Economics

Well I did it last night. I got brave enough or mad enough to walk into some of the worst looking corn I have.  The same field the Farm Progress video was shot in.

Here are the results:  5 random ears pulled from 17.5 ft of row.  That is representing 1/1000 of an acre, a representative sample in the ag world.

A picture is worth a thousand words they say.  Well this one screams those words in a high pitch as well.

I will say that better than 65% of my corn fields looks like this, 20% may look as good as the photo I posted in the blog post before this one and the last 15 % never put out an ear.

Been on the road to meetings the last few days, will post an update on some things I learned later tomorrow.

 

Water math for a Southern Illinois corn crop.

Inches of rain we are behind in this drought:  14 inches for the year.

Gallons of water needed to produce 1 bushel of corn per acre: 4,000 US Gallons (some say more some say less but we will use this number) 

Gallons of water needed per acre to raise 150 bushel corn:  600,000 US Gallons per acre

Gallons of water in a 1 inch rain fall per acre:  27,154 US Gallons

Gallons of water in 14 inches of rain:  380,156 US Gallons per acre

Inches of water needed to reach our current growth stage (~R1): 13 inches of water per acre or 353002 gallons of water per acre (University of Nebraska Irrigation Guide To Corn) 

Inches of water needed to finish the crop out to maturity: 16 inches of rain per acre or 434,464 gallons of water per acre.  (University of Nebraska Irrigation Guide to Corn)  

Rainfall predicted in inches for the next 5 days:  0.25-0.5 inch of rain (NWS Hydrometeorological Prediction Center) 

Gallons of water in a 0.5 inch rain:  13,577 US Gallons

A half inch rain is hardly a drop in the bucket when your dry like we are and a flood when you saturated.

But I would gladly take a half inch rain right now……………..gladly.

Progress was made today on many fronts on the farm it seems.

First off after two unsuccessful tries the roof is now complete on the new shed.  I am happy about that!  It looks like about one more good day and then the whole thing will be closed in, minus the doors.  I am told next is concrete.  So we are getting ever closer to being done.

Second I got the NH3 bar all but ready for side-dressing.  It has been a hit and miss job so to speak.  Minus a few little details its about ready.  But it will have to wait a while because one of the needed repairs to it will require a torch.  Why wait on a torch?

I ran out of acetylene and went to get another cylinder at the “air and acetylene company” (omitting full name to protect them) and they were out.  Out of acetylene.  How could you be out of acetylene?  Well its in short supply and they wont have any until Thursday.  Short supply?  What? Has there been a run on acetylene?  Well no, we just haven’t had much on hand lately (ah back to my no inventory pet peeve).  Well isn’t your company name “air and ACETYLENE company”?

So I wait until Thursday to finish the tool bar.

I then spent the rest of the day working on my truck getting ready for soil testing season to start.  Which looks like it could start this week.  Next is to work on the ATV and then I will be ready to go, sort of.

The new enclosed trailer is here now and I have to find time to get it outfitted for soil testing and other activities.  But I will use my old trailer until I get time to fix it up right.

That pretty much sums up today……..

I have been hit recently by those in academia who believe that anything that comes from the university system that is called “research”, “peer reviewed” and published is gospel.

Who’s gospel is my question.

Having been through a MS program and having done research, thesis defense and abstract of other research papers as part of my MS program, I read all research with much skepticism.

First thing I want to know about any research is who funded it.  Follow the money.  One does not fund a research project with hopes that their desired result is not discovered.  So who funded the research.  If the money is tied to a company or individual who could benefit from such research, then the results are suspect to me.  If the government funded any research it is suspect to me.   If  those who funded the research also are sponsoring the researcher, then they and their research are junk.

Call me paranoid.

Second I want to know who the researcher(s) are and what they have to gain from the research.  Now don’t get me wrong, a researcher who is looking for a cure to a disease is looking for RESULTS or POSITIVES in their research.  That to me is not suspect.  One who is getting sponsorships from the one who funds research and gets a positive result, then that is suspect.  We have a bunch of those folks in the world of agriculture right now.  There are several well known agriculture professors who are out on the rubber chicken and roast beef circuit who are pumping up the results of their research, who are also being sponsored by those who funded the research.  The ever-present sales pitch is part of their “research”.  So I take their results with a grain of salt.

Call me skeptical.

Lastly there are those who use old research to justify their current research.  In other words it’s easier to get researcher A’s paper and then go and duplicate the result on a small scale and get the desired result without doing real research.  Again there seems to be a herd of those type university folks out there right now.  I suspect its a lack of funding from the traditional sources but more likely its just to prove their bias or please their sponsor.

Call me hacked off.

What is research?  I think I know real research when I see it.  1)  It must be randomized and replicated in a way that removes the element of bias of a given result. (Side by sides are not research and multiple side by sides are not research)  2) It must be done in enough locations to show a true cause and effect relationship (for fertilizer, chemicals and additives)  3) The researcher should be free of bias.  While they can get funding from the persons for whom the research is for, they should not be sponsored by them.  4) The research should last over several trials or several years to show it is not luck, happenstance or coincidence.

The sad fact is that a lot of peer reviewed scientific research that was showed at winter ag meetings this winter had little true research in them.  Mostly it was either rehash of old research or it was so biased that it was meaningless.  Worse yet the professors from the Land Grants should know better……..and are the worst offenders.

Yesterday I was listening to NPR or more correctly our local public radio station, WSIU, and heard a story about who in Illinois had contributed the most money to Illinois Politicians.  The top contributor was a Chicago Law firm followed by a couple of businesses in Illinois.  The amount they contributed was staggering.  The amount they contributed would have employed several hundred people at wages well above minimum wage.

If your so inclined, get on the net and do a search of campaign contributors in Illinois for your county.  It will surprise you who in your county contributes money and to whom.   In my little search I found that some people contribute and equal amount of money to “both sides”.  As an example I saw one fellow locally who contributed to the local Democrat House member and to a Republican House member in another district.  The shocking thing is the amount of money that goes outside of the area to other states where these folks do business as well.  Even in a bad economy some people have a ton of money to use to buy a politician.

Make no mistake about what these folks are doing with their money:  They are buying access and influence to elected people.  When you donate a million dollars you just purchased a Senator, House Member, Judge or Governor. You might even get to own a President.

OK there is nothing new here is there?

Nope, nothing new at all.

So why are you bringing this up now?

I always thought the way to change America, Illinois and Franklin Co. was for good men and women to run for office and get elected.  Folks with morals, conviction, Godly values and dedication to the working men and women of this nation.

That is a grand falsehood.

I have been living in the “Land of Make Believe” with Mr Rogers.

In reality all you need is enough money to buy one or more elected officials.

Its like going to the mall and looking in the window of the pet store.  There are all the cute puppies playing and pooping and you pick out the one with the spots you like and pay at the counter and he is yours.  If the dog acts up, you jerk his chain and get him back in line.

So with an elected official, you go to the State House, Senate, Governors Mansion and you look in the window and you pick the dirtiest, lying, cheating, immoral, valueless and brainless scumbag you can find who will sell his soul for money and you buy him. Then you jerk his chain, his wife/mistress/boyfriends chain or kids chain when they act up and he gets right back in line and does your work for you.

Simple isnt it.

All it takes is money.

So my new goal in life is to make enough money to buy my own elected official…..

And from the looks of the contributors list here locally the old saying holds true………you do get what you pay for!

Dont go cheap……….even if that money could be used to feed the homeless or employ hundreds of folks…………

Thanks NPR……..you enlightened me today.

 

I guess we can let the cat out of the bag now and make the first of two major announcments that I alluded to earlier in January of some changes here on the farm.

Not only is this  a shed we are building, but it will also be a warehouse for Pioneer Seed.  Robertson Farms is now officially a Pioneer seed dealer.  We will be servicing farmers mostly in the western part of Franklin Co.  It is a natural fit for us.  We have enjoyed a long and productive relationship with Pioneer as a seed customer and seed grower, mainly because I have felt that their agronomy and sales staff have always had my success at heart when offering me products and services.  So when the opportunity presented itself last fall we began the process to become dealers for Pioneer.  We have a lot to learn but are eager and ready for the challenge!

The end of day 5 on the new shed…………….now we are ready for metal!  The nice sunny days have allowed for quick progress, but the bottom has fallen out of the ground around the site. We had to pull their forklifts and tellehandler out today.  The telehandler  was setting on the frame with the last truss suspended in the air………fun!

 

 

Meanwhile, while the last truss was going up, we spotted smoke accross the field and found that our neighbors old barn was on fire.  By the time we got over there the major part of the black smoke was gone but the flames were still going as high as the silo tops!


The old barn has been a land mark on Rt 14 east of Benton and the silos are also the site where the original farm owner killed himself back in the 40′s or 50′s…………more on that later………

Last week, as you know by now if you read this blog or follow me on Twitter, I attended the KARTA meeting.  KARTA (Link Here) stands for Kansas Ag Research Technology Association.

KARTA (originally KARA) was organized in May 2000 by a group of innovative Kansas producers, university researchers, and industry members who shared a common desire to learn more about production agriculture and continue to be a part of the leading technological and informational changes taking place on today’s farms

This year was the fifteenth annual conference. It was an applied workshop consolidating information about new and old technologies with a focus on supporting scientifically valid on-farm research efforts and increasing overall farm business profitability.

Topics included precision ag, social media, economics of travel logistics between fields and farms, on farm research, and crop nutrition as well as various presentations by industries on their new, current or trending technologies.

The Thursday night after dinner topic covered land rents and land values.  This particular discussion was led by Dr. Terry Kastens & Dr. Kevin Dhuyvetter.  I would call it the “Bear Pit” of KARTA.  It was a fantastic discussion involving any and all attendees of the meeting.  The topic was batted back and forth and ripped apart…and that was just the three hours or so that I stayed for it!  Very good discussion…….

While the evening session or Bear Pit was my favorite part of the meeting, I must say that I give the entire meeting a “10″ as far as meetings go.  It was very well organized, very well attended by producers and industry. It was an open exchange of information. Information was CURRENT, RELEVANT, FORWARD LOOKING and it was HONEST.  It was everything that an agriculture producer meeting should be.

I think so highly of the meeting that I believe we need something like it here in Southern Illinois!

If you are a regular reader of this blog, you know how much I hate the usual “rubber chicken and roast beef” agriculture meeting circuit here in Illinois.  Well, this wasn’t a rubber chicken meeting by a long shot………in my opinion it very closely resembled, for the production and precision side, what Farm Futures Management Summit is for the economic and business side.

I left there with that good feeling, that positive feeling of knowing that I had been rubbing shoulders with the progressive life long learners of agriculture.  When that happens you know you have been to a good meeting……….yes their world is different than mine here in southern Illinois, but that doesn’t matter.  It’s the mindset I look for.  The mindset of being proactive vs reactive.

KARTA is a great proactive meeting………I highly suggest you attend the 16th meeting if at all possible.

 

I got a good question the other day and I thought I would share it with you.

The question was basically that an input supplier was looking for input from a grower on what they thought the future would look like to the grower, and how the input suppliers business fit into that world.  In other words what can we do to keep or get your business in the future?

I like to turn the question around and ask how does the input supplier view the world and how does that view fit into my business plans?  So I think I would ask them these questions to see what their view of the future and my business is:

  1. If you are to be my supplier of choice, what are you going to be doing to insure that you are providing me with inputs at the best cost to insure that we both make a profit?
  2. In these times of great volatility, what are you going to do to insure that you don’t get caught on the wrong side of the swings in input prices and have inventory that we either don’t want, or cant afford, because it puts us at a negative margin?
  3. If early prepay is going to be necessary to lock in the best prices, are you willing to give me letters of credit on my purchases that are still in your inventory?
  4. What is your vision of your company’s future and how does that vision fit with my farms vision and mission statement?
  5. You are my preferred supplier of choice, therefore how can I be you customer of choice to insure your success and make your day to day business life and mine easier?
  6. As farms consolidate what are your plans to equip yourselves to provide more timely service to larger operations and fit into their business plans?

The first three questions will most likely make them uncomfortable. Your asking them to bear their soul and they see those questions as trust questions vs. business questions.  You must trust them if your doing business with them, but how are they relating to you as a business?  Your suppliers have to understand that your trusting them. They also have to understand your a business that needs business assurances not just handshakes.

The last three tell you what they think of you as a customer…………and how you relate to them. Are you an income opportunity or a business partner? I hope they answer in a business partner manner…….if they don’t……red flags should appear because they view you as only an income source,  instead of seeing you as a partner who will succeed when they succeed………..

I think we have to view our suppliers as our partners.  That being said you only want partners who want you to succeed in your business.  To me these questions tell me if they are my partner or just a guy trying to selling me bulk input commodities.

I have enough guys trying to sell me bulk input commodities………………..

I was at local business today when a guy asked me how much new iron I traded for this winter.  I had to laugh and say “none, I am not into that game”.

He laughed and said that “I must not be that good a farmer if I wasn’t spending all my profits on trading equipment to avoid paying taxes”.

I laughed back and said that an “old tractor worked just as good as a new one for the same job as last year”.

He shook his head in agreement and we talked about all the new iron that is showing up in driveways the last few weeks.  I have noticed several million dollars of combines and tractors moving up and down the roads around here as of late.  Guys have had a couple of good years and with the government and their squirrelly tax laws, especially the lack of a continuation in the large deprecation write off, they are spending the money to avoid the tax and also to insure they have some depreciation to write off in the future.

He then commented that he would like to invest some money into farm land and asked what it was going for right now.  After talking about some land sales around here where ground went for anywhere from four thousand to ten thousand he then laughed and said that he would leave his money in the bank.  He thought that the land market was over valued and headed for a bust.

I don’t know about the land market, it could bust or plateau.  I just don’t know.  I don’t seem to know much anymore when it comes to the farm economy.

The one thing I do know is that new iron will eventually rust.  And if there is a land bust, then that new iron will be hard to pay for in the future, rust or not.

I have been working on a whole bunch of small stuff in the office, mainly fertility recommendations but also some “what if” crop planning.  A few years ago I wrote a simple spreadsheet to do some what if type comparisons.  Then the thing grew to a not so simple monster of a spreadsheet.  I guess the correct term would be a worksheet or work book with something like 15 or 20 different linked spreadsheets in the workbook.  You change your corn acres and all the sheets update:   seed needs, fertility, chemicals, insurance, fuel and so forth as well as what your insurance coverages are and what your marketing price targets should be.

In running the spreadsheet the last couple of days I have had to put in acres of corn, beans and wheat as well as landlord split acres.  I never realized how many sets of “acres” I have for the same acreage.

There are FSA Acres, Rented Acres, Share Acres, Spray Acres, Harvest Acres and GPS Acres to name a few.

None of them are the same.

If you farm you know……..its 40 acres you pay rent on that only has 38 acres in it by planting and spraying but is 37.2 by GPS around the boundary but shows 41 on the yield monitor and the FSA office has it down as 40.5 acres for the farm program.

So you rent 40 acres but insure 40.5 because that’s the official government measurement, you plant and spray 38 acres of inputs but combine 41 acres of crops and figure your coffee shop yields off the 37.2 acres of the GPS unit…………

All those acres add up…………

Seems like everyone has a blog, newsletter or magazine article on nitrogen and corn yields for the 2011 crop.  Well I guess I will chime in with my .02 worth on the topic this Friday.

A pound of N is a pound of N.  (Yea, we all know that I hope by now.)  It is where, how and when you place that N that matters most.  In 2011 where, how and when made all the difference in the world.  Yet there are still fertilizer dealers and farmers who are flat out in denial.

I have been told that some calculations have already been done here locally by a few farmers that their sidedressed corn had a $200/ac advantage to their preplant corn.  I believe that is the case and think is higher in some instances.  A lot higher in some instances.  Based on the available N testing that I did this spring, testing for both Nitrate and Ammonia N, there were many instances of preplant N loss, (urea, solution and anhydrous) of 50% with some fields I tested losing 75% by the time the corn was V2 – V3.  Some of those fields didn’t have corn growing in them by the 20th of April either…………

Fields with preplant N, where the farmer either tested and believed the results or assumed a N loss based on crop color and looks by V5-V6, and then sidedressed supplemental N at between 50 and 75 lbs/ac, and reported to me a 50-70 bu/ac yield increase over doing nothing.

So 50 bu/ac @ $6/bu = $300/ac Gross minus 75 lbs N/ac @ .50/lb = $37.50/ac Cost equals $262.50 NET/ac (no labor or machine cost subtracted).

So on 100 ac that’s another $26,250 of profit…………..Sidedressed N, applied with a knife, in the ground, between the corn rows.

Will that hold true every year……….. probably not.  But if a pound of N is a pound of N and placement and timing are everything, then how much are you willing to give up for convenience?  $262/ac?  $200/ac??  $50/ac??

In that range of numbers above is a lot of the cash rent that is paid in this area……….Where, how and when could have easly paid your cash rent………plus  a great return on your time an machiney investment.

Where, how and when was everything this year……..

 

Between things that have to get done I have been trying to get some things done here in the office and in the house that I have neglected or that got pushed to the back burner because of everything else that has gone on this year.

One of those projects that I got started over the weekend and am hoping to finish up today is installing the new kitchen counter and sink that has been laying in the family room for the better part of 10 months.  So at an hour here and a hour there I am down to installing the sink and plumbing it up.

Which means a parts run this morning…………

So off to two (2) local businesses to get the stuff I need.  Why not one (1)?  Because no one in this economy will stock any inventory.  Its not just hardware stores its farm equipment stores and tire shops and everyone with inventory.  They are all happy to order, at an additional cost, but no one has any inventory.  So it takes two stops to get what a fellow needs to do an odd job.

But I am wandering off topic………

I could get started on this inventory and parts thing esp. with equipment dealers who charge a premium for ordering stuff but I won’t.  I have learned to save gas on the farm side and just go online and order it that way.  Its here in 24 hrs delivered to the door by the Brown Truck of Joy (UPS) and I don’t have to leave the place, drive anywhere and find out they don’t have it…….plus its always flat rate shipping that is cheaper than the gas to drive to the parts store anyway……….

But again I wander off topic……..a blog for another time.

I got home from my parts run and put the receipts down on my desk so that I could record them in the checkbook.  You know a receipt, that strip of while thermal paper that comes running out of the cash register or computer printer once you complete your transaction and pay for your items.  A receipt.  A receipt is an evidence of purchase.  A receipt is an acknowledgement that a transaction has taken place.

Well, I guess we are so stupid as a nation anymore that this morning when I put the receipt down on the desk, I noticed on top of the of the white thermal paper, in bold face type the following:  THIS IS YOUR RECEIPT.  

What?  I mean what have people been thinking  the paper they get was?  THIS IS YOUR RECEIPT.  KEEP THIS FOR YOUR RECORDS.

Is being able to identify what a receipt is at this particular business so difficult that they have to print THIS IS YOUR RECEIPT on the tickets?  Is this some legal junk to keep them from being liable for returns or has there been a problem legally where they have to state to the customer that they have got their receipt?   

If any of this is the case I don’t want to shop there anymore.  Why?  Because that much stupid could rub off.  Both in the business that has to tell its customers what a receipt is and in the customers that shop there.  

Its no wonder our country and economy is in so much trouble……………

Well its that time of year again, time to sign up for the Farm Futures Management Summit.  This is the second year that I have been asked to speak and am looking forward to not only speaking but just attending the meeting itself.  I just love this meeting and think it is the best meeting of the year and not because I am speaking.  It is just one of those meetings where the line up of speakers is relevant, current and forward looking and not reflective and re hashing the same old wore out research or topics.  

Its fresh.  Its alive…………..that is the best way I know how to describe it.  I always leave St Louis with a positive outlook even in those years when their wasn’t a positive outlook to see on the horizon.

I think the reason why is that all the other meetings I attend during the year are based on reacting to what is happening in the agriculture world after it happens.  The speakers at the Summit focus on being proactive and managing what is happening in the agriculture world before it happens.  The information gained at this meeting has help me be a more profitable farmer each year.  No its not one big thing that David Kohl or Mike Boehlje say or that Moe Russell or Daryl Dunteman point to but its the trends they talk about and all the little things that add up to something big that make the difference.

So I have taken to labeling meeting invites I get anymore into two categories:  Reactionary and Proactive.  Then I try hard to make all the Proactive meetings I can attend and fill in with the Reactionary if I need to.

The problem is, in my opinion, that most of agriculture is focused on being reactionary…………  A result is that a lot of meetings beat the same old dead horse to death.  Reactionary meeting invites fill my inbox and mail box.  Proactive meetings seem to be few and far between these days.  They exist and you must seek them out and you will have to travel to get there but that is a small sacrifice to pay for the empowerment they give you.

So I hope to see you in St Louis for what I anticipate will be the great PROACTIVE meeting of the year………….  I wouldn’t expect anything else at the Summit.

 

Think for a minute where your water comes from.  While you think about that also think about where your power comes from.  Not sure?  Don’t know?  I am not looking for “the faucet” or from “the plug”.  

Water comes from a large source like a lake, reservoir or major stream or river.   Water is pumped, by electrical means from the source through underground pipes to a treatment plant.  Then it is pumped out in main trunk lines, that are under ground, to be distributed to houses and places of business through an even more complex and longer series of pipes.  At some point in the maize of pipes is a device to hold or keep pressure on the liens so that water flows when the tap is turned on and doesn’t sit in the pipes.  This is often a water tower or water tank in which water is pumped into at a great volume and height to keep a constant pressure on the outgoing water supply.

So your water gets to your house by underground pipe that has pressure applied to it by means of a water tower (at some point) and an electrical pump at many levels or locations from the source.

Turn off the power, drain the water tower or break a pipe and your out of water.  Now multiply that by the houses in your town, county and then in the region around you……………..

Think about your electricity the same way except it is all in overhead lines on wooded poles (for the most part) assuming that the major supply lines (those big steel transmission lines) don’t fall down as well.  Think about the last time you were without power.  How long did it take to fix that one pole that broke? Fix that one substation the went down?  Replace that one transformer that took a lightening hit.  Now multiply that time by the number of homes, poles, towns and such in your region.

And we haven’t talked about natural gas, fuel, propane, sewers, storm water, telephones and internet.  All things that travel under ground in pipes or in lines attached to poles up in the air.

It is estimated that it will take MONTHS to restore just basic service of water and power.  In some of the more rural areas it might be a YEAR or more.  Most pipelines that supply the NE US (Chicago alone gets most of its gas supplied though pipelines that run through this area) will have numerous breaks and take months if not years to fix.  Roads and bridges will be impassable for YEARS.

This isn’t a winter storm where the power will be out for a while and then come back on.  It is not a winter storm where you have time to go get milk and bread at the store before it gets here.  This will be a NO NOTICE EVENT.

The economic loss will be beyond comparison.  A 7.0 New Madrid earthquake would eclipse Hurricane Katrina in human and economic loss and not only hit the Mississippi/Ohio Valley hard but would hurt the entire eastern one third of the US.  Basically any service (natural gas, power, highway, rail or water) that runs through the shaded areas blow could be disrupted in a New Madrid event.  Look at the map, that basically blocks the east half of the country from the west half………

The human loss will be unbelievable as well:  Injured, killed and displaced.  During Katrina was the first time I have ever heard the news stations in the US and FEMA refer to people trying to get out of NOLA as “refugees”.  We will have a lot of “refugees” in the red and pink areas of the map above.  I don’t think we can comprehend the toll this event could take on human life.  The folks in NOLA had a chance to get out……….this is a NO NOTICE EVENT.

So, do you have a plan?  ”Waiting on the government helicopter to drop supplies” is not a plan………..  there wont be enough assets to cover this, you had better be ready to go alone for a while”. 

A quick update this morning, on the run this week.

Took this picture of my oldest and favorite son shelling corn on Saturday.  He just loves running the combine but loves being annoyed by his Daddy even more!

Corn yields continue to be good for us but we know there is the June replanted stuff to get yet.  That being said if it doesn’t tank to bad we could have a just below average crop.  Still a week or so away from trying it though, to many things to do yet on other fronts.

Harvested the second N plot and this one is significant in its results.  The 100# rate yielded 171 bu/ac and stair stepped up to the 200 # rate making 194bu/ac.  Looks like the optimum rate is about 170 or so (without doing the math) with puts it right in line with our previous plot results on this field of 165 #/N or so.  Will post more results when there is time.

Larry Cooper with Opticrop came and calibrated the wheat drill so as soon as I get a few repairs made to it and the gauge wheels back on we can drill wheat.  Or after I get the repairs made and get the fields sprayed I can plant wheat.  That is one of the jobs to day is to get the chemical to spray I hope in the next day or so.

Also I have to pull a bin fan today and take it to the shop, its pulling way to many amps on start up and causing problems………plus the Cat is still sitting in the shop with one track off waiting on seals and tracks….. and we had to put a new bearing in the unload auger……..and there is more but there isn’t space or time to list them all.

It goes without saying that if you farm, you know……..about repairs.

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