I have written about the need to have an increasingly global view regarding the factors impacting U.S. agriculture as well as U.S. agriculture's impact on the world. While we love to show that on average, the U.S. consumer only spends 9-12% of their disposable income on food, and that due to the huge load of value-added functions, only a small value of commodities are in our final retail food presentions, the truth is a little more complex.
You may enjoy Pasta Fagiole at your favorite Italian restaurant and pay a premium price for it even though it contains no meat (pasta and beans), but that fashionable dish is the centerpiece of a set of very creative vegetarian meals eaten by the people of southern Italy...that part of Italy below Naples that tourists don't normally see as their tour group wings its way through Milan, Rome and Florence. Tour groups don't go to the boot of Italy because it is the place where Italy's poor live. You have to get up north to Bologna before the typical spaghetti sauce has meat in it.
The poor in latin America, the middle east, southern Europe, India and Asia combine a carbohydrate with a legume or nuts to try to assemble the spectrum of amino acids which meat provides (but at a much higher cost). It doesn't take a lot of imagination and insight to quickly figure out that there isn't 90 percent value-added in a hand-patted tortilla cooked on a grill fueled by a wood fire. Tortilla and beans, pasta and beans, flat bread and hummus (chick peas), rice and soycurds, rice milk, nuts and coarse grains are the staple diet of about three billion people on this planet. How do you suppose a doubling or tripling of the world price of grains affects the percentage of their annual disposable income (if they even have one) that is spent on critical food items?
One need only return to the United States to see how the truth about disposable income is hidden in the averages. Environmentalists pooh pooh the increase in food costs here and by necessity around the globe (as do many industry analysts) when they justify food cost increases for the U.S. on the basis of the often dead-weight transfers of wealth needed to create a growing list of questionable environmental improvements. Hidden in that average of 9-12% spent by the typical U.S. consumer is the bottom quintile of wage earners, the working poor, who spend from 18% to 32% of that paycheck on food.
The "solution" that is in the works is to produce less meat by promoting political decisions around the environment which create a "tax" on meat producers. I have visited with a lot of pork producers lately who are waiting with overdue hope for the pass-through of input prices to take place so things can return to "normal". Just keep in mind that the pass-through of input prices that we are waiting on happens when supply is decreased. Given the "taxes" that are already in place and the new ones related to food miles, carbon footprint, global warming, global oil supplies, etc. etc., the pass-through may very well pass-through you.
The optimism of dramatic increases in feed grain yields will have to keep up with an equally growing set of creative ways to raise the cost of meat production via political decisions. Who knows, Malthus may finally be right, which, like Earl Butz, shows that if you hold your position long enough (in this case since the late 1700's), one day, you'll be the smart guy.
