Expensive oil as trigger for less exhausting ag land practices

Special WSJ report on agriculture, with interesting article on "fertile land is under strain."

Ag takes up about 1/5th of energy consumption in the US, so higher oil encourages, over the long run, abandoning certain energy-intensive practices, such as tilling:

The most popular fuel-reduction strategy involves a radically new way of planting seeds. Instead of breaking up the ground with a plow to plant seeds, no-till farming leaves the remains of last year's crop on the surface.  Drills punch through this mat of vegetation and insert seeds into the ground.  Ditching the plow can cut fuel consumption by as much as half . . . It also reduces the need for expensive fertilizer.

A major enviro drawback, according to an accompanying article?  No-till requires more herbicides.

Another reason why farmers like to plow: you can dry out a wet spring field and thus plant earlier.  You see that hear in Indiana with its super-wet springs.  But with climate change making for more droughts, ag experts expect more and more farmers to adopt the no-till method (or one of its many variants) over time, thus reducing the ag sector's energy draw.  Fields that aren't plowed typically hold up much better in July and August when rain gets much more rare.  Indiana has suffered super-dry summers, with this year's summer reducing the crop haul by a large amount, as just my eyeballs can attest.

Interesting pair of articles.

The map and chart below came with the first cited piece.  Note all the stable soil in the "New North."

Click the smaller image for a more readable version.

Too few immigrants = an absolute ag industry loss

WSJ story on how 1/4 of second-biggest crop ever of Washington State apples is going to rot on the tree/ground due to a severe shortage of immigrant labor.  Compounding the insult, the apple crops elsewhere in the nation are dramatically down this year due to drought conditions, so the nation's is really screwing itself on an agricultural bright spot this year thanks to our inspired national crackdown on illegal immigration.

Apples are Washington's top ag produce earner: $7B supporting 60k permannent jobs in the ag sector.

But it doesn't work without the access to seasonal farm workers....

Yes, they have tried with prison labor in the past.  Turns out prisoners don't work very hard - go figure.

Damn (lack of) illegal immigrants are ruining this country!

Smart argument on handling America's water advantage

Smart op-ed in WSJ.

America is sending over huge amounts of alfalfa to China.  Alfalfa is a VERY water-intensive crop.  China uses it to feed their cattle which produce beef and dairy products.

Point of the article:  why not send beef and dairy to China instead and reap the better profit margin for our valuable water?

That's how New Zealand does it.  Its highest-value export is powdered milk, notes the authors of the piece.

The culprit?  America's antiquated and byzantine water-regulation practices - especially in the West.

A sign of Africa's genuine emergence within, and connectivity to, globalization

Marriott, says the WSJ ("Hoteliers race to fill a gap in Africa"), may have over 600 properties in more than 70 nations, but up to now none inside sub-Saharan Africa. That now changes with planned hotel in Kigali, Rwanda.

Yes, Rwanda of "Hotel Rwanda" infamy.

Eight more planned after that.

But Marriott just trying to keep pace with Hilton, Carlson, etc, in capturing some of the crowded business traffic. Plus, with South African, Chinese and Indian hotel chains already in Africa's biggest cities, the Western firms realize it's safe to go into the water.

The infrastructure to support expanding business travel.  Nicest sort of emergent connectivity to be found.

The rest of Asia's hopes for China next stimulus package

Turns out China's one-party state is pretty predictable in its spoils system:  new leaders get in, investment boom follows, and you can bet the best connected princelings clean up.

So while the US resorts to QE3, the world waits and hopes for China's pattern to continue.  The biggest hopes for this path are located in Asia, where China's economic slowdown is causing the same for South Korea and Japan.

The Asian Union integration process has already begun.  Memberships were offered and accepted in the form of FDI flows and absorption into China's vast processing trade networks.  

Asia sinks or swims together, which makes for a new burden for China regarding leadership transparency (where in the world was/is Xi?), because Beijing's decisions matter far beyond China's borders.

With the challenges of deepness and complex geology, China has no choice on shale gas but to seek foreign help

FT story on how "China opens shale gas exploration to foreign joint ventures."

It's described as a "milestone policy change that will allow foreign energy companies to play a greater role in developing China's rich potential reserves of shale gas."

China has all the same ambitions as the US: reduce dependency on foriegn sources of coal and oil, plus simply move "down" the hydrocarbon chain to less CO2 emissions.

The irony:  to escape one form of foreign dependence is to invite another.

Yeah, right. It's Washington regulations that are screwing "clean coal."

We all see the commercials:  Washington is killing clean coal with its regulations!

Complete and utter bullshit.

The gas glut is killing coal, displacing it for up to a quarter of US electrical production across the latest full quarter.

So now you see power companies even going to the point of idling coal-fired stations (from the WSJ story):

Sammis is one of a growing number of coal-fired plants that were built to run 24 hours a day, seven days a week, but now may run only occassionally because of soft demand for electricity and competition from gas-fired plants that are cheaper to run and cleaner to operate.

Coal, says the piece, has been progressively losing out to shale gas for four years now. It's just gone super-critical over the last year.  Cheap gas now is half the cost of coal when it comes to generating electricity.

This is why America is going to be exporting our superior coal to Asia in coming years.

And that will be a good thing.

US ag industry: the greatest force for stability on the planet

Pick out the world's biggest exporter of wheat from this chart.

It's the US, which is also the biggest exporter of corn, soybeans and food aid.

Guess what got devastated this year?  Corn and soybeans (where the US just lowered its forecase of yields for the 3rd time), but somehow the US pulls off a slight increase on wheat.  Problem is, everybody else is down.  From the WSJ story (which provided the chart above):

The weather troubles, if they continue [read, winter wheat], risk pushing wheat back to the fore of global concerns about soaring food prices.  Wheat is a staple food around the world and a major source of basic nutrition for the poor, and prior price spikes in recent years contributed to political unrest.

Like the doubling of bread prices in Egypt in the months leading up to Mubarak's fall.

I say this in presentations all the time: the biggest force for global stability right now is the U.S. farmer.

Bring on the Asian fembots!

A sign of shifting demand centers: the hiring of Asian "brand ambassadors" (aka, models).

In an industry with historically little diversity, even small shifts stand out.

It's like switching the bad guys in the "Red Dawn" remake from Chinese to North Koreans.  Why?  North Koreans don't go to movies, but Chinese do - in large numbers.  So you don't want to piss off your audience.

Same thing here: after a while, the lack of Asian models is noticed in a world where the global middle class' spending shifts from mostly Caucasian to the everybody else.

Good piece on US concerns: Libya v. Egypt

Appears in NYT.

The one thing that's been clear about the Arab Spring to date:  it is a process of Sunni empowerment that comes with a great deal of identity politics.  America is now experiencing some payback for all those decades of supporting dictators who kept a lid on that identity.  in the past, I felt we did that in deference to the volatility generated by similar dynamics among the Shia in the decades after the Iranian Revolution.  But that was a conundrum-like choice:  we deeply angered half of the Middle East out of fear of the other half.

Now the Shia half seems back on its heels.  We might have imagined a tipping point with the re-Shia-ization of Iraq, but that seems rather puny right now with Syria almost literally coming apart and Iran still in internal lockdown against domestic opposition and external lockdown over the nuke program (those dropping oil exports . . .).

Yes, we now get a chorus of experts saying, "Aha!  I told you the Arab Spring was a disaster!"  But it's like that quote I gave Esquire back when it started:  the Arab Spring is like a kidney stone.  Sure, it's no fun passing it, but if you think it's going to stay in that kidney forever, just getting bigger, that's no answer either.  So yeah, passing it will hurt, but what's the alternative to trying to get it done quickly?  Pretending it's never going to come?

But the major (for me, at least) theme remains:  globalization has arrived in the Middle East, and it has triggered a lot of social and political tumult.  Large chunks of the population (mostly young) do not see a future they like, while Africa is booming and Asia keeps getting richer and a middle class blossoms across Latin America.  The Arab world is still losing - dramatically - at globalization.  As the region ages demographically from a mean age of about 22 to 32 across this decade and the next, the lack of jobs will be magnificently destabilizing.  That youth bulge is not being served, and when you can't produce the jobs (the MB's real problem now), you - those who pretend to rule - have to indulge the anger.

That's what we're seeing now: the Sunni Islamists in power are no more clued in than the secular dictators who preceded.  They are, however, more willing to indulge the populism.  This can go on for a long while.  It just can't go anywhere in terms of progress, because global investors will want none of this uncertainty.  Frankly, it's why China greatly prefers Africa.

Ancient Chinese secret: Modernity shapes society just like any country in West

NYT story (As China Ages, Beijing Turns to Morality Tales to Spur Filial Devotion) shows that China not really all that different from West:  urbanization, industrialization, modernity all conspire to make "sandwich" generations (caring for kids and parents at same time) less caring about their elderly parents.

Beijing tries to instruct them with old morality tales.  It ain't working.

Great piece.

I sneak off to Denver for another speech.  This time it's a commodities (gold) focused convention.

Split the difference on the S. China Sea disputes! Impossible! Only businesspeople are so naive!

I know the non-Tebowed Republicans like to ask, What would Reagan do?  But Reagan's example is mostly inappropriate now.

The real historical players to cite are our two best Dutch diplomats:  the Roosevelts, Teddy and Franklin.  Both were perceived (incorrectly, I believe) as hostile to business when they were all about taming capitalism's worst instincts in a massive progressive era that stretched across their two seminal presidencies.

We are in the same territory now, replete with Teddy's multiple rising great powers following a huge expansion of the globalization of that era (the rather exploitative Euro version).  

So we need to concern ourselves with, a la Clad and Manning in the FT, "What Roosevelt would do in the South China Sea."

Planting flags on islets, declaring cities where there are too few residents to fill a restaurant, and huffing and puffing over uninhabited rocks are acts more suited to a Gilbert and Sullivan farce than to nations in the 21st century.

Absurdities aside, the tensions in the South China Sea could shape the balance of power in Asia and put at risk the $18tn east Asian economy. However, a century-old diplomatic idea used by a former US president offers a solution to the crisis.

At present, things appear to be at an impasse. Legally, the overlapping territorial claims defy resolution – either through bilateral steps or through the Law of the Sea treaty. This treaty, to which China has acceded, rejects lodging “historically based” claims, which are precisely the type Beijing periodically asserts.

With the legal problems exacerbated by nationalist sentiment, practicable solutions are even harder to achieve. Yet tensions need not slide inexorably into entrenched hostility, or worse. We propose a way out that would allow step-by-step commercialisation while setting aside disputes over sovereignty.

The current surge of interest in the South China Sea is driven first, by China’s steady rise and second, by the perception (if not the reality) of oil and gas deposits that may be accessible using new technologies.

Even so, no company will invest the billions of dollars required to exploit these reserves without a stable political and legal environment. Competing nationalisms and Sino-American friction are simply adding new layers of risk to an already challenging environment.

This should present an opportunity for creative diplomacy. Chinese oil companies still need foreign partners; they lack offshore drilling technology to exploit resources that may be much less substantial than China reports. Even optimistic estimates fall far short of projected Asian demand over the next 20 years.

A creative diplomacy for the South China Sea needs, for starters, to rein in rivalry – as Hillary Clinton has this week sought to do in her tour of Asia . . . 

True enough on Hillary, but at the same time Obama pushes ahead with his "pivot," his AirSea Battle Concept (brought to you, the worse-off-than-four-years-ago-taxpayer by your friends in the Military Industrial Concept), his massive arms sales to the region, his promise to meet Chinese cyber theft with kinetic responses (the new cyber strategy), and mucho missiles in a transparent encirclement strategy.

The authors' answer?  "We might revive a type of split-the-difference US diplomacy last deployed after Russia and Japan fought a war in 1905."

Guess which sitting prez won a Nobel Peace Price (for actually doing something instead of just talking about it) for that?

Ah, but such perspectives are naive.  Instead, the region needs as much weaponry and hair-trigger warfighting strategies as possible.  

That will fix things.

Morsi will continue to surprise

Fascinating article on GM-SAIC partnership in China

From WSJ.

The USG could learn much from GM on this:  the Detroit automaker sought out SAIC about 15 years ago, which is when the US should have made its moves as well.  They embraced genuine partnership with the Chinese automaker, and worked hard to bring it up to global standards.  In the process, GM became the biggest foreign player in China's exploding auto market.

But yeah, now SAIC wants to go global with GM and somewhat on its own at the same time, and that's where the relationship gets trickier.

But my point is, GM has the right problems to manage right now, while the USG is still stuck in a host of aging issues with Beijing.

As the piece says, "SAIC wants more from its partnership with GM; GM has yet to decide how far it will go."

The great quote from GM chief exec Dan Akerson:

It's kind of like a marriage.  We have a good and viable relationship and partnership.  But to make it work, you have to have needs on both sides of the table, not just wants.

That, in a nutshell, is the big constraint on Washington's approach to Beijing:  we constantly focus on our wants and denigrate China's needs.

Would that national security strategists had the breadth of vision that GM has so ably demonstrated in this long-term engagement.

Again, that's where the US and China should be:  we facilitated China's rise and then got scared right when we should have moved closer in.

The latest US missile defense announcement re: Asia

What to say?  WSJ says US is planning yet another "major expansion of missile defenses" in Asia.

The excuse continues to be North Korea, but that's a lot of money for just the DPRK.

"The focus of our rhetoric is North Korea," said Steven Hildreth, a missile-defense expert with the Congressional Research Service . . . "The reality is that we're also looking longer term at the elephant in the room, which is China."

As usual, I ask you to consider the reverse scenario:  China placing missile defense systems around the perimeter of the United States so it could maintain "access" for its carriers and their air wings.  Imagine the Congressional hearings on that one.

But we are only being prudent while the Chinese are being aggressive.  After all, it's East Asia, where the U.S. military has long ruled as de facto Leviathan.  We did this so powers could rise peacefully - through economics, which China most certainly has (how many wars has China fought since 1980 versus the United States?), but China grows it's military quite a bit, even as observers might note just how much bigger the US defense budget has become over the same time period (let's say the US has increased its budget by $500m since 1990 and China has probably jacked its budget up by about $125).

From Wikipedia

Yes, no doubt that China is spending plenty to make it hard for the US to get in close, and that worries its neighbors.

But you really have to ask, is this an arms race we can expect to afford - much less win?  Their neighborhood: we can plant plenty of defense systems, they can stock up on plenty more missiles, but what is the end-point here?

We spent decades encouraging the peaceful rise of Asia writ large, and now we flood the place with weaponry? Triggering a race dynamic with China?

Makes you wonder where our mil-mil could be if not for the Taiwan situation holding it back all these years.

The irony: as America executes "strategic pivot" to contain Chinese military, the US economy continues to open up to Chinese FDI

FT p. 1 story: "US opens up to Chinese takeovers with record figures for M&A deals."

Almost $8b of deals announced so far for this year.  Biggest is Dalian Wanda buying my favorite movie theater chain from my college years - AMC Entertainment.  Next is a Sinopec purchase of a stake in Devon Energy.

Best year of Chinese FDI to date is $8.9b, so 2012 likely to set new record.

Why this matters: the more China buys into the US economy, the harder it gets for Washington to treat it as the military "other," because stakeholders accumulate inside the US - in addition to all those who export to China.  All these jobs add up.

China's looming populist problem

It's right out of 1880s America:

In China, less than 1% of households control more than 70% of private financial wealth.

So noteth the WSJ.

In the US today, we're talking somewhere between 40 and 45 percent.

Globally, says, John Bussey in the WSJ, the number is "nearly 40%," so America's not much off the norm.

But here's the biggest problem for China: a great deal of the wealth is connected to people with political positions (aka, the princelings like Bo Xilai and his now imprisoned wife).  In the US, if you want to get rich, you need to stay out of government (or get rich before you go in, aka, the "fuck you money" that allows you to behave yourself while in power and quit on principle if need be).

For China to truly advance and become a genuine competitive threat, the political system has to decide to divorce wealth from political power.  Otherwise we're looking at decay and decline and a very short "Chinese century."

US hit that moment and launched itself into a multi-decade progressive era that cleaned up a lot of things but government most of all.

As I have said many times, the world needs a small army of Teddy Roosevelts right now - but China most of all.

Some common sense on S. China Sea dispute, where US China hawks are losing all perspective

I've known Doug Paal for many years now (going back to my early Naval War College days), and he's an eminently sensible fellow with a huge background in Chinese affairs.

Some key bits from a Diplomat piece just published:

The South China Sea presents complicated issues of evolving international law, historic but ill-defined claims, a rush to grab declining fish stocks, and competition to tap oil and gas reserves. Beijing’s much discussed “nine-dashed line,” that purports to give China a claim on about 80 percent of the South China Sea and its territories, used to be an eleven-dashed line. Two dashes separating Chinese and Vietnamese claims were resolved through bilateral negotiations years ago. This suggests that the remaining nine dashes are equally negotiable. But China rigidly refuses to clarify the basis for its claims, whether they are based on the accepted international law of the United Nations Convention on the Law of the Sea (UNCLOS) or the less widely accepted historical assertions. Beijing’s refusal to choose suggests it wants to maximize its legal and political leverage, even as the growth of its military and maritime assets gains physical leverage over its weaker neighbors.

Beijing is not alone. Hanoi has leased oil exploration blocks in contested waters, and Manila is trying the same. Their colonial occupations left a discontinuous record of historic claims, inclining them to rely more on UNCLOS to manage disputed resources. They eagerly encourage American weight thrown onto their side of the competition with China for free.

This is where the United States needs to move with caution and only after thinking many steps ahead . . . 

Point being, while China is clearly strong-arming and pushing its claims even more so than others, it is not the only country rattling sabers and pushing boundaries.  

Now, by singling Beijing out for criticism, but not the others, Chinese observers believe the United States has taken sides against China. This has undermined the U.S. assertions of a principled approach based on international law by appearing not to be impartial.

U.S. direct interests in the South China Sea are not unlimited . . .

The Obama Administration has clearly decided to champion this cause as a means of "standing up" to China, thus raising the "losing of face" dynamics, which means, instead of our usual approach of trying to cool things down, we've decided to purposefully heat things up.  Why?  A lot of Washington political and budgetary interests are served by this choice - just like in Beijing.

Today, the South China Sea is not at the “Sudetenland” moment of the twenty-first century, which calls for standing up to aggression and the rejection of appeasement. China has not militarized its foreign policy and does not appear equipped to do so for a long time. Its neighbors are not supine, and they show on occasion, when needed, that they are able to coalesce against Chinese actions that they judge as going too far. At the same time, China and those neighbors have more going constructively in trade, investment, and other relations with each other than is at risk in this dispute.

This suggests the makings of a manageable situation, even if it remains impossible to resolve for years to come. Different Asian societies are quite accustomed to living with unresolved disputes, often for centuries.

No kidding.  There are numerous missing peace treaties in Asia, which is part of this problem of ill-defined territorial boundaries, but leapfrogging from that reality to a rerun of WWII is hyperbole of the worst (meaning unthinking) sort. Frankly, you know your counterparty in any argument has run out of ammo whenever they pull out Hitler.

A very sensible piece worth reading.  Might just keep you off the budgetary gravy train that is AirSea Battle Concept.

When - and why - GMOs will attract a lot less criticism/resistance

WAPO story on how a few select US farmers are waiting on pins and needles to see how a planting of GMO corn ultimately handles the worst US drought in half a century - one that costs the US economy about $18B just after last year's TX-centric drought cost $8B.

In western Kansas, the corn looks unsalvageable. The landscape is rife with curled brown leaves, an unmistakable sign of severe drought.

Yet beneath those wilted leaves, some of the corn shows promise. The kernels have held up surprisingly well in a few places given this summer’s swelter. At hundreds of sites across the Great Plains, seed companies such as Monsanto and Pioneer are testing a slew of corn varieties engineered to withstand drought. As the harvest approaches, they’re anxious to see the results . . . farmers are more interested than ever in innovations that could make crops more resilient. That includes improved farming practices, better plant-breeding techniques and even — most controversially — genetic engineering . . . “I’ve been surprised so far. The plants are responding well,” said Clay Scott, a Kansas farmer who planted two plots of Monsanto’s genetically engineered DroughtGard Hybrids among his 3,000 acres of corn. The experimental strain, which carries a gene that helps it draw water more gradually from the soil, is slated for wider release in 2013. “The ear size, kernel counts, the ear weights look good,” Scott said. But, he cautioned, “pretty corn doesn’t always result in yield.”

For Scott, who lives in a region prone to dry spells, where irrigation water from the nearby Ogallala Aquifer needs to be conserved, these crops could prove indispensable.

It’s a pitched battle between nature and human ingenuity that will only grow more difficult. Earth’s population has soared past 7 billion. Climate models suggest that drought will become more frequent in North America. Water will become increasingly precious. Feeding the world will require wringing as much food as possible from every last drop of water.

It’s far from assured that human ingenuity will win out.

Human greed will win out.  US farmers and the US economy will want that income in order to exploit the wider human greed for better and longer lives through improved nutrient and caloric intake.

Yes, as the story points out, GMOs are only part of the equation.  There are plenty of tactics that improve yields and make crops more resistant to drought - but water is water, and climate change is undeniably here (to all but those who abandon facts for faith).

In the future, GMOs will constitute a clear margin between life and death.

First openly gay US flag officer - a big move for all involved

Obviously a calculated gesture that had to have been cleared with a lot of people beforehand, but a very nice move by the US Army, Defense Department and the Obama Administration.  My hat off to all of them - especially the flag officer (newly promoted to BGEN) and her spouse.

An Army officer being promoted to brigadier general openly acknowledged her homosexuality on Friday by having her wife pin her star to her uniform, thus becoming the first openly gay officer of flag rank in the United States military.

Everyone knows we've had gays and lesbians in the military forever.  The only question left hanging all these years was: would we allow them their identity - openly - in exchange for their service?  Too much to ask?  Hardly.

It's a tough job and a hard life, and everybody deserves to be able to acknowledge their fundamental sexual identity while serving their country.

I can tell you exactly when the whole subject jumped the shark for me:  There was this study done sometime (I believe) in the 1990s.  An inside job where some trusted Pentagon contractor went back over the personnel records of the entire force throughout the entire Cold War, looking for instances in which homosexuality led to somebody being successfully blackmailed by the enemy.  Their finding?  Not a single case.  

Despite all those Allen Drury novels saying otherwise, nobody gay (uniform or civilian) ever had their secret used successfully against them in a security-breach manner.

It was at that point that I knew it was just a matter of time - and the right administration.

So my thanks to Obama on that score.

I have to admit that when I saw the headline in the NYT, I thought it was a gag.  I mean, I don't think there are any publicly acknowledged enlisted personnel, so how did somebody get all the way up to being a general, I thought (rather stupidly, I realize).  But then it struck me: the DoD wanted somebody prominent as the first to step forward in this manner, and somebody going from officer to flag is the perfect tipping point in a career to hold up as an example.  

Very smart.