Getting forgetful seems another fascinating aspect of ‘growing up’!
This has turned out to be a Neil Kelly week-end on Learning from Dogs. Yesterday, there was his gorgeous jig-saw joke. Today, the following cartoon, sent to me by Neil.
Let me leave you with one of my favourite sayings, “I remember everything, except those things I forget!“
Neil is one of those people that sees the world around him through different eyes than the rest of us. It shows up in the form of the most exquisite sense of humour. If you don’t remember Neil’s view of Village Life posted a few months ago, then do go there now!
So with that as an introduction, enjoy the following.
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A little silver-haired lady calls her neighbour and says, “Please come over here and help me. I have a killer jigsaw puzzle, and I can’t figure out how to get started.”
Her neighbour asks, “What is it supposed to be when it’s finished?”
The little silver haired lady says, “According to the picture on the box, it’s a rooster.”
Her neighbour decides to go over and help with the puzzle.
She lets him in and shows him where she has the puzzle spread all over the table.
He studies the pieces for a moment, then looks at the box, then turns to her and says, “First of all, no matter what we do, we’re not going to be able to assemble these pieces into anything resembling a rooster.”
He takes her hand and says, “Secondly, I want you to relax. Let’s have a nice cup of tea, and then,” he said with a deep sigh,
There have been a couple of hard-hitting posts this week, first about the implications of climate, with respect to the massive drought across the USA this year, and the efforts of Polly Higgins of the Eradicating Ecocide movement to make ecocide a crime against humanity.
This short but very compelling video shows why the planet is so worth protecting. Enjoy!
OK, that sub-heading must seem a tad bizarre! Let me explain. On Tuesday, Jean had an important visit to make down in Mesa, AZ on the outskirts of Phoenix. The first 65 miles, give or take, from Payson to Mesa are down along Highway 87.
At 11.20 we started on our return from Mesa planning on being early back home, say by 1pm at the latest. But 31 miles up the Northbound carriageway of Highway 87, we came to a halt. The road was closed due to an accident with a tanker. As our local newspaper, the Payson Roundup, put it,
The driver of the truck was taken by ambulance to a Scottsdale hospital with non life-threatening injuries. DPS has not ruled out speed as the cause of the crash. Photo by Andy Towle.
Due to a hazardous spill, Highway 87 was closed most of Tuesday, but reopened Wednesday morning after overnight clean up efforts, according to the Arizona Department of Public Safety.
Officials initially thought the roadway could be closed as many as two days due to the amount of oil spewed across both sides of the highway.
The highway closed down after a semi truck carrying oil used for paving rolled Tuesday afternoon near milepost 228, at the bottom of Slate Creek.
That resulted in us having to take a 170 mile detour and not arriving back until 4.30pm!
So what’s that got to do with the post for today? Simply that the implications of Tuesday spilled, like the tanker’s oil cargo, across into Wednesday and the long, thoughtful post I had in my mind to write got put on hold. Thus in its place is this republication of a recent release by Stanford School of Engineering at Stanford University. Apologies for another republished item but the article is relevant and interesting.
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WIND COULD MEET WORLD’S TOTAL POWER DEMAND – AND THEN SOME – BY 2030
Wind turbines near Livermore, CA.
HIGH RESOLUTION MODELS
In their study, Jacobson and Archer adapted the three-dimensional, atmosphere-ocean-land computer model known as GATOR-GCMOM to calculate the theoretical maximum wind power potential on the planet taking into account wind reduction by turbines. Their model assumed wind turbines could be installed anywhere and everywhere, without regard to societal, environmental, climatic or economic considerations.
The new paper contradicts two earlier studies that said wind potential falls far short of the aggressive goal because each turbine steals too much wind energy from other turbines, and that turbines introduce harmful climate consequences that would negate some of the positive aspects of renewable wind energy.
The new model provides a more sophisticated look than previously possible by separating winds in the atmosphere into hypothetical boxes stacked atop and beside one another. Each box has its own wind speed and weather. In their model, Jacobson and Archer exposed individual turbines to winds from several boxes at once, a degree of resolution earlier global models did not match.
“Modeling the climate consequences of wind turbines is complex science,” said Jacobson. “This software allows that level of detail for the first time.”
With a single model, the researchers were able to calculate the exposure of each wind turbine in the model to winds that vary in space and time. Additionally, the model extracts the correct amount of energy from the wind that gets claimed by the turbines, reducing the wind speed accordingly while conserving energy. It then calculates the effect of these wind speed changes on global temperatures, moisture, clouds and climate.
POTENTIAL APLENTY
Among the most promising things the researchers learned is that there is a lot of potential in the wind—hundreds of terawatts. At some point, however, the return on building new turbines plateaus, reaching a level in which no additional energy can be extracted even with the installation of more turbines.
“Each turbine reduces the amount of energy available for others,” Archer said. The reduction, however, becomes significant only when large numbers of turbines are installed, many more than would ever be needed.
“And that’s the point that was very important for us to find,” Archer said.
The researchers have dubbed this point the saturation wind power potential. The saturation potential, they say, is more than 250 terawatts if we could place an army of 100-meter-tall wind turbines across the entire land and water of planet Earth. Alternatively, if we place them only on land (minus Antarctica) and along the coastal ocean there is still some 80 terawatts available—about seven times the total power demand of all civilization. Hypothetical turbines operating in the jet streams six miles up in the atmosphere could extract as much as an additional 380 terawatts.
“We’re not saying, ‘Put turbines everywhere,’ but we have shown that there is no fundamental barrier to obtaining half or even several times the world’s all-purpose power from wind by 2030. The potential is there, if we can build enough turbines,” said Jacobson.
Mark Z. Jacobson, professor of civil and environmental engineering. Photo: Linda Cicero / Stanford News Service
HOW MANY TURBINES?
Knowing that the potential exists, the researchers turned their attention to how many turbines would be needed to meet half the world’s power demand—about 5.75 terawatts—in a 2030 clean-energy economy. To get there, they explored various scenarios of what they call the fixed wind power potential—the maximum power that can be extracted using a specific number of wind turbines.
Archer and Jacobson showed that four million 5-megawatt turbines operating at a height of 100 meters could supply as much 7.5 terawatts of power—well more than half the world’s all-purpose power demand—without significant negative affect on the climate.
“We have a long way to go. Today, we have installed a little over one percent of the wind power needed,” said Jacobson.
In terms of surface area, Jacobson and Archer would site half the four million turbines over water. The remaining two million would require a little more than one-half of one percent of the Earth’s land surface—about half the area of the State of Alaska. However, virtually none of this area would be used solely for wind, but could serve dual purposes as open space, farmland, ranchland, or wildlife preserve.
Rather than put all the turbines in a single location, Archer and Jacobson say it is best and most efficient to spread out wind farms in high-wind sites across the globe—the Gobi Desert, the American plains and the Sahara for example.
“The careful siting of wind farms will minimize costs and the overall impacts of a global wind infrastructure on the environment,” said Jacobson. “Regardless, as these results suggest, the saturation of wind power availability will not limit a clean-energy economy.”
Funding sources include National Science Foundation, U.S. Environmental Protection Agency, and National Aeronautics and Space Administration high-end computing.
Andrew Myers is associate director of communications for the Stanford University School of Engineering.
Monday, September 10, 2012
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Let me close by pointing you to Mark Jacobson’s website.
While Learning from Dogs trawls around a wide variety of topics, the theme behind the writings is, as the banner says on the home page: Dogs are integrous animals. We have much to learn from them.
Integrity, defined more or less universally as the ‘adherence to moral and ethical principles; soundness of moral character; honesty.‘
Please trust me that this position is taken not from the perspective of the writer, I’m struggle with ‘right’ and ‘wrong’ as much as the next guy. No, this position is the result of one very simple and stark vision: If we don’t understand pretty damn soon what we, as in mankind, are doing to our planet, both directly and indirectly, then we are living through the era of the end of civilised man; these are the last times.
The relationship between man and the dog is ancient beyond contemplation. It is widely believed by scientists who study the history of man that, at the very least, dogs assisted man in evolving from hunter-gatherers to farmers. But some scientists believe that without the support of dogs, man never would had made the transition to farming. Either way the relationship goes back more than 10,000 years.
So what on earth does that have to do with integrity? Simply that alongside millions of us, dogs offer us the examples of loyalty, faith, meditation, patience, truth in love; an example of an adherence to moral and ethical principles; soundness of moral character; honesty.‘ In a single word: integrity!
OK, now that I have got that off my chest, to the topic of today’s post. For some months now I have subscribed to the blog run by The Permaculture Research Institute of Australia. It has much that will be useful for Jean and me when we move to Oregon in November. But also, not infrequently, the Institute highlights deeper, more fundamental, issues.
Thus it was that a few days ago, my attention was drawn to an item with the title of We Need Your Help to End the Era of Ecocide. It was about the work of English woman, Polly Higgins. I’m ashamed to say that I had not heard of her before! A very quick search came across the website Eradicating Ecocide, from which one quickly learns that Polly,
In March 2010 international barrister and award winning author Polly Higgins proposed to the United Nations that Ecocide be made the fifth Crime Against Peace. There are currently four Crimes Against Peace: genocide, war crimes, crimes of aggression and crimes against humanity. Ecocide is the missing fifth crime – it is a crime against humanity, against current and future generations, and against all life on Earth.
Wow, that makes sense. So what is ecocide? Again, Eradicating Ecocide offers the answer,
Back to the specific topic. This is a copy of what is the latest news item on the Eradicating Ecocide website and it is reproduced in full. I’ve included the Editor’s introduction from the Permaculture News website, as I couldn’t say it any better.
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We need your help to end this era of Ecocide
Editor’s Note: We’ve covered a little of Polly Higgin’s important work before (see here and here). If you’re not already familiar with Polly’s work, I would strongly encourage you to check out the web pages and videos linked to below, as well as our aforementioned pieces. Permaculturists dream of whole earth restoration, but our efforts, whilst essential, are, if I may, largely piecemeal. The reason for this is that for every positive step someone makes, an industry or government does, or allows, something significantly more destructive to take place that more than overshadows it. We will never break out of this destructive cycle unless we make environmental destruction illegal, and hold the people responsible accountable. As you are able, please support Polly’s work. If you cannot donate, please at least do what you can to share and circulate this page.
Polly Higgins
I have something I would like to share with you. Today myself and my team have reached zero. The pot is now bare and our funding resources are in urgent need of replenishing. In the past year your donations of over £200,000 funded my and my team’s work; we planted some incredible seeds in the run up to the Rio Earth Summit. Out of that we have had some wonderful successes; in the past year alone we have held a mock Ecocide Trial in the UK Supreme Court, the University of London launched their Ecocide Project, I have travelled to countries and spoken on many platforms, I launched my second book Earth is our Business, I have been awarded Overall Champion by the PEA awards, I have started a training programme for others to learn how to become a Voice for the Earth and I have submitted a concept paper, Closing the door to dangerous industrial activity to all government’s around the world. All this has been done with the help of your money and without it none of this would have been at all possible.
Yesterday we held an emergency meeting; despite the enormous efforts of our fundraiser over the past few months we have been unable to raise more than a few thousand pounds. We are looking squarely at the future and we see enormous opportunity to take forward all that I have already achieved; just think how close we are to making this law a reality.
Everything we do is governed by permaculture ethics; people care, earth care and fair share. Ecocides occur when we take far more than our fair share, which affects both our people and our Earth. To ensure we live within our planetary limits, a law of Ecocide creates a legal framework that can ensure we all live in peaceful enjoyment.
Please help me to continue to build upon all of this good work; now more than ever people care, earth care and fair share matters. Together we can end the era of Ecocide.
With love for the Earth,
Polly
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If you read this and want to share this Post, feel free to so do. If you want to do that and more, then:
Send a cheque to us at 6 Highbury Corner, Highbury Crescent, London N5 1RD. Please write your cheque out to our charity, The Earth Community Trust.
In the US you can donate via the Iris Arts and Education Group 1856 San Antonio Ave, Berkeley, California 94707. Please write your cheque out to our charity, The Earth Community Trust.
Please become one of our funding volunteers. We are seeking a team of people to help us fundraise. This can be done in a number of ways. If you think you can help, please email our intern Nina: nina (at) eradicatingecocide.com
We are seeking a volunteer for 2 weeks full time to come into our London office: please email Louise with your CV: louise (at) eradicatingecocide.com
And don’t forget to go to the Eradicating Ecocide website to become more aware and then take action! Speaking of becoming more aware, do watch this video.
This was sent to me recently. It has been doing the rounds big time, and rightly so!
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Before going on to today’s post, I feel the need to explain something. That is that over the last week or so I have been republishing many more items rather than writing my own creative stuff. This is an unfortunate consequence of us having our house here in Payson up for sale, which is generating more work than usual. Plus we are packing. All this to do with us moving from Arizona to Oregon in the first week of November.
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Charles Schulz
The following is the philosophy of Charles Schulz, the creator of the ‘Peanuts’ comic strip.
You don’t have to actually answer the questions. Just ponder on them. It will make very good sense!
Here’s A Little Quiz
You don’t have to actually answer the questions. Just read them straight through, ponder a tad, and you’ll get the point.
Name the five wealthiest people in the world.
Name the last five Heisman trophy winners.
Name the last five winners of the Miss America pageant.
Name ten people who have won the Nobel or Pulitzer Prize.
Name the last half dozen Academy Award winners for best actor and actress.
Name the last decade’s worth of World Series Winners.
How did you do?
The point is, none of us remember the headliners of yesterday. These are no second-rate achievers. They were the best in their fields.
But the applause dies. Awards tarnish over time. Achievements are forgotten and accolades and certificates are buried with their owners.
Here’s another quiz. See how you do on this one:
List a few teachers who aided your journey through school.
Name three friends who have helped you through a difficult time.
Name five people who have taught you something worthwhile.
Think of a few people who have made you feel appreciated and special!
Think of five people you enjoy spending time with.
Did you find that Easier? Of course you did!
So here’s the lesson!
The people who make a difference in your life are not the ones with the most credentials, or the most money…or the most awards…they simply are the ones who care the most.
Changing climate is changing us and the world in significant and fundamental ways.
I wrote this around noon on the 7th September. That day we awoke to the sky, normally clear blue, covered totally in grey stratus cloud. Shortly after 9am it started to rain and some three hours later that rain was still steadily falling from the sky. Don’t get me wrong, the steady rain was vital to the area.
The precipitation statistics for Payson, AZ up to yesterday (6th at the time of writing) are:
Precipitation year to date (ergo to the 6th September) = 8.02 inch (20.37 cms)
Precipitation 30-year average to the end of September = 16.25 inch (41.28 cms)
Year to date as a percentage of 30-year average = 49.4%
The annual 30-year average precipitation for the year for Payson is 21.5 inch. (54.6 cms)
So despite a moderately effective monsoon, there is no way that Payson, Arizona will be even close to the 30-year average for precipitation.
That’s why a recent essay by Chris Martenson, he of Peak Prosperity fame, is so critically worth reading. I’m very grateful to Adam Taggart, Chris’s business partner, for giving me permission to republish the essay. (Note that the essay was published before Hurricane Isaac arrived.)
Also note that this is Part One of Chris’s very detailed report and that to read the concluding Part Two you will need to enrol over at Peak Prosperity. However, Part One is very detailed and covers much. Thus even without Part Two there is much here to ‘exercise the mind’.
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The U.S. Drought Is Hitting Harder Than Most Realize
This is an important update on the U.S. drought of 2012, the combined record-setting July land temperatures, and their impact on food prices, water availability, energy, and even U.S. GDP.
Even though the mainstream media seems to have lost some interest in the drought, we should keep it front and center in our minds, as it has already led to sharply higher grain prices, increased gasoline costs (via the pass-through of higher ethanol costs), impeded oil and gas drilling activity in some areas (due to a lack of water), caused the shutdown of a few operating electricity plants, temporarily reduced red meat prices (but will also make them climb sharply later) as cattle are dumped in response to feed- and pasture-management concerns, and blocked and/or reduced shipping on the Mississippi River. All this and there’s also a strong chance that today’s drought will negatively impact next year’s Winter wheat harvest, unless a lot of rain starts falling soon.
The good news from Hurricane Isaac is that he’s traveling on a perfect path to deliver relief to one of the most heavily drought-impacted areas:
There are steps that everyone can and should take to become more food- and fuel-resilient in case the drought persists – as some experts think is quite possible – into next year and perhaps a few more. We’ll get to those steps shortly.
Further, there will be a definite impact to U.S. GDP, which could add to pressures (excuses?) that the Fed may use to justify additional quantitative easing (QE) measures (otherwise known as ‘printing more money’).
U.S. Drought Intensifies
The drought in the U.S. has intensified in the recent weeks, even though it has somewhat dropped from the front pages of mainstream media, possibly because the story is stale or possibly because it’s just too serious to dwell on for long:
Extreme drought in the U.S. intensifies
Aug 17, 2012
The drought in the United States is continuing to intensify, according to the National Oceanic and Atmospheric Administration (NOAA).
The latest Drought Monitor says 61 percent of the contiguous United States faces moderate or worse drought conditions this week.
Nearly 30 percent is experiencing extreme to exceptional drought, exceptional being the most severe category.
Officials say the amount of land that’s currently affected across the U.S. is larger than the entire state of California.
In this next image, it is notable that the areas of the highest drought classification — ‘exceptional’ — have dramatically expanded from the prior week (the August 7, 2012 report).
Much of the drought is centered squarely over the U.S. ‘breadbasket’ region and has really dented this year’s harvests in a big way.
Crop Losses
Certainly the number one story around the U.S. drought centers on its impact on grain production, specifically corn and soybeans. In a minute we’ll discuss the other impacts, but we’ll start with the one that has the greatest potential to cause both suffering and strife over the coming months (and possibly years), especially for those on limited budgets.
In 2011, the U.S. reaped a corn harvest of some 314 million tons. In 2012, the USDA has estimated a harvest of 274 million tons – a shortfall of 40 million tons – despite record acreage being planted.
While the USDA has been steadily reducing their crop estimates, practically with every passing week, it seems likely that the USDA remains behind the curve today, as it has been every step of the way. A different source for information comes from the Pro Farmer Midwest Crops Tour, which is coming in slightly under the current USDA estimates:
Initial reports from the closely watched Pro Farmer Midwest Crop Tour suggested more crop damage than expected from the drought, raising the potential for diminished soybean production this fall and sending futures sharply higher.
The disappointing crop reports from scouts touring fields on the Pro Farmer crop tour in states such as Ohio and South Dakota make it hard to believe soybean yields will reach current U.S. government crop projections, said Don Roose, president of advisory and brokerage firm U.S. Commodities in West Des Moines, Iowa.
The market is in the “watch and worry” mode on all fronts as shrinking crop forecasts will further tighten supplies already projected to dwindle to precariously tight levels in 2013, Mr. Roose said.
On the annual Pro Farmer tour, analysts and investors walk corn and soybean fields in seven Midwestern states over four days to assess prospects prior to the fall harvest. Pro Farmer is an agricultural advisory firm. The Pro Farmer tour, which wraps up Thursday, reported diminished potential for the soybean crop in both Ohio and South Dakota.
The crop tour doesn’t estimate soybean yields, but it reported an average 584.9 pods per 3-foot-by-3-foot square area in South Dakota, down 47% from a year ago. In Ohio, scouts reported soybean counts at an average of 1,033.72 pods per 3-foot-by-3-foot square area, down from 1,253.2 pods a year ago.
Soybeans entered their critical growing phases in recent weeks, and the crop has benefited in some regions from recent rains across the eastern Farm Belt.
Meanwhile, scouts with the Pro Farmer Midwest Crop Tour on Monday reported an average estimated corn yield in Ohio of 110.5 bushels per acre, down from the tour’s estimate of 156.3 bushels a year ago. In South Dakota, tour scouts reported an average yield estimate of just 74.3 bushels per acre, down from 141.1 bushels a year ago.
While commodities traders and agronomists have braced for weeks for the prospect of a crop decimated by drought, the estimates were lower than many had expected.
The summary here is that the Pro Farmer Tour is reporting crop yields to be 2% – 3% lower than current USDA forecasts, which is a big deal when it comes to food. We’re talking a few tens-of-millions-of-bushels’ difference.
The somewhat sour note in this unfolding drama is the fact that 40% of the nation’s corn crop goes to ethanol producers, which means that food will be burned in the nation’s auto fleet instead of helping to keep prices down for consumers and animal feed. Another 40% goes to animal feed (chicken, cattle, hogs, etc.), and the remaining balance goes to direct human consumption.
However, the ethanol mandate is a congressional requirement for our fuel blenders, so they do not have a choice in the matter. It would literally take an act of Congress to even temporarily suspend the ethanol requirement – and in an election year, that’s just not going to happen, given the powerful constituencies invested in preserving that mandate.
Of course, higher input costs will ripple through the entire chain, so perhaps Bernanke will get the inflation he seeks, although it won’t be the one he wants. The inflation he wants is simple monetary-driven inflation. The inflation he will get is nothing more than a supply/demand mismatch.
Still, the USDA has a handy calculation for estimating the future impacts:
The USDA has provided considerable information about how the drought’s effects were likely to percolate through the economy. Because of a smaller-than-expected corn crop, the USDA said it can make the general prediction that “we will see impacts within two months for beef, pork, poultry and dairy (especially fluid milk). The full effects of the increase in corn prices for packaged and processed foods (cereal, corn flour, etc.) will likely take 10-12 months to move through to retail food prices.”
The USDA has a formula for predicting changes in the rate of inflation caused by gains in prices at the commodity level: if the farm price of corn rises 50%, retail food prices rise by 0.5% to 1% as measured by the Consumer Price Index (CPI).
The price of September corn futures from mid-June until early August advanced 55%, meeting the USDA’s criterion for a measurable increase in the CPI Lapp presented a more extreme scenario than the USDA. He predicted that the damage to the 2012 corn crop will translate into a food inflation rate of 4% to 5% in 2013. In his view, the dollar cost of the drought already was $30 billion, which accrued rapidly over the summer.
“This is a cost that somebody has to bear,” Lapp said. “Some price hikes are fairly quick and others take a while.”
He said high feed costs will have to be absorbed by producers, who will likely liquidate part of their cattle and swine herds and poultry populations. At the retail level, the drought’s effects will translate into narrower margins — and expected higher prices — for processed food and soft drink manufacturers among others.
Lapp offered his opinion that legislation that has effectively required 40% of the corn crop be used in making biofuels has made everything worse.
“The situation has been aided and abetted in a negative way by the biofuels mandates,” he said. “Shame on us for having mandated so much to corn ethanol” without creating contingencies for a bad crop year.
Because corn is the base unit for so many things (especially in the form of high-fructose corn sweetener), and because it’s a primary feed component for finishing cattle and raising chickens and hogs, it tends to have a pretty decent impact on food prices.
However, it takes time for those price hikes to work through the system. So it will not be until 2013 sometime that we really begin to feel it in the U.S. And for the rest of the world that lives more directly on grains? They’re not as lucky. The price hikes hit them almost immediately.
It looks like the harvest in Russia will be below expectations as well:
(Reuters) – Two leading Russian agricultural analysts cut their forecasts for Russia’s grain harvest on Monday after harvest data from two drought-stricken eastern growing regions reduced the outlook for the overall crop.
SovEcon narrowed their grain forecast to 71-72.5 million metric tonnes (…)
The government’s official grain harvest forecast is 75-80 million tonnes, of which 45 million tonnes could be wheat. The government has put this season’s exportable surplus at 10-12 million tonnes, a level seen by traders as an informal cap on exports.
The government has tried to reassure markets there will be no repeat of August 2010, when Russia’s government shocked markets with a snap decision to ban grain exports when the scale of losses from major drought became clear.
The government has indicated that protective tariffs could be an option, though only after the end of the calendar year.
But traders widely expect limits to be imposed in some form, perhaps as early as November, after heavy exports in the early months of the season showed Russia could hit the 10-12 million tonne mark sooner than January.
Russia is still officially projecting 75-80 million tonnes but may only get 71 tonnes. If the projected exportable surplus is 10-12 million tonnes, but Russia actually harvests 9 million tonnes less than their hoped-for projection, then its exports will have to decrease to plug that gap.
Here’s the kicker: Russia has already exported a good deal of that amount. That is, the prospect of another Russian export ban this year is quite realistic. If we get one, then we can expect a repeat of the turmoil in the grain markets that we saw in 2010.
But there’s another much more fundamental reason why we can expect higher prices going forward.
Need for Even Higher Prices
The good news is that there’s still plenty of supply to carry us through to the next harvest. However, demand is going to have to go down some, and the way we accomplish that is through the price mechanism.
Right now, physical grain traders are saying that prices are too low and that unless they rise, we’re going to run out of grain before the next harvest. Obviously, that’s not truly going to happen – increasing scarcity will cause prices to rise until current demand levels are reduced.
Fall in corn price disguises real picture (Financial Times)
Aug 20, 2012
Corn prices surged this month to an all-time high of $8.4375 a bushel on the back of the worst drought in the US in nearly half a century. But prices have since fallen roughly 5 per cent. The impression is the rally has run out of steam.
This is far from the real picture. Prices need to rise again – probably setting all-time highs – to dampen consumption that is running ahead of supply.
If demand does not slow down, silos will be all but empty before the next harvest arrives in late 2013.
On paper, the balance sheet for corn supply and demand published by the US Department of Agriculture seems good enough. But in practice, the numbers look a bit shaky. The agency, whose figures are closely watched by the market, first estimates supply and, after that, adjusts the demand data to maintain a minimum level of inventories.
This time the USDA is asking for monumental rationing on the demand side. For example, US corn feed and export demand will need to drop to their lowest levels in nearly 20 years.
The USDA is also forecasting lower ethanol production – and thus corn demand. Ethanol output has fallen, but not nearly enough. Worse, the rise in wholesale petrol prices back above $3 a gallon means that ethanol producers are profitable again, even when paying record corn prices.
Corn is now trading just above $8 a bushel – but traders in the physical market say that prices need to rise to $9-$10 to force demand down enough to meet the consumption levels anticipated by the USDA.
The retreat in corn prices over the past couple of weeks has given inflation watchers a false sense of security. The market should not relax, however. More food inflation is just waiting around the corner.
The idea here is that the cash market will have to lead the futures market higher, an odd situation because it is usually the other way around. With so many hedge funds now playing in the commodity space, one explanation is that they are simply playing paper games with each other – those playing the short side will get a lesson in the importance of keeping one eye on reality.
A truly shocking event would be if the U.S. ever gets to the position of limiting exports of corn or even soybeans. That is a very unlikely proposition to consider, but if the silos get drained because we have dysfunctional markets that saw fit to keep prices bizarrely low while our free trade agreements allow the too-low grains to be exported, threatening domestic supplies, then that possibility notches up a little bit.
Dairy, Meat, and Even Higher Gasoline Costs
While it is clear that basic grain prices are heading higher, the knock-on effects into other soft commodities are a little less clear, but are definitely still important to consider.
The most obvious of these are higher grain feed costs that will hit both livestock and dairy producers especially hard:
The withering crops are translating into higher feed costs for livestock producers. “This is different than anything I’ve ever experienced,” said Kent Pruismann, who raises cattle and hogs on a farm in Sioux County, Iowa, and saw his costs for feed jump by 20% in July.
The higher corn, soybean and wheat prices will reach food makers, exporters and eventually consumers. Drivers already have seen fuel costs climb because of higher prices for ethanol, a corn-based fuel that is blended into gas. The drought also has reignited the debate over whether ethanol production is a drain on global food supplies.
LOUISVILLE, KY (WAVE) – When you think of cattle feed, you probably don’t think of candy, but due to the drought that’s exactly what one farmer chose to do.
At Mayfield’s United Livestock in Western Kentucky, owner Joseph Watson feeds his herd second-hand candy.
Watson started feeding his cattle the candy because corn prices were so high.
He mixes the candy with an ethanol by-product and a mineral nutrient. He monitors the daily intake and said the cows have had no real health issues.
Yes, the higher grain costs are going to hit everything from big cattle feedlot operations to my own two-bags-a-month chicken-feed usage.
However, it will be the cost of and even lack of hay that will really create some big problems later this year. The drought not only harmed the range and pasture lands, forcing greater use of stored hay to offset the decline in forage, but it put a huge crimp in this year’s hay production:
Widespread drought has scorched much of the pastureland and hay fields needed to sustain cattle herds in the U.S., forcing many ranchers to find feed alternatives or sell their animals early into what has become a soft beef market.
The shortage has led to higher hay prices, with some farmers saying they have to pay two to three times last year’s rates.
Despite farmers setting aside more land to grow hay this year, they are still producing a lot less because of the drought, according to a recent Department of Agriculture estimate.
The harvest of alfalfa, generally considered to make the best hay because of its high nutrient levels, is forecast to be the worst since 1953, according to the USDA.
Pasture grass and hay are what most cattle are fed for the roughly two years they live before being slaughtered, but the drought is threatening to starve the animals.
Illinois rancher Steve Foglesong said that most years he could graze his cattle from spring through November on verdant fields that are now brown, buying them hay bales only in the winter. This year, he and his animals have their eyes on withered corn plants.
“It may not have any ears on it, but it makes pretty good cow feed,” he said.
John Erwin, who owns 20 acres of land in Shelbyville, Ill., said he is having trouble growing alfalfa hay, but demand is strong for what he can produce.
“I’m getting calls from ranchers as far away as Wyoming,” Mr. Erwin said. “They’re desperate.”
He said he has been offered $250 a ton for his hay, nearly double the $130 a ton in a non-drought year. His fields didn’t produce any hay in July.
A doubling of hay prices is obviously going to create quite a bit of economic hardship for many farming operations, which tend to be marginal profit businesses even when everything is going well.
Here’s another view on the hay situation:
I spoke with Caldwell [of Indiana horse rescue] and a number of other horse-rescue organizations around the country by telephone this week. The relentlessly hot dry weather, amplified in many areas by wildfire, has been devastating to farmers, ranchers and other horse owners.
“Everybody is using their winter hay now. The pastures are destroyed and they probably won’t recover before winter,” said Caldwell. “The price of hay has doubled, and the availability is down by 75 percent.”
Caldwell is somewhat sanguine about his own lot, but not optimistic about what lies ahead.
“Today the problem is not nearly as bad as it’s going to be,” he told me. “It’s terribly bad today, but it is going to get a lot worse.”
The drought has done some very serious harm to the nation’s hay supply that goes beyond the economics of higher hay costs. First there’s the supply of the hay, and then there’s the relatively poor quality of hay that was taken from non-irrigated, drought-stricken fields. All in all, it’s not a good situation.
To add a bit more difficulty into the situation, it turns out that drought-stricken silage and even the corn itself can be harmful to animals:
COLUMBIA, MISSOURI, U.S. — Tim Evans, an associate professor of veterinary pathobiology and toxicology section head at the Veterinary Medical Diagnostic Laboratory at the University of Missouri College of Veterinary Medicine, Columbia, Missouri, U.S., warns U.S. farmers and livestock producers that drought-damaged corn plants can pose a risk to animal health.
“During severe drought conditions, corn plants, especially those heavily fertilized with nitrogen, can accumulate a chemical called ‘nitrate’,” Evans said.
“This chemical can be very harmful to animals, especially cattle, if they eat corn plants or other vegetation containing too much nitrate. Eating plants with too much nitrate can cause damage to red blood cells, resulting in lethargy, miscarriage, and even sudden death.”
Evans says that in normal conditions, corn crops typically absorb nitrate into only the lower 12-18 inches of the stalk, which does not have to be fed to animals. However, during severe drought conditions, high concentrations of nitrate can accumulate in the upper portions of the stalk, which cattle and other livestock often eat.
Evans also says that many naturally growing plants and weeds in grazing pastures can accumulate nitrate during drought conditions, as well. These plants include many types of grasses and some weeds, which animals might be forced to eat because of limited pasture or hay available as forage for livestock.
The key here is that nitrates are safe below 2,000 ppm but toxic above 15,000 ppm, and the levels found in the stalks and how high it travels are a function of whether enough rain fell to allow the plant to take it up. Much of the corn crop was so desiccated that the plants could not even manage to draw up this nutrient, and therefore it is safe as a feed product.
While it’s hard to get a read on at this early stage, there are enough warning signs here pointing to much, much higher grain, food, and meat prices in the future. The worry is whether there will even be enough feed to sustain the animal populations through the Winter and Spring. Given the damage to the harvestable corn, a lot of it is going to be turned into silage
Many ranchers and farmers are faced with a horrible choice here. Saving their herds may be economically unsound or even impossible where hay and safe silage are not available, and so they are selling their herds, one of the most heart-wrenching decisions anyone could have to make.
So many are doing this that recently the price for cattle has dropped, as everyone is selling into an increasingly soft market. My advice is to enjoy these low meat prices while they last, because the next stage of this story involves much higher meat prices.
The problem with understanding just how bad the hay situation might (or might not) be is that there are no national statistics collected that could tell us whether or not there’s even enough hay available to sustain the current commercial and recreational livestock populations.
The Importance of Positioning Yourself
So, with all of these repercussions building during the current drought – to which there’s yet no end in sight – what can you do today to minimize their impact on your budget and lifestyle?
Part II: Positioning for the Drought’s Aftermath looks at the likeliest outcomes in food prices, food availability, energy prices, and macroeconomic consequences (of which there will no doubt be many from this drought). We have a national food distribution system that runs significantly on a just-in-time basis, which leaves it vulnerable to price and inventory shocks when there are supply disruptions. The reduced water levels caused by the drought are handicapping electrical power generation in growing regions in the country; electrical thermal plants are the number one biggest user of water in the U.S. The global financial markets are similarly tenuous these days, as resources are already taxed in trying to stimulate the moribund U.S. economy and dig Europe out of its massive credit woes.
This is one of those moments where taking simple, prudent steps now can have an outsized effect on preserving your quality of life.
It’s not pleasant reading, is it! But unless we all fully understand the implications of what we are doing to the planet by continuing to pollute the atmosphere, how can we embrace change!
Learning from Dogs 