Blog description.

Accentuating the Liberal in Classical Liberal: Advocating Ascendency of the Individual & a Politick & Literature to Fight the Rise & Rise of the Tax Surveillance State. 'Illigitum non carborundum'.

Liberty and freedom are two proud words that have been executed from the political lexicon: they were frog marched and stood before a wall of blank minds, then forcibly blindfolded, and shot, with the whimpering staccato of ‘equality’ and ‘fairness’ resounding over and over. And not only did this atrocity go unreported by journalists in the mainstream media, they were in the firing squad.

The premise of this blog is simple: the Soviets thought they had equality, and welfare from cradle to grave, until the illusory free lunch of redistribution took its inevitable course, and cost them everything they had. First to go was their privacy, after that their freedom, then on being ground down to an equality of poverty only, for many of them their lives as they tried to escape a life behind the Iron Curtain. In the state-enforced common good, was found only slavery to the prison of each other's mind; instead of the caring state, they had imposed the surveillance state to keep them in line. So why are we accumulating a national debt to build the slave state again in the West? Where is the contrarian, uncomfortable literature to put the state experiment finally to rest?

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Showing posts with label Dairy Industry. Show all posts
Showing posts with label Dairy Industry. Show all posts

Thursday, November 13, 2014

Trekking Toward Literary Ramble IV: Patronising Email to Young Share Milking Couple. Goals, Books and the Farm Budget.



My coming disquisition – I was aiming for critique but failed - on our modern literature is now past thirteen thousand words, and no matter how much I tinker, it’ll still go down like cold sick. So while I work on that, this email to a young share milking couple on why, amongst other priorities, they should read literary fiction, (noting for the wise, literary fiction is not a literature, per se, it’s part of a literature, but I would love over my career to wean one farmer – if they read fiction at all, and I ask them, most don’t - off a staple diet of airport bestsellers.)


I have learned over the years that the wealthiest self-made clients, who are often the most innovative, laugh on mention of formalised business plans and five year budgets – perhaps don’t tell [name of bank manager] this. Formal financial planning is not ‘huge’ within the psyche of an entrepreneurial spirit. One of the world’s richest businessmen, Richard Branson, of Virgin Airlines, admits he’s never been able to learn the difference between gross margin and net profit, and can’t read a set of financial statements. (I’ve done okay, yet have never in the twenty three year life of my practice ever done a financial budget or written business plan. Time spent on that would've been a waste of time for me, in my specific circumstances. ) I believe the important characteristic of these people, and individuals such as Branson, is they tend to work on a conceptual, goal driven level, as well as a life-is-fun, glass-half full, ethic, plus they’re interested in everything, not just the specific fields in which they work: particularly they read and travel widely, which educates and broadens their minds to new and differing opportunities.

By read widely, I mean within your industry, in order to understand the drivers of the economics of dairy in New Zealand, changes in technology, staff management, farm management, etc. Especially staff relations: that's huge in dairy. When the Dairy Exporter enters your mail box, actually make time to sit down and read it, for it’s part of your job. But also read widely outside farming, including general news – NZ Herald, Stuff, NBR, BBC, CNN (Internet great for this) – read and have opinions about politics, economics, and most certainly, shock, horror, read literary fiction novels to understand what life is, and the experiences of others – it’s a cheap way of travelling through other cultures, other countries, in other lives.  (If for no other reason, reading widely as well as broadening your minds to new opportunities and developing interests in other fields, including artistic, means when you’re out socially with non-dairy farmers you won’t bore them witless. Truly, I’ve been out with dairy farmers, I know what I’m talking about, as I've been bored witless. I've been at nights where if I heard the words, payout, heifer, rotary, conversion, tax, income equalisation, et al, one more time, I would have self-immolated.)

I love the courses your bank runs, one of which you’ve done. Albeit I think their value is not so much the content, as forcing you off the farm and talking to each other about your aspirations and your lives together. When stuck in the often stressful, hum drum routine of the farm, on-farm, it's very easy to 'drift into' automatic pilot and not talk to each other at all until your relationship ends up on auto-pilot, as with your farm management. The only reason I've ever seen farmers on my client base leave farming- outside retirement and carking it - is over relationship breakdowns: I've not had a single one go broke, or forced off for lack of a five year budget. At least four times a year arrange, if nothing else, long weekends to get away by yourselves. Surround yourselves in ‘difference’ as much as you can, so you don’t end up old in your forties, thinking in straight lines. Always have a part of your mind off the farm, looking for other skills, no matter how unrelated they seem.

So, go through the exercise of the five year plan, and we’ll have a look, remembering my own opinion that you really mostly need a detailed cashflow for year one to negotiate the current facility and which can be revised as you go through the year; a near detailed plan for year two, but year three and beyond is really broad strokes only at this stage, and capital budgeting set by your goals for your lives. The year one and two detailed budgeting will have (hopefully) come from earlier goals you were striving for. My point being it’s the goals that are important, and budgeting doesn’t give you those, rather, it’s based on them. My challenge for you, outside of that, is get away at least once a quarter, and by this time next year have read  three literary fiction novels: if you want to know what, off the top of my head, a New Zealand great, Maurice Gee, perhaps his novel Going West; Milas Kundera, The Unbearable Lightness of Being; and Elizabeth Knox, another Kiwi, Glamour and The Sea. (I can see your faces from here.) If not that, then take up painting, or something, anything, just not directly related to farming. If you must, sport, but mixing with a different crowd to what you normally would - ie not all farmers - I particularly like solitary pursuits, as they force you to live and cogitate inside your own head.

Will ring soon to tee up time for me to come out. Regards Mark.

PS: You’ve got a shitload of tax coming up, luckily you’d planned well for that in your two year budget, though understand, I feel your grief.


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Tuesday, June 3, 2014

Green Naivety: Carbon Tax.


Julie Anne Genter is a New Zealand Green MP, and promoting the NZ Green Party policy this election year of a carbon tax, including on agriculture - dairy, initially, with other livestock to follow presumably. Julie wants to tax our dairy industry from the peak it is on, and the important place it holds for sustaining the standard of living of all of us. I simply copy and paste the below relevant timelines: note I do Twitter quickly, so mine are full of typos.

Some summary points before starting, though. The Green Party says that households will be better off by $326 per annum via a tax cut (tax free threshold on first $2,000 of income). Two points: I can eat and drink that sum in a single meal out with Mrs H: it will do nothing to allay the additional costs of fuel - thus increasing cost of every product freighted - power, and food. But more importantly, the Green's will only be getting this policy through via a coalition with Labour, who are promising higher personal income tax rates: I expect to see personal rates back to at least 39% from $70,000: therefore, guess what will happen ... there'll be a carbon tax PLUS higher income tax for middle and upper income earners. It is guaranteed the majority of households will be worse off.

Also, as I sum up at end of first timeline below, and deal with in second timeline, the Green Party's economic naiveté is, as ever, jaw dropping. First they believe that very specialised dairy capital - such as $1 million rotary, computerised cow sheds - can be put to other uses on the flick of their tax switch: it can't - that capital is destroyed; no one profits through that. Moreover, the current level of dairy farm land (and rising) is producing milk because there is a world-wide market for it. Green's such as Julie believe if you use a tax to make it uneconomic to produce milk, because the tax is designed to increase the cost of production - and I seriously believe Julie thinks this won't increase the 'price' of the food bill in total (it will) -  then 'magically' you can 'more efficiently' grow some other food type - even if that is so, if all this dairy land can produce another food type/s more 'efficiently', that is pointless if there is no market for such crops. The market at this time calls for a supply of milk solids: if the Green Party is to responsibly implement their carbon tax policy, have they identified in their five year Soviet styled plan those other uses this land can be put to with equally profitable markets (or markets, per se), and compensation for those farmers whose dairy capital has been destroyed?

 













































 

Note in that above tweet I obviously mean food y becomes less pricy, ‘relative’ to the now more expensive food x.

 





 

 

Second timeline:

 

Regarding this policy, and the obvious Green Party desire regarding dairy to ‘knock the bugger off’, then responsibly they must issue with that policy advice on the export market/s they have identified which can replace the worldwide demand for diary produce, with that analysis considering the capital that has been invested in dairy and destroyed, and so not available to set up the next ‘more efficient’ - a term which now means nothing - enterprises the Green Party think these dairy farms can be immediately changed to. As I state below:

 




























 

 

The above said, and such as my predilections are as evidenced in this blog, one aspect of our modern factory dairy farms does, too often, horrify  me: animal welfare. I think way too many dairy farms are concentration camps for cows: and any dairy cocky who condones killing their bobbies by bashing them many times in the head with a hammer, too tight to afford a goddamned bullet, can go to hell. You are cruel swine.
 

Otherwise, I’ll close on some very good points made by economist Matt Nolan on the problems with the Green Party’s carbon tax (and noting Matt is generally for taxing externalities); this carbon tax is virtually all pain for New Zealand, while letting our competitor economies leech off our (enforced) sacrifice, and with the minuscule size of our economy, that is a national economic suicide: see On Free-Riders and Externalities

 

 
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Monday, August 12, 2013

Fonterra: The Free Market is the Solution. Why Has Fall-Back For Everyone Become More Statism?

There currently exists a desperate need for a contrarian view of the Fonterra food contamination debacle. Although some commentators are coming out with their predicable viewpoints, there’s far too many turncoats finding all the wrong words in their scrabble sets and spewing them over their op-eds. It frightens me the majority of journalists seem to think the state must step in with inquiry and oversight, for answers to problems created by the state in the first place. No, nationalisation of Fonterra is not the solution here, free markets are.

As a quick overview, Chris Trotter, famous for his unblinkered view of free markets - that's irony, John Drinnan - opines how Fonterra’s problems this last week proves we can’t be unblinkered about free markets. No surprises there. Fran O’Sullivan; I respect Fran, but she does the statist misstep far too often, to which end I cite the near-nationalisation of Christchurch call after the earthquakes, then gender quotas in politics (fine) and legislated in private boardrooms (not fine), and now telling John Key that a full inquiry on Fonterra is the only option. Then one of my heroines has come out with this shocker:



And to top it off, National stalwart Matthew Hooton,  assuming the need for an inquiry also, ends his piece with this:

Fonterra exists only because of the support of the government, parliament and ultimately the New Zealand people – which gives all three the right to demand it performs a hell of a lot better than this.

In this paragraph Matthew has unwittingly found the problem, but then driven his $160,000 farm Jeep right by it and up the well-worn old hill track leading to that vertical cliff of farm debt too much of our dairy industry is built on. The view from the top of that cliff is scary, because conscious of economist Tyler Cowan’s great stagnation thesis, which I shall post specifically on at a later date, applying it to our dairy industry, we might hypothesise the major productivity gains, the low hanging fruits of profit, have been made already by this capital intensive agriculture, noting as proof there’s a ballooning $82 million plus, beyond schedule irrigation scheme being built not thirty minutes drive from where I’m writing this. I believe it will be dubious when interest rates are in double figures again, whether return on the asset will outweigh the cost of debt, and when Labour get in and start taxing equity, the party is definitely over. Given the dairy debt cliff, an alarmist could forecast a bust coming, given the right circumstances, to rival 1987. Milk is a commodity, and commodities follow cycles, and even on these historically high payouts, many corporate dairy farms are still hurting: before moving to the contamination scare, that's the major alarm bell in this industry. So, if or when such a bust happens, and everyone will be, as in this debate, blaming free markets, remember you read it here: Fonterra was stillborn of crony capitalism which is to capitalism as sea horses are to horses - which is not the same at all, in case I need to make that clear. Fonterra is not a beast of free markets at all, but a beast of burden.

And that’s the sleight of hand in this debate.



The debate lines have been drawn mistakenly assuming this is an issue between private enterprise and what Orwell called state capitalism, with some commentators pressing the need, even, for semi-nationalisation of Fonterra: no. This truly is Irish, as free enterprise has never had a look in with Fonterra. Matthew stated that earlier: Fonterra is a monopoly product of government, parliament, and the herds at the voting booths.

I’m not a journalist, I write this blog mainly because I enjoy putting one word from my scrabble bag after the other, thus I can’t remember the full regulatory narrative – for the farmers, narrative is a word smart people use, apparently, read feminist discourse - … I can’t remember the full regulatory narrative of Fonterra’s set up, but Matthew’s quotation reminds me of the broad strokes of it, plus Kiwiwit has this great piece on the monopoly powers granted this firm, explaining why, from its inception, I disagreed with my dairy clients over the formation of Fonterra because it was in essence a state granted monopoly, and thus there would be no transparent free market pricing mechanism – for either farm suppliers or the consumers of milk -  or the resource allocation system of a free market, that miracle of economics. That is, no true market signals. These US farmers complaining about Fonterra’s monopoly are correct in essence, although such a claim is 100% pure cowshit when considering how the US farmer is one of the world’s most protected.

This is what I know. A government messes with the resource allocation of a free market with peril. Given the size of the numbers involved in the dairy industry, then as we have gleaned with even this contamination hiccup – and that’s all it was actually – extreme peril. So, think about this: the monopoly given Fonterra gave it an edge over other land use that the banks with their fiat money and cheap credit were then given the confidence to bankroll, and bankroll it they certainly did, even as the cost of conversions rose ludicrously, as did underlying land values unrealistically. Thus dairy grabbed a bigger allocation of resources than it could have under free markets, which would have allocated resource, land, capital, et al, in a far slower manner. That’s one thing the spontaneous order arising from markets is relatively good at: coordination. We have all seen the price of this too rapid expansion: degradation of the environment in New Zealand, and a PR sales machine caught flat-footed in China – bet Fonterra wishes they had more than a single science degree (the CEO is a food technologist) on the board now, and in the PR team.

If readers of this stop and keep very still, you’ll hear a huffing and a puffing: I have just breached Austrian school economics orthodoxy by professing an implied worry over externalities. I confess to being conflicted on this matter, and willing to announce so publicly, because as I mentioned in this earlier post on literature, of all things, I seem embarked in this self-indulgent blog on a futile odyssey to match that of the little fella in Hitchhikers Guide to the Galaxy, trying to piss everyone off; albeit he was doing it alphabetically, I’m being a bit more random.

Dairy’s quick and artificial growth - artificial because government initiated and protected - looks to have done harm; real harm. It has led to an allocation toward this single agriculture at the expense of diversified land use by a range of complementary, biodiverse agricultures that couldn't catch the banker's eye, given they were so smitten by the big sad bovine eyes of the large herds. Dairy has outpaced its resources of capital and skills, despite how it has saved our economy through the world financial crisis – and all the naysayers don’t ever forget that or that it remains the lynch pin of our economy.

Speaking personally, though hypocritically, as I have done well off the cows back also, I would love to still be living in at least a partially pastoral landscape in South Canterbury; a landscape of fields, woodlots and carefully planned hedgerows for stock to shelter behind. I’ll repeat that for the factory farmers reading this:

FOR STOCK TO SHELTER BEHIND. That is, humane animal husbandry - (remember that; it's what real farmers do).

I say the above because instead of the pastoral idyll, driving around I see a War of the World’s movie set with giant pivot irrigators striding across paddocks denuded of trees and shelter, and far too many reports, lately, and growing, of starving and abused herds because of the lack of skill-set in farm labour, and sometimes just straight cruel bastards. Look at my posts against animal testing over last month, and you’ll see that animal welfare is the chink in my rationalist armour. Though more than that: I can’t think of a quicker way to destroy milk sales in all of our markets other than images of animal neglect.

That’s my spleen vented. From it, the answer to this latest Fonterra debacle becomes obvious.

The way to ensure Fonterra takes on rigour, right down to the basics, is to take away every piece of law delivering them any sort of monopoly, whatever those rules, regulations and laws are – I’m not looking them up, I only need to know they exist. Look at how well competitive private enterprise in New Zealand handles food safety issues in the dairy sector. My little township of Geraldine has a cheese-maker, one of many hundreds across the country: they’ve poisoned no one. On my apple pie this Sunday lunch-time I’ll be eating Clearwater’s – the original organic dairy co, ten minutes drive away – glorious new clotted cream product, and Mrs H has been eating their organic yoghurts for years without being poisoned also. Private enterprise lives by the fact that the best way to keep a customer, is not to kill them, or even piss them off.

In league with this, I suspect one thing the commentators have got right, is looking askance at the culture of Fonterra, remembering further its a co-op, not a private company, and the culture may well be more in the nature of a bureaucracy protecting its statutory monopoly, than using its full resources for innovation; and its eye may be too much on Parliament, not enough on its customers, suppliers and basic processes. Think, even, when Campbell Live was covering escalating dairy prices for consumers, how much energy this firm had to expend explaining its idiotic price setting book: hint, no company needs to run a little red pricing formula book where you have pricing under the transparency of competitive free markets. And speaking of a nascent competition, it exists already, just let it live: I’ve heard of Fonterra suppliers shifting to Synlait before this scare, based on little more than an annoyance with the arrogance from Fonterra's head office over sharing-up issues.

So don’t go the nationalisation route. Fonterra doesn’t require more oversight, and I don’t want my taxpayer money wasted on government inquiries. In a free market, the government has no place at all in Fonterra governance issues. Simply open the Co-op up to full competition and management will realise pretty quickly, just like the cheese-maker and the clotted milk makers down the road, the importance of a food testing regime that delivers the test results before product leaves the factory, rather than when it’s being bought off the supermarket shelves. And if proof were needed on why government would be no help with that, well this is the government that has just set up an expert panel to assess the necessity or not of animal testing for stoners, after they have passed an Act enacting animal testing for stoners. You can no more sell food on such an uninformed basis than you can pass legislation.

In ending, just so I can truly offend every party in this: to the Chinese Embassy councillor on The Nation this Sunday: you idiot. Some important final facts on this current issue:

Number of people who have died: none.

Number of people who got a tummy ache: none.

Indeed, Fonterra’s main incompetence may well end up there was no harmful contamination at all. So I enjoin the Chinese councillor to leave Fonterra product on the shelf, if he is so worried about their food safety record, and consume instead Chinese dairy products: perhaps you could buy them from that part of your country where you displaced millions of your own people to build that dam; or any of the villages in China I saw on some doco or other recently the inhabitants of which were dying from pollution.  The land of the world’s biggest state monopoly is only drinking Fonterra milk, because they don’t trust anything produced in their own country.

Right, let’s see:

Journos pissed off – tick.
John Drinnan - tick (not above, some sort of free hit on Twitter last night via John not being able to see into the depths from the shallows he must be writing his op-eds on).
Fonterra – tick.
My farming clients – tick. (Nah, not really: by clients are 'real farmers' to a last one).
Government – tick.
US farmers - tick.
Libertarians – tick.
Statists – tick.
Statists and socialists – tick.
Statists and Gareth Morgan - tick.
China - tick.
Ireland - tick.

Yep, my work is done. It’s an Oyster Bay 2013 for lunch.

Oh, Deborah, I forgive ya ... this time. Outside of that, I've really got to start pushing some work through, so my blogging has to be scaled back for a little bit.


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