Farmer Diaries

I was for 25 years an analyst in a very successful fund manager.  I was very lucky as was the fund.  The owners of the fund had been around for a while, the family behind the fund have been investment managers for the better part of three centuries.   They knew the value of people who work for them.   One of my closest friends at school took a very different path, and eventually became a member of Her Majesty's armed forces.   Our lives never really intersected professionally on a formal basis, but I had almost quarterly meals with my old school chum.   Over 30 years it adds up.   The truth is that I paid for most of these meals, the reason was that I was employed in the City, and my friend, well, had limited official income.   I didn't care!   He was smart and well informed; a foil against whom I could gauge my world views.    To this day, we meet on a quarterly basis, granted that the conversatio...

Farmers, as a whole, are price takers!   That cannot be a surprise, as a supplier of widely available staples.  The market is far larger and diversified, therefore, prices at which we sell our produces are dictated by the market and not by us, hence the prices in Q1 and Q4 when the vast majority of fruits and vegetables are imported, are a lot higher. That is true for about half of our turnover.   It is not true for our cheese or our butter, which are both produced on the farm.  Our butter is sought after by restaurants for several reasons, but primarily the fat content (don't ask, it's not important).  Both productions are severely limited and we sell to a small list of buyers that have been with us for a long time. The fruits, vegetables and animal protein we sell to our ancillary business are different, we still sell at market prices, as per our initial agreement with our partners, we also share in the upside in increased prices to buyers and consum...

In 1990 I purchased a Rolex submarine watch for about £1,500.  At the time I thought it was a fair price for a nice practical "sports" watch.   I saw it on the wrist of a friend while scuba diving in Australia.  36 years later I still own the watch.   I mention this because last week as a surprise my wife had it cleaned and maintained professionally in London, as a surprise delayed birthday gift. Now, I treat the watch as any watch I own. It's for work and little else, I stopped wearing it about three years ago because it did not keep time very well. I owned a seiko perpetual (which I bought ten years later) that was also automatic and kept time perfectly. The gift was thoughtful and also included an electric autowinding case for three watches, nothing outrageous but still.  What surprised me was the value of the watch.   A 1990 (which is the year my watch was manufactured) watch is worth between £9,500 and £14,000, down from nearly £20,000 –...

Three quarter of the financial year have now been completed, and for the farm and its ancillary businesses the year so far has been on budget, that is despite fuel costs being through the roof.  The average has been 127 pence per liter, which is about twice what it was last year.  Not insignificant.  All other energy costs have been stable for the year since 100% of our energy is produced on the farm.   We have not had to use the generator once this year and we have "given away" the waste gases our biodigestors produce that we cannot use.  All our farm equipment, aside from tractors, are now electric.  The range, price and quality is more than sufficient for our needs.   We have actually used my car once to drive down to London, but we did this only once, the train is far more convenient. In terms of profits, we are on budget for the year.  Granted, that most of our "real profits" are generated in Q1 and Q4 when produce prices across the...

After spending five days in the US, we flew to Calgary to see friends of ours. The province of Alberta is in the middle of an independence debate that is going badly, especially when the leader of the independence movement has just been served with a $100 million lawsuit by a US hedge fund that was backing his independence movement activities. It seems that the hedge fund was sold something that could not be delivered. Our stay in Canada was limited, but one thing we found amazing was the new Canadian identity that has been created since Donald Trump, the American president, began his trade war with the country.  Canada, like Germany at the beginning of the war in Ukraine, know that a trade war with America will be costly. Aside from a few crazy separatists, the vast majority of Canadians, even in Calgary had the same view, as they say "elbows up". Somehow that refers to ice hockey. In our two days stay in Canada, it was apparent that there was a strong anti-American sentimen...

I must be a glutton for punishment but my wife and I are just back from a trip to America.  Again the wedding of the daughter of a friend of my wife, and so we went to Georgia for five days.  We landed in Atlanta, and the whole process was as unpleasant as it had been in the past.  Many questions about why we were in the US, and that I appear to go to the US very often.  They did not like our home address, somehow they still have issues with addresses in the UK.  Still after an hour, we made it into the country. Weddings are weddings, they change and they look different. Some of it is cringing, but there’s a rhythm to the things and usually by 1 AM you’re done.  We underestimated the welcome we received in Georgia.  To be perfectly honest, the entire weekend was lovely. Both my wife and I stayed away from any political conversation. Nevertheless, we were both surprised by the ignorance of the people of the party, in particular the young ones. I have no...

Trump's desire to reduce the price of beef is a last minute reflex, that is understandable considering how much the American population doesn't want to understand what is happening.   The fundamental problem is that beef production is the lowest it has been for nearly 70 years, and the reason is drought.   31 US states are operating in a severe drought environment, and a cow will consume at least 15 gallons of water per day.  No water, no cattle.   It was evident months ago that there was a fundamental problem in the United States when large slaughter houses started shutting down.  At first the reason was that most operated with illegal labor and that ICE was active.  However, the compliant slaughterhouses did not have a good 2025 year anyway. The problem was massive herd culling.  How do I know? I am a farmer, and these things are discussed.   So Donald Trump wants to import the equivalent of 1.2 million head of cattle for ham...

Forty trillion dollars is a lot of money! Even on planet earth its a lot of money.  The problem is that America is not the only one borrowing, moreover, more than three trillion dollars worth of maturing bonds have to be refinanced.  That's a lot of money. The other factor that is important to understand is that America is not the only one borrowing, but it is the only one that is trying to kill its trade deficit.  What American policy makers fail to understand is that a trade deficit is basically a situation where you get stuff and you give sellers little pieces of paper that they keep in safes.   About 40% of all new treasury bonds are purchased by foreign holders.   The two largest holders are the Japanese government and the Chinese government.   The latter is reducing its holding quickly because it needs liquidity.  The reality of China that most don't seem to understand is that it is quickly aging and about 25% of its economy is dis...

An often asked question is, could the US dollar's hegemony be at an end?  Could another method of exchange be used, and could commodities be priced in things other than dollars?  The short answer is YES, the long answer is IT COULD take a long while. The problem is that the dollarisation of the planet for trading has been in place for nearly five decades.   The convergence of very specific factors (a) the American economy eclipsed the rest of the world in the 1950 and 1960s (gold was still an important benchmark then).   (b) A large percentage of trade was directed to the United States, and (c) many currencies were not freely exchangeable or very liquid.   The only real debt markets were the UK (the old standard of exchange) and the United States.  In short it became "convenient" to price things in US dollars. The first American President to weaponise the US dollar was Bush after the World Trade Center attack.  People forget that once th...

OK first,  I have no skin in the game, but what is remarkable is that I had completely understated the amount invested in the AI sector.   To give you a sense of how large the investment in the sector is, the Bank of England in a recent study indicated that for AI investment to meet the current stated rate of return, the entire sector would need to generate nearly $2.5 trillion in revenues per annum.  To give you a sense of perspective, it's equal to 140% of the total revenues from the global tech sector.  BTW, that's a lot of money! Today, right now, (and from the same study) corporate executives use AI for about 100 minutes per week, they pay small amounts and have generally indicated that they have not seen any real value to the product.  Still they pay the minimum (a few hundred dollars a year).  The second group are small businesses that have been able to scale up their operation using AI instead of human staff.  Again, not nothing, but not a...

There were two American icebreakers, the Polar Star and the Healey.   The first one has been in drydock for over three years, but the work has now stopped, it has now been determined that the 50 year old hull is simply not up to the challenge.   The Healey was supposed to be the answer, in 2024 it suffered from a massive fire, and limped back to port. In its recent sea trials it had a massive engine room fire. It is not clear at this stage if the vessel can be rehabilitated.  In short, the US navy needs new icebreakers. So far so simple, one tiny fly in the ointment, there are no US shipyards that are currently able to build a new military vessel (the shipyards that could, are booked until at least 2031).   The solution is to purchase new hulls from other nations.  The problem: the two shipyards that have the ability and capacity to build such vessels are in Canada and Finland.   Not exactly good friends right now.  The first is obv...