Food troubles

It’s not like I think about global food prices a lot…unless I’m indulging in an environmental-disaster-themed dystopic rant.
Like the writers of the classic 70’s film Soylent Green, I tend to think that *eventually* climate change will cut down on the amount of arable land while the population explosion will cause hyperinflation…thus, ridiculous food prices and *ahem* alternative food sources.

(See humorous dino comix!)

dino comix

Accordingly, I definitely didn’t think that the price of food would go up significantly until climate change and resource wars forced it up. But recent media coverage shows that problems in the global supply chain are jacking up prices alarmingly.

According to the International Grains Council, total cereal crop in 2007 was 1.66 billion tons, the largest ever and 89 million tons more than 2006.

When supply goes up, prices go down…right?

Not so! The Economist says that food prices have skyrocketed; in December 2007, wheat was at it’s highest price ever recorded at $400 a ton. According to the NYTimes “The food price index of the Food and Agriculture Organization of the United Nations, based on export prices for 60 internationally traded foodstuffs, climbed 37 percent last year. That was on top of a 14 percent increase in 2006, and the trend has accelerated this winter.” The Economist says that this trend is partly due to huge subsidies for corn used for ethanol production around the world. The steady growth of demand for meat especially in China, India and other developing nations, has also driven grain prices up.

In a classic free-market, this development should serve to help the world’s poorest people who, one assumes, are farmers.
But Nobel laureate Gary Becker, as quoted by The Economist, says that if food prices rise by one third, they will reduce living standards in rich countries by only about 3% but in very countries by over 20%. As usual, the poor get poorer.

I don’t necessarily know how to interpret this kind of information, but the news says: The dollar continues to take a pounding, the US economy is entering into recession, the Fed will no doubt cut interest rates again, and Bush’s puppet masters have prepared another tax-cut-for-the-rich stimulus package. Capital is going into developing countries rather than into the US. So at a time like this it might seem counterintuitive to get rid of the subsidies and tariffs that shield rich American agribusinesses from the market. But lower food prices would help the world’s poor and boost the world economy, ultimately helping taxpayers.

Right? Yeah, that’s the ticket…

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2 Responses to “Food troubles”

  1. William Says:

    This post is… not terrible. I like that you quote The Economist, as well as one real-life economist (Gary Becker).

    That said, I’m trying to make sense of the last paragraph. What’s going on there? Are you being ironic?

    BTW, I’m planning to actually start writing some blog posts soon, so be on the lookout for that.

  2. tripinchina Says:

    Just for posterity here’s a NYTimes editorial from March 2008, 6 weeks after I wrote this post:

    http://www.nytimes.com/2008/03/03/opinion/03mon1.html?_r=1&hp&oref=login

    I dictate journalistic opinion!

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