Richard Posner on food prices
"The demand for agricultural products has grown, though not as a result of population growth; instead as a result of increased demand for ethanol and other biofuels, and for food that requires more agricultural acreage to produce. Today, besides people and pigs eating corn, our motor vehicles "eat" corn that has been converted into ethanol."
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Food bureaucracies in many countries (such as those in their Ministry or Department of Agriculture, their attached bureaus and agencies, other related ministries or departments, and counterpart bodies by local governments) are among the hindrances why food supply is not keeping pace with demand.
Those bureaucracies require plenty of taxes and fees to be sustained, and they often cause regulatory delays to some food producers like corporate farms, as well as traders and food processors.
Between risk-taking in food entrepreneurship and risk-free food bureaucracy, a number of people choose the latter. Many people who stay in food entrepreneurship are not sophisticated enough in improving productivity and financial discipline.
Posted by: Nonoy Oplas, Philippines | Apr 14, 2008 11:20:23 PM
Posner also links higher food prices to biofuels and economic growth in China and India. The supply response to that increased demand for food has been constrained by the high cost of fuel. We may be seeing the beginnings of an "attenuated Malthusian response", Posner said, in countries where food riots lead to increasing subsidies for urban consumers and export restrictions on domestically-produced food, which limit rural income and dampen the domestic supply response.
Posted by: George | Apr 26, 2008 4:27:33 AM