5 ms·

The scoop on rising food costs

19 points by pitdesi 15y ago

mathgladiator 15y ago
This on the flip side is creating an opportunity to optimize (if you have the land) to iterate in farming.
- thaumaturgy 15y ago
  Hahaha. Modern farming methods are advanced. If you think a background in programming would be enough to contribute a significant advance to the science of farming, then you've fallen into the common programmer's trap of actually believing that understanding one kind of system means you can more easily understand unrelated systems. You would likely have to spend years in study and practice before you could expect to contribute to agricultural science.
HaloZero 15y ago
Why hasn't it happened such that somebody just goes to a nation like India and brings modern farming technologies that yield such high growth products here? This allows people to grow products a fraction of the price but at a similar market value. Thus eliminating that 5x increase in the cost of feed for the milker, allowing him to expand his supply to meet the new demand for milk.
- william42 15y ago
  Isn't that what the Green Revolution was?
  - HaloZero 15y ago
    See above about the cows in India vs United States. There have also been significant advancements in farming since the 1970s when the Green Revolution happened I would think.
- rdouble 15y ago
  They did - the green revolution.
- chime 15y ago
  > somebody just goes to a nation like India Norman Borlaug did. See: http://articles.timesofindia.indiatimes.com/2009-09-13/india/28066884_1_norman-borlaug-green-revolution-nobel-citation http://articles.timesofindia.indiatimes.com/2009-09-13/india...
- ghshephard 15y ago
  Great question. I suspect that Milk production is held back because of the lack of larger "Factory Farms" - supposedly, milk production in india is 1/10th the yield that it is in the United States. I don't know if it's the animal breed, hormonal control, milking, manufacturing, storage, or shipping - but something is holding India back - particularly as they became the largest milk producer in the world over 10 years ago, and, of course, have been beneficiaries of the green revolution. Google provides us with the following policy brief: http://www.fao.org/ag/againfo/programmes/en/pplpi/docarc/pb_wp2.pdf http://www.fao.org/ag/againfo/programmes/en/pplpi/docarc/pb_... Extended Paper: http://www.fao.org/ag/againfo/programmes/en/pplpi/docarc/wp2.pdf http://www.fao.org/ag/againfo/programmes/en/pplpi/docarc/wp2... Relevant snippets: ""one dairy cow in the USA produces as much as ten Indian 'dairy animals''. This dramatic difference can be explained by various factors such as genetics, feeding, management, technology, etc, about which a greater amount of scientific knowledge exists"" ""Local Cattle: Original Indian 'milch' animals (mostly Bos indicus) which have a relatively low milk yield potential but are well adapted to local conditions"" The graphs, on page 11/61 of this paper also make it very clear that breeding plays a major role - with daily yields of local cattle being 1/5th of the cross bred cattle. The extended paper, as a whole, tells you pretty much everything you want to know about dairy production in India.
- JoeAltmaier 15y ago
  Different techniques apply when labor is expensive vs cheap. A different solution would be appropriate in India.
thaumaturgy 15y ago
I keep hearing the phrase "worldwide food costs are at an all-time high" on NPR and in other news outlets; although I would expect natural disasters and political conflict and other changes in supply and demand to affect specific regional markets, I find it difficult to ascribe a worldwide across-the-board rise in commodities to just those explanations. (I would expect a higher demand in China for American milk to actually decrease domestic milk prices, for example, assuming that production could be scaled upward to meet demand; given what I've seen of the dismal conditions of several dairy farms in California, healthy pastureland doesn't seem to be a requirement for operating a dairy.) There's a solid alternative theory -- as yet unproven, though -- that makes a lot more sense to me. Relatively recent changes in the handling of speculation in commodities is causing across-the-board price increases where prices should be decreasing instead. For more info: http://english.aljazeera.net/indepth/opinion/2011/04/2011415143212280315.html http://english.aljazeera.net/indepth/opinion/2011/04/2011415...
- serichsen 15y ago
  I was immediately reminded of the same story. As far as I remember, speculators (who are important for a market, but should not dominate it) have been relatively recently allowed to dominate the market they speculate in. This led to them simply buying and buying, speculating on the rising prices the buying itself causes.
  - thaumaturgy 15y ago
    Yes. IIRC, the critical change was that a major investment firm successfully lobbied regulators to allow them to give investors the option of indefinitely rolling over their commodities investments for a small fee. Investment firms are making a ton of money on the rollovers, and investors are simply purchasing commodities orders at whatever price they're available for and sitting on them until the market prices raise enough for them to feel like selling the orders. So, I could buy a pile of grain or a truckload of oil or what-have-you, not on the expectation that I'll be able to sell it for more money 6 months from now, but on the expectation that I can sit on it until I can sell it for more money. Basically, it gives me a place to stash money, that's guaranteed to pay me back at whatever rate I feel like demanding. The downside for everyone else is that this is creating artificial scarcities in markets across the board. There's a glut of oil in storage right now that isn't being refined into gasoline or other products just because investors somewhere are waiting for the price to go up before they let go of it. When you look at the peculiar way that so many commodities prices have risen so quickly in recent years, and at the way that other more traditional markets have been recovering more sluggishly than people are expecting, and at the way that the real estate market has been staying in gutter, this theory starts to make a lot of sense. There seems to be a lot of investment capital missing somewhere, and commodities seems to be inflated.

19 points by pitdesi 15y ago

mathgladiator 15y ago

This on the flip side is creating an opportunity to optimize (if you have the land) to iterate in farming.

thaumaturgy 15y ago
Hahaha. Modern farming methods are advanced. If you think a background in programming would be enough to contribute a significant advance to the science of farming, then you've fallen into the common programmer's trap of actually believing that understanding one kind of system means you can more easily understand unrelated systems. You would likely have to spend years in study and practice before you could expect to contribute to agricultural science.

HaloZero 15y ago

Why hasn't it happened such that somebody just goes to a nation like India and brings modern farming technologies that yield such high growth products here? This allows people to grow products a fraction of the price but at a similar market value. Thus eliminating that 5x increase in the cost of feed for the milker, allowing him to expand his supply to meet the new demand for milk.

william42 15y ago
Isn't that what the Green Revolution was?
- HaloZero 15y ago
  See above about the cows in India vs United States. There have also been significant advancements in farming since the 1970s when the Green Revolution happened I would think.
rdouble 15y ago
They did - the green revolution.
chime 15y ago
> somebody just goes to a nation like India Norman Borlaug did. See: http://articles.timesofindia.indiatimes.com/2009-09-13/india/28066884_1_norman-borlaug-green-revolution-nobel-citation http://articles.timesofindia.indiatimes.com/2009-09-13/india...
ghshephard 15y ago
Great question. I suspect that Milk production is held back because of the lack of larger "Factory Farms" - supposedly, milk production in india is 1/10th the yield that it is in the United States. I don't know if it's the animal breed, hormonal control, milking, manufacturing, storage, or shipping - but something is holding India back - particularly as they became the largest milk producer in the world over 10 years ago, and, of course, have been beneficiaries of the green revolution. Google provides us with the following policy brief: http://www.fao.org/ag/againfo/programmes/en/pplpi/docarc/pb_wp2.pdf http://www.fao.org/ag/againfo/programmes/en/pplpi/docarc/pb_... Extended Paper: http://www.fao.org/ag/againfo/programmes/en/pplpi/docarc/wp2.pdf http://www.fao.org/ag/againfo/programmes/en/pplpi/docarc/wp2... Relevant snippets: ""one dairy cow in the USA produces as much as ten Indian 'dairy animals''. This dramatic difference can be explained by various factors such as genetics, feeding, management, technology, etc, about which a greater amount of scientific knowledge exists"" ""Local Cattle: Original Indian 'milch' animals (mostly Bos indicus) which have a relatively low milk yield potential but are well adapted to local conditions"" The graphs, on page 11/61 of this paper also make it very clear that breeding plays a major role - with daily yields of local cattle being 1/5th of the cross bred cattle. The extended paper, as a whole, tells you pretty much everything you want to know about dairy production in India.
JoeAltmaier 15y ago
Different techniques apply when labor is expensive vs cheap. A different solution would be appropriate in India.

thaumaturgy 15y ago

I keep hearing the phrase "worldwide food costs are at an all-time high" on NPR and in other news outlets; although I would expect natural disasters and political conflict and other changes in supply and demand to affect specific regional markets, I find it difficult to ascribe a worldwide across-the-board rise in commodities to just those explanations. (I would expect a higher demand in China for American milk to actually decrease domestic milk prices, for example, assuming that production could be scaled upward to meet demand; given what I've seen of the dismal conditions of several dairy farms in California, healthy pastureland doesn't seem to be a requirement for operating a dairy.) There's a solid alternative theory -- as yet unproven, though -- that makes a lot more sense to me. Relatively recent changes in the handling of speculation in commodities is causing across-the-board price increases where prices should be decreasing instead. For more info: http://english.aljazeera.net/indepth/opinion/2011/04/2011415143212280315.html http://english.aljazeera.net/indepth/opinion/2011/04/2011415...

serichsen 15y ago
I was immediately reminded of the same story. As far as I remember, speculators (who are important for a market, but should not dominate it) have been relatively recently allowed to dominate the market they speculate in. This led to them simply buying and buying, speculating on the rising prices the buying itself causes.
- thaumaturgy 15y ago
  Yes. IIRC, the critical change was that a major investment firm successfully lobbied regulators to allow them to give investors the option of indefinitely rolling over their commodities investments for a small fee. Investment firms are making a ton of money on the rollovers, and investors are simply purchasing commodities orders at whatever price they're available for and sitting on them until the market prices raise enough for them to feel like selling the orders. So, I could buy a pile of grain or a truckload of oil or what-have-you, not on the expectation that I'll be able to sell it for more money 6 months from now, but on the expectation that I can sit on it until I can sell it for more money. Basically, it gives me a place to stash money, that's guaranteed to pay me back at whatever rate I feel like demanding. The downside for everyone else is that this is creating artificial scarcities in markets across the board. There's a glut of oil in storage right now that isn't being refined into gasoline or other products just because investors somewhere are waiting for the price to go up before they let go of it. When you look at the peculiar way that so many commodities prices have risen so quickly in recent years, and at the way that other more traditional markets have been recovering more sluggishly than people are expecting, and at the way that the real estate market has been staying in gutter, this theory starts to make a lot of sense. There seems to be a lot of investment capital missing somewhere, and commodities seems to be inflated.