Why is it that when disaster strikes Hawke’s Bay, Wairarapa’s food production can’t simply plug the gaps?
This is the question that I keep being asked, and as a non-expert, I will attempt to answer.
Wairarapa has a finite amount of land and a finite amount of sheep and beef. Because the farming system relies on breeding and breeding seasons, you can only have so many cows or sheep in any given season.
Farms are also only set up to carry a certain number of cows with a set amount of grass to feed them.
So, when floods wipe out Hawke’s Bay’s livestock, Wairarapa can’t magic up thousands of cows to replace those lost – we also probably do not have the capacity to take their cows either.
The same applies to crops, and if they’ve been wiped out, they need to regrow.
When Hawke’s Bay is hit, the total food production of the nation drops – but using laws of supply and demand, we’re now out of whack.
So, what happens now? Prices rise.
Why do prices rise? Because the value of that commodity has now increased, due to demand.
Behind the scenes are all sorts of other inflationary pressures, including labour, cost of living, and regulation.
Although Wairarapa is capable of producing more, and more different kinds of food, it takes years of investment and infrastructure to make that shift.
As explained by a local farmer, it’s generally quicker and less expensive to re-plant and repair an existing farm with needed infrastructure than to move the business entirely.
When prices increase for the consumer, due to demand, this also does not always mean that farmers are suddenly being paid more. In fact, their takings may have stayed the same while repair and inflationary costs hit them too.
Farmers generally take the price for the products that are offered to them, and they can’t simply ask for more because the cost of living is pinching them too.
The elusive supply chain will set the price.
However, it would be fairer if farmers could set their prices based on the cost of production and output rather than their products being purchased by exporters or distributors that then sell them on.
The exporters and distributors also set their prices based on markets, otherwise known as what people are willing to pay.
Coming back to supply and demand – if supply is low and demand is high, in general, prices will rise.
Unless we want to go back to the barter system, which unfortunately is also subject to the law of supply and demand, this is the reality that we’re stuck with.
Although money is an intangible resource, it’s the glue that holds modern trading economies together.
In conclusion, absorbing the food products lost in Hawke’s Bay is practically impossible because that simply is not how it works.
This discussion lends itself to the thought: If we invented money as a means of trade, can’t we make a better system that benefits workers and producers better?
Luckily for us all, I will not be the person trying to reshape the modern economic system.
