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Sunday, April 20, 2008

Oil at $117 a Barrel. What is a Farmer to Do?

Two-Horsepower Solution

At some price, oil will become too expensive to burn as a fuel, at least for some applications. If you believe in free markets, you accept the facts as they are, oil is always at the correct market price. While the world seems to tolerate high fuel prices, rising food prices are more problematic. In many parts of the world the rising price of food is approaching the red line. People look at food as a right and oil as a commodity, but you need oil to produce food. 

Not all oil is distributed based on price. It is sold at a deep discount within Saudi Arabia, Russia, Venezuela, Iraq, Kuwait and Iran. The producing countries are extracting a targeted tax on the oil consuming countries. The consuming countries seem unable to respond. 

The contradictions compound. The squeeze continues.

________________________

Farmers eye options as fuel, fertilizer costs soar

FREDERICK, Md. (AP) Washington Times
Maryland farmers are facing record-high diesel fuel and fertilizer costs this plant season, the result of the escalating costs for crude oil and natural gas.

Diesel prices Friday averaged a record $4.168 a gallon nationally, more than triple the price last year for fuel widely used to power farm equipment.

U.S. prices for natural gas — a major component in the production of the nitrogen fertilizer anhydrous ammonia — have nearly doubled since late August, boosting field-preparation costs.

Brian Clark, a University of Maryland Cooperative Extension agent in Clinton, said the increasing costs of inorganic fertilizers has resulted in many farmers in Maryland's farm belt and the region turning to such alternatives as manure.

"But there is little they can do about record diesel prices," he said.

Chuck Fry, a Frederick County turkey and dairy farmer, said he pays $120 to $140 to refuel his diesel-powered, poultry-litter spreader, compared to $30 to $40 last year. The increase has made Mr. Fry use his large equipment more judiciously, he told the Frederick News-Post.

Ragina C. Averella, a spokeswoman for AAA Mid-Atlantic, said farmers also are dealing with higher livestock feed costs.

The increased production costs, plus the higher cost of transporting farm goods to market on diesel-powered trucks, are ultimately passed on to consumers, she said.

"It is a horrible cycle that translates to higher transportation costs to the marketplace and still higher prices for the eggs, milk, fruits, vegetables and other consumables," Mrs. Averella said. "All of this while we all continue to grapple with higher pump prices, too."

According to the American Farm Bureau Federation's Marketbasket Survey, retail food prices increased about 9 percent in the first quarter of 2008.

Historically, diesel fuel was cheaper than gasoline because it was easier to refine, according to industry researchers. Since the Environmental Protection Agency issued mandates in September 2004 requiring major reductions in the sulfur content of diesel fuels to improve air quality, the price generally has been higher than that of regular gasoline, according to the Energy Information Administration.

Mrs. Averella said retail diesel fuel prices are likely to remain high as long as crude oil prices and world demand for distillate fuels remain high, according to forecasts by the EIA.

42 comments:

  1. A kinswoman in the Philippines says gasoline is 60 pesos per liter. That translates to 6 dollars and 14 cents a gallon, in a country where the typical daily wage is from seven to ten dollars a day. So count your lucky stars.

    The Philippines is a net importer of rice, and market price has doubled in the last six months to about 36 pesos per kilo. A lot of people are taking rice off the market and hoarding it in warehouses to be sold when it exceeds 40 P a kilo, which only accelerates the misery. Add to this the wheat prices, which makes bread harder to come by, and you've got the makings of food riots. But riots don't plant crops.

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  2. time to raise and tax food to all opec and other oil producing countries.

    we also need to raise the costs of medicine, technology & weapons to all opec nations with a tariff

    the use provides 1/2 of all food aid to the poor of the world, this is a wonderful thing...

    the opec nations have added 1 trillion dollars extra in the last 12 months JUST on the increase in price of crude...

    It's time for the world to tax, for the world, the opec's oil production directly to pay for 3rd world's food needs... (would that not be a kick in the pants)

    even if we dont do that, we need to start a shame war on opec to show the world how much they earn for doing nothing and how much they take out of the mouths of the world's poor

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  3. There is no going back. We don't even have the horses, to go back to farming wtih horses. If things were to get really tough, and we were facing starvation, we'd have to ration fuel, and give it to the farmers and security services first.

    Build those nuclear generating plants now. That will help. Drill Alaska. Drill California, Maine, Florida.

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  4. When you hike through most of the forests in the east, you will often find stone walls which were made by the indigenous Indians and European settlers as they cleared fields. The marginal fields were abandoned to woodland as the western farms were opened and supported by the rails. It would not surprise me to see some of that land cleared again for farming.

    So much good land has been wasted by absurdly unplanned suburban sprawl.

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  5. Every year around here, somewhere in farm country, there will be an 'old time farm day', and the fellows will get out some horses, and plow a few acres.

    But you got to harvest, too, with horses, a big task. There are many old pictures around, I have some in my personal keeping, of the old harvests, with eight, ten, horses pulling an old harvester. With as many mem working. We are not going back. It would be mass starvation. The horses would eat half the harvest. We best think ahead, make plans, create energy. No more of this bs from the 'environmentalists'.

    Their bellies rumble too.

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  6. When our political parties begin to compete over who can best provide energy to the masses, instead of a farce of this day time talk show crap we have got going, we'll be getting somewhere.

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  7. So much good land has been wasted by absurdly unplanned suburban sprawl.

    Well, some has been wasted. That is for sure. But you'd be surprised how much is sitting around out there, in the Conservation Reserve Program, or just kind of otherwise let go.

    We have got enough land. We are not in the situation of Japan, say. But energy, this is a scary thing we are approaching.

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  8. Barack Obama was greeted by the largest crowd of his campaign Friday night in Philadelphia. Some 35,000 people jammed into Independence Park to see the Democratic presidential candidate, four days before this state's crucial April 22 primary.

    Frank Friel, director of security at the Independence Visitor Center, made the official estimate.

    The crowd exceed the 30,000 who greeted Obama and Oprah Winfrey in December in Columbia, S.C.
    ----

    Oprah Winfrey as Secretary of Energy?

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  9. Soaring food prices and global grain shortages are bringing new pressures on governments, food companies and consumers to relax their longstanding resistance to genetically engineered crops.

    Fancy that!

    After years of accusing Americans of trying to ram our Frankenfood down the throats of the hungry masses, now they are switching to the mode of accusing America of withholding Frankenfood from the hungry masses.

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  10. if the saudis want to sent an additional 15,000 students to the usa raising their numbers to 30,000 I say fine, it just should cost them $12,000,000 each.

    Let's CHARGE a fair price for our universities to OPEC members

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  11. I'll have a little mustard with that Frankenfoodfrankferter, if you please.:)

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  12. I'm trying to figure out what kind of combine that is, cutting the soybeans. Looks like a Deere, but the unloading augur is in the wrong place. hmmm...

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  13. hmmm...maybe it's an Optimo 550, made in
    Argentina.

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  14. I hope nobody missed the Compassion Forum last night. I know I did.

    "I have my vengeance. It's a form of verbal judo where you let your opponent over-extend himself by sharpening what kind of nuisance he is."

    I repeat: Do not encourage. And do not let yourself become further associated with someone that Wretchard and his commenters do not want or need around. Again, obviously, this is just a friendly suggestion, as he will be back.




    Food prices have gotten high enough here (and boy are they ever) that State for the first time gave its employees a monthly COLA.

    I know what you're thinking: Oh, those poor State Dept. people. Yeah, yeah, yeah.

    How poor Colombians manage to eat, I just don't know. But I've started subsidizing every panhandler in my neighborhood.

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  15. My spouse DID watch the creepily-named Compassion Forum. He talked to the television much of the time. What really got to him? Obama's assertion that Republicans want to get rid of the separation between church and state.

    A smarter moderator would have responded, "You mean Republicans want state-directed religion?"

    But no. The assertion goes essentially unchallenged. This is how infuriatingly fatuous our election politics have become. On both sides.

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  16. "But we can make either two years of military service or two years of full-time community service mandatory, age 19 to 21."

    Make indentured servants of our young people in order to improve their social lives, right upon their having completed their first twelve years of indentured servitude?

    That's a pretty heinous idea, especially when proposed by an older person to whom it won't apply.

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  17. From Cato Unbound:

    Teens in Crisis

    by Michael Strong
    The Conversation
    April 18th, 2008

    I am delighted that Richard Rothstein acknowledges the ways in which cultural influences undermine teen learning and that “it is reasonable to speculate that our high school organization is flawed.” Analyses of American education that fail to acknowledge that we have an especially severe problem at the secondary level strike me as surreal. For some time TIMSS international comparisons have shown that our performance is mediocre in 4th grade, worse in 8th grade, and worse yet in 12th grade — and it is striking that this pattern of relative decline as one goes up the grade levels holds true both in the NAEP longitudinal trends that Rothstein originally cited as well as in TIMSS international comparisons.

    We can’t make any significant progress in secondary education until we acknowledge that teen culture in the United States has changed dramatically in the last fifty years, and that this change has mostly been deleterious both to trends in adolescent learning and adolescent public health. By almost every measure public health in the United States has improved in the past fifty years, with adolescent well-being being the one major exception. Relative to the 1970s there have been some upward trends, but from a parent’s perspective the possibility of a catastrophe is still very real. One out of seven 9th grade girls attempts suicide. More than a third of high school aged girls reported feeling sad or hopeless almost every day for two weeks. Depression is tied to risky teen sex and drug and alcohol use. Accidents, homicide, and suicide are the leading causes of death for 15-19 year olds.

    [...]

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  18. WE will be fine for food. We have scads of pretty good/fair land lying fallow. Heck, we've got over 34 Million Acres in the CRP. A lot more is being just barely utilized for grazing, or is just lying completely unused.

    It takes about 8 gallons of diesel to grow an acre of corn (av. yield last year - 151 bushels.) In other words: After allowing for distillers grains, we can farm about 90 acres with the ethanol produced from one acre. Don't get all hung up on the difference between diesel, and ethanol; for reasons that would take too long to go into here, it's not a big deal.

    Wheat is down about $0.70/bushel in the last two days, and about 40% from the intraday high a couple of months, ago. Beans are down about 25%. Corn's dropping also.

    Your food problems are coming from Communist/semi-communistcountries with planned/command economies with goofy export/import schemes (note: Colombia's trying; but they need to go ahead and drop their import tariffs on ag. products, and worry about the FTA later.)

    Oh, food was up 0.2% in the last CPI Report.

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  19. Hate to rain on your parade, Rufus, but we're already rationing food here in America. In America! I feel as flabbergasted as that lady in GWTW who said, "Yankees! In Georgia!"

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  20. Trish: That's a pretty heinous idea, especially when proposed by an older person to whom it won't apply.

    That older person might possibly have been a Navy Brat who followed her dad into the NAV for six and then rolled that into a career as a civilian, still in the NAV, currently surpassing a total of 24 years of service.

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  21. A couple of Costcos had above normal demand for rice exported from India, and they tried to protect their regular customers by limiting purchases to past performance?

    Aww T, Come on. THAT ain't "rationing."

    THAT is searching Deperately for a Headline.

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  22. You did so voluntarily, T. (So did I and my brother as lifelong Army brats, and so will my son.) Does not make the proposal less objectionable - if anything, just the opposite.



    Rufus, if they're unilaterally removed the FTA has to be renegotiated - either side would like to do that about as much as stick their head in the oven. Additionally, unilateral removal is simply too easy to reverse in times of crisis, perceived or real; the treaty is a "commitment device" that makes such a reversal much more difficult for subsequent leaders and policy makers to reverse.

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  23. "We" aren't rationing food. Apparently some COSTCO stores are limiting rice purchases in some stores to one 50 lb bag per customer.

    The media takes one specific fact and blows it into a global crisis to boost advertising.

    Then the gullible try to hoard food to stave off imaginary starvation thus causing the next global crisis.

    We need a stupid tax!

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  24. Correction:...the treaty is a "commitment device" that makes such a reversal much more difficult for subsequent leaders and policy makers.






    I can tell you another thing, T: The military doesn't want 'em on those terms. With good reason.

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  25. I missed my appointment with Farm Services Agency, so can't report until next week about taking land out of CRP--if they know anything yet. The rumors are, something is up, but maybe just rumors.

    Clinton is reported to be up by double digits in Penn. This thing might go to the convention.

    A beautiful thing to watch, a beautiful thing to watch...

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  26. Rufus, if they're unilaterally removed the FTA has to be renegotiated - either side would like to do that about as much as stick their head in the oven. Additionally, unilateral removal is simply too easy to reverse in times of crisis, perceived or real; the treaty is a "commitment device" that makes such a reversal much more difficult for subsequent leaders and policy makers to reverse.

    I Agree; That comment was particularly Not well thought out.

    BTW, there IS a big problem coming in Global Agriculture; and, that is FERTILIZER. We could have a couple of Really "Interesting" years as a result of fertilizer shortages.

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  27. Bob, I've heard that there are some rumors that they are considering letting farmers take some land out of the CRP without paying "penalties." I, also, read that the farmers that don't have land in the CRP are crying "Foul." They don't want more land in production, and lowering corn/bean/grain prices.

    Is that what you're referring to?

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  28. Trish: You did so voluntarily, T. (So did I and my brother as lifelong Army brats, and so will my son.) Does not make the proposal less objectionable - if anything, just the opposite.

    I proposed that there was a dearth of the sense of community, and I was asked for a solution. My solution is contrary to a rugged individualist ideology of absolute freedom. I suppose you can't have your cowboy cake and share it with other people too.

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  29. Yes,
    Ruf, but I don't really know what I am talking about here( as usual:) ) I have just heard rumors.

    If and when I know more, I will report.

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  30. "My solution is contrary to a rugged individualist ideology of absolute freedom."

    I'll take my community without a government program of coercion, thanks. And so would you.

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  31. Rufus: We could have a couple of Really "Interesting" years as a result of fertilizer shortages.

    Maybe we could get a conveyor belt going to transport all the bullshit away from inside the Beltway.

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  32. A fertilizer crisis, rufus?

    If only it would hit during election season. (Ba-dum-DUM)

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  33. I'm perfectly willing to 'throw a little crap around' :)

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  34. Yeah, I guess you all are right. It's Definitely not a "Fertilizer" crisis. Transport? Maybe. The Conveyer belt is a good idea. :)

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  35. The 340,000-member National Union of Public and General Employees (NUPGE), along with more than 40 other labour organizations in Canada, the United States and Mexico, will file a charge Wednesday against the U.S. under the North American Agreement for Labour Cooperation (NAALC), the labour side agreement to the North American Free Trade Agreement (NAFTA).

    The complaint will be lodged formally in Ottawa on Wednesday on behalf of the labour groups by members of the Canadian Association of Labour Lawyers /Association canadienne des avocats du mouvement syndical (CALL/ACAMS). (Participating organizations are listed below.)

    ...

    The complaint is being filed on the eve of a high-level political meeting in Ottawa between the labour ministers for the three countries. Members of the CALL/ACAMS will deliver the message personally to the ministers when they gather in Ottawa on Thursday 24 for a luncheon to discuss the NAALC.


    Labor Standards

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  36. Here you go, Bob.

    The tragedy of suburbia:
    http://www.ted.com/index.php/talks/view/id/121

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  37. The United Nations Climate Conference in Bali in 2007 set the world on a two-year path to negotiate a successor to the 1997 Kyoto Protocol. Yet not even the most rosy-eyed delegate could fail to recognize that stabilizing atmospheric carbon-dioxide concentrations is an enormous undertaking.

    ...

    The reference scenarios used by the IPCC's fourth assessment report (AR4) were described in a 2000 Special Report on Emission Scenarios1 (SRES). In 2003, the IPCC decided not to develop comprehensive, new scenarios for AR4, so they used the SRES scenarios and related pre- and post-SRES scenarios2, 3 based on similar socioeconomic assumptions.

    ...

    We also use the emissions-scenario building blocks in our analysis, but adopt a frozen-technology baseline to reveal the full challenge of decarbonization. Using this baseline also reveals the huge amount of emissions-reducing technological change built into the SRES and similar scenarios.


    Dangerous Assumptions

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  38. http://google.com/

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    ReplyDelete