Sunday, October 25, 2009

the land barons return?

The Telegraph carries a business report that indicates where it thinks the next big boom will be .

"...now is a good time to buy into many areas of food production and distribution..."

A recent report called The End of Cheap Food, analysts and economists from Standard Chartered have calculated that food production would need to rise by a 70pc by 2050 if the world’s population is to remain adequately fed. The bank argues that water will become scarcer and restricted availability of arable land will increase imbalances in food production, while rising biofuels production will deny an increasing amount of grain output for human consumption. (Biofuel refineries in the US have set fresh records for grain use every month since May. Almost a third of the US corn harvest will be diverted into ethanol for motors this year, or 12pc of the global crop. )

It concludes that feeding the world is an achievable goal at a global level, but at a cost which will inevitably mean higher prices. While higher prices have positive implications for farm incomes and investment incentives, they will hinder the drive to improve food security for the poor. A matter of "Can't Pay - Can't have"

Food prices are likely to rise and stay high and it will mean owners of arable land will see the value rocket and companies involved in the global supply chain will benefit . You can also trade the "Ag" rally by investing in exchange traded funds , which is stock market speculation on food. Or you can invest in the bio-tech, fertiliser, and land services companies that will make money.

Strictly speaking , says The Telegraph , the world has enough land to feed everybody. The Soviet Union farmed 240m hectares in Khrushchev's era. The same territory now farms 207m hectares. Crop yields could be doubled in Russia, and tripled in the Ukraine using modern know-how.

In another article on food production and profits The Telegraph says "...the terms of trade between country and city will revert to the norms of the Middle Ages. Landowners will be barons again..."

Over the past 50 years, governments in the developed countries have intervened massively in farming. They have used subsidies, compensation and strictly enforced quotas to limit production. This has resulted in food being destroyed and land taken out of production to keep output more or less in line with market capacity. The amount of food that can be sold on the markets is always much less than could be produced directly for needs. The "profits before people" laws of the capitalist system are always going to come before the needs of the hungry.

Our inability to make full use of productive powers is a permanent feature of capitalist farming but in socialism this restriction will be removed. Through voluntary co-operation and with the ability to freely organise and use all the factors of production and distribution, communities across the world will have no barriers against producing food in the amounts required for needs. With the ending of rival capitalist states and the market system the world community in socialism would have the great advantage of being able to make the best use of the land resources of the planet in whatever location may be considered best. With food, it is possible to increase production rapidly because a lot can be done with hand labour. Local initiatives could mean more people using their local land resources for more intensive production. Local initiatives would greatly improve the supply of food within a very short time.

On this socialist basis the work of increasing food production and ending hunger would be straightforward and immensely rewarding.

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