BC: FARMING IN A PO WORLD
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From posts on TOD by 'highplainsfarmer'
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Part of what you are saying here makes sense; the tech innovations in modern agribuiness has allowed many folks to do something besides farm. You can't have proffessions such as ad salesman, manicurists, etc. You would not have vast numbers of folks attending university to take up psych, soc, apperal merchandising, etc if tey had to grow enough food to feed themself.
There is simply NO WAY in the world that agriculture is going back in time. NONE.
I read JHK's book, "The Long Emergency" and while I agree with a lot of it, he got agriculture TOTALLY wrong, and here's some reasons his view of ag in the future is WAY off;
1) Using horses to farm takes WAY WAY TOO much land. In the horse ag days, it took one-third of all ag produce to feed the horses that did the production. TALK ABOUT EXPENSIVE fuel! In the horse days, the amount of acres it took to grow that fuel made ethanol look like a garden plot.
2) Modern farms today have 300 hp tractors pulling 60 ft wide airseeders operated with AUTOSTEER. (That's right, our tractors use gps to steer) At 6 mph, by 60 ft wide, wasting not a penny on overlap, it takes VERY LITTLE fuel to farm with.
3) My farm uses 4.23 gallons/acre, while IA State says it takes closer to 9 gallons per acre. COMPARE THAT TO HORSE farming on a EROEI basis.
4) According to IA State, the ave corn yield on IA farmland on a 10 year ave is 173.4 bu/acre. Using all BTUs from fuel, fert, and pesticides, that's a EROEI of about 13:1. That's better than the North Sea in it's hayday. Including equipment expense, labor, deprec, insurance, etc, the EROEI is still around 10:1.
5) There is 395,000 BTU's in a bushel of corn. If you don't like my figures, check them.
6) There will ALWAYS be SOME oil produced. Even 50 years from now the production will be at least 20 mbpd, I'm guessing worst case scenario. Where do you think those barrels will go?
I'm 100% convinced those few barrels will go to the guy who adds the MOST VALUE to them. Whomever can get the most EROEI out of them. It ain't the soccor mom. It ain't Joe Suburb. It ain't the engineer designing the next widget.
The FIRST barrel produced will go to herbicide/pesticide, because it adds SO MUCH value vs the BTU content of the herbicide. (One pint of roundup = 20,000 BTUs. This pint will EASILY add 50 bu/acre. 50 bu corn = almost 20 million BTUs. EROEI of Roundup/herbicide/pesticide = 1,000 to 1.)
Once all the globes pesticide needs are met, the next barrels will go powering tractors.
Nobody out there will be able to OUTBID a farmer for petro, because nobody adds as much value to a unit of petro.
I've spent lots of time looking at Peak Oil, and I'm convinced we are here, but there's a BIG MISSING SUBJECT on the conversation about the outcome of PO. That is;
Where will those precious few barrels of daily production go in 20 years? Who will get them? Who adds the most value to them?
I say its the highest bidder. That person is me.
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Here's the way I see modern ag going;
Whoops, let me first back up and discuss the third world and ag, and how subsidies work. Last week I traveled through a piece of rural Mexico. Ever notice that "Rural" and "Poverty" go hand in hand? To understand where ag is going, we must remember how we got here.
Whenever I travel, all I here is growth, growth growth. BS!! Not in farm country.
Walk down the halls of a highschool in rural farm country and look at the photos of graduating classes. Each recent one is smaller than the one before. We export 90% of our youth to suburbia. Most of the mainstreets lost most biz, and stores are empty, vacated, and falling apart. My hometown had 540 pop in 1915, its less than 20 people today. I live in central/western SD. IA is much the same when you look at the small towns 50 miles or more from its bigger towns.
Cheap energy is the ENEMY of rural America. It is a transfer of people and wealth from rural areas to the cities.
Here is how ag subsidies basically work;
1) Countercyclical payments. These kick in when grain prices are low.
2) Flat per acre payment. This one depends on where you live, but its roughly 20% of rental rate. This one ultimately goes to the landlord, because rent bids factor in recieving the payment. Hence if it were eliminated, it would reduce the rental rate by the same amount.
3) The BIG one is LDP. Its VERY VERY important to understand this one before ANY conversation about third world ag takes place. LDP = Loan Deficiency Payment. The gov't sets a price target for each grain, they are;
Corn = $1.80
Soybeans = roughly $5.80
Wheat = roughly $3.50
It goes like this, - The local elevator bid on corn in the fall of 2005 was $1.50 (depending on the day). That's 30 cents BELOW the gov't price target. Therefore, the farmer gets the missing 30 cents from the gov't. If the elevator bid was only $1, then the gov't paid 80 cents per bushel.
Every day the LDP changed, because every day the local bids changed. The old game was to hedge grain during summer rally, then pick up LDP during the harvest low. This game turned upside down as cheap grain said adios.
Subsidies 1 and 3 above GO AWAY when grains rise much. They've never risen much above target prices before for long, so we are in uncharted territory. Basically, except for subsidy 2 above, (Which gets embedded into rent and ultimately goes to landlord) ag is in a free market system for the first time since WWI.
How does this impact third world ag? Well, in the subsidized era, (Most of the 20th century) European and American farmers kept producing more and more BELOW THE COST OF PRODUCTION. This WRECKED HAVOC on third world ag.
Basically ag in the third world is in its infancy, because they HAD NO ECON INCENTIVE TO modernize ag production UNTIL NOW.
Fertilizer only went to subsidized areas, because we were the only ones who could afford the stuff. Now everyone can. Hence the price of fert has risen 800% in the past 2 years.
The END of cheap grain is a HUGE shot in the arm to struggling rural poor in the developing world. If US/European grain subsidies were their enemy, (which they were) then expensive grain will fuel a boom for farmers in Africa/elsewhere.
People do NOT starve due to lack of productive capability. People starve due to politics. Take Zimbabwe as an example. The country once exported half its ag production, today it starves. Why? Because left wing dictator decided to take from rich and give to poor. A recipe for disaster every time its tried.
So ag will need to become more efficient in its use of fertilizer, because there will be less to go around. This is a good thing for the environment. There are hundreds of ways to squeeze more production out of a unit of fertilizer without sacrificing yield, but until now, why bother? In the future, it will pay big to utilize best tech for utilizing fert including;
1) Site specific application using GPS and grid soil sampling.
2) Adding stabilizers to N fert that reduce leaching. (Been on market for years, but until now were cost prohibitive - cheaper to just apply more N)
3) Here's the BIG one! Biotech. Biotech crops that use very little fert are nearly EPA approval. This is GREAT news. They take a gene from one plant that efficiently utilizes fert, and inject it into a grain crop.
PO may be the death of suburbia, but its JUST WHAT global ag needed.
Hope this info shed light.
P.S. In "The Long Emergency" JHK claimed the highplains would do poorly, because we need subsidies. WRONG! The plains of SD, ND, KS, OK are THE LOW COST PRODUCERS of wheat. At these price levels, we neither need nor get subsidies.
Every PO "expert" has the future of agriculture 100% WRONG
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My next door neighbor is a melon/pumpkin/squash grower. He has about the same annual income as a 5,000 acre normal farmer employing 2 people. He employs 20 people at times to operate 100 acres.
Its labor intense. Maybe ag will go this way to an extent? He can CERTAINLY outbid me for an acre. No doubt about that.
Farm land will go to the crop that can bid the most for it. My melon farming neighbor can bid far more per acre than I can, but presently there is not a lot of call for melon acres. I raise, corn sunflowers, and wheat.
Ultimately, people will need to move closer to the food origination. What will get raised on those acres? Will corn go away as vegetable crops outbid corn for acres? Wheat will bid hard for acres. Soybeans might bid fairly hard to get acres as well.
I guess at the moment I don't see corn's ability to bid against the vegetable crops to get acres, so it will hemmorage acres IMO. The world will need some corn, so it can bid for a few acres.
IMO The first barrels produced will go to the oil industry which needs it to produce more barrels, and the next barrels will make pesticides, the next barrels will operate tractors on the wheat/soy acres.
A lot of acres may go to veg crops that require limited tractors. |
