Last updated on October 19, 2014
From an article in The Atlantic:
The International Grains Council estimates that inventories of soy, wheat, barley, and corn are reaching their highest volume in 30 years. …
And what has caused this explosion in grain supplies? Prices. They’ve been unusually high in recent years and have encouraged farmers to pour money into boosting production. According to the Food and Agriculture Organization of the United Nations, from 2005 to 2013 the land used to cultivate wheat, soy, and corn grew by 11 percent globally. Never before has such a large swath of the earth been tilled.
…
Today’s lower prices could discourage investment and reduce future production, ushering in another period of higher prices. This cycle is nothing new, but in recent years it has been shaped by new drivers (climate change, demographic change, volatile global economic conditions) that make the swings more frequent and the range of variation more extreme.
The problem with these developments is that greater food-related volatility will bring about social and geopolitical instability.
That giant sucking sound you just heard was caused by the eyeballs of a thousand agricultural economists rolling backward into their skulls.
Three things:
- There have been food price cycles like the one just described ever since humankind left its hunter-gatherer lifestyle behind and developed agricultural systems. Nothing guarantees that food prices will go up anytime soon: Food prices had been steadily decreasing for over 30 years from 1975 to 2008.
- Low food prices are a good thing for the vast majority of the world’s seven billion people who happen not to be net producers of food. And with food representing over 50% of people’s budget in many developing countries because food is a necessity, low food prices are a really good thing if you care about the poor. The only people who would like you to believe otherwise play right into the hands of the agricultural lobbies.
- If, by food-related volatility, the author means food price volatility, then the claim in the last paragraph quoted above is absolutely, spectacularly wrong. In my article on food prices and food riots that is forthcoming in the American Journal of Agricultural Economics, I found that high food prices cause food riots, but that increases in food price volatility have the opposite or no effect. In plain English: (social) science shows that food price volatility leads to decreases or no change in the amount of food riots. Oh wait, maybe you meant like, actual conflict instead of riots? If so, Sam Bazzi and Chris Blattman find no effect of commodity price shocks (i.e., price volatility, including food) on conflict. Now, what goes down must come up, and both I and Sam and Chris find that rising prices increase the likelihood of riots and conflict, respectively. Shouldn’t we fear that? Maybe. But again, remember that there was a 30-year period of decreasing food prices between 1975 and 2008, and that we certainly already have the technology necessary to keep food prices low.
But like one of the commenters on the Atlantic article said: “only at (sic) the Atlantic: why more food than ever is a bad thing.” And indeed, it’s articles like the one above that make The Atlantic a scaredy-cat baby-boomer’s low-rent version of The Economist.
(ht: Norma Padron.)