Food Prices and Inflation

Lots of recent discussion of the rise in food prices, including whether it had an impact in the Mid East uprisings.  But the graph in this post, hat tip Ezra Klein, shows the price trends for "foodstuffs" and finished consumer foods. The former (wheat, rice, corn, etc.) are much more volatile than the later, mostly because there's pennies worth of wheat in a loaf of bread, etc. etc.

Impeccable Logic Representative Lucas

From Chris Clayton summarizing a House Ag hearing:

""The agriculture economy is highly cyclical and it changes like the weather in western Oklahoma: fast, sharp, and without notice," said Chairman Frank Lucas, R-Okla. "This reality helps explain why the mood in farm country today is both upbeat and apprehensive. This fact, along with experience, offer a cautionary note to anyone who might be tempted to cite current economic conditions on the farm as the basis for setting long term farm policies." 

 

FSA--One Plus, One Minus

One of the draft posts I've had started for a couple days is a criticism of FSA's press release/blog post on counter-cyclical payments.  But before I do that, I need to praise the writer of Notice DCP-247 who got to the point: there's no such payments for 2010 because target prices are too high.  That info was buried in this language from the press release:

Farm Service Agency Administrator Jonathan Coppess announced today that USDA will not issue partial 2010-crop counter-cyclical payments to producers of certain covered commodities. Payments will not be made to producers of wheat, corn, grain sorghum, barley, oats, upland cotton, long grain rice, medium grain rice, soybeans, sunflower seed, rapeseed, canola, safflower, flaxseed, mustard seed, crambe, sesame seed, dry peas, lentils, small chickpeas, large chickpeas, and peanuts. For all covered commodities and peanuts, market price projections exceed levels that would trigger these payments.

If the first sentence had simply said "...will not issue any 2010-crop counter-cyclical payments."  it would have worked.  It's the "certain" which throws the reader, because the expectation is there's two categories: certain crops don't get paid, other crops do.

A 2x4 for Agency Chiefs and CIO's

I wonder whether the cuts OMB gave some agencies in IT funds were big enough to get the attention of the chiefs of the agencies, remembering the old joke about getting the attention of a mule by using a 2x4. USDA didn't get such a cut.

The Insidious Assumptions We Make

I was often laughed at when I worked for ASCS because to create example cases of how the farm program would work, I always used 100 acres of corn with 100 bushel yield.  Made it much easier to calculate.  It also was unrealistic even in 1980, and would be ridiculous today.  And I vaguely remember the symmetry of numbers leading to a screwup--something which seemed reasonable with the assumed numbers wasn't.

That's the case with Megan McArdle's recent post on savings. She writes;

 Say you're a 40 year old couple with 100,000 a year in after-tax income, and you save 5% of that, the way ordinary Americans do.  (Assume further that it all goes in retirement).

My point? A couple with $100,000 after tax income is earning maybe $120,000 or more in before tax income. Such a couple is probably close to being in the top 10 percent of the US households, i.e., not "ordinary" and not a good example to use for a discussion of savings.

R.I.P. George Buddy

I'm one of these people who tends to be a day late and a dollar slow in keeping up with social [demands, needs, everything I think of has a double Freudian meaning].  I'm sorry.  George Buddy, the blogger at Buddy's Bemusing,died on Feb 4, 2011 after lung surgery.  I'll miss him.

The Return of the Vicious Budget Cycle

I commented somewhere yesterday on the reason deficits are important--it leads to the vicious budget cycle where an ever increasing portion of the budget goes just to pay interest to fat cats bankers. Today the Post has an article on it. An excerpt:

Starting in 2014, net interest payments will surpass the amount spent on education, transportation, energy and all other discretionary programs outside defense. In 2018, they will outstrip Medicare spending.

 I remember the Clinton administration struggling with this. I'm a little afraid that people who weren't grown by then (Yglesias, Ezra Klein) may not have those memories.  It's well and good to point to the fact that inflation is low now despite the Fed's monetary easing, but it's very easy to get behind the eight-ball, to the detriment of needed programs.

The Fading Rural Economy

John Phipps describes the closings of local services.  Unfortunately, economics says big farms are more efficient than small, meaning the farming population declines, which puts all the services on which farmers depend under pressure.  Add on the competition from bigger outfits, the easier transportation from cars and good roads, and there's a big current to row against.

Coppess Out

According to Farm Policy:

A news release yesterday from Sen. Debbie Stabenow (D-MI), Chairwoman of the Committee on Agriculture, Nutrition and Forestry, indicated that Jonathan Coppess had been named Chief Counsel for the Committee.
The release added that, “Jonathan Coppess served most recently as Administrator of the Farm Service Agency (FSA) where he oversaw nationwide agency operations including implementation of the safety net programs from the 2008 Farm Bill. Prior to serving as Administrator, he served as the agency’s Deputy Administrator for Farm Programs and previously worked as a Senate aide, focusing on agriculture, energy and environment issues and working extensively on the 2008 Farm Bill. Coppess grew up on his family’s corn and soybean farm in Ohio and earned a law degree from the George Washington University Law School.”

 Generally speaking, this is bad for FSA. Most past administrators I remember have served a full term--4 or 8 years.  Since any political appointee needs a period of brainwashing by the career bureaucrats learning the ropes, the longer the better.  That's assuming, of course, the appointee is capable of learning.

Fantasy Documents

Thanks to Dan Drezner, who was commenting on NY's manual for law in the midst of disasters as described in the Times today, I'm introduced to the concept of "fantasy documents".  From the Amazon product description for the book:

How does the government or a business plan for an unimaginable disaster-a meltdown at a nuclear power plant, a gigantic oil spill, or a nuclear attack? Lee Clarke examines actual attempts to "prepare" for these catastrophes and finds that the policies adopted by corporations and government agencies are fundamentally rhetorical: the plans have no chance to succeed, yet they serve both the organizations and the public as symbols of control, order, and stability. These "fantasy documents" attempt to inspire confidence in organizations, but for Clarke they are disturbing persuasions, soothing our perception that we ultimately cannot control our own technological advances.

For example, Clarke studies corporations' plans for cleaning up oil spills in Prince William Sound prior to the Exxon Valdez debacle, and he finds that the accepted strategies were not just unrealistic but completely untenable. Although different organizations were required to have a cleanup plan for huge spills in the sound, a really massive spill was unprecedented, and the accepted policy was little more than a patchwork of guesses based on (mostly unsuccessful) cleanups after smaller accidents.

While we are increasingly skeptical of big organizations, we still have no choice but to depend on them for protection from large-scale disasters. We expect their specialists to tell the truth, and yet, as Clarke points out, reassuring rhetoric (under the guise of expert prediction) may have no basis in fact or truth because no such basis is attainable.

 It rings true to me, and I might add other documents to the fantasy category: strategic plans, for example. I've always thought those were paper exercises divorced from reality.  Environmental assessments and economic impact statements also might fall into the category.