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How do you argue that wheat demand is inelastic? Demand for food as a whole is inelastic, but wheat is just one of many, many food sources. Wheat is a cheap foo
by thehappypm 5y ago
How do you argue that wheat demand is inelastic? Demand for food as a whole is inelastic, but wheat is just one of many, many food sources. Wheat is a cheap food. The second is stops becoming cheap people will shift to other cheap foods like rice or potatoes. I see a more modest increase in demand for alternatives that pulls all prices up, but it’s hard to see how prices skyrocket.
- jacobolus 5y agoYou are expecting everyone in a country that usually consumes ~5–10x more wheat than rice or potatoes to flip their whole food culture overnight? Do you have any historical examples of that happening? How did it work out? Where are they going to ship the tens of millions of extra tons of rice/potatoes from that won’t be just as big a logistical change?
- thehappypm 5y agoThe best example is the Irish potato famine. Happening in the mid 1800s. You’d hope today’s more robust diets and supply chains would improve things
- log1_aa 5y agoYou are right in that there are countries where wheat as a food source can be substituted with other sources of calories in case of relative price differences. These are usually countries where wheat is not a traditional food staple, but where wheat products (cakes, cookies, bread) have started to replace local food supplies in a growing middle class. Unfortunately the big Middle Eastern importers of wheat have traditionally had a wheat heavy diet, and it is very hard to change dietary customs. And as another commenter said, it is not easy to replace 20mt of wheat with 20mt of rice or potatoes.