One of my perennial bugbears is the accuracy of statistics that people use to try and make some point about the world. All too often people end up using numbers they don’t quite understand and this leads them to recommending policies that have only the most tenuous connections with reality. My particular ire today is over this oft quoted number that it takes 7 kg of grain to make 1 kg of beef. Given this we must all become vegetarian or poor people will die.
The problem with this number is that while it is possible to use 7 kg of grain to make 1 kg of beef it is not necessary to do so. The number has in fact been formulated for one reason and is then being used, hopelessly inaccurately, for entirely another.
The background being that there are ever more people who are ever richer. This increases demand for meaty things and thus there is less grain to feed the other, poorer people. So, we should stop eating meat to leave more grain for people to eat and….yes, that’s right, we all have to become vegetarians because the planet and basic human morality requires it.
Now, if you’re thinking of investing in agricultural commodities that’s a useful piece of information. There are cattle futures (just ask Hilary!) and there are grain futures and so it is at least theoretically possible to arbitrage between the two. If grain prices are rising then surely cattle futures will rise as well? Given that so much of this more expensive grain will be needed to fatten them up?