Why do they matter? Fish and McD's

Pinstrup-Anderson, co-author on my textbook, recently asked what fish have to do with food and nutrition security. He answers that it matters a great deal and recommends a new report by a high-level panel of experts on the subject.

The current debate and the many papers written recently about how agriculture can be made more nutrition sensitive also miss the point.  We should talk about how the food system, including fisheries and aquaculture and the total supply chain, can be made more nutrition sensitive.  If we limit the discussion and policy recommendations to agriculture, we are foregoing some very big opportunities for improving food security and nutrition. ... 

The report, which is available at www.fao.org/cfs/cfs-hlpe or in hardcopy from cfs-hlpe@fao.org, is a goldmine of policy-related knowledge about the fisheries and aquaculture sectors, their importance, sustainability issues, governance and recommended policies for consideration by governments, the private sector, civil society and international organizations. It provides a comprehensive assessment of the interaction between the fisheries and aquaculture sector and food and nutrition security. The report is a must-read for those of us interested in food policy.

Handjiski points out that all of Sub-Saharan Africa only has two countries with McDonald's franchises. Even though countries like Seychelles, E. Guinea, Gabon, Botswana, and good old Nigeria have a higher income than Indonesia, Egypt, Pakiston, or Moldova did when they got their first. He suggests that, since having a McDonald's requires a certain level of infrastructure, entrepreneurship, and access to a large number of ingredients, it can be a development indicator:

In almost 60 percent of cases, developing countries grew [significantly] faster in the five years, compared to the previous five, following the opening of the first McDonald’s. ... What this means is that McDonald’s may be viewed as one of the tipping points for when a country has amassed sufficient urban middle-class, investment security and supply chains for economic take off.

 Speaking of which, there was also a recent article about how Americans' general stupidity with fractions stopped A&W from beating McDonald's Quarter Pounder with a "Third Pounder". People said 3 is less than 4 and therefore 1/3 is less than 1/4. Ouch. In related interesting news, New York states has decided that a burrito is a sandwich for tax purposes.

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I, Cheeseburger

As I look forward to possibly enjoying my first pizza of the newly renovated AUN Club kitchen tonight, let us pause in humble reflection on the miracle of markets:

I realized that my prior plan hadn’t been ambitious enough—that wasn’t really from scratch. In fact, to make the buns, I’d need to grind my own wheat, collect my own eggs, and make my own butter. And I’d really need to raise the cow myself ... mine or extract from seawater my own salt, grow my own mustard plant, etc. This past summer, revisiting the idea, I realized yet again that I was insufficiently ambitious. I’d really need to plant and harvest the wheat, raise a cow to produce the milk for the butter, raise another cow to slaughter for its rennet to make the cheese, and personally slaughter and process the cow or sheep. ...

Further reflection revealed that it’s quite impractical—nearly impossible—to make a cheeseburger from scratch. Tomatoes are in season in the late summer. Lettuce is in season in spring and fall. Large mammals are slaughtered in early winter. The process of making such a burger would take nearly a year, and would inherently involve omitting some core cheeseburger ingredients. It would be wildly expensive—requiring a trio of cows—and demand many acres of land. There’s just no sense in it.

A cheeseburger cannot exist outside of a highly developed, post-agrarian society. It requires a complex interaction between a handful of vendors—in all likelihood, a couple of dozen—and the ability to ship ingredients vast distances while keeping them fresh.

 Remarkably, Jaquith was unaware of the I, Pencil article of which this is one more example. UPDATE: I forgot to mention I, Pizza, the story of the 150 people it takes to take one shot of a slice of pizza being lifted for a commercial.

Best of 2011

Time for some intense naval-gazing. I wasn't going to do one of these, but then I enjoyed others' so much for the posts I missed that it seemed much more interesting.

Top Ten Posts of 2011
1. Google's statement on AUN's amazing internet usage, got a lot of doubting comments and a few  defending and very plausible explanations.
2. Nutrition Labeling, describing the new requirement that meat include information on calories from fat.
3. Unemployment: Leads and Lags - Breaking unemployment into separate decisions to hire or fire will give us a better indicator of where the economy is going (has been) than total unemployment.
4. AEA session on agricultural export bans during the 07/08 food price crisis.
5. Microinsurance in Kenya via cellphone
6. My first visit to AUN. Classes will resume Thursday the 24th
7. Low saturated fat diet vs. low simple carbohydrate diet
8. QE2 and food prices - debunking the idea that the Fed is causing global food price inflation
9. Food safety, food movements, and paternalism
10. Lit in Review: Food Demand -- Ethiopia and Speculators
Honorable Mention (because I thought it was fun): The socially acceptable price of fried chicken, also known as the political economy of fast food markets in South Korea.

Top Ten Posts of 2010 (in 2011)

1. My pictures of the Thorvaldsen's Christus and apostles statues, mentioned in a Church lesson this year.
2. Lit in Review: Grossman and Helpman, there has been steady interest in summaries and other papers that make use of the "Pay to Play" model of lobbyists.
3. Food in Africa: Too much and too little discussing the problem of getting food from food-surplus states to food-deficit states. There was never a large spike, but a steady stream of interest throughout the year.
4. High Hopes for Rwandan Agricultural Development
5. Food Security in Nepal which has been of increasing interest lately
6. Cutting Costs Through ... Fonts?? Some fonts go easier on the printer's ink
7. Population Health vs. Individual Health - commentary on macro vs. micro in economics and health
8. Ethiopian Monetary Policy - combines monetary policy, food prices, Ethiopia's development goals (food self-sufficiency), and growth prospects
8. Five from vacation: education, hyperinflation, and Chinese food safety.
10. Fed governor: if we could guarantee 5% NGDP growth, it would be great - I'm glad this made the list because I think it was my most significant post, interviewing Governor Dudley about what they are targeting and Sumner's policy.

Where did my visitors come from in 2011?

Random Links: food governance, being LDS, behavioral economics

C. Juma on how to improve Africa's research infrastructure - basically, make research institutions more like teaching institutions and teaching institutions more research oriented.

A fascinating Kenyan website called I paid a bribe. The tagline is: uncover the market price of corruption.

The price of orange juice at a 34-year high.

Price transmission in NYC from subway to pizza.

Why are Americans eating less meat? Partly higher relative prices, partly recession, party "Flexitarianism."

WalMart pays Nicaraguan farmers less than other retail outlets, but offers much less price variance in compensation. Since food price variance has increased, this might be a better deal than it used to be.

"What is essential to being a good Mormon? According to the [Pew] survey [of pretty active American members of the Church of Jesus Christ of Latter-day Saints], 80 percent said "believing Joseph Smith saw God the Father and Jesus Christ" is essential to being a good Mormon, 73 percent said "working to help the poor,"" Other interesting sound bites:

• The Latter-day Saints surveyed had a more favorable opinion of Pres. Obama than LDS Senate Majority Leader Reid (25 to 22)
• 97% of us identify as being Christians, believe in Jesus' resurrection, and use the word "Christian" as the single word that best describes us, while 49% of non-Mormons do not think we're Christian
• Most of us rank being a good parent as more important than career or religious activities
• 60% of converts cited church beliefs as why they joined. 60% of converts joined between 18 and 35 years old.
• 82% say they have a food storage, and almost half have 3 months stored up. When Pres. Ensign came to check on us and assess our needs, we were happy to report that we had 1-2 weeks of food stored up and enough cash to satisfy our needs. Water was another story, but we could boil the tap water to make more as needed and had already refilled a 5 gallon (20 liter) drum with boiled water.
• Even though most identified as conservative, we are much more positive about immigrants and immigration than the average conservative.

Asking people to give a lot of examples actually convinces them that something is less likely than asking them only a few examples. It is the ease of coming up with the marginal example that matters rather than the total number.

Bellemare on how to do well in an economics class.

How to prolong lithium battery life.

Lunch for Jonathan and Obama

They do things differently in the US and UK from Nigeria, and yet it's not so very different after all.

There is a delightful BBC show (Lady Thatcher's favorite during her term) called "Yes, Prime Minister." Elegant. Witty. And it introduced the world to public choice. In the very first episode's side story, the PM is cranky because no one is there to make him lunch. The staff explain that the cafeteria is only for staff, not the PM. Because the staff is doing government work, the government pays; but the PM is political, so the government can't pay for his lunch. However, meeting with ambassadors is government work, so he announces he will have lunch with a different ambassador every day so that the government will make his lunch. It goes back and forth quite entertainingly and later fits in to how defence budgets are created. Remarkable stuff.

I also have in my collection an old radio bit called The First Family, a series of comedy sketches around the Kennedy family. There's one where during a meeting of heads of government, Pres. Kennedy tells them he has been taking some criticism for the expense of all the fancy state dinners, and economy starts at home, so today they will be having a typical American businessman's lunch. Hilarity ensures as Castro orders a chicken sandwich with a live chicken, Kruschev wants the eastern half of Adenauer's "Western sandwich", and Abdul Nasser and Ben Gurion find peace over pastrami. At the end of the sketch, the President then asks each of them to pay for their sandwich.

Pres. Jonathan, encouraging us to eat cassava bread
to reduce wheat imports.

Over here, the removal of the fuel subsidies has brought to light just how much is budgeted to feed the President and Vice-President: 1 billion Naira. That would be US$6.5 million by exchange rates. The one data point I have tells me it costs twice as much to feed our family in Nigeria as it did in the States, so a not-quite Purchasing Power Parity exchange rate would put it at closer to $3 million. Still a hefty sum.

The breakdown:
           N477million for meals and catering for the office itself; -- note we're not just buying food, but hiring labor too
           N293 mil for Pres Jonathan's meals at home and office;
           N104 mil for Vice-Pres Sambo's office.
           N90 mil for kitchen supplies - similar to last year - half for the state house, half for the President's home

Among the things I would like to know, based on the humor I've already consumed, is how much of that is for feeding official guests. As my colleague Alvin Lim put it when I asked him that question, "I guess the President can't serve his important guests meat pies."

Over here, they have been touting British and American austerity, expounding on the great poverty of our millionaire leaders. On the other hand, it appears Pres. Obama's $4 million vacation to Hawaii this Christmas was also paid by taxpayers, mostly because it costs $3.3 million just to fly Air Force One there and back again. Another quarter million goes to paying for security's hotel and per diem. FactCheck tells me that Pres. Obama has used Air Force One less than Dubya did in his first two years.

So for which would you rather be taxed? $3mil to feed your leader for a year or $3mil to fly him across country for a one-week vacation?

General Equilibrium: Fuel Subsidies and Cocoa

What other effects does the removal of a fuel subsidy have? Well, it increases the price of cocoa, for one. Removing the fuel subsidy led to strikes, and strikes led to this:

The ongoing labour strike in Nigeria has contributed to drive the price of Cocoa to highs not seen in 11 years. Government processing offices that usually grade Cocoa before export are closed as a result of the strike. Also virtually all export terminals have been closed as a result of the strike. Cocoa beans are first certified/graded before being bagged and shipped for exports.
The price of Cocoa had fallen over 30% in 2011, however the strike has seen prices rebound and gain 15% in just two days.

Food demand and price volatility

In Mankiw's Principles of Microeconomics textbook, he poses students the following paraphrased question: Your friend notes that food has a very high demand elasticity and comments that it would be a good source of tax revenue. In what sense is your friend right about it being a "good" tax and in what sense is the tax "not good"?

Most students successfully answered that it was "good" in the sense that it would generate a lot of tax revenue, (missed the part of it being "good" in the sense that there would be very little deadweight loss), and that it is "not good" in the sense that it will hurt the poor who may not have enough to eat more than the wealthy.

FAO in its new High Level Panel of Experts report on food price volatility takes that excellent point one step further in rigor. As societies and individuals become wealthier, their demand for food becomes less sensitive to price (less elastic). This means when any price change occurs, it is the poorer consumers who will change their consumption pattern most. When all food prices increase and it isn't because of an increase in demand*, the poor have less to eat while the non-poor are still able to have enough food.

Food price volatility increases the inequality of food consumption. They also show that biofuel policies increase the inequality of food consumption even further, shaping a food system designed to hurt the poor more when food prices rise.

The Lighter Side of ... where our food comes from and where we go thereafter

Transcriptions below the fold