There’s an old joke about astronomers discovering a giant meteor heading toward the Earth, and the Washington Post running the headline: “World To End; Minorities and Poor To Suffer Most.” Well, on Sunday the front page of the Post read: “The New Economics of Hunger.” In the subhead: “The world’s poor suffer most.”
First, it is not clear that the economics of hunger are any different now than they have been in the past. There is still supply and demand. And there still are no free lunches.
Second, if you happen to be a poor farmer, increasing prices for crops should not make you “suffer most” – they should make you suffer less. If you can grow even a little more than you consume, you will end up with additional cash in your pocket.
The Post article asserts that corn prices have “been climbing for months on the back of booming government-subsidized ethanol programs.” This has quickly become the conventional wisdom. But while free market types (like me) are skeptical about both subsidies and tariffs, there is actually no evidence that these market manipulations have been a major factor behind rising prices for corn or other grains. Researchers Robert Zubrin and Gal Luft point out that the total U.S. corn crop has increased 45% since 2002. The amount of corn available for food and feed has increased 34 percent --- after the part used for ethanol has been taken out.
But haven’t those farmers cut back on other crops -- soy and wheat, for example -- to plant more corn and hasn’t that led to increases in the prices of those grains? Apparently not. As Zubrin and Luft also note, U.S. soy plantings this year are expected to be up 18%, wheat plantings 6%, and overall, U.S farm exports are up 23%.
American farmers are rational businessmen. When the prices crops command rise, they produce more -- both by increasing acreage under cultivation (only about 30 percent of U.S. farmland is currently cultivated), and by cultivating more intensively – producing more bushels per acre. That requires more investments but it brings more return on those investments.
The Post article also blames higher prices on global warming. But there is no solid evidence to suggest that whatever global climate change we have experienced in recent years – an increase of 0.31 degrees Fahrenheit per decade since the mid-1970s is the best current estimate -- has reduced food production. In fact, a warmer climate should mean a longer growing season allowing for more food production.
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