Monday, June 16, 2008

Uncertain times

The two word title above seems to stay in the forefront of my thoughts lately.

Being pessimistic by nature, I am finding the current state of affairs nerve wracking. Some days, it takes a concerted effort of will not to slide down into anxiety and its baser companion, outright panic. I see a perfect storm of challenging, epic proportions coming to a head over the months to come.

First, we have the skyrocketing fuel prices. As anyone knows that lives up here, fuel prices equal shipping costs, and darn near everything is shipped in from points well south of the Port of Anchorage. Ever heard of fuel surcharges? No? Basically this is an extra fee that the freight company clips you for, over and above established rates. Fuel surcharges are over 30%, and I expect they will continue to rise at a pace commensurate with crude futures speculation activity. This means that (for example only here) a cargo van whose established freight is $3000, the actual cost is over $3900. It's not uncommon for companies to arrange the shipping of their container, and not know how much the freight will be until it is actually loaded onto the ship.

Second, the high price of fuel. Yes, I know I already said that ;) But, fuel prices directly effect the cost of fertilizers on all crops-and it isn't the increased cost to harvest and ship that crop either. Many areas of the US have seen the price double over last year or two, and this is true here in Alaska as well. Consequently, some farmers up here have confessed to me in private, that they could not afford to apply fertilizer in the amounts they have done in previous years-some, not at all. With the closing of the Agrium plant on the Kenai (not enough natural gas, remember?) that local source of fertilizer is not available any longer. It must be brought up from the L48-again subject to those surcharges.

Third, the weather. Perfect storm, indeed. The unusually cool and cloudy weather we have had here in Southcentral, has played out in the PNW also. Speaking to growers down there, I am hearing that there is expected to be as much as 30% less hay and grains harvested this year, over last. In some specific locations, premium dairy grade hay is double the cost of last spring. Dairy operations and cattle farmers (plus feed lots, etc) are having a very difficult time finding affordable forages....and this is true for the large hay brokers such as Anderson, who ship many tousands of tons of hay and grain offshore. It hasn't been better for the MidWest either. Late spring frosts and snows, and now flooding (or searing heat with no rain in some areas) have literally decimated corn, soybeans, beets, etc. These are the same crops that not only feed our herds, but are used in large part in our horses' grain rations. If you haven't been hearing about this, you should pay attention....we are not an island here, and what affects the phenominal production of the Amercan farmer, affects us here in Alaska too.

Fourth, the weather again. Weather plays a huge role here in Alaska as far as hay and grain production goes. Notice how cool it's been this summer so far? Have you taken a really good look at feilds you have chanced to drive by? See how short they are? All those clouds, and very little rain. A very cold spring with a late snow and farmers were unable to get fertilizers down or crops in by the usual time. And hardly any "growth days" as far as temperature either. I see this in my own garden where it took nearly three weeks for the green beans to sprout. It's only been the last week or so that I haven't had temps into the upper 30s overnight. I still haven't seen any potatoes up, and its obvious that the ground is still too cold for some things to germinate-like carrots. Likewise, the hay is short.....we need a few weeks of real summer weather to bump the yeild-farmers may very well opt for a single cut due to this. Expect a late first cutting, is what I am hearing. The very few who have irrigation will be able to avoid this, but many 100s of acres out at Pt MacKenzie are not irrigated, as an example.

Fifth, market adjustments. I am absolutely astounded that the horse market here has not corrected itself yet. While the rescues are overwhelmed with huge numbers of abandoned or seized horses in the L48, and auctions are overrun with horses selling for a pittance, you can still find plenty of "projects" here for thousands. >rolls eyeballs< Check out fuglyhorse and read about what's happening across the L48. Pay special attention to auction reports-it's sobering. It's not uncommon to see a horse advertised here all summer long with a price tag that only a finished show horse would bring at sale down south.....and it will have minimal training and likely has behavioral issues to boot. Even on that cheapest of marketing tools, Craigslist, you can find horses listed every day for ten times (or more) than their counterparts command down south. Owning a horse here has never been so costly, and never so challenging. Ask any vet or farrier, I am sure they have a lengthy list of horses needing homes right now, and most of those will be reasonably priced, or free.

The coming perfect storm of rising costs. It used to be, I knew plenty of folks who counted on their PFDs to stock up on hay and grain for the coming year. This summer, most people I have spoken to, plan to use their Dividends to pay for home heating costs. Just how they are going to make it through the winter months with their horses they haven't thought through. The only formal rescue group we have in state (Alaska Equine Rescue) can no longer accept horses which are healthy for any reason. They save their resources for the truly seriously needy, and also have a list of horses available from private parties. On the one hand, this is a good thing-it forces people to deal with their horses themselves.......this is especially true for the infirm and/or aged horse with health issues. On the other, this means that their limited resources are stretched beyond the breaking point. And of course, they do not get nearly the community support they deserve and merit.

I too, am nervous about the coming winter. I have already turned down five horses for free. First cutting is still a week or two out, and thus the sticker shock to come-I estimate the doubled fertilizer cost to increase the price of hay off the feild by about $2, roughly. I have a hunch this is going to push those owners who were scraping by so far, right over the edge. When the choice must be made: heat or feed-who do you think will suffer?

Uncertain times, indeed :(


Original L said...

Yes, "perfect storm" is an all-too accurate description of what is gathering around us all. For a long time I've been waiting for things to crash due to decades of generally disastries policies and practices throughout banking, ag, government, personal finances - it's not going to be pleasant. But facing what's coming rather than trying to ignore it gives us the chance to prepare.

Original L said...

Ugh, "disastrous" rather than "disastries."

suvalley said...

I am not looking forward to what's's just a matter of degree: How bad is it going to get?

How bad for the people, and the horses in their care? I know I am making some adjustments at home, and have been working over the diet to attempt to cope with the sky high feed prices. I don't know that I can tweak it any further and still provide the premium, well balanced program as it is now.

Thankfully, I am not a "hay snob" one way or the other-and different hays have different uses for me. If I could find a source of *really good* round bales, I would probably buy a trailer or two.

The key being "really good". I haven't seen anything even remotely good in some time, except for one specific farmer. Ugh.

Tarr said...

How about hay for $3 a bale. We have way tons of it. Or $25 for a big round bale, wrapped.

Course it would have to be hauled.

suvalley said...

tarr, cow hay up here sells for....are you ready for this?

wait for it!

sitting down yet?

A whopping $5 to $6 a small square, which can be anything between 35 and 65 rotten pounds. Rounds go for somewhere in the $70 to $100 range-for "cow feed" And those will weigh between 400 and 1000 pounds.

Of course none of these dweebs know that feeding moldy forage is not exactly going to put the weight on cattle, period. Nope, they are just thinking: It's cheap! Horses can't eat it! Feed it to the dairy calf I bought for $100!!!

Gomme a break, that shit hay that gets fed out to cattle, that eventually feeds humans, would be burned or composted in the L48.

The professional stock folks know, the better the roughage, the better the meat on the plate *rolls eyes*

suvalley said...

Oh and I suppose I better mention what horse hay sells for, produced in state:

Small squares, from 35 to 70 pounds-$7 to $14 each.

Small rounds-$75 and up

Larger rounds (up to 1200 pounds) $95 to $185