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Generational Dynamics Web Log for 10-Aug-05
Food prices continue to increase dramatically around the world

Web Log - August, 2005

Food prices continue to increase dramatically around the world

Hunger, poverty and starvation are spreading to increasing masses of people around the world, as the growing world population makes food scarcer and scarcer.

From the point of view of Generational Dynamics, this is called "the Malthus Effect," as I described in an article I wrote last year. I estimated that food production grows at 0.96% worldwide, while population grows at 1.72% per year.

The Malthus Effect refers to the fact that while food production grows exponentially, the population of the world also grows exponentially, but at a faster rate. The result is that food becomes more and more scarce and, by the law of supply and demand, it also becomes more expensive.

According to a study (PDF) by North Dakota State University, food prices have been increasing dramatically since the year 2000. Here are some sample prices:


                     ------ Prices -------    -- Increases --
                     1999-   2000-   2004-    Since    Since
          Commodity   2000    2001    2005     1999     2000
--------------------  ------  ------  ------   ------  -------
        Spring wheat    2.85    2.79    3.35   17.54%   20.07%
        Winter wheat    2.49    2.25    2.87   15.26%   27.56%
         Durum wheat    2.58    2.48    3.83   48.45%   54.44%
                Oats    0.90    0.86    1.11   23.33%   29.07%
         Feed barley    1.39    1.37    1.50    7.91%    9.49%
            Soybeans    4.19    4.23    6.02   43.68%   42.32%
         Alfalfa hay   43.00   46.00   63.89   48.58%   38.89%
           Other hay   29.00   31.00   46.35   59.83%   49.52%
       Oil sunflower    6.56    6.06   11.96   82.32%   97.36%
   Non-oil sunflower   13.50   11.30   17.74   31.41%   56.99%
              Canola    7.50    6.55   11.40   52.00%   74.05%
            Flaxseed    3.79    3.31    7.35   93.93%  122.05%
                 Rye    1.44    1.31    1.96   36.11%   49.62%
            Potatoes    5.60    5.45    5.03  -10.18%   -7.71%
Beef 400-500# Steers   97.68  106.07  128.86   31.92%   21.49%
Beef 800-900# Steers   80.87   85.79   99.59   23.15%   16.09%
           Cull cows   36.50   39.80   50.40   38.08%   26.63%
       Hogs - 250 lb   32.50   43.10   51.12   57.29%   18.61%
      Slaughter ewes   25.00   31.00   36.00   44.00%   16.13%
     Slaughter lambs   69.57   72.74   94.59   35.96%   30.04%
        Feeder lambs   76.64   83.78  115.34   50.50%   37.67%
                Milk   13.20   11.30   15.22   15.30%   34.69%
Consumer Price Index  168.80  175.10  190.70   12.97%    8.91%

The bottom line of this chart shows that the inflation rate (CPI) has been just under 9% since 2000. But food prices have generally been increasing at several times the inflation rate. In this list, only potatoes have fallen in price.

When Thomas Roberts Malthus wrote his famous Essay on Population in 1798, he made some mistakes, but his basic point that population grows faster than the food supply was correct. Malthus' conclusion was that famines would result. This was the wrong conclusion: the result is poverty and malnutrition.

That's what's happening today. From the point of view of Generational Dynamics, this is what happens in most generational cycles. When food becomes too scarce and the price of food becomes too great, then a genocidal crisis war occurs. This reduces the population and restores the balance between food and population. For those who don't like this conclusion, let me assure you that it's been happening for millennia, and it's happening again now.

Since the end of World War II in 1945, it appears that the following has happened: In order to prevent another world war, countries of the world, led by the Rockefeller Foundation, launched a "green revolution" which brought modern agricultural techniques and technology to countries around the world. The Green Revolution evidently greatly increased the supply of food in the world throughout the 1960s. Since then, addition application of new agricultural technology have produced smaller and smaller benefits, as would be predicted by the economic Law of Diminishing Returns.

It appears that the effects of the Green Revolution petered out in the mid-1990s, as world malnutrition has been increasing since then.

Furthermore, worldwide food prices have been increasing dramatically since 2000. These increases have been primarily driven by the demands of China's exploding bubble economy, but it would have happened anyway.

As more and more people in the world are forced into poverty and starvation because of the Malthus Effect, the political state of the world is becoming increasingly unstable. Generational Dynamics predicts that we're headed for a new "clash of civilizations" world war, and it will happen sooner rather than later. (10-Aug-05) Permanent Link
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Generational Dynamics Web Log for 10-Aug-05 Food prices continue to increase dramatically around the world

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Generational Dynamics Web Log for 10-Aug-05
Food prices continue to increase dramatically around the world