Highly indebted
governments, banks, or corporations can seem to be merrily rolling along for an
extended period, when bang! — confidence collapses, lenders disappear,
and a crisis hits.
— Reinhart and
Rogoff quoted in This Time is Different
I know the above quotation has to do with money and dollars,
but money is really just a functional necessity of a somewhat artificial world
of enterprise and finance. I suppose in reality we could eat dollars, but all
they would really do is increase our daily fiber content, not much nutritional
value there. We could also eat dirt, with much the same result. Furthermore
both money and dirt are in some circles considered filthy, which is undoubtedly
true in a biological context.
The point is both money and dirt are in theory used to grow
something. Sadly in our economic world the over use of debt, through highly leveraged
fractional reserve banking is in the process of bankrupting the world. In the
case of real dirt, that same monetary leverage is leading to perhaps the final
chapter in the Debt Supercycle and we may go truly hungry as that deleveraging
occurs.
In the United States there are currently over three hundred
million people, of that total less than one percent, perhaps two million are
directly involved in providing the food we eat. (Since as of this writing we
still do not have an permanent Internet connection, that estimate will have to
do.) Yet if something goes wrong with what that small minority does; either
through natural climate changes, or world economic changes — well over
three hundred million people in this country are going to go hungry — and
much of the rest of the world will face a severe famine.
We donÕt like to think about dirt, after all it is dirty and
we like to be clean. Yet the Bible says that were created out of the dust of
the ground, and formed into a likeness of the living God. Even evolutionists
believe that somehow, through great mega-faith, those dirty elements rearranged
into some form of life.
Essentially we like to be dirt-free because we donÕt want to
accept our humble roots, hence we can seem to be merrily rolling along for
an extended period, when bang! — confidence collapses . . . and a crisis
hits.
One of the conversations I had during my move to Reardan
dealt with the precarious nature of our current food supply and how, if we
really desired to Òeat a healthy diet,Ó this probably was not possible,
especially for those who could not be considered affluent. We no longer have
the agricultural diversity required to produce sufficient ÒhealthyÓ calories.
For the most part via government subsidies and agribusiness,
the amorphous they, believe in Òlet them eat cakeÓ as long as it is made from
genetically modified corn and soybeans and for our other protein sources these
grains are fed to mostly industrially produced chickens, but also pigs and
cows,
The economic basis for all of this rests upon a dubious
four-legged milk stool of cheap energy, abundant dirt-cheap water, excessive
farm debt, and government subsidies to provide the difference between
productions costs and market prices. The problem with a four-legged milk stool,
as opposed to the three-legged or the single leg variety, is that four legs
need a perfectly flat floor to maintain balance. For the last generation we
have created a national farm policy that would make an old school Russian
Bolshevik proud.
In human nature, like our distain of dirt, there is always
the propensity to believe if it ÒainÕt broke donÕt fix it.Ó It seems that this
is now the one and only law of the Federal government. This probably means that
instead of leading, they will follow the common national discourse. So in that
illumination let us look briefly at the four legs of the milk stool that keeps
us, for the time being, from becoming a nation of caloric want.
Cheap Energy
Our modern agricultural system is totally dependent upon
cheap energy. This is normally discussed in Òsustainable circlesÓ as the fact
that foodstuffs are transported most of the time over thousands of miles before
it gets to your local supermarket. That however is only part of the story,
ammonia fertilizer is made from natural gas, as well as all the herbicides,
pesticides and farm chemicals are made from fossil fuels. Furthermore it takes
a lot of energy to operate the mega-scale farm machinery now required to
cultivate and harvest large acreages. Added to that is the energy required to
irrigate much of the semi-arid and arid lands now under cultivation.
World energy prices of fossil fuels are controlled by either
cartels or price speculators, or some sort of cancerous collusion of the two.
Neither of which really care about how much energy costs are associated with
the production of a bushel of corn in Iowa. The only people with any direct
understanding of these phenomena were the former corn farmers in Mexico, which
are now because of NAFTA, probably working in a meat processing plant somewhere
in the United States
Abundant
Dirt-Cheap Water
Around the world fresh water, not energy, is our most
limited natural resource. Yet even more than petroleum we mine it from deep
aquifers like they will never run dry. We divert streams and rivers to irrigate
our deserts and so pollute the return flow that it truly requires significant
treatment to be used again, or pollutes the aquifers from whence it returns.
As oft cited here, John Wesley Powell understood that the
American grasslands, generally west of the one-hundredth meridian, ecologically
semi-arid short grass prairie transitioning into true deserts, either require
irrigation water or must be properly managed as grazing grasslands. That
includes virtually all of what is called the Great Plains, and during a decade
of drought during the 1930s became the American Dust Bowl. It could happen
again, with or without man induced climate change.
Excessive Farm
Debt
Your tasteless chicken breast that has become the most
economical form of protein in the American diet, is generally produced on a
small acreage southern chicken farm where the average chicken farmer makes
around twenty thousand dollars ($20,000) or less and is leverage through bank
loans and industrial chicken marketing concerns into multi-millions of debt dollars.
While the numbers are somewhat different, the same can be said for hogs and
beef feedlot operations.
When you move from the meat protein producers to grains, the
debt leverage continues. The prices for a piece of new industrial farm
equipment begins at $100,000 and can easily reach five times that and you need
a lot of these implements just to stay in Òbusiness,Ó Much of these required
implements are used only for brief periods per year, like days or a few weeks.
This equipment is again leveraged by implement manufacturers and commercial
debt — based upon the speculative value of farmlands.
Just as the illusion of home prices would continue to exceed
the rates of inflation forever, as was followed by a similar bubble in
commercial real estate, such a bubble would-could never happen for farm land,
because the market really isnÕt large enough to be a market at all. While the
acreages are vast, when you look at the yields per acre for corn, soybeans,
wheat or other crops, what you find is returns on investment that make
absolutely no business sense in any other human enterprise. Which leads us to
our United States Federal Government.
The Federal Farm
Bill
In 2012 the Federal Farm Bill is up for renewal. These
diverse and varying subsidies allow farmers and agribusiness to make a small
profit on crops whose market price is less than the true cost of production.
Considering Congress has continued to kick the debt can down
the road for it seems as forever, this renewal process should make for some
interesting debates. Since this is also the presidential election year, after many
months of grandstanding, pontifications and other types of manure producing
rhetoric, the leadership of both political parties will probably kick this can
into 2013 as well.
With so few people actually involved in farming, and the
numbers of those concerned about continuance of the status quo; even fewer, I
would suspect anything that might be done — related to our nationalized,
industrialized, cheap energy dependent, abundant dirt-cheap water, excessive
farm debt, government subsidized agricultural economy — could best be
described as a punt rather than can kicking. After all punts fly through the
air for long distances, where as kicking the can is almost a continual process.
So what does this mean as it relates to ÒDoings in the
Dirt?Ó
Since I moved out of Seattle in the summer of 2007, things,
actually almost everything, has been on a downhill course of varying degrees.
We have been told that the Great Recession is over, but that sure is not the
case in Northeast Washington and there is no end in sight. All this is
eventually leading to and Endgame of really the twentieth centuryÕs means of
financing prosperity through excessive debt.
The problem with this particular Endgame is that all the important
structural players, the economist-financial types, traders of all persuasions
and politicians across the political spectrum seem to think that what is
happening is just a glitch in the enlightened view of mankind creating our own
utopia here on earth. From that perspective there is no need to make
significant, or what I would call stupendous changes, because essentially dumb
luck got us here, and by kicking the can some more, be it up a little steeper
hill, has always worked before, not so much defined as laissez faire, but more
what will be will be.
So to expand on the wisdom of Forrest Gump: Stupid is as
stupid does; likewise lazy is as lazy doesnÕt!
If this continues, we will be eventually looking at a milk
stool with no legs, which means many very hungry people and historically,
social unrest we have not seen in the world in over a century.
No one, who seriously looks at American agriculture can call
it market driven, but if this results in and Endgame, another game must begin
in which markets and true wealth creating opportunities are created and made
operational. These beginnings must account for risk as a means of reward, what
we call at Wonder Springs — agricultural returns. Compound Interest on
debt cannot adequately account for risk, hence the mess the world now currently
finds itself.
Through our corporate structure of PREFER Ltd, we are
currently looking at three areas of diverse investments. The first is our
precious metals concentration and refining equipment. Updated designs from our
1980s models have been created and are ready for design-built prototypes. That
was impossible to accomplish up in the woods with limited resources and even
more limited opportunities to obtain financing.
As we began planning to move to the Reardan area we started
seriously looking at alternatives to the current industrial food production
schemes. We have written extensively that many of our current economic problems
stem from trying to extend the life of the Industrial Age beyond its usefulness
with excessive debt. American agriculture now totally follows that Industrial
Age model.
For sake of simplicity we have named the future as the
Individual Age, yet it is quite different from the narcissism of twentieth
century individualism and well beyond the interactions of current social media.
What all that means in agricultural terms is that some
basics of food production, from before the Earl Butz-Richard Nixon
industrialization of agriculture, will again become economically viable.
Contrary to the vegetarians and the vegans this must be focused on meat,
because only ruminant animals can convert grass to meat in any viable means.
Without the dependent four legged agriculture milk stool,
much of the land beyond the hundredth meridian will again become similar to
when the buffalo roamed; only this time in addition to the bison, we will see
cattle, sheep and goats, all grass fed and with the taste of real meat. We have
begun seeking opportunities to help these producers market their critters.
Along that line, when I got out of graduate school at WSU, I
moved to Seattle to work on the worldÕs ultimate patented (now expired) sludge
drying process. As the process chemist and the environmental guru on the
project I got the opportunity to test the process on virtually all types of wet
solid materials.
At the beginning of the program, before I arrived, an
outside marketing study determined that the biggest market for the process was
effectively drying sewage sludge, turning it into organic fertilizer-compost.
As time went on and corporate politics being real, the goal changed to where
could we sell the first unit. By that time we knew that itÕs prime application
was economically drying animal feeds.
The process was developed as part of the Boeing
diversification efforts in conjunction with deep space exploration. The solvent
used, triethylamine, is soluble in water below 19 degrees C and separates into
water and solvent layers above that temperature. So the material to be dried
was cooled and mixed with chilled solvent and the solids removed with only a
small amount of residual water, greatly decreasing drying costs.
The deep space portion of the process was that chickens were
to be used as the protein source for space explorers well beyond Mars.
Triethylamine was able to remove the uric acid produced by chickens, allowing
the chickens to essentially reuse much of their food, for the uric acid is
toxic.
Today because of the wasted corn and poor utilization of
feed by chickens, the cleanings from chicken houses is fed to cattle in feedlots.
This contributes to not only the acidification of the cattleÕs digestive
process it also is a source of e-coli cross contamination between cattle and
chickens. Furthermore the triethylamine kills the bacteria, removes the uric
acid, and is totally biodegradable, being found by analysis in minor levels in
the feed before the drying process.
We have preliminarily renamed the process by the acrostic
SAFER (Solvent Applications For Ecological Remedies) and once we get situated
will begin to seek funding to build and operate these units based upon almost a
decade of high level industrial research and development.
These three opportunities will produce agricultural returns
that create real wealth, for really relatively limited venture funding. We are
beginning to seek enterprise partners for any or all of these developing
adventures.
©
2011: All rights reserved.
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