Monday, 31 March 2014

How to argue on Twitter

One of the great things about Twitter is that its hard to predict what's going to happen. Something odd pops up & piques your interest, you ask an innocent question and the whole thing explodes into a massive argument that soaks up way more time than you bargained on. Or maybe that's just me. 

Anyway, having ended up in a few of these I've decided to compile this handy guide to arguing in 140 character chunks.  

1. Write...essays
Rules are for breaking, and the 140 character one is your first target. Start a nice long argument off & then just put these little dots...

...around the chunks of your text. Be sure to save the main points to last. This way you can keep raving for ages, and no-one else can...

...take the risk of responding because they can't tell where its all heading. Plus you get to drop little nuggets along the way for later...

2. When in trouble, divert
If you realise mid-argument that you've made a mistake, you need a way to cover your arse without admitting it. Diversion is that way. Plot a course to a new safer ground and then start off in that direction. 

But how? Well, you could use the essay trick. Course changes half-way through an essay are a great option. Make the necessary admissions as part of a bigger package that re-steers the argument. If it gets spotted you can "but I already said that" them, which makes them look thick.

3. Reframe disingenuously
This is another diversionary tactic. The idea is to find questions that make the other person look like a dick. Frame up their position in the most absurd way and then ask the obvious question. For example, if they're arguing against cat control try assuming they're promoting human-cat marriage. If they're arguing for cat control, why not assume they're also in favour of euthanasia in general?

4. Persevere
Arguments only end when someone stops - that person is the loser.  This is why #3 works. It forces your adversary into a whole other line of thinking and provided you keep going it gives you a reputation for tenacity. This makes it more likely the other person will start to doubt the wisdom of continuing, which of course increases your odds of winning.

5. The late bomb
Save up some substantial ammunition (preferably a link that'll take a while to digest), then go silent and wait for your adversary to blow themselves out. Don't drop the bomb until you're confident they are in self-congratulation mode.  

There must be others, but that's my lot for now.

Sunday, 30 March 2014

Don't follow the money

Rod Oram is complaining today that Fonterra is just cashing in on the China-driven boom in milk powder. The co-op has been "stricken" with Dutch Disease in which by Rod's account
"The bonanza sucked capital and resources out of other sectors, drove up the exchange rate and generated excessive optimism and poor decision-making by companies, investors, government and consumers. 
Sounds horrible doesn't it. But let's think about it for a tick. The symptoms of Dutch disease are capital inflows leading to an over-valued exchange rate. There is fairly widespread acknowledgement that NZ's dollar is over-valued, some say by 20%. But how is that the fault of the dairy industry? I'd be more inclined to look at the nexus between monetary policy and real estate prices. Maybe Rod has a theory for how Fonterra's strategy is to blame for our high dollar? If so, I'd love to hear it.

Moving on, we get to the real substance of the piece, which seems to be a plea for Fonterra to not follow the money. Apparently these high prices are a bad thing:
"The high WMP price has caused havoc with Fonterra's finances and strategy in three main ways
Crikey. What could they be?  Here is the list

  1. Fonterra has missed out on some of the boom because it doesn't have enough milk powder making capacity. Funny, I thought Rod was arguing that we were doing too much milk powder.
  2. Fonterra couldn't afford to pay the modelled milk price because of #1 above. I discussed this last year, but again I'm struggling to see how this is a bad thing or something to blame Fonterra for.
  3. The high commodity price inflated the input cost for (added value) consumer & ingredients products so these made less profit. Sure, but isn't this just underlining one of Fonterra major strengths? It makes money from commodities when commodity prices are high and from other stuff when commodity prices are low. How is this bad?

When it comes down to it, Mr Oram is basically arguing that Fonterra should not earn good $ from commodities during high price periods. Leave those $ on the table for God's sake. Its all a trap.

Friday, 28 March 2014

Good call Dr Rolleston

I confess to not having been a fan of that very influential chap Dr William Rolleston. My main concern has been that he seems super keen on genetic engineering about which I am more skeptical.

But this excerpt from a recent speech suggests I may have underestimated the man.
...we need science to help us to do a whole lot more from a whole lot less - all the while ensuring that the soil minerals, insects, bacteria and nutrients are kept in optimal balance.
We may have something to learn from organic agriculture here but we must be sure that the ideas we deploy have a scientific basis while satisfying our productivity and environmental requirements
This is exciting news because of Dr Rolleston's status as one who helped initiate and actively participates in New Zealand's new collaborative approach to taxpayer-funded science. Obviously it is sensible to canvas a wide range of options for improving the sustainable productivity of agriculture; indeed it would be foolish not to.

So I am pleased to hear that Dr Rolleston supports using NZ's taxpayer funding of science to properly investigate all of the options for sustainable growth in agriculture, including general-purpose technologies that farmers can adopt themselves without paying licence fees to holders of intellectual property.

I admit that so far I haven't seen any evidence that this new approach is actually seeking to seriously investigate even biological farming ideas, much less organic ones. But being a mere farmer I guess that's not too surprising. I shall investigate further.

Thursday, 27 March 2014

Vote your levy

Last evening's #agchatnz discussion on twitter was about the levies farmers pay.

For dairy farmers, this levy is paid to the "industry good" body known as DairyNZ. We currently pay 3.6c/kg of milksolids. National production has been growing at an average of 4% per annum, so this is also the growth rate of DairyNZ's levy revenue. But there is still a proposal to increase the levy to 5c.

Last night's discussion showed that there are different views about how the levy is spent. Here is the current breakdown, from DairyNZ's most recent annual report.
How Dairy NZ spends the levy (% shares)
We all have different priorities about what we'd like this chart to look like - that's natural. My main concern is that DairyNZ is of approximately zero help to people like us who are running farms with very little urea. Legumes are a substitute for urea - biological life interacts with legumes to harvest nitrogen from the atmosphere, whereas urea supplies nitrogen from fossil fuel resources. It is also believed that urea inhibits the growth of legumes or at least that it can do. So urea and legumes are in competition with each other.

I would like our industry good body to help us understand this competition, for example by doing scientific work on biological farming systems and the role of legumes in sustainable dairying. Unfortunately, DairyNZ appears to just not care. Six months ago, I did a wee test by searching DairyNZ's website for the terms "urea" and "legume". Urea won by miles with 521 search results compared to 8 for legume.

Six months is a long time in dairy research though, so I've just repeated the exercise and the new results are

urea: 780 search results, up by 50%
legume: 8 search results - no change.

Pretty clear where their priorities lie isn't it?

OK, so that's just my own gripe and many farmers will have different ones. An obvious way to resolve these is to allow farmers to vote their levy, or even just part of it. We could for example set aside 30% for stuff that just has to be done (disease control, admin, databases) and then allow farmers to allocate the other 70% of their own levy payment to particular categories. That way those of us whose interests are just not being served can at least band together and get a bit of value.

Tuesday, 25 March 2014

The price of milk

Keith Woodford has been thinking about Fonterra. If I read it right, he reckons that Fonterra needs external capital to invest efficiently.

This doesn't ring true, and I suspect that the milk price manual might be at the bottom of the confusion. Keith says:
Fonterra's solution for 2013-14 is to siphon funds from the theoretical milk price, as calculated using the rules in Fonterra's Milk Price Manual. 
It is true that this season's payout is lower than what the Manual suggests, but the (claimed) reason for that lies in the difference between Fonterra's actual business and the notional business modelled in the Manual, as I discussed earlier. Now it could be that Fonterra are just bullshitting us (that has happened before) but the following passage makes me think its more likely that Keith is perhaps not fully across the details of the Manual.

Determining the milk price under Trading Among Farmers (TAF) was always going to be a challenge. Given the absence of a competitive market, it was always going to be the outcome of complicated back-room calculations. Realistically, these new rules are still unlikely to give retained profits of more than $500 million after paying out dividends of about another $500m.
In fact, the model is deliberately aimed at giving Fonterra a modest return on the capital needed to produce commodities (plus depreciation). The milk price is the difference between the world price of commodities and the costs of an efficient and low-risk manufacturer. In other words, the Manual is deliberately designed to maximise the milk price, which is after all exactly what would happen if rival processors were competing for raw milk.

Setting that NZ commodity business aside, Keith correctly notes that shifting up the value chain into branded consumer products requires more investment. Fine, but Fonterra has other profit centres from which to gather that capital. Around 1/3 of its raw milk is sourced outside New Zealand and therefore doesn't fall into the scope of the milk price Manual. It has branded consumer products on sale in many other countries, such as Anchor and Anlene. It also sells lots of ingredients that go beyond the basic commodities in the Manual.

These other lines of business should provide the cash for growth. I think we should be pretty careful about before concluding Fonterra needs to expand its externally provided capital base.