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Heinberg: Food Crisis on the Way
Richard Heinberg, Post Carbon Institute
The economic crash is still unfolding (no need for explanation here, just pick up any newspaper). It is inherently deflationary in nature because trillions of electronic dollars and euros are simply vanishing on a weekly basis. Efforts by central banks and the US Treasury to re-inflate the system are so far proving ineffective. This ultimately means less money in the pockets of consumers. If things go badly, it will mean NO money in the pockets of a great many would-be consumers.
Meanwhile input costs to farmers are at an all-time high, despite the recent fall in oil and natural gas prices. Moreover, farmers need loans in the course of their normal operations, and loans are hard to get now. That means many farmers just won’t plant as much as they ordinarily would. Many will decide they just can’t afford their hobby any more and go looking for work that actually pays.
On top of this we have the trends that have already led to high food prices in recent months—biofuels mandates, weather impacts (and crop failures) due to climate change, and higher transport costs for farm inputs and outputs.
(15 October 2008)
U.K.’s Rising Food Prices Hamper Economic Policy
Aaron O. Patrick and Alistair MacDonald, Wall Street Journal
The cost of food in the U.K. is rising at a faster rate than elsewhere, putting more pressure on an economy already squeezed by the credit crisis.
A 12.7% increase in food prices in September from a year earlier helped to drive overall inflation last month to 5.2%, its highest level in 16 years, the Office for National Statistics reported Tuesday.
Amid the global banking crisis, the high food prices are further crimping Prime Minister Gordon Brown’s ability to adjust economic policy. Because they add to inflation, they affect the Bank of England’s ability to bring down rates, and take more money out of consumers’ pockets. Though Mr. Brown’s handling of the banking crisis has boosted his standing from its lows a month ago, food prices are politically damaging: They’re immediately visible and can make people feel poorer quickly.
Because it has a small farming sector, Britain imports more of its food than other major economies, making it vulnerable to movements in commodity prices and its currency.
(15 October 2008)
Selling the good earth in China
Edward Lanfranco, UPI Asia
Beijing, China — The Chinese Communist Party ended a key meeting Sunday by issuing a communiqué promising measures to deepen reform of rural land management rights. It aims to give residents greater incentives to leave the farm for cities or make agriculture more efficient if they decide to stay.
The document released after the Third Plenary Session of the 17th CPC Central Committee, held Oct. 9-12 in Beijing, stated: “Rural infrastructure is still weak and needs improving. Rural development is lagging behind and needs support.” It also said farm incomes were “increasing slowly and need speeding up.”
China’s top ruling body promised, “We shall work out new concepts and ideas to solve problems in rural development.” In other words, it hopes to apply to the countryside the same market-driven decision-making processes that have unleashed dynamic growth in its urban areas for the last 30 years…
(13 October 2008)
