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59 responses to “Quick link: The coming food crisis”

  1. patrickg

    The link with speculation is really all there is to know about “food crisis”.

    This is not to downplay the legitimate concerns the other things brought up represent, however those are all medium to long term concerns. As a factor in “food crises” as a result of high prices etc, the speculative market is almost wholly responsible.

    Floods in Pakistan and drought in Russia etc – though tragedies in their own rights – have almost no bearing on the food market, except insofar as they influence speculation. At the moment, according to my best understanding, those thing are not influencing speculators very much at all.

  2. Robert Merkel

    It’s not a food production crisis, it’s a food and cash distribution crisis.

    Increasingly, the rich world (and this includes the better-off in the developing world) prefers to feed plant material to their pigs, chickens, and cattle – not to mention their cars as ethanol – than to poor people.

  3. Steve1

    Malthus will never die!

  4. David Irving (no relation)

    One of my sons passed this on to me the other day. It seems to be along the same lines.

  5. mediatracker

    Elsewhere recently (forget where) I read another report on the movement of the large hedge funds into futures markets worldwide as a consequence of the GFC and it went on to link the manipulations which occur in these markets both with the artificial and the real creation of food shortages.
    Is this going to be another area where Governments will fail to introduce controls on these areas of Derivatives and/or Commodities Markets before the next crises occur?

  6. ken n

    Speculation does not drive up prices. Speculators do not consume the commodity or produce it. When they buy they must sell. Same with short sellers, the other way.
    So speculators are, over time, a neutral force in the market.
    I doubt that any economist would disagree with this.
    Depending on the commodity, much or all of the trading that goes on is producers or users hedging their supply or needs. A user of, say, maize or sugar or cocoa, is perpetually short. So when he “speculates” he is deciding how far into the future he wants to cover his requirements. Similarly a producer is always long. He can, if he wishes, sell his crop several seasons ahead.
    If prices are going up in the futures market it means someone believes physical prices will go up. They can be right or wrong.
    There are plenty of examples of traders being burnt on bets on commodities.
    So, speculators play no part in the increase of prices of food or any other commodity.

  7. BilB

    Robert’s right @ 2. As an enthusiastic supporter of ethanol I have no problem with farm land being used for biofuel production. However the benefits have to flow to the local population. If not then local people and land owners are stripped of both food and revenue to buy food. This is the corporatisation of land utilisation. The problem is responsible management, sadly lacking in a greedy world. Where farmers manage the local balance of mixed land use for both food production and biofuel production achieve the best effect with food production stability and additional income to buy the products to become more efficient coming from the biofuel component. That is how it is meant to work.

    Now we are in a race against time

    http://www.oil-price.net/

    scan the flow of articles from earlier to the present. Will affordable non recesional oil run out before we are able to make the adaptations necessary for the future? Next time you come face to face with a denialist, stick a sock in his mouth.

    It seems that we humans are collectively less intelligent than individually so.

  8. Mercurius

    Speculation does not drive up prices.

    Well, I’m selling 12-month tulip futures for $1000 a bulb. Seriously, if you miss them at this price now, you’ll be pissed when they hit $2000 this time next year.

  9. Jarrah

    “So speculators are, over time, a neutral force in the market.”

    If anything, they are a positive force. They buy when prices are (in their opinion) low, increasing demand and thus increasing the price. They sell when prices are (in their opinion) high, decreasing demand and thus decreasing the price. This has a moderating influence on the ups and downs.

    Further, they provide a valuable service in increasing the stock of information about the world of tradeable commodities. Their actions in buying and selling help the market get closer to the ‘right’ price by buying low and selling high.

    Best of all, they only risk their own money to do so, or that of their backers.

    Problems arise when speculation occurs in markets where the expectation is that prices won’t fall, like when bailouts and quantitative easing are the norm.

  10. Razor

    Biofuels – so how’s that working out for you? Who’s great idea was that one? Bueller?

  11. Brian

    Brian Keating of the CSIRO gives a useful overview.

    ken n @ 6 says markets are neutral over time and Jarrah @ 9 says that if anything, they are a positive force. For a useful antidote to these views go to Background Briefing of 3 August, 2008.

    We’ve been through speculative episodes many times before. Coffee, after oil, is said to be the second most traded commodity. Towards the end you’ll hear (or read) how the ‘normal’ coffee market gets f*cked when the big traders move in. There is also the problem of ‘dark markets’.

    There is a perception that Goldman Sachs caused the 2008 bubble. This stems from a story by Frederick Kaufman The food bubble: How Wall Street starved millions and got away with it. He was interviewed in July on Late Night Live. There’s more at Democracy Now.

    So while the effect might be neutral over time, I struggle to see the effect of commodity trading in this particular area as entirely or perhaps even a net positive. According to the World Bank the 2007-2008 food crisis wiped out years of development gains. While large traders can move markets to make a bit of dosh and get out before the bubble bursts,

    “…we’ll have to find a way to avoid food crises becoming the new normal.’’

    Good luck to them. According to the Backgroud Briefing piece, banning commodity trading doesn’t work. How could regulating speculative markets work if we have dark markets, designed to avoid transparency?

  12. BilB

    Biofuels are working just fine, Razor. As with any emerging technology there is a steep learning curve to traverse. It is a pity that the coal and oil industries killed off biofuel development back in the thirties in the US. If that hadn’t happened we might have had the problems ironed out decades ago, a lot more oil left, and the techniques of best practice mixed cultivation resolved.

    Is it a total solution probably not, but then it does not have to be. It is the mix of solutions that will be our future with electric vehicles playing a major role. One recent biofuel success was the inititation of a methane gas from waste plant feeding gas into the London gas system. This project has excellent prospects of being duplicated for major cities around the world. The NASA Omega biofuel project is extremely promising. Meanwhile ethanol production continues to expand and the industry improves steadily in efficiency.

  13. Duncan

    “It’s not a food production crisis, it’s a food and cash distribution crisis.”

    Global coarse grain production is down 9 million tonnes this year, due to drought and flooding in Europe, Canada, US, Pakistan, Australia etc..

    As far as animal feed grains are concerned it certainly is a production crisis, one which will manifest itself through higher prices for meat, eggs and dairy products.

    Thailand and Vietnam, who between them produce about half of the worlds rice, are experiencing widespread drought, the Mekong river is at just 10% flow rate in many agricultural areas and salinity is becoming a serious issue.

    Aquifer depletion in China, India and Pakistan have serious repercussions for those countries ability to produce their own grain requirements.

    Many African countries rely on grains grown in Russia, who have had such a bad year that they are unable to export any of their grain.

    Im not refuting that speculation is a significant factor, but you are fooling yourself if you think land and water resource degradation, out of control global population and climate change are not related to the current fears about food shortages.

  14. Sabbra Cadabra

    Even a hedge fund manager is implicating speculation in the current situation:

    “Longtime hedge fund manager Mike Masters, who has worked with WDM, said: “Because there is already much more capital available in the world than hard commodities, speculators can increase the price of consumable commodities, like foodstuffs or energy, much higher than traditional consumers and producers can react.

    “When derivative markets are linked to commodity markets, this nearly unlimited capital from the financial sector can cause excessive price volatility.”

    http://www.guardian.co.uk/environment/2010/oct/25/impending-global-food-crisis?intcmp=239

    Nonetheless, many other issues are no doubt involved.

  15. derrida derider

    As an economist SocProf makes a good sociologist. In fact this is precisely the sort of analytically confused guff that makes many economists unwisely and unfairly look down their noses at sociologists.

    It’s not even clear from the article whethe SocProf is claiming that the “crisis” is a long term sustainability one (eg due to environmental degradation, Malthusian overpopulation or Robert’s diversion of food to other uses) or a short-term peak due to specific market failures, let alone attempting to distinguish among possible reasons for either of these.

    There is no attempt, too, to counter the traditional argument for encouraging speculation – that successful speculation always stabilises markets because to successfully speculate you must buy low (ie push prices up when they’re low) and sell high (ie push prices down when they’re high). It is not possible, for example, for a farmer to buy a put option on his next crop (in effect knowing the prices in advance so he can decide what to plant) without having a speculator sell it to him. Absent huge amounts of hoarding to create temporary artificial shortages and corner the market (of which, of course, the professor adduces precisely zero evidence and which in any case is especially difficult with bulky and perishable food), speculation is absolutely necessary to efficient markets for risk management.

    Blaming “speculators” for high food prices is as old as capitalism – indeed probably older. Of course for many centuries in Europe everybody knew which ethnic group was being referred to.

    No doubt if the Europeans and Americans stopped their subsidies the good professor would next be complaining about the destruction of traditional lifestyles associated with the spread of cash crops for export to them. That such traditional lifestyles have for many millenia been assocated with periodic famines never seems to occur to him.

  16. Graham Bell

    A timely post, Mark.

    For those who cling to the belief that “it couldn’t possibly happen here” …. just take a look at the loss of good farming land in Australia …. and weep. We’re not quite as bad as the Japanese yet; they buried their best farming land under concrete (with the complicity of Nokyo), but we’re catching up with them fast.

    The under-reported loss of well and bore water in northern China is a real timebomb for all of us …. beside it, our Murray-Darling whinges look insignificant.

    Did anyone mention the losses of food in harvesting, transport and storage?

    As for those speculating on – and creating – food shortages: well, that’s really a self-correcting problem because the speculators will, sooner or later, become intimately involved with food production themselves …. as the contents of packets of “Soylent Green”. Yummy!

  17. Sabbra Cadabra

    DD says:

    ” … many economists unwisely and unfairly look down their noses at sociologists.”

    As someone with a social science degree, I would rephrase that: economists fairly and wisely look down their noses at sociologists. I’ve long argued that sociologists should have to spend at least one year studying economics. Hopefully this would make their critiques more informed and less, well, embarrassing.

    Contemporaneous sociological critiques of “neoliberalism” are sadly no more informed than the critiques offered about “economic rationalism” a generation ago. Remember when the Hawke-Keating reforms were supposed to leave us all impoverished and the Australian Sociological Association ranked Michael Pusey’s 1991 book “Economic Rationalism in Canberra” one of the ten ten most influential books in 40 years of Australian Sociology?

    It really is quite depressing.

  18. The Low Spark of High Heeled Boys

    I second DD comments indeed it is food for thought!

  19. Razor

    Bilb @ 12 – even that paragon of Left Virtue – the UN – decried the impact that using food crops for Biofuels had on global food prices (among other negative impacts), especially for Less Developed Countries. Indeed, an IMF Director described it as a criome against humanity.

    I wasn’t referring to the technical side of things.

  20. sg

    I would have thought that in food markets, the issue of whether speculators are a long term positive or neutral force in markets is irrelevant if in the short term people starve because of them.

    In the long-run we may all be dead; but if speculators are increasing the risk of this happening in the short run, due to pricing food out of the reach of poor countries in this season’s harvest, then they’re a bad influence regardless of their long run benefits.

  21. Razor

    sg – but without the speculators, who is going to provide certainty to the producers who wish to reduce their risk by forward selling ast a known price? If they can’t get the certainty that a futures market provides, then they will require higher rates of return (revenue-costs) than they currently do, which will, perversely have the same effect you are decrying at the moment. It’s a bit like democracy – the system sucks but there isn’t a better one.

    Government mandated price controls are also hugely inefficient.

  22. Graham Bell

    Razor (on 21):

    There are plenty of ways of reducing the risks to, and increasing certainty for, food producers …. however, allowing speculators to tamper with the market is, and always has been, a very inefficient way of doing that. Some of the Chinese famines were seriously exacerbated by food-price speculators …. and I suspect that might have happened in other empires too.

  23. OldSkeptic

    The blog site Market Skeptics has long been predicting this.

    Horror weather in India, China, US and Russia, plus lowest food reserves on record = trouble.

    Realistically we are probably about ‘peak food’ under the current system, with all major inputs (land, topsoil, water, oil, phosphorus) at their peak of production/availability and expected to decline from now on.

    9 billion people? Not a chance, more likely 4-5 billion.

    As for an Australia at 35 million, again not a chance. Personally I think we will struggle to reasonably feed 25 million here in 20 years.

  24. derrida derider

    Graham Bell and sg have studiously missed the point. The only time speculators can make a quid by driving up food prices is precisely when food prices are low! Speculative buying at the top of the market is a recipe for bankruptcy and only occurs in a bubble, where herd behaviour takes over. But if it’s a bubble:

    1) Where’s the self-deluding herd? Where are the classic signs such as “it really is different this time”, or “food prices never fall”, or a range of dodgy financial products being sold to small punters?

    2) What does a market bubble have to do with long-term issues of sustainability anyway?

    3) And where is your evidence? Where’s all the surplus overpriced food being stored? If it doesn’t exist, then how can you say the price increase is not just a matter of supply shortages? If the supply shortages are somehow a product of deliberate underproduction, how is this being enforced over millions of farmers in dozens of countries(the usual developing world complaint complaint about US and European farm subsidies is it leads to artificial overproduction)?

    The whole argument is purest crap, and simply because you want to believe that Teh Evil Financiers are screwing poor farmers or poor consumers (as I noted, not so long ago they would have been “Teh Evil Jewish Financiers”), you’ve swallowed it whole without thinking it through. God knows there’s enough real problems in financial markets without inventing more.

  25. derrida derider

    Graham Bell @22:

    There are plenty of ways of reducing the risks to, and increasing certainty for, food producers

    Name them. And don’t say government price control, because that has always had a truly miserable record – as Razor correctly notes.

    Some of the Chinese famines were seriously exacerbated by food-price speculators

    Well I’m sure that’s what the government of the day told the food rioters – better that “those people” (probably some ethnic minority) bear the brunt of popular anger. But I’m confident this is just another official lie – as I’ve noted the huge bulk, dispersed production and perishable nature of food makes it peculiarly unsuitable for the very large scale hoarding necessary to corner a market. Speculators would have had a much better chance of manipulating the market in gemstones or silk.

    Sociologists would do a lot better casting light on the reasons societies swallow this sort of stuff than believing it.

  26. derrida derider

    Whoops, soory for the tag messup. Can we please get a Preview function?

  27. sg

    um, derrida derider, how is it good for poor countries that the only time speculators push up prices is when prices are low? There are very large numbers of people in the world for whom even small price changes from “low” are very bad.

    As I said, a market bubble doesn’t have to have any relevance to long-term stability. It just has to starve people this year.

    And I’m not suggesting this is or isn’t happening, just responding to the claim that in the long run speculators are a neutral or positive phenomenon. No-one in Uganda cares about the long run if they’re starving as a consequence of seasonal speculation.

  28. derrida derider

    But sg, its precisely the claim that there’s a short-term bubble I’m disputing. More generally I’m saying that widely distributed food markets are markets that are not good natural candidates for bubbles, because demand is very stable and because of the difficulties of manipulating and hoarding supply.

    It’s good for the farmers in poor countries when speculators push up prices when prices are low. It’s good for the consumers in poor countries when speculators push down prices when they are high. And its good for BOTH that prices are not as volatile as they otherwise would be.

  29. BilB

    Speculation was endemic in India where wealthy the stockpiled produce to force prices up while commercially enslaving their suppliers. The internet made it possible for farmers to know what the broader market had to offer, and the Gramine (sp) bank made it possible for cottage industry to rise above desperate subsistance.

    Specualtion in the long term global frame is short lived, but each short lived speculative event is a bump, and many bumps make for slow passage. From the perspective of elapsed time and condensed information the commercial landscape may appear smooth, but it is anything but that at the personal survival level. Lets not forget that the recent oil price surge (oil to $170 per barrel) was driven predominately by specualtion. And that event is widely considered to have been the trigger maechanism that set off the already primed GFC.

    Specualtion is not inconsequential.

  30. OldSkeptic

    Oh yes there is speculation, lots of it and it will get much, much worse.

    Heck Keynes speculated (that’s how he made his money). Once he got caught out and had to actually take delivery of bales of wool, which he stored all over Oxford University (he was burser there).

    Think for a second. The US Wall street banks are awash with zero interest money from the US Govt. Yes they can then buy US Govt bonds, but that is only half a percent or so. Far better to speculate, after all if they make money they keep it, of they don’t the US Govt will bale them out.

    Then there are the creditor nations (Saudi Arabia, China, Japan, et al) they are awash with useless US dollars. What to do with them, buy US Govt bonds with near zero interest and the devaluation risk? No lots going into oil, land, gold, food, etc, etc, sadly etc.

    So we have trillions of dollars chasing some sort of return.

    Now ‘in the long run’, as idiot neo-liberal economists love to say, speculation doesn’t last, but it can last for months or years (e.g. the US housing market). If the speculation is on food, it can last far longer than people can do without food.

    Mass extermination by the ‘free’ market.

    It doesn’t help that the big 2 (US and the EU) have the most subsidised, distorted agricultural systems that humanity has ever been able to devise. And both have fought long and hard for decades to destroy every other countries agricultural systems.

    Going to get ugly folks.

  31. desipis

    There are two main ways that I see speculation as consequential.

    1) From a global and purely economic point of view the most efficient thing to do is let millions of people starve.

    If the marginal (poorest) consumer can no longer afford to buy from the marginal (most expensive) producers than the market discourages production. If the poorest people in the world food market can’t afford to buy the most expensive basic food stuffs then they get to starve.

    To the extent that speculation increases global trade efficiency, it puts millions of people at risk of starvation.

    2) The relative high capital liquidity of foreign speculators combined with their complete insulation from the local economic and social consequences of high prices enable them to extract prices much closer to the theoretical maximum gain than local producers ever could. When it comes to people and food, that maximum price is everything they own. This process strips the community of the limited financial stability and local capital investment that it had.

  32. fxh

    A single desk Australian Wheat Board speculates by witholding /storing wheat until it reaches a price farmers or AWB are happy with – levelling out prices to producers “good” salt of the earth oz farmers and levelling out prices to “good” third/second/first world people who like to eat.

    I f this didn’t happen the “good” oz farmers might not grow wheat but grow something else. Farmers speculate (gamble) each time they plant a crop. Unless they forward sell to an “evil” speculator to gain certainty.

    Everyone with superannuation speculates on the share market.

  33. sg

    derrida derider, I still don’t think you’re right. If international prices go up then farmers have an incentive to sell food overseas ratehr than locally, or to sell food locally at prices only rich locals can afford. this has been discussed in connection with NZ cheese and lamb for a long time. Since not everyone locally is a farmer – in fact many people are cash croppers or tenant farmers – this is a big issue.

    Furthermore, as others have pointed out, many of these countries are net food importers, so price rises don’t benefit them at all; or they’re left to compete with meat prodcuers in wealthy countries, who can afford to pay more for the raw product because it’s a raw material for a value-added product.

    I can see the point about distributed goods but many raw ingredients aren’t; as observed above, Thailand and Vietnam(?) grow half the world’s rice. That ain’t a distributed network.

  34. Brian

    sg, in 2008 some of the significant commodity exporters stopped exporting by government decree, as I understand Russia has with wheat now, so they could feed their own populations. There may be more of this in the future, which is why some cash-rich countries are buying large tracts of land overseas, mainly in poor countries. When the squeeze is on poor countries may not have access to food grown in their own countries unless they appropriate it, which would be a very provocative act, but can’t be discounted, I think.

  35. Brian

    Back @ 11 I linked to a Stan Correy Background Briefing program and pointed to a segment where the effect of big traders moving in was to make the ‘normal’ market behave in a way that was unfamiliar to experienced traders (I used an abbreviated form of words). It seems no-one has followed the link, so with apologies re length, here it is:

    Stan Correy: For her research, Susan Newman interviewed all the key players in the coffee market, from growers in Uganda and Tanzania, to coffee traders and investment bankers in London. Her interest was to find out how these players related to the new investment forces.

    Susan Newman: There’s been a shift in the types of contracts of developing country exporting companies in the way in which they sell to overseas importers. Previously they had a contract called a fixed price forward contract, so that determines the amount, the time of delivery, and the price that’s paid. And this is, since deregularisation, this has moved to a price to be fixed contract, which stipulates the time of delivery, and the amount, but the prices now will be plus or minus whatever is occurring at the world level.

    Stan Correy: Coffee used to be a fairly predictable market, until the financial investors moved in. A year or so ago, Susan Newman interviewed a European coffee trader. We’ve re-enacted that interview here, and the first question she put to him was about how what happens in New York and London affects prices for coffee.

    Coffee Trader: Well for us, it is of course important, because for our members, of course prices are based on New York and London. So it’s a very important role. When I started in coffee, then if you had bearish news, then the market really went down. And if you had the information that Brazil is having a much larger crop, then prices went down, or OK, there is an earthquake in Nicaragua, then prices went up. So the market was somehow predictable. And with that, you know more or less what to do. Are there bullish factors, are there bearish factors? I mean you still took your own decisions, but –

    Question: You know you were going in the right direction.

    Coffee Trader: Exactly. And this is no longer the case; with the big monies coming in from investment funds, this has completely changed. I mean, they put in their buy stops, their sell stops, they jump in and out. So for the people living from that commodity, that has become a very difficult development.

    Stan Correy: The really big coffee producing organisations may be able to handle the volatility, but most coffee is grown on fairly small plantations.

    Coffee Trader: And for producers, as I said, not many will be able to use these tools, and not many will be able to, from their mentality, to use them wisely. I think the danger that they will start to speculate is really, really big, and it would really be a pity if they go broke because they don’t know how to do it, or they become greedy. They take it once, and they think, ‘Ah, now I’ve made some money on a contract’, and then it’s the same as on the casinos in Monte Carlo.

    Stan Correy: In other words, pure gambling. The role of speculation in the coffee market is making everything uncertain.

    Coffee Trader: What I see is there are big amounts of money flowing in and out, for reasons that outside these investment companies, aren’t understandable.

    Question: So they have nothing to do with the supply and demand of coffee?

    Coffee Trader: No, they don’t, and this makes it very hard.

    Stan Correy: To manage the new volatility, all coffee producers and processors have to play some very complicated financial games, and for the small players it can be a disaster.

    Susan Newman.

    Susan Newman: People don’t have the same financial abilities, they don’t all have access to information. Hedging on derivatives exchanges is not the best way for everyone to stabilise their incomes.

    Stan Correy: So if you’re plugged into your local futures broker and you know how to deal with them –

    Susan Newman: And you have enough money.

    Stan Correy: And you have enough money, then you’ve got some ability to win out, but if you’re not, it doesn’t happen for you.

    Susan Newman: Yes. And in fact you really have to be very, very consolidated in a very large international player in order to win out.

    Stan Correy: Susan Newman from the School of Oriental and African Studies at the University of London.

    In short, while the big financial traders are presumed to have made some money, the little guys, traders and producers, don’t necessarily fair so well.

    The Correy piece is not suggesting that financial speculation was the only or even main cause of the difficulties in 2008.

    The article linked by Sabbra Cadabra @ 14 suggests that things are not as bad now as they were in 2008, but people are getting edgy and loss of productive land is identified as a significant issue:

    UN special rapporteur on the right to food, Olivier de Schutter, says a combination of environmental degradation, urbanisation and large-scale land acquisitions by foreign investors for biofuels is squeezing land suitable for agriculture.

  36. wbb

    fxh nailed all you speculation speculators – the issue is primary production – not the secondary market.

    The article Mark linked to makes that clear already.

    “Worldwide, 5m to 10m hectares of agricultural land are being lost annually due to severe degradation and another 19.5m are lost for industrial uses and population growth”.

  37. Duncan

    “Thailand and Vietnam(?) grow half the world’s rice.”

    Sorry, i was mistaken.

    Thailand and Vietnam between them provide close to 50% of global rice exports, not 50% of total rice production. My point still stands though.

    http://www.bloomberg.com/news/2010-09-09/global-rice-supply-quite-tight-prices-worrisome-biggest-buyer-says.html

    http://www.atimes.com/atimes/Southeast_Asia/LG02Ae01.html

    http://www.mapsofworld.com/world-top-ten/countries-with-most-rice-producing-countries.html

  38. Duncan

    “Thailand and Vietnam(?) grow half the world’s rice.”

    Sorry, i was mistaken.

    Thailand and Vietnam between them provide close to 50% of global rice exports, not 50% of total rice production. My point still stands though.

  39. derrida derider

    Actually, Duncan, your point doesn’t stand at all because that’s a huge difference. The Thai and Vietnamese governments could not collude to push up export prices by limiting production (how they could do that without anyone noticing is another question) because others would start exporting their production in the face of the price rise.

    As for the long and irrelevant story of coffee, coffee is a pure cash crop so issues of subsistence farming hardly come into it anyway. We’re not told why the shift fron fixed price to fixed volume contracts occurred – given that there are plenty of buyers, why did the suppliers agree to this unless they saw it as in their own interest? Plantations that have traded internationally for generations, even if they’re small, will know all about hedging and forward contracts.

  40. Duncan

    “The Thai and Vietnamese governments could not collude to push up export prices by limiting production”

    I didn’t suggest that thai/viet rice farmers were collluding to push up the price, my point was that production is being limited by water scarcity, land degredation and salinity.

    Yknow, actual real world limiting factors to production.

    If Thailand and Vietnam are unable to maintain current yields due to these limiting factors, they will be unable to continue exporting the quantity of rice they historically have, which will drive up the price globally.

    “As for the long and irrelevant story of coffee..”

    Yes it is irrelevant. That’s why i didnt mention it, and im not quite sure why you raised it in relation to my comment.

  41. David Irving (no relation)

    Coffee is not irrelevant, Duncan.

    I’m going to really miss it 🙁

  42. Duncan

    DI(nr) You could grow coffee bushes up at your farmlet in pots, or maybe espaliered up against a north facing wall to protect from frost.

    http://www.daleysfruit.com.au/fruit pages/coffee.htm

    Where there’s a will…

  43. David Irving (no relation)

    Thanks, Duncan! That’s the caffeine sorted, then.

  44. John D

    I have the luxury of being able to stabilize my weekly food bill by changing the mix of food we consume – WITHOUT HAVING TO COMPROMISE ON THE HEALTHINESS OF OUR DIET. There is plenty of room to move because there is a lot of agricultural inefficiency in the much of the food we eat. We eat grain fed chicken instead of grain. We eat more fruit, protein etc. than we really need to. The fruit and protein mix we use has more to do with enjoying food rather than minimizing cost and maximizing agricultural efficiency etc. We also eat a lot of food where the price ex farm gate and the cost of transport are relatively small compared with what we pay to get the food on our plates. In addition, our weekly expenditure includes a lot of non-food optional expenditure that gives us even more room to avoid too much pain when the price of food rises.

    However, if we were seriously poor and already using the minimum cost food mix the only adjustment I could make would be to either reduce kJoules consumed or on the healthiness of the diet. So any increase in the price of food is going to be a crisis.

    Part of the problem is that the standard of living is rising for large swathes of the world’s population. As a consequence, the percentage of low efficiency foods is increasing. More land is required to support the average world citizen. To make matters worse, the fish stocks that used to help feed the masses have crashed which adds further to the land.

    The comments above have touched on many of the issues that should be addressed if the world is to reduce the extent of the coming food/population crisis. But what I would suggest is that part of the problem is a cooking crisis. For example, consider meat consumption. The problem in Australia is that we use so much meat because we use meat as a primary flavoring as well as a nutrient. If we are going to reduce meat we need to find other ways of flavoring food and to develop a taste for these lower meat foods.

    We should also extend the range of foods we use. For example, the current locust glut would be seen as a protein opportunity in many countries. Try googling insect farming or similar. We are missing all sorts of opportunities that require much less land and water than most of the food we eat.

  45. Duncan

    “We should also extend the range of foods we use. For example, the current locust glut would be seen as a protein opportunity in many countries.”

    It could be here in Australia too and without us having to eat bugs, if poultry were more widely used to clean up paddocks after grazing or harvest.

    This is being done on a viable, commercial scale near Heywood in western vic at “Kaz’s Googs” and on many other small-medium sized mixed farms.

    “We are missing all sorts of opportunities that require much less land and water than most of the food we eat.”

    We can grow beef and sheep on marginal country unsuited to cropping due to being saline effected, too boggy, too dry, too stony or too steep.

    Pigs can be safely and quickly grown on heat treated, milled market and agricultural waste. IMO free range pigs need significant supplementary feeding to be commercially viable re: turnover.

    I do believe we have to reduce how much meat we eat, but equally important is to change how we produce the meat, eggs and dairy that we do consume.

    Intensive, high input systems are only the most efficient way to produce food when those inputs are cheap and readily available.

  46. David Irving (no relation)

    As a side issue, insects (specifically termites) aren’t too bad if you’re really hungry.

  47. fxh

    duncan and john d – looking forward to tasty locust recipes for a suburban family of 4 and can you post estimates of future locust supplies, prices and retail outlets.

  48. David Irving (no relation)

    You’ll have to catch your own, fxh. (After all, that’s what I did with the termites.) I believe you can toast them on a shovel over an open fire. (Again, relying on previous termite experience.)

  49. John D

    fxh: Google “edible insects” and you will get over 200,000 hits. Ditto if you google “locust recipes”. You might like to: try some of these from Mildura?

  50. Patricia WA

    Even cane toads are edible once their venom is removed. So protein is available aplenty in the Northern Territory. We can stop worrying for a while yet. Toad in the hole anyone?

  51. Brian

    Duncan, I think that dd @ 39 was referring to my comment @ 35 about coffee trading, which you also seem to think is irrelevant.

    Some people apparently do coffee trading for a living, and these traders found the markets distorted and unpredictable when the big money moved in. That’s all.

    I’d be surprised if small-holder coffee producers, of which there seems to be a large number, are not price takers, who can’t afford not to sell, and are not into hedging and futures.

    Anyway, wbb @ 36 inspired me to look again at the article linked in the post. Stan Correy in the Background Briefing piece seemed to come to the conclusion that the 2007-8 spike in prices that caused food riots in 25 countries was multi-causal. The linked article seems to support that notion.

  52. Duncan

    Nah, i don’t think its irrelevant Brian.

    Just irrelevant to the point i was making re actual production shortfalls, as opposed to artificial shortages created by speculation etc.

    “..the conclusion that the 2007-8 spike in prices that caused food riots in 25 countries was multi-causal. The linked article seems to support that notion.”

    Yep, i agree. As i said earlier up the thread, i have no doubt that speculation is a factor.

    The linked article says “..the coming food crisis due to a series of factors not entirely related to low production”

    To me that implies that the most important factor is actual physical shortages, rather than being driven primarily by speculation and market distortion.

  53. OldSkeptic

    fxh, things like the AWB were created to smooth out fluctuations in food (and some other prices). Many of these sorts of institutions were created in many countries during, after the great depression or just after WW2.

    Now this is actually a good thing, as smoothing can ensure constant food production, rather than a boom-bust, over production to under production cycle. Plus long term prices can help planning, investment, etc.

    Where these sorts of things can go wrong is when they fall into downright subsidisation (as per the US and EU now and for all its faults the AWB didn’t do). Plus if the subsidies are driven by politics, rather than scientific/business/food security criteria then you get tremendous distortions in the market and malinvestment (e.g. US ethanol).

    Now there has to be something to deal with food security as anyone with a quarter of a neuron knows that any society is just 3 days away from collapse, if the food stops so does society. But this should be part of long term strategies, with long term R&D, investment capital, etc.

    But god help you if you are a country like the UK, you depend on the ships arriving everyday to feed you .. and having the money to pay for it. Not a nice position to be in. If the UK some (probable) day defaulted on its immense debts and the pound collapsed, they’d need Oxfam to feed them. Food parcels for the Poms anyone?

  54. GregM

    Food parcels for the Poms anyone?

    I, for one, will start hoarding lard and molasses right away.

  55. John D

    GregM: I remember sending food parcels to the Poms after WWll. They thanked us by dropping commonwealth preferences so they could cuddle up to their old EU enemies that we had helped them fight in two world wars. Let their new mates save them this time?

  56. GregM

    John D, think of the kiddies.

    I’m not suggesting anything fancy like canned pineapple circles, raisins or powdered eggs. I agree with you that we over-indulged them with those luxuries. I’m not even proposing to collect tins of corned beef or Spam for them.

    But lard and maize meal, supplemented by the wild herbs such as nettles they can collect in the fields or from vacant blocks in their recession wasted cities, should provide nutritious, if not very exciting, sustenance. Surely we can spare them a drizzle of molasses occasionally just for the excitement of it.

    It would not be much worse than the diet that many of their ancestors lived on in the 19th century.

  57. Brian

    @ 53:

    you depend on the ships arriving everyday to feed you .. and having the money to pay for it.

    Of course much of the concern for future food security takes into account the loss of fertile river deltas through sea level rise, the lack of irrigation water from ice caps and other adverse effects of climate change. There is a concern that you won’t be able to buy the food at any price.

  58. John D

    OK GregM: Lard oatmeal and molasses for the kiddies. We surely don’t want any more boat people to start coming from pommey land!!

  59. Duncan

    “China introduces subsidies amid food shortages”

    http://www.bbc.co.uk/news/business-11772184

    “The average wholesale price of some vegetables in Chinese cities rose by nearly two-thirds in the first 10 days of this month, raising fears that food hoarding was exacerbating shortages.

    It is also thought the government may be considering stiffer penalties for those caught hoarding food.”