Great Depression Online Archive Issue:

Bush Steps In A Cow Pie

Great Depression Online
Long Beach, CA
May 20, 2008

Inside This Issue You Will Discover…

*** An Astonishing Problem
*** Have We Reached Peak Food?
*** Bush Steps in A Cow Pie
*** And More

An Astonishing Problem

Between 1798 and 1826, English economist, Robert Thomas Malthus, gazed gravely at society and grunted and grimaced.  For he perceived an astonishing problem. 

And each time he looked, the problem magnified some more.  He muttered to the heavens and mumbled to anyone who’d listen…while publishing six editions of his famous treatise – An Essay on the Principle of Population.

In the linear world that Malthus envisioned, he projected an impressive collapse brought about by two important factors – population and food.  Namely that population would increase faster than the food supply could sustain unless war, famine, or disease intervened or efforts were made to limit population.

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He even had facts, figures, charts, and statistics to back up his professions of doom.

But in the 1830’s Cyrus McCormick was doing some grunting and grimacing of his own.  Except his was of more practical sorts.  For he, like everyone else for all of mankind, was cutting grain by hand.

So it was with weary hands, after a long day’s toil, that Cyrus McCormick had a vision of his own…a nifty invention called the reaper.  Unfortunately for Malthus, he missed out on its glory; for it was about this time he met another reaper…one that was grim by nature.

With the advent of the reaper grain could be cut mechanically rather than by hand.  And more importantly, the time needed to harvest an acre of wheat was cut in half.  When combined with the rapid expansion of mid-western farmland that was also occurring at this time, Malthus’ proclamations of famine proved to be as mad as Y2K did on New Year’s Day of the new millennium.

Soon combustion engine tractors, petroleum based fertilizers, pesticides, mass irrigation, agronomy, horticulture, soil science, and Purdue University made food scarcity in the developed world an archaic concern of a more primitive man.

Yet even with all this progress modern man can’t escape a simple fact.  We still live in a natural world and, alas, we are still bound by its natural limits…limits that seem to have become uncomfortably constrictive in the year 2008.

Have We Reached Peak Food?

We’ve noticed the discussion of Peak Food sprouting up as a more frequent news theme as of late.

Peak Food is the idea that humans are consuming more food than farmers are growing.  That population is increasing and arable farmland acreage is decreasing.  And that high oil prices – and Peak Oil – exacerbate food production because of agricultures heavy reliance on petroleum fertilizers and diesel powered equipment.

Then there’s the implication of dwindling water supplies and global climate change distressing crop output.  And we recently learned about Stem Rust Ug99, an epidemic of stem rust on wheat that’s currently spreading across Africa, Asia and most recently into the Middle East.  Stem Rust Ug99 is a fungus that’s spread rapidly by wind blown spores, and can result in yield losses as severe as 50- to 70-percent.

There’s also the burgeoning middle class in China and India.  They’ve eaten too much rice for far too long and there sick of it.  Now they have some money to do something about it…and they’re upgrading their diets to consume more meat.  But cows and chickens demand more grain than the amount of food they provide, exasperating the supply problem.

President George W. Bush recently stepped in a cow pie himself over this very issue…

Bush Steps in a Cow Pie

“A brief comment by President Bush about the role of India in the world food crisis has set off a firestorm of criticism in this [India] country,” reported Rama Lakshmi in the May 8, 2008, Washington Post.

“Speaking to employees at a high-tech firm in St. Louis over the weekend, Bush noted that much of the developing world was prospering and that U.S. businesses could benefit.  As an example, he cited India, where the ‘middle class is larger than our entire population.’

“But ‘when you start getting wealth, you start demanding better nutrition and better food,’ he said.  ‘And so demand is high, and that causes the price to go up.’”

Seems like Bush was just stating the obvious to us, but…

“Overnight, Indians reacted with outrage at what they saw as a suggestion that they were to blame for inflation.  Politicians lashed out at Bush.  Newspapers excoriated him.”

Maybe if we lived in one of the nations near India – like Thailand or Egypt – that have experienced food riots or protests this year we’d better understand why Bush’s remarks were so offensive.

Nonetheless, this did remind us that just last month World Bank president, Robert Zoellick, on the organization’s website, estimated that ‘33 countries around the world face potential social unrest because of the acute hike in food and energy prices’.  

We don’t know what to make of the Peak Food hubbub.  Robert Thomas Malthus thought we’d hit the peak some 200 years ago.  But Cyrus McCormick thought otherwise. 

Still, with more flying silage of late than a calaboose refectory, we can’t ignore the stomach grumblings of a growing global food fight.

Sincerely,

M.N. Gordon
Great Depression Online

P.S.  With the global food fight making a mess of your food bill an agricultural commodity ETF may just be the answer.  While your grocery bills go up, your investment returns will too.  Learn more about investing in ETFs here: ETF Authority.

 

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