Grantham: The food crisis should not be left to cowboy capitalists

[PlanMaestro]

http://www.ft.com/cms/s/0/8f2f7fae-e531-11e1-8ac0-00144feab49a.html#ixzz23UrZamb9

 

Food prices have risen for three main reasons. Demand for meat from the expanding middle class in developing countries (especially China) absorbed corn and soya – one pound of beef carcass requires 30 pounds of grain and one pound of pork requires 12 pounds of soya. Chinese soya demand, growing at 10 per cent a year, has transformed the agriculture of the western hemisphere, which now has more acreage with the crop than with wheat. Second, the global population has continued to increase at a rapid pace. Third, the weather has become more hostile to farming, with a substantial increase in severe droughts, floods and heatwaves.

 

(...)

 

In the end, market prices may change this behaviour, but they will at first send rich countries too faint a signal for them to react, while pushing the poorest out of the market. A symbol of our current indifference is that filling up a single tankful of a sport utility vehicle with corn-based ethanol displaces enough calories to feed one Egyptian farmer for a whole year.

 

[rkbabang]

Ethanol has nothing to do with a free market.  It has everything to do with government regulations, laws, and subsidies. It is your government that is starving that Egyptian farmer not the cowboy capitalists.

[NormR]

Ethanol has nothing to do with a free market.  It has everything to do with government regulations, laws, and subsidies. It is your government that is starving that Egyptian farmer not the cowboy capitalists.

 

+1

[woodstove]

Maybe a bit of both, of government and cowboy capitalists!  Some time ago, looking into ethanol economics, I believe I noticed that the Bush family would be a beneficiary of corn-for-ethanol subsidies.  Cannot recall details, and that was several years ago.

[JEast]

Gosh, I love the GMO team and their commentary.  But what is with all the gloom and doom from Grantham?  O.K. I get that he is left of center and that is fine, but is he moving more towards Karl Marx too that capitalist are the problem?  Some tongue-in-cheek here so don't take it too serious  :P

 

Cheers

JEast

[rkbabang]

Maybe a bit of both, of government and cowboy capitalists!  Some time ago, looking into ethanol economics, I believe I noticed that the Bush family would be a beneficiary of corn-for-ethanol subsidies.  Cannot recall details, and that was several years ago.

 

I should have been more clear, when I use the term "capitalist" or "capitalism" I mean "free market capitalism"  not crony-capitalism, state subsidized and state protected capitalism, not mercantilism.  Bush is not a capitalist by my definition.  I associate him and those like him with government not the market.

 

Many have a distorted view of what a free market actually is.  If you grow corn or make ethanol, for instance, and you can get the government to subsidize corn and require ethanol in fuel.  You may be a lot of things, but a free-market capitalist isn't one of them.

[PlanMaestro]

Gosh, I love the GMO team and their commentary.  But what is with all the gloom and doom from Grantham?  O.K. I get that he is left of center and that is fine, but is he moving more towards Karl Marx too that capitalist are the problem?  Some tongue-in-cheek here so don't take it too serious  :P

 

Keeping it light! But I understand where Grantham is coming from. Actually some would say his arguments are conservative ... old school-Burke-Madison-Chesterton-Munger-conservative not the current bunch. And there are right wing people betting on his same assumptions.

 

All our food and resource problems could be handled easily if we were the homo economicus of economic theory – well-informed, rational and incorruptible. Most estimates of future outcomes are based on that assumption. But it just isn’t so.

 

Sadly, we are easily manipulated by vested interests, we passionately prefer good news to bad, we are more short-sighted than we think we are, and we are all too corruptible. The world is likely to act too slowly to conserve resources, improve farming technologies and discourage meat eating and waste, which accounts for between 30 and 40 per cent of all food from field to mouth. Our behaviour, which unnecessarily pushes up prices, will inadvertently cause malnutrition and outright starvation in poor countries.

 

Jeremy Grantham