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Wednesday, October 03, 2007

More Food Divided by More People

Caroline Baum on the Neo-Malthusians:

Neo-Malthusians Worry About Food Supply Again, by Caroline Baum, Bloomberg: Some bad ideas refuse to die... Take, for example, the notion that the world population will outrun the food supply. That prediction ... gained currency with Thomas Malthus in the late 18th century; was revitalized with the 1968 publication of ''The Population Bomb,'' by biologist Paul Ehrlich, predicting famine and death on an unprecedented scale; reappeared, courtesy of the Club of Rome, in the 1972 book, ''Limits to Growth;'' and garnered renewed media attention in 1980, when economist Julian Simon challenged Ehrlich on his prediction of massive shortages of natural resources (Simon won), before landing on today's doorstep with the huge rally in grain prices.

On cue, the headlines are once again warning of dire consequences from rising food prices and low grain stockpiles.

Why is this sort of Malthusian gloom and doom so appealing to so many? You don't have to be a farmer or an agricultural economist to raise an eyebrow over predictions of chronic crop shortages. While weather may affect crop yields from one season to the next, shortages ...[and] higher prices induce producers to increase their output. And somehow man, through his eternal inventiveness, always finds a way to produce more with less.

That said, consumers are currently paying higher prices for food. ...

''We are not suddenly going to run out of food,'' says Michael Swanson, senior agricultural economist at Wells Fargo & Co... ''There will be a supply response.''

Already U.S. farmers have planted 93 million acres of corn this year compared with 78 million acres in 2006 in response to increased demand in the production of ethanol, a gasoline additive and substitute fuel. Swanson calls the increase ''unprecedented.'' ...

Put aside the romance associated with tilling the land, and farmers are no different from other businessmen. They want to make a profit. Give them an incentive in the form of higher crop prices, and they'll jump on it.

Farmers aren't content with the same output per acre year after year. Through a combination of better seed, better chemicals and improved farming practices, ''supply has been able to meet demand,'' Swanson says.

In 1970, the corn yield was 72.4 bushels per harvested acre, according to Keith Collins, chief economist at the U.S. Department of Agriculture. Thirty years later, that same acre was yielding twice as much. ...

And that's before the introduction of some ''remarkable technology coming down the pipeline,'' including a Global Positioning System (GPS) for precision agriculture, Swanson says.

The application of satellite positioning and navigation systems will enable farmers to better manage their land. It's being described as the next evolution in agriculture, promising increased productivity and reduced production costs.

It sounds pretty impressive. Which makes you wonder why there are so many folks willing, at the slightest provocation, to take the other side of that bet.

Part of the concern is over the effect higher food prices will have on the world's poor. While it's true that the effect of higher food prices depends upon things such as whether an individual is a farmer or a consumer, and it's also true that food prices may be relatively lower in the future, lower prices in the future don't provide much comfort to those who are already living near the edge and facing even more hardship from higher food prices today.

    Posted by on Wednesday, October 3, 2007 at 12:42 AM in Economics, Technology | Permalink  TrackBack (0)  Comments (64)


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