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At least over here, farmers are planting a lot less than previous years, because fertilizers are so expensive. I don't know why the markets or futures trade do

At least over here, farmers are planting a lot less than previous years, because fertilizers are so expensive. I don't know why the markets or futures trade don't work to increase the price of grain enough to make it worthwhile.

tinco 4y ago
Because of the often overlooked part of the demand/supply equation is that demand isn't just what people want, it's what people can afford. Grain futures won't go higher if people won't pay more for grain. Less grain production will simply mean at some point that the persons who don't have enough money will go hungry (or eat something else). It's actually the effectiveness of the markets that cause this. If grain production in rich countries goes down because of expensive fertilisers, then the demand of grain by those rich countries is satisfied by the supply of poorer countries. The pain won't be felt domestically, except by the farmers.
- xyzzyz 4y ago
  Farmers might benefit from that too. It all depends on the exact shapes on demand and supply curves. Reduction of supply volume can result in more supplier profit, if the price also goes up appropriately. You are, of course, correct that it will be the poorest customers that will suffer.
- lumost 4y ago
  Modern practice is to ban food exports in these cases. The Irish potato famine was notably not caused by a lack of food production in Ireland, but by a lack of affordable food. In a food drought it’s quite likely that rich countries would feel the pain as well as poor countries.
- unyttigfjelltol 4y ago
  We're talking about grain. If people can't afford grain what simpler, cheaper food would they fall back to? Sand?
  - colechristensen 4y ago
    Lots of US grain goes to produce ethanol which can be cut back. Lots more goes into livestock feed around the world. People might be able to afford grain but not meat and lots of grain is available to be reallocated to humans.
  - drozycki 4y ago
    If people can't afford grain then they go without food. Aka famine is the "fallback".
    - formerkrogemp 4y ago
      From the ancient riots in Rome for the 'panem,' the cries of the Miserables storming the Bastille for the pan, the Russian revolution, the 'Arab spring,' the collapse of the Soviet Union, and other revolutions and times of trouble seem all to be coinciding with elevated grain/flour/bread prices. The poorest will have nothing to lose and will have everything to gain with a change in regime. Rich people will be fine I'm sure. Interesting times that we live in.
deleted 4y ago
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tinco 4y ago

Because of the often overlooked part of the demand/supply equation is that demand isn't just what people want, it's what people can afford. Grain futures won't go higher if people won't pay more for grain. Less grain production will simply mean at some point that the persons who don't have enough money will go hungry (or eat something else). It's actually the effectiveness of the markets that cause this. If grain production in rich countries goes down because of expensive fertilisers, then the demand of grain by those rich countries is satisfied by the supply of poorer countries. The pain won't be felt domestically, except by the farmers.

xyzzyz 4y ago
Farmers might benefit from that too. It all depends on the exact shapes on demand and supply curves. Reduction of supply volume can result in more supplier profit, if the price also goes up appropriately. You are, of course, correct that it will be the poorest customers that will suffer.
lumost 4y ago
Modern practice is to ban food exports in these cases. The Irish potato famine was notably not caused by a lack of food production in Ireland, but by a lack of affordable food. In a food drought it’s quite likely that rich countries would feel the pain as well as poor countries.
unyttigfjelltol 4y ago
We're talking about grain. If people can't afford grain what simpler, cheaper food would they fall back to? Sand?
- colechristensen 4y ago
  Lots of US grain goes to produce ethanol which can be cut back. Lots more goes into livestock feed around the world. People might be able to afford grain but not meat and lots of grain is available to be reallocated to humans.
- drozycki 4y ago
  If people can't afford grain then they go without food. Aka famine is the "fallback".
  - formerkrogemp 4y ago
    From the ancient riots in Rome for the 'panem,' the cries of the Miserables storming the Bastille for the pan, the Russian revolution, the 'Arab spring,' the collapse of the Soviet Union, and other revolutions and times of trouble seem all to be coinciding with elevated grain/flour/bread prices. The poorest will have nothing to lose and will have everything to gain with a change in regime. Rich people will be fine I'm sure. Interesting times that we live in.

deleted 4y ago

[deleted]