WTH? We aren't producing enough food?

One of the most serious problems nowadays is the increase in food prices. From agricultural countries like Vietnam, Thailand, … to the biggest exporter of agricultural products-US, food prices are rocketing. We all know that price of everything, not only food, is determined by the supply and demand. The rising price means that these factors are changing dramatically. The world population is rising fast. Are we not producing enough food?  And if this trend continues to remain long, will our children face the greatest crisis in history: the food crisis?

What are making the food prices increase?

Price is determined by both supply and demand. So, let’s have a look at both sides.

Firstly, on the demand side, we have 2 main factors: bio-fuel and the inevitable increasing demand.

In the recent era of electricity, industry, physic, …, the biggest concern of mankind is energy. As we are always told, the natural resources are not limitless, and more sadly, are nonrenewable. Renewable resources such as sun, wind cost much given the recent technology. Luckily, scientists have a solution, an alternative for coal and crude oil: bio-fuel. There’s no need to define what bio-fuel is. We hear of it every day. Some of us may already use it. Bio-fuel is fuel coming from plant. The suitable plants used for bio-fuel ranges widely, from trees to flower and vegetables. Among those suitable plants, corn shows up as a favorite one for producer. Cheap, short-termed, easy to plant,… corn is a good choice. Unfortunately, corn is one of three main meals of the world population: rice, wheat, corn. All else equals [ceteris paribus], an increase in demand for corn results in a higher corn prices. Ceteris paribus, a decrease in supply of corn in food aspect leads to an increase in prices of other foods as a substitute for corn. Boom! Corn’s domino effect. Now all the food prices are flying on the wings of corn. Note that the bio-fuel needs not only corn but also many other plants. Now you can imagine the effect of bio-fuel on the food prices.

Another factor is the increasing demand for food. China is no longer a poor country. Neither are India, Thailand, Indonesia and Vietnam [to some extent]. The period of eating 2 meals of rice a day is over. Now, not only rice but also meat is affordable. An increase in income will lead to an increase in consumption. People are eating more and more. Nowadays, there’s hardly anyone worrying about being dead because of starvation. The only concern is obesity. Moreover, people now prefer meat to rice or wheat. And to produce a unit of meat requires more afford than producing a unit of vegetables. It means resources used for producing rice, wheat, … is reduced in order to make more meat. Don’t worry about starvation. If this trend goes on, we will die due to global warming before starvation. Cows are the main source of methane, a gas, along with CO2, causes the global warming.

Secondly, on the supply side, we have 3 major factors: climate changes, export restriction and agricultural investment.

Does climate change contribute to the recent crisis? Global warming makes the weather become hasher. The global warming is making some areas in the earth colder in winter and hotter in summer. The dry season is longer than before, and flood is now more destructive than ever. Moreover, disasters are happening more frequently.  Is Mother Earth punishing us? And we can’t do anything to stop it? Every human civilization has understood the need to plan for vicissitudes. If they don’t, they would not have survived. Climate change does have some impact, but absolutely not too large, at least now.

Some people believe that export restriction has caused the crisis. They believe in what Ricardo said 100 years ago: free trade benefits everyone. Their main point is that export restriction has caused some dead-weight loss and wasted the products. Remove the restriction will help solve the problem.

However, I believe the main factor is the human’s confidence over the past decades. After many years of no starvation [except for Africa], mankind is forgetting agriculture. We are racing to produce more steel, more cars and more energy. We compete with each other to attract more customers in service aera. We have reduced investment in agriculture. It’s been a long time since the last agricultural revolution. Moreover, land for agriculture has gradually been used for making golf course, industrial zone,… which can make more profit than rice or wheat. Given the same technology, less resources for agriculture will lead to a fall in supply. It’s quite incomprehensible and irrational of mankind to cut down the supply while the demand never stops rising.

So, the solution for this problem does not lie on the demand side. We do not have to cut down the demand. Indeed, we cannot do that because of the increasing population. We have all the rights to eat more and more. Bio-fuel is a good alternative for crude oil and other nonrenewable natural resources. What we have to do is to shift the supply to the right. An increase in investment in agriculture will help do it. Not so difficult a solution, is it?

But can human give up the short-term profit to achieve a long-term target?

Kz

Explanation for a phenomenon in VN: why the so-called “cheap” music still survives?

3 years ago, there was a rumor that due to a worldwide shortage of food, rice price would rise at least 20%. Everybody was shocked. Everyone loved the idea that there was plenty of rice in Vietnam. The rumor led to a real panic, or we can say, a self-fulfilling panic. In an interview with economic experts, a citizen raised a question: “What should the Government do to stop the recent panic?” That question is similar to the question “How can the Government reduce the rice price?” What is your suggestion? One of the experts answered: “Why should we do that? Why should we reduce the price? Nearly 80% of Vietnam population is farmer. If there is an increase in the price of agricultural products, most of us will benefit. Urban people are richer than rural people. A small increase in price will not harm the city men much. But with the quantity of over 35 million tons a year of rice, only an increase of $0.1 per kg will surely makes the farmers prosper much." 

Rule of thumb number 1: there are 2 groups in the society: the majority and the minority.

The business of business is to make as much profit as possible. Somebody may criticize the recent V-pop for producing so many “cheap” products together with so many “stars”. Many of us don’t laugh when they watch comedy movie from Phuoc Sang. I don’t like them too. But it doesn’t matter whether I or you like them or not. No, it doesn’t matter. Which matters most is whether most of us like them or not. After all, the only purpose is to make profit. Only when we realize we are just a small part of the society can we understand why these “stars” still survive. Lê Cát Trọng Lý can compose nice songs. Rừng Na Uy perhaps is a great movie. The critics love them. The elite love them. However, they are not the majority. The majority love what the elite regards as “cheap” products. These “stars” perhaps will never receive an award for their music, but instead they can make much profit.

Many of you must be annoyed by the GPRS commerce on TV. I guess none of you has ever texted to register GPRS or download games, “pictures”, “music” through such agents. Some of you may wonder how such commerce’s still on TV. An advertisement spot of 30s on TV costs about $3000-$5000 depending on the time and channel. It means the commerce really works. They have attracted a large number of TV viewers. They have convinced many people texted and downloaded. Similar to the V-pop and Phuoc Sang’s movies, their target is the rural people. Many teenagers in rural regions aren’t able to get access to Internet to register GPRS or download. They need a guide. And there comes the TV. Imagine, with more than 60 million people in rural area, just 5% of them spending 50,000VND – $2.5, which is not a very big money, per month can benefit the agents much.

So, don’t be surprised why Phuoc Sang’s movies can earn so much money in Tet holiday. Don’t get mad at the music from the recent “prince” and “princess” of V-pop. Try to see the issue from a different perspective: they are really good businessmen. They have identified correctly where the money comes from. And they have succeeded in earning money from such sources.


Kz

My friends

I’m sure you all know that I have a facebook account. I also post the some entries here in my facebook acc. My facebook is surely more famous than this blogs pot, for it has nearly 175 friends on list already and somewhat more than 60 awaitings for my reply, compared with 2 followers on this page. But I’m mentioning that not to complain that no one wants to follow this page, or to announce that I’m going to close this one.

I’m writing this post to thank you, readers of “Neutral”. It’s good that I know all my readers. You’re all my friends. One of you is even the most special one in my life. And Bee, though we used to have some conflicts, you’re still among some people on earth that I admire (I’m not lying. You can ask our classmates. I remember telling some of them about that many times. Bao Chau, yeah, I did tell her that). Although you guys haven't left a comment yet, I believe you all read my post.

A new year is coming.

Happy Lunar New Year!