Thursday, April 25, 2013

Will Abenomics Lead to a Food Crisis in Japan?

I have been saying that inflationism/currency devaluation leads to economic calculation problems that yields the opposite effects from the intended.

We are getting reports on this.

From Reuters:
However, in Japan, something odd is happening as a result of Abenomics — a big shortage of squid.

Japan Squid Fisheries Association (JAFRA) decided to halt all fishing operations this Friday and Saturday because a weaker yen is pushing petrol prices higher, to the extent that going out to the sea will bring a guaranteed loss. The yen has lost more than 13 percent against the dollar since the start of the year.

Squid fishing is highly energy-intensive because fishers use light to lure squid at night. Fuel makes up around a third of the cost of fishing.

There is a government subsidy for fishermen when energy prices surge. But according to JAFRA, even with the subsidy, the average loss per boat can go up to as much as 200,000 yen ($2,009) per year at the current dollar/yen exchange level of around 100.

The temporary halt is only affecting squid fishing, but people are worried other fishermen may be forced to follow suit if the yen weakens further. The Federation of Japan Fisheries Cooperatives is planning an emergency meeting to ask the government for more financial help.
Supply side adjustments won’t be able to cope with demand side dynamics mainly due to asymmetric responses to the distortions brought by unstable price levels. 

The end result, shortages and higher prices from shrinking markets (due to supply side constraints and reduced demand from consumer), lesser investments, and social disorder.

Will a food crisis follow?

1 comment:

Unknown said...

Maybe even whales could be safe from Japanese fishermen if inflation keeps going up! It would be priceless: Abenomics achieving what Greenpeace and others couldn't.