The coronavirus has given “big data” a meaning beyond what anyone envisioned just five months ago. The early, wild projections approaching logarithmic stature have since been revised as more data becomes available.
A seemingly innocent formula of number of deaths (numerator) divided by number of virus cases (denominator) seemed reasonable, but the obvious was ignored. The denominator is likely larger than data managers imagined, thus overstating the catastrophic outcome.
Little credit was given to even guessing the number of people who experienced the virus without knowing it. Exact testing wasn’t available. The irrational small denominator of “cases” created hyperbolic death estimates. As a result, locking down our economies came faster than the ability to test.
Algorithms, computer logic and artificial intelligence seemed to have replaced discussions of pros and cons, what-ifs, rational thinking and common sense. It’s easier to pass the buck with a model showing questionable results than make the tough decisions.
My concern is the attempts to further support fledging agriculture will have unintended consequences that result from the tariffs on China. The current market facilitation payments remind me of the target price payments of previous years that worked well in the short run. But that was before the detrimental effects of the past three years.
The underlying problem is we have 4 million to 8 million acres too many in global production. We can’t afford the time it will take to absorb the excess.
Food access might force importers to consider a strategic reserve of grains or food as a cushion against future pandemics experts say are sure to come. We think nothing of using a similar reserve to support big oil, why not agriculture?
Play the Hand You’re Dealt
Until a commonsense approach to agriculture evolves, we are stuck with the hand we are dealt. Currency disparities are not likely to be resolved soon, nor is demand for ethanol likely to regain historical levels. Consumers might have found they can get along with less.
When I wrote a column a decade ago about the pitfalls of being tied to the hip of the 800-lb. gorilla (China), I did not imagine the chain of events leading us to the structural problems of today.
This black swan event looks a lot different than I expected. The key is survival. However, I’ve read the last chapter of this book. We’ll win again, but our lives will be changed materially.
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Jerry Gulke farms in Illinois and North Dakota. He is president of Gulke Group. Disclaimer: There is substantial risk of loss in trading futures or options, and each investor and trader must consider whether this is a suitable investment. There is no guarantee the advice we give will result in profitable trades. Past performance is not indicative of future results.