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Generational Dynamics Web Log for 11-Apr-07
Price of food is skyrocketing in India and China

Web Log - April, 2007

Price of food is skyrocketing in India and China

In fact, crop prices are increasing around the world, according to an article in Monday's Wall Street Journal. (The article can also be found here and here.)

Rate of food price inflation in US, China, India and Turkey. <font size=-2>(Source: WSJ)</font>

Rate of food price inflation in US, China, India and Turkey. (Source: WSJ)

According to the report, US food prices rose 3.1% in the last year, but they rose 5-10% or more in countries around the world.

I'd like to focus on one particular paragraph in the story:

"Doomsday predictions of a major food shortage in China and elsewhere have circulated for years but haven't materialized. And some economists believe the recent increase in crop demand probably can be met without severely straining the global economy. They think prices could come back down over time, especially if some countries that have more land that could be put under cultivation -- particularly Brazil -- can greatly increase production. Technological advances, such as better seed varieties, could also help boost production to keep up with demand."

This paragraph is interesting because every sentence is wrong, or at least misleading:

First sentence: "Doomsday predictions of a major food shortage in China and elsewhere have circulated for years but haven't materialized."
Almost everyone misunderstands this. When there's a food shortage, you don't have large masses of people dying from starvation, as the "doomsday" word suggests. Instead, a food shortage causes increases in food prices.
If a man has to work for an hour to earn enough to feed his family for the day, then that's one thing; but if food prices go up and he has to work 7 or 8 hours to earn enough to feed his family, then he has nothing left over for rent or clothing or other expenses. And if the family lives in a "megacity" packed with 10 or 20 million or more people with no place to grow their own gardens, then the family will have to forage through garbage dumps to eat.
There are millions of people today doing exactly that. Whether that constitutes a "doomsday" depends, I suppose, on your point of view.

Second sentence: "And some economists believe the recent increase in crop demand probably can be met without severely straining the global economy."
This is the kind of weird stuff that economists come up with. If a few million people are foraging through garbage dumps to feed themselves and their families, maybe that won't strain the global economy, but those millions of people won't be happy.

Third sentence: "They think prices could come back down over time, especially if some countries that have more land that could be put under cultivation -- particularly Brazil -- can greatly increase production."
This is a provocative statement. The way that Brazil could put a lot more land under cultivation is because they could cut down the rain forest, causing more "global warming," according to the current fashion. So is it OK to cut down the rain forest if it means that food prices will come down a little?

Fourth sentence: "Technological advances, such as better seed varieties, could also help boost production to keep up with demand."
As I wrote about in 2004, the "Green Revolution" made a huge difference in the 1960s in India, because American technology advances were applied to Indian agriculture, which formerly had been using very old techniques. The result was an explosion of food, and everyone was well fed.
But that was a one-shot deal. There are no more major technology advances to be applied. Maybe better seed varieties will provide some improved agricultural production, but not enough to make a big difference.

My own estimates are that the Green Revolution had a major effect on food production for a long time, until the 1990s. Since then, food production increases have been leveling off, while the population continues to grow faster. The result is that there's less food for everyone, which pushes food prices up.

In 2005, an e-mail discussion led me to do a piece of research that that I originally posted at that time. I found some food commodity prices on the internet, and was able to prepare the following table:

                          ------ 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%
                    Oats    0.90    0.86    1.11   23.33%   29.07%
           Oil sunflower    6.56    6.06   11.96   82.32%   97.36%
                  Canola    7.50    6.55   11.40   52.00%   74.05%
                Flaxseed    3.79    3.31    7.35   93.93%  122.05%
    Beef 400-500# Steers   97.68  106.07  128.86   31.92%   21.49%
             Hogs 250 lb   32.50   43.10   51.12   57.29%   18.61%
    CPI (Inflation rate)  168.80  175.10  190.70   12.97%    8.91%

The last line of this table shows the inflation rate for comparison purposes. This shows that for many foods, prices have increased far faster than inflation.

The percentages in the last two columns show price increases over a 5-6 year period. The figures in the Monday's news report indicate that prices in India rose over 10% in one year alone. So the new figures indicate that food prices are increasing even more rapidly.

From a theoretical point of view, I would expect food price increases to accelerate. The reason is that, as time goes on, population grows faster than food production, and the difference grows exponentially.

The "Malthus effect," the observation that population grows faster than the food supply throughout history, is an important part of Generational Dynamics, because it proves that genocidal crisis wars must occur.

The result of the Malthus effect is not "doomsday," or mass starvation. The result of the Malthus effect is war. An individual who can't feed his family anyway has nothing to lose by joining the army; and a nation that can't feed its people has nothing to lose by going to war against someone else. (11-Apr-07) Permanent Link
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Generational Dynamics Web Log for 11-Apr-07 Price of food is skyrocketing in India and China

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Generational Dynamics Web Log for 11-Apr-07
Price of food is skyrocketing in India and China