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Planting Season, 1589 B.C.E.: A Sojourn



April 06, 2011 – Comments (2)

Board: Macro Economics
Author: FastMike
"...We had meager food at that time. Everyone did. And we lived literally on cornbread and beans. And that was our main meal and at night we’d just have cornbread and milk.... I felt like we had good food compared to a lot of people..."--- dust bowl eyewitness Imogene Glover- from PBS American Experience

Dear contented Fools :

Begin Sojourn :

Yosef was still puzzled. Why should he have been invited to the daily meeting of Pharaoh's court? His position there was only recent and such invitations were coveted by established senior officials. He could think of nothing else. Finally, after what seemed an eternity, Pharaoh's entourage entered the audience hall.

As Apepi stepped up on the platform his attention was drawn to a neat pile of papyrus scrolls that awaited him on the royal bench. He sat and for a few moments and just stared at the pyramid of petitions. Then a quick hand wave: the order of dismissal, immediately followed by a bassy congregational moan of disappointment. As the assembly was rising to leave, Pharaoh roared : "NOT YOU!" In one collective breath the dismissed assembly froze in its' tracks. He then paused to open and read the first of the scrolls. Without looking up, his tone became distracted and nonchalant. "Not you, Yosef ben Yakeb. Stand right where you are, sir". He waved his hand at the others.

The Grand Vizier flashed a jealous look at Yosef.

When the last official had left and shut the door, Apepi sank into his seat and breathed a loud sigh. "Yosef, my Grand Vizier is a windbag. My councils 'yes-me' to no end. They constantly seek to ingratiate themselves with me. Worthless! The entire scheming lot! You're not from Egypt. You're different. It's written all over your face. I've heard about you, Yosef ben Yakeb. You, sir, work too hard. Imagine that! Working too hard for your Pharoah?! Yet, I've not seen one petition from you? Not one? You ask for nothing? That makes you a strange bird around here, sir! A very strange bird, indeed!" The Pharoah tossed the scroll to the floor, stepped down from the bench and casually strolled around the hall. After a short while, he sat on one of the many plush audience lounges facing the platform. He motioned for Yosef to sit on the lounge next to his. As Yosef walked over he noticed something different in the Pharaoh's imposing appearance.

His demeanor had suddenly changed. He became sullen. His mood darkened as if a cloud had come over him. He looked completely distraught. To Yosef's surprised Apepi held his hands to his face and reclined himself across the plush lounge easing his head onto an armrest. Yosef approached and sat quietly. The Pharaoh spoke in a low voice: "My cup bearer, (who I consider my clothing spoiler) and my bread baker, (who should be my brick maker), have been saying that you have a gift for interpreting dreams. Is this so?"

Yosef was stunned. Here was the most powerful king on earth, weak and vulnerable! It dawned on him that this was a singular chance of a lifetime! His mind raced. He struggled to be subtle and eloquent. "Sire, our daytime thoughts are like commerce on the Nile; boats sailing cargo here and there. But a dream is like a sunken boat. Its' cargo is not as much lost as it is unreachable. Salvagers will grapple for the boat, for if they can find it and raise the cargo, they profit. Dreams, too, are like sunken cargo. If they can be raised to the surface they can be profitable."

Apepi dropped his hands from his face and lifted his head, "Ahh! So you are a man of wisdom, Yosef!"

Yosef noticed a waxed writing tablet that had been left behind. He picked it up and prepared to take notes. "Sire, why don't we talk a little about the dream that troubles you?"

Apepi let his head recline back. He breathed a long sigh. He spoke in a rapid, nervous whisper :

"I host a gathering. The guests feast themselves. They are fat, joyous, happy, finely dressed. A servant hands me a plate of food. It's all stinking and rotten. All covered with maggots and flies. I look up at the guests. They're ragged, dirty, thin, starving! Angry! They throw stones! I look at the stones. Gold coins! I shout, "Keep them! Keep the coins!", and toss them back. But they fly again as stones! Their anger worsens! They drag me down. They chop me to pieces and devour me..... alive!"

"This dream visits me often, Yosef. So much so, I fear sleep". Apepi was sweating and trembling.

Yosef studied his notes for a few moments and then spoke confidently: "Sire, a good harvest has many masters. A poor harvest has none. Hunger respects neither law nor gold. Be prepared! Tax a good harvest. This is fair. Restore a bad harvest. This is generous. By doing so your rule will be respected in both good and bad times."

Apepi's eyes suddenly opened wide. He sat up very quickly like a person startled from sleep. The color returned to his face. His entire appearance brightened and he looked regal again. Apepi was about to say something but stopped. He spoke quietly: "Yosef, wait! There's something you must, must understand! I cannot divulged this dream to anyone! I have enemies! The court has surely heard rumors by now. This can be used as an excuse! A prophesy of my downfall!

Yosef thought for a moment. "Sire, I've often heard your advisers boasting about their own fat herds of cattle and healthy fields of corn?"

Pharaoh replied, "Oh, do they ever! They care more for cattle and corn than for the kingdom! But what should that have to do with anything?"

Yosef smiled. "Sire, have me seated near the windbag tomorrow morning. With your permission, I will weave a Pharaoh's dream just right for his ears that will give him, let's just say, a little food for thought?"

It is planting season, 1589 B.C.E., and the dream that Yosef relates to the Grand Vizier the next morning will spread through the court, through the entire kingdom, throughout the known world and then down through the ages: an oracular warning, easily understood, but seldom ever heeded.

End Sojourn.

Are we living in the midst of a Pharaoh's dream? Are we too complacent about our food supply?

If you like to count calories, well then, here's a something for you to ponder : "...A 2002 study from the John Hopkins Bloomberg School of Public Health estimated that... three calories of energy were needed to create one calorie of edible food... grain-fed beef... requires thirty-five calories [of energy] for every calorie of beef produced....... [the] study didn’t include the energy used in processing and transporting food.... it takes an average of seven to ten calories of input energy to produce one calorie of food...As much as forty percent of energy used in the food system goes towards the production of artificial fertilizers and pesticides... Producing and distributing them requires an average of 5.5 gallons of fossil fuels per acre..."

Our Agricultural Network is highly productive and at the same time, extraordinarily energy inefficient. It receives government subsidies that discourages efficiency. Most importantly, the link between food and energy prices is unbreakable. And although it's hardly described as such, total Non-Discretionary Consumer Expenditures on Food and Fuel, in reality is a function, dependent on those two variables.

Here's why : Our agricultural network has four inter-competitive supporting cornerstones at the base of a 'food price pyramid'. The sides of this pyramid lead up to the consumer spending apex. The four cornerstones are : Foreign exports, biofuel production, consumer food production and fertilizer (and feed) production. Let's walk around this pyramid and see what's inscribed on each cornerstone.

On the first cornerstone is carved the single word exports

The United States supplies half of the entire planet's grain demand. But recent natural disasters, as in Russia, Australia and other places have constrained global supply in the face of growing global demand: "...High food prices were among the triggers of street protests that recently swept North Africa.... Egypt is the world's biggest importer of the grain.....China is gobbling up nearly a quarter of the U.S. soybean crop in order to fatten hogs and chickens....U.S. wheat exports are up 46% from last year because weather problems knocked competitors.... out of some markets..."---WSJ

In spite of strong demand, U.S. farmers receive subsidies, a policy that began during the dust bowl days. Soybean is in the top five of US farm subsidized crops, representing at least $610 million dollars per year and 7.6% of 'farm income stabilization' funds. In a sense, taxpayer and government debt are being used to balance the trade deficit. Domestic consumption must compete with foreign demand during this period of constrained supply.

For a rough idea of how much goes towards what follow this link :

However, before we start 'throwing stones' at other countries, let's move along the second cornerstone of the food pyramid. On it, is inscribed the word fuel.

It is argued that Ethanol and Biodiesel offset the cost crude oil imports. That's true, but only to a limit : Ethanol and biodiesel are fuel additives used to stretch out the supply of gasoline and diesel. The demand for grain based fuel additives, to hold down the price of gasoline and diesel but adds to the overall demand for grain :

"...Due to rising gasoline prices, as well as federal mandates, about 40% of being brewed into ethanol...By the time the fall harvest begins, the Agriculture Department expects the U.S. to have enough corn... for 18 days.... a supply this tight [seen] just once since the 1930s Dust Bowl era...demand for corn is so strong that this 10% increase in the harvest would lengthen the country's reserves by merely five days..... political pressure to strip the ethanol industry of federal support could build if U.S. food prices soared and the high cost of feeding livestock crippled the production of milk, pork, beef and chicken."--WSJ

So without grain subsidies, the price at the gas pump rises.

Corn, by the way, gets the lion's share of subsidies, $3 billion dollars and corn based ethanol is 'protected' from Brazilian cane sugar based ethanol by a 54 cent/gallon tariff. You don't have to be Adam Smith to figure out that grain exports plus biodiesel demands are stressing the sides of the pyramid.

We need fuel to move cargo, including food, around the country. So biofuel grain competes with export grain, both subsidized by the taxpayer. And that effects the price at the pump. It doesn't stop there, however. That's because people do not live by grain alone. Which brings us to the third corner of the pyramid. The inscription there has portentous significance : cheap, tasty, convenient.

A 'whopping' 41% of the food we eat, on average, is categorized as 'Food Away From Home' by the BLS Consumer Expenditure Survey by average consumer unit:

This euphemistically means restaurant or fast food. (Food expenditures on out-of-town-trips is considered 'food at home'. Go figure.) What makes fast food so cheap and easy or a head of broccoli more expensive than a pound of pork? In large part, a brutal, energy inefficient, pollutive and clearly unsustainable supply side method of farming called Intensive Agriculture or Factory Farming :

"...The U.S. agricultural industry can now produce unlimited quantities of meat and grains... at a high cost to the environment, animals and humans. Those hidden prices are the creeping erosion of our fertile farmland, cages for egg-laying chickens so packed that the birds can't even raise their wings and the scary rise of antibiotic-resistant bacteria among farm animals... our energy-intensive food system uses 19% of U.S. fossil fuels, more than any other sector of the economy.... The crop [corn] is heavily fertilized.... with subsidies... Over the past decade, the Federal Government has poured more than $50 billion into the corn industry...."----Time (2007),8599,1917458-2,00....

(Do take the time to read that. To see 2011 sources refer to the post script notes)

Okay so far? Taxpayer (thus debt) subsidized biofuels competing with export demands competing with feed grains for over indulgence (and exportation again) of protein, (A.K.A. meat), each of which pressure the price of gasoline and diesel.

Now you may ask, what about abundant natural gas? Oh-oh! We'd better go look at the last cornerstone where find the inscribed word fertilizer.

Industry always seems to seek the 'increase-the-supply' solution before squeezing out inefficiencies. In order to meet growing global demand, highly productive hybrid crops have been developed. And copious amounts of fertilizer are needed to maximize per acre production. When I say fertilizer, well, I'm not talking cow chips : "...In the USA in 2004, 317 billion cubic feet of natural gas were consumed in the industrial production of ammonia, less than 1.5% of total U.S. annual consumption of natural gas... Natural gas is overwhelmingly used for the production of ammonia.... The cost of natural gas makes up about 90% of the cost of producing ammonia... The increase in price of natural gases over the past decade, along with other factors such as increasing demand, have contributed to an increase in fertilizer price..."-- Wikipedia

As it stands now, the well head price of gas has not changed much since 2004, with the exception of a few spikes. However, considering the price pressures of the other cornerstones, what will happen to fertilizer prices as the demand for natural gas increases? It seems that if we become more reliant on domestic natural gas for our energy needs, then that pressures fertilizer production, which then exerts pressure back on the other three cornerstones.

Hence, it seems that stresses on any one cornerstone stresses the load on the others. And the cornerstones of this tenuous pyramid sits on a foundation of cheap energy and the mortar holding the blocks together are taxpayer subsidies.

That completes the tour of the base of the great food price pyramid.

Recently, it's been noted that retail packaging portions have been shrinking. The cause has been attributed to "stealth inflation" :

Is this really a form of inflation? Isn't inflation when famished weak dollars rise up to devour fat healthy dollars? When viewed in the shadow of this pyramid, is it not possible that this is more of a supply-demand problem that's driving prices?

Let me riddle you, dear reader : are you more comfortable knowing that food prices are increasing because of inflation, or that food prices are increasing because there isn't as much to go around as there used to be?

The answer is quite unsettling isn't it?

Our entire agricultural network is so energy inefficient and energy dependent at every node, that the dangerous potential exists for both Food and Fuel prices to melt up in a rapid and self perpetuating whirlwind.

The handwriting is already on the walls : if something isn't done to change in the way the American Agricultural Network functions, a sustained energy shock could cause such a severe and rapid shift in consumer non-discretionary spending, that it would result in empty supermarket shelves and years of economic stagnation.

Among all the talk I hear about automobile efficiencies, wind energy, energy efficient homes, appliances, tidal energy, geothermal and using abundant natural gas, has anyone heard any suggestion about making our Agricultural Network more energy efficient?

Yet a sustained global energy price shock will necessarily result in a sustained food price shock. Conversely, multiple food shocks from natural or 'man made' disasters will result in a sustained energy shock. Food and fuel are opposite sides of one single coin.

So it might come to pass that a lavish portion of the American Dream could rapidly deteriorate into an all consuming, wanting nightmare.

Your phantasmagoric Fool,

P.S. Notes :
1) A sudden sea-change in our eating habits could put downward pressure on real estate. Companies, most notably MacDonald's owns a high percentage of their franchise properties.
2) The NYT "shrinking package" came to my attention thanks to Yodaorange's post :
3) The Intensive Agriculture industry hasn't changed since 2007, but rather expanded. The most recent investigation is titled "Animal Factory: The Looming Threat of Industrial Pig, Dairy, and Poultry Farms to Humans and the Environment"---David Kirby--- 2011
4) Farm Input costs from the USDA :

2 Comments – Post Your Own

#1) On April 07, 2011 at 9:58 AM, Jbay76 (< 20) wrote:

Good post.  I enjoyed reading it as it brought to light a subject I have held dear for many years now.  But it leaves something to desire in that I do not think you provided enough insight into how to change the way things are.

Notably, the support of local, free range grass-fed farming of cattle, pork, chicken, ducks, sheep, goats.  One can find the farms in their respective states by going here.  I do not work for this organization, but rather have used them to find local producers here so that my dollars vote for me. 

In any case, it has been reported that 1 barrel of crude oil is used to raise a cow for slaughter using ag technologies.  Coupled with our ravenous appetites, this makes the ag industry, and our consumption habits, the biggest users of gas, not the family with SUV's, though SUV's are gas-hogs.  But, as has been teh cae coutless of times in the past several decades, corporations paint the consuemr as the one who needs to change their ways,and gov't protects the corporation.

Here in MD, the state Ag depart had an opportunity to pass a bill that woudl have remoevd arsenic from chicken feeds.  Who wants to eat arsenic, the active ingredient in rat posion?  But, becuase that'd put too much incovenience on the chicen farmers, it was not acted on.

So, not only is this an issue of appropriate use resources for food production, but there is an underlyign issue of health and the fuutre costs associated with todays eating.  More obese people today than ever before in this country is eveident, but the other issues like food allergies.  You may think big deal, but the underlying theme is that we are producing more people who have essentially evolvedto not tolerate certain foods anymore.  Anecdotal evidence shows that these people come from families that use processed foods predominantly in their diet.  Sorry Kraft, but your food sucks and is not healthy for us.

I can go on and on, but it shoudl becoem clear to people that not onyl are we getting hoodwinked froma financial stand point, but from a health and quality fo life stand piont as well.  How do you equate a dollar sign to that?

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#2) On April 08, 2011 at 10:01 AM, FastMike (< 20) wrote:

 "...I can go on and on, but it should become clear to people that not only are we getting hoodwinked from a financial stand point, but from a health and quality fo life stand point as well.  How do you equate a dollar sign to that?..."

 Dear J :

 Ahhhh! Yes, it's a big, big issue, but there's only so much time in a day. As to your comment about quality of life, Ahhhh! It's been this way since the beginning of recorded history :

Your inscripted Fool,


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