Posts Tagged ‘James Surowiecki’

The Perils of Efficiency

Sunday, November 23rd, 2008

– This story, from The New Yorker, says that we were saved from the high and rising food prices recently because they were followed closely by the economic collapse which, lucky for us, drove the food prices back down.   Lovely.

 – I’d say one could be forgiven if they suspect we might be getting into a zone of general instability; gas prices rising and then falling, the stock market up and down 400 and 500 points at a whack, the governments dumping billions of dollars into market stabilization efforts.  Ya think?

– Oh and I agree with this author so much  on his comments about the consequences of globalization.   All those highly touted greater efficiencies of the markets – carry, as the back side of the same coin, the fact that whether or not people can feed themselves is no longer a local matter.   Now a problem half way across the world can lead to local food shortages.   Welcome to the ‘improved’ globalized world.

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This spring, disaster loomed in the global food market. Precipitous increases in the prices of staples like rice (up more than a hundred and fifty per cent in a few months) and maize provoked food riots, toppled governments, and threatened the lives of tens of millions. But the bursting of the commodity bubble eased those pressures, and food prices, while still high, have come well off the astronomical levels they hit in April. For Americans, the drop in commodity prices has put a few more bucks in people’s pockets; in much of the developing world, it may have saved many from actually starving. So did the global financial crisis solve the global food crisis?

Temporarily, perhaps. But the recent price drop doesn’t provide any long-term respite from the threat of food shortages or future price spikes. Nor has it reassured anyone about the health of the global agricultural system, which the crisis revealed as dangerously unstable. Four decades after the Green Revolution, and after waves of market reforms intended to transform agricultural production, we’re still having a hard time insuring that people simply get enough to eat, and we seem to be more vulnerable to supply shocks than ever.

It wasn’t supposed to be this way. Over the past two decades, countries around the world have moved away from their focus on “food security” and handed market forces a greater role in shaping agricultural policy. Before the nineteen-eighties, developing countries had so-called “agricultural marketing boards,” which would buy commodities from farmers at fixed prices (prices high enough to keep farmers farming), and then store them in strategic reserves that could be used in the event of bad harvests or soaring import prices. But in the eighties and nineties, often as part of structural-adjustment programs imposed by the I.M.F. or the World Bank, many marketing boards were eliminated or cut back, and grain reserves, deemed inefficient and unnecessary, were sold off. In the same way, structural-adjustment programs often did away with government investment in and subsidies to agriculture—most notably, subsidies for things like fertilizers and high-yield seeds.


– Research thanks to LA