To quote the great one, (P)Rick from The Young Ones.
"He's bloomin' right you know!"
The head of the World Bank has said that soaring food prices are causing hardship and starvation for poor people worldwide, and implied that at least some of the blame lay with Western governments' efforts to encourage biofuel use. "While many worry about filling their gas tanks, many others around the world are struggling to …
Instead of turning 10% of the increasing consumption of hydrocarbons into "renewables", having a goal of having the amount of hydrocarbons burnt be 10% less in coming years than it is currently projected to be?
Then we don't have to argue over relative efficiencies nor push food prices through the roof.
Or maybe this is all about putting a crimp in China's style. And sod the other net importers who can't afford it. Or maybe it's the other way around and is a 2nd World plot to drag the decadent West's living standards down to their level.
Too many people? And I suspect this is bollocks.
They're vague on the countries they're referring to, so I'll pick one with a historically disastrous food situation:-
"Ethiopia's poverty-stricken economy is based on agriculture, accounting for almost half of GDP, 60% of exports, and 80% of total employment. The agricultural sector suffers from frequent drought and poor cultivation practices. Coffee is critical to the Ethiopian economy with exports of some $350 million in 2006, but historically low prices have seen many farmers switching to qat to supplement income." - from the CIA worldfactbook.
So, 60% of exports and 80% of the population are in farming, just fill me in on the way in which farming is harmed by high food prices?
Little economics teaser for you...
If the price of coffee doubles, is Ethiopia a) Worse off or b) Better off?
This is like saying that the high prices of CPU's is making it difficult for Intel to do any adding up.
(The bollock icon)
in diesel engines. cheaper and easier than any other "biofuel" scheme. you can add 20 to 50% of oil in the regular gasoil, and it's better for the engine than regular gasoil. The problem is, Texaco don't get money from that. They don't get much from ethanol either. Which might shed a new light on Zoellick's position.
And let's face it, all actions by the world bank so far tended to increase poverty and hunger in developping countries.
If anything can lead to recovery of 3rd world food crop production this will be it.
During the last 20 years a large portion of the 3rd world has forgotten how to farm and manufacture. We simply dump all of our leftover food, 2nd hand clothing, used electrical goods, etc as kind "charity donations". To add to that in many places multiple levels of local mafia, corruption and crime have grown along these aid channels. If this is what it necessary to take them down i am all for it. Where is the closest biofuel fourcort? I will have a full tank of dat please...
Me coat, with the "stop killing 3rd world industry by dumping our leftovers" sticker on it.
War. The country has been at war, with itself or Eritrea or Somalia, on and off, for the best part of thirty years. Most of the famines there were caused by people being driven off their land, armies stealing all the food or the work-age population getting slaughtered. And not down the pub, either. My dictum tends to be, when there's a problem, look for the man from the government. In this case the men from the government are carrying guns and stealing your son, but in other cases...
Of course Ethiopia might be in a much better position if it weren't for the protectionism of the US and the EU, both of whom prefer to see third-world farmers starve so they can protect their own farmers from having to actually compete in the world marketplace - and of course CAP finally achieved its stated goals and reduced our surpluses just at a time when we *really* need them. Ohio is 100% behind biofuels in the US, and France is pushing it here. Both are demanding more subsidies. There's that government interference again. C'est la vie.
The Biofuel boondoggle is just the icing on the cake, coming at a time when world food production has actually taken a slight dip (largely because of rising fuel costs, consequently causing a double pressure on food prices). I mean, who thought it would be a good idea to use *food* as *fuel*? What *idiot* came up with that? Oh wait, it was the government. How silly of me. And there's that man from the government again...
Paris, because even she's smart enough to know that you don't use bread to heat your home and you never, ever trust the government to feed you.
"Little economics teaser for you...
If the price of coffee doubles, is Ethiopia a) Worse off or b) Better off?"
As I understand it, the price of coffee hasn't increased quite as much as theat of cereal crops has.
This is because:
A) You can't make a decent biofuel from arabica.
B) Coffee-growing conditions are quite far removed from cereal-growing conditions.
Coffee is not in competition with maize, so does not benefit from an increase in the price of basic food crops.
In fact, coffee is technically a luxury good.
Little economics lesson for you:
When the price of essentials goes up, disposal income goes down.
As disposable income goes down, so do the prices of luxuries.
We have encouraged our poorer neighbours to base their economies on luxury cash crops. Which won't make them cash now. Or feed them. We are b*st*rds, basically.
The comments above seem a little naive. The problem is that the short term quick buck route means that any avialible food material will be sold to the highest bidder. That is standard capitalism, where short term profit is put before long term investment, note the quick fix ethanol as opposed to the longer more expensive methanol or biodiesal. Possibly in ten years the system might work out a equilibrium but until then the poor and helpless will starve the rain forest gets smaller and the planet gets warmer (but the suppliers of ethanol get richer).
Biodiesel is ridiculously easy to make. Go to your local McDogfood, nick the used cooking oil (they LOVE to not have to pay for disposal!), and run it through a coffee filter. BAM! Biodiesel.
It requires no modifications to a diesel engine to run biodiesel. My old garage manager used to use it in his 2007 Ford F350, and he actually got BETTER mileage than using traditional #2 diesel. And far cheaper, with diesel at $4.859 a gallon at our fuel station.
The rich make the market scarce with export bans on rice and other food products and it was the rich in the oil market with fake supply issues that drove us to this in the first place.
Robert Zoellick should know all about this kind of thing as he is one of the richest.
IT seems he would like farmers to go back into debt so that his rich friends in the banking industry can go back to making gobs of money.
At last someone in the higher money spheres realizes that. Food crops for biofuels means less crops for actual food. There are plenty of schemes that don't require using the edible part, or even plants altogether, like that "cow crap" natural gas scheme in California.
Contrary to what the previous AC suggests, what will really happen is that farmers will ditch actual food crops and substitute them with biofuel crops, thus *reducing* the food supply. Coffee and tobacco plantations have already done their fair share of reducing food crops, as well as cannabis/coke plantations; farmers see these as more profitable options than actual food crops.
Get me a biowaste biofuel processor and that would definitely be a good option. Make one that can process human sewage and we'll get an added plus of cutting down on pollution as well!!!
`Instead of turning 10% of the increasing consumption of hydrocarbons into "renewables", having a goal of having the amount of hydrocarbons burnt be 10% less in coming years than it is currently projected to be?'
There's a fundamental problem with energy conservation, in that there is only ever so much of a saving to be made. There is a limit beyond which you can go no further. You can find a shortcut that will knock ten minutes off a journey, and another that will knock five minutes off that, and maybe even a third that knocks another two minutes off but once you've found the quickest route, there are no more short cuts to be found anywhere.
Making the energy we have got last a bit longer is a laudable goal and there's no reason not to do it, but by itself it is insufficient. We need renewable energy sources because the world's demand for energy is never, ever going to decrease.
True but since those methods are uneconomical, the "big companies" wouldn't bother and it's back to ethanol and the starving millions !!
@Pierre - that's because the World Bank is an American-run organisation that is for the benefit of the Americans. It is better to take a look at what the Asian Development Bank, the African Bank and, now, the Latino Bank are doing !! Starved peons cannot work hard for their multi-national massas !!
@Oxfam can go fish - Give a man a fish and you feed him for a day. Teach a man to fish and he'll sit on the river bank, drinking beer all day !! :-)
It ends up being a worse polluter than conventional gasoline in terms of toxicity of output. So what if it outputs slightly less CO2? Last time I heard plants like CO2, and tree-huggers like plants, so therefore, why do tree-huggers hate CO2? WTF?
It has no benefit, will just end up killing roadside vegetation and joggers, and inflates the cost of my cheese! Stupid Bastards!
"This is because:
A) You can't make a decent biofuel from arabica."
Incorrect. Actually, a professor at the University of Nevada, Reno has determined a method of making biofuel from coffee grounds. They are actually ideal because they contain a pretty fair amount of natural oil.
Correct observations above of developing world economies are tending to confuse causes with effects. (I'll spare the Grauniad my ire).
Follow the money. First, the USA has been dumping foodstuffs into developing countries at prices at which the farmers there cannot compete in the open market, and so are driven out of agriculture. Second, the terms of reciprocal arrangements mean that developing countries are forced to produce for export rather than for the domestic population, so as to procure dollars to repay foreign loans.
I wonder what the World Bank has to do with all this - not.
Are we going to ban bio fuels? Becuase if farmers can make more money selling crops for fuel rather than food that's the only way to stop them.
It seems the issue is not biofuels being inherently evil (much as I know the reg despises anything that may be good for the environment) but that the increases in oil prices have made previously unprofitable crop uses the cheaper option.
>The comments above seem a little naive..That is standard capitalism, where
>short term profit is put before long term investment, note the quick fix ethanol...
That's beyond naive.
Ethanol had nothing to do with capitalism and market forces.
It got it's start in dunderheaded environmentalists.
Back 20 years ago they required oxygenators in the fuel in certain parts of the U.S. to reduce pollution. The industry chose the cheapest one -- MTBE. Which is a water soluble carcinogen. Ok, that wasn't smart.
So the laws started to change that said no more MTBE -- you need Ethanol instead!
Problem was...you don't need oxygenators today. Advances in the computer controls for the cars address the problems that chemical additives like MTBE or Ethanol are meant to address. But dunderheaded environmentalists wouldn't accept fuel with oxygenators.
Then the farm lobby -- about as warped as you can think of from capitalism with a large number of federal programs and subisidies that muck with the market -- realized that having 10% of the fuel supply be ethanol was a way to increase farm profits...and they took up the cause of requiring Ethanol everywhere, not just where oxygenators had been needed twenty years ago for pollution control.
Big oil's response? Shrug their shoulders. Ethanol can't be mixed at the refineries, nor pumped by existing pipelines. And you need a lot more of it the MTBE to achieve the same effect. So they bought the extra tanker trucks, barges, and rail cars...and removed petroleum storage capacity at terminals to store ethanol instead, and did all the other steps to meet the law requiring ethanol to be used -- much more expensive, but they don't really care, they just add on the standard 15% profit to whatever it costs them to produce the fuel.
That Ethanol has a lower energy content which means you need to consume a few percentage points more fuel to drive as far...oh well, oil companies get to sell more fuel, too. Oh, that of course stresses a refining and distribution network already maxxed out driving up costs to constrain usage somemore...
Ethanol has nearly nothing to do with capitalism. It has to do with out-of-date environmentalists who like to make nice incomes going by continously suing somebody for something, combined with a farm lobby that would make Karl Marx proud. Plus politicians that pander to both of those groups, and healthy dose of bureaucrats who enjoy their government jobs in [agriculture|environmentalism], and corporations that just shake their head at stupidity and simply tack on their pre-determined profit margin to whatever the cost of producing goods are...even if substantial parts of those costs had nothing to do with their own decisions or how they would have made investments in a free market.
@jonb , sadly you really do not know much about Ethiopia and it's long history do you , for it has been at war with it's neighbours and fighting over resources for almost as long as recorded history itself , from ancient Egypt to virtual open warfare from the Seventh Century AD with a variety of Moslem controlled Empires to the present stupidity currently funded by the Yankee wankers for a price as they are being bled dry in both Somalia and Ogaden at the same time from ten thousand paper cuts !
As for the World Bank , it has and always will be a ploy to encourage poor third world nations to squander their limited resources very cheaply at one cent in the dollar to the prime beneficiary the US of A for it to function as country !
What price a choice indeed , for we have rigged the market and scales for the pure benefit of only one country to the exclusion of every one else , but even comedians like the Liverpool(Anfield) born Alexei Sayle , can be very cutting about the continuing failure of the World Bank to address any real issues in the so called developing third world !
"that's because the World Bank is an American-run organisation that is for the benefit of the Americans."
That was exactly my point. Ethanol is BAD for World Bank because Texaco doesn't get money from it. Recycled (or brand new) oil in unmodified diesel engines is BAD for World bank (and for most of "Western" govs) because Texaco, Shell and company can't make money out of it. Lobbying at its worst. I must mention here that putting 20 to 50 % oil in your diesel engine actually helps your local colza producer, which re-equilibrates "world economy" because we don't need to flood third-world countries with our heavily-subventionned excedents anymore. Still the World Bank (and consorts) will never agree to that, because it goes against their very aim, which is to get as much money from developping countries as they can. And that implies the need to keep them "underdevelopped".
I always understood that it cost a lot of fossel fuel energy to grow crops. So much so that making food directly from fossel fuels was considered. More fossel energy goes into growing crops than you get out of the crop.
Any benefits from cleaner burning fuels and lower CO2 are lost when you look at the full picture. It's similar to zero emmission Hydrogen cars. Water is an emmission, and so is the CO2 released by the electricity generating grid used in the release of hydrogen from water.
More people eat more food and take up more space giving less space available to grow food. Result, we all eat Soylent Green.
Then there is the cost of transportation, as rising fuel prices drive up the cost of food (and just about everything else) and the oil industry admits to record breaking profits. But let’s leave that rant for later…
Why fire? Burn everything, that will solve the problem!
Food shortages have little (if anything) to do with grains being turned into fuel. Look at rising consumption of animal protein in India and China. 2 Billion people are switching from maybe eating meat monthly to doing it weekly (or daily). We could switch to 100% ethanol and still have less impact than that consumption landslide.
Cattle and other ruminants consume about 5 times the resources to raise per ton as basic foodstuffs. It's simple math - as the third world adopts a more affluent diet, there will be food shortages. Dwarf wheat and other innovations (GM crops anyone?) have kept the lid on that pressure cooker for years, but we're reaching the limits of current tech. At least, until we work out the Soylent Green angle...
No. Just no. I work for an environmentalist organization (we do electronic waste disposal), and we operate a fleet of stonking huge trucks that get 5 miles to the gallon on near-$5/gallon diesel and have saddle tanks that you could store dead bodies in. This situation was naturally at odds with our mission. So we made some friends in the local restaurant and snack food production industries, built a "small" refinery (about $25,000 investment), and now we produce enough biodiesel at the cost of something like $0.05 per gallon in consumables to feed a fleet 3 times our size.
The only problem comes when we have to send a truck outside range from our facility and run it on regular diesel.
We've also received a visit from the police because our neighbors (read: The town council) were concerned that we weren't participating in the mandatory local recycling program... Nevermind the gigantic "WASTE DISPOSAL" and recycling logos painted on the side of our vehicles. Unfortunately that program is mandatory in the sense that you "must participate in the program" and not "must recycle" - so we stick the stupid little bin out on the curb once a week with one aluminum can in it, and the rest of our waste goes onto our own trucks. But that's another issue.
The actual complaint, as far as I can understand is the following - "Don't do biodiesel, developed nations, because then you can't give away food you weren't going to use."
Since when is charitable government self-evident truth? I don't think that saving the environment (ethanol might not be actual saving, heck, it might pollute more, but for the purpose of the argument I'm assuming it's eco-friendlier than burning crude) for everyone is a worse goal than helping nations that by no means can help themselves.
If the charitable ability of the developed nations deminishes for any reason, why is it assumed that these nations are doing something wrong? In fact, the food surplus of EU is a beurocratic joke, and one that will find solution in the ever increasing openenness of the market.
So if we stop overproducing, or use the overproduced crops for something else; then we are all biggots who don't want to help our fellow man in dire need. I guess there is no pleasing some people, then.
What does this guy think third world countries produce? Spaceships?
No, they produce mostly basic commodities, in particular food.
Yes, producing Ethanol from potential food sources reduces the availability of food, but the causes for people starving are not related to food scarcity. In fact, there's enough food in the world to overfeed the whole world. No, hunger cause is poverty. These starving populations simply cannot afford food. Why? Because what they produce is not as highly valued as other things.
Raise the price of food and these populations will have to pay a higher price for food (which amounts to perhaps 50% of their cost of living) but also raise the amount of their whole income by the same proportion. Net result, they have more capacity to acquire food and be well fed.
Now, I still think that making Ethanol is stupid, but not because of the reason mentioned. It is stupid because there are much better energy sources available, and the internal combustion car is dying anyway.
Are you ready to be held liable when someone reads your comments and does as you say?
"It requires no modifications to a diesel engine to run biodiesel."
This quote is correct in most cases and I have no argument with it.
"Biodiesel is ridiculously easy to make. Go to your local McDogfood, nick the used cooking oil (they LOVE to not have to pay for disposal!), and run it through a coffee filter. BAM! Biodiesel."
This quote is just wrong and will kill most Diesel engines.
What you have after running it through a coffee filter is clean used cooking oil.
The problem with running an engine on cooking oil is that it is much thicker than Mineral Diesel or even BioDiesel. As it's thicker the fuel pump has to work much harder, you are more prone to clogged injectors etc. Also it solidifies at much higher temperatures that Diesel so in cold weather you are trying to inject butter into the engine.
Diesel engines can run on clean oil if you convert them to heat the fuel before it reaches the pump/engine.
To convert it to BioDiesel you need to react it with Lye and Menthanol which strips most of the glycerine (a handy by-product of this process) and water out of it.
You also get a ready supply of soap from the used Lye.
The high value of biofuel crops is leading to deforestation in Brazilian rainforests to grow biofuels. It is likely that we are nearing a 'tipping point' where the rainforest is no longer able to generate the rainfall it needs to sustain itself and so will collapse.
I think that's what they call irony.
While ethanol might use up some grains that could otherwise be used to feed a starving child, so too could the grains that are wastefully converted into excess quantities of beef in feedlots.
There is no real grain/soy/whatever shortage. Instead, various consumptions rise to consume the production. When a new consumer emerges then other consumption needs to adjust.
The major buffer between production and consumption is the production of feedlot animals using the surplus grain/soy.
I'm not a vegetarian. Animals-as-food make a lot of sense, but raising them feedlot style does not. There is a lot of land, for example hill country, that cannot be used agriculturally except by running cattle and sheep etc. Traditionally animals have been used to convert waste and marginal resources into food: a few pigs and chickens fed on scraps etc, but now we use prime agricultural land to raise grains and soybeans to raise feedlock animals.... and for those that have eaten both: grass fed beef really does taste better.
Feedlot animal production, however, is extremely wasteful. The food input is many times the food output. Raising one food unit of feedlot output to give a Westerner an extra heart attack could feed many tens of starving kids.
What really screws things up are the various agricultural subsidies that encourage inappropriate production and consumption models.
The trick to making ethanol is to not use grains but instead use grasses and sugar cane etc. These don't compete for the same land as grain production (the optimum land for grain/soy != optimum land for grasses/sugar cane).
I'm not a specialist on energy, but sometimes I get pissed off with the poor and untrue discourses people, which we hope to be well informed, do. Ethanol cars run on misery? As far as I know, there is no "misery" in the developed world. So, what is it about?
Well, here some points:
- ethanol production is inefficient in North America and Europe. Does it take place from food production? Certainly yes. There. Whatever it is for, fuel or food, the crops are financed with heavy subsidies anyway. The only way food get to poor places is from donations! Well done! Great way not to feed misery!
- Brazil has been producing ethanol for 30 years, from sugar cane. This month the comsuption of ethanol has been larger than gasoline. Cars run on 100% ethanol or whatever the mix of ethanol and gasoline you prefer. An uninformed person would say: You are destroying the Amazon forest! Bullshit. We have huge areas occupied by cattle that still can be used for agriculture. The Amazon issue is totaly another discussion...
- What about other poor countries? Just like Brazil itself, it has never been a problem of land, but of public policies of distribution. And, as a matter of fact, Brazil is "giving away" technology to other countries to produce ethanol. Not because we are the nice guys, but as a market strategy to make ethanol worldwide viable.
Now, is it a food issue? Well, here we go again! A new environmental/human rights bullshit, to sell the idea that initiaves like the Brazilian one are stupid, wrong, as a practical way to convince legislators in the consuming centers (oh! would it be the rich countries?) to adopt restrictions to what could be a source of income to poor regions. Let's just pretend it is about about food, ethanol and environment.. and forget about subsidies, market access restrictions, and where exactly the pockets are going to be filled with money...
From the world food porgram:-
Facts & Figures
Land area: 1,104,300 sq km
Climate: Tropical monsoon with wide topographic-induced variation
Terrain: High plateau with central mountain range divided by Great Rift Valley
Food Production: Cereals, pulses, oilseed, sugar cane, potatoes, quat, hides, cattle, sheep, goats
Right, my coffee point was (I thought obviously) fascetious, the shortage of food production in ethiopia isn't actually relevant in this context, the point is that it is a country with an economy dependent on agriculture, such an economy is better off from high food prices (whether at war or chanting at a hippy tree hugging love in).
Similarly to the obvious statements that ethiopia has spent a significant time at war, the growth of food prices actually has broader causes than bio-fuel alone.
The growth of wealth in India and China has meant that people who previously existed on the bread line, can now buy more food, so they do. Oil prices, and as has been observed in numerous other Reg articles farming uses rather a lot of fuel, have gone up.
The bottom line is that it's time to hand out condoms with the food parcels.
There are many factors in the current world food shortage.
Bioethanol is one of the smaller ones. More people to feed, an increasing demand for meat in the developing world, climate change damaging harvests, soil degradation due to intensive farming methods, shortages of fuel and fertilizer due the impending peak oil (and after that peak natural gas) all add to the problem. The bottom line is limits to growth. We are making more people, but we are not making more land, that what we have is getting less fertile. We are not making any more oil , gas or even coal, but we are burning them all as fast as we can get them out of the ground, but that rate of extraction cannot keep up with demand, and the supply of oil is about to decline, permanently.
Industrial society and the green revolution are predicated on huge inputs of cheap energy. When those inputs stop growing, then society stops growing richer. From now on, economic growth is a negative sum gain. We get richer only if other people get a lot poorer. Worse still (for us), is that the global money system (fractional reserve banking with interest) is only stable in a growing economy. Once the global economy stops growing, the system collapses.
Credit crisis anyone?
The future is going to be nasty for all of us.
...Coming form the World Bank.
Maybe if they stopped mandating that countries to which they provide 'aid' have to spend it on grow-once Monsanto zombie seeds, food prices would drop somewhat...
Just a thought but what do I know, i haven't got a degree in <del>population control</del> economics.
You're dead wrong in your reasonning about food prices, though I understand that your reasonning is natural as a first thought.
I can explain why (in fact, Anonymous Coward already did so, and if you read him again, you should see that he obviously knows more about economics than you do, if only because he knows the concepts and terms), but first there's something you should realise before even entering the explanation:
The World Bank, who is paying hundreds of experts to study such things, says it's bad for the poor.
You can draw three conclusions from that without even trying to get into arguments:
- Either you think you're so clever that without any knowledge in economy (that shows in the way you describe things, no offence), you're better than hundreds of people paid for that are.
- Or you think they're bad people with a secret agenda (I have two friends who work there, and they're closer to raving ONG guys than to your usual money-comes-first guy, so if they had the impression that organisation had a "bad guy" secret agenda, they wouldn't work there, but hey, you're free to disbelive).
- Or, if both points above seem unlikely to you, then you have to conclude that though you don't yet know why (and noone can understand everything), you just have to be wrong (or at least you might be inadvertently right, but not for the reasons you think, which are way too basic to not have been considered and analyzed deeper than you ever could by appropriate people).
Here. So basically, you have the choice between saying you're arrogant stupid guys who think they know better than professionals of the field, state that there is a conspiracy, or open your mind and assume that you're wrong though you can't yet see why, which is normal.
Now, on to the explanation itself.
Since the reasons were already explained in a language that is not familiar to most of us, I'll focus on an example, a rough description of how rising food prices make life more difficult for poor farmers (which I agree is counter-intuitive, but follow me to the example).
Take a poor country.
Without trade, 50 or more years ago, they were all farmers.
They grew only enough to eat, cos' the soil is not yielding much, and they have no technology to improve yields.
They can produce 100 food-crop (no unit here, it's just a number for comparison
), and eat 99 if they are to survive.
99% of the population are farmers, because they just have to do that to survive. There's 1% that feeds off the small surplus and provides basic services (you can change the numbers, it doesn't matter, the results won't change, I chose those for simplification).
Come the open market. Price of crop-food is 1.
They don't have anything to trade, so for a time, it doesn't change anything. They just keep producing their food and eat it, and they don't care (that's your reasonning) about food prices.
But then someone comes and says "hey, you have a competitive advantage. We're rich, we want coffee, and you have the climate for it. Produce that instead of your food, it's worth more".
And indeed, instead of 100 food-crop, they can produce 100 of coffee.
And coffee sells for 3 while crop-food sells for 1.
So farmers there start growing coffee, sell 100 coffee for 300, and buy 100 of food. Oops, now they can feed themselves and have 200 left to buy basic goods.
There's a demand for goods growing there. As a consequence, some people can stop farming (2 thirds of them, possibly) and go live into towns, where they'll produce things to sell to the farmers for their disposable income (the 200 not used for buying 100 crop-food they stopped producing but still need to eat).
So now you have a country where many people can stop working as farmers, and can start a real economy, selling things to farmers so they can buy their own food.
You get a coffee economy.
Do you see where it leads now? What you didn't see is that raising food prices are the same as a lowering of the coffee price.
Now, crop-food prices double. Coffee prices stay put.
Now the farmers who produce coffee have to pay 200 to buy their food instead of 100.
Once they've fed themselves, they've got 100 left, when they had 200 before.
Their revenue was HALVED (food excepted). They're much, much, much poorer.
And going backto producing crop-food wouldn't help, since they'd then only make enough to feed and wouldn't even have the 100 left that they still have now.
And that's not even the worst of it.
People in the towns, what do you think they're doing now? Each farmer was supporting 2 city-dwellers with the 200 he made (he bought for 100 to each and each spent that 100 on crop-food). Those 2 city-dwellers produced things for the farmer to buy (chair, tables, roofs, electricity, not much, but still a big life improvement).
Now, farmers spend only 100. And each city dweller needs 200 to buy food.
This means instead of 2 city-dwellers supported, each farmer, with 100 he buys from cities, supports only HALF a city-dweller.
That 3 QUARTERS of the city dwellers that now don't have a livelihood anymore and are in danger of starving (at least until they go back to cro-farming).
Do you se what it can do now?
Of course, the example is simplified, the numbers are rough so that they're understandable, but whatever numbers you choose, it doesn't change the principle: because food price climbs compared to coffee (or other luxury good) prices, farmers are impoverished, have lower disposable income (what's left after feeding themselves), and worse, it completely wrecks the economy of the cities that were based on the assumption the farmers could produce enough luxury-crop to support feeding of the whole society.
Incidentally, notice how there have now been food riots in at least three countries, and those riots take place in the cities: the farmers get poorer and poorer, up to the point where they would revert to the poverty level of when they produced food-crop, but the city-dwellers can very, very quickly get to the point where they just starve.
I hope you paid attention and understood where your previous argument was wrong.
I know how difficult it is to admit we have missed something, but your previous point was not really wrong, it was just based on incomplete assumptions.
Taking into account the "luxury-crop versus food-crop" problem, it chagnes the deal.
"The CIA World Factbook" Possibly the most biased, subjective and distorted set of `facts` you are ever likely to read.
LMAO...bet there's some cracking tales told in that particular version of world events.
Oh and everyone, please stop making yourself look so stupid. Please stop with the `tin-foil hat` references as a response to things you have no idea about. It is a very poor cover for an absence of any kind of knowledge, understanding or insight into the issue at hand, and belies an inherent lack of ability to articulate an intelligent response or challenge.
Interesting story here on some of the current effects of Biofuel harvests http://fortuzero.wordpress.com/2008/03/28/the-darkside-of-biofuel/
Let's get one thing straight. Sustaining or increasing the world population, or raising the standard of living of the poorest in the World towards that of the minority in the West is NOT truly at the forefront of any government agenda. The land is incredibly fertile and rich in natural resources, which we just love to mine. The people in these places? ER, well, yea. I guess they are a bit of a problem. Can't be seen to do anything which the public may find `distasteful` now eh...
I bet heads of state and their buddies at the top of the military and industry barely sleep at night for fretting over the fate of the sub-saharan Africans and their future generations. Night and day they toil in an admirable struggle to ensure a good quality of life for these unfortunates... Just as they fret over the hundreds of thousands (non - combatants) slaughtered in Iraq so that `we` can make things `better` for `the people`...
is for gasoline to go to $8 a US gallon in the USA over the next 24 months. Then Americans will realise that it's just not globally acceptable to drive a 12 miles per gallon 2.5 ton truck for the school run.
A ten percent reduction is easy if you go from a vehicle that can barely offer 20 miles per gallon to one that can offer 30. Until Ethanol can be produced from the husks of corn instead of the edible part, it's simply avoiding the root cause of the problem
I'm a real, trained economist. I used to do it for a living. I now program computers because they pays more (a nice demonstration of real-life economics there). The classical economic arguments I'm reading here are pure self-justification.
The first world has rigged international trade with the third world, so economic arguments which assume a free market are laughably naive. One of the major reasons crops are being sold to the first world for ethanol production is simply that they can't be sold to the first world for eating. In your world of pure economic dreaming both of these uses would fetch the same price. In the real world, the market for the higher-value use is forbidden to the seller.
This was a deliberate betrayal, including by the UK. The Uruguay Round removed the barriers to trade of most manufactured goods and services, a great benefit to manufacturing and financial services nations at the cost of (usually poorer) agricultural nations. The subsequent Doha Round was to liberalise agricultural trade. But guess what, the manufacturing nations are happy with the situation as it is and the US and EU are doing their best to torpedo the Round.
Coffee production is being held up by some postings as a high value crop? In Ethopia? WTF, the situation there is so bad there was a Sundance-screened feature documentary "Black Gold". The PR stink was so bad that Starbucks whacked a "fair trade" coffee on their menu.
Coffee growers get 1% of the retail price, because Western consumers love their brands, resulting in a monopsony of buyers (coffee is a commodity, but US consumers pretty much all purchase via Starbucks, Nestle, Sara Lee, Kraft, Proctor and Gamble giving them the power to pay bugger all of nothing). Like a monopoly of sellers, classical economics' theories of free markets fail in a monopsony. So most of the comments which focus on simple production substitutions between coffee and grain are the sheerest bunk.
There was a recent study into the CO2 emissions of crop-produced ethanol. A hunt in New Scientist should find it. It's well worth a read as the references include most of the solid studies into the economics of ethanol.
The argument that increased crop-derived biofuel use in the first world will lead to deaths from starvation in the third world seems solid. This is hardly the first study to say so and instances have already been documented.
If that sits uneasily with your morals, then living in a rich country you are not short of alternatives. I ride a bicycle myself.
>People in the towns, what do you think they're doing now?
I think they'll have to charge more for what they produce, so that their staff can be paid a living wage or their businesses will go bust. This happens rather a lot.
>You can draw three conclusions from that...
1. The world bank aren't too worried about security of fuel supply in developed nations, because that's not their job. We however, should be concerned that we are dependent on countries that hate us for our fuel supply.
2. The world bank oppose subsidies and other trading barriers, and this is their way of adding pressure to reduce them.
3. The world bank is an aid organisation and wants to help people who are in the crap because their parents had too many kids.
All of these are very admirable viewpoints. I'm just stood in a different place.
"Rice prices were up by 75% in just two months."
...because most bio-fuels are made from rice.
Or perhaps the rising price is more to do with growing consumption in India and China and high oil prices and the whole bio-fuel thing is relatively insignificant but that's what grabs the press attention.
>"The CIA World Factbook" Possibly the most biased, subjective and
>distorted set of `facts` you are ever likely to read.
World Food Programme stats:-
Agricultural Production (% GDP): 50%
Agricultural Labour force (% total): 81%
(sources: FAOSTAT, World Bank,
Food & agriculture indicators in Ethiopia, November 2006)
Obviously the CIA have infiltrated the WFP & World Bank as well, better strap your tin foil hat down tight AC.
Yes, the markets are rigged and that's a fair criticism. The problem with that is the rigged market, not biofuels though.
Coffee wasn't "held up by some postings as a high value crop?" is was an example fo a commodity produced by ethiopia. It still stands (irrespective of market abuse) that if the price doubles then ethiopia benefits.
"the CO2 emissions of crop-produced ethanol" Again, agreed, although bio-diesel is better and the energy involved could come from renewables more easily than teh energy in your car.
>The argument that increased crop-derived biofuel use in the first world
>will lead to deaths from starvation in the third world seems solid.
No, increased consumption in Inida and China, a high oil price, a higher population than the evonomy can sustain, bad government, a rigged market (good point) and poor investment in agricultural equipment and training do.
>I ride a bicycle myself.
I walk, buying bicycles just means that people in the third world can't afford bicycles.
"I think they'll have to charge more for what they produce, so that their staff can be paid a living wage or their businesses will go bust. This happens rather a lot."
Whoh, you really didn't read what I wrote.
They can't charge more, it's exactly the opposite. The rest of the population, precisely because they spend double what they used to in food, don't have money left. So they can't buy.
Indeed, they "go bust". Except even talking about "going" bust shows the ignorance here. It's not companies, it's people. In those country, over 90% of people don't belong to a company, they just do what they can to make a living, on their own. And they don't "go bust", they just stop doing what they did. Trouble here is that in the extreme, there is absolutely nothing left they can do in the cities. they have to go back to farming, poor, pure subsistance farming (if they can still find land for that).
Whoh, that's funny.
First point is, most often, people who need to use an argument of "I know, I'm in the field" are those who actually can't convince otherwise and have the weakest case.
Second point is, actually, I'm in exactly the same position as yours, except I didn't think relevant to say it before, since the logic of arguments is what counts, not the "I'm this or that, so shut up I know better". I'm a trained economist, I stopped doing it to go and work in computer sciences cos' it paid more (only difference is, two months from now, I'll have started an economist's job again cos it pays even more).
"The first world has rigged international trade with the third world, so economic arguments which assume a free market are laughably naive. One of the major reasons crops are being sold to the first world for ethanol production is simply that they can't be sold to the first world for eating. In your world of pure economic dreaming both of these uses would fetch the same price. In the real world, the market for the higher-value use is forbidden to the seller."
That's completely out of the subject. I haven't talked about ethanol (and their subsidies) but about the food price. Whether correlated or not is moot in my argument, which centered on food prices and poor countries. And to my knowledge, Ethiia does not buy ethanol, so it really is moot here (though as an other topic, I might not disagree).
"Coffee production is being held up by some postings as a high value crop? In Ethopia? WTF, the situation there is so bad there was a Sundance-screened feature documentary "Black Gold". The PR stink was so bad that Starbucks whacked a "fair trade" coffee on their menu.
Coffee growers get 1% of the retail price, because Western consumers love their brands, resulting in a monopsony of buyers (coffee is a commodity, but US consumers pretty much all purchase via Starbucks, Nestle, Sara Lee, Kraft, Proctor and Gamble giving them the power to pay bugger all of nothing). Like a monopoly of sellers, classical economics' theories of free markets fail in a monopsony. So most of the comments which focus on simple production substitutions between coffee and grain are the sheerest bunk."
The share of the price that they get is also irrelevant.
The fact is, they get more by selling coffee than by selling food-crop. And they used to be able to grow coffee and use the proceeds to buy food AND more.
The more food price raises relative to coffee's (meaning "the price THEY are paid for coffee") the poorer they get, whether it's about 1% of the final price or 300% of the final price.
Now if your argument is that if we would just give them 10% of the price, then food-crop price would not be a problem for them anymore, yes, sure. In the meantime, it is.
"The argument that increased crop-derived biofuel use in the first world will lead to deaths from starvation in the third world seems solid. This is hardly the first study to say so and instances have already been documented.
If that sits uneasily with your morals, then living in a rich country you are not short of alternatives. I ride a bicycle myself."
So, in the end you agree with what I say.
All in all, one has to be dumb to not understand the problem when it's phrased simply: For a poor coffee producer, raising wheat-prices are bad. For a poor city-dweller, raising wheat-prices are bad. The poorer they are, the bigger the part of their revenue goes into food, the worse the raising prices are
Exactly my point, whatever business they're engaged in, becomes uneconomic, they do something else, if there is nothing else then either society supports them or they die. It's actually exactly the same in Britain.
>I haven't talked about ethanol (and their subsidies) but about the food price.
In that case you've missed the point entirely, look at the article title.
>For a poor city-dweller, raising wheat-prices are bad.
Unless you make your rmoney in an activity peripheral to wheat production as many people in poor countries do. In fact, if my job in the factory starts to pay so badly that I can't afford food, I might try to get work in the wheat boom.
The world bank's idea of saving the third world from this problem is pure short termism, feed them now, they all have 20 kids then what? India and China will still get richer and will use the money to buy food, which will push up food prices. We'll have to buy more food to give to the ever greater numbers of people in third world cities, which also pushes up food prices.
What is required is that people in these poor countries can earn a living from farming and that has been eroded by years of dumping cheap food in their markets destroying their farming industries through under-investment and allowing their populations to grow to unsupportable levels.
The solution is not more dumping.
>All in all, one has to be dumb to not understand the problem when it's phrased simply
The problem is broader than you see it, and the solution is not as simple as giving the coffee producer and city dweller money to buy wheat.
There is no food price increase due to the use of corn.
First off, tons of corn and food goes to waste every year. Farms lay fallow or let the harvest rot. The reason those in third world starve is seldom due to a global shortage food. Rather, it is more often than not due to local situations (usually poor infrastructure, war, warlord/dictators, and corruption).
The number one factor in food price increase is not shortage, but rather the drastic increase in cost of transportation. (Which is one of the number one costs in getting food to market.)
Guess what that cost is derived from? fuel costs....
Granted corn is NOT the best prospect for biofuels. But it happens to be the most readily available biofuel produce that is currently available and has an infrastructure distribution in America. There is tons of corn, and we could grow lot more. Come visit Pennsylvania if you want to see how much more corn we could grow. Or even better, visit Connecticut. Which is mostly forested. But at one time in the 1700's was nearly ALL farmland.
But since we have corn, and we know how to easily make it into bourbon, whiskey, and scotch...er I mean ethanol for cars. It is what the biofuel industry will use in it's infancy.
Already there are advancements in biofuel technology. The future is most likely to be found in algae, grasses and a few unusual oily seed plants. But that's NOT going to happen over night. And the infrastructure and development will take about two decades.
Yes, people quote that if you used all the corn that America grows it would only substitute 1% of America's oil & hydrofuels use. But already there is are companies experimenting with algae and seeing 100x the conversion and see potential for more. So now re-factor that equation when 1 acre can produce a 100x corn's result. You could say that using a 100% of the farms growing corn could produce enough biofuel to run the whole U.S. Since the U.S. has vast amounts of unused farmland, we could eventually grow all the corn we grow and probably replace 50% of our oil products with biofuels within 20-50 years.
For those advocating a reduction of 10%, please factor in population growth. Also show me any reduction in oil use of 10% (might find it briefly after the end of WWI or WWII).
Just not feasible. But use of nuclear power plants, combined with the adoption of homes built with solar cell technology, REEVers like the Chevy Volt, and biofuels. We could eliminate 90% of our oil usage given time.
You will NEVER completely eliminate oil usage because we need it for the plastics, and synthetic materials we use and wear every day of our lives.
"At 20,000 bags per square acre, algae yields around 100,000 gallons of algae oil per year. In contrast, one acre of soybeans only produces about 50 gallons of soybean oil a year, while one acre of corn yields about 29 gallons of oil per year. The largest benefit to date is that the Algae farms can be built virtually anywhere, a point hopefully demonstrated by locating a facility in West Texas.
Craig Harting, Global Green's chief operating officer stated that meeting U.S. gasoline and diesel demands with biofuels from seed crops would require all arable farmland in the nation to be planted many times over. With algae oil production, we can do it with less than 1 percent of that same area and it can be done anywhere."
>please factor in population growth
This is the gorilla in the room, that everyone pretends they cannot see.
>You will NEVER completely eliminate oil usage
That's a very good argument for not burning it as well.
Farm equipment looks like a good target for electrics actually, it rarely needs enormous mileage, it almost never drives at night, and gets stored in the same place every evening, just right for overnight battery charges and not far for a tow when the battery usage gets messed up.
I'm most concerned about all these economists who are apparently a bunch of god-damned hippies! None of them advocate a capitalist approach to the problem opting instead for everyone chipping in to the world bank who apparently want to become farmers like a high-speed version of the communist 5 year plan.
Is the sad state of economics tuition the cause of the current global financial disaster?
For five generations my family has worked to improve my country for our childrens sake & their kids. In their spare-time they've answered the worlds call to dispose of dictators (3 times), fought a civil war, tamed the American southwest just to mention the highlights. Anytime the UN wants to move out of New York, I'm sure Donald Trump would pay well for the buildings & I don't think his personnel would race through our streets drunk killing our citizens, flouting their "Diplomatic Immunity" at the drop of the hat. There's a whole country devoted to "neutrality", see if Switzerland will put up with your crap for half a century! We already had our 3 mile island ( & Russia had their Chernobyl) if the crazy Arabs want to play with nukes, enjoy their neighborhood & leave us alone. After 40 years we're tired of being held hostage to middle eastern oil & insanity, if he doesn't like our solutions, either supply better ones, shut up, or best of all encourage those people to spend a few years improving THEIR nation. Heres another "Freebie" from the "Evil Americans", Instead of buying guns & killing each other, buy a desalinisation plant. Plant some trees to hold the soil. If you really need a blueprint, try what we did in the 30's, the trees serve as a wind breaks, holding the soil to grow food. Put a wind mill to pump your water. Maybe in 100 years, you can put a man on the moon & look down your nose at us! In the meantime, we're a little busy fixin' our own country. Maybe after November we'll have some time.
Since all of us have free time to comment on this online then we all have nothing to worry about now don't we? If we have our PC/Mac/Linux computers we aren't suffering because of food shortages. Don't worry little buckaroos the viral plague that is do will set everything right. It will take care of all those who can't afford to comment on old El'Reg and with luck us too.
Power to the lemur! Singing and dancing cures all; humans forgot that except for Dreamworks :)
You read in my post what you want to see there, not what is actually there.
On eexample that shows it is your conclusion: "The problem is broader than you see it, and the solution is not as simple as giving the coffee producer and city dweller money to buy wheat."
Oh yeah? Can you cite any part where I said people should be given money to buy wheat?
Of course, you need to think I said such things, otherwise you might find out you don't disagree so much with my position.
Actually, what I said is "It's mathematical to see that an economy that got richer by going from food-crops to luxury-crop cannot be made richer when food-crop price increases". Unless the food-crop becomes even more expensive than luxury crop in which case they can switch back (which wouldn't guarantee anything actually but I'll spare everyone those more complex trade-offs).
Until then, the increase in food-price only erodes the gains they had a few decades by moving to luxury crops.
Gains that moved them from starve-poor (I produce just enough crop to feed myself and have nothing left after) to just dirt-poor.
Apart from that, I didn't suggest a solution, I didn't talk about ethanol (yes, the article is about the "ethanol makes food more expensive which makes poor poorer". I for one focused on the second part of that sentence), I didn't say they should be fed, I didn't say they wouldn't get overpopulated to an even worse effect if we did. In short, I didn't voice any opinion or solution. So stop assuming I did.
I only explained an almost mathematical phenomenon which some clearly did not grasp.
>Can you cite any part where I said people should be given money to buy wheat?
"- Either you think you're so clever that without any knowledge in economy (that
shows in the way you describe things, no offence), you're better than hundreds
of people paid for that are."
That would be the world bank who are advocating that "people should be given money to buy wheat".
You've become rather obsessed with my pick of a luxury item as an example of a traded commodity. My point was that poor countries are predominately working in agriculture, they should be better off from high food prices. That is not to say that everyone in a poor country is better off from high food prices, just that the country as a whole is. Just as Texas is better off from a high oil price, but if you're a taxi driver there then you will feel otherwise.
>I only explained an almost mathematical phenomenon which some clearly did not grasp.
No, you wittered on with a simple, obvious and irrelevant concept in a patronising manner.
I was really observing that these countries are overpopulated and that that is the problem rather than bio-fuels, for some reason the world refuses to accept that this is a signfiicant problem. Secondly that a farming society should be better off when the value of their product is high, that they are not is more to do with a badly run economy - often the result of world bank pressure to switch to commercial farming from subsitence in the first place along with a failure to provide any kind of welfare system via taxation of their own people.
High food prices for a food producer are relevant only if it's not an agriculture of subsistance, that is, if the food grown is not grown for their own cionsumption. Otherwise, whether it's worth pennies or gold ingots is moot.
Unfortunately, such is the unfortunate way of the poorest countries. Go and find third-world countries that are net exporters of food-crop. I'll bet you won't find more than one in ten (one exception was zimbabwe but it's now ruined). Even the few that are are in fact exporter to other poor countries, which means as an aggregate, they're still importers.
The reason I focus on luxury crops is simple. And it's the same as the reason those economies try to focus on it too:
In an open economy, it's all about competitive, comparative advantage.
Those countries have a competitive, comparative advantage growing coffee beans or mangos (and even then, not so much of an advantage but well), thanks to their climate.
They have a clear disadvantage for crop-food, because of their climate, of their absence of mechanical equipment and fertilizers which make the yields per worker be sometimes 1000 (yes, 1000) times lower, such as for rice for instance.
One worker produces around 550kg of rice a year in a typical poor country (with 100kg needed to seed the fields), whereas one worker produces 500,000kg of rice a year (figure for Louisiana). (of course you have to deduce tremendously higher costs for the Louisiana worker but still).
Because of that difference, it is ludicrous to imagine that whatever the food price, those small guys could ever dream of selling their production abroad. And inside the country, who would they sell anything to, since the higher the price, the less likely anyone is to be able to afford it (as you said everyone will be going back to producing food).
If as you say those economies where economies of subsistance, higher food price would not help, it would just be neutral.
As it is, they're not subsistance economies anymore (or at least, the further they went away from that, the more they improved in the last few decades). And rising food prices can at best corner them out of the world market: since they can't sell their coffee for a profit, then they're back to autarcy and producing their own food, and are all the poorer for it.
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