Posted on 11/26/2007 10:38:30 AM PST by DeaconBenjamin
Malthus may have been right after all, though two centuries early and a crank. Mankind is outrunning its food supplies. Hunger - if not yet famine - is a looming danger for a long list of countries that are both poor and heavily reliant on farm imports, according to the Food Outlook of the UN Food and Agriculture Organisation (FAO).
The farm crunch has been creeping up on the world for 20 years. Food output has risen at 1.3pc a year: the number of mouths at 1.35pc.
What has abruptly changed is the twin revolution of biofuel politics and Asia's switch to an animal-protein diet. Together, they have shattered the fragile equilibrium.
The world's grocery bill has jumped 21pc this year to $745bn (£355bn), hence the food riots ripping through West Africa, Morocco, Yemen, Bengal, and Indonesia.
Three people were killed this month in China at a cooking oil stampede in Chongqing. Mexico has imposed a ceiling on corn prices to quell a tortilla revolt.
Russia has re-imposed a Soviet price freeze on bread, eggs, cheese, milk, sugar, and vegetable oil until January. Russian bread prices have doubled this year. Global wheat prices have surged from $375 a bushel to $826 since mid-2006.
The FAO says the food spike has a different feel from earlier cycles. "What distinguishes the current state of agricultural markets is the concurrence of the hike in world prices of, not just a selected few, but of nearly all, major food and feed commodities," it said.
"Rarely has the world felt such a widespread and commonly shared concern about food price inflation."
"There is a sense of panic," says Abdolreza Abbassian, head of the FAO's grains trading group. As so often these days, China is the swing player. It is replicating the switch to a diet of beef, pork, chicken, and fish that occurred in Taiwan and Japan when they became rich.
The US Department of Agriculture says the Taiwanese eat nine times as much animal protein as the Chinese.
Why does it matter? Because it takes 16lb or so of animal feed - mostly soya or corn - to produce a single pound of animal flesh. It takes 50 times as much water.
Until last year, China was able to grow enough grain to supply its ubiquitous poultry and fish farms. It has now become a net importer of corn for the first time in its modern history.
Urban sprawl across China's eastern seaboard is stealing most the fertile land, and the water tables of northern China are drying up. The same trends are under way in India, Vietnam, and much of emerging Asia.
Meanwhile, the Bush administration aims to supply 20pc of total US fuel needs from biofuels within a decade, up from 3.5pc today - a ploy to break dependence on oil demagogues and slash the trade deficit.
Credit Suisse says worldwide biofuel targets will take up 12pc of global arable and permanent cropland in 10 years, although new technology using the non-edible stalks will mitigate food displacement up to a point.
"It's a total disaster for those who are starving," says Jean Ziegler, the UN's food Rapporteur.
"It takes 232kg of corn to make 50 litres of bioethnanol. A child could live on that amount of corn for years," he said. Mr Ziegler wants a five-year ban on biofuels.
Yes, there are pockets of spare farm land - in Brazil, the Black Sea region, and parts of Africa. Europe is ditching its CAP land set-asides at long last. But many of the new frontiers are forest, or carbon sinks. You see the problem.
Investors who want to take advantage of agflation must tread with care, both for moral reasons and questions of timing. Grains have already had a torrid run for the past two years.
The US Department of Agriculture says reserves will reach the lowest in 35 years by 2008. The EU's vast silos are empty. "All the grain surpluses have vanished. We have nothing left except a wine lake," said Michael Mann, the Brussels farm spokesman.
This is of course priced into the futures markets. Short-term hedge funds are rotating out, not in. Even so, farm commodities look safer at this late stage of the cycle than industrial metals.
"They are a good defensive play," said Stephen Briggs, an analyst at Société Générale.
"They are less sensitive to the global economy than base metals, and the bull market is still much younger," he said.
While base metals and energy prices have all smashed records, sugar would have to rise 300pc to touch its all-time highs, and corn by 50pc. Cotton is trading at 53 cents a pound. It fetched 30 cents in 1860. The super-cycle clearly has a long way to run.
* * *
Malthus may yet be outwitted. Fuel cells and solar panels may come to the rescue. GM crops may gives us another Green Revolution. The price of oil may crash again, cooling the biofuel craze for another cycle.
And yes, there are always spuds, the forgotten miracle. As the UN tell us, the potato produces "more nutritious food more quickly, on less land, and in harsher climates than any other major crop", and almost all the tuber is edible.
Rich countries will not starve. But as Japan's Marubeni Institute warns, they may face a return to post-War food rationing long before the world population peaks in the middle of the century.
Good time to be a successful farmer.
The population control crowd never gives up and never stops to make a rational assertion. Whatever they think must be happening is happening.
Meanwhile the Taliban is burning food aid.
Biofuel is another of those artificial limitations placed on the productivity of agriculture. This strategy APPEARS to be an “answer” for the seemingly rising prices of fossil fuels, but in fact, is a net energy/resources negative. Because the inputs for the opening up of additional land for biofuels production will demand even MORE fossil fuels (most of which would then have to be imported), the overall demand for fossil fuels will INCREASE. Something is wrong with that equation, if the intention is reduction of dependence from foreign sources. And as the production of biofuels is now competing with the production of food, the price of both must rise to assure adequate supplies of both. It is the old question of supply and demand. High demand + low supply = high price.
It would all be so easy if only we didn’t eat.
There are other sources of relatively cheap energy. But if it were cheap, we would just waste more of it.
“Malthus may have been right after all, though two centuries early and a crank. Mankind is outrunning its food supplies. Hunger - if not yet famine - is a looming danger for a long list of countries that are both poor and heavily reliant on farm imports, according to the Food Outlook of the UN Food and Agriculture Organisation (FAO).”
Malthus was wrong and the assumptions that he was not wrong ignore the man-made nature of all of the problems with sufficient food production, and the latest of those problems - the taking of precious land and water for bio-fuels - is, additionally a phony and needless problem, because its premise, that man-made CO2 from fossil fuels has made the climate warmer is not science, it is political science.
Biofuels are not a negative energy gain. Accounting for all inputs, ethanol offers about a 20% net energy capture from sunlight. Turning sunlight into mobile fuel is what it is all about. The 20% gain even accounts for the steel production for the farm equipment. From my personal perspective, it takes about 1/2 gallon to plant an acre of corn generating 400 gallons of ethanol/acre. The current goals include generating 1000 gallons of ethanol/acre. The byproducts are also fed to livestock as a high protein supplement.
Most people I know could ingest far fewer calories and do just fine.
He does not include the vast amount of farmland in the US that has been abandoned back to pasture due to low crop prices and increasing efficiency in the last 30 years. The famr population has been declining for many years.
I could stand to lose 50 pounds.
Is food fungible? If not, let’s start by telling the Saudis that 1 bushel of corn = 1 barrel of oil.
Organization of Food Exporting Countries. Heh.
Beware the “Tortilla Revolt”!
There is an additional 47 million acres in conservation programs. We actually have about 1,000,000,000 acres of useful farmland.
About 20% of the world’s farmland. The only way to understand the full size of this is to drive from Southern Kansas to Northern Nebraska and try to find a human in the corn and wheat.
The numbers I have are from 2006 and 2007 from the USDA and it shows approximately 1.1 billion acres available for agriculture.
About 1.7 million square miles of stuff growing in the ground.
A higher portion of agricultural output was dedicated to transportation fuel in Malthus’ day than is so today, even with the advent of bio-fuels.
What is your bushel yield per acre?
Can’t wait until we hit the 300 bushel average...
hehehe
I agree.
Personally I am not a great fan of biofuels, particularly ethanol, nor a fan of the economic need for increasing population, but the doom and gloom about agriculture, its land and production in the US, is absurd.
In the long run we (the US) are indeed in the catbird seat, if of course we don't plunge further into Leftism, which destroys everything. (Actually we need to reverse somewhat).
Only another verification that the global manipulators, who know this, really are conspiratorial a**holes, ala Soros, Buffet, Hillary, Rockefellers, the CFR, et al.
You live in Texas and corn production there is poor compared to the Midwest. We had a very dry year but yields in this area were around 150Bu/acre. 300 Bu corn has been raised in parts of Iowa and Illinois for several years now. The goal now is to break 400 Bu/acre. Corn and bean yields continue their upward trend. There was a guy in SW Missouri that raised 154Bu/acre soybeans on a small irrigated plot this past year. Ethanol is the not the total solution to foreign dependency but it does have a viable role to play.
My point was not that the biofuels would or would not be a net energy benefit. But in order to achieve that benefit, even GREATER amounts of fossil fuels, in some form, would have to be extracted and utilized, just to keep us running in the same place.
TANSTAAFL (There ain’t no such thing as a free lunch).
My personal choice for extracting energy from agricultural by-products is either using Thermal Depolymerization on all kinds of organic waste (sewage sludge, slaughterhouse waste, old tires, used newspapers, or waste from food processing) to produce kerogen, a substance very similar to crude oil, but with none of the grit and saline of crude petroleum, or go to Plasma Waste Reduction, which uses an electric arc with an operting temperature of about 33,000 degrees Fahrenseit (about three times the temperature of the surface of the Sun), which reduces EVERYTHING organic to a mixture of very hot carbon monoxide and hydrogen gas. The second method is used as a heat exchange to superheat steam to drive a power generation unit (same as power generation stations everywhere), then BURNING the syngas produced as fuel to drive additional steam generation units.
Electricity output of the second system is about three times the amount of power necessary to keep the plasma arc firing, and it takes ALL kinds of organic and inorganic waste. EVERY kind of hazardous chemical is reduced to its constituent elements in this process, with the exception of radioactive materials, and the non-gaseous products are reduced to a glassy slag, which is tapped off, and used as aggregate for concrete or road-building, as it is mostly silica and various kinds of mineral salts. Substances like potash, soda ash, phosphates, lime, chlorides, and practically every other metallic or inorganic element are dissolved in this molten silica slag.
Now THAT is taking two negatives (inadequate energy supply, excessive waste stream) and turning it into a positive (plentiful electricity). And electricity can substitute for vast amounts of steady-use energy.
This world will NEVER have to run out of liquid petroleum, or access to energy. Human beings are smart enough to convert this otherwise wasted stream of resources to our benefit.
Even carbon dioxide may be converted back into a “biofuel”, by using tank and piping systems to hold highly specialized algae, and allow them to form kerogen, which may be used exactly like crude oil.
Carbon dioxide is NOT a pollutant in earth’s atmosphere. It is a highly essential compound, without which life could not exist. In fact, it would prove impossible to remove ALL CO2 from our atmosphere. It just keeps on coming back, and is absorbed by photosynthesis.
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