Ridley is also on target when he explains that, “scarcity drives up price; that encourages the development of alternatives and of efficiencies.” Over the long run shortages won’t be a function of supply – they’ll result from errant policies. As such, the worst response is to hamper the market because it inherently manages scarcity. When allowed to work, higher prices discourage consumption on one side and encourage production on the other side. The recent Russian embargo on grain exports is a perfect example of what NOT to do. The policy disallowed producers to access the world market. Consequently, it sends exactly the wrong signal to producers – don’t plant more wheat because there’s no opportunity for reward on the other side. Policy exacerbates the problem – not production shortfalls.
In the end, the enduring concern shouldn’t be about price spikes or lack of production. Rather, the focus needs to be upon agriculture’s business framework. Commodities, food products and technology must flow freely throughout the globe to feed its people. However, excessive regulation, corrupt or errant government policy, and absence of open markets will almost certainly guarantee failure. Solutions are possible if we don’t impede progress with needless stumbling blocks. After all, agriculture is THE success story of mankind, capable of responding to world needs when allowed to do so.