Today was the first time we have shown a rainfall surplus at my house in about five years. Of course, it is measured in one hundredths of an inch but it is still a surplus. Feeder cattle prices continue to astound analysts after the beating cattle feeders have taken since 2007. Perhaps, the rain around the country has something to do with that. More likely it’s because customer cattle numbers are finally starting to drop below breakeven fill percentages. Keep in mind a commercial feedyard operates just like a big hotel. Profit and loss is determined by percent of occupancy and not whether fattening cattle is making its customers money or not. The problem with an overbuilt industry is that no one ever voluntarily shuts down. As a last resort, the feedyard will actually use its own money to buy cattle to maintain breakeven capacity. This is usually a very bad decision. Consequently, it’s always a game of last man standing. It appears that game is about to begin.

The New York Times reports that the CEO of Humboldt Creamery in Ferndale, California, Rich Ghilarducci, has disappeared after mentioning there might be some financial irregularities in the co-op. Now the survival of the 80 year old creamery which serves a premier organic grass dairying area is in jeopardy. The creamery is owned by 50 farmers in the Eel River Delta. The farmers have voted unanimously to defer the $2 million owed them for their January milk to keep the creamery operating. Feed suppliers have put the area’s farmers on a cash-on-delivery basis which has many scrambling to cut out grain supplementation. The creamery had recently raised $400,000 in a preferred stock offering but creamery executives insist it has all been spent.

CattleFax market reporting service estimates that grain finished cattle have lost their owners around five billion dollars since November of 2007. The service notes that despite these horrendous losses cattle feeders continue to pay too much for feeder cattle and they are still betting on the come. However, at some point this will have to end and feeder cattle will have to come down in price. CattleFax estimates feeder cattle will trade between $90 and $95, basis the CME feeder cattle contract for the next 60 days. After that, it could get dicey unless cattle feeders start making some money.

Wal-Mart has found that the only thing its consumers are willing to pay a considerable "green" premium for is organic food. Richard Edelman of the public-relations giant Edelman told the Wall Street Journal that in studying consumer behavior at Wal-Mart, he found that people are willing to pay 25 percent more for food they strongly believe is good for their bodies. In everything else, people respond to pure short-term economic calculations despite a "green" marketing approach.. The paper noted the value of one-year-old used, hybrid, automobile has fallen $10,000 over the last eight months as gas prices have declined. Edelman said it would require a price of at least four dollars a gallon for most people to switch to a more fuel-efficient car.

American farmers are planning cutbacks in corn, wheat, rice, peanuts, beef, pork, poultry and milk in 2009 due to the high price of inputs, the lack of available credit and just plain old fear. Cotton farmers are expected to plant the fewest acres of cotton since 1983 and the USDA expects the production of meat from every species to drop this year. This is something that hasn’t happened since 1973. Prices for corn, soybeans, wheat and rice are half what they were last year and the price of milk is its lowest since 1978. As a result, net farm income is expected to shrink by 20% in 2009. Even Midwest farmland is finally falling in price. The Federal Reserve Bank of Chicago said fourth quarter farmland values in its district fell four percent from the previous quarter. Farmland values have been falling on the East and West Coasts for over a year now as urban demand for recreational land has declined. In the worst bind in 2009 is likely to be grainfed livestock producers. The USA ethanol industry currently consumes 30 percent of domestic production or 3.7 billion bushels of corn. This is expected to rise to 4.1 billion bushels next year according to The Wall Street Journal and could go much higher. The ethanol industry is pushing the Obama administration to increase the mandatory amount of ethanol in American gasoline from 10 percent to 15 percent to bail out the over-built industry.. "We are setting ourselves up again for unintended consequences," Robert Maskow, a food industry analyst for Credit Suisse Securities told the newspaper.

The recent peanut salmonella outbreak which killed nine people and sickened 700 has caused many consumer to question the value of organic certification according to The New York Times. Organic certification was never meant to certify the health safety of the products. Only that certified organic inputs had been used. This realization has come as a shock to many consumers who were paying a premium price due to the perceived "healthfulness" of the products. A private organic certifier in Georgia took seven month’s after discovering health violations to recommend that the USDA revoke the organic certification of the Peanut Corporation of America’s Georgia plant and only did so after the company was in the thick of a massive food recall. So far, nearly 3000 products have been recalled, including popular organic items from companies like Clif Bar and Cascadian Farm. The Peanut Corporation of America’s, Texas plant was allowed to keep its organic certification even though it had lost its state health certificate. The Times noted that certifiers are paid by the companies they certify and so are reluctant to blow the whistle on anything that could possibly cause the company to close down and the certifier to lose his fee. This fee can be in the hundreds of thousands of dollars. Arthur Harvey, a Maine blueberry farmer who does organic inspections, said "Certifiers have a considerable interest in keeping their clients going." The Organic Trade Association, which represents 1,700 organic companies, is beginning a $500,000 Web-based campaign on the benefits of organic food with the slogan: "Organic. It’s worth it."