Between 2009 and 2011 we worked with a group of colleagues on nutrient run-off problems on the Eastern Shore of Maryland…including both grain and poultry operations. The relationship between the poultry farmers and the processors like Tyson Foods appeared to be an amazingly ‘one-sided’ contract.
Christopher Leonard has done an expose and NPR did a report.
Maybe it’s just me, but the last few years are getting tough to tell apart. Imagine a quiz question:
Name that year where we threw obstacles in the recovery’s way, but kept growing slowly; where Europe avoided both a disaster and a solution to its mess; and where China kept growing over 7 percent, but didn’t rebalance its economy like it said it wants.
You’d be right to guess 2013. You’d also be right to guess 2012, 2011, or 2010.
So, to remind ourselves what did change in the last 12 months, we asked our favorite economists, journalists, and think-tankers for their favorite charts of the year. The stock market went on a tear, the labor market didn’t, and Wall Street and Main Street came to terms with a New Normal. Without further ado, here are 37,000 words worth of charts to tell the most important stories of 2013.
The Atlantic Report
This is wonderous economic analysis!
…Take the grain titan Cargill. The largest private company in the U.S., Cargill has gathered and shipped a bulk of the world’s supply of wheat and corn for more than 100 years. Nowadays, however, Cargill also sells billions in derivatives to food companies, and runs two massive hedge funds, managing more than $14 billion for investors. Or take Louis Dreyfus, another major grain trader. In 2008, Dreyfus launched its own fund enabling investors to bet on food prices. By 2011, the fund had grown so fast it stopped accepting new money.
The New Republic Article
“There is no regulation of physical [commodity] markets,” said Mike Masters, founder of Better Markets and a hedge fund manager in Atlanta. “It’s the Wild West, they can do whatever they want and nobody knows.”
Golden Rice is rice that’s been genetically engineered to deliver enough beta carotene to improve the health of the malnourished poor who might eat it. (Deficiencies blind over 250,000 children a year.) It’s a humanitarian project — funded by the Rockefeller and Gates foundations, among others — that has been in development since the 1990s. Some people object to it; they see it as a Trojan Horse that the biotech industry is using to enter countries that might otherwise reject their technology.
The Grist Article
In my humble opinion, this article’s real value is in pointing out the difficulties when one ‘kind’ of people decide their going to solve vast problems for another ‘kind’ of people….the real fool’s gold is the hubris that underlies many technical solutions.
Many of today’s young farmers (and a good number of older, thoughtful small operators) are committed to farming in a manner that creates minimal environmental harm (I think any human land use, by definition, creates environmental and ecological change to the landscape)…and produces substantial environmental benefits.
Unfortunately, most communities do not provide financial support for these new, small farm environmental benefits. Already in a financially stressed situation, small farmers could realize real improvements in their economy if communities began to 1) value the environmental benefits provided by sustainable small farms, and 2) pay small farmers for the community assets they are creating year after year.
USDA, through its NRCS (Natural Resource Conservation Service), provides incentive payments to farmers. The payments, however, are to address resource concerns…correct an environmental harm or environmental problem (the farmer allows his livestock to pasture in a stream area…NRCS pays for fencing and stream restoration).
With two partner organizations (New Urban Farmers in Pawtucket, RI and the African Alliance Growers Collaborative in Providence, RI) we’ve been working to 1) determine the agro-ecological areas where small farmers are creating environmental benefits, 2) analyze if any of the eco-benefits fit into the structure of USDA NRCS conservation practices and practice payments, 3) if appropriate, expand the payments USDA NRCS is making to small farmers to better align their incentives with the work of small, organic, and urban growers, and 4) examine how other community based agricultural organizations (primarily state conservation districts) might create funds to ‘invest’ in small farm environmental asset building.
From our research, there are six areas where small farmers are creating substantial environmental benefits:
1) Improving the physical, chemical, and biological conditions of soil through compost, mulch, manure, and remineralization practices.
2) Managing nutrients to protect from runoff, improve air quality, and improve production characteristics.
3) Managing weeds and pests with natural methods that improve plant communities/wildlife habitat, enhance the quality of forage, and control pests.
4) Managing water for water control, irrigation, runoff, and water harvesting.
5) Managing farm infrastructure for conservation improvements – tree and shrub establishment, vegetative barriers, etc.
6) Managing farm energy uses to reduce energy use, and improve energy efficiency.
Small farmers are utilizing both novel methods (those developed in the last 30 to 50 years through biodynamic -realizing its’ non-scientific aspects – and permaculture practices utilizing new ecological science) – as well as revisiting old, natural farming processes – to realize their sustainability goals.
These benefits not only increase their farm productivity, they also improve environmental qualities in their communities. They are becoming an increasingly responsible ‘underground’ community of economic asset builders related to those environmental improvements.
At the same time that – across the country – restaurants and thoughtful households are demanding local, nutritious, sustainably-grown food, the economy and financial infrastructure for small farmers is feeble and immature. That is especially true for new and socially disadvantaged farmers.
Changing the small farm financial infrastructure is critical to expanding local food production, improving household nutrition, and reducing healthcare costs. USDA through the Farm Service Administration has rethought the FSA loan program to provide more opportunities for small and new farmers. USDA Rural Development has become much more sensitive and helpful to the needs of socially disadvantaged small farmers.
What else can we do?…a few thoughts and suggestions:
1) Small farmers need routes to ownership for their land (we’re doing a tiny bit here with a RI farmland fund). Communities across the nation need to rediscover their small bank infrastructure and use it to build local farm assets.
2) We should pay small farmers for the environmental goods they produce. I’m not talking about correcting resource problems…I’m advocating for local systems for incentive payments to small farmers that build ecosystem assets for themselves and their neighbors.
3) Communities need to begin rebuilding the small farm services infrastructure that existed until perhaps fifty years ago. It’s not a romantic notion to rebuild small farm economies in every community in America…it’s good economic sense!
4) Eat thoughtfully (I’m borrowing from Wendell Berry on this one). We can be the best advocate for the local farm community by buying food and farm products in a thoughtful manner.
5) Establish the educational infrastructure necessary to use the talents of refugee socially disadvantaged populations – who many times have significant farming skills. Language and business/financial education is critical to the success of these new citizens.
6) Rethink how your savings, investments, pensions, etc. are being utilized. Most conventional investment mechanisms used by Wall Street do little to diversify wealth and expand social equity (many would say today’s financial markets do quite the opposite – they are, in essence, wealth concentrators). Invest 3% of your wealth in local farmers and food enterprises….and advocate that your community’s institutions, foundations, etc. do the same!
7) Resist working in thoughtless environments. If your work is not meaningful and honest, find a local farmer or food provider and hook up!
8) Demand honest, sincere, timely decisions from your government representatives. If they are not honest, sincere, and timely, elect someone else. Our current American governmental institutions resist meaningful, important changes that will make us all healthier and happier…we need to work with our neighbors to demand new social policies and institutions that better ensure opportunity for all!
A presentation by Kleiner Perkins on Internet/communications technology trends.
It immediately made me aware of how readily Internet, social media, etc. enterprises can collate data…versus us farm and environment folks.
The Presentation
For some insight on Owning Nashville…a new Exchange Traded Fund based upon equity in Nashville based corporations.
First, the NPR Article
Next, the Wikipedia Definition of an Exchange Traded Fund (I did not include the citations, but the link):
ETFs offer public investors an undivided interest in a pool of securities and other assets and thus are similar in many ways to traditional mutual funds, except that shares in an ETF can be bought and sold throughout the day like stocks on a securities exchange through a broker-dealer. Unlike traditional mutual funds, ETFs do not sell or redeem their individual shares at net asset value, or NAV. Instead, financial institutions purchase and redeem ETF shares directly from the ETF, but only in large blocks, varying in size by ETF from 25,000 to 200,000 shares, called “creation units”. Purchases and redemptions of the creation units generally are in kind, with the institutional investor contributing or receiving a basket of securities of the same type and proportion held by the ETF, although some ETFs may require or permit a purchasing or redeeming shareholder to substitute cash for some or all of the securities in the basket of assets.[4]
The ability to purchase and redeem creation units gives ETFs an arbitrage mechanism intended to minimize the potential deviation between the market price and the net asset value of ETF shares. Existing ETFs have transparent portfolios, so institutional investors will know exactly what portfolio assets they must assemble if they wish to purchase a creation unit, and the exchange disseminates the updated net asset value of the shares throughout the trading day, typically at 15-second intervals.[4]
If there is strong investor demand for an ETF, its share price will (temporarily) rise above its net asset value per share, giving arbitrageurs an incentive to purchase additional creation units from the ETF and sell the component ETF shares in the open market. The additional supply of ETF shares reduces the market price per share, generally eliminating the premium over net asset value. A similar process applies when there is weak demand for an ETF and its shares trade at a discount from net asset value.
In the United States, most ETFs are structured as open-end management investment companies (the same structure used by mutual funds and money market funds), although a few ETFs, including some of the largest ones, are structured as unit investment trusts. ETFs structured as open-end funds have greater flexibility in constructing a portfolio and are not prohibited from participating in securities lending programs or from using futures and options in achieving their investment objectives.[5]
Under existing regulations, a new ETF must receive an order from the Securities and Exchange Commission, or SEC, giving it relief from provisions of the Investment Company Act of 1940 that would not otherwise allow the ETF structure. In 2008, however, the SEC proposed rules that would allow the creation of ETFs without the need for exemptive orders. Under the SEC proposal, an ETF would be defined as a registered open-end management investment company that:
Issues (or redeems) creation units in exchange for the deposit (or delivery) of basket assets the current value of which is disseminated per share by a national securities exchange at regular intervals during the trading day;
Identifies itself as an ETF in any sales literature;
Issues shares that are approved for listing and trading on a securities exchange;
Discloses each business day on its publicly available web site the prior business day’s net asset value and closing market price of the fund’s shares, and the premium or discount of the closing market price against the net asset value of the fund’s shares as a percentage of net asset value; and
Either is an index fund, or discloses each business day on its publicly available web site the identities and weighting of the component securities and other assets held by the fund.[4]
The SEC rule proposal would allow ETFs either to be index funds or to be fully transparent actively managed funds. Historically, all ETFs in the United States have been index funds. In 2008, however, the SEC began issuing exemptive orders to fully transparent actively managed ETFs. The first such order was to PowerShares Actively Managed Exchange-Traded Fund Trust,[6] and the first actively managed ETF in the United States was the Bear Stearns Current Yield Fund, a short-term income fund that began trading on the American Stock Exchange under the symbol YYY on 25 March 2008.[7] The SEC rule proposal indicates that the SEC may still consider future applications for exemptive orders for actively managed ETFs that do not satisfy the proposed rule’s transparency requirements.[4]
Some ETFs invest primarily in commodities or commodity-based instruments, such as crude oil and precious metals. Although these commodity ETFs are similar in practice to ETFs that invest in securities, they are not “investment companies” under the Investment Company Act of 1940.[4]
Publicly traded grantor trusts, such as Merrill Lynch’s HOLDRs securities, are sometimes considered to be ETFs, although they lack many of the characteristics of other ETFs. Investors in a grantor trust have a direct interest in the underlying basket of securities, which does not change except to reflect corporate actions such as stock splits and mergers. Funds of this type are not “investment companies” under the Investment Company Act of 1940.[8]
As of 2009, there were approximately 1,500 exchange-traded funds traded on US exchanges.[9] This count uses the wider definition of ETF, including HOLDRs and closed-end funds.
Finally, personal vindication on claims for sustainable intellectual property!
The Commerce Department tomorrow will adjust GDP numbers…all the way back to the Great Depression…to account for human creations (artistic endeavors, intellectual property) that, by their analysis, have enduring value.
Let’s see how the accountants react.
Here’s the article.
…just went up to CNN for a news break from my writing and saw Smithfield Farms is dropping their sponsorship of Paula Deen with the statement:
Smithfield condemns the use of offensive and discriminatory language and behavior of any kind. Therefore, we are terminating our partnership with Paula Deen. Smithfield is determined to be an ethical food industry leader and it is important that our values and those of our spokespeople are properly aligned.
I just three weeks ago drove from Raleigh Durham, North Carolina to Wilmington, North Carolina. In the middle is a small town named Wallace.
Our visit took us to a friend’s home and meal at a gated community and country club named River Landing…on the edge of Wallace.
Evidently River Landing was developed by the Murphy family. I was told the Murphy’s were large hog producers …and that the Murphy’s had sold their hog operations to Smithfield Farms.
I would suggest folks might want to take a look at Wallace, North Carolina and the surrounding area.
Richard Pace 