Jim Rogers calls a next bubble in food again

[dropthatcash]

Re: Jim Rodgers calls the next bubble - Food

Over the last 5 years the value of U.S. farm land has appreciated well over 1 Trillion dollars and the typical farmer has had a little over a one million dollar windfall. It's the biggest boom the world over and we're still subsidising farms to buy votes. The U.S.D.A. survey of Iowa farm sales indicated an acre trading at 1857 in the year 2000. Today the price is just over $7400! The average farmer has seen his income increase from 80,000 a year to almost 340,000 a year.

http://business380.com/2011/03/22/io...7-in-6-months/

A long interview on Turd's website, I just had time to listen to it this weekend. In the third video down he goes on for a while on what he expects food to do, and although he does not use the word bubble, he gives all the attributes:

A perceived or real shortage throughout the world
Anyone that can make food (has land, water, seeds and time) will be wealthy
Many people will use technology to grow food for profit in extra house spaces such as their garage.

http://www.tfmetalsreport.com/blog/2...s-good-be-turd

[seobook]

Re: Jim Rodgers calls the next bubble - Food

Can we eat gold? A real doomer will prefer a farm instead.

does drinking it count? http://en.wikipedia.org/wiki/Goldschl%C3%A4ger

[flintlock]

Re: Jim Rodgers calls the next bubble - Food

Can you eat stock certificates? I cannot even get stock certificates any more. Everything is electronic. Maybe I can eat my computer? As I have pointed out several times before you can indeed eat gold. Entirely aside from the complete non-sequitor, what exactly do you intend to do on this farm? The last set of tomato I put in turned into brown stalks before I could turn around. Do you feel comfortable seeing $60,000 to $100,000 worth of crops turn yellow because you over watered? I hope you have a big cushion. The regularity with which this slogan or quip keeps coming up requires some sort of canned reply that I can past in here. Let me put it like this: Your farm will fail more thoroughly and more completely than if you where suddenly put in charge of a large electrical supply chain with no knowledge of the electrical industry.

Agree. People talk like you can just google "how to farm".

[c1ue]

Re: Jim Rodgers calls the next bubble - Food

The U.S.D.A. survey of Iowa farm sales indicated an acre trading at 1857 in the year 2000. Today the price is just over $7400!

This would be a stronger message if the farm value graph didn't so closely resemble the residential property graph...


Clearly as I noted earlier, farmland also benefited from cheap credit.

[bagginz]

Re: Jim Rodgers calls the next bubble - Food

[brent217]

Re: Jim Rodgers calls the next bubble - Food

This would be a stronger message if the farm value graph didn't so closely resemble the residential property graph...


Clearly as I noted earlier, farmland also benefited from cheap credit.

The missing piece here is QEx, and the possibility of both hyper inflation/deflation. As I recall from reading about post WWI Germany, when the Mark went into hyper-inflation, the farmers made out quite well, as land (similar to PMs) maintains its' full value in both old and new "dollars."

Therefore, land in America would only be a poor investment if you believed that we have a fiscally responsible government. Unfortunately, I do not believe this, but am hoping land drops in value (to enable buyers like me) before the government(s) completely destroy fiat.

[c1ue]

Re: Jim Rodgers calls the next bubble - Food

The missing piece here is QEx, and the possibility of both hyper inflation/deflation. As I recall from reading about post WWI Germany, when the Mark went into hyper-inflation, the farmers made out quite well, as land (similar to PMs) maintains its' full value in both old and new "dollars."

I'm not saying this can't happen, but I am pointing out that farmers in 1923 didn't have to buy seeds from Monsanto or fertilizers from DuPont.

Nor did they have to buy lots of oil to run gigantic combines/harvesters.

In 1923 - oil was just another commodity like corn.

Combine all of the above, and then throw in the present perennial need for credit in order to finance operations. Because in the Great Depression, farms went under left and right due to the inability to obtain financing.

[lakedaemonian]

Re: Jim Rodgers calls the next bubble - Food

I'm not saying this can't happen, but I am pointing out that farmers in 1923 didn't have to buy seeds from Monsanto or fertilizers from DuPont.

Nor did they have to buy lots of oil to run gigantic combines/harvesters.

In 1923 - oil was just another commodity like corn.

Combine all of the above, and then throw in the present perennial need for credit in order to finance operations. Because in the Great Depression, farms went under left and right due to the inability to obtain financing.

What spurred Farm Aid in the mid 80's?

I'm thinking it would be linked to the much smaller recession where farmers got caught in a vice when the commodity boom busted and interest rates exploded in the late 70's/early 80's.

We sold while the money was good and when the exit was clear and tidy and hope we made the right choice to be able to find an opportunity to re-enter in the future.

We know FAR too many farmers leveraged up to their eyeballs...if commodity prices drop(in a smaller version of 08/09) and interest rates climb and/or credit gets tighter the exit could become VERY crowded in agriculture property.

When China comes off the economic boil and it's dairy demand curve slips and Chinese credit inflow into NZ slows it could be a BIG problem down here.

[Guest]

Re: Jim Rodgers calls the next bubble - Food

Your thinking is pretty basic and only applies to a free/fair market. We do not have that.

There is something wrong with speculating on food when people are starving. Moreover, there is something wrong with putting your money into a corrupt market to start with. In my opinion, Wall Street is evil. You play the market, you are contributing to the evil to a degree, and deserve the market crash you will get caught in.

Of course, if we want to survive we must participate in the "system". So, we really can only do our best to stay on a right path.

Examples of choices that I have made:
Pulled money out of TBTF bank.
I do not put new money into Wall Street -> it takes bigger ones than I have to actually pull it all out and close the accounts, however.
I will not buy stock in bad(morally) companies. No smokes/military equipment/f*** drug companies.
I pulled out of my company's matching 401K plan. Even with the 50% match, it is not worth it.
I use cash more often.

Buying stock in ConAgra is certainly less bad than directly buying wheat or corn. But, they still do their fair share of damage to the world.

1. I just explained how buying a stock is not speculating. You'd think it meant you bought a ton of grain that was headed to a village in Africa.
2. I don't own any Ag stocks. I don't own any US stocks currently. Actually I own gold, silver, short term treasuries, and a single TIPS bond fund in a 401(k) right now. I was explaining a basic economic concept. Hardly going to pay the price when things collapse.
3. The "damage" these companies do is feeding millions who otherwise would starve. Corporate farming and the advances made possible by it is much more productive than a peasant with a wood plow and 3 kids hauling it around his back yard.
4. Capital made available from higher stock prices and profits will eventually allow them to convert unproductive famland worldwide to more productive professionally managed farmland as it becomes scarce in more developed nations. Rather than growing grain in the US and paying to ship it to Africa, it may be possible to grow enough there to feed them.
5. A tomato grown in your back yard costs far more than one grown on a huge farm. With nobody buying the stocks out of their sense of moral superiority it would cause more hunger, not less.
6. Food is more expensive because transfer payments/social spending consumes so much of developed governments revenue worldwide that they must print up money to pay for it. This inflation finds its way in the global economy to food.
7. They have land in some of these starving areas, but they need capital to exploit it. When they get their acts together in terms of social and legal stability, those evil stock holders will send it there to make their farms bountiful.
8. There is a lot of corruption. But buying a portion of a company hoping to make a return is corrupt only if you're Karl Marx.

[touchring]

Re: Jim Rodgers calls the next bubble - Food

What spurred Farm Aid in the mid 80's?

I'm thinking it would be linked to the much smaller recession where farmers got caught in a vice when the commodity boom busted and interest rates exploded in the late 70's/early 80's.

We sold while the money was good and when the exit was clear and tidy and hope we made the right choice to be able to find an opportunity to re-enter in the future.

We know FAR too many farmers leveraged up to their eyeballs...if commodity prices drop(in a smaller version of 08/09) and interest rates climb and/or credit gets tighter the exit could become VERY crowded in agriculture property.

When China comes off the economic boil and it's dairy demand curve slips and Chinese credit inflow into NZ slows it could be a BIG problem down here.

There'll be an ice age, followed by hyperinflation. Do read up on Albert Edwards, he tells the full story.

http://www.itulip.com/forums/showthr...ry-boom-in-May.

[aaron]

Re: Jim Rodgers calls the next bubble - Food

Unfortunately, when I say "you", I am speaking in general terms. Sorry if I lead you to believe I was indicting anyone at all.

Wall Street and the entire system is corrupt, in my opinion. Sure, if you think your (one's) money is going towards the greater good, go for it! I do not believe that it does in the current environment. I do not believe you are helping a soul by buying a stock, regardless of which company, and you are most likely harming somebody.

Your other points may be valid. But, again, i think we do not live in an environment where buying stocks equals "buying a portion of a company hoping to make a return". It is speculating. It is speculating that you will get yours before the system crashes and gramma loses her savings. It is participating in an immoral, corrupt system. --> it may be all we got, but we should be at least aware of our complicity.

As far as I am aware, companies do not get capital from retail stock purchases. They only get it from the IPO (and follow up dilutions). Again, you are not investing a nickle. You are purchasing cash flow. You are speculating. I suppose with higher stock prices a company could then borrow more free money. Funny thing is, it is really hard to compete with companies that get free money.

I bet Marx did talk about this (and the inevitability of companies growing so large that they become harmful). It is not a subject I have time to dig into. However, there are millions of web pages dedicated to bringing down 'evil' agricultural companies. I am sure they are wrong about 99% of their claims. There is the 1% of them that are interesting, however.

[Adeptus]

Re: Jim Rodgers calls the next bubble - Food

Thanks for sharing this bagginz. It was excellent. Deserves to be posted in the iTulip video section. It gets especially good around 13 minutes when he goes into the issue of % of speculators vs real commercial entities and also the limitations of position limits. It was only in Jan of 2011 where the CFTC ruled to impose position limits on silver to the exclusivity of the likes of JP Morgan whom at one point was rumoured to control some 40% of the market thanks to their massive short position acquired through the Bear Sterns take over. Had they been forced to liquidate those silver shorts, the squeeze would have put silver beyond $75 in a matter of days. For now, they along with HSBC and likely a few others continue to be allowed to manipulate the markets through mass speculation.

[bagginz]

Re: Jim Rodgers calls the next bubble - Food

Thanks for sharing this bagginz.

No worries I just stole the link from the Jesse's excellent Café Americain site. He'd posted it a couple of days ago...

[doom&gloom]

Re: Jim Rodgers calls the next bubble - Food

I'm not saying this can't happen, but I am pointing out that farmers in 1923 didn't have to buy seeds from Monsanto or fertilizers from DuPont.

Nor did they have to buy lots of oil to run gigantic combines/harvesters.

In 1923 - oil was just another commodity like corn.

Combine all of the above, and then throw in the present perennial need for credit in order to finance operations. Because in the Great Depression, farms went under left and right due to the inability to obtain financing.

Farming today is a "play" on many themes:

1) growing world population (IIRC about 93 million more per year)
2) increasing demand for meat products (3 - 7 grain inputs per 1 meat output)
3) decreasing advances in yields per science inputs (down to less than 1%/yr)
4) priority of fuel allocation in peak oil (starving people bring down governments)
5) shrinking arable land available for crop conversion
6) shrinking water tables in heavily groundpumped farmlands (Ogalalla Aquafier as example)
7) as throughout time, it is a "necessity" and part of the FEW (food, energy, water)
8) food is now being used for fuel (as ridiculous as we all think that is)
9) changing or erratic weather patterns affecting harvests reduce world outputs of grains

just a few things to think about before you pan ag as an investment.

What spurred Farm Aid in the mid 80's?

I'm thinking it would be linked to the much smaller recession where farmers got caught in a vice when the commodity boom busted and interest rates exploded in the late 70's/early 80's.

We sold while the money was good and when the exit was clear and tidy and hope we made the right choice to be able to find an opportunity to re-enter in the future.

We know FAR too many farmers leveraged up to their eyeballs...if commodity prices drop(in a smaller version of 08/09) and interest rates climb and/or credit gets tighter the exit could become VERY crowded in agriculture property.

When China comes off the economic boil and it's dairy demand curve slips and Chinese credit inflow into NZ slows it could be a BIG problem down here.

In the 80's farmers were leveraged beyond their eyeballs in the US. that is not the case now. I believe (last I recall seeing) the avge farmer was carrying about 7% debt or so. They learned from the 80's. Farmers are not the dumb rednecks so many seem to think they are...

[Camtender]

Re: Jim Rodgers calls the next bubble - Food

Just exactly how does the price of ConAgra's stock going up enable or cause them to charge higher prices to 3rd world peasants? Those prices are a function of market supply/demand. Corn costs $xxx/bushel whether stock prices are up or down. Stock prices merely reflect the expected future profit flows of the companies involved. If the stocks rise it is because of expectations that profits (and sale prices relative to input prices) will be rising. Buying the stock doesn't cause the prices to rise. Shortages and our exporting inflation to other countries does.

I'm no economist, but as prices increase for food, there will be more entrants to the marketplace as potential profits rise, thus lowering prices again. (ceteris parabus). Higher stock prices and profits means more capital for productivity and other expansion to fill the demand. This is pretty basic stuff isn't it?

Exactly, the cure for high prices is.......................higher prices.............The cure for too low of price is.....................the low price its self.

Until you understand this dynamic, you should not be investing any of your money - get help.