance that will shape the face of global trade in the coming years is not that of energy, but that of food, driven by constantly rising food prices due to a fragmented supply-side unable to catch up with increasing demand, one in which China will play a dominant role but not due to its commodity extraction and/or processing supremacy, but the contrary: due to its soaring deficit for agricultural products, and in which such legacy trade deficit culprits as the US will suddenly enjoy a huge advantage in both trade and geopolitical terms. Coming soon: the agri-dollar.
But first, some perspectives from Karim Bitar on CEO of Genus, on what is sure to be the biggest marginal player of the agri-dollar revolution, China, whose attempt to redefine itself as a consumption-driven superpower will fail epically and very violently, unless it is able to find a way to feed its massive, rising middle class in a cheap and efficient manner. But before that even, take note of the following chart which takes all you know about global trade surplus and deficit when narrowed down to what may soon be that all important agricultural (hence food) category, and flips it around on its head.
Karim Bitar on China:
Structurally, China is at a huge disadvantage as it accounts for 20% of the world’s population, but only 7% of arable land. Compare that with Brazil which has the reverse of those ratios. What that does for a country like China is to incentivise the adoption of technification. Let’s look at their porcine market, which represents 50% of global production and consumption. In China, to slaughter roughly 600 mn pigs per year, which is about six times the demand in the US, they have a breeding herd of about 50 mn animals. In the US, the comparable number is only about 6 mn so there is a huge productivity lag.
Owing to its structural disadvantages, China is much more focused on increasing efficiency. For that, it needs to accelerate technification. So, we’re seeing a whole series of government incentives at a national level, a provincial level and a local level, focusing on the need to move toward integrated pork production because that’s a key way to optimise total economics, both in terms of pig production, slaughtering, processing and also actually taking the pork out into the marketplace.
The Chinese government is important as a customer to us because of its clarity of vision on food security. It has seen the Arab Spring, and it is cognisant of the strong socio-political implications of higher food prices. Pork prices could account for about 25% of the CPI, so it knows it can be a major issue. It’s because of all these pressures, that China is more focused on responding to the food challenge. It’s a sort of a burning platform there.
...Take milk production in China and India. China is basically trying to leapfrog and avoid small-scale farming by adopting a US model. In the US, you tend to have very large herds. Today about 30% of US milk production is from herds of 2,000 plus, and we expect that to reach 60% within the next five years. Today in China, there are already several hundred dairy herds of over 1,000. However in India, there’ll be less than 50. The average dairy herd size is closer to five, so it’s very fragmented. So the reality is that a place like China, because of government policies, subsidies and a much more demanding focused approach to becoming self-sufficient, has a much greater ability to respond to a supply challenge rapidly.
The problem for China, and to a lesser extent India, however one defines it, is that it will need increasingly more food, processed with ever greater efficiency for the current conservative regime to be able to preserve the status quo, all else equal. And for a suddenly very food trade deficit-vulnerable China, it means that the biggest winners may be Brazil, the US and Canada. Oh and Africa. The only question is how China will adapt in a new world in which it finds itself in an odd position: a competitive trade disadvantage, especially its primary nemesis: the USA.
So for those curious how a world may look like under the Agri-dollar, read on for some timely views from GS' Hugo Scott-Gall.
Meaty problems, simmering solutions
What potential impacts could a further re-pricing of food have on the world? Why might food re-price? Because demand is set to rise faster than supply can respond. The forces pushing demand higher are well known, population growth, urbanisation and changing middle class size and tastes. In terms of economic evolution, the food price surge comes after the energy price surge, as industrialisation segues into consumption growth (high-income countries consume about 30% more calories than low income nations, but the difference in value is about eight times). Here, we are keenly interested in how the supply side can respond, both in terms of where and how solutions are found, and who is supplying them. We are drawn towards an analogy with the energy industry here: the energy industry has invested heavily in efficiency, and through innovation, clusters of excellence, and access to capital has created solutions, the most obvious of which are renewable energy and shale. The key question for us is, can and will something similar happen in food?
It’s hard to argue that the ingredients that sparked energy’s supply-side response are all present in the food supply chain. In food, there’s huge fragmentation, a lack of coordination, shortages of capital in support industries (infrastructure) and only pockets of isolated innovation. We suspect that the supply-side response may well remain uncoordinated and slower than in other industries. But things are changing. Those who disagree with Thomas Malthus will always back human ingenuity. As well as looking at where the innovators in the supply chain are (from page 10), and where there are sustainably high returns through IP (e.g., seeds, enzymes etc.), we need to think about the macro and micro economic impacts of higher food prices, and soberingly, the geo-political ones.
Slimming down
Could the demand destruction that higher energy prices have precipitated occur in food? There are some important differences between the two that make resolving food imbalances tougher. Food consumption is very fragmented and there is less scope for substitution.
Changing eating habits is much harder than changing the fuel burnt for power. And, ultimately, food spend is less discretionary that energy, i.e., the scope for efficient consumption is more limited and consumers will not (and cannot) voluntarily delay consumption, let alone structurally reduce it. This means that higher food prices, especially in economies where food is a greater portion of household spending, will lead to either lower consumption of discretionary items or a reduced ability to service debt (with consequent effects on asset prices). When oil prices spiked in the late 1970s, US consumers spent c.9% of their income on energy vs. an average of 7% over the previous decade. And yet, the total savings rate rose by c.2% as they overcompensated on spending cuts on other items. 2007-09 saw a similar phenomenon too. Even the most cursory browse through history shows that high food costs can act as a political tinderbox (so too high youth unemployment), and we believe there is a degree of overconfidence with regard to the economic impact of food prices in the West: food costs relative to incomes may look manageable, but when there is no buffer (i.e., a minimal savings rate) then there are problems. Food spend as a percentage of total household consumption expenditure is a relatively benign 14% in the US, versus c.20% for most major European nations and Japan. This rises to c.40% for China and 45% for India. Of course, as wages rise, the proportion of food within total consumption expenditure falls, but that is only after consumption hits a ceiling. Currently, India and China consume about 2,300 and 2,900 calories per capita per day, compared to a DM average of about 3,400. If the two countries eat like the West, then food production must rise by 12%. And if the rest of the world catches up to these levels then that number is north of 50%.
The scramble for Africa’s eggs
In terms of ownership of resources, food, like energy, can be broken into haves and have-nots. While there are countries that have been successful without resources, it is quite clear that inheriting advantages (in this case good soil, climate and water) makes life easier. But that, of course, is only half the battle; what is also required is organisation, capital, education and collaboration to make it happen. Take Africa. It has 60% of the world’s uncultivated land, enviable demographics and lots of water (though not evenly distributed). Basic infrastructure, consolidation of agricultural land and minimal use of fertilisers and crop protection could do wonders for agricultural output in the region. But that’s easier said than done. Several African economies also need better access to information, education, property rights and access to markets and capital. Put another way, it needs better institutions. If Africa does deliver over the coming decades, rising food prices will alter the economics of investing in the region. The next scramble for Africa should be about food (while it is about hard commodities now and in the late 19th century it was about empire size). Fertiliser consumption has a diminishing incremental impact on yields, but Africa (along with several developing economies elsewhere) is far from touching that ceiling. Currently, Africa accounts for just 3% of global agricultural trade, with South Africa and Côte d'Ivoire together accounting for a third of the entire continent’s exports. But if the world wants to feed itself then it needs Africa to emerge as an agricultural powerhouse.
Higher up the production curve is China, which has been industrialising its agriculture as it seeks to move towards self sufficiency. Power consumed by agricultural machinery has almost doubled over the last decade, while the number of tractors per household has tripled, driving per hectare output up by an average of more than 20% over the same period.
Even so, in just the last 10 years China has gone from surplus to deficit in several meat, vegetable and cereal categories. So a lot more needs to be done, and a shortage of water could also prove to be an impediment, especially in some of its remote areas.
The power of the pampas
With significant surpluses in soybeans, maize, meat and oilseeds, Brazil and Argentina have led the Latin American continent in terms of food trade. Current surpluses are 6x and 3x 2000 levels, versus only a 30% increase in the previous decade, and are rising. A key impediment to boosting exports is infrastructure. Food has to travel a long way just to reach the port, and then further still to reach other markets. Forty days is possibly acceptable for iron ore to reach China on a ship from Brazil, but that would prevent several perishable food items from being exported. And hence, solution providers in terms of durability, packaging, refrigeration and processing will be in demand. Also, while you could attribute a lot of the agricultural success of LatAm economies to good conditions, they have also benefitted from the adoption of agricultural innovation. For instance, more than a third of crops planted in the region are as seeds that are genetically modified, versus more than 45% in the US and about 12% in Asia. Genetically modified crops are not new. They provide solutions to some of the most frequent constraints on agricultural yields (resistance to environmental challenges including drought and more efficient absorption of soil nutrients, fertilisers and water) or add value by enhancing nutrient composition or the shelf life of the crop. And while the adoption of GM crops and seeds is far from wholehearted, particularly in Europe, it’s most certainly a key part of the solution in economies that are set to face a more severe food shortage.
The last mango in Paris?
Europe’s deficit/surplus makes for interesting reading. Seventeen of the 27 EU countries face a food trade deficit, and yet, the EU overall recorded a surplus (barely) in 2010 for only the second time in the last 50 years (see chart). Broken down further, the UK is the largest food importer, followed by Germany and Italy, while the Netherlands and France lead exports thanks to their very large processing industries. If Europe’s future is one of relative economic decline, then reduced purchasing power when bidding for scarce food resources is an unappetising prospect. Therefore, it needs all
the innovative solutions it can muster, or import substitution will have to increase. It’s important to note that being in overall surplus or deficit can mask variety at the category level, i.e., Europe is a net importer of beef, fruit & vegetables, and corn, while its exports are helped by alcohol and wine specifically. Japan, in particular, is very challenged. It is the only country in the preceding table to show a deficit in every single food category.
We conclude our trip around the world in North America. Large-scale production, access to markets, a home to innovation
and favourable regulation has meant that the US (and Canada) continues to dominate some of the key agricultural resources such as soybeans, corn, fodder, wheat and oilseeds. Put this self sufficiency together with the medium-term potential for energy self sufficiency and relatively good demographics (better than China), and a rosier prognosis for the US, versus the rest of the Western world and parts of Asia, begins to fall into place.
Agri-dollars on the rise
Before we conclude, we need to devote a few lines to the geo-political and macro economic consequences of higher food prices. It’s likely that countries will act increasingly strategically to secure food supply, and that protections (e.g., high export tariffs) may well rise. It is also likely that there are special bi-lateral deals to access stable and secure food supply.
This could obviously damage the integrity of the WTO-sponsored system. Another consequence might be the emergence of agri-dollars, in the same way that petro-dollars emerged in the 1970s. This may seem far fetched (the value of the world’s energy exports is US$2.3 tn compared to US$1.08 tn for agriculture) but it’s important to think through the consequences. The big exporters, especially those with the scope to grow their output, may well have sustainable surpluses that can be reinvested into their economies (or extracted by a narrow part of society). Similarly, the consequence of being a net importer will be an effective tax on consumption: disposable income in the US would jump if oil was US$25/bbl.
As we have said, we would expect the big gainers of a meaningful rise in food prices in real terms to be Brazil, the US and Canada, while Japan, South Korea and the UK would face challenges. The top chart is important: look how China’s surplus has turned to deficit. What will happen if the Chinese middle class swells as it is expected to? And that’s the rub; what we have been used to in terms of food’s importance is set to change. How food moves around the world is likely to change, and the flow of currency around the world will also likely be impacted.
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Farmers will be kings in the next cycle.
Productive farmland is what you want.
You are confused. The Kings will be farmers after they confiscate all productive farmland for the good of the public.
The word "Dollar" means "one ounce of Silver". It has nothing to do with petroleum, farmland or aliens.
Back in the day. Now it means Jewtopia.
Interesting alternative, aquaponics...
Soil-less farming...
http://www.friendlyaquaponics.com/
Goes back to the days of the Hanging Gardens of Babylon,
I would have loved to have seen them in person.
Having quite a bit of experience myself with both aquaponic and hydroponic systems I see some difficulties in large scale agricultural production off the top of my head. However I would love to believe human ingenuity can overcome these obstacles.
Aquaponics is a living system and thus must remain highly balanced in order to be successful, for example minor temperature fluctuations will lead to changes in populations and diversity in bacteria, protozoa, rotifers, actinomycetes, and fungi resulting in fluctuations in nutrient uptake by the plants. Also, like hydroponics, because the plants all share a nutrient solution if disease were to strike it would be complete and utter devastation with close to no survivors.
Hydroponics is more stable than aquaponics but has similar requirements regarding temperature fluctuations. Off the cuff, hydroponics results in more conservative water usage, but has similar pollutive aspects as chemical fertilizer soil farming as waste nutrient solution must be disposed of.
To put it in simply in conclusion, water based agriculture can be highly successful as long as your environment has consistent weather and temperature. If you lack these characteristics more money must be spent on technological environmental stabilizers thus reducing potential proft.
All the best ORI, thanks for bringing up the subject.
sooo.... we should make fiat out of rice paper, and dys out of protiens and vitamins, then we can eat dollars :p~
The agricultural empire is set to fall. It's effectively operating at razor-thin safety buffers. All it will take is a couple mistakes with the global food supply and we're 3 steps away from WWIII.
http://www.planbeconomics.com/2010/08/29/why-our-agricultural-empire-wil...
Are we talking mistakes such as, oops, we planted too much corn and not enough soy?
Or are we talking, "Damn, nobody saw yet another year of global drought wiping out half the harvest"?
Excellent points AC. Good to hear an experienced voice.
From my understanding, the fish in an Aquaponic system help stabilize the environment to a large degree, relative to a pure hydroponic set-up?
If you like, visit the site above and get in touch with them. The folks there have had amazing success with commercial scale Aquaponic set-ups and even privide training for it.
I'm hoping to bring them to India at some point. Indian farmland is being gobbled up by Industry at an alarming rate and water is dis-appearing at a concominant rate.
ori
The whole aquaponics systems is a closed loop system, meaning that there is no waste, all has a purpose....something we can design our whole lives around eh? I personally like the story of Will Allen and what he's done up in Wisconsin at www.growingpower.org/ . You can check out some youtube videos of his project which grows food year round, regardless of the outside temperature in Wisconsin, another design we should all implement.
Reaching far back into the depths of my memory, I somewhat vaguely remember a Daniel Quinn quote, author of Ishmael, in that, "The problems we have today, with fixing the world and the human race, will not be solved with old minds and new programs, but with new minds and no programs...." Something along that thought thread.
The power of change will happen over night and I believe it will be those that swim through these currents, the ones that know the depth for they have been there, the ones with the experience as well as the control of ego in knowing that all in all....we really don't know anything.
Hopefully the light will continue to bask its scarcity across the truth here in the near future and no longer will be slaves of our own minds, but rather open our hearts to something deeper and greater, something we've all been wired for and unknowingly, quite ready for.
All the love to all of your wanderings on your own paths, may you be fearless and full of light and love.
/hippy rant off.....
I think that your sentence " the power of change will happen over night, etc." is possibly right but not I would not read it in the way you seem to do.
Imo, I don't expect the powers that be to wait for any form of consensus to happen with the masses of the population.
They won't let their advantages vanish and even less likely is the odds for them to risk their survival.
If Histroy is any lesson, they could trigger incredibly violent changes indeed over night.
But when you think about it what will you do if you were in their positions? You know things are going out of hand, that population don't really care and for all its pretences it is only envolved in the "public affairs" (ie res publica) once every couples years and that only involves voting, not much of a personal investment in the gran scheme of things. The same population is entiled in its opinion, no matter how they ve been pushed in that direction, the system is incredibly complex (again putting aside responsabilities), and overall even if oligarchs were to point, for once, in the sane direction, the message would be lost, contested and what not.
I think that at some point, even if they were all sudden, which never really happened, crushed by the concerns about every body well being and the overral society best interest, they would come to the conclusion that we are helpless and that they have to resort to what they do best and that is preserving their best interests, from there...
@ oh regional indian
therein lies the rub... pakistan has threatened war with india over hydro dams, eg. agricultural, fishing, wildlife, etc., depletion.
as a side note; china's farmers are finding it harder to irrigate their crops. what once was a sufficient 900 meter well has become unresponsive. they now must drill at minimum 1,500 meters, which has placed a huge financial burden on their tiny margins...
feedback appreciated if incorrect... :-))
jmo
absolutely fantastic article
thankyou tyler
And I can't help thinkin about the garbage problem those Chinese cities have, to now include the waste from some 8 times the animals they recycle compared to the US. And as I have said many times before (now here so much), that it is the people of china that it's gvt is most afraid of, rebellion and financial included. If they rebell on a large enough scale, it will affect global trade and increase the suffering of all persons not prepared to recieve such a crisis.
It's true Earl, water war's abound in thsi region. Sadly enough, even states within India are fighting each other, damming rivers, controlling flows. And our water wars are with all neighbours (China, Nepal, Bangladesh).
A not-well (!) ending story, I believe.
ori
We may have the agua/aqua dollar before the agri-dollar...
If this is true, then we will all be worshipping Sun Gods and Fertility Goddesses, again.
There is a reason farmers talk about the weather so much.
DISCLOSURE STATEMENT: LONG WEATHER-CONTROL TECHNOLOGY
It will be Kings who will opt for farming in the next cycle.
"Mr. Karim Bitar has been the Chief Executive Officer of Genus Plc since September 30, 2011. Mr. Bitar has been the President of European Operations of Eli Lilly & Co. and Lilly Research Laboratories since July 2008."
"Genus is a world leader in applying science to animal breeding creating advances through biotechnology and selling added value products for livestock farming and food producers."
Here's this guy who is the henchman for promoting cafo's (Concentrated Animal Feeding Operations) as the solution to the world food production and distribution issues. Invest here, ignore the fact that there is no solution for water and air pollution, animals on increasingly potent antibiotics which the consumer receives as well, corruption of our genetic heritage through gmo grains production and animal cloning and elimination of the small scale farmer. Sounds like Henry Kissinger's playbook.
Think of them as bankers in the world of biotechnology. Fukk them.
Any public access to weather control technology will be a means by which the gubamint and their financial enablers steal public funds...
To wit. Solandra, et al. Ethanol....
A US silver dollar contains .77 ounces of silver. Any combination of dimes, quarters or half dollars which when added together equal a dollar contains .72 ounces of silver.
thanks Crockett, I was under the assumption it was derived or related to 'tally' stick
http://www.thefreedictionary.com/Tally+stick
An interesting possibility considering the common roots of many words with related meanings although I believe that the German derivation of dollar is well documented. But it is always a good idea to keep one's thinking cap on and consider other possibilities.
How many counterfeit paper dollars are required to convince someone to part with a real dollar?
Depends on whether they're just good, or, in fact, passably good.
The "tally" stick comes from the French "tailer" which means to trim or cut. The notches, that is. 700 years of price stability and slowly rising living standards.
"A US silver dollar contains .77 ounces of silver. Any combination of dimes, quarters or half dollars which when added together equal a dollar contains .72 ounces of silver."
US coins haven't had any silver since 1965. Quarters and dimes have zero silver, they are made of nickel and copper. Pennies and nickels are too expensive to make and Geithner said they're being taken out of circulation in 2013.
I got a Silver Eagle to bet that says you are wrong.....CB
Mostly true. I considered that to be a given. However Kennedy half dollars dated 1965 through 1969 inclusive contain 40% silver.
This is a great resource:
http://www.coinflation.com/coin_calculators.html
Bad Crockett.... One demerit.....
1965 to 1970.... details details..... That should be one silver dime..... haha.... CB
The 1970 Kennedy half dollar only appeared in collector sets and is not found in general circulation. It is usually not considered when discussing "junk" silver.
http://en.wikipedia.org/wiki/Half_dollar_%28United_States_coin%29
Ha, ha, indeed.
dolla dolla bill yo
Get rid of the 75 IQ natives in Africa and it would be the second USA. China knows this and is taking advantage of the situation.
apart gor ur unfounded Kiplingesque poetry on african IQ, what the chinese are doing is direct investment in massive infrastructure; something the west has not done in a 100 years except for their OWN extractive empires; ripping off RM. Not saying the Chinese will be better, but at least they put money in in INfra.
Africa needs massive investement and local partnerships to bring local people into the economic loop, and not just be AlQaeda or Rwandian rifle carriers for the outside Oligarchy.
Having worked in Africa, if there was education there it would pay off big time. Its a young continent, immense riches. This includes head up ass Arab nations all full of oil and god's dogmatic slothfulness. "We only move if God says so..." Now that....
Get rid of all the 75 [and above] IQ's anywhere and you'd be just like America... Narrow the parameters to eliminate the 50 [and above] and you'd have Americans on Black Friday...
You mean there are no Noble Savages?
Honor is what makes Man noble, for without it he is just another beast.
Regards,
Cooter
Why don't we just agree that if you have a EBT card you are on the below 100 IQ list.
http://minorityhealth.hhs.gov/templates/content.aspx?ID=6456
So when you're young and slender and have the average IQ, which is 100, but then get fat, your IQ drops?
How does that work, exactly? Is there a pound to point ratio that some skinny college lab assistant has worked out in a major university study?
No pound to IQ trade off, only a watching Jerry Springer trade off. Hey doc look at the facts. Grow a set of balls. You and people like you are cowards. I see your ugly ass at the university everyday. Fuck off.
Thanks. It's this kind of intellectual banter that helps keep my mind sharp.
Maybe you can go kill something and relax a little.
This is why Klingons are the most noble race in the galaxy.
I always loved that 'noble savages' phrase.
Now I won't be able to get it out of my head. I'll be calling my boys noble savages for the next two weeks.
tarzan and chimp Cheeta.
John Carter and Dejah Thoris
After watching black friday shoppers on youtube maybe get rid of the 75 IQ natives in the USA and the USA would be the second USA. And obesity rather than race seems to be the discriminator.
Copy that.
Obesity and African Americans
http://minorityhealth.hhs.gov/templates/content.aspx?ID=6456
ooooh, blacks AND women - y'gots yerself a twofer. and you've been running this ad for a while now.
tool.
You forgot to refute it, say why it wasn't important, explain it away as correlation rather than causation, etc., etc., etc.
Sure, it's racist and sexist, but it seems to be true, and ignoring the truth is what has gotten us into most of the messes we discuss here on ZH.
No no no no my friend. The first confiscation will lead to something very unpleasant - having to do with rope and large pieces of desending steel. When the middle class finally gets pissed off they will not form armies - they will form linch mobs. Go long pitch forks, rope and 223 ammo - short government bonds... western history is full of examples. The future will more closely resemble the French revolution than the American. Time will tell...
So we can all look forward to Robespierre re-emerging... Swell!
The original American Revolution was a POLITICAL one - the French Revolution was more an ECONOMIC one. When people are hungry and their rulers are feasting, things get nasty - and quick.
The 'Arab Spring' wasn't about 'democracy' - it was about hungry, jobless people po'd at corrupt officials. What do you think will happen here when unemployment benefits run out and food pries soar? What will happen when $US buy less and less and less?
PEOPLE AREN'T DUMB - they see bankers stealing millions and getting away with it while those that protest this legal travesty are themselves arrested. Look at the reaction to OWS - government is scared to death that people are starting to demand real ACCOUNTABILITY, that they might start demanding that government actually enforce laws.
One up for you L-J-S. Though i dont agree,cause:
Kings will have peasants,and seems we already passed that in early history.
And if you turn rainforest into farmland"Brasil" you go Sahara,and a good part of the North,already looks like Sahara!
After your rainforest meal, you get desert!
There is no need to confiscate, all you do is raise taxes. Similar to confiscation without all the messy legal hassles and potential of conflict. The US does this all the time and look how well it works! Even Argentina adopted this model a few years back.
Silver you are cirrect, this is why the US government is proposing to abolish the 5 million dollar exemption on inheritance on farms and to reuce it to $1 million dollars and to raise the tax to over 50 per cent from the present 15% on anything over the exemption limit.
This is part of the "Bush tax-cuts" and thus the fiscal cliff. You are right about the $5mm exemption changing to $1mm, but the current rate is 35% and will become 55% IF nothing is done. I look for a $3.5MM exemption and 45% rate compromise as the end result. And it's not just farms, (although there are currently special rules for family farms that help out to a degree) it's on all estates. Just to clarify, from a CPA.
Oops, double post!
yes, and stop the use of GMO and of corn to biofuels in USA; so dumb its not even pure ass its siliconed tits.
Gotta go GMO.....we need to save the spotted owls.
if you feed pink slime to a yellow chink
does he turn pastel orange?
Until desperate governments take the property by force (or make it impossible to operate otherwise) for the "greater good." Not saying that farmland isn't the best bet for the future... heck the Bush's bought that big plot in Paraguay in what appears to be an aquifer play. Just thinking that it really will depend on how things play out. Some bet in some place might be solid. In other places... well... maybe not the same outcome.
100 acres sold down the road from me for 1.39 million. Farm land with no buildings. But if you price it in gold the price is very close to unchanged for 40 years.
1.39 million USD is a boatload of money. You make an important point... farmland in the U.S. is grossly overpriced relative to comparable farmland in other locations, such as South America, where the infrastructure exists to supply the market. Next time, have the purchaser take a look at opportunities in South America where 1.39 million can buy 400 or 500 acres with comparable productive capacity.
Did someone say, "Gold for land?"
~Cristina Fernández de Kirchner
Your Friend in Argentinian Real Estate
;-)
Wait a minute.
Is that an Adam's apple I see?
On second thought maybe it's just an enlarged goiter...
1.39 Million for 500 acres is a total rip off.
Honestly?
I would.
Wouldn't you ?;o)
Not until she told me where she was stashing her private gold hoarde... Oh, that, & she'd have to be humming 'Don't Cry for me Argentina' [in the proper key] during the act...
I suspect she'd be actually be singing "Don't strip for me Psycho Sawyer" as you were led away in leg irons to the local musty dungeon.
@ hh
one chain link at a time... perserves the weakest?
That should read "Your Partner in Everything Argentian"
yuck... Turkey Neck...
http://youtu.be/P0WjRmqHz48
Fetching 20 large per acre here in my corner of IA
Remember.....the aquifer under your feet can't last past 2040
Read "Cadillac Desert".
We just watched 'the dust bowl' on pbs and I told the wife it was happening again now because the aquifer was almost done.
I still couldn't explain it properly after an hour, so I gave up.
tell her the tale of T Boone Pickens & the Ogallala Aquifer, it's one I like to use when illustrating how "everything" is for sale by the "wealthy philanthropists" just looking out for business. . .
http://nebraska.statepaper.com/vnews/display.v/ART/2011/03/12/4d79ede36d...
happy ending?
http://amarillo.com/news/local-news/2012-08-10/growth-will-follow-water
follow the $$$ trail before it dries up. . .
sucking up the water deposited in the last ice age...until it's all gone. Methinks the aqua-dollar won't last long. Grantham also talks about the remaining stores of potash, 75% of which is in Morocco
All but 20% of the world's known potash reserves are in Canada and Russia. That's 7700 million metric tons. Spain/Morocco doesn't even show up as a rounding error compared to that. You need better sources of info, bub.
Goodbye Agri-Dollar, hello Gold-Yuan.
That would require a pretty massive devaluing of the yuan, or of any currency that would be backed with gold... Cue the SDRs, where opaque political decisions appoint the people who control the basket and the weighting, which to achieve a gold-backing, would require devaluations of the entire basket, and could paradoxically allow for rounds of Coordinated Easing (goodbye QE, hello CE) during the process of implementation. Oh, the ugliness, as SDRs slowly incorporate more local currencies, with a determined weighting, and become transactable currency around the globe. A supranational currency all backed by gold (but actually not, through continued incremental, banker-coerced global democratic devaluations..).. Fiat is AI.. evolving, adapting, growing... AHH~~stop the nightmare!
If this comes to fruition the bankers and oligarchs around the world will have acute control over the food supply. This would not be good.
Well, just as Stalin collectivised the Ukraine, killing 20 million Russians by starvation so will obama collectivise all US agriculture. He'll soon have a totally compliant SCOTUS, and thus will begin to rule even more harshly than ever before by decree. The only thing that will stop all of this madness is another revolution.
So any dream of "agri=dollars" ruling anything is just that, a dream. What will rule is pure force used against the US population.
UN Agenda 21 protocol.
Yup.
Maybe that is connected to the re-wilding part of it -- arid land returns to prior disuse after water runs out. Would be a sad thing though, and who wants the UN involved in it anyway..
Don't you need a lot of oil to produce food: diesel and fertelizer.
Fertilizer becomes especially expensive when you have to truck it from the horse's ass to the pasture and garden. Small farms are not faced with this expense, as production is proximate to use. I have first-hand knowledge on this particular issue.
Not only that...but we have these little things called fences.
You can let livestock graze around in one area, move them over to another area...let it "dry out", plow it, plant it, harvest it, move em back in to pick it over. Its like a miracle...or sumpin...been going on for centuries...lol.
or you can let the hens in after 3 days, enough time for the maggots to develop,and let them gorge and scatter the pies.
fowl follows herbivore...
@h_h
Hell ~ Scale down the operation as necessary & your rabbit pellets would probably do...
Does your first hand knowledge include water as the new oil? What is the nearest fracking site to your land.
The closest fracking site is about a mile from our homestead. It is important to have reliable surface water, as well as sub-surface. Plus, there are plenty of other reasons early agrarian settlements were all located near a navigable river.
Also, I first began purchasing water rights in several western states in the early '90s, thanks to the foresight of a relative.
Thanks for the map, when the SHTF me and my neighborhood are headed for your place !
Potable water is the new oil. Waterdollar TM
And you can even pan for gold on the Llano. Me and my buddy didn't have much luck (turns out we were in the wrong part) but had a blast!
Regards,
Cooter
Nice map Hedgelss. I used to raft doiwn nmany of those rivers in the 1990s when I lived in Central Texas. Now that area looks too crowded from what my old neighbors tell me.
Former Dust Bowl aquafir is drying up as we write.
You do not neet to worry about fracking to ruin your groundwater. Decades of pesticide, herbicide, insecticide and fertilizer use has seriously deteriorated the quality of groundwater. The vast farming using excessive water has overdrawn the aquifers, which also helps to reduce groundwater quality. The was a tremedous amount of groundwater (vastly more than all the streams, lakes and rivers combined) but so much has been pumped out and flowed back into the surface environment that this thought to be a significant percentage of the rise in sea levels. Contamination from fracking is just a small additional amount of groundwater contamination from irresponsible operators and the history of old poorly construted oil and gas wells.
That's not a closed cycle ... you will still get soil depletion. If you want a closed cycle with natural fertilizers you need all the output from the asses fed by soil ... or in other words, we need to recycle our shit better (at the moment sewage is way too polluted to use for anything but poisoning soil).
Crop rotation, including nitrogen-fixing plants, certainly helps.
Oh sure, in the short term if the US is forced into trade balance status stuff like that will definitely become necessary as the price for imported fertilizer increases ... but peak phosphate is going to be a problem in the middle term already and has no such solutions.
We will need to start with efficient shit recycling within a few decades if we want to maintain current world populations.
Glad you brought up the topic of soil depletion Marco, this is an important point that our friend Hugo Scott-Gall did not touch upon. I suppose this is what happens when bean counters develop the necessary hubris to think that they are now bean growers as well. Part of the reason why our agricultural yields have been so high for so long here in the United States is that the North American continent was the most agriculturally virgin land in the world when Europeans landed upon its shores. We didn't even have earthworms here till they came over with the colonists.
Humanure to the rescue??
I wouldn't recommend it. The amount of C. difficile coming out of humans now is epidemic. The spores are notoriously difficult to kill. Unless you can find a group of " clean" humans. C diff is the coming plague and hospitals are scrambling to find ways to deal with it. We use to panic when a patient got MRSA, this will be much worse.
Miffed:-)
Dear Miffed,
The composting process destroys every pathogen known to man. Been composting humanure
for about 5 years now with no problems. Can this spore survive 150 degrees for a day???
Dear Hulk,
You may be right. There is so much conflicting recommendations regarding the distraction of these spores. Autoclaving works because we use the lack of growth of spores during the conclusion of autoclaving as proof of sterility. They know those alcohol wipes/ gels are ineffective and hand washing just reduces numbers but does not deactivate. I know I'm infected because I've worked with that organism for 30 years. They estimate at least 30%of healthcare workers are colonized. One reason I stay fit, healthy ,take probiotics and avoid fluoroquinalones like the plague. Guard your humanure and don't let anyone like me near it. I wouldn't take any happiness in being right!
Miffed:-)
Always looking for new info Miffed. One day there may indeed be something that makes it through the compost process, just like prions make it through cooking. But for now, I don't believe in putting this shit below ground, where it will contaminate our spring water. I try and stay with nature on this problem and keep it above ground. Working good so far and the sawdust toilet is a very cheap solution to a complex and expensive problem...
Wise approach. We are currently on well water and have septic. Water in our area is primarily from rain water being trapped in rock shelves on our Mesa. Al least that's what the local well drillers tell me. In other words, very definitely finite and easily contaminated. Kid you not, about a mile away from us someone drilled their well right next to their leach lines. All of us locals had a good laugh at that. Their " leaving the city and experience country life" dream didn't end well. Country life certainly isn't for the dim witted... Well maybe unless you're rich enough to fix stupid.
Miffed:-)
hey hulk, how long are you curing for? what is your next step in the process after the toilet? curious as to how you're getting high temps. using a slightly different process here by inoculating with probiotics and introducing an anaerobic stage, then going aerobic, but currently concerned that temps are not getting high enough, especially after just reading about C.diff.
Hey Tip.e, we generally let these compost piles (formed by 1 inch hardware cloth made into a cylinder 4 feet in diameter)
for 6 months. We just empty the 5 gallon sawdust bucket into the compost pile and mix with equal parts green and brown.
On a 75 degree day, I have measured temps at 160 degrees, which compost purists view as too high, but thats what I get.
I don't do anything fancy, no turning , etc. Just a five foot high cyclinder, 4 feet in diameter of hardware cloth.
cool, thanks amigo. simple is as simple does, no? got mine in a 55 gallon pickle barrel, it's black and in the sun so it should be getting hot enough.
Crop rotation does indeed help, but the damage caused by chemical fertilizers and pesticides is absolutely immense. At best it can only slow the rate of destruction as long as modern farming techniques are being practiced.
On the subject if one wishes to study the world's best example of crop rotation and sustainable farming look no further than the Native Americans.
Scientific studies on land used by certain Native American tribes for agriculture showed that the land was in fact more fertile after its use than even the surrounding untouched land.
planting with the three sisters. . . *nods*
http://www.nativetech.org/cornhusk/threesisters.html
The trick is designing a tractor that can harvest the three sisters, one at a time, without destroying the other two.
I'm tinkering around with hugelkultur. see link. Anyone here tried it?
http://www.youtube.com/watch?v=Sso4UWObxXg&feature=fvst
I thought rotting wood was a net user of nitrogen? That's why you don't use wood chips as mulch
Yes it works and very well. And it's true that initially it pulls nitrogen from the soil but usually in the first year or so and then it's net positive for nutrients rendered. The mass also holds moisture like a giant sponge and negates nearly any watering needs. I grow blueberries and raspberries on some, melons on another, and herbs and the last. Biggest problem so far is chickens pulling the soil off the top but some temporary fencing helped that. My beds are 4-5' deep, 30' long, and about 8' wide but I have an excavator and lots of space. You can do hugelkultur on a much smaller scale and it still works effectively provided their is sufficient organic mass involved. I used dead pines, oaks, and leaves/grasses to get the most matter in the beds as possible. They shrink over time but the benefits last for quite a long time.
Food is part of the FEW, food-energy-water. You can do without that Black Friday scuffle at the mall for cheap Chinese trinkets, but you cannot survive without the FEW. And when Peak Cheap Oil hits in full force, 1) pricing will simply get passed along by the farm segment as 2) it is allocated that way because of the necessity of the FEW.
What will be of more concern is having your land close to water or rail transport as trucking grains long distance will become quite expensive.
Ah! ... So ... Now it becomes perfectly clear ... Everything possible has been done to destroy the Family Farms, including proposed/passed legislation that makes it impossible to pass the farm to children ... Gee! ... Who will own all of these Agri-Dollar producing farms? (Rhetorical Question)
Not doubting you, quite the contrary, but I'd love to see some documentation of that or at least the name of the law or terminology included so that I can look it up. In attempting to do so I found the following which looks like good news for PA farmers:
I do not believe the state taxes are the problem, but the federal taxes. Most of the value of the farm or ranch is in the land, not cash. So if daddy Hoss leaves me his large ranch which is modestly profitable I will not be able to pay the inheritence tax and will have to sell the land to pay the tax. This forces the land out of the family into the market where large industrial farms/ranche businesses can scoop them up.
This is largely a non-issue. It's called rudimentary estate planning... and farmers have enough money to not only need it, but to pay for it. There are plans being made all day, every day for all types of family farms...
Yes, if you just haphazardly live your life without a plan or care in the world, all the vultures will pick your carcass. However, the people with enough intelligence to make it to the point where they actually have any semblance of decent farm acreage are typically bright enough to do a little planning in this regard... find something else to worry about.
This is from LSH's link:
Sounds like an issue to me.
This is patently ridiculous without actually discussing historical tax rates. http://wills.about.com/od/understandingestatetaxes/a/estatetaxchart.htm
What do you think people did before the exemption was $5m? Give me a break folks... The sky isn't falling.
The other issue is that the author makes a blanket statement regarding the tax rate without actually discussing it in detail and supporting his thesis. The trick here is the wording he utilizes, "much, much harder" does not entail impossible, it simply means that it will take more planning and cost more money to achieve. This is pretty much a universal truth to all regulations regardless of the relationship to small farmers.
The reason many small farmers are being over-run is the same reason mom and pop shops on mainstreet were over-run, a complete and total failure to adapt to the ever-changing environment and/or the logical conclusion of operating a failed business model. There will always be successful family farmers... [it's also important to distinguish between "owning" the land and "farming" the land; there will always be a need for the latter, regardless of whether a giant corporation owns the land and the real value is in the skill of the farmer, not the ownership of the land].
I suppose that it would bee useless to point out that all taxation is theft.
Not useless and certainly true, but completely irrelevant to the discussion... unless you're planning on getting those repealed. [I won't hold my breath].
The fact remains though, that the estate/gift tax is largely only for people who don't do estate planning... it's for the folks who put their fingers in their ears and go lalalalalalala and then die. Since the inception of estate tax, there have been tax professionals who seek to avoid it for clients... the tax exemption/credit simply makes things easier because it doesn't actually require planning for the amount of the exemption... put on your tax avoidance hat and kick some ass.
Thanks for your reasonable response. Employing hired guns in order to protect yourself from tyrants is certainly a reasonable course of action. But I'll still bitch about the the tyranny in the meantime.
I'm looking forward to the tax collecters repealing themselves. The beginning is nigh. When individuals have regained their sovereignty and deploy their own resources without impediment let no moochers or looters regain a foothold on your property.
Do you think Buffett is paying 55% on his billions? They wrap these assets in trust, buy insurance, and other such tactics.
An issue like it doesn't pay to die?
One Current Example> http://www.infowars.com/they-are-going-to-make-it-nearly-impossible-to-p...
Thanks Hog and Squid. I suspected that the Feds were the problem.
I think he was referring to the increased federal death taxes that are almost certainly coming. State death taxes are an issue, but generally much less of one.
Federal death taxes (55% above $1M is expected) will make family farms (and family small businesses) almost impossible to pass to the next generation. Incorporating won't help if the stock is closely held in the owner's name as the value of stock inherited is taxed. This means that the heirs have to mortgage the farm or business to pay the tax. The interest expense from the loan often takes the business from profitability to losses. The only solution is to sell out or go out of business.
A large corporation has thousands or millions of owners and spreads out any inheritance taxes out over lots of people over many years. Also, not an issue to the large corporation since it doesn't pay the inheritance tax, the owners do.
Corporate-socialists are in charge of both parties (especially our Fearless Leader). They dislike small business because it is difficult to shake down. You have to have 10,000 people at your cocktail party if each business has $1M gross per year versus 1 person running a $10B per year business.
It makes the bribe money so much easier to collect.
Increasing the size of the businesses which perform *any* given role is a natural effect of capitalism.
Even WITHOUT regulatory capture, big farms drive small farms out of business, just as big box-stores drive small stores out of business.
The elegant symmetry is: because it's the big-money folks who control the electoral process through campaign financing, they wield influence with government agencies to make it even more difficult for the smaller entities to compete.
Private capital tends to become concentrated in few hands, partly because of competition among the capitalists, and partly because technological development and the increasing division of labor encourage the formation of larger units of production at the expense of the smaller ones. The result of these developments is an oligarchy of private capital the enormous power of which cannot be effectively checked even by a democratically organised political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature. The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education). It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights. (Albert Einstein, 1949)
Ah, now we talk true paradigm change; the age of plethora becomes age of scarcity.
Its not just food, its water and also peak energy at lo-cost hi-Eroei. China's biggest bottle neck could be water for agri revolution.
And the Achilles heel of north africa as asia hi-population countries.
So lets see this commodity game becoming the hi-stakes in Oligarchy rip-off.
We continue in the Pax Americana construct to see how to organise the fight of maximising profit from scarcity; not for fighting to improve humanity's fate. Typical Oligarchy deady logic.
Remember, amongst the first world countries USA and France are the biggest net producers of agri; along with Brazil in BRIC.
The Agri-dollar. Another tax on the worlds poorest people. And we wonder why they hate us.
Let them eat cake should resonate once again for the proles
Let them eat each other.............
Friends, countrymen, lend them your ears! ;-)
Of corn?
Practically speaking, it is much, much, easier to be self-sufficent when it comes to food than it is for energy.
But most gas stations are open all nite, grocery stores not so much.
Good comment and you were brave enough not to use the " sarc" .
You used to be able to buy twinkies at gas stations... :(
But food is energy, its just a question of scale!!!
and speaking of food, after looking at your Thanksgiving pics, I ran into the kitchen and tried my hand at
making dinner rolls from scratch. It was a complete fucking disaster, even the Hens wouldn't eat the result, but it was instructional
and I'll try it again. I think my bread flour was too old...
Having a "Bread-Proof" setting on your oven to raise the bread dough makes it much easier. Otherwise, wrap it in towels and set it in a sunny and warm windowsill.
Good advice, and also find a good flour it does make a difference. I use Hudson Cream Flour. Of course grinding your own is good too.