Lynne Kiesling
In a post about how reducing your meat consumption can help you manage food costs, Megan McArdle has the best quote I've seen thus far about the food chain:
Also, you may have noticed that meat is getting kind of pricey. Best bet is that it will go up before it goes down, since meat is essentially grain cubed, with a time lag.
UPDATE: As you can see from the comments, a better model is
Meat(t1) = (grain(t0))^3 + [grassfed_dummy(t0)) * (grass(t0) - (grain(t0))^3] + water(t0)
Meat(t1) = (grain(t0))^3 + [grassfed_dummy(t0)) * (grass(t0) - (grain(t0))^3] or something like that...
Yessssss ... that raises another interesting substitution question: what is the cross-price elasticity between grain-fed beef and grass-fed beef? Of course, if the truly binding constraint is land and not grain, then the price of both should rise, cet. par., and presumably the current price spread between them would persist. But if a grass/grain price differential narrows (assuming I am correct that Pgrassfed > Pgrainfed), then that's consistent with grain scarcity being the issue.
Interesting.
Don't forget the water! 2,500 gallons for a pound of meat (more)
Can the economists in the crowd explain why this type of argument is not laugh out loud ignorant given the massive size of farm subsidies??
Especially given the fact we are getting ready to pass a 300 billion dollar farm bill that on one hand pays some people not to farm and the other hand pays different people to farm more.
This is an especially aggravating topic for me because when I worked in habitat preservation I got tired of watching non subsidized, sustainable cattle ranches get plowed up and the native habitat destroyed. The sustainable, environmentally friendly grazing operation was then replaced with a highly subsidized, environmentally destructive, mono culture grain farm.
Beet on the Brat
TJIT,
I think your problem is with the politics of the livestock industry, not with the meat production function ... the economics are pretty straightforward. If we reduce our demand (as opposed to our quantity demanded) for meat, then we shift to a different equilibrium that involves using less grain, less water, and less land.
Oooh, should put land in the production function ...