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Thursday, April 10, 2008
The Hunger Opportunity
Forget everything that you’ve heard in the last few years about “peak oil”, the credit crunch, and the falling dollar. Instead, I have one word for you: food.
People are finally beginning to wake up to the real crisis: a global food shortage. Already, there are reports of food riots around the world. Nervous governments are imposing restrictions upon the export of food, in the hope of controlling prices and supplies.
It’s just the beginning. Just wait and see how the harvest turns out in the Northern Hemisphere this year and see where food stocks are by the time we hit fall. That’s when the real panic is going to set in.
A few years ago, I remember having a conversation with several people who insisted that the United States was doomed because they “don’t produce anything that anyone wants to buy anymore.” I pointed out that the United States was the world’s leading producer of pretty much every single key foodstuff. “Anyone can grow food,” they replied. “Yeah, we’ll see,” I said. And so we shall.
Of course, people could have produced their own food. But, for various reasons, they didn’t. Instead, they listened to environmentalists who ranted about the dangers of genetically-modified seed. Foolishly (including here in North America) millions of tons of corn were converted to biofuel in order appease both the farm lobby and environmentalist howls. Europe insisted on continuing to lavishly subsidize their inefficient and under-producing farms.
The net result of all of this is that the United States produces 33% of the world’s wheat exports, 12% of its rice exports, nearly 58% of the world’s coarse grains, and 39% of the world’s soybean exports. Oh, yes, and the U.S. also accounts for 24% of the world’s meat production.
If one adds in other Anglosphere nations (mainly Canada and Australia) the Anglosphere accounts for 53% of total global wheat export and 64% of the world’s coarse grain exports.
In other words, when it comes to food, the United States is Saudi Arabia and then some.
The policy implications of this are multi-fold.
First of all, as I’ve already suggested, the connected bubbles that have developed in Gold, Oil, and the Euro, are going to pop. All three have run up, in large measure, as a reaction the decline in the U.S. Dollar. Remember – one of the main reasons for the appreciation in the Canadian Dollar has been the rise in oil prices which, in turn, has been driven (in part) by a decline in the U.S. Dollar. You have all of these forces working in one direction. But they can shift as swiftly as the wind – and will do just that. Food prices soar, therefore people need to buy more U.S. Dollars in order to buy food (especially when higher prices are combined with high demand and lagging production) which, in turn, will set off declines elsewhere. It really is a beautiful system.
Second, it’s clear to me that our politicians are going to have to get to thinking about agriculture – and quickly. It’s the least glamorous and most un-sexy of subjects, I realize. Many of us are pretty far removed from the farm. It’s been at least four generations since anyone in my family was a farmer. I don’t think I’m that rare. All of us are going to have to do some reading on the area.
This second point is especially true since, like most sudden panics, this one has been obviously coming down the road for several years – it’s just that none of us have been paying real attention. The obvious end result of the massive demand for oil and other raw materials – materials being used to produce things in China, India, and elsewhere – was always going to be an increase in the standards of living for people in those lands and the obvious result of a higher standard of living for those people was always going to be them eating more. I attribute the fact that so few of us thought this through until recently (if even by now) to how far we’re removed from rural life. Honestly, I’ve never given much thought to how food gets to the supermarket – I’ll generally skip agricultural stories when reading the business pages.
We need to understand how this works – and quickly – so that we can figure out how to best profit from one of the best opportunities that I’ve seen in years. Think about it – we’re facing a massive global shortage of a universally essential commodity for which not only are we a major supplier but where, in many cases, we already control the majority of the marker and where we have the capacity for further expansion of production which others lack.
For example, it occurs to me that one area where this might obvious effect is the settlement of the illegal immigration question. Don’t get me wrong – I continue to despise illegal immigrants for the reasons that I’ve set out before – but it looks like we might be soon facing an all-hands-on-deck situation so far as agricultural labor is concerned. Perhaps this will be the time to hurry some sort of guest worker program into being. After all, someone’s going to need to harvest all of those crops – and it’s sure not going to be me (and probably not 99%+ of you folks, either).
As well, at first blush, we might also reconsider our biofuel policy, since it consumes valuable grains. On the other hand, we might well choose to maintain (or even increase) that policy since there’s always going to be more than enough food in North America and continuing to divert all of that corn to Ethanol production will constrict global supplies and, therefore, increase prices.
This is not going to be a quick crisis. Food production is limited not only by land – but also by equipment, manpower, and other materials. You can’t turn people into farmers overnight. Indeed, in general, history shows that it’s pretty hard to turn people into farmers in any case. As the dimensions of this crisis become clearer, we’re going to have all sorts of frantic attempts to respond put into practice and most of them are going to fail because most of them are going to be conceived and implemented by New Class global elite types who are at least as far removed from the farm as I am.
If you think I sound slightly amused by this, that’s because I am. In their haste to run American down, a lot of people forgot that America just happens to feed most of the world. In their haughty rejection of genetically-modified foods, environmentalists forgot that, in the end, people were going to have to be fed from somewhere. Other governments which adopted unwise policies such as land redistribution or enacted lavish subsidies which denuded production are going to pay too. Proof, perhaps, that there is a God.s
Posted by Adam T. Yoshida on April 10, 2008 in International Affairs | Permalink
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Comments
Americans suffer incredible rates of malnutrition and obesity. Indeed, there is a world-wide explosion of obesity. Could a food shortage be a blessing in disguise? Maybe. This verbose drivel article is so riddled with nonsense that it is hard deciding where to begin destroying it. But take GMO foodstuffs as a starting point. Where is the evidence to suggest that the world would be better off with production and supply if GMO was more widely applied? In India, farmers who bought into GMO are committing suicide in record numbers as they fail in business. No conservative would ever think that fast tracking GMO is a wise idea.
Supposed innovations in agricultural production has resulted in horrendous records of failure. Feeding rendered animals in feed to cattle and other live stock is what led to BSE (mad cow) outbreaks that destroyed centuries old blood line herds all over Britain and elsewhere. Canada has done substantial damage to our name brand as a country by pushing GMO and by engaging in production practices that harms the brand--injecting antibiotics in healthy cattle to help them bulk up, creating bacterial resistance problems that show up in hospitals and human health and Walkerton's water contamination from cattle manure run-off have hurt our export markets and brand identity. Competing in commodity foodstuffs is a mugs game. Branding is the way to go and the Canadian brand has been badly damaged by speculators and plain idiocy.
Posted by: ROGER | 2008-04-11 12:05:40 AM
Adam,
One flaw in the logic: American policy of mandates and subsidies for ethanol and other inefficient "biofuels." What had been feeding the rest of the world is now being wasted on energy boondoggles.
Posted by: D.J. McGuire | 2008-04-11 9:02:45 AM
Farmers' suicides in India are exaggerated. They've not been taking their lives because of GM foods. You just need to read this blog (http://www.fbaeblog.org/)to know what Roger is talking about is mere fantasy. The issue has also been tackled by blogger James in his blog GMO Africa(http://www.gmoafrica.org.
Posted by: mwana | 2008-04-11 10:39:40 AM
"You just need to read this blog..."
I found multiple references to farmer-suicides in India on primary-source sites like Reuters and Associated Press. I have to take those as more reliable sources than a blog which aggregates from other blogs, letters to the editor, and press releases. gmoafrica.org is run by a PR Specialist, James Wachai. That's like visiting BCferries.com for the last word on just how safe the ferries are.
I have zero opinion on the issue, but I disagree with mwana's assertion that two blogs can override primary-source journalism.
Posted by: Pattern Recognition | 2008-04-11 11:31:27 AM
>"I found multiple references to farmer-suicides in India on primary-source sites like Reuters and Associated Press."
Pattern Recognition | 11-Apr-08 11:31:27 AM
Primary-source of lies.
Both Reuters and AP have been caught multiple times just making shit up in the past 2 years.
From fauxtographs to completely false stories about the Jenin "massacre" to bombings of civilians reported by fake Iraq Police commanders, these 2 wire services have ZERO credibility today.
Posted by: Speller | 2008-04-11 11:55:02 AM
An Indian woman presented a speech on the topic of the crisis in Indian agriculture caused by GMO technology and the resulting suicides of Indian farmers. She delivered her speech at Duke University last year. The floor was open for questions and anyone could challenge her, if they wished, but not one person chose to take her on. She is an older Indian woman with a scientific research background and an activist and founder of community self-help projects in India and who has gathered statistics on the situation with respect to Indian agriculture and agribusiness, as well as issues on inputs, such as water, and on environmental resource issues, such as water, and pollution issues, such as water, and the attempts by government to force markets to change to monopoly structures from competitive structures (for example, in the area of cooking oil) and has in fact set up counter measures to maintain competitive market structures (creating alternative oil refining companies to break the monopoly market imposed by government regulation). Against this kind of action and persons, Mwana offers some ad agency and paid propaganda writing journalists? LOL! You will lose this fight, and lose it badly! You are no match for an old Indian woman whose voice is louder than your puny little whimper. LOL!
Posted by: ROGER | 2008-04-11 10:45:21 PM
You are fumbling numbers to prove an incorrect point.
For example, US produces just 1.4% of world's rice, Canada produces 0% (LOL), 11.6% of wheat etc. This is according to USDA: http://www.fas.usda.gov/wap/circular/2003/03-02/wldsum.pdf.
In fact, China and India produce more wheat and way more rice than US or Canada or Mexico - they just don't export it as they consume it all.
So you are using export numbers to deduce largest producers, which is just plain wrong.
Rest of your logic and article is based on this flawed assumption so it is not worth commenting on.
Posted by: ROGER | 2008-04-14 5:28:26 PM
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