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February 2009 Archive for U.S. Farm Report Mailbag

RSS By: U.S. Farm Report, US Farm Report

Comments, questions, opinions...this is your chance to speak out regarding anything and everything reported on U.S. Farm Report. Viewer feedback updated regularly.

John Responds to Feedback

Feb 25, 2009
Editor's Note:  The February 21-22, 2009 edition of U.S. Farm Report generated quite a bit of reaction - here is a sampling of the viewer feedback on a variety of issues..and a couple of responses from John:

John,
   Great show.  The U.S. Farm Report is part of my Sunday ritual here in N. Idaho.  I have a great respect for farmers and farming and have always described farmers as the real economists of our society - that their "abundance of common sense" is a trait not found in too many folks these days.  
    I have a somewhat eclectic mix of financial, investing, real estate appraisal and mining background.  So whether I wanted it or not, I was exposed to a large cross section of our society.  For years I became more and more uncomfortable with how everyone suddenly "became rich".  The societal shift from hard work and thrift (or living within our means), to one of borrowing and consumption that became mainstream starting in the late 1990's, was unsettling.  
   Anyway, I agree there are issues and difficult decisions that come from the "paradox of thrift".  The right (although not perfect) answer might be that we need to go through the painful process of removing the propensity to spend and consume, actually instill a propensity to work and save, and then learn to live and adjust for the kind of healthy consumption and spending that follows - after a certain leval of savings has been achieved. 
   For some reason we are aftraid consumption won't come back.  It will, it will just be the kind of consumption that is supported by a truly healthy economy in the United States and the natural growth coming from other countries as they advance their standards of living.  
   Americans are very resourceful.  I think we are spending too much time trying to figure out how to avoid the pain of ripping off the bandaid.  There are going to be some losers in this one.  We just need to get it over with and focus on rebuilding a more viable, albeit less dynamic, economy based in reality.  In my opinion, we cannot allow the creation of bigger and bigger problems because we don't want to experience the hangover.
   I am concerned that if we don't get in front of this soon, it is going to happen anyway - and well outside of our control.
My two cents.  Keep up the good work.
John Swallow
Idaho
***John's Response:
   Thank you for watching and for your thoughtful remarks. Like you every time I think I have a handle on the situation, things seem to get worse.  Obviously we are going to continue to wring a lot of ephemeral, even imaginary, wealth out of our system. 
   Oddly enough, one thing I think will help end this trend is our brain chemistry.  We are designed to adapt to even horrifying fears after 6-18 months.  As our cortisol and other stress chemical levels abate due to the body's natural emotional immune system (since allowing it to continue would literally kill us), we will face the future will lower expectations and better chances of fulfillment regardless of the money situation.  Already we see families cutting back and finding they can cope better than they imagined.
   I'm not trying to be a cheerleader here, but we often underestimate our ability to persevere under pretty harsh circumstances.  we can even find happy moments in the process. The main thing I think is to alleviate as much absolute threats (hunger, homelessness, etc.) while our extremely flexibile system does its job.
   We are also going to make some faulty plans and execute some bad choices, but then the whole history of humankind is one of triumph over less than perfect plans. 
   Stay in touch.  Let me know what you are seeing in your corner of our world.  John
 

  
Thanks to Mr. Phipps for addressing the need for universal healthcare in this country.  As one of the 47 million individuals without health insurance, I appreciate the use of this forum to speak for those who do not have the volume to get this urgent message across to our leaders in charge of policy.
 
Does feedback show that farmers are willing to forgo farm subsidies if universal healthcare becomes a reality?  If so, the exchange in entitlements would be one way to help pay for universal healthcare.  I would like to see the farming community rally behind this idea.  I hope you continue addressing this topic on your show.
 
I really enjoy watching your show.  Keep up the good work!
Kari Marsh
***John's Response:
   Kari - Thanks for watching and for your support.  I'd trade my DCP payment in a heartbeat for access to a group insurance policy for farmers.  As health insurance gets more problematic, these ideas may get more serious consideration.



Dear John: 
   Your U.S. Farm Report program comment on February 22, 2009 has led me to write you.  I strongly feel the opposite on whether a farm HAS to become larger in the future to remain in business. My wife, who has a profession of her own and works on the farm; my son age 30, who has just decided to return to the farm after basiclly losing his job as a building contractor; and myself age 58, 3rd generation farmer who returned to the farm after serving in the military and a short profession in the early computer age. My question is one that comes to mind everytime I tune into your program or listen to farm organizations discussing the future of farming.
    Why can't the ag community learn from the large cartels of the oil countries. "ORGANIZE". By controling ag outputs (Food), the producers could position themselves to be able to grow their products for a profit instead of a hit and miss, year to year balancing act to meet expenses. Wouldn't it be better for every producer, who IS, and HAS been a good manager, to be able to make a living. This could bring back rural development or at least keep it from becoming extinct. Growth and expansion is great if it doesn't just led to only a few having everything.
    Our operation here is roughly 3600 acres which is considered to be on the smaller scale of farm size because of idle ground being needed due to low rain fall. The farm is at present about 95% debt free and is located in an area of the country that is limited in the crops that it can raise, therefo limiting the potential farm income that the farm itself can generate. Why would a producer want to  jeopardize its operation just to become bigger because the mentality of ag is "in order to survive, you have to expand" or you have to "produce MORE to survive"
    I believe that my grandfather and father were able to pass the farm on by remaining relatively debt free and not wanting to be the biggest or the richest operations.  Maybe the attitude of biggest and richest (GREED) is why this countries economy is in the shape its in presently. 
    More faith and less greed.    
    I look forward to your thoughts on my comments.


 
Saving money doesn't help the economy with increased sales.
Seems like companies in the U.S. are dumping employees by the ton since the government's stimulus program is saying they will provide more and longer unemployment benefits.
But, back to saving money. I have managed to accumulate quite a large amount of CD's, because, I never felt the stock market was a safe place to put money.
Now, I'm wondering if I wouldn't be smart to bury the money, after cashing the CD's, in the backyard. FDIC, to me, is just a part of the U.S. Government, and the shape the govt. is in doesn't make me think FDIC is as good as the economists are making it sound.
Just my thoughts.  Gary Maize
***John's Response:  
   Thanks for watching and for your feedback. I disagree about the FDIC even though your backyard is paying practically the same return.  Those CD's are the safest place you could have money, in my opinion.  They just aren't going to grow very fast.
This nation is not going to collapse, nor will the US default.  We could see significant inflation later, but all that occurs after the recovery starts.  And I think we may be closer to that beginning than we fear.
 
   I was very surprised to say the  least when I saw your drought map showing SW Kansas at the low end of drought.  According to the old=timers that live in Rolla, KS, we are approaching the Dust Bowl days.  I have seen the wind blow acres of dirt and roads covered so bad that they had to be dug out by bulldozers. 
  No wonder I never hear about our drought situation.  I don't know where you are getting your information but in our area, you should be showing us extreme level.
  Not to mention the tumbleweed catastrophe due to the ranchers not being allowed to graze cattle on the Cimarron Grasslands because of drought supposedly.  Now the farmers will be spending more money for weedkillers and to replace crops that are wiped out because of the tumbleweeds, not to mention the fences that have been pushed over. 
Welcome to the real world.
Susan Kallenbach 
Flying K Horse & Cattle Co.LLC
Rolla, KS

John,    
     In your comments last week on the ever increasing size of farms and how the decision will be made on who stays on the farm. While I am a staunch believer in a great God who created all things and not evolution I do think that when farmers use their God-given abilities, talents, knowledge, etc. that a certain " evolutionary" process or "natural selection" will take place in which , simply put, those who make money will stay and everyone else will go. When those who find it necessary to sell their land, if possible, it might be good to keep some. You can raise enough to feed a large family on 80 acres.
                                       Sincerely, Dennis Tucker from S.W.Missouri
 

Good morning John!
   Thanks for the update on switchgrass!  You missed one important piece of information:  how many million BTU's / acre.  That will be the bottom line for all biomass  and other renewable energy operations.  When the Saudi oil field goes dry there will be a terrible crisis at hand and we need to learn now which direction we will need to go.  Do you want to eat or keep warm?  Maximum utilization of land will be imperative.  I think global population control efforts will be too little too late.  The light at the end of the tunnel that most people seem to see is just a freight train.  Glowing reports that we hear of our energy future are purely delusional!
Thanks,
Mike Hradel
Cold Stream Farm
***John's Response: 
   I'm less pessimistic than you about our energy future.  If nothing else, we have just postponed the inevitable by a couple of decades with this severe recession.  I'm not  a big believer in switchgrass frankly, due to the low energy density - you have to handle too much stuff to get much out.  It could be a last ditch source, but we're a long way from that kind of desperation, in my opinion.



Hi!  Ex-California farmer here.  I noticed on your farm report today you were talking about water for almonds.  When I was there in 1978 we had a similar problem.  The problem was the irrigation district had sold our Madera irrigation water to Bakersfield.  Maybe some investigation on this is in order?  Could this be happening again?
Thanks!  Sherry Halvorson
***John's Response: 
   Thanks for watching.  You bet cities are buying water rights, as well as simply commandeering them during the drought.  It's hard to see how it could be otherwise politically.  This is one reason CA dairies are moving to ID, NM, etc. It also is an easy decision to make when desperate municipalities throw millions at farmers for the water.
While losing our almond production is unfortunate, I think thirsty humans are a higher priority. If we can allow the market to arbitrate these decisions, better outcomes will arise.

 
 

The "Sin Tax" Debate

Feb 16, 2009
Dear John:
   One of the problems of being an idealist is that I don't compromise very well.  I've come to the conclusion that my role in these debates is to state the ideal and then grind my teeth while others compromise.
   Your idea of raising the gas tax while offsetting it with a reduction in the payroll tax would probably be an idea I could compromise with.  But a reduction in payroll taxes is not likely to happen while a rise in the gas tax is, especially since people who have a prominent voice seem so willing to concede it.
   I understand the concept of the Pigovian tax.  Lay terminology often refers to it as "sin" taxes, i.e., cigarettes, alcohol, carbon taxes, and likely soon to be firearm taxes, fat taxes, and who knows what else.  The problem I have as it is applied here is that it implies that gasoline use is a sin.  While it is appropriate to make the public aware of the risks, there is substantial evidence to cast doubt on fossil fuels' contribution to climate change and zero conclusive evidence that it does (an entirely separate debate, I know).  In fact, I would argue that fossil fuels are such a cheap and efficient way to run an economy that the wealth that it creates allows for better care and improvement of the environment than if we are forced, via sin taxes, to go without them.   As such, the risk posed to our standard of living presented by socialist solutions to these problems is greater than the risk posed by the problems themselves. 
   However, the main point of my aversion to a tax increase is to offer some means to discipline government spending.  It bothers me that so many people will now concede to tax increases, largely out of guilt - either self-imposed or through brow beating from politicians - for the maniacal spending taking place.
   I'll recommend a book, "Atlas Shrugged".  Perhaps you've heard of it.  If not - check it out. It was written in the 1950's by a woman who grew up in Russia but emigrated here in the late 20's.  The story depicts a United States marching toward socialism (eerily similar to today's issues) and reveals the virtue of reason and self-interest in a capitalist economy.  But it's quite a project...1100 plus pages.  Tackling a book of this size was a new frontier for me.  But it helped me legitimize the values I hold - so many of which have come under attack.

Sincerely,
Gary Anderson

JOHN'S REPLY:

Gary,
   Your points are well taken and have also matched my positions at times.  The payroll tax reduction is seriously being considered and gas taxes will be going up for revenue purposes alone in CA and IL pretty soon.  The Pigovian nature of gas taxes are well outlined here, and much better than I can express.  The bottom line it is not based solely on climate change worries.
   Ayn Rand was almost required reading back in my college days and I have marched through Fountainhead and Atlas Shrugged both.  Her stark depictions make for powerful arguments, but questionable social and economic policy, I think.  Worse still, the emerging field of behavioral economics is offering physiological reasons why our hard-wiring will make rationalism difficult to embrace.
   As well, I bought into the "starve the beast" arguments offered in the '90s to control spending.  But it it now clear to me that Republicans will ignore fiscal discipline for socially conservative and political reasons and Democrats are only beginning to recognize the well is about empty.
   These are unique times, and I appreciate your good humor and articulate comments.  Thanks for watching.  You might also enjoy checking my blog from time to time, where I go on at much greater depth about these and other matters.

 
John

Is Gregg Hunt Crazy, Part 2

Feb 13, 2009

***Editor's Note:  Gregg Hunt's support of a signicant bump in the federal gas tax once again generated quite a bit of response.  His comments aired on the January 7-8 edition of U.S. Farm Report (available at www.usfarmreport.com):

COMMENT #1:
As I understood Gregg Hunt's defense of his proposal for a drastic gasoline tax on AgDay on Monday February 9, he said that to do so would pressure car makers to produce cars capable of the European average of 42 miles per gallon. That from-the-bottom-up approach will penalize the average person as the end-justifies-the-means method of achieving the intended target. Despite his objections, it would make much more sense, achieve the goal far more quickly, and not penalize the public if Congress were to legislate that car makers make cars capable of that mileage target.  Mr. Hunt meanwhile needs to engage in a fundamental rethink of his economic philosophy!
Yours sincerely,
Jim Hansen

COMMENT #2:
Dear John Phipps,
   I have watched your show for years, every Sunday AM while I am doing my ironing!  I am not a farmer, do not live on a farm and don't intend to, I really enjoy your show because it is very informative about many things that affect my everyday living.  Today was my first disappointment.  I didn't catch his name but the gentleman that said the Federal Govt needs to raise gas taxes to stop Americans from using SUV's was terrible.  It is great to drive a little bitty car that gets 40 MPG, but we were a family of 6, two adults and four children, almost poverty level, but I wanted my children to see some of the USA and have some nature time.  We went camping!  How would all of us, all the camping gear (yes, we had a tent) all the food, clothing etc. in a compact car.  Think of the ripple affect, vehicle sales down, maintainence down, and travel economy on the whole!  Please don't invite him back again.  I enjoy your show because it is not political (we have all had enough politics in the last 2 1/2 years!) and you don't try to tell me what I should THINK! and how great the "left" is.  I know this is too long but I couldn't contain myself!  HAPPY FARMING ( I was born and raised in NJ - "the Garden State" so my first jobs were on farms, picking, hoeing & packing, I still go back and pick my own blueberries every year).
Barbara

COMMENT #3:
Please do have greg hunt as a part of you telecast anymore. His idea on raising the gas tax is unreal.  Does he expect farmers to haul seed,etc.to the field in a vehicle that gets 42 miles/g.  If this is the kind of reporting that you think would be helpful to the american farmer, you"re wrong.  If I see him on your show ever again , I will not be tuning in.  Please get some people to report news that would be revelant to our industry.  Very disappointed in you.   
Elaine Binder  
Table Rock  NE

COMMENT #4:
   What in the hell is Gregg Hunt trying to say? You allowed him time to clarify what he said on the 27th of January and he can't form a cogent thought! This guy is NO free market economist. I listened intently and he started a new thought about 4 times. The only thing I "think" he is trying to say is that he wants the free market to work when it is in his favor, but when its not, government should intervene. That is a recipe for disaster - witness the present debacle.  
By the way, where in the hell does Dan Flores think we are goin to get energy from? The sun? Corn? Beans? Wind? Vera-Sun is proving what a "viable" industry ethanol is. Here in Minnesota, the State has subsidized corn-ethanol for over 30 years! It will not work, it decreases mpg by 33% and disrupts the corn/food supply, is a net LOSS in energy, uses too much water and ruins small engines! What is there to like?   
   I see that because Flores drives a Prius he is a champion of electricity! How are you going to make electricity if Obama gets his way? Obama said he will kill the coal industry. He is going to backtrack on all of Bushs' plan to expand oil recovery. He doesn't care for nuclear! All the alternative sources make up a fraction of new energy.
   
I thought your ag. based economist fellow were pretty smart. From what I am hearing now, I would run out of their offices for fear of turning this Country into a complete socialist state! Oh I forgot, Obama is going to attempt this anyway.
God help us!
 
Joe Polunce
Cologne, MN

COMMENT #5:

Mr. Hunt,

My name is Gary Anderson.  I farm 230 acres in northeast Wisconsin but also have a day job of servicing dairy farm equipment.  My whole life has been either farming or farm related industries.  
 

Your comments on raising the gas tax caught my attention because any concession to raise taxes violates my common sense.  I think you're being much too parochial in your interests. Raising taxes on gasoline -exclusively on passenger cars as you've said - just panders to the special interest exclusivity that has made our tax code the mess that it is.  Understandably, you're interested in advancing ethanol.  But taxing gasoline does not create a profit motive as you've described.  It creates a stick motive. I'm interested in advancing the prosperity of America, not just agriculture.  When America prospers, agriculture will prosper.

Currently, our politicians are spending money like drunken teenagers with Dad's credit card.  When teenagers irresponsibly spend their allowance you don't raise their allowance. You cut them off.  It's the only way we will discipline their spending.  The same with politicians.  If we want them to stop spending we need to cut them off and remind them that they work for us - not we work for them.  The fact that we would concede to or, even worse promote, a tax increase seriously irritates my sensabilities. 
 
Washington would obviously love having a tax increase on gasoline.  Along with the revenue, it gives credence to their faulty argument of fossil fuels' contribution to man-made climate change.  All of this is used as an excuse to create more mandates that limit our economic freedom.  Gasoline taxes are one more such economic limitation.
 
I'm sure you and I would agree that energy independence is crucial to our economic freedom.   But we don't need a gasoline tax to force energy independence.  We have enough fossil fuel reserves in the form of coal, oil shale, and oil reserves in ANWR, and off shore oil.  Again, special interest mandates from Washington based on false premises of environmental damage are limiting our energy independence.  Fighting these mandates, rather than rolling with the flow of adding more special interest regulations such as the case you make for increasing gasoline taxes, is the better way to advance America's energy independence. 
 
I'm in favor of developing other forms of energy, including ethanol.  But they should be developed on their economic merit rather than their political influence.  If and when fossil fuels run short, other forms of energy will naturally be developed, just as oil was developed as a form of energy in the late 19th century.  But forcing this development through taxation and regulations will result in a decline in our standard of living and will force economic resources to flow to the wrong places.  I know this sounds like a lecture, but to concede to more taxes and give Washington more authority over us will advance - unfortunately now at a much faster pace - our march toward socialism.  We're losing our country in the name of special interests - agriculture included.
 
I realize I'm being an idealist.  But we have too few idealists to fight for the principals that the country was founded on.  People such as yourself would help if you would advance a little of that idealism.
 
Respectfully,
 
Gary Anderson
Cecil, Wisconsin

COMMENT #6:
 There is an old saying that when you're in a hole, quit digging. Gregg Hunt kept digging this morning. He has a high tax, big government philosophy and no amount of talk will get him out of the hole. His idea was stupid the first time and just as stupid with further explanation. Most people don't want government telling us what we can drive. The reason people drive SUVs is for safety. He wants us driving cardboard boxes. (I don't drive an SUV and have no intention of buying one.)  Hunt must have campaigned for Obama with his attitude. 
Darrell Smith
Indiana


COMMENT #7:
Dear Sirs, 
   Mr. Hunt appears very uncomfortable on air this morning during his explanation about our economy. His disjointed explanation is dated and not relevant to our current economic happenings.  

Sincerely,
Kevin K.
Fort Wayne, IN

An Unfair Change?

Feb 11, 2009
   I wanted to throw in my two cents on program rule changes - I think I read something on AgWeb and maybe John Phipps talked about it on US Farm Report.  I think the rule change is extremely unfair to those of us that have traditionally grown non-program crops.  We have smaller program acreages as a result of historically growing non-program crops and as a result are not receiving payments on vegetable crop acres.  With the rule change corn-soybean growers would be getting a subsidy to compete against us - I am happy to compete but the field needs to be level.  Either we get paid on non-program acres or corn-soybean growers give up payments on non-program crops.  Actually I would like to see payments eliminated for all crops but that is probably another discussion.  Thanks for your interest.
 
Craig Phelps
Livingston County, NY
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