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04/13/2008

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Francisco de Zavalía

Rich countries aren't the only ones messing around with food markets. Take, for example, Argentina. for us the rise of food price was a blessing, specially if we consider that we had a terrible crisis a couple of years ago.
But the goverment instead of fomenting food production decided to tax our farmers. For example, the goverment keeps almost 40% of the selling price of soybean. Meet, milk, corn and other crops are also heavily taxed and, in some cases, the goverment forbids exports.
A crazy world.

Justin Rietz

Not mentioned in either article is a key statistic: the stock to use ratio. This ratio is used by analysts as the best measure of supply and demand.

The stock to use ratio for wheat is near its lowest level in almost 50 years from the data I have seen. Ratios for other commodities such as coffee and cotton are also near recent historical lows.

Jack

Thomas you may have to do a bit more digging to find out why folks have children than in the economic world of 'cost/benefit'.

"If people respond to incentives when choosing to bring a child into the world, as an economist might expect, then the population would increase as the cost of raising a child decreased, and peak as food (and other costs of living) prices began to rise."

....... your model might have some relevancy in third world nations where, despite the crippling costs of bearing children they are added hands in the fields and perhaps the parent's and grand-parents ONLY security in old age.

But in the developed world can you make any economic argument for either the well-set or low income family to bear the costs of raising and educating their kids? Methinks the answer will be found somewhere nearer to women commenting on "biological clock tickings" the genetic urge to pass on DNA, and a man's urge to pass on his hard-earned skills of fly-fishing and hard-earned capital assets to those of his own.

Leon

Jack --- that doesn't particularly invalidate Thomas' argument. (And we are talking about poorer countries here anyway.)

It isn't important that the benefits of childbearing are intangible, spiritual, biological, natural, or whatever. The important premise is that these intangible benefits are weighed against costs -- in this particular case, the cost of feeding one's children. As this cost increases, more and more people will decide to have fewer and fewer children, regardless of how intangible the benefits are, so long as there's some kind of "weighing up" process involved..

Thomason

The closing remark about presidential politics, of the past, recalls a factor impacting the present. The current dominos of commodity and currency revaluations were pushed over by the Bush tax cuts and related economic policy decisions. His campaign said this approach would 'prove out' years later. Not.
Another factor too is speculation, now done in real-time. If there's a frost in China, or a mite the Ukraine, then that propels speculation about future demand and prices. Today's price/value of corn-as-corn is less objectively measured, and it trades jaggedly alongside fertilizer-as-petrochemical and dollars-as-inflated.

Jack

Leon.. yeah, that's about right, as we see the fertility rate of the advanced nations as much lower than the poor countries. But it's more of the total costs, say in the nations where its expected that soccer and going to college is part of the deal, rather than food costs.

Having spent time in Korea when it was quite poor, I think I saw more of a reverse curve, "tragedy of the commons" effect as despite the nation's difficulties in feeding itself, there was the hope that out of many kids (even after leaving agriculture behind) that one might prevail and 5 might provide a form of SS in the old age of the parents.

"Something" must explain the difference in fertility rates between Europe and the US; is it that we've still space? or higher rates of religious participation in sects that encourage higher procreation rates? Optimism? Wars?

Joe

"But urban food subsidies imiserate the rural population..."

I agree with most of what Prof. Posner writes in this piece, but I'm not sure I see how urban food subsidies make farmers worse off. Is this an argument that the tax incidence on the rural population (i.e., to fund the subsidies) exceeds the increased price paid to farmers due to the food subsidy? Perhaps this is the case, but it depends on elasticities of supply and demand for food and how the subsidy is financed. In contrast, restrictions on food exports unambiguously hurt the domestic agricultural sector.

MS

What about the silly popularity of "organic" food in developed countries? Less efficient food production ("organic") is highly valued in developed countries. A few farmers in developing countries cater to these markets. Food production goes down. Great, job greenies.

Brian Davis

When Judge Posner's outlook on our capacity to formulate sensible trade and distributive policies (as in subsidies and tariffs) that affect us all is so pessimistic, it gets my attention. In the U.S. we're long on consumption but short on progress and, it seems, sustainable shared values. The implication-by-process-of-elimination is that it'll take another Depression or major war to shake us from a national hangover. Nobody alive who's actually survived either one looks forward to a repeat.

Jim

How many young people express an interest in being farmers? It seems to me that, at least in the midwest, many farms have been sold for lack of legacy to farm to people trying to escape the madding crowd. The peasants don't even want the land. Probably a good thing too else the idiot politicians would "re-distribute" it and then there would be real price inflation

Jack

MS "Silly" is a risky door to open in discussing the economics of wealthy nations! Organic farming might be 'silly' in terms of maximize yields as measured in tons, but if organic provides the "hook" for small farmers to live on their land and grow crops locally, and perhaps deliver them, fresh and directly to the consumer at popular "Saturday Markets" that provide family entertainment and give kids, and adults some connection to the land it may not be silly at all.

Perhaps we need a silliness scale to use for comparison? Say near the top would the activities and rewards of "Wall Streeters" who are paid exorbitant fees for either accomplishing very little or as we see with the Delta-NW lash-up and the recent incestuous hook up of the two satellite radio broadcasters, creating oligopolies whose market power precludes competition.

"Silly" is tough to define these days! "Reality TV?" Papparazzi as a viable industry? The hard part of constructing our scale would the that of establishing the non-silly end!

Jim

Does anyone remember "victory gardens" and canning? For that matter, does anyone remember cooking at home. Division of labor is great when markets and distribution work. When not, best to have a few basic skills and a source of supply, maybe even a big dog and a shotgun.

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