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Farmers and biofuels - Jan 14

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The Farmer is the Man [and Woman]

airdale, The Oil Drum
...some general comments about farming and agriculture in my part of the country [western Kentucky].

Since others may find it somewhat worthwhile to gain a little insight nto the practices that I observe and are part of I am posting it on this Drumbeat so that many might view it.

Caveat: This is personal observations.

...Costs are referred to as INPUTS. The operator tries to understand what the various crops will do as far as the market goes. He then has to keep his inputs below what the crop brings(various crops, harvested at various times,etc..complex) and if he does meet his inputs then he takes a loss. He wants the price to exceed his inputs. Inputs are many and varied. Employee pay, housing, electricity, diesel, new equipment, maintaining old equipment,and many many many more. Most keep one person busy just doing record keeping and accounting. Some times its the spouse yet they all have computers as well as satellite services that can display realtime weather as well as a streaming display of commodity markets and prices. Real time.

Many are into 'precision farming'. This is an area I have worked in and implemented extensively. Use of computers as well as GPS coupled with autosteer of tractors or just precision tracking while drilling seed or harvesting and even spreading lime as well as fertilizer and can get very complex. Such as variable rate application of fertilizer and spraying of crops. This prevents waste and supplies just the exact amount of whatever at just the right place and right time.

Fertilizer is costly and you want to maximize its use. Same as with seed. The drills are very complex and can be huge. Plant 32 rows at one pass.

So numbers are very hard to come by and generalities are hard to make.
It's constantly shifting and you have to remain current on seed varieties, the weather, the market, keep your landowners happy, keep you land under control, keep some onery farmhands corralled , and pay the bills as well as keep the wife happy and the children going to school.

... The farmer/operator has a very tough job and he can't be sick too long or off work. Winter is the time to get caught up. Breakdowns in the field can kill you. Weather can kill you. Farm bill are very complex and must be completely understood.

I can't venture cost inputs since they change so much but many are extremely concerned with the fuel costs. Enough to sometimes go get a tanker and haul their own in order to save. They use an enormous amount of diesel and must have it ready at all times.

When a piece of equipment is idled in the field then you might be basically loosing lots of money the longer it sits there. When you do not have the fuel ... then you are in very very much trouble. Last year was very worrisome for farmers in that regard.

Without diesel nothing can happen. The semi I drive achieves about 3 mpg. This counts all activity and it's lousy but that's because of many factors.

... This is what is happening as far as I experience it. Farming is what might save our asses when TSHTF. We live on a fairly thin layer of topsoil. When the fertilizers go due to peak oil then we are going to have to become very very good at farming the way it used to be and doing that niche thing. Some raise chickens and some milk cows and some meat animals and work out a system whereby we can survive.

That thin layer of topsoil might be all we have left. There won't be time to watch Oprah or Reality shows or American Idols. Everyone will be busy working the land or doing some niche job, like washing others clothes or whatever. We will likely do a lot of bartering.

We are totally unprepared for all of this if that's what it comes to. Only those who are doing it now have the means and the skills and the land.

...I have not heard many farmers who have any idea about PO either. The ones I talk to just brush it aside.

It's not a pretty picture out there. The only good thing is grain prices are up and looking good. Some years the farmers just eat their losses. Sometimes they commit suicide like in Australia. Many have a very hard life. Many are in deep debt. I don't know why they persist but they do. I know some that are quite rich. I know some that barely survive. Its a mixed bag. Without them we would all be toast.
(14 Jan 2007)
Posted as a comment on today's Drumbeat at The Oil Drum. According to his bio, author Airedale's background is:

Mech E&R-McDonnell (avionics), USN CrewDog Technican 5yrs, Instructor Rocket Guidance, IBM Field Engineer/Staff Programmer, Farmer, Consultant, Blacksmith, Banjo Picker, etc

In another recent EB piece on agriculture ("Justice, Farms and Victory Gardens"), Sharon Astyk reported on recent trends, including the fact that : "in the US, the only really fast growing segment of agriculture is that of independent women farmers."

A traditional folksong of the Plains:

The farmer comes to town with his wagon broken down,
But the farmer is the man who feeds them all.
If you'll only look and see, then I think you will agree
That the farmer is the man who feeds them all.

. -BA


Out-of-control burn-your-food-for-fuel policy

Marketto Market, Iowa Public Television
"out-of-control burn-your-food-for-fuel policy out of Washington"
---
Kalpa in comments on today's Drumbeat at The Oil Drum writes:

I watched the Iowa Public TV show
Market to Market
this weekend and it was all about these issues and corn prices. The phrase "outa control" was used repeatedly. I'd highly recommend looking at the transcript for anyone interested in this issue. But here are some excerpts:

Doug Jackson. ...what we continue to see ... are the results of what is arguably an out-of-control burn-your-food-for-fuel policy out of Washington.

...with the new set of arithmetic we have now, the market realizes that what we really must do now is increase acreage nearly ten million acres next year and have a good yield simultaneously to have any opportunity or chance to keep supply/demand in balance. Now, Mark, ten million more acres is nearly three times the biggest amount of acreage switch that we've ever seen in a nonprogram change year, so we're not sure that we can accomplish that. Washington continues to mandate or force ethanol usage. The new ag committee chairman, senator Harkin, is proposing doubling and tripling the use of ethanol. Again, mandated or forced usage is unrationable. If you're going to force people to use it, then market forces can't move to allay that problem.

...And the market is afraid that this kind of proposal, which is discussed and projected within the context of a technology that we don't have yet, the cellulosic production potential is unreasonable and unattainable on a corn-based model. Can we get 12 million more acres of corn and beans annually, which is what we need to keep this in balance? And we see statements that we have no interest in Washington to open the conservation reserve program. And so what we're seeing here is an unnatural intervention in the market with one of the most obtrusive government policies that we have ever seen, and yet they're asking market forces to solve the problem.

...But the problem goes on and on as this ethanol demand goes on and on, and what we may have here is just an untenable set of supply/demand statistics. and if the market concludes that, that you can't get enough acres reasonably, then you've got to take prices to a level that either dramatically cuts livestock feed demand or eventually takes prices to a level where ethanol production becomes unprofitable, and that's over $5 today.

...And if biodiesel margins are practically negative today, you can imagine what the situation will be if the vegetable oil situation tightens up by 08-09. We're seeing expansion of bio diesel worldwide in Indonesia, Malaysia, Europe. We're already seeing margins collapsing there, though. And, mark, while the corn situation is compelling and is the more immediate problem now with the ethanol, very quickly, the world arithmetic can tighten up on world vegetable oil. Any commodity that we measure in pounds, that we'll now be burning up for fuel in tons, can have a dramatic shift very quickly.
(12 Jan 2007)


Biofuels boom pinches the world's poorest

Philip Brasher, Gannett News Service
WASHINGTON -- America's appetite for fuel ethanol could take food away from some of the world's poorest people.

The price of corn and other crops is soaring because of the demand for grain to make ethanol, a gasoline additive, and that means the government's budget won't buy as much food as it used to. The price of corn alone, a key food in Africa, has more than doubled in the past year.

The pinch is already being felt.

Catholic Relief Services, one of several organizations that distribute U.S.-donated food in Africa and Latin America, expects to deliver 161,000 tons this year, down from 200,000 tons last year.

"In the long run, it means that we are fueling our cars with food that people might have eaten. There are important trade-offs," said Lisa Kuennen-Asfaw, director of public resources for the Baltimore group.

Congress could increase funding for food aid to make up for the higher commodity prices. But if history is a guide, that likely won't happen.

Americans, and especially American farmers, take pride in feeding the world's hungry, but the truth is that the government's food-aid programs historically have at least as much to do with helping U.S. agribusiness interests as helping the poor.

The last time there was a similar surge in commodity prices -- in the mid-1990s -- government food purchases fell sharply but rebounded when global commodity prices collapsed a few years later.
(14 Jan 2007)
Also posted at The Clarion-Ledger.

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