Ferraris for all

The China Digital Times, an excellent portal source for information on contemporary Chinese society, has produced a useful series of guides to China in 2008. Topics include China and the developing world, the environmental crisis, the global financial crisis and China’s domestic market. Links to each review are provided in the latest topic guide: on the contentious subject of food and product safety.

Labels: china, development, economics, environment, food

I was saddened but not surprised that my local Borders bookshop is cashing in this Christmas with a section promoting books related to the credit crunch. All of the books look like they have either been rebranded or recycled for the section.

Among the most heavily promoted titles are Delia’s Frugal Food and Save Cash & Save the Planet. Other topics including debt management, DIY, making your own clothes and holidays (either in Britain or camping).

Meanwhile, the cover story in this week’s New Scientist magazine is on “how to unplug from the grid”. It examines how to live unconnected to the power grid or water, gas and sewerage supplies.

Unfortunately these examples seem to indicate that the trend for green austerity is becoming stronger rather than weaker. As long as growth scepticism remains unchallenged the possibility of resisting green austerity will be diminished.

Labels: consumption, economics, environment, food, science

Belatedly caught up with the BBC TV Horizon programme on Jimmy’s GM Food Fight (as I write there are still 23 days left to watch it on BBC iPlayer). It provided an unexpectedly good primer to the debate about genetically modified (GM) crops (or GMOs as they are known in America). The presenter was Jimmy Doherty, a traditional farmer with a PhD in entomology, who also presented the informative Jimmy Doherty’s Farming Heroes (see 20 July 2008 post).

Doherty did a good job of explaining the basics of GM. For instance, he pointed out that selective breeding of plants has existed for literally thousands of years. He pointed out that crops such as broccoli, Brussels sprouts cauliflower, Kohlrabi and numerous varieties of modern cabbages were all bred from the wild cabbage. GM technology merely provides a more efficient way of breeding.

He also pointed to other advantages of GM technology. These include modifying plants to improve their qualities by making them, for instance, more drought resistant or disease resistant. Such modifications can mean that less pesticides are required to growth them. It is also possible to use GM technology to enhance the nutritional value of food.

Doherty also allowed the critics of GM, based mainly in Europe, to have a voice. Lord Peter Melchett, a British environmental campaigner, voiced his opposition to GM mainly on the grounds of the uncertainties involved in relation to the environment and human health. Yet despite professed concern about “uncertainties” such campaigners, including Melchett himself, have destroyed experiments to determine the qualities of GM crops.

The programme also contained a couple of surprises:

• An interview with an Amish farmer who – despite eschewing mechanised tractors – happily used GM crops. The programme also pointed out that 80% of corn, cotton and soya production in America is GM. GM technology has been used in dozens of countries for over a decade.

• An interview with the head of a research unit in Uganda experimenting on using GM technology to counter a fungus that is decimating the country’s vital banana crop. The unit has high security but, unlike in Europe, its aim is not to keep anti-GM protestors out. The fences and barbed wire are designed to keep out Ugandan farmers who desperately want to plant the crops rather than await the results of time-consuming trials.

Labels: consumption, food, health, science, technology, television

An article on America’s Thanksgiving festival as a celebration of abundance and prosperity.

Labels: America, consumption, food

Paul Collier¸ professor of economics and director of the Centre for the Study of African Economies at Oxford University, has expanded on his arguments on the need to develop agriculture (see posts of 15 April 2008 and 22 August 2008) in an article in the latest issue of Foreign Affairs (November / December). I have previously criticised Collier in my review of his book, The Bottom Billion (see link on the left hand side of the homepage), but on this topic he talks much sense. His latest arguments summarises his argument as follows:

“The real challenge is not the technical difficulty of returning the world to cheap food but the political difficulty of confronting the lobbying interests and illusions on which current policies rest. Feeding the world will involve three politically challenging steps. First, contrary to the romantics, the world needs more commercial agriculture, not less. The Brazilian model of high-productivity large farms could readily be extended to areas where land is underused. Second, and again contrary to the romantics, the world needs more science: the European ban and the consequential African ban on genetically modified (GM) crops are slowing the pace of agricultural productivity growth in the face of accelerating growth in demand. Ending such restrictions could be part of a deal, a mutual de-escalation of folly, that would achieve the third step: in return for Europe's lifting its self-damaging ban on GM products, the United States should lift its self-damaging subsidies supporting domestic biofuel.”

Labels: development, economics, food

The introduction to the following story shows how mobile phones can be used to raise productivity in poorer countries. I should emphasise I have no personal interest in Thomson Reuters!

“CHANDIGARH, India, Oct. 21 /PRNewswire/ -- Thomson Reuters today announced that it has expanded its ground-breaking mobile information service for India's agricultural community to Punjab. Reuters Market Light, which brings commodity prices, crop and weather data to Indian farmers via mobile phone, launched today with over 3,000 subscribers signed up in Punjab, the birthplace of Green Revolution in India.”

Labels: development, food, technology

The lead story in today’s Observer quotes Dr Rajendra Pachauri, the chair of the United Nations Intergovernmental Panel on Climate Change, argues that people should reduce their meat consumption to help quell global warming. There are several obvious things wrong with this demand. In no particular order:

• It is an intrusion into individuals’ personal freedom. It should not be up to the authorities to tell people what to eat.

• It is an attack on Western living standards. It helps set a precedent that people should be prepared to do with less.

• It is an attack on development. Everyone should have access to the best the world has to offer – including meat.

• It is a meaningless gesture. The idea that such token gestures can do anything about climate change is ridiculous. On the contrary, by focusing on our individual behaviour it encourages a climate of narcissism rather than the broad thinking need to tackle the problems facing humanity.

Labels: climate, consumption, environment, food

There have been several interesting articles and discussions this week but until now I have been too busy to blog them all. Here is a quick round-up:

* Debate on geo-engineering. The Royal Society (Britain’s premier science organisation) has published a series of papers in its Philosophical Transactions on geo-engineering. That in turn prompted a substantial article in the Economist (6 September edition) and a piece by Oliver Tickell (an environmental campaigner) on the Guardian comment is free site supporting geo-engineering but only if it is linked to a reduction in emissions.

* Book on Nazi’s green credentials. I came across this when I heard radio presenters making fun of the title How Green were the Nazis?. To me it is a perfectly reasonable question and the book looks interesting. There is no doubt that many Nazis supported what are today classified as environmental ideas - which does not mean that all environmentalists are Nazis. The most serious critique I could find of the book was in Haaretz (Israel’s leading newspaper).

* Critique of Garrett Hardin’s classic article on “The tragedy of the commons” from a leftist viewpoint. Available here.

* Article on conservative assumptions of organic food movement. Conservative in a literal Burkean sense. Available here.

* Poll on hostility to local development in America, Britain and Canada. Available here.

* James Heartfield on Enron as a pioneer of environmentalism. Based on extracts from his latest book. Available here.

Labels: book, development, economics, environment, finance, food, geo-engineering

For time reasons I have so far avoided commenting on Prince Charles’s silly intervention in the debate on genetically modified (GM) foods. But the Comment Is Free article by Paul Collier, the director of the Centre for the Study of African Economies at Oxford University, on the damaging effect of opposition to GM makes many useful points. I have disagreed with Collier on some key issues in the past including his implicit support for empire and his relatively narrow vision (see posts of 14 May 2007, 6 June 2007, 1 July 2007, 20 July 2007 and 15 October 2007). But his support for GM and large scale farming is welcome (also see post of 15 April 2008).

Labels: Africa, environment, food, science, technology

In this climate of gloom and low expectations it is fantastically refreshing to come across anyone with a positive “can do” spirit. This is certainly the case in relation to Brazilian agriculture which, according to an article on BBC online, has enjoyed a productivity surge in recent years. As a result it has grown from being a marginal player to a position as a large international supplier of food and biofuel. What is more only 70m - 80m hectares of a potential 350m hectares of land available for agriculture is being used.

No doubt the Brazilian President Lula has his limitations but his aspirations should not be faulted:

"We have more Chinese people eating, we have more Indians eating, we have more Africans eating and we have a lot more Brazilians eating.

"All this, which is treated by the press as if it were a crisis and is sold to the world as if it were a crisis," he said.

"Without any arrogance or self-importance, we Brazilians need to confront what for others is a crisis, as an extraordinary opportunity to truly transform ourselves into the granary of the world, as many people have long predicted."

Labels: development, food, Latin America

There is nothing inherently radical about the current obsession with eating right. In American Conservative (30 June 2008) a right winger reclaims it for his tradition. “Crunchy Cons” are a well established phenomenon (see post of 15 August 2006).

Labels: consumption, environment, food

The government is having yet another go at people for wasting food (see 8 May 2008 post). A key problem with the argument - leaving aside its snobbery and paternalism - is the poor maths involved. According to a BBC news story on the Cabinet Office report:

“A government study says the UK wastes 4m tonnes of food every year, adding £420 to a family's shopping bills.”

Yet if you do the sums this works out as very little. Assuming the average household size is about 2.4 people I estimate it means about 48p per person per day. Or in terms of weight it is about 183g.

Considering how busy people are this is a remarkably low wastage rate. It is even more striking considering that the food is often fresh and free of preservatives - making waste even greater.

The news story also make a completely illegitimate comparison:

“The Cabinet Office report claims that up to 40% of food harvested in developing countries can be lost before it is consumed, due to the inadequacies of processing, storage and transport.”

Such waste is the result of factors such as a poor road network and lack of electricity. It is linked to low levels of development rather than some kind of moral failure by individuals or families.

Labels: consumption, food

I have no doubt that the Guardian - and reportedly the World Bank - is wrong in attributing 75% of global food price rises to biofuels. I am sure that that drive towards biofuels is contributing to higher prices but the increases are not caused by the technology itself. The American government is giving huge subsidies to the production of a particularly inefficient form of biofuels (corn ethanol) as a result of its obsession with energy security. More efficient ways of producing biofuels already exist, for example from Brazilian sugar cane, and no doubt better forms will emerge in the future.

Labels: energy, food

After writing my piece on the campaign against the use of Indian child labour by suppliers to Primark (see 24 June post) an interesting parrallel occurred to me. It seems to me there are similarities between the campaign to “save” Indian children with Hugh Fearnley-Whittingstall’s campaign for chicken welfare at Tesco. Both sets of campaigners see themselves as superior beings protecting lower creatures from the forces of greed.

Labels: consumption, ethics, food, india, television

A roundtable of Nobel laureates hosted by Michael Milken (a financier, philanthropist and man who has served time in jail for securities violations) unwittingly gave an insight into the current food crisis. It seems that even Nobel prize-winners do not think it is possible to transform agriculture in the third world as it would lead to mass unemployment among former peasants. In other words leading economists do not see extensive generalised development as even possible:

“[Michael] Spence [2001 laureate]: The poorest spend 60 percent of their income on food. For now, we need a rapid response to malnutrition whatever the long-term solutions. Over time, productivity can increase, as was the case with the Green Revolution. Yet, 50 percent of Chinese still work in rural agriculture and 70 percent of Indians. Capital-intensive agriculture and higher productivity would displace them from their living. It’s a double-edged sword.

“[Myron] Scholes [1997 laureate]: If you move too fast to improve productivity in food, you create a surplus population that is forced to move to the already over-urbanized cities. That is a huge cost. There are 1.25 billion people in agriculture in India and China. Where will they go?”

Nor are such views restricted to these two eminent economists. A recent article in the Financial Times (Alan Beattie “Seeds of change”, 3 June) quoted a British academic who opposed the introduction of modern agricultural technology because it might replace hand weeding in Africa:

“Andrew Dorward, an academic at London's School of Oriental and African Studies, says that adoption of GM crops resistant to herbicide would, for example, be disastrous for many poor households: the crops would allow the replacement of hand-weeding, which is a big source of income for many.”

Others call for the adoption of “appropriate” – that is primitive – technology:
“Leftwing critics of the idea of a green revolution do not doubt that Africa can increase productivity with new seeds and inputs, but say the benefits will go to large corporations and rich farmers. Raj Patel, a fellow at the left-leaning Institute for Food and Development Policy in the US, recently told a congressional committee that projects such as Agra, "while perhaps well intentioned, are models of unaccountable and unsustainable technological investment". He called instead for "programmes that further the adoption and research into locally appropriate and democratically controlled agro-ecological methods".”

I suggest such “leftwing critics” spend a few months in the baking sun doing some hand weeding themselves. Perhaps they might then change their minds.

Labels: Africa, economics, food

I am hardly a regular reader of Marie Claire but I was struck by how its June eco-chic edition managed to combine environmentalism, beauty and celebrity. Amid the adverts for brands such as D&G, Estee Lauder and Clinique are Cate Blanchett endorsing Marie Claire’s campaign to stop global warming, profiles of Hollywood stars turned eco-campaigners (including Gwyneth Paltrow, Jake Gyllenhaal and Julia Roberts) and an interview with Hugh Fearnley-Whittingstall.

I was particularly amused by the “Message from our associates” at coolaworld:

“Just being cool is a beautifully simple way to save the planet”.

“Being cool means having a passionate relationship with the world around you, a growing awareness of where things come from and how they arrive. Being cool is shopping to save the planet, saying yes to tap water and no to excess packaging. Being cool is ‘Fashion without Heart’ and food without air miles and, because it helps you feel good about the environment, being cool will always be considered stylish and smart.”

If such self-obsession is considered “cool” then I’m all in favour of some warming.

Labels: celebrities, consumption, environment, film, food

There follows a comment by me on rising global food prices from the latest Fund Strategy magazine (12 May). It is linked to a longer cover story I wrote on the subject.

The world seems to be suffering from the delusion that there is a chronic shortage of food. Rising consumption of food in the developing world and the growing use of biofuels is said to be bolstering demand and therefore raising prices. Many fund groups are also harnessing such arguments to encourage investors to put money in their shiny new agriculture funds.

Problem is there is little basis to such arguments. As Daniel Ben-Ami shows in this week's cover story the rising demand for food inside, for example, China is largely met from rising productivity inside the country. Even America's Department of Agriculture concedes that China is largely self-sufficient in food. It is unlikely therefore that Chinese demand is pushing up prices on the world market.

Biofuels have played a role in pushing up prices in the short term but not in the way generally understood. The problem is not with the technology itself but with Western governments providing substantial subsidies to grossly inefficient forms of biofuel production. As a result the shortages created by biofuel demand need only be temporary.

The fundamental problem with food supply is low yields in sub-Saharan Africa and developing Asia. American yields are, on average, 10 times African levels and three times Asian levels. Yet if the developing world had access to the modern agricultural technology and economic infrastructure enjoyed in the West its yields could increase enormously. Other modern techniques, such as biotechnology, could bolster productivity still further. These have the advantage of being able to build such qualities as resistance to drought, pests and salt water into crops. They can also enhance the food value of agricultural produce.

In any case the spike in food prices cannot be explained in terms of long-term trends alone. Food prices have increased by 45% since the end of 2006 - hugely more than the increase in food consumption in developing countries over the same period.

It seems likely that short-term factors have played a key role in pushing up food prices over the recent period. These include a financial bubble as investors, nervous about market developments elsewhere, seek to make money from investing in agriculture. In this sense there is a resemblance between the surge in food prices and earlier bubbles in technology and housing.

Rising food prices should not be blamed on improving diets in developing countries.

Labels: economics, food, Fund Strategy

Gordon Ramsay, probably Britain’s most annoying celebrity chef, has spoken to the prime minister about fining restaurants which serve out of season produce.

There are at least two things wrong with Ramsay’s proposal. First, why shouldn’t people be able to eat out of season food if they want to? If I want Kenyan strawberries in March I should have the freedom to buy them. It might satisfy my desire for strawberries and it could benefit the Kenyan economy too. No one is forced to buy such strawberries if they prefer local produce.

Second, just because someone doesn’t like something it doesn’t mean there should be a law against it. Such an attitude leads to gross intrusions on personal freedom. I detest Ramsay’s boorish and formulaic TV programmes but I have never campaigned for them to be banned.

Labels: celebrities, consumption, food, trade

The lead story of today’s Independent (London) is a hysterical rant about food wastage in Britain. It notes that:

“Each day, according to the government-backed report, Britons throw away 4.4 million apples, 1.6 million bananas, 1.3 million yoghurt pots, 660,000 eggs, 550,000 chickens, 300,000 packs of crisps and 440,000 ready meals.”

But to me the striking thing is that, in a population of 60m people, how little is wasted: “The roll call of daily waste costs an average home more than £420 a year but for a family with children the annual cost rises to £610”. But this means the average family with kids wastes less than £2 a day on food. Given the difficulty of matching food purchases to changing family circumstances this seems pretty efficient. A certain amount of food wastage is inevitable given the difficulties of matching individual purchases and consumption. Indeed it is desirable because it is symptomatic of living in a richer society.

It is worth noting that the government has played a role in whipping up such hysteria. The figures come from Waste & Resources Action Programme (Wrap), a government waste campaign.

In a related leader the Independent makes the correct point that it would be wrong to counterpose wasted food in Britain and food shortages in the developing world. But it immediately goes on to suggest such a moral link:

“Ordinary shoppers in Britain are not to blame for the rising price of food across the world. The fact that we are richer and consume more calories than vast swathes of humanity should not be a source of guilt. But in our increasingly connected and exploited world, there does exist a moral responsibility on all of us to consume resources responsibly and sustainably. And that includes food.”

Labels: consumption, ethics, food

I disagree with Paul Collier, author of The Bottom Billion, on many things. Readers may remember that I debated him at the Battle of Ideas 2007. But he makes some astute points on the current food crisis in an article in today’s Times (London):

“The remedy to high food prices is to increase supply. The most realistic way is to replicate the Brazilian model of large, technologically sophisticated agro-companies that supply the world market. There are still many areas of the world - including large swaths of Africa - that have good land that could be used far more productively if it were properly managed by large companies. To contain the rise in food prices we need more, globalisation not less.”

He goes on:

“In Africa … the World Bank and the Department for International Development have orientated their entire efforts on agricultural development to peasant-style production. Africa has less large-scale commercial agriculture than it had 60 years ago. Unfortunately, peasant farming is not well suited to innovation and investment. The result has been that African agriculture has fallen farther and farther behind.”

Labels: Africa, development, economics, food

I must receive many thousands of press releases every year but one last week from Cooperative Financial Services must rank among the most despicable. It started by revealing that “the British workforce spends a staggering £162 million on lunch every day”. It then calculated that this figure represents an average of £5.503 per day, which equates to £1,265 per year or £50,600 in a lifetime. The next stage was to declare that “the research shows that only just over a quarter (29 per cent) of the 3,200 people questioned take a packed lunch to work with them. Two-fifths (41 per cent) of the British workforce purchase their lunch from the local supermarket while one in seven (14 per cent) prefer to stay close to the grindstone and visit the staff canteen.”

I do not know about my readers but spending £5.50 per day on lunch does not seem excessive to me. However, the Co-op has done its sums. It says that “official statistics show that the Great British favourite is a BLT sandwich with a banana and a packet of crisps washed down with a café latte. If everybody took the time to make their own BLT sandwich at home and substituted the expensive caffeine option for water, they could save £4.36 every day which equates a total saving of over £1,000 per year.”

It seems to me excessively churlish to begrudge people the “luxury” of buying a sandwich and packet of crisps for lunch. And having a café latte instead of water is hardly the height of decadence. This also underlines James Heartfield’s point about environmentalists having contempt for our time.

Of course the Co-op has a reason for asking us to forsake consumption in the present. If only we invested in a Coop personal pension we would be much better off in retirement, it says. However, according to my calculations it could mean about 11,000 frantic morning rushes to make packed lunches and the same number of miserable lunchtimes.

Labels: consumption, finance, food, work

A bizarre alliance is emerging between those who run the 1.5m small farms in Poland and British eco-toffs, if the International Herald Tribune is to be believed. A front page story yesterday started with the description of a small Polish farmer:

“He keeps his livestock in a straw-floored "barn" that is part of his house, entered through a kitchen door. He slaughters his own pigs. His wife milks cows by hand. He rejects genetically modified seeds. Instead of spraying his crops, he turns his fields in winter, preferring a workhorse to a tractor, to let the frost kill off pests residing there.”

It later that revealed that Sir Julian Rose, a British organic farmer (and evidently a double baronet), co-founded the International Coalition to Protect the Polish Countryside. Jadwiga Lopata, the other co-founder, evidently received a visit from top British royalty: “Prince Charles visited her farm (by helicopter) with its solar panels and the black sheep (responsible for mowing the grass) in the yard.”

It is understandable that Polish peasants are anxious about their livelihoods – although few such small stakeholdings are ever likely to provide anything but the most meagre subsistence. But the British aristocrats should be pilloried without mercy for their romanticisation of such a backward system of agriculture.

Labels: development, economics, food

There follows a comment by me from this week’s Fund Strategy. It is related to the news analysis on rising food prices that I posted yesterday.

Thomas Malthus, who more than anyone else popularised the idea that population grows faster than food supply, died in 1834. It is a tragedy that so many people now seem intent on resurrecting his ideas.

When Malthus first published "An Essay on the Principle of Population" in 1798 he famously argued that the food supply would rise arithmetically (1, 2, 3, 4 and so on) while population would grow geometrically (1, 2, 4, 8 etc). He therefore foresaw a future of mass starvation and famine.

Fortunately, nearly 200 years of history have proved Malthus wrong. It is true that over the years there have been occasional famines, with many millions dying. But the general trend is of vast improvement. Overall, the average human has far more and better-quality food than when Malthus was writing, despite the huge rise in population. There is still some way to go before everyone is well fed but the situation is generally getting better. It should be remembered that back in Malthus's time virtually everyone lived on the edge of starvation.

The fundamental mistake Malthus made was to underestimate human ingenuity. Although demand for food has increased, the supply has risen even more. People have harnessed new technology to allow agricultural yields to rise enormously. Far more food is produced for each hectare of land.

Sadly, many contemporary authorities propound what are essentially Malthusian views. The recent surge in global food prices has added impetus to such arguments. Many conclude that rising population and affluence, which they see as driving up prices, are therefore negative developments.

Like Malthus the contemporary cynics underestimate humanity. They do not see that the richer we are the more technology is likely to develop and the better able we will be to deal with problems. For example, richer countries are in a stronger position to deal with the challenge of climate change. The Netherlands can afford modern flood defences whereas Bangladesh currently cannot.

Ironically it is often the same doomsters who block technological progress. The widespread campaign in Europe against genetically modified crops is a good example. Such technology could provide huge advances in raising yields, yet many are acting against its implementation.

It would be far better to let Malthus rest in his grave than try to bring his spirit back to life.

Labels: consumption, economics, food, Fund Strategy, Malthus

There follows part of a news analysis by me on rising food prices from this week’s Fund Strategy.

While Borat enjoyed mocking America, last week's news from that comedy character's "home" country, Kazakhstan, was far from a joke. The price of wheat being exported from Kazakhstan, one of the world's largest exporters of the grain, rose 25% in one day. Its government had introduced export tariffs to quell domestic inflationary pressures.

The surge in Kazakh wheat prices added to a more general surge in global food prices, which rose by 38% between September 2006 and January 2008, judging by the International Monetary Fund (IMF) Food Price Index (see graph). Food prices have more than doubled since their low in July 1999.

Such substantial price increases bring winners and losers worldwide. Possibly the biggest losers are the urban poor. The poor in cities have little disposable income and have to buy their own food. But three-quarters of the world's poorest people, defined by the World Bank as those living on less than a dollar (50p) a day, live in rural areas. At least some of them could benefit from rising food prices. Farmers, even those working on a small scale, could be paid more for their produce. However, most poor households are net buyers of food.

For fund investors the surge in food prices has brought a particularly welcome bonanza (see box). With more conventional asset classes - such as bonds and equities - performing poorly, it has become more attractive to invest in assets related to agriculture. As a bonus, there are diversification benefits to be had from investing in the agricultural sector. No doubt many investors would contend that such investments play a positive social role by bringing much needed capital to the agricultural sector.

A more general impact will be the effect of rising food prices on inflationary pressures. It is likely to be greater in poorer countries, since they spend a higher proportion of their income on food. But the more food prices increase, the more inflation is likely to become a problem worldwide.

To examine the likely trajectory of food prices it is necessary to examine both supply and demand factors. It is also useful to distinguish between those that are relatively short term and longer-term effects.

On the demand side, there are several key long-term factors. First, there is population growth. More people means more mouths to feed.

Second, the developing countries are becoming richer and more urbanised. As people become wealthier they tend to eat more meat, which itself means more grain has to be used as animal feed. It takes several kilos of grain to produce one kilo of meat.

For example, China's annual average meat consumption has risen from 34kg per person in 1997 to 50kg today, according to an authoritative study from the United Nations Food and Agriculture Organization and the Organisation for Economic Cooperation and Development*. India's consumption is much lower, although also rising; increasing from 3.4kg in 1997 to 4.4kg in 2008. The average for the developed world is about 66kg. Overall, the World Bank estimates that global demand for food is likely to double within 50 years.

Finally, there is the rise of the biofuel industry. This is diverting food away from human consumption into energy production. America in particular has provided substantial subsidies to its farmers to produce biofuels.

However, demand side factors alone cannot explain rising prices. The first two factors in particular are long-term trends. Yet the surge in food prices is a relatively recent development.

Part of the explanation for recent price rises is in one-off or short-term factors such as extreme weather in Australia, Europe and north America. Many fear such problems will be made worse by climate change.

However, George Lee, the manager of the CF Eclectica Agriculture fund, also emphasises the time lag - or what economists call inelasticity - between rising demand and increasing supply. "The problem is it takes quite a while for new investment to come through," he says.

When prices were low there was little incentive for suppliers to invest. Although more investment is likely, it can take several years to set up a fully functioning farm from scratch. Investments in technology, such as genetic modification, could also play a big role in raising agricultural productivity.

Other factors not directly related to food can also have a significant effect. For example, rising energy prices can bolster food prices since agriculture can be energy intensive. Also the weakness of the dollar can exaggerate the impact of rising food prices. If food is priced in, say, euros, the price rises would not look nearly as great.

* Available at www.agr-outlook.org

Labels: economics, food, Fund Strategy

Jay Ranyer has a good piece defending supermarkets in today’s Observer.

Labels: consumption, food

The New York Times has pubished a feature by Mark Bittman arguing that excessive consumption of meat is damaging the planet (27 January). A few years ago such an uncritical piece would more likely be in the Ecologist than a mainstream newspaper.

Near the start of the article he argues that: “Global demand for meat has multiplied in recent years, encouraged by growing affluence and nourished by the proliferation of huge, confined animal feeding operations. These assembly-line meat factories consume enormous amounts of energy, pollute water supplies, generate significant greenhouse gases and require ever-increasing amounts of corn, soy and other grains, a dependency that has led to the destruction of vast swaths of the world’s tropical rain forests.”

Towards the end the article quotes a 2006 study from the United Nations’ Food and Agriculture Organization (FAO) on “Livestock’s long shadow”: “There are reasons for optimism that the conflicting demands for animal products and environmental services can be reconciled. Both demands are exerted by the same group of people ... the relatively affluent, middle- to high-income class, which is no longer confined to industrialized countries. ... This group of consumers is probably ready to use its growing voice to exert pressure for change and may be willing to absorb the inevitable price increases.” So for the FAO the solution is self-restraint.

The possibility that rising meat consumption should be celebrated as an expression of increasing affluence does not seem to occur to anyone quoted. And the associated environmental problems are generally viewed as insurmountable rather than difficulties to be overcome.

Labels: consumption, environment, food

Cheap food is one of the great achievements of humanity. Despite the sneering of environmentalists the available of cheap and abundant food – at least in the developed world – is to be celebrated. Thanks to enormous increases in productivity we no longer live on the edge of starvation.

It is therefore worrying that food prices have started to rise. The Economist, in its lead comment this week (6 December), estimates that food prices have risen by 75% in real terms since 2005. This follows a fall by three-quarters in real terms from 1974-2005.

According to an accompanying briefing in the Economist there are two main reasons for the rise in prices. First, rising incomes in Asia means that people are consuming more meat which in turn bolsters demand for animal feed. Rising meat consumption is closely correlated with economic growth and therefore welcome. However, this is a long-term trend which does not explain the sudden surge in prices. Second, is the increased demand for crops such as maize to be converted into ethanol for fuel. There is nothing wrong with this development in principle but it is necessary to ensure sufficient food is produced as well.

It is clear that the urban poor suffer as a result of the trend to agflation. They have to pay more for their food both in absolute terms and substantially more relative to their incomes.

But it is doubtful that most of the rural poor benefit from higher prices. Those that are landless still have to pay for food. And the main problem facing most third world producers if low productivity rather than low prices.

Recent publications which examine this trend more closely include an article in Finance & Development from the International Monetary Fund (IMF). There are also relevant sections in chapter one (PDF) of the IMF’s most recent World Economic Outlook. More broadly the latest World Development Report from the World Bank is about agriculture and development.

Labels: consumption, economics, food, globalisation

The Independent is scared of economic development.

Yesterday the newspaper ran a classic Malthusian scare story on its front cover about how food prices were rising while supplies were falling. It said one of the main factors behind this trend towards “agflation” (agricultural inflation) is the “growing affluence of millions of people in China and India is creating a surge in demand for food - the rising populations are not content with their parents' diet and demand more meat.” The other factor it identified was the increasing use of agricultural crops as a source for biofuels rather than food.

The Independent did a poor job of putting recent food prices rises into context. Although food prices have risen recently the long-term trend is for them to fall. To be fair the article did conceded that: “Sixty years ago an average British family spent more than one-third of its income on food. Today, that figure has dropped to one-tenth.”

On Friday it ran an article on what it saw as the threat of relatively cheap cars becoming available in India. Apart from congestion the inevitable threat of climate change was raised.

It is a tiny step from expressing such fears about development to outright hostility. If the Independent’s perspective is accepted then it makes sense to try to limit development.

The alternative is to welcome economic development as it brings better lives to literally billions of people. It also brings with it a better chance of tackling such problems as insufficiently high agricultural productivity and climate change. After all, the experience of the two centuries since Malthus shows that his pessimistic outlook grossly underestimates human ingenuity.

Labels: china, climate, consumption, development, environment, food, india, Malthus

An astute point buried in the letters page of today’s (London) Sunday Times:

FOOD FOR THOUGHT: India Knight (Comment, last week) writes: “Our ancestors existed on red meat, and there is no evidence to show they all died of breast cancer.” But almost all of them died before the age of 30. Statistically, they would have had little risk of breast cancer relative to all life’s other dangers whether they ate red meat or not. Even by 1800 life expectancy was only about 35 years. She also says “organic food is the way forward”. Our ancestors only ate this along with fresh air and plenty of physical activity – and still died by 30. – Dr Ian Horman, co-author of 2 Million Years of the Food Industry, Blonay, Switzerland.

Labels: book, food, progress

Ben Goldacre, who writes the Guardian’s Bad Science column, has written an article criticising scare headlines linking cancer to genetically modified (GM) potatoes. He gives as an example a high profile story in 1998 making such a link and a similar more recent one in the Independent. On closer examination neither story was justified by the evidence yet they help to create the misleading impression that GM foods are unsafe. Goldacre argues that any research on GM should be published in full, so that it can be properly scrutinised, rather than being reported on the basis of leaks.

Meanwhile, the Times has run a preview of a forthcoming Channel 4 series on GM. In Animal Farm Dr Olivia Judson, a biological scientist, will put the case for GM while Giles Coren, a food writer will take a more critical view. In the course of working on the programme Coren evidently realised that GM food has many advantages. However, like Ben Goldacre of the Guardian, he expresses fears of the control of GM technology by multinational corporations.

Labels: food, science, technology

This week’s Economist (9 December) includes some useful criticisms of the idea of “ethical food” while also making unnecessary concessions. It points out that organic food is far less intensive than traditional agriculture; so therefore more expensive and able to feed fewer people. Fairtrade discourages farmers from diversifying and local food often uses more energy than that produced a long way away. However, it is untrue that the ethical food movement aims to encourage development while there is nothing inherently positive about protecting the environment. The final conclusion, that only politics rather than ethical consumption can bring change, is certainly correct.

Labels: ethics, food

An astute point on the downside of relying on local food sources from the unexpected source of the International Monetary Fund’s World Economic Outlook. Its chapter on commodity prices (PDF) makes as an aside the point that:

“the volatility of food and raw agricultural material prices seems to have fallen on average over the past couple of decades, as growing geographical diversification of production and technological advances have reduced the sensitivity of food prices to supply shocks, such as bad weather or natural disasters.”

In other words global food production and high technology can help prevent food shortages and even starvation. If there are problems in one part of the world then food can be transported in from other regions of the globe. The original source is a 2004 report on the state of agricultural commodity markets by the Food and Agriculture Organisation.

The same chapter makes the point that the supply of base metals is practically unlimited. Aluminum, for example, accounts for 8% of the earth’s crust and iron 5%. The original source is a 2003 study by John Tilton.

Labels: food, technology, trade

Monitoring the alleged sins of modern life

It turns out the humble Bacon, Lettuce and Tomato (BLT) sandwich is a Weapon of Mass Destruction (WMD). This month’s Ecologist magazine has a 10 page cover story on the subject plus an editorial by Zac Goldsmith. Among other things the BLT pollutes rivers because of pig faeces from intensive farms, destroys biodiversity through the production of soya to make fodder for the pigs, involves the use of dams to irrigate horticulture, uses pesticides, fertiliser and energy. All this for a food item which, the Ecologist claims, has no nutritional value.

Goldsmith suggests two solutions to deal with this apparent threat to humanity. First, “honest accounting” by which he means more taxes so the average BLT costs a lot more than the current average of about £1.80. Second, individuals should eat BLTs that are local and organic.

It does not take a close read to realise that what the Ecologist really objects to is modern agriculture. As Goldsmith argues in his editorial: “The BLT itself is not the problem, the global food system is the problem.” The issue also contains an award-winning essay by Clive W Dennis on “Humanity’s worst invention: Agriculture.” The essay is reminiscent of the 1987 piece by Jared Diamond, a leading American environmentalist, on agriculture as “The Worst Mistake in the History of the Human Race” (also see my 1 August dispatch). So it seems that environmentalists are not only hostile to the Industrial Revolution but to the Agricultural Revolution as well.

A quick postscript I cannot resist. This issue of the Ecologist also includes an insert from the Vegetarian & Vegan Foundation with a picture of an unhappy looking woman drinking a glass of milk. The main caption: “Up to 100 million pus cells in every glass …”. Delightful!

Labels: food, sin tracker