Food Crisis
Apparantly a food crisis will soon be upon us. "The days of cheap food are over," so they say.
There has been a fair bit of this, but to my knowledge there has not been any serious consideration of what the impact of this will be. To my mind, one of the most obvious implications of this is that obesity will rise and general health will go down, putting greater strain on the NHS. Greater food prices = fatter people Oh, it seems like it should be a paradox! Why isn't it a paradox! |
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Higher food prices don't have to result in fatter people, because the 'crisis' will have a snowball effect on the entire food market, including the fast-food market. When the wheat prices increase, then the meat prices follow because cattle usually eats wheat/grain.
Or weren't you referring to that? |
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I was refering to the liklihood that people will eat foods which are cheaper, or that food companies will make food with cheaper ingrediants. Affordable food will therefore have higher levels of fat and salt and that kind of thing.
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It could well be that people will start eating more potatoes (and fish) yet again.
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Potatoes? You mean fries, I assume?
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Starving eat homeless. If you're starving and homeless, you eat your own limbs.
Not original, but it should work. |
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Food is a necessity, not a luxury. People will (or should...) include their food budget first, and then luxury items after. Because of this, it's likely that spending on other consumer goods will drop and food shopping will remain relatively the same (excluding luxury food).
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The other way of looking at this (as I heard on the radio the other day) is that the consumption of luxury foods may actually increase.
Luxury foods will be largely unaffected by increases in the cost of production, since they are by their nature not tied to basic commodities. So, lets say a luxury item is twice as expensive as a basic one. If the basic one increases by a 50%, then the luxury item is now only 30% more expensive and appears to be almost a bargain, so it's quite possible more people will buy it as it appears to be more affordable. |
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Possibly, or more likely unscrupulous traders will increase the price of their luxury item keen to turn a larger profit, blaming rising fuel costs to boot. I suspect whats more likely is the trick of keeping the price similar while making the product a smaller quantity. |
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The price of everything will rise, staple and luxury alike, because the price of food is not only a formula of demand, but also dependent on the price of oil. SO, everything will go up. This means 1st world countries will pay more for forr across the board. And that 3rd world countries will face famines, especially in Africa and South East Asia.
This crisis, deepened my bio fuel boom, will eventually give way to onomies will go to the rescue of poor countries and their biggest contribution will come in the form of technology revealing and training. Thus, while short term we are heading towards a major world crisis, 10 years down the road it should be back to normal, 30 years down the road the world will produce more food percapita than ever before in history. |
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Investments in intensified use of arable land do not have to result in more and cheaper food becoming available, if we also continue investing in using our food as fuel. |
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I agree. But Malthus was proven wrong decades ago. Tech is a wonderful thing.
Moreover, this will never be the single source of energy. There will always be, more or less, nuclear, coal, gas, oil, solar, wind, thermo, etc... including future ones. Further, biofuels have the inherent benefit that they are renewable. That is why they are so appealing as a reliable source of energy. So, while I agree 100% energy demand will always impose a burden of food production+biofuel, I wouldn't be surprised if especially-biotecnologically designed-super-energy-producing crops are developed in the next 30 to 50 years to counter the problem. As time goes by, energy demand will grow perhaps, but so will also production, efficiency & conservation. My point was, that while likely catastrophic in the short term, biofuels my prove to be what the 3rd world needs. They can easily become food and energy baskets if the developed countries give them the technology, the training and the markets. |
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There is no food crisis. There is a massively inefficient market and a retarded media though. What I'm trying to say is, that, with the tariffs and trade barriers the western countries hold up we're being held hostage in a situation where the infrastructure is unable to develop in where it should in order to support the increasing demand for food. The problem there is, that dramatic industry development often requires a level of export. Even if someone'd invest in building basic infrastructure for food production in a country B outside the European Union/United States, the chances are, he'd go out of business even if he could produce goods of equal quality cheaper and more effective. This has to do with a 19th (or early 20th) century thought of the necessity of protecting homeland food production to ridiculous extents.
The only thing that's vaguely interesting about this "food crisis" is the fact that it leads to yet more polarization. It's like a little extra tax to the less wealthy. Quote:
At best, this sort of stuff could, though, result in an interesting Giffen -effect. This would be due to the fact that the people who are already consuming the less expensive food products (and little if any of those mentioned "luxury foods") and investing a larger share of their net income in grocieries experience a more significant decrease in their real income. Even if the prices of food will be increasing, these people will be increasing their demand on the least expensive, most basic foods. Quote:
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The increasing food prices will hit the people with less income harder. This is what's actually interesting. |
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The only thing about the fuel market that surprises me is that oil producing countries failed to realise sooner that they could just double the prices overnight, and still get filthily rich.
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Unfortunately the price of oil isn't simply regulated by basic supply and demand economics. It is a traded product and therefore subject to market forces and more importantly speculation. The reasons why the oil price is so high at the moment has more to do with speculation by traders rather than any intrinsic change in current demand from the consumers or current supply from the producers. Oil (along with other commodities) has become a basic hedge against equities, more so as traders continue to worry about the failing credit markets. Oil is also somewhat inversely correlated with the dollar, and therefore as the dollar has been weakening, so to has oil prices increased. Oil is also proving to be somewhat of a safe haven against inflation. Of more importance, is the speculation by traders that oil prices will increase in the future. The futures market is often a good indicator of where traders think oil prices will be in the future. Where you have traders taking out call options (the right to buy at some time in the future at the strike price) upwards of $250 it tells the market that people are betting that in x number of months/years they believe that the price of oil will be higher than it is today. The market sometimes (as it has done) responds to this with even more speculative buying on the assumption that the purchasers of these options are indeed correct. The next few months are going to be very interesting. Oil prices might continue to increase or there is a growing chance that the bubble will burst on commodity and oil prices. On another note, if you do your research, I think you'll find that some of the larger oil producers and drillers have reasonably large stakes in alternative energy companies. |
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If what you're saying is that the oil prices are on a rise because of speculation, I'm partially agreeing. What I'm saying, though, is that the speculation is a symptom of an ill market. Rest assured, you can say that it's speculation that's causing the price of the barrel to rise, I can't really disagree with you, but I can claim that the speculation originates from the market structure present. It wasn't simply a joke someone came up with. There hasn't been much anything you could call a speculative attack on the Euro since it was established as an official currency. On the contrary, prior to and during the great regression of the early 90s, there was significant speculative attacks on the Finnish Markka. Why isn't anyone hitting out at Euro? Because it's far stronger than a feeble local currency ever was, or ever could have dreamt to be. Did I cover my case on why the structural problems of the oil market are a core reason to the price of the barrel going upwards? Mind you, this isn't exactly nothing new, I'll actually continue to elaborate my claims with a real example. The oil crisis of the 1970s. Here's a graph for you. The cakefaces mentioned several times decided to pull a plug on the supply. The resulting incidents lead to the collapse of the Bretton Woods and a depreciation of the dollar, while the oil prices were on the rise (yes, there seems to be a negative correlation between these two. now, a sharp-sighted person would not close out the possibility that this correlation is partly/purely statistical, and doesn't necessarily apply without other factors involved). Feel free to do more research on the 70s oil crisis. I'll throw a question up again. Why do people speculate with oil? |
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All I know is that Twiglets now cost £1.11 from my local Asda. Gone are the days when I could pick up a packet for a mortgage-friendly 79p.
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a) The 70s oil crisis is widely known as an event that "can happen" b) Based on past experiences it's easy to say there's not going to be an intervention to cut prices down - we're all aware that a majority of the oil is controlled by OPEC which is the classical example of an oligopoly. c) There are major nations currently exerting military force in where a lot of oil is - for a political reason or another. Quote:
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What you didn't answer was Have you ever stopped to wonder why oil is in the position it is in today's investment market? What it seems you are claiming is that people are speculating on oil at the moment simply for shits and giggles. And that's what's causing the price increases. What I'm saying is, that the reason the oil prices are volatile in general is the fact that oil has a very recent history and a current strong status of oligopolistic nature (and OPEC behavior generally), which produces a strong incentive to speculate on it. Now, attacking Iraq, and the war stretching longer and longer (one could argue it's still a war zone there) is another incentive. The speculators are grabbing these excisting issues in the oil market and thus attempting to make money of it, causing the prices to increase. Essentially, it's speculating that's resulting in the prices increasing, but if the oil market wasn't already ill to begin with, this would never happen. While we're at it, we could claim that the fact that Iraq was attacked and is still essentially at war must have had some effect on oil supply. I took the liberty to do some googling. "An oil economics specialist, Mamdouh Salameh, who advises the World Bank and the UN Industrial Development Organisation, contends that oil prices would be at less than 1/3 of their current level had the US not invaded iraq. - " (Source - it's worth noticing this is fairly fresh.) Here is a broader article regarding this statement. "Iraq war fears lift oil prices - a BBC headline"(Source - this is to elaborate that there often are sources for speculation) "One of the things I find puzzling about the whole oil market discussion is how complicated people seem to make it. They get all wrapped up in stuff about forward markets, hedge funds, etc., and lose sight of the fundamental fact that there are only two things you can do with the world’s oil production: consume it, or store it. - Paul Krugman"(Source - I'm assuming you know who Paul Krugman is) |
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Another more recent example would be India and China. Both countries saw their major indices shoot up, where both countries had ridiculous p/e ratios, even when the companies the indices were made up of had not grown by that much. One thing you have to realise is that there are broadly three types of investor. i) The informed institutional investor. - banks, hedge funds, private equity etc. These types of investors tend to have their own research houses, analysts who do their research on a product/s and investment decisions are usually based on the decisions of their quants and research team. ii) The uninformed institutional investor - pension funds, corporations, governments etc. These type of investors have very small research houses or none at all. They are completely reliant on the information of the analysts and salesman in the companies they are purchasing/selling products to. iii) The private investor - individual people, smaller companies etc. Research is limited to reading papers, websites, tips and jumping on the bandwagon. Investors from ii and iii, especially investors from iii can end up throwing huge amounts of money on questionable research. Pension funds are totally reliant on the honesty of salesman and traders in banks. I probably do not need to remind you that a salesman is motivated by a sale only and rarely stops to tell you their opinion of the product you are purchasing, unless you request it or they consider you an important enough client. Quote:
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Clearly everyone else has got it wrong. |
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Of course it's not definitive. Did I claim so? Or are you just intentionally misunderstanding? Is your claim that the oil prices are solely due to stock speculation definitive?
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If you read my build up, i've made it pretty clear that I think it is the main reason, however other factors will always be priced in. |
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Right. Did you read the links or did you just skip them again? Let me elaborate what I'm saying again and again. On one of them, there's an oil economics specialist stating that the oil prices would be 1/3rd of what they're now if the Iraq war didn't happen.
First, speculation is the symptom, the market mechanism, that adjusts the price, but it's not something that happens standalone in this magnitude. Now, while speculation can create a self-fulfilling prophecy, I doubt this speculation on the oil prices would have happened had the scenario with the Iraq gone different as by Dr. Salameh. Now, if someone was to believe the opinion of a) a known controversional Princeton professor b) a UN/WTO oil economics specialist or c) an anonymous internet poster who isn't stating any references to his claims, which would be the pick? I'm going to link you another chief-economist text to read here. |
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I cannot be bothered to look at them because I know what they're saying.
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I have not posted any links that back my argument of speculation, because I know full well that there are those who do not think it has anything to do with speculation. This is the beauty of an argument. Everyone has an opinion. However, your continued pursuit in posting these links, and your continuing attempt to try and end your argument based on the rationale of professors who believe in your side of the argument is nothing but unfounded arrogance. There are always two camps. I'm on the side that backs the theory of speculation, you are on the side that backs that believes otherwise. However, next time a hedge fund manager calls me - I shall point him to this link and state clearly that I have discovered a person named Tietäjä (who has not even worked in Investment Banking) has come up with the solution and he has provided evidence to support his argument. I'll make it clear to him that all those arguments between the speculative band camp, and the other side have been solved. Congratulations! |
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succumb more like suckumb am i rite
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I thought it had to do with receiving shells, bullets, bombs and secret operatives:salute: |
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