Guest Post: Why Current Food Scares are Overhyped

By Kalpa, who blogs at big picture agriculture. Kalpa’s formal education was in medicine, science, and the humanities. Having seen the destruction that industrial agriculture has done to the biosystem of the Midwestern Plains, where she grew up, she writes on the comprehensive picture of economics in agriculture, ag science, ag policy, food security, energy, and sustainable practices

Picture 16

The stocks-to-use ratio—grain supply measured against grain demand—is simply: Ending stocks divided by Total Use. Please note that cereal includes wheat, rice, barley, maize, rye, oats, millets, etc. Coarse grains include corn, which is largely produced in the U.S., where one-third of the crop goes towards ethanol production.

There has been much in the news lately discussing food inflation, speculation, and global food supply scares. Much of the supply issue, as of now, is hype, sensationalism, and lazy reporting, which is why I put together this chart from the very recent FAO September 1, 2010 updated report. This year’s cereal use is expected to be slightly higher than production, but is expected to end at 23%, down 2% from last year. Last year’s opening stocks were at an eight-year high. During the food crisis of 2007/08 cereal stocks-to-use hit a low of 19.5%.

Food inflation in Asia and other nations, however, is very real and concerning. Policy determines much in agriculture, and food inflation is no exception. Why do they riot in Mozambique over bread prices? Because their governing situation is worsening and because it sets the price of bread. Domestic policy changes in Mozambique such as less wheat and gas subsidization due to deteriorating national finances which have resulted in a greatly devalued currency explain both the food inflation and the frustration of the citizens. In poorer nations, citizens spend much more of their income on food.

Governmental policies of export and import restrictions, hoarding, subsidies, panic buying, and infrastructure standards of food storage and transport, as well as investor speculation, currency valuations, individual national inflation rates, weather and climate change, the evolving monoculture genetics, rising input costs, and global macro economic health all impact food security.

Currently, slack remains in the agricultural commodity production system. This should afford reasonable global food security for some time, however, it is always subject to the unpredictable wildcards of weather and geopolitics. A sustained global deflationary period would also provide a short-term oversupply of agricultural commodities.

In the coming decades we will most likely be facing deteriorating global macro economic conditions, increasing climate-change induced weather disruptions (floods and droughts), and more volatility in agricultural commodity prices and the price of energy used to produce and transport those commodities. Expect many more Mozambique-like situations to play out, along with a resulting increased desire and attempt at human migrations.

Finally, why is the discussion always on how future agricultural production can meet population growth, never on how population growth can be curtailed to meet the limits of agricultural production? I notice this in article after article. True food security means regional food security. If shortages do occur in the future, and they will, each nation will feed itself first.

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  1. Daniel de Paris

    Welcome to you,

    Thank you for sharing your views.

    “Currently, slack remains in the agricultural commodity production system.”

    I reckon we should not misunderstand what the markets “tell us”. They do not inform us about deteriorating “monetary conditions”.

    Why is the average “retail investor” – as you routinely call they in the US start interested in commodity markets including food ?

    We will, for sure, have no slack of money on the markets, especially the long term money looking for a way to avoid the expected bond-market crash.

    That, of course, creates the conditions for a level of speculation on commodity markets unknown at this stage. Especially when leverage is made available to anyone, big or small, to play the markets…

    Unntil a reasonably decent international monetary framework is established, expect the worse. Including on a geopolitical basis when “foreign money” will deprive countries of their resources.

    Thanks God, I read Jacques Rueff in the 70s…

    1. psychohistorian

      You are laying out the exact type of dislocation that will cripple or crash international trade as soon as serious commodity speculation becomes the refuge for enough bond fund monies looking for “security”.

      On one of the elephants in the room questions….
      Population “control” will be discussed in America when the Mormons and fundies stop creating big families to extend their religions reach.

  2. hayekfavon

    Finally, why is the discussion always on how future agricultural production can meet population growth, never on how population growth can be curtailed to meet the limits of agricultural production?
    Because curtailing population growth is impractical in an even somewhat-free society. It can only be attempted (and still likely fail) under some dictatorship. Something with an “or else” attached to it.

    Production growth relies on human ingenuity and the use of newer technology or a more widespread use of existing technology. It occurs as a result of people trying to improve their standard of living. You don’t have to point a gun at anyone’s head to achieve it.

    That’s why.

  3. derek

    “why is the discussion always on how future agricultural production can meet population growth, never on how population growth can be curtailed to meet the limits of agricultural production?”

    Because the employer class (the minority of people who own most of the world’s capital, and employ labor to work on it for their profit) wants and needs more labor, and doesn’t mind that the labor will be poorer for it: they’ll be fine themselves.

    But isn’t the resulting ever-increasing rise in labor a bubble? Yes, it is, but notice how the people who are invested in a bubble always demonize those who first call the bubble? It’s the same thing with the world labor bubble: the employer class sees to it that the propaganda message is “those people who want to discuss how population growth can be curtailed just hate humans, and they hate adorable babies in particular. Especially the brown ones, I bet. Racist, racist baby haters! (and probably nazi eugenicists too, don’t listen to them, growing populations are always better)”

    When the bubble bursts, it will be “who could have known this would be a bad idea?”

  4. Indigenous Centurion

    own most of the world’s capital, and employ labor to work on it for their profit) wants and needs more labor,


    If you own bunch of robots that weld auto-chassis, do you want more human labor out there competing with your ‘bots? No! You need more overpopulation to buy your automobiles. You need market share.

    Did July 2008 see $147.47/barrel oil long enough to signal POP, Peak Oil Panic? Will PO, Peak Oil follow quickly on the heels of POP? Is most of WFS, World Food Supply now dependent on energy supply? How much food we harvest with human labor? Plant with human labor? Animal labor? Genetically alter with human labor? Do you see how our agricultural world is about to collapse on the other side of PO? Do any of us realize what a literal pipe-dream alternative fuel sources are?

    Simplest way to approach global depopulation is to admit that a woman can have very limited number of births. By contrast, a man can father literally thousands of offspring. Sterilization of females is complex and dangerous. You got to dig deep into her body before you get to the goodies. By contrast, microsurgery on every newborn male can be done at a time which he will never remember. It can be done with no obvious scar. Without causing congestion of the testicle, small segment of vas deferans can be removed.

    Tell me something! When neoNicola neoTesla suddenly explains to us how we can all live forever, are we going to have enough clean air, clean water and clean socks to enjoy life? Do you want to die hungry just as everyone else starts to live forever?

    You are my people, Populace.

    Face facts, People!

    Get organized

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