Wednesday, February 16, 2011

Food, Weather, Prepping, and Oil...

Corn closed just under $7 per bushel. Wheat - just under $8.50 per bushel.

"Killer Cows" in the Southeast are $.75 to $1.00 per pound (a "Killer Cow" is a breeding female that has lived past the point of diminishing returns in the calve to feed ratio and is slaughtered and sold for "cheap meat", as opposed to sliced meats from a young, healthy steer), up from $.42 per pound last spring.

I cannot remember this happening before... that is, when the price of corn goes up, farmers and ranchers tend to over-slaughter, and that has traditionally caused meat prices to fall because meat is a "sell it or smell it" commodity. Today's market is giving a tremendous incentive to over-slaughter: high prices for meat and high costs for feed.  Problem is, who is going to calve next spring? The U.S. cattle herd continues to shrink to levels not seen in decades, and while higher slaughter weights have made up for headcount, that won't be true if grain prices keep heading north.

At this point, it is ALL about the weather. G-d forbid, the U.S. corn and wheat belt have a bad harvest and one other major region, say Ukraine this summer or Argentina next winter, and the world will be in a universe of hurt.  It is all the weather. I always link people to the heatwave and drought of 1936. That weather pattern brought us "The Grapes of Wrath". If that type of weather pattern were to befall the U.S. grain crop this year it would be a significantly bigger disaster, because inventories are so very low.  If it happened 2 years in a row, that disaster would be biblical. Or Hollywoodish.

World food prices have now eclipsed 2008's run up, and have left Egypt and Tunisia upended. The big Asian population centers are completely addicted to fossil water - and that resource is literally drying up. There are many more political implications to this story than even Oil.

While I occasionally poke fun at the doomers, I think if you are not a prepper you don't have an appreciation for probability theory.

6 comments:

Stephen B. said...

Your post gets me to think that the US might have just seen Peak Meat or at least Peak Cows in the past decade.

I think that it was only the fact of "cheap" grain and feed, supplied by cheap oil, that caused the US meat livestock herd (along with the large chicken industry) to expand so much over the past few decades and now that animal feed is no longer in part subsidized by cheap fertilizer and other fossil inputs, it wouldn't surprise me that we in the US start eating more grain directly, given that it's getting too costly to feed to animals given the much lower conversion rate when the grain is run through animals first.

Put another way, it may have been affluence that let us keep so many animals and eat so much meat and now that the affluence is slipping away, we're seeing our meat industry shrink.

Maybe we won't see the cattle herd rebuild so much.

I apologize if I'm stating the obvious.

I've often wondered if, in a severely energy and technology-challenged world, when people jokingly suggest we could go back to draft animals, whether we could do it? By this I mean that a mare only can toss a foal every 18 months or so, and as you point out, cattle (oxen) numbers don't rebuild very quickly either. Not that I seriously think we could rebuild the millions of horses that automobiles displaced decades ago because certainly we cannot accommodate that many large animals in our urbanized/suburbanized world even IF we still had the expertise (we don't have that), but one simply doesn't rebuild a population of cattle or horses all that fast.

I guess I should go horse shopping.

Stephen B. said...

"The big Asian population centers are completely addicted to fossil water.."

Ouch, I didn't know that. I knew that our Plains states were in the situation of depleting deep, slow-to-recharge aquifers, but I never really thought that other parts of the world had headed down that path too.

Oops.

kathy said...

We're trying to figure out the best use for a 2 acre pasture we have. A local dairy farmer used to keep it mowed for us and he fed the hay to his cows. This lst week, he lost the roof to one of his barns and, given that he was not making any money anyway, he's not rebuilding and putting the farm on the market. I think we may run some lambs on it, primarily because we won't have to overwinter them, the market is good for the meat and fencing isn't a pain with sheep. We're going to follow with turkeys for the same reasons. We own a share in a milk cow and a neighbor raises grass-fed beefers so, with our pigs and chickens, we won't be going vegetarian any time soon. The thing about draft animals is that you can raise their feed, they do provide high-value off-spring and a pair can be rented out when not in use. Our are has a lot and the interest is growing due to the growing popularity of agricultural fairs. When I speak to groups about prepping, I am often asked about economic collapse. They are a bit disappointed when I tell them that we are more likely to be in trouble in the short term because of a weather pattern or a geological event than the loss of our economy. You can't manipulate an earthquake the way you can a currency. Mother Nature holds us in her fickle hands.

Greg T. Jeffers said...

Two acres can hold a small milk cow and a couple of goats. Goats will need shelter, but nothing fancy, and a Dexter cow can fit almost anywhere a goat can.

2 acres of pasture will support that cow for at least 6 months of the year (9 months here in Tennessee)... and you will actually get more grass by keeping the 2 or 3 goats with that cow as they will eat the stuff the cow won't keeping things competitive for the grass.

I don't know if you've raise them before but Turkeys are not easy livestock! I love my chickens and Muscovy ducks.

westexas said...

Conclusion to the first draft of an essay I just wrote on Egypt as an example of export declines:

Table Two: http://i1095.photobucket.com/albums/i475/westexas/Slide3-1.jpg

The only real difference between the ELM (and three case histories discussed above) and total global net oil exports is the lower Consumption to Production ratio (C/P) for overall global net exports. Note that the lower the C/P ratio at a final production peak, the slower the net export decline rate will be, for a given production decline rate.

It’s difficult to do detailed modeling on global net exports, but in many cases we can get a useful estimate of post-peak CNE (Cumulative Net Exports) for a region by extrapolating the rate of increase in the C/P ratio. If we extrapolate the 2005 to 2009 rate of increase in the C/P ratio for global net exports, it suggests that post-2005 global CNE are on the order of about 420 Gb (billion barrels). This is of course only a rough approximation, but consider the fact that just from 2006 to 2009 inclusive, world importers consumed 65 Gb of cumulative net exports, 15% of projected global post-2005 CNE.

However, a key question is how are post-2005 CNE going to be distributed? On table two, note that in four years Chindia’s combined net oil imports, expressed as a percentage of global net exports, rose from 11.3% to 17.1%. If we extrapolate this rate of increase, it suggests that Chindia would be consuming 100% of global net oil exports around 2025.

While we can all agree that something will change, and Chindia will not be consuming 100% of global net exports in 2025, it does appear that it’s likely only a question of what the long-term rate of increase is going to be for Chindia’s net oil imports.

In any case, for purposes of illustration, it’s useful to carry the Chindia extrapolation out to its logical conclusion. If we define Available Net Exports as the volume of net exported oil not consumed by Chindia, then the estimated post-2005 total volume of Available CNE would only be about 150 Gb, and in 2006 to 2009 inclusive, non-Chindia importers have consumed about 56 Gb, or one-third of projected post-2005 Available CNE.

Our view is that the two real questions are: (1) The long-term rate of change in global Net Oil Exports, and more importantly to developed OECD countries, (2) The long-term rate of change in Available Net Oil Exports. In both cases, we think that the long-term trend line is down, and Egypt, as well as many other countries, serve as clear warnings of where we are headed. Furthermore, we believe that we are currently maintaining something close to Business As Usual, only because of a very high rate of depletion in post-2005 global Cumulative Net Exports and especially because of a very high rate of depletion in post-2005 Available Cumulative Net Exports.

Consider the first 15 minutes after the Titanic hit the iceberg, versus the last 15 minutes before the ship sank. In the first 15 minutes, only a handful of people knew that ship would sink, but that did not mean that the ship was not sinking. In the last 15 minutes, it was readily apparent to everyone that the ship was sinking, but by then it was far too late to try to get to a lifeboat.

Jehu said...

Most doomer porn (e.g., Dies The Fire, Lucifer's Hammer, One Second After, etc) would be seriously degraded in its potency if the US still maintained the 3 year supply of food grains that it did prior to the 80s. Civil defense since then has frankly been appalling.