If you’ve followed this blog over the years you already know that I’m not a big fan of biofuels in general, and ethanol specifically. Since the ethanol blending mandates were first instituted, big agriculture, the government and the proponents of ethanol haven’t exactly been honest with us. Diverting a source of food for both people and animals, corn, into the production of fuel was never a good idea for anyone except, of course, the ag industry, its lobbyists, and the politicians they’ve
bribed (cough cough, excuse me, slip of the fingers there) influenced to push ethanol fuel mandates. Ars Technica, of all places, has an interesting summary of the findings of a study just published last Tuesday in Proceedings of the National Academy of the Sciences.
The corn industry and ethanol industry, of course, immediately struck back by simply claiming that the whole study is, basically, a lie. And Monte Shaw, the head of the Iowa Renewable Fuels Association said he is “not interested in spending time on silly stuff like this“. So basically he is condemning the entire report without having even read the thing.
What the study discovered was that the biofuels industry is nowhere near as “green” as they’ve been claiming it is for decades. What the study showed is what a lot of people have been claiming for years now, that when all of the factors involved in the production of the corn used to make ethanol are added into the equation, ethanol is, at best, no better than using gasoline, it’s actually worse in some areas.
What’s ironic about the whole thing is that the whole ethanol fuel industry is doomed in the first place as we transition to EVs. Whether we like it or not the internal combustion engine is on it’s way out and is being replaced by electric vehicles. The ethanol industry can rant and rave all it wants, push for higher and higher percentages to be added to gasoline, and it all isn’t going to matter in the slightest because the market for the stuff is simply going to vanish along with the internal combustion engine.
Glyphosate, the generic name for the active ingredient in the herbicide RoundUp, is suffering from severe shortages, to the point where a lot of farmers aren’t sure if they’re going to be able to get any or not for the upcoming growing season. The manufacturer of a key ingredient has had a mechanical failure that’s shut down production. The product was already in short supply for several other reasons, most of them not related to the virus, I should add. The biggest problem was Hurricane Ida shutting down Bayer’s primary glyphosate production facility for an extended period of time.
There has been a sort of ‘perfect storm’ of garbage being dumped on farmers in the past few months and it looks like that isn’t going to ease up any time soon. It isn’t just glyphosate. There are shortages of fertilizers like potash and anhydrous ammonia causing prices to sky rocket. The craziness between Russia and Ukraine is causing fuel prices to increase, and putting pressure on the commodities markets because Ukraine is a major producer of wheat, sunflower seed, and rapeseed for canola oil. Prices on corn and soybeans are going up and up, which is great for the people who grow the stuff. But for dairy and beef farmers, it is causing serious problems.
What it all amounts to for us consumers is don’t look for food prices in the grocery stores to come down any time soon.
Meat Monopoly Rakes In Record Profits
If you wanted to have a nice ribeye or T-bone steak for your Superbowl party, you probably looked at the prices and once you got your heart restarted you settled for grilled cheese. Prices of meat, especially beef and chicken, have skyrocketed over the last two years, and it’s all being blamed on, of course, the virus. Or is the virus only being used as a scapegoat by the meat industry as an excuse to bring in record breaking profits?
Tyson, JBS and Nation Beef more than tripled their profits during the pandemic, despite claims that price increases were due to increased expenses caused by worker shortages and supply chain disruptions. They had a 120% increase in gross profits, and a 500% increase in net profits. And profit margins, the amount of money companies make over and above their expenses, have skyrocketed as well, with margins climbing to up to over 300% in some cases. If the price increases were indeed due to an increase in expenses, profit margins would remain flat because increases in profit would be offset by increases in expenses.
The entire beef processing system in the US is a monopoly, controlled almost entirely by four companies, Cargill, Tyson, JBS and National Beef. Chicken is controlled by Tyson, Pilgrim’s Pride, Perdue, Sanderson and Koch Foods. The situation is pretty much the same with Pork, with the biggest player there, Smithfield Foods (owned by, drum roll please, China) being the major player there, along with a couple of others. For all intents and purposes, the entire US meat production system is controlled by just a handful of multinational companies.
A Convenient Scapegoat
While I’m on the subject of the pandemic, let’s look at some other areas where it is being used as a convenient scapegoat to try to explain away problems and/or massive price increases.
Trucking – You’ve probably heard that there is a massive shortage of truck drivers due to the pandemic. That claim is only partly true. There is a driver shortage, yes, but it isn’t because of the pandemic. In fact, right now we have more registered CDL holders than at any time since trucking started. The fact is that trucking companies have never been able to hire enough truck drivers, and driver turnover rates are sky high. The problem is that driving truck is hard, frustrating work, laden with sometimes utterly ridiculous regulations in some areas and not enough regulations in others, and drivers are often abused, short changed and treated like garbage by their employers, and they don’t get paid very well either. I know one company out of Green Bay that keeps teams of drivers on standby to do nothing but fly out to pick up trucks abandoned by drivers who got so fed up that they couldn’t take it anymore and just left the trucks and walked away. I would imagine that most of the bigger companies have to do the same.
Ports – The ports in the US are really the main choke point here. The US has some of the worst ports in the industrialized world thanks to years of neglect and a failure to upgrade port facilities because that would cut into their profits. Like the trucking business, this issue with US ports actually goes back decades. While ports in Europe and Asia have been upgrading their facilities and making major investments in them, in the US little or nothing has been done to upgrade materials handling capabilities or to streamline operations. Even before the pandemic the US ports were just barely functional and were already causing disruptions in shipping. The pandemic just made an already existing problem worse and showed just how bad the situation was.
If you look at the drought map up there from https://droughtmonitor.unl.edu/ you can see that things look a bit, well, scary, really. Right now more than half of the country is under drought conditions that range from mild to extreme. For a while there it seemed the West might see some relief from what is, according to some climate researchers, the worst drought they’ve had out there in 1,500 years. But that situation seems to be changing and things are starting to get worse again. Water use restrictions are already in place in many places out there and more are almost certainly going to be instituted unless they get significant precipitation. Even here in Wisconsin we’re well behind normal for precipitation. Last I heard our snowfall amounts here were running 16 – 25 inches behind normal. I’ve only had to use the snowblower once so far this winter. Most of the snowfalls we’ve had, and we haven’t had many, have been a light dusting that we’ve dealt with using electric leaf blowers.
Of course weather is, well, weather, and things can change rather quickly, but I haven’t seen conditions this bad in a long time. The drought is one reason why commodities prices have been pushing up over the last few months.
Farmland Prices Climbing
Here in Wisconsin farmland prices have always been less volatile than in other parts of the country. Prices here haven’t gone up much since I sold the farm. But that’s changing. Here prices haven’t shifted a lot, but they’ve been moving up gradually. In other parts of the country, though, prices have gone a bit, well, bonkers, really. I’ve seen some sales where prime farmland was going for as much as $20,000 per acre, an amount that seems completely crazy to me.
One trend that I find extremely troubling is the entry of investment companies into the farmland market. This has been going on for a while now but they have been becoming much more active now and there seem to be new ones starting up every year. They buy up farmland, often outbidding actual real farmers for the land, then turn around and rent it back to the farmers. Not only is this pushing the sale price of farmland up and up, making buying land unaffordable for a lot of farmers, it is pushing land rental prices up as well as these companies will gleefully gouge farmers for every penny they can get, even if it means putting real farmers in financial jeopardy.
That’s it for this time.
Stuff Coming Up
I have all kinds of things that might end up in the pipeline that feeds this blog, whether any of it actually gets in here is something else again. One thing that will be coming up is a look at a bowl hollowing system for wood turners that I’ve been using of late. It’s been on the market for some time now but it’s new to me and I like it rather a lot.
It’s February and snowing outside as I write this so this seems like an odd time to be planning gardens and buying seed but that’s exactly what we’ve been doing here. We’re thinking of expanding the garden areas yet again, perhaps adding another raised bed or two, and making one of the in-ground gardens considerably larger. We’ll see how ambitious we get once spring gets here.
A note about seeds – if you haven’t already laid in your stock of seed for spring planting, you might be out of luck. I’ve been hearing of serious seed shortages, not just for home gardeners but also for nurseries which produce seedlings and bedding plants for the home gardening market.
I’ve been seeing a lot of ads popping up over the last few months for what are being called household emergency power systems that use batteries instead of the traditional gasoline, natural gas or diesel engine powered generators. Some of them are being called “solar generators”, even though they aren’t. A lot of the ads are wildly misleading, even outright lies. There are problems with all of these systems, whether you go with batteries or the more common gasoline or other fuel powered systems. So if I can work up enough ambition you might see a piece about that in the future.