When Will The Food Bubble Burst?
We’ve all heard of the housing bubble that sent the entire world into financial turmoil, but what if our food system was headed for a similar disaster? Author Vikram Mansharamani of Bloomberg suggests in a recent article that our agricultural policies are leading the food system down the same troubled path.
During the housing boom, banks took advantage of very low interest rates, lots of cash liquidity, government-sponsored financing for mortgages, political policies encouraging lenders to make housing accessible to all, and favorable tax policies. All of these things led to banks lending money to people who never would have qualified for loans before and driving up housing prices with inflated demand. Of course, the bubble burst and resulted in massive forclosures and bank failures and contributed to the worldwide debt crisis… but we don’t have to tell you.
So what does any of that have to do with food? In the 1970s, crop failures in America and the Soviet Union caused food prices to skyrocket, and so the government instituted new food policies designed to keep food prices low. In theory, these weren’t bad decisions, but they have remained in place long past the end of the crisis, all the way to today.
The old policy was designed to discourage farmers from producing a particular crop when supply was high and prices were low. The new policy rewards farmers for producing more and more of certain crops—corn, soybeans and wheat are the main ones—regardless of the price. Basically, this means that farmers can grow corn, for example, literally until the cows come home, produce an infinite supply, and the government will guarantee they get a good price for it.
That policy alone doesn’t seem sustainable, as, in theory, our food system can only absorb so much corn, right? But the system has done a heroic job of trying. Today, farmers produce nearly 4,000 calories of food per person, per day, more than twice the government recommended amount. A lot of that are grains, and a lot of those grains get fed to animals or turned into ethanol, but the average American now eats about 400 calories a day more than we did in the 1980s. And a lot of that is corn—if you look at food labels, some sort of corn or corn byproduct is in nearly every processed food we eat, from a loaf of bread to shredded cheese.
Mansharamani suggests in his article that this system is ultimately unsustainable because overeating (along with poor diet and lack of exercise) contributes to obesity, which in turn contributes to diabetes, heart disease and other health problems. Eventually, there will be a tipping point, where farmers in the U.S. are producing so many subsudized crops that the government can’t pay for it and the US food system can’t do anything with it any more. We’re already throwing out nearly a quarter of all food produced in this country.
What’s the solution? Mansharamani suggests that the government could take the $50 billion it spends on these outdated farm programs and reallocate it to support farmers growing fruit, vegetables and other healthy foods, as well as a national education campaign to get us to understand the relationship between our growing waistlines and our national food bubble.
For more information about the farm bill and what you can do to encourage lawmakers to revamp it, you can visit the USDA website and the National Sustainable Agriculture Coalition website.
Image: Kables
