Scythe & Spade Blog

Blog #24 - 7/23/10

by Chas Bonner

SAFETY IN AMERICA

Today we are bombarded by information that is downright scary, whether it be economic, social, criminal, or other. What seems to be rare is good news, and that will be our focus today.

The July 19 edition of Newsweek magazine carried an article about Business/Recession. It suggested that government has run out of ideas for rebuilding the economy, but that business and consumers are undertaking the job. Despite daily news, jobs are slowly increasing, economic output increasing, home value decline slowing, and consumer spending again rising. Just as important, the economies of the rest of the world, with exception of Europe, are growing even faster than ours.

Corporate America’s balance sheet has never looked stronger, corporate earnings are increasing, and cash flow increasing at an even higher rate. Sadly, corporations are not spending that cash load, primarily because they don’t trust government to hold the line on existing laws and regulations. Business needs and likes consistency; our current administration is about “change.”

For agriculture specifically, there are definite pluses. In the past 5 years, purchases of almonds by China have risen eightfold. Other commodities have similar stories. The middle class in China, India, and all BRIC countries is becoming larger by the day, and middle classes become big consumers. This global growth also creates foreign investors, and safety is a key element in all foreigners’ investment decisions. America is one of the few places on earth where intellectual property is tightly protected, where the rule of law is consistent, and where fears of expropriation are non-existent.

Safety in America bodes well for our farming communities and farm values despite any hiccups that may occur in the short-term.

Blog #23 - 7/16/10

by Chas Bonner

G.M.O. & Agriculture

Genetically modified organisms in agriculture have been a hot button in most societies. It is too bad since most of these genetically modified crops have resulted in tonnage increases, resistance to unwanted pesticides and herbicides, drought resistance, and essentially all kinds of improvement in productivity. If world population estimates of 9BB people by 2050, and declining acreage of arable land throughout the world prove to be true, with restricted ability to increase agricultural productivity, we will be faced with spreading hunger, famine, and perhaps wars over food.

But a little door has just been opened. The European Union, which has banned most GMO foods since 2006, recently proposed relaxation of European Community-wide bans. The proposal calls for country by country decisions. Some European countries like Austria, Scotland and Wales are dead-set against GMO foods while others like Holland want to open the gates wide.

This was also welcome news to the U.S. and the World Trade Organization, both of which have been fighting the E.U. ban for years, threatening trade sanctions.

Apparently, most European farmers, while they welcome the proposed change, are not quite ready to jump on the band wagon. They fear that other regulations will suddenly change again, especially since much of the decision making may be pushed down to E.U. bureaucrats rather than the commissioners themselves. Furthermore, anti-GMO activists have resorted to violence in farming communities over past approvals, causing farmers to be wary of using GMO seeds before the outlook is completely clear.

To open any door, a crack must first be seen.

Blog #22 - 7/2/10

by Chas Bonner

COMPETETIVENESS OF AMERICAN AGRICULTURE

Please excuse what may appear to be a personal “travelogue,” knowing there is a message about agriculture.

For the past 2 weeks, my wife and I were on a river boat cruise from Vienna, Austria to Amsterdam, Holland via the Danube, Main and Rhine Rivers. At first, I was reluctant to go, thinking “this kind of travel is for old folks” (and I am a mere 68). But was I wrong; it could not have been more interesting and enjoyable!

We would cruise sometimes during the day, but normally at night, and while the daily hikes through historic castles, cathedrals, and villages was intriguing, what caught the agriculturist’s eye when cruising during daylight hours were comparisons and contrasts of U.S. to German, and Dutch farming.

Even for the non-farmers, European agriculture was a fascination. Boat travelers were constantly discussing how beautiful and prolific all these farms were, while my thoughts were “No wonder European food is so expensive.”

The high expense of European farming was evident at every turn of the river. Each hectare of arable land is farmed, even 30-40 degree slopes. Most grape vineyards are planted on steep slopes, with the vine rows vertical to the slope rather than horizontal as one might logically think. Those vineyards had all kinds of concrete erosion preventers, and nonetheless a big rainstorm always caused havoc. Wheat, barley and rye were abundant and planted right up to the edge of town or forests. Minimal irrigation systems are in use, but in Holland spending is profuse on pumping water OUT of farmland, with 15-20 inch pipes visible everywhere, all emptying into canals. Finally, what added mostly (in my opinion) to the beauty of European farming was that virtually no houses or other buildings are on the farm; all homes are in the villages where the farmer lives and commutes daily to his farm---via either his tractor or his Mercedes.

We are fortunate in the U.S. that most of our farmland is more extensive and can therefore be farmed less intensively and less expensively. In short, we can be more competitive.