U.S. Government Driving Pecan Growers and Pecan Buyers Nuts

Pecan harvestingThose who contend that the Federal government has no business managing the nation’s healthcare system because it can’t even manage its way out of a paper bag got fresh ammunition this past week.

The Wall Street Journal published an article chronicling how incorrect government data has wreaked havoc in the pecan industry. Evidently, the government vastly overstated the amount of pecan exports to Asian countries and other destinations in 2010 and 2011.

The relatively small size of the U.S. pecan industry (just shy of $700 million production) means that there isn’t a futures market for the crop. Instead, pecan buyers look at trade statistics to determine whether demand will be strong or weak – and lock in purchase contracts accordingly.

When U.S. trade stats purported to show heavy overseas shipments – and with the Chinese market ramping up purchases for the Lunar New Year celebrations – pecan buyers locked in their purchases early. And pecan growers in the Eastern U.S., where the crop is harvested first, did well with supplying the product at these lucrative prices.

But when the “phantom demand” from overseas failed to materialize, pecan prices tumbled. Growers in the Midwest and West found themselves facing pecan prices nearly half the levels of just a few weeks earlier.

The culprit? The Federal government, which published the completely bogus trade figures based on “a computer malfunction” at the Census Bureau’s foreign trade division.

“There were internal processing errors,” division chief Nick Orsini reported.

When and how did the government find this out? Not until one of the industry’s buying firms questioned the figures and reported its concerns to the agency.

The foreign trade division’s “internal processing errors” have since been fixed. But in its wake is a trail of debris that reaches into every corner of the pecan industry.

Some buyers are miffed because they were led to lock in purchases when the market was at its peak, wasting hundreds of thousand of dollars on high-priced buying.

Midwestern and Western growers who harvest later in the season found themselves having to sell their crop at a deep loss, the market having crashed. So they’re not happy campers, either.

One thing’s for certain: Everyone in the pecan industry now knows what it’s like to be burned. And because it’s the government … there’s nothing anyone can do about it.

Oh sure, the National Pecan Shellers Association sent an official letter to Federal officials outlining its concens with the faulty data … but that promises to have as much impact as a pecan tree falling in the forest.

And from the Federal officials’ point of view, what’s the big whoop, anyway? What sort of political clout to these people have?

After all, it’s just a ~$680 million industry.

About on par with Solyndra.

Clean energy initiatives banging up against cold harsh reality.

Inoperable Tesla Roadster being towed on a flatbed.Let’s face it: This hasn’t been a very good year for environmental and clean energy initiatives. First it was the Solyndra debacle — a saga that appears to be never-ending.

Next were the reports of “global warmists” getting caught fabricating documents in an attempt to deflect attention away from the steadily mounting data that’s making global warming no longer the “consensus view” in the scientific community.

And now we have a damning report about Tesla Motors’ vaunted Roadster electric vehicles, the darling of the clean car crowd.

It turns out that most of the Roadster models sold into the market suffer from severe design flaws that can essentially destroy the value of the car. If the vehicle’s battery becomes totally discharged, the car becomes completely immobile; the vehicle won’t start, and it can’t even be pushed down the street.

The only remedy for hapless Roadster owners? Tesla will cheerfully replace the battery system … for a cool $40,000. And the owners will have to pay the entire bill, too, because Tesla’s warranty policy does not cover car damage due to battery failure.

That is correct: For those who purchase a Roadster, when it comes to battery-related repairs there’s no warranty … no insurance available from outside carriers … and no payment plan.

[To be fair, Tesla does offer a $12,000 “battery replacement program” for cars whose batteries are more than seven years old. Of course, that figure doesn’t begin to cover the ~$32,000 battery replacement cost plus ~$8,000 in labor charges.]

Some auto industry wags have started to call the Roadster by another name – the “Brickster.” That’s because when the car is immobilized due to the death of the battery, it becomes completely inoperable — basically thousands of pounds of dead weight.

Owners who face the misfortune of a full battery discharge will come to find out that conventional towing won’t work because the car’s wheels won’t even turn. Instead, they’ll have to figure out a way to lift the entire vehicle onto a flatbed truck for towing and repair … in the process spending additional hundreds (or thousands) of dollars in towing fees.

And lest people think that the battery depletion occurs only because of stupidity on owners’ part in forgetting to plug their vehicle in … not so fast. In some instances cars were plugged in but the electrical charge wasn’t strong enough to charge the battery, perhaps because an extension cord was too long.

And considering the hefty ~$109,000 sticker price of a Roadster, it’s disappointing to discover that the vehicle’s battery can become fully discharged in as little as one week’s time. Good luck with that if you find yourself stuck somewhere that’s not in close proximity to an electrical power source.

And for people parking their Roadster at the airport lot during a family vacation … better just hope that the charging mechanism is working properly. Either that, or have someone check up on your vehicle several times during your trip, lest your vacation ends up costing you an additional forty-grand.

The Tesla cautionary tale is yet another example of the disconnect that exists between the promise of clean energy and the practical challenges of turning it into reality.

To begin with, at ~$109,000 a pop, how many consumers can even afford the cost of a Roadster? And how many people who could afford the vehicle will actually plan to sink their hard-earned cash into a product that possesses such fatal design flaws? Even gas pump prices of $7 or $8 per gallon won’t change that dynamic.

Tesla has sold only ~2,500 Roadsters so far. But its aggressive plans call for manufacturing ~25,000 of its new Model S Roadsters by the end of 2013.

The company’s optimistic forecasts are based on the belief that the Model S’s lower price tag of ~$50,000 will attract a new and larger crop of consumers.

But I wonder if that will actually happen. After all, the sticker price remains high … and the “battery bricking” issue will only become more apparent to consumers as more Roadster vehicles end up on the highway.

Time will tell whether the Tesla Roadster’s fortunes will soar to new heights … or sink under its own (dead)weight. Maybe it’s worth making a $40,000 bet on the outcome.