Vegan Baby Killers

[lord of the mark]

Originally posted by KrazyHorse

Decrease the price of grain/legumes

These are not necessarily fungible commodities. Transportation costs, trade barriers, price controls and subsidies all play a huge part. I sincerely doubt that my ceasing to to eat beef from cattle raised in Alberta, Nebraska, Argentina and Australia is really going to make a difference in grain prices in Zimbabwe.

The US is the biggest exporter of corn and soybeans in the world. Transportation costs are important, but are unlikely to be changed by your consumption habits. The price of corn delivered FOB New Orleans, is going to be its price at Omaha, plus rail/water to the port. The price delivered at say, Mombassa, Kenya is going to be the FOB New Orleans price, plus the shipping and handling costs. Unless some other grain source makes US corn uncompetitive there. The price of US corn delivered Kigali, Rwanda, is going to be the price at Mombasa, plus any cost to due trade barriers in Rwanda, plus the cost of transport (by truck?) Mombassa-Kigali (assuming, as is likely, a more or less free market in grain and trucking in Kenya and Rwanda) I doubt there are any significant trade barriers limiting the import of grain to Rwanda.

So yes, ceteris paribis, an increase in the price of corn in Omaha, results in an increase in the price of corn in Kigali. (Is ceteris parabis valid? Well a really big fall in the price of corn in Omaha MIGHT lead to shortages of transport capacity along the pipeline, and offsetting increases in costs - but for the most part barriers to entry in the relevant transport industries (US rail aside) are not that high, and the market should adjust and provide the demanded capacity.

Grain, in fact, IS probably one of the more fungible commodities in the world. Corn is rather more fungible than wheat, which has different varieties differing in gluten and protein content, creating effectively different markets. Soy, I dont recall, I think its less fungible than corn but more so that wheat.

And yes, Ive dealt with some of these issues in a professional capacity.

Now of course your PERSONAL consumption isnt going to matter much, cause youre only one dude. A drop in the sea. Same way your gifts to charity (unless youre very wealthy) wont matter much, either.

But if large numbers of people change consumption patterns, that would matter.

At the moment, IIUC, the increased consumption of animal protein in China, as it becomes richer, IS expected to impact world grain prices (including in Africa)

[lord of the mark]

for your amusement.

http://www.agmrc.org/agmrc/business/gettingstarted/commoditygrain.htm

Grain price arbitrage is very important, and links different markets around the world.

[KrazyHorse]

a) I understand that one person's consumption habits don't make a globally huge difference. That is not my point.

b) I understand that, as you say, ceteris paribus, there will be SOME impact on grain prices.

c) My point is twofold:

i) How much in the way of cost is the spot price in New Orleans? How much is the fixed price of transport, duties etc?

ii) How close are those who are actually starving to being able to pay for their own food at local market prices? Would a drop in the price of grain of 10% catch a significant percentage of the truly malnourished, or are they so poor that even this wouldn't really affect their ability to buy their own food? Are those local market prices determined by the world free market in grain, or is there a significant effect due to food aid and subsidised consumption?

[Kidlicious]

LotM,

I don't think you considered that the price of grain is that which provides sufficient incentive for farmers to grow it. Grain farmers are in the business of supplying feed to cattle. If they lose that business they might grow something else.

[lord of the mark]

Originally posted by Kidicious
LotM,

I don't think you considered that the price of grain is that which provides sufficient incentive for farmers to grow it. Grain farmers are in the business of supplying feed to cattle. If they lose that business they might grow something else.

90% of the alternatives are other food crops. In the northern US, the most likely alternatives to corn and soy are wheat and barley. I suppose in the southern US cotton would be an alternative.

[Kidlicious]

Originally posted by lord of the mark


90% of the alternatives are other food crops. In the northern US, the most likely alternatives to corn and soy are wheat and barley. I suppose in the southern US cotton would be an alternative.

Well yes, the price of corn is pretty high right now isn't it? The point is that just because people stop eating beef food prices aren't going to fall significantly, because that would cut into profit.

[lord of the mark]

Originally posted by KrazyHorse
a) I understand that one person's consumption habits don't make a globally huge difference. That is not my point.

b) I understand that, as you say, ceteris paribus, there will be SOME impact on grain prices.

c) My point is twofold:

i) How much in the way of cost is the spot price in New Orleans? How much is the fixed price of transport, duties etc?

ii) How close are those who are actually starving to being able to pay for their own food at local market prices? Would a drop in the price of grain of 10% catch a significant percentage of the truly malnourished, or are they so poor that even this wouldn't really affect their ability to buy their own food? Are those local market prices determined by the world free market in grain, or is there a significant effect due to food aid and subsidised consumption?

A. By what percentage does the price of grain at, say Kigali, decrease due to a 10% drop in the price of grain at Omaha.

I dont have the data handy to answer that question. I also suspect it varies significantly across geography. Obviously transport costs are far higher for someone living in Kigali (in Africa, and inland) then for someone living in a slum in Port au Prince, Haiti, for ex. It may also vary by season (since transport costs do, and storage at some points in the pipeline is quite limited)

B. What would a 10% drop in the price of grain at say, Kigali do to remedy malnutrition in Kigali? I dont know, thats a question for folks like Oxfam. I would think it would not be insignficant, and I think pretty strongly its non-zero.

c. What is the effect of food aid and subsidised consumption?

That obviously varies from place to place. My impression is that food aid, while its important in cases of famine and starvation, does not reach anything close to 100% of those who suffer from more ordinary malnutrition. ARe you suggesting that the only impact of a drop in world grain prices would be to lower the cost of food aid?

As for subsidised consumption, my impression is thats more common in the not quite poorest countries - in the poorest there isnt the budget for it. I could be wrong.

Im not sure that reducing the amount of money third world countries spend on bread subsidies,even if thats the only impact of a reduction in grain prices, is not a significant benefit. Though obviously less gripping than "that hamburger is starving a child"

[lord of the mark]

Originally posted by Kidicious


Well yes, the price of corn is pretty high right now isn't it? The point is that just because people stop eating beef food prices aren't going to fall significantly, because that would cut into profit.

If people stopped eating beef, food prices would fall. That would cut into farmers profits. Farmers often lose profits (or in fact, lose money) when prices fall. Thats a routine part of farm life.

[Kidlicious]

The way it works is you pay the farmers for their grain and give it to people who can't afford it. That way the farmer makes a profit. If consumers stop buying beef it won't end up in cheaper food in the long run. I suppose it would result in lower prices for a little while.

[Kidlicious]

Originally posted by lord of the mark


If people stopped eating beef, food prices would fall. That would cut into farmers profits. Farmers often lose profits (or in fact, lose money) when prices fall. Thats a routine part of farm life.

They lose profits in the short run. They can't afford to keep losing profits.

[lord of the mark]

Originally posted by Kidicious


They lose profits in the short run. They can't afford to keep losing profits.

AFAIK, there is not that much land that would exit production even with a significant drop in grain prices (though some farmers who bought land on debt would be forced to sell the land to others) In technical terms, the supply of farmland is relatively inelastic at the present time, at any plausible level of prices.

[lord of the mark]

an example of price related hunger

http://news.bbc.co.uk/2/hi/africa/4176700.stm

Note, Oxfam now seems to focus more on political issues, and has less information on the details of hunger.

[KrazyHorse]

Re you suggesting that the only impact of a drop in world grain prices would be to lower the cost of food aid?

No, I'm suggesting that local food prices in famine areas may be strongly tied to the supply of food aid rather than the global grain market. Unless you think that there is no "secondary market" in food aid, I think you'll be forced to agree with me here...

I'm also suggesting that if more pople are able to pay for their own food we might see a drop in the food aid supply.

The devil is in the details here, LotM.

I need numbers to make a decision on this. My feeling is that the impact of excess consumption of foodstuffs in the first world has far less of an effect on the ability of the Third World to feed itself than one might think by a first-order analysis...

[Kidlicious]

Originally posted by lord of the mark


AFAIK, there is not that much land that would exit production even with a significant drop in grain prices (though some farmers who bought land on debt would be forced to sell the land to others) In technical terms, the supply of farmland is relatively inelastic at the present time, at any plausible level of prices.

I don't want to pretend to know more about the specific industry than I do, but the sort of situation that you describe can't last.

edit: It's a disequilibrium condition.

[lord of the mark]

Originally posted by KrazyHorse

Re you suggesting that the only impact of a drop in world grain prices would be to lower the cost of food aid?

No, I'm suggesting that local food prices in famine areas may be strongly tied to the supply of food aid rather than the global grain market.

That may well be the case. Im thinking less of famine areas, than of ongoing hunger and malnutrition.