[Bas]

I assume that with higher prices alot of farmers will choose to grow corn this year, resulting in price rises in all other agricultural products. This is very good news for alot of third world countries that are dependent on those products for hard cash. I really like it for NOW but I hope it won't create any food shortages in the future (in poor countries). Also the environment might suffer as it will become more profitable to clear forests in order to grow corn.

Besides all this the EU and US still have big agricultural surplusses and are still dumping them on the world markets at prices small farmers can't compete against.

[MrBill]

$this->bbcode_second_pass_quote('Bas', 'I') assume that with higher prices alot of farmers will choose to grow corn this year, resulting in price rises in all other agricultural products. This is very good news for alot of third world countries that are dependent on those products for hard cash. I really like it for NOW but I hope it won't create any food shortages in the future (in poor countries). Also the environment might suffer as it will become more profitable to clear forests in order to grow corn.

Besides all this the EU and US still have big agricultural surplusses and are still dumping them on the world markets at prices small farmers can't compete against.

[Bas]

$this->bbcode_second_pass_quote('mrBill', 'I') certainly have nothing against farmers making a living wage from farming or consumers paying a little more for their food. Until we curb population growth we are always going to have problems with the distribution of food to the world's poorest in any case. Even if we do not use any arable land for bio-fuels.

However, any rise in farm incomes will benefit the largest farm corporations the most and not the familiy farm. It always does. And any rise in farm incomes will quickly be capitalized into the price of farmland driving down total returns. It always does. This benefits those that already own land and can sell at a profit. It always does.

But hopefully higher commodity prices will at least curb excessive western government subsidies that hurt farmers in the developing world. So it is not a zero sum game. Just that like any policy change it will have unintended side effects creating winners and losers.

[MrBill]

Bas wrote:
$this->bbcode_second_pass_quote('', 'T')hose sound like fair points, however also a higher price for farmland could benefit third world countries as well as their individual farmers as they own most of it at the moment. Also the small farmers will still get a better price for their crops, even at their local market. So overall I think I have to disagree with you this time.

[Bas]

$this->bbcode_second_pass_quote('MrBill', 'M')any farmers in the developing world have very weak property rights. Certainly, in countries like Zimbabwe land seizures can be quite arbitrary, and even Chinese communes are not likely to get fair value compensation for any property taken from them.

[MrBill]

Agriculture reform, like Doha reform from blind free trade to fair trade, is worth doing for its own sake. Remove subsidies that benefit a small group of producers or pockets of consumers to reduce market distortions for everyone. Production and trade should be based on sustainable competitive advantages not currency manipulation or trade distorting government subsidies.

These things are worthwhile doing in any case. Maybe even especially if you suspect the system will not survive post peak oil decline. Better to get your houses in order ahead of time. And then give yourself some time to address the real issues of sustainability of our current economic system.

We have been fooling ourselves for far too long that we are rich and therefore we can afford these policies. If you are running deficits paid for by foreign investors or passing these costs along to future generations then you cannot afford your current lifestyles or existing policies. I do not think it is brain surgery? It is quite plain and simple.

Eventually, the Mexicans are going to have to get their own house in order. If Cantrell is in steep decline maybe they should re-examine their constitution that bans foreign ownership of oil & gas assets in Mexico? And the government's policy of skimming 60% of PEMEXs revenues off the top for their general operating expenses? Instead of leaving enough for PEMEX to re-invest in exploration and development of new oil & gas assets as well as updating and improving their aging, leaking infrastructure.

It will not change the basic geological fact that oil is a finite resource, but it can slow depletion. And fighting bureaucracy, government incompetence and official corruption is a worthy goal to alleviate poverty in Mexico, and to give Mexicans more opportunities at home. US policies, whether they are pro-immigration or turning subsidized corn into expensive ethanol, are not a proxy for Mexico getting their own house in order. It is not either or? It is both.

That goes for every other screwed-up developing country. Yes, it is nice when the rest of the world gives them a helping hand, but if not then learn from HK, S.Korea, Taiwan, plus sectors of Chindia, and do it for their own benefit.

Just one example. There is absolutely nothing, no neo-colonial power, no one stopping Africa from opening-up a continent wide free trade zone in goods & services. That is their decision and their's alone to make. The commodity price index is up 50% since 2005, up 87% since 2000, benefiting these countries that produce commodities, base and precious metals as well as energy. If not now, then when? On the backside of post peak oil decline?

[zoidberg]

Maybe this is all part of a clever plan to extort oil from the Mexicans with food.

Perhaps the US government could promise to cut ethanol subsidies in exchange for relaxing foreign ownership rules in the mexican oil industry. Theoretically foreign investment could help increase the total amount of oil extracted from Mexico in a shorter time period.

The american oil companies would then act as a proxy for the US government to import oil into the US, from Mexico. In return lower ethanol usage will free more corn for export, perhaps just enough to prevent a degradation of order in Mexican society.

Certainly seems a more efficient use of corn than turning it into ethanol for liquid fuel.


After all decades of massive American and European food subsidies and subsequent dumping on global markets has afforded this faustian food lever. Does anyone doubt the will of the western elites to use food to gain compliance?

I don't.

It'd be interesting to cross reference countries with high food imports from the US with their natural resources.

[MonteQuest]

$this->bbcode_second_pass_quote('Bas', ' ')oh and it does cut import because if ethanol is cost effective the oil import would already be shrinking, so it would only be shrinking faster.

[MrBill]

A very concise assessment of where we are. I have already sent the full version to some of my family as a summary of the debate.
$this->bbcode_second_pass_quote('', 'W')hen an issue gains as much momentum as Greenhouse Gas Emissions (GHG), reality is often lost to a combination of rhetoric and sloganeering. Effective action must be based on an understanding of how hydrocarbon energy is used and what realistic alternatives are currently available.

Let's look at the three big categories: electric power generation, transportation and heating/air conditioning.

Most of the world's electricity is generated from coal. While electricity is also generated by burning fuel oil and natural gas, the fact that coal is the most emissions-intensive hydrocarbon means that reducing emissions from coal-fired plants is the biggest challenge.

[MrBill]

We all eat from the same rice bowl or taco as the case may be....
$this->bbcode_second_pass_quote('', 'T')ortillas Spark Inflation, Drive Down Mexico's Peso (Update1)

An increase in the cost of tortillas, a staple of the Mexican diet since the Maya ruled 1,000 years ago, has triggered a slump in the peso.

Tortilla prices jumped 5.9 percent in January, the most in eight years, after costs climbed for corn, the main ingredient. That increase fanned inflation and a bond market rout that curbed demand for the currency. The peso has fallen 2.4 percent in the past month, making it the world's third-worst performer against the dollar among the 70 currencies tracked by Bloomberg.

``There's a big risk that tortilla price increases will lead to higher wage demands and fuel inflation,'' said Eduardo Perez, head bond trader at Mexico City-based brokerage Valores Mexicanos SA, the country's largest independent brokerage. ``Foreign investors don't like this environment and are selling. This is directly linked to peso weakness.''

The currency's slide in the past month to 11.1820 pesos per dollar leaves it down 3.3 percent in 2007. Only the South African rand and the Turkish Lira have fallen against the dollar more in the past month, weakening 3.24 percent and 3.2 percent, respectively.

A slowdown in the U.S. economy has added to the peso's drop by curbing demand for exports and cutting into remittances immigrant workers send to their families. Mexicans living abroad sent an average of almost $2 billion a month home last year.

The peso may fall further in the next several months as corn prices continue to rise. Corn has soared 15 percent in the past eight weeks and 119 percent since late 2005 as demand for the grain grows from ethanol producers.

Tortilla Pact

President Felipe Calderon, seeking to shore up support for his administration less than two months after taking office, arranged a price freeze with tortilla makers on Jan. 18. The rise in corn may lead to price increases at tortillerias, as small tortilla shops are known, once the government accord ends next month. Higher corn prices are also driving up the cost of livestock feed, eggs, chicken and beef.

``Risks for the peso will begin at the end of April or beginning of May when the pact ends, inflation pressures begin to mount and demand for bonds drops,'' said Luis Raul Rodriguez, head economist at Vector Casa de Bolsa SA, a brokerage in Mexico City. ``It'll be a dangerous moment.''

Under the agreement, tortilla shops agreed to hold prices at a maximum of 8.5 pesos ($0.76) a kilogram, down about 2.5 pesos from the highest prices at the time.

Calderon also dispatched 380 consumer protection agency officials to crack down on cheating and record prices at shops throughout the country. The agency began publishing those prices on its Web site to try to foster competition. They report on about 180 shops in Mexico City alone.

Enchiladas, Quesadillas

``We need citizens to call and complain and report tortilla shops that are exploiting the situation,'' Gladis Lopez, head of the agency's enforcement department, said in an interview in Mexico City. ``We're getting there.''

Historians track the tortilla back about 1,000 years, when the Mayans controlled much of present-day southern Mexico from their base in the Yucatan peninsula. A flat bread made out of ground corn, quicklime and water, the tortilla is served at breakfast, lunch and dinner in many Mexican households. It's featured in some of the country's most famous dishes including tacos, enchiladas, quesadillas and flautas.

The tortilla accounts for almost half of the calories the average Mexican consumes each day. Lula Martin del Campo, head chef at HSBC Holdings Plc in Mexico City, said there's no food that has similar importance in the U.S. diet.

``The majority of poor Mexicans use tortillas as their forks and knives,'' Martin del Campo said.

Core Inflation

Calderon's measures pushed down tortilla prices 1.3 percent in the first half of February after they rose 8.8 percent in the previous two months.

The drop slowed a surge in the core inflation rate, the price gauge most closely watched by analysts in Latin America's second-biggest economy. The annual core rate, which excludes energy and some fresh foods, was 3.95 percent in the 12 months through mid-February, the highest rate since August 2002. The core rate was 3.89 percent in January.

Mexico's overall inflation rate rose to 4.1 percent in the 12 months through mid-February, above the central bank's target range of 2 percent to 4 percent.

Central bankers said after a policy meeting on Feb. 23 that they would lift the country's benchmark lending rate from 7 percent, a 2 1/2-year low, should core inflation fail to slow. They also said they were concerned that rising tortilla prices would ``contaminate'' inflation expectations and lead workers to demand bigger pay increases.

Bond Market Rout

Banco de Mexico's statement deepened declines in the currency and bond markets. Peso-denominated bonds have lost 4 percent this year, the worst performance among local currency- denominated securities issued by emerging-market countries, according to JPMorgan Chase & Co. data.

The yield on the government's 8 percent peso bonds due 2015 has risen 46 basis points, or 0.46 percentage point, since Dec. 21 to 7.9 percent, according to Santander Central Hispano SA. The bond's price, which moves inversely to the yield, has dropped 3.05 centavos to 100.61 centavos per peso.

Vector's Rodriguez began reading in December the daily reports on tortilla prices published by the consumer protection agency. Now, confident the government-brokered accord will hold down prices through next month, he's shifted his focus to international corn prices.

``The expected success of the pact is based on the assumption that the corn price impact would be short-lived,'' Rodriguez said. ``This is not the case anymore. We're expecting inflation to surge.''

[cube]

$this->bbcode_second_pass_quote('MrBill', 'A')griculture reform, like Doha reform from blind free trade to fair trade, is worth doing for its own sake.
...

[MOCKBA]

$this->bbcode_second_pass_quote('cube', 'A')ll the farmers of the 3rd world who made 10 cents/hour would say: "Hey! I can make more money investing in the finished product end." So naturally they would invest their money where it would yield the highest return. If a flood of money were to be invested in the finished product end...

[MrBill]

$this->bbcode_second_pass_quote('MOCKBA', '')$this->bbcode_second_pass_quote('cube', 'A')ll the farmers of the 3rd world who made 10 cents/hour would say: "Hey! I can make more money investing in the finished product end." So naturally they would invest their money where it would yield the highest return. If a flood of money were to be invested in the finished product end...

[MrBill]

cube wrote:
$this->bbcode_second_pass_quote('', 'B')lind free trade == true freedom. However fear not MrBill...we will never have true free trade. There's no shortage of people in high places who have a financial interest in maintaining government restrictions on the movement of capital. A good argument can be said that's how they got rich to begin with.

my 2 cents

[cube]

$this->bbcode_second_pass_quote('MrBill', '.')..
Cube, as much as I like you, that is probably your worst post and worst example in a post ever! .... And coffee farmers sell a commodity, not a finished product to the final consumer. Technically, they can quit working the fields and get a job in a Starbuck's and capture more of the economic value added. So it is not a restriction on the flow of capital, but a restriction on the flow of labor.
...