07 February 2011

Krugman Loses Perspective

Paul Krugman joins the crowd who think that they can see the signal of greenhouse emissions in noisy, short-term data on food prices, and then construct a chain of causality to the ongoing unrest in the Middle East.  Such tenuous claims of attribution have about as much scientific standing as Pat Robertson saying that Hurricane Katrina was the result of the vengeful wrath of God.

Here is what Krugman writes today:
[T]he evidence does, in fact, suggest that what we’re getting now is a first taste of the disruption, economic and political, that we’ll face in a warming world. And given our failure to act on greenhouse gases, there will be much more, and much worse, to come.
The figure at the top of this post is from a paper by Daniel Sumner, of the University of California-Davis (here in PDF), in which he seeks to place the 2006-2008 increase in grain prices into historical context.  Current grain prices are at a similar level to the peak in 2007.  Sumner's paper also has a figure going back to the mid-1800s.  Good luck disentangling a long-term climate signal in the long-term data, which shows a significant decline in grain prices, much less attributing such a signal to a particular cause. Efforts to link short-term wiggles to the effects of greenhouse gas emissions go well beyond the canons of empirical science, to use a polite euphemism from The Climate Fix.

Sumner concludes:
The percentage price increases for grains from 2006 through 2008 were among the largest in the 140-year history for which U.S. data are readily available (figure 2). That said, at the end of 2008, real prices of grain remained near those of just two decades earlier (figure 3). Government policymakers often fail to appreciate the strength of forces driving commodity prices, and policies often exacerbate market imbalances or use commodity market flux as a rationalization for income transfers to favored groups. Looking forward, relatively minor demand-side adjustments to biofuels policy may allow grain prices to moderate significantly. However, assured renewal of longterm productivity growth requires renewed commitments to investments in agriculture science.
Like Pat Roberson's attribution of Katrina to the wrath of God in punishment for our sins, Krugman's attribution of unrest in the Middle East to the wrath of Climate in punishment for our sins is in one sense just emotive commentary from an uninformed pundit. On the other hand, to the extent that Krugman's views shape policy, they are simply misguided and misleading.

Make no mistake, there are plenty of good reasons to accelerate the decarbonization of the global economy, for climate and non-climate reasons. But anyone who thinks that action on greenhouse gases provides a meaningful lever to influence food prices, much less unrest in the Middle East, has lost all perspective. We'd be just as well off praying for the forgiveness of a vengeful God.


  1. Received by email:

    "I like the comparison of Krugman to Pat Robertson! Both delusional preachers with a large flock of followers.

    Let's note two things on the long term graph of food prices. First, the huge peak in 1974 occurred during the first oil embargo. Yes, there is a connection between oil prices and food prices, as we also saw in 2008 and are seeing today.

    Second, although Roger doesn't mention it, the food/oil connection is exacerbated today because of corn to ethanol. Less food is grown for human or animal consumption, hence higher corn and meat prices. That is in addition to higher food prices because the energy inputs (fertilizers, fuel for tractors and combines, fuel to take food to market) are higher.

    Of course, the ethanol lobby and grain councils maintain that there is no connection between higher food prices and having 1/3 or so of all corn now devoted to fuel production, not food. Once again, highly paid lobbyists can occasionally make it appear that a naked emperor is fully clothed.


  2. Are you making the bold argument that weather does not impact short-term food prices?

  3. So you agree that drought, floods & other extreme weather events do impact short-term food prices?

  4. Looking forward, relatively minor demand-side adjustments to biofuels policy may allow grain prices to moderate significantly.

    It may be more accurate to say that global warming alarmism, which is in large part the driver for turning good quality food into second rate motor fuel, shares responsibility for food price increases.

  5. -4-Sam

    If you would like to make an argument or present an analysis of a GHG signal in the graph at the top of this post, please do so -- your views are welcomed here. But your (trivial) question has been asked and answered. Thanks!

  6. Krugman's argument is "what really stands out is the extent to which severe weather events have disrupted agricultural production. And these severe weather events are exactly the kind of thing we’d expect to see as rising concentrations of greenhouse gases change our climate."

    The first part you've just coped to. Is it the second part you disagree with?

  7. Too bad Krugman did not bother to read the literature. The IPCC, to name one organization that prefers to err on the alarmist side, predicts that moderate climate change reduces global food prices.

  8. Global warming will not create constant warming, but erratic extremes in weather. So while Grain/food prices may go down even as Greenhouse gases go up, increasing eratic prices in grain/food is reflected by extreme weather and leads to far more devasting effects on the poor than a constant predicted increase in food prices.

  9. -7-Sam

    Have a look at Sumner's Figure 2, which provides some context as to the relative magnitude of recent price shocks, in historical context.

    Again, if you'd like to offer an argument or analysis (rather than silly semantics), the offer is open.


    I recommend Sumner's Figure 2 to you also.


  10. I'm amazed by those who can see AGW behind food price inflation but not ethanol subsidies/mandates.

    A warmer world means longer growing seasons which means more food not less. This is because AGW is strongest at the higher latitudes, strongest in cold dry air than warm moist air. Which also means that storms become less intense not more because storm energy depends on the temp difference between low and high latitudes.

    Pat Robinson indeed!

  11. I can see the long-term signal - as temperatures rose in the late 20thC, crops grew more reliably so prices fell :)

    As usual on this blog, it's good to see some rational common sense based on real data, in contrast to the widespread hysteria.

  12. Here is RC's take on the issue as of about 11:30 am Eastern time in the USA:


    Not much light there.

    More importantly, it seems that eric agrees with Krugman's Climate Science.

    It's becoming to be a sad sad situation for all of science.

  13. You do an excellent job avoiding the basic questions about your position--those silly semantics often get in the way of a good polemic.

    Krugman's piece is straightforward. (1) Extreme weather events impact the short term prices of food which can trigger political events. (2) Scientists predict that climate change will trigger more and more extreme weather events--which will mean more and more short term food price impacts.

    You counter with the argument that long term food prices have been going down. And make the point that the short term "wiggles" are hard to pin to the effects of climate change.

    Krugman's point is that "short term wiggles" are often caused, at least in part, by extreme weather events which we can expect to see more of as climate change continues unabated. Therefore we can expect to see more "short term wiggles" in the long term.

    It's really straightforward & that is why I'm asking you if you disagree with #1 or #2.

  14. What this means is that as the CO2 obsession continues to infect the policy making process, less and less policy effort is available to solve real problems.
    This is another example of the marginal cost of AGW: bad policies which are all that AGW can actually deliver come at the cost of making good policies to actually help people.

  15. -14-Sam

    Scientists do indeed predict changes in some extremes over the course of the century. The literature that I am aware of (e.g., Bender et al., Wilby et al., Crompton et al. etc) suggests that the time frame for detection and attribution of such changes in climate events is many decades if not longer.

    Again, I understand the logic of your (and Krugman's) argument. Let us not conduct further an exegesis of Krugman's writings, but rather, let's focus on the empirical evidence in support of the claims. To focus the discussion, can you answer the following with data, not just assertion?

    1) Can you detect a signal of long-term (say, the past 30-50 years or more) climate change (regardless of causality) in historical crop prices over time?

    2) If the answer to (1) is "Yes," can you attribute (some part) of that signal to GHG emissions?

    You indeed have an interesting hypothesis, as did Pat Robertson;-) ... the question I have is whether you can support it by evidence. My reading of the climate impacts literature is that the answer to (1) and (2) is "No" -- but perhaps you can show otherwise.


  16. -14-Sam

    As you look into this you may want to start with the literature review of the IPCC (following from the suggestion of Richard Tol above), which says this about the effects of a moderate temperature change on grain yields:

    "these summaries indicate that in mid- to high-latitude regions, moderate to medium local increases in temperature (1ºC to 3ºC), across a range of CO2 concentrations and rainfall changes, can have small beneficial impacts on the main cereal crops."


    "These results, on the whole, project the potential for global food production to increase with increases in local average temperature over a range of 1 to 3ºC"


    I wouldn't hold the conclusions of the IPCC as being too authoritative, but the point here is that the existing literature as reviewed by the IPCC says that crop production is supposed to increase at an up to 3 degree change. The IPCC says properly that there are lots of uncertainties, of course.

    You an Krugman want to argue against the IPCC? Deniers! (Joke;-)

    More seriously, do let me know what you find ... Thanks!

  17. When has Krugman had perspective to loose? Since he began writing his column, he's been a polemical partisan - or did I miss the voice or reason?

  18. Is it that you don't have a opinion on if extreme weather events impact short term food prices? Or is it that you don't have an opinion on if climate change will trigger more extreme weather events? They're both very straightforward questions.

    You seem to think these questions don't matter--but they are the substance of the Krugman piece and any critique that doesn't address them is lacking.

  19. -19-Sam

    You are now entering troll territory. Both of your questions have been answered. Should you wish to engage on the questions I posed to you, please do ... Thanks!

  20. Maybe, I'm slow. Where did you answer either question? And what were the answers? It would take a 10 seconds to do a simple yes or no on both 1 & 2.

    My clear answer to your question is: no. I'm not sure why you think historical wheat & corn price fluctuations are relevant however. Most scientists agree that there is a "safe level" of atmospheric CO2--of which most of the studied time period was in. It's not until we leave that "safe" area that we would presumably see impacts both in extreme weather & in food prices.

  21. -21-Sam

    Last time ...

    1. Weather affects short-term food prices

    2. Climate change is projected to trigger more extremes

    So if you are asserting that we have not seen impacts of CO2 in extreme weather and food prices, then that pretty much undercuts Krugman's claim that we have seen those impacts today, and we are in violent agreement.

  22. #14 Sam,

    Here's an article from 1975.
    the Soviet harvest is expected to fall at least 25 to 30 million tons short of this year's goal of 215 million tons—forcing the U.S.S.R. into foreign purchases that are jarring world markets and causing political turmoil in the U.S.....A freakishly warm winter failed to provide the essential protective coat of snow for the winter wheat, hurting the crop. Then, just as the spring plantings of corn and wheat were sprouting, a hot June parched the shoots, stunting the yield.

    And what was going on in Australia?
    However the La Niña years of 1916, 1917, 1950, 1954 through 1956, and 1973 through 1975, were accompanied by some of the worst and most widespread flooding this century.

    It looks to me like nature is replaying the 1970's.

  23. What would happen if we stopped growing crops for fuel?

  24. Sam,

    Krugman does seem to be taking a fairly clear position that the "fingerprint" of global warming can be detected in recent extreme weather events, beginning with this line:

    "The question then becomes, what’s behind all this extreme weather?"

  25. Quoted from Krugman. Seems perfectly sound empirically and logically to me. And are you ignoring the Russian example?

    "It’s true that growth in emerging nations like China leads to rising meat consumption, and hence rising demand for animal feed. It’s also true that agricultural raw materials, especially cotton, compete for land and other resources with food crops — as does the subsidized production of ethanol, which consumes a lot of corn. So both economic growth and bad energy policy have played some role in the food price surge.

    Still, food prices lagged behind the prices of other commodities until last summer. Then the weather struck.

    Consider the case of wheat, whose price has almost doubled since the summer. The immediate cause of the wheat price spike is obvious: world production is down sharply. The bulk of that production decline, according to U.S. Department of Agriculture data, reflects a sharp plunge in the former Soviet Union. And we know what that’s about: a record heat wave and drought, which pushed Moscow temperatures above 100 degrees for the first time ever."

  26. Like 2007-2008, 2010-2011 is marked by dollar weakness, and an attendent move by hedge fund managers to buy commodities. The volatility in global grain prices is obvious to anyone who works in the field. Grain speculators distort the price signal as they move into markets they have little knowledge of. A farmer who sees wheat prices appreciating in August has just a few months to decide whether to plant Winter Wheat (which won't be harvested until the next summer), or wait and plant corn the next spring. The opposite holds true. With rapidly rising corn prices, wheat or barely farmers may switch to corn. If commodity brokers buy thier futures, the farmers subsequently are locked in. And if this occurs on a global scale, we see attendent shortages in certain crops due mainly to the markets and not climate.

    In any event, Dr Pielke's point is well taken. Where in the data can one find a correlation between the "climate signal" and grain prices? And weather isn't climate. A dry or very wet growing season cannot be attributed to AGW. Not only does the very definition of climate preclude this, but short term weather variations can and often are subsumed within long term trends. One can find exceptionally hot dry summers in European weather data during the coldest decades of the LIA. Likewise, it is not difficult to find extremely hot summers followed by extremely wet and frigid winters (see 1977-78). Short term variations of certain atmospheric oscillations such as ENSO or the NAO explain these events, where greenhouse gas concentrations do not.

  27. Sam

    Food prices are determined by both supply and demand. Weather is one of many factors that affect food supply (production). I suggest you spend a few minutes with this page to see if you can tease a weather or climate signal out of this world supply and demand data.

  28. Roger, Richard, or others, I know there is no signal in economic data from long term climate change.

    Regarding "2. Climate change is projected to trigger more extremes [in weather]". Is there a signal in extremes of weather in non-economic terms? (E.g., # of hurricanes, floods, tornadoes, etc.) Thanks

  29. Great. Thanks! I guess we disagree with what Krugman's case is. I read it as the (I think) straightforward case I laid out above. He includes all the usual caveats of complexity and causation.

    Generally the fact that a stable climate (& agricultural advancement, improved transportation, etc.) have allowed food prices to drop steadily over the past half century--enabling a population boom and generally rising standard of living-- doesn't undercut that basic argument.

    Unabated climate change will trigger destabilizing weather events (among other things) which will cause similarly destabilizing short term food price spikes (among other things). Even if (a big if) the long term trajectory continues downward, the increase in short term spikes will cause problems--especially in poor countries.

  30. Paul Krugman, November 8, 2010 ...

    " ... the BLS has convenient average price data, so let’s compare some ... prices to what they were, say, three years ago, when Bush was in the White House and all was well with the world. Over those three years, the price of gasoline has soared by … well, actually gasoline is a bit cheaper now than three years ago. OK, but milk … actually, milk prices are down substantially since three years ago. But it’s true: bread has gone up in price."

  31. We alluded the other day to the price of milk, and the meeting of milkmen in July last year to fix that price. The reasons then adduced were fair, and so acknowledged to be by the public ... there had been a terrible drouth, burning up everything green on the face of the earth.
    The New York Times, July 7, 1865

  32. The price of commodities reflects the activity of speculators on the Chicago Board of Trade. These people are betting that the agricultural disasters in Russia last summer and Australia as of now will drive up prices in the future. Those people could care less about burning ethanol or AGW.

  33. -30- Sam

    Stable Climate! Good one. I'll try a few now:

    Jumbo Shrimp!
    Congressional Ethics!
    Seriously Funny!

  34. Like Krugman says, this is just a first taste. There are a lot of other things that put strain on societies translated into higher food prices (land degradation, top soil erosion, aquifer depletion, increased salinity, speculation, biofuels, and last but not least: oil price), but extreme weather induced by AGW is the big effect multiplier.

    Let's see where we stand in a a year or two if we have another El Niño followed by a La Niña, shall we?

    In the meantime I hope you'll soon have time to keep us up-to-date with regards to the amount of economic damage the recent floodings, cyclones and bushfires have done in Australia, Roger. Total losses as well as insured losses.

  35. Has anyone actually predicted jet stream blocking due to a 12 year period of non-warming and I somehow missed it? If so please tell us all the actual mechanism involved!

    And wasn't corn for ethanol introduced to give overproducing farmers a market? Why yes, it was subsidy to the Red states, shock horror! Environmentalists by the way, are the biggest vocal opponents of such ill-conceived biofuel projects, and for obvious reasons.

    Not that biofuels had much to do with food spikes in 2007, which were in fact due to the enormous increase in commodity speculation and subsequent hoarding of food in warehouses until the pips sqeaked. No doubt that is to blame here too. Ironically the commodity futures markets were supposed to help smooth things out for the farmer. So much for that idea.

  36. Sam said... 30

    "Generally the fact that a stable climate"

    1959 Chinese Famine
    1968 Sahel famine caused by drought
    1972 Ethiopia famine caused by drought
    1974 Bangladesh famine caused by flooding
    1980 Ugandan famine caused by drought and conflict
    1984 Ethiopian Famine caused by drought
    1991 Somalian Famine caused by drought and conflict
    1998 Sudanese Famine caused by drought and conflict

    When in the history of the world has the weather been stable enough so that no one in the world starved to death due to 'extreme weather events'?

  37. Harrywr2 & Matt

    Fair points. I should have said "more" stable climate. You're both right, we've always had extreme weather events.

  38. "Generally the fact that a stable climate (& agricultural advancement, improved transportation, etc.) have allowed food prices to drop steadily over the past half century-..."

    Who has said the climate has been stable over the last half-century?

    We've had apocalyptic global warming. Nine out of ten dentists, 2008 Nobel laureates in economics, and people named Albert Gore Jr. agree on that.

  39. Sam,

    Here's a graph from Wiki.


    You will note the data goes to 2000 and shows a sharp increase in the 90s for "extreme weather".

    Is there something wrong with the Wiki graph or were crops a lot more resilient until 2000?

  40. Sam is setting up a strawman argument (Are you making the bold argument that weather does not impact short-term food prices?) and is upset Roger did not bite.

    Nobody disagrees that weather impacts food prices. But there is doubt that AGW causes political turmoil.

    If Sam feels that AGW caused the political problems in Egypt then he must provide the proof.

  41. -38- Sam,

    If you had said, "'more' stable climate," then you'd be moving from the realm of the oxymoronic to begging the question.

    Given that not too long ago, there was concern of "Global Cooling," whatever the climate was doing, it wasn't perceived as terribly stable.

  42. Sam

    How does Krugman take into account that in the last 20 years the world pop as grown by about 2 billions people.

    Would you suggest that the number of people to feed does not affect the price of food.

  43. I thought that a discussion over how many angels can dance on a pin head was a thing of the 12th century. Can’t you people see that the unrest (an euphemism) in Islamic countries now have nothing to do with famines, climate change, weather or high grain prices? It is the result of dictatorships ruling for a long time in countries where people with an increasing access to what is going on in developed countries are finally reacting? They want to live as people in the west do. It is all about of local politics and the increasing influence of fundamentalist Islamic groups.

    Famine? Where? If you want to learn about real famines just read:


    You’ll be surprised.

  44. I've read in the hlogs that food prices are stable in Egypt due to government subsidies. This would put a different light on the issue, if the statement is accurate. Does anyone have accurate information on this?

  45. This debate gets curiouser and curiouser.If one was to look at global temps and precip patterns over 1000 years (an impossibility, but let's say for the sake of arguement we had such data), and applied the necessary smoothing algorithims in order to find a decent climate signal, all of that noise (ie extreme weather events) would be lost. Climate statisiticans do this all of the time; otherwise, they couldn't make heads or tails of trends. But, now our experts tell us they can make heads or tails of all of this background noise. Essientially, there will be more noise (ie large fluccuations in precip and temp patterns). Theoretically, if this is the case, it would become even more difficult for scientists to discover a climate signal. Carrying this reasoning to its logical end, we can say that the more difficult it becomes to discover a climate signal the more "global warming", "climate change", or "climate disruption" is occuring.

    Utter nonsense. I had more respect for the Alarmists when they argued that AGW was occuring. They are getting desperate.

  46. Peter,

    You should read this study the Pentagon put out: http://www.climate.org/topics/PDF/clim_change_scenario.pdf

    Few people would say the climate change causes political unrest, but its consequences can be a destabilizing force. For example I think you'd have a hard time finding a political scientist who would argue that short term food price spikes can't impact politics.

    Look another 60 year drought that will further destabilize food prices: http://www.nytimes.com/2011/02/09/business/global/09food.html?hp

  47. There are quite a number of scholarly papers and news reports on the web concerning Egyptian food subsidies. Apparently food prices in Egypt are stable because of significant government subsidies. This would seem to make the current discussion moot in terms of Egypt contra Krugman.

  48. @Sam

    "You're both right, we've always had extreme weather events."

    What has changed is that those earlier events were explained to the faithful as evidence of a wrathful God, and are now explained to the faithful as evidence of over use of SUV's.

  49. Author Kalpa at http://bigpictureagriculture.blogspot.com/ got Andy Revkin’s moniker of a “deuling post” to Krugman’s latest “hypothesis” because Kalpa responds cogently on the subject.

    Kalpa offers:
    “Since you [Krugman] like talking economics, besides supply and demand [here, Kalpa refers to Russian/Ukrainian reduction in wheat plantings because of prior oversupply], major causes of high food prices are individual national food policies and currency conditions. The Asian nations are experiencing food inflation because they are experiencing high overall inflation. Poverty levels, subsidizations, tariffs, setting bread or fuel prices, devalued currencies, import and export restrictions, infrastructure standards of food storage and transport are all important factors in food prices which help determine levels of food security within individual nations.”

    Krugman reminds me of a professor continually in the peril of “publishing or perishing” - for the New York Times, no less. Aside from writing afield by divining AGW signals from the price of foodstuffs, he’s now apparently ignoring even basic supply and demand principles in promoting an agenda. How much latitude should a Nobel Prize winner get?

  50. Sam #38 "Fair points. I should have said "more" stable climate."

    But we haven't had "more stable climate" over the last 50 years.

    The IPCC has said that, never in the history of humanity, has there been as much anthropogenic global warming as in the last 50 years.


    From the Wikipedia page:

    "These assessments have largely followed or endorsed the Intergovernmental Panel on Climate Change (IPCC) position of January 2001 which states:

    'An increasing body of observations gives a collective picture of a warming world and other changes in the climate system... There is new and stronger evidence that most of the warming observed over the last 50 years is attributable to human activities.[1]'"

    So your statement that:

    "Generally the fact that a stable climate (& agricultural advancement, improved transportation, etc.) have allowed food prices to drop steadily over the past half century-..."

    ...is wrong (except for your parentheticals).

    There has been unprecedented anthropogenic global warming over the last 50 years. At least that's what the IPCC says. (And 9 out of 10 dentists. ;-))

  51. dljvjbsl said... 45

    "dljvjbsl said... 45

    "I've read in the hlogs that food prices are stable in Egypt due to government subsidies. This would put a different light on the issue"

    I've been following the Sandmonkey for years.

    Apparently he's one of the 'instigators' of the uprising. CNN and NBC have interviewed him in the last couple of days. He's somewhat overweight, owns an automobile and was educated in an American university(his family is not poor). There was substantial unrest in Egypt on the 29th of November,2010 over fraudulent parliamentary elections(9 dead). It got little international attention as the talking heads were all busy blathering on about Wiki Leaks.
    dljvjbsl said... 45

    "I've read in the hlogs that food prices are stable in Egypt due to government subsidies."

    According to the head of the UN FAO food is subsidized substantially for the poor in Egypt.


  52. Sam, nice job as prosecutor - your witness has been cornered. Krugman correctly asserts that weather events cause spikes in food costs. To this Pielke agrees. And Krugman correctly asserts that an atmoshpere with increased average temperatures and heightened water transpiration contributes to increased frequency of extreme weather events. To this Pielke agrees.

    If only this were a court of law, a summary judgment would have already been issued in Krugman's favor .

  53. j

    And what would judge and jury say about the peer reviewed literature and the "extreme weather" graph I linked to above?

  54. This blog has been infested by lonesome trolls... bah. The more I read these guys, the less respect I have for this "climate science". How can Krugman simply forget 2008's finantial crisis, and a gazillion of other factors that are way more important on a global level than mere local weather events, is beyond me.

    So now what? Is Krugman telling us that because of Global Warming, the rather closed and inept economy of Egipt can't feed its people? Is that it? Because he couldn't have said otherwise. If Egipt has a good economy, even local bad weather is not problematic: they can always import food. So if the economy is the problem, why is he lambasting the usage of SUVs instead?

    Isn't it 1000 times better and far more secure to make sure that Egipt has an efficient and prosperous economy, best linked to the global market, so they can prevent themselves of any local problem in their resources, rather than just editorializing how bad the western SUV owner really is, and seeing if such chastising produces an effect?

  55. Hi Dr. Pielke, I used the above graph in my own critique of the man, "When Krugman becomes climate paranoid", http://funwithgovernment.blogspot.com/2011/02/when-krugman-becomes-climate-paranoid.html. Thank you.

  56. Received by email:

    "I've just run across an agricultural economics blog which has an interesting take on Krugman:


    Here are the most salient words:


    Krugman: What’s behind the surge in food prices? The usual suspects have made the usual claims — it’s all about the Fed, or it’s all about speculators. But I’ve been looking at the USDA World supply and demand estimates, and what stands out from the data is mainly that


    Kalpa: This is so far off base, Paul Krugman, I hardly know where to start.

    I'll begin with the basics. The most important food commodities which determine food security for human consumption are rice, wheat, and corn. To summarize, right now we have comfortable global stocks of rice and wheat, but we are extremely short of corn in the #1 global corn exporting nation because that nation is using well over a third of its corn production to fuel its cars. At the risk of sounding like a broken record, the major commodities causing the FAO food basket price surge are sugar, oils, and corn.


    Back to my take: the whole entry is worth reading. There are draughts somewhere in some wheat producing part of the world most years; apparently the parts of Russia and the Ukraine that lost a lot of wheat production last summer experience draught-related losses 2 of every 5 years, it is a "risky" wheat production area.

    So Krugman takes draught-related wheat losses in a draught-prone wheat region, and conflates it to a global harvest failure. Yet wheat itself isn't one of the foods causing a commodities prices surge, and global stocks are down only marginally. Corn, however, is one of those crops causing a food commodity price surge, and we know the culprit there: one of every three acres in the US planted in corn is used to produce fuel instead of food. As for sugar and oils? I don't know of any major crop-related failures there, although it might be possible. A quite reasonable explanation is that huge numbers of people have left the lowest levels of poverty and can now afford to buy foods that they couldn't when they were earning $1 and $2 per day, just a decade ago.


  57. Well, Krugman may be wrong on that particular case - the fact that current rising global food prices are caused by climate-change-induced (i.e., at least partly induced) extreme weather events - but using 20th century data showing decreasing prices (or increasing production, for that matter) saying "Good luck disentangling a long-term climate signal in the long-term data" as a way to disprove his argument is just silly.

  58. Sugar: Brazil makes ethanol from sugarcane. There was also a shipping problem in Brazil last year that may have affected global sugar stocks.

    Oils: Biodiesel? Probably not on volume, but pricing maybe. I worked for a boutique biodiesel producer (now defunct) for a short time and they were always complaining that Archer Daniels Midland was capturing all the profit in the business by pricing soybean oil proportionally to crude oil.

  59. "If only this were a court of law, a summary judgment would have already been issued in Krugman's favor."

    Yes, and OJ Simpson was found "not guilty."

    There's a quite reasonable way to settle this matter. I'd be happy to bet Paul Krugman that the combined U.S. (or world) prices for bushel of corn, wheat, soy plus any other plants will be lower in 2011, 2012, 2013, etc. (until the end of either of our natural lives) than they were in 2010 (adjusted for inflation).

    If Paul Krugman really believes that weather disasters will increase the prices of food in the future, he should be happy to take the bet.

    Note: The terms of the bet would be that the *net loser* at any time could say, "Uncle!" and stop the bet. But the net loser would have to write in public, "I do not know what I'm talking about with respect to food prices and climate change."

  60. ICE (#58) "Well, Krugman may be wrong on that particular case - the fact that current rising global food prices are caused by climate-change-induced (i.e., at least partly induced) extreme weather events - but using 20th century data showing decreasing prices (or increasing production, for that matter) saying "Good luck disentangling a long-term climate signal in the long-term data" as a way to disprove his argument is just silly."

    Paul Krugman's argument is just like Pat Robertson's...neither can be disproven. Pat Robertson says that God makes hurricanes to punish excessive homosexual activity.

    Paul Krugman says that the recent spikes in food prices were caused by anthropogenic global warming. There is no mountain of evidence that can "disprove" that assessment, because no one but God (or maybe Pat Robertson) can tell whether the recent spikes in food prices were due to random fluctuations in weather or global warming.

    However, there *is* one thing Paul Krugman said that may be testable:

    "But the evidence does, in fact, suggest that what we’re getting now is a first taste of the disruption, economic and political, that we’ll face in a warming world. And given our failure to act on greenhouse gases, there will be much more, and much worse, to come."

    If he's willing to make a more concrete prediction, such as that the corn and wheat prices shown in the figure (from 1948 to 2008) will stop falling and rise over the 20-50 years, THEN he would have a prediction that could be proved true or false.

    But will Paul Krugman ever make that bet? I will give $100 to Paul Krugman if he will even MAKE the bet that I proposed in #60.

  61. That was supposed to be a "Preview". Poor blog software here.

    "Mark B. said... 18

    When has Krugman had perspective to loose? Since he began writing his column, he's been a polemical partisan - or did I miss the voice or reason?
    Mon Feb 07, 10:40:00 AM MST "

    Grammarnasty rant/ Jeez, even when looking directly at the correct word, some insist on substituting the wrong one. Loose as a goose writing oftem makes me lose it. >:(
    Careful writing and spelling is the writer's way of making a solid effort to make things easier for the reader. And vice versa. /rant

    There is abundant reason, potential food riots among them, to continue to boost agricultural output by maximizing atmospheric CO2.

    Free coal plant-generated electricity for all!


  62. "Barba Rija, #55;
    Is Krugman telling us that because of Global Warming, the rather closed and inept economy of Egipt can't feed its people? Is that it? Because he couldn't have said otherwise. "

    Even that's not true. Egypt's food distribution system is like most others in a very top-down controlled economy. When the top wobbles and stops issuing instructions, everything stops. Grain has been piling up on Egyptian docks, undistributed to the bakeries, etc.

    It's a political system failure, not agricultural or economic or meteorological.

  63. Firstly, I agree with all comments to the effect that Egypt's ability to feed itself needs to put into the proper political and historical context. (I feel the same about studies that completely de-historicise and de-politicise issue of climate refugees...)

    However, Roger, I think that your invocation of historical (global) food prices is a form of false equivalence. For one thing, the drivers that are under discussion are completely separate (as, I believe, are the time-frames although other commentators have already had their say on that).

    Failing another Norman Borlaug, I don't see us succeeding with radical improvements in global agricultural output - and hence lower prices - to the scale that we saw in the middle part of the 20th century. (Although, yes, Africa is still patiently waiting for its own Green Revolution!)

    I'd be very surprised if we didn't find ourselves on a higher plateau for food prices over the next decade... If nothing else, but for years of underinvestment and the stronger link between the prices of energy and non-energy commodities. (http://blogs.worldbank.org/prospects/placing-the-200608-commodity-price-boom-into-perspective)

    Last, I think Krugman could rightly defend that he was only turning the argument back on the people who made the food riot - inflation - Fed bad! connection in the first place.

    Thanks for an interesting debate,

  64. This is now solidly in dead-horse-beating territory, but for what it's worth, here's a chart showing commodity pricing for a variety of items.


    Except for a divergence of metals a couple of years ago, which then came back into line, all commodities seem to follow the same trend.

    Are they all impacted by "extreme weather"?

  65. "Failing another Norman Borlaug, I don't see us succeeding with radical improvements in global agricultural output - and hence lower prices - to the scale that we saw in the middle part of the 20th century."

    2/3rds of the earth's surface is covered with water. But what percentage of that water is farmed (i.e., fish farms)? An insignificantly small area has fish farms, yet fish farms supply approximately 1/3rd of all fish consumed by humans (i.e., about 50 million tons out of 160 million tons consumed).

    The next "green revolution" may well be blue.

  66. You need grain for fish farms.

    But more to the point there has been a 50% increase in price for key commodities over a couple of years in a world with a lot more people. Of course this will have no effect.

  67. "But more to the point there has been a 50% increase in price for key commodities over a couple of years in a world with a lot more people."

    Are you saying that the price of corn and wheat, adjusted for inflation, will consistently rise over the next 60 years, as opposed to falling over the previous 60 years, as shown in the graph?

  68. And the run up in commodity prices had, of course, nothing at all to do with the fact that the US Federal Reserve was pumping out money at an incredible rate all the while. Somehow I don't think the price of gold or copper, for example, has anything at all to do with global warming.

  69. DeWitt #69, I would recommend that you have a look at the World Bank study I linked to above (#64). Yes, monetary policy has played a role in the rise of commodity prices, but it is one many other causal forces at work (not least of all, changing market fundamentals in terms of buyers and sellers). Indeed, according to this influential study at least, the predominant factor at play in rising commodity prices over the last few years in the increased link between energy and non-energy goods.

    In fact here is a direct quote:

    Apart from strong and sustained economic growth, the price boom was fueled by numerous factors including low past investment in extractive commodities, weak dollar, fiscal expansion and lax monetary policy in many countries, and investment fund activity. On the other hand, the combination of adverse weather conditions, the diversion of some food commodities to the production of biofuels, and government policies (including export bans and prohibitive taxes) brought global stocks of many food commodities down to levels not seen since the early 1970s, created a "perfect storm" further accelerating the price increases that eventually led to the 2008 rally.
    The paper concludes that a stronger link between energy and non-energy commodity prices has been the dominant factor in the boom of agricultural and food prices, and is likely to be the dominant influence on developments in commodity, and especially food, markets.