The Blogging Farmer

Alex Tiller’s Blog on Agriculture and Farming

Will Agriculture in Japan Survive?

For all its awesome natural beauty and thousands of years of history, Japan is a nation that is very poor in resources. Back between 1900 and 1945--taking their cues from Britain, Germany, France and the U.S.A.--the Japanese attempted to rectify that situation by creating their own empire in Asia. That didn't work out so well for them.

Afterwards, Japan started focusing on developing its economic and manufacturing muscle. That actually worked out very well - but the problem of resources remained, especially as the population exploded during the post-World War II decades. The country still winds up importing a lot of its food, since only about 15% of the country is arable...and that situation is not getting any better. Nonetheless, between making the most of what they had through advanced farming techniques and some smart advance planning, Japan has managed to become around 65-70% self-sufficient in agricultural products.

Then came the triple-whammy earlier this month--major earthquakes, tidal waves (tsunamis) and now, nuclear radiation from damaged reactors at the nation's power plants. The latter is especially serious, since radiation can poison the land for decades--or centuries.

A recent report out of KFGO in Fargo, North Dakota pointed out that the tsunamis, which penetrated in land up to six miles in some places, affected only four of the country's prefectures (those are similar to provinces, counties or boroughs)--and those four account for just over 12% of the nation's rice production. Because of the saltwater, farm production in those areas is going to be out of production for awhile. However, the report did not account for the effect of those damaged reactors, which happens to be located in one of those areas--the Fukishima prefecture, to be exact.

It's something that most people are not talking about, though reporters over at Bloomberg interviewed some knowledgeable sources on the topic. While pointing out that food products are often treated with radiation in order to prolong shelf life (the process is called irradiation, and many people find even this is a questionable practice), the real problem is what happens to the soil. The bottom line is that food production within a 20-mile radius may be affected for up to thirty years--and if the weather or ground water leaching carries radioactive particles further, the problem may get worse. At particular risk are dairy products.

Once some radioactive particles get into the human body, they may remain for years--and wreak havoc on DNA that is not pleasant to contemplate. Japanese agricultural productivity is likely to be down for quite some time.

Published March 25, 2011 at Alex Tiller’s Blog on Agriculture and Farming

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Thank God The Japan Earthquake Spared The Markets.

Or Did It?

Heard on CNBC a few nights ago from anchor Larry Kudlow regarding the recent earthquakes in Japan:

"I mean, the human--the human toll here looks to be much worse than the economic toll, and we can be grateful for that..."

Mr. Kudlow probably didn't quite realize how awful that sounds...but he might not have been right, either. It appears that Mr. Kudlow may have spoken too soon. In fact, prices on several commodity futures have dropped significantly in the wake of the Japanese earthquakes, tsunamis and now nuclear accidents. According to Bloomberg (15 March):

"Wheat fell to a four-month low, and corn and soybeans tumbled on concern that the earthquake and nuclear crisis in Japan will reduce raw-material demand."

Here's the fact: Corn (maize) is the biggest crop in the U.S. (to the tune of just under $67 billion)--and Japan is the world's biggest buyer of this particular commodity. At the Chicago Board of Trade, corn futures tumbled by .30 cents to $6.36 a bushel (that's the CBOT limit, by the way--it could have gone down further). At the same time, Japan's largest purchaser of maize, Zen-Noh, has announced that it is cutting its order by 24%.

Other commodities aren't faring so well, either. Wheat and soybean futures also took a heavy hit, falling to their lowest levels in several months. Seems as though our friends over in the Land of the Rising Sun have bigger issues to deal with--and meanwhile, the commodity traders over here are dumping their contracts right and left, further driving down prices.

If there is a silver lining to all of this, perhaps it is that low-income people in the developing world (and increasingly, right here in the USA) may finally start seeing a little relief when it comes to food prices that have been skyrocketing in recent months--and hitting hardest the people who can least afford it.

Published March 15, 2011 at Alex Tiller’s Blog on Agriculture and Farming

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Bubble, Bubble--Here Comes Trouble

Americans have a very short memory, so I'll remind them of the last two bubbles that blew up in their faces after government regulators lay down on the job (or were bought and paid for by the same people they were supposed to be regulating). The first on was the "dot-bomb" bubble that burst back around 2001. The second was the housing bubble, which blew up in 2008, after which then-President George W. Bush handed out billions of taxpayer dollars to the same bankers and Wall Street firms who caused the crash in the first place (those who think Obama would have done better can take no comfort, as a senator, he voted for it and as president, probably could and should have done something to stop it and bail out the victims instead).

This time, it's farmland. In Iowa alone, land that was selling at $6000 an acre in 2010 is now being auctioned off at $10,000 an acre as farmers, looking to cash in on the ethanol boom and soaring prices of cereal crops and soy, start expanding their holdings. Unfortunately, we've seen this movie before--back in the late 1970s. That's the last time farmland values went this high. Before that, it was right around World War I, when the demand for American agricultural goods--first from Britain and France, then the U.S. military--made farming very lucrative. But when the "War to End All Wars" was over, so were the good times--and ultimately, families like the Joads lost everything and wound up moving to California.

There are a few differences between the late 1920s, the late 1970s and today. Farmers are carrying less debt than they did back then (one of the reasons farmers like Pa Joad lost their land is because during World War I, they took out some sizable loans to expand their farms and buy those new-fangled steam and gasoline tractors). However, today's farmers may be making the same mistake that homeowners did in the run-up to the disaster of 2008 by taking out second mortgages on land they already own--at inflated values that may stay inflated, or may not. There also appears to be an assumption that prices on commodities are going to continue to rise...

Here's a little word of warning, at least to those speculators who are banking on increased demand for corn-derived ethanol...enjoy it while you can. As this speculation continues to drive food costs up across the board, particularly in countries where people can least afford it, there's going to be increased rage--and trouble...and anything can happen. The other side of the equation is that as things stand, algae is showing a whole lot more potential as an alternative fuel than corn--because over half of its weight consists of usable oil as opposed to corn, which is only about 20%--and nobody eats algae.

Beyond that, my advice is to tread carefully, because you know the law of gravity, which seriously applies to financial markets as well as physics.

Published March 14, 2011 at Alex Tiller’s Blog on Agriculture and Farming

Hello, and thanks for checking out my blog.  My name is Alex Tiller and I grew up in rural Ohio (Clark County) where my family still owns farmland (corn and beans). I am a member of the American Society of Farm Managers and Rural Appraisers and am also an agribusiness author/blogger. I write about commercial farming, family farms, organic food production, sustainable agriculture, the local food movement, alternative renewable energy, hydroponics, agribusiness, farm entrepreneurship, and farm economics and farm policy. I visit lots of farms in different areas of the country (sometimes the world) that grow all kinds of different crops and share what I learn with you through this blog. You can contact me via email by clicking here: Email Alex at http://blog.alextiller.com/contact