Tim Worstall , FORBES CONTRIBUTOR ... I have opinions about economics, finance and public policy.
It Does Not Take 7 kg Of Grain To Make 1 kg Of Beef: Be Very Careful With Your Statistics
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.
So the number turns up in The Guardian this morning:
Meat consumption is rising in China, India and Brazil, and since it takes 7kg of grain to produce 1kg of beef (and 4kg to produce 1kg of pork), this is adding to global demand.
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.
So I asked Larry Elliott where the number came from and was sent this from Fidelity Investments (not online so far as I know).
The demand for more protein has a significant knock-on impact on grain demand. Livestock is reared on grain-feed, making production heavily resource intensive. Indeed, it takes 7 kilograms of grain to produce just 1 kilogram of meat. As demand for meat rises, this increases the demand for and prices of feedstock – these increased costs of productions flow back to the consumers in the form of higher meat prices. Adding to the upward pressure on feedstock price and much to the dislike of livestock farmers, have been US environmental regulations (the Renewable Fuel Standard) that require a proportion of corn crops be used for the production of bio-fuel.
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?
Congratulations, you’ve just lost a fortune, for what actually happens when grain prices rise like this is that cattle are slaughtered early and we get a glut of carcases. This is well known enough that falling meat prices in Third World markets are taken as signs that there’s about to be starvation out there over the horizon. For it’s a sign of strongly rising grain and feed prices.
But if this number is useful why am I saying that it’s nonsense? Because it relies upon one particular technology:
The efficiency with which various animals convert grain into protein varies widely. With cattle in feedlots, it takes roughly 7 kilograms of grain to produce a 1-kilogram gain in live weight. For pork, the figure is close to 4 kilograms of grain per kilogram of weight gain, for poultry it is just over 2, and for herbivorous species of farmed fish (such as carp, tilapia, and catfish), it is less than 2.
It is only in US or US style feedlot operations than cattle are fed on this much grain. Thus the equation is useful if you want information about what is going to happen with US cattle and grain futures: for that’s the general production method feeding those cattle futures. But very little of the rest of the world uses these feedlots as their production methods. I’m not certain whether we have any at all in the UK for example, would be surprised if there were many in the EU. Around where I live in Portugal pigs forage for acorns (yes, from the same oak trees that give us cork) or are fed on swill, goats and sheep graze on fields that would support no form of arable farming at all (they can just about, sometimes, support low levels of almond, olive or carob growing). Much beef cattle in the UK is grass fed with perhaps hay or silage in the winters.
My point being that sure, it’s possible to grow a kilo of beef by using 7 kilos of grain. But it isn’t necessary. The number might be useful when looking at agricultural futures in the US but it’s a hopelessly misguiding one to use to try and determine anything at all about the global relationship between meat and grain production. And most certainly entirely wrong in leading to the conclusion that we must all become vegetarians.
Which brings us to the lesson of this little screed. Sure, numbers are great, can be very informative. But you do have to make sure that you’re using the right numbers. Numbers that are applicable to whatever problem it is that you want to illuminate. If you end up, just as a little example, comparing grain to meat numbers for a specific intensive method of farming really only used in the US then you’re going to get very much the wrong answer when you try to apply that globally.
Oh, as a bonus point, pasture land, that used for grazing meat beasts, is the best form of land use for locking carbon into the soil. Ploughing it up to grow grains (where that is even feasible) releases vast amounts of CO2 into the atmosphere. So we most certainly don’t want to do that at all. Better to use it for the only thing we can use it for, growing beef and other meats. Which we’ll have to eat thus not becoming vegetarians.
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