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Comment by n4r9 | Hacker News Reader

I've been reading Matt Stoller over the last couple of years, discussing how weak anti-trust enforcement is leading to consolidation and concentration in the market and a reliance on foreign exports in the name of efficiency. Mostly he focuses on the US but I suspect that similar things are happening in the UK. It leads to a fragile supply chain rife with bottlenecks and "just in time" links, overly reliant on imports and not robust to unexpected events like COVID or war in Europe.

If you're interested here is some further reading:

https://www.theguardian.com/commentisfree/2021/oct/01/americ...

https://mattstoller.substack.com/p/national-champs-or-nation...

https://mattstoller.substack.com/p/counterfeit-capitalism-wh...

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Anti-trust measures wouldn't necessarily help with supply chain fragility.

If our markets were perfectly competitive with many participants, they'd have an even more 'efficient' supply side and the pressure to rely on the lowest cost - or highest quality - source would be even stronger. In such markets, a competitor whose source of goods is slightly cheaper that yours will almost instantly capture all of your market share, so there's little room to pick a high cost local producer (unless you have the capital buffer to sustain losses until your competitors suffer a supply chain shock).

A monopolist would accrue greater short term profits by having a hyper efficient fragile supply chain. However, it's not obvious that the profit incentive of the monopolist is higher than the survival incentive of the competitive agent.

Tariffs, quotas and local-bias regulation could help to localise supply chains in either market structure.

Monopolies can implement efficiency gains and lock-in strategies that companies with less market share can't.

For example, imagine grain being shipped across an ocean. Initially there are multiple shipping companies providing transport services, with their own models of ships and way of doing things. Over time, GrainMove Co buys out the other big players and becomes the main provider. In a bid for dominance, they buy up the ports on both sides so that competitors either have to pay exorbitant fees to dock, or build their own ports. They introduce a fleet of ships of the same model & capacity in order to streamline their logistics management. Then they start manufacturing container crates and modify the ships so that only their containers fit on them, forcing customers to also hire their containers in order to ship grain.

There are now a number of weak points making the industry less robust. An unexpected fault or parts shortage for that specific type of ship. A sudden increase in demand for containers because a toxin from a disease of the grain means they can only be used once. All these are suddenly not just inconveniences that the market can adapt to, but major disruptions to the food chain.

That may be, but the massive corn subsidies in the US maybe can finally ful-fill their original purpose - protect against starvation in case of war.

Or we could just... make sure people don't starve? Subsidizing corn is the worst, least direct way to do that. People don't need more high fructose corn syrup and most of that corn is going to feed or ethanol anyways.

US produces enough raw food to satiate 10 billion people. The cost is not the issue

The argument in favour of subsidies is not to generally reduce the cost to the consumer, it is to deliberately encourage overproduction most of the time so that even in bad years you’re still OK.

I don’t have the domain knowledge to know if this is or isn’t the reality of any actual subsidy that really exists, all I can say is that the argument seems plausible.

Grain reserves store grain in adequate quality for at least a year so subsidizing massive overproduction doesn't make a lot of sense if a bad year is the only concern. IMO a lot of food security policy around overproduction is related to poverty, domestic hunger and international starvation in normal years.

(Driving prices down is making food a smaller percentage of the economy, making it more affordable directly to people in poverty and easier to support food programs from charity/tax.)

Stores don't help if someone else is willing to pay more for the grain as infamously demonstrated in famines in productive regions (Irish Potato Famine and Holodomor).

Just reserves lead to speculation dynamics in shortages. There is always an expectation of the reserve running out and panics turn it self-fuffilling as infamously demonstrated by supply chain issues or possibility of snowfall. Increased production kills the expected future price.

You seem to be talking about long term underproduction.

In the Irish case, the subsistence farmers would have been devastated by a US overproduction even before a famine, similar to subsistence farmers in Africa and India today.

Holodomor includes perpetual mismanagement and a political decision not to accept food help or really do anything. No amount of overproduction before Stalin would have prevented food being seized and then rotting in transit.

Certainly it's the case that you need at least enough overproduction to drive prices down marginally and to restock a reserve if it is actually used, and make speculation not a sure bet.. I think current subsidies go beyond that and arguably don't work because all that overproduction drove innovations in making food fungible to energy (i.e. as ethenol) and energy is now a more retainable wealth as the major input to proof of work.

Subsidized corn has a massive effect on decreasing food prices. People may not need high fructose corn syrup, but they need food and a lot of food has corn syrup in it. Cheaper feed leads to cheaper meat. Cheaper ethanol leads to cheaper fuel which makes everything a little less expensive.

I can't vouch for corn subsidies being the best way to lower prices, but it's certainly a powerful lever that decreases food prices across the board.

> a lot of food has corn syrup in it

Trash food.

> Cheaper feed leads to cheaper meat.

Great, don't eat meat. It's incredibly expensive, and not just monetarily.

If we're facing a food shortage, corn seems like a really bad place to dump money.

In terms of calories per acre, corn is absolutely king. Chickens and pigs turn corn calories into meat calories at a ratio unreasonably close to 1:1, and feeding people without meat is very difficult.

You have it backwards. Feeding people with meat is difficult.

This is why meat is expensive and why people in less developed countries can't afford as much meat as Americans.

Cow meat is expensive. Chicken costs about as much as potatoes.

How close do numbers need to be as much and what country?

But I also imagine it can't be cheaper to buy X food and feed it to chicken to then eat the chicken compared to just eating X food.

https://www.globalproductprices.com/Thailand/

I, for one, would much rather have chicken than chicken feed.

"Making sure people don't starve" means there has to be food. That doesn't just happen; someone has to grow it. The corn subsidy isn't about high fructose corn syrup, not really. It's fundamentally about growing more food than we need, so that, if something bad happens, we still have enough.

> US produces enough raw food to satiate 10 billion people.

I'm skeptical of that claim. Source?

I would also like to see that estimate it seems close, but not quite enough.

“Overall production of corn in the U.S. was 15.1 billion bushels for 2021“ * 56 lb per Bushel / 10 billion people = 84.6 lb of corn per person is about 23% of the minimum calories needed per year. But corn is about 37% of all crop land.

Fishing, cattle on grassland, and hunting etc might bump that a little, but ~5 billion seems like a better theoretical estimate and presumably lower in practice.

I wonder how much of our government's deep embrace of corn subsidies might have something to do with the fact that the Iowa Caucuses play such an outsized impact on our presidential elections. That, and how the Midwest has become more and more of a purple battleground region. I know it's not the biggest factor, but I can't help but think it has something to do with it.

I always assumed as much. Constant fear of nuclear war is not what has made the corn subsidies constant.

I get that you're being a bit glib, but this sort of thinking is pervasive and bothersome so I'll choose to take it seriously.

'make people not starve' is a laudable _goal_. It's a state of the work we want to reach. 'Subsidize corn farming' is a _policy_, it's an intervention that has all sorts of intended and unintended effects on the state of the world. Under that policy, fewer people starve, but also there's more HFCS, some farmers make more money than the would, some make less in inequitable ways, etc.

Regardless, if one thinks a policy isn't doing a good job achieving its intended goal, one can't just suggest achieving the goal as an alternative. If it was trivially attainable, why do we have government intervention and policies in pursuit of it?

One has to articulate an alternative policy, or at least acknowledge that an alternative is necessary. Why, after all, is it the case that the US produces as much food as it does. Is it in spite of the prevailing farm policy?

</rant>

> One has to articulate an alternative policy

Food stamps are the best way to ensure people don't starve, not specific crop subsidies.

That helps feed people who can't afford food, but doesn't make food available. Subsidies are insurance for farming risk, you can't use stamps on food they didn't grow.

> but doesn't make food available

Yes it does. If people spend more money on food, food prices will go up, and more food will be grown.

It could make food available later. That is retroactive though, to use the stamp the food has to exist in the first place. It also doesn't relieve any risk to the farmer which is the point of the subsidy.

Cash is probably better than food stamps. Food stamps prevent you from directly buying what you actually need/want, but it doesn't prevent you from buying groceries for strangers and trading those groceries for less money so you can actually buy what you need/want. The result is that the same amount of money spent on providing assistance as food stamps doesn't provide as much benefit to the recipients as the cash equivalent. And this doesn't even include the costs of maintaining the infrastructure (including time wasted writing laws that restrict what food you can use food stamps for) required to make food stamps work.

There are also lifestyle shifts that can be made that are far less severe than starvation, like the Woodrow Wilson's WW1 proclamation for meatless Tuesdays and one meatless meal every day [1]. That would reduce pressure on supplies of basic cereal grains.

It will also be interesting (if it happens) to see how substitutable other cereal grains are for wheat. One impact of globalization is that people are far less provincial in what they will eat than they used to be, so they could substitute more rice for wheat, for example.

The thing there is no substitute for today is fertilizer, which is used at similar rates by all 3 main stable cereal crops, but rice and corn produce several times more calories per hectare than wheat [2]

1. https://en.wikipedia.org/wiki/Meatless_Monday#History

2. https://www.washingtonpost.com/lifestyle/food/in-defense-of-...

With some variance across cultivars, wheat has 50% more protein than maize and nearly double the protein of rice.

Further, "feed corn" (maize) isn't really suitable for humans. Best way to turn it into calories for human consumption is to feed it to egglayers, after that it's broilers, then dairy cattle, then swine and beef cattle.

Finally, changing a crop mixture is something that has a long lead time. Got to sow the fields a season in advance, at least. Rising price of wheat means that some of the land used for maize for this season will be wheat for next harvest. Market will take care of that. Won't have any food shortages in the USA, but could be rough in less agriculturally-capable parts of the world.

Why it isn't suitable for humans? To me it seems perfectly fine.

It is certainly not the best food source, but it a subsistence.

During famines in Finland people used to eat even bark, especially inner bark.

https://en.wikipedia.org/wiki/Bark_bread

Can't just mill it and eat it as you can with wheat. Needs to be post-processed extensively with alkaline water, plus what the threshers and mills turn out for ethanol and feed ain't what you'd want to make tacos in the first place.

Plus, maize is only okay in the diet, low in proteins and nutrients compared to wheat, it really needs some pulses alongside if you want good nutrition, so pulses would need to be planted a bit more or soy processing would have to shift over from feed to tofu alongside. Historical records show pre-Columbian folks in the maize empires (Aztec, Incas) were a bit malnourished compared to their wheat-eating European and meat-hunting North American counterparts. In the modern day, animals (eggs, poultry, dairy, swine, beef) basically post-process a less-than-ideal crop into something real good for the human.

A few egg layers in the back yard, though, works wonders to turn feed corn into something nutritious for a human being.

Field/dent corn is perfectly suitable for humans. You make corn meal and corn bread from it.

Nixtamalization is important, if it’s a major component of the diet. It makes great tacos, tamales, and enchiladas.

> Further, "feed corn" (maize) isn't really suitable for humans. Best way to turn it into calories for human consumption is to feed it to egglayers, after that it's broilers, then dairy cattle, then swine and beef cattle.

So a less red-meat-intensive diet. I don't think Woodrow Wilson meant vegetarian when he proclaimed Meatless Tuesdays, although that is a much more viable option these days. It's probably going to be more expensive to be paleo, though.

Grains raised for animal feed or producing ethanol are commonly unfit for human consumption. Every crop is highly optimized for its intended end use. You can't take existing corn stocks beyond what is currently used in food and convert it into food, the varieties planted are not meant to be eaten by people. The supply chain that supports these crops is also optimized with assumptions about the end purpose.

It would be possible to re-plant that land with edible crops but it is not fast or simple.

Exactly. During covid, foods destined for restaraunts couldn't even be sold to consumers since the supply chains didn't exist in many cases.

If we were faced with famine even army could provide sufficient logistical support.

The only problem during COVID was that it was not profitable. It was cheaper to dispose it than to try to sell it.

The biggest exporter of meat products is Brazil, which conversely also makes them a really big importer of feedstock. The amount of scenarios in which a European/Asian war could somehow affect trade between the Americas without also involving the apocalypse are very few.

The corn is inedible it’s mostly for biofuel and feed stock

This was a topic of a few Asimov books.

In describing the big cities of earth, the more complicated and JIT nature of getting food where it needs to be meant that where previously an hour delay was tolerable, that minute delays could severely impact everyone with massive ripple effects.

It seems like what we are seeing WRT the supply chain is the equivalent of putting more and more traffic on a road and gradually increasing the speed limit to deal with delivery bottle necks (rather than making new roads/routes). Of course, the issue is that whenever someone cuts someone else off or whatever, you create massive shockwaves which can pull everything from 90mph to 10mph. [1]

[1] https://www.youtube.com/watch?v=Suugn-p5C1M

In the UK we also have a government which has absolutely zero interest in rigidity and plasticity of systems. Everything is done to the lowest bidder, even if that bidder has demonstrated no credible ability to do the job. This sets the standard for the whole nation in my opinion.

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