Bt Byproduct Found In Human Blood

From India Today:

Fresh doubts have arisen about the safety of genetically modified crops, with a new study reporting presence of Bt toxin, used widely in GM crops, in human blood for the first time.
Genetically modified crops include genes extracted from bacteria to make them resistant to pest attacks.
These genes make crops toxic to pests but are claimed to pose no danger to the environment and human health. Genetically modified brinjal, whose commercial release was stopped a year ago, has a toxin derived from a soil bacterium called Bacillus thuringiensis ( Bt).
Till now, scientists and multinational corporations promoting GM crops have maintained that Bt toxin poses no danger to human health as the protein breaks down in the human gut. But the presence of this toxin in human blood shows that this does not happen.
Scientists from the University of Sherbrooke, Canada, have detected the insecticidal protein, Cry1Ab, circulating in the blood of pregnant as well as non-pregnant women.
They have also detected the toxin in fetal blood, implying it could pass on to the next generation. The research paper has been peer-reviewed and accepted for publication in the journal Reproductive Toxicology. The study covered 30 pregnant women and 39 women who had come for tubectomy at the Centre Hospitalier Universitaire de Sherbrooke (CHUS) in Quebec.
None of them had worked or lived with a spouse working in contact with pesticides.
They were all consuming typical Canadian diet that included GM foods such as soybeans, corn and potatoes. Blood samples were taken before delivery for pregnant women and at tubal ligation for non-pregnant women. Umbilical cord blood sampling was done after birth.

I'm not sure what to make of this.  I think it falls in with the concerns of Don Huber at Purdue, about potential sterility in livestock fed Roundup GM corn.  I think there probably ought to be a number of research projects funded to look into it, but I don't know that any results will satisfy the seriously anti-GM anti-Monsanto folks.  I wouldn't think Bt itself would be very serious, since organic gardeners use it as an insecticide, but this is well outside of my area of expertise (breaking things).

Subsidies and Nutrition

The Physicians Committee for Responsible Medicine looks at the farm bill and subsidies (also from Ritholtz):

The Farm Bill, a massive piece of federal legislation making its way through Congress, governs what children are fed in schools and what food assistance programs can distribute to recipients. The bill provides billions of dollars in subsidies, much of which goes to huge agribusinesses producing feed crops, such as corn and soy, which are then fed to animals. By funding these crops, the government supports the production of meat and dairy products—the same products that contribute to our growing rates of obesity and chronic disease. Fruit and vegetable farmers, on the other hand, receive less than 1 percent of government subsidies.
The government also purchases surplus foods like cheese, milk, pork, and beef for distribution to food assistance programs—including school lunches. The government is not required to purchase nutritious foods.

That threw me for a minute.  I couldn't figure out what they meant about meat subsidies, until I realized they were talking about corn and soybeans as feed grains.  I guess that makes sense. 

Corn Planting Slow, Especially In Ohio

Des Moines Register:

The U.S. Department of Agriculture said that despite gains last week, corn planting still lags behind last year and five-year averages because of cold, wet weather in the Corn Belt east of the Mississippi River, and in Minnesota and the Dakotas, as well as flooding in the Lower Mississippi River valley.
The corn market reflected nervousness about corn supplies, driving up the price for the July contract 16 cents per bushel to $6.98 Monday on the Chicago Board of Trade.
The national crop is now 63 percent planted, the USDA said, compared to 87 percent planted last year and 75 percent planted over a five-year average.
Farmers generally want their corn crop planted by mid-May to avoid yield loss during later pollination during August heat, or vulnerability to early frost in September.
Iowa’s crop is 92 percent planted as of Sunday, the USDA said. That compares to 96 percent last year and 84 percent in a five-year average between 2006 and last year.
But while Iowa benefited from warm weather last week and the widespread use of larger planters, other states haven’t fared as well. Just 69 percent of Illinois’ crop is planted compared with 96 percent last year; only 29 percent of Indiana’s crop is in and just 7 percent of Ohio’s corn is planted.

That is right, things are going extremely poorly here.  We are around 20% planted, but it went into marginal ground, and the forecast doesn't look very good either. 

Western Kansas Drought Takes Toll

From Morning Edition:

ERIC DURBIN: There are parts of the Midwest that have received more rain in a single day than huge tracts of Kansas have seen since last fall. That's when farmers here planted hard red winter wheat. That's the wheat primarily used for making bread. The drought covers significant portions of Kansas, Texas and Oklahoma.

The Wheat Quality Council's annual wheat tour recently cataloged the crop and estimated a harvest almost 30 percent less than last year.

Farmer Jason Ochs walks through a field of yellowish-green wheat stalks almost two-feet tall. While in the field, Ochs gets word of another Hamilton County farmer whose fields were appraised at only three bushels per acre, 27 bushels below the county average.

Mr. JASON OCHS (Farmer): They won't even take that to harvest at that point in time. They'll tear it up and start conserving moisture for the next crop, as far as that goes. I've seen - or heard of several thousand acres where that's happened.

DURBAN: Dean Stoskopf is a former Kansas Wheat Commissioner. He says weather patterns over the next several weeks could potentially swing harvesting totals here by as much as 50 million bushels either way. But even if it rains now, farmers will still see low yields, and Stoskopf says that will show up in the price of bread, although not as much as you might expect.

Mr. DEAN STOSKOPF (Former Kansas Wheat Commissioner): The fluctuation from actually the amount of wheat that goes into a loaf of bread doesn't change a whole lot. We could have a really reduced crop, and from the wheat side of that, maybe a couple cents a loaf of - for bread.

3 bushel per acre.  That would be two semi loads from a full (640 acre) section.  That is very hard to imagine.

Chicken Manure Tax Credit

Are folks in the Grand Lake St. Mary's watershed using this:

You don’t believe there’s spending in the tax code???  Here’s a real life example:  the chicken-s**t tax credit.  Really, section 45 of the Internal Revenue Code.  You can look it up.  The late Senator Roth of Delaware (home of lots of chickens and “poultry manure,” as it’s euphemistically called) put this little goody into our tax laws.  Here’s the backstory:  the EPA said that enormous chicken farms could no longer put their poultry waste in pools or bury it because it poisoned the ground water.  One of the best options to meet the new requirement was to dry the vile effluent and burn it to make electricity, but that was still costly.  Roth didn’t want chicken farmer profits to plummet or chicken and egg prices to rise just because farmers couldn’t use the earth as a giant toilet, so he pushed through the chicken s**t tax credit to create a profitable market for that (as well as all sorts of other crap).
There are lots of chicken s**t tax subsidies.  The mortgage interest deduction is basically a housing voucher for rich people.  Those who really need help get bupkes.  The tax-free health insurance you get at work is heavily subsidized by the tax code, but those with low incomes rarely get health coverage and, if they do, the subsidy is worth little or nothing.  The ethanol tax credit is a farm price support program  that is literally starving people.

I am glad Republicans are around to stand up for multinational oil companies when evil Democrats try to take away their tax credits ($21 billion dollars over 10 years).

Naked Capitalism Link of the Day

Today is an excellent set of links.  I'm going to highlight two, because they are both significant agriculturally, but there are excellent links to an awesome sky survey, an investigation of corruption in Southern Illinois courts, concern that Fukushima is as bad as, or worse than Chernobyl, a report on Bahrain's Sunni government demolishing Shiite mosques, an interesting history of the removal of the gold indexation clause in debt contracts in the Great Depression, and several other interesting stories.

The first link I'll highlight is Unnatural Selection: Wily Weeds outwit herbicides, at New Scientist:

The weedkillers atrazine and simazine were introduced in 1958. Ten years later, a plant nursery in the US that had been regularly using the pesticides reported that they were no longer effective against a plant called common groundsel – the first confirmed case of herbicide resistance.

Half a century on, the number of known strains of resistant weeds stands at 357 and counting. "Herbicide resistance is a fantastic example of evolution in response to human-induced selection pressure," says Stephen Powles of the University of Western Australia in Perth, who studies the problem.

Because of its huge commercial importance, a lot of money is spent studying the problem and in many cases we know exactly how plants are evolving resistance. The mechanisms range from changes in leaf shape or waxiness to reduce herbicide uptake, to mutations that prevent herbicides binding to the proteins they target.

Strategies such as alternating the type of herbicide used can slow the evolution of resistance, but it is not foolproof. Many weeds have developed resistance to more than one herbicide. In some cases, this is due to plants evolving resistance mechanisms that are effective against more than one pesticide. For instance, many break down pesticides using new variants or higher levels of enzymes of a kind called P450s. These enzymes often protect against a range of different herbicides. In the 1980s, two weeds were found to be resistant to weedkillers that had never been used in the field. In other words, says Powles, weeds can evolve resistance to herbicides that have not even been developed yet.

The second story is Farm Antibiotics: 'Pig Staph' in a Daycare Worker, at Wired:

It’s been just about seven years since an alert epidemiologist in the Dutch town of Nijmegen identified an aberrant strain of MRSA, drug-resistant staph, in a toddler who was going in for surgery to fix a hole in her heart. The strain was odd because it didn’t behave normally on the standard identifying tests, and because it had an unusual resistance factor — to tetracycline, a drug that it should not have been resistant to, because the Netherlands had such low rates of MRSA that tetracycline wasn’t being used against the bacterium there.

Pursuing the source of the strain, researchers at Radboud University found it in the toddler’s parents and sister, and in the family’s friends. Not knowing where else to look, they asked what the parents and their friends did for a living; discovered they were all pig farmers; and went to their farms, and checked the pigs, and found it being carried by them, too. Suddenly, that strange resistance pattern made sense: The Netherlands uses more antibiotics in pig agriculture than any other country in the European Union, and the drug that it uses the most is tetracycline. Clearly, the aberrant strain — known as MRSA ST398 for its performance on a particular identifying test — at some point had wandered into pigs, become resistant to the drugs being given to the pigs, and then crossed back to humans, carrying that new resistance factor as it went.

From that first discovery unrolled the microbiological equivalent of a car-chase scene, complete with unpredictable turns, skids around corners, and unexpected dead ends. Researchers have identified ST398 in animals, people and retail meat in most of the EU; in pigs, farmers and hospital patients in Canada, and in pigs and a few farm workers, and most recently supermarket meat, in the United States. (You’ll find a long archive of posts on ST398, and more here.)

Both of these stories raise significant concerns about how we raise our foods.  They each also indicate that things may become more challenging in the near future, as we deal with glyphosate resistance and antibiotic-resistant bacteria.  Without even throwing in peak oil, I believe there will be no shortage of challenges in the future.

Chinese Food Safety and the Political Class

James Fallows notes that China may face some real muckraking reform, or maybe not:

- From China Geeks, which translates material from the Chinese press and blogosphere, an English version of a very important story from Southern Weekend,  南方周末, as fearless a reform publication as you will find in China, about a true "let them eat cake" saga underway there now.

At a time when tainted-food scandals are erupting all over the country, the story describes a special farm and food-supply system for government bigshots, to spare them exposure to the heavy-metal laden, adulterated, and otherwise contaminated food the rest of the population ingests. People often compare early 21st century China to early 20th century America, when industrial abuses gave way to the Muckraking and Progressive era. We'll see whether reformers can get similar traction there. If you want an idea of what makes ordinary people in China angry, check out this story.

Wow, that has tremendous potential to bring about massive reform, or it may bring a government crackdown on such media outlets.  Heavy-metal laden, adulterated and otherwise contaminated food.  That is a disturbing situation in a country with 16% or so of the world's population.

Naked Capitalism Link of the Day

Today's link: Food inflation, land grabs spur Latin America to restrict foreign ownership, at the Christian Science Monitor:

One of the first things passengers see when disembarking at Cuiaba airport in central Brazil is a real estate advertisement promoting arable land to foreigners.
South America has some of the most productive land on the planet, and buyers have long been drawn to pastureland for cattle; fields for grains, soybeans, and sugar cane; and forests where they can plant eucalyptus for timber and paper. Farms can reach the size of small nations.
Such advertisements may soon be preaching to an empty audience, however, as this and other South American nations that traditionally welcomed foreign investors are now changing land laws to restrict foreign ownership as arable areas worldwide become more sought after, a fact underlined by recent food crises. For lawmakers in Brazil, Argentina, and Uruguay, a nation where an estimated 25 percent of all land (an area the size of Denmark) already sits in foreign hands, it isn't a moment too soon to roll back the welcome mat.
These three nations produce much of the world's beef and grains and have been attractive to investors not just because land is available, but also because buying it was relatively straightforward.
Newly concerned over land grabs and eager to exercise more control over its food security, Argentinean Pres­ident Cristina Fernández de Kirch­ner said April 27 she would send a bill to Congress restricting how much land foreigners can buy or own. Uruguay fears that nations such as China and Saudi Arabia want to buy prime real estate and has promised to clamp down. Brazil, the world's biggest producer or exporter of beef, coffee, sugar cane, orange juice, and tobacco, last year blocked foreign companies based in Brazil from purchasing additional local real estate.

There was a big push ten years ago for U.S. farmers to go down and buy land in Brazil.  It economically made sense, but I couldn't see moving down there permanently to farm in a foreign land.  Guys who got involved were making a killing, but there was a lot of risk involved also.  I'm not surprised they are clamping down, and would anticipate laws in some Corn Belt states limiting corporate ownership.  Things are going to be very interesting in the near future.

There is also an interesting story about Ireland's alleged plans to restructure its debts to the EU and the IMF within 3 years.

Naked Capitalism Link of the Day

Today's link: Climate Shifts 'hit global wheat yields,' at the BBC.  This is a recap of the posts here and here.  From the BBC story:

The team carried out a large statistical analysis that tried to isolate the effects of temperature and precipitation on crops, independent of all other factors such as changes in technology and land management.

Wheat and corn are the staple crops that are most affected by changes in temperature

"We can see how much these variables affect crops... for example, for a crop like wheat, a degree (Celsius) of warming on a global average translates to about a 5% loss in production."
Professor Lobell said the study only referred to past relationships, as extrapolating the findings to predict future trends would require a number of assumptions to be made.
"In particular, you have to assume how non-linear the response will be and how different the crops of tomorrow will be from the crops of today," he said.

Population growth and energy consumption is straining agricultural resources, adding increasing global temperatures to the mix could very easily lead to catastrophe.

Other links of note include a story on the right-wing campaign to destroy the public schools, and a solar device to sterilize medical equipment.  A daily visit to Yves Smith's naked capitalism site is highly recommended.

Why the Slowdown in Agricultural Productivity?

From Greed, Green and Grains, via Mark Thoma:

Two words:

Climate Change  Global Warming.

Well, there may be more to it.  Like reduced public research and pathogens like wheat stem rust.

But new research by my colleagues David Lobell and Wolfram Schlenker, along with Justin Costa-Roberts shows that warming has hurt corn and wheat yields on all continents except North America:

Farms across the planet produced 3.8 percent less corn and 5.5 percent less wheat than they could have between 1980 and 2008 thanks to rising temperatures, a new analysis estimates. These wilting yields may have contributed to the current sky-high price of food, a team of U.S. researchers reports online May 5 in Science. Climate-induced losses could have driven up prices of corn by 6.4 percent and wheat by 18.9 percent since 1980.

The article was embargoed until 2pm today, but it's already circulating.

Why not North America, or why not yet in North America?  I think any climatological change in the Corn Belt could be disastrous. Don't fear, if you say nothing is happening, nothing is happening, right Republicans?

Are the Chinese Hoarding Commodities For Financing?

Yves Smith highlights  that Michael Pettis claims China is importing excess copper because (somehow) it allows cash-strapped businesses to access financing.  He also speculates that they might be doing the same thing with soybeans:

As much as it may sound barmy to stockpile commodities to obtain better terms on financing, Michael Pettis claims that’s one of the factors behind what looks to be unduly aggressive purchases of copper by the Chinese. An excerpt from his latest newsletter, courtesy Michael Shedlock:

China had been importing for many months far more copper than was needed for real use…. Imports continued even when London prices exceeded Shanghai prices by more than the equivalent of China’s value-added tax.

Instead of being shipped to end users, it seems that copper was being stockpiled in warehouses.　 Why?　 One possibility of course was pure speculation…

It turns out, that the copper purchases were not entirely, or even mainly, speculative.　 They were part of a financing scheme for companies that….were having trouble accessing bank credit.　

Credit-starved companies were importing copper because they could obtain trade finance or some other sort of foreign financing, and then used the physical copper (or warehouse receipts, I guess) as collateral for domestic borrowing.　 The financing was continually rolled over.　 Buying copper was just a way to borrow for companies that needed loans and were otherwise unable to get them.

As I mentioned two weeks ago, when I discussed this in February with a senior executive in a major commodities company, he responded by saying that he thought the same thing might also be happening in soya…

I don't understand this at all, but if they cut back purchases, we might get some really nasty price drops, especially if this wet weather continues and the market gets concerned about acres switching from corn to beans at the end of the month.

Inflation in Food

Federal Reserve Bank in Dallas, via Mark Thoma:

Among the causes of the recent world food price surge are weather-related poor harvests of staple crops such as wheat and some coarse grains. Affected heavily by drought in Russia and excessive rains in Canada and Australia, world wheat production for the 2010–11 marketing period is on track for a decrease of 5 percent compared with the 2009–10 period. World production of coarse grains (corn, sorghum, barley, rye and oats) is on pace to fall 2.5 percent.[4] Export bans by some countries, increased stockpiling by others and higher input costs—especially for energy in the production of fertilizer—likely also contributed to diminished supplies of many agricultural commodities.[5]

A basic principle of economics is that decreased supply increases a good’s relative price—that is, its price in terms of the other enjoyable things one must sacrifice to acquire the good. The number of theater tickets or MP3 downloads or haircuts one must sacrifice in order to enjoy a steak dinner increase when the relative price of steak increases. So too, does the number of hours one must work—and forgo leisure—to obtain a given amount of steak.

This is true in a world where money is used to facilitate the exchange of goods and services and would be true in a world without money (and thus without monetary policy).

Over periods of a few years (and, of course, over longer horizons), central banks can exercise considerable control over the rate at which the prices of an economy’s goods and services rise or fall, in units of money. An important point, though, is that—with a few qualifications—monetary policy affects money prices for goods and services in general, not the terms at which goods and services exchange for one another.[6]

Monetary policy can slow the rate at which food prices (together with all other money prices) rise; it cannot make food—or any other particular good or service—more affordable in terms of other goods and services.

Also, it includes a chart with the food components of CPI, beer is one.

Crop Yields

Mark Thoma:

Why is food production slowing down? This is from Michael Roberts:

Is this because of changes at the intensive or extensive margins? That is, is the slowdown due to declining productivity on existing land, e.g. from bad luck with the weather for several years in a row, or a more permanent change like global warming? Or is it because world growth is bringing marginal, less productive land into production? Whatever the cause, Michael Roberts thinks it's likely a permanent rather than a temporary problem:

There are many reasons for high commodity prices. But recent data from FAO shows a pretty rapid slowdown in productivity growth. The price spike in 2008 occurred in a particularly bad year in which yields declined on a worldwide basis for three of the four largest food commodities. In 2009 all four of the majors saw yield declines, something that hasn't happened since 1974. 2010 couldn't have been much better and was probably worse, given how bad things were in the U.S, the world's largest producer and exporter (worldwide data for 2010 isn't available yet).

The yield slowdown comes at a particularly unfortunate time, with accelerating demand from emerging economies like China and subsidy-driven expansion of ethanol. Keep in mind: we need productivity growth to accelerate considerably to keep up with projected demand growth. FAO says we need 70 percent higher yields by 2050. (Although I'd like to do my own projections, and will one of these days...)

Naked Capitalism Link of the Day

Today's link: How Goldman Sachs Created the Food Crisis, at Foreign Policy.  The whole thing is fascinating.  There is also more on food production here.  To summarize, Goldman created a long-only commodity index fund, and after the CFTC allowed speculators to take unlimited positions in 1999, long-only funds have grown massively.  The new money flowing in from investors, pension funds, insurance companies and such are driving up food prices.  I really liked this history at the beginning of the article:

It took the brilliant minds of Goldman Sachs to realize the simple truth that nothing is more valuable than our daily bread. And where there's value, there's money to be made. In 1991, Goldman bankers, led by their prescient president Gary Cohn, came up with a new kind of investment product, a derivative that tracked 24 raw materials, from precious metals and energy to coffee, cocoa, cattle, corn, hogs, soy, and wheat. They weighted the investment value of each element, blended and commingled the parts into sums, then reduced what had been a complicated collection of real things into a mathematical formula that could be expressed as a single manifestation, to be known henceforth as the Goldman Sachs Commodity Index (GSCI).
For just under a decade, the GSCI remained a relatively static investment vehicle, as bankers remained more interested in risk and collateralized debt than in anything that could be literally sowed or reaped. Then, in 1999, the Commodities Futures Trading Commission deregulated futures markets. All of a sudden, bankers could take as large a position in grains as they liked, an opportunity that had, since the Great Depression, only been available to those who actually had something to do with the production of our food.
Change was coming to the great grain exchanges of Chicago, Minneapolis, and Kansas City -- which for 150 years had helped to moderate the peaks and valleys of global food prices. Farming may seem bucolic, but it is an inherently volatile industry, subject to the vicissitudes of weather, disease, and disaster. The grain futures trading system pioneered after the American Civil War by the founders of Archer Daniels Midland, General Mills, and Pillsbury helped to establish America as a financial juggernaut to rival and eventually surpass Europe. The grain markets also insulated American farmers and millers from the inherent risks of their profession. The basic idea was the "forward contract," an agreement between sellers and buyers of wheat for a reasonable bushel price -- even before that bushel had been grown. Not only did a grain "future" help to keep the price of a loaf of bread at the bakery -- or later, the supermarket -- stable, but the market allowed farmers to hedge against lean times, and to invest in their farms and businesses. The result: Over the course of the 20th century, the real price of wheat decreased (despite a hiccup or two, particularly during the 1970s inflationary spiral), spurring the development of American agribusiness. After World War II, the United States was routinely producing a grain surplus, which became an essential element of its Cold War political, economic, and humanitarian strategies -- not to mention the fact that American grain fed millions of hungry people across the world.
Futures markets traditionally included two kinds of players. On one side were the farmers, the millers, and the warehousemen, market players who have a real, physical stake in wheat. This group not only includes corn growers in Iowa or wheat farmers in Nebraska, but major multinational corporations like Pizza Hut, Kraft, Nestlé, Sara Lee, Tyson Foods, and McDonald's -- whose New York Stock Exchange shares rise and fall on their ability to bring food to peoples' car windows, doorsteps, and supermarket shelves at competitive prices. These market participants are called "bona fide" hedgers, because they actually need to buy and sell cereals.
On the other side is the speculator. The speculator neither produces nor consumes corn or soy or wheat, and wouldn't have a place to put the 20 tons of cereal he might buy at any given moment if ever it were delivered. Speculators make money through traditional market behavior, the arbitrage of buying low and selling high. And the physical stakeholders in grain futures have as a general rule welcomed traditional speculators to their market, for their endless stream of buy and sell orders gives the market its liquidity and provides bona fide hedgers a way to manage risk by allowing them to sell and buy just as they pleased.

I've cursed the speculators a number of times, but they are important to the liquidity of the markets.  Unfortunately, the limitations on the size of their positions shouldn't have been removed.  There is a special place in hell for Phil Gramm.

Update: The Food issue has a lot of interesting stuff.

Naked Capitalism Link of the Day

Two today, both ag related: First, Pigs have 'evolved to love mud', at BBC:

That analysis has led Dr Bracke to propose that mud wallowing, like rolling, could play a role in reproduction in pigs.
But more fundamentally, Dr Bracke suggests the behaviour could have evolved in pigs' most ancient relatives.
"We all evolved from fish, so it could be that this motivation to be in water could be something that was preserved in animals that are able to do so."
For many animals, this would be too dangerous, because watering holes are ideal places for predators to ambush their prey.
"But pigs, like many carnivores, are relatively large animals with enlarged canine teeth, so they would be better able to fend off an attack."
So rather than pigs needing to cool down in mud because they do not have [functional] sweat glands, Dr Bracke thinks that they "did not evolve functional sweat glands like other ungulates because they liked wallowing so much".

Second, Why Is Damning New Evidence About Monsanto's Most Widely Used Herbicide Being Silenced, at Alternet.  If Don Huber at Purdue is correct about Roundup, we've got a serious problem on our hands:

But Huber says this is not true. First of all, he points out, evidence began to emerge in the 1980s that "what glyphosate does is, essentially, give a plant AIDS." Just like AIDS, which cripples a human's immune system, glyphosate makes plants unable to mount a defense against pathogens in the soil. Without its defense mechanisms functioning, the plants succumb to pathogens in the soil and die. Furthermore, glyphosate has an impact on microorganisms in the soil, helping some and hurting others. This is potentially problematic for farmers, as the last thing one would want is a buildup of pathogens in the soil where they grow crops.
The fate of glyphosate in the environment is also not as benign as once thought. It's true that glyphosate either binds to soil or is broken down quickly by microbes. Glyphosate binds to any positively charged ion in the soil, with the consequence of making many nutrients (such as iron and manganese) less available to plants. Also, glyphosate stays in the soil bound to particles for a long time and can be released later by normal agricultural practices like phosphorus fertilization. "It's not uncommon to find one to three pounds of glyphosate per acre in agricultural soils in the Midwest," says Huber, noting that this represents one to three times the typical amount of glyphosate applied to a field in a year.
Huber says these facts about glyphosate are very well known scientifically but rarely cited. When asked why, he replied that it would be harder for a company to get glyphosate approved for widespread use if it were known that the product could increase the severity of diseases on normal crop plants as well as the weeds it was intended to kill. Here in the U.S., many academic journals are not even interested in publishing studies that suggest this about glyphosate; a large number of the studies Huber cites were published in the European Journal of Agronomy.
If Huber's claims are true, then it follows that there must be problems with disease in crops where glyphosate is used. Huber's second letter verifies this, saying, "we are experiencing a large number of problems in production agriculture in the U.S. that appear to be intensified and sometimes directly related to genetically engineered (GMO) crops, and/or the products they were engineered to tolerate -- especially those related to glyphosate (the active chemical in Roundup® herbicide and generic versions of this herbicide)."
He continues, saying, "We have witnessed a deterioration in the plant health of corn, soybean, wheat and other crops recently with unexplained epidemics of sudden death syndrome of soybean (SDS), Goss' wilt of corn, and take-all of small grain crops the last two years. At the same time, there has been an increasing frequency of previously unexplained animal (cattle, pig, horse, poultry) infertility and [miscarriages]. These situations are threatening the economic viability of both crop and animal producers."
Some of the crops Huber named, corn and soy, are genetically engineered to survive being sprayed with glyphosate. Others, like wheat and barley, are not. In those cases, a farmer would apply glyphosate to kill weeds about a week before planting his or her crop, but would not spray the crop itself. In the case of corn, as Huber points out, most corn varieties in the U.S. are bred using conventional breeding techniques to resist the disease Goss' wilt. However, recent preliminary research showed that when GE corn is sprayed with glyphosate, the corn becomes susceptible to Goss' wilt. Huber says in his letter that "This disease was commonly observed in many Midwestern U.S. fields planted to [Roundup Ready] corn in 2009 and 2010, while adjacent non-GMO corn had very light to no infections." In 2010, Goss' wilt was a "major contributor" to an estimated one billion bushels of corn lost in the U.S. "in spite of generally good harvest conditions," says Huber.
The subject of Huber's initial letter is a newly identified organism that appears to be the cause of infertility and miscarriages in animals. Scientists have a process to verify whether an organism is the cause of a disease: they isolate the organism, culture it, and reintroduce it to the animal to verify that it reproduces the symptoms of the disease, and then re-isolate the organism from the animal's tissue. This has already been completed for the organism in question. The organism appears in high concentrations in Roundup Ready crops. However, more research is needed to understand what this organism is and what its relationship is to glyphosate and/or Roundup Ready crops.

White-Nose Syndrome May Cost Ohio Farmers

Columbus Dispatch:

A deadly disease to bats could become a major financial headache for agriculture, costing Ohio farmers as much as $1.7 billion a year.
A new study is the first to tie a dollar value to the millions of crop-damaging insects that bats routinely devour each year. Now, the night-flying hunters face the threat of a fungal disease that kills most of the bats it infects.
White-nose syndrome, named for the fungus that spreads over bats while they hibernate, has killed at least 1 million bats in 15 states and Canada since it was discovered in New York in 2006.
On March 30, Ohio officials announced that they found the disease among bats hibernating in an abandoned limestone mine in the Wayne National Forest. They fear it will march through Ohio as it has nearly everywhere else.

Not only might the bats not be around to eat bugs, but Fish and Wildlife could put more restrictions on cutting trees during the Indiana Bat mating season or nesting season, or whatever it is.  It is rather spooky how effective the white-nose syndrome is in killing bats.

Naked Capitalism Link of the Day

Today's link: Inflation expectations my butt, at MacroBusiness:

But today’s inflation is not in labour or household items. It is in financial assets. Excess liquidity these days doesn’t suddenly appear in product prices and wage claims. It appears in securities markets and, until the irresistible warning of the GFC, housing markets.
In other words, inflation expectations are now operative in capital not labour markets.
I know some will argue that the FOMC watches Treasury markets for inflation expectations in capital. But how reliable is that when the market is dominated by the purchases of foreign governments whose goals are national interest not market related, as well as the FOMC itself? Members of the FOMC have themselves acknowledged the uselessnes of the measure.
The inflation of capital is important because it is one half of the new boom and bust growth cycle that has taken over the global economy (the flip side being the real and perceived shortages in various hard assets, that is, commodities).
If you want to get a gauge of future inflation, you need to be surveying the expectations of capital market traders, not labour market consumers. And if you did your survey after today’s FOMC meeting, expectations would be very high indeed.

In some ways, I think for the Fed that this is a feature, not a bug.  It seems to be the ultimate in trickle-down strategies, feed the stock markets and utilize that wealth effect to grow the economy.  That seemed to be the strategy in the '90's with the tech stock boom and after it popped in the real estate boom in the 'oughts.  Both ended in tears, and I'm afraid all this will too.  I can't decide if the Fed is hoping for inflation to ease the debt problems both in the private and public sectors, or what they want to do to address that.  I don't think causing bubbles to engage the wealth effect works in the long-run, and the potential of peak oil and possible food shortages causing price spikes in an already struggling economy is very disconcerting.  Regardless, we'll have some answers in the not too distant future.

QE2 and Commodities

Marshall Auerback on QE2, via Yves Smith:

Those who point to the success of QE2 make the following observations: In the US, growth accelerated after the implementation of QE2 from a 1.7% annualized pace in the second quarter to 2.6% in the third quarter and 3.1% in the fourth quarter. Inflation expectations ceased falling and began rising back to normal levels. Confidence rose. And the pace of hiring improved meaningfully. In both February and March, private firms added over 200,000 jobs. Since the Fed’s policy began, the unemployment rate has fallen a full percentage point.

But just because a rooster crows first thing in the morning doesn’t prove that this is what causes the sun to rise. These are two separate occurrences with no underlying causation. The very deficits now decried so loudly by the deficit hawks and ratings agencies are likely what engendered recovery, not QE2.

So what has QE2 actually achieved? Little in the way of positive impact, but much in terms of its deleterious impact by fomenting additional speculative activity, notably in the commodities complex — gas and food prices. Obviously, with other determinants of aggregate demand in question, commodity prices and the gasoline price in particular now matter. The price of gasoline is almost as high as it was at its brief peak in May-July 2008. In the past, increases in expenditures on gasoline could be managed by consumers because they had access to credit. That is certainly less true today. Rising fuel prices could tip the economy towards greater weakness. As it now stands, the U.S. economy has been growing around trend (2.7%) and the first quarter was probably below that. Tipping the economy towards weakness would bring growth way below the current optimistic above trend consensus.

Though it cannot be proved, in the minds of many the current wave of speculative and investment demands is tied to the Fed’s emergency measures of ZIRP and QE. Within the Fed itself, a number of inflation hawks have reflected this belief, notably Dallas Fed President Richard Fisher and former Kansas President Tom Hoenig. If so, this inadvertent adverse consequence of QE means that the Fed might be hoisted on its own petard.

QE2 is certainly part of the commodities run-up, but I'm afraid some real supply and demand issues are also involved, and if so, that indicates some serious problems down the road, especially when it comes to our addiction to oil and it's corollary, using food for fuel.  I also think he's right in saying the real problem is that society is too laden down with debt to take on new loans to expand businesses.  We're in a trap of our own making.

Is Commodity Inflation a Self-Fulfilling Prophecy?

The run-up in commodities (especially oil and grain) has been tremendous, and has brought with it a lot of talk about runaway inflation.  Is the discussion warranted?  I can see several different causes for the run-up in prices, some fundamental and some technical, but it seems like it is a positive feedback loop. 

First off, the start of the rally came with the wildfires in Russia last summer.  That concern about supply, and already tight wheat markets, sent grain up significantly.  Then came a U.S. harvest which was below expectation, combined with the Fed announcement of their QE2 program.  Since then, higher oil prices have made ethanol more competitive, driving further demand for corn, and more Chinese grain buying has added to supply concerns.  Throw in the upheaval in the Middle East and more Chinese and Indian demand for oil, and prices have skyrocketed.  These price increases have fueled buy-side purchases based on technical factors, and pension funds and the like have piled in for inflation protection. 

I guess what I see is supply issues, coupled with increased demand, pushing prices, along with fear of the Fed policy boosting inflation concerns.  The increased prices lead to more fear of inflation, plus, the competition between ethanol and expensive oil leads to more corn being ground.  Finally, the Chinese have stacks of (depreciating) dollars and need for commodities, so they continue to buy more.  My conclusion, I guess, is obvious, but prices will continue to rise until they don't.  I don't know what will end up breaking this feedback loop, but it can't continue indefinitely.

Sheep Growers Doing Well

You know things are getting crazy when sheep farmers are making good money:

 In his 33 years raising sheep in West Texas, Glen Fisher has never seen it so good. Demand by U.S. consumers is up, imports are down and prices have soared.
"You have almost what you can call a perfect storm," said Fisher, 64, who has about 3,100 animals on his acreage near Sonora. "The great part is we have record prices for lambs — the highest ever by a whole lot."
Last year's May delivery of lamb fetched about $1.39 a pound; this year the price is around $2.20 a pound, said Fisher, the immediate past president of American Sheep Industry Association.
Lamb numbers far outstrip those for mutton. In 2010 about 156 million pounds of lamb was slaughtered at federal and state inspected plants, compared with about 11 million pounds of mutton.

If it weren't for my cousins raising sheep and having lamb roasts, I never would have eaten the stuff.  Other than burgoo in Owensboro, Kentucky and Seinfeld, I've never heard of anybody eating mutton.