[Outcast_Searcher]

So doomers, apparently the howls of destruction about mass starvation soon were a bit overblown? As the moderates to cornies tried to point out, markets WILL adapt when shortages of things that can (at this point) have additional resources applied to them -- in the hopes of garnering greater profits.

So now it appears we have a grain GLUT. Is that doom too?

(This is NOT to say that long term, BAU growth will not end in disaster (or tremendous pain and loss on a planetary scale) -- this is to say that all the SHORT TERM predictions of doom over seemingly EVERY event/topic approach a credibility score of zero, IMO. And - far more importantly detract from the potential core message this and similar sites have to offer folks who want to learn about the issues of the end of cheap energy.

http://www.bloomberg.com/news/2011-11-1 ... ities.html

[careinke]

We have dryland wheat, (no irrigation), in Eastern Oregon. Normally it takes two years of rain for one years crop. This last year there was so much rain that we were able to plant all of it, basically doubling our wheat production. So I am not surprised by this.

[vtsnowedin]

I have to ask. With what money are the Egyptians using to pay for the wheat they are importing?

[Pretorian]

Tourists came back. It costs funny money to fly there from Europe.

[vtsnowedin]

Tourists came back. It costs funny money to fly there from Europe.

So the airlines are buying Egypian peasents wheat?

[Pretorian]

You can say that competition between airlines and hubris of European hotels are buying wheat for Egyptian lumpens, yes.

[AdTheNad]

markets WILL adapt when shortages of things that can (at this point) have additional resources applied to them -- in the hopes of garnering greater profits.

That is good news. It's also a good indication of how poorly the free market performs when it comes up against time lags, which is a very important concept given how long it will take to transition away from oil.

The market will adapt if you have enough capital to throw at a problem, however the markets answer may be that you and your family starve due to a lack of capital. But hey, at least equilibrium is restored. The increase in prices needed to bring about the extra capital expenditure may also have surprising other consequences, such as helping to destabilise third world countries leading to social unrest, leaders being buggered by knifes while soldiers are forced to eat human flesh and kiss dead dogs. The market certainly did not react in time to prevent a large increase in food prices last year, along with the associated problems.

If you catch an exotic disease, rest assured the free market might be able to cure it, but it doesn't matter to you if you're already dead. Waiting for the markets to react is really not an optimal solution to the world's problems.

[EnergyUnlimited]

Waiting for the markets to react is really not an optimal solution to the world's problems.

Much better solution is to waste money on useless government activities...

[ColossalContrarian]

I'm wondering if the wheat market is reacting similar to the oil market where we might experience massive swings of surplus and deficit. I don't know any thing about wheat though... it just makes food that tastes good and is healthy...

[Pops]

Beef, eggs, dairy all up 10% YoY, all other meats up over 5%.
Bread up 7.3%
Fruit +8.7%
Oils up 11%
Potatoes up 16%

Since the "recovery" started, average incomes are down $3,609 - oh yeah and increased crude oil costs of $2500 per household...

Enjoy yer gruel.

[seahorse3]

On another forum, this very issue of a "wheat glut" came up and is being discussed. The doctor is still out on it as far as I'm concerned. Predictions about the future, are just opinions, and like assholes, we all have them and they all stink. There are many above and below ground factors to all this that predictions are a fools game. Although some way they will have record wheat harvests, personal experiences by some who grow wheat on that other forum say they aren't so lucky, so depends where you live I guess. Further, I never discount political and economic motives in trying to drive any commodity price down or up to make a buck.

In the end, there will always be food and oil, if you have access to it in the currency of the day. Even in the famed movie "Road Warrior" there was oil, if you could get it.

[kublikhan]

You can say that competition between airlines and hubris of European hotels are buying wheat for Egyptian lumpens, yes.

If the west would stop pushing developing nations to hollow out their agricultural sectors while we sell them our own heavily subsidized crops, the Egyptians would be in a far better position.

The dependence on foreign largesse, coupled with the low price of global grains, encouraged many Middle Eastern regimes to hollow out their agricultural sectors. Throughout the 1980s and 1990s, trade liberalization programs pushed Egypt and Morocco, among others, into a dangerous dependence on cheap carbohydrates from abroad. Encouraged by the IMF and the World Bank to lift tariffs and import bans, and discouraged (or even restricted) from investing in their own agricultural sectors, they went from being net agricultural exporters to net importers -- especially of subsidized American wheat. In 1960, Egypt was producing enough wheat to be almost self-sufficient; by 2010, it was importing roughly half the country's total intake (nine billion tons), making it by far the biggest wheat importer in the world.

The solutions are simple: the United States and the international banking community should encourage its Middle Eastern allies to develop their own agricultural sectors, where economic growth is far more effective at lifting people out of poverty than in other sectors. The United States should also stop sending agricultural surplus abroad as foreign aid, which depresses prices in the countries that receive it and drives farmers further into poverty (the Obama administration has taken steps toward ending this practice).

Let Them Eat Bread

[vtsnowedin]

[. In 1960, Egypt was producing enough wheat to be almost self-sufficient; by 2010, it was importing roughly half the country's total intake (nine billion tons), making it by far the biggest wheat importer in the world.

You are ignoring the population growth in Egypt between 1960 and today, and that is where the problem lies.

[Pretorian]

He is also ignoring continuing loss of arable land in Egypt due to urban development , erosion, pollution, desertification, dam-building, etc. As soon as Europeans will be forced to stay closer to home and as soon as US will stop giving them $2-3 billion per year and subsidizing the grain they buy , Egyptians will starve, big time, and for a good reason.

[kublikhan]

You are ignoring the population growth in Egypt between 1960 and today, and that is where the problem lies.

I am not ignoring it. I did not bring it up because food production since 1960 has grown faster than population growth.

There were gloomy predictions in the 1960s about the consequences of rapid population growth, the most famous appearing in Paul Ehrlich's 1968 book, "The Population Bomb." He wrote that "the battle to feed humanity is already lost, in the sense that we will not be able to prevent large-scale famines in the next decade."

Happily, Ehrlich was wrong. World food production grew faster than population during the last 50 years. Food production per person in 2009 was 41% higher than in 1961.

A lot of people? Yes. Apocalypse? No.

He is also ignoring continuing loss of arable land in Egypt due to urban development , erosion, pollution, desertification, dam-building, etc. As soon as Europeans will be forced to stay closer to home and as soon as US will stop giving them $2-3 billion per year and subsidizing the grain they buy , Egyptians will starve, big time, and for a good reason.

The amount of arable land in Egypt is higher today than it was in the 1960s:
Arable land (hectares) in Egypt

[vtsnowedin]

You are ignoring the population growth in Egypt between 1960 and today, and that is where the problem lies.

I am not ignoring it. I did not bring it up because food production since 1960 has grown faster than population growth.

There were gloomy predictions in the 1960s about the consequences of rapid population growth, the most famous appearing in Paul Ehrlich's 1968 book, "The Population Bomb." He wrote that "the battle to feed humanity is already lost, in the sense that we will not be able to prevent large-scale famines in the next decade."

Happily, Ehrlich was wrong. World food production grew faster than population during the last 50 years. Food production per person in 2009 was 41% higher than in 1961.

A lot of people? Yes. Apocalypse? No.

He is also ignoring continuing loss of arable land in Egypt due to urban development , erosion, pollution, desertification, dam-building, etc. As soon as Europeans will be forced to stay closer to home and as soon as US will stop giving them $2-3 billion per year and subsidizing the grain they buy , Egyptians will starve, big time, and for a good reason.

The amount of arable land in Egypt is higher today than it was in the 1960s:
Arable land (hectares) in Egypt

Three million hectares of land divided by eighty plus million Egyptians gives each a very small garden to live off of. Your worldwide production figures are nice but for that Egyptians that requires importation. The used to pay the food bill with exported oil. They have run out of that so they are up the Nile without a paddle.

[kublikhan]

I understand Egypt has small and shrinking amounts of arable land per person and pressures such as population growth and desertification, etc. can play a role in the troubles of Egyptians food security. These are serious issues. But those are not the only issues. Misguided government policies, both foreign and domestic, also play a role in the problem of Egyptian food security. Policies such as favoring importing cheap, subsidized American wheat, Exporting cash generating crops, misguided bread subsidies, etc. A nation should first look to food self-sufficiency before talking about exports. There is more to the Egyptian food security problem than throwing up your hands and saying: "nothing can be done, they are having too many babies, they are all gonna starve, and it's all their fault too!" That is an uninformed position to take.

In Siam's eyes, to reach nine million tonnes, government needs to distribute high-productivity seeds on a nationwide scale, while such seeds are used in only 30 per cent of wheat lands at present.”“To implement this plan, a revision of policies is needed,” he adds. “First, the services of agriculture guidance, that really deteriorated, should be brought back with efficiency. Second, small peasant farmers need more facilities and support,” states Siam.

He recognises the difficulties peasants are facing since the liberalisation of the sector that started by input liberalisation and was followed by land rent liberalisation. “The prices of agriculture inputs increased highly after the liberalisation of the sector, while the price of the crops didn’t rise at the same levels, which made it unrewarding for peasants. American and European farmers benefits from subsidies; why not the Egyptians?” El-Batran wonders. El-Batran assures that Egyptian peasant farmers will be subsidised as part of a new policy aiming to increase production and help the sector employ around eight million persons. “If we count the families, and industries that depend on agriculture, we will find that 40 per cent of the population depends, whether directly or indirectly, on agriculture to earn its living,” says El-Batran.

This new language at the ministry comes after years when the idea of self-sufficiency was seen as old fashioned, liberalisation being the main target. Egyptian agricultural policy was focused on cash generating crops that can be exported, like fruits and vegetables. The most famous example is the cantaloupe of Youssef Wali, minister of agriculture between 1982 and 2004, that spread in Egypt in a few years. The idea was to export high-priced horticulture products to raise enough money to finance the import of cheap cereals. The consequences: Egypt imports 60 per cent of its wheat, 50 per cent of its fava beans, 90 per cent of edible oils, and the list goes on.

Until 1950, Egypt enjoyed self-sufficiency in wheat. “Egypt started to import wheat at this time to cover the needs of the British troops. After 1952 Revolution, wheat consumption increased when the government started to generalise bread made from wheat, while before, in the countryside, people mainly consumed bread made from maize,” recalls Abdel-Salam Gomaam, president of the Grains Centre in the Ministry of Agriculture, known as the "father of Egyptian wheat". He calls to go back to this mode of consumption, to partially solve the problem.

From liberalisation to self-sufficiency: Egypt charts a new agricultural policy

According to The Wall Street Journal (September 30, 1983):
− the government paid 2.5 times more for imported US wheat than the price it paid Egyptian farmers for their wheat;

The Egyptian Wheat Market

"The subsidy system is not a reflection of social justice; around two-thirds of the people benefiting from it are not poor," Magda Kandil, executive director and director of research at the Egyptian Center for Economic Studies, told the seminar.

Mills produce subsidized flour for the government for as little as 160 Egyptian pounds a tonne, while its market value would be around 2,000 pounds. Experts say subsidized flour is often leaked into the open market at a big profit. To stop this, the government is considering making mills and bakeries purchase wheat and flour at market prices. The government would then buy the bread at market prices but sell it on with a subsidy to ration card holders, Abdel Khaleq said.

However, subsidized bread would still be cheaper than animal feed, a price distortion which encourages waste. "The people who don't need the subsidy are taking the bread anyway and feeding it to their animals," Kandil said. With bread so cheap, Egyptians have one of the world's highest rates of wheat consumption per capita in the world. Egyptians consume about 180 to 200 kg of wheat a year, compared to an estimated 51 kg for Mexicans.

Agriculture on the northern Mediterranean coast, which was cultivated in Roman times, could be expanded, he said. Much of the area, dotted with holiday resorts, is now a summer retreat for affluent Egyptians. "You have 1.5 million acres behind these resorts that are readily cultivable with underground water. You can grow wheat there," Beshai said.

Even without expanding farmland, however, Egypt could cut imports, improve its domestic production and generate more cash from exports by improving its distribution system to reduce the amount of food lost before it reaches the consumer. "Currently, post-harvest losses result in the destruction of 30 percent of the produce. In the case of tomatoes, post-harvest losses can reach 60 percent," said Angie Helmy, vice chairman of Egyptian Agrofoods Co. "Produce is improperly packaged, it is stacked in a random way on trucks, travels exposed and does not receive any cooling," she added. Helmy, who has been exporting fresh produce to European markets for a year and a half, said addressing these problems would save large volumes of produce.

Such reforms of agriculture have been discussed for years in Egypt but have often failed because of poorly functioning government bureaucracies and red tape, which make investing in the sector a challenge. Many of Egypt's farmers own very small holdings which make changing growing practices and the creation of large, economically efficient farms difficult. But success with food subsidy reform could encourage the government and the private sector to press ahead with wider changes to the agricultural sector, while freeing up some government money to promote them.

Egypt inches towards far-reaching food subsidy reform

Food for Peace is probably our most harmful foreign aid program. The United States is dumping over $2 billion worth of surplus agricultural commodities a year on Third World Countries. Although sometimes alleviating hunger in the short run, the program often disrupts local agricultural markets and makes it harder for poor countries to feed themselves in the long run.

Food for Peace was created in 1954 to help the Eisenhower administration get rid of embarrassingly large farm surpluses. The program aimed to benefit American farmers and the U.S. merchant marine and at the same time help hungry foreigners. In reality, it removes the evidence of the failure of our agricultural policies, often with little concern for the food recipients.

In the 1950s and 1960s, massive U.S. wheat dumping in India disrupted that country's agricultural market and helped bankrupt thousands of Indian farmers. George Dunlop, chief of staff of the Senate Agriculture Committee, speculated that food aid may have been responsible for millions of Indians starving.[7] U.S. officials have conceded that massive food aid to Indonesia, Pakistan, and India in the 1960s "restricted agricultural growth . . . by allowing the governments to (1) postpone essential agricultural reforms, (2) fail to give agricultural investment sufficient priority, and (3) maintain a pricing system which gave farmers an inadequate incentive to increase production."

U.S. food aid is still having devastating effects. A report by the AID inspector general found that food aid "supported Government of Egypt policies . . . which have had a direct negative impact on domestic wheat production in Egypt."[9] AID administrator Peter McPherson has admitted his concern that U.S. food donations are still having an adverse effect on Egyptian agriculture.[10] In Haiti, U.S. free food is widely sold illegally in the country's markets next to the Haitian farmers' own crops. Governments often accept U.S. free food at the same time that they are repressing their own farmers, refusing to pay them what their crops are worth.

The Continuing Failure of Foreign Aid

And let us not forget, that even despite these problems, Egyptians today are better fed than they were in 1960. Their per capita caloric intake is far higher today than in 1960, near the same levels as bloated Americans.

Egyptians consumed annually less than 110 kilograms per capita of wheat in 1960. In the 1980s, the wheat supply was enough to provide 175 to 200 kilograms per capita, compared with a world average of less than 60 to 75 kilograms per capita. Some of this went to chicken and cattle feed because the low prices made it economical for farmers and households to substitute wheat for other fodder.

The silver lining of this cloudy picture was the marked improvement in the average Egyptian diet. Daily food consumption increased from 2,307 calories per capita in the period 1961 to 1963, to 3,313 calories per capita from 1984 to 1986, and from 62.5 grams per capita of protein to 81.1 grams per capita over the same period. These averages put the Egyptian diet directly below that of developed countries.

The Food Gap

[sparky]

markets WILL adapt when shortages of things that can (at this point) have additional resources applied to them -- in the hopes of garnering greater profits.

That is good news. It's also a good indication of how poorly the free market performs when it comes up against time lags, which is a very important concept given how long it will take to transition away from oil.

The market will adapt if you have enough capital to throw at a problem, however the markets answer may be that you and your family starve due to a lack of capital. But hey, at least equilibrium is restored. The increase in prices needed to bring about the extra capital expenditure may also have surprising other consequences, such as helping to destabilise third world countries leading to social unrest, leaders being buggered by knifes while soldiers are forced to eat human flesh and kiss dead dogs. The market certainly did not react in time to prevent a large increase in food prices last year, along with the associated problems.

If you catch an exotic disease, rest assured the free market might be able to cure it, but it doesn't matter to you if you're already dead. Waiting for the markets to react is really not an optimal solution to the world's problems.

All true , so true but you personalize the market , it's not a thing , it's a process
like steering with only two actions , too high or to low
.... it tend to have thing wrong most of the time but is right on average


@ Kubilai , most of the Middle East have food subsidies ,
their population have exploded and their food production shrank ,
since they have a lousy economy with massive unemployment food doles are a necessity
it's like food stamps or the Roman free food distribution

It's also a good way of keeping labor cost low since the food fraction of the lower classes
is the biggest expense

As for grain prices , Rice and wheat are the two big ones
this year rice is up , wheat is down ,
the overall trend is still a worry , it is rising .

[kublikhan]

@ Kubilai , most of the Middle East have food subsidies ,
their population have exploded and their food production shrank ,
since they have a lousy economy with massive unemployment food doles are a necessity
it's like food stamps or the Roman free food distribution

It's also a good way of keeping labor cost low since the food fraction of the lower classes
is the biggest expense

I am not arguing for cutting off all food subsides in Egypt. But a reform of the current system could lead to significant improvements. It could redirect more aid to the poor who need it, reduce overall costs, reduce imports, eliminate black market profiteering, etc.

Importing cheap and subsidized American crops is no good for the employment situation either. It pushes the local non-subsidized Egyptian farmer out of business. Increasing agricultural employment and income is a great tool for lifting people out of poverty, importing cheap subsidized crops undermines that goal.

In summary, there is plenty of scope for reforming the present food subsidy scheme in Egypt, particularly for baladi wheat our and rationed sugar and cooking oil, so that transfers to the needy are more cost-effective. Experience in other countries shows that, from a technical point of view, this can be done.

It is clear from government documents, interviews with government officials, and MOTS statements, that the government has no intention of dismantling the food subsidy system because of its social and political importance. It is widely agreed, however, that there is significant scope for reforming the existing system in ways that enhance its efficiency and effectiveness in reaching the poor.

The major proportion of subsidy benefits accrues to those who do not need it. Consequently, the present general food subsidy system in Egypt represents an expensive means of trying to improve food security and nutrition of the poor.

The Egyptian Food Subsidy System

[vtsnowedin]

They can play with efficiency of production all they want but they can not get ahead of the population curve. Yields per acre in Egypt are already near the top of world statistics. To think that a few changes in policy and practise will match the needs of a population that grows at a steady two percent per year is foolish.
But I do like the idea of ending all the evil American shipments of food to the middle east. End the practice and let reality set in and steel ourselves to watching millions of people die while we are helpless to do anything positive about it.
http://earlywarn.blogspot.com/2011/11/s ... graph.html
This graph is world total population. The Egyptian only graph would not look any better.