This invisible germ of life in the grain of wheat can thus pass unimpaired through three thousand resurrections...

April 15, 2008 10:27 PM

Some of the world's biggest grain exporters barred their farmers from selling in global markets yesterday, exacerbating the food price crisis for poorer nations that import their food and highlighting the failure of governments to nurture stronger rules for agricultural trade. Google news on restrictions on grain exports... Previously on MetaFilter.

“Business as usual is no longer an option,” Paris-based UNESCO says in a sweeping report on the world agriculture system that was three years in the making and released on April 15. “There is a recognition that the mounting crisis in food security is of a different complexity and potentially different magnitude than the one of the 1960s.”

The need for action is urgent. Since March 2007, soybean and wheat prices have increased by 87% and 130% respectively, and global grain stores are today at their lowest level on record. Prices of staple foods such as rice, maize and wheat are expected to continue to rise because of increased demand, especially in China and India, and because of the alternative use of maize and soybeans for bio-fuels. Furthermore, states the report, “35% of the Earth’s severely degraded land has been damaged by agricultural activities.”

posted by KokuRyu (105 comments total)

Let's just export all our food to Mars. That will really capitalize on this problem by stimulating space exploration.
posted by TwelveTwo at 10:36 PM on April 15, 2008 [1 favorite has favorites]

Kazakhstan is the world's fifth-largest wheat exporter?

Huh.
posted by delmoi at 10:50 PM on April 15, 2008

OH HAI THAR PEAK OIL
posted by loquacious at 10:52 PM on April 15, 2008 [2 favorites has favorites]

So, let's see.

Food production and distribution: broken
Agriculture: broken
Fishing industries: broken
Mortgage industry: broken
Bank credit and liquidity: broken
Pension funds: broken
US dollar: broken
Environment: broken
Nuclear proliferation controls:broken
Middle east: broken
Fossil fuel supply/demand: broken
Geneva convention: broken
American government: broken
First world population: shrinking and aging
Third world population: young and growing

Prognosis: party time. It's going to be an awesome decade or two ahead of us. And by awesome, I mean terrifying, unless you're one of the very rich.
posted by stavrosthewonderchicken at 10:53 PM on April 15, 2008 [5 favorites has favorites]

It's going to be an awesome decade or two ahead of us.

Adversity brings out the best and worst in people. I find it heartening that history records (reports?) the better stuff that comes about after eras of trial. It suggests that people can make it through the tough times, albeit with necessary changes.
posted by Blazecock Pileon at 10:57 PM on April 15, 2008 [1 favorite has favorites]

U.S. President George W. Bush on Monday offered $200-million (U.S.) in emergency food aid, following a challenge by World Bank president Robert Zoellick on the weekend for donor nations to put “our money where our mouth is.”

There is irony upon irony in this statement
posted by 7segment at 11:01 PM on April 15, 2008 [1 favorite has favorites]

I agree.

The Green Revolution of the 60s was pretty impressive, as were the medical advances made after the war, and the efforts to clean up industrial pollution in the 70s and 80s. It's I also heartening that the US seems to be on the verge of electing more enlightened folks to the White House (although GWB did pay the UN, while Clinton did not).

BTW, I fail to see the correlation between peak oil and the current food crisis. I thought that one of the big causes of the current crisis was commodities speculation, which is cyclical.
posted by KokuRyu at 11:04 PM on April 15, 2008

Adversity brings out the best and worst in people. I find it heartening that history records (reports?) the better stuff that comes about after eras of trial.

Let's hope for more of the former and less of the latter. I do agree that from adversity comes real strength (not the chest-thumping fake GWB soundbite kind), and that a little shared adversity might just be what the West in particular needs to jump out of the doooom-bound rut we seem to have gotten ourselves into as a civilization. I guess we can hope that not too many people will die unnecessary deaths in the process.

I tend to think it's becoming a matter of either rebooting the operating system, or it'll eventually and inevitably be down to, you know, the old flatten-and-reinstall. And nobody wants that. [/geek]
posted by stavrosthewonderchicken at 11:08 PM on April 15, 2008

Mortgage industry: broken
Bank credit and liquidity: broken
Pension funds: broken
US dollar: broken

My sense is that "breaking" may be a better word choice here, since the news about the collapse of America's financial markets seems to be occuring in slow motion.
posted by ornate insect at 11:10 PM on April 15, 2008

By the way, the other day someone posted on here that a gallon of ethanol contained 4 million calories, or something absurd like that and suggested that you could feed someone for a year or fill your tank.

Anyway, the math was way off. A gallon of ethanol is about 3 kilograms, and the energy density of ethanol is 26.8 MJ/kg.. That adds up to 80 Megajoules of energy, or 19,000 kilocalories, enough to feed someone for like a week and a half.

(Food energy is actually measured in kilocalories or Large Calories)

Now of course, Corn ethanol is not all that efficient, so a lot of energy is lost between the grain and the grain alcohol, but the same is true of any food you eat that's not like cornbread. Certainly any kind of meat is going to eat will have used far more calories in grains then what you actually end up eating.

It's also interesting how everyone complained about how heavily subsided first-world ag products flooding the markets were killing the Ag industry in the rest of the world, but when those subsidized prices go away, people act like it's horrible or something.
posted by delmoi at 11:10 PM on April 15, 2008

BTW, I fail to see the correlation between peak oil and the current food crisis.

There need not be correlation, although certainly it must be noted that recent extreme fuel prices mean a massive increase in food prices in places like here in Korea, where 70% of total food consumption is imported.

And I do think a deep correlation between all of these emergent ills exists, rooted in the ways we collectively approach concepts like wealth and growth and happiness and security and all of that, but I'm hesitant to go into it, because a) it's a bit handwavy and b) it'd take me about 10,000 words and c) I'm lazy.

My sense is that "breaking" may be a better word choice here

You're probably right (although when the bough breaks, it's broken before it hits the ground), but I was kinda going for pith over accuracy.
posted by stavrosthewonderchicken at 11:13 PM on April 15, 2008

Blazecock Pileon: It suggests that people can make it through the tough times, albeit with necessary changes.

The problem with the 'What doesn't kill us can only make us stronger' approach is that we're at a place where the situation could easily kill us. In fact, I'd argue that the only directions we can go are up and down - our current tech level is unsustainable and we can't even come close to supporting the world population without it. Either we develop sustainable technologies or there will be a huge dieback and a collapse of civilization. We can't have a dark age and a reconstruction at this point.
posted by Mitrovarr at 11:18 PM on April 15, 2008 [1 favorite has favorites]

BTW, I fail to see the correlation between peak oil and the current food crisis. I thought that one of the big causes of the current crisis was commodities speculation, which is cyclical.

The whole reason for the commodities speculation the fact that it's being used for fuel, which is caused by high fossil fuel prices, which is caused by peak Oil.
posted by delmoi at 11:20 PM on April 15, 2008

we're at a place where the situation could easily kill us

Haven't we always been at that place? If it isn't nuclear holocaust, it's Mother Nature throwing ice ages, asteroids and plagues at us.

Granted, if this situation did come to nuclear war, I'd agree it would be hard to come back from that, but given the option to root for blind optimism and the other option to root for annihilation, I'll take blind optimism. Fatalism is still a choice.
posted by Blazecock Pileon at 11:24 PM on April 15, 2008

Delmoi: Actually, the numbers are even worse for the energy contained in food, from the numbers I've seen. There are supposedly something like 2 Calories of petroleum energy used for every 1 Calorie of food energy made available to a human being standing at the end of the modern industrial supply chain. So you have to factor that into the "food" option as well. (I.e., 19,000 kilocalories of petroleum would only get you 9.5kc of food.)

I suspect that if the human body was capable of directly metabolizing petroleum, there wouldn't be much of a food shortage. But when you try to 'eat' petroleum, by passing it through the intermediate steps of a chemical fertilizer plant, gasoline refinery, internal combustion engine, etc., it's anything but efficient.
posted by Kadin2048 at 11:25 PM on April 15, 2008

our current tech level is unsustainable and we can't even come close to supporting the world population without it. Either we develop sustainable technologies or there will be a huge dieback and a collapse of civilization. We can't have a dark age and a reconstruction at this point.

No one is going to die, we're all just going to have to be more frugal. If we can force people to pay for carbon credits to reduce greenhouse emissions, everything would be fine. People will naturally stop buying SUVs and plane tickets when gas is $10 a gallon. We've certainly been living an unsustainable lifestyle, but being alive isn't the same thing as burning a tank of gas every day in your hour long SUV commute and consuming lots of junk that required a lot of energy to produce.

On the other hand, it is possible that a "me me me" attitude as this thing moves forward could cause energy to be hoarded by first-worlders, greenhouse gas emissions to be ignored, the polar icecaps could melt, flood all kinds of stuff and reduce the amount of arable land, etc. In that scenario the poor countries of the world would really get fucked. But all of that is avoidable without new technologies.
posted by delmoi at 11:27 PM on April 15, 2008 [2 favorites has favorites]

The whole reason for the commodities speculation the fact that it's being used for fuel, which is caused by high fossil fuel prices, which is caused by peak Oil.

Or it's caused by the fact that China and India have rapidly growing middle classes, which have a voracious demand for energy, to the point where there's a new power plant going online every week in China.
posted by Leon-arto at 11:29 PM on April 15, 2008 [2 favorites has favorites]

Thanks for the post. I wish I found the report more readable. I did find this bit from the executive summary ironic:

The International Assessment of Agricultural Science and Technology for Development (IAASTD) responds to the widespread realization that despite significant scientific and technological achievements in our ability to increase agricultural productivity, we have been less attentive to some of the unintended social and environmental consequences of our achievements. We are now in a good position to reflect on these consequences and to outline various policy options to meet the challenges ahead, perhaps best characterized as the need for food and livelihood security under increasingly constrained environmental conditions from within and outside the realm of agriculture and globalized economic systems.

I'm not sure whether we're in a good or bad position, but we do certainly seem to be in a position to reflect. And now, if you'll excuse me, I'm off to Safeway, gotta pick up some toothpaste, some *cough*flour*cough*.
posted by salvia at 11:30 PM on April 15, 2008

but given the option to root for blind optimism and the other option to root for annihilation

I think you're creating a false dilemma. It's not fatalism vs. optimism, it's 'ignore the problem' and 'do something about it.' The options are either we figure out a way to be sustainable, or civilization collapses in a bloody heap. That's not fatalist, that's realistic.

The "blind optimism" you speak of seems dangerous to me because it could easily lead to us putting off the very hard work that it would take to avoid that 'bloody heap,' until it's too late. It seems uncomfortably close to sticking one's fingers in one's ears and screaming "LA, LA, LA I CAN'T HEAR YOU" at an oncoming freight train.

On preview: what delmoi said at 2:27.
posted by Kadin2048 at 11:30 PM on April 15, 2008

when those subsidized prices go away, people act like it's horrible or something.
Not really empathising with the hungry here much.
Maybe it's the old bait and switch? Sell it cheap until the (local 3rd world) competitors are out of business, then jack up the prices.
I don't actually think it was that sophisticated, more like 1st world governments saying, I need farm votes, screw developing world farmers, they can buy cheap grain. Followed by, some years later, 1st world governments saying I need bio-fuels even though there is a drought in Australia and the grain market is pretty tight etc. screw the developing world, they will have to pay market prices like everyone else.
Which would all be fine if it was iPods or SUVs, but it's *food*.
posted by bystander at 11:34 PM on April 15, 2008 [1 favorite has favorites]

I think you're creating a false dilemma.

I suggested that people can make it through tough times, albeit with necessary changes. I think Mitovarr was creating the false dilemma you're referring to, which I responded to by choosing the option that allows the human species some freedom to make its own way, given that we're always under constant threat of extinction.
posted by Blazecock Pileon at 11:35 PM on April 15, 2008

The whole reason for the commodities speculation the fact that it's being used for fuel, which is caused by high fossil fuel prices, which is caused by peak Oil.

I thought that commodities speculation was caused by the mortgage/banking crisis in the US, plus rising demand in China, India, etc. Also exacerbating the problem is the weak American dollar. What would $100 barrel of oil cost in 2001 dollars?
posted by KokuRyu at 11:41 PM on April 15, 2008

I haven't read through all of the links yet, but I'll just say that what the government is doing to small family farmers is despicable. All of the subsidies and safety nets regarding crop pricing are designed to help corporate and large-scale farming interests... All of us who are able to do so should plant crops in our backyards, sort of like the "Victory Gardens" of WWII, except these will be "Fuck The Man Gardens."
posted by amyms at 11:43 PM on April 15, 2008 [5 favorites has favorites]

Blazecock: I think we're probably in agreement on the major points. I just was taken aback by the "blind" part of "blind optimism," but not the "optimism" part.

KokuRyu: Calculated using CPI, "$83.05 in the year 2000 has the same 'purchase power' as $100 in the year 2007." (Some people seem to think CPI is a pretty flawed metric, though.)
posted by Kadin2048 at 11:53 PM on April 15, 2008

>The whole reason for the commodities speculation the fact that it's being used for fuel, which is caused by high fossil fuel prices, which is caused by peak Oil.

>>I thought that commodities speculation was caused by the mortgage/banking crisis in the US, plus rising demand in China, India, etc. Also exacerbating the problem is the weak American dollar.

I think rather than arguing chicken-and-egg style, it's better to just agree that the whole clusterfuck is both complicated and interrelated.
posted by stavrosthewonderchicken at 12:04 AM on April 16, 2008

are you saying it's a chicken omelet?
posted by ornate insect at 12:18 AM on April 16, 2008 [1 favorite has favorites]

Its interesting if you think about it: Over the past 100 years, our civilization has gone from burning a little bit of fuel to make lots of food -- to burning lots of food just to make a little bit of fuel. That strikes me as a rather ominous development.

In other news: "US increases food crisis aid as Philippines threatens rice hoarders... ... As oil prices hit a new high of 112.78 dollars a barrel, Bangladesh became the latest nation to see food protests and UNESCO said the inflation was forcing poor families take children out of schools and go to work to help pay for food.

...The rapidly escalating crisis of food availability around the world has reached emergency proportions," he told a meeting of key UN financial, economic and trade institutions in New York. Food protests have already been the cause of deadly protests in African countries such as Cameroon, Senegal and Mauritania and riots in Haiti and Indonesia.

... The UN Children's Fund (UNICEF) said increased prices are forcing children out of classrooms and into jobs to help pay for family food. The impact of higher food prices is particularly marked in poor countries where 75 percent of a family's revenues go on food, compared to rich countries where just 15 percent of a household's income is spent on meals, UNICEF said. A drop in school attendance is already being observed in Nepal, said World Food Programme spokeswoman Christiane Berthiaume. In many countries, the only warm meal children get in a day is the meal served in school canteens. In Cambodia, the WFP has been forced to suspend food distribution to school canteens as local suppliers ended their contracts so they can sell elsewhere at a higher price.
posted by Avenger at 12:29 AM on April 16, 2008

Is this one of the fundamental contradictions of capitalism or something? Why do I feel like this was predicted in some obscure theory chapter I didn't read for the class session on Marxism?
posted by salvia at 12:47 AM on April 16, 2008

delmoi: No one is going to die, we're all just going to have to be more frugal.

No, I really don't think it's going to work that way. You could not become sustainable if you wanted to, even if you renounced technology and lived in a mud hut. Modern technology is simply not sustainable on the long term, since nearly all of it is based on fossil fuels (and what isn't, is based on having a solid economy propped up by fossil fuels.) If you throw technology out the window, the planet turns out to be vastly beyond its natural carrying capacity and thus you also get Everyone Dies. Maybe not every single person, but in the death throws of civilization, I wouldn't make any bets.

If everyone ditched their SUV, stopped commuting, and used compact fluorescent bulbs, you might forestall the collapse for a time - but not indefinitely. It burns a ton of oil just to keep this many people alive.

Now, I'm not saying Everyone Dies is the only option possible. We're not really far off a sustainable economy, technologically speaking (imagine if solar panels were 10% more efficient and half the price - a tough goal, but it's not madness.) The only way to get there is to survive at this unsustainable level until a progression to a sustainable level is possible. Now, cutbacks will help with that - to a point - slowing down technological development in any way would be a problem.
posted by Mitrovarr at 12:52 AM on April 16, 2008 [2 favorites has favorites]

George Monbiot says GO VEGAN! (... well, maybe more vegetarian, unless you want pearlescent, grey skin, that is... I seriously worry for his vegan friends of colour)
posted by davemee at 1:10 AM on April 16, 2008

George Monbiot says GO VEGAN!

I don't know. I'd think the more logical solution would be to start eating people. Or rendering them down into fuel or something. The new Hyundai Soylent -- gets 100km to the abdomen!
posted by stavrosthewonderchicken at 1:14 AM on April 16, 2008 [3 favorites has favorites]

Or it's caused by the fact that China and India have rapidly growing middle classes, which have a voracious demand for energy, to the point where there's a new power plant going online every week in China.

By voracious you mean 1/3 of the energy demands of a typical westerner of course.
posted by srboisvert at 1:57 AM on April 16, 2008 [7 favorites has favorites]

Agricultural commodities are an interesting market to trade in. I don't, by the way, so news that they were gapping out to the upside session after session caught by eye a few months ago

Unlike, for example, the stock market, some futures markets will have both maximum and minimum daily trading limits, as illustrated in this futures contract specification for Wheat traded on the Kansas City Board of Trade (KCBT).

If trading pushes the prices above or below either limit, the session is closed for the day. Doesn't matter if these limits are breached one hour or one minute after the start of trading - hit that limit, everyone closes down for the day.

I always found this curious, as the equity markets certainly don't cut a soaring profit short. Although, after 1987, similar mechanisms ("circuit breakers") were instituted on the US equity markets to counter sharp downward movements.

Although counter intuitive to the idea of a free market, I have seen academic papers documenting (at least in the equity markets) that said breakers reduce volatility while not distorting the long run rate of return of the market as a whole. So there you go.

Will soaring prices continue very long? Its anyone's guess, although speculation upthread about the banking crisis is causing commodity price shocks may be somewhat off base; since 2006 there have been warnings about agricultural commodity prices and shortfalls. I read a lot of market research, and know some of the big investment banks were putting their private banking clients into commodities back in that time frame, so I tend to think it might just be a perfect storm of:

• Capital migration - many astute investors were calling a top to the housing bubble, and moving money out of housing into many sectors, including commodities in 2006
• US recession warning - as I've posted before, many of us in banking knew there was high degree of probability of a US recession, starting sometime Q4 2007, so again, capital movement
• Biofuels - lots of food being diverted away from its primary use to be converted into fuel
• Droughts in Oz - A country that has a production capacity of 25 million tonnes pa is producing less than half of that; I don't know proportionally how this hits global supply (anyone?), but this can't be good ...
• Wheat blight - There are several different types of fungus which seem to be impacting crops to some extent; I only mention this as a buddy of mine (commodity trader) brought it to my attention

So lots of different causes, all sorta coming together into a perfect storm to drive prices up, sharply up.

But you folks know I'm an optimist (what equity market participant isn't?) so here's the other side of the coin (in no particular order as I'm typing this quickly and off the top of my head before a meeting - hey hey MeTaFilter at work!) :

• Outcry against bio fuel - I've personally got great hopes for this one
• Widening trading limits - Some exchanges are widening the limits discussed above. I think this might help because the news of daily trading gapping out to the upside was creating a feeding frenzy, attracting lots of speculative money (IMHO)
• High prices attract producers - basic economics tells us that increased prices will entice new farmers to plant, and existing farmers will reorient productive land to relatively expensive crops, thus driving down prices as supply increases
• Food price cycles - As I've posted many times on MeFi, these things all move in cycles; indeed, the US alone has experienced several cycles of sharply higher, then lower prices for dairy goods (for example); this alone shows us there is a cyclicality to unregulated, demand driven pricing
• We know some of the price increase are being driven by the emergence of what economists call a Giffen Good; basically, if a group of people can't afford meat demand for an inferior good, e.g., rice, actually increases. As supply increases and meat prices adjust to inflation weighted long run norms, demand for rice will recede as folks can afford meat again
• US recession - well, this is all over the mainstream media, so I'm-a-thinking its done or close to - not putting any money behind this (I don't trade that way), but unlike Q2 2006 when I first warned about a recession, that US Govvie yield curve is looking pretty healthy these days
• Capital migration - Well, I'm a customer of HSBC Private Banking, and recently they sent across some research telling folks it was time to get out of commodities.

In any case, because of the rising food prices Mrs Mutant & I have been stockpiling rice and anything based on wheat that we eat regularly. Pasta, etc, the walk in close is full and we've just cleared another so we lay down more canned goods.

Cheap bastard that I am, I do track prices very carefully, and (at least in London) we still haven't seen those supply side price shocks impacting us on retail yet, but they most definitely will. I put the sharp increases at three months or so out, but the usual IMHO applies.

One staple that hasn't seen price shocks yet? The potato. And guess what I'm making Mrs Mutant for dinner tonight? Yum!
posted by Mutant at 2:29 AM on April 16, 2008 [8 favorites has favorites]

By the way, the other day someone posted on here that a gallon of ethanol contained 4 million calories, or something absurd like that and suggested that you could feed someone for a year or fill your tank.

Anyway, the math was way off. A gallon of ethanol is about 3 kilograms, and the energy density of ethanol is 26.8 MJ/kg.. That adds up to 80 Megajoules of energy, or 19,000 kilocalories, enough to feed someone for like a week and a half.

That was me, and thanks for completely misrepresenting what I wrote.

20 gallons of ethanol is 400 000 calories. This satisfies the minimum caloric intake for the average person for 300 days. This is the unavoidable calculus behind biofuels; you can commute for a week, or someone can eat for a year.

400 000 kcal for a 20 gallon tank, compared to 19 000 kcal/gal...if my math was way off, yours can't be very much better. I assumed 1300 calories per day, which while not generous, will keep the average person alive, and is completely sufficient for an average sedentary woman.

400000/1300=307.69

I'm sure once inefficencies inherent in corn ethanol production are accounted for, the amount of corn that went into one 20 gallon tank of ethanol would have been enough to satisfy the food energy needs for an average person for a full year. I believe a recent Economist article makes this exact comparison, but I'm not sure.

Anyway, get bent, Delmoi. Maybe next time you criticize the accuracy of some recent comment, it might be a good idea to know what that comment actually said.
posted by [expletive deleted] at 2:33 AM on April 16, 2008 [2 favorites has favorites]

Quoting papakwanz from a previous thread: Thank god all my money is tied up in frozen concentrated orange juice.
posted by amyms at 2:50 AM on April 16, 2008 [1 favorite has favorites]

Grow your own. It's really not that difficult. 3rd year growing veg and I just can't believe how incredibly easy and rewarding it is. I'm not even really trying. I'm pretty confident that a couple of hours work a day and I'd have enough veg to feed myself and partner for the year. At the minute I'm spending maybe a couple of hours a week and we still get a meal or two out of that.
posted by twistedonion at 3:16 AM on April 16, 2008

that comment was more aimed at the middle classes in the west... if we could start growing our own then it doesn't need shipped halfway around the world. Surely that's gotta help a bit? And we could still afford to buy our shiny stuff.
posted by twistedonion at 3:19 AM on April 16, 2008

We are stuck in the belly of this horrible machine and the machine is bleeding to death
posted by nasreddin at 3:20 AM on April 16, 2008 [3 favorites has favorites]

Grow your own. It's really not that difficult.

I tried growing amber fields up rippling wheat on my 2 square metre balcony. I encountered limited success.
posted by stavrosthewonderchicken at 5:29 AM on April 16, 2008 [3 favorites has favorites]

I tried growing amber fields up rippling wheat on my 2 square metre balcony. I encountered limited success.

Well don't grow wheat then! Even with a 2 metre square balcony you could be growing hanging tomatoes for a bit of fresh fruit, and you could possibly get around 20 grow bags with a couple of potatoes in each... which should yield a hundred odd potatoes.

But yeah, my back yard isn't great for growing. That's why I rented a plot of land.
posted by twistedonion at 5:46 AM on April 16, 2008

I know. I was just being a smartass ...or trying, at least.
posted by stavrosthewonderchicken at 5:50 AM on April 16, 2008

since 2006 there have been warnings about agricultural commodity prices and shortfalls.

Hello again Mutant. I must point out again that some of the problems have been warned about since at least 1998, it's just been getting gradually more attention since then, particularly since the global grain supply deficit really became apparent a few years ago. If this is just another commodities cycle, it is at least a larger one than usual, and might last a while yet. I am reminded of the surge of warnings from market analysts about crude oil being over-priced some time around 2004. If ag prices do decline a bit, it may be worth remembering that as we saw with crude oil, a mere one-year decline does not necessarily mean the end of this trend. I don't know. Hope for the best, but plan for the worst.
posted by sfenders at 6:03 AM on April 16, 2008

I know. I was just being a smartass ...or trying, at least.


No, perfectly good smartass comment - The idea of fields of wheat in balconies gave me a smile... Seriously though, I reckon it's time (if only Governments were serious about tackling a food crisis) to free up land for their citizens to rent and grow food cheaply. Because I have a good bit of disposable income I can afford to privately rent a plot. the waiting lists for a government allotment is years unfortunately.
posted by twistedonion at 6:14 AM on April 16, 2008

> some of the problems have been warned about since at least 1998

I have to say, speaking as someone who has for 30-odd years been getting his futurology from sources most folks here would find sympathetic (e.g. Sierra Club, Friends of the Earth, Lester Brown's Worldwatch Institute) that the new century is looking almost exactly the way it was expected to look.
posted by jfuller at 6:22 AM on April 16, 2008 [2 favorites has favorites]

We are stuck in the belly of this horrible machine and the machine is bleeding to death

Is that before or after we play baseball with hot chicks in post-apocalyptic Tokyo?
posted by Laugh_track at 6:31 AM on April 16, 2008

[expletive deleted]: "By the way, the other day someone posted on here that a gallon of ethanol contained 4 million calories, or something absurd like that and suggested that you could feed someone for a year or fill your tank.

Anyway, the math was way off. A gallon of ethanol is about 3 kilograms, and the energy density of ethanol is 26.8 MJ/kg.. That adds up to 80 Megajoules of energy, or 19,000 kilocalories, enough to feed someone for like a week and a half.

That was me, and thanks for completely misrepresenting what I wrote.

20 gallons of ethanol is 400 000 calories. This satisfies the minimum caloric intake for the average person for 300 days. This is the unavoidable calculus behind biofuels; you can commute for a week, or someone can eat for a year.

400 000 kcal for a 20 gallon tank, compared to 19 000 kcal/gal...if my math was way off, yours can't be very much better. I assumed 1300 calories per day, which while not generous, will keep the average person alive, and is completely sufficient for an average sedentary woman.
d."

1300 calories/day would keep a bedridden 100-pound 70-year old woman alive. A 35 year-old 135-pound non-bedridden woman would starve.
posted by aerotive at 6:41 AM on April 16, 2008

Fields of Gold a slightly UK centric article shows how this will affect you, as well as all the others.
posted by adamvasco at 6:54 AM on April 16, 2008

Why is everyone so worried about the use of trade barriers and protectionism in the wake of a little economic trouble? I seem to recall that the last time the world tried that, everyone agreed that the results were Great.
posted by roystgnr at 7:36 AM on April 16, 2008 [1 favorite has favorites]

The gov't should really start taxing the hell out of gas. I mean really taxing it. Make it cost $20/gallon at the pump and subsidize it for essential services like police, fire, ambulances, etc (and farmers I suppose). The only reason I drive is because I can afford it.
posted by chugg at 8:05 AM on April 16, 2008

Stop!

First, much of the price increase in commodities is due to (a) weakening dollar (declined by 15% over the same period) and (b) speculation.

Furthermore, the US is by far the world's largest exporter of agricultural commodities. So a large commodity price increase actually helps the US balance of trade. Ag is very much a winning industry for the US, through the entire vertical market, from seeds, fertilizers, farming, farm equipment, rail, processing and export.

The problem that the developing countries that are banning exports have is that their agriculture industry is very highly regulated and their governments are intimately involved in the ag business.

So by banning exports they create a market imbalance that actually hurts the farmers. Banning exports reduces supply on the international market, which raises the price. But the local farmers can't sell at this price, because their government won't let them access the market. Instead, they can only sell into the domestic markets, where prices are lower. But they have to buy seeds and fertilizer off the international market, whose price is set on the market and is related to the price of the ag commodity on that market. So local farmers are paying international prices for fertilizer, seed and machinery, only to have to sell the final product at a low price. What will happen is that farmers won't farm. Well, they'll farm the bare minimum necessary to keep the government from seizing their farms. But the end result is an economic catastrophe.

The reason this is happening is because these local governments don't want to be out of the ag business and turn control and ownership over to the farmers. The result for them will be that farmers will riot over seed prices or wages or percentage rather than rioting as consumers of food. But they'll still riot. This is a classic case in which the capitalist outcome trumps all others.

In the US, lots of people are out of work, but they aren't out of work at Monsanto, John Deere, Union Pacific, Bunge or other ag companies. You could say that these companies are making a killing, and you'd be right, but unlike the oil companies, these firms are putting people to work in the U.S. This industry, agriculture, is basically the U.S.'s last line of defense against a working class depression. About 1 million people are employed directly in farming or raising livestock. This doesn't include the hundreds of thousands of people working in related industries like fertilizer (mining), rail, etc.

Clearly the push for ethanol is idiotic, and giving the increased prices of grain, now is the time to pull the subsidy, because there's enough cushion in the price. But ultimately this crisis will be alleviated when China and Africa get their heads out of their respective asses and make a commitment to their farmers and invest in modernizing them.
posted by Pastabagel at 8:09 AM on April 16, 2008 [7 favorites has favorites]

the new century is looking almost exactly the way it was expected to look

Often overlooked and pretty much echoes my own thoughts as well (I'll add to that list some of Gore Vidal's books from the 70s where he thought this was all more imminent). When Bush was clamoring for war in Irag in 2002, I was reminded of Cliff Robertson's rant at the end of Three Days of the Condor (1975), about the lengths to which the "government within the government" will go to provide for its own survival, and by extension, try to meet the basic needs of its people (if only to keep them from openly revolting).

Although the governmental actions that film predicted were both more and less cynical than how things have actually gone down, if you have that apocalyptic mindset (failure of the American banking system and with it the US dollar, unchecked population growth, middle eastern unrest, etc.), nothing the current administration has done would surprise you.
posted by psmealey at 8:12 AM on April 16, 2008 [1 favorite has favorites]

The gov't should really start taxing the hell out of gas. I mean really taxing it. Make it cost $20/gallon at the pump and subsidize it for essential services like police, fire, ambulances, etc (and farmers I suppose). The only reason I drive is because I can afford it.
posted by chugg at 11:05 AM on April 16

Good for you. Most people drive because they have to. Unless you are massively wealthy, most people with children try desperately to move to the suburbs for the better schools. Moving to the suburbs puts them further away from work. Let's say a family makes $75,000, or about $40,000 after taxes, and they have to fill their tank once a week. The average tank is 15 gallons. You would have them spend about $1000-1200 a month on gas, or $12,000-$14,000 per year. Per car. Assume they are the luckiest people in America and have a $2000/month mortgage. That's $24,000 per year.

Combined, gas and housing are $38,000 per year, which is nearly their entire after tax income. Congratulations, your gas tax has condemned them to a life of slavery.
posted by Pastabagel at 8:22 AM on April 16, 2008 [2 favorites has favorites]

Combined, gas and housing are $38,000 per year, which is nearly their entire after tax income. Congratulations, your gas tax has condemned them to a life of slavery.

Ooh, well of course it's their fault for moving to the suburbs. They should have bought a downtown loft instead. And a fixed-gear bicycle. LOLFATSUBURBANITES AMIRITE?
posted by nasreddin at 8:25 AM on April 16, 2008

By the way, anyone looking to profit off the hunger and starvation of the oppressed of the world , but who doesn't want to invest in evil corporations like Monsanto and Deere, can look into DBA an exchange-traded fund that holds a basket of food commodities like corn, wheat, sugar, etc. But I am not your investment adviser and this does not constitute advice, past returns are not indicative of future results, your mileage may vary, consult your physician, bridge freezes before road surface, side effects may include dizziness, nausea and diarrhea, some investors may experience mild sexual effects, here there be tygers, if this van's a-rockin', don't come a-knockin', etc
posted by Pastabagel at 8:45 AM on April 16, 2008

Pastabagel, a family of four could easily get about in a small 1.0L economy car like a polo or similar. How many of them do you see on the school runs?

Congratulations, your gas tax has condemned them to a life of slavery.

Maybe a life of public transport, but slavery?!? Don't make a mockery of the word.
posted by twistedonion at 8:55 AM on April 16, 2008

So a large commodity price increase actually helps the US balance of trade.

Interesting idea, so I looked it up. The US trade balance for all agricultural products in 2007 was very roughly about 10% of the magnitude of oil and gas. Eh, it's worth a few tens of billions of dollars, every little bit helps.
posted by sfenders at 8:55 AM on April 16, 2008

Congratulations, your gas tax has condemned them to a life of slavery.


There are other options, pastabagel.
posted by chugg at 8:59 AM on April 16, 2008

Pastabagel, a family of four could easily get about in a small 1.0L economy car like a polo or similar. How many of them do you see on the school runs?

The point is not that it's not possible, but that a gas tax is much more regressive than almost any other kind of tax. It's just not fair to force middle-class and poor people who are already struggling to get by in a declining economy and a tanking housing market to pay exponentially more at the pump--and any politician who suggested it would not only not be reelected, but probably tarred and feathered as well.
posted by nasreddin at 9:04 AM on April 16, 2008 [1 favorite has favorites]

It's just not fair

you know what else isn't fair, the middle and upper classes consuming far more than their fair share of global resources.

You worry about the middle classes and poor in America. What about those who haven't even had a chance yet to know what disposable income really is?

A gas tax is regressive, yes. But if it reigns us in then brilliant. Just like taxes on cigarettes I couldn't care how high they go. And I smoke as well as drive. If we can't be responsible enough to curb our own addictions then maybe tax is the only way?

like I said, i don't see many middle class homes downgrading to more efficient cars. So raise taxes till we learn.
posted by twistedonion at 9:12 AM on April 16, 2008

Damn, nobody knows what they're talking about. And the article is even muddier.
posted by Student of Man at 9:14 AM on April 16, 2008

Damn, nobody knows what they're talking about...
posted by Student of Man at 12:14 PM on April 16 [+] [!]

Now that's eponysterical.
posted by psmealey at 9:23 AM on April 16, 2008

Maybe a life of public transport, but slavery?!? Don't make a mockery of the word.

The problem being, of course, that existing public transport is poor to nonexistent in most parts of the US, and even if the money from your gas tax were to go directly into creating more public transport, the infrastructure wouldn't just appear overnight. Even Busses would take a certain amount of time to build.

Of course, a certain segment of your suburbanites would just move into the cities ... which are often ill-equipped to deal with a sudden influx of suburban refugees, for a number of reasons. In some cities, low income housing would be converted to condos or otherwise gentrified, leaving an increasing number of low income people competing for a steadily decreasing number of available living situations. Or perhaps canny developers will buy up existing abandoned buildings and/or open space to build additional market-rate housing, but overtaxing an already heavily burned city infrastructure.

To implement such a tax, the Government would need to be willing to spend at least a year, maybe more, investing in building the infrastructure that would make the transition an easy one, and this is something local and State government can't take on, and that the Feds would, I think, refuse to take on (as they're squandering all our tax dollars breaking the Middle East right at the moment).
posted by anastasiav at 9:23 AM on April 16, 2008 [1 favorite has favorites]

you know what else isn't fair

losing elections because of unpopular taxes? the kind of gas tax that's being talked about here is not going to happen because it's political suicide
posted by pyramid termite at 9:27 AM on April 16, 2008

My first rule of national security: Grow your own food.

It is not the result of the "failure of governments to nurture stronger rules for agricultural trade", it is the result of letting other people grow your food. If you want to help the third world survive, help them grow their own food instead of buying food from your own industrialized agri-business and giving it to them.
posted by Bovine Love at 10:15 AM on April 16, 2008 [1 favorite has favorites]

1300 calories/day would keep a bedridden 100-pound 70-year old woman alive. A 35 year-old 135-pound non-bedridden woman would starve.

Aerotive, 1300 calories per day is shockingly low by rich western standards, but I'm not talking about your average westerner. When I say filling your tank takes a year's worth of food, I'm talking about a year's worth of food for the most food-insecure people in the world. For a good example, look at Haiti. This is where I got the 1300kcal/day number from. I wanted an estimate of the average calorie intake of the people who are most at risk.

This study is from 1990, which was a time for Haiti about as bad as things are now. Look at the data for the bottom two expenditure groups. This is 23.3% of the population, more than a million people at the time.

The median daily per capita energy availability for this group, which is somewhere between the bottom quintile and bottom quartile of the population, is only 1049kcal/day. This includes children, of course, and this same study also provides adult equivalent energy availability. For the same group, this is 1358kcal/day. That's the median, so 11.65% of the population lives on less than that. When you consider that adults in the bottom expenditure group, which is 6% of the population, consume on average less than 1000kcal/day, I think it's safe to assume that the bottom decile of adult Haitians lives on less than 1300kcal/day. That's day in day out, year after year, and keep in mind these aren't sedentary people, these are subsistence farmers, and most of the women are probably pregnant or breastfeeding or both.

So, yes, 1300kcal per day is deprivation. I said it was sufficient for the average sedentary woman, and that might be an overstatement, but it will keep someone alive. This is the way millions of people live, and it's precisely these people who are the most at risk when we start fueling our cars with staple grain.

So no, filling your tank with ethanol isn't using a year's worth of grain for your average North American, but it is using a year's worth for an already malnourished Haitian. Well, that's much better.
posted by [expletive deleted] at 10:50 AM on April 16, 2008

Damn, nobody knows what they're talking about.

Nobody gets down to the details of world crop conditions and yields? Nobody fully realizes the horror of famine? Nobody had a chance to read the IAASTD report yet? Or is your complaint more existential in nature, nobody can tell what this all means? He who knows does not speak? Nobody knows if you're a dog?

All of us who are able to do so should plant crops in our backyards

Perhaps that would help with the quality of Internet discussions of agriculture. It would be counter-productive for my own food security, as they pay me lots of money to do other things with my time, but anyway I think I will try some very low-effort gardening this year.
posted by sfenders at 11:02 AM on April 16, 2008

I would start with tomatoes and then branch out to arugula from there if you're successful. I only modest success with tomatoes last year, am not yet graduated to the arugula level.
posted by psmealey at 11:11 AM on April 16, 2008

There are other options, pastabagel.
posted by chugg at 11:59 AM on April 16

Stop assuming everyone in America lives in New York. Here's why that link is ironic. The reason the fuel economy of cars has not increased since the 80's is because of mandatory increases in safety features like airbags, anti-lock brakes, chasses with crumple zones, etc. So you want to replace it with putting kids in what amounts to a Radio Flyer little red wagon and darting around city streets.

Furthermore what you linked is an option for someone who lives in or near a city. If you live 10 miles from where you work, a bike is not an option. It also is not an option for most people with kids who have to get around every day in the freezing cold.

Pastabagel, a family of four could easily get about in a small 1.0L economy car like a polo or similar. How many of them do you see on the school runs?

Maybe a life of public transport, but slavery?!? Don't make a mockery of the word.
posted by twistedonion at 11:55 AM on April 16

None, because they don't sell VW Polo's in the US. But I see a lot of priuses, sentras, focuses, and camries. I even see smart cars. But you are forgetting that people don't start from nowhere. They have a car now that would have to be replaced. If you force people to buy a new car it gets twice the mileage of whatever they are driving now. You only cut their gas burden in half. So it's like you raised the price from $3.50 to $10 instead of $20, but you also have to factor in the cost of the new car. (And if you buy used, you have to factor in more for repairs). And you are also assuming that oil prices don't double again in the next 3-5 years.

And there is no appreciable public transport from the suburbs to the cities that doesn't also involve travelling a few miles to the train station, assuming again that you work in the city, and not somewhere else in the suburbs.

And you can't tell people to move, because guess what, at $20 or $20/gallon, no one is going to buy a house in the sticks.

You have to address the problem taking the present situation as your initial conditions. You can't reset everyone to zero and shuffle everything around. The solution to expensive gas is not more expensive gas, or no cars, or changing your house. The solution is a car that doesn't need to burn fuel.
posted by Pastabagel at 11:12 AM on April 16, 2008 [1 favorite has favorites]

> My first rule of national security: Grow your own food.

I have tried on more than many occasions over the decades to explain why Japan's rice trade policy (which is basically Import? That would be a No) is not only not regressive and superstition-based but, on the contrary, intelligent, realistic, and forward-looking. Looking forward to utopian futures is fun but a selected array of the more likely dystopian ones is worth a look also, and maybe even a public policy or two.

As of today I don't have to explain any more. Not to Asians, anyway.
posted by jfuller at 11:12 AM on April 16, 2008 [5 favorites has favorites]

Great great great set of links, jfuller, especially "superstition".
posted by KokuRyu at 11:25 AM on April 16, 2008

As of today I don't have to explain any more. Not to Asians, anyway.
posted by jfuller at 2:12 PM on April 16


But as you say, for decades it did not make sense to grow their own rice. Extrapolating form your link, for decades the Japanese government has been subsidising rice to the tune of about a billion dollars a year. The fact that a near term problem has arisen does not justify wasting untold billions in the form of higher prices and misallocated resource for decades prior.

Furthermore, that money could have been invested elsewhere and put far more wealth in the hands of japanese consumers than they did by subsidizing rice. That additional wealth could have more than compensated for the increased price.

Notice that the countries that have the food supply problem are countries that were already poor to begin with. The fact that Japan has avoided this fate is not because of their agriculture policy, it's because they are a fabulously wealthy country in comparison.

Finally, you are missing the heart of the story. The story is that due to food supply problems in some developing countries, those countries are barring their farmers from exporting food. How do they have food to export if there's a supply problem? Because the government has screwed up the distribution and compensation structure. Instead of letting farmers sell their commodity directly to the international market and receiving those proceeds directly, the government sits in the middle and suppresses the price at which farmers can sell through them, and takes to much of the proceeds from the sale on the market.
posted by Pastabagel at 11:26 AM on April 16, 2008 [2 favorites has favorites]

How do they have food to export if there's a supply problem?

While agriculture policies are no doubt screwed up by governments the world over, the most obvious reason they would have food to export would be because foreigners could pay more money for the food than local consumers could.
posted by deanc at 11:33 AM on April 16, 2008

"Maybe a life of public transport"

"The problem being, of course, that existing public transport is poor to nonexistent in most parts of the US"


This is what I was gonna say. We tax the shit out of fuel and to what end? How much that will get pulled out to fund real public transportation? If history is any guide... next to none. Not only that it, like property taxes, is truly regressive. I mean fuck it, if it does what you want it creates a steadily declining amount of available dollars as people stop driving. Yeah. That's a good idea.

psmealy is right. Now is the time to kill the farm bill. And now is the time to start funding international programs that teach family planning and birth control.

you know what else isn't fair, the middle and upper classes consuming far more than their fair share of global resources.

So you should stop doing that.

While I agree about over consumption it's more than just "them"... ALL the classes in the west over consume. There are more in sheer numbers of the lower middle and lower classes who shop at WalMart demanding ever lower prices for consumer goods. The cumulative effect of which drives down wages every place else in the world. Including here. The problem is frigg'n everybody in the west. You . Me. Everyone.

The ride might be over. And shit rolls downhill. So prepare. For every person who makes this observation let them then pluck the mote from their own eye. Sell your car. Move to a smaller apartment. Buy what you really need and buy local. And. Pay what things are really worth.
posted by tkchrist at 12:27 PM on April 16, 2008

> The fact that a near term problem has arisen does not justify wasting untold billions
> in the form of higher prices and misallocated resource for decades prior.

My house burning down would be a pretty big near-term problem for me too. Still, do you know I don't consider what I've spent over the years on fire insurance to have been "misallocated," even taking every imaginable opportunity cost into account. If there were any kind of insurance I could buy that would guarantee my family's food supply, and I could afford it, I'd sign up in a heartbeat. "Near-term" sounds negligible, but you can starve to death in a month, after which there is no long term. I have a Save the Children kid in the Philippines and I'm very worried about her.


> Furthermore, that money could have been invested elsewhere and put far more wealth in the
> hands of japanese consumers than they did by subsidizing rice. That additional wealth could
> have more than compensated for the increased price.

There's all kinds of "wealth" you can't eat without transforming it into some other form of wealth (e.g. rice.) In the everyday course of business foreign credits and ton(ne)s of rice are both liquid, but they are not--not ever, under any circumstance--fungible. (I deep-fried a $500 bearer bond last week just to be sure. It was, as Achille Murat said of turkey buzzard, Not Good.)

Japan has (IMHO, naturally, but Japan and I are right) allocated--not misallocated--a proportion of its considerable wealth to insuring its food supply against the day liquidity dries up and goes away. It happens. It's happening now.



> Great great great set of links, jfuller, especially "superstition".

fuller rises, tips hat.
posted by jfuller at 12:43 PM on April 16, 2008 [2 favorites has favorites]

I am single and self-employed and my income is just enough to pay the alimony and for college for the kids.... I live in a small rental house.... I drive a vehicle big enough to tow my small boat.

Should I look to get enough to buy to own a very modest house, at low interest rates? Also, psychologically..... man, I will need to adjust to this knowledge! Philosophically..... I think I will just rest on the indestructibility of matter and energy and the unity of it all.... and go down with a sense of peace or something.....

Or maybe we should start local cooperatives.... Or form affinity groups.....
posted by swlabr at 12:46 PM on April 16, 2008

But as you say, for decades it did not make sense to grow their (the Japanese) own rice. Extrapolating form your link, for decades the Japanese government has been subsidising rice to the tune of about a billion dollars a year. The fact that a near term problem has arisen does not justify wasting untold billions in the form of higher prices and misallocated resource for decades prior.

I'd like to add that not all rice is equal. Comparing Thai long-grain rice to Japanese varieties of rice is like comparing plantains to bananas. Even if there were no import barriers it's unlikely Japanese consumers would even consider purchasing rice from a different country. So I doubt Japanese consumers mind paying a little extra for rice in the name of food security, quality and (dare I say it) political graft.

It's all about quality. I lived for ten years in rural Fukui Prefecture, the home of koshi-hikari rice, the best there is. It's quite easy to tell the difference between the rice grown locally versus rice served at "family restaurant"-style chain eateries. While quality may be a luxury in the face of famine, Japan is not there yet.
posted by KokuRyu at 1:06 PM on April 16, 2008

Pastabagel: " The solution is a car that doesn't need to burn fuel.

Indeed, heaven forbid that we would need to change our lifestyles at all. Let's just wait until technology magically solves all of our problems.

If the suburbs can't be made reasonably close to sustainable, then we shouldn't have suburbs. We should start that transition now. It is a strange sense of entitlement to think that everyone deserves to continue with the exact living conditions they have now. There are limits in the physical world and we have to respect those limits. It may be that the transition will be harder for certain types of people (e.g. suburbanites), but it doesn't really matter what is fair. It matters that we live sustainably.
posted by ssg at 2:05 PM on April 16, 2008

On the upside, a lot of Siberia is unfreezing at the moment, and once all the methane gas has evaporated, there might be a *lot* of arable land left.
posted by sour cream at 2:22 PM on April 16, 2008

So, can anyone tell me when I should start hoarding food?
posted by Vindaloo at 2:25 PM on April 16, 2008

Its a bit of a worry that the post advocating a $20 a gallon tax on fuel was shouted down so quickly as being impossible to accommodate.
What happens to these people if the price of oil rises to make fuel $20 a gallon?
posted by bystander at 2:59 PM on April 16, 2008

Interesting times. *sigh* The scope of this, and many related problems, is so vast that, when confronted with them, my mind sort of shuts down in despair. I've gotten in trouble here before for saying this, but...I'm glad I didn't have kids.
posted by you just lost the game at 3:12 PM on April 16, 2008

What happens to these people if the price of oil rises to make fuel $20 a gallon?

then the shit hits the fan - but there's a difference between that and throwing shit at the fan when you don't have to

i don't know that fuel is going to hit 20$ a gallon for awhile (in constant 2008 dollars, of course) - neither do you - neither does anyone else

i know for sure they won't get that high because of taxes
posted by pyramid termite at 3:13 PM on April 16, 2008

I genuinely wonder what plans the Pentagon has stored away for contingencies like these. Societies being a few meals away from anarchy, and all.
posted by Blazecock Pileon at 4:00 PM on April 16, 2008

Maybe a life of public transport

Someone's never visited the U.S.

what you linked is an option for someone who lives in or near a city. If you live 10 miles from where you work, a bike is not an option. It also is not an option for most people with kids who have to get around every day in the freezing cold.

What amazes me is that chugg lives in Calgary, a city with inadequate public transport and bitterly cold winter temperatures, and seems not to know how it really is.
posted by oaf at 6:32 PM on April 16, 2008

I've gotten in trouble here before for saying this, but...I'm glad I didn't have kids.
posted by you just lost the game at 6:12 PM on April 16

Who do you think is going to solve all these problems, the baby boomers?

Indeed, heaven forbid that we would need to change our lifestyles at all. Let's just wait until technology magically solves all of our problems.
posted by ssg at 5:05 PM on April 16

"Technology" usually means highly skilled experts with jobs advancing science and the state of their art, so it isn't a function of waiting, nor does it happen magically. Someone has to decide that the investment is important.

And when you say "change our lifestyles", you really mean that people other than you should change their lifestyle, which is a bit unfair, considering they didn't really choose the one they have to begin with. And you might consider that in the very painful process of changing their lifestyle, those people will also change yours in ways you didn't expect, and may not like. Or if history is any guide, they may decide that the problem is that society needs less of some ethnic or religious minority. The last time people's lifestyles went for easy to hard was in the depression, adn they only pulled themselves out of that with a war that killed over 50 million people.

So, yes, I think it might be better to just replace the current embodiment of "car" with a better one.
posted by Pastabagel at 7:23 PM on April 16, 2008

Pastabagel: Science is not a system where, if you throw enough money at a problem, it will be solved. In any case, even if we eliminated every single environmental problem associated with cars, we would still be living unsustainably.

And no, I don't mean people other than myself should change their lifestyles. I mean everyone in the west and much of the rest of the world should change their lifestyles, myself included. I would dearly love to be able to change my lifestyle in many of these ways, but these changes are not the sort of changes that can be made unilaterally by individuals.
posted by ssg at 8:00 PM on April 16, 2008

The problem being, of course, that existing public transport is poor to nonexistent in most parts of the US, and even if the money from your gas tax were to go directly into creating more public transport, the infrastructure wouldn't just appear overnight. Even Busses would take a certain amount of time to build.

I'm not directing this at anyone in particular (the example I just quoted was the first of several examples). But wow, there is a lot of whining and excuses, and very little can-do spirit here. Gas goes to $20? By God, there would be public transit. After every county supervisor and city councilmember got voted out? They'd get that stuff up and running. Everywhere, rural Indiana. Infrastructure ramp up? I imagine they could find some spare vans with their $18/gallon revenues, perhaps all the ones that people would suddenly be selling.

Or people would do something else. One hundred and two million US workers (75%) drive to work alone every day. Three out of four people. Do you think that's because nobody lives near, or passes by, anyone who's headed the same direction? No, other things are at work here, things like "why bother?" and "I like my quiet time" and "it's not very convenient."

Remember how there used to be no cars? What did people do then? Horses? Live close to things? There are a lot of options: it's not like "type of fuel" and "type of vehicle" are the only variables in the equation. Obviously, you wouldn't institute a $20 gas tax overnight. Over a couple centuries, society has been optimized for the conditions of cheap fuel and ecosystem "invincibility," and now we have to optimize it for a different set of circumstances.

I see the point about a gas tax being incredibly regressive, and it does concern me. But in today's very capitalist society, where people make so many decisions based just on the financial implications, and where the idea of regulation is so frowned upon in favor of things that are market-based, I'm just not sure that another option is going to get much traction. And it does seem rather appropriate and the most direct way of sending the message, using fuel screws up our environment in ways that are going to be incredibly costly to fix.
posted by salvia at 8:05 PM on April 16, 2008

Obviously, you wouldn't institute a $20 gas tax overnight.

no one's instituting a $20 gas tax in any amount of time - this idea is being shot down on a fairly liberal, leaning towards tree-hugger website

imagine how it's going to play in the rest of the country

that's not whining, that's not excuses, and it's not a violation of the can-do spirit, it's reality - you are not going to legislate a society based on new energy systems by taxing the old ones to death - not without dictatorial powers, anyway
posted by pyramid termite at 8:25 PM on April 16, 2008

I agree nobody's instituting a $20 gas tax. I'm not making a policy proposal here. I'm saying I don't think the defeatist comments are useful or even very accurate. Providing transit (for starters) isn't brain surgery or some impossible dream. And who knows what else we could actually accomplish if we all pulled together? (Yes, I have just been watching the primary debates.)
posted by salvia at 10:16 PM on April 16, 2008

Japan has (IMHO, naturally, but Japan and I are right) allocated--not misallocated--a proportion of its considerable wealth to insuring its food supply against the day liquidity dries up and goes away. It happens. It's happening now.

Hmm. I can't speak for Japan, but here in Korea, as I've mentioned before (in this thread? I can't remember), Korea imports 70% of its total food consumption, but is also self-sufficient in terms of rice production.

Which is all fine and good, except: 1) rice costs at least 4 times what it does in other countries like, say, Australia or Canada (places where I also lived and bought rice) where rice is not a staple, at least to the same degree, and 2) people eat a heck of a lot more than just rice, after all.

I'm not sure if Korea could actually farm enough, given its size and population (50 million people in an area on the order of 1/8 the size of British Columbia), to be self-sufficient in food production. The problem is, as it in many other places, that are are just too damn many people.

I'm not sure if being self-sufficient in rice (but little else) is such a great thing in and of itself. Again, I don't know about Japan, but I suspect the situation isn't radically different there.
posted by stavrosthewonderchicken at 12:10 AM on April 17, 2008

For those still following this topic, Victor Mallet's column in todays FT has an article touching upon food shortages then addressing the prevention of world famine.

A quick, three point summary (for those would rather not click through):

• Encourage international trade of food
• Ending domestic subsidies
• Population control

Mallet has written about the population problem before; in January 2007 he wrote Procreation does not result in wealth creation", which addressed the commonly held belief that population growth is necessary for economic growth.
posted by Mutant at 6:01 AM on April 17, 2008

Also, meant to post this yesterday but was otherwise distracted ...

If you're bullish on Agricultural commodities but don't have experience trading futures or aren't willing to assume the risk (you smart cookie you) there is another way - Deutsche Bank has an ETF ("Exchange Traded Fund" -- have I ever told you guys how much I love ETFs?) tracking agricultural commodities, Deutsche Bank Agricultural Fund, or DBA.

Deutsche constructed this fund to focus on only four components - corn, wheat, soybeans and sugar. I guess they're overweight on those four for some very good reasons that aren't immediately obvious to me.

DBA seems to have performed well since inception (although past performance is not, blah, blah, blah), is up about 10% YTD and seems to track it's underlying NAV fairly closely. Also, at roughly $2.3B in assets, it's large but not that large; there is academic evidence (supported by real life examples e.g. Fidelity's Magellan and others) showing fund performance is inversely correlated to the size of the assets under management (within certain constraints that aren't germane to this thread).

A word of warning (and this applies to basing pretty much any investment decision off data found on the internet - although Deutsche's own link shows they underperform their benchmark (the DJ Agricultural Index) somewhat, this link shows a contrasting view.

The reasons are obvious (different base dates and reporting period end for starters) but all too frequently I see folks (yes, *gasp*, *horror*, even on MeFi!) pointing to a single source of data as "evidence" of financial performance or lack thereof. Always troublesome, even with exchange traded instruments (you think NYSE never screws up? We've found problems with their daily TAQ feed in the past, so I'm always suspicious of data, especially so when money is involved ... )

Don't trade based on this comment, these links, or even any single item you read on the 'Net. Trade based on your own research and (extensive, please?) due diligence.
posted by Mutant at 6:58 AM on April 17, 2008

It's posts like this that make me wonder why I sometimes wander off for months without reading Mefi. The grow-your-own-food comments above ring true to me, the build-a-better-automobile comments, not so much.

Under the auspices of my locavorous wife, I've been reading a book by Wendell Berry. His 1977 The Unsettling of America: Culture and Agriculture holds that our problem isn't not having the right technology, or the right trade mechanisms, but that our culture is exploitive in character. That's why our production and consumption processes tend to run open-loop. He makes a deeply compelling case, drawing careful distinctions between exploitation and use, and exploring interconnectedness of body, soul, commmunity, and land in concrete and practical terms.

He also has some interesting things to say about the US government and agriculture industry.

I'm left with the opinion that any solutions that don't address this character problem are merely band-aids, and may delay but will also exacerbate the eventual reckoning.

I don't know what the future will bring. I plan to start a family in the next year or two, move somewhere I can have some land and start growing. No more spending money unless it's absolutely necessary. Maybe I'll have to stay in the IT industry at least till I learn how to make furniture or something. Of course it's not that simple. It's scary, and I wish I had started earlier in preparing for big changes.

Perhaps to those who are not as ignorant as I about the miraculous workings of various investment vehicles, my comments are unbearably naive.
posted by maniabug at 7:24 AM on April 17, 2008 [1 favorite has favorites]

Whoops! Just saw Pastabagel's (much) earlier mention of DBA ... I did indeed look before posting, but well done!

Anyhow, to clarify and expand on Pastabagel's original point - DBA rolls over futures contracts, and doesn't actually hold or otherwise take possession of the underlying commodity. So the long gains economic exposure to agricultural commodities, but without certain risks associated with physical possession.

The long also benefits from the leverage derivatives such as futures provide.

Finally, ETFs will at times exhibit deviations from NAV; I'm active in ETFs (but not DBA), and will generally purchase and ETF only when it's trading at a discount to NAV; this allows me to acquire one dollars worth of assets for less than one dollar. Sweet deal that.

Nothing in life, especially equity market trading is certain, so I take advantage of every trick to stack the deck in my favour when taking a view. ETFs are wonderful trading vehicles, absolutely amazing financial innovations.

Please excuse me for a few minutes as I tend to get all weepy when I think about my favourite ETFs...
posted by Mutant at 7:35 AM on April 17, 2008

Mutant: I'd suggest that buying DBA is a deeply unethical investment move given that speculation on agricultural commodities has been responsible for some of the rapid increase in food prices*, which has had very negative effects for the poorest people in the world. Buying agricultural commodities futures (indirectly, in this case) is only going to increase the price of the underlying commodities for those who actually eat them.

* I suppose you could argue that speculation is not causing increased prices, but I'd have a lot of trouble believing that.
posted by ssg at 10:16 AM on April 17, 2008

ssg -- "I'd suggest that buying DBA is a deeply unethical investment move ..."

Well, I certainly wouldn't purchase DBA 'cause I don't trade like that. And I think I made the case earlier that I believe in commodity price cycles, not sure where we are in this one, but if someone were to purchase DBA now they'd like to sell later, for a profit. Buy low / sell high? Far too risky for my tastes.

No, I like sure things. I'm a cash flow investor, I only trade into securities if I can get 10% or higher current yield out of them (btw, some eye popping yields out there now, far higher than 10% as lots of folks still running scared). Cash flow investors are largely share price indifferent. Compare this to the usual investors outlook - buy low, sell high. They are hardly indifferent to the price of the securities they hold.

But as you've introduced ethics, where are you putting your money? In this environment I surely hope you're not sitting on (too much) cash. We've talked a fair amount about inflation on MeFi, and as I mentioned upthread, I think we've yet to see full impact of what's hitting the producer side.

I have to admit that its difficult for me to think of an investment that either doesn't have a negative effect, or the potential for a negative effect, on someone, somewhere.



"Buying agricultural commodities futures (indirectly, in this case) is only going to increase the price of the underlying commodities..."

I'm sorry, but going long a futures contract hardly is a guaranteed profit. Neither the instruments nor the futures markets work like that. I only wish it were so simple.

No, the long hopes the underlying commodity will increase in value. But the value of the commodity - and hence the futures contract - can and frequently does decrease in value.

And keep in mind the same leverage which can magnify a profit will also sharply increases losses should the value of the underlying commodity decrease.

When we talk about risk free securities in finance, we don't mean futures contracts, especially commodity futures.
posted by Mutant at 11:28 AM on April 17, 2008

I have to admit that its difficult for me to think of an investment that either doesn't have a negative effect, or the potential for a negative effect, on someone, somewhere.

Surely you will admit that some investments are more likely to cause more negative effects than positive and some are more likely to cause more positive effects than negative? I'm arguing that buying DBA is most likely to have far more negative effects than positive.

I'm sorry, but going long a futures contract hardly is a guaranteed profit.

I'm not saying it will; in fact, I haven't said anything at all about profit. Buying DBA is equivalent to buying agricultural commodities futures. Buying agricultural commodities futures increases demand for them, which increases their price. The increased price of the future helps to increase the price of the underlying commodity. People with very little spending power can afford less of these commodities.
posted by ssg at 4:47 PM on April 17, 2008

ssg -- "I'm arguing that buying DBA is most likely to have far more negative effects than positive."

Maybe, maybe not. But its your argument so I'll leave it to you to present some proof. It would be very challenging research, to say the least, to prove DBA has a deleterious effect on the commodity markets.

At $2.3B or so in market cap I'm not sure that DBA has enough clout to move the agricultural commodity markets, or have a measurable impact; after all, this is a vehicle for the retail crowd, ain't no pro gonna speculate on commoditys via DBA - the vehicle is too costly, for one, no direct control over the underlying assets for another, probably a dozen or so others reasons why not.

And I'm not sure how you'd disentangle DBAs effect on the commodity markets underlying pricing (i.e., data generating process in econometric speak) from one, activity engaged in by speculators, and two, hedging undertaken by producers.

Yeh, interesting position to say the least, but I'm afraid you've got some very challenging research to prove your point.



"Buying agricultural commodities futures increases demand for them, which increases their price. The increased price of the future helps to increase the price of the underlying commodity."

If one goes long a commodities future, demand for the future increases, not for the underlying. There is a non casual relationship between the price of the futures contract and the underlying, but this relationship falls far short of the positive feedback loop you're describing. And the greater majority of futures contracts are closed out without the long taking physical delivery of the underlying commodity (in fact, CBOT only qualifies a relatively small number of participants as being able to either take or make delivery of the underlying commodity to satisfy a commodity future).

There is convergence in prices, naturally, between futures and the underlying, as the futures contracts maturity date approaches. But the underlying is NOT driven (at least not solely) by the pricing behaviour of the futures contract.

And convergence works both ways; the underlying can both increase and decrease in value, as a large number of speculators in the futures markets have found out to their regret.

Once again - when we talk about risk free securities in finance, we aren't taking about commodity futures.
posted by Mutant at 1:18 AM on April 18, 2008

Were we talking about risk free securities in finance?
posted by Bovine Love at 8:41 AM on April 18, 2008

Bovine Love -- "Were we talking about risk free securities in finance?"

If you read upthread you'll see a misconception; namely that going long a commodity futures contract causes an increase in spot price.

Were such a relationship to exist, it would approximate a risk free security; go long the futures, receive variation margin as the underlying price (naturally) increased.

Neither the futures market nor futures (or forwards) work that way. I think the misconception comes in as OP doesn't understand supply & demand as they relate to futures; namely, there is NOT a limited supply of futures contracts. Increased demand for a futures contract doesn't, only by itself, translate into higher prices for futures contracts and the underlying commodity.

Too bad because, as I said before, I only wish it were so simple.
posted by Mutant at 9:30 AM on April 18, 2008

I see. I can't agree that it would approximate a risk free security, since it may very not be the only relationship. Finance is pretty polygamous (as you well know), and I didn't see anyone imply it was a monogamous relationship, simply that one influenced the other. That would not mean it is risk free, since there may well be 1000 other relationships to screw that up.

Surely you're not going to tell us that spot price and commodity futures contracts are orthogonal? At the very minimum the investors with an interest in both can observe both and will react on either changing, even if there were no direct financial relationship (which I suspect there is). Such human dynamic can make a pretty big difference; it isn't a rational system even if it likes to masquerade as one.
posted by Bovine Love at 9:53 AM on April 18, 2008

Bovine Love -- "I didn't see anyone imply it was a monogamous relationship, simply that one influenced the other. "

Well, lets see, the statement - "Buying agricultural commodities futures increases demand for them, which increases their price." - reads to me (at least) that simply going long a futures contract causes the prices for futures contacts increase. That doesn't really happen, as we both pointed out. Simply purchasing a futures contract doesn't strain an available supply, which I believe was the original misconception. The futures contract is created, on the fly as it were.

Purchase as few or as many futures contracts as you'd like; its' the price of the underlying that (largely) influences the futures price. And we've also got

"The increased price of the future helps to increase the price of the underlying commodity."

As I posted before, there is definitely a non casual relationship between futures prices and the price of the underlying, but not as clearly linked as originally posted.


"Surely you're not going to tell us that spot price and commodity futures contracts are orthogonal?"

Not at all. Previous comments about I wish it were so easy to make money this way still stand.


"At the very minimum the investors with an interest in both can observe both and will react on either changing, even if there were no direct financial relationship (which I suspect there is)."

Now that's an interesting comment; there definitely is a relationship between futures and spot, and speculators (not investors mind you - not hedgers for that matter) will tend to flip back and forth, as the side of the trade they're on (long/short) and variation margin flow make it profitable. But it gets really interesting when you start to expand your universe of instruments to forwards and then consider interest rate expectations across the term.

Many folks believe that traders are indifferent between futures and forwards and a superficial glance at the instruments might lead one to conclude this is so, but thats not true at all. We'd have to look at the side of the trade and the correlation between futures prices and interest rates. If we assume both futures and forwards are identically priced, you'll end up with two states, depending upon the correlation coefficient.

Positive correlation between futures prices and interest rates.

You should be long a futures contract. Again two cases:

• Futures prices increase, and so will interest rates (positive correlation). The long invests variation margin received at relatively high interest rates.
• Futures prices decrease, and thus interest rates will follow suit (positive correlation). Long futures position pays variation margin, but can borrow at relatively low interest rates.

Negative correlation between futures prices and interest rates.

Its preferable to be short a futures contract rather than a forward. Again two cases arise:

• Futures prices decrease, but interest rates increase (remember, negative correlation). Short gains, long pays. But as forwards don't pay variation margin, the advantage of this side of the trade is clear (i.e., be short a future).
• Futures prices increase, and interest rates decrease (negative correlation). Short pays, long receives. But the short can borrow at relatively low interest rates. Ffunds to pay variation margin either can be borrowed, or dis-investment to pay variation margin takes place at relatively low interest rates.

These results are after Cox, J.C., Ingersoll, J.E., & Ross, S.A. 1981, 'Forward and Futures Prices: Evidence from the Foreign Exchange Markets', Journal of Finance, 36, December 1035.

I don't know what the difference in rates would have to be to entice an entity to hold a futures over a forward and vice versa - I suspect the answer would vary markedly, depending upon funding costs and hurdle rates - but there are most certainly conditions under which participants will hold one or the other and make this decision deliberately and quantitatively.

So you're absolutely correct; there isn't a single, very casual relationship between futures prices and the underlying. In fact the illustration above should show that speculators will tend to flip not only from the underlying to a derivative, but also amoung derivatives, depending upon factors such as their own expectations of interest rates, as well as the side of the trade they're taking.

All in all, as you've pointed out, a very complex relationship.
posted by Mutant at 12:24 PM on April 18, 2008

Gosh reading through my earlier comments I realise that I've been terribly unhelpful to the person who originally raised this issue.

A commodity futures prices is solely a function of the present value of the underlying commodity, S, calculated at time t, continuously compounded forward at interest rate r, with the contract maturing at time T. Or:

    F(t) = S(t)e^r(T-t) 

N.B., Both T and t are expressed in days, this formula doesn't take into account the quantity of futures outstanding, at all, nor other finer points of interest only to practitioners e.g., but not limited to dividends, storage costs, etc. Simple, it does provide a good foundation to understand the pricing of futures (perhaps forward contracts as well).
posted by Mutant at 2:39 PM on April 18, 2008

A commodity futures prices is solely a function of the present value of the underlying commodity, S, calculated at time t, continuously compounded forward at interest rate r

I don't know about that. This would seem to imply that the market sometimes uses a negative interest rate, which seems a bit wrong, and then sometimes you have a futures curve that's U-shaped or whatever. I suppose it's more like the result of many competing models of expected interest rates, storage costs, and yes even a little anticipation of future spot prices, rather than anything quite so simple. I suspect futures prices can influence spot prices in various sometimes irrational ways, but all I know really is that somewhere, at this very moment, there is earnest debate going on somewhere about exactly how that relationship works, and nobody seems to have it nailed down really, in practice. This for example relates to that earlier mefi post on the subject, and I think illustrates that some weird stuff goes on.

"Buying agricultural commodities futures increases demand for them, which increases their price."

It doesn't increase demand for the commodities, at least not directly, and it may or may not tend to increase their price on the spot market, depending on who you believe. Successful speculation in the futures does cost someone money, presumably if speculators as a group are successful (I'm not sure, but I seem to recall reading that they're generally not usually, at least in some markets) that somebody is commercial buyers and sellers who are using futures for whatever reason. In that case, it could mean something is wrong with the market that the speculators are helping to correct, or the commercials, who do also trade the futures actively, need to find some better traders, or maybe just the speculators are effectively selling insurance against price changes and getting the market rate for that service. In any case I think it's true that commodities futures markets by their nature are at least more closely tied to the fundamental balance of supply and demand than most other markets, and if you think speculation in them is unethical, then first you cannot have a properly diversified portfolio of investments as so many people recommend, and second if you think it through I believe you'll find you're also saying that it's unethical to have any kind of free market in these commodities in the first place. And I can see some sense in that, but designing and implementing a better way of allocating scarce resources is going to be quite a challenge.

As for the "huge dieback and a collapse of civilization", well yeah, but we're not really there quite yet I think. Or at least, I don't think this round of food price increases is all that likely to be the final one. Better technology and resource management will do what they can, and perhaps life can go back to something closer to normal for a while. It looks possible, and then maybe the next time around might be the really bad one, a decade or three from now if population growth and climate change go badly as predicted. Of course even then you'd have peak oil to cause some other problems in the mean time, but optimistically one can hope in the long run that will help contribute to people seeing the need to do things in a more sustainable way.

It's strange to think that with oil, there's no shortage of people saying the higher the price the better, since that will force us to start building the alternatives we're going to need when supply inevitably fails to keep up with demand; but with food, you don't see that argument so often. It seems the same logic applies, and though a shortage of diesel fuel is in itself less painful than a shortage of food, the one can lead to the other, and it is still a harsh loss for the people who can't afford it any more, who've come to depend on it to earn a living. Unless we give up on the concept of money though, it does seem to take an increase in the price of gasoline to make people start thinking about building electric cars, an increase in the price of electricity to get people using solar power, and a shortage of food to start thinking about what we can do differently to produce enough of it in the future. Such systemic lack of foresight is lamentable, but so it goes, as usual.
posted by sfenders at 5:49 PM on April 18, 2008

It's strange to think that with oil, there's no shortage of people saying the higher the price the better, since that will force us to start building the alternatives we're going to need when supply inevitably fails to keep up with demand; but with food, you don't see that argument so often. It seems the same logic applies ...

Well, I would imagine that is because oil is inherently limited and is pretty much destined to rise in price (above inflation) in the long run as supply diminishes. Outside of the impact of oil cost on food production (a very close relationship currently), there is no particular reason why the supply of food should decrease on the whole. Of course, if demand were to exceed supply, that could be a different situation.
posted by Bovine Love at 8:13 PM on April 19, 2008