THE OTHER FACE OF THE ECON DEBACLE. La otra cara de la debacle
Given the current abundance of
food globally, confidence in permanent food surpluses and low grain prices is
high. Few worry that the present
abundance of food could be temporary. But the global food supply is more
fragile than we might think, despite historically low grain/agricultural
commodity prices.
Both corn and wheat have plummeted in price due to current
demand/supply:
Let’s start with one salient
fact: there are 7+ billion human mouths to feed now plus hundreds of
millions of animals that are being fed grain to supply humanity’s insatiable
appetite for meat:
What few consumers grasp is that
the global abundance of food depends on weather extremes remaining rare.
If extremes of weather become commonplace, global food surpluses will turn into
shortages.
In the larger context, the global
food supply chain is a real-world system that cannot be “fixed” with financial
gimmicks. No amount of money-printing
will replace crops lost to weather extremes, replenish depleted fresh-water
aquifers, magically rebuild top soil lost to erosion or repair the
environmental ravages of industrial pollution.
In Globalization’s
Few Winners and Many Losers (July 20, 2016), I
discussed the fatal flaws in market price discovery: in the Tyranny
of Price, risks and costs imposed by environmental degradation are ignored
in price discovery, along with largely invisible declines in value, quantity
and quality.
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