Farmer Diaries

Posts

Trump dollar coin

At first I thought it was a joke, the US treasury is issuing one dollar coin with the face of the current US president for $2.10 each. In fact, you have to buy a roll of 25 for about $62. It is quite remarkable, that Donald Trump is doing such a thing. In addition, these coins are legal tender for a dollar each. That means, that if you go to Starbucks, and buy a four dollar coffee, with a Trump coin, the coffee will cost you eight bucks. Now, if it was a real commemorative thing, they wouldn’t sell them in roles of 25. Instead, that would make a plaque in which you put the coins and somehow somewhere the coins would eventually be worth more than $2.10 each. But no, it seems that US treasury wants real Americans to buy something for two dollars that is valued at one dollar. It’s hard to believe that people will do so? On the other hand, it’s not the first scheme that Trump introduced. Finally, is it even legal for an image of the current sitting president to be on a coi...

The Bond market – political reality

Scott Bessent is "called" a bean farmer but is nothing of the sort. He worked at Brown Harriman and Soros fund, when things were serious. He was a young trader at Soros' when that fund attacked the pound sterling exchange rate against the newly formed Euro (and won). Scott Bessent is many many things but he is not stupid… and then he does something incredibly stupid. He bets against the bond market! There is no doubt that Scott's descent into hell was at the prompting of his boss, the American President, another deluded idiot. Scott's first announcement was that he was pledging tens of billions of dollars to defend bond prices (i.e. lower interest rates). Now to be clear, 10 billion is about five minutes of trading in the international bond market. Anyway that's not the real drama, the real drama is that for the past 20 years two buyers have accounted for nearly ⅓ of all new international issuances (the international bon...

Defense a new paradigm

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...

Inflation in farming

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...

Rolex

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 –...

2026 and all that

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...

Canada

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...

America –Again

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...

300,000 tonnes of Beef

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...

Bond Prices

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...

Deodollarisation -- is it even possible?

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...