Runaway inflation of foodstoff prices hits Russia hard

[Stark]

Does Greenpeace say anything that isn't retarded anymore?

[Admiral Valdemar]

While Greenpeace are the epitome of ecological retardedness (LOL, airliners flying into concrete domes = CHERNOBYL BOMB!!1), they have something of a point with bio-fuels. Although my point of contention is that they sucking fuck, rather than they destroy forests.

[Stark]

That's what makes it so bad: there are really good arguments against biofuels from their tree-hugging perspective, but 'oh the land was forests once thus it sucks' is just retarded. Instead of emotive bullshit they could just throw up crop area/biofuel yield statistics, but noooo they have to come across like idiots instead. Damn populists.

[Siege]

That is correct, of course, but remember this is the same Greenpace that at the very same time agitates loudly against more nuclear power, despite it being the cleanest source of abundant energy I am aware of, because of of what amounts to 'ZOMT TEH NUCLERZ'...

[Starglider]

Does Greenpeace say anything that isn't retarded anymore?

Greenpeace is a fundamentally retarded and unashamedly populist organisation. It's just that they've occassionally been right by accident.

[Kanastrous]

I like Greenpeace best when their guys are interposing themselves between whales and harpoon launchers.

And when they're burning lots full of SUVs. Although maybe that's more the ELF's bag.

[Macunaima]

Macunaima - You can't use petroleum pipelines to move ethanol for a number of engineering reasons, plus in the US the bulk of the pipeline network is in the south, built to serve petroleum distribution, rather than in the midwest where it's needed to service ethanol distribution.

Hum, so one has to use specific build pipes for ethanol, makes sense. I guess Transpetro, the Petrobras subsidiary which manages distribution, has already a large specific network for this type of fuel.

Brazil is presently benefitting from some smart - at least, they look smart, to me - investment and infrastructure decisions made by your leadership in the 1970s and onwards.

The military dictatorship that was in power back then did a lot of fucked up things, to be sure, but I guess one of the good policies implanted by them was energy related, with a viable ethanol program implanted nation-wide, the expansion of hydroeletric generated power and the construction of nuke power plants (two ready since the 70's, one being finished). There was great criticism over their energy policies since the start, but it seems that the payoff can be worth down the road.

[Mayabird]

Mexico has already been having issues with soaring tortilla prices since U.S. corn isn't being dumped on them anymore. I hadn't seen much about it recently but there were rumors that it was starting to destabilize the government.

And on Greenpeace: a lot of the "save the whales" people have split off to form their own organization. I guess they got tired of the crap too.

[Kanastrous]

First time I worked in Mexico, I went to the nearest market looking for produce - which I expected to be really nice and fresh and tasty, since it would have been local - only to find that the stuff on offer was bruised, tiny, practically mouldering near-refuse.

Turns out the good stuff all gets shipped north, and the locals have to settle for the leavings. It was just depressing.

[K. A. Pital]

Interestingly enough, Greenpeace seems to have reservations against the idea, although it's not because people are starving in Central Asia but because biofuels are distilled from crops grown on land that used to be forest (or so they claim.)

Greenpeace - an example of what is wrong with modern environmentalism. Not care about human death due to poor environmental decisions. Care about environment itself.

[Sea Skimmer]

Strange, around here Petrobras has lots of pipelines for ethanol distribution. The impossibility to move ethanol in pipelines is due to some particularity of ethanol made with corn?

Short distances, or specially built pipelines are okay, but the existing network of oil and gasoline distribution pipelines which spans the US is unsuitable. Those pipes have many low spots in which water collects, and a passing charge of ethanol through the pipe would suck it right up. Excessive water contamination, aside from being illegal to sell, would causes engine stalls.

The military dictatorship that was in power back then did a lot of fucked up things, to be sure, but I guess one of the good policies implanted by them was energy related, with a viable ethanol program implanted nation-wide, the expansion of hydroeletric generated power and the construction of nuke power plants (two ready since the 70's, one being finished). There was great criticism over their energy policies since the start, but it seems that the payoff can be worth down the road.

Sounds to me like that wasn’t good energy policy, it was good political strategy to win the support of the poor farmers to help prop up the military government, which just happened to turn into good energy policy later on.

[Macunaima]

Sounds to me like that wasn’t good energy policy, it was good political strategy to win the support of the poor farmers to help prop up the military government, which just happened to turn into good energy policy later on.

Change it to mostly the rich sugarcane farmers and owners of the sugarcane-conversion-to-ethanol plants in the Northeast states, and you'll be pretty much right on the money on that. Those fuckers have been always a bad consequence of the whole program, since then using their importance as leverage to gain more and more profits and political influence.

[Glocksman]

I know it's due to Brazil's geographic location, but to an American, the words 'Northeast states' and 'sugarcane farmers' just don't go together.

More seriously, despite being in a state that grows huge amounts of corn I think the whole idea of E85 in the US is retarded.

Food prices aside, I've never seen the ethanol advocates adequately prove that we get more energy out of a bushel of corn distilled into alcohol than it takes to grow, transport, and distill that bushel for use in E85.


US Farm policy used to have 2 goals.
One was to insure a steady supply of inexpensive foodstuffs.
The second was to insulate farmers against 'boom/bust' cycles and insure that they were paid a reasonable price for their crops.


Now it just seems as if it's goal is to maximize profits for ADM, and fuck the consumer.

[Ace Pace]

Raise the dead...there be news on this!

Link.

represent a crime against mankind.

Jean Ziegler, the United Nations special reporter on the right to food and sociology professor at the University of Geneva and the University of the Sorbonne in Paris, stunned many Friday when he blasted biofuels.

Ziegler, who gave the remarks at a press conference at the U.N. headquarters in New York, posed dire predictions if the development of biofuels was to continue. His remarks follow a Thursday presentation to the U.N. General Assembly's human rights committee on the dangers of biofuels.

He stated that blame for the record high price of some staple grain crops is directly attributable to biofuel initiatives.

This much is factually accurate it appears. Between September 2006 and November 2006 corn prices rose 55 percent. Corn prices are at record highs of over $3 USD per bushel. The Wall Street Journal says this is largely due to the new industrial demand for corn for ethanol conversion. This has caused food producers such as Tyson to struggle.

Ziegler ardently drove home this point at the press conference and stated that biofuels in their current state are not a good alternative to petroleum. He said that he feared biofuels would bring more world hunger. He stated that recklessly converting maize and sugar and other foodstuffs to biofuel was a "recipe for disaster."

In the U.S., the production of corn for ethanol has already overtaken its use for food, and President Bush has recently announced higher targets for the use in biofuels in U.S. vehicles. Wheat prices have more thandoubled in the past year, led by reduced cultivation of the grain. Prices of meat and dairy staples have also risen, driven by higher foodstock prices for farm animals.

Ziegler pointed out that it takes 510 pounds of corn to produce 13 gallons of ethanol. That much corn could feed a child in Zambia or Mexico for a year, he said. He also stated that diverting arable land to cultivate crops to be used to produce biofuels or directly burned was a "crime against humanity."

''What has to be stopped is ... the growing catastrophe of the massacre [by] hunger in the world," Ziegler continued.

Ziegler requested that a five year worldwide ban on biofuel be put in place, to prevent such occurrences.

Ziegler stated that he is not entirely opposed to the idea of biofuels, just the current state of them. He said that instituting a ban would allow for the development of technological advances that would allow conversion of waste materials such as corn cobs and banana leaves into fuel, as opposed to the crops themselves.

Such technologies may be possible, but the high starch and low sugar content of these biomaterials necessitates much more chemical and/or enzymatic processing.

Ziegler did point to the more practical use of oil-bearing crops in arid lands. He elaborated that “the cultivation of Jatropha Curcas, a shrub that produces large oil-bearing seeds, appears to offer a good solution as it can be grown in arid lands that are not normally suitable for food crops.”

The International Monetary Fund issued similar, but less drastic, comments earlier this month. The IMF, which is tasked with overseeing the global financial system, stated that the demand for biofuels may have dire consequences on the world's poor as it raises the cost of staple crops such as corn and maize to untenable prices.

A IMF report stated that "One country's policy to promote biofuels while protecting its farmers could increase another (likely poorer) country's import bills for food and pose additional risks to inflation or growth."

Biofuel is thought to be more environmentally friendly as the growth of crops, which absorb CO2, is thought to counteract its environmental impact, somewhat. However, biofuels often need to expend energy and chemicals in their growth and also consume similar debts when being processed. Overall the process is thought by experts to be slightly more environmentally friendly than petroleum. According to a recent UK government publication biofuels cut emissions "by 50-60 percent compared to fossil fuels," though their exact methodology at reaching this figure was not clearly stated.

However, new research demonstrates biofuels emit more greenhouse gases than fossil fuels. A research team led by Nobel Prize-winning chemist Paul Crutzen calculated total emissions from crops such as rapeseed, corn, and sugarcane. They found nitrous oxide (N2O) emissions were twice as high as previously understood.

Total emissions from all sources were up to 70% higher than those the use of gasoline. Crutzen, who won the Nobel for his work on the ozone layer, is widely respected in the field of climate research.

The charity organization Grain also released a report condemning biofuels as contributing to deforestation. The group also slammed biofuels for causing the return of the old colonial planting system to Asia, Africa, and Latin America, at the expense of local and indigenous communities.

Biofuels are certainly gaining steam. Between 2000 and 2005 the use of biofuels worldwide grew four-fold. Brazil leads the world in production, with over 16 billion liters of ethanol produced yearly from sugar-cane. The European Union is also jumping on the biofuel bandwagon, with a mandate which calls for 5.75percent of transport fuels to come from biological sources by 2010.

The promise of cheap, renewable replacements for fossil fuels managed to turn America's Breadbasket into America's Gastank almost overnight. Yet as Ziegler and others warn, such rapid transition is not without drawbacks.

[K. A. Pital]

A good article, but...

Jean Ziegler, the United Nations special reporter on the right to food and sociology professor at the University of Geneva and the University of the Sorbonne in Paris, stunned many Friday when he blasted biofuels.

Ziegler's words could only "stun" ignorant rich fucktards who have little idea how global competition for resources "proceeds" in the Second and Third World countries, and how it basically turns into market-forced starvation of the poor. For any person living here his words are an urgent, real problem which needs to be dealt with. Of course I applaud Ziegler, but with fuckers like Bush and PNAC at the helm, I doubt that sixfold monthly food inflation in Central Asia and double yearly food inflation in Russia/CIS is "the worst" that is coming.

[Master of Ossus]

One might also propose that funneling billions of rubles' worth of oil, gas, and weapons/technology exports into vainglorious buildups and re-equipping of military forces, is some form of callousness, too.

If you noticed, I'm not a fan of the state of things in my country, or of the people who run it. But oil for food is also a Ricardian deadlock and a temporary measure. What is needed is a re-invigoration of nuclear technologies, abolition of mass private transport and re-instation of energy-effective public transport systems, especially RTS like Metro.

And I certainly think that exporting grain when your population is in a food crisis is extreme callousness, which is happening now. Far more extreme than just using money for some vainglorious building, actually, since that money could have saved people already in hunger, but didn't. A price hike in foodstoffs actually sends new people into the hunger abyss and maintains those already there on the bottom. Thus it's definetely more vile than usual excess spending, since it's a non-neutral action.

Allowing the price to rise lets importers bring in more food. The whole reason why food is being exported is because they can get a higher price elsewhere. To correct the imbalance, you let the price rise. This is not complicated. The Russian political policies for handling the situation are INSANE and are clearly compounding the problems.

[Darth Wong]

I strongly recommend the documentary "Darwin's Nightmare", which describes the effect of asymmetrical agricultural exports in painfully explicit fashion. The doco was actually made by an African rather than a Hollywood director on safari, so it's not too polished or well-produced. It kind of meanders along and there are parts in the early going where you start wondering where the fuck this film is going. But by the end, the point is razor-sharp, because rather than preach at you, it simply shows you.

[K. A. Pital]

To correct the imbalance, you let the price rise.

You mean you let people starve, since rising prices cut off millions of buyers. "Imbalance", my ass. I love "market talk". Prices rise, milliong plunge into hunger, but that's okay! It's correcting "the imbalance".

This is not complicated.

Sure, it is very simple, as famines prove. I mean, what's bad if prices rise? After all, it's only a few million brown people sacrificed for the First World private car industry due to disparity in purchasing power. That can't be wrong now, can it?

Allowing the price to rise lets importers bring in more food.

"Bring in more food" for whom? For people who can't afford it? The price rise reduces effective demand - the number of people who can afford the food.

[Darth Wong]

Allowing the price to rise lets importers bring in more food. The whole reason why food is being exported is because they can get a higher price elsewhere. To correct the imbalance, you let the price rise. This is not complicated. The Russian political policies for handling the situation are INSANE and are clearly compounding the problems.

Allowing the price to rise means that the people involved in the export business make more money. The "trickle down theory" suggests that this wealth would be rapidly spread around the entire country, but that is, I suspect, more of a pleasing fiction that people use in order to assuage their consciences. In reality, when you pour a sudden influx of wealth into a single industry in an otherwise under-developed country, it has the effect of a shock to the system. The people in that particular industry do well, while the rest of society is beset by shock-waves of famine and social unrest. And they don't "trickle down" this wealth at all; they simply widen the gap between rich and poor.

Of course, we're assuming here that locals actually own the industry in question. If it's owned by foreign multi-nationals, most of the profits might actually be disappearing overseas.

Economies change best when they change slowly. Any time you have a very rapid shift of resources in a country, there is a lot of human turmoil which is often glossed over by economists who think of the big picture. This happens even in developed countries like America, where shifts in the country's economic base have left millions living in depressed areas that once served thriving "old industry" cities. The effect is far more pronounced in developing countries, where the proportional size and rapidity of the shift is vastly greater.

The solution is to put the brakes on this process, and slow down the rate at which a host country's infrastructure is transformed by free trade. But of course, that involves trade barriers, which violates the free-trade dogma. I say this as a former free-trader myself; the theory looks good but fails to account for certain human factors.

[K. A. Pital]

Allowing the price to rise means that the people involved in the export business make more money.

Indeed so; during the Great Irish Famine and the Tsarist Russia famines, grain traders massively increased their wealth which also coincided with mass spread of hunger.

Here's some effects from a recent RIA(n) aricle:

Over half of Russians - 52% - are forced to reduce their nutrition expenses due to prices rising, according to a VTSIOM polling on Wednesday.

One third of respondents - 34% - says that the price inflation will harm their budget, but they will not reduce nutrition levels. According to sociological polling, 82% perceive the inflation in the country as very high, 13% called the rise "moderate" and 1% - "irrelevant".

[...]

75% of polled say that such a price rise should not have been allowed (57% from those polled who count themselves as "materially well-supplied" and 86% from those who count themselves as "ill supplied"). [...]

Only 5% spend less than a quarter of their income on food. 29% of polled spend 25-49% of food, while 60% spend over 50% of income on food, and 18% spend most or all of income on food (75% of income or more) ...

[Master of Ossus]

To correct the imbalance, you let the price rise.

You mean you let people starve, since rising prices cut off millions of buyers. "Imbalance", my ass. I love "market talk". Prices rise, milliong plunge into hunger, but that's okay! It's correcting "the imbalance".

This is not complicated.

Sure, it is very simple, as famines prove. I mean, what's bad if prices rise? After all, it's only a few million brown people sacrificed for the First World private car industry due to disparity in purchasing power. That can't be wrong now, can it?

Allowing the price to rise lets importers bring in more food.

"Bring in more food" for whom? For people who can't afford it? The price rise reduces effective demand - the number of people who can afford the food.

Ummm... bringing in MORE food is how you correct a famine. You cannot stop people from starving by importing less and exporting more food. What part of this is difficult for you to understand? As for the stuff about higher prices starving people.... You cannot lower prices by bringing in LESS food, dumbass, which is precisely what you're claiming should be done. I suppose that if that were an option it would be great, but that's not the trade-off we have. Price-caps on foodstuffs is precisely the wrong way to handle a famine. At least if it's the price that's high (as opposed to a shortage), people can elect to forego other things that cost money to pay for food. If you just take away the food then they don't even have that option, crappy though it be.

Greenpeace - an example of what is wrong with modern environmentalism. Not care about human death due to poor environmental decisions. Care about environment itself.

The problem with Greenpeace is that they are not pro-environment. They are anti-development. That's why they've opposed things like nuclear power (see the infamous "machine gun" analogy) and why they oppose trading large, protected wildlife refuges for relatively small but highly developed industrial areas.

[K. A. Pital]

Ummm... bringing in MORE food is how you correct a famine.

That acts on the premise that imported food is cheaper. The price hike is caused by the rising import prices as well.

You cannot lower prices by bringing in LESS food, dumbass, which is precisely what you're claiming should be done.

You can lower prices by exporting less, since more of the product remains in the country.

Price-caps on foodstuffs is precisely the wrong way to handle a famine.

Really, and why? Since some rich fucktards care more about their profits than about starving citizens? That's not an argument. If the price cap allows operating with a minimal or zero profit, and is combined with export ban, it's perfectly viable way to stop hunger and food price inflation.

At least if it's the price that's high (as opposed to a shortage), people can elect to forego other things that cost money to pay for food. If you just take away the food then they don't even have that option, crappy though it be.

You're a moron if you think that's what the government is doing. The government is LOWERING import tariffs for fuck's sake, to compensate for import prices rising, which is OUT OF IT'S CONTROL. The food is "taken away" by greedy exporters, not by the government.

[K. A. Pital]

It's also perfectly viable to use oil superprofits to compensate food production losses, if the food production operates at a loss.

However, I do not see Russia's grain producers operating at loss - they still have not met real domestic demand, but they voluntarily choose to export since outer bidders outbid the citizens of the country. Therefore, it's an issue of choosing higher profit which directly harms citizens, not "oh doom and gloom, they'll go bust if they don't export the grain but sell it at home".

They will NOT go bust, they will merely have less profits. Oooh, I'm so sad right now that Russia's grain didn't go to the First World and the grain traders didn't get gazillions of profits, I'm almost crying out my eyes.

[Gerald Tarrant]

Economies change best when they change slowly. Any time you have a very rapid shift of resources in a country, there is a lot of human turmoil which is often glossed over by economists who think of the big picture. This happens even in developed countries like America, where shifts in the country's economic base have left millions living in depressed areas that once served thriving "old industry" cities. The effect is far more pronounced in developing countries, where the proportional size and rapidity of the shift is vastly greater.

The solution is to put the brakes on this process, and slow down the rate at which a host country's infrastructure is transformed by free trade. But of course, that involves trade barriers, which violates the free-trade dogma. I say this as a former free-trader myself; the theory looks good but fails to account for certain human factors.

For the record most Trade Economists have a different approach to the disruptions caused by free trade. The general approach is based on the assumption that the gains from trade are usually greater than the cost of the disruptions it causes. This is generally true. My International Econ Professor (pdf warning) relayed the following in an anecdote about why Economists never get invited to parties.

He'd had occasion to meet with the trade minister (or whoever was responsible for this sort of thing) at a dinner party. She started bragging about how their new tariff had saved 1000 (IIRC) garment making jobs. Dr Gilbert pointed out that the jobs were only worth about $30,000 a year and they ended up costing almost $100,000 a year per worker (economic estimates of dead weight losses and the like). He was not invited to the next government dinner party.

In any case the general thinking is that the governments best bet would be to drop tariffs and then institute a general tax (or a specific one if the gains or concentrated in some particular demographic group) and use the revenue to either fund retraining or support those who are not retrainable (workers at or near retirement for example). The consensus is that even allowing for the dead weight losses of a tax, and the inefficiencies in disbursement the gains due to trade are greater than the net losses for individuals. Leading to the prescription that trade is generally better than a no trade situation, and less impediments to trade are generally better than more impediments to trade.

There are of course exceptions to the above, like when the government is too inefficient to properly disburse or collect the tax; thereby squandering the gains due to trade. Another exception that is widely claimed is one of national defense, it's not always the best bet to rely on a foreign supplier for your arms needs. Food is also often lumped in as a national defense item. In the US sugar was originally given a protective tariff for that reason. I believe Saudi Arabia at one point was worried about a food embargo of the kingdom and instituted its own trade barriers to try and create its own domestic supply (found this supporting info) . Another exception comes from a bit of game theory. What's the best act when there are limited sellers who sell High Price Items, the best (and probably only real example) example is Boeing vs Airbus. If you look at the industry alone without any other markets, there are instances where the best policy of a country is preferential buying (A de-facto tariff) or subsidies or tariffs, which change the behavior of a company which receives those benefits.

But in general most trade economists think that there are better approaches to dealing with the disruptions caused by trade. They usually prefer welfare/retraining disbursements as a first choice, and as a second choice subsidies which are less disruptive in absolute terms than a tariff.

[brianeyci]

The problem with welfare is the serious social stigma assigned (rightly or wrongly) with sucking government tit.

Can you explain the difference between a tariff and a tax? If your goal is to prevent certain types of goods from leaving the country it seems to me tariff is a superior mechanism. Alright, so you raise taxes so the price of sugar is at parity with international buyers. What then?

Millions of people can't buy or suffer, and at worse starve. That's what. What's your rebuttal to that?

The only objection I can think of is agriculture will relocate if you impose too many tariffs. But agriculture depends on farmland, which is a natural resource. It can no more up and leave than the oil industry or a diamond mining industry can, and if they do there's always someone willing to exploit the resource around. Or you can just save it and say, no, we're not allowing exploitation of a natural resource that's against our country's interests. As long as the tariffs are not so great that it stops investment completely, then I don't see any serious rebuttal. Believe it or not you do not have to classify items as a "national defense" item to be in the general interest of the country. For example in broadcasting, you can hardly classify public television as national defense yet it is considered in the general interest of Canada.

Bottom dirty line of exploitation of natural resources is the business needs the country more than the country needs the business. So countries shouldn't be afraid to protect their natural resources, which are of course, rightfully theirs. South America found that out, so hopefully Russia does too and if some Americans with SUV are crying well maybe they can start WWIII over it.