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Food Versus Fuel

Ethiopians are starving because they decided to cash in on biofuels. How much of this was due to government policies?


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Karl Hallowell wrote:

One annoying thing is that the journalist can't be bothered to do some simple math. I get that Ethiopia has roughly 1.1 million square km of land area. 18% of it being cultivated means that roughly 200,000 square km is being cultivated. Out of that, 400,000 hectares were swapped out with biofuel. That's about 4,000 square km. Meaning that roughly 2% of the total farmland was affected by this government program. That's significant, but I don't think it'll in itself threaten the food security of Ethiopia, such as it is.

Here's what's weird here. I get from the article that the group that was going to pay these farmers was a private company, not the Ethiopian government. So it looks to me like we have a government agency lending its reputation, such as it is, to a private enterprise. This sounds very shifty to me.

Carl Pham wrote:

It's a terrible article, chock o' block full of the usual economic ignorance and vicious small-mindedness of your typical journalist, but I don't know that you've characterized it correctly, Rand.

Some farmers are in a hole because they (quite rationally) accepted the promise of a higher price for different crops, but the company that promised the price reneged on the deal. It's income they're lacking, not food.

To the extent government policies contributed, I would say it's not Ethiopian government policies, which have merely encouraged farmers to plant crops for which they'll get a better price, but American and European policies, which apparently led this American-Israeli company to be more optimistic about the market for its "alternative energy" product than the naked open-market price said they should. Maybe that's your point?

If so, I expect lots more of this stuff. One of the things the new Obamatron government can deliver on, without having to make nasty tough choices, is a substantial new "alternative energy" boondoggle, like Carter's $19 billion ($47 billion in 2007 dollars) Synthetic Fuels Corporation. I would advise buying up "alternative energy" start-up stock, the crazier the underlying technology the better, and then selling it no later than a year from now. I expect there'll be a nice little bubble on which one can make good money betting against clueless Obotnik hopenchange suckers.

AshleyZ wrote:

The anti-globalization movement has been pointing out this problem for decades: the IMF pushes countries to grow cash crops rather than food for their people (partly because they must deregulate so that democratically elected governments can't choose how their economies will run, and partly because they're required to generate hard currency to pay debt maintenance).

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This page contains a single entry by Rand Simberg published on November 5, 2008 11:55 AM.

Well, That Sucks was the previous entry in this blog.

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