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Food prices increased by 75% due to biofuel says World Bank

Tim the plumber

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Uh, hello? The correlations to go back to at least 1990. 28+ years of correlations is not "short term."



Wow. So again, you completely ignored not just tons of relevant facts, but also my point that there are over a dozen factors that have impacts on global food prices. #monomania



Are you out of your forking mind?

Global population in 2005: 6.5 billion
Global population in 2017: 7.5 billion

A global population increase 1 billion people in just 12 years has no effect whatsoever on demand?!? You've completely lost it.

And again! These billions are not eating the exact same amount and type of food every single day. As noted in previous discussions, the number of people in dire poverty is falling, and incomes are going up for those who are incredibly poor (mostly in China and India). One thing these people do is buy tastier calories, mostly meat -- which is more expensive.

Tell us, oh economic genius: What happens when Chinese consumption of pork per capita jumps by 20% between 2005 and 2015? Surprise! The answer is not a simple linear formula, because there are lots of other factors involved such as an outbreak of disease (e.g. blue-ear pig in 2007), hog farms getting larger, the availability of imports and more.

Anyway.... All of these complexities defy such pathetically simple claims like "biofuels double the price of food!" We're dealing with global economic systems that are impacted by factors as varied as...
• population size
• changes in disposable income in different income tranches
• changes in consumer tastes (i.e. demand)
• the impact of disease
• the impact of weather
• industrial uses for biomass
• the ability to use waste biomass for non-food products
• the interconnected nature of global finance and supply chains
• consolidation of Big Ag
• the impact of weather on the nutritional properties of crops (e.g. Brazilian soybeans enjoy better growing weather than the US, thus higher protein content)
etc etc



That doesn't respond to a single point I've made.

It's also pretty much a bull**** point for you to raise. Palm oil production started its rapid increase in the late 90s, years before biofuels were all the rage. Much of this was due to the policies of governments who didn't give a crap about environmental concerns, such as Suharto pushing palm oil in Indonesia as early as the 1970s. In fact, global demand for timber encourages Indonesia to chop down its forests, and then use the cleared area for agriculture (have I mentioned yet that global agriculture is incredibly complex and interconnected?) We could even look earlier to British colonists planting palm oil in Malaysia for export, if we wanted. Some of its virtues include high yields, use in a variety of products (margarine, soap, lipstick, ice cream, lubricants etc). Price is only part of the equation.

I.e. You have to be a very special kind of person to believe that the only reason to grow more of a crop, which has a variety of industrial and food uses, is because "the cost of food went up."

Unsurprisingly, environmentalists object to the heavy use of palm oil because of its environmental impact. Organizations like the WWF are trying to hold corporation's feet to the fire over sustainable palm oil. MEPs voted to ban palm oil use in biofuels last year. I could be here all day quoting examples.

Oh, wait. I forgot. You don't care about facts. All you care about is: "Bad thing! Blame environmentalists!" :roll:

Thanks for making it apparent, yet again, why you keep getting thoroughly trashed when you raise this ridiculous point.

Yeah, I'm out of my mind, as is the World Bank. Both of us seem to have this mad idea that removing vast amounts of food out of the world market makes food much more expensive. What do we know about economics?
 

Threegoofs

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Yeah, I'm out of my mind, as is the World Bank. Both of us seem to have this mad idea that removing vast amounts of food out of the world market makes food much more expensive. What do we know about economics?

Good question.

There is no real supply problem with food- especially corn. We grow so much of it in the US, we have to give money to farmers when the price drops too low.

Functionally, mandating ethanol for fuel is a way to prop up prices too.

But the effect upon commodity prices is fairly modest, because if the subsidy is removed, the land will go to other uses- probably for growing feed corn and pasture.

Interestingly, studies have shown that the bump in commodity prices helps out farmers in developing countries a lot, while putting a burden on the urban poor.

Biofuels and food prices: Separating wheat from chaff - ScienceDirect
 

Tim the plumber

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Good question.

There is no real supply problem with food- especially corn. We grow so much of it in the US, we have to give money to farmers when the price drops too low.

Functionally, mandating ethanol for fuel is a way to prop up prices too.

But the effect upon commodity prices is fairly modest, because if the subsidy is removed, the land will go to other uses- probably for growing feed corn and pasture.

Interestingly, studies have shown that the bump in commodity prices helps out farmers in developing countries a lot, while putting a burden on the urban poor.

Biofuels and food prices: Separating wheat from chaff - ScienceDirect

Large landowners in poor places do, I'm sure, benefit like large landowners here.

Small farmers in poor places are also poor. If they could they would like to produce those high value crops that they could export to the local markets and buy their bulk food in. But today they are forced to live hand to mouth and eat all they produce, mostly. They are mostly outside the moneyed economy. That's subsistance for you.

If there was a general rapid increase in wealth of the poor in such places the effect on the local farming sector would be that they would be growing the cherries for the cake rather than just trying to live. They would have enough to send their children to school perhaps.
 

Threegoofs

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Large landowners in poor places do, I'm sure, benefit like large landowners here.

Small farmers in poor places are also poor. If they could they would like to produce those high value crops that they could export to the local markets and buy their bulk food in. But today they are forced to live hand to mouth and eat all they produce, mostly. They are mostly outside the moneyed economy. That's subsistance for you.

If there was a general rapid increase in wealth of the poor in such places the effect on the local farming sector would be that they would be growing the cherries for the cake rather than just trying to live. They would have enough to send their children to school perhaps.

The improvements in world poverty over the last decades have been substantial.

4c1767b78598fedb3c9086766c712cfa.jpg


Hmm. This also correlates with widespread adoption of biofuels!
 

Tim the plumber

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The improvements in world poverty over the last decades have been substantial.

4c1767b78598fedb3c9086766c712cfa.jpg


Hmm. This also correlates with widespread adoption of biofuels!

Yes the poor of the world are getting slowly richer, Things are getting better.

It would be vastly better still if they had cheap food.

It is also a bit odd that the 3 billion or so that live on less than $2.50 a day are not extremely poor.

 

Visbek

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Yeah, I'm out of my mind, as is the World Bank.
Nope. Just you.

Unsurprisingly, the World Bank didn't stop examining this issue in 2008. For example, their 2016 Commodities Outlook document had a special (albeit brief) focus on the relationship between energy, biofuels and food supplies and prices. (http://documents.worldbank.org/curated/en/561181469610329636/pdf/107237-WP-PUBLIC.pdf) What did they find?

Surprise! They found that "energy prices were an important driver of the post-2006 surge in agricultural prices." The primary driver in the drop of food prices between 2011 and 2016 was, yeah, the drop in oil prices.

Another aspect they mentioned, which I didn't even get around to, is currency fluctuations. Long story short: As the US dollar appreciates, food prices drop.

Another aspect they mentioned, which I didn't get around to, is changes in GDP. Long story short: As income grows, spending on food increases more slowly than other types of spending. Thus, when GDP goes up, food prices drop. That consistently dropped prices between 2000 and 2016.

Guess what they say about biofuels? Surprise! Biofuels pushed prices up AND down in recent years. Biofuels increased demand for certain grains (of course), but this did not result in a one-way change in prices. What happens is the changes in demand, and government policies (notably subsidies), changed the stock-to-use ratio. If the stock-to-use ratio is low, prices fall. However, when biofuels policies encourage higher grain production, then the stock-to-ratio rises, and prices fall.

Impact of crop conditions and biofuel policies. The
stock-to-use ratio, a measure of how well-supplied
food markets are relative to demand (including biofuels),
is also an important contributor to food price
variability (Figure F5). Typically, low stocks-to-use
ratios exert upward pressure on the prices of storable
commodities, as was the case in the early stages of the
price boom (conversely, the relatively high stocks of
the past few years reduced such pressure.) The elasticity
of real food prices to the stock-to-use ratio is estimated
at -0.33. That is, a 10 percentage point increase
in the stock-to-use ratio is associated with a 3.3 percent
decline in food prices, similar to findings reported
elsewhere (Bobenrieth et al. 2012, FAO 2008).


Anyone with a rudimentary understanding of economics ought to understand this, because stock-to-use ratio is just a way of describing supply. So tell us all, Tim: What happens when you increase the supply of a commodity?

Anyway.... What was the overall result? Between 2000 and 2016, GDP growth rates consistently exerted a downward pressure on food prices. Between 2000 and 2008, oil prices consistently increased food prices around 15%; while stock-to-use ratios increased prices on some grains (corn, rice, wheat) increased prices, while s-t-u had no impact on soybeans. After 2008, all of these factors contributed to a fall in prices for almost all four major grains. The impact of biofuels was less than 15% in either direction between 2000 and 2016. Needless to say, this data was not available in 2008.

Screenshot 2018-11-21 11.59.59.jpg

Thus, based on the World Bank's 2016 analysis, the idea that "biofuels increased the price of food by 50%" is completely wrong.

So. Was the World Bank right in 2016? Or were they only right in 2008?
 
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Tim the plumber

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Nope. Just you.

Unsurprisingly, the World Bank didn't stop examining this issue in 2008. For example, their 2016 Commodities Outlook document had a special (albeit brief) focus on the relationship between energy, biofuels and food supplies and prices. (http://documents.worldbank.org/curated/en/561181469610329636/pdf/107237-WP-PUBLIC.pdf) What did they find?

Surprise! They found that "energy prices were an important driver of the post-2006 surge in agricultural prices." The primary driver in the drop of food prices between 2011 and 2016 was, yeah, the drop in oil prices.

Another aspect they mentioned, which I didn't even get around to, is currency fluctuations. Long story short: As the US dollar appreciates, food prices drop.

Another aspect they mentioned, which I didn't get around to, is changes in GDP. Long story short: As income grows, spending on food increases more slowly than other types of spending. Thus, when GDP goes up, food prices drop. That consistently dropped prices between 2000 and 2016.

You are ***.

How does that cause food prices to drop??????????????????????
 

Visbek

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Northern Light

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Food prices have also been increased by habitat destruction from climate change along with traditional food sources disappearing due to modernization. More people in urban areas than ever before = more people relying on the industrial food system. There have been supply problems for years, but also no clear end to food monopolies raising their prices to obscene levels.

It's quite a mess on all sides and it can only end badly.
 

Threegoofs

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Food prices have also been increased by habitat destruction from climate change along with traditional food sources disappearing due to modernization. More people in urban areas than ever before = more people relying on the industrial food system. There have been supply problems for years, but also no clear end to food monopolies raising their prices to obscene levels.

It's quite a mess on all sides and it can only end badly.

Just to reorient everyone... food prices are not increasing tremendously. They spiked in 2007, crashed with the crash, recovered in 2011 and have been stable or declining ever since.

b20c0eccfb72426dcd6aab0051ec9f6d.jpg
 

Northern Light

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Just to reorient everyone... food prices are not increasing tremendously. They spiked in 2007, crashed with the crash, recovered in 2011 and have been stable or declining ever since.

b20c0eccfb72426dcd6aab0051ec9f6d.jpg

Source for that image?

You need to cite sources.
 

Northern Light

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I ‘need’ to?

Why?

Because you’re incapable of looking it up on your own?

Don't get defensive. You posted a chart but didn't cite where it came from. I can't corroborate what you're saying without that. I'm just asking you to cite your source so that I can do so. It's no different than if you quoted someone.
 

joko104

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Biofuel is one of the more extreme examples of politicians buying votes with our money.
 

Threegoofs

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Don't get defensive. You posted a chart but didn't cite where it came from. I can't corroborate what you're saying without that. I'm just asking you to cite your source so that I can do so. It's no different than if you quoted someone.

Reverse image search should do it
 

Northern Light

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Reverse image search should do it

I don't want to belabour this or cause further antagonism, but it's courtesy to provide someone a source when they ask for it, rather than expect them to do it for you. And technically, the forum rules state that if you post an outside source you have to cite where it's from. So for my sake, and yours, I'd appreciate it if you could just give me the link so we could move on?
 

Threegoofs

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I don't want to belabour this or cause further antagonism, but it's courtesy to provide someone a source when they ask for it, rather than expect them to do it for you. And technically, the forum rules state that if you post an outside source you have to cite where it's from. So for my sake, and yours, I'd appreciate it if you could just give me the link so we could move on?

:roll:

World bank.

Where commodity prices are going, explained in nine charts | Let's Talk Development
 

Hawkeye10

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I'm not a big fan. Also, the ten percent ethanol has clogged my Mini multiple times, and it costs like eight hundred dollars to fix it. It's currently clean but garaged, as I can't float that expense again. Just build solar and wind farms and get it over with.

Sounds like you need to find some pure gas:

https://www.pure-gas.org/
 

Helix

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Sounds like you need to find some pure gas:

https://www.pure-gas.org/

one of those is somewhat close to where i live, but it looks like it's a marina. Mini should probably recall the cars that suffer from this design flaw. they told me at point of sale that if i used 93 octane, i'd be fine. then it was 93 octane plus an aftermarket additive. then it was 93 octane plus their custom aftermarket additive. nope.

i will say that it has been one of my favorite cars ever, even with all of the problems, and assuming that i sell it, it will be hard to part with. if you ever get one, trade it when the warranty is up. i tend to keep cars long term, though.
 

Deuce

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https://www.theguardian.com/environment/2008/jul/03/biofuels.renewableenergy



There are those here who call me many names for saying this.

Biofuel is evil. Biofuel has happened due to the bad science of global warming.

Bad science does vast harm.

Almost half the planet lives on less than $2.50 a day and has life expectancies in the 40's.

Literally one country has a life expectancy of 49 and it's not even 1% of the world's population, which is one of several reasons the "calculation" you always do regarding alleged biofuel deaths is horse****.
 

Into the Night

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Another thing about USA fuel standard.

Ethanol only has 60% the energy as gasoline. That means a 10% mix is only 96% as much per per gallon as 100% gasoline. Something else to consider when comparing European gas mileage, beside the imperial gallon vs. the USS gallon. Then another factor yet is the mandatory mix ratios of hydrocarbon chains now enforced on USA gasoline. Different gasoline makers used to have different energy levels per gallon. Premium used to have more energy than regular.

Now it's all the same, except for the additives used.

That's actually the purpose of a fuel moderator. To slow down the burn.
 

Threegoofs

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stan1990

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Biofuel is one reason why food prices soared. However, other reasons remain behind high food prices including industrial farming for feeding Poultry and livestock.
 

Northern Light

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Thanks, that was informative. It appears you are correct about food shortages. My original comment was incorrect.

However, I do foresee that climate change will have impacts.

Also... I read an interesting article yesterday about how using hemp to create biofuel would be 5-6 times more efficient than using corn. But first the government has to legalize the hemp industry, which it won't do because it could undercut many industries.
 
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