Back in March, I posed the question of whether the growth of a new middle class in the developing world was going to stress the world’s capacity to provide food and fuel. At that time Light crude (above) was selling for $85 a barrel and there were no food riots in Egypt, Pakistan, India, Thailand and Sudan. Yesterday, The New York Times weighed in on this question. They presented a balanced view on both sides of the story, concentrating more on the food issue than the fuel.
The whole world has never come close to outpacing its ability to produce food. Right now, there is enough grain grown on earth to feed 10 billion vegetarians, said Joel E. Cohen, professor of populations at Rockefeller University and the author of “How Many People Can the Earth Support?” But much of it is being fed to cattle, the S.U.V.’s of the protein world, which are in turn guzzled by the world’s wealthy.
This is all very comforting, but are we all going to turn into vegetarians? So they try another angle, which sounds more resonable: plant more land.
Anyone who has ever flown across the United States can see how that’s possible: there’s a lot of empty land down there. The world’s entire population, with 1,000 square feet of living space each, could fit into Texas. Pile people atop each other like Manhattanites, and they get even more elbow room.
Water? When it hits $150 a barrel, it will be worth building pipes from the melting polar icecaps, or desalinating the sea as the Saudis do.
On the other side of the issue are agronomists like Dr. Harriet Friedman who say our industrial food system is part of the problem, not part of the solution.
Dr. Friedmann argues that there is a Malthusian unsustainability to the way big agriculture is practiced, that it degrades genetic diversity and the environment so much that it will eventually reach a tipping point and hunger will spread.
There are three part of the U.S. food business, I think we really need to look at. First we have to stop subsidizing our agriculture. By pouring billions into the pockets of Cargill and Archer Daniels, we distort the world price of Wheat, Corn, Soy, Rice and Cotton and we make it impossible for farmers in the developing world to compete or grow more than subsistence crops. Second, as the cost of oil rises, big industrial farming that needs lots of oil inputs not only for machinery but for fertilizers, will have less of an advantage over smaller scale organic farming, especially in the fruits and vegetables categories. Where I live, the local farmers markets, three times a week are very popular and clearly the value for what you pay is outstanding.
Finally, I think we really do need to look at the role commodity speculation is playing in price distortion. We have known of the developing world’s need for more food and fuel for years. Why did the chart above develop the hockey stick only in the last six months? Because as the stock market fell, there were $trillions looking for a new rising market and that market was commodities. The defenders of speculation say the huge new capital flows into the commodity markets are making them more liquid and therefore it is a plus for the airline that needs to hedge fuel prices or the farmer who needs to hedge corn prices. The problem is that as the dollar falls, most of this new money is flowing into the “buy-side” contracts of which there is a limited supply. Like any Econ 101 student, we know what happens in that situation. I think the solution is that if you are not willing to take possession of a commodity, you shouldn’t be able to play in the futures market.
Ultimately this whole issue is one of the most vexing ones we will face in the next half century. We clearly have a lot more land that could be planted to feed the world. As to oil, I think the Peak Oil theorists are right. For Americans, we are going to have to live a more frugal and less wasteful lifestyle. We have to raise the urgency of moving to alternative fuel sources like wind, solar, and even nuclear if we are to avoid a Malthusian doomsday scenario.