Scythe & Spade Blog

Sustainability & Profitability

by Chas Bonner

Conventional wisdom says the two words are oxymorons.

After all, virtually all governments are trying to impose environmental controls, cap and trade programs, water use reduction, sewage clean up, and more. The Kyoto treaty was one of the first world-wide treaties committing many countries to global warming initiatives (and the U.S. was non-signatory to that treaty). Then there was a similar treaty in 2009 in Copenhagen which was a flop. A year later a climate meeting was held in Cancun, and few showed up. The latest one was in Durban, South Africa in November, and nothing substantial resulted. In short, few governments, let alone the U.N., have been effective in forcing climate control on any country.

However, business has seen much more positive results. The accounting firm of Ernst & Young recently quizzed heads of 300 international companies, and surprisingly, 83% of them were in favor of legally binding treaties to mitigate global warming. Even more surprising, most of them were already investing heavily in the arena, AND on a profitable basis. Improved energy consumption has been the most notable, but reduction in waste has also proven profitable. Being “Green” is making green.

As an example, Wal-Mart intensely planned out their transport system, and reportedly are now saving about $200 million per year. Tesco, the big British supermarket firm has taken similar steps, and claims to be saving almost $300 million per year. The Carbon Disclosure Project which charts energy emissions of over 500 large companies now reports that 59% of energy efficiency projects undertaken will be profitable within 3 years---a 33% rate of return. That is profitability.

Closer to home, Scythe & Spade was hired to manage a very large farm in Central Idaho which was a mess, and after wells, pumps, sprinkler systems, ditches, etc. were repaired and revamped, return on the farm more than doubled, much of that due to water savings.

A HAPPY NEW YEAR TO ALL!

Very Merry Christmas

from your friends at Scythe & Spade

A short but meaningful message from all of us to all of you:

VERY MERRY CHRISTMAS TO YOU

Merry Christmas,
Happy New Year too.
May your dreams come true,
And may a Christmas Star
Shine brightly where you are.
We wish a very Merry Christmas to you.

Author: Tamara Moir

Corn Bottles

by Chas Bonner

While we complain about $4 per gallon gasoline, many of us buy bottled water at $8 per gallon ($.99 for a one pint plastic bottle of water). Then we run up the cost by dumping into the garbage, and current estimates are than 25% of all land-fill is plastic bottles. Decomposition of those bottles might take 1000 years, again adding to societal cost.

Naturally, there is a push for more environmentally friendly bottles, and the agriculture community is again the beneficiary. Clear, plastic bottles can be made out of almost any starch, corn, beets, potatoes, etc., by a process of fermentation which eventually produces polylactic acid which is yet another polymer.

For almost 20 years many companies such as Newman’s Own, Whole Foods or Wild Oats have used starch based bottles, but it was not until Wal-Mart decided to improve their sustainability image, and start using starch based bottles that the industry took off.

Some of the pluses of starch based containers are that it takes an estimated 65% less energy to make compared to oil-based polymers, manufacturing processes produce about 68% less greenhouse gases, corn bottles can degrade into fertilizer in short time (if properly composted), and we cannot imagine going to war over corn or potatoes.

There are always minuses to every product, but they are becoming fewer as we gain more knowledge about the product and manufacturing. Today, starch based bottles cannot take hot product; they melt. If thrown in the garbage with oil based polymers, the starch based containers lose their ability to compost, and take just as long to degrade as others.

Despite the downsides, we continue to see improvement in costs and processes, so we can foresee the day when virtually all food containers will be food based, and someday when all containers are made from reproducible sources.

And in the meantime, all of us in the agriculture business will see improvement in demand which never hurts our business.

Agricultural Revolution

by Danielle Stephens

We have done blogs in the past about sustainability, commodity prices, future food sources and shortages, and what it all means to farm owners and employees.

Doing more research on the subject has been most interesting, and one of the best sources of long-term outlooks has been McKinsey & Co., a recognized expert in future planning, and not just for the agriculture industry, but for all business.

McKinsey recently published two interesting articles, one entitled “A New Era for Commodities” and the second entitled “The Next Agro-Industrial Revolution.” Of paramount importance (facts we all know but bear repeating):

• Over 200 years ago, Thomas Malthus wrote that growing populations would eventually die out due to starvation, pestilence, or war. The Industrial Revolution disproved his theories---or as we increasingly hear, maybe just postponed them.
• In the past century, commodity prices continually declined on a constant dollar basis because of better efficiencies and discovery of new sources. In the last decade however, commodity prices have steadily increased, and show no signs of later decreases.
• In food commodities, increasing populations, growing middle classes, reduced land availability, reduced water, and slowing productivity increases will exacerbate shortages and keep prices high on a relative basis.

We encourage our readers to go to both McKinsey sites. They are quick reading.

While knowledge of the facts and theories is critical, of more importance is “What do we do with the information and how do we increase opportunity and decrease risk?”

At Scythe & Spade, one of our company goals is that all team members keep abreast of industry developments and know how to improve productivity while reducing costs. I am personally reminded of a book written by Andy Grove, former CEO of Intel Corporation, entitled “Only the Paranoid Survive.” Fear is a great motivator and forces continual improvement.

Non-Blog Blog

by Chas Bonner

Knowing that consistency is important in the area of information dissemination, we are sending this short blog. However, it is used solely to make sure our readers have seen the article just sent by Brett MacNeil, and covering a very important topic to farmers today.

Note the link to his article entitled “IRRATIONAL EXUBERANCE.”

We have already seen positive feedback from readers.