Australian Dairy Prices Up Due to Grain Prices
It's said that the way to a man's heart is through his stomach. Less well known but perhaps more useful these days is the knowledge that the way to his fear is through brain.
The amygdala is a tiny part of the brain that, under stressful conditions, helps produce your sense of fear. Hunger produces stress. But often, the amygdala kicks into action before you have any conscious knowledge of a threat.
This can come in pretty handy when a tiger is on your tail. But fear is triggered by more mundane circumstances too. Empty stomachs produce more than just bellyaches. They produce anxiety about where the next meal is going to come from. Or, if you're sitting in the comfort of you're air conditioned office in a well-fed Western country like we are, you might wonder how a planet with less arable land than 50 years ago can feed 2 billion more people.
But then, we're not telling you anything you can't read on the front page of the newspaper these days. Rising food prices are all over the front of the papers now. Today's Age had a graphic showing corn up 31%, rice up 74%, soya up 87%, and wheat up 130%.
No one is mentioning cows, though. Cows eat grain. Grain is more expensive. Australian dairy prices are rising as a result. Dairy Australia reports that East Coast dairy farmers are trucking milk all the way across the Nullarbor to Western Australia. Western Australia exports 20 million litres of milk a year to Singapore and Malaysia. But with Australian dairy demand growing so fast, the cows in WA just aren't working hard enough to meet demand.
What do you think the embedded energy cost is in a litre of Australian milk that ends up in Singapore? You have the petrol to power the tractor that harvests the grain that feeds the cow who's milk must be refrigerated as its trucked across the continent via internal combustion engine to be transported on a coal or oil powered ship in containers made of plastic (oil) to Singapore where a lorry driver with a refrigerated truck that runs on petrol takes it to a store whose lights and freezers are kept bright and cool by coal-fired power. All so you can have some Australian milk with your cake in Singapore's fabulous Changi airport as your carbon foot print grows to the size of Godzilla's paws.
Dan Denning
The Daily Reckoning Australia
P.S. to get The Daily Reckoning direct to your inbox sign up to our free e-mail newsletter or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.
Related Articles:
- China Fueling Inflation in Australia & New Zealand
- Cattle Prices Have Risen Only 1% This Year
- Aquaculture: Soybeans and Corn Under Water
- Thomas Malthus and the Global Food Crisis
- Base Metals Prices Spiking After China Earthquake
About the Author
Dan Denning is the author of 2005's best-selling The Bull Hunter (John Wiley & Sons). A specialist in small-cap stocks, Dan draws on his network of global contacts from his base in Melbourne, Australia and pens the small cap newsletter, The Australian Small Cap Investigator. He is also a contributing editor to the Australian resource investing publication Diggers & Drillers.
Comment by Coffee Addict on 16 April 2008:
I’ve come across market bulls, market bears and market pigs and bottom feeders. The new creature to add to this menagerie is the market Cow.
The market cow is the companion of the bull and always retains an optimistic and relaxed attitude. While bulls act erratically and sometimes independently, the cow will just follow the herd, eat grass and moo. Market cows just take what comes be it a well trodden path to the milking shed, a fresh bail of hay or an appointment with the Bull. Eventually the cow will join the bull of a final ride to the slaughter house but this does not seem to worry the cow.
There are times to be bullish, times to be bearish and times to act like a pig (if you have the risk appetite, confidence and knowledge to get away with it). What I can't understand is why a majority of investors and fund managers are acting like cows.
Comment by Unpopular Truth on 16 April 2008:
Because cows are the only ones you can milk
Comment by Diggin it! on 16 April 2008:
I would have thought they were more like sheep, one walks into a fire and the rest follow
Comment by Coffee Addict on 16 April 2008:
Unpopular truth
The milked bit is an absolute truth.
Diggin it
Yeah ... sheep are much the same except that they are mulsed and fleeced in addition to being milked, slaughtered, skinned then eaten.
Comment by christina on 17 April 2008:
People sure do act like sheep, just blindly following the crowd, who are also going the wrong way. Actually, I reckon people act more like marionettes. I quote this song, from Metallica (I think it's called symphony of destruction):
"Just like the pied piper
Led rats through the street,
They dance like marionettes,
Swaying to the symphony of destruction"
Comment by karl on 17 April 2008:
Cows aren't the only bovines that are fed grain. Pretty much any bovine that is raised in a feedlot is going to be grain fed. More and more animals are being sent to feedlots because feedlots offer the best return for investment, they are more environmentally neutral (you don't get cows hooves trampling and eroding a large area of land), plus they offer better individual tracability and feedback to the owner of the beasts. If you want to see the extent of grain feeding, look up Wagyu Grain Fed Beef, its pretty much the highest priced beef you can buy. Its sold all over the world, especially to US and Asian countries. If the price of grain goes up, milk is not the only thing that will be affecetd.
Comment by christina on 19 April 2008:
Poor cows. I'd hate to be a cow in Australia. Try telling the poor cows they don't work hard enough. If only the cows in Australia could hop on a plane, and fly to India, where they worship them, Im sure they'd all be lining up for airline tickets
Comment by christina on 19 April 2008:
Ps- why don't they just breed their own cows in Singapore, and then milk them? How hard could it be- just stick a male cow and a female cow together. Now wouldn't that be much easier?
It reminds me of the story about the Americans who spent millions of dollars developing a pen that would work in space, under zero gravity, and that could write upside down etc etc so it could be used on space flights. And then the Russians solved the same problem quickly and simply- they used pencils in outer space. Yes, that's right, plain old greylead pencils like you use in primary school
Comment by Jason on 20 April 2008:
in case you lost your atlas, singapore is a very small island in the tropics. there isn't any farmland. thats why they import nearly all foodstuffs. they also have a fresh water pipeline from malaysia. please think and consult a man before putting forward your brilliant solutions. this goes for replacing biofuels with solar energy too. shoosh, adults are talking.
Comment by Pete on 21 April 2008:
Jason: I think you just said what we were all thinking
Comment by christina on 22 April 2008:
2 arrogant pigs, feeding off each others arrogance and conceit. Excuse me your royal hignesses, for having the shame to talk in yur presence. Obviously you two know everything there is to know about every topic on planet Earth.
Comment by christina on 22 April 2008:
Ps- I know your type. You sit there and stuff your face at dinner parties while you mouth off and put everyone else a the table down. While you wifes shamefully pretend they're not with you. And then you sit there and sook when your wives walk out on you
Comment by Pete on 22 April 2008:
Touche'. I apologise Christina. Lets leave it at that.
Comment by christina on 22 April 2008:
Ok