Support for Increased Funding of Ag Research. I am struck as I surf the net today by the statements and articles supporting the idea that the current world food price spike should be addressed by increasing national and international support for agricultural research.
posted June 4, 2008 at 9:50 p.m.
Personal stories with Photos from FAO. The whole series is here. Here's a sample of a 15 year old in Gambia. Notice that his family's income is about $1300 per year.
"Here I am on the right helping harvest my father's groundnuts. They grow deep in the ground and it's hard work pulling them out, then threshing them. That's a friend working with me.
My father grows groundnuts to sell. We also grow millet, sorghum and maize to eat ourselves.
When everything goes right, we sell around 10 bags of groundnuts at 3 750 dalasis (about 125 US dollars) each. That's my father's main income for the year."
posted June 4, 2008 at 9:00 p.m.
Saudis pledge Half a Billion Dollars for Food Aid. Current pledges to the UN's World Food Programme are $2 billion, compared to a planned budget of over $4 billion for the calendar year.
posted June 4, 2008 9:00 p.m.
From New York Times Links of the Day. Is it "agreement unlikely" or "deal possible"? Or are they the same thing?
June 4, 2008
Fox News Channel
June 4, 2008
June 4, 2008
posted June 4, 2008 8:40 p.m.
The Doha Round. News reports some incremental progress toward agreement on agriculture in the Doha round of GATT. To what extent has the farm bill tied the negotiating hands of the Bush administration? The veto override enacts a bill that fundamentally eliminates the possibility of further cuts or modifications to US farm subsidies. But "lawmakers said they would take up the farm law's trade section as a separate bill and pass it after their Memorial Day break." And Congress shows no willingness to succumb to pressure to approve trade agreements (Colombia Free Trade Agreement)..
posted June 4, 2008 8 p.m.
Biofuels and World Agricultural Prices. The Council of Economic Advisers has this assessment of the impact of ethanol production on world food prices:
"We estimate that the increase in U.S. corn-based ethanol production accounts for approximately 7.5 percentage points of the 37% increase in corn prices over the past twelve months. The increase in corn-based ethanol production in the rest of the world this past year accounts for as much as an additional 5.5 percentage points. Combining the increases in ethanol production in the U.S. and the rest of the world, we estimate that the total global increase in corn-based ethanol production accounts for about 13 percentage points of the 37% increase in corn prices, or about one-third of the increase in corn prices over the past year....Because corn only represents a small fraction of the IMF Global Food Index, we estimate that the increase in total corn-based ethanol production has pushed up global food prices by about 1.2 percentage points of the 43% increase in global food prices, or about 3% of the increase over the past twelve months. This estimate includes the indirect effects of the increase in corn-based ethanol production, through crop substitution and spillover effects into other food products. Looking back to 2005 and 2006, the effect of increased ethanol production on food prices during these two years taken together has been of similar magnitude."
posted June 4, 2008 6:00 p.m.
Global Warming and Agriculture USDA has released a study of the impact of global warming on agriculture in the US over the next 25 to 50 years. The executive summary is full of "on the one hand this, on the other hand that" kind of analysis. But deep in the report -- Table 2.6 on page 30 -- we see estimates of the relative sizes of the (generally negative) impact of higher temperatures on crop yields, and the (positive) impact of higher CO2 concentrations on crop yields. The prediction is that as a result of global warming, US corn and rice yields will decrease, soybean yields will increase, and wheat yields will be unaffected. The report does not attempt to estimate the behavioral impacts of changing crop yields -- that farmers who now produce corn in the midwest may find it profitable to switch to soybean production.
posted June 4, 2008 5 p.m.
Does Money Make you Happy? The (Richard) Easterlin Paradox is that wealthy people are not happier than poor people. But a recent paper by Stevenson and Wolfers of University of Pennsylvania casts doubt on this.
"Easterlin has examined the relationship between happiness and GDP both across countries, and within individual countries through time. In both of these exercises, he finds no significant evidence of a link between income and happiness. In contrast, there is robust evidence that within countries those with more income are happier. These two findings—that income is an important predictor of individual happiness and yet apparently irrelevant for aggregate happiness—have spurred researchers to seek a reconciliation through evidence of reference-dependent preferences and the importance of relative-income comparisons. Indeed, Frank infers that these recent findings from the happiness literature “are not only consistent with the view that relative income is a far better predictor of happiness than absolute income, but they also seem to suggest that absolute income may not matter at all.” The conclusion that absolute income does not impact happiness invites far reaching policy implications. If economic growth does little to improve social welfare, then it should not be a primary goal of government policy. ...
Our key result is that the estimated income-happiness gradient is not only significant, but also remarkably robust across countries, within countries, and over time. These comparisons between rich and poor members of the same society, between rich and poor countries, and within countries through time as they become richer or poorer all yield similar estimates of the well-being-income gradient. ... Across the world’s population, variation in income explains a sizeable proportion of the variation in subjective well-being. There appears to be a very strong relationship between subjective well-being and income, which holds for both rich and poor countries, falsifying earlier claims of a satiation point at which higher GDP is not associated with greater wellbeing."
As reported at the Economist blog Free Exchange, the evidence is consistent with a declining marginal utility of income hypothesis, so taking $1000 from a person making $100,000 (reducing his income by 1%) and giving the $1000 to a person making $10,000 (increasing her income by 10%) will increase the poor person's happiness more than it decreases the rich person's happiness.
posted June 4, 2008 at 4:50 p.m.
Biofuels and Food Prices. A good short review of the biofuels-food price link can be found at the European Affairs website.
posted June 4, 2008 at 3:10 p.m.
Norman Borlaug. Alex Tabarrok at Marginal Revolution links to a decade old speech by Norman Borlaug.
"Yields can still be increased by 50-100% in much of the Indian sub-Continent, Latin America, the former USSR and Eastern Europe, and by 100-200% in much of sub-Saharan Africa, providing political stability is maintained, bureaucracies that destroys entrepreneurial initiative are reigned in, and their researchers and extension workers devote more energy to putting science and technology to work at the farm level...."
posted June 4, 2008 at 1:30 p.m.
End Poverty with Economic Growth?? Abhijit Banerjee from MIT writes about the Illusions of Macroeconomics.
"Don’t we know that all that matters for reducing poverty is growth, especially after China? And therefore we development economists should focus on the things that make growth happen: Macro policy and creating the right institutional environment. And not bother with the micro evidence… No, no, and, as the expression goes, no. Every step in that syllogism is wrong, and, I will argue in this essay, each step is probably more obviously wrong than the previous one."
posted June 4, 2008 at 1:30 p.m.
Approaches to Environmental Policy. Deal with global warming through reduced consumption, or new technology? Instapundit, linking to Ron Bailey, favors the latter.
posted June 4, 2008 at 12:45 p.m.
Copenhagen Consensus. 50 leading economists met to recommend actions to improve the world. The top recommendation: reduce micronutrient malnutrition by distribution of vitamin A capsules and zinc supplements. Cost: $60 million per year. Benefit: $1 billion per year.
posted June 4, 2008 at 12:10 p.m.
Why Europeans are getting taller, but Americans are not. A New Yorker article on "anthropometric history" appeared in April.
"Holland’s growth spurt began only in the mid-eighteen-hundreds, Drukker found, when its first liberal democracy was established. Before 1850, the country grew rich off its colonies, but the wealth stayed in the hands of the wealthy, and the average citizen shrank. After 1850, height and income suddenly fell into lockstep: when incomes went up, heights went up (after a predictable lag time), and always to the same degree.... [T]he essential equation is the same: when the G.N.P. grows, everyone grows. ...
As America’s rich and poor drift further apart, its growth curve may be headed in the opposite direction. ...
Steckel has found that Americans lose the most height to Northern Europeans in infancy and adolescence, which implicates pre- and post-natal care and teen-age eating habits. ...
Inequality may be at the root of America’s height problem, but it’s too soon to be certain. ..."
posted June 4, 2008 at 12:10 p.m.
Ahmadinejad and Mugabe diagnose the world food problem. This morning’s NPR had a report on a meeting to consider the causes and reaction to high food prices. In an interview, Lester Brown points to increased food demand in China as a possible cause. His book “Who Will Feed China?” is availableat Amazon. Meanwhile, Mugabe has halted private food aid distribution efforts in Zimbabwe until after the election. “Food distribution is not only a matter of life and death to recipients, but it’s a strategic political resource that the government deploys to promote its political agenda.”
posted June 4, 2008 at 11:55 a.m.
Bubbles? Are the high food prices of the last two years a result of a speculative bubble? CFTC is considering the possibility.
“The portion of each commodity market held by index funds varies by product, from 40 percent of cattle futures to 15 percent of other goods, [CFTC chair] Lukken said. Rising concern over higher agricultural prices justifies the CFTC's inquiry, said Lukken”
NYTimes and Scott Irwin of the University of Illinois were on the story in March.
posted June 4, 2008 at 11:50 a.m.