Say Anything Blog

Another interesting aspect to all this is that we have been told for some time now that cheap(illegal) labor is the key to low food prices, but it turns out that the law of supply and demand is really the important factor.  Command economies always run into this kind of consequence.  No govt agency can manage the economy as well as free people making free choices.  It just gets proved over and over again.
Trying to manage an economy to achieve social and political outcomes is always a bad thing.

If you don’t know by now, don’t mess with it.

Rob:

Wal-Mart won’t say it, but I will: Ethanol subsidies, which are driving food producers to devote their crops to fuel production instead, are driving up the price of food by lowering supply. 

So how is corn ethanol affecting the availability of rice again?

There is a lot of overlap in the food market for staple crops, which both corn and rice are.  If more land is going for corn, and more corn is going for ethanol, less land is available for other crops and demand for those other crops goes up as well.

I’ll grant that the areas acceptable for growing rice are different from the areas acceptable for growing corn, but even so the markets are intertwined.  People have to eat.  Less food is on the market as a result of ethanol subsidies.  Thus, supply is down and prices are up.

When the people fear their government, there is tyranny; when the government fears the people, there is liberty.

-- Thomas Jefferson

Rob’s recently listened-to songs:

So how is corn ethanol affecting the availability of rice again?

In addition to what Rob said, there is diversion of capital and resources to the more profitable(due to the subsidies) corn for ethanol.  It’s a market distortion, much like the distortion of 90% margin distorted the demand for stocks in the late Twenties.  You know what that led to, don’t you?

If you don’t know by now, don’t mess with it.

robert108:

No govt agency can manage the economy as well as free people making free choices.

Are you sure about this?  The US Dept. of Agriculture, beginning with the Eisenhower Administration, introduced farm parities and price supports, introduced crop regulations, mandated soil conservation and encouraged new approaches to farming and agri-business which resulted in making the USA the bread-basket of the world.

I agree with your observation about free peoples and free markets, but I don’t think government agency management is always less useful than freedom of choice; just ‘mostly’ less useful.

Farmers who initially resisted the changes proposed by the D of A later agreed it was the right thing to do.

"Here lies, in honored glory, an American soldier, known but to God.”

The stakes are high. Whether the issue is the economy, or energy, or the federal courts or national security, the right answers are coming not from the Democrats, but from the Republicans. The surge of operations that began a year ago is succeeding. The only way to lose this fight is to quit. Richard M. Cheney, Vice President, 30 May, 2008

Pparets, there are exceptions to every rule but typically those exceptions prove the rule.

When the people fear their government, there is tyranny; when the government fears the people, there is liberty.

-- Thomas Jefferson

Rob’s recently listened-to songs:

Rob:

If more land is going for corn, and more corn is going for ethanol, less land is available for other crops and demand for those other crops goes up as well.

I’ve looked at it, and found no such effect.  For example, wheat production in the United States actually increased last year, in spite of a drought, as did rice production.

As I have mentioned in the past, there is plenty of excess capacity, so much so that farmers have traditionally been paid not to grow crops (the conservation program).  This amounts to 8% of arable land, an area the size of New York state. Farmers are opting out of this lease program, and we can expect a strong response from US farmers to the huge increase in profits being offered by current commodity prices.

In addition to the conservation land, there is a significant amount of land that wouldn’t be economically viable given 1990 prices that is very usable at the current price structure.

If you are looking for something to bash biofuels over, I would recommend looking at what the high corn prices are doing to the economical viability of corn based ethanol…

r:

It’s a market distortion, much like the distortion of 90% margin distorted the demand for stocks in the late Twenties.  You know what that led to, don’t you?

Are you the same r who says we are not in or heading for a recession?

“If a conservative is still a republican after the last 13 years, he is blind to the fact that his party of choice has failed him utterly.” – Realitybasedbob

RBB, do you ever do anything besides shit troll droppings?  Don’t you have a life?

Rob:  That’s why, in my post, I said, “I don’t think government agency management is always less useful tham freedom of choice; just “mostly” less useful.

"Here lies, in honored glory, an American soldier, known but to God.”

The stakes are high. Whether the issue is the economy, or energy, or the federal courts or national security, the right answers are coming not from the Democrats, but from the Republicans. The surge of operations that began a year ago is succeeding. The only way to lose this fight is to quit. Richard M. Cheney, Vice President, 30 May, 2008

Carrick, I think it’s a little unfair for you to say that I’m looking for something to bash biofuels over.  I think you and I see the issue differently, but I’m not motivated in my opposition to biofuels by anything other than my own opinion.  And vice versa for you.

In short, I’m not any more looking for reasons to bash biofuels than you’re looking for reasons to support them.

And you may be right about excess capacity for crops, but the simple fact is that food prices are soaring.  How else do we explain that other than government subsidies leading to ramped-up ethanol production?

When the people fear their government, there is tyranny; when the government fears the people, there is liberty.

-- Thomas Jefferson

Rob’s recently listened-to songs:

Carrick:

Don’t you have a life?

Ahhhh, my friend, RBB has a mission , which is always more important than having a life.

Not to mention that every once in a while, on very RARE occasions, rbb does make a point, however tedious. 

"Here lies, in honored glory, an American soldier, known but to God.”

The stakes are high. Whether the issue is the economy, or energy, or the federal courts or national security, the right answers are coming not from the Democrats, but from the Republicans. The surge of operations that began a year ago is succeeding. The only way to lose this fight is to quit. Richard M. Cheney, Vice President, 30 May, 2008

4063 asks 1828 if he has a life...very rich…

“If a conservative is still a republican after the last 13 years, he is blind to the fact that his party of choice has failed him utterly.” – Realitybasedbob

Rob:

I think it’s a little unfair for you to say that I’m looking for something to bash biofuels over.

And you may be right about excess capacity for crops, but the simple fact is that food prices are soaring.  How else do we explain that other than government subsidies leading to ramped-up ethanol production?

How about increased demand (40% growth in world food demand due to increasing frequency of meals in China and India, following a wave of affluence in those countries).

Major crop losses due to cold weather in China, Australia, Argentina and even the United States winter crops (for us, colder weather means plants that are more vulnerable to disease and funguses).

Increased fuel costs translates into increased food costs.

False reporting of food crises in Japan and Thailand, the crisis isn’t nearly as pervasive as our alarmist media are portraying.

Main reason rice increased:

The rice price increase is a result of a domino effect, NBC11’s Noelle Walker reported. Drought in Australia led to a severe decline in rice production that in turn led the world’s largest rice exporters to restrict exports. That spurred higher rice prices and hoarding in Asian countries, NBC11 reported.

There will never be a shortage of bullshit.  (h/t Instapundit.)

RBB:

4063 asks 1828 if he has a life...very rich…

LOL. 

I have no doubt you don’t understand blogging, Bobby.  All one has to do is look at any of your random turd droppings to see that.

By the way, the rationed amount by Walmart?

Shoppers at Sam’s Club discount wholesale clubs will be limited to four bags of rice per customer. Wal-Mart “working with our suppliers to address this matter to ensure we are in stock, and we are asking for our members’ cooperation and patience.” It’s not as bad as it sounds, the bags are still 50 lbs each.

200 lbs per customer please.

Farmers who initially resisted the changes proposed by the D of A later agreed it was the right thing to do.

The reality is that the alternative was never tried, due to govt mandate, so we have no way of knowing how the post war boom would have affected a free market agricultural sector.  In fact, it’s quite possible that the US would have done even better without the govt interference.  You have to go with basic principles on this; when the govt steps in, all other choices go out the window.

Carrick: I “bash” biofuels because they are a bad idea, and should never have been forced on us by confiscating our money and using it to create a product for which there is no real demand, then telling us that it’s our only choice for “energy independence”.  If the market will really support biofuels, let them stand on their own; let the people decide.  I thought that’s how we do things in this country.

If you don’t know by now, don’t mess with it.

Certainly weather anomalies and fuel prices are playing their part, but we’ve dealt with weather before.  And high fuel prices.

But when was the last time we saw a spike in food prices like this one?

Also, China is a net-grain exporter.  India is largely self-sufficient.  I don’t think either of these countries are having a significant impact on global food prices.  At least not any more than they have in the past.

And then there’s this:

Politicians in both the United States and the European Union are mandating that vast quantities of food be turned into fuel as they chase the chimera of “energy independence.” For example, Congress passed and President George W. Bush signed misbegotten legislation requiring fuel producers to use at least 36 billion gallons of biofuels by 2022-which equals about 27 percent of the gasoline Americans currently use each year and is about five times the amount being produced now. And the European Union set a goal that 10 percent of transport fuels come from biofuels by 2020.

The result of these mandates is that about 100 million tons of grain will be transformed this year into fuel, drawing down global grain stocks to their lowest levels in decades. Keep in mind that 100 million tons of grain is enough to feed nearly 450 million people for a year.

I don’t think the problem is not that we cannot expand food production to meet rising demand, but rather that stupid energy policies (namely biofuel subsidies and mandates) are artificially inflating demand at a rate production can’t keep up with.

When the people fear their government, there is tyranny; when the government fears the people, there is liberty.

-- Thomas Jefferson

Rob’s recently listened-to songs:

Robert108:

“. If the market will really support
biofuels, let them stand on their own; let the people decide.

I agree with this of course.  Remove the subsidies, remove the tariff.  Let the chips fall as they may.

200 lbs per customer please.

Hey, make fun if you want, but when was the last time any food was rationed in America at any level (excluding times of natural disaster/crisis)?

I don’t think we necessarily disagree as much as we think, Carrick.  It’s just that I think you discount the impact of biofuel subsidies and mandates entirely too much.

When the people fear their government, there is tyranny; when the government fears the people, there is liberty.

-- Thomas Jefferson

Rob’s recently listened-to songs:

Rob, you seemed to have missed the news about China’s major crop failures this winter.  Your article preceded the freezes that created the crop failures.  The same crop failures that are threatening to create a major famine in North Korea.

I don’t think the problem is not that we cannot expand food production to meet rising demand, but rather that stupid energy policies (namely biofuel subsidies and mandates) are artificially inflating demand at a rate production can’t keep up with.

If this were truly the main culprit, it would be reflected in the market.  But it isn’t, which is my point.  While I agree with your point, if the energy policies were to be continued, they would end up disastrously, I don’t think they are having much of a real world effect. 

If you can point to commodities market data demonstrating otherwise, I would be happy to revise my opinion.

In the case of the rice shortage in particular (how we got started on this discussion)

Certainly weather anomalies and fuel prices are playing their part, but we’ve dealt with weather before. And high fuel prices.

To add to this, Rob, I watched ABC News tonight, and they stated right out that there is “a global food crisis”, so the propaganda campaign is in full swing.
I think the control freaks need a “crisis” to sell us on the idea of letting them control our lives.

If you don’t know by now, don’t mess with it.

Rob, I’ve seen plenty of times they’ve placed limits on how much of a commodity I can purchase.  But get serious, a limit of 200 lbs per customer? I don’t have to poke fun with that, it does it itself!

Just more main stream media alarmism, IMHO.  It’s what they do best.

I don’t even really disagree with your premise that using food for biofuels will lead to supply problems.  I’ve just not found objective evidence that it has played much of a role in the current food shortages and price hikes, so I just have to conclude that it hasn’t happened yet.  Evidence in the market to the contrary, I will concede the point.

Robert108:

I think the control freaks need a “crisis” to sell us on the idea of letting them control our lives.

Yes, I think that’s pretty much it too.

There are problems that are not to be minimized, but I think MSM alarmism has created over-reactions that have exacerbated the situation.

I neglected Canada in the list of countries with winter crop failures:

A stretch of cold, rainy weather in the middle of the wheat growing season on the Prairies is being blamed for a dramatic shortfall in stockpiles that in turn has pushed prices for the grain well into record territory.

“We are at price levels that are unprecedented,” said Marlene Boersch, a partner at Mercantile Consulting Venture in Winnipeg.

Stockpiles of durum, used to make pasta and bread, were at 15.15 million tonnes at the end of December, down more than 30% a year ago, according to a report by Statistics Canada. For varieties excluding durum, supplies slumped the same proportion to 12.28 tonnes.

robert108: 

The reality is that the alternative was never tried, due to govt mandate.

I don’t think there was any ‘alternative’.  Most farmers, even after the disaster of the dust bowl in the 30’s, were continuing to farm as they always had: no crop rotation, soil exhaustion, etc.

It took a tough Eisenhower appointee, Sec of Ag, Ezra Taft Benson, to convince farmers, through the Farm Bureaus and Ag Extension offices to “modernize” their methods and increase productivity multi-fold.

In at least this one case, gov intervention - which I am by nature opposed to - seems to have worked.

"Here lies, in honored glory, an American soldier, known but to God.”

The stakes are high. Whether the issue is the economy, or energy, or the federal courts or national security, the right answers are coming not from the Democrats, but from the Republicans. The surge of operations that began a year ago is succeeding. The only way to lose this fight is to quit. Richard M. Cheney, Vice President, 30 May, 2008

Hyping a situation as a “crisis” produces feelings of helplessness in the general population, thus making fertile field for politicians to promise new programs to “solve” the “crisis”, instead of simply letting supply and demand to do their thing.  Higher grain prices, absent govt controls on supply, will bring out more supply.  Unfortunately, this ability is diminished by the mandates and subsidies already in place.
By diverting capital and resources into corn, through the bribe of subsidies, that capital and those resources are less available to increase food production.  There is also a time lag, since no crop just appears magically to fill the demand.  I don’t know the growing seasons for rice and wheat, but they must be 3-4 months or so.  Meanwhile, rationing just keeps market forces from working as efficiently as they would if left unhindered.

If you don’t know by now, don’t mess with it.

Food is a small percent of Americans budget so as the price of food goes up some of us will give up some quality or choice .
Other places people starve,
gov’ts fall.

A stretch of cold, rainy weather in the middle of the wheat growing season on the Prairies is being blamed for a dramatic shortfall in stockpiles that in turn has pushed prices for the grain well into record
territory.

Damn that global warming!  Er, I mean “climate change”.

If you don’t know by now, don’t mess with it.

pp: I think it’s a bit of magical thinking to assume the postwar economic boom wouldn’t have changed the agricultural sector.  Rather, I think govt controls were put into place to slow the pace of capitalization that would have produced corporate farms, in place of the family farms of old.
If you compare American business prewar and postwar, there is a tremendous difference; why not in agriculture, as well?

BTW, the original purpose of farm subsidies was to protect the small farmer by guaranteeing the price of the crop before it was planted.  It was known as “farm price supports” then.

If you don’t know by now, don’t mess with it.

Rice is being rationed.  In America.

hmmmmm. just like China under mao.

Sparkie, one reatailer in the private sector limiting sales is the same as government allowing only a specific amount to market?

where’s the rice come from?

pparets - Are you sure about this?  The US Dept. of Agriculture, beginning with the Eisenhower Administration, introduced farm parities and price supports...

Freedom worked in New Zealand. A few years ago they dropped all price controls, all tariffs, all subsidizes, and all government control. The result was that food production increased while using less land.

The result was that food production increased while using less land.

That’s the way the market works, when it’s free to do so.

If you don’t know by now, don’t mess with it.

Corn is food. Only morons would use it for vehicle fuel. Oh, thats right! Government is forcing people to use it. Morons.

Una Salus Victus Nullam Sperare Salutem

Nothing to see here. Pay no attention to the man behind the curtain.

Una Salus Victus Nullam Sperare Salutem

I’m with Carrick on this one.  Love or hate ethanol, it has very little impact on the current rice situation.  Australia had a huge impact.

Interestingly enough, part of the reason that Australia’s rice production is so low now (in addition to the drought), is that the farmers discovered that growing wine grapes was more profitable.  When a good is undervalued vs. it’s peers there is no incentive to produce. 

I have a feeling that this will equalize.  The limit on purchases is to allow price and demand to equalize and limit hoarding until cooler heads prevail - not because ethanol production has consumed all cereal grains to the point of famine.

I’m with Carrick on this one.  Love or hate ethanol, it has very little impact on the current rice situation.  Australia had a huge impact.

Additonally, one of the major rice producing areas of the U.S. is eastern Arkansas.  For the last month plus, that region has been inundated with rain which led to some historic floods.  The flooding has damaged or destroyed a large portion of the crop.  Before these other woes started driving the price up, the farmers were already warning of these shortages.

"Although I can accept talking scarecrows, lions and great wizards in emerald cities, I find it hard to believe there is no paperwork involved when your house lands on a witch.”
- Dave James

I think the control freaks need a “crisis” to sell us on the idea of letting them control our lives.

Clinton was so disappointed when y2k didn’t cause a collapse in the financial markets.

Other places people starve,
gov’ts fall.

You for it half right, poodle.  Like Zimbabwe, the people starve because the inept government of Magabe doesn’t fall.

The Supreme Court is a bunch of black robed tyrants

Good point, DD. Zimbabwe’s people are having socialism rammed down their throats just as woofie wants to do in America, yet he does not want to talk about that. Hands over ears, chanting lalalalalalalala, he and the other Marxist/socialist assholes simply want to ignore the fact that their ideology is, has, and does kill millions of people. What a piece of shit.

Una Salus Victus Nullam Sperare Salutem