"Be Prepared..." - Jim Rogers / March 1, 2009 (9min.)

[LargoWinch]

I know that the "George" is one of Ed./iTulip's friend (and maybe a relative of our own Outback Oracle?), hence the reason for my post.

As a side note, it seems that Jim put its bow tie on!

Gotta love THE Jim. I cannot wait until EJ's interview with Jim this year.

Lastly quote of the day:

"George; go become a farmer [and stock on MiracleGrow]" - Rogers

(I feel humorous today!). - W.

[phirang]

Re: "Be Prepared..." - Jim Rogers / March 1, 2009 (9min.)

Why is Rogers touting Ag again? I actually know farmers and analyst in the Ag industry, and all agree that farm land prices are going DOWN.

[LargoWinch]

Re: "Be Prepared..." - Jim Rogers / March 1, 2009 (9min.)

phirang, maybe because land and RE are overvalued and commodities grossly undervalued?

[pksubs]

Re: "Be Prepared..." - Jim Rogers / March 1, 2009 (9min.)

When in history have farmers ever been rich ? Only when they in fact have not been 'farmers' but wealthy landowners, extracting rent from those poor sods who actually till the land. In a way, it's no different than being a banker..

I don't get this 'go become a farmer' stuff from JR : does he mean build an agribusiness, dealer in commodities, or in fact a landowner-rentier. It sure can't be the actual farming..

[Serge_Tomiko]

Re: "Be Prepared..." - Jim Rogers / March 1, 2009 (9min.)

Why is Rogers touting Ag again? I actually know farmers and analyst in the Ag industry, and all agree that farm land prices are going DOWN.

Unlikely. worldwide food production is declining, and long term the amount of arable land in the US will go into serious decline as dryland farming becomes increasingly difficult in those states where rainfall and irrigation is not feasible.

[D-Mack]

Re: "Be Prepared..." - Jim Rogers / March 1, 2009 (9min.)

Both Faber and Rogers have been saying that people should learn how to drive a tractor on a couple of occasions.


Rogers even switched from mentioning Maserati to Lamborghini in this clip, when talking about the guys on Wall Street.

Automobili Lamborghini S.p.A., commonly referred to as Lamborghini, is an Italian manufacturer of sports cars, based in the small Italian village of Sant'Agata Bolognese, near Bologna. The company was founded in 1963 by businessman Ferruccio Lamborghini, who owned a successful tractor factory, Lamborghini Trattori.

http://en.wikipedia.org/wiki/Lamborghini

[sn1p3r]

Re: "Be Prepared..." - Jim Rogers / March 1, 2009 (9min.)

I think he is saying that most people will be more concerned with putting food on the table and that having a farm is the surest way to feed your family. AND in that scenario ag. business will do well since it is a necessity...

[strittmatter]

Re: "Be Prepared..." - Jim Rogers / March 1, 2009 (9min.)

When in history have farmers ever been rich ? Only when they in fact have not been 'farmers' but wealthy landowners, extracting rent from those poor sods who actually till the land. In a way, it's no different than being a banker..

I don't get this 'go become a farmer' stuff from JR : does he mean build an agribusiness, dealer in commodities, or in fact a landowner-rentier. It sure can't be the actual farming..

I'm curious as too his meaning too.

The landowner/renter arrangements vary. Cash rent is an agreed upon per acre per year price regardless of what the farmer does with the land, row crops or cattle. Otherwise it's similar to an oil lease - input cost/profit share percentage. Rental pricing has to stay of course within the bounds of what the market will bear otherwise the landowner will extract zero return on his idle property.

Then the farmer hedges with crop insurance - bankers require this with borrowed money.

Like everything else, farmers come in all shapes and sizes. Many are about as financially and managerially astute as the J6 subprimers. They go through the motions because it's what daddy and grandpa did. So they are stuck in that "dreadful" way of making a living.

Many others are as sound in their dilligence and practice as say EJ is with his thing, and they make money. Some make good money.

Vegetables, which are much more labor intensive, tend to be more profitable than standard row crops such as corn, soybeans, milo, wheat, etc.

Peanut farming, grown in the right type of soil, used to be one of the most profitable row crops up until the subsidies, the "peanut walefare" was cancelled. The open market price is around $350/ton and the subsidy added approx $300 = $650 ton. Average yields in my area are 1.5 - 3 tons per acre. Profit margin around 35%.

Not to come across as a subsidy advocate from a former growers position, but here is what many never realize or think all the way through:

The supports went a long way to help keep more American growers and labor in business. It aided the economies of the industry related aspects such as harvesting equipment manufacturers - 90% is/was made in US, tractors, seed stock processors, irrigation equipment, fertilizer manufacturers etc. etc.

Again, the support price equated to $650/ton. Now, next time you are at the grocery store, take a look at the price of a 10 oz. package of salted peanuts or a jar of Planters or whatever then multiply that back into a ton. You will get between $9,000 - $12,000/ton. Welfare?

The candy companies and the processors are not stupid. They want cheaper intput costs like everyone else. Nowadays the majority of raw peanuts are imported from the likes of Brazil, Argentina, Mexico, etc. There are a gillion uses other than food for peanuts, peanut plants (hay) and peanut oil. Biofuel really not being one - as it's just like corn in that I think the energy in / out ratio is still a net loss. When Adolf Diesel first test ran his new prototype engine back in the late 1800's, he ran it on peanut oil.

Farming is not my main source of income. It's a hobby, it's fun, it's sorta spiritual, it's in the blood.

[LargoWinch]

Re: "Be Prepared..." - Jim Rogers / March 1, 2009 (9min.)

When in history have farmers ever been rich ? Only when they in fact have not been 'farmers' but wealthy landowners, extracting rent from those poor sods who actually till the land. In a way, it's no different than being a banker..

I don't get this 'go become a farmer' stuff from JR : does he mean build an agribusiness, dealer in commodities, or in fact a landowner-rentier. It sure can't be the actual farming..

Jim is essentially of the view that:

1- Chindia (China and India) will consume alot more as they grow and develop.

2- Significant investments in farming have been insufficient to meet this demand (new investments in the past 30 years has been in paper assets).

3- It is very hard to farm food for cheap without cheap oil and we are running out of the cheap oil.

4- Governments are printing money.

[pksubs]

Re: "Be Prepared..." - Jim Rogers / March 1, 2009 (9min.)

I'm curious as too his meaning too.

Peanut farming, grown in the right type of soil, used to be one of the most profitable row crops up until the subsidies, the "peanut walefare" was cancelled. The open market price is around $350/ton and the subsidy added approx $300 = $650 ton. Average yields in my area are 1.5 - 3 tons per acre. Profit margin around 35%.

Not to come across as a subsidy advocate from a former growers position, but here is what many never realize or think all the way through:

The supports went a long way to help keep more American growers and labor in business. It aided the economies of the industry related aspects such as harvesting equipment manufacturers - 90% is/was made in US, tractors, seed stock processors, irrigation equipment, fertilizer manufacturers etc. etc.

Again, the support price equated to $650/ton. Now, next time you are at the grocery store, take a look at the price of a 10 oz. package of salted peanuts or a jar of Planters or whatever then multiply that back into a ton. You will get between $9,000 - $12,000/ton. Welfare?

.

This is exactly my point : somehow the planters nuts are worth 12000/600: 20 times as much on the shelf as out of the ground!! A semiconductor chip is worth maybe 2-3 times as much on the shelf as out of the factory. Does it pay more to be a farmer or the food processor ? Who has pricing control - it's clearly the company with the brand (planters). When I as a consumer am willing to pay 20x the price of the product, then why does the farmer need subsidy ? Coz the profit is being collared elsewhere, so how would this be an incentive to be a farmer? I can see the incentive to be a middleman, or trader(like jim), but to be a farmer: well it's peanuts .

I respect the view and emotional ties you have with farming though. Have some antecedents in the area myself...

[strittmatter]

Re: "Be Prepared..." - Jim Rogers / March 1, 2009 (9min.)

This is exactly my point : somehow the planters nuts are worth 12000/600: 20 times as much on the shelf as out of the ground!! A semiconductor chip is worth maybe 2-3 times as much on the shelf as out of the factory. Does it pay more to be a farmer or the food processor ? Who has pricing control - it's clearly the company with the brand (planters). When I as a consumer am willing to pay 20x the price of the product, then why does the farmer need subsidy ? Coz the profit is being collared elsewhere, so how would this be an incentive to be a farmer? I can see the incentive to be a middleman, or trader(like jim), but to be a farmer: well it's peanuts .

I respect the view and emotional ties you have with farming though. Have some antecedents in the area myself...

and that's why I'm curious with the "what the hell?" smirk on my face when Mr. Rogers makes those statements. Maybe he means, "Get yourself an engine driven garden tiller, a rake, a hoe, some seeds and a gardening almanac because soon food will come to be like his oil outlook - not available at any price?"

I can't wait for the interview.

[BiscayneSunrise]

Re: "Be Prepared..." - Jim Rogers / March 1, 2009 (9min.)

Also remember that Rogers is not just a speculator but an entertainer. He gets to be featured on various programs for making provocative statements.
Good for ratings, you know.

As for financial people having to drive tractors, also take it with a grain of salt. The financial industry spent tens of millions on campaign contributions so they could still maintain influence in Washington. So as long as the us gov't is doling out trillions and setting up programs like cap and trade, expect the financial industry to reap a lot of the benefit of this largesse.