Sunday, April 11, 2004

A discussion of agro-economics and the impending grain shortage

I was recently listening to NPR's Living on Earth program when they interviewed Worldwatch president Lester Brown and Robert Paarlberg, Professor of Political Science at Wellesley College.

Lester Brown wrote a book in 1995 called: Who Will Feed China? Wake-Up Call for a Small Planet. His newest book is called Plan B: Rescuing a Planet Under Stress and a Civilization in Trouble

Here's some more info from Environmental magazine on Brown.

Find the transcript of Life on Earth here (it's 3/5 of the way down the page, or you can search for Paarlberg).

Selected quote:

CURWOOD:...Mr. Brown says his gloomy forecast is based in part on a rapid development that's paving over some of China's best crop land, and on water scarcity.

BROWN: Two things are happening. One, water tables are falling. And when the aquifers are depleted there will be a cutback in the amount of irrigation water, simply because the pumping at that point cannot exceed the recharge. The second thing that's happening is, as water becomes more scarce, is that the cities are pulling irrigation water away from farmers. We saw this most dramatically in the Spring of '94, when the government banned farmers from all the reservoirs in the agricultural region surrounding Beijing. When China runs into water scarcity, when the cities begin pulling water away from farmers, then they have to import grain. When China imports a ton of wheat, it's basically importing a thousand tons of water. This is how countries begin to balance their water books.

* * * *

BROWN: There's going to be an enormous gap developing between the soaring demand and the slowly declining supply. This could lead to imports of somewhere between roughly 200 and 360 million tons of grain by the year 2030. I said imports; I should say import needs, because though China can probably afford to import that much grain, which is nearly twice world grain trade at present, the grain is not likely going to be there on that scale, and what I think we're going to see is much higher grain prices. Now, rising grain prices is good if you happen to be a grain exporter like the United States. But if you're a grain importing country, like most of the low income countries in Africa, if the price of grain doubles, then these countries, many of them, will be facing life threatening situations.

CURWOOD: Rob Paarlberg, you think this threat of massive imports is a false one; am I correct?

PAARLBERG: Yes, you're correct. I expect that China will become a substantial importer of grain into the next century, probably 40 or 50 million tons by the year 2020 or 2030, but I think it will be doing that for a very good reason. It will be converting grain land into the production of higher value crops like fruits and vegetables, and it will be importing grain, especially feed grain, from places like Iowa and Illinois that don't face water shortages or land shortages. It makes environmental sense. So I don't think it's a worrisome trend for China to import. I think they should and I think they will. But I don't think there's any likelihood that they're going to import 200 or 300 million tons of grain. We've heard predictions of scarcity in the past, and they haven't come true in the past.

CURWOOD: But recent corn prices are up by 60%.

PAARLBERG: Grain prices that are 30% or 40% higher than they were a year and a half ago is not the problem; that's the solution. Because of higher grain prices, the United States is now going to take land that the government was paying farmers to keep idle and bring it back into production. And we're going to rebuild the stock levels that were drawn down too low.

BROWN: Let me just say that the situation today, I think, is different, than from any other time in history, in the sense that even though grain prices are rising and may well double shortly, the production response will not be the same. For one thing, back in the 70s when food prices went up, fishermen invested heavily in more fishing trawlers. But if they do that today they're simply going to hasten the collapse of fisheries. And similarly with the use of fertilizer. Farmers poured on a lot more fertilizer in the 1970s when grain prices doubled, but now in many parts of the world more fertilizer simply doesn't have much effect on production.

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