“Everyone wants to eat like an American on this globe”

Don’t ever forget that this is exactly the problem – and why not? Remember the famous words of Oscar Brown Jr: “You so rich and free and fat; Son-of-a-bitch that’s where it’s at!”

Whether an American, Brit, Netherlander – it doesn’t matter. Plenty of people on this Earth are rich and fat and clean. We bang wives made out of girls from Ipanema, buy, wear, drive and eat whatever we like and send our kids off to University to learn how to do even better than us. Good God, man, who wouldn’t want a part of that?

From the New York Times:

Everywhere, the cost of food is rising sharply. Whether the world is in for a long period of continued increases has become one of the most urgent issues in economics.

Many factors are contributing to the rise, but the biggest is runaway demand. In recent years, the world’s developing countries have been growing about 7 percent a year, an unusually rapid rate by historical standards.

The high growth rate means hundreds of millions of people are, for the first time, getting access to the basics of life, including a better diet. That jump in demand is helping to drive up the prices of agricultural commodities.

Farmers the world over are producing flat-out. American agricultural exports are expected to increase 23 percent this year to $101 billion, a record. The world’s grain stockpiles have fallen to the lowest levels in decades.

The article mentions, interestingly, how fortunate farmers are (one, in particular – what’s a newspaper story without an anecdotal anchor, after all?). I’m not so convinced. Costs are increasing for them, also. Fuel and food are big parts of their factor costs and, while they can certainly extract greater rent from Consumer (non-lexicographically-inclined readers, this means jack up the price to make more profit), even the mere perception of this is going to put signficant strain on America’s thoroughly embarassing farm welfare. Meanwhile those costs are appreciating rapidly, just as they are for the rest of us (the NYT does mention this). The only difference is that farmers are producing one of the inflating-price goods: how’s your control over the labour market going, these days? Yeah, didn’t think so.

This – the death of farm welfare – is a good thing, certainly – provided it comes off. More likely is that, with even greater control as a lobbied-for group, farmers will also extract rents from Governments trying to get them to grow basic foodstuffs for the common good (not, for example, mustard seeds – and yes, David, I know ‘the market’ should sort all of that out).

In all this, though, what the writer really nailed was one of the two causes: global demand (the other is crop yields – maybe climate change (I think so), maybe not):

As the newly urbanized and newly affluent seek more protein and more calories, a phenomenon called “diet globalization” is playing out around the world. Demand is growing for pork in Russia, beef in Indonesia and dairy products in Mexico. Rice is giving way to noodles, home-cooked food to fast food.

Though wracked with upheaval for years and with many millions still rooted in poverty, Nigeria has a growing middle class. Median income per person doubled in the first half of this decade, to $560 in 2005. Much of this increase is being spent on food.

Nigeria grows little wheat, but its people have developed a taste for bread, in part because of marketing by American exporters. Between 1995 and 2005, per capita wheat consumption in Nigeria more than tripled, to 44 pounds a year. Bread has been displacing traditional foods like eba, dumplings made from cassava root.

Mr. Ojuku, the man who buys fewer loaves, and one of his fellow tailors in Lagos, Mukala Sule, 39, are trying to adjust to the new era.

“I must eat bread and tea in the morning. Otherwise, I can’t be happy,” Mr. Sule said as he sat on a bench at a roadside cafe a few weeks ago. For a breakfast that includes a small loaf, he pays about $1 a day, twice what the traditional eba would have cost him.

To save a few pennies, he decided to skip butter. The bread was the important thing.

“Even if the price goes up,” Mr. Sule said, “if I have the money, I’ll still buy it.”

Eco 1 students, for the extra credit: is Mr. Ojuku behaving rationally?

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