Ch 5 Food Technology
The cost of food has been rising for a number of reasons:
- Weather: droughts, floods, frost, etc;
- Ethanol and other alternative fuels;
- Lost farming land from erosion and expansion limits;
- Growing life-stock consumption from developing countries switching to meat based diets;
- Growing populations;
- Greater consumption per capita from developing countries (350 million middle class in China and India each – for the first time);
- Technology plateau after decades of expanding food production;
- And other such global trends.
Fraction of Cost
Once combined, these have added far greater cost pressures then the feds monetary policies. The best news is that most of these added costs have not fully translated over to the American consumer because of the reasons listed here. It’s critical to recognize the urgency of these global trends and what it means to our food supply. So far, we are only paying a fraction of what these prices should be costing us. That is likely to change soon.
We are competing with developing nations for the first time just when land and other farming resources have peeked and are now falling. These factors are far more serious then some currency fluctuations. It means that repairing our currency imbalances would not solve this growing food shortage. The price of food would continue to rise – substantially, even if our economy stabilized once again. Even a gold standard currency would see these rising food prices because they are independent of monetary policies. Feds policies are taking the blame for rising food prices and so hiding these more serious causes.
We have Export Deflation, operational efficiencies and reduced corporate margins among other factors that have been buffering America from the full impact of these rising food prices. There are others as well. The federal price subsidies used for decades to keep prices artificially low have absorbed some of these added costs. Restaurants and super markets have also absorbed costs, especially fast food chains like Mc Donald’s or Burger King. They have subsidized the cost of their burgers for years and do so today. All of these special advantages offer us a buffer of reprieve. The bad news is most are coming to an end - soon. Then we will face hyper food inflation, even if our currency was better managed.
Cost Parity to Small Farm
The counter part to this growing threat is that food prices are finally leveling costs parity for small and alternative food production. This is creating the next generation of food suppliers like we see of the alternative energy sector. They are harnessing a host of new technologies that are expanding the quality, volume and ease of alternative production. They need to be expanded with all the sense of urgency of a national crisis.
Here again, Democrats get Five Stars for pushing the alternative food supply industries. Republicans missed this one.
Reduced Commodity Consumption
The best definition of alternative farming would be any production that reduces commodity use. This includes land, water, equipment and most of all, oil. Organic personifies this because it removes most every aspect of petroleum based agriculture. It also means local farming that reduces transpiration costs, or hydroponics that reduces soil use, or greenhouses that expands arable land. This revolution is hidden behind the ‘new age’ yuppie movement, but it represents a critical answer to foods coming hyper-inflation.
Home-gardening may prove the wonder kid in all this. Imagine 20% to 30% of all households with (indoor) gardens supplying 5% of their own food. It would be the garden revolution. The old ‘Victory Gardens’ of WWII England will rise once more. Retail would have a lot to gain. Homes would have to be 10% to 30% larger and require a host more equipment. The raw materials for food production are cheaper in the long run then the retail price of food as the price of oil, land and safe zones against weather related risk continue to rise. Let’s build upon these alternatives as a counter measure to the coming food wars. It should have a greater priority then we had for green energy.
Replacing Petro Ag
Previous gains in agricultural production were built upon petroleum based technologies from machinery and hybrid seeds, to chemical pesticides and fertilizers. Those advantages have peaked and are now on the retreat for the first time. This is happening more rapidly as oil prices continue to rise and its technology is pushing against a growing list of side effects and limitations to the food, environment and financials.
Migration to Organic
The result is very much the same like we saw of the energy sector. We have a sizable migration on a scale not seen before where millions are gearing towards an interest in and commitment to alternative food production. It’s the first significant progress to counter the shrinking small farms as we have seen over the last century. This migration is fuelled by a new age of lifestyle interest and brand of social-eco activism that has translated into a multi-billion dollar market and retail distribution network. This includes everything from health food chains, to fashion trends and product lines, to lifestyle communities and eateries geared to tap this booming market. The rising cost of petroleum and commodities is leveling the playing field for a host of self-sustainable products and models. This new market place is spawning a new generation of producers. These kinds of alternatives may likely have a larger impact against food inflation then possible through fed policy shifts alone. This market place needs be formalized as a critical component to our food supply and be recast as a leading component of America’s security blanket against economic shock and the social unrest we would have from it.
We may have been spoiled by our low food prices. Just a hundred years ago, food ran between 20% to 30% of people’s total income. This was true for hundreds or even thousands of years. This was true under the gold standard as well. The fall in food prices came in direct response to production efficiencies found through industrialization and later, by agricultural technology. Monetary policies generally play a secondary role. That is especially true today. Food technology is what sat at the center of our food deflation over the last 100 years. Petroleum based agriculture is approaching a tipping point of diminishing returns just as demand is spiking dramatically. This remains one of the nations top threats and yet, one of the quietest of all our looming crisis. Most ‘experts’ misdiagnose the problem as a fed policy issue rather then one about food production. Hopefully, our call to action can help change this.
Gov’t Can Offset
These alternate producers will provide the same kind of infrastructure to our food supply as green energy has for energy. This means we can leap frog this industry forward. Gov’t intervention did this with the solar panel industry. The feds put in $19 billion in guaranteed loans. The price of solar paneling collapse by 70% within a couple years. Solyndra, like other manufacturers went, bankrupt because of this price collapse. However, it created a more affordable solar industry. A similar kind of gov’t investment would do the same for these new ‘small’ food suppliers. It needs to be expanded along side measures to save the small farmers now being squeezed out by corporate farming.
Food Security: Top Priority
We have a closing window of opportunity before the country is buried under by foods coming hyper-inflation. Corporate farming can not fully counter this because they are breed upon petroleum based agriculture and falling access as developing countries take over their own set of lands and other resources. As oil prices continue to spike, so will petro-ag supplies. Much of this spike will be entirely independent of our monetary policies. Answers lie with alternative food suppliers. Green energy is gradually displacing oils economic role and political importance. This will leave ‘food security’ gradually over taking energy security. Most monetary reforms will only be as good as our food supply. To reform the feds without solving our food supply will have the same effect as hyper-inflation. Food and monetary policy are the same issue - much like oil and our economy use to be.