Food production over time

[gwynedd1]

Re: Food production over time

"The "monopoly" factor does not really account for the prices inside a stadium either. Why else would both Coke and Pepsi be sold at identical (yet high compared to supermarket) unit prices, from multiple different vendors ran by different companies?"

The vending space is where the monopoly is. Just because you have two competitive producers of a raw product does not mean that monopolistic power does not exist in the product or service chain. Supply and demand is a market force. However markets can be manipulated. So as much as a market force paddles in one direction, there may be a tow cable pulling it in another.

Space is in relation to its surroundings and has inherent uniqueness, and anytime you have that there is monopolistic power to varying degrees.

[bart]

Re: Food Report: One Harvest Away from a Catastrophe

http://www.financialsense.com/contri...-a-catastrophe

Lots of good stuff and indents and all in there, just hit the link for a good read.

More food for thought:

[Ellen Z]

Re: Food production over time

Earlier quote:
>I feel like reggie is having a Club for Growth conversation with himself and the rest of us are trying to figure it out.

I'm not sure what in the previous post caused you to hit the eject button

I was one of the people who was "trying to figure it out." That's because I don't have enough background information about the Club of Rome.... what you were posting was interesting, but for someone like me, you didn't give enough pointers or explanations, so I didn't "hear" the main points. I just mentally filed it away as something interesting I need to learn about more, when I can.

[jiimbergin]

Re: Food production over time

Just found this thread. Last year I picked 40 lbs of wild Blackberry and 16 lbs of Cob nuts and Hazelnuts. Though with the cold wet spring and summer, not likely to get such a good yield this autumn.

I have picked wild blackberries for more than 60 years! I love them and freeze a lot for the rest of the year. My wife prefers my domesticated blackberries which we mostly eat as we pick them.

[Ghent12]

Re: Food production over time

I heard this many times, but what it boils down to is: if there are major other factors than demand or supply, then the supply/demand curve is a false reference.

Or put in other terms, if you try to abstract down from 'supply' and 'demand' as the top level abstractions into the components; if said lower level components are not in fact dominated by supply and demand, then the top level names are wrong.

That's not a correct assessment of the situation. When dealing in economic terms, there are really only three basic things to consider. There's people, there's the things that people want, and there's the value that people place on those things. In other words, there's demand, supply, and price. This is the essence of supply and demand theory--supply and demand are coordinated by prices, and everything else is just an input into one or more of those matters of consideration.

You've completely missed the boat here, my friend. Yes, Coke and Pepsi are monopoly (technically an oligopoly) in soft drinks. But the monopoly I referred to wasn't Coke and Pepsi - it was the stadium. In the stadium - it is extremely difficult if not impossible to shop for a soda anywhere but the stadium vendors. Hence the prices charged by the vendors can be very high, and in part because the stadium charges high rent to the vendors. Whatever the precise breakdown, ultimately the cause is monopoly. I say so because there is no lack of supply nor is there exorbitant demand.

No, Coke and Pepsi are not a monopoly. Coke, Pepsi, and Dr. Pepper Snapple form an oligopoly which does not operate under the principles of monopoly. These are completely separate principles that operate under different circumstances with different outcomes for all concerned.

The stadium does not have a true monopoly, nor can it exercise monopoly pricing. Stadiums must remain competitive with each other, especially when it comes to events that can be held in the same city in different arenas or grounds. While a given sports team may be constrained to a stadium much of the time, its prices must still be sufficient to most closely match their seating capacity with the demand for that sports event. Also, numerous other events could be held in either a sports stadium or an indoor arena or even a large farm outside of town or the fairgrounds. There is no real monopoly in this. What a stadium event represents is a type of massive aggregation of demand due to a popular event.

When you make claims of the absence of "exorbitant demand" and that there's "no lack of supply," you are both technically and metaphorically wrong. Congregating thousands of tens of thousands of people for hours at a time does cause an appreciable spike in demand well outside the norm expected--"exorbitant demand"--and there is in fact a "lack of supply" because the real estate inside of a stadium, arena, or even on the fairgrounds is limited. The vendors must compete with each other to rent the various locations to sell their products which drives the cost of supply anything to people in those locations up higher than under a typical city's day-to-day operation.

Finally, you are incorrect even in principle that "monopoly" is a cause of anything. It is a condition. Humans and nature (and human nature) are the causes of things.

You're still treating supply and demand as impersonal forces of reality.

Distribution, monopoly, and so forth are not a function of impersonal forces of reality, there are a function of business (or greed, in many situations).

The 'face of poverty' in Somalia isn't due to food production, it is due to war and displacement from farms/property. Where do political, ideological, and similar prerogatives exist in the 'supply and demand' space?

To bring this closer to home - we can look instead at corn ethanol. Corn prices - far from being objectively valued for their worth in ethanol vs. food export, were driven by massive subsidies both direct and indirect.

Is this then 'supply and demand'?

If you want to break it down into functions of business, can you tell me what is considered a function of business and what is not? The laws of economics may not be as scientifically rigorous as the laws of physics, but they are empirically true and will remain true as long as humans remain beholden to human nature--that is, humans hold great value in serving themselves (which is not to the exclusion of serving others).

Everything you mention are classic examples of perturbations in supply and/or demand, or in their coordination via prices. Politics is a very common disruption taught in virtually every economics textbook, as its influence is both readily visible and accounted for. Things such as subsidies can serve as either political increases in demand or as price floors or as price ceilings, all of which are accounted for in basic supply and demand theory and the results of such political actions are predictable. As an example, rent control in a city (such as New York City) is a type of price ceiling--the price of renting a space cannot exceed an arbitrary number deemed fair by the political institutions of that jurisdiction. Supply and demand theory dictates that if the price is forced "left" or down via political action, then there will be tendencies for both an increase in demand and a decrease in supply. This has played itself out in every price control since the dawn of time--more people want the cheaper stuff, but fewer suppliers are willing to move in to fill that increased demand.

In answer to your question, yes, it all falls under supply and demand. Political distortions cause effects that are predictable. While you cannot quite express exact figures with great confidence (i.e. "if the government will always buy up unsold beef at $3.00 a pound, this will cause an 18% increase in beef production nationally"), you can certainly express the general trends that can be expected from various meddling in the market. Increases in demand (through whatever means) tend to cause increases in supply and price. Caps on a price that are below the market price tend to cause a mismatch between supply and demand by decreasing the former and increasing the latter. Etc. This is all very basic and is easily understood from first principles. Here's the most basic first principle--given a choice between two completely equal products, people strongly (or universally) prefer the one with the lower price.

For further reading, I'd recommend any microeconomics textbook or other guides to basic economics such as Basic Economics by Thomas Sowell.

[doom&gloom]

Re: Food production over time

I'm not sure what in the previous post caused you to hit the eject button, but I was only quoting from CoR publications. However, I do realize that I've been given the opportunity to rewire my brain, and have taken full advantage of that gift. I seem to now have more in common with the average homeless man on the street than I do with others. Sorry, sometimes it's hard to me to relate.

I Hit the 'eject button' when I made a comment, you countered with a one liner, I asked for prooft, and you countered with the CoR. Whatever was running thru your head was certainly not making in into your one liners in a comprehensive and understandable fashion.

[doom&gloom]

Re: Food Report: One Harvest Away from a Catastrophe

That last chart certainly says the trend is and has been UP for the past near decade.

[jk]

Re: Food Report: One Harvest Away from a Catastrophe

from jeremy grantham's latest, available at gmo.com. free registration required:

Welcome to Dystopia!
Entering a long-term and politically dangerous food crisis

Summary of the Summary
We are five years into a severe global food crisis that is very unlikely to go away. It will threaten poor countries with
increased malnutrition and starvation and even collapse. Resource squabbles and waves of food-induced migration
will threaten global stability and global growth. This threat is badly underestimated by almost everybody and all
institutions with the possible exception of some military establishments.

Summary

1. Last year we reported the data that showed that we are 10 years into a paradigm shift or phase change from
falling resource prices into quite rapidly rising real prices.

2. It now appears that we are also about five years into a chronic global food crisis that is unlikely to fade for
many decades, at least until the global population has considerably declined from its likely peak of over nine
billion in 2050.

3. The general assumption is that we need to increase food production by 60% to 100% by 2050 to feed at least a
modest sufficiency of calories to all 9 billion+ people plus to deliver much more meat to the rapidly increasing
middle classes of the developing world.

4. It is also widely assumed that at least the lower end of this target will be achieved. I believe that this is
substantially optimistic. At very best, if we reach that level we will not be able to hold it. Much more likely,
we will not come close because there are too many factors that will make growth in food output increasingly
difficult where it used to be easy:

• Grain productivity has fallen decade by decade since 1970 from 3.5% to 1.5%. Quite probably, the most
efficient grain producers are approaching a “glass ceiling” where further increases in productivity per acre
approach zero at the grain species’ limit (just as race horses do not run materially faster now than in the
1920s). Remarkably, investment in agricultural research has steadily fallen globally, as a percent of GDP.
• Water problems will increase to a point where gains from increased irrigation will be offset by the loss of
underground water and the salination of the soil.
• Persistent bad farming practices perpetuate land degradation, which will continue to undermine our longterm sustainable productive capacity.
• Incremental returns from increasing fertilizer use will steadily decline on the margin for fertilizer use has
increased five-fold in the last 50 years and the easy pickings are behind us.
• There will be increased weather instability, notably floods and droughts, but also steadily increasing heat.
The last three years of global weather were so bad that to draw three such years randomly would have been
a remote possibility. The climate is changing.
• The costs of fertilizer and fuel will rise rapidly.

5. Even if we could produce enough food globally to feed everyone satisfactorily, the continued steady rise in
the cost of inputs will mean increasing numbers will not be able to afford the food we produce. This is a key
point that is often missed.

6. On the positive side, scientists are now very optimistic that they will be able to engineer more efficient
photosynthesizing “C4” genes (corn belongs to that family) into relatively inefficient but vital “C3” plants
such as rice and wheat, in 20 to 30 years. If successful this would increase output up to 50% and would buy
time for a less painful transition to a sustainable population.

7. Many of these increasing difficulties were reflected in the original 2008 food crisis and the 2011 rebound.
The last six weeks’ price rise is more threatening because it occurred despite very much larger plantings than
were available in 2008. Global demand is now so high and rising so fast and reserves are so low that price
sensitivity to weather setbacks has become extreme.

8. It seems likely that several countries dependent on foreign grain imports have in fact never recovered from
the 2008 shock. Countries like Egypt saw the percent of their consumer budget for food rise to 40%. At
this level, social pressures may be at an extreme and probably have already contributed to the Arab Spring.
Any price increases from here may cause social collapse and a wave of immigration on a scale never before
experienced in peacetime. Another doubling in grain prices would be catastrophic.

9. Strong countermeasures to prevent a food crisis would be effective in curtailing the current crisis and
preventing the development of a much greater crisis, but these measures will likely not be taken. This is
because the price signals for the rich countries are too weak – they can afford the higher price – and there is
inertia in all parts of the system. Also, the problems of malnutrition in distant countries are not generally felt
as high-order priorities in the richer countries.

10. If food pressures recur and are reinforced by fuel price increases, the risks of social collapse and global
instability increase to a point where they probably become the major source of international confrontations.
China is particularly concerned (even slightly desperate) about resource scarcity, especially food.

11. The general public, the media, the financial markets, and governments badly underestimate these risks. Only
the military of some countries, including the U.S. and the U.K., seem to appreciate them appropriately.

12. Natural gas supply increases buy some time, mainly for the U.S., but seem more likely to create complacency
and continued dependence on hydrocarbons. The energy situation is less pressing globally in the short term
than is the food problem. Supplies are sufficient to cause merely a slow and erratic price increase. The
main problem with oil is in its contribution to the food problem through higher farming costs and generally
increasing cost pressures on poorer countries.

13. In the longer term, in contrast, energy costs and absolute shortage in the case of oil form a serious problem
second only to food shortages and will result in prices so high that they will impact global growth and even
the viability of modern, rather fragile, economies.

14. On paper, though, the energy problem can be relatively easily addressed through very large investments in
renewables and smart grids. Those countries that do this will, in several decades, eventually emerge with
large advantages in lower marginal costs and in energy security. Most countries including the U.S. will not
muster the political will to overcome inertia, wishful thinking, and the enormous political power of the energy
interests to embark on these expensive programs. They risk being left behind in competiveness.

15. Availability of metals is, in contrast, a minor problem in the next few decades. The prices will steadily rise
but the consequences will be less. In the long run though, metals are the most intractable problem. There is
no brain-intensive solution as there is for agriculture (i.e., organic farming), nor is there any capital-intensive
or technology-intensive solution as there is for energy. We will just slowly run out and prices will rise.

16. The results of these problems will be felt mainly as price pressure in rich countries. The need to obtain
adequate resources will squeeze national budgets, profit margins, and economic growth. For poor countries,
though, it is literally a matter of survival.

17. We are badly designed to deal with this problem: regrettably we are not the efficient species of investment
theory, but ill-informed, manipulated, full of inertia, and corruptible. Only once in a blue moon – like World
War II – do we perform anywhere near our theoretical capabilities and this time the enemy is amorphous and
delivers its attack very, very slowly. But the stakes globally are very high indeed. We must try harder.

18. The following comments on this topic are mine personally and reflect my Foundation’s portfolio (and a total
lack of career risk!). These comments are based on a time horizon of 10 years and beyond. The portfolio
investment implications are that investors should expect resource stocks – those with resources in the ground
– to outperform over the next several decades as real prices of the resources rise. Farming and forestry,
though, are at the top of the list. Serious long-term investors should have a very substantial overweighting in
a resource package. I suggest for long-term investors a resource position of at least 30%. Another relative
beneficiary of resource pressure is the quality group of equities. Resources are a smaller fraction of final sales
than average and higher profit margins make them more resilient to margin pressures.

19. Perhaps more importantly, the resource squeeze, coupled with other growth-reducing factors (to be discussed
next quarter), is likely to reduce the return from the balance of the portfolio.

[doom&gloom]

Re: Food Report: One Harvest Away from a Catastrophe

As a farmer, I hope he is mostly right, as a humanist I hope not so much...

[Chris Coles]

Re: Food Report: One Harvest Away from a Catastrophe

For the record, it is my personal view that we are about to add another aspect to the above description; a rapid rise in sea levels. When I mean rapid, perhaps within a summer. When I mean a rise, I concur with the Scientific American article that described the potential for between 50 and 170 feet. http://www.lightblueline.org/scienti...an-unquiet-ice
Unquiet Ice Speaks Volumes on Global Warming

Abundant liquid water newly discovered underneath the world's great ice sheets could intensify the destabilizing effects of global warming on the sheets. Then, even without melting, the sheets may slide into the sea and raise sea level catastrophically
By Robin Bell, February 4, 2008 http://www.scientificamerican.com/ar...he-unquiet-ice

[Chris Coles]

Re: Food production over time

That's not a correct assessment of the situation. When dealing in economic terms, there are really only three basic things to consider. There's people, there's the things that people want, and there's the value that people place on those things. In other words, there's demand, supply, and price. This is the essence of supply and demand theory--supply and demand are coordinated by prices, and everything else is just an input into one or more of those matters of consideration.

And therein lies the conundrum of modern economic theory; you make no mention of the capacity of the people to purchase.

As I see it there are four, not three basic things to consider. Demand is NOT the first but the second. The first is the availability of funds to enable contemplation of a purchase; Available Prosperity.

No doubt you will say that demand has available prosperity as an inclusive factor. In return, I will say that by not opening the debate with that first factor; available prosperity, you miss the essential point that has very nearly brought the Western economies to their knees.

You must have available prosperity as the PRIMARY driver of any local market place. Without that available prosperity, nothing gets off the ground, no one can contemplate the purchase in the first place..

[doom&gloom]

Re: Food Report: One Harvest Away from a Catastrophe

I've never been a big believer in the whole 'glowball warming' thing, mainly because I did not believe that you could model the climate of something so complex as a planet when you still cannot model the human body sompletely -- and we have spent way more time screwing around with that.

I do believe that there is 'climate change' as the climate is always changing, and I do believe man has some affect upon the earth and thus the climate, though we will never know for sure just how much we contribute.

The planet has been thru many warming and cooling cycles. Sunspots have an affect, and a large volcanic eruption can have a major effect that lasts for many years as the dust floats around the world before it settles. Ocean currents have a significant impact depending on their direction, rotation, speed and strength, and those tend to run in 20-50 year cycles.

Perhpas one day we will see significant melting that raises the oceans enough to give some inland peole waterfront people. I am not convinced that will happen in our lifetimes without the sun going much hotter on us.

In the 70's they said we were gonna freeze, in the 90's and 2000's they said we were gonna burn up. They claimed CO2 was gonna go on a moonshot, yet it hasn't, and the earths temp over the last decade has barely budged and I believe has actually cooled.

Personally, I don't spend my days concerned about 'climate change'. I should think we should all be more worried if fukishima catches fire and the resulting environmental catastrophe that would be spread to the US, the entire Pacific, and beyond. TEPCO is no company to have any faith in from all we know.

[gwynedd1]

Re: Food production over time

That's not a correct assessment of the situation. When dealing in economic terms, there are really only three basic things to consider. There's people, there's the things that people want, and there's the value that people place on those things. In other words, there's demand, supply, and price. This is the essence of supply and demand theory--supply and demand are coordinated by prices, and everything else is just an input into one or more of those matters of consideration.

How does that account for things like slavery? The model you use assumes that labor has access to its surplus to generate demand for its wants. This is why neoclassical theory in a word, sucks.

And then what is slavery?

"I own you, give me half of your harvest"
"No, I am a free man"

"I own this land, give me half the harvest as rent"
"OK"


Just slap supply and demand on all this?

[c1ue]

Re: Food Report: One Harvest Away from a Catastrophe

This is the essence of supply and demand theory--supply and demand are coordinated by prices, and everything else is just an input into one or more of those matters of consideration.

You're still trying to assume supply and demand is correct by just assigning everything into either the supply or demand category. But you've ignored my question: if the primary controlling factor isn't either demand or supply, but greed, then how can supply and demand be the controlling factor?

No, Coke and Pepsi are not a monopoly. Coke, Pepsi, and Dr. Pepper Snapple form an oligopoly which does not operate under the principles of monopoly. These are completely separate principles that operate under different circumstances with different outcomes for all concerned.

I think your "completely separate principles" are a function of quantity, not quality. Whether oligopoly or monopoly, the ultimate result is inordinate control over a market by the supply side.

The stadium does not have a true monopoly, nor can it exercise monopoly pricing. Stadiums must remain competitive with each other, especially when it comes to events that can be held in the same city in different arenas or grounds. While a given sports team may be constrained to a stadium much of the time, its prices must still be sufficient to most closely match their seating capacity with the demand for that sports event.

I disagree. A given area cannot support multiple 60,000 seat stadiums. Equally a given crossing cannot support multiple parallel bridges.

Suppy and Demand assumes both sides of the equation are unbounded in any way, and there are innumerable examples in real life where this is untrue.

When you make claims of the absence of "exorbitant demand" and that there's "no lack of supply," you are both technically and metaphorically wrong. Congregating thousands of tens of thousands of people for hours at a time does cause an appreciable spike in demand well outside the norm expected--"exorbitant demand"--and there is in fact a "lack of supply" because the real estate inside of a stadium, arena, or even on the fairgrounds is limited.

Pretty tortured, but let's play with this for a bit: You're saying a spike in demand, but what does that mean? Are you comparing vs. when the stadium is empty?

Unless the demand per unit is above normal, then there is no spike of demand, there is simply a shift in the location of the demand into the stadium as the originators of the demand themselves move in.

As for the vendors competing - while this is true in a very narrow sense, the reality is that they're competing using the massive rents charged by the stadium as a base. Thus 'competition' exists, but it isn't anything like the competition outside the stadium because of the monopoly nature of the stadium.

If you want to break it down into functions of business, can you tell me what is considered a function of business and what is not?

Absolutely. Business is a function of making money.

There are, however, all sorts of illegal, immoral, unsocial, and so forth ways of making money.

As for your economics textbooks - I do think it is amusing that you still think they have any credibility beyond the area of thought experiment. The economics profession is a sham, and the 'fundamental principles' don't actually work in real life.

Thus if economics were just about a couple of professors arguing minutiae over coffee and peer reviewed papers, no worries.

However, the reality is that our government and ourselves are affected by these minutiae, and when it is abundantly clear that these 'principles' are in fact inapplicable in real life, I choose to move on.

I have, in fact, read over 50 different economics textbooks because it is a hobby of mine - and what I've taken from them is clearly different than what you have.

[bart]

Re: Food Report: One Harvest Away from a Catastrophe

...
if the primary controlling factor isn't either demand or supply, but greed, then how can supply and demand be the controlling factor?
...

By far the largest problem with economics in my opinion is that it operates in a partial vacuum, in the sense of excluding the other social sciences.