Healthy soil and sustainable growing

["Tradingpost" <tradingpost@lobo.net>]

Questions? Disagreements?

Welcome to the Permanent Recession – Food and Transportation Prices Rising
http://www.theoildrum.com/node/6268
March 9, 2010 - 10:30am
This is a guest post by Brian Gordon.

If employment is inversely proportional to oil prices (it is), and oil prices 
are only going to trend up…then employment by necessity is going down. 
Because oil is so fundamental to our economy, oil price increases ripple 
through the entire economy.

Take food as an example: current factory farming methods are entirely 
dependent upon oil from planting to processing to getting the food to market. 
Certain types of food are also heavily subsidised, especially meat and dairy. 
Note that these subsidies do not necessarily include oil subsidies, 
taxpayer-provided roads, subsidised water, and so on. As the price of oil 
increases, so goes the price of food; in fact this has already been happening 
in Canada and the United States. Note especially the increase in 
transportation costs, and both sources cite rises in fuel as a primary driver 
of inflation, so-to-speak.

If we take subsidised, oil-based factory farming prices as our minimum, and 
locally-grown, unsubsidised, organic (requiring little or no oil) prices as 
our maximum, in an environment where oil prices are increasing then the 
prices of factory-grown foods will tend to approach – and ultimately exceed – 
those of locally-grown organic.

Now, anybody who has done any grocery shopping recently knows that organic 
produce, meat, and dairy costs considerably more than factory-grown food, 
sometimes double or more. As the price of oil increases, more shoppers will 
switch to organic. Why not? If the cost differential evaporates, why not buy 
organic?

There is a big problem with this.

Let’s assume this does not drive up the price of organic, because factory 
farms switch to organic. This is easier said than done, and there are still 
plenty of oil-based costs (e.g.: for transportation) that will drive up the 
price of both organic and non-organic food. However, let’s be generous and 
ignore that.

If all food approaches the price of organic food, everyone not currently 
buying organic will see their food budget increase proportionally. As food is 
a necessity, cutbacks will be made elsewhere. Entertainment, purchases of 
non-necessities, etc. will decline, reducing jobs in those sectors.

Voila, food price increases translate to lower overall employment, aka a 
recession.

On the plus side, organic agriculture requires more labour and less oil, so 
there will be jobs there. On the downside, those jobs are typically very hard 
work for very little pay, which is why we use migrant workers. As long as we 
continue to do that, there will be unemployed Canadians and Americans with no 
income to buy the now much more expensive organic produce and animal products.

One way for people to compensate will be to eat less meat, as factory-grown 
meat is far more energy-intensive compared to vegetables, and therefore will 
be affected more by oil price increases. Compare the price of free range, 
organic beef to feedlot beef in your local grocery store, for example. Meat 
is also one of the most heavily subsidised foods, and no doubt there will be 
considerable pressure on governments to increase subsidies to keep meat 
prices down.

How long that can go on is uncertain. Because Canadian and U.S. governments 
are already heavily in debt and running deficits, any additional subsidies 
are added to the national debt and increase the deficit. That is clearly 
unsustainable, and eventually real food prices will have to be paid. The 
longer the subsidies remain in place, the greater the ultimate pain.