Monthly Archives: June 2008

Peak Oil

Short Supply

From the Wall Street Journal on May 27th:

Lofty Prices for Fertilizer Put Farmers in a Squeeze
By Lauren Etter

At a time when food prices are soaring world-wide, so is the price of fertilizer, producing huge profits for leading fertilizer makers and stirring anger among farmers in the U.S. and India….

The price of fertilizer “defies rational explanation,” says Robert Carlson, president of the North Dakota Farmers Union, one of the state’s most influential farmers’ groups. In a May 8 letter to North Dakota’s three-member congressional delegation, he accused fertilizer companies of “price gouging,” and asked for an investigation.

On Friday, Sen. Byron L. Dorgan, a North Dakota Democrat, said he is asking the Federal Trade Commission to scrutinize the industry’s business practices. Sen. Dorgan heads the Senate Commerce subcommittee that oversees the FTC.

Read more here.

As I mentioned in my post about fertilizer shocks, we are on the world market. And now it appears that the few world suppliers have the market cornered.

The silver lining in this fertilizer shock is that it seems to be a shortage that can be overcome by building increased capacity. But it will take a few years for that to happen, and for prices to ease.

Recognizing what was going on, we immediately bought two and a half months’ worth of supply to protect ourselves. We don’t like to do this. But we do have the ability to move quickly when we need to.

Sulfur is in short supply, too, maybe until the first quarter of 2009. And now other blends may be short when they have a sulfur component. There’s a lot to be aware of.

Peak Oil, Sustainability

An 800-Pound Gorilla

I spent all day Tuesday and all of Wednesday morning at the Pacific Basin Agriculture Research Center (PBARC) for a stakeholders’ workshop and program-visioning conference.

We were asked:

• “What do you see PBARC doing in 10 years?” and,
• “Where can PBARC provide support in furtherance of its mission?”

Our exercise seemed similar to what might have happened had Hawai‘i’s whaling industry held a conference soon after oil was discovered in Pennsylvania in 1859.

In 1846, more than 700 whaling ships were calling in Hawaii. Some of the conferees may have asked for research on potatoes so they could supply the ships, or for aggressive marketing and promotion of fish and poi to the sailors. Or for studying how whale harpoons could be mass-produced in a factory. Others, thinking ahead, may have asked for the study of sugar cane cultivation.

Back then, the 800-pound gorilla in the room was the discovery of oil. Now, the 800-pound gorilla in the room is the fact that we are running out of oil.

This meeting I attended was an important one. Andy Hammond, the Area Director of USDA, ARS, Pacific West Area, was there. There were administrators and staff from the Hawaii State Department of Agriculture, both the UH Manoa and UH Hilo’s Colleges of Agriculture as well as representatives from other supporting agencies. Most of the Hawaii agricultural industry’s representatives were there, too.

Dennis Gonsalves is the director of the Pacific Basin Agricultural Research Center. He had an illustrious career at Cornell University (he is the person who developed the Rainbow Papaya, which saved Hawai‘i’s papaya industry) and then came back home to Hawai‘i after making it big on the national scene. In all his years away he did not lose any of his local sensibilities, and that’s a big reason he is so effective in his job. We need more of these “local sensibilities” when choosing our leaders!

Let me define these two organizations for you:  Agriculture Research Service’s (ARS) mission, which applies to Food, Feed, Fuel and Fiber, is to develop and transfer solutions to agricultural problems, and support research needs of action agencies.

PBARC’s mission is to support aquaculture, plants, genetic resources, plant biological and molecular processes, as well as crop protection and quarantine.

In answer to the questions we were asked to consider (“What do you see PBARC doing in 10 years?” and, “Where can PBARC provide support in furtherance of its mission?”) industry people in normal years would just recite the priorities of their individual industries, and if the need crossed multiple lines so much the better.

But this year, there is that 800-pound “oil shortage” gorilla in the room. We hear people on the news talking about $200-250 per barrel of oil in the next couple of years. This was unimaginable to most people just eight months ago.

So it made our job a little more difficult. We were instructed to come up with action items that were of “utmost importance,” “very important” and “important.”

Some felt that generalities were nice but they wanted action. For example, the coffee industry representative did not want to waste time—he wanted specific things done for the industry. He was very effective, listing seven or eight items for consideration. All were of the “utmost importance.” Most of the other people had two to four items that were of “utmost importance.”

In the end, it turned out well because the people who were concerned about world oil shortage issues brought out points that applied across the board, so those items were adopted. And the people with specific action items for particular commodities had their issues heard as well.

By the way, I ran across a definition of sustainability that I like. It’s a German term that was coined by the Prussian Forest Administration back in 1790 or so, and it means that one should never take more wood out of the forest than can re-grow between two harvesting periods. That means we leave nature intact and just live from nature’s interest rates.

(to be continued)