Opportunities in smallcaps header image 2

Rising food prices

February 7th, 2011 · No Comments

It’s a disaster for the global poor, but what is behind it?

Global growth can only explain so much. Unless very poor, people don’t eat much more when their income rises, although diet changes goes some way to explain some of it. Rising middle classes in China and elsewhere eat more meat, and that takes up a whole lot more land (something like eight times as much) to produce cattle feedstock (instead of using those grains directly for human consumption).

US Quantitative easing (QE) seems hardly a candidate either as the bank lending and the money supply aren’t rising anywhere near the same, if at all. The timing is also awkward (see first article).

Some possibly complementary candidates:

When the first article came under criticism, a rather apt response was this:

yep. destruction of 1/3 the russian wheat crop, half the pakistani wheat & cotton crops, 1/4 of the chinese cotton, a weather related poor crop in canada, and flooding covering an area the size of texas & california combined in the agricultal part of australia had nothing to do with it…

to say nothing of 170 million tons of our corn being diverted to ethanol, which enough to feed 330 million people at what the UN considers a sustainable level…

Before you balk at the second, read this:

“Almost a third of global farm output depends on animal pollination, largely by honey bees.”

And here is what a rather famous guy once argued:

“if the bee disappeared off the surface of the globe, man would have only four years to live”.

Guess who? Albert Einstein. Now, he had a bit of a habit of making bold claims (which often proved wrong), but there seems a fair bit of logic behind this one..

Tags: Remarkable