Corn is over $3 bushel compared to an average of about $2 for the last few years. Soybeans are over $8.50 per bushel vs. an average of about $6.00 for the last few years. While prices are up, and good marketing will pay off for many producers, many others may be facing yield problems as a result of drought conditions.
SOYBEANS: The recent dry weather will be deleterious to those plants that were stressed during the flowering and pod fill stages. Flower and pod abortions will likely result. For those already in grain fill, pods will be lighter of may have fewer beans.
CORN: Corn has had many obstacles this year. After planning early we had a late freeze. Frost typically will not hurt corn at less than V4 stage, but there were some worries about germination with cold ground temperatures. Early planted corn may have made it through critical pollination stage but the heat and drought was pretty bad when it came to grain fill. Ears may not be as full, and test weights will likely be much lighter. The dry conditions will force the plant to draw moisture and nutrients from the stalk if it can’t get all that is required from the parched soil. ( notice the quick browning we’ve seen in the last couple of weeks). This will greatly affect the physiology of the plant when it comes time for harvest, and could result in more loss due to harvest conditions.
Estimates put corn yields down 26 bu/ac vs 146 bu/ac last year.
Friday, August 31, 2007
Thursday, August 30, 2007
DISCRETIONARY MONETARY POLICY IV: What should we do now?
The fed has already taken action by lowering the discount rate. We will see if further liquidity is provided in September with a lowering of the Fed Funds target.
Many are opposed to this on the grounds that we should let the markets ‘sort things out.’ Others think that we should maintain a focus on controlling inflation.
It was not unfettered markets that lead to these things ( see previous entries). At this point unfettered markets will call for a correction, which could be devastating to the economy. They could lead to a recession or at least massive losses in the financial and real estate sector.
Since this correction would be very much the consequence of Fed action,( once again the boom/bust result of discretionary monetary policy previously discussed) should the fed use their ‘discretion’ to help cover up their mistake? If they do will we not expect to see another bubble in some other sector in 5 more years? Or, regardless of inflation or expectations, are we experiencing a monetary contraction that calls for fed action to provide liquidity?
These are the questions we have to ask, and they illustrate the uncertainly and instability that we live with in the face of discretionary monetary policy.
Many are opposed to this on the grounds that we should let the markets ‘sort things out.’ Others think that we should maintain a focus on controlling inflation.
It was not unfettered markets that lead to these things ( see previous entries). At this point unfettered markets will call for a correction, which could be devastating to the economy. They could lead to a recession or at least massive losses in the financial and real estate sector.
Since this correction would be very much the consequence of Fed action,( once again the boom/bust result of discretionary monetary policy previously discussed) should the fed use their ‘discretion’ to help cover up their mistake? If they do will we not expect to see another bubble in some other sector in 5 more years? Or, regardless of inflation or expectations, are we experiencing a monetary contraction that calls for fed action to provide liquidity?
These are the questions we have to ask, and they illustrate the uncertainly and instability that we live with in the face of discretionary monetary policy.
Friday, August 24, 2007
DISCRETIONARY MONETARY POLICY III: Towards an Explanation of the Sub-Prime Mortgage Crisis
In a previous post I presented a brief overview of a hybrid monetarist/Austrian view of bubbles and business cycles. This explained the bursting of the ‘agriculture bubble’ in the 70’s. Similar logic would also explain the tech bubble in the 90’s.
The current issue is the recent disruption in the housing market and the sub-prime lending ‘meltdown’ as they are calling it.
By keeping interest rates artificially low for so long- via discretionary monetary policy- resources were devoted to housing at a level that is not supported by fundamentals.
In addition, with low interest rates, the lenders were able to cast their nets much deeper and much wider, getting a large applicant pool with risk characteristics that were unprecedented. Many financial institutions felt that should the house of cards fall, the fed would come to the rescue with liquidity. For this reason risks were taken that otherwise would have been avoided ( this is referred to as a ‘moral hazard’ problem).
After the true fundamentals of the housing market began to materialize, and the bad risks presented themselves with defaults and late payments, chaos ensued.
The current issue is the recent disruption in the housing market and the sub-prime lending ‘meltdown’ as they are calling it.
By keeping interest rates artificially low for so long- via discretionary monetary policy- resources were devoted to housing at a level that is not supported by fundamentals.
In addition, with low interest rates, the lenders were able to cast their nets much deeper and much wider, getting a large applicant pool with risk characteristics that were unprecedented. Many financial institutions felt that should the house of cards fall, the fed would come to the rescue with liquidity. For this reason risks were taken that otherwise would have been avoided ( this is referred to as a ‘moral hazard’ problem).
After the true fundamentals of the housing market began to materialize, and the bad risks presented themselves with defaults and late payments, chaos ensued.
Tuesday, August 21, 2007
DISCRETIONARY MONETARY POLICY II: Macroeconomic Linkages to Agriculture
In the previous post, I noted that the miscalculations that result from discretionary monetary policy may have resulted in many of the economic crisis we have experienced this century.
With regards to agriculture, the macroeconomic linkages are very important. In the 1970’s expansionary monetary policy led to inflation. This was initially reflected in higher commodity prices and the appreciation of land values. These conditions and easy credit made it possible for many farmers to expand and invest in their operations.
Later, when the fed became worried about inflation the direction of monetary policy changed. Interest rates increased and the farm sector suffered with record foreclosures in the late 70’s and 80’s. The agriculture ‘bubble’ had burst.
This was discretionary monetary policy at its worst. Economists at the time believed there was a trade off between inflation and employment-i.e. economic bliss. It turned out that this was only a temporary phenomenon, that once realized, resulted in a crash.
With regards to agriculture, the macroeconomic linkages are very important. In the 1970’s expansionary monetary policy led to inflation. This was initially reflected in higher commodity prices and the appreciation of land values. These conditions and easy credit made it possible for many farmers to expand and invest in their operations.
Later, when the fed became worried about inflation the direction of monetary policy changed. Interest rates increased and the farm sector suffered with record foreclosures in the late 70’s and 80’s. The agriculture ‘bubble’ had burst.
This was discretionary monetary policy at its worst. Economists at the time believed there was a trade off between inflation and employment-i.e. economic bliss. It turned out that this was only a temporary phenomenon, that once realized, resulted in a crash.
Friday, August 17, 2007
DISCRETIONARY MONETARY POLICY: Towards an Explanation of the Sub-Prime Mortgage Crisis
Many economists agree that in the short run, an increase or decrease in the money supply has real effects on the economy. That’s how the fed raises and lowers the fed funds rate, buy buying and selling bonds and utilizing printed money to manipulate the money supply in such a way that the fed funds rate (determined by overnight borrowing between banks) remains at it’s target level.
So, if the federal reserve wants to try to stimulate economic activity, at least in the short run it can inject liquidity into the market by lowering its targeted fed funds rate. This is why many people agree that the fed should be able to conduct discretionary monetary policy. When markets are volatile the fed's action can calm tensions.
The problem is that the tensions that the fed may be trying to calm are a symptom of problems created by previous discretionary monetary episodes. The general consensus of the Austrian and Monetarist/Rational Expectations views of monetary policy (admitting in substance they actually differ in many ways) is that expanding the money supply when not fully anticipated can lead to an artificial expansion. Decisions are made based on conditions in the credit market that may not be supported by the true fundamentals of the market. I.e. credit is cheaper than it should be. People take on riskier projects, leveraging increases, and if it is anticipated that the fed may intervene when problems ensue, they take on more risks than otherwise. This creates a moral hazard and adverse selection problem, and a series of bad ‘mal-investments.’
Later, when there are problems with inflation, or risky plans start to fall through, this house of cards built on miscalculated expectations and easy credit begins to fall. It is expected that the Federal Reserve will take action to alleviate concerns at this point. However it is often the case that the fed will have inflation concerns and be reluctant to act. A monetary contraction may follow with a recession. Many economists believe that this ‘boom and bust’ scenario is characteristic of discretionary monetary policy and that most of the recessions (including the great depression in the 30’s) we have had are a direct result.
So, if the federal reserve wants to try to stimulate economic activity, at least in the short run it can inject liquidity into the market by lowering its targeted fed funds rate. This is why many people agree that the fed should be able to conduct discretionary monetary policy. When markets are volatile the fed's action can calm tensions.
The problem is that the tensions that the fed may be trying to calm are a symptom of problems created by previous discretionary monetary episodes. The general consensus of the Austrian and Monetarist/Rational Expectations views of monetary policy (admitting in substance they actually differ in many ways) is that expanding the money supply when not fully anticipated can lead to an artificial expansion. Decisions are made based on conditions in the credit market that may not be supported by the true fundamentals of the market. I.e. credit is cheaper than it should be. People take on riskier projects, leveraging increases, and if it is anticipated that the fed may intervene when problems ensue, they take on more risks than otherwise. This creates a moral hazard and adverse selection problem, and a series of bad ‘mal-investments.’
Later, when there are problems with inflation, or risky plans start to fall through, this house of cards built on miscalculated expectations and easy credit begins to fall. It is expected that the Federal Reserve will take action to alleviate concerns at this point. However it is often the case that the fed will have inflation concerns and be reluctant to act. A monetary contraction may follow with a recession. Many economists believe that this ‘boom and bust’ scenario is characteristic of discretionary monetary policy and that most of the recessions (including the great depression in the 30’s) we have had are a direct result.
Tuesday, August 14, 2007
VOTING PARADOXES
I’ve previously discussed one issue with government decision-making, being type-two error bias.
The next issue I would like to introduce is the arbitrariness of putting decisions to vote. Let’s look at a particular voting scenario to illustrate this.
VOTER X: A >B >C
VOTER Y: C> A> B
VOTER Z: B> C >A
If the voters were voting on this issue, voter X would prefer law A over law B and law B over law C. In shorthand – A > B > C. To summarize all of the choices of the voters we see that 2/3 of the voters have preference A > B, 2/3 of the voters have preference B > C, but when voting A vs. C, 2/3 have preference C > A.
See if you follow the application of this. If we have two elections and the first is made between policy B and C, then B will win (2/3 of the voters have preference B > C). If this is followed by a second election A vs. B (Because C was eliminated in the first election) then A will be the law that ultimately passes by majority rule.
Now if the order is changed, in which the first election is between A and B, A will win (because 2/3 of the voters rank A > B). Then in the second election when A goes against C, C will be the law that passes by majority rule (again because 2/3 of the voters have preference C > A).
So when voting on these policies, the process becomes arbitrary. The outcome depends on the order of the vote, so a cycling of choices ensues. According to public choice economist Gordon Tullock, any outcome can be obtained in majority voting by at least one voting method. There is nothing magical and there is no ‘truth’ in the outcome just because it was reached by majority rule. Majorities can be irrational and dangerous. The exception to this is if preferences are single peaked. I will present this in a separate entry, because it presents problems of its own.
The next issue I would like to introduce is the arbitrariness of putting decisions to vote. Let’s look at a particular voting scenario to illustrate this.
VOTER X: A >B >C
VOTER Y: C> A> B
VOTER Z: B> C >A
If the voters were voting on this issue, voter X would prefer law A over law B and law B over law C. In shorthand – A > B > C. To summarize all of the choices of the voters we see that 2/3 of the voters have preference A > B, 2/3 of the voters have preference B > C, but when voting A vs. C, 2/3 have preference C > A.
See if you follow the application of this. If we have two elections and the first is made between policy B and C, then B will win (2/3 of the voters have preference B > C). If this is followed by a second election A vs. B (Because C was eliminated in the first election) then A will be the law that ultimately passes by majority rule.
Now if the order is changed, in which the first election is between A and B, A will win (because 2/3 of the voters rank A > B). Then in the second election when A goes against C, C will be the law that passes by majority rule (again because 2/3 of the voters have preference C > A).
So when voting on these policies, the process becomes arbitrary. The outcome depends on the order of the vote, so a cycling of choices ensues. According to public choice economist Gordon Tullock, any outcome can be obtained in majority voting by at least one voting method. There is nothing magical and there is no ‘truth’ in the outcome just because it was reached by majority rule. Majorities can be irrational and dangerous. The exception to this is if preferences are single peaked. I will present this in a separate entry, because it presents problems of its own.
Thursday, August 09, 2007
PUBLIC CHOICE THEORY
Often times, when it comes to environmental protection or any other issue of social interest, government intervention is justified on the basis that markets are dominated by businesses and wealthy individuals that are motivated by profit and greed. As a result, their incentives are perverse, and their actions will not be in the best interest to society. Laws and regulations must therefore be implemented to curb their behavior, and achieve a responsible outcome.
The problem with this logic is that for probably close to 30 years now the area of economics known as Public Choice has demonstrated that government decisions can be viewed as rational choices made by individuals to maximize their well being. They may not focus on profits or share prices, but people in government do focus on budget maximization, personal benefits, and power. As the power of the federal government has expanded, the role of big business in influencing government through these channels has been magnified. ( this is referred to as ‘rent seeking’ )
Public Choice Theory allows us to be more precise in evaluating public policy alternatives by looking at the incentives of government and big business and the institutions that influence their behavior.
The problem with this logic is that for probably close to 30 years now the area of economics known as Public Choice has demonstrated that government decisions can be viewed as rational choices made by individuals to maximize their well being. They may not focus on profits or share prices, but people in government do focus on budget maximization, personal benefits, and power. As the power of the federal government has expanded, the role of big business in influencing government through these channels has been magnified. ( this is referred to as ‘rent seeking’ )
Public Choice Theory allows us to be more precise in evaluating public policy alternatives by looking at the incentives of government and big business and the institutions that influence their behavior.
Public Choice
There are a lot of interesting things going on in Agriculture. Alternative fuels, the farm bill, animal waste,organic agriculture, biotechnology, global warming, concerns about sustainability etc. Many of my posts focus on how markets deal with these issues.
However, we make choices and markets function in an environment heavily influenced by government. I have briefly touched on governmental issues in some of my posts. Those dealing with type two errors and the tragedy of the commons were two examples. It is my goal to address governmental affairs more formally in some of the posts that will follow labeled 'public choice'. I will still throw in updates related to energy and natural resource issues, but it will be useful to have the public choice context because the analytical framework it provides is necessary for effective government policy in these areas.
However, we make choices and markets function in an environment heavily influenced by government. I have briefly touched on governmental issues in some of my posts. Those dealing with type two errors and the tragedy of the commons were two examples. It is my goal to address governmental affairs more formally in some of the posts that will follow labeled 'public choice'. I will still throw in updates related to energy and natural resource issues, but it will be useful to have the public choice context because the analytical framework it provides is necessary for effective government policy in these areas.
Monday, August 06, 2007
FOOD PRICES AND ETHANOL
You may have heard the headlines about the resulting increase in food prices from demand for ethanol. There is actually much more to the story.
It is true that in this country, we eat corn, wheat, and soybeans. We may not directly consume them, but they are our staples. We used to devote about 60% of our corn crop to animal feed ( meat & milk consumption), 20% to exports, 15% to food byproducts and direct consumption, and the remainder for industrial uses and ethanol. Now almost 18% of our corn crop is being devoted to ethanol production. Of course this will put upward pressure on the price of corn. And as people divert acres away from wheat and soybeans it will put upward pressure on the prices of those commodities too. So it would seem palpable that food prices would follow the trend. They have to some degree.
According to a recent study :
Link
http://www.ethanolrfa.org/objects/documents/1157/food_price_analysis_-_urbanchuk.pdf
“Increasing petroleum prices have about twice the impact on consumer food prices as equivalent increases in corn prices”
Compared to energy, even corn prices impact a much smaller segment of the food market. Advancements in genetics and technology are allowing producers to continue to meet our demands for both food and fuel with minimal impacts on price. This year the markets have responded via producers planting the largest corn crop since WWII. There are projections of a record crop of 11 billion bushels this fall.
I admit that much of this demand and the response to it stems partly from a 51-cents per gallon tax credit, and a 54-cents-a-gallon tariff on imported ethanol, and ethanol based oxygenate reqquirements for all gasoline. As I mentioned in a previous post, gasoline demand and production is based largeley on governent subsidies and regulations as well. The point is that the market is responding given the circumstances and the crisis is not what many are making it out to be.
It is true that in this country, we eat corn, wheat, and soybeans. We may not directly consume them, but they are our staples. We used to devote about 60% of our corn crop to animal feed ( meat & milk consumption), 20% to exports, 15% to food byproducts and direct consumption, and the remainder for industrial uses and ethanol. Now almost 18% of our corn crop is being devoted to ethanol production. Of course this will put upward pressure on the price of corn. And as people divert acres away from wheat and soybeans it will put upward pressure on the prices of those commodities too. So it would seem palpable that food prices would follow the trend. They have to some degree.
According to a recent study :
Link
http://www.ethanolrfa.org/objects/documents/1157/food_price_analysis_-_urbanchuk.pdf
“Increasing petroleum prices have about twice the impact on consumer food prices as equivalent increases in corn prices”
Compared to energy, even corn prices impact a much smaller segment of the food market. Advancements in genetics and technology are allowing producers to continue to meet our demands for both food and fuel with minimal impacts on price. This year the markets have responded via producers planting the largest corn crop since WWII. There are projections of a record crop of 11 billion bushels this fall.
I admit that much of this demand and the response to it stems partly from a 51-cents per gallon tax credit, and a 54-cents-a-gallon tariff on imported ethanol, and ethanol based oxygenate reqquirements for all gasoline. As I mentioned in a previous post, gasoline demand and production is based largeley on governent subsidies and regulations as well. The point is that the market is responding given the circumstances and the crisis is not what many are making it out to be.
Tuesday, July 31, 2007
WHEN SHOULD PERSONAL DECISIONS BECOME GOVERNMENT DECISIONS
WHEN SHOULD PERSONAL DECISIONS BECOME GOVERNMENT DECISIONS
According to many , the harms from cigarette smoke are well known and scientifically documented. Many on both sides of the issue have stated that they purposely avoid restaurants that allow smoking by eating elsewhere.
One might compare bans on smoking to restaurant inspections, bans on leaded paint, or drunk driving laws, all of which are implemented to protect the public from harm.
When should government get involved? One case is when individual decisions harm others without compensating them. This is what economists refer to as a ‘negative externality.’
In some cases, if individuals can come to an agreement on their own through property rights, exchanges, contracting, or some other type of arrangement, government intervention may not be necessary. However, in the case of drunk driving, it is not possible for other drivers to know who is intoxicated and who isn’t. No agreement can be made to avoid harm. In purchasing a home, one may not be able to contract for the effect of lead poisoning if they are unaware about the use of lead paint. When eating at a restaurant, it may not be possible to know if food was handled properly before eating. In these cases when there is both an information and bargaining problem, the theoretical argument for statutory action by government is often accepted.
When it comes to making an argument for implementing a smoking ban, two important questions should be asked. Is there sufficient information available so that when citizens enter a restaurant they can recognize the presence of harmful second hand smoke and understand the danger it poses? If so, does the market provide a way to easily avoid it? If you have trouble answering this, re-read the first paragraph.
According to many , the harms from cigarette smoke are well known and scientifically documented. Many on both sides of the issue have stated that they purposely avoid restaurants that allow smoking by eating elsewhere.
One might compare bans on smoking to restaurant inspections, bans on leaded paint, or drunk driving laws, all of which are implemented to protect the public from harm.
When should government get involved? One case is when individual decisions harm others without compensating them. This is what economists refer to as a ‘negative externality.’
In some cases, if individuals can come to an agreement on their own through property rights, exchanges, contracting, or some other type of arrangement, government intervention may not be necessary. However, in the case of drunk driving, it is not possible for other drivers to know who is intoxicated and who isn’t. No agreement can be made to avoid harm. In purchasing a home, one may not be able to contract for the effect of lead poisoning if they are unaware about the use of lead paint. When eating at a restaurant, it may not be possible to know if food was handled properly before eating. In these cases when there is both an information and bargaining problem, the theoretical argument for statutory action by government is often accepted.
When it comes to making an argument for implementing a smoking ban, two important questions should be asked. Is there sufficient information available so that when citizens enter a restaurant they can recognize the presence of harmful second hand smoke and understand the danger it poses? If so, does the market provide a way to easily avoid it? If you have trouble answering this, re-read the first paragraph.
FARM BILL: WHERE OUR ALLEGIANCES LIE III
A final excerpt from an e-mail I received encouraging me to oppose new farm bill legislation.
“When you think of family farmers, do you picture comedian David Letterman or former NBA star Scottie Pippen? How about billionaires like David Rockefeller and Microsoft co-founder Paul Allen?”
In a previous post I addressed the issue of the family farmer.
“Local governments and fad enthusiasts may be trying to capitalize on the romanciticism of old fashioned agriculture to promote tourism via pork barrel spending. I think this undermines those legitimate producers interested in transitioning from tobacco to produce, and tarnishes the image of the modern producer and the self-reliance that modern technology makes possible.”
‘FARMERS’ MARKETS” March 23, see ‘agricultural economics’ label
Here are some additional key facts regarding farm programs:
1) Total spending on agriculture comprises 1% of the federal budget. Of that amount, less than half is allocated to the producer. The bulk of the rest is spent on aid to the poor and school lunch programs.
2) Despite that the funding is a small proportion of total federal spending, there are still market distortions that result from these programs.
One Iowa State University economist has pointed out that up to 1/3 of the price of farmland can be attributed to government payments. In fact many producers have expressed that government programs have increased the price of land and impeded their ability to expand their operation and remain competitive.
In conclusion, to have a consistent position opposing the farm bill you have to be dedicated to embrace modern science and biotechnology and be opposed to creating market distortions.
“When you think of family farmers, do you picture comedian David Letterman or former NBA star Scottie Pippen? How about billionaires like David Rockefeller and Microsoft co-founder Paul Allen?”
In a previous post I addressed the issue of the family farmer.
“Local governments and fad enthusiasts may be trying to capitalize on the romanciticism of old fashioned agriculture to promote tourism via pork barrel spending. I think this undermines those legitimate producers interested in transitioning from tobacco to produce, and tarnishes the image of the modern producer and the self-reliance that modern technology makes possible.”
‘FARMERS’ MARKETS” March 23, see ‘agricultural economics’ label
Here are some additional key facts regarding farm programs:
1) Total spending on agriculture comprises 1% of the federal budget. Of that amount, less than half is allocated to the producer. The bulk of the rest is spent on aid to the poor and school lunch programs.
2) Despite that the funding is a small proportion of total federal spending, there are still market distortions that result from these programs.
One Iowa State University economist has pointed out that up to 1/3 of the price of farmland can be attributed to government payments. In fact many producers have expressed that government programs have increased the price of land and impeded their ability to expand their operation and remain competitive.
In conclusion, to have a consistent position opposing the farm bill you have to be dedicated to embrace modern science and biotechnology and be opposed to creating market distortions.
Friday, July 27, 2007
FARM BILL: WHERE OUR ALLEGIANCES LIE II
Another note related the e-mail in opposition to the proposed farm bill.
“Moreover, by disproportionately subsidizing corn, wheat, and soy, the current Farm Bill encourages us to eat cheap, unhealthy, and fattening processed foods instead of fresh fruits and vegetables. As writer Michael Pollan puts it, "the reason the least healthful calories in the supermarket are the cheapest is that those are the ones the Farm Bill encourages farmers to grow."
It is true that many versions of farm programs reduce risk and increase the price farmers receive for their crops. This would have a supply effect making corn, wheat, soy, and meat products less expensive. However, commodity prices make up a very small proportion of the price we pay for food in the grocery store.
Farmers grow corn, wheat, and soybeans because they are food staples, not because congress legislates it via farm programs. Fruits and vegetables, which are not staples but make healthy supplements to our diets, will always be more expensive because they are riskier and more labor intensive among other things. Farm programs that encourage grain crop production have no effect on this.
With advanced genetics corn, wheat, and soybean products are actually becoming healthier and better for the environment. Vestive soybeans have healthier oils, low phytate corn reduces animal waste and groundwater pollution, Bt corn exhibits lower levels of carcinogenic mycotoxins.
SOURCES:
http://www.asas.org/midwestern/press/allee.html
http://www.plantbreeding.iastate.edu/lowlin.html
http://www.whybiotech.com/index.asp?id=1973\
“Moreover, by disproportionately subsidizing corn, wheat, and soy, the current Farm Bill encourages us to eat cheap, unhealthy, and fattening processed foods instead of fresh fruits and vegetables. As writer Michael Pollan puts it, "the reason the least healthful calories in the supermarket are the cheapest is that those are the ones the Farm Bill encourages farmers to grow."
It is true that many versions of farm programs reduce risk and increase the price farmers receive for their crops. This would have a supply effect making corn, wheat, soy, and meat products less expensive. However, commodity prices make up a very small proportion of the price we pay for food in the grocery store.
Farmers grow corn, wheat, and soybeans because they are food staples, not because congress legislates it via farm programs. Fruits and vegetables, which are not staples but make healthy supplements to our diets, will always be more expensive because they are riskier and more labor intensive among other things. Farm programs that encourage grain crop production have no effect on this.
With advanced genetics corn, wheat, and soybean products are actually becoming healthier and better for the environment. Vestive soybeans have healthier oils, low phytate corn reduces animal waste and groundwater pollution, Bt corn exhibits lower levels of carcinogenic mycotoxins.
SOURCES:
http://www.asas.org/midwestern/press/allee.html
http://www.plantbreeding.iastate.edu/lowlin.html
http://www.whybiotech.com/index.asp?id=1973\
Thursday, July 26, 2007
FARM BILL: WHERE OUR ALLEGIANCES LIE
I received an email recently from someone opposed to the farm bill. Part of their critique was as follows:
“Amazingly, they're some of the people receiving your taxpayer dollars in the form of crop subsidies, which overwhelmingly benefit absentee landlords and big agribusiness at the expense of farmers in America and the developing world who are struggling to feed their families.Here’s one example: In West Africa, millions of desperately poor people farm cotton to make a living, often surviving on less than $1 a day. But our cotton subsidies make it more difficult for these farmers to survive by artificially lowering the price of cotton in violation of international agreements…..”
It is true that cotton subsidies may give our producers an advantage over poor farmers in less developed countries. I understand the author’s critique. On the positive side, advances in biotechnology have if not leveled the playing, certainly improved the standards of living, public health, and productivity for poor farmers.
If we are to believe that the farm bill will be detrimental to small farmers and the developing world, and oppose it on those grounds, then should we not favor a technology that benefits the 3rd world?
Ironically, I would bet that those opposed to the farm bill are also opposed to the promotion of GM (genetically modified) food crops in developing countries. Even people in developing countries that may complain about unfair trade often have their own ironic opinions related to this issue. Zambian President Levy Mwanawasa has been quoted making the statement that he "would rather let his people starve than eat anything 'toxic" - referring to biotech foods vs. conventional and organic. His, and other government’s antitrade policies are often cloaked in concern for ‘food safety’ and other rhetoric.
SOURCES:
"Acreage Under Bt Cotton Set to Increase: Study," Indo-Asian News Service
http://allafrica.com/stories/200706051019.html?viewall=1
“Amazingly, they're some of the people receiving your taxpayer dollars in the form of crop subsidies, which overwhelmingly benefit absentee landlords and big agribusiness at the expense of farmers in America and the developing world who are struggling to feed their families.Here’s one example: In West Africa, millions of desperately poor people farm cotton to make a living, often surviving on less than $1 a day. But our cotton subsidies make it more difficult for these farmers to survive by artificially lowering the price of cotton in violation of international agreements…..”
It is true that cotton subsidies may give our producers an advantage over poor farmers in less developed countries. I understand the author’s critique. On the positive side, advances in biotechnology have if not leveled the playing, certainly improved the standards of living, public health, and productivity for poor farmers.
If we are to believe that the farm bill will be detrimental to small farmers and the developing world, and oppose it on those grounds, then should we not favor a technology that benefits the 3rd world?
Ironically, I would bet that those opposed to the farm bill are also opposed to the promotion of GM (genetically modified) food crops in developing countries. Even people in developing countries that may complain about unfair trade often have their own ironic opinions related to this issue. Zambian President Levy Mwanawasa has been quoted making the statement that he "would rather let his people starve than eat anything 'toxic" - referring to biotech foods vs. conventional and organic. His, and other government’s antitrade policies are often cloaked in concern for ‘food safety’ and other rhetoric.
SOURCES:
"Acreage Under Bt Cotton Set to Increase: Study," Indo-Asian News Service
http://allafrica.com/stories/200706051019.html?viewall=1
Monday, July 23, 2007
SILENT SPRING, OR SILENT HERO?
Not only did Norman Borlaug won the Nobel Peace Prize, but now he has been awarded the Congressional Gold Medal.
Read more:
http://online.wsj.com/article/SB118461857225767963.html?mod=googlenews_wsj
Friday, July 20, 2007
TELEGRAM: BEEF, IT'S WHAT'S FOR DINNER
According to a recent article on the Telegraph (U.K.) eating beef produces more pollution than driving. It is stated that producing 2.2 lbs of beef generates as much greenhouse gas as a car traveling 50 mph for 155 miles. The article ends with a quote stating:
"Everybody is trying to come up with different ways to reduce carbon footprints, but one of the easiest things you can do is to stop eating meat."
link:
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/07/19/nbeef119.xml
Should we really stop eating beef? It is a very nutritional part of many people’s diets and difficult to match. On average 20 of the 29 lean beef cuts have only 1 more gram of saturated fat than a skinless chicken breast per 3-ounce serving. In additon beef is not only low fat, but also very nutrient-rich. Compared to a skinless chicken breast, beef has eight times more vitamin B12, six times more zinc and two and a half times more iron.
Cars are very necessary for transportation, and we know that they produce greenhouse gases, but we don’t stop driving altogether. We continue to produce more and more fuel efficient cars instead. The same can be said for beef production.
Beef production per cow has increased about 185 pounds since the mid-1960s to 585 pounds per cow in 2005. According to the data in the telegraph, for every cow that goes to slaugheter today vs. 30 years ago, increased efficiency in beef production is equivelant to removing from the highway 84 cars traveling 50 miles per hour for 155 miles. ( 185/ 2.2= 84)
Improvements in nutrition, genetics, and management will only improve the ‘environmental footprint’ of beef production. Beef production has never been greener.
"Everybody is trying to come up with different ways to reduce carbon footprints, but one of the easiest things you can do is to stop eating meat."
link:
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/07/19/nbeef119.xml
Should we really stop eating beef? It is a very nutritional part of many people’s diets and difficult to match. On average 20 of the 29 lean beef cuts have only 1 more gram of saturated fat than a skinless chicken breast per 3-ounce serving. In additon beef is not only low fat, but also very nutrient-rich. Compared to a skinless chicken breast, beef has eight times more vitamin B12, six times more zinc and two and a half times more iron.
Cars are very necessary for transportation, and we know that they produce greenhouse gases, but we don’t stop driving altogether. We continue to produce more and more fuel efficient cars instead. The same can be said for beef production.
Beef production per cow has increased about 185 pounds since the mid-1960s to 585 pounds per cow in 2005. According to the data in the telegraph, for every cow that goes to slaugheter today vs. 30 years ago, increased efficiency in beef production is equivelant to removing from the highway 84 cars traveling 50 miles per hour for 155 miles. ( 185/ 2.2= 84)
Improvements in nutrition, genetics, and management will only improve the ‘environmental footprint’ of beef production. Beef production has never been greener.
Tuesday, July 17, 2007
Corn, Ethanol, Markets, and Diversity
http://www.csmonitor.com/2007/0521/p09s02-coop.html?page=1
I’ve recently commented on the above article from the CS monitor. It also contained an additional statement that I take issue with, at least theoretically.
"Any sort of shock to corn yields, such as drought, unseasonably hot weather, pests, or disease could send food prices into the stratosphere. Such concerns are more than theoretical. In 1970, an outbreak of a fungus destroyed 15 percent of the US corn crop.”
I think they want to make the point of how tight supply and demand conditions are and how easily we could see price spikes to ration shortages in case of a drought or some other disaster. (as a result of corn diverted to ethanol production)
But the point is that the corn blight of the 70's was the result of common male sterile inbreds being used to produce most of the hybrids grown then. This common genetic background made almost the entire corn crop susceptible. Most companies have learned their lesson and genetic diversity among corn hybrids has proliferated to meet diverse grower needs since then anyway. Between diversification in crops planted and the risk management tools available in the market, disasters like the corn blight in the 70’s are really much more theoretical than the CS Monitor implies.
I’ve recently commented on the above article from the CS monitor. It also contained an additional statement that I take issue with, at least theoretically.
"Any sort of shock to corn yields, such as drought, unseasonably hot weather, pests, or disease could send food prices into the stratosphere. Such concerns are more than theoretical. In 1970, an outbreak of a fungus destroyed 15 percent of the US corn crop.”
I think they want to make the point of how tight supply and demand conditions are and how easily we could see price spikes to ration shortages in case of a drought or some other disaster. (as a result of corn diverted to ethanol production)
But the point is that the corn blight of the 70's was the result of common male sterile inbreds being used to produce most of the hybrids grown then. This common genetic background made almost the entire corn crop susceptible. Most companies have learned their lesson and genetic diversity among corn hybrids has proliferated to meet diverse grower needs since then anyway. Between diversification in crops planted and the risk management tools available in the market, disasters like the corn blight in the 70’s are really much more theoretical than the CS Monitor implies.
Wednesday, July 04, 2007
OUR COMMONS, OUR CHOICE
“People like the freedom to choose their lifestyles, what they consume and when they consume it,” observes Attari. “However, the environment is a ‘commons’ that we share with other citizens of the world, and when individual choices start negatively impacting others, we need to understand how to change or alter those behaviors.” http://www.prism-magazine.org/apr07/tt_01.cfm
Whenever the cost of one’s behavior is not factored into a price at which a choice can be valued, a commons problem exists. This is in essence what we get from Hardin ( ‘The Tragedy of the Commons’) after applying a little basic economics to his reasoning.
However, according to Coase (‘The Problem of Social Cost’) with the establishment of property rights and markets (bargaining) the externality of the commons can be internalized. Behavior is changed or altered to account for the negative impact our choices impose on others. Demsetz (Towards a Theory of Property Rights) goes on to say that property rights often evolve as a means to internalize externalities. Sometimes given the current state of technology, the costs of developing property rights and markets are greater than the benefits that would arise. However, with technological development, these cost structures change and new options become available. Today we can see how technology has allowed for many externalities (or commons problems) in agriculture to be internalized with examples such as biotechnology and GPS. The article linked above focuses on how engineering can contribute to this end.
The literature referenced above may be broad, but it opens the door for many applications. It is certainly not as narrow and limited as the much older line of reasoning developed by Pigou, which advocates changing and altering behavior based on taxes or command and control governement regulations.
REFRENCES:
Towards a Theory of Property Rights.
Harold Demsetz
The American Economic Review. Volume 57, Issue 2. May, 1967
The Problem of Social Cost
R. H. Coase
Journal of Law and Economics, Vol. 3, Oct., 1960 (Oct., 1960), pp. 1-44
The Tragedy of the Commons
Garret Hardin
Science, Vol 162 no 3859 Dec 13, 1968 p. 1243-1248
The Economics of Welfare
Arthur C. Pigou Macmillan and Co. London, Fourth edition, 1932. First published: 1920.
http://www.econlib.org/Library/NPDBooks/Pigou/pgEW.html
A Meta-Analysis of Effects of Bt Cotton and Maize on Nontarget Invertebrates
Michelle Marvier, Chanel McCreedy, James Regetz, Peter Kareiva
Science 8 June 2007:Vol. 316. no. 5830, pp. 1475 - 1477
Whenever the cost of one’s behavior is not factored into a price at which a choice can be valued, a commons problem exists. This is in essence what we get from Hardin ( ‘The Tragedy of the Commons’) after applying a little basic economics to his reasoning.
However, according to Coase (‘The Problem of Social Cost’) with the establishment of property rights and markets (bargaining) the externality of the commons can be internalized. Behavior is changed or altered to account for the negative impact our choices impose on others. Demsetz (Towards a Theory of Property Rights) goes on to say that property rights often evolve as a means to internalize externalities. Sometimes given the current state of technology, the costs of developing property rights and markets are greater than the benefits that would arise. However, with technological development, these cost structures change and new options become available. Today we can see how technology has allowed for many externalities (or commons problems) in agriculture to be internalized with examples such as biotechnology and GPS. The article linked above focuses on how engineering can contribute to this end.
The literature referenced above may be broad, but it opens the door for many applications. It is certainly not as narrow and limited as the much older line of reasoning developed by Pigou, which advocates changing and altering behavior based on taxes or command and control governement regulations.
REFRENCES:
Towards a Theory of Property Rights.
Harold Demsetz
The American Economic Review. Volume 57, Issue 2. May, 1967
The Problem of Social Cost
R. H. Coase
Journal of Law and Economics, Vol. 3, Oct., 1960 (Oct., 1960), pp. 1-44
The Tragedy of the Commons
Garret Hardin
Science, Vol 162 no 3859 Dec 13, 1968 p. 1243-1248
The Economics of Welfare
Arthur C. Pigou Macmillan and Co. London, Fourth edition, 1932. First published: 1920.
http://www.econlib.org/Library/NPDBooks/Pigou/pgEW.html
A Meta-Analysis of Effects of Bt Cotton and Maize on Nontarget Invertebrates
Michelle Marvier, Chanel McCreedy, James Regetz, Peter Kareiva
Science 8 June 2007:Vol. 316. no. 5830, pp. 1475 - 1477
Tuesday, June 26, 2007
Benefits of Biotech in Africa
http://allafrica.com/stories/200706051019.html?viewall=1
great link on the benefits of biotech in Africa.
In addition to talking about the benefits of biotechnology in Africa, it makes the point that biotech crops are not as extreme as many of the foods that we have been eating for decades- including conventional and organic crops. Most all of the modern rice and wheat hybrids that we consume today have been developed using a process called Gamma Ray Mutation which involves using radiation to create desirable mutations in plants. These foods have never been tested for long-term health or environmental effects and have been accepted for decades by the general public and organic food consumers.
A recent article in the Economist reviews other techniques that use thermal neutrons, X-rays, or ethyl methane sulphonate, ( a harsh carcinogenic chemical) to accomplish the same end.
Zambian President Levy Mwanawasa is quoted making the statement that he "would rather let his people starve than eat anything 'toxic" referring to biotech food imports.
great link on the benefits of biotech in Africa.
In addition to talking about the benefits of biotechnology in Africa, it makes the point that biotech crops are not as extreme as many of the foods that we have been eating for decades- including conventional and organic crops. Most all of the modern rice and wheat hybrids that we consume today have been developed using a process called Gamma Ray Mutation which involves using radiation to create desirable mutations in plants. These foods have never been tested for long-term health or environmental effects and have been accepted for decades by the general public and organic food consumers.
A recent article in the Economist reviews other techniques that use thermal neutrons, X-rays, or ethyl methane sulphonate, ( a harsh carcinogenic chemical) to accomplish the same end.
Zambian President Levy Mwanawasa is quoted making the statement that he "would rather let his people starve than eat anything 'toxic" referring to biotech food imports.
Friday, June 22, 2007
COLONY COLLAPSE DISORDER III
According to recent research published in the Proceedings of the National Academy of Sciences researchers have discovered another possible cause of CCD. This time it’s not mites but microorganisms from the small hive beetle, which has been introduced into the US and Europe from Africa.
"Beetles are scavengers and their job is to clean up. In the case of the small hive beetle, it uses a fungus to digest left-over pollen, from which it gets its nutrients. This fungus causes fermentation, in effect causing a change in the chemistry in the hives. Since bees are very sensitive to such variations, they eventually abandon the hives"- Dr Baldwyn Torto.
What is curious is that the beetle and the fungus it carries has no effect on African bee hives. African bees have some unknown mechanism for dealing with this.
"Knowing what allows African honeybees to survive attacks under the tough tropical conditions, and introducing these components into European honeybees, might be a step towards resolving the CCD," says Dr Torto.
Scientists may be able to identify a marker for these traits and develop a breeding program to incorporate this mechanism into our bees. If the mechanism is very specific, direct molecular genetic modification may be the solution. It might very well turn out that instead of being the cause, biotechnology will be the solution to CCD.
SOURCE: (PNAS, 4th May 2007)
http://www.pnas.org/cgi/content/abstract/0702813104v1
"Beetles are scavengers and their job is to clean up. In the case of the small hive beetle, it uses a fungus to digest left-over pollen, from which it gets its nutrients. This fungus causes fermentation, in effect causing a change in the chemistry in the hives. Since bees are very sensitive to such variations, they eventually abandon the hives"- Dr Baldwyn Torto.
What is curious is that the beetle and the fungus it carries has no effect on African bee hives. African bees have some unknown mechanism for dealing with this.
"Knowing what allows African honeybees to survive attacks under the tough tropical conditions, and introducing these components into European honeybees, might be a step towards resolving the CCD," says Dr Torto.
Scientists may be able to identify a marker for these traits and develop a breeding program to incorporate this mechanism into our bees. If the mechanism is very specific, direct molecular genetic modification may be the solution. It might very well turn out that instead of being the cause, biotechnology will be the solution to CCD.
SOURCE: (PNAS, 4th May 2007)
http://www.pnas.org/cgi/content/abstract/0702813104v1
Thursday, June 21, 2007
Master of Science in Agriculture (Bioscience Management Emphasis)
Master of Science in Agriculture (Ref.#052)
The Master's Degree is a general degree in agriculture and can be thesis or non-thesis depending on student goals. The degree is general by design which allows for maximum flexibility for each student.
Emphasis in Bioscience Management
This is an interdisciplinary emphasis focused on the role of science in business and the role of business in science. Course work includes statistical genetics and applied economics with applications to a variety of problems relevant to agriculture and life sciences. Applied problem solving projects and cooperative education serve to bridge the various disciplines associated with agriculture and life sciences.
Applied Statistics and Experimental Design
AGRI 491G DATA ANALYSIS/INTERPRET 3
AGRI 590 EXPERIMENTAL DESIGN 3
Crop Science and Genetics
AGRI 528 POPULATION GENETICS 3
AGRO 414G CROP IMPROVEMENT 3
AGRI 475G SPECIALTY CROP PRODUCTION 3
AGRO 521 PASTURE MANAGEMENT 3
Agricultural and Applied Economics
AGEC 463G AGRICULTURAL FINANCE 3
AGEC 468G WORLD FOOD DEVELOPMENT 3
Research Methods and Problems in Agriculture
AGRI 598 SEMINAR 3
Supervised Individual Study - Applied Problem Solving
AGRI 597 IND SPEC PROB/AGRIC: GAME THEORY/TRAIT RESISTANCE MGT 3
AGRI 597 IND SPEC PROB/AGRIC: ECONOMETRICS/BIOTECH PERCEPTIONS 3
Supervised Individual Study - Cooperative Education Experience
AGRI 597 IND SPEC PROB/AGRIC: COOPERATIVE EDUC/SEED R&D 3
--------------------------
TOTAL CREDIT HOURS: 36
Supplemental M.B.A. Courses
ECON 502 APPLIED MICROECON THEORY 3
BA 505 ACCOUNTING 3
BA 519 ADVANCED MANAGERIAL FINANCE 3
Subscribe to:
Posts (Atom)