Restricting Ag Production To Feed the World's Hungry
By Edelman and Flinchbaugh
© Copyright Agri-Pulse Communications, Inc.
ME: Some environmental and world food interests suggest reducing agriculture's nonfood output so more is left to address world hunger. Some livestock and trade interests are contemplating whether to join the fray. Let's hypothetically accept the proposition for a moment to see where it takes us. You are appointed “tyrant for a year.” From this day forward your public policy only will allow agricultural production to be used for human food consumption--the rest is illegal. What would be the impacts on American producers and the world agricultural economy?
BF: Sounds ridiculous, but I'll go along to see where you are headed. Those who argue for putting a lid on corn, soybeans, and tallow for biofuels, might conclude such prohibitions mean more food for human consumption. If we lowered the 15 billion gallon per year corn cap on biofuels to zero, of course we would put a $40 billion industry out of business and world food prices might decline some for a year or two. But the farmer's share of the consumer's food dollar is only 11.6 cents and the impact of the corn farmer's share is much smaller. Longer term food prices would not likely see much impact if that is the only thing that happens. The temporary market chaos and impacts depend on how many nations went along. More important, some studies are raising the old Malthusian notion that real food prices are going to rise long term because population growth is starting to outpace productivity growth in agriculture. If that is the case, a biofuels cap might only be a small blip on the malnutrition megatrend line. In the mean time, our markets for grain become more distorted with arbitrary policy restrictions on uses of agricultural production.
ME: Well you didn't go far enough. Don't mess around. We are talking about feeding hungry people here. Let's prohibit all nonfood uses of agricultural production? There goes pet food for dogs and family cats. Downtown New Yorkers would hate that. No food for pet fish, hamsters, turtles, snakes, birds and so forth. The U.S. pet food industry is a $16 billion annual business. Also, the equine industry is not allowed. That is a $39 billion industry. No horse racing and no pleasure horses are allowed unless we are going to ship them to Europe where it is found on the menu. Sorry cowboys and 4-Hers, get a 4-wheeler. We also need to outlaw zoos and parks because we don't use those animals for food either. That is another $13 billion U.S. industry. Sorry, feeding zoo animals for educational purposes is not acceptable, hungry people take priority. Oh, almost forgot to outlaw cotton. The “fiber” in “food and fiber” is no longer an accepted mission for U.S. agriculture. Cotton crowds out land that could be used for wheat or rice to feed hungry people. So U.S. cotton would be another $5 billion industry out the window.
BF: This is ridiculous. Even if you made all of those hypothetical restrictions, I doubt if there would be much impact or temporary relief on food prices for the world's hungry. Malnutrition has been a global problem for decades. The hungry will still be hungry until local food access and income problems are resolved. The biggest impacts of your policy would be adjustment costs here in terms of loss of income and freedom of choice. Ag producers would not be able to produce what they want to satisfy consumer choices in an open market. Parents could no longer take their kids to the Zoo. Pets could no longer be the pet owner's best friend. Equestrians would not be able to pursue their pleasure. Whenever government arbitrarily caps, limits, or prohibits agricultural production or use in the market, those in the affected industries have less earning potential and some might even be out of business.
ME: Ok, let's get even more particular. If the Malthusian world arrives, extremists may not stop at prohibiting nonfood uses, but may want agricultural producers to shift resources from less efficient to more efficient human food production systems. Producers can get more meals per pound of grain through a pig than a steer. Oh but wait, we get more meals out of feeding our grain to chickens than pigs. Oh but wait, we get more meals out of feeding our grain to fish on farms than chickens. Ultimately, Malthusian extremists may prohibit use of agricultural resources for any livestock feed as they are needed for direct human food grain production to feed the world's hungry people.
BF: I see your fan mail taking a serious nose dive. Your argument is similar to all of the spurious arguments regarding energy balance, lifecycle analysis, and indirect land use. All they do is create an alternate theory for doing things differently from rational economic theory. They take attention away from addressing the economic linkages in the real world. A well functioning open market provides consumers with the goods and services they want for those with ability to pay. Sovereign government institutions must decide who pays the bill for any allocation to those who lack ability to pay. Markets reward producers with the largest profits if they produce for the market more efficiently. If and when consumer tastes and preferences shift from fiber and energy to food, markets will reward producers who shift from fiber and energy to food. What you forget, is that we have this grassland resource that would not enter the food system at all unless we put it through a cow. Most people don't want to eat the same things every day. They get tired of fish and rice for every meal.
ME: My point, exactly. This “wild goose” chase illustrates one path forward if we accept the extreme Malthusian view and conclude the age of agricultural productivity is dead. Some interests are calling for limits on the use of production under the veil of reducing world hunger, but they really represent industries with products demanded by higher income consumers and trading nations. All agricultural interests have a good reason to hang together on freedom to produce for all legal markets, because arbitrary market restrictions imposed on one agriculture sector may represent a short step to all others.
* Professor of Economics at Iowa State University and Agricultural Economics Professor Emeritus at Kansas State University.