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Date: 2024-06-22 Page is: DBtxt003.php txt00012126
MESSAGING
BE CAREFUL WITH THE USE OF DATA

It Does Not Take 7 kg Of Grain To Make 1 kg Of Beef:
Be Very Careful With Your Statistics


Original article: http://www.forbes.com/sites/timworstall/2012/09/03/it-does-not-take-7-kg-of-grain-to-make-1-kg-of-beef-be-very-careful-with-your-statistics/
Peter Burgess COMMENTARY
This is a thought provoking piece. I did not appreciate it when I first archived it more than a decade ago, but it resonates with me now (June 2023).

My early career was informed in large part by the technology of the time, and the reality that the UK had lost much of its national wealth as a result of the war effort in the early 1940s. This was in contrast to the United States that accumulated wealth during the war years faster than any other time in its history.

The United States lost much of its global economic power in 1973 when the OPEC oil cartel took control of global oil energy and started to call the shots. Fifty years later in 2023, Saudi Arabia has a huge amount of economic power and needs to be taken seriously, no matter how much this hurts.

This piece about data and analysis and the production of beef makes me think of the reality that in the USA for the past 40+ years since the Reagan administration the US economy has been optimised for economic profit for business and investors without very much consideration to any other national priorities ... in fact such national priorities were almost totally set aside by successive Republican administrations.

It is no accident that China has emerged over the past 40 years as an economic and military power to be reckoned with while, and even though the USA has the biggest military force on the planet as well as the biggest consumption economy it has lost in terms of reputation in almost every corner of the world.

The US may have figured out how its business entities and investors can make the maximum amount of money and profit ... but in the process has lost a lot more than it has gained.
Peter Burgess
It Does Not Take 7 kg Of Grain To Make 1 kg Of Beef: Be Very Careful With Your Statistics

Written by Tim Worstall , FORBES CONTRIBUTOR ...
'I have opinions about economics, finance and public policy.' ... Opinions expressed by Forbes Contributors are their own.

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.

Tim Worstall , FORBES CONTRIBUTOR ... I'm a Fellow at the Adam Smith Institute in London, a writer here and there on this and that and strangely, one of the global experts on the metal scandium, one of the rare earths. An odd thing to be but someone does have to be such and in this flavour of our universe I am. I have written for The Times, Daily Telegraph, Express, Independent, City AM, Wall Street Journal, Philadelphia Inquirer and online for the ASI, IEA, Social Affairs Unit, Spectator, The Guardian, The Register and Techcentralstation. I've also ghosted pieces for several UK politicians in many of the UK papers, including the Daily Sport.

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