Tuesday, November 18, 2008

Food for the people!

A great essay in the New Yorker addresses the recent spike in food grains and the impact a prolonged price increase would have had for the poorer people of the world.

It is a great concise essay, the type this feeble mind is more apt to follow....but to summarize it even further, its main points are
  • The growth of global crop yields has slowed dramatically since the 1990s.
  • Under the pressure of the IMF and the World Bank the various national Agricultural Control Boards (ACB) were done away with in the interest of free markets
  • The demise of the ACBs lead to the decrease in the stockpiling of food grains by various countries making them susceptible to food shortages since they then depended on exports and did not have any internal reserves.
  • The free market did not necessarily lead to increased production and when it did, it was more for cash crops rather than staples.
  • Very few 3 - 5 countries supply most of the food exports and any shortages in any of these countries can dramatically drive up prices (note the recent draught in Australia)
  • Reliability is key to food supply rather than efficiency and in a business as complex as agriculture, maybe redundancy and over production is a good thing.

Some of the other concerns this feeble mind may add include the dramatically growing population which when coupled with lowered yields could precipitate a food crisis.

This Thanksgiving though, lets us all appreciate the bounty we have on our tables and be grateful for it.

And look for long term investments in the agricultural sector ;-)

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