Food prices and corn and politics

Summary:  Ethanol is evil.*  Food prices are naturally cyclical.

 A good harvest means lower prices, in general, and a poor harvest means higher prices, in general.   Left to their own devices, food supplies pretty closely match demand over time, and in general, they get closer to that demand level over time, but random factors like weather, disease and pests interfere with this natural efficiency, both in good and bad ways.

It's pretty easy to understand.  If you're a farmer, you produce what you can consume or sell; in today's world, most farmers sell most of their production.  If you don't sell it, you have to either store it until you can sell it -- higher costs -- or just discard it.  Sometimes, even after storing it for a while, you have to discard it, which is the worst possible outcome.

Farmers can and do change crops from year to year, for a variety of reasons.  One of those reasons is the price being offered for a particular crop.   People who feed animals, and I'm one of those people, consider the overall costs of a particular food, and make changes from time to time, sometimes on efficiency, but it all boils down to price.  If I can cut my feed bill by 10% and get the same results, I'll do that as soon as I can. 

A local chicken producer near me was complaining that fish meal prices had doubled because a fish meal plant in Chile had burned down in an earthquake.   He buys his fishmeal from a supplier in Alaska.  Why would a fire in Chile affect prices in Alaska, or Washington?  Because in toady's world any producer can sell to any consumer anywhere in the world, and when the music ended, someone didn't get the fishmeal that they needed, and so everyone bid more for it -- globally.

Governments like stable food supplies.  There's nothing to make your populace more angry than being hungry, and in poor countries this is a very real, and very present, risk.  If you are in the government, you better make sure that you have adequate food around or you'll pay a significant poltical price for not. **

Rich made this comment on my blog: 

(Rich is quoting me: )

"...prices are up for corn, and the primary reason is our continued use of food as fuel in ethanol..." It is easy to blame ethanol for all the ills in the world, but I haven't seen an explanation for why prices dropped so much last year. Was less ethanol produced last summer, leading to less demand for corn resulting in a greatly reduced price? Wheat was about $6.50/bu last spring, dropped to almost $3.50/bu at harvest last summer, and is now around $8.50 to $9.00. How did ethanol production cause that? Ethanol has linked the price of grain to the price of oil while eliminating the great surpluses that stole all the profit out of grain production in the '70's. A better explanation can be found at: http://frankwjames.blogspot.com/2011/01/recovering.html Quantitative Easing 2 (increasing the money supply by 20%) also had to have an effect on the price of corn and other grains. How can corn not increase in price if it takes 20% more dollars to purchase a bushel of corn?

(you'll find the comment in its original context here)

*In 2010 the USDA estimates that we will consume 4.950,000,000 (4.95 billion bushels) of corn to produce ethanol.  That production is directly subsidized by the government -- for every gallon of ethanol produced, there's a 45 cent subsidy, and the market for this alcohol is artificial.   The demand is created by a set of federal laws mandating the addition of alcohol to motor vehicle fuel, despite the fact that it's very expensive and reduces mileage -- requiring people to use more fuel to accomplish the same work.   Ethanol is really popular in local governments, because it increases gas tax revenues -- people are paying for more gallons of fuel everywhere ethanol is used. 

That's 40% of the corn production of the USA, by the way.  40% of the corn produced that would normally either feed animals, be used for seed or for human consumption is consumed in this enterprise. 

The blog entry referenced by Rich isn't really the point I'm making.  It's written by a corn and soybean farmer, and talks about subsidies and the fact that in times when we've had crops to spare, poor people around the world couldn't afford to get it shipped to them even if we gave it to them for free.  That's a different issue, a political issue, and as I've said earlier, something for governments to worry about. 

My issue with ethanol production, or in a wider sense, converting any sort of food into something other than food, is that if you add even a little tiny amount of demand to our finely tuned food system that causes huge disruptions. 

We're playing musical chairs, and suddenly everyone realizes that someone is going to be left standing.  And that's where the rich countries outbid the poorer ones, and during that bidding, prices go crazy.  That's my concern. 

Do we have to worry about food supplies in the USA?  Not really.  We're the richest country on this planet.  We spend less of our total income on food than anywhere else in the world.  We could double our food costs and still be below many countries, measured as a percentage of income.  No worries about hunger here.  We can outbid anyone. 

But I don't think that we should be using our riches to starve people, or to increase the misery index of the world.  That's just plain evil. 

** Bolivia is a country that would rather not have food riots or political unrest related to food supplies, so they're buying food. This is not limited to Bolivia, and is true in the USA as well. Unstable food supplies in the USA have caused us to enact a series of laws and regulations that attempt to stabilize our food supply. Some of these work, some don't.

Scaring people for a living - Kellene Bishop

When I was looking for background information on corn prices when I wrote this blog entry one of the search terms I was using ran across a web site apparently authored by Kellene Bishop, that is an odd mix of topics, which include things like classes that she offers on how to use coupons (really?  who knew?), home defense ("...the most extensively certified female NRA Instructor in the Western States...") and various other topics.   It's enough of an odd mix that I really struggled for a way to describe it. 

Kellene makes a point of talking about how her site does not accept advertising, and she is quite proud of that; her site basically exists to sell her courses, some tv show she's working on, and her web instructional videos, which is all fine and good, but I mention it because its central to my argument here. 

My opinion?  Kellene makes a living out of scaring people.  Bad people are going to come to your home.  The food world as we know it will end.  Produce prices in the winter are higher than in the summer, and you should be warned!   In fact, a recent topic has been about coming food shortages, and she's encouraging people to buy food to avoid the coming shortage.  Oh yea.  and take her seminars.  Don't forget the seminars. 

My nit to pick with Kellene is not that she has an opinion.  Clearly she does.  I'm fine with that.  But when asked for backup for something she's said, she brushes it off.  here's an example: 


"Michele 02.16.2011 08:15


I’m trying to share this with my family, & they keep wanting “sources” for your info. Could you direct me to where to start them looking?


Personally, I’ve been to every sale so far this week & will keep it up as long as I can."


Kellenes response:

"Kellene # 02.16.2011 11:01


Sorry Michele, I simply do not have time for that. What I have shared can easily be found with an internet search, interviews of grocers, and USDA and UN officials, library archives to establish historical trends etc. This has been a multi-week effort but the information is certainly not secret by any means. If someone wants to wait to do something until they see the lamestream media confirm it, then that’s their prerogative. But by the time it hits Fox News, supplies will be gone.

My philosophy with this blog is “here’s the information.” Do what you want with it. But my hands are clean in sharing it and rather than spend any additional efforts in holding people’s hands to get them to do the right thing, I will instead focus my efforts in making sure that I provide peace and comfort for my family. No one has to take my word for it but I also believe that the internet is not the appropriate source to look to for a confirmation of these kinds of matters–rather a “gut check”, listening to the Spirit, etc. is the ultimate authority on the truth of all things and is usually much more convincing that any research I could point a person towards.


Pray about this. If it’s true, you’ll know it. If not, you’ll have a stupor of thought on it. It’s times like these that play out exactly why Spiritual Preparedness has the highest priority of all other principles of preparedness "

Got it.  Kellene says whatever she'd like, and if you'd like to have some facts to back it up -- well, she's kinda busy.  don't ask her. 

She's claiming that the corn harvest -- which appears by reports to be the 2nd best USA domestic corn harvest EVER RECORDED was a disaster.  Why?You'll find kellenes blog entry -- with the offending corn reference and my (edited by kellene) response in the comments here.

She's apparently had some previous controversy.  You'll find it here. 

Folks, the food system is fine.  prices are up for corn, and the primary reason is our continued use of food as fuel in ethanol.    But Kellene sure is entertaining. 

cold and snow

I know that you guys in the great white north and east coast will consider our 18-20f (-8c) weather to be just middling cold, but for  western Washington its frigid.  We usually get a week or less of this weather, and right now is when its happening. 

It's seriously frosty, and I spent 4 hours today rebedding the pigs and making sure that everyone had liquid water and food.  Was thankful that I got a load of chips from a local tree service yesterday; that 10 yards was really handy.  Nothing like pine-scented chips to make a shelter cozy. 

The cold keeps the produce that we get in pristine form, too.  Here's a picture of part of the load we got on Friday.  The heads of lettuce and cabbage are perfect.  Here's what I'm feeding to my pigs. 

 The melons are their special favorites, but they'll also dig the grapes out and savor them.  Pigs really do get into their food. 

Sold a boar today; contrarian small farm thinking

...Well, not this boar, but his grandson.   I've been noticing an increasing number of people buying animals from me with the intention of breeding them.  Sold a young adult boar today out of my herd;  I don't keep many boars, and this one had looked very good as a piglet, and continued to pass the test as he grew. 

It's interesting.   There's definitely a contrarian movement in small farms.  When meat prices go up, people buy livestock and raise it themselves.  The reasons are varied, but the main reason that livestock prices rise (and meat prices) is the price of feed.  So much of the pork and chicken we produce isn't really affected by the weather, it's raised in buildings that are climate controlled -- so the only real variable is the cost to bring them to market, and that's feed costs. 

What I've noticed is a growing number of people with small acreage (1-5 acres) who are considering breeding, and asking for good quality stock to do so. 

With the rise in feed prices, I'm doing several things to keep my costs down.   between 30 and 40% of my feed at this time is fruits and vegetables from produce departments; I'm going to be more intensively planting crops that I can feed to my hogs, and I'm also carefully culling my lower producing animals.  But I'm going to bet that pork will be pretty popular this summer as it has been, so I'm going to reserve a larger number of weaners to bring to market as BBQ pigs. 

When the cost of feed rises, agribusiness tends to reduce herd sizes, and this helps the price go up, too.  So I'm going to listen a little to what my customers are telling me and follow their lead a little -- I'm going to have more pigs for market in June/July/August than I would normally because I'm betting that other producers in this area are going to reduce their herds out of fear of feed costs, and I'm thinking that the market (and prices) will be better this summer for it. 

Getting a little more formal about planting

It's getting pretty close to the time that I start plants indoors for later transfer to the garden or greenhouse; and this year I'm going to make a planting calendar, so that I know the schedule for my plantings. 

For planning your garden, I've found this table from Territorial seeds to be handy. 

The basic rules that I have on the garden is that I prefer to plant things that taste much better fresh (carrots spring to mind) are expensive to buy (lettuce, sugar peas, peppers) or things that are possible items for resale (pumpkins, watermelons, basil).   I'd also like to plant things that have a dual use (ground cover/livestock feed) or that might be good crops in the future. 

This year I am going to plant 4 acres of corn to supplement my animal feed later in the year, as I expect corn prices to be outrageous for the rest of this year.  Thank you, ethanol lobby. 

The greenhouse allows me to stretch my season a little, both at the start and end.  So I can actually start planing salad greens and cold-hardy plants like peas around the first of march.  The majority of the warm-weather crops I'll start the 2nd week of march, and plan on transplanting in April.  For the squash and other items that take up a bit of space, I'll wait, sometimes until late may or early June.  Last year it was a cold and wet spring, followed by a cold and wet summer, and the only real production I got was from the greenhouse for most of the year.  The fall was good, and warm, and that's when the squash did very well. 

So what I do is look down my list to see if there are items I'd like to be done by a particular time - like pumpkins by Oct 1st - and then work backwards from that date to see what the planting date I'll need to meet to reach that goal. 

For things like salad greens I look at my weekly consumption, and plant 4x that amount each week.  Inevitably there's some loss of plants and if you end up with extra produce, you can always find an animal that's overjoyed to eat it -- or, if you have a true abundance, a market for it.  Last year I produced about 500lbs of organic basil and I sold the majority of it. 

My list of plantings for this year  (am i missing something good?  Tell me!)

Salad/greens
Spinach
Catnip
Lettuce (Romain, iceberg)
cabbage
arugula
Sugar peas
Tomatillos
Tomatoes (various varieties)

Beans
String beans

Squash
Zucchini
Summer squash
Acorn squash
Pumpkin

Melons
Watermelon (2 varieties)
Cantelope

Herbs
Basil
Mint
Cilantro

Peppers
Thai
Habenero
Sweet bell
Anaheim

Animal fodder
Turnips
Parsnips

Experiments
Honeydew
winter squash (haven't selected variety)
sweet corn
field corn

Dead beaver

There is a pretty healthy beaver population in the area around my farm.  I see them from time to time, swimming in the drainage ditches, and i find their handiwork everywhere -- trees and bushes chewed off, sometimes farther off the ground than I would think possible.    Click on any picture for a bigger version. 

This is a pretty small beaver, but it's the first one that I've ever had the chance to look at close-up.  It weighs about 25lbs, and the fur is a dark, lustrous red. 

The carcass is relatively fresh; probably  hit an hour or two ago, and it's still flexible. 

The front paws are smaller than I would have thought -- and the rear are bigger than I would have thought.  it looks like they have swim fins on. 

the famous beaver chisel teeth.  You wouldn't think that they could cut down a tree, but I see the evidence every day. 

Front foot

rear foot. 

it is a fresh carcass.  I wonder what beaver tastes like?

Turkeys think its spring

 The turkeys have decided it's spring.  They toms are starting to strut in earnest. These are the survivors, and they're in pretty good shape for as wet a winter as we've had this year. 

 As we do each year, we'll pen the turkeys to collect their eggs and incubate them.  My goal is to get our turkey production completely on farm.  We'll probably hatch about half the turkeys we sell this year; the other half we'll get from hatcheries. 

The turkey on the right is unimpressed.

Moving food - no lets move the pigs

Andrea was having trouble scooping up the last of one weeks produce delivery; the ground was soft, and the tractor was getting stuck now and then.  So instead of moving the food to the pigs, we moved the pigs to the food.  A quick loop of electric fence rope and a few push-in posts, and the pigs trotted right out to vacuum up the remaining food. 

The pig on the right in the picture above is one of our living room pigs. 
I wrote about her when she was half-grown here, about halfway down that blog post, and again
here when she was out messing with the sheep.    She's a sow in her own right now, with a couple of litters under her belt and still going strong. 

The pigs will form a skirmish line and advance across the wood chips; there's fruit and bread mixed into the wood chips, and they're carefully sorting it all out and eating their favorites.  They leave the oranges and onions, though.  Apparently pigs hate food that starts with O. 

The fence is pretty insubstantial, and I can do this because they've had long experience with it and take pains not to touch it from that experience.  I wouldn't do this sort of containment for pigs that weren't conditioned to the electric fence. 

Final foreclosure update?

In December of 2010 I purchased a townhouse at a foreclosure auction. 

I wrote an update about the situation here, talking about the overall financial picture.  I still don't understand why citibank didn't redeem the property prior to auction, but hey, it worked out for me. 

To get the former owners to move out, I offered them $500 and a date, and they agreed, and moved out on schedule. 

 While the property is in pretty good shape, they had hung up quite a few pictures and so on, and the paint was darker than I'd like, so we took the opportunity to patch the holes and repaint with a lighter, warmer shade on the walls, and to change the ceiling color to white. 

Many times, when they're doing these projects, it's built and painted as cheaply as possible.  In this case they painted everything beige -- walls, ceiling, hallways, etc.  I've always liked a different color ceiling, and in this room having it be white makes a big difference in the rooms feel. 

The two stripes on the wall just to the left of the light fixture are test strips of paint; wanted to see what it would look like on the wall.   I had to replace the dishwasher -- didn't work, and repairs were fairly expensive, so easier to go get another and pop it in, and I'll probably have the stove looked at; some issue with the oven.  Financials: 
 
  Painting costs:  $400
  New dishwasher:  $650
  Stove repair (projected) $125
  Move out inducement:  $500
  Purchase price:  $101,000
Total acquisition price:  $102,675

I had to carry it vacant for 15 days while it was painted, but it's occupied now, and that's a short vacancy for rental properties, especially in this sort of market. 
 
As a rental, this 3br 2.5 bath/2000 sq foot will rent for $1100-1200/month.  This is down $200 a month from the last few years, and this reflects the overall market.

Basically I'm able to rent it at a rate of 1% of the total purchase price per month, after taxes.  This is the lowest cost unit in this development in terms of purchase price, so I'm probably doing ok...but that's not the whole story.    After property taxes, and with a set-aside to cover stuff like a management firm to manage the rental, I'd expect an ROI of around 6%. 

 Prices in this area (north marysville, wa) are still going down.  An identical floorplan unit next door was repo'd by a bank, and put on the market.  The bank has been cutting the price $5-8k/month for the last year.  They initially listed it at 160k, and the last listing that I saw had it listed at 137k.   There are people who want to buy it, but these are relatively cheap units, and folks who want to live here typically can't get financed.   The traditional buy-and-flip model wouldn't work here as it has in the past.  My intention is to keep it as rental property for the foreseeable future. 

Summary:  Rental property purchased for $50/sq foot, closed on day of auction, no issues removing former owners, property in good shape and occupied. 

this is probably the last post I'll make on this property. 

WA state: "Cottage food operations"

Your help needed

The Washington state legislature is working on a bill that I think is interesting.  From my read it would allow the production of some types of food (primarily things like bread and jam) in residential kitchens for on-premises sale. 

It appears to be aimed at allowing people to produce food for resale without having to either rent an inspected kitchen, or bring their residential kitchen up to inspected kitchen standards,  which can be expensive either way. 

There are various items in the bill about packaging and labeling the food, but the biggest limitation that I see is that the total gross yearly sales is capped at $15k/year.  An early draft had an even lower limit, at 5k a year. 

For most small businesses, gross sales of $1,250/month (that's what $15k a year is...) means that there's just not enough dollar volume to even be a part-time job.

If you had a gross sales limit of $15k A MONTH there's enough dollar volume there to be able to make a modest living, and if I have any problem with this bill, it's this.  I'd like to see the dollar limit substantially raised.

At $15k a month gross sales, you'd have enough revenue  to be able to make a modest living off the business (remember, all of this food has to be prepared, packaged and marketed, and $15k doesn't go very far at all) and if its successful enough, to be able to afford the inspected/commercial kitchen.   A modest living:  $2k a month. 

The foods that they're talking about here are shelf-stable products, and the risk to the consumer is pretty low, and it doesn't cost the state or county anything -- in fact, being exempt from inspection will probably save the state/county money. 

Here's how you can help: 
Email the bill sponsors and ask them to raise the gross sales limit on bill 5748  to $15,000/month, and tell them that you appreciate them supporting small farms and helping small businesses. 

rockefeller.phil@leg.wa.gov | See his district here
Maralyn.Chase@leg.wa.gov | See her district here
 Honeyford.Jim@leg.wa.gov | See his district here

You'll find a current draft of the bill here.

Food and feed and prices and plans

The price of pig feed has risen for me from $280/ton to $390 a ton, and appears to be going higher.  This really tracks an overall rise in the price of food worldwide.  The price of wheat has doubled in the past year, for instance. 

It means that this year I'm going to have to raise the price of my pigs and chickens, and I've got to think carefully about how many pigs and chickens I raise for sale.  The basic issue is that people don't like paying higher prices, but will after a while.  So by reducing my production a little, I skip the grumbling from the customers about the higher price, and start producing more when people are used to the higher prices. 

Plus it means that my capital (as in $$) needs are lower. 

In countries where a large portion of the population lives in poverty, some governments are stockpiling food so that there isn't famine, and the associated riots.  Boliva is one example in this news story.

You can expect to see the price of all food to go up this year.  My guess is you'll see meat prices go up first -- chicken, pork - and then beef eventually. 

Remember that part of this is our using food for fuel -- converting corn into ethanol.  So the next time  you talk to a policymaker, ask them why they're doing that. 

Rising food prices push millions into poverty
Food prices in China soaring

updates

Sorry about the delay in blog postings; here's a roundup

farm life: 

New births: 
4 litters of piglets born, 1 off-season lamb (ram got out and got to the ewes, apparently at the right time for this particular ewe),  and the cows and sheep are all doing fine. 

Weather: 
Buckets of rain.  More rain that I've seen in my 6 years on this property.  Mud everywhere.  finally had to buy some gravel so that I wouldn't get stuck so often in my driveway.  Very challenging to keep anyplace dry for the animals to sleep.

Season: 
 Ordered seeds, chicks and poults, started some early-spring plants in the hoophouse.  Lettuce and peas right now, more stuff as the season progresses.  The hoophouse is turning out to be a pretty useful structure.  More on that later. 

Government: 
Got a ticket from snohomish county animal control because my pigs got out of my fence and onto the road.  It's not much, $50, but it reminds me that I need to do more fencing this year, and think about more durable fencing, too. 

Foreclosure:  Offered the former owners $500 to move out by feb 1st, and they did so.  Place is in pretty good condition; a carpet cleaning and some patch/paint (primarily screw holes left by pictures) and it's good to go.  I've got it occupied already.  So far so good.  More on that later, too. 

Trolling craigslist

"This dog ran into my store and appeared lost and frantic. We had a hard time catching it, and I couldn't keep it at the store,so I've brought it home. It is very scared of me even though i have treated it kindly. If this is your dog please contact me so that you can get it. It is chasing my cat and made a mess of my bathroom where I'm keeping it and I'm afraid that if I let it out it will be hard to catch again.


Thank you for looking"

Responses so far: 

"im sorry to tell you, but the dog you found is a coyote.... probably not domestic, and TRYING to eat your cat"

"You might want to call the ACME Company for an anvil, and keep your roadrunners away from it."

"Are you serious? THat is not a dog...it's a coyote and of course it will eat your cat. Let it loose. It is not a domesticated animal."

"lol. Is that post a joke? That is really funny.  I'm sure you know that isn't a dog, it's a wild coyote."
(same fellow, after he figured out i was pranking him: )
"LOL  Good one!!!"

"It looks to me like a coyote.   Are you quite sure it's a dog?  If it is a coyote, be very careful as it could be rabid.     Perhaps you should call Animal Control."

"UMMM, maybe it is so frantic and is making messes because it is not domesticated.  I think you caught yourself a COYOTE!  I think I'd call animal control if I were you!"
"

I live on 15th in in Shoreline and I saw one nearby. That is a coyote. Google image it. They can be small." "Please Google "coyote" and find pictures. I think that may be what came into your store and it could have rabies so keep clear until you are sure"   This one is interesting:  My brother lost his two coyote/husky mixes a couple days ago when his roommates left the front door open to move a couch in without putting the dogs away. They were litter mates, Rex and Kara. He weighed about 40 and she weighs between 30 and 35. They are only two and half. I can have him come pick them up, or I can on my way to visit him. PLease call/text me at xxx-xxx-xxxx Thanks!"  note:  they can claim the coyote no matter what sex it is.  I think they want a coyote!   "I am pretty sure this is a coyote. I would   let it out of your house immediately.  "   "are you joking!???  this is a coyote- let him go- hes lost and confused and they DO attack people...."   "That is a coyote! Is this a joke?  I hope so, or you unknowingly have a coyote in your house."   "Are you sure it's not a wild dog? Or cyote? It really looks like one? Maybe call animal control, be careful!"   " Google coyotes to see pics.  I'm 90% sure that's what it is...  Keep your cats away just in case.  My mom is telling me there ARE coyotes around here.  Maybe it isn't..." "That's not a dog that is a wild wolf and I would not try to get close to it it will eat u"   "sorry pal-that is a coyote not an indoor cuddly puppy"   "If this is the truth , your dog is a coyote, You may want to let it go."   "I think what you have is a coyote.  35# is about right.  call animal control if you are serious that you found this."   "Don't be alarmed but, I think this dog is a cyote. That is why it is probably not tame. It is probably semi tame from people feeding it. It probably ran into the store because it was hungery. The best thing to do with it is to release it in the area you found it unless its a bad spot in the city then i'd release it in the woods. That or someone caught it and was trying to keep it as a pet."

"UM!! This,  I DO believe, is a coyote!! NOT a pet!! Call the "wild life" people"

Andreas bad day

 Andrea is a beautiful girl.  On most days, anways.  But if she's working on the tractor and manages to catch her face in the tractor door... well.    I still don't understand how you get your face stuck in the tractor door. 

I guess it's kind of an extra cheekbone.  She was laughing about it pretty soon after.  I told her that she could wear football player black and tell people that she's rooting for one of the teams in the superbowl. 

She's fine.