Thursday, February 10, 2011
Wheat price differentials surplus/deficit areas
Earlier I calculated the 'wheat flow' from counties where they grew more than they ate to counties which grew less wheat and more livestock. Recently I found extraordinarily detailed data which lists the wheat price by county only by year but by week within the year! I thought that the difference in wheat price between counties might be explicable just by some function of the distance between them. Turns out not to be so simple as that, but more interesting. The difference between counties is much more pronounced when there is a bad harvest. When the harvest is bad, the wheat exporting counties really take advantage and the prices in the importing counties surge. Sounds like the sort of behaviour we see over tickets to hockey games, doesn't it! So I worked out which counties had the most surplus (Lincolnshire and Cambridgeshire) and which had the biggest deficits (Lancashire and Middlesex). Then I subtracted Lincolnshire from Cambridgeshire...because if my theory os correct, the gap between the two surplus counties shouldn't change much. Then between the biggest surplus county (Lincolnshire) and the highest deficit county (Lancashire). If things are going my way, then the difference between these two should be accentuated in years of bad harvests. Sure enough, the red line really jumps in years when we know from old books that the harvest was poor. The years 1816/17 are a good example of this. 1800 looks dramatic, but we were at war with the French then (remember Napoleon?) and so there were all sorts of other factors involved. These results have a modern-day significance in terms of food security. Especially now as the world looks like it is running out of food. The events in Eqypt were basically triggered by high food prices. Learn from history! Next step is to try to quantify the effect. This is fun!