It’s all doom and gloom throughout Australia’s farms, isn’t it?
Nope. Now that the drought has started to break in parts of eastern Australia, farmers can take advantage of record prices for “soft commodities”, such as grains. Meanwhile, dairy farming’s not doing so bad either - over in New Zealand, dairy farmers can’t get enough people to work on their properties as the industry’s growing too fast to keep up. While the irrigated dairies of the Murray-Darling basin can’t get enough water to produce much, over the other side of the Divide Gippsland dairy farmers are doing quite nicely.
What’s going on? Well, a lot of it’s the same story as mined commodities - increased demand from China and India. As people get themselves out of poverty, one of the first things they tend to buy more of is meat. And the vegetarians are right - it requires a heck of a lot more than one kilogram of grain (that could otherwise be eaten) to produce a kilogram of pork, chicken, or fish. Throw in the United States’ (and to a lesser extent, the EU’s) quixotic attempt to grow its way to “energy independence” through turning its corn crop into alcohol, and you’ve got a big jump in demand for all things agricultural.
Globally, this has all manner of interesting implications, in terms of the speed of third-world urbanization, the potential for farm trade reform, and the situation of the urban poor in those third-world countries. Locally, this is going going to affect the process of water reform; while there might be more money for improving infrastructure, water will be worth more so buying back water rights might become even more expensive. Assuming, of couse, that there is water in the Murray-Darling to buy back; La Nina may currently be drenching Queensland but climate change is about long-term climate, not year-to-year variations.
In the short term, it’s going to mean that Australian farmers, with more money in their pocket, are going to spend more. Given that, in aggregate, demand for stuff is already outstripping supply and thus pushing up prices, farmers buying more stuff is going to mean that there’s even more pressure for price rises. The Reserve Bank’s quest to tank the economy to reduce inflation might get even harder…
Note: story edited to clarify piece of complete brain fade on my part.
And good luck to the farmers. I would not be able to take the stress of that good news bad news industry. I think that the biofuel pinch is a growing pain that will pass quickly. In the longer term biofuel will be more of a by-product of food production and not the whole show. The nett benefit will be more sustainable and profitable agriculture which will work to improve adaptability to environment change.
If the economy is flooded with liquidity which is to be exacerbated with tax cuts, then this is the appropriate time to kick off a carbon tax for the purposes of funding energy industry restructuring. But that would all require some form of strategic plan, and I doubt that that is coming anytime soon.
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BilB is quoting vegetarian activists (or radical vegetarians or neo-vegetarians or vegetarian extremists) who advocate everyone adopting a vegetarian diet because of the reasons given in his quote:
Supposedly this will cut down on global warming.
You’re right Chade, the post could be edited / tidied up. I assume Robert means it takes more grain to produce a kilo of meat than equivalent calories of bread/pasta/etc. Basically, animals are just converters that turn carbs into protein (with a little fat).
What got me wanting to post though was your comment on biofuels push. Absolutely crazy policy. Evidence is mounting that the supposed environmental benefits simply don’t stack up (could even be negative). The economics of biofuels certainly aren’t there (unless you’re a grain farmer!). “Energy Security” FFS, how dumb are they?
I hope, but don’t agree with BilB that biofuel is a ‘growing pain’. But it is a good time to bring in a carbon price (via tax or permits).
Plenty of grains (and legumes) are high in protein.
Like quite a lot of previous “facts” about read meat, the statement that it takes more than a kilo of grain to produce a kilo of beef is based upon North American research, which is often the diametric opposite of the outcome in Australia.
Most of the cattle in Australia never eat grain. Most of the land used to run cattle in Australia has never, and will never, grow grain.
Chade: sorry about the brain fade, now clarified.
SATP: that’s largely true, but somewhat orthogonal to the point I was trying to make - that the increasing amount of meat being eaten in China is pushing up demand for grain.
Yep, steve, currently most Australian cattle aren’t grain-fed, but that’s not true of the rest of the world and if prices for beef keeping going up it will eventually not be true of Australia either.
The world’s already growing about as many non-grain-fed cattle as it can. Extra demand for beef will have to come mostly from grain-fed ones. It’s the economists’ distinction between an aggregate and a margin.
lol. It’s all good, it’s Friday!
Doesn’t the US import a lot of ethanol from South America (and specifically Brazil) anyway? So much for energy independence…
No. That would make corn ethanol economically uncompetitive. The point of ethanol mandates is to make corn growers and Archer Daniels Midland richer.
As I understand it Chade, when Brazil turns sugarcane into ethanol, the process uses more BTUs to make a litre of ethanol than can be then gleaned from that litre.
SATP: the energy return from sugar cane ethanol is generally believed to be quite good, in the order of 8 units of energy out to every unit of energy in. See Robert Rapier on the topic.
Er, I know nothing about biofuels and hate to be a party pooper but as a home brewer I can say that when sugar is converted into ethanol, large amounts of CO2 are given off. So while burning ethanol may produce little CO2 (?), producing it creates plenty.
Anyone know anything about this?
If the Howard / Nationals were still in gov.au then we could expect a round of subsidies and tax breaks to help the farmers over the painful excess cash flows and assistance with learning to drive new 4WDs, Statesmans and big green and yellow combines and to help preserve a “way of life” threatened by surplus income.
Call me cynical but I doubt the Rudderites will be any more able to resist the call of the auctioneers flat akubra, the squatters moleskins and the ascendancy RMs than Wilson Tuckey can resist flicking lacker bands and spitballs in the house.
FXH: Yea rite, as if!
Boy from Flynn: Home brewing is quite dangerous, you should stop immediately. Pour out every drop (in case it explodes or something). Get yourself down to the pub where the beverages are made according to Australian health standards & stuff like that.
Don’t take risks with your health!
Heh heh, you know that home brew shop owners use exactly that argument in reverse Steve.
But pubs are good too. Can host great social events. Why, my brother-in-law once won the Digger’s arms iron man contest - the only competitor to chew and swallow the raw prawn (speaking of health hazzards!) and keep it dowm. I seem to recall the prize was more piss. Great night out tho.
Boy from Flynn: that’s true, but that the carbon in that CO2 was from plants absorbing it from the atmosphere. So there’s no net addition (at least from that source).
Cheers Robert. That’s cool. My home brewing will now be guilt free.
That would be right wouldn’t it? The sugar cane/sugar beet/whatever had to absorb the CO2 from the atmosohere first to make the sugars, unlike the carbon in coal and oil which have been store since the dinosaurs.
Flynn, like… near Traralgon? Gippsland lad??
Robert, An interesting point is that the poor in developed countries will compete with the bulk of the population in China (and other) for meat and energy products. The energy crisis (and climate change mitigation) are driving up grain and food prices and will cause increased income disparities in developed countries because the impacts of the relative price changes are global.
Heh heh, no Ambigulous. Flynn - the country’s newest electorate - is in central Queensland. It takes in Gladstone on the coast (where I live) and goes right out past Longreach. It was expected to be a safe Nationals seat. Nationals candidate Glen Churchill - prick came and stood beside me when I was spruiking YRAW how-to-vote cards and smirked smugly in anticipation of his victory - couldn’t believe it when Labor won. Contested the result but to no avail. He He, it was a good night.
You a Gippslander are you? We went around Vic last year, taking our long service leave in case such a thing ended up being made non-existent. Pretty place. Bloody cold in Wodonga though! Even worse in Beechworth! Not sure if we went through Traralgon or not - do remember driving past a giant worm maze.
cheers
Boy From Flynn, surely you aren’t referring to election night as a “good night”. Not as far as the electorate of Flynn was concerned? The seat had one of the longest waits to be called, had to wait for every postal vote to be counted.
It was a “notional” National Party seat, not a “safe”. The tightness of the election result would point to the seat at least being worth contending for the National Party, rather than such endeavours being to “no avail”.
That only became apparent after the night Steve. It was expected to fall to the Nationals on the night but it went the other way - so those of us who were there considered it to be a good night.
Flynn is a very large rural seat. We were formerly part of Hinkler which was considered a fairly safe National seat and which in fact did go to the Nationals.
The result was tight so of course he would call for a re-count: but it was “to no avail”.
Murky is the subject indeed,more so if you look past the statistics to realities,and the confidence of farmers,and agri-business will be misplaced entirely unless they all figure something out,that,cannot be denied as is self evident in reading farm based newspapers,and the regular insights of others about the profitability of land per unit of usage measured in hectarage.Then there is the problem that an intelligent person like Mark Merkel and other Academics know all to well,the State education systems produce the scientists that make the difference and not private schooling, even though regularly in The Land newspaper every Private education facility can advertise for willing farmers sons and daughters,and the non cash crop,of the status implied.Drip fed no doubt.But I maybe being unfair too about that.Then you have the posterings and rip-offs associated with off farm inflators and services,say, like a long slow boat to China,with rusting sides,or up up and away on the latest of noisy cargo cult Macquarie bank omnibuses!?Then there is the joy of organics as observed in Acres newspapers,where the Chinese have discovered organics,and they churn out other exports willingly bought to be used on organic farms.So do the Indians as of India,our very best friends that no-one ever is seriously criticising the New Zealanders,abounding in sheep and cattle,but cannot find the workers,god bless those workers,they must be still over here as accountants,and marketing people to see if Bunyip turds can be marketed as the leading organic fertiliser.But in the Land are charity for our farmers and a Financial expert are pushing all the lovely packaging and soft drink,that competes with the outgassing baby bottles heated with non-GMO milk,in the bottles, feed to cows.Even the do it yourself yoghurt starter from New Zealand came with a plastic thing,a case for trying both ends of the Hilsch VortexTube ,say, from headquarters of ExAir Darwin or the other stuff that can spank the outgassing out of the plastic.I am trying onion skins wrapped inside ,or outside of my veges,in my electric cheap steamer,of polycarbonate stuff,and no gaurantee from government it has been proven safe to utilise polycarbonate in this manner.Dogs in Australia,and their owners recently werent seen protesting against another closer of a dog food product line.The pooper scooper servants won over by the need for doggy bones and great organic chow,means, I am sure, that a pressure for organic bones is on,and the demand will be great.Somewhere having the marrow of a good beasty in the soup of the average meat eater will find competition from the bow-wow movement and associated barkers,non-QC.I have a personal experience to relate,one of a long list of such.I proposed through a local newspaper that some research should be done on privet a plant that bears enormous fruiting bodies and prolific leafing material to see if it could be used as sileage.There are many ways to produce silage including burying it underground,as yet, I should of buried like the proverbial ostrich ,and used my arse effectively in that manner.Here in downtown small place name on map,the potato yields are measurable in rain gauge units,with the balance numbers opposite measured by on farm costs accruing and advice from the financial sector to round off the figures.Brain fag setting in now,I have been putting off the fireweeding by hand because of the bookwork imposed by the weather consultant ,who has as his address,pie-in-the-sky.I think he must be overworked,often popping up with the fellow who gets around with the reindeer.Oh!Dear!The Land charity for farmers didnt have one of those bottles in the four wheel drive.Time to take my pills for being schizo!See if the house rat has shat on my metal plate,ask my pet galah a question about why he thinks I am not feeding him enough,and tell him to renew his pilot license I am a collector of grass hoppers and praying mantises since noting they were found in ancient hieroglyphics.Well Until I hear from myself again,see you remember to store your garlic and wheat in a hypotenuse side structure and do the right thing.Mexican Wave. There is a hole in the bucket dear Henry…………..
Like, oil comes from dead dinosaurs and stuff that used to roam the earth’n'that. Doesn’t that mean that the oil industry is therefore an expression of evolution and natural selection in order to help return into balance Gaia’s wondrous natural carbon cycle? This would make Shell and the Saudis the world’s true environmentalists. Bless their hearts!
Just from memory, I think it takes about 7 kilos of grain to produce a kilo of beef. And a lot of water.
Dairies use a lot of water also to produce stuff which by and large I don’t consume any more since I joined the zip club.
I’m somewhat pessimistic about the near term impact of climate change. They keep finding new reasons why it doesn’t rain as much anymore in our major food producing areas. Dr Wenju Cai’s research is complicated and hard to summarise, but I think he is saying that the effect of aerosol pollution on the oceans in the Northern Hemisphere ends up meaning less rain here. If we clear up the aerosols the planet cooks earlier.
Then in an article entitled Food bowl is fast drying up in the AFR of 8 Feb we were told that top scientists were calling for major cutbacks in the irrigation licences in the Murray-Darling, essentially because the latest research showed that the last 10 years may be the norm from here on. They are suggesting that there may be 30-50% less water in the system in the future compared to long-term averages.
What they’ve found is that of the 15 world climate models used to forecast rainfall trends the 6 most pessimistic are proving to be more accurate for south-east Australia.
The scientists quoted were Jim Peacock, Chief Scientist and senior CSIRO hydrologist Ian Prosser.
On biofuels, the EU are having second thoughts. It seems that they are planning a certification system and perhaps giving palm oil a miss. Meanwhile in the US of A
Time to dust off Erhlich, people. If farmers are doing well, it’s because we are eating ourselves out of the house.
This is bad news.
Food production requires arable land plus inorganic fertilizers. Arable land is decreasing. Per capita arable land is plummeting. And we are steadily working our way through the fertilizer stock as well.
Tech advances can only hold the dyke so long before population pressures explode the myth that arable land is an infinite and renewable resource.
I suggest learning to like Laura’s legumes - or at least make sure your kids grow up to like them because they will be eating a lot more of them than we did.
Arable land is decreasing. Per capita arable land is plummeting.
And we’re busy building suburbs all over it.
To the best of my knowledge, the Reserve Bank is a privately owned international bank, so why does it get to play with our interest rates.
And as there is no gold standard anymore, the real facts of inflation etc belong to the banks who indiscriminately and with much abandon hand out money they magically create out of thin air and double entry bookkeeping.
We pay it back with real money created from our labour, and they then tell us inflation is our problem for too much spending.
Do banks have accountability regarding inflation? No, not when they can foist the blame on the community at large.
Sue, next time you happen to be in the vicinity of your local uni, follow the signs to the Department of Economics and sign up for their 1st year macro-economics subject.
It will do you a world of good.
Harsh but fair, Paulus.
SATP - The US, being good ole freemarket believers, puts an import tax (150% off hand) on Brazilian ethanol which uses the bagasse to supply the BTUs.
Most cattle (in Oz) spend their final months fattening on grain and fishmeal, dairy cattle spend their entire lives on it.
Paulus & WBB - why would you want another economist polluting the world & stealing oxygen? They can’t even be used for for SoylentGreen as they so full of shit.