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Illogical Economics: Inefficiency in Food Production Causes Problems

By admin | December 21, 2011

Photo: Or Resef

By: Dylan Rodgers

The relationship between Supply and Demand constitutes the simplest economic model.  But economics is far from simple; the complex web that connects each and every commodity and its prospective value makes the Supply and Demand model an unbelievably multifaceted system.  So when we wonder why food prices have skyrocketed by nearly 300 percent in some areas in the world, there is no one answer to this growing problem.

We’ll start with the good news-food prices are expected to continue to drop as they have over the last few months.  Some predict it will bottom out, a result bad for investors and good for hungry families.  This reprieve may be enough for struggling countries to begin to get back on our feet at least in terms of feeding ourselves.  But what about the future?  How can we as the World’s economy levee against a future flood of skyrocketing food prices?

The Economic Viewing Glass

Until now, we have let our tastes dictate the crop production rather than our economic and environmental effects.  Take meat for example; 1/3 of the world is used to produce food and 3/4 of that is used to raise livestock.  Through economic eyes, we’d see that eating less meat (and opting for the less desirable parts from time to time) would result in major effects on our crop yield, food prices, and health.

Accordingly, growing crops in a regionally specific manner would also allow resources to be used more efficiently.  Take New Mexico’s peanut farming for example.  Peanuts have to be soaked in 6 inches of water weekly order to grow, but New Mexico’s annual rainfall (in the peanut production areas) can be as low as 12-15 inches.  That’s only two weeks’ worth of what’s needed for peanut development.  New Mexico also struggles with extremely low amounts of drinking water.  By growing more regionally natural crops, New Mexico could solve multiple problems at once.  That’s a win/win no matter how you look at it.

Fictional Over-Value

Organizations make billions from speculating on the coming food prices based on insufficient knowledge of future events (for a complete explanation, click here).  So even if production is high (i.e. lowering prices), the speculators may have bet it would be lower months before.  So as the food price market naturally fluctuates from high to low and back, speculators who make a profit on high prices cause the market to be high, plateau, then go higher.  This suggests that the natural ebb-and-flow of Supply/Demand has been disrupted by people gambling on our future.  Without serious regulation on these greedy ‘crystal-ballers’, food prices will continue to be high regardless of the Supply/Demand reality.

The Economic Butterfly Effect

The more the global economy intertwines, the more dependent we as Americans become on the well-being of other countries.  It’s the economic butterfly effect.  There are plenty of ways we could internalize our production and become a less dependent nation, but it all requires breaking some economic ties to other countries and distant regions, a touchy subject to say the least.  This is by no means a call to burn our international bridges.  It has more to do with subjecting our own to the economic hardships brought on by uncontrollable weather conditions and poor decisions elsewhere.

Conclusion

These are but three categories in the game of world economics, and in a way I am oversimplifying its complexity.  The point here is that there are many more ways to improve our food related economic foundation while working to prevent monetary disaster.  If we continue to address the problem of food prices by increasing production, we will keep trying to jam a square peg into a round hole.

Real economic shifts inevitably ruin aspects of the market; companies who have built empires on the old ways must change or be crumbled under the unsustainable weight of their own methods.  The important part is that we don’t let the economic system we have built deny us nourishment.  And because the economic butterfly effect often starts here in the U.S., the decisions we make affect the lives of everyone living on this planet.  The question follows-will we choose to sustain the modern machine or survive against it?

Change is the only constant.  Hanging on is the only sin.

                                                             -Denise McCluggage

Photo: Or Reshef

Dylan Rodgers is a writer with dreams of existential understanding and lyrical nonsense.  Share with him in the well of human experience @dylangers.wordpress.com.

For more updates on food news, follow me on Twitter (@MarcusCooks)

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