Touch the Soil News #691 (Photo- Senzeni Zokwana – South African Minister of Agriculture faces huge challenges – CC SA 4.0))
While public discussions are infrequent, the issue of whether or not the realm of food should be removed from free markets and competition is not new. The issue goes deeper than just the free-market concept. All economic efforts – be they individual or business – must first be translated into dollars.
Somewhere along the path where free-market concepts and the financial sector intertwine, things can go awry. They can go awry, because neither the free market nor financial world knows how to react to real world issues such as weather and drought. Unable to work with people, the system abandons them.
Recently, in the nation of South Africa, a perfect example emerged where the market put egg farmers out of business to the point of collapsing supply resulting in high prices that can put eggs further out of reach for consumers.
So here is how it unfolded:
- South Africa has been experiencing drought, which impacted the production of grains needed to feed chickens producing eggs.
- From August 2014 through December of 2016, the price of grains doubled, while the price of eggs remained flat.
- Small South African egg farmers were caught in the squeeze. High grain prices for chicken feed ate up the profit margin, forcing them out of business.
- As egg farmers went out of business, the number of chickens laying eggs decreased. This all took a period of about two years.
- All of a sudden today, the consuming public wakes up and there are not enough eggs or egg farmers.
- The price of eggs is starting to spike on consumers who do not have unlimited purchasing power.
The free-market and financial answer to real world problems such as drought or abundance of production is to bankrupt farmers and the supply of food first. The principles of supply, demand and finance all too frequently must abandon the needs of people and farmers.
Many nations around the world have had to face similar issues as relates to health care and ultimately decided that free-market medicine left too many people without medicine? What is to be done?
How important is it moving forward for people to know how to grow food? How important is it to have mechanisms that facilitate cooperation in a world of uneven weather and other issues?