Categories
Economics

[1703] Of comparative advantage versus food sovereignty

Just one of those articles which try to point out that the idea of food sovereignty is flawed.

One relates directly to trade: Is it best to specialize in whatever food grows best in a country’s soil, and trade it for all other food needs — or even, perhaps, specialize in services or manufacturing, and trade those for food?

Or is it best to seek self-sufficiency in every type of food that will, weather permitting, grow within a country’s borders? [Hoarding Nations Drive Food Costs Ever Higher. Keith Bradsher. Andrew Martin. New York Times. June 30 2008]

I have been skeptical to the idea of food sovereignty from the beginning. Food sovereignty in its essence is protectionism, hurts trade and subsequently makes us all poorer (on average, of course).

Categories
Economics

[1687] Of food crisis, overblown

I am currently reading the latest OECD-FAO Agricultural Outlook 2007-2018 as part of work and one of the more interesting facts is:

The commodity price spikes witnessed in the last couple of years, and particularly most recently, are exceptional when viewed from the perspective of the last decade or so but not so much so when seen in a longer historical context. Figure 2.1 shows the evolution of annual average world prices of wheat, coarse grains, rice and oilseeds from 1970 to 2007, with projections from 2008 to 2017. Monthly average prices for April 2008 are also included to indicate most recent developments. [Page 38. OECD-FAO Agricultural Outlook 2007-2018. OECD-FAO. 2008]

I will try to put up the graph later in the day but I have a dinner appointment to catch. Tata.

Categories
Economics

[1638] Of revisiting minimum wage and food sovereignty

One of the tragedies of humanity is that of Sisyphus’. The boulder keeps rolling down the hill each time it has been pushed up.

From time to time, the same issues resurface, rejuvenating familiar debates once held in the past. Two of the issues which of great public concern at the moment, yet again, is minimum wage (no thanks to the Labor Day celebration) and food sovereignty. I have penned my opinion on both issues and in the spirit of recycling, they are:

  1. [1282] Of questioning the morality of minimum wage
  2. [1099] Of food sovereignty and comparative advantage

In the first entry, I oppose minimum wage while in the second entry, I appeal for an appeal to comparative advantage and not to food sovereignty.

Categories
Economics

[1099] Of food sovereignty and comparative advantage

As a graduate of economics, I unreasonably assume that everybody knows basic economic ideas like supply and demand and comparative advantage. Perhaps, it is time for me to throw away that assumption and assume the opposite. Explanation on comparative advantage is crucial in effort to discredit the idea of food sovereignty; food sovereignty is merely another name for protectionism.

The idea of food sovereignty is well-stated in the Ninth Malaysia Plan. See Chapter 3 of the Plan if you prefer not to take my words for it. Given that the current administration is stressing on agriculture, perhaps it is not too astounding to see food sovereignty being part of the administration’s economic game plan.

The idea of food sovereignty basically states that a nation should be able to produce enough food for its population and not dependent on others. It should be self-sufficient in food production.

In order to do that, resources would need to be allocated in a way that prioritizes the food production sector. Such prioritization if done as rigidly as possible would deprive other sectors of resources. And indeed, the idea of food sovereignty might contradict the concept of comparative advantage and ignore the possibility of trade.

Comparative advantage is a basic economic principle first proposed by David Ricardo approximately two centuries ago. It states that an entity, be it a whole economy or a person, should concentrate on what it does best. In order word, the entity should specialize in what it could produce most efficiently. From there on, trade away in order to obtain other goods that the entity does not produce. Whenever trade is impossible, the idea does not apply for the obvious reason. There is more to gain from trade than autarky, nonetheless.

When it comes down to the issue of food sovereignty, the question that needs to be answered is this: does Malaysia have a comparative advantage in food production?

Even if Malaysia has comparative advantage in food production — which I think it does to some extent due to favorable climate — the concept of food sovereignty is not as helpful as comparative advantage in creating a more prosperous society.