Malthus’ Revenge?

Food security is a growing issue to add to climate change, globalisation and meltdown in the financial markets as a cause for concern. Professor John Beddington, chief science adviser to the government, has warned that as the world’s population increases and grows wealthier, demand for food could outstrip supply ... are we returning to Malthusian misery?

“Something is actually happening out there for very good reasons, namely that poverty is being alleviated.

“To some extent we are actually trying - and properly so - trying to eliminate poverty. Now as poverty is eliminated big changes in consumer demand occur.”

Thomas Robert Malthus was the economist in the C18th and C19th who warned that although population can increase exponentially, food production may only do so arithmetically. He warned that, “The power of population is so superior to the power of the earth to produce subsistence for man, that premature death must in some shape or other visit the human race”. Of course, he was wrong. In the developed world, at least, population growth slowed as average family sizes fell, and innovations in agricultural technology increased productivity dramatically in food production. If anything, the trend in some of the most advanced economies is a surplus of calories, leading to obesity.

But food prices are on the rise. This creates inflationary pressure in the economy which restricting the ability of the MPC to cut base rate to stimulate growth .

It might also be useful to consider the demand and supply factors which are driving up the price of staples such as wheat and rice. If there are problems with supply, the higher prices should (in the long-run) create incentives for farmers and land owners to expand agricultural output.

Or are there factors might restrict food output, even in the long-run? The article on wheat, hyperlinked above, carries a few clues. Excellent revision potential here for the topic of interrelated markets!