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dwot (99.50)

Food, Water, Population and Civil Unrest

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April 15, 2008 – Comments (6)

Food security has been making the news.

I am not sure that my students appreciated the importance of population, food and water issues, but these were things that I had my students looking at in the fall.

I've said a few times that I disagree that emerging economies are going to do as much as people believe they will do and the primary reason is water issues.  China, for example, has 2.5% of the water supply of Canada per person.  There are serious, serious water pollution issues, lack of access to potable water for many and a rising standard of living will simply make these issues more serious.  In my opinion, it will limit a growing standard of living faster than people realize.

Additionally, food supply is a serious issue.  Food export controls have been imposed by Russia, China, India, Vietnam, Argentina, and Serbia.  Increasing food costs have hurt poor people far in excess of any economic growth.  How well will economic growth continue when people are rioting in the streets and destroying businesses?  Food riots aren't a maybe, they are already here, in Haiti, Burkina Faso, Cameroon, Egypt, Indonesia, Ivory Coast, Mauritania, Mozambique and Sengal.

  "Indonesians spend half their income on food, Vietnamese spend 65 percent and Nigerians spend 73 percent."

Information I found in the fall indicated that world food storage supply has been decreasing from over 200 days in 2000.  Reading the link above, it has declined to 75 days.  I am sure the information I was reading in the fall was indicating world supply was still at least double that, 155 days sticks out in my mind.  Old information?  Hording? Hedge funds???  I don't know, but this is about life, death, and probably war.  What will the political fallout be if the rest of world watches their people starve and then they learn they couldn't afford to eat because of speculation by hedge funds? 

Other information I've read indicates that in China even though wages have increased in the range of 10%, food prices have increased in the range of 20%, or about double the rate of incomes.  How do people end up with a higher standard of living out of this? 

I have a feeling that businesses involved in homeland security are going to have a boom. 

 

6 Comments – Post Your Own

#1) On April 15, 2008 at 10:29 AM, abitare (99.38) wrote:

dwot,

Good post. A hungry population is a dangerous population.

When people want an open border here in the US, the 20+ million migrant are not immune from becoming violent if there is no food.

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#2) On April 15, 2008 at 10:54 AM, FourthAxis (< 20) wrote:

This (resource) threat has made me anxious for quite a while now.  I've even gone long on a couple "water" funds economically.  However, it is obviously a bigger issue than finance....unfortunately...I don't see a simple or soon end.

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#3) On April 15, 2008 at 11:00 AM, eldemonio (98.81) wrote:

Cadillac Desert:  The American West and Its Disappearing Water is a great book that offers insight into our history of pissing water away. 

Unfortunately, many Americans aren't concerned with food shortages and water shortages occurring in other parts of the world.  Couple that with the fact that we have already been trained to spend money we don't have, so higher priced food and gas might cause a little whining, but won't be cause for rioting in US streets.  Too bad, that might be what is needed to get fiscal policy makers to pull their heads out of their a$$es.

The US FED and US Government, like you mentioned in a previous blog, are not helping improve our economic sitiuation with short sighted policies. 

The only thing left to do is look out for #1.

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#4) On April 15, 2008 at 11:44 AM, AnomaLee (29.23) wrote:

It's very sad. People won't take anything seriously until it's damn near too late. You know it's bad when the IMF and World Bank are warning people. They have to protect their investments too.

http://news.yahoo.com/s/afp/20080413/bs_afp/imfworldbankeconomy
Sun Apr 13, 4:29 PM ET

WASHINGTON (AFP) - The World Bank on Sunday launched a "New Deal" to fight hunger and poverty and urged governments to take action against a food crisis that has sparked deadly unrest in developing countries.

 A doubling of food prices over the past three years could push 100 million people in poorer developing countries further into poverty and governments must step in to tackle the issue, World Bank president Robert Zoellick said

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#5) On April 15, 2008 at 11:44 AM, GS751 (28.08) wrote:

These high prices in food come from sevearl things.  Well high prices here in the US are not helped by Bernanke and Co and his printing presses.  But we have seen underinvestment for several years in agriculturl infrastructure mixed with increased demand from emerging economices which is creating a situtation that is favoring higher demand.  Notice my amount of Commodity ETF's that I am picking to outperform. 

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#6) On April 15, 2008 at 4:52 PM, FourthAxis (< 20) wrote:

GS751 - Get your facts straight.  You dollar isn't buying anything because of the policies your leaders have undertaken (overspending).  The fed merely reacts to those policies....though their current reaction isn't helping...it isn't causing.  I agree with higher ag. and commodity prices though.

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