Op-Ed: Hunger For Oil Could Mean Hunger For Real?
Hyperinflation will trigger worldwide food crisis.
As the specter of bailouts upon bailouts looms, it's become clear that the US government may be pushing us -- wittingly or unwittingly -- toward hyperinflation. I'm writing today, with no small degree of concern, to suggest that there will be non-economic consequences to hyperinflation which no one is yet considering - and these consequences are far more dire.
In a true hyperinflationary situation, food is very quickly going to become a high-demand asset. Indeed, if hyperinflation hits the US, the primary concern won't be food inflation but rather food availability.
To understand why, it's important to grasp that the American system of food production and distribution is unlike any other in human history. Starting in the 1950s (and accelerating rapidly in the '70s and '80s), food production in the US left behind the model used by every human civilization since people first settled together in Babylon: Namely, grow the food where the people live.
The small local farms which once surrounded every American city have given way to sprawling industrial farms in California's Central Valley, Colorado, North Carolina, Iowa and other more or less wide-open places. Land was cheap, and operations could grow exponentially larger than they could in the midst of the burgeoning suburbs.
As a result of this transformation, total per capita food supply (including fruits, vegetables and meat) grew by almost 15% from 1970 to 2006. Shipping distances for agricultural commodities also exploded. Today, a piece of produce consumed in the US today travels , on average, more than 1500 miles before reaching the kitchen table - a number that represents a 20% increase in the past 2 decades alone.
Additionally, more and more components of our food (yes, our food has components) are being imported from overseas. Everything -- from soybeans to blueberries to the synthetic vitamins sprayed on your morning cereal -- is rolling into this country on planes and boats and trucks.
Perhaps you like shrimp, for example? Chances are you haven't eaten a shrimp harvested in America for years. At last count, 92% of all shrimp consumed in the US were imported.
The reasons for this monumental transformation are pretty straightforward. Refrigeration improvements and the advent of the national highway system, along with abundant cheap oil, made trucking crates of vegetables across the country not only feasible but profitable. Americans, after all, love economies of scale, and we're very good at creating them. The rise of imported food is simply the natural progression of this trend.
The problem that this presents for us as we face an uncertain economic future, however, is that this particular economy of scale is hugely dependent on abundant cheap oil.
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