All over the news tonight again! Food Shortages

[furrowtickler]

Burbot, you are on a world beyond pluto man.

[Vader]

Charlie, if you think the supply problems are nearly over, you may have forgotten ethanol. Remember oil is now touching $120.00 per barrel and gasoline may be going to $1.50 a liter. What does that do for the profitability of ethanol plants and the demand for grain.

The US used about 80 million tonnes of corn last year for ethanol. Just imagine what the US is spending on oil imports. That factor alone will drive their renewable fuel strategy. The "noise" about food shortages will not deter the construction of more ethanol and bio-diesel facilites. The recently passed RFS will continue to fuel the industry. Eventually there could be 160 million tonnes of grain going into ethanol. If they get the technology for cellulosic ethanol that will take some acres away from food production to produce crops like swithgrass.

This roller coaster ride is not over yet.

[Vader]

I meant switchgrass.

[Vader]

Let me ask a question.

If you could produce biodiesel/ethanol to run your farm machinery and the cost was very close to the price of fuel from your supplier, who would you rather pay to produce your fuel, the oil company or yourself?

How many here would rather continue using fossil fuels because they feel that it is a crime against humanity to convert food into fuel?

Now in general terms you might say that the consumer should decide whether grains are made into food or fuel based on their buying decisions and what they are willing to pay for the two products.

However my question is slightly different, since on our farms we can control directly whether a portion of our grain production goes into biofuels. In fact you could base this decision, not on the simple economics of price substitution between fossil fuels and biofuels. You might decide that even if the biofuel option was slightly more costly the price disadvantage may be more than offset by the increase in grain prices resulting from a reduction of grain supplies. You might call this a form of "supply management". If farmers collectively chose this option just how much grain could we cause to disappear into our tractors, combines, and picup trucks? If a corresponding amount of fossil fuel became surplus along with the associated refining and retailing capacity would that have an impact on fuel prices? Since most markets respond to supply and demand you could argue that as a result of farmers not using all that fossil fuel they would not be contributing to the demand driven increases in the price of gas at the pump.

Just to further rationalize this move consider that a hundred years ago every farmer in North America used a portion of their production to fuel the horsepower on their farms. What percentage of your production did that consume?

Ultimately the whole world will have to find alternative sources of energy. Perhaps the average citizen could, with a major conservation effort, largely convert to renewables. It is unlikely that farmers will be able to till the soil using wind power. It is just a fact that it takes a certain amount of energy to produce energy, or to put it another way that a certain amount of "drag" is involved in energy production. And food is energy. Farming and food production is not free. There is no perpetual motion machine that can plant and harvest our crops.

So let me repeat the question and direct it to the consumers of food.

Farmers need to consume energy to produce food. Would you find fault with farmers for producing their own energy to guarantee your food supply in an environment of spiralling fossil fuel costs?

Just like oil production where a certain percentage of the oil is left in the resevoir because of the laws of nature, so too the productive capacity of an acre of ground must be reduced by that amount of energy required to fuel the process.

[Vader]

If any of you have read Ayn Rand's satire called "Atlas Shrugged" you will remember that part of the hypothesis of the book was a machine that could produce abundant free energy. Well it appears that many people have read this book and are trying to sell the concept back to the general public at a profit. I found this post on engadget.com

Steorn: inventors of infinite energy, destroyers of laws of thermodynamics?
by Ryan Block, posted Aug 18th 2006 at 11:48AM

We're sure most of you are well aware of the first law of thermodynamics, which states that energy cannot be created or destroyed, and the second law, which states that putting energy into a system will always result in a loss in potential output -- these are the reasons why everybody buys gas, why we pay for electricity, and in many ways why the world economy is shaped the way it is. Which is why whenever someone comes along and says they've developed a technology that undermines hundreds of years of scientific study with the ability to create boundless amounts of free energy with no emissions, well, you have to imagine we'd cry snake oil -- but it would seem Steorn, claimers of such an absurdity, has already launched a PR campaign to circumvent naysayers such as ourselves. In fact, the Irish tech company issued an ad in The Economist announcing a challenge to 12 of the worlds' finest scientists -- to be chosen by them (hey, is Hwang Woo-suk available?) -- to step forward and disprove their infinite clean energy technology. And once their technology isn't disproved -- and they obviously believe that it won't be disproved -- they'll begin licensing it to the world's energy companies (and charitably freely licensing it for rural water purification and electricity generation). If it's the real deal then after all the congratulations are all over and we've reevaluated the fundamental underpinnings of physics as we know it, perhaps all humanity's energy ailments are finally going to come to a close. But the chances it could be a large PR hoax toying with our desperate need to revamp our global energy situation? Well, let's just hope Steorn proves us all wrong and changes science forever.

[charliep]

Actually not disagreeing with you but looking at current prices. Just an observation that Dec. MGE wheat is $9/bu versus $12 plus in March. Can the market push back to $12 in the next month or two without new information (eg weather impacting US corn yield potential)? Assuming the northern hemisphere crops and southern hemishere wheat crops have cooperation from mother nature, the process of rebuilding world wheat stocks will begin again (or at least that is what the international grains council tells us).

Corn is a truly interesting situation. The US needs the acres this spring and cooperative weather for high yields this summer to feed their ethanol industry. A $6/bu corn market is building in a least some weather concern. I have to note the impact of this price on our livestock industry - particularly if the Statcan barley acreage forecast proves correct and Canada is potentially a US corn importer again. $6/bu CBT corn futures translates into $300/tonne western Canadian feed grain prices. Under the current meat supply situation (and perhaps economic), can the N. American industry can pass along these increased costs to consumers? Does that mean a smaller cattle and pig industry?

If a weather problem occurs, then all bets are off but a person will have to sort the short term reaction from the longer term equilibrium. For anyone who has done some new crop pricing, owning some out of the money calls is likely a good investment as an insurance policy.

[bucket]

Vader the PHILANTHROPIST.

This goes against your liberal ways. You better talk to ralphie soon. Liberals don't like people who forget to take of themselves first. Even Al gore was caught the other day misleading the public about some great ice shelf. Turns out it was a piece borrowed from a computer generated movie.

Hey vader since you had time to spew - why don't you answer some questions on the other threads about the costs of buybacks.

[Vader]

Thank you Mr. bucket.

Perhaps that was meant as an insult albeit rather lame.

There are many definitions of philathropy. The classic one of giving away money would certainly not apply to a poor dirt farmer.

I like this one.

Philanthropy is defined in different ways. The origin of the word philanthropy is Greek and means love for mankind. Today, philanthropy includes the concept of voluntary giving by an individual or group to promote the common good. ...
www.mscf.org/DonorResources/DR_Glossary.html

[bucket]

Bio fuels to blame? I hear this all the time. In canada don't you think that when the cwb issued pros last year it spoke volumes that they and the world didn't want our milling grain. In comparison farmers were being sold on high yield ethanol wheat that would move and get paid.

It will continue and just wait until the federal government allows or these ethanol builders use flow through share offerings for ethanol plants. That how the oil industry was reborn in Alberta. There will be very little milling wheat grown. And poof 500 leeches out of work in Winnipeg.

[bucket]

Vader

Wow your catching on. See how my training will help you become a better liberal politician.

See, you self absorbed yourself in the insult/compliment so you don't have to answer the real questions about the buyback scheme in which you are taking care of yourself. Classic liberal.

[Burbert]

Vader, Thanks for putting the Ritz cracker fans, back in their tiny little box, (ie trash the CWB) Us decoder ring and tin foil hat guys still believe!

[cottonpicken]

Monetary expansion is driving this,and nothing else matters.

I cant wait till orange juice goes parabolic and everybody is standing around scratching their butts saying weather,supply,demand.

[agstar77]

If there is a shortage of food why are grain and oilseed prices dropping while inputs are rising? Funds have pulled money out of the ag sector and are back into equities. Farmers are being conned into planting more and being squeezed harder. The real joke will occur if N.A. crops fail or at least come in short.

[jensend]

to a large extent ethanol is irrelevant to the grainfarmer. the actual net returns will be the same whether grain is used for food or fuel because the farmer has no influence over his cost structure so any extra revenues to fuel will not flow through. the only ones who might actually benefit by increased food prices are the organic producers if the premium to organic production remains intact.

[TOM4CWB]

C.P.

"Monetary expansion is driving this,and nothing else matters."

I must agree.

Consider this:

Oil is being pushed up... because that is the policy of the UN and world powers.

Higher price = less consumption. I now drive a VW Jetta... instead of my 1t Chev.

And... on top oil co's don't mind one bit if oil is $120/b

Why should we go and mortage our farms... to plant the crop this spring... and produce 25% more... to get 50% less?

Vader as done us all a big favour... by dropping $30/bu durum... and $20/bu DNS.


When milling wheat is $10 or $25/bu... it doesn't much matter what pedigree it is... as long as it makes good flour!

There are 101 ways to skin a 'Designated Area' Beaver... and the CWB has had over 80 years to practice!

Food Shortages... Beaver Skins. If short energy prevented groceries from getting to the consumer... or a computer glitch... or whatever else prevented us from visiting to supermarket... THEN there would be a shortage!

For the first time... local folks are actually asking for... and buying flour from our farm!

HOARDING is the answer.

Every consumer on the globe should be convinced to put 200lb of good Beaver flour in the bottom of the pantry... plus 50 lb of rice... 10 bottles of Canola oil... and 500lb of pulses!

That would put the prices through the roof... consumer driven... pure supply and demand!

Fransisco... put that into a spread sheet...and lets see how many years it would take to meet this demand!