Summary: Hunger Games - Are we running out of food? This seems like a silly question today, but it wasn’t so foolish 30 years ago. Food prices had doubled in the early ‘70s, and many economists thought we were running into the “Limits to Growth,” a doomsday scenario where global scarcity and resource constraints would force the world’s economy into an economic scenario labeled, “overshoot and collapse.” The solution, according to some, was voluntary simplicity, living simply so that others might simply live. I live in a college town, and I still see bumper stickers proclaiming that “Two is company, six billion is a crowd.” But as the world population closes in on 7 billion, with still no indication of mass famine, starvation, revolution, or Armageddon, it’s worth asking what went right. How did we dodge the limits? The short answer is productivity. Automation of farming techniques and green revolution crops in food staples like rice, wheat, and corn have allowed prices to fall by 75% over the past 100 years, even as population has grown over four times. Moving from muscle power to the machine age has allowed farmers to produce more with less, and some of the most productive cropland in the world is in the most industrialized areas. If real prices are falling, we can’t be running out of food. Moreover, the source of this productivity growth has changed from a higher use of inputs, like machinery, irrigation, and fertilizer, to new techniques, like contour plowing and innovative crop rotation. Many of these innovations have yet to be implemented in places like Africa and Central Asia. Even advanced developing regions like Latin America and China are only as productive as a 1960s Iowa farmer. There’s still a lot of low-hanging productivity fruit. As the world’s major health issue shifts from famine to obesity, it’s clear that cheap and abundant food is a feature of the modern economy. We may have other issues—income distribution, labor underutilization, and so on—but impending widespread famine won’t be on the list any time soon. Douglas R. Tengdin, CFA Chief Investment Officer Follow me on Twitter @tengdin
