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Yesterday, someone gave me a live chicken

I am the owner of this chicken.

I am the owner of this chicken.

Later next month we’re planning to have a soccer match in Gembe East, a village of approximately 15,000 people located just east of Mbita Point in Homa Bay County. We’ve been doing research work there for the past decade or so but I don’t think that my employer has really taken the time to try to integrate with the community in any capacity other than research and health interventions.

We were having choma with the chief of the area a few weeks ago, and we came up with the idea of having a regional soccer match. Yesterday was the first meeting of the planning committee. (Turns out that putting on a soccer match is like setting up a punk show, except that people will probably turn out.)

We discussed the particulars of the football match, and then ate a great chicken dinner from the chief’s mother. We also met the chief’s father, an 87 year old ex-school teacher who had his last child 12 years ago and learned of that gentleman’s mother who died two months ago at the incredible age of 105. In an area where the average life expectancy hovers just around 40, these are some tough people indeed.

After eating, we went and checked out the soccer pitch, which has an amazing view of Lake Victoria and some nearby mountains. It’s going to be a great day.

The roads out there are terrible. I was getting sea sick on the way back, when the guys in the car suggested that we go an visit on of our staff members. I reluctantly said ok since I was just hoping to get out to the main road as quickly as possible. (Plus the Iran/Argentina game was about to start.)

We arrived to his house and it was already dark. The staff guy is there standing outside holding a radio. His wife looks like she’s just come from church.

Everyone suddenly jumps out of the car and proceeds to run around greeting one another. I talk to the staff guy for a moment. He’s exceedingly friendly but looks somewhat impatient. I figure out that the radio means that he’s waiting for the game to begin.

Silas (another staff member) asks me if I like watermelon. I say yes, and the wife comes up behind me and puts a live chicken in my hands. “This one will be very sweet” comes out in a really confident, educated brand of English that’s somewhat uncharacteristic of the area.

I’m not sure what to do. I’ve never held a live chicken before. I say thank you and carry it over to the car and put it in the back with the watermelons. We quickly say thank you, get in the car and drive on.

On the way back, I have to keep making sure that the chicken doesn’t get crushed by a rolling melon. After we get home, we put the chicken in a box and set it in the food pantry with some corn and rice.

We’ve resolved to have the house lady transform the chicken into dinner tomorrow, which gets me off the hook, because I have no idea how to do such things.

Odd claims that biofuels were responsible for skyrocketing commodity prices

The blog Uneasymoney, posted an article this morning claiming that policies which encouraged the production of biofuels was responsible for the crazy run in commodity prices throughout the 2000′s and was ultimately responsible for the 2007/2008 crash.

The post refers to an article in the Journal of Economic Perspectives, which I am reading now but the results of which are summed up here:

the research of Wright et al. shows definitively that the runup in commodities prices after 2005 was driven by a concerted policy of intervention in commodities markets, with the fervent support of many faux free-market conservatives serving the interests of big donors, aimed at substituting biofuels for fossil fuels by mandating the use of biofuels like ethanol.

And then:

What does this have to do with the financial crisis of 2008? Simple. ..the Federal Open Market Committee, after reducing its Fed Funds target rates to 2% in March 2008 in the early stages of the downturn that started in December 2007, refused for seven months to further reduce the Fed Funds target because the Fed, disregarding or unaware of a rapidly worsening contraction in output and employment in the third quarter of 2008. Why did the Fed ignore or overlook a rapidly worsening economy for most of 2008 — even for three full weeks after the Lehman debacle? Because the Fed was focused like a laser on rapidly rising commodities prices, fearing that inflation expectations were about to become unanchored – even as inflation expectations were collapsing in the summer of 2008. But now, thanks to Wright et al., we know that rising commodities prices had nothing to do with monetary policy, but were caused by an ethanol mandate that enjoyed the bipartisan support of the Bush administration, Congressional Democrats and Congressional Republicans. Ah the joy of bipartisanship.

So then, what I’m gathering here is that the Fed was obsessive about commodity prices fearing inflation, despite the fact that the Fed was in no position to influence commodities markets. This distracted the Fed from focusing on the real causes of the crash and the Lehman disaster, making a bad situation worse.

I’m not sure that this correctly connects the dots, given that there is little evidence that the run in commodity prices had anything to do with biofuels. Even as biofuel consumption increased throughout the 00′s, overall production of corn and yield per acre also increased. Assuming that commodity prices are in part dictated by supply, I would (from an armchair economist perspective) assume that prices should remain somewhat constant.

I’m interested to see that the article disregards financialization of commodities, following a loosening of rules of speculation on ag products in the 90′s and the move toward commodities following the equity bust of 2000 as not being a major factor in the rise in corn prices. This is particularly strange when we consider that non-energy commodities also exhibited rapid price increases and violent fluctuations throughout the 00′s. I fail to see how energy policy could result in increases and volatility in, for example, copper.

It’s a tempting thesis, and made more tempting by the explicit identification of individuals who suggested and implemented such policy, but not one borne out by the data, in my limited, amateurish opinion. The list of potential factors which influenced the run in commodities is a long and confusing one (climate change, increased demand from China and India, global instability, etc. etc.), but I don’t think that the effect of Wall Street greed can be discounted as a major determinant. Interestingly, despite the overall themes of the paper, the author does a poor job of discounting the effect of financialization in the creating of commodity price bubbles.

In reading this paper now, I’m somewhat confused. On the one hand, he confirms many of my initial suspicions that the rising price of food is unrelated to supply and demand factors as growth of both supply and demand were more or less constant, despite localized climate shocks. On the other, he seems to blame a rise in prices during the crash to a shift in energy policy toward biofuels, while overlooking that commodities were already volatile and rising, beginning with the crash of the tech bubble in 2000. I am thining that much of the rise in commodities during 2007/8 was due to panicky speculation as real estate markets tumbled, not to any change in energy policy. Certainly, it may be the case the the policy influence traders to try to exploit potential areas of growth, but it’s hard, then, to discount the effect of financial speculation in commodities outright.

I can at least agree with this:

The rises in food prices since 2004 have generated huge wealth transfers global landholders, agricultural input suppliers, and biofuels producers. The losers lobal landholders, agricultural input suppliers, and biofuels producers. The losers have been net consumers of food, including large numbers of the world’s poorest ave been net consumers of food, including large numbers of the world’s poorest peoples.

Egyptian instability is crushing Kenya’s economy

Coffee prices since 2000

Coffee prices since 2000

One of the problems with African economies, is that they tend to rely on receiving export revenues from just a few items. Some economies, like Nigeria and Angola, rely on oil. Oil economies are expecially problematic as the extraction process creates very few jobs, and revenues tend to flow directly into the pockets of corrupt politicians and middle men.

Kenya, lacking mineral or oil resources, is an agricultural economy. Specifically, they are really good at growing tea, and, to a lesser extent, coffee. This helps explain why Kenya’s developmental trajectory has been far more successful than that of other economies. Tea production is labor intensive and often depends on small and mid-sized farms which employ lots of people. Instead of money flowing in the pockets of the corrupt, who often squirrel it away in overseas accounts, money goes directly in the pockets of growers.

Kenya is the UK’s biggest tea supplier, but Egypt buys more tea by volume from Kenya than any other country. A piece in Think Africa Press today wrote on the dual problem of falling demand for tea from Egypt due to prolonged unrest, and that of falling commodity prices worldwide.

The cause of the farmers’ problems lies far to the north of the cool, tea-covered slopes of the Aberdares, in the heat of Cairo and the continuing fallout from the Arab Spring. In 2010, the last year before the uprising in Egypt, Kenya supplied the tea-obsessed UK with around half of its tea, but Egypt was the the single largest destination for Kenyan tea exports, buying nearly a fifth of what the factories around Nyeri produce. With the overthrow of President Mohammed Morsi in July 2013 and the ongoing campaign against the Muslim Brotherhood causing continued political instability, demand has plummeted and prices have gone with them.

“It’s a supply and demand issue,” says Chai Kiarie, Field Services Manager at Gitugi Tea Factory. “We produced more tea this year, but we still made nearly $2 million less than we did last year. With these problems abroad, the demand just isn’t there.”

This isn’t an isolated problem. Coffee prices, once riding high on a boom in commodity prices have been steadily falling since the financial collapse. The commodity boom was a winning sitaution for African economies and helped drive much of the rapid growth seen throughout the 00′s. Regulation has started curbing speculative practices that drove the increases, removing a source of destructive volatility which drove up food prices in developing countries, but has also decreased badly needed foreign exchange revenues.

I visited a few farms the last time I was in Kenya. Farmers aren’t waiting around for subsidies to help pull them out of a potential mess. All of the farmers I spoke with are looking for new ways to diversify their operations and meet potentially lucrative world wide demand for competitive products. All of them wanted to think of ways to increase productivity while decreasing the cost of inputs. The pressures from falling tea demand could help push them to find ways to innovate and increase both revenues and stability.

Cell phone banking in Kenya protects public health

MPESAIt’s rare that I read an academic paper I can get really, really excited about, but this is one of them.

Researchers at Georgetown and MIT have shown that transactions over M-PESA, an African phone banking service can help struggling households when faced with a sudden illness, weather event or economic shock.

We explore the impact of reduced transaction costs on risk sharing by estimating the effects of a mobile money innovation on consumption. In our panel sample, adoption of the innovation increased from 43 to 70 percent. We find that, while shocks reduce consumption by 7 percent for nonusers, the consumption of user households is unaffected. The mechanisms underlying these consumption effects are increases in remittances received and the diversity of senders. We report robustness checks supporting these results and use the four-fold expansion of the mobile money agent network as a source of exogenous variation in access to the innovation.

M-PESA is a cel phone based banking system which allows users to send and receive money to friends and family. Transactions can be small; most users are transferring less than $10 at a time. Users are charge about $.40 to transfer money and a percentage to withdraw. It is free to deposit money into the system.

Anyone can be an M-PESA agent. Starting an M-PESA business requires only a small investment so that even extremely rural areas have access to the system. Agents receive a percentage of transaction costs, and often piggy back it onto existing enterprises such as grocery stores and mobile phone shops. M-PESA not only provides a needed service, but has also created profitable business opportunities for people even in isolated rural areas.

The system is wildly popular. Africans are extremely mobile but maintain deep friend and family networks often spread out over wide distances. When a person has trouble, he or she will often turn to family and friends for financial help.

Previously, people would send money by getting on a bus and travelling, or by sending it with friends who might be going to a particular destination. Transportation costs are high ($5 to go a distance of 200km) and often outweigh the amount to be sent. Sending money by hand also incurred risks of loss to theft and misuse.

The number of M-PESA users has skyrocketed since its introduction in 2007. Nearly all adults in Kenya have access to a cel phone now, and the number of M-PESA users is now 70% of all mobile phone users.

Shocks due to illness or negative weather events such as drought can be devastating for a poor household. A single bout of malaria could set a family back as much as a month’s income or more. When poor households lose money, they don’t get it back and successive events can quickly pile up so much so that families will often wait until illness has become too severe to effectively treat.

Jack and Suri, the researchers who conducted the study found that illness shocks can reduce a households consumption by at least 7%. An average household only consumes around $900 a year, nearly half of which is for food. A 7% reduction in consumption could mean that households will simply eat less given a sudden negative event.

M-PESA users, however, experience no reduction in consumption given a sudden health or economic event. Presumably, the ability to transfer money quickly over long distances provides insurance against disaster. Mutual reciprocation allows the system to effectively function to protect against financial disaster.

This has incredible implications for public health. Financial concerns are an incredible barrier to insuring prompt and effective treatment for diseases such as malaria, diarrheal disease and respiratory infections. An efficient system of moving money creates a broader social insurance scheme, protecting the public against the worst and, hopefully, reducing costly advanced treatments and mortality.

M-PESA is a private sector entity, which was never intended as a public health intervention. However, in an area where public sector health delivery is inefficient, underfunded and most broken, a private sector banking initiative could help bolster availability of life saving drugs (for example) by insuring a consistent flow of money. Shops in extremely isolated rural areas will be more likely to stock malaria drugs if they know that customers have the means to pay for them.

This also has incredible implications for development. One of the pillars of the Millennium Development Goals and the recent Rio+20 Conference on Sustainable Development is to insure that the basic health needs of the poorest people on the planet are met. This cannot happen without addressing the greater problem of financial stability of poor households, which requires the participation of the private sector. Covering basic issues of financial movement, security and access to funds by isolated households is a major step to not only helping households which are disproportionately impacted by health and weather events, but also allows flow of cash to poor regions, bolstering local economies.

Are we living in the age of protest?

ProtestsIt’s possible.

A working paper from the Initiative for Policy Dialogue tracked all protests from 2006 to 2013. The authors classified each protest according to the types of grievances and causes of outrage, the profile of demonstrators, size and the nature of opposition.

They found that protests are becoming more common worldwide and larger in size. The largest protests in human history (one exceeding 100 million people) have occurred in the past six years.

Increases in frequency are consistent across all types of protests, including economic justice, failure of political representation, rights and global justice.

Full on riots are fortunately few (only ~10% of all protests), but arrests and state violence are common. The biggest offenders include Iran, Russia, the US, Canada and Cameroon.

Developed countries account for the lion’s share of protests and the authors noted increased levels of “soft repression” in the form of surveillance and profiling.

More encouraging, they found that 37% of protests result in some kind of political change. These gains were mostly in the areas of political, legal and social rights. Global issues and economic justice, however, appear the most difficult areas to achieve change. No surprises here. These problems are vastly complex, entrenched, include numerous players and not easily solved.

I’ve written before on the issue of food prices and protest in South Africa and other authors have found similar trends in the Middle East. While the grievances of protesters often has little to do with food or issues of daily living, I’m wondering how economic pressures might be stimulating conditions favorable to demonstration. No doubt, we might look to solving the worldwide problem of volatile agricultural commodity prices and food availability.

Most interesting are the ubiquitous calls for “real democracy” or adequate representation of the populace in political matters. Policy makers would do well to respond to this simple and obvious call for inclusion. If not, we will see further unrest and potentially more violence and instability.

Food Prices and Riots in South Africa: One Year Later

I noticed this morning that gold is tanking. This is no surprise as the rally in gold over the 00′s was fueled by excessive commodity speculation following the loosening of finance regulations at the end of Clinton’s term. On the down side, this commodity bubble drove food prices up around the world but, more positively injected a decent amount of cash into Sub-Saharan African economies. Much of the economic growth that Africa has experienced over the past decade has been financed by this bubble.

I’m wondering if Glenn Beck and Ron Paul foresaw this event, encouraging the market in gold to help encourage a price rally, so that they, and other savvy individuals might jump out at the right moment. That smacks of conspiracy, however, and I’m not sure that either are smart enough to think that far ahead. It’s a fun thought to consider.

I was curious, however, if the collapse of the commodity bubble (though really less of a collapse and more of a “cooling down” of a slow burn market) might also be having impacts on social unrest. As I’ve shown here on this blog and other, more learned individuals have confirmed, food prices are associated with social unrest around the world.

I have written before on how the problem of Wall Street speculation is contributing to the problem of rising food prices around the world.

Fortunately, food prices are declining with the real or expected tightening of commodity speculation. Most notably, the Volcker Rule, as part of the Dodd-Frank set of reforms, aim to prevent banks from engaging in risky speculation in commodity derivatives. The Commodity Futures Trading Commission has also introduced several new rules regarding commodity speculation, most notably limiting the grabbing of large stakes of commodity futures with the aim of price manipulation. These rules, which place specific restrictions on agricultural futures and are though to only affect approximately seventy traders worldwide, have been fought vociferously by Wall Street.

Most relevant to developing countries, corn, price fluctuations of which have been shown to be tightly associated with speculative behavior, is returning to pre-2006 levels and could even get back to 1996 levels. This is bad for corn exporters (or maybe a return to normal), but great for corn buyers, particularly families living on pennies a day.

As before, I counted (or rather, the computer did) the number of newspaper articles which mentioned protests in South Africa, arguably the protest capital of the world, and combined them with the FAO’s food price index to see if a dip in prices was associated with a dip in protests. As the graph shows below, there is evidence to suggest that it is.

plot_zoom_png

The Dodd-Frank reforms are welcome, but they aren’t enough. Starving kids and violence that result from excessively high food prices should be considered a major human rights priority. Fortunately, some groups like the World Development Movement are putting pressure on the UK government to enact and support badly needed reforms.

Is antibiotic use in livestock killing humans?

ABThis morning, I awoke to several “news stories,” suggesting that low level and regular antibiotic use in livestock is contributing to widespread antibiotic resistance.

An example from SFGate (a San Francisco local news and entertainment portal), entitled “Report links antibiotics at farms to human deaths”:

“The Centers for Disease Control on Monday confirmed a link between routine use of antibiotics in livestock and growing bacterial resistance that is killing at least 23,000 people a year.”

Other headlines, mostly from websites promoting vegetarian diets and opposing “factory farming,” state emphatically that the CDC has “discovered a link” between the administration of antibiotics and antibiotic resistance:”

“Antibiotics Used to Make Livestock More Profitable May Be Killing Us” – Truth Out

“Farm Antibiotics Linked to Human Deaths: CDC” – NewMaxHealth

I took the time to download and read the actual report (crazy, I know), “Antibiotic Resistance Threats in the US: 2013″. Within the report, there are statements of concern regarding risks of low level antibiotic use on factory farms. The CDC suggests that the practice should be phased out.

However, nowhere in the text does the CDC attribute any of the (estimated) 23,000 yearly deaths from drug resistant infections to livestock farming specifically. The report provides no indication as to what percentage of deaths are due to antibiotic use on farms, nor to any other specific cause.

This is, of course, for good reason. No one really knows.

What I found interesting, was a graphic that illustrates how drug resistant bacteria (and fungi) emerge and infiltrate the human population. In the graphic, there are two possible scenarios:

1) Resistance develops within the human gut, and resistant strains of bacteria spread through institutional environments by way of contact with fecal matter and due to improper cleaning and sterilization procedures.

2) Resistance develops within the animal gut, and drug resistant bacteria enter the human population through improperly cooked meat and through poor management of animal discharge with contaminates vegetable crops which humans eat.

The first scenario, is, of course, an operational problem. Out patient procedures are becoming more common to minimize the possibility of spreading resistant bacteria within institutional environments, but obviously it is impossible to contain every possible pathway at all times.

The second is more interesting, but again, this is also an operational problem. The first pathway, contact with uncooked meat, is a fairly easy problem to solve on an individual level. Cook your burgers or buy your horse sashimi only from places you can trust. Of course, there is no failsafe here.

The problem of discharge management is also an operational one. Farms have to maintain standards to insure that animal waste does not contact, say spinach farms as happened back in 2009.

I cannot say whether antibiotic use is good or bad for raising livestock (having no expertise in the field), though I will take many of colleagues words at face value and assume that it is not necessary and that the potential costs outweigh the benefits. The jury seems to be out on the issue, however.

However, it would appear from the CDC report, that the greater potential for harm comes from operational issues, which should be resolved in any case. Though resistant bacteria are a threat to human health (and potentially detrimental to the long term economic health of the food industry), there are many other threats that follow the exact same transmission pathways. The e. coli outbreak in California spinach in 2009 is a great example.

Though I understand that those who oppose meat eating or factory farming wish to use what I would call a distortion of the fact and the CDC report to further a particular political position, it would seem that those interested in protecting human health would be far better off calling for more stringent standards within the livestock industry.

So, to answer the question in the title: “Is antibiotic use in livestock killing humans?, ” I have the following responses:

1. It is not clear from the CDC report that any of the 23,000 deaths have anything to do with livestock.

2. Assuming that any of the deaths have anything to do with livestock, the problem would appear to have more to do with how food is cooked (dumbass factor) and the poor management of animal waste (both of which also come with other threats to human health).

Now, before anyone accuses me of trying to minimize the problem, it is true that antibiotic resistance is a serious, serious problem. Antibiotics are over prescribed in the United States to humans, and new antibiotics are not being developed (mostly). We’ve run out of options to fight existing bacteria and as long as doctors are willing to hand antibiotics out like candy, the problem will only become more severe.

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NOTE: Now, this blog post is not a defense of the livestock industry, nor a call for greater use of antibiotics. In general, however, I take issue with misuse and distortions of data for political aims on any part of the political spectrum. Call it a weakness of mine.

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