Cynical Manipulation
Robert Samuelson discusses the skyrocketing cost of food globally and points out the disaster that is heading for the underdeveloped countries as a result. The culprit is food being diverted to the production of ethanol and the result will be increased starvation globally. It is a case of cynical manipulation for the gain of a few special interests. The price will be paid by people. In the past 45 years great strides had been made on hunger throughout the world as evidenced by the doubling of global population in that time period. Food production had been out-pacing population. It is not these days because of the advent of biofuels.
Higher grocery prices obviously make it harder to achieve economic growth and low inflation simultaneously. But if higher food prices encouraged better eating habits, they might actually have some benefits in richer societies. The truly grave consequences involve poor countries, where higher prices threaten more hunger and malnutrition.
To be sure, some farmers in these countries benefit from higher prices. But many poor countries — including most in sub-Saharan Africa — are net grain importers, says the International Food Policy Research Institute, a Washington-based think tank. In some of these countries, the poorest of the poor spend 70 percent or more of their budgets on food. About a third of the population of sub-Saharan Africa is undernourished, according to the Food and Agriculture Organization of the United Nations. That proportion has barely changed since the early 1990s. High food prices make gains harder.
What's disturbing is that the present run-up doesn't seem to be temporary. Of course, farming is always hostage to Mother Nature, and drought in Australia has cut the wheat harvest and contributed to higher worldwide prices. But the larger causes lie elsewhere. One is growing prosperity in China, India, other Asian countries and Latin America. As people become richer, they improve their diets by eating more protein in the form of meat and dairy products. The demand for animal feed grains rises. This has been going on for years and, until recently, was met by the steady gains in agricultural output from improved technology and management.
It's the extra demand for grains to make biofuels, spurred heavily in the United States by government tax subsidies and fuel mandates, that has pushed prices dramatically higher. The Economist rightly calls these U.S. government subsidies "reckless." Since 2000, the share of the U.S. corn crop devoted to ethanol production has increased from about 6 percent to about 25 percent — and is still headed up.
Samuelson points out that the embrace by politicians of this cynical subsidization to benefit a few special interests has, at best, dubious impact on anything the increased use of ethanol is supposed to address. If 100% of American corn production were diverted to ethanol production, it would replace only 12% of petroleum fuels used in the US. In other parts of the world Rainforests are being burned to the ground to make way for palm oil plantations. The net effect of all this is actually worse for the global environment.
Energy, Environment | Gaius Wednesday, 12 December , 2007
By feeblemind, Wednesday, 12 December , 2007 @ 8:42 am
I find the high-grain-prices-are-hurting-the-poor-countries argument to be a curious one. Just a year or so ago, world trade talks collapsed over the issues of ag subsidies. The poor nations griped that subsidized grain from the developed countries made their farmers unable to compete. Well, now we have high grain prices and it is supposedly hurting the poor countries now that they have an incentive tp produce. High grain prices=bad for poor countries. Low grain prices=bad for poor countries. Both equations can’t be wrong. Which way do you want it?
By crosspatch, Wednesday, 12 December , 2007 @ 1:21 pm
The sad part of all of this is that we have the technology to do a much better job. We should be building more nuclear plants AND reprocessing plants for the spent fuel so we can recycle it.
By martian, Wednesday, 12 December , 2007 @ 1:49 pm
Michael Crichton’s latest book, “State of Fear” addresses this very issue. He spent a lot of time researching the science in the book. One of the things he points out is that no action taken for or against the environment is without consequences. In nature, as in Physics, Newton’s 3rd Law seems appropriate: “For every action there is an equal and opposite reaction.”
Crichton points out that nature has even more of a Murphy factor than Physics. For any action the reaction may not be equal, it may, in fact, be magnitudes higher, and it may not be exactly opposite, it may go off at some weird and unexpected tangent. The one thing you can be sure of is that for every action there WILL be a reaction and more often that not (the balance of nature being so fragile) the reaction will be negative.
The book itself is fiction. However, Crichton did a lot of research and built huge amounts of valid science into the storyline. I recommend it for people who are interested in the global warming debate.
By Sam, Wednesday, 12 December , 2007 @ 4:06 pm
I don’t put much faith in the idea that ethanol and biodiesel are wreaking havoc on the environment and the poor third world customers. I agree with feeblemind on this. On the other hand, I strongly believe that farm subsidies in the US and Europe, including those on corn, are bad for pretty much everyone other than the farmers receiving the subsidy. I wish there was a way to reduce or eliminate the subsidies, but have grown frustrated and cynical that anything will happen.