Friday, August 2, 2013

The Economics of Horse Poo

First off, I’d like to acknowledge that this week’s post might seem a little off-topic. For any readers out there familiar with previous articles (hi Mum!) you’ve probably noticed that there is a general theme to this blog – bad photoshopping and Fitness Singles sidebar ads…and if you can see past those, cycling. But I can assure you that there is a link, tenuous as it may be, between the sub-culture of cycling and the micro-orgasmically (??) rich world of horse manure.

But now that we’re here, on an interesting side note, I recently discovered that one of the key properties of an animal-manure-based fertiliser is that it “replenishes the soil with essential elements and adds humus to the soil.” Adding humus to the soil should not be confused with the middle-eastern farming technique of adding hummus to the soil which, although still effective, is not suited to a temperature climate.
Back on track with the prevailing theme of this blog.

But enough about Hummus...back to the Horse Poo...and eventually cycling. When you go for a road bike ride outside the metropolitan boundary, or when you drive to a mountain biking venue in a rural location it’s quite common to find a hand-painted sign outside a farm gate advertising manure. Something along the lines of:
Horse Poo - still $2 a bag.

For as long as I can remember, Horse Poo sold on the side of the road has always been $2 a bag. And despite any effects the research for this article about drugs and cycling may or may not have had on my memory, I’m confident that it’s been at least a fairly long time.

Obviously Horse Poo is not a volatile commodity like oil or precious metals, whose price can waver considerably on a daily basis, but I would have thought that there should have been some increase in the price due to inflation over the last 20 years.

The price of a loaf of bread, for example, has increased from about $1.50 to around $3.00 over the last 20 years and the price of a litre of milk has gone up by a similar amount. If, like me, you only drink Bonsoy then you’ll know that it’s not uncommon for the price to increase by up to 50%, even in the short distance between Thornbury and North Fitzroy. But Horse Poo appears to be immune to these inflationary pressures.

The Consumer Price Index (CPI) calculated by the Australian Bureau of Statistics is a measure of the price of a basket of standardised goods and it is used to estimate inflation. The total price of the basket is compared over time to get a measure of the amount of inflation (or in rare cases deflation) in the economy. The basket comprises groups of items such as food & drinks, alcohol & tobacco, clothing & footwear, housing, household furnishings, healthcare, transport, communication, recreation & culture, education and financial services. The full list of items comprising the CPI basket can be found on the ABS website.

Interestingly, the Transport group does not include expenditure on bicycles (only private motor vehicles and public transport) however the Recreation & Culture group does make a rather vague reference to Sporting Equipment so it’s possible that bikes do get included there, but if you want to be sure then you’ll need to ask somebody more knowledgeable than me – perhaps the federal Treasurer, whoever that happens to be this week.
Australian Politics makes an article about Horse Poo seem important and engaging.

You will notice that the basket does not include Horse Poo or any reference to animal manure, but this is not an indication that it should be immune to the effects of inflation. The CPI index is used to reflect the average price of household goods and should give a reasonable indication of inflation across the entire economy – of which Horse Poo is, of course, an important component.

Here’s a chart demonstrating inflation in the Australian economy based on the CPI since the year 1901.

What you can see is that from the base year (arbitrarily taken as 1945) the CPI has risen from a base value of 100 points to over 3000 points by 2010, meaning that prices have effectively increased by over 30 times. In the 20-year period between 1990 and 2010, the index rose from 1839 points to 3079 points, indicating an increase in prices of almost 70%. Based on this rate of inflation, that bag of Horse Poo that you could purchase for two dollars back in 1990 should now have risen to around $3.35…but strangely it hasn’t.

So what are some of the possible factors causing the stagnation in the price of Horse Poo?

1. Reducing demand
If other substitutes for Horse Poo have become more attractive to consumers then this could cause the price to stagnate. Substitutes include other natural commercial fertilisers, chemical fertilisers and of course, other forms of manure such as chicken, sheep or cow poo.

2. Falling bag size
All the analysis thus far has assumed that the size of a standard bag of Horse Poo has remained constant, but perhaps the size of the bags has actually decreased, meaning that while the price per bag has remained constant, the price per kilogram of Horse Poo has actually risen over the past 20 years. This, of course, opens up a whole separate topic concerning the standardised size of a bag of Horse Poo.

Unfortunately it’s a discussion that I’m unwilling to enter in to at this point as I place a higher value on my time (only slightly, mind you) than I do on Horse Poo quantisation. Hopefully, you feel the same, but if not, then I would direct you to this document outlining the Agricultural Standards Act where you will, no doubt, find plenty of interesting discourse.

Assuming that the 1990 bag of Horse Poo weighed 20kg, then in order for the price per bag to remain constant since that time, the size of the bag would have had to fall to around 12kg – most certainly a significant drop and one that I’m sure any astute horticulturist (or seedsman) would have noticed.

3. Currency logistics
Perhaps farmers are just not interested in dealing with banknotes and the inconvenience associated with giving out change from their soiled hands. After all, coins are a lot simpler to collect and manage when your hands are covered in horse poo. Perhaps it is simply our currency which is holding back growth in this important rural industry. If the farmers were able to successfully lobby the Australian government to replace the $5 note with a coin then perhaps we would see the price of Horse Poo rise to $5 a bag. It would certainly make for an interesting political platform.
Buckingham Palace is yet to give the go-ahead for a new $5 coin that places the Queen's head in very close proximity to a pile of Horse Poo.

So next time you stop to purchase a bag of $2 Horse Poo for your biodynamic kale & quinoa planter box, I urge you to take a moment to consider the plight of the poor farmer being priced-out of their own core industry by economic pressures, non-standardised bag sizing and inflexible currency restrictions. Perhaps the noble thing would be to leave a tip that acknowledges the struggle that they are facing – just be sure to leave it in coins as the last thing farmers want to be doing is trying to squeeze poo-covered bank notes in to their wallets. That is likely to distract them from their core business - keeping a close eye on their daughters.

No comments:

Post a Comment