Wednesday, December 27, 2017

Bridging the Gap Between People and Farmers - why agvocacy and science communication matters

From:

The gulf between farmers and the people they feed is getting dangerously wide | Financial Post:

http://business.financialpost.com/commodities/agriculture/the-gulf-between-farmers-and-the-people-they-feed-is-getting-dangerously-wide


"realizing that without advocacy a generation that doesn’t know about food production has the power to make running a farm operation nearly impossible.If nothing is done to close this gap and the logic pounding away at this wedge is taken to its limits, farmers will continue to see an increase in agriculture-related policies and laws that have no grounding in the way things really are outside of Canada’s cities; farmers will feel more and more pressure to justify what they do to an audience seemingly oblivious to the fact that farms produce food; farmers will be forced to continue finding ways to diversify and stay afloat while government and other risk-management supports crumble; and more and more cultivated land will be forfeited to development."

Really good points. This is why agvocacy matters. Its not about 'being right on the internet' or dominating a twitter feed. This is also why those interested in the 'free market' need to stay tuned. As food companies voluntarily put out 'free-from' labels and engage in other questionable marketing practices they are nurturing an environment and sentiment that can be energized to pass technologically restrictive laws - that have no grounding in the way things really are - ultimately increasing risk, reducing food security and sustainability on a national and global scale.

This is also challenging in light of research that indicates the challenges of science communication. See: Polarization of Controversial Science and Limitations of Science Literacy

Monday, December 18, 2017

Food and Farm Bill of Rights Stereotypes Modern Ag and Family Farms

In a recent Forbes article related to food trends that will shape 2018 one trend that stood out to me was #9, Politics and Food:

"Among the most troubling political moves to food businesses has been the country's withdrawal from the Paris Climate Agreement…There are two important focused efforts that will impact our food world in 2018. The first is the San Francisco ordinance that requires retailers to report antibiotic use by meat and poultry suppliers…this ordinance could also expand across the country.The second is the Farm Bill that will set in place eating and farming policy for a five-year period."

This is interesting given the political polarization we have seen with food preferences and beliefs.  The article also references democratic representative Earl Blumenauer's "Fight for Food" and "Food and Farm Bill of Rights." 

For instance in discussing the farm bill his web site states:

“The current Farm Bill provides little help to most American farmers and ranchers. 94% of all Farm Bill subsidy payments go to a few large-scale corporate farms that produce corn, rice, wheat, soy, cotton, and peanuts. These payments do little to support local food systems and growers. The result is that, we are paying the wrong people to grow the wrong things in the wrong places.”

“It's time for a better Food and Farm Bill that provides more Americans with healthy, locally grown food; that promotes sustainable farming practices; that reduces our impact on the environment; and that builds an economy around local farmers--not massive, corporations.”

We've seen this distorted view of subsidy payments before (see Four Big Questions about Big Ag, Subsidies, and Food ) ...and it overlooks the fact that these products are subsidized because that is what we eat vs. the other way around. It is also interesting that this language calls out "growing the wrong thing in the wrong places" yet in other places seems to favor subsidizing local production which would be contrary to comparative advantage as well as less sustainable. There is a lot here that may be hard to take issue with, but careful reading seems to put America's family farmers on defense.

The 2nd amendment in the Food and Farm Bill of Rights states: "Americans have a right to local supplies of fresh, healthy food, not subsidized food that makes them sick...Instead, the Farm Bill supports industrial meat production and processed foods that pose problems for human health and the environment."

This is some combination of ignorance of agricultural policy and production, hyperbole, and condescension. The causal connection between subsidized food and making people sick is tenuous at best. (a good read related to this is Tamar Haspel's recent article "Junk food is cheap and healthful food is expensive, but don’t blame the farm bill.")

Further the 6th amendment states: "Americans have a right to a healthy natural environment, and to a farm policy that does not exacerbate climate change...Our food and farm policies should reduce the emission of greenhouse gases from animal production, tilling practices, and crop selection, while minimizing energy demands.”

OK I agree but what do they have in mind? We've already pointed out the potentially conflicting goals of supporting local food and sustainability. And it is a fact that the current subsidies they are so critical of (like crop insurance) are for crops that are nearly all genetically modified and associated with sustainable practices like crop rotation, reduced tillage, improved biodiversity, as well as reduced emissions. 

For the most part this is just a recycling of myths and stereotypes about modern agriculture to garner support from the usual critics. This campaign feeds these stereotypes and appears to provide them legitimacy that may eventually lead to policies that hurt family farmers as well as ultimately the environment and the future sustainability of agriculture.

See also:

 Sustainably Feeding the World: Organic Food and Vegetables vs Conventional Commodities.

Agricultural Intensification and the Environment

The Cult of Statistical Significance...or...no bacon is not really as bad or worse than cigarettes!

Technical Efficiency, Yields, and Livestock Energy Conversion

What is the Most Effective Way to Mitigate Climate Change

Friday, December 8, 2017

Updated Hypothetical Yield, Price, and Revenue Projections for December Corn

***This commentary is provided for descriptive and entertainment purposes only and is not intended to be used for specific trading strategies or interpreted to be investment advice. *****  

Last September I wrote:

"My basic projections based on this data implies that to get any where near $4/bu, taking all other USDA estimates on usage and harvested acres, corn yields need to be in the 163-164 bu/acre range. More complicated estimates and some adjustments with the usage numbers may be a little friendlier."




September WASDE November
Projected Yield: 169.9 167 163.5 175.4 175.4
Projected Stocks to Use: 16.40% 14.70% 12.65% 19.62% 17.23%
Projected Price: 3.36 3.62 4.04 2.95 3.24

But those price projections were based on what seemed to be the loudest voices in the markets thinking that national corn yields would likely be somewhere less than 170 bushels/acre largely because of uncertainty of yields and variation due to late planting, as well as diminishing crop conditions. For example, from the Aug 21 crop conditions report:

---------------------------------------------------------------------------------------------------------------------------
      State     : Very poor :   Poor    :   Fair    :   Good    : Excellent 
----------------------------------------------------------------------------
                :                          percent                          
                :                                                           
Colorado .......:     -           3          16          71          10     
Illinois .......:     4          10          32          42          12     
Indiana ........:     5          12          30          42          11     
Iowa ...........:     3           9          27          51          10     
Kansas .........:     4          10          29          43          14     
Kentucky .......:     1           3          19          61          16     
Michigan .......:     2          10          32          45          11     
Minnesota ......:     1           2          15          65          17     
Missouri .......:     3           6          30          50          11     
Nebraska .......:     3          10          24          45          18     
North Carolina .:     1           6          21          51          21     
North Dakota ...:     6          11          33          45           5     
Ohio ...........:     2           7          31          45          15     
Pennsylvania ...:     -           1           7          45          47     
South Dakota ...:     9          18          31          40           2     
Tennessee ......:     -           2          12          51          35     
Texas ..........:     -           3          18          57          22     
Wisconsin ......:     2           7          20          50          21     
                :                                                           
18 States ......:     3           9          26          48          14     
                :                                                           
Previous week ..:     3           9          26          49          13     
Previous year ..:     2           5          18          54          21     
----------------------------------------------------------------------------

Overall good to excellent was about 62% compared to 75% the previous year. (I'll point out that KY corn crops were exceptional with 71% at good to excellent).

So my price projections back in September were capped out based 169.9 yields which I thought at the time was the most conservative/pessimistic projection. Then came the October report with the 171.8 bushel per acre estimate and the most recent November 175.4 shocker. So above I have my price projections with this yield, first based on the September report numbers backing the stocks to use estimate ($2.95/but yikes) and then with the updated November numbers. Were it not for the changes in use (depicted below) prices could be even worse. With today's Dec 17 futures at $3.40 and and RSI at 45 (and bouncing around the 40's since September) it doesn't indicate oversold. With a naive nearest neighbor estimate based on last year's stock's to use we have an upper bound around $3.45. Looking out at March $3.52 and May futures at $3.61 looks like what you see is what you get with the December contract.

U.S. Corn Balance Sheet 2017-18 2017-18

WASDE WASDE
Item September November Change
Supply:


Planted Acreage (million acres) 90.9 90.4 -0.5
Harvested Acreage 83.5 83.1 -0.4
Yield (Bushels/Acre) 169.9 175.4 5.5
Beginning Stocks (million bushels) 2,350 2,295 -55
Total Production 14,184 14,578 394
Imports 50 50 0
Total Supply 16,585 16,922 337




Consumption:


Feed and Residual (million bushels) 5,475 5,575 100
Ethanol (5,500)


Other Food, Seed, and Industrial 6,925 6,935 10
Exports 1,850 1,925 75
Total Consumption 14,250 14,435 185








Ending Stocks (million bushels) 2,335 2,487 152
Ending Stocks/Total Consumption (%) 16.39% 17.23% 0.84%








2017 Stocks to Use: 17.23%

Projected Price: 3.1538087981

Projected Price (power): 3.2414480127

NN Estimate: 3.45


*data pulled from: https://www.usda.gov/oce/commodity/wasde/index.htm 

So where does this leave my revenue projections from back in September?
Lets look more at the assumptions I made back in September:
Costs, Revenues, and Returns Per Acre
Total Variable Costs $400.00
Fixed Costs $75.00
Total Operating Costs $475.00
Land $175.00
Total Land and Operation Costs $650.00
Yield 175
Price $3.40
Total Revenue $595.00
Returns/A -$55.00


Farm Level Costs, Revenues and Returns
Total Acres: 2,000


Total Revenue: $1,190,000.00
Total Costs: $1,300,000.00


Total Return to Labor -$110,000.00
And here are the updated scenarios:

September Nov (A) Nov (B) Nov(C)
Projected National Yield: 169.9 175.4 175.4 175.4
Projected Stocks to Use: 16.40% 17.23% 17.23% 17.23
Projected Price: 3.36 3.24 3.4* 3.4*
Return to Labor: $44,000.00 -$4,000.00 $60,000.00 -$110,000.00
The September, and November scenarios A and B are based on 200 on farm bushel per acre yields with projected and current (*) market prices while scenario C assumes the national average being the on farm yield at current (*) market prices. It is easy to see how much yield matters here. The price projections are all based on this. (or costs for that matter).

Per my last update, these numbers only reflect current prices and hypothetical production costs. My next update will look at how different marketing scenarios could have impacted revenues and returns.

***This commentary is provided for descriptive and entertainment purposes only and is not intended to be used for specific trading strategies or interpreted to be investment advice. *****  

Friday, November 24, 2017

The future of independent crop consultants and killer ag apps

From:  Is Bayer’s Highly-Anticipated xarvio App the Next Uber for Ag?

"Yes, like I said this not only recognition, it's mixing four components in real-time in the nozzle. And we also are convinced that, speaking with regulatory bodies like U.S. EPA, we'll be able to register entirely new crop protection products which are resistance breaking, and we can tell them and actually prove that we are using them across only maybe 1% of the total acreage."

That seems really powerful and nothing short of just awesome. I've been talking for a long time about the convergence of big data and genomics and the impact on productivity and sustainability in this space and this is just another potential example of how this can all come together.  This also gets me thinking about an interview with Monsanto CEO Hugh Grant back in April 2016 where he discussed these kinds of applications in Monsanto's future:

"If I think about the next 30 or 40 years, I think through the use of data we’ll be applying these chemistries much more accurately and we’ll be applying them earlier, so applying them before diseases really take a hold in these crops or bugs are tearing these crops apart, so I think we’ll be more prophylactic, we’ll be more accurate and our selection of these chemistries will be a lot more discriminating. That’s kind of my vision of the future as through the use of data and bringing biology and science together, we’ll get much smarter about how we use these things, a bit like how the vision works for personalized medicine.” 

That sounds a lot like how they are describing  the Bayer xarvio app in the PrecisionAg article above. And, based on Grant's vision back in 2016, this all seems consistent with a strategy involving a Monsanto-Bayer merger.

However the article makes another interesting claim:

"The idea that a huge corporation like Bayer can largely automate and deliver agronomic recommendations remotely though a smartphone is a far greater danger to the future sustainability of any agronomic consulting operation, in this author's opinion, than a few large growers buying generic glyphosate off an online marketplace"

Based on what I have already said above, I can't doubt the value and potential disruption this app may bring with it. This makes me think of some parallels with apps and algorithms in the medical diagnosis space as well. Recently on LinkedIn data scientist Nasim Eftekhari offered an interesting perspective on this:

"With the recent news of the pneumonia detecting algorithm that has proved to be more accurate than human doctors, I see a lot of "who needs doctors anymore?" Or "are doctors going to lose their jobs?" Circulating around Linkedin. Guess who these algorithms learned from? Guess who labeled millions of images for the algorithm to find patterns? DOCTORS! What if new diseases and patterns emerge that are nowhere in the historical data? Who has to detect and interpret them? DOCTORS! 
AI can't replace doctors, but can tremendously empower them! It can give them a heads up when they don't notice a pattern they have seen before. Or for problems they have not seen before, it can help them with thousands of  similar examples and their diagnosis. It can give them access to the knowledge of smart doctors like themselves all around the world."

This reminded me of a discussion a few years back with economist Tyler Cowen on EconTalk with Russ Roberts:

"I would stress much more that humans can always complement robots. I'm not saying every human will be good at this. That's a big part of the problem. But a large number of humans will work very effectively with robots and become far more productive"

What Nasim says about doctors may largely apply to crop consulting, with some exceptions. Consulting might change, more focus on leveraging the array of tools, technology, and most importantly data being generated. As Grant noted back in the Here and Now interview:

"It takes about 40 decisions, from right around now until harvest in August or September, the grower takes about 40 decisions to produce a crop. Some of those decisions are highly technified, and others it’s because of what his mom and dad did or what he hears in the coffee shop or what he read in a magazine. So we’ve been populating those 40 decisions with data and I think by improving the quality of decisions, you increase the yield. I think the transition for Monsanto is increasingly in the next 10 years becoming a solutions-driven company, and coalescing the biology, the more accurate application of chemistry and the much smarter use of data. You know, these big green John Deere combines are streaming data off the field, one yard at a time, and it’s how you use that biological data and apply it back to the field to help growers with better insights, I think that’s going to be the next piece.” 

Taken one  decision at a time it might seem that a producer could cut out the middle man with a combination of a few apps. But they still might need someone that can step back and take a big picture systems view of the operation- that's where consultants can provide better insights and continue to create value. The way they do it just might not be the way I did 20 years ago with pen, paper, and a yardstick trotting across the field.

Sunday, November 5, 2017

CRISPR: Who’s pulling the wool over who’s eyes?

From: Amid GMO Strife Food Industry Vies for Public Trust in CRISPR (via NPR

(link)

http://n.pr/2yXk13G

"if this is genetic engineering, then call it that," says Perls. She says these producers are just trying to pull the wool over consumers' eyes with a strong public relations push."

Question: What do you call zapping a plant with radiation or dousing with chemical mutagens to create *random* gene edits vs. *targeted* ones? Well you can call it USDA Certified Organic, or slap a 'natural' label on it or have the butterfly logo assure you it's non-gmo. Who's really pulling the wool over who's eyes here?

Thursday, October 12, 2017

Food with Integrity is Catching On

There is a quote often attributed to Abraham Lincoln:

"You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time."

Recently Mann Packing has taken that lesson to heart and received good publicity in relation to its decision to not label some of its products as GMO free:

"The company is removing the non-GMO verified check from its single-cut lettuce products in its next print run, which could take place next month, said Gina Nucci, Mann’s director of corporate marketing. Mann did an about face after presenting its product packaging in Canada, where the Non-GMO Project Verified label is only allowed on products that have a GMO alternative."
"There is no GMO lettuce," said Nucci. "It made us go: Why are we doing this? We are perpetuating a fear that something is wrong with GMOs. We didn’t feel right doing that, so we chose to take that label off."


This is impressive transparency in an age of free-from labeling. 

Contrast this with companies like Chipotle taking the exact opposite stance engaging in nuanced and deceptive marketing practices to sell their products.  Lately trying to play to both sides of the GMO debate, they have been engaged in a lawsuit (against them) in relation to some of its free-from GMO advertising because the supply chain for softdrinks and animal feed contain GMOs. 

So they are agitating both the informed consumers that understand biotechnology is actually a good thing, as well as some of their customer base that is at least informed enough to understand the supply chain and ingredients.  To Chipotle's detriment. (even though they may have won this one in court). Hopefully with groups like Peel Back the Label we will see more consumers becoming more informed as they catch on to what food with integrity really means.

Maybe we will even see lawsuits against companies using the kinds of misleading 'free-from' labels (like with lettuce) that Mann Packing abandoned on grounds of misleading advertising! 

Tuesday, October 3, 2017

Gluten Free Bread via CRISPR

CRISPR technology might make gluten free wheat a reality:  

https://www.newscientist.com/article/2148596-genetically-modified-wheat-used-to-make-coeliac-friendly-bread/ 


For people with Coeliac or severe gluten intolerance this could be very exciting. However, there are a number of people choosing a gluten free diet for sociopolitical reasons that probably will continue to look for the 'gluten free' label bundled with non-GMO certification (which would most likely rule out CRISPR based advances like this). We have seen food companies abandon promising technologies (i.e. rBST in milk, finely textured beef) because of issues related to consumer acceptance/perceptions. Will they be willing to invest in commercialization of CRISPR based gluten free food given this history and the trend toward 'free-from' labeling?  Will there be enough demand from current gluten free consumers that are otherwise agnostic to these fads and trends? Can we learn anything from other new consumer enhanced products like non-browing apples, the Simplot Innate potato or the Impossible Burger?