Data on the food crisis

[c1ue]

From the Economist:

http://www.economist.com/world/inter...ry_id=11049284

Usually, a food crisis is clear and localised. The harvest fails, often because of war or strife, and the burden in the affected region falls heavily on the poorest. This crisis is different. It is occurring in many countries simultaneously, the first time that has happened since the early 1970s.

Hmm, Bretton Woods ended in the 70's. There was an oil shock in the 70's. Coincidence?

“We are the canary in the mine,” says Josette Sheeran, the head of the UN's World Food Programme, the largest distributor of food aid.
...
“For the middle classes,” says Ms Sheeran, “it means cutting out medical care. For those on $2 a day, it means cutting out meat and taking the children out of school. For those on $1 a day, it means cutting out meat and vegetables and eating only cereals. And for those on 50 cents a day, it means total disaster.”

Just over 1 billion people live on $1 a day, the benchmark of absolute poverty; 1.5 billion live on $1 to $2 a day.

Hmm, isn't that nearly half of the 6.65 billion people estimated to be around right now?

I'm guessing they aren't going to have many babies, or many surviving babies.

So all you rich-country, BRIC, and whatnot better start fornicating right quick to make sure the world continues to grow in population.

[Guest]

Re: Data on the food crisis

C1ue -

I'm not posting here in reply to the population bomb, but rather to the question : Does anyone on itulip have a handle on estimating what rough percentage of the current food prices crisis is encompassed by inflationary signals emanating from money and credit inflation and what if any portion is instead genuinely attributable to an emerging food production vs. population growth crisis?

It would be too simple a formula to assume this is all purely monetary inflation, no? Just wondering. I'm aware and accept iTulip's premise that a large part of this is a corollary of the credit bubble and monetary inflation dysfunctionality - but at some point in the next decade (Beginning now? And if not now, why not?) wouldn't it be probable that as peak cheap oil really kicks in, the entire energy intensive agriculture of the past 70-100 years gets hit wth a serious crimp precisely at it's one point of major vulnerability?

It's not just the cost of mechanizing agriculture to keep feeding 7 billion people that gets hit by peak cheap oil. Food inflation is directly vulnerable to inputs from the cost of synthetic fertilizers, refrigeration, critically dwindling water tables, the massive populaiton bias upwards, increasing desertification, energy costs in food transport.

The entire equilbrium of sufficient food production (and therefoe it's price, which is an immediate and rapid barometer of complex problems there) clearly is vulnerable to peak cheap oil. It would appear rational then, with all those vulnerable points in the future cost of food, that at some point fairly soon we should be adopting a bit of caution as to the extent which we apply fiat currency dysfunction to the reported food inflation? When is "soon"?

Maybe we all need to remain on our guard as to when we will need to reclassify currency debasement as the primary cause of food inflation and food hoarding. If / when we begin to observe export limitations adopted amd maintained semi-permanently by entire nations, doesn't the fiat currency factor then have to explain some increasingly complex fundamentals in food prices? Seems those "food quarantine" or "export embargo" restrictions are beginning to get adopted at a few national levels right now, so in two or three years if that persists you could say this had turned into a "new semi-permanent status"? "When is "soon" in the case of the emergence of fundamental issues within food price inflation, and the ever creeping redirection of grains into "alt-energy" fuel sources?

[Guest]

Re: Data on the food crisis

I'd like to hear comments on whether the food crisis in some of these asian and other poor nations will force their governments to depeg their currencies from the dollar somewhat so that their citizens' money will go further and buy them the food they need. It seems like they would face political unrest as some point if they don't.

If this happens, could this be a precipitating factor in speeding up the "crash" here?

Any specifics on this?

What effect would it have on the price of gold and other things here?

[Nervous Drake]

Re: Data on the food crisis

.

[jtabeb]

Re: Data on the food crisis

C1ue -

I'm not posting here in reply to the population bomb, but rather to the question : Does anyone on itulip have a handle on estimating what rough percentage of the current food prices crisis is encompassed by inflationary signals emanating from money and credit inflation and what if any portion is instead genuinely attributable to an emerging food production vs. population growth crisis?

It would be too simple a formula to assume this is all purely monetary inflation, no? Just wondering. I'm aware and accept iTulip's premise that a large part of this is a corollary of the credit bubble and monetary inflation dysfunctionality - but at some point in the next decade (Beginning now? And if not now, why not?) wouldn't it be probable that as peak cheap oil really kicks in, the entire energy intensive agriculture of the past 70-100 years gets hit wth a serious crimp precisely at it's one point of major vulnerability?

It's not just the cost of mechanizing agriculture to keep feeding 7 billion people that gets hit by peak cheap oil. Food inflation is directly vulnerable to inputs from the cost of synthetic fertilizers, refrigeration, critically dwindling water tables, the massive populaiton bias upwards, increasing desertification, energy costs in food transport.

The entire equilbrium of sufficient food production (and therefoe it's price, which is an immediate and rapid barometer of complex problems there) clearly is vulnerable to peak cheap oil. It would appear rational then, with all those vulnerable points in the future cost of food, that at some point fairly soon we should be adopting a bit of caution as to the extent which we apply fiat currency dysfunction to the reported food inflation? When is "soon"?

Maybe we all need to remain on our guard as to when we will need to reclassify currency debasement as the primary cause of food inflation and food hoarding. If / when we begin to observe export limitations adopted amd maintained semi-permanently by entire nations, doesn't the fiat currency factor then have to explain some increasingly complex fundamentals in food prices? Seems those "food quarantine" or "export embargo" restrictions are beginning to get adopted at a few national levels right now, so in two or three years if that persists you could say this had turned into a "new semi-permanent status"? "When is "soon" in the case of the emergence of fundamental issues within food price inflation, and the ever creeping redirection of grains into "alt-energy" fuel sources?

You know how many corn Kilo-calories (nutritional calories) goes into making 72 gallons of ethanol?

(1 gallon of ethanol produces about 60% of the mileage 1 gallon of gas does B.T.W.)


Answer: Enough to meet the caloric intake requirement to feed a person for 1 YEAR, 1 Freaking Year. (about 1872 pounds of corn, about 72 gallons of ethanol, which has the same as mileage as about 43 gallons of gasoline or two weeks worth for me)

Each 72 gallons of ethanol we produce starves someone else for 1 year. This doesn't include the crowding effect. So much acreage has shifted into growing corn that the acreage that now produces the supply of food we actually consume for sustenance has been reduced significantly.

This is why you are seeing horrendous increases in the price of food. The lack of arable land and water, plus cost increases from fertilizer, fuel, herbicide, and pesticide are second order causes by a long shot. Just do the math, 1 TON of corn (in) = 77 Gallons of ethanol (out).

basic equation for you
Kill 1,000,000 through starvation = 77,000,000 gallons of petroleum not burned.

Pretty sick if you ask me, not to mention insane, unless you are actually trying to cause armageddon ON PURPOSE.

You can't burn food to fuel cars, well actually you can, it's just that I don't think a person's life is worth two weeks worth of gas. ($144.00 at my price of $3.35 / Gallon today)

Food for thought, so to speak.

YMMV

JT

[touchring]

Re: Data on the food crisis

In the end, it will be the sub-sahara countries that depend on imported food that will starve. The middle income countries can always subsidize food.

[*T*]

Re: Data on the food crisis

Ya - Castro was right.
Fidel Castro: U.S. Biofuel Plan 'Genocidal'

Some blame the Australian droughts, for example, on nascent global warming.

Personally - and this is an opinion not based on hard fact - I think it is mostly monetary inflation, I think peak oil and global warming are not hitting the economy or prices yet.

Having said that OPEC just refused to raise production again - maybe they can't?

[touchring]

Re: Data on the food crisis

Why should they raise production? High oil prices keeps the US in its place - with respect to Iraq and Iran, and earns good money.

Having said that OPEC just refused to raise production again - maybe they can't?

[Southernguy]

Re: Data on the food crisis

Jtabeb:
Congratulations for your writing.
At some point, we should look at things on an ethical point of view.
Talking about "monetary inflation" as origin of the crisis is baseless. That's because those earning a salary, specially in poor countries are not seeing their salaries "inflate", following food prices.
Paul Krugman's column today at NYT is very illustrative.
However the implications to asset allocation for those who have the resources, time and money to think that way, this crisis needs us to think in ways to reduce consumption of ever scarcer resources.
High taxes on gas and electricity for air conditioning, etc should be implemented shortly.
And most of that money should be used to improve food production in poor countries.
It's just a bit of self preservation for inhabitants of developed world, which means also rich or medium class population in underdeveloped places.
żWhen will the hunger striken get hold on arms to strike back?
Just think of that and you'll find 9/11 just kid's play.

This waste of resources can't go on any more. And, yes, Fidel Castro was right. But he's been warning the world about this problems for more than 30 years now.
Humanity can't live by western standards. At some time, westerners, as defined previously shall have to reduce our consumption patterns.

[c1ue]

Re: Data on the food crisis

Lukester,

I know, you're still on your 'peak oil' feeding into 'commodity price spiral' kick.

I'm completely agnostic still. The price rises we've seen in the past year are much too fast for 'economic time'; this and the giant pile of investment money floating around looking for a home (and justification for billion dollar annual pay) is why I still reserve judgement.

Certainly from a demand standpoint, I still don't see much demand increase nor supply decrease as yet to justify the price action.
---------------------------------------------------------------------
JT,

As for the morality of ethanol - when did morality ever mean squat in geopolitics?

That hundreds of thousands starve in Africa or wherever, is irrelevant so long as the US government can continue to pacify its population. Those starving Africans don't vote nor (more importantly) do they host fundraisers.

In fact as things get worse from an inflation standpoint, the starving kids in Africa theme will get less and less resonance. If history tells us anything, it is that luxury begets compassion. If the US goes into an economic tailspin for a decade, I can guarantee you that every politician will be saying USA, USA as the trade barriers go up and the WPA II restarts.

As for Europe - as 'conservationist' as it pretends to be, it still consumes far more Earth footprint than sheer numbers or even education justify.

For me personally, I don't eat much meat nor do I drive much. But I do have 2 - V8 cars which I drive a total of 8000 miles a year. I do walk to work, but I am not going to go Vegan and start making my own clothes until I see everyone else does.

And when that happens, I'd probably shoot somebody rather than submit to whichever latter day eco-Stalin shows up.

[Guest]

Re: Data on the food crisis

c1ue -

Relax pal, we are not about to have our last freedoms taken away by an "eco-dictator" just yet. If you read my post once again you might notice I was fairly agnostic about the possibility that resource depletion or peak oil actually were a large portion of the food inflation action just yet. But "just yet" are indeed the operative words. My whole point was to ask you, do you think it's plausible to remain permanently in the viewpoint that it's all primarily money inflation, in perpetuity?

I well understand your irritation with the "eco-dunces" who employ popularized, dumbed down sloganeering, (I wince at some of the sloganeered viewpoints also) but it's indeed quite evident that peak cheap oil is arriving, it has many inputs into food, we already have water depletion, drought/desertification (ask the Aussies just how nervous they are about a permanent state of drought appearing!) a population explosion manifestly gearing up to a point where the incremental leaps in the next fifty years in humans will equal the entire world's population 150 years ago - etc. etc.

Incidentally, that entire world's population from 150 years ago took 10,000 years to accrue. When you see that number redouble in a mere 25-30 years, you must realise even if just statistically, the rules of the game have changed, no?

There are lots of rational reasons to expect fairly soon the robust growth of world food production which occurred on high-density moves from the coal age to the petroleum age will reverse itself. E.J. wrote on that, pointing out that whatever transtion we make the energy density of petroleum will absolutely not be matched. Nuclear will cover a lot, but it won't roll out to every last combine harvester maintaining food production in the world.

I actually tend to side with *T* on this, thinking that the major component of what's happening in food prices is indeed still fiat currency dysfunction gone global, i.e. it's all still mostly inflation and monetary dysfunction. But I was pointing out that you need to beware of getting dogmatic or overly fixed in that viewpoint, as though it were some sort of axiom governing commodities. If you employ a genuinely agnostic viewpoint, we are clearly moving into an era where lots of old paradigms break down (or is that not evident to you?), and our economic read of what's happening needs to broaden to include factors such as "fundamental squeezes" in commodities. This resource depletion notion has in many quarters been until now regarded as the province of ingenuous fools, but those genuinely curious to discern new global trends in the 21st Century see that changing - soon.

Jtabeb - thanks for your input on ethanol. I am fully on board with you, that the energy reward equation in ethanol is outrageously stupid, bordering on criminal. In a world where energy availability begins to ratchet down, and it's unit cost to ratchet inexorably up, society begins to do all the aberrant things that a sociologist could find any group of living things does when it's environment's ability to support them begins to go into stress - the group begins indirectly to cannibalize parts of it's periphery to adjust - and in this case we'll apparently do it via keeping cars running (Lincoln Navigator driving middle class people carry the analogy to the point of obscenity) while we delegate to silent limbo that fact that the weakest groups at the periphery are left to starve.

One last point to C1ue: you suggest that the extreme cynical viewpoint wherein humane considerations have "never mattered" to governments the world over should be self evident? I fully take your point, and I agree, those impulses are often fatally compromised by self-serving sentimentalisms or outright cynicism - but to sweep the entire US agricultural free aid to the poorest nations right off the table as merely having been some sort of cynical ploy would be an error.

The US has been the world's largest food donor for many decades. Of course there are ways to explain it away cynically (surpluses, gaining cynical political capital, etc) but my point is, if you elevate the cynicism of your international analysis to a permanently preeminent position in your world view, you actually render it slightly less realist rather than more so, as often in history some nations have included some genuine expressions of their own idealism (misguided or not is not the point) within their foreign policy. A true agnostic incorporates that thinking as well into their global view. Cynicism itself is NOT a direct equivalent to realism. It's merely a component.

And *T*, I definitely think you should have kept your older avatar, the tired, bewildered and disillusioned civil servant guy, peering out from what looked like a TV boob-tube shaped box? I actually voted it the coolest avatar on all of iTulip. I was going to comment on it several times, and am now prompted to as you've scrapped it. Lots of very chic retro character there *T*! I say dump the skull and crossbones and get your tired and bemused civil servant icon back! (Jtabeb's rather hairy revolutionary war general gets an honorable mention. Or was it a hoary (equally hairy) German anarchist from the 19th Century?).

[GRG55]

Re: Data on the food crisis

Lukester,

I know, you're still on your 'peak oil' feeding into 'commodity price spiral' kick.

I'm completely agnostic still. The price rises we've seen in the past year are much too fast for 'economic time'; this and the giant pile of investment money floating around looking for a home (and justification for billion dollar annual pay) is why I still reserve judgement.

Certainly from a demand standpoint, I still don't see much demand increase nor supply decrease as yet to justify the price action.

The supply decrease is in the inventory trends. Whether grains or OECD petroleum, the trend is down. And once the perception of an impending shortage (real or imagined, it doesn't matter) takes hold it precipitates the same age-old response...hoarding.

Today we have global grain inventories at multi-decade lows and active hoarding underway. Hoarding not only at the consumer or producer level, but national hoarding in the form of government export controls and export taxes in the producing jurisdictions, leading to the predictable self-reinforcing outcome.

Are we seeing the leading edge of the same behaviour - government sanctioned national hoarding - with petroleum also?

[jtabeb]

Re: Data on the food crisis

And when that happens, I'd probably shoot somebody rather than submit to whichever latter day eco-Stalin shows up.

I heard that brother! I gets the ammo, you brings the guns!

This does raise an interesting academic question though.

Is this whole mess being contrived so that people will be "willing" to accept things like "energy rationing" , Paying "Carbon Taxes" on their energy consumption, paying "VAT for eating Beef vs Tofu vs raw corn kernals".

If you think about it, this would be a great racket to start. You could tax the living SHIT out of people this way, and you wouldn't necessarily have to do anything with the money to FIX anything ( you could just spend it on your cronies and yourself) because the whole thing was contrived in the first place.

Pretty good Idea, Huh?

Yes, this may be a little paranoid, But I'd rather be paranoid than DEAD or someone else's slave.

Paranoia Keeps you ALIVE and FREE, words to live by.

"Free your mind and your ass will follow"

[jtabeb]

Re: Data on the food crisis

(Jtabeb's rather hairy revolutionary war general gets an honorable mention. Or was it a hoary (equally hairy) German anarchist from the 19th Century?).

Actually, Karl Marx is correct.

[Guest]

Re: Data on the food crisis

Actually, Karl Marx is correct.

jtabeb

Dude needs a haircut if you asked me (which you didn't).