Guest Post by Willis Eschenbach
People have short memories. One of the things that I have learned in this game is to start any particular quest by finding the longest continuous records and look at them to understand the situation. This prevents the unjustified exaggerations that result from a short-term view of an issue.
Take the world food supply. People worry that the food supply is being negatively affected by climate change. Or if not, that it will soon be negatively affected, by gosh, and this time they’re not kidding. Really.
The recent radical rise in food prices from 2005 to 2008 is often cited as if it were climate related. People claim that the prices of basic foods doubled in that time period and that climate played a part. To to take a different, long-term look at that, consider the ancient relationship between cost, supply, and demand. Here’s how it works, and it’s bozo simple, first rule of economics:
Scarcity drives up prices.
This basic relationship means that if we want to see if food in the world is getting more scarce or less scarce, we can look at the change in the commodity price over time. Here’s that chart, showing the yearly changes in corn and wheat prices since the mid 19th Century.
Figure 1 from Sumner, “Recent Commodity Price Movement in Historical Perspective”. After the 2008 peak prices subsequently dropped. Recently they have begun rising again, although they are below the 2008 levels. SOURCE: American Journal of Agricultural Economics
Some things are immediately apparent from this graph.
First, the claims are true, the price for the basic foodstuffs corn and wheat did double from 2005 to 2008.
Second, that doubling only returned the price to the 1995 level.
Third, the historical price levels (with excursions for two wars and the great depression) were pretty stable until after WWII. Since then (with the excursion for the 1971 oil shock), things have greatly improved.
Fourth, I see no trace of a climate-related signal in that graph. Might be one, but if so, it’s well hidden.
Fifth, during the period 1866 – 2006 there have been a number of shifts in climate, both PDO related and otherwise. There has also been a general warming. As far as I can tell, there is no sign of either of those in the corn and wheat price record.
SUMMARY
The recent increase of commodity prices is a real issue. And of course it hits the poorest hardest, so it should not be ignored.
However, a look at the historical record shows that we’re doing pretty well, thank you very much.
So while of course we should be concerned by any price increase that strike at the poor, the claims of impending food-related climate doom have no more historical or evidentiary foundation than any of the other, more familiar alarmist claims. Farmers have dealt with the vagaries of weather for centuries. When the climate changes they do what they have always done. They change their farming practices to adapt. The idea that a change of a few degrees will shrink the world’s farm production reflects the naive thinking of someone who has never been a farmer. If a couple degrees of warming over the next century were the farmers’ biggest problem, they’d be overjoyed …
w.
This idea, that farmers can adapt to changing climate, may be a false one. The whole CAGW movement is a movement to turn our entire economy from a free enterprise/capitalist economy to a command economy. If it succeeds, farmers will no longer be able to adapt, because they will not be allowed to. They will do whatever their new masters, who believe in CAGW, tell them to do, or else.
Now the question is, what if, as seems increasingly likely, this whole farming idea is Wrong? What if, at the very least, we are in for several decades of 70’s style “ice age scare” cooling, or worse, are heading into a mini ice age? With our new masters having spent so much capital on convincing us of warming, they will not admit to cooling, as it would result in their losing power that they worked so hard to gain. Result, it may cool, but we will not be allowed to adapt to it because that would mean admitting that warming is wrong.
Result, we could have mass starvation. This has, indeed, happened before. During a previous little ice age, farmers adopted, substituting potatoes fror wheat on many farms when wheat was found to be subject to the new late springs and especially early falls. However, French peasants where unable, unwilling, or not allowed to adapt (they had a command economy). Result: famine followed by revolution, dictatorship, and war. Could this happen again? Do we learn from history?
mkelly said @ur momisugly June 10, 2011 at 1:34 pm
“One German organic farm has killed twice as many people as the Fukushima nuclear disaster and the Gulf Oil spill combined.”
Instapundit » Blog Archive » QUOTE OF THE DAY: “One German organic farm has killed twice as many people as the Fukushima nuclear…
I say, ban organic foods. We can’t know if they’re safe!
——————————————————————————————————————
“Two workers missing since the natural disasters of 11 March have now been found dead in the turbine building of Fukushima Daiichi unit 4.
Kazuhito Kokubo and Yoshiki Terashima, aged 24 and 21 respectively, were found in the ‘-1’ level of unit 4’s turbine hall. The chairman of Tokyo Electric Power Company, Tsunehisa Katsumata, said they had been “working to protect the safety of the Fukushima power station after the earthquake and tsunami.” Similar basement levels of other reactors on the site have been found to be flooded, possibly by tsunami water flowing through cabling trenches close to the seafront.
One worker also died at Fukushina Daini after suffering serious injuries and becoming trapped in the crane operating console of the exhaust stack of one of the units during the earthquake.”
Two drownings, one trapped in a crane.
“U.S. Coast Guard Adm. Thad Allen, incident commander of the Deepwater Horizon disaster, said the deaths of two spill workers were reported Wednesday. One of the dead was from the “vessel of opportunity” program in which local boats are enlisted to help the cleanup effort. The other involved a swimming pool accident. He gave no further details.”
Two deaths, presumably both from drowning. That makes five deaths.
“German scientists were working today to confirm an organic vegetable farm as the source of an outbreak of E.coli bacteria that has killed 22 people and caused a food scare across Europe.”
Twice five makes twenty two? And where did the E coli come from? One of the workers forget to wash their hands after taking a dump? Now that would never happen on a conventional farm, would it? Get a life…
You’re making me hungry
Many years ago, Scientific American published a whole special issue about food worldwide, and one of the articles showed world food production versus energy input to the food system, for every conceivable economy from the most primitive hunter gatherers (yes they still exist) to the most well fed western “civilizations”. That straight line graph showed very clearly that energy input equals food output. You give an “Eskimo” bullets with gun powder energy instead of his spear, and he can kill more seals. His snowmobile burning gasoline, out does his dog sled for covering plenty for terrain searching form food.
So guess what the world wide consequence is of the present administration’s deliberate starving of the US energy market. If the USA doesn’t get energy (our own or someone else’s), the world is going to be short of food; this isn’t rocket science. Only New Zealand and France produce significantly more food per Joule, than the world wide ratio; a simple fluke of local weather patterns (at the time of the study). And collectively, those two don’t amount to a hill of beans as regards world food needs, so it is academic that they are a bit more efficient.
So the greens can go back to clambering around in fig trees for food if they want to; I’ll take a nice steak, even if I have to shoot it myself. And if the almighty hadn’t intended for us to eat cows; then why did she make them out of meat ?
The last refuge of politicians is to blame the speculators-or the Jews. So, I understand why there are many comments above condemning speculators. Each time there is a price spike, damned fool politicians have to blame someone (rather than being responsible and accountable themselves!) But very few people understand that speculators play a positive and important role in sharing the risk of unanticipated price fluctuations. Please see Dr. Thomas Sowell’s book “Basic Economics”.
http://www.amazon.com/Basic-Economics-4th-Ed-Economy/dp/0465022529/ref=sr_1_1?s=books&ie=UTF8&qid=1307800763&sr=1-1
Unfortunately, blaming the “speculators” can be a useful tool for politicians to cover up either their own causation of a problem or their inability to cure a problem. There is a long and (dis)honorable tradition of politicians doing just that. For example, every time the price of gasoline goes up Congress has investigations of the oil companies. And the fools in the so called main-stream-media carry the denunciations of “greedy oil companies” and “obscene profits”. Yet each time when the investigations come to naught, the same media boot licks never report that all those charges were baseless. Another example is how demagogues and politicians have, for some 2000 years, blamed the Jews for everything. And still do, after all they are the speculators.
It is discouraging that people fall for the same identical hoax every time. One would hope that eventually they would learn.
In recent years, the only politician of note who HAS NOT blamed others for his problems has been George W Bush. And see where it got him! (I would welcome examples of other politicians who did “man up” to the problems of the day.) When poor GW was president, he was deemed a failure when unemployment was around 5%. Now that unemployment is oficially 9%+, it is STILL his fault. And a recent study indicates that the real unemployment rate for African-American males is closer to 50%. But nobody, other than a few like me, seem to care.
Regards,
Steamboat Jack (Jon Jewett’s evil twin)
More bad news for the Malthusians:
http://nextbigfuture.com/2011/06/new-super-variety-of-wheat-is-rust.html
From 2002
World agriculture 2030:
Global food production will exceed population growth
http://www.fao.org/english/newsroom/news/2002/7828-en.html
So, Jack, can you give us an idea where all the cash paid out by the fed to former bond-holders via QE2 is residing right now?
Quantitative easing –
” Quantitative easing (QE) is a monetary policy tool used by some central banks to stimulate their national economies when conventional monetary policy has become ineffective. The central bank creates money through open market operations, such as buying government bonds and other financial assets, in order to increase the money supply and the excess reserves of the banking system”
Quantitative easing and the commodity markets
“QE is likely to boost investment allocated to commodities (derivatives and physical stocks of raw materials) by altering both prospective returns on different asset classes and the composition of instruments available for investors to include in their portfolios.”
Trapped: The Fed Has Painted Itself Into a Corner
” The Fed intended [“easy money” policies of zero interest rates (ZIRP) and quantitative easing (QE2) ] .. to lower long-term interest rates and to nudge investors into riskier assets, thus stimulating growth. At least one part of that strategy is working. By lowering the yields on traditional financial investments such as bonds to near-zero, the Fed has essentially forced trading desks and hedge funds to scour the globe for higher yields.
Many traders and investors have found that higher yield in commodities, which is where speculative money is now flowing in abundance, helping to push up prices. Because the price of wheat, for example, is roughly the same everywhere in a global market, these rapid price increases are destabilizing poorer countries where much of household income is devoted to food. ”
– – – – – – – – – – – – – – – – – – –
Bolding above is mine.
.
There are two things that are causing food prices to rise and scarcity of production is one and the second is stockpiling to make a bigger profit. Now we have technology to safely store food basics in best condition it makes this easier to hoard products.With wheat prices fluctuating it is hard to know the right decisions if you are a farmer or investor. It’s imperative to know commodity trading tips, trend and strategy guides. For anyone interested in finding the options available for wheat trends, I wish you would check out Agriculture.com. While I am working for them, I can trulyy tell you that the data they offer is both useful and complete from farmers and marketing firms available, as well as other information such as daily weather reports.. They are definitely worth following up on.
Legatus: “The whole CAGW movement is a movement to turn our entire economy from a free enterprise/capitalist economy to a command economy. “
AHA! It was those darn COMMUNISTS all along!
How do you respond to articles like this one about the US Navy’s concerns about the national security implications of climate change?
Are they part of the conspiracy?
Footagus says:
June 12, 2011 at 6:32 pm
How do you respond to articles like this one…
========
Read the 2nd paragraph of the summary. Does anyone really need to respond to articles like the one you’ve cited — studies that blindly apply IPCC conclusions?
Sorry for not coming back earlier. I re-did the graph of corn corrected for inflation. I can also do wheat or any traded commodity. I’m just not sure how to post it here. I can email to anybody if I have an email.
Hi David,
If you post the graphs to a free site like flickr [ http://www.flickr.com/tour/10 ] you can then list a link.
Thanks for taking the time to adjust for inflation. It should be interesting to compare it to the graph above.
Hope this works, This is the link.
http://www.flickr.com/photos/64035064@N06/
Prices of wheat and corn is divided by the 1982-1984 base year CPI, so it’s in constant dollars of 1982-1984. Data doesn’t go further than July 31 1959.
Thanks David,
Works great.
Hi David,
Well the graph above is surprisingly close to your results and the peaks, until recently, appear to be inflation related.
If there is a climate signature in the price, its likely ENSO related and regional. Is it possible to run corn and wheat for just the US and Beef for the US and Australia over the same time frame?
I added a graph of live cattle to the same link. All futures (wheat, corn and live cattle) are from a US Exchange. Data for Australia is not readily available, although I would guess prices tend to follow each other, since these are easily exportable products (prices should tend towards a world level, taking into account transport prices). I agree with you, there is no climate signature in the prices. Recent spikes in corn and wheat could be link to the use of corn to produce ethanol, driving prices higher. The high prices of oil probably pushed prices of corn (and one of its substitute, wheat) higher.
Thanks David,
Well I have to agree with Willis, “… a look at the historical record shows that we’re doing pretty well, thank you very much.” But, I disagree about the scarcity part of the premise.
Thanks for taking the time to do the inflation adjusted charts!
The high prices of oil probably pushed prices of corn (and one of its substitute, wheat) higher.
That makes sense from the petrochemical fertilizer standpoint and the cost of fuel for farm equipment etc. What a mess if the Carbon tax inflates costs across the board. I wonder what idiot came up the the carbon tax idea.