On food price rises and Malthusian catastrophism

Exorbitant food prices seem to be the song these days. After wheat’s race to heaven, the price of rice more than doubled since January –up 50 per cent in two weeks- and producing countries are cutting down or even banning exports to ensure local consumption. The sharp increase -Thai medium-quality rice, a global benchmark, traded at about $850 a tonne on Friday- came as leading exporting countries, including Vietnam, India, China and Egypt, banned completely foreign sales.

However, some countries seem to be taking advantage of the situation to improve the Government’s fiscal balance. Apparently, this is what is currently happening in Argentina, where Government raised a tax on exports of soya to between 43 and 49 per cent, up from 35 per cent, and placed new duties on other farm exports. Farmers’ turmoil ended up with empty shelves in the major cities.

According to the FT:

Some countries postponed their imports earlier this year when prices started to climb, in the hope that the increase was a short-term anomaly, but now these countries are buying, traders said

The FT refers to African countries coming in late, but it is Asian countries that have rice as main protein source. A quick look to the US Department of Agriculture statistics shows that net importer countries are going to have a rough ride in the next years. So, the worst might be yet to come.

Amongst the poorest net nice importer nations, different actions are being implemented.

In Bangladesh, the Bangladesh Rifles (BDR), the border security force has been assigned the additional task of procuring and distributing rice. And to cut down on rice consumption, Bangladesh Army chief has advised his countrymen to eat potato with rice to fight food shortage.

Similar requests have taken place in the Philippines, where following on a Government request, restaurants have cut on rice portions after supplier nations informed of significant cuts on the amount of rice to be exported into the country. According to the London FT:

[…] in three auctions held between December and March, Manila received tenders for just two-thirds of the volumes it set out to buy.

Proof that the rise in food prices is starting to hit the poorest is the death in Haiti of at least four people and 20 wounded after riots turned deadly following an increase up to 50 per cent in the last year on the prices of rice, beans and fruit.

Once we look at the broader picture, my problem with the rising price of cheese looks like a mere caprice.

Let’s give them the benefit of the doubt, and Tajikistan wins the desperation prize so far. After one of the coldest winters in record, the country’s National Bank gave false data to the International Monetary Fund in order to get its hands on $47m in loans to allegedly ‘to assist [their] agriculture’.

Even though some humanitarian agencies say Central Asia’s poorest nation is heading towards catastrophe, Tajikistan has been ordered to repay the money.

It seems that a Malthusian catastrophe is in the making. Thomas Maltus catastrophe is a return to subsistence-level conditions as a result of population growth outpacing agricultural production, but I am pretty sure that good old Tom didn’t think of factoring in the effect of speculation into the equation.

Just in case I will pop in my local supermarket and stock on tinned food… before the headlines hit the newspapers and the average taxi driver talks to you about his well stocked up cellar.

Until tomorrow,

.Calvin

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