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Entries in agriculture (40)


Tracking agriculture's northward shift due to climate change

Fascinating NYT story on a subject I am very interested in tracking:  how ag moves northward with climate change.

This story focuses on ag's canary-in-the-coalmine, wineries.  Nothing is more sensitive, and thus wineries are the first to start shifting:

For more than a decade, wine experts have discussed the impact of climate change on wine grapes, agriculture’s diva, a marquee crop nurtured and pampered around the world.

Now scientists are raising a new question: when grapes are transported to new areas, assuming warming weather and flagging rain make current regions unsuited to such harvests, what will the crop’s arrival do to the animals and plants already in residence?

Will there be a conflict between prosecco and pandas in China? Will the contentious wolf hunts near Yellowstone National Park be complicated by new vineyards that crowd out everything else — wolves, elk and hunters?

“One of the adaptation strategies for grape growers will be to move into areas that have a suitable climate,” said Rebecca Shaw, a scientist at the Environmental Defense Fund and an author of a new paper to be published Monday in the Proceedings of the National Academy of Sciences. “This adaptation has the potential to threaten the survival of wildlife.”

Or, in the words of the new study, “Vineyards have long-lasting effects on habitat quality and may significantly impact freshwater resources.” In addition to introducing sterilizing chemicals and fertilizer, which remake the ecosystem, mature vineyards “have low habitat value” for native species “and are visited more often by nonnative species.”

So the interesting point to consider here: As climate change stresses "Middle Earth" (central band below 35 degrees north and above 35 degrees south), ag will be moving poleward for survival.  All sounds good until you realize that leapfrogging in this manner will be disruptive to what's already there.

So how do you balance the needs of enviro refugees (humans and their activities) with those of native species?

I can see this being a huge political issue going forward.  But, for now, just a glimpse.


Wasting lives over food "purity"

Bjorn Lomborg writing that 8m kids worldwide have died over the past 12 years because Western and local activists prevented the arrival of rice that is genetically modified to possess an abundance of Vitamin A:

Finally, after a 12-year delay caused by opponents of genetically modified foods, so-called “golden rice” with vitamin A will be grown in the Philippines. Over those 12 years, about 8 million children worldwide died from vitamin A deficiency. Are anti-GM advocates not partly responsible?

Golden rice is the most prominent example in the global controversy over GM foods, which pits a technology with some risks but incredible potential against the resistance of feel-good campaigning. Three billion people depend on rice as their staple food, with 10 percent at risk for vitamin A deficiency, which, according to the World Health Organization, causes 250,000 to 500,000 children to go blind each year. Of these, half die within a year. A study from the British medical journal the Lancet estimates that, in total, vitamin A deficiency kills 668,000 children under the age of 5 each year.

Yet, despite the cost in human lives, anti-GM campaigners—from Greenpeace to Naomi Klein—have derided efforts to use golden rice to avoid vitamin A deficiency. 

Great piece by a brilliant guy.

These fights are like every other one in a developing environment:  West wants South to avoid its own past 
"mistakes" and demands they develop in "pure" fashion.  Result is stunted development and wasted lives.  Truth of history is this: if you want people to care about the environment, get them richer first and then they'll care. Until then, expect a local rise in pollutions and other things because there really aren't any magical short-cuts on development.  Plus, quite frankly, the damage done while still poor vastly outranks the cumulative damage inflicted by the income/industrial rise.  But basic point:  don't be a hypocrit and expect the poor to atone for your past excesses.

On the GMO, the West's enviro case is far weaker.  There is no evidence of substantial risk and plenty of evidence of substantial gain.  This is simply rich people who can afford organic pretending they're doing good by telling the poor to hold out for it - or else.   

Expect a lot more fights as climate change exacerbates droughts in food-vulnerable regions and well-meaning Northerners do their best to prevent the application of genuine solutions.


Chart of the day: US farm income to be highest in 4 decades

WSJ story.

Despite last year's drought, net farm income in US (128B projected) will be highest since 1973 (adjusted basis).


Higher prices for livestock and poulty and "a continued boom in the farm belt initially fueled by rising global demand for grains" + that idiotic conversion into corn ethanol.

The big danger?  Great Plains enters the season way too dry - still.

So we see here the interplay between two dominant global dynamics in this century: rising global middle class and rising global temperature.


The growing Sino-America co-dependency on food

FT story on a subject I've been harping on since my last book (and in it):  the stunning co-dependency that arrives with America increasingly feeding China, making our ag output as important to Beijing as the PG's energy exports.

Some data points on China's total imports (so not all NorthAm or US):

  • Cereal imports into China up almost 13,000 percent since 2008 to current 5.2m MT
  • Wheat up 6,000% to 3m MT
  • Rice up 264% to 1.6m MT
  • Overall rise from low-point of 2008 is from 2m MT to 12m MT.
  • China is now the 7th biggest importer in world, after Japan, Egypt (remember that when you imagine Egypt going rogue under the MB), Mexico, EU-27, Saudi Arabia, and SoKo.  Japan is #1 at just under 25m MT.

Note that US is biggest world exporter of wheat, corn and soybeans.

Yes, China is planting like crazy, so its own ag output is up.  It's just that demand is rising much faster.

The key line of the piece: 

China still has an official policy that mandates 95 percent self-sufficiency - a policy known as the "red line" - but recent comments suggest that the insistence on self-sufficiency is waning.

The US is waking up to China as THE ag export market.  Nebraska's top ag official:

China represents a huge export market . . . [and] a growing export destination.  

Nebraska's corn exports to China have doubled in the last half-decade.

China is already the world's biggest soybean importer (and - again - the US is the biggest exporter), and "is adding corn, wheat, barley and rice to its shopping list" (and - again - the US is the biggest exporter of corn and wheat).


Obesity epidemic: one variant of the punitive approach

WSJ headline says Denmark scraps it's "much-maligned 'fat tax' after a year."

Danish lawmakers have killed a controversial "fat tax" one year after its implementation, after finding its negative effect on the economy and the strain it has put on small businesses far outweigh the health benefits.

Nations including Switzerland, the U.K, and Germany have held up the tax, which applies to any food containing more than 2.3% saturated fat, as a potential model for addressing obesity and other health concerns. But in Denmark, it has been a source of pain for consumers, food producers and retailers as the nation's economy struggles.

"The fat tax is one of the most maligned we [have] had in a long time," Mette Gjerskov, the minister for food, agriculture and fisheries, said during a news conference Saturday announcing the decision to dump the tax. "Now we have to try improving the public health by other means."

The failure of Denmark's fat tax is a demonstration of how difficult it can be to modify behavior by slapping additional duties on products seen by many as essential staples, especially during tough economic times. Products such as butter, oil, sausage, cheese and cream were subject to increases of as much as 9% immediately after the new tax was enacted.

"What made consumers upset was probably that an extra tax was put on a natural ingredient," said Sinne Smed, a professor at the Institute of Food and Resource Economics.

The fat tax comes to an end after netting an estimated €170 million ($216 million) in 2012 in new revenue. Danish lawmakers will slightly raise income taxes and reduce personal tax deductions to offset the lost revenue. The lawmakers also decided on Saturday to reverse an earlier decision to create a sugar tax.

"This is not what is needed in the current economic situation," said Holger Nielsen, Denmark's minister for taxation.

Human bodies are designed to crave fat, especially when we're stressed.  The body is telling us to store up because things seem dangerous.  This is evolution talking:  if things are going south, better to stockpile fat now for the bad days ahead.

Problem is, modern life creates all sorts of stresses and modern food companies love moving this sort of product, because it nets them the highest profits.

End result:  an obesity epidemic.  The food companies know how to trigger our interest, and life provides all manner of stimuli that triggers our desire.  The cost is pushed downstream.  

Governments want cheap food but then regret the healthcare bill that follows.  Governments then try to go punitive - actually on the consumer - by issuing a fat tax that the sellers pass on directly.  Consumers get mad, tax gets scrapped.

Conservatives yell, "nanny state."  But in truth, Western governments already lavish the ag and food industries with subsidies that encourage all this, meaning the nanny state is already here, she's just encouraging us to eat the worst sorts of food (or the most profitable to sellers).  In relative terms, veggies and fruits aren't subsidized, grains are.  So we're being fatted up by our nanny state for the healthcare providers.

Governments can't disincentivize bad eating by taxing people.  They need to rejigger the already bad incentive system for ag and food companies.

Still, the fact that states are trying is an indicator of the progressive agenda that eventually must come.

But Big Food wins another round ("See, the evil government is trying to deny you your bad diet!"  Cha-ching!)


Growing vegetables in the future

WSJ story about vertical farming vision from Sweden.

Goal is to make food happen while farmland disappears (to urbanization and harsh climate change) and to be able to do so year-round in a northern clime. Then there's the local food angle (less transpo, etc.).

Critics say the economics won't work at this time, especially on the energy, but advocates say this is a long-term solution that will become economical as climate change raises the price of doing business in many parts of the world, triggering global shifts in food production and - presumably - migration.

Interesting stuff.

Interesting idea.  I think the notion may make some sense regarding vegetables, but I don't see either fruits (maintenance of trees too tricky) or grains (just can't get the volume).

On vegetables, they (and fruits) account for only 3% of US farmland use, which is overwhelmingly given over to wheat, corn and soybeans (and a few others).  So, given that reality, vertical farming for major urban areas may make economic sense on a major scale sometime later this century.


Expensive oil as trigger for less exhausting ag land practices

Special WSJ report on agriculture, with interesting article on "fertile land is under strain."

Ag takes up about 1/5th of energy consumption in the US, so higher oil encourages, over the long run, abandoning certain energy-intensive practices, such as tilling:

The most popular fuel-reduction strategy involves a radically new way of planting seeds. Instead of breaking up the ground with a plow to plant seeds, no-till farming leaves the remains of last year's crop on the surface.  Drills punch through this mat of vegetation and insert seeds into the ground.  Ditching the plow can cut fuel consumption by as much as half . . . It also reduces the need for expensive fertilizer.

A major enviro drawback, according to an accompanying article?  No-till requires more herbicides.

Another reason why farmers like to plow: you can dry out a wet spring field and thus plant earlier.  You see that hear in Indiana with its super-wet springs.  But with climate change making for more droughts, ag experts expect more and more farmers to adopt the no-till method (or one of its many variants) over time, thus reducing the ag sector's energy draw.  Fields that aren't plowed typically hold up much better in July and August when rain gets much more rare.  Indiana has suffered super-dry summers, with this year's summer reducing the crop haul by a large amount, as just my eyeballs can attest.

Interesting pair of articles.

The map and chart below came with the first cited piece.  Note all the stable soil in the "New North."

Click the smaller image for a more readable version.



Too few immigrants = an absolute ag industry loss

WSJ story on how 1/4 of second-biggest crop ever of Washington State apples is going to rot on the tree/ground due to a severe shortage of immigrant labor.  Compounding the insult, the apple crops elsewhere in the nation are dramatically down this year due to drought conditions, so the nation's is really screwing itself on an agricultural bright spot this year thanks to our inspired national crackdown on illegal immigration.

Apples are Washington's top ag produce earner: $7B supporting 60k permannent jobs in the ag sector.

But it doesn't work without the access to seasonal farm workers....

Yes, they have tried with prison labor in the past.  Turns out prisoners don't work very hard - go figure.

Damn (lack of) illegal immigrants are ruining this country!


Smart argument on handling America's water advantage

Smart op-ed in WSJ.

America is sending over huge amounts of alfalfa to China.  Alfalfa is a VERY water-intensive crop.  China uses it to feed their cattle which produce beef and dairy products.

Point of the article:  why not send beef and dairy to China instead and reap the better profit margin for our valuable water?

That's how New Zealand does it.  Its highest-value export is powdered milk, notes the authors of the piece.

The culprit?  America's antiquated and byzantine water-regulation practices - especially in the West.


US ag industry: the greatest force for stability on the planet

Pick out the world's biggest exporter of wheat from this chart.

It's the US, which is also the biggest exporter of corn, soybeans and food aid.

Guess what got devastated this year?  Corn and soybeans (where the US just lowered its forecase of yields for the 3rd time), but somehow the US pulls off a slight increase on wheat.  Problem is, everybody else is down.  From the WSJ story (which provided the chart above):

The weather troubles, if they continue [read, winter wheat], risk pushing wheat back to the fore of global concerns about soaring food prices.  Wheat is a staple food around the world and a major source of basic nutrition for the poor, and prior price spikes in recent years contributed to political unrest.

Like the doubling of bread prices in Egypt in the months leading up to Mubarak's fall.

I say this in presentations all the time: the biggest force for global stability right now is the U.S. farmer.


Chart of the Day: Water and Food in Mideast

Close the Straits of Hormuz, says the WSJ, and you shut down more than oil flow.  Ninety percent of food in the PG is imported.

Water is perhaps the most complex of the region's resource-security puzzles.  Gulf countries have some fo the lowest rainfall rates and smallest water resources in the world.  Gulf countries satisfy demand by desalinating seawater, but that leaves them vulnerable if their desalination plants malfunction or are attacked.


When - and why - GMOs will attract a lot less criticism/resistance

WAPO story on how a few select US farmers are waiting on pins and needles to see how a planting of GMO corn ultimately handles the worst US drought in half a century - one that costs the US economy about $18B just after last year's TX-centric drought cost $8B.

In western Kansas, the corn looks unsalvageable. The landscape is rife with curled brown leaves, an unmistakable sign of severe drought.

Yet beneath those wilted leaves, some of the corn shows promise. The kernels have held up surprisingly well in a few places given this summer’s swelter. At hundreds of sites across the Great Plains, seed companies such as Monsanto and Pioneer are testing a slew of corn varieties engineered to withstand drought. As the harvest approaches, they’re anxious to see the results . . . farmers are more interested than ever in innovations that could make crops more resilient. That includes improved farming practices, better plant-breeding techniques and even — most controversially — genetic engineering . . . “I’ve been surprised so far. The plants are responding well,” said Clay Scott, a Kansas farmer who planted two plots of Monsanto’s genetically engineered DroughtGard Hybrids among his 3,000 acres of corn. The experimental strain, which carries a gene that helps it draw water more gradually from the soil, is slated for wider release in 2013. “The ear size, kernel counts, the ear weights look good,” Scott said. But, he cautioned, “pretty corn doesn’t always result in yield.”

For Scott, who lives in a region prone to dry spells, where irrigation water from the nearby Ogallala Aquifer needs to be conserved, these crops could prove indispensable.

It’s a pitched battle between nature and human ingenuity that will only grow more difficult. Earth’s population has soared past 7 billion. Climate models suggest that drought will become more frequent in North America. Water will become increasingly precious. Feeding the world will require wringing as much food as possible from every last drop of water.

It’s far from assured that human ingenuity will win out.

Human greed will win out.  US farmers and the US economy will want that income in order to exploit the wider human greed for better and longer lives through improved nutrient and caloric intake.

Yes, as the story points out, GMOs are only part of the equation.  There are plenty of tactics that improve yields and make crops more resistant to drought - but water is water, and climate change is undeniably here (to all but those who abandon facts for faith).

In the future, GMOs will constitute a clear margin between life and death.


Impact of the drought is multivariable

First, the good news: the "margin squeeze" due to rising corn prices/futures is killing corn ethanol - still the stupidest idea on the planet (outside of Washington-subsidized Iowa).

Then the worse news: Russia/Black Sea region is undergoing another bad drought, raising the specter of another export ban. US is biggest exporter of wheat but the Black Sea trio (Russia, Kazakhstan and Ukraine) account for one-quarter of global exports and are traditionally key suppliers to north Africa and the Middle East.


Chart of the day: Why US ag subsidies are going away

From an Economist story about how Congress will eventually dismantle the ag subsidies long distributed to US farmers and ag corps.


Something to watch re: global stability

FT piece on how the intense heat and drought currently across most of the US farm belt is causing grain futures to rise.

From lead:

Few farmers in America's corn belt have seen anything like it. Only weeks ago, they were looking at a record-breaking harves.  Those hopes are fast turning into a mirage.

The hote summer in the US, the world's biggest exporter of corn, soyabeans and wheat, could have far-reaching effects on global agricultural markets, where memories of the 2008-08 food crisis are still fresh and price have been volatile on the back of a drought in South America.

Indiana is a big corn and soybean producer, and I can tell you that, after a very dry winter and unusually non-rainy spring, we haven't seen significant (more than half an inch) rain since 1 May.  We are thus phenomenally dry - as in, unless you irrigate your lawn, you're done mowing (as I have been) for about 4 weeks now.

Example of US corn: farmers here planted 5% more acreage this year, and under reasonable circumstances, there were very solid expectations for record harvest.

Point being, we are looking at very far-reaching - as in, global - repurcussions on food prices, which - by extension, determine a lot of political stability in countries with high import requirments (Southwest Asia leads the way) and where well over half of family household budget is spent on food (virtually the entire Gap).


Chart of the day: Fish-stock sustainability index

From the Economist.

NOAA (National Oceanic and Atmospheric Admin) reports that a record six fed fisheries are re-certified as healthy last year.  

After a decade of similar progress, 86% of America's roughly 250 federally monitored commercial fish stocks were not subject to overfishing; 79% were considered healthy.

The lesson:  don't let fishermen run things and - even more importantly - keep the idiot politicians out of the mix. Instead, the ones who do the best management are . . . the scientists.

More evidence of the sheer stupidity of US politics - and the GOP in particular:

And the politicians are still interfering. On May 9th the House passed legislation forbidding NOAA from developing an innovative means of apportioning fishing quotas, known as catch shares. These are long-term, aiming to give fishermen a stake in the future of their fisheries; market-based, since they can be traded; and, in practice, good for fish. Sadly, the two Republican congressmen behind the ban consider they have been designed “to destroy every aspect of American freedom under the guise of conservation”.

This borders on Know-Nothing stupid, which tells you that history can roughly repeat itself under similar circumstances.  But it's dumb stuff like this that has kept us from ratifying the UN Convention on the Law of the Sea (UNCLOS), which is really starting to hurt us as the Antarctic opens up.

Really stupid. It's like banging your head against a brick wall with these people.



Signs of the coming agricultural interdependency

FT story on Marubeni, the Japanese trading house, buying US grain trader Gavilon - a major corn trader.

Why buy it?  China's recent forays into the US corn market suggest the rise of a similar long-term relationship as did early Chinese forays on soybeans years ago.  China now regularly imports massive amounts of US soybeans. A similar long-term transactional relationship now seems in the works regarding corn.  Marubeni already has an agreement with Sinograin, a state-owned Chinese company that manages the country's strategic food reserves.

Military strategists of varying levels of economic awareness imagine the US, Japan and China fighting naval battles over the South China Sea.  Meanwhile, truly deep economic/resources dependencies - such as these in food - are cropping up all over the place. 

Guess which relationships prevail?

And no, comparing this to globalization-cum-1914 is too ludicrous a notion to process.  It isn't comparing apples to oranges; it's comparing apples to mammals.

BTW, growing up on the edge of the US corn belt (SW Wisconsin), this issue is near and dear to my heart.


Chart of the day: You can import the milk cows. The water is another story

Fascinating WSJ piece on China importing cows like crazy to build up its dairy stock.

Since 2009, China has become the world's most important buyer of dairy cows, driving up prices for calves world-wide and putting pressure on other markets such as alfalfa and bull semen. China has imported nearly 250,000 live heifers, or cows that haven't yet reproduced, since 2009, according to data tracker Global Trade Information Services. Last year it spent more than $250 million on 100,000 foreign heifers, about 25 ships worth.

China old cows were European and it has a cattle ban on North America since the mad-cow disease scare in 2003, so it's buying up stock in Australia, New Zeland - even as far as Uruguay.

Story describes the setting-up of modern American-style dairy farms (our cows outproduce the world on a per-head basis), but the trick is the amount of fresh water they require.  All the places they import these cows from are relatively water rich (more global freshwater share than population share), whereas China is 22% of the world pop with 7% of the water.

Tricky business, that.

But clearly, the attempt shows how intent China is on continuing to try and remain food self-sufficient. China won't succeed, but it'll try like all get out.


The future of American agriculture has arrived

Been briefing and writing about this one going back to about . . . I wanna say 2006.  I remember the slide I had my old slidemaster Bradd Hayes generate for what was still the Blueprint for Action brief.

Here is the reality as captured in the piece: US demand flattening, China's skyrocketing - especially for dairy (it's a growing middle class, mind you).

The head of California Dairies: "We're in an evolution. No question."

Markets "once treated as an afterthought" are now "reshaping the relationship between rural America and the rest of the world."

What are you really exporting when you export milk - even milk powder?  Water.  Whether or not you take it out for packanging, a whole lot of water goes into milk - directly and indirectly.

That's why the Kiwis have been in the lead.

It wasn't just the geographic proximity but the excess of water on a per capita basis (New Zealand has about 5 times the water it needs).

California ag exports to China and HK are up 85% since 2008: "All of a sudden, milk powder has become this valuable commodity." The sent this year's Miss California to China to hawk pistachios.

Amber waves of grain, my friends, in a back-to-the-future development that marks the resurgence of the economy - with ag and energy in the lead.

And yeah, both are plenty high-tech.


Wikistrat post @ CNN-GPS: New global sources of demand

Editor’s Note: The following piece, exclusive to GPS, comes from Wikistrat, the world's first massively multiplayer online consultancy.  It leverages a global network of subject-matter experts via a crowd-sourcing methodology to provide unique insights.

When Americans are warned that the “era of cheap credit is over,” we’re really being told that the inherent advantage of owning the world’s reserve currency is coming to an end. No, it won’t happen overnight, because China’s renminbi is still far from becoming a serious rival.

But the end is coming all right, and it’ll make all that Thomas Friedman hyperbole about a “flat world” a whole lot more real. America simply won’t have the advantage of being able to float debt - of all kinds - as easily as we did in the past, which means we’ll need to compete more intensely on the price and quality of our goods.

The primary driver here is China’s need to shift from a super-saving economy to a super-consuming economy. It’s gone about as far as it can go with export-driven growth, and now it needs to turn on its domestic consumption big-time, but doing that means China’s willingness to finance the debts of others will decrease - thus the end of cheap credit.

So, accepting all that, what can America anticipate when it comes to new sources of demand in the global economy?  What are some of the hot goods and services of the coming years?  We asked Wikistrat's global community of strategists for some ideas, and here’s what they chose to highlight:

Read the entire post at CNN's GPS blog.