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Sunday, December 09, 20071197212400

How Iowa farmers are helping African development

Economist has a good article about the rise of ethanol (plus better diets,and other factors) increasing the price of corn and other food throughout the world. Of course, this is a good thing.

Africa needs one thing: infrastructure. Africa needs a system of roads to transport, police to prevent crime, courts to adjudicate disputes, machinery to amplify the productivity of labor, and rules to guide economic development.

Unfortunately, Africa does not have infrastructure. And the greatest infrastructure-building effort of all time ended in failure, following the bankruptcy of the European states caused by the World Wars.

Fortunately, the increasing cost of food will naturally shift production to Africa, and interested parties will begin to provide the infrastructure Africa needs. Of course the reasons will be largely selfish: the Core needs the roads to transport the food, the police to ensure production of food, the courts to ensure the delivery of food, the machinery to harvest and perhaps mill the food, and the larger rules to make sure all these steps happen smoothly.

But unlike oil, diamonds, or other goods that impact only a small part of a country's land and workforce, food production is a job for the whole country. The benefits -- not just increased income, but increased infrastructure -- are felt by half or more of the country's population, and throughout all arable land.

Mark in Texas points out that corn will give way to other crops as a source for ethanol. Indeed, corn isn't an end in itself. But the rise of corn-based ethanol in the United States develops the infrastructure to use ethanol: it develops the infrastructure to develop the infrastructure for Africa.

And that's a good thing.

Comments

Or increased food costs will lead to increased world hunger.

Perhaps the infrastructure effort failed because it was only designed to help white settlers and thier interests. I doubt the average African farmer will be able to afford enough land to make this into a profitable enterprise. More than likely any profit will go to the wealthier land owners and companies - possibly even leading to land evictions, intimidation, and corruption rather than solving those problems. I hope this doesn't redirect the flow of African crops to countries that are willing to pay more for it (as long as its less than the increased price ethanol brings). If it does then the Africans will be in an even worse condition than before, the crops in their own backyards will rise in price with a rise in global price. Be careful when you say increased machinery would be beneficial. Increased machinery will mean increased unemployment among African farm hands.

Posted by: J. Kauffman | Sunday, December 09, 2007

J,

I assume you believe therefore the primary cause of hunger in Africa is the high price of food, and not the lack of infrastructure required to deliver that food from the port to the people?

Posted by: Dan tdaxp | Sunday, December 09, 2007

I'm not disregarding infrastucture's role. However, I am asking you to weigh the risks of increased food prices. I am arguing that a rise in American food prices would mean that farmers in Africa could sell their crops for higher prices. That would cause the price of food aid and food grown in Africa to increase. Making it harder to buy for Africans who need it.

I don't see how rising food prices would increase Africa's food exports in such an exponential way. The price of African crops is already remarkably lower than US and I don't see the massive effect you're talking about.

If we really cared about their infrastructure instead of cheap food we should all applaud China's efforts to build roads in the Congo as well as South Africa's construction of a massive dam in the Congo.

Will you address my other points made above as well?

As a side note:
Good infrastructure can't fix bad coastlines.

Posted by: J. Kauffman | Sunday, December 09, 2007

"'Im not disregarding infrastucture's role. However, I am asking you to weigh the risks of increased food prices."

I assume, therefore, you are in favor of America's food subsidies, that depress African farming while also decreasing the cost of food throughout Africa?

"If we really cared about their infrastructure instead of cheap food we should all applaud China's efforts to build roads in the Congo as well as South Africa's construction of a massive dam in the Congo."

Indeed, I do.

"Will you address my other points made above as well?"

Which are? (I have trouble telling your rhetoric from your substance, so a bulleted list would be convenient.)

"As a side note:
Good infrastructure can't fix bad coastlines."

Indeed, and fixing coastlines is besides the point.

There are multiple factors that impact living standards. Coastlines, genetic heritage, cultural heritage, etc, all matter.

No one of these needs to be "fixed" -- rather, factors can be marginally improved to produce improvement in living standards, globalization, etc.

Posted by: Dan tdaxp | Sunday, December 09, 2007

i don't want it to get lost in the discussion that Iowa is awesome ;-)

Posted by: Sean | Sunday, December 09, 2007

Why will increasing the cost of food shift production to Africa? Are you assuming that the cost of production in Africa will be low enough to overcome the level of investment in infrastructure necessary to bring the food to outside markets? Or that it will be too expensive for Africans to buy outside food, so they'll produce their own? I'd dispute both tracks.

For the first line of reasoning, any outside competition for food production for the US or EU will result in greater agricultural subsidies so that domestic farmers don't go out of business. Thus African food exports will never be economical as long as Midwestern and French farmers are politically powerful.

For the second line of reasoning, the key variable in whether Africans produce their own food is not the price of outside food, but the availability of food aid. Food aid will be more expensive, maybe that will cause less food aid and have a small bump in local production, but I doubt it would be large enough to make investing in local infrastructure worth it.

Posted by: Adrian | Monday, December 10, 2007

Adrian,

"Why will increasing the cost of food shift production to Africa? Are you assuming that the cost of production in Africa will be low enough to overcome the level of investment in infrastructure necessary to bring the food to outside markets"

Simply that a higher market price for foodstuffs increases infrastructure investment. I support reducing or abolishing US/EU/Japanese farm subsidies and tarrifs for the same reason.

"any outside competition for food production for the US or EU will result in greater agricultural subsidies so that domestic farmers don't go out of business."

Corn prices are significantly above historic highs at present, and US production is close to maxing out. Corn requires good land and plentiful moisture. Significantly expanding corn production with the US faces both these problems, as well as competing forms of subsidies (such the Conservation Land program, beloved by land-holders, environmentalists, and hunters).

Further, once the US ethanol infrastructure is built, it will be possible to switch from corn to sugar, which the US is unable to produce in large quantities.

"For the second line of reasoning, the key variable in whether Africans produce their own food is not the price of outside food, but the availability of food aid."

True... but food aid is widely unavailable because of lack of infrastructure -- everything from poor roads to corrupt officials. It's easy to dump excess Core production to port -- it's hard to get it 10 miles inland.

Developing African infrastructure -- which would naturally include producing cash crops for export as well as providing mechanisms for insuring minimal sanitation, nutrition, etc -- is an important goal. Increasing demand for African crops is part of reaching that goal.

Sean,

Lol!

Posted by: Dan tdaxp | Monday, December 10, 2007

Excellent points. Getting rid of agri-subsidies would be nice, but I guess a nice unintended consequence of our absurd fascination w/ corn-based ethanol and that commodity's subsequent price hike will give Africans a chance to complete vis-a-vis agri-exports.

Good analysis, IMO.

Posted by: Garrett G | Monday, December 10, 2007

J
Remember, a lot of your questions will depend on HOW the infrastructures and markets for African crops are developed.

One example: The Irish Potato Famine didn't happen because of a lack of food, it happened because the potato was the only crop most Irish peasants were allowed to eat by their landlords. They starved as the docks of Dublin were filled with the grain and beef they themselves had grown. If African farmers are allowed clear title to the land they work, they'll be better equipped to deal with changing conditions than if they're forced to act as sharecroppers or tenants.

Another example: a country that imports a few civil engineers and experts in Roman architecture (just add lots of stone and laborers) may do better (at least in the short run) than the one which imports lots of western-built equipment and asphalt (Do they have the expertise and resources to maintain it yet? How easily can they acquire it?). Africa may need the western technologies eventually, but the simpler technologies of Roman and other ancient civilizations would allow them to gradually build their way up instead of the "1st world or bust" approach of prior development efforts. Note, also, that 'infrastructure' in this case includes western-style tractors and combines.

Posted by: Michael | Tuesday, December 11, 2007

Among the reasons that I think the United States should be encouraging ethanol production from sugar cane in the nearby Caribbean Gap area is to prevent things like this from happening:


http://www.mysanantonio.com/news/metro/stories/MYSA121607.01A.Nicaragua.297e041.html

Posted by: Mark in Texas | Wednesday, December 19, 2007

Makes sense. Helping Mexico shore up its borders would also help-- heck, it would be easier than shoring our own borders up.

Posted by: Michael | Thursday, December 20, 2007

Tom has his take up. [1]

Garret,

Thank you!

Michael,

Agreed!

Mark in Texas,

Agreed!

Michael,

Are you speaking of Mexico's northern border with us, or Mexico's frontier with the rest of the world?

[1] http://www.thomaspmbarnett.com/weblog/2008/01/food_and_fuel_logic.html

Posted by: Dan tdaxp | Wednesday, January 02, 2008

Rest of the world. Shore up their southern borders (which are a fraction the length of our own). Also work with them and Canada to raise the standards of security at all three countries' sea and air ports.

Posted by: Michael | Wednesday, January 02, 2008

Michael - absolutely agreed.

Posted by: Dan tdaxp | Wednesday, January 02, 2008

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