9 posts tagged “food”

Seemed like a good name at the time

We're already in a period of supply & demand imbalance that is driving up prices on all kinds of fundamental resources. Oil prices are jumping, and supplies seem to be peaking. Likewise, there's concerns about peak food, just as there is peak oil. Demand for metal is driving up prices and creating a colorful black market. Even financial credit is more scarce today than it was a year ago. And as industrializing economies continue to increase demand, prices look set to continue rising indefinitely.

One aspect of this is that the global economy seems less able to withstand shocks to the system that it would have been in healthier times. Like pulling on a rubber band, if it's loose, it will stretch, but if it's taut, it will snap. So are we at a stretching point, or a snapping point?

• Today, a Nigerian oil pipeline was attacked, cutting off 10% of the country's oil flow, and driving up the price of a barrel to $136.88, $2.67 higher than the day before; almost inevitably, this seems likely to cause prices at the pump to continue to drive their rise above $4/gallon. It seems like only a month or two ago that policymakers were anguishing over the fact that prices had risen above $120 per barrel, but already that looks like an improvement over the current situation.
  
• A widening & as-yet unexplained salmonella outbreak with tomatoes is disrupting prices for produce, to the point that it has people considering the locavore movement as an alternative to national or international food markets. But is this really a solution? Stephen Dubner suggests that it's an appealing idea, but probably unlikely to have the intended benefits.
• Meanwhile, a quick Google News search for "shortage" turns up stories about limited supplies of deep-sea oil drilling ships, Indian fertilizer, bees, Canadian doctors, African blood, British teachers, Indian coal, Japanese doctors, and Midwestern sandbags. And every one of those, in its way, tells its own sad story.

When times are better, it seems like we are better prepared to weather these little storms. There have, for example, been several contaminated food outbreaks over the past few years -- most notably the 2006 E. coli outbreak with spinach & lettuce, but there are lots of other examples.

But usually when something like this has happened, it's a temporary glitch, people make do, and things go back to normal a few weeks later.

This time around, things seem different. People seem to be talking more openly about changing decades-old behaviors. People drive less & take public transit more, and are willing to pay more for organic food. Car companies are closing or repurposing SUV plants. Just in the building I live in, it seems like more people are recycling now than were even a year or two ago.

Clearly, things are changing. The big question is, is this a tipping point, or a breaking point?

BrassMonkeyBeastieBoys

Brass Monkey
That Funky Monkey
Brass Monkey, Junkie
That Funky Monkey

-- The Beastie Boys, "Brass Monkey", License to Ill

There have been stories for a couple of years now about how the rise in prices of basic mineral commodities fueling the rapid economic growth in China and southeast Asia has in turn spawned a thriving global black market in stolen metals, as thieves steal all kinds of things for the raw materials, from automotive catalytic converters (platinum), to roofs (lead), plaques (bronze), and -- my favorite -- home electrical wiring (copper).

The items aren't taken for their own value -- there aren't underground art collectors out there building up catalogs of public statues -- but rather they get melted down and sold as slabs to dealers who export them to Asian factories. This seems to be safer & more profitable than more traditional crimes like mugging, drug dealing, home burglary, etc.

(Perhaps ironically, the rise of this kind of crime has coincided with a broader fall in crime rates, particularly violent crimes, that has itself been tentatively linked to banning lead from paint & gasoline -- so maybe somehow, in some way, our baser urges are driven by minerals trade. Or maybe I'm just taking this line of thought too far, nevermind.)

In any case, while this raw materials black market has been percolating for years, I was reminded of it recently by a local story about someone stealing a quarter-ton of cast iron metal from an active roadway construction site, and somehow no one saw it happen.

Someone stole 475 pounds of cast iron metal off the new pavement of Josephine Avenue Sunday night, according to police, and no one saw a thing.

The suspect traveled along Josephine Avenue, from Kidder to Broadway, and stole 20 manhole and 15 water gate covers, police said.

The manhole covers weigh at least 20 pounds and the water gate covers weigh five pounds, said Somerville Police Captain Paul Upton. They had been taken from the street and stacked on top of one another as work crews repaved the road and replaced sewer infrastructure, according to city spokeswoman Lesley Delaney Hawkins.

“They’re not light,” Upton said. “It took some time for it to happen.”

The police do not have a suspect. Upton said residents have not been able to provide police with information. None, he said, reported hearing or seeing 475 pounds of metal taken from their street between 5 and 10 p.m.

Last night police sent out an automated call to every home within four square blocks of Josephine Avenue asking for help.

“Not only is this a crime but it presented a serious safety concern for anyone walking or driving along this street,” Upton said in the message.

The weighty heist begs the question: how did it happen? Any scenario it seems would involve a vehicle with a lot of storage room. But Upton said there are other possibilities.

“It’s not inconceivable that someone living right on the street rolled them into their backyard,” he said.

“It’s unlikely but you can’t rule any possibility out.”

But this kind of thing isn't unique to Somerville, of course. Apparently it's also a problem in southern California, as roadway thieves have taken traffic signals, signage, and guardrails, as well as tools and wiring. And it's happening all over the place.

In the United States, a quick search turns up everything from California military bases and Oregon firefighting equipment, to Missouri scrap yards, Connecticut swimming pools, and Michigan electrical equipment.

Around the world, headstones are stolen from cemeteries in Australia, the lead roof is stolen three times in one month from a church in England, a robbery at a cable company is blocked in India, and fibre optic data cables are stolen by divers in Vietnam (oops! those are made out of cheap glass, not valuable copper).

And this isn't even getting into the many stories about how people driven by the subprime mortgage crisis are being evicted after foreclosure, and getting back at the banks by taking everything they can, from appliances to lighting fixtures to the wiring from the walls. One could almost take a charitable view here and argue that these aren't even really theft, as the house had recently belonged to them, it was arguably taken away by forces beyond their control, and besides, it isn't like the bank is going to get a quick sale on the place anyway, unless maybe the government wants to buy the house. But maybe that's a bit too charitable.

In any case, it's clear that this is an accelerating worldwide trend, being driven by metals prices that are rising just like the prices on gas & food are rising. Where will it all end? Back here in Somerville, the manhole cover theives are still at large, but the police did catch four men trying to steal "hundreds of railroad spikes and plates". Which would be great for the trains, if anyone actually took the trains, but hey, the police have to start somewhere.

Milk prices

A lot of the things I've written about on here are simply facets of big trends driving the world today. You could punt and say that the big trends are just "global warming", or "peak oil", or "peak food", or "the credit crunch", but even those seem like facets of the broader globalization trends going on. If it were just the USA putting out greenhouse gases, consuming oil & other resources, and driving the credit markets, then the problems we're having now might (maybe) still be happening, but less acute. But the big national economies are all interdependent now, and depend crucially of the rapid growth of big new economies like China, India, Brazil, and others.

On one level, the growth of these emerging nations is unquestionably a good thing. It raises the standard of living in the growing countries, provides cheap goods & services to the developed nations, and opens up new markets on both sides. But it raises problems as well: as the standard of living in the emerging countries comes up, so does their level of consumption, increasing the strain on global resources and amplifying trends like climate change and habitat destruction, raising questions about whether this is all sustainable into the future, or whether it brings back a Malthusian crisis.

Thomas Malthus realized in 1798 (!!!) that human populations rise geometrically ("fast"), while natural resources rise linearly ("slow"), and eventually we're likely to hit a point where there aren't enough resources to feed everyone any more. The only problem is, Malthus ended up being wrong: the population has ballooned massively since 1798, and so has the global standard of living by almost any measure. The reason is often believed to be the Industrial Revolution., which brought about a wave of prosperity & growth that swept the world and is still improving lives today. While the pressures Malthus raised over 200 years ago are still present, many feel we can continue to stay ahead of them, while others point out that Malthus was right for all of human history up to his own time, and for all we know we won't be able to escape the trap he identified forever.

Enter Newsweek International editor Fareed Zakaria, who has coined the term "the rise of the rest" to describe where we stand now:

• Foreign Affairs, May/June 2008, "The Future of American Power: How America Can Survive the Rise of the Rest", by Fareed Zakaria"
• Newsweek, May 12 2008 issue, excerpt from Zakaria's "The Post-American World"
• NPR/PRI's Marketplace, May 12 2008 broadcast, interview with Zakaria, "Economic problem: 'The rise of the rest'"
• Bostonist blog, May 9 2008, article on a talk Zakaria gave about the book at Harvard

The main differences between what Zakaria is arguing and the themes I've been looking at include:

1. Zakaria is the editor for Newsweek, and I'm just some guy, so people will actually listen to him.
2. Zakaria has been watching these trends a lot longer, and thinking about them a lot more deeply, than I have, so people will actually pay attention to him.
3. Zakaria seems to be a lot more optimistic about the long term outcomes than I currently feel, so maybe people will prefer his take on the situation to my bleaker one.

I'll finish with an excerpt from Zakaria's "Marketplace" piece:

Expensive oil is one facet of the signature trend of our age -- global growth. Last year 124 countries around the world grew at over 4 percent. This year, despite the American slowdown, growth in most of those countries remains robust. While we debate the current financial panic and impending recession, our future is not likely to be shaped by crisis and collapse. The real problems we will face will be the consequence of what I call the "rise of the rest" -- the rest of the world that is.

Look around, it's not just oil that is soaring. Almost every commodity is at a 200-year high. Wheat and rice prices have doubled and then kept on rising over the last two years. In some cases, demand is so high that we're actually running out of stuff. Helium, the gas used in balloons and MRI machines is in short supply globally. And it is the second-most abundant element in the universe.

The problems of growth are, of course, high quality problems. But on this scale they are problems we have never really experienced before. We know how to handle a recession. But how do we handle the rise of the rest? That will be the real challenge of the next decade, long after this recession has turned to recovery.

TO OUR CUSTOMERS

You may have heard that milk prices worldwide are rising at the fastest rates ever. 

Unfortunately prices for milk will be higher for the foreseeable future. 

We will continue to monitor the market and adjust milk prices to offer you the best value possible. 

We apologize for any inconvenience. 

WE'D LIKE YOU TO KNOW

Declining egg production and an increased demand for dried egg whites used in manufacturing as product ingredients has resulted in a decreased supply of fresh eggs. 

This decrease in supply has caused the cost of eggs to rise dramatically, which has resulted in increased egg prices. 

We apologize for any inconvenience this may have caused. 

Banana price increase

[...] He said he bought the business in February 2008, just in time to see the price of wheat, flour and Romano cheese “skyrocket.”

“Everything I need has gone up about 30 percent” in the last three months, he said. In addition, vendors have begun charging for the gas they used when delivering to him.

“We're trying to hang in,” he said. Masci said family members have helped by coming into work without taking a paycheck and he has added wraps, chickens and turkeys for the young professionals of the neighborhood.

He also said the economic downturn has made potential customers a little tighter with a dollar. “I get the sense that people are saving their money to pay for gas right now,” he said.

Following on from the population collapse theme (gee this blog is shaping up to be pessimistic, isn't it?), I was reminded today of another fun trend going on recently, again as an apparent side effect of global warming: large ocean regions, including the waters off the coast of the US Pacific Northwest, but also off all coasts of all oceans, are become deoxygenated to the point that most sea life is unable to survive. The heavily linked salmon collapse story mentioned in the last post is the most prominent outfall of this, but by no means the only one.

• National Geographic: "Ocean Dead Zones Growing; May Be Linked to Warming"
• LA Times: "Where are the salmon? Looking at long-term trends, the ocean, and climate change for clues."
• Nature: "'Ocean deserts' are growing: Low-oxygen regions have expanded over the past half-century."
• New Scientist: "Growing ocean dead zones leave fish gasping"
• Ars Technica, Nobel Intent column: "Increased deoxygenation of the oceans"
• Wired: "Climate Change Chokes Oceans"
• NPR: "Low-Oxygen Zones Spreading to Deep Ocean"

 Et cetera.

The following list -- hardly comprehensive, I'm quite sure -- lists some of the things that are believed to be on the edge of catastrophic population collapse:

• Bananas (CNN, Dan Koeppel book, NPR, Snopes (which disagrees))
• Bats (Boston Globe, NPR)
• Bees (Fox News, New York Times, Wikipedia)
• Frogs & other amphibians (New Scientist, New Scientist (2), NPR, Scotsman, Washington Post)
• Polar bears (AFP, CBC, New Scientist, San Francisco Chronicle)
• Russians (Christian Science Monitor, BBC, VOA, Wall Street Journal, Wikipedia)
• Salmon (BBC, Fox News, San Francisco Chronicle, Scientific American, USA Today)

Okay, so maybe "Russians" is an odd fit for this list, but it still seems part of a pattern here, somehow.

Common explanations seem to include fungus infections (weird to me, but frequently cited as a possible cause), global warming, habitat destruction, human hunting, etc. But some of these -- particularly bananas & bees -- are being actively cultivated by humans, and still seem to be at risk in spite of our efforts to nurture them.

The twenty-first century scares me when I think about it too much.

Via Paul Krugman, an interesting article from October 2004:

Since its last major low in 1998 at $12 (when The Economist published a very bearish piece about oil), crude oil prices have climbed to around $50 at present. The question, therefore, arises whether oil prices are headed for a sharp fall, as most analysts seem to think, or whether far higher prices could become reality in the years to come.

[...]

Just consider that China's car population has more than doubled since 2002 and that it is up tenfold since 1994! Thus, as mentioned above, oil imports of China have risen by 40% so far in 2004. And while I certainly do not believe that Chinese oil imports will rise every year by 40%, it is equally unlikely that oil imports into China will ever decline again meaningfully.

In fact, if we look at what happened to per capita oil consumption during phases of industrialization in the US between 1900 and 1970, we see that per capita consumption rose from one barrel per year to around 28 barrels. In the case of Japan's industrialization between 1950 and 1970 and South-Korea's between 1965 and 1990, per capita oil consumption rose from one barrel to 17 barrels.

In the case of China, oil demand per capita is still only 1.7 barrels per year, and for India it has only reached 0.7 barrels. By comparison Mexico consumes annually about 7 barrels of oil per capita and the entire Latin American continent around 4.5 barrels.

Therefore, starting from such a low base, oil consumption in Asia will, in my opinion, double in the next ten to 15 years from currently 20 million barrels per day to around 40 million barrels per day.

Remember also, that if China's per capita oil consumption went to the level of Mexico's per capita consumption China would consume 24 million barrels of oil daily, which would be close to 30% of global production. And since it is most unlikely that current total global oil production of 80 million barrels per day can be increased much - in fact, it may begin to decline because no major oil field has been discovered since 1965 - I expect that prices will increase further in future - possibly far more than anyone is now expecting.

And, in the case that oil prices were to rise in real terms to their 1980s highs - well over US$ 100 - then the foundation for World War Three would be laid and most certainly begin to weigh heavily on equity prices for which I cannot share the prevailing widespread optimism anyway. Financial stocks have begun to weaken and this is an indication that something is not quite right!

As of mid-late April 2008, petroleum is hovering around $115 - $120 per barrel.

"Peak Oil" is a widely familiar idea by now, and it certainly seems to be well underway, but the knock-on effects are still trickling down. Does peak oil imply "Peak Food" as well? Hmm.

Here's some sobering news excerpts from the past six months or so:

For as long as most people can remember, food has been getting cheaper and farming has been in decline. In 1974-2005 food prices on world markets fell by three-quarters in real terms. Food today is so cheap that the West is battling gluttony even as it scrapes piles of half-eaten leftovers into the bin.

That is why this year's price rise has been so extraordinary. Since the spring, wheat prices have doubled and almost every crop under the sun—maize, milk, oilseeds, you name it—is at or near a peak in nominal terms. The Economist's food-price index is higher today than at any time since it was created in 1845 (see chart). Even in real terms, prices have jumped by 75% since 2005. No doubt farmers will meet higher prices with investment and more production, but dearer food is likely to persist for years (see article). That is because “agflation” is underpinned by long-running changes in diet that accompany the growing wealth of emerging economies—the Chinese consumer who ate 20kg (44lb) of meat in 1985 will scoff over 50kg of the stuff this year. That in turn pushes up demand for grain: it takes 8kg of grain to produce one of beef.

But the rise in prices is also the self-inflicted result of America's reckless ethanol subsidies. This year biofuels will take a third of America's (record) maize harvest. That affects food markets directly: fill up an SUV's fuel tank with ethanol and you have used enough maize to feed a person for a year. And it affects them indirectly, as farmers switch to maize from other crops. The 30m tonnes of extra maize going to ethanol this year amounts to half the fall in the world's overall grain stocks.

Economist, December 6, 2007 "The end of cheap food", subhead "Rising food prices are a threat to many; they also present the world with an enormous opportunity"

In China, pork has become so expensive they're stealing pigs by the truckload. In Kansas, it's wheat. In Mexico, they've got tortilla riots over the cost of corn. In American supermarkets, the price of milk and eggs has soared.

All over the world, the price of food is headed up. Sometimes way up. And an era of cheap food is over.

We're turning corn into fuel, feeding meat to new millions, paying more for oil to farm -- and there are consequences.

NPR's "On Point", February 12, 2008, "The Soaring Price of Food"

THE food industry is being squeezed from all sides. Last year prices for milk, eggs, corn, wheat, oils and almost all other edible commodities climbed to unprecedented levels. They are still rising, although at a slower pace. The prices of electricity and fuel are also on the increase, which makes processing and distribution more expensive. And passing on higher costs is not easy when customers too are feeling the pinch, as unemployment rises, the value of their homes falls, and inflation erodes their purchasing power.

Economist, April 10, 2008 "Tightening Belts", subhead "As commodity prices rocket and America's economy sickens, food companies and retailers are racing to adapt"

The president of the World Bank yesterday urged immediate action to deal with sharply rising food prices, which have caused hunger and violence in several countries.

[...]

Zoellick said that the fall of the government in Haiti over the weekend after a wave of deadly rioting and looting over food prices underscores the importance of quick international action.

Washington Post, April 14, 2008 "World Bank Chief Calls for Immediate Action on Deepening Global Food Crisis"

This isn’t the first time we’ve had a worldwide surge in food prices. There was a huge price rise in 1972-1974 — bigger, in percentage terms, than the current spike. [...] Is this a rerun? Or is it more fundamental? I don’t know the answer …

New York Times, Paul Krugman blog, April 15, 2008, "Memories of the Nixon-Ford administration"

PICTURES of hunger usually show passive eyes and swollen bellies. The harvest fails because of war or strife; the onset of crisis is sudden and localised. Its burden falls on those already at the margin.

Today's pictures are different. “This is a silent tsunami,” says Josette Sheeran of the World Food Programme, a United Nations agency. A wave of food-price inflation is moving through the world, leaving riots and shaken governments in its wake. For the first time in 30 years, food protests are erupting in many places at once. Bangladesh is in turmoil (see article); even China is worried (see article). Elsewhere, the food crisis of 2008 will test the assertion of Amartya Sen, an Indian economist, that famines do not happen in democracies.

Economist, April 17, 2008 "The silent tsunami", subhead "Food prices are causing misery and strife around the world. Radical solutions are needed"

There are several reasons for that rise, with consumers blaming everything from the Atkins diet to ethanol — Atkins because of a higher demand for beef, eggs and other food high in protein and ethanol because of the use of corn (also used for chicken feed) in ethanol production and an upwards trend in corn prices. One key issue is actually the rapidly rising cost of transporting eggs from the chicken to your kitchen; that is to say rising gas prices mean rising food prices.

The cost of a dozen eggs has jumped, on average, 60 percent from where it was a year ago, and grocery stores are passing that cost along. [...]

There isn’t a simple solution to combating rising food prices. I’ve been concentrating on making as much of my menu from scratch as I can. But even staples are costing more than they did even a few months ago.

Wisebread, April 17, 2008 "Pricing Eggs, and New Egg Products"

That anger is palpable across the globe. The food crisis is not only being felt among the poor but is also eroding the gains of the working and middle classes, sowing volatile levels of discontent and putting new pressures on fragile governments.

In Cairo, the military is being put to work baking bread as rising food prices threaten to become the spark that ignites wider anger at a repressive government. In Burkina Faso and other parts of sub-Saharan Africa, food riots are breaking out as never before. In reasonably prosperous Malaysia, the ruling coalition was nearly ousted by voters who cited food and fuel price increases as their main concerns.

International Herald Tribune, April 18, 2008 "Across globe, hunger brings rising anger"

People can live without oil. It would be inconvenient, it might even trash the economy, but people will survive somehow.

But people can't live without food.

The twenty-first century scares me when I think about it too much.