Hay is Very Important. Who knew…
OK, right up front, this is a slightly silly posting about an odd thing I stumbled upon and a couple of others that have just been nagging me for a bit. Not a lot of emotional vigor here, nor much to challenge the intellect, OK?
So, on Bloomberg was a snippet that wheat prices ought to be rising due to “the weather in Russia”.
OK, I’d not heard anything about the weather in Russia, and it’s summer there. So what could it be?
Turns out they are having a shortage of rain. A drought. FWIW, my opinion is that it is neither the heat nor the cold that matters most, but where the water ends up that matters. During Ice Age Glaciations, it’s the shortage of rainfall that causes the shortage of plant growth locations, not the cold. Lots and lots of land remains available, but much more of it becomes desert. During interglacials, it’s nice that Canada and North Russia come out from under the ice, but it’s the consistent rains in the American Midwest that feed North America. (Along with lots of other places with rains).
The story on Russia is here:
But that’s not what caught my attention in the article.
There were two comments that caused me to have a “What?” moment.
First – Wheat
First, that Russia is a major wheat exporter. Under communism, it had been a major wheat importer. Clearly something has changed in the Russian agronomy systems.
Wheat rallied, erasing earlier losses, on speculation that dry weather in Russia, the world’s fourth-biggest exporter, will limit global supply.
I’ve typically left Russia off the list of food exporters. ( I know, wheat is not ‘net food’, but it’s a big part especially in non-Asian countries where rice does not dominate grains.) But here it is in the #4 slot. That means one of the traditional Big Five exporters has been left behind. (USA, Canada, Ukraine, Australia, Argentina) The USA is usually #1, http://www.blackseagrain.net/agonews/ukraine-worlds-third-largest-grain-exporter puts Ukraine in the #3 slot. But it also puts the “European Union” in the #2 slot. I’m unwilling to count the “EU” as a “country”, though.
Puts the rank in PRODUCTION as follows:
Top Ten Wheat Producers
Below are the leading wheat producers for the 2005-6 season. The top 10 producers accounted for over two-thirds of global wheat harvests.
1. China … 96.2 million tonnes (15.4% of global wheat production) 2. India … 72 million (11.5%) 3. United States … 57.1 million (9.1%) 4. Russia … 45.5 million (7.3%) 5. France … 36.9 million (5.9%) 6. Canada … 25.5 million (4.1%) 7. Australia … 24.1 million (3.8%) 8. Germany … 23.6 million (3.8%) 9. Pakistan … 21.6 million (3.4%) 10. Turkey … 21 million (3.4%)
Clearly China must eat most of what it produces. While it ought not to surprise me, it did, that China and India are the two top producers of wheat. So first off we have to realize that the major exporters are NOT the most important places to look at when pondering the impact of weather on world food supplies. (I’d been working on the implicit but wrong assumption that the major exporters would also be the major producers. With Australia at 3.8% and Canada at 4.1% they are just not that important to the question of a supply failure famine. Asian weather clearly is THE issue with the combined China, India, Russia, Pakistan, Turkey percentage at: 41% of global production.
If you would predict world food supplies and potential for famine (at least with wheat “let them eat cake” as a prior indicator) you must watch Asian rainfall. NOT Canada, USA, Australian nor even South American weather.
For exports, this site:
Has an interesting chart.
This groups exports by major regional area ( “EU” and FSU – Former Soviet Union for example). Of particular interest is just how volatile exports can be from any region from year to year. Right behind that is the rapid growth of FSU exports. Wheat exports, it seems, can change very rapidly. The FSU component also argues for increased productivity being available in some geographies.
Where it goes is more or less as expected. North Africa: the Muslim Arc of North Africa to the Middle East; and Asian population centers.
So again we have Asian weather as critical (as a Rice Failure in Asia would also impact those Asian population centers at the same time bad weather could be impacting wheat from Asia). Africa gets an ‘honorable mention”, but with such modest agriculture there anyway, it is not the major driver. It does open the potential for increased rains in North Africa as providing some relief if the climate zones shift slightly toward the equator.
Ok, so what was the other thing?
Second – Hey, it’s about HAY!
The article also had:
Wheat is the fourth-biggest U.S. crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay, government data show.
Corn? Sure. Soybeans? Yeah, we all know that. But, but…. #3 is hay? Really?
Look, I knew we were a country of ‘hayseeds’ and I’ve walked in fields of alfalfa and oat hay and I’ve ‘bucked bails’ in two states (in a far ago time…) but HAY? Number THREE in production?
Man, that’s got to feed a heck of a lot of cows, sheep, horses, and goats.
So now I’m wondering if there are “hay futures” and “hay options” and a “hay derivatives market” and I just can’t keep from giggling… 8-)
Third – OK, On The “What?” Theme – BK French Fries
Since I’m doing this “Odd Bits” posting, here is a minor trivial point that’s nagged at me for a while, and I’ve never sent a letter to Burger King, so I’ll just put it here and ‘get it off my chest’.
About the late 1980′s to early 1990′s Burger King was winning the Burger Wars and displacing Macdonald’s Then they hit the rocks and fumbled. Nobody there has figured it out, and if anyone else has figured it out, they are not talking.
I can explain why.
At the time they had a great burger and darned good fries. Then someone decided to “improve the fries”. They had a big market survey, and lots of hoopla about it. Big add campaign for their new and improved fries. (I’m certain they had internal marketing surveys showing folks liked them more too – they passed out survey forms…)
For some folks, the added ‘crunch’ of the new fries was a feature. For some other folks (me among them) they have a slightly ‘soapy’ flavor / aftertaste. So my buddy and I, who typically had BK for lunch about 3 times a week, stopped. Multiply that by a few million folks, and the sudden halt of growth is clearly explained. It”s all about the crummy fries.
I’d also add it was about a broken way to survey the customer. Surveys are filled out by one SUBSET of the customer base. The guy eating there 3 times a week will not be filling out the form every day for 4 months. The 8 year old kid with “mom” will, especially when ‘mom’ hands him one to keep him busy each trip.
Further, folks will NEVER tell you they want “boring comfort food”. But they will regularly buy it. Again and again and again. If you serve ANYTHING novel, folks will vote for it (thus the “Garlic Mashed Potato” fad a few years back). But after the novelty wears off (and it will, fast…) they go back to the comfort food. Thus the persistence of plain old mashed potatoes over decades as a major seller.
Every so often I’ll try them again (it’s about once per 2 years at this point) and then move on.
OK, My Gift to Burger King:
If you would like to beat the pants of everyone else, go back to simple and direct ‘comfort food’ french fries. Simple sliced potatoes cooked in hot oil. Lightly dusted with salt when done. No more. No less. But be careful with the oil used, it drastically alters the perception of the fries. Macdonald’s changed to a new oil and their fries have been dull ever since. “In-’N-Out Burgers” uses the simple potatoes in oil method and makes some very nice fries, but uses cottonseed oil and changes it very often (daily?). The result is a very clean tasting fry, but one lacking in depth and character. At home I use soybean or corn oil sometimes (OK for a ‘one off’ use but extended use oxidizes rapidly to ‘bad stuff’ so polyunsaturated oils ought not be used for extended frying), but the best fries have come from a mix of safflower (a mono-unsaturated oil that is more temperature stable than the soybean and corn polyunsaturates) with some Palm Oil added.
So there you have it, Burger King.
The keys to market dominance handed to you for free. It’s the French Fries.
Folks wishing to nag about the saturated fats in Palm Oil will run headlong into a rant about the special health benefits of a very short chain fatty acid and the broken studies that tied cholesterol levels to ‘saturated fats’ when they did not keep a clear line between ‘trans fats’ and saturated. They treated hydrogenated vegetable oils as ‘saturated’ when they were really ‘trans fat plus saturated’. A study with pure tri-stearate saturated fat found ZERO change of cholesterol while trans fat tests have shown horrid health impacts. The WORST thing you can do is substitute a 1/3 trans fat margarine for lard in pastry making, but that is what we in the USA did under nagging from the AMA and ads from the margarine makers. And that is why the French had no issues compared to the Americans despite their ‘bad’ diet. The French would rather die than use margarine instead of butter. So they have done neither and folks in the USA have done both.
OK, after a mere 2 decades I’ve finally gotten that off my chest…