A grasp of economics

For all the false optimism about the reduction in opium production in Afghanistan this year (see video below), there is one writer who has got the point. This is Simon Jenkins, who writes in The Guardian:

"The Afghan poppy crop is largely a function of the price of poppies compared with that of wheat ... The crop has shrunk because the wheat price has risen and the recession has dampened European demand. It will rise again."

This is exactly as we wrote a few days ago, and Jenkins is absolutely right. Market forces have a far more powerful effect than anything our pitiful efforts might achieve.

Furthermore, the situation is even worse than that. The UN faithfully trots out statistics on the number of provinces in Afghanistan that are "opium free" – i.e., no longer grow poppies – as if this actually meant something.

Particularly fêted is the apparent success in the northern provinces, which used to be the heart of drug-producing territory but which are now largely poppy-free. But to claim this as a "success" is completely (and perhaps wilfully) to miss the point.



With growers of Helmand and Kandahar provinces (with production in the latter having increased) moving into the market, northern growers, who can produce only about 10 kg of opium per hectare, simply cannot compete with average yields of 56 kg/ha which can be obtained from the more fertile soils in the south.

Thus, the northern growers have done exactly that which happens in every other sector faced with a similar challenge. They have moved into "added value". Instead of growing poppies, their main economic enterprise is converting the raw opium into the much more valuable heroin, and acting as a conduit for the thriving export business (as well as serving the growing domestic market).

During the rule of the Taleban, much of the "added value" processing was done outside Afghanistan, in Tajikistan and elsewhere. Now the value remains in the country, while Tajik and other businessmen have compensated for the loss by expanding their arms-trading and other nefarious enterprises.

And into this mix do we blunder. Clearly, since one of the major control mechanisms on opium growing is the price of wheat, our interests are best served by keeping the wheat price high. This can be done be a variety of market intervention mechanisms, principally either by intervention buying (as in the EU) or by implementing a minimum-price guarantee, topping-up farmers' incomes if the wheat price falls.

These options, however, have apparently been blocked by the US – it seems on "ideological" grounds, although it is difficult to pin down exactly where and why there is this blockage. If this is the case, then we are looking at mass hypocrisy, with US grain growers benefitting from some of the highest subsidies in the world.

Without a support scheme, things are bad enough – but we seem intent on making it worse. With Brown's much-favoured "wheat not heroin" scheme, we are giving away free seed wheat and fertiliser to Afghan farmers, while much of the aid is directed towards improving irrigation.

The net effect of these initiatives is substantially to improve wheat production. In the absence of a developed marketing infrastructure, this leads to local surpluses and crashes the price of wheat, thereby altering the economic balance in favour of growing opium, issues we have explored in depth here and here.

Our policies, therefore, are actually achieving the precise opposite of what we intended. We are thus paying huge amounts of money and putting soldiers' lives at risk, escorting seed convoys and distributing seed and fertiliser, to make the situation worse.

Of course, no discussion about opium-growing in Afghanistan is complete without bringing up the issue of forcible eradication. Forget the economics, some continue to say – just burn, grub up or poison the illegal poppy fields.

However, bearing in mind that coalition forces control perhaps less than ten percent of the area in the southern provinces of Helmand and Kandahar, ground intervention might be difficult.

Aerial spraying is an option but then, there is no better way of driving hundreds of thousands of Afghanis into starvation, forcing them into the arms of the Taleban. The current level of insurgency would be nothing compared to what it would be.

In the long run, though, the economic solution would work. It has worked on a small-scale in Afghanistan and has been successful elsewhere in the world. But nowhere, ever, will any policy succeed when it flies in the face of the very fundamentals of economics, which is what we are trying to do in Helmand. We might just as well try to re-write the laws of gravity.

COMMENT THREAD

That road to starvation

Earlier this month we were reporting on the coming grain harvest, observing that while overall production was down, there was at least a bright spot with wheat.

That happy situation arose, in part, because of a bigger than expected yield from India which for the past two years has been prohibiting wheat exports to stave of shortages at home.

However, only a few later the prospects are no longer looking so rosy. The Indian Met Office is predicting that the 2009 monsoon may fail, delivering only 93 percent of the normal 19 inches of rain which falls during the season.

More worryingly, the grain bank of the country - north-west India, including Punjab and Haryana – is predicted to suffer the most, getting only 81 percent of the long-term average for the region. Add a possible error of eight percent and the rainfall for north-west India could be as low as 73 percent of normal, leading to drought conditions.

Most Indian farmers depend on the monsoon as only 40 percent of farmland is irrigated. They tend, therefore, to plant summer-sown crops such as wheat, rice, soybeans and sugarcane in the monsoon months of June and July.

Demonstrating how slender a thread on which we all rely, this current forecast is a significant "correction" from the mid-April statement when "near normal" rainfall was expected. At least this is an improvement on 2004 though, when drought conditions were last experienced. Then the Met Office missed the signals early enough to put out a warning.

Currently, up to yesterday, the country had received only 53 percent of normal rainfall, with central India getting only 25 percent. The government is shying away from declaring an emergency but the situation is undoubtedly of concern.

The Times of India notes that nearly 70 per cent of Indians depend on agriculture, which represents around 17 percent of India's GDP. It has averaged nearly 4 percent growth over five years. The sector was expected to buoy India's overall growth, hit by the global crisis so a fall in farm production could not happen at a worse time.

With food prices are already high, they could hit the roof if the rains do not come, while food security could become an even more pressing issue.

And then, just to add to the well of human happiness, scientists in Canada and around the world are racing to find a way to stop a destructive fungus that threatens to wipe out 80 percent of the world's wheat crop.

Officials say that the airborne fungus, known as Ug99, has so far proved unstoppable, making its way out of eastern Africa and into the Middle East and Central Asia. It is now threatening areas that account for more than one-third of the world's wheat production and scientists in North America say it's only a matter of time before the pest hits the breadbasket regions of North America, Russia and China.

Global warming, under the circumstances, is the least of our problems.

COMMENT THREAD

The road to starvation

Building on our pieces about global weather conditions and the harvest prospects, Booker launches into the issue today in his column.

The simple thesis is that accumulated evidence points to the beginnings of a global cooling trend which, inevitably, is having an impact on food production. But so besotted are out politicians with their myth of CO2-induced global warming that they have not noticed what is happening in the real world.

Booker also notes that it is more than 200 years since the great astronomer William Herschel observed a correlation between wheat prices and sunspots. When the latter were few in number, he noted, the climate turned colder and drier, crop yields fell and wheat prices rose. In the past two years, he tells us, sunspot activity has dropped to its lowest point for a century.

Right on cue comes another article on sunspot activity from Watts up with that, adding strength to the overall thesis, which tells us something serious and disturbing is happening.

It really cannot be stressed enough how close are the margins of global food production. With total world consumption of grains in 2009/10 forecast at 1,736 million tons, actual production is expected to reach only 1,721 million tons – and even that is an optimistic forecast which is being revised downwards as each month passes.

This means that the global community will, over the next year, be living off accumulated stocks, currently standing at 344 million tons, representing 17 percent of total production.

That is a healthy enough position for the moment, except that most experts believe that global production has peaked while consumption can only continue to increase. Even without the weather effect, it will not take very long at all for global stocks to erode but, if the harvest conditions are replicated next year and beyond – which looks increasingly likely – it will not be at all long before we are looking at real shortages.

Increasingly though, it is not only the politicians who are wrapped up in the global warming myth. Just as the so-called science begins to crack apart and the warmist religion looks less credible each day, The Daily Telegraph appoints as it environment editor Geoffrey Lean, a fading refugee from the bankrupt Independent on Sunday, to promote the discredited creed (this marking a further stage in the newspaper's retreat from conservative values).

Grasping at the last gambit which the warmists hope will rescue their creed, Lean tries to make the case that promoting green issues is actually good for the economy, jobs, the universe and everything. He fails to note, of course, that Spain's drive for renewable energy has cost 2.2 jobs for every job "green energy" created, and that much of the capacity is now off-line to avoid destablising the grid.

What Lean is actually doing though is pointing up the fact that greenery is now big business, something we have pointed out before, presenting the corporates with yet another opportunity for plundering the private purse. As The Times noted last March, "green" investment is making a lot of rich people even richer

Now wonder, as Lean points out, the chief executives of 100 top companies ranging from Dupont to Deutsche Bank have called for tough measures to cut emissions of carbon dioxide. And to drive the point home, we also learn that WWF (formerly the World Wildlife Fund) now enjoys an annual income exceeding $650 million. Green activism is seriously big business.

On the other hand, agriculture and food production are mature industries, fragmented and delivering poor margins, without the opportunities for government-sponsored "rip-offs" which characterise the green movement. Thus, the "smart money" is still in global warming because that is where the fortunes are to be made. That a very significant proportion of the world faces starvation is clearly a small price to pay for the greed and stupidity of the green lobby.

COMMENT THREAD

On the brink

At the beginning of last month, the body responsible for tracking global grain production, the International Grains Council (IGC), was comfortably forecasting that increase in global wheat stocks to 171 million tons, bringing them to an eight year high - nine million tons above this year's figure of 162 million tons.

With world wheat consumption for the 2009/10 harvest estimated at 642 million tons and an expected production of 651 million tons, the global food situation looked assured, even if the harvest will be 37 million tonnes below the 2008 record.

However, a mere month later, after a run of bad weather in North America, and prolonged droughts elsewhere in the world, international investors are scenting blood. Even on the current IGC forecasts, this represents a five percent fall in production. Supplies are tight and look to get tighter.

This, though, might be seen as a longer term crisis although, contrasted with the apparent certainty of last month's IGC forecast, one expert was reporting yesterday that "grain markets seem about as clear as mud".

Wheat supplies, currently, are still seen as comfortable, buoyed as they are by expectations of a bumper crop in India and higher than expected forecasts from China, the world's two biggest wheat producers. But the fate of other crops, particularly corn (maize), is already very different.

Here, almost entirely as a result of the late spring and the cool summer, US production is set to fall to 771 down from the peak of three years ago when 788 million tons was produced. Against this, demand driven by biofuel production is soaring, leading to an expected drop in stocks of 21 percent after the 2009/10 harvest period. Significant falls are also expected in other crops, leading to a drop in total grain stocks on the year by about 15 percent.

Another vital crop is soya, where US reserves are likely to fall to a 32-year low, despite rising demand. Here, there is little excess supply to protect against possible crop losses and any hiccup in production in the Northern Hemisphere will be a major problem.

Then there is oilseed rape and adverse weather in the US and Canada is significantly affecting yields, with Canada alone forecasting a drop from 12.6 to 10.2 million tons on the year. Its oat production is expected nearly to halve.

On this basis, although we are not yet faced with a crisis, the United Nations' Food and Agriculture Organisation is predicting that food costs will be driven higher by market pressure, exacerbated by the stresses in the energy, financial and currency markets, which makes food commodities "increasingly vulnerable to external shocks."

Moreover, the expert opinion seems to be that current harvest projections are "highly tentative". Given how much the situation has already changed within the space of one month, everything – as always – depends on the weather, which is showing unusual volatility. As a result, global production forecasts for a wide range of crops are being revised monthly and, in many cases, downwards. The soya estimates, for instance, stood at 212.8 million tons a month ago but have now been reduced to 210.9 million tons.

The volatility is especially an issue with with China – the world's biggest wheat producer, which was reporting production problems and a serious winter drought and is even now experiencing extreme weather conditions with less than 60 percent of the wheat harvest in.

Thus do we get Steve Nicholson, a commodity procurement specialist at International Food Products Corp in St Louis. He notes that trend the last several years has been for demand to outstrip global production capacity. He warns that prices will have to stay high to keep farmers planting more to prevent shortages from developing – but that is before even we see weather effects.

Against this obvious fragility of the global food production and supply system, a continuation of the current cooling trend could have catastrophic implications. We are very much on the brink, and only the slightest lurch will send us hurtling over the precipice.

COMMENT THREAD

Fool's paradise

With Watts up with that exulting in the news of recent snowfalls in North Dakota (the first June falls in sixty years), a Daily Telegraph leader yesterday took the Met Office to task for issuing a weather forecast for 2080. How preposterous it is, the leader stormed, to issue a weather forecast for 71 years hence when the Met Office cannot guarantee getting it right 71 hours from now.

This was precisely the issue which Booker raised last week, noting also the downturn in temperatures which undoubtedly are giving rise to the North Dakota snows.

Yet it is not only this locale which is experiencing unusually cold weather. The delightfully named Carole Cloudwalker informs us of "2-4 inches of snow fall in Cody", in (almost) next door Wyoming. Further north, across the border in Alberta and Saskatchewan this weekend there were reports of six inches of snow on the ground while it was still snowing heavily, with an expectation of eight to ten inches.

In South Africa, unusual snow was also reported, with over an inch of snow in the Eastern Free State (pictured – note the caption), making driving conditions hazardous, with temperatures forecast to plummet.

Australia is experiencing good snow conditions for the opening of its ski season. It is also reported that skiing is well underway with resorts in New Zealand starting early. There is snow in Norway and a fresh fall in Austria - and some in India too. Even in Saudi Arabia there was snow, although this has now melted.

And, on the opposite side of the planet from Australia, last week we saw two inches of snow in the Cairngorms after temperatures on the mountain plunged to 0°C. Hail and snow was expected with winds of up to 30mph and temperatures at 3000ft were not expected to rise above 3°C.

All of this is jolly good fun with which to bait the warmists, but there is also a deadly serious side. Just one report from the Mississippi basin tells us that weather related problems have curtailed spring time planting for corn. Growers have reduced yield per acre prospects for the 2009 crop and projected end stocks to use for 2009/10 corn working toward a record low level dating back to 1999.

We see the same effect further north, where cool weather has pushed growth of Western Canada's wheat and barley crop at least 10 days behind schedule. Late-spring frost has hit and continues to strike the Prairie canola (rapeseed). One pocket of western Manitoba dipped to -4°C and some farmers are considering reseeding.

Similar weather effects are being reported in Brazil, which is considering cutting this year's corn output forecast for a third consecutive time as a frost in central southern states damaged crops. A drop of as much as nine million tons against last year is being expected.

What is extremely disturbing is that we are seeing the beginnings of a trend and, in fact, we were reporting similar woes this time last year. At the time, the message was don't panic … yet.

Despite this the global warming industry ploughs on regardless, continuing its ludicrous propaganda, heedless of the political implications of a prolonged cooling cycle.

And if a global shortage of food is a distinct possibility, the really disturbing thing is that the political classes – including our own – are so fixated with their global warming myth that there is no recognition of or planning for the travails that may well come.

That, above all, may well be the greatest political betrayal of them all, when the world starves because our fatuous politicians cannot even being to deal with reality and remain firmly embedded in their own fool's paradise.

COMMENT THREAD

Some examples

Two examples of why our MPs are so important to us and why, therefore, this furore of their "allowances" misses the point, are offered today by Booker today in his column.

The first relates to "climate change" and, writes Booker, a measure of the fantasy world now inhabited by our sad MPs was the mindless way that they nodded through, last October, by 463 votes to three, by far the most expensive piece of legislation ever to go through Parliament.

This was the Climate Change Act, obliging the Secretary of State for Energy and Climate Change to reduce Britain's "carbon emissions" by 2050 to 20 per cent of what they were in 1990 – a target achievable only by shutting down most of the economy.

Given a vibrant House, where MPs actually used their brains – those that have them – and the extremely generous staff and office allowances, and they would have thrown the Bill out, accompanied by hoots of derision at the government in presenting it to them.

As we shiver our way through May and another cold Bank Holiday weekend (here, at least) the one way to get a laugh is to complain about "global warming". Ordinary people can see that the scare is a scam, and a growing number of reputable scientists and thinkers – as Booker recounts in his piece – are coming to the same conclusion.

But, Booker notes, such is the zombie state of our MPs that they not only agreed to this lunatic measure, they did so without the government giving any idea of what this might cost. Of all the gilded, over-paid MPs present in the debate, only one, Peter Lilley, actually raised the question of costs – and no answer was given.

However, the same Peter Lilley last month, alerted us to the fact that the minister, Ed Miliband had at last slipped out a figure on his website. It is a measure of the contempt this government has for parliament, and the docility of MPs, that he did not even bother to tell parliament – not that it would have made any difference if he had.

But, while we fret about the costs of our MPs and their cavalier attitude to taxpayers' money, the costs of all our MPs salaries and perks amounts to perhaps £4 per household per year. Yet the government's estimate for the costs of its lunatic Climate Change Act was £404 billion, amounting to £18 billion a year, or £760 per household every year for four decades.

The second of Booker's examples relates back to October 2006 when, under the heading "Our troops will patrol in 'coffins on wheels'", he reported on the Ministry of Defence’s plan to deploy 189 Pinzgauer Vectors in Afghanistan. These were to replace Snatch Land Rovers, which had proved horribly vulnerable to roadside bombs.

The Vectors, Booker explained to his readers, were even more fragile. But, after five British soldiers died recently in this way, the MoD admitted that Vectors had been withdrawn because they were "vulnerable" to roadside bombs – to be replaced with a version of the Snatch Land Rover.

He thus concludes, "If I could predict this before it happened, where, pray, were those MPs on the Commons defence committee whom we pay to pre-empt such outrageous blunders?"

At two levels, therefore, we have specific failures of MPs to do their jobs – on the one hand saving us huge amounts of money and, on the other, saving lives, as well as money. Expenditure to date of the Vector programme has been nearly £50 million of the near-£100 million allocated.

The worst of it all, as Booker points out in another piece, is that MPs were not at all slow in using parliament to their own advantage when they voted in tax exemption for their own allowances.

This, incidentally, is the same House of Commons that insisted the Queen should pay income tax, thus craftily adding a whole new dimension to the nest-feathering of our political class.

Interestingly, Geoffrey Wheatcroft in The Guardian yesterday, makes a related point about our MPs. There is, he writes, a connection between the torrent of money for second (or third) homes and all the other allowances and the fact that parliament has never been more inert in relation to the executive. Without consciously realising it at first, MPs have been bought off, and become ciphers.

As we remarked, the government has been stuffing their mouths with gold and, so full are they now, our MPs have forgotten how to speak on our behalf.

It is their peculatory habits rather than their surrender, however, that has done for them. The Sunday Times suggests that 325 MPs – more than half – will be swept away at the next election, "as voters take revenge on politicians". The damage though has already been done, and the "revenge" will hardly be that sweet when the retirees make off with their severance packages and their diamond-studded pensions.

We, as always, will have to foot the bill and some will not even be alive to do that. What a mess they have made of it all.

COMMENT THREAD

A new one almost every week

"Before we succumb to the oracles of doom, we should formulate a new scientific law: small fluctuations in scientific data produce disproportionate panic in the populace. Climate scares have become like health scares: there is a new one almost every week, and they get less persuasive as they multiply."

So writes Felipe Fernandez-Armesto, in the Independent on Sunday of all places, speculating about the quiet sun and the prospects of the world suffering from a cool spell.

He is absolutely right to propose such a scientific law, although there is hardly anything new in it. The dynamics of scares - or "moral panics" as the sociologists prefer to call them – are well understood.

Fernandez-Armesto, however, believes the current cooling trend will "probably be a short lurch", as opposed to the warming which, in accordance with the warmist orthodoxy "is the long-term trend."

One can only hope he is right for, as we have observed on many occasions, the impact of even slight cooling on world agricultural production is likely to be extremely serious - in a system which has little in-built flexibility.

Quite how close to the edge we really are comes with little-noticed reports from Pakistan, which are warning of an imminent wheat crisis. Already, prices of wheat flour and its products are soaring and the Pakistani government is being forced to increase imports to meet the shortage.

Of even more concern is another report which points to greater turmoil to come. This predicts that the GDP growth rate of Pakistan is expected to decline further as the current wheat production target looks set to be missed by 6.8 percent. Initial estimates of wheat production show that only 23.3 million tons of wheat are expected from the current harvest as against the target of 25 million tons.

This decline in production is in spite of the fact that the wheat sowing target was surpassed. The government had fixed the target at 8.610 million hectares, while wheat has been sown on 8.749 million hectares, an increase of 1.61 percent. This shortfall is expected to have a profound effect, driving down GDP growth to two percent - the lowest in the past 38 years of Pakistan's history.

A great deal has been written recently of the political situation in Pakistan, the growing instability and the rise of the Taleban but, at the root of it all is this specific phenomenon. No country which neglects its agricultural base can ever prosper.

In Pakistan, we hear of urgent need for structural changes in the economy and, in particular, of the need for land reforms, without which there can be no leap in agricultural productivity. But so bad has the situation become that yield per acre is not increasing in line with increased population.

Since 2000, the per annum increase in wheat production has been a paltry 0.44 percent, against an approximate 2.3 percent population increase. Unsurprisingly, Pakistan ranks 61 out of 85 countries in the 2008 Global Hunger Index.

Against the underlying problems in agriculture, Pakistan is one of the many countries which can least afford a further decline in production arising from cooler weather. If the current political instability can, in part, be attributed to lacklustre agricultural performance, then it provides an indication of how things might develop if cooling does set in for a prolonged period.

This is a "climate scare" that we do not want to see turn into reality.

COMMENT THREAD

The politics of stoopid

One thing that does not come over from the growing collection of videos on "police brutality" during the G20 demonstrations is the context. Greenie protestors have developed and refined the art of provocation to a quite remarkable degree, calculated to try the patience of a saint and geared to trigger precisely the responses which have been so assiduously filmed.

As to the demonstrators themselves and their creed, one can only marvel at the police restraint – that there were in fact so few instances of "brutality" when the natural and human instinct would be to irrigate the area liberally with tear gas or something with a more permanent effect.

The nature of the beast is well described in The Australian this week, an atavistic creed which is uniquely damaging to our way of life and our prosperity. Says Christopher Pearson in this newspaper:

The environmental romantics have a loathing and fear of population increase, seek to return to the past and promote pagan superstitions. Well before the crunch of global warming appeared, the environmental romantics hated the modern world despite the fact that in industrial societies we live longer, we are healthier, the air and water are getting cleaner, the area of forests is expanding and we have far greater freedom than in past times. It is the energy-intensive communication systems of the modern world that allow the environmental romantics to spread the word.

Quite how stupid and dangerous these "atavistic romantics" are, however, comes not from the streets of London but from the local US press which reports that "Oklahoma is getting a late dose of winter weather as a storm system pushes through the state, dumping snow across northern and western sections of the state."

Amazingly, the US National Weather Service issued a blizzard warning through Saturday for much west-central, northwest and north-central Oklahoma. A winter storm warning also was in effect through Saturday for southwest, central and northeast Oklahoma.

For the consequences of this weather anomaly, however, you have to read the Tulsa World which tells us that the freezes before this last one have already done serious damage, having devastated Oklahoma's winter wheat. It could end up killing 40 percent to 60 percent of the crop.

Mike Schulte, executive director of the Oklahoma Wheat Commission, is saying that most wheat fields in the southeastern part of the state had 90 percent of the crop destroyed, adding that only areas close to the Kansas border have avoided most of the damage. "Its real bad out there," Schulte says. "In some places it's a total loss."

Actually, the situation is not that happy in Kansas either and there are disturbing signs beginning to emerge from commodity markets worldwide, with damage and disruption by no means confined to the United States.

As Booker has sought to point out many times in his column, we are no longer seeing a warming trend and, over the last seven years there has in fact been a distinct cooling trend. With the climate models sharply diverging from reality and an ominous quiet sun, there is now real, observable evidence to suggests that we are going to have severe global stress on crop production.

Where there have not been intensive periods of cold, there have been serious floods (pictured) all of which have conspired to reduce crop yields which, this year, could drive down global stocks to critical level.

The possibility of a global food crisis resulting from cooling was one we flagged up last year, almost exactly to the day. The possibility now looks more frighteningly real. But – as we have observed before – the consequences are manageable as long as there is an early and well-directed policy response.

That is the reality of politics – the politics of global (and national) food production – which lies at the heart of our survival and prosperity, and on which the world relies upon for its stability. But, since our politicians have outsourced food policy to Brussels, and our idle political gossips probably think food comes from Tescos, there is absolutely no prospect of the issue being given even momentary thought.

Instead, while the claque is wrapped up in its interminable court gossip, the "atavistic romantics" dominate the streets demanding exactly the opposite of what is required, screaming "police brutality" to an eager audience, when we should be shooting them all before their warmist creed drives us into starvation.

That our political claque can no longer focus on anything that even remotely approaches serious issues – like our survival – is the politics of stoopid.

COMMENT THREAD

It's official - the law is different for them

Two recent cases of fatal accidents in which the perpetrator had been sending and receiving texts prior to crashing into a stationary car and killing its driver have come to notice. One was that of the waitress, Philippa Curtis who killed Victoria McBryde on the A40 near Wheatley in Oxfordshire. She was given 21 months in prison and was banned from driving for three years.

The judge used suitably tough language even though Ms Curtis sounded shattered by her experience (as well she might be):

Judge Julian Hall said it had been "folly and madness" to use a phone while driving and it had been "disastrous" for Curtis, Ms McBryde and her family.

Ms McBryde's family are campaigning for tougher penalties for people who use mobile phones particularly to send and receive text messages (try doing that while keeping your eye on the road).

Let's not get overexcited. The second case concerns that pillar of the Establishment, Lord Ahmed, last heard of strenuously trying to prevent the Dutch politician Geert Wilders from making his case in the House of Lords and succeeding with the help of our own special idiot of a Home Secretary.

Incidentally, Lord Ahmed sees nothing wrong with him inviting controversial speakers to the House, as David Pryce-Jones points out on his blog.

Two years ago, Lord Ahmed invited Mahmoud Abu Rideh, a Palestinian previously detained on suspicion of fundraising for groups associated with al-Qaeda, into the House of Lords. It was his parliamentary duty, he told critics, to listen to what Abu Rideh had to say.

He has also hosted a book launch for a well-known anti-Semitic writer, Israel Shamir also known as Jöran Jermas. But freedom of speech goes only so far with the noble peer and in this he seems to be supported by those brave souls in the Home Office.

However, the latest news is that Lord Ahmed has finally been sentenced for his dangerous driving during which he sent and received text messages and at the end of which he killed a man. Precisely the same sort of behaviour that earned Ms Curtis 21 months in prison.

So, if a barmaid gets 21 months and a three-year driving ban, a peer of the realm who is much in the public eye and ought to be an example to many people, not least Muslim young men, gets ... 12 weeks.

Well, you see, he had finished texting a little while before the accident, though, as the judge pointed out, he had actually been conducting a long conversation with a journalist via his mobile phone's texting facility (or possibly his Blackberry but that hardly matters). And anyway the chap who was killed had been drinking. Well, yes, the vehicle was stationary but ... ah well, you know, these things do happen and we can't have the first Muslim peer going to gaol for a long time and possibly losing his peerage.

Actually, he is not going to prison for even that long as he will serve half the sentence on licence. Well, one wouldn't want to inconvenience his lordship too much, would one. He has also been banned from driving for a year and ordered to pay £500 of prosecution costs. His solicitor seems to think this is all a terrible injustice.

Outside court Lord Ahmed's solicitor, Steve Smith, said he thought his client had been used as a "scapegoat" by those attempting to drive home the message about not using a mobile phone while at the wheel.

He said he was launching an immediate appeal against the sentence.

He said: "I've been with him. He's very philosophical. He's approaching it with great dignity."

Goodness, I am so glad that he is exhibiting great dignity in the face of the terrible injustice of a six-week gaol sentence for killing a man through careless and dangerous driving.

COMMENT THREAD

A magical mystery heatwave

After last week's effort, I had not intended to return to the subject of the weather so soon. But after the intervention of the railway engineer, we now have a further episode of madness that simply cannot be ignored.

Our friend James Hansen, uniquely it seems, is reporting via his magical mystery GISS temperature dataset that October 2008 was the warmest October on record. This is conveyed via Watts up with that. What pulled the temperature up, according to Hansen was that, although North America was cooler than normal, Asia apparently suffered from a massive "heatwave".

On the other hand, the satellite data from NOAA recorded that the US had its 44th coolest October (out of 114 years), much of Europe was cool, ice extent grew at a record pace and snowcover exploded in Asia.

It didn't take Watts's readers very long to discover why Hansen was so adrift. An examination of the individual records shows that the September figures for Russia have been carried forwards into October unchanged. Thus, Hansen has magicked a heatwave out of a simple data error.

In the real world, away from Hansen's foetid dreams, the weather continues to deteriorate. Most interesting is our tiny corner of the world where, in Scotland, agencies report that "early snow and ice has triggered the start of an £8.5 million plan to keep Scotland's main roads open this winter." The early start to winter has already seen contractors and operating companies treating parts of Scotland's 2,000-mile motorway and trunk road network (below, right).

Strange, though it is part of the UK, nothing of that has been mentioned by the English press. But then it ain't London snow. That, apparently, might come by Thursday and then the world will come to an end.

Meanwhile, across the pond, it seems to be Canada and the US Lakes area that is taking a beating, with reports here, here, here and here variously bringing tales of heavy snow and unseasonable weather.

Interestingly, the first report talks of a high number of deaths from road crashes – an inevitable effect of bad weather. But we never hear of global warming the advantage that it reduces road deaths attributable to bad weather.

This story here, from Ontario, is also interesting, not least because it offers a gallery of 24 snow pics. We have used the first (top of this post), for the very simple reason – it depicts a Mr Cameron. David? I wish. It might bring him closer to the reality he so very obviously has left behind.

Worrying though is the news from South Dakota. This brings reports of downed transmission lines and snapped power poles, with a "lot of deep snow" and "...snow cats and snow machines out there trying to figure out what's going on." Some 45 inches of snow fell in the northern Black Hills and 10-18 inches on the prairie in western South Dakota. Where there was not snow there was freezing rain and high winds, with local floods.

But that was not the worrying bit. That came from the Agriculture Department. It reported that rain and snow had "halted row crop harvest progress", adding in its weekly crop report that some farmers do not expect to get back into the field until next spring.

That is the reality. We were talking about the effects of prolonged cold weather earlier this year. Last winter was highly marginal for winter wheat and if the conditions we are seeing begin to be commonplace, we are looking at five percent or more shaved off global crop yields, particularly wheat. The effect of that do not bear thinking about.

The problem is that pace Hansen, the "colleagues" are still in the land of the fairies, intent on looking the wrong direction. They won't change, or course – not until Hell freezes over. But then, we might not have very long to wait for that.

COMMENT THREAD

A lucky prime minister?

With tales of economic doom and gloom dominating the media, prime minister Gordon Brown's reputation is shot to pieces and the pundits are having a field day.

But, creeping in from stage left is a little bit of good news which, to readers of this blog – who have read this piece and this - will not come as a great surprise.

The news comes courtesy of The Times which is retailing information from Associated British Foods, which is saying that the worst of the food inflation we have been suffering is over.

ABF is one of Britian’s biggest food producers and it should know. It has noted that the price of corn oil has fallen by a third over the past four months and wheat prices hit their lowest for a year last week. The group is thus poised to bring down the price of Mazola oil (pictured), one of its biggest-selling vegetable oils, for the first time for more than three years.

Corn oil prices in the United States have fallen from 90 cents a pound to 60 cents a pound in the past four months as experts predict an oversupply on the market. Soya prices have fallen in line with crude oil prices, while wheat prices dropped to year-lows on all three American futures exchanges last week.

On a broader front, official figures are showing that input price inflation at food manufacturers across Britain had eased in August to 15.9 percent, from 19 per cent in July. Prices in the shops, however, are continuing to rise – a normal phenomenon. They tend to lag behind raw material prices when they are going up and the reverse tends to happen on the way down. But, soon enough, we are likely to see some falls.

Furthermore, manufacturing input prices are also dropping at the fastest rate in 22 years, after the price of oil and scrap metal tumbled, the latter reflecting the downturn in global economic conditions and a slackening in demand for commodities.

All of that suggests that inflationary pressures are easing, which may give the Bank of England an opportunity in the not too distant future to reduce interest rates – easing the credit market and, in particular, making mortgages marginally easier to afford.

Interestingly, The Times has a good record on this issue, forecasting the emergence of food inflation long before other newspapers were interested in the subject.

And with easing of inflationary pressure, some of Mr Brown’s political problems will ease. The news comes far too late to save him, as the political "tipping point" has long been and gone, but at least he will have a few brownie points to trade when he gives his speech to the Labour Party conference.

He may have pulled off his purple banana trick (see also here) which may give some cheer to his beleaguered troops.

COMMENT THREAD

A perfect storm

One of the (many) stories sitting on my files to do was an article picked up from the front page of The Yorkshire Post on Saturday, developing our own report last Thursday on the dire state of the UK wheat harvest.

Coincidentally, the story was picked up yesterday by the Mail on Sunday and thence by Watts up with that.

This invaluable blog, quite rightly, got excited by the headline to the Mail which proclaimed, "Awful August has delayed this year's harvest but global warming is not to blame" – a distinct contrast to The Daily Telegraph piece in early July which did indeed seek to pin the wet weather on global warming.

But, while we can rejoice in sense returning to at least one newspaper, behind both the stories of a bad harvest lies a disturbing picture that could have serious consequences for British arable farming – and thus the rest of us – amounting almost to a perfect storm.

The particular problem, as we pointed out in our last piece, is not so much quantity but quality, especially with the wheat crop which has deteriorated severely as a result of the bad weather.

As The Yorkshire Post reports, this means that much of the crop will be fit only for animal feed. Yorkshire farmers alone could take a "hit" of £10 million as their produce is downgraded.

If that gives temporary relief to hard-pressed livestock farmers, who have seen feed prices escalate to record levels, it is bad news for consumers as high protein wheat for bread-making will have to be imported in some quantity, at a premium of £20 per metric ton.

However, the problem for farmers may be even worse than the headlines suggest, as events elsewhere in the world take shape. Here, the situation in the Ukraine is of special interest. The region, on the one hand has enjoyed a record harvest, up to 43 million tons from 29.3 million last year, with expectations of exporting a surplus of 17.5 million tons during the coming year. On the other hand, the crop has suffered what is described as "insect-related" problems, which is forcing about 70 percent of it to be used for animal feed.

This surplus on the world market is expected to drive down prices of feed wheat, creating an abysmal situation for British farmers. At a time when input costs – from diesel and fertiliser to labour – are all rising, they are now reconciled to prices which are unlikely to cover the costs of producing the harvest.

Small wonder, the YP is retailing sentiment from farmers that many of them will drop out of wheat next season. Some experts are saying this could lead to a shortage next year.

It is here, of course, that an agricultural support system could make the difference. Where prices have been driven below the cost of production, there is a classic role for farming subsidies, if for no other reason than to ensure the availability of supplies in the following season and to take the edge of shortage-induced price increases.

However, now that the EU – which has sole competence over our agriculture policy – has opted out of production support and is looking to cut subsidies over the next budgetary period, farmers are on their own. They are looking at reduced prices, increased costs and less state support.

Perversely, the cut in support will not filter back into reduced EU contributions or lower taxes as the EU has siphoned off some of the subsidies to pay for its vanity project, the Galileo satellite navigation system, while it is also proposing to hand upwards of $1 billion to developing countries to promote farming there – reducing, incidentally, export opportunities for British farmers.

The net result of all this is that British consumers will still be paying huge sums for an agricultural support system, but one that no longer functions, while also paying inflated costs for their bread and other wheat-containing foods, costs which are set to go up even further next year.

Somehow, this is not quite what either farmers or consumers expected when we first joined the EEC but, as the implications of yet another failed policy sink in, one wonders whether the farmers will finally see the light and round against the EU, which is now doing nothing but add to their woes.

COMMENT THREAD

Harvest blues

After the wash-out summer – where hardly a day seems to have passed without rain – harvest-watchers will be unsurprised to learn that wheat futures for December delivery on the Chicago exchange are up to $8.99 a bushel (although still down from the February peak of $13.50).

However, the issue is not quantity, per se, after record global plantings, but quality, the late harvests – delayed by the weather – reducing the amount of milling quality wheat. This is affecting some producers in the United States, but is also getting to be a major problem in the UK and affects even Black Sea producers.

More recently in the UK, Northern Irish farmers have suffered extensive flooding (pictured) in what is slated as the wettest August for a hundred years, although even Devon farmers are complaining as their wheat starts to sprout in the fields. One farmer even lamented that he was depressed than he was during foot-and-mouth.

Throughout the country, farmers are facing a race against time as waterlogged fields prevent them getting the combine harvesters into action and, although the situation is not irretrievable, some are warning that it is getting that way.

Unless we have some prolonged dry spells in the next two weeks, many farmers are in trouble – and so are we, with the price of bread reckoned to soar as much as 30 percent as shortages bite.

But just to show that, sometimes, Mother Nature is the least of our problems, a Bloomberg report tells us that Russia is enjoying its best wheat and barley harvest for 15 years – and is rapidly running out of storage, putting much of the crop at risk and limiting exports.

Apparently, Russia has about 95 million metric tons silo capacity, against a forecast grain harvest of at least 85 million tons – although some estimates put it at 97 million tons.

Of course, that is only part of the picture. By no means all the silos are in the right place. More are needed in the southern and central parts of the country, where most grain is produced and exported.

Building 100,000 tons of silo capacity in Russia costs about $50 million, including costs for rail, road and power connections and, while Russia seems to be able to find the money to finance its mad adventures in Georgia, it has been reluctant to invest in infrastructure.

This does not only extend to bulk storage. The country has only 12,500 specialist rail trucks needed to transport grain, more than a third fewer than are needed. For exports, Russia's total port capacity for exports stands at about 15 million to 18 million tons a year, only just enough to meet demand if there are no problems. The government is forecasting grain exports of about 15 million tons this season.

Russia, therefore, is in a position not so very different from less developed economies like Egypt and Afghanistan, where it needs to develop infrastructure in order to exploit its production potential.

By contrast, the US has about three times more silo capacity than it can produce in a single harvest, and can easily cope with fluctuations in supply and demand. But then, this is a free-enterprise system, whereas, even now, much of the Russian trading system is in State hands.

If we are going to suffer food shortages, therefore, this is going to be as much due to inadequate governance as it will be Mother Nature, although bad weather and bad government is a formidable combination.

COMMENT THREAD

The essence of politics

Martin Vander Weyer in The Daily Telegraph op-ed writes that "the great oil bubble has burst".

We would observe that, given what was in the public domain last May, when we wrote this, the only surprise is that it lasted so long.

Equally, we are seeing bullish forecasts on the European cereal harvest, with expectations of output jumping to 16 percent above last year's level, bringing output to almost 301 million tons – a lift of 43m tons from the previous harvest.

Unsurprisingly, European milling wheat traded in Paris at €184 a tonne on Thursday, close to a 12-month low.

Once again, we are ahead of the game, having written this last April, tentatively suggesting that the food crisis was over, or largely under control – given that there were no weather events which had a major impact on yields.

As with price hikes, though, falling prices take their time to feed into the retail market but it is fair to assume that, in the short-term, some of the inflationary pressures that have been driving up prices have eased. Thus, those who are hoping that runaway inflation will destabilise Gordon Brown and ease Mr Cameron into office may well be disappointed.

Indeed, Brown may have pulled off his purple banana trick and may be able to return to the House in the autumn with cheering news, backfooting the Tories on the economic front.

However, while writing in April, we did caution that the putative good news was confined to the short-term. In the longer-term, the obsession with renewable energies and general "greenery", plus other measures which distort policy, are set to drive up prices, creating inflationary pressures that hitherto have been caused (in part) by commodity imbalances.

For those who make the fundamental mistake of believing that politics is about politicians, rather than policies, and thus dissipate their energies and talents on tittle-tattle and personal trivia, might do well to note that such future inflationary pressures as we do experience will be almost entirely government-induced.

Furthermore, those pressures will largely be the same irrespective of which party holds office in London, not least because the Tories share Labour's obsession with greenery, but mainly because the strategic decisions are taken in Brussels where policy is decided.

Our biggest problems, therefore, lie not with "world conditions", globalisation, population growth or even resource shortages, but with our own governments – their distorted and inadequate policies which create problems where none should exist. That is the essence of politics and when (if) the children grow up and take note of this, we might start getting somewhere.

COMMENT THREAD

The great biofuels con

A long news focus piece in today's Sunday Telegraph comes from the Booker/North team.

One of our most bizarre findings is from a Cornell University study shows that biofuel production from farm crops such as corn takes 29 percent more energy than is yielded by the fuel itself - and that does not include the distribution energy to transport the ethanol.

To produce a "fuel" which actually consumes more energy than it delivers can only be described as insane – a "crime against humanity". The use of such inefficient feedstocks is made possible only by subsidies ($3 billion a year in the United States, just to support ethanol production) and the power of vested interest. These have basically hijacked the alternative fuel policy.

The equation looks even more insane when it is realised that an average US automobile travels about 20,000 miles per year and uses about 1,000 gallons of petrol per year.

To replace only a third of this petrol with ethanol, 0.6 ha of corn must be grown. Currently, 0.5 ha of cropland is required to feed each American. Therefore, even using highly optimistic data, to feed one automobile with ethanol, substituting only one third of the gasoline used per year, Americans would require more cropland than they need to feed themselves.

There is not and never has been any justification – economic, moral or environmental – for turning high-input food crops like maize and wheat into fuel. It is actually, beyond insanity. Which is why, presumably, the EU is so keen on the policy.

*** Forum temporarily down ... I'll post a link as soon as I can.

Don't panic … yet!

Lifting our heads briefly to look at broader horizons – before we get stuck in to the Irish referendum later today – we note that US midwest farmers are having a tough time.

Temperatures have been unseasonably low, there has been continuous rainfall and states such as Illinois have experienced the third wettest January-April since 1895. There has been widespread flooding.

The implications for world food stocks are dire, as crop yields are being marked down rapidly. For some farmers, harvest expectations may slashed by as much as 50 percent. Prices for corn (maize) and soyabeans are, as a result, soaring.

On the Chicago market, corn futures have risen seven days in a row, jumping nearly 20 percent since 3 June, ending at $7.09 a bushel for July. Soybean futures also rose to their highest level in more than three months, lifting to $15.365 a bushel, the highest since 5 March.

As we left it in May, the situation then looked touch and go, whence we observed that, "Everything depends on the weather – as it always does." So far, the weather has not been kind.

However, wheat prices are still giving some room for optimism, having recently slid back 17 cents to $8.51 a bushel, short of the nine dollar level some were predicting – and well short of the February peak of $13.50 a bushel. Rice futures for July are slightly up, currently at $20.05 per 100 pounds, but still significantly lower than its historic high of $24.46 in April.

Rice production in Burma is worrying though. It is expected to fall by 600,000 metric tons in the next season. The decline results both from a reduction in area and a drop in yield due to the damage from Cyclone Nargis that hit the country in early May. As Burma is a traditional exporter, this may intensify global pressures later in the year.

Meanwhile, the much needed rains to boost Australia's 2008/09 wheat crop have not materialised and, unless they come within the next few days, yield forecasts could be downgraded. While Australian Crop Forecasters are so far maintaining their predictions of a near record 26 million ton crop, actual production might now be considerably less.

Some are predicting a below average harvest: 5 million to 15 million tons of wheat available for export, compared with 17 million or 18 million tons in an average year.

Thus, hopes that increased global production might ease supply difficulties and check rampant commodity inflation are beginning to look forlorn – although it is still too early to press the panic button. But, on the UK domestic front - with oil prices also continuing upwards (although some reckon it is over valued by 40 percent) - it is looking increasingly unlikely that the embattled Gordon Brown can expect any relief from the inflationary pressures that are blighting his premiership,

And, if the flow of data pouring onto this site is any indication, things are going to get a lot worse before they get better. All the indications are that global cooling is taking hold – in which case "bad" is going to be very bad indeed. Mr Cameron might want to consider a rain check on winning the next election.

COMMENT THREAD

The cult of the myth

As the price of oil hits new records, topping $135 a barrel, and the media is retailing alarmist stories about continued rises, the BBC Radio 4 World at One has devoted its whole programme to the "oil crisis". However, in The Times and The Daily Telegraph less alarmist voices can be heard.

The offering in The Daily Telegraph comes from Ambrose Evans Pritchard who, under the heading, "Oil's perfect storm may blow over", points to the fact that the global supply of crude is rising and the market for crude has been creeping into surplus for several weeks.

In many respects, the current price highs have all the ingredients of a classic commodity bubble. So, although there may be enough momentum to keep the boom going until Christmas, the global slowdown in economic growth will gradually kick in, slowing demand and the pressure of prices.

As interesting is The Times offering, which comes from Anatole Kaletsky. His line is well evident from the strap, which reads: "Rip up your textbooks, the doubling of oil prices has little to do with China's appetite", thus confronting the settled opinion that China’s growth (and, to a lesser extent, India) is responsible for many of our woes.

"In fact," writes Kaletsky, "China's 'insatiable' demand growth has decelerated." He continues:

In 2004 it was consuming an extra 0.9 million barrels a day; in 2007 it was consuming just an extra 0.3 mbd. In the same period global demand growth has slowed from 3.6 mbd to 0.7 mbd. As a result, the increase in global demand growth is now well below last year's increase of 0.8 mbd in non-Opec production, according to Mike Rothman, of ISI, a leading New York consulting group.

Then, comes the rhetorical question: "Why, then, are commodity prices still rising?" The answer will come as no surprise to our readers:

The first point to note is that many no longer are. Rice, wheat and pork are 20 to 30 per cent cheaper than they were two months ago, when financial pundits identified Asian and African food riots as the first symptoms of a commodity "super-cycle" that would drive prices much higher. And the price of industrial commodities such as lead, zinc and nickel, supposedly in short supply a year ago, has now dropped by 40 to 60 per cent. In fact, most major commodity indices would already be in a downtrend were it not for the dominance of oil.

This is the point we were making last Sunday, when we reported that the global price of rice was plunging. Earlier, we had reported that the price of wheat had fallen back from its record February high, and it has now stabilised.

What is doubly interesting is that we had already picked up indications that the economic picture in China is not quite as rosy as some would wish to believe and, furthermore, that its growth in food consumption was relatively modest.

These are all "real world" indications – factual evidence that seems to contradict the perceived wisdom of China's role in the current crisis. Yet, even this lunchtime, the myth was being trotted out by the BBC. Our question, therefore, is why so many commentators seem anxious to talk up the crisis, and misdiagnose the causes – apart from the obvious: talk of crises sell newspapers.

One less obvious answer lies over the Channel in Brussels, where the "beneficial crisis" is seen as one of the major tools for driving forward the integration agenda.

And another indicator of how quick the "colleagues" are to invoke this dynamic also comes from Ambrose Evans-Pritchard who writes of "a top cast of European statesmen" who have "called for a creation of a pan-EU body to protect the citizens against the 'social risk' posed by modern capitalism."

The financial crisis "is a failure of poorly or unregulated markets, and shows us, once more, that the financial market is not capable of self-regulation," they write, as they demand a new "European Crisis Committee" to take the matter in hand.

The crazy thing is that, at the heart of the contemporary (and most) crises, lie political and regulatory failures – as we have shown with the food crisis. Yet, each time we have a crisis, the politicians call for more political and regulatory control – thereby ensuring that any crisis is made worse. And what keeps them going is the cult of the myth.

COMMENT THREAD

Understanding, not grandstanding

In common with the EU, the United Nations likes nothing better than a crisis, the dynamic of the "beneficial crisis" creating ideal opportunities for increasing power, influence and cash.

It should come as no surprise, therefore, that The Daily Telegraph should be reporting: "World food price crisis 'here to stay'", conveying the views of Sir John Holmes, Britain's former ambassador to Paris who now serves as the UN's under-secretary for humanitarian affairs.

Holmes concedes that, "It is possible that in the next two or three years prices will come down a bit from the peaks we've seen in the last few months …" but he does not think they will revert to previous levels. As a result, he says, the world needs a "green revolution" to feed its rising population.

His argues that the emergence of hundreds of millions of middle class consumers in China and India has increased demand for food, high oil prices have made transporting it more expensive and the supply of grain has been hit by bad weather and the transfer of land to grow biofuels instead of food crops.

However, Sir John clearly has not caught up with the latest developments in the rice market, where prices are plummeting, or with the recent price history of wheat, where it has dropped from its record February level of $13 to around $9 a bushel.

Given reasonable weather over the next few months (in both hemispheres), wheat prices are likely to remain stable over the short-term, while rice has a way to fall yet. Thus, prices are already falling from their record peaks and, with the volatility of the commodity market, next year's prices are anyone's guess.

The great uncertainty is the price of energy. Here, while some are looking to the $200 barrel of oil, others are still maintaining that the current price level cannot be sustained and, sooner rather than later, the bubble will burst.

Either way, the big driver of food commodity prices will be the diversion of land to biofuel production, in which case, it is not so much a "green revolution" that is required, but a "common sense revolution". That, unfortunately, is the less likely of the two events – especially when the spectre of food shortages offers such good opportunities for exploiting the crisis.

It would also help if the media and the collected pundits learnt some economics and, for want of such knowledge, desisted from indulging in economically illiterate drivel.

Such an injunction should apply to The Daily Telegraph which, on top of a emotive piece on Haiti, calculated to tug at the heart strings, then goes on to publish an editorial of stunning vapidity.

Its prescription for "curing" the food crisis is "to stop imposing restrictions on genetic manipulation" and to scrap the EU's Common Agricultural Policy, substituting direct payments made by each state.

The former, of course, would only have a marginal impact - if any. Many of the GM seeds, in fact, require high inputs and intesive cultivation to deliver any benefits, which makes them inappropriate for many developing country agricultural systems. Much more helpful would be a sensible approach to pesticides and other argo-chemicals, in a bid to deal with the massive losses arising from pest attack and plant disease.

As to the CAP, the writer of the piece has cotton-wool for brains. At a time when grain prices are at a record high, and arable farmers are actually making money, what on earth is the point of intoducing a system of "direct payments" to farmers? The market, at this time, is perfectly capable of addressing commodity shortages.

Above all, though, the paper - like Sir John Holmes - needs to recognise that there are no "magic wands" which will deal with what, in fact, are multifarious problems. There needs to be a recognition that the problems in Egypt and not the same as those in Malawi, which are not the same as those in Haiti or the Philippines.

Crucially, most often, local food shortages stem from economic mismanagement - which is certainly the case in Haiti - or stem from structural problems relating to land ownership and the availability of cheap credit at local level, and are exacerbated by trade distortions arising from protectionism.

In a grown-up newspaper, some of these issues might actually be addressed. Instead, this particular paper simply contents itself with a puerile pay-off line: "The time has come to scrap the CAP", which does not even begin to demonstrate and understanding of the issues. Like Sir John's input, it smells more of grandstanding than understanding.

What we need is definitely less of the former and more of the latter.

COMMENT THREAD

Rumbles from the East

We hate to say it, but we were writing about China on the brink in February – albeit that we had some help at that time from the Telegraph's Beijing correspondent, Richard Spencer.

Nevertheless, we had been writing in a similar vein the previous December, the combination of our two pieces suggesting that the Chinese economy is much more fragile than was generally reckoned.

Now, The Times is retailing in its business section warnings from analysts that yesterday's earthquake "could unravel the Chinese government's recent efforts to rein-in bank lending and cool inflation". But because of damage to roads and other transport facilities, there could be shortages of food and consumer prices are now liable to rocket further. Construction material prices are also expected to soar.

In a previous piece, however, the same paper points to more fundamental problems, with the headline: "Fears of unrest as China's growth slackens", echoing the tenor of our own pieces.

Incidentally, it is interesting how, like The Telegraph, real news is relegated to the business sections which the main papers deal with the entertainment industry, of which domestic politics is part.

Anyhow, that earlier piece in The Times tells us that "astronomic food price surges and a winter of freak snowstorms have taken the edge off China's roaring economic growth." These, it says, are "stoking government fears of embarrassing social unrest before the Beijing Olympics".

Those fears may well explain Premier Wen Jiabao’s extraordinarily rapid and very public response to yesterday's earthquake in Sichuan Province, with him flying to the scene to oversee the emergency relief effort within hours of the disaster being reported. This is so unlike the Chinese leadership that it suggests there is serious concern at the very highest levels over the mood of the people – hence the need to be seen to be responding directly to yet another crisis.

Behind the scenes, China’s economy expanded at 10.6 percent over the first three months of 2008 – slipping from the 11.2 percent growth logged in the previous quarter. Admittedly, this is still very substantial growth rates, but it has triggered concern that China’s expansion has peaked, with additional fears that, as the western economies slow down, its export trade will also decline.

Against this background, there is also what The Times terms "the negative effect of the Olympics on industry". Factories in and around Beijing, we are told, are preparing themselves for long, government-enforced shut-downs in an effort to clear some of the pollution from the city's smoggy skies.

To this must surely be added the effect on the economy generally, as food, supplies – and water – are diverted to the capital in order to put on a "good show", denuding the countryside and industry. An estimated $40 billion has been spent on the Olympics, on improving infrastructure and building sports venues.

What alarms Chinese policymakers, though – or so The Times asserts - is growing evidence that efforts to curb inflation are not working. Consumer prices were 8.3 percent higher in March than the same time a year ago, placing inflation near a 12-year high and far surpassing the government's target of 4.8 percent for 2008. High inflation has, in recent decades, been a trigger for street protests and other unrest.

Adding an extra layer of sensitivity, much of the inflationary pressure now arises from soaring costs of basic foods such as cooking, oil, wheat, pork and other meat. Because food has such a high weighting in China’s consumer price index (38 percent), the effect of 21 percent rise in the cost of food since the beginning of the year is very marked.

What is not factored in (to this report) is the remarkable finding which we highlighted in our report on the modest rise in China’s share of the global grain harvest, rising a mere 1.8 percent in 2006-07, from 382.2 million tons to 389.1 million.

Much has been made of the growing prosperity in China, fuelled by the manufacturing boom, but this figure suggests that the spread has been very limited. And if that prosperity has been linked with increased grain consumption – having been used to feed less efficient meat animals – then the indications are that many regions have been untouched by China's new-found wealth and may, indeed, be slipping backwards.

Whatever the broader projections of growth might be, therefore – and some suggest that it will stabilise at nine percent for the year – if what seems to be the majority of Chinese are not sharing in the "proceeds of growth", then the country as a whole will we ill-equipped to deal with the multiple problems besetting it.

Some of these are set out in a "backgrounder" from AP, which catalogues, amongst other things, the earthquake, the "snow disaster" and the Tibetan troubles.

In a way, Tibet – and the attendant Olympic protests, may have diverted attention from the more fundamental social and economic problems in China, not least because the unrest seen in Lhasa was by no means confined to the capital, or even Tibet itself. Other provinces, populated by Han Chinese, have also been the scenes of violent unrest.

Obviously, the Chinese government will do its best to keep the lid on dissent until the Olympics (and afterwards) but, as AP also reminds us, the rise in inflation did set off protests in the 1980s and '90s.

But, while the focus in the popular media is on the rescue attempts after the recent earthquake, it is as well to remember that there are political rumblings as well, which – in the fullness of time (perhaps sooner, rather than later) - which could have a more profound effect than even the current disaster.

COMMENT THREAD