Grain prices shoot up as a result of ethanol and biofuels or demand in China or global warming, but the price of food is still cheap relative to other things we take for granted like cell phones, computers and cars, argues Wayne Robertson (Now Magazine).
We can't seem to resist a deal and this leads to bad production choices that literally end up smacking us in the face.
...Wage-adjusted food prices – that is, the time it took a typical North
American to earn the money to buy plenty of food – have fallen by 80
per cent since the good old days of 5 cent cigars and coffee.
It
sounds counter-intuitive, I know, but the real food crisis gripping the
world these days is not what everyone thinks it is. It’s really more
about the 80 per cent drop in real-time food prices since 1947 than
the modest, dare I say, “market correction” of recent years.
Humanitarians, greens, health advocates and lefties need to get this right or they will push the wrong policies.
The
world’s largest occupational group, by a country mile, is farming. Add
food processing, distribution, preparation, serving and disposal and
that’s half the jobs in the world. Cheap food is what keeps “the other
half” in poverty.
Poverty, not the rising cost of
food, threatens with starvation the third of the world’s people who
earn less than $2 a day. Since there’s still plenty of food to go
around at this point, today’s crisis is caused by lack of money, not
lack of food.
The market, says Johnston, is
“ruthlessly efficient.’’ When the price of oil or metals goes up,
people buy less oil and metal until prices go down, and demand and
supply are matched. But if the world’s hungry wait for prices to go
down before they eat, they will die of starvation.
With
food, says Johnston, “we want to separate the ruthless from the
efficient.” The most efficient way to do that is to find ways to raise
incomes, not ways to suppress food prices, which only makes the poor
poorer and hungrier.
Johnston is also something
of an agnostic about the standard whipping boy of rising world food
prices: corn ethanol. He attributes only about 10 per cent of the rise
in food prices to the effect of taking food lands out of production to
grow corn for fuel.
Yes, I know a “secret” report
by economist Don Mitchell for the World Bank now making the eco rounds
concludes biofuels, as well as related low grain inventories,
speculation and food export bans, are responsible for 70 to 75 per
cent of food price rises. If it were an official report, it would have
little cred in green circles, but since it’s “leaked,” people forget
the bank is motivated to deflect blame from its own failure to invest
in poor nations’ agriculture over the last 25 years.
My
own guestimate is closer to Johnston’s. Either way, there’s little
doubt government subsidies behind corn ethanol (the industry would die
overnight without subsidies and tax breaks, in case anyone is into
letting markets decide this issue) belong in the museum of stupid
ideas.
In Europe and North America, about a third of the
corn crop goes to car fuel. Every SUV tank filled with ethanol fuel
uses enough resources to feed one starving child for a year, ethanol
critics argue – a nice way to point out the ethics behind what
governments do and don’t subsidize, but not well reasoned in terms of
food impacts.
Almost 40 per cent of corn goes to
feed livestock, producing an excess of low-?cost, high-?fat meat, one
of the causes of the other “world food crisis” known as obesity, which
affects 1.6 billion people without causing complaints about corn abuse.
Another
perverse waste of the corn crop is the cheap sweetener called fructose.
Most junk foods and soda pops stay cheap and over-?consumed thanks to
corn fructose, which takes up about 10 per cent of the corn crop
without causing the slightest controversy about rampant diabetes or the
diversion of food land from feeding the needy.
Of
the dangerous tricks our psyches play on us, denial has been the big
problem in terms of global warming. But in terms of the world food
crisis, the trick to watch for is displaced aggression.
World prices for basic staples have skyrocketed―up 83 percent compared to three years ago...World price increases between March 2007 and March 08:
