Friday, January 23, 2009

A Big Mac per month...

Back in the day, when American farmers suddenly discovered some of their grain and livestock checks were written in yuan, it was fashionable to multiply stuff by 9-zero-numbers and become infatuated by the profits represented in the figures.  One these rural myths ran something like this: If every Chinese were to eat just one Big Mac per month, we would have to double the size of the US cow herd to supply it. (I always wondered what this speculation implied for pickle producers, not to mention the "Special Sauce" industry.)

I actually scribbled through some rough calculations and the statement is roughly within the ballpark, but is still nonsense, as we have discovered.  Why would the source be US meat, and how do you plan to get rural Chinese anywhere close to a Mickey D's and possessing the necessary funds and desire?

It seems we're back at this game only from a different angle.
Global grain markets are facing breaking point according to new research by the University of Leeds into the agricultural stability of China.
Experts predict that if China's recent urbanisation trends continue, and the country imports just 5% more of its grain, the entire world's grain export would be swallowed whole.
The knock-on effect on the food supply - and on prices - to developing nations could be huge.
Sustainability researchers have conducted a major study into the vulnerability of Chinese cropland to drought over the past 40 years, which has highlighted the growing fragility of global grain supply. Increased urban development in previously rich farming areas is a likely cause.
"China is a country undergoing a massive transformation, which is having a profound effect on land use," says Dr Elisabeth Simelton, research fellow at the Sustainability Research Institute at the University of Leeds, and lead author of the study. "Growing grain is a fundamentally low profit exercise, and is increasingly being carried out on low quality land with high vulnerability to drought."[More]

To be fair, this premise may have more legitimacy than the hamburger fantasy, as land conversion in China is definitely occurring and the switch to high values crops from grain also commonplace.  But in the same breath, it is obvious China cannot simply expropriate the entire global grain trade.

Recently China has been skipping the part of grain stage of the value chain and importing mucho meat. This cancels the need for a lot of grain. Moreover, China will be the beneficiary of grain yield advancements just like Western producers.  Some of them they might actually not steal, but develop themselves in their own massive biotech industry.

Lining up all the variables in one direction can produce some dramatic answers to economic questions. But between a global recession and commons sense, I'm not holding my breath waiting for an instant grain shortage due to Chinese demand or their faltering production.


Anonymous said...

Hey, turn on the spell-check. You'er annyoying me

John Phipps said...


My goodness - that was a remarkably bad post, wasn't it? My bad. Many corrections made.

Just another reason why I have convinced myself I really, really, need a new MacBook Pro with backlit keys for guys like me who type with two fingers.

buffalobill said...

Uh...Would that be a Big Macbook?