Tuesday, 22 April 2008

The Other Crunch: Let Them Eat - ... ?


When it comes to global commodity crises, real or imagined, until quite recently talk has been of energy, water and high-value metals: and it has been easy to take ones eye off the meat-ball, so to say. Hands up – food prices didn’t get a mention in our predictions for 2008: but it’s food that is the first true global commodity flashpoint of the new century.

In retrospect, how obvious this is and how parochial have been the concerns over energy and metals - the rich man’s ‘necessities’. But meagre incomes are spent predominantly on food, with pitifully little room for manoeuvre. We can take a tenfold rise in oil prices (since 1998!) more or less in our stride, and even become blasé about commodity prices (we may even have invested in them …) They cannot easily take a doubling in the price of wheat and rice.

Of course commodity prices are interlinked, and this we did foresee: that the lunacy which is EC biofuels policy would soon unravel. Biofuels for power generation may be primarily woodchips and chickenshit (and diseased carcasses): but biofuels for transportation compete directly and brutally with food production and rainforests. As we noted here last month, the grand EU enviro-energy plan entails that more than half the renewables we are ‘legally bound’ to use will come from biofuels.

It’s an ill wind … and some very powerful (and greedy) lobbies are limbering up for a big, big payday. The French and US farmers, the GM crop manufacturers: all will strangely find high prices insufficient motivation, and will demand ever more protection, promotion and subsidy for their ‘help’ in solving the food crisis.

A rethink by the EC on biofuels would be a start – we’ll return to this in future - but there are only rumblings at present. Heaven help those on a dollar or two per day.

ND

15 comments:

Old BE said...

It was all so predictable and predicted. Only when the crisis gets into the news do our Dear Leaders start to ponder it. The solution is of course far too simple to be actually implemented.

Anonymous said...

Buy farmland!

Bill Quango MP said...

It’s an ill wind … said ND

Or even an ill Wind Farm.

Nick Drew said...

Don't get me started, BQ

Mark Wadsworth said...

It's so simple, really.

The Golden Rule is "Subsidies do not make things cheaper, they make them more expensive" (OK, in the instant case, subsidies/protection for bio-fuels make food more expensive, but it's all the same thing in the end).

Anonymous said...

There is a real human cost to this crisis and no-one in the EU seems to mind very much.

Anonymous said...

Even in this country poor peoples pend a much higher proportion of their income on foods and so the ongoing steep price inflation is hitting low paid people the most.

Anonymous said...

Eat the poor - they're fat. At least in this country. So far.

Anonymous said...

4pints of milk in ASDA now £1.34. Was only £1.04 before Christmas. At that rate it will be £3.00 by next Christmas. Annual compound growth rate would be close to 300%.

Petrol was £1.02 a litre at ASDA at the beginning of March. Was £1.065 today. That's almost a 5% increase in just 6 weeks. Annual compound growth rate of 48%.

Anonymous said...

They'd probably be pretty stringy too though Dearieme.

Although I guess you could get the POlice to tenderise them for you first...

Schadenfreude said...

You've got to hand it to the Americans. Solve your trade deficit and budget problems in one go by fermenting wheat to make ethanol. Reduce your fuel imports and at the same time watch the price of wheat go through the roof while the nations of the world dependent on US grain get desparate for food. Classic food market manipulation. Used to happen here in the UK lots before the CAP was introduced. Too much wheat on the market? Prices too low due to excess competition? Why not just burn it!

Nick Drew said...

the shades of Swift are afoot: hard to distinguish satirical proposals from real ones

we have fallen down the rabbit-hole and like Alice are destined for a crazy ride

hopefully, Mutley, Brown cops the blame for this. He probably will, the Brits are like that, I recall my father blamed *bloody Harold Wilson* for the weather and everything else

Bill Quango MP said...

funny you say that Nd. Mrs BQ only yesterday reminded me that when Gordon came into power it was pissing down.."and we haven't had a really nice day since"

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