US Agricultural Economists Say Bacon Shortage Is Hogwash 137
PolygamousRanchKid writes "The economics of the current drought are likely to nose up prices for bacon and other pork products next year, by as much as 10 percent. But U.S. agricultural economists are dismissing reports of a global bacon shortage that lent sizzle to headlines and Twitter feeds last week. Simply put, the talk of scarcity is hogwash. 'Use of the word 'shortage' caused visions of (1970s-style) gasoline lines in a lot of people's heads, and that's not the case,' said Steve Meyer, president of Iowa-based Paragon Economics and a consultant to the National Pork Producers Council and National Pork Board. 'If the definition of shortage is that you can't find it on the shelves, then no, the concern is not valid. If the concern is higher cost for it, then yes.'"
Re:Nothing to see here (Score:2, Insightful)
Well with the hype about this, politicians are sure to step in and "solve" this problem. Price controls and agricultural policy meddling will bring about shortages.
Re:Nothing to see here (Score:4, Insightful)
Farmer Brown (or, more likely, subsector 12 of Hive 11 of the Archer Daniels Midland Collective) raised x pigs over the past couple of years. The value of x was determined by figuring out how much money they could make versus raising, say, chickens. The price of pork has risen now, so now the value of x has risen. There's a lag, as we have to wait for the piglets to mature, but farmers are in it to make money - the price has spoke, the market wants more pork.
So if we do engage a price control, that is, we limit the amount that Farmer Brown can charge for the pork, he won't trim his sails, he'll just keep raising chickens, despite that what people really want is more pork. A price control is a statement that "yes, people want this more, but you cannot profit from it." And thus people will not take the extra measures to provide it that people would prefer.