XKCD

One for the conference-attenders. I dare all of you…

Otherwise, please. Don’t ever ask people to bear with you.

Meat vs. food

That’s my mathematics, of course. Opinions differ.

Following on from the oil post, a food commodities post! There is a decent editorial in (I believe) the Christian Science Monitor, found by way of Yahoo:

Food prices worldwide hit record highs in 2006, and all the signs are that they will go on rising this year, and for the foreseeable future. The era of cheap food, the experts say, is over and we are going to have to get used to it.

I disagree with the staff writer’s exonerating of crop yields, as a factor – his reference to Australian production is off, and it is the only one he uses, in a world with declining yields across the board. However he covers things like bio-fuels and shifting palates (“increasingly prosperous consumers in India and China are not only eating more food but eating more meat”) reasonably well: I’d have liked to see more on just how great a waste of grain a cow is, but that’s also my vegan’s prejudice. One aspect that is well-covered is the distributional effects of our new Malthusian utopia:

… it is the poorest people in the world who suffer most, because food takes up a bigger share of their daily shopping bill than it does for richer people. A family in Bangladesh, for example, living on $5 a day, typically spends $3 of that on food. The 50 percent rise in food prices the world has seen in recent years takes a $1.50 chunk – nearly 30 percent – out of the family budget.

Even farmers are not immune. On the whole, small-scale farmers in developing countries buy more food than they sell, so they, too, are net losers. Relatively few peasants have holdings large enough to benefit from price increases.

Big farmers in the rich countries, however, are doing well: US corn farmers have seen the price their crop fetches jump by 50 percent since 2000. Other net food exporters, such as India, Australia, and South Africa, will also do well out of rising prices. Major dairy producers, such as New Zealand, have done well as consumption of milk, yogurt, and cheese rises in Asia. As a result, while property values in New Zealand are generally expected to soften, flat rural land, where cows can graze, is expected to continue to rise in price, according to a survey by Massey University in New Zealand.

Speaking of cows, and how rapidly farmers can change crops – or how willing they are to do so, given the uncertainty over yields, rainfall and prices – Argentina is, apparently, also beginning to suffer. Kind of:

… while Argentines are some of the world’s top meat-eaters, consuming nearly 70 kilos, or 154 pounds, per capita each year, soaring grain prices and export caps are driving many cattle ranchers to sell their herds and instead farm more lucrative crops. Ranchers have switched from grazing to grain on about three million hectares, or 7.4 million acres, since 2005 – a 10 percent decline in ranch land, said Pablo Adreani, an economic analyst with AgriPAC Consultores, an agricultural consultancy in Buenos Aires.

Export caps, imposed by then-President Nestor Kirchner as an anti-inflation measure, have flooded the local market with meat, keeping beef prices low while soybean, corn and wheat prices soar.

…

Some agricultural analysts say that Argentine soybean farming is now three times more profitable than cattle ranching. Others say that reliable figures are lacking. Nonetheless, the trend against ranching is powerful, the commodities expert Ricardo Baccarin said.

“The business of soybean farming is brilliant in Argentine today,” Baccarin, chief analyst at the grain brokerage Paniagricola, said.

Half of all cultivated farmland in Argentina is dedicated to soybeans – an explosion aided by the fact that soybeans need just eight months to reach harvest, far less than the two to three years needed to raise a beef herd, he said.

Soybeans also require less fertilizer, a major expense, than corn or wheat, and almost 90 percent of soybeans are exported for high prices thanks to a solid futures market and constant international demand, he said.

Funnily enough, I don’t know that I’m that big a fan of such a move, either: monocultural agriculture never strikes me as a good idea – even if it’s for the commodity I consume as a staple (I’m still looking forward to the day of realisation that soy kills us and has destroyed all our top-soil. Every skinny person with decent skin will die at the hands of mob violence). It just isn’t good to punish land without a break, like that.

At least, like all agricultural suffering, the government can be blamed.

“If the government would allow a free, unrestricted market, Argentina could be the second largest world exporter of beef,” Adreani said. Instead, it is now the fourth, behind Brazil, Australia and India in the USDA ranking.

The remaining ranchers in Argentina are particularly frustrated to be missing out on rising global beef prices driven by the same swelling cost of grains that cattle are increasingly fed. At his white-tiled slaughterhouse at the Yaguane meat processing plant, the quality-control supervisor, Carlos Alberto Kuida, blames the government.

“We’ve got our hands tied behind our backs with these export taxes,” Kuida said. “We’re in the worst situation we’ve been in for years.”

Iraqi dividends

First, a welcome to the very strange spike in people viewing this post (I believe all they’re interested in is the map of the Underground – go figure).

Second, Iraq: delivering oil. Finally.

Iraq’s oil exports shot up in the last quarter of 2007 and the ministry in charge of production forecast on Wednesday that it will reach 3 million barrels per day by the end of the year.

Ministry spokesman Assem Jihad said Iraq’s average production was 2.4 million barrels per day in November, nearly a half million more than the post-2003 average. Exports stood at around 1.9 million barrels per day, sold at an average price of $83.87 per barrel.

…

“The ministry’s ambition is to increase the production for more 3 million bpd by the end of 2008 and to pass the national oil law which will enable us to draw foreign investment to our oil resources,” Jihad told The Associated Press in a telephone interview.

But

Iraq’s political factions last February drafted the first version of a bill to regulate the country’s oil industry in an effort to share its revenues among Shiite, Sunni and Kurdish communities.

But the effort bogged down in parliament, mostly over delicate power sharing issues involving the central government in Iraq. The Kurds, for example, want a greater say in managing oil fields in their self-ruled area of the north.

Sunni Arabs fear that they will be left out of oil profits as the provinces where they are dominant have few proven reserves. Most of Iraq’s oil reserves are in the Kurdish north and the largely Shiite south

…

In August, Iraq’s semiautonomous regional government of Kurdistan passed its own oil law and signed more than a dozen production-sharing contracts with international oil companies. The Oil Ministry has said it considers these deals to be illegal and has threatened to blacklist the foreign companies that are involved.

I’m not so sure that a “semiautonomous regional government of Kurdistan” will along with the idea that the Oil Ministry gets to call its contracts illegal, while putting out those of its own.

Now, to those numbers: Of the 2.4m bpd being produced in Iraq, 80% is being exported. If they’re talking about exporting 3m pbd, that would mean a nearly-60% increase in production – while the government cannot seem to get adequate legislation in place to manage reserves or revenues.

Broadening our vision, somewhat: Iraqi oil is supposed to have been the dividend of invasion. Iraq itself is supposed (in the passive sense) to be one of the two potential sites of any remaining oil superfields (I believe Siberia is the other). If we can stabilise that sort of production, we’d be laughing (currently 3m bpd is less than 5% of total world production). In the meantime:

The 2005 oil peak remains thus (from The Oil Drum’s Oilwatch Monthly):

Unconventional production is going along, nicely. Nothing like the same level, though.

OPEC still pushes the trend, with non-OPEC production looking (a) random, and (b) like it might be declining in the last couple of years.

More locally of interest, gasoline stocks in the US are a lot like those elsewhere – low. Meaning that the idea that Iraqi oil may somehow keep prices down at the bowser simply should not form.

According to a the OPEC Review, in fact, demand may just not be met, next year (you can find the article, Theoretical limits of OPEC Members’ oil production, if your university has access).

So not much slack, possibly, for 2008. Petrol prices may just have to stay high (your food prices, too. Your real incomes and house prices? Not so much). If real demand crunches hit during likely-recession-heavy 2008, hell, Iraq’s production may not even register (or it may become hugely politically sensitive, domestically and internationally).