Words & Meaning of Words

Words are symbols, which means the same word can mean different things to different people.  A perfect contemporary example are the labels “liberal” and “conservative.”  I have never found anyone who was wholly one or the other.

GAO used to mean “Government Accounting Office,” now it means Government Accountability Office.  There is a new GAO report on the farm bill.  The summary states:

The Government Accountability Office (GAO) and the U.S. Department of Agriculture’s Office of Inspector General (OIG) seek to enhance the efficiency, effectiveness, and accountability of the federal government. As Congress debates ways to address the federal government’s long-term fiscal imbalance, it becomes even more critical that we help with this challenge by identifying opportunities for cost-savings and for improving programs to ensure that every dollar counts.

In this spirit and in anticipation of upcoming deliberations over the 2012 Farm Bill, we are issuing companion reports today. They present the following set of principles significant to the integrity, efficiency, and effectiveness of programs in the farm bill:

  • Relevance. Does the program concern an issue of national interest? Is the program consistent with current statutes and international agreements? Have the domestic and international food and agriculture sectors changed significantly, or are they expected to change, in ways that affect the program’s purpose?
  • Distinctiveness. Is the program unique and free from overlap or duplication with other programs? Is it well-coordinated with similar programs?
  • Targeting. Is the program’s distribution of benefits consistent with contemporary assessments of need?
  • Affordability. Is the program affordable, given the nation’s severe budgetary constraints? Is it using the most efficient, cost-effective approaches?
  • Effectiveness. Are program goals clear, with a direct connection to policies, resource allocations, and actions? Does the program demonstrate measurable progress toward its goals? Is it generally free of unintended consequences, including ecological, social, or economic effects? Does the program allow for adjustments to changes in markets?
  • Oversight. Does the program have mechanisms, such as internal controls, to monitor compliance and help minimize fraud, waste, and abuse in areas where these are most likely to occur?

In the context of these principles, our reports summarize key GAO and OIG findings, respectively, related to farm bill programs. The principles could guide consideration of each program and potential program, and the summaries could help Congress make well-informed decisions about program design while continuing to maintain a strong agricultural sector and the safety and security of the nation’s food supply and to provide nutrition assistance, promote U.S. exports, support renewable energy and conservation, and enhance economic growth in rural communities.

(more at link including link to pdf.)

The sentence which has me thinking is, “Does the program concern an issue of national interest?”  What exactly does that mean?  Is it one thing to processors.  Is it another thing to rural communities?

Could a survey of the entire country come up with an agreed upon definition?  Or, is the national interest actually greater than people’s concepts .  Are, for instance, teenagers capable of understanding their own best interest?

How many people would be willing to say, “As long as the milk in on the store shelves, everything is OK.”  What about the quality of life in rural America?  Should the production of food become more concentrated or is there a public interest in a dispersed food supply?

As the so-called Farm Bill of 2012 is being cooked up, it seems to me some preliminary discussion would be in order.  No one should be surprised that the corporations are running the country.  Corporations are all about exclusion and not a bit about inclusion.

 

Posted in GAO | Tagged , , , | 20 Comments

Dairy Products

Today, USDA released its annual “Dairy Products” report.

The number for 2011 look as follws:

(click on image to enlarge)

2010 is on page 53, if you wish to compare.

The fact is, a lot of product was made and sold in 2011.  It is also a fact that many tricks are used to “enhance” production.  More milk and less “enhancement” most likely would have created a demand for more product.

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Dizzy

Today International Dairy Foods Association (IDFA) issued a press release.

Jerry Slominski, senior vice president for legislative and economic affairs at the International Dairy Foods Association, issued the following statement on the Senate Agriculture Committee’s vote to approve the 2012 Farm Bill and move it to the Senate floor. The bill includes a dairy market stabilization program, first introduced in H.R. 3062, the Dairy Security Act, by Rep. Collin Peterson (D-MN), which will raise consumer prices, hurt exports, cost thousands of new jobs and stifle investments in new facilities.

“We commend Chairwoman Debbie Stabenow (D-MI) for getting a Farm Bill out of committee as it is very important legislation for our agriculture communities. We appreciate the concerns that several members expressed about the dairy title and applaud Senator Michael Bennet (D-CO) for his leadership in finding a true compromise that provides support for dairy farmers without the necessity of a new dairy supply management program. His proposed margin insurance program will offer dairy farmers the ability to manage price volatility without including a failed policy that discourages investments by dairy food companies and takes away opportunities for dairy farmers to expand production. “

Not mentioned is that without some sort of sham legislation, farm milk pricing would revert back to parity pricing.

The bill is a sham in that it does not address the root problem but, through an insurance program, partially funded with public money, claims to attempt to deal with volatility.

Actually, the members of IDFA are the cause of volatility.  For that matter it is a very small portion of IDFA’s membership that regularly trades on the Chicago Mercantile Exchange (CME).

The claim by the systemic choir is that over production causes lowered prices.  Despite a general belief in the logic of supply/demand, the data shows no correlation.  There is, over time, a positive correlation, on an annual basis, of milk production and farm milk price.  A positive correlation means that when farm milk production increases so too does farm milk price…60% of the time.

If all the cards were on the table, face up, there would be none of the talk which occurred in Washington, D.C. today.  The D.C. talk merely obscures the control of the powerful few over the many.  The milk pricing system essentially is legal plunder, and the dairy areas of rural America resemble a war zone.

 

Posted in . Parity, abuse of power, Dairy Policy, Dairy politics, Dairy Pricing Supply management, IDFA | Tagged , , | 4 Comments

Mad Cow – Not Really

Yesterday’s headlines regarding another “mad cow” is not quite right.  The cow in California had bovine spongiform encephalopathy (BSE) which is a protein prion disease.  A prion is neither bacterial nor fungal nor viral and contains no genetic material.  The term,coined in 1982, is a combination of the words protein and infection.”

Mad Cow” disease is specifically a new variant or nv prion.  The California cow was not a nv prion infection and therefore not technically a “mad cow.”

Today’s cattle futures rose which is a good sign.  Dairy farmers do not need a crash in beef prices while trying as best possible to deal with falling milk prices.

Posted in Beef | Tagged , , | 1 Comment

Mad Cow Again

Today’s news was not good.

U.S. authorities reported the first U.S. case of mad cow disease in six years on Tuesday and quickly assured consumers and global importers that meat from the California dairy cow did not enter the food chain.

John Clifford, the USDA’s chief veterinary officer, said the case was “atypical” and that there was “no cause for alarm” from the animal. Cows can contract the disease spontaneously in rare cases and that it cannot be transmitted unless the brain or spinal tissue is consumed by humans or another animal, according to scientists.

(more at link)

Here is a CDC link for “Atypical BSE.”

It is too early to guess how this case will affect cull dairy beef prices.  Cull price have been putting a floor under dairy replacement prices.

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China Mega Dairies

According to various reports China is exanding its milk production based on U.S. CAFO models.  The Wall Street Journal has a recent article.

China’s dairy industry has a long way to go: Chinese cows are only half as productive as their American cousins. But just as it built up dominance in electronics, textile and toy manufacturing, the Chinese government has set its sights on becoming a dominant milk producer. It has set production goals, created tax and other financial incentives for big dairy producers and encouraged foreign investors to come in with capital and technology. And it is buying up high-producing foreign cows by the boatload.

Since 2009, China has become the world’s most important buyer of dairy cows, driving up prices for calves world-wide and putting pressure on other markets such as alfalfa and bull semen. China has imported nearly 250,000 live heifers, or cows that haven’t yet reproduced, since 2009, according to data tracker Global Trade Information Services. Last year it spent more than $250 million on 100,000 foreign heifers, about 25 ships worth.

(more at link)

China’s land base does not look like the Central Valley of California.

(click on image to enlarge)

No one is going to put a 500 hp big green tractor on much of China’s agricultural land.  For that matter, China is losing farm land at an alarming rate.  China now has .08 of a hectare of land per person (hectare = 2.47 acres).  In 1967 China had 0.13 hectares per person.

In the early 1900s F.H King wrote “Farmers of Forty Centuries“  At the time King observed, cattle grazed on graves so as to not use valuable arable land.  The American model uses an impressive amount of fossil fuel to produce food and ship it over the country.  In term of calories input versus food calories at the plate, much of America has calorie deficit food supply.

Ultimately, if China continues to move in the direction of American agriculture, China will devour the planet.

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More Indexes

The Bureau of Labor Statistics (BLS) not only publishes Consumer Price Indexes (CPI) but also, Producer Price Indexes (PPI).  The PPI covers, for dairy the farm and the processor level.

The PPI is calculated on the same base period (1982-84) as the CPI.  In the last post I covered the details of how the calculation are made.

BLS has one data base covering all dairy products CPI.

Looking at all of 2011 and January through March of 2012 is interesting.

(click on image to enlarge)

The interesting aspect of the CPI is the the general rate of inflation for all items is only slight greater than the “All Dairy” products index.  So, at retail life is normal.  At the farm level, exploitation is the only explanation.

 

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Ice Cream Season

The weather has been odd but, we are approaching the traditional ice cream season.  Ice cream is a comfort food if ever there was one.  Perhaps, that explains why the Consumer Price Index (CPI) for ice cream remained steady during the so-called Great Recession.

(click on image to enlarge)

The Bureau of Labor Statistics track the Consumer Price Index (CPI) for many items.  The CPI is determined using 1982 – 84 as the base period and each month’s price is compared with the base (multiplied by 100 or 100%).  March 2012 CPI for ice cream is 218.238 or just over twice the price of the base period.

The National Bureau of Economic Research (NBER) is the official tracker of recessions.  Officially, the recession ended in July 2009.  Technically a recession is defined as a decline in GDP for two or more consecutive quarters.  In reality many people are worse off now than during the recession…especially those whose unemployment benefits have ended.

If the nation “All Milk” price had equaled the CPI for ice cream, the March 2012 farm milk price would have been $29.54.  No one need take off their shoes to count toes to know the farm milk price was considerably lower.

All of this should not be taken to mean that you cannot enjoy a bowl or cone of ice cream.

Posted in CPI | Tagged , , | 1 Comment

More Reports

This morning April 20, 2012 USDA released its “Livestock Slaughter” report.  USDA reported “Dairy cow slaughter during March 2012 totaled 278,000 head.”  However, according to yesterday’s “Milk Production” report there were 9,168,000 dairy cows January through March 2011 and 9,254,000 head in the same period of 2012.

This afternoon the “Cold Storage” report was released.  Total Natural “cheese stocks in refrigerated warehouses on March 31, 2012 were up 2 percent from the previous month but down 2 percent from March 31, 2011.”, according to the report.

Jeff Frankel of Harvard has an interesting blog post on “Bias in Government Forecasts”  The third paragraph states:

Such forecasts underlie governments’ failure to take advantage of boom periods to strengthen their finances, including running budget surpluses. During the expansion of 2001-2007, for example, the US government made optimistic budget forecasts at each stage.  These forecasts supported enacting big long-term tax cuts and accelerating growth in spending (both military and domestic).  European countries behaved similarly, running up ever-higher debts.  Predictably, when global recession hit in 2008, most countries had little or no “fiscal space” to implement countercyclical policy.

Although, the connection with dairy may not seem obvious, there clearly is a bias in government policy to see that there will always be plenty of milk on the shelves.  Just as the budget “surplkus” projections were not prudent, government policy regarding dairy lacks any deep thinking about where the public’s interest lies.

Posted in USDA Data | Tagged , , | 4 Comments

Milk Production

USDA released another “Milk Production” report today…it was up.

Milk production in the 23 major States during March totaled 16.5 billion pounds, up 4.3 percent from March 2011. February revised production at 15.1 billion pounds, was up 8.2 percent from February 2011. The February revision represented a decrease of 13 million pounds or 0.1 percent from last month’s preliminary production estimate. Adjusting February production for the additional day due to leap year causes February revised production to be up 4.5 percent on a per day basis.

Both milk per cow and cow numbers were up.

Here is what is difficult to get.

(click on image to enlarge)

If price and production are connected, why the difference from state to state?  Someone will quickly leap forward with a theory.  Let’s say weather.  New York sits between Ohio, Pennsylvania and Vermont.  There should be some connection in those four states.  There is not.

What is really odd is the numbers come out every month and how often will any conventional expert question the spreads.

Who can predict where milk production will go?  The fact is, the only thing certain is there will be fewer dairy farmers.   What kind of society has an open season on farmers?

Posted in milk production | Tagged , , , | 6 Comments