Higher food prices? A good thing?

First, no government will allow prices of commodities (food) to increase by design. It has become a staple, it seems, for central bankers to control food prices. Why? because of the shared and common ill-feeling almost everybody has on price increases or in economic and high-fa luting terms - inflation.

If inflation is any higher, those who benefit from kicking out the current government would have an easier job. It is easier to entice hungry people. As they say, "Hungry people, are angry people!" = )

But let's not get into easy explanation just yet because high prices could also suggest better profits. If profits are higher and invested back, the story is different than what our easy explanations would suggest. It would be different than what most of our telenovelas propagate.

Higher prices leads to higher profits which leads to increase liquidity which allows businessmen to be creative and to be entrepreneurial which will lead to increase employment which leads to something really good.

This is the easy logic but one has to know that this cause and effect scenarios happen across time. Sometimes a long time and one could get really impatient. But if we have learned that our impatience could get us nowhere, what is time but a canvas where we draw, if God allows it, and make our aspirations true?

An increase in price will definitely lead to increase in profits and make the whole delivery system very efficient.

How? Let's take a look at what happened in the oil industry and let's go back in time, the 70s.

Two events changed the whole complexity of the business of oil, the price shock in early 1970s and the fall of the Shah of Iran that even made the price of oil increase. This made the oil consuming countries and the oil producing corporations to re-think the whole business system of oil.

By the late 1970s, investment in oil exploration and refining has sunk so much investment in it that we have not seen such magnitude to this date. We are all currently reaping the benefits of decisions made 30 years ago.

Now, let's put that into the context of food business.

Higher prices would lead to higher profits which in turn be use to justify investment made in the capital intensive "delivery side" of the food business system. By capital intensive, I mean think better roads, better transportation methods or even better drying and milling facilities.

Up to this moment, we only use "This is the responsibility of the government!" to justify pave road projects and look at where it brought us? What if we allow the dynamics of business to take part and make the farmers in the cooperative context richer in the process?

Are we not solving the poverty in the urban cities by giving the next generation farmers an alternative to these three fatalistic choices: 1 Makipagsapalaran na lang tayo sa Manila, 2 the OFW option and 3 Migration.

Think. Seriously think.

But again, this will happen across time. Patience is needed. But by patience I mean, "We endure what we understand." And for this to happen, a new kind of businessman will have to emerge. This will be the businessmen that were called to do this noble task.


P.S.

If the whole oil business system can reconfigure itself why not the business of food . I mean, we can live without oil for months but that could not be said about food even if one is fasting. (Jesus Christ, the Son of God, fasted for 40 days and 40 nights only.)

So, why not?