Food for Thought and the Price of Food
Thomas Dawson
January 05, 2006
It may seem to many that we are living in a period in which there are potentially insurmountable problems facing us on every side. Certainly the world is on the precipice of a population explosion that we will be unable to sustain. The consumption of our natural resources and the destruction of our environment continue on a scale never imagined by the majority of us. However, nearly every generation of mankind has seen periods of hard times and some of us have experienced some very good times as well. The very nature of life on earth has been a history of turmoil and upheaval, from subsistence and mere survival to prosperity and a degree of security, and sometimes, back again. Don’t expect things to change for the better in the very near future regardless of our sophisticated economy. Consider the single aspect of food prices in the western world. Food has been relatively inexpensive in the western world, except in war-torn areas for the entire lifetime of our generation. This will probably not be the case for the next generation.
It was only a few years ago that the population explosion was in the news all the time, almost to the same extent that we are currently preoccupied with the energy crunch usually referred to as “peak oil”, and the erosion of the western standard of living by “globalization”. The media let up on the problems of population growth because people got tired of hearing about it. After all, the western world didn’t appear to be particularly affected by it. The population explosion has since been generally ignored in the news until recently. That is not to infer that the problem went away. It took thousands of years of human history to produce and sustain a population of a billion people by the early nineteenth century. In the past 200 years, we have multiplied that population by six. There are now over six billion people in the world and we will add the next billion people in only about a dozen years.
With the advent of the industrial revolution, the western world became trade oriented over the last couple of centuries. Since the cold war has ended, our international companies have seized opportunities to sharply increase their profits by arbitraging the labor markets of Asia while selling products at home; sometimes referred to as globalization. This employment of large numbers of people has given impetus and acceleration to the already rising prosperity of a small percentage of the population in various parts of Asia. This small increase in prosperity affecting such large numbers of people has spawned a demand for resources and commodities around the world.
Suddenly, a few people in the more populated parts of the world have the monetary wherewithal to improve their standard of living and have hopes for a better life for their children. They have needs of infrastructure, electricity and transportation as well as food. Now the western world finds itself competing for limited resources, especially energy.
The most efficient forms of energy are oil and gas. The owners of oil and gas find themselves in an enviable position where they have an asset worthy of preservation. They will probably never again allow the prices to fall very much for any extended period of time.
The cost of energy and fertilizer (usually made from natural gas) are substantial costs in food production, not to mention the cost of transporting that food. The 2006 crops will be affected by the recent increase of prices in oil and gas. Expect food prices to accelerate their rise in the next year and continue to rise thereafter. To exacerbate the problem, many farmers around the world can now make more money raising crops for bio-diesel fuels than they can make raising food. Across South Asia, in the Amazon and elsewhere, farmers are razing the forests to plant crops capable of making biofuels. Even in this country, laws will be enacted to require some percentage of ethanol or the addition of some kind of bio-fuels to gasoline and diesel fuels to further subsidize and satisfy the farm lobby.
As prosperity develops for some people in the more populated parts of the world, demand for all kinds of resources will rise considerably faster than their general population prospers. This includes both the quantity and the quality of food. At the same time, wages in the United States will continue its downward drift and the cost of food will rise. You will be told that this is the natural consequence of our so-called market driven economy, not to mention the planned inflation. Just as there is only so much of anything in the world, there is only so much arable land; and much of that is being profitably destroyed. As always, the people with money will be able to buy food at the expense of those without. This leaves little hope for the people of North Africa where there is neither hope nor money and a devastating condition of starvation persists.
It was only a few years ago that the population explosion was in the news all the time, almost to the same extent that we are currently preoccupied with the energy crunch usually referred to as “peak oil”, and the erosion of the western standard of living by “globalization”. The media let up on the problems of population growth because people got tired of hearing about it. After all, the western world didn’t appear to be particularly affected by it. The population explosion has since been generally ignored in the news until recently. That is not to infer that the problem went away. It took thousands of years of human history to produce and sustain a population of a billion people by the early nineteenth century. In the past 200 years, we have multiplied that population by six. There are now over six billion people in the world and we will add the next billion people in only about a dozen years.
With the advent of the industrial revolution, the western world became trade oriented over the last couple of centuries. Since the cold war has ended, our international companies have seized opportunities to sharply increase their profits by arbitraging the labor markets of Asia while selling products at home; sometimes referred to as globalization. This employment of large numbers of people has given impetus and acceleration to the already rising prosperity of a small percentage of the population in various parts of Asia. This small increase in prosperity affecting such large numbers of people has spawned a demand for resources and commodities around the world.
Suddenly, a few people in the more populated parts of the world have the monetary wherewithal to improve their standard of living and have hopes for a better life for their children. They have needs of infrastructure, electricity and transportation as well as food. Now the western world finds itself competing for limited resources, especially energy.
The most efficient forms of energy are oil and gas. The owners of oil and gas find themselves in an enviable position where they have an asset worthy of preservation. They will probably never again allow the prices to fall very much for any extended period of time.
The cost of energy and fertilizer (usually made from natural gas) are substantial costs in food production, not to mention the cost of transporting that food. The 2006 crops will be affected by the recent increase of prices in oil and gas. Expect food prices to accelerate their rise in the next year and continue to rise thereafter. To exacerbate the problem, many farmers around the world can now make more money raising crops for bio-diesel fuels than they can make raising food. Across South Asia, in the Amazon and elsewhere, farmers are razing the forests to plant crops capable of making biofuels. Even in this country, laws will be enacted to require some percentage of ethanol or the addition of some kind of bio-fuels to gasoline and diesel fuels to further subsidize and satisfy the farm lobby.
As prosperity develops for some people in the more populated parts of the world, demand for all kinds of resources will rise considerably faster than their general population prospers. This includes both the quantity and the quality of food. At the same time, wages in the United States will continue its downward drift and the cost of food will rise. You will be told that this is the natural consequence of our so-called market driven economy, not to mention the planned inflation. Just as there is only so much of anything in the world, there is only so much arable land; and much of that is being profitably destroyed. As always, the people with money will be able to buy food at the expense of those without. This leaves little hope for the people of North Africa where there is neither hope nor money and a devastating condition of starvation persists.
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