The price of anything is the amount of life you exchange for it - Henry David Thoreau

The Subprime Food Crisis

by Hal_10000

Eeek:

In the last year, the price of wheat has tripled, corn doubled, and rice almost doubled. As prices soared, food riots have broken out in about 20 poor countries including Yemen, Haiti, Egypt, Pakistan, Indonesia, Ivory Coast, and Mexico. In response some countries, such as India, Pakistan Egypt and Vietnam, are banning the export of grains and imposing food price controls.

Are rising food prices the result of the economic dynamism of China and India, in which newly prosperous consumers are demanding more food—especially more meat? Perennial doomsters such as the Earth Policy Institute’s Lester Brown predicted more than a decade ago that China’s growing food demand would destabilize global markets and signal a permanent increase in grain prices. But that thesis has so far not been borne out by the facts. China is a net grain exporter. India is also largely self-sufficient in grains. At some time in the future, these countries may become net grain importers, but they are not now and so cannot be blamed to for today’s higher food prices.

If surging demand is not the problem, what is? In three words: stupid energy policies.

But you regular readers of the blog knew this.  However, all is not lost:

So what to do? In the short run, there is some good news. High prices are encouraging farmers to shift back toward wheat and soybeans which should relieve some of the pressure on grain prices. Second, the biofuels mandates must go. If biofuels are such a good idea, entrepreneurs, inventors and investors will make them into a viable energy source without any government subsidies. Thirdly, both high and low technologies are addressing high fertilizer prices. On the high tech front, Arcadia Biosciences has created biotech rice and corn varieties that need much less nitrogen fertilizer that conventional varieties require. In Bangladesh and other poor countries, farmers are embedding low tech fertilizer-infused briquettes in the soil to deliver nitrogen to rice. This boosts crop production 25 percent while cutting fertilizer use by 50 percent.

In other words, it’s that universal panacea—the free market.  Funny how the unfree market always manages to screw things up, isn’t it?

Comments

Posted by on 04/10/08 at 11:26 AM from

Just my opinion:

The energy sector of the “free market” is anything but free.  There are just too few suppliers for it to be free, there are wasteful subsidies, and the companies that control it also wield far too much power over our politicians.  Now we’re grafting everything bad about that sector onto the grain sector.  The same energy companies, I have no doubt, are using their leverage and cash to gain control of the grain-energy field.  They have no interest if grain as it relates to food but their control can have no other result but trashing the entire lot.  And enough Americans have jumped onto the biofuels bandwagon to make it easy.

Posted by Hal_10000 on 04/10/08 at 04:25 PM from

I agree TxAg.  The “free market” that introduced into California’s energy situation was particularly unfree, which let Enron go nuts

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