How secure is our food supply?

Re. food security: The US is a major food exporter. If foreign food shortages start jacking up prices here at home, it would surprise me not at all to see the Export Administration Act applied to US food exports, with the latter allocated to countries (e.g., Gulf States, certain minerals exporters) able to barter, in exchange for food, raw materials we deem "essential". This might well mean starvation in other parts of the world, but the bulk of American citizens would likely find that problematic only if the CNN stories on that particular subject managed to shake the citizenry's preoccupation with our own domestic troubles and/or American Idol & the like.

Re. redundancy & reliability: Nice to see others realizing there's a tradeoff involved between these two. Although, as mentioned above, US food security doesn't appear doubtful, we would do well to consider Surowiecki's point WRT other areas of our economy, e.g., manufacturing, energy....

It would make sense to tie the export of food to the price of oil. For every dollar the price of oil goes up, a certain percentage of food can no longer be exported.

The foreigners want to eat, they keep the price of oil down. But the other poster has it right. If there were any danger of food costs going too high, exports would be stopped and no one in the US would care if Africa eats or not. (Except of course for David Kuo who seems to have forgotten which country he is living in.)

But we will always have this to fall back on:

Industry News - PM
Hormel steps up Spam production

By Tom Johnston on 11/17/2008


Hormel Foods is maximizing the production of its Spam products to meet demand for the thrifty meats during the throes of a down economy.

Dan Bartel, business agent for the United Food and Commercial Workers International Union Local 9 in Austin, Minn., told Meatingplace.com that the local Spam plant has been running two shifts of workers seven days a week since July. Hormel's other Spam line in Fremont, Neb., also has upped production, he said.

"(Demand for) Spam has always been good, but it has become exceptionally good and I'm sure that has to do with hard times," Bartel said, noting the cheap price, long shelf life and versatility of the product.

Hormel officials did not respond to requests for comment, but the company's chief executive, Jeffrey M. Ettinger, reported in September that Spam sales were increasing by double digits.

Bartel said workers are reporting that the maximized production will continue indefinitely, with many putting in 12-hour shifts and some volunteering for even more work to cash in on overtime pay. That boosts morale, he said.

"When economic times are as they are right now, if workers can get overtime, that kind of puts a smile back on their face," Bartel said.

Pyrrho, any insights? The peaks are as intriguing as the troughs.

I'm very busy today so this is going to be somewhat sketchy. This is a theory I've been toying with and I haven't had the time or inclination to follow up with the type of legwork I usually get paid to do ;-)

[1] When the financial crisis hit in Aug/Sep 2007, the Fed started aggressive rate cutting.
[2] Many developing countries around the world peg their currencies to the dollar and so had to follow suit with rate cuts.
[3] The US is in a different part of the business cycle than these developing countries (contraction vs. expansion). Cutting rates in the developing world is very inflationary.
[4] People and institutions with money in these developing countries (China, Russia, India, Middle East) began to hoard commodities as a hedge against inflation of their local currencies.
[5] Hedge funds and actors in the 'shadow banking system', seeing an opportunity, piled on.
[6] Drinkers of Austrian Kool-Aid believed the 'crack up boom' was at hand and told everyone they knew to buy gold and other commodities as the Fed tried to 'inflate its way' out of the debt crisis (not understanding economics well enough to know that this was impossible and not likely even if it were possible).
[7] Eventually, the commodity bubble started to destroy demand. Prices began to fall and the various hoarders dumped their holdings, causing a spectacular cascade effect.
[8] Then, the deflationary vortex in the United States sucked in the rest of the world, and the theory that the rest of the world had become independent of the US economy was exposed as the BS most of us knew it to be all along.

I believe ships were used to hoard these commodities and hold them from market until the price was right. For a while the 'carrying costs' of renting a ship and having the crew take its time getting to market outweighed the rapid rise in the value of the cargo. (There is abundant evidence of this type of behavior in the past and I suspect the same will be found to be true of this past boom ... if anybody bothers to investigate.)

Now for some circumstantial evidence. (I hope these HTML tags work.)

Notice how the dollar broke resistance at 80 in Aug/Sep 07 when the Fed began to cut rates aggressively. (The fall below 80 was a BIG deal.)

Dollar

Notice how investors and speculators dumped the dollar for currencies such as the Euro and for gold.

Euro
Gold

Notice how we had 'peak oil', 'peak corn', 'peak rice', 'peak wheat', 'peak soybeans', etc., etc. In other words, note how the essential commodities all followed the same pattern.

Light Crude Oil
Corn
Rice
Wheat
Soybeans

Well, my work break is over. This is as far as I'll be taking this for now.

Wow, I guess Rod freed up my original post. Check out those embedded links!

So is that a Pyrrhic victory then?

I bet you get sick of pointing that out, Pyrrho!

MI LOL nice comment.

But I agree that we should grow enough food regionally to support regional needs. Import bananas and pineapples if that's what the consumer wants. But apples, cabbages, hogs, honey, and other basics should be grown everywhere, especially outside of (and even within) every city. We'd reduce carbon load, avoid Chinese food scares, and have some resilience built in if international food supplies were disrupted. Also, if every region grew food, they could cover for eachother in case of localized natural disaster.