Economist Debate on Food Prices
online at The Economist July 29 - August 8
Joachim von Braun, IFPRI Director General, will be participating in the debate on the proposition: "This house believes there is an upside for humanity in the rise of food prices."Follow the debate at The Economist.
I recently read circa 1980's "The Politics of Hunger". The same process continually replays. Grain prices rise and urban poor and farm labourers are starved. Prices fall and 3rd world farmers are hit.
I've been inspired by the appearance in Canadian politics of a carbon price shift; these shifts are key to salvaging the capitalist economic model. I'm forwarding the concept of a hunger price shift: subsidize wheat storage and tariff feed grains.
Wheat is primarily consumed directly by people; only the lowest grade harvests are used for feed. Whereas barley and to my knowledge millet are feed crops primarily. The idea is to index a tariff on feed grains inversely proportional to the global level of wheat stores. Same for a wheat subsidy. When wheat stores are high, drop the wheat subsidy and feed tariff. When wheat is depleted, subsidize it and tariff feed grains.
The concept only works if wheat storage facilities are robust, otherwise the price shift can be mitigated by underfunding wheat elevators. I've omitted oats (feed) because they are relatively high in protein. I've omitted corn because I don't think it is directly substitutable for wheat. Corn grows in a slightly warmer climate. A creative way to penalize corn is to subsidize sunflowers (directly substitutable for wheat), and tariff canola (can be grown where wheat is). This assumes consumers of these oils can switch easily.
A hunger price shift helps account for increasing develpoping world meat consumption, but makes poor 1st world consumers consume less meat.
There have been two main development models. The bad model is where countries farm export crops and import non-productivity enhancing consumer and (non-farm)capital goods that exceed crop export revenues. Rising debt levels affect ability to borrow for productivity enhancing investments.
The successful model is where the country borrows for farm machinery, pesticides, fertilizer, GMO seeds and irrigation. Non-labour agri-productivty advances release workjers to be absorbed in cities. Assuming there is higher wage labour-intesnsive employment in cities, a larger urban workforce creates more demand for agri-goods and a virtuous cycle is created eventually enabling industrial productivity advances to pay down the debt.
I think where debt was created to support the failed model, and the nation is now not using the exploitative model, debt should be forgiven. Especially if debt payments prevent social investments in non-corrupt regimes.
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Typo. Meant to say sunflowers are directly substituble for corn. Even though all of the above are found in southern Manitoba. Not sure if it is really fair to attack corn on a feed basis but corn syrup and corn ethanol are good enough indirect reasons. The mentioned carbon price shift would have provisions for low income Canadians, maybe the same sort of thing could be engineered for low-income meat consumers under a hunger price shift?
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