Singapore Peak Oil

With the recent flooding situation in Thailand (Link), the price of rice is going to increase. This is only the beginning of a multi-decade long increase in the price of food as climate change, peak oil and a growing population make it increasingly difficult to feed everyone satisfactorily (850 million people are chronically hungry according to FAO). Mr Lee KY thinks that it is no problem because we can pay for it if our economic growth is strong.

Lee Kuan Yew in TODAYONLINE:

Student: In the next 20 to 30 years time, what if global demand for food outstrips supply, then what will be of our food security plan?

Mr Lee: It doesn't matter whether you grow your own food or you buy your food. The question is the price. If there is a food shortage worldwide, the price of food, produce will go up. And the answer for a country like Singapore is to make sure that our incomes rise, our total GDP rises faster than the food prices.

It does not matter whether you grow your own food or you buy your food. The question is the price? Really, Mr. Lee? Let's go back a few years in history and consider the following news headlines from 2008:

Brazil May Curb Rice Exports to Boost Inventory

Vietnam to cut rice exports to curb inflation

Cambodia Halts Rice Exports to Curb Rising Domestic Prices

India introduces rice export ban

And also from 2011

Myanmar Puts Lid on Its Rice Exports

Egypt says rice export ban to Oct 2011

It is often said that money makes the world go round, but when times are desperate and push comes to shove, governments around the world are going to restrict their food exports to protect their domestic supplies and to calm any local food unrest. When that happens, it does not matter how rich you are because no country is going to sell any food to you. Your dollars and cents will just be worthless pieces of paper or electronic entries in a bank's vault or computer database.

It was fortunate that Thailand did not ban any rice exports in 2008:

Thailand will not ban rice exports (2008)

With the recent catastrophic floods in Thailand and Vietnam (AFP Link), there is a huge chance that their governments might just introduce curbs or restrictions on the amount of rice that they export.

Now consider this plausible scenario a few years from now: 1. Extreme weather patterns destroy the production of all the major rice exporting nations; 2. Oil production in the Middle East plummets due to Peak Oil and political unrest. Results? Food prices soar and every major food exporting nation bans food exports completely to protect their domestic markets. What becomes of Singapore's food supply? Are you going to chew your paper Singapore dollars? In light of this, is it not important to grow your own food, Mr Lee?

Also, some intelligent responses from a reader in that TODAYONLINE report:

david

Updated 05:42 PM September 06, 2011

When there is global food shortage, it is no longer a matter of price. We may not be able to get any food, or enough food, at any price.

Even if Singapore owns the farm overseas, the foreign government (where the farm is located) may not allow the farm produce to be exported. Even if the foreign government allows the farm produce to be sold to Singapore, the workers at the farms or trucking firms or dockyards may sieze the produce to feed their own families first. Do you think they care about Singapore's survival or the rule of law?

It may not be sexy or wonderful for our economic numbers to produce our own food, but it is time that Singapore placed more importance to food security.

What was wrong with Lee Kuan Yew's reasoning? His typical, mainstream economic way of counting everything in dollars and cents and his strong belief in the free market system. Some comments that I left on Gerald Giam's blog are worth repeating here:

The way I see it, the main problem is that mainstream economists have a wrong set of units for accounting. They reduce everything to dollars and cents which are nothing more than abstractions divorced from the material world. Oil prices hit a low in 1999 at $17/barrel but the price did not tell us what was left in the ground for us to extract. All it did was to create the temporary illusion that oil was plentiful, and that alternative sources of energy were therefore uneconomic and unnecessary – in dollar terms – according to the self-deluded economists.

Had they learned to calculate the economic inputs/outputs of a nation in terms of energetic units (Watts, BTUs, etc.), biocapacity and ecological footprint, they would have realized that our entire growth-centric-consumerist economic paradigm is one giant energy sink and resource blackhole that is squandering away at unsustainable rates the earth’s natural capital and natural resources that have taken eons to form.