01 May 2008

China's Enormous New Appetite Drives Food Price

There are many reasons for higher world prices for food. High energy and fertiliser costs, local droughts-famines-wars, the low value of the dollar driving commodities market speculation, etc. But one particular country appears to be more responsible than the rest of the world combined: China.
A change in Chinese meat consumption habits since 1995 is diverting eight billion bushels of grain per year to livestock feed and could empty global grain stocks by September 2010, according to a new study from Biofuels Digest, now available for download here in an expanded version.

...even if the U.S. ethanol industry were shut down tomorrow, rising Chinese demand for meat, and the ensuing livestock feed demand, will empty global grain stocks as soon as 2013. The report offers gloomy news for policymakers who have hoped to address global food vs. fuel concerns by restraining U.S. ethanol demand.

“It’s not food, it’s not fuel, it’s China,” said Jim Lane, editor of Biofuels Digest and author of the report....The US ethanol industry, which has been criticized as the primary cause of grain shortages and rising prices, increased its grain usage by 31 million tonnes during the 12 year period. By contrast, livestock grain demand to supply Chinese meat consumption increased by 199 million tonnes.

“Given that the US population has grown 15 percent in the past 13 years, the 82 percent increase in US corn production left plenty for people, plenty for livestock, and plenty for ethanol.” said Lane. “The truth is that the grain was Shanghaied, leaving us with a fuel crisis and a food crisis. The good news is that it’s easier to find a good steak in Beijing.” __BiofuelsDigest
While the clueless blankers continue blaming biofuels for high costs of food, the reality of the problem is far more complex--and possibly too much of a political hot potato for most of them to touch! While it is politically correct to blame the US for the world's problems, China is often given a free pass.

The media has made a monkey of itself over global warming (CAGW). Now it is making itself the fool over food prices. It is past time for a new media regime that looks at all the evidence, rather than following cliquish fads and political correctness in deciding what news it will cover, and what spin it will take. It is rumoured that journalism students are required to fail IQ tests before being admitted to journalism school. Perhaps they must also take an oath of oafishness as well.

Update: Another factor adding to food shortages is crop damage from frost and unanticipated cold climate (both northern and southern hemisphere). See here and here. H/T Tom Nelson

Here's a look at a country that is truly facing food shortages.

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Blogger Bruce Hall said...

The neat thing about the free market... when it is allowed to operate... is that it has the innate ability to correct imbalances.

It's when governments step in to try to "fix" imbalances with laws, regulations, prohibitions, subsidies, and public flogging that markets really get screwed up.

Friday, 02 May, 2008  
Blogger al fin said...

There is plenty of land in North America to feed a growing China, India, and the troubled parts of the third world, if the market were allowed to work.

One problem on the horizon is a possible natural long-term "flip" to a cold climate regime. That would present a hardship to many farming areas of the world that had adapted to warmer and longer growing seasons.

Saturday, 03 May, 2008  

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