Posted on 06/27/2009 10:24:04 AM PDT by FromLori
The real crisis is coming… and it’s coming fast.
Indeed, it started last year, almost entirely off the radar of the American public. While all eyes were glued to the carnage in the stock market and brokerage account balances, a far more serious crisis began to unfold rocking 30 countries around the globe.
I’m talking about food shortages.
Aside from a few rice shortages that were induced by export restrictions in Asia, food received little or no coverage from the financial media in 2008. Yet, food shortages started riots in over 30 countries worldwide. In Egypt people were actually stabbing each other while standing in line for bread.
The developed world, most notably the US, has been relatively immune to these developments. For us, gas hitting $4 a gallon was a bigger deal than any hike in food prices. But for much of the developing world, in which food and basic expenses consume 50% of incomes, any rise in food prices can have catastrophic consequences.
And that’s not to say that food shortages can’t hit the developed world either.
According to Mark McLoran of Agro-Terra, the Earth’s population is currently growing by 70-80 million people per year. Between 2000 and 2012, the earth’s population will jump from six billion to seven billion. We’re expected to add another billion people by 2024. So demand for food is growing… and it’s growing fast.
However, supply is falling. Up until the 1960s, mankind dealt with increased food demand by increasing farmland. However, starting in the ‘60s we began trying to meet demand by increasing yield via fertilizers, irrigation, and better seed. It worked for a while (McLoran notes that between 1975 and 1986 yields for wheat and rice rose 32% and 51% respectively).
However, in the last two decades, these techniques have stopped producing increased yields due to their deleterious effects: you can’t spray fertilizer and irrigate fields ad infinitum without damaging the land, which reduces yields. McLoran points out that from 1970 to 1990, global average aggregate yield grew by 2.2% a year. It has since declined to only 1.1% a year. And it’s expected to fall even further this decade.
Thus, since the ‘60s we’ve added roughly three billion people to the planet. But we’ve actually seen a decrease in food output. Indeed, worldwide arable land per person has essentially halved from 0.42 hectares per person in 1961 to 0.23 hectares per person in 2002.
It’s also worth noting that diets have changed dramatically in the last 30 years.
For example, in 1985 the average Chinese consumer ate 44 pounds of meat per year. Today, it’s more than doubled to 110 pounds. That in of itself is impressive, but when you consider that it takes 17 pounds of grain to generate one pound of beef, you begin to see how grain demand can rise exponentially to population growth with even modest changes to diet.
It also helps explain why stocks-to-use for wheat and corn are now at their lowest levels in 30+ years.
If you’re unfamiliar with stocks-to-use ratios, they are used to determine the amount of food carried over in excess of current demand. Measured as a percentage of demand (so if stocks-to-use is 16%, the total worldwide stocks is currently 116% of demand), stocks-to-use are a good measure of how much extra food we’ve got left over after demand.
Currently the stocks-to-use ratios for corn and wheat are 17% and 23% respectively. On the surface, this sounds like we’ve got a lot of extra food lying around. But you’d be very mistaken to think that: remember a stocks-to-use of 0% would indicate we’re producing just enough food to meet demand in real time. At that point, one bad harvest and people start starving.
Now, stocks-to-use usually runs inverse to price (if supply goes lower, prices rise). And stocks-to-use for wheat and corn are at their lowest levels since the ‘70s. At that time, grains prices were more than three times as high as they are now.
Make no mistake, agriculture is at the beginning of a major multi-year bull market. We’ve got rapidly growing demand, reduced production, and decade low inventories. I can’t tell you when prices will begin to spike (timing is especially difficult given the degree of financial speculation in commodities), but at some point in the not-so-distant future, food prices will go up… WAY up.
I’ll detail how to profit from this trend in tomorrow’s essay. Until then…
Good Investing!
If food shortages appear hear, the Dems and O bambi are toast. There will be open revolt.
And better still, a shooting revolt.
I never throughout the article as I read found anything relative to food production, and land for food production going to Ethanol, and other bio energy products.
Seems to me that would have been a major item to report in this article, and makes me suspect of what his future articles will be.
Our weekly global crises.
Are we over the flu crises yet? And whatever ones followed before that? (I lose track of all the crises. There are just too many.)
I say to the new crises, “let them eat cake.”
“The ethanol mandates that have been foisted on American taxpayers are not just fiscal insanity, they are immoral. Congress has created a system of subsidies and mandates that requires the U.S. to burn food to make motor fuel, at a time when there is a global shortage of food and no global shortage of motor fuel.”
....and drumroll please.....
(snip of above below, quoted not mine....)
“So, where did the claim that ethanol is more energy efficient originate? I believe it originates with researchers from Argonne National Laboratory, who developed a model (GREET) that is used to determine the energy inputs to turn crude oil into products (4). Since it will take some amount of energy to refine a barrel of crude oil, by definition the efficiency is less than 100% in the way they measured it. For example, if I have 1 BTU of energy, but it took .2 BTUs to turn it into a useable form, then the efficiency is 80%. This is the kind of calculation people use to show that the gasoline efficiency is less than 100%. However, ethanol is not measured in the same way. Look again at the example from the USDA paper, and lets do the equivalent calculation for ethanol. In that case, we got 98,333 BTUs out of the process, but we had to input 77,228 to get it out. In this case, comparing apples to apples, the efficiency of producing ethanol is just 21%. Again, gasoline is about 4 times higher.
"OK, so Argonne originated the calculation. But are they really at fault here? Yes, they are. Not only did they promote the efficiency calculation for petroleum products with their GREET model, but they have proceeded to make apples and oranges comparisons in order to show ethanol in a positive light. They have themselves muddied the waters. Michael Wang, from Argonne, (and author of the GREET model) made a remarkable claim last September at The 15th Annual Symposium on Alcohol Fuels in San Diego (5). On his 4th slide , he claimed that it takes 0.74 MMBTU to make 1 MMBTU of ethanol, but 1.23 MMBTU to make 1 MMBTU of gasoline. That simply can’t be correct, as the calculations in the preceding paragraphs have shown.
"Not only is his claim incorrect, but it is terribly irresponsible for someone from a government agency to make such a claim. I don’t know whether he is being intentionally misleading, but it certainly looks that way. Wang is also the co-author of the earlier USDA studies that I have critiqued and shown to be full of errors and misleading arguments. These people are publishing articles that bypass the peer review process designed to ferret out these kinds of blatant errors. I suspect a politically driven agenda in which they are putting out intentionally misleading information.
"One of the reasons I haven’t written this up already, is that 2 weeks ago I sent an e-mail to Wang bringing this error to his attention. I immediately got an auto-reply saying that he was out of the office until March 31st. I have given him a week to reply and explain himself, but he has not done so. Therefore, at this time I must conclude that he knows the calculation is in error, but does not wish to address it. In the interim, ethanol proponents everywhere are pushing this false information in an effort to boost support for ethanol.
"Look at the Minnesota Department of Agriculture claim again: "the energy yield of ethanol is (1.34/0.74) or 81 percent greater than the comparable yield for gasoline". If the energy balance was really this good for ethanol and that bad for gasoline, why would anyone ever make gasoline? Where would the economics be? Why would ethanol need subsidies to compete? It should be clear that the proponents in this case are promoting false information.”
I was also expecting some mention of ethanol and biofuels.
The emphasis, istead, on a population explosion made me wonder if this guy isn’t another leftist population controller. Because as I understand it, population growth rates are actually falling, although there will be a bulge before there’s an absolute drop.
In the Wheat Fields of Kenya, a Budding Epidemic
Stem Rust, Vanquished by Science Five Decades Ago, Has Returned in a Destructive New Form
GREAT RIFT VALLEY, Kenya — A virulent new version of a deadly fungus is ravaging wheat in Kenya's most fertile fields and spreading beyond Africa to threaten one of the world's principal food crops, according to the United Nations’ Food and Agriculture Organization.
Stem rust, a killer that farmers thought they had defeated 50 years ago, surfaced here in 1999, jumped the Red Sea to Yemen in 2006 and turned up in Iran last year. Crop scientists say they are powerless to stop its spread and increasingly frustrated in their efforts to find resistant plants.
Nobel Peace laureate Norman Borlaug, the world's leading authority on the disease, said that once established, stem rust can explode to crisis proportions within a year under certain weather conditions.
“This is a dangerous problem because a good share of the world's area sown to wheat is susceptible to it,” Borlaug said. “It has immense destructive potential.”
That in of itself is impressive, but when you consider that it takes 17 pounds of grain to generate one pound of beef, you begin to see how grain demand can rise exponentially to population growth with even modest changes to diet.”
********
It takes 0 pounds of grain to produce one pound of beef as cattle are bovines (ruminants) and don’t need to consume any grain to produce beef. As a matter of fact they’re designed to take plant proteins (grasses and certain legumes grown on marginal ground not fertile enough for grain production) and convert them very efficiently into more usable animal proteins.
Even cattle finished in feelots on grain based inputs produce beef much much more efficiently than 17 to 1 (more like 4 or 5 to 1). And this is just for the final couple hundred pounds to finish a weight of 1200 lbs and they may come in weighing 800-900 lbs.
it takes 17 pounds of grain to generate one pound of beef, you begin to see how grain demand can rise exponentially to population growth with even modest changes to diet.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
So?....Beef is a luxury. If the grain becomes more expensive to feed the beef then the price will rise and consumption of meat will decrease. Duh?
We saw the same phenomena with lobster, for instance.
We aren’t complaining about future famines because the price of lobster is higher today than a century ago.
In the U.S. there is plenty of land. A Chinese peasant could feed his entire family on the land surrounding a typical U.S. suburban tract house. Throw in a few chickens, a goat or two, a community pond for farmed fish, and a yearly pig and nutrition would not be a problem.
If we want to feed the world, then the solution is to have markets throughout the world that are as free as possible.
This is article is written by a liberal/Marxist who is fundamentally rooted in the cultural of death. He hates human life and wants to see less of it.
Baring natural disasters the US farmers are not even close to maxing production.
Fear sells, whats your product?
I think we should all go to Mexico and take over their country. It is under developed and we could use the land for farming. It appears no one follows the laws that has any authority in that country or ours; do why not? It seems the Mexicans don’t want to live in their country and we all know if we leave; they would trash this country and Obama would have nothing.
Let's call him what is really is: a Marxist!
All liberals are really Marxists. It's like a train. Every liberal is on the same train. Each socialist program is merely a station stop. The liberal will never be satisfied until they reach the finally destination: COMMUNISM!
And,,,Yeah! He is a full fledged member of the Culture of Death. All Marxists are.
Food shortages will happen elsewhere, as they always have.
Let’em starve to death, I don’t care.
For 200 years we have shown the world the way to have a torrent of food that far exceeds the needs of a nation. They’ve chosen not to follow our lead, and instead have decided to stick to dictators and despots as heads of their countries.
Screw ‘em. They can starve as we burn our excess foods to fuel our vehicles and warm our homes.
See my tagline, it’s been true for decades, and will be true this year and next, and on into the forseeable future.
A can of sweet corn that I paid $0.56 for three months ago is now priced $0.72.
Solution: Lightly fertilize the Southern Ocean with iron and other trace minerals.
Result: More plankton followed by more fish and more protein to feed the world. Then sell the carbon credits for all of the CO2 we are removing. We could become CO2 neutral at a cost less than $100M/yr.
Side Benefit: Very good for baleen whales!
Let’s trade the Chinese food for our debt at a thousand to one bushle ratio
That's exactly the reason some Middle-Eastern religions have prohibitions against eating pork.
The Aztecs did a lot of human sacrififices...they ate the sacrificed bodies.
Why? Because grain was expensive?
As for human sacrifice, was cannibalism part of the daily or weekly diet or merely an occasion ritual?
Similar thoughts here as well.
Thanks for your response.
Perhaps it’s beacuse corn used as ethanol feedstock is still used as animal feed.
Leftists are never going to admit to creating their own crisis. Hysteria is their bread and gravy. The concept of people helping themselves by their own means is frightening to them.
The grain used to feed pigs could be used to feed starving humans...ten times as many humans.
"As for human sacrifice, was cannibalism part of the daily or weekly diet or merely an occasion ritual? "
I don't know how often. Anthropologist Marvin Harris (bless his soul) said that there was a whole network and heirachy as to who got the best 'cuts' of the human carcass.
“...corn used as ethanol feedstock is still used as animal feed.”
Fully aware, but the point is that it wasn’t mentioned, nor hinted at. That is a major factor, therefore I believe the article agenda driven.
There’s always the possibility that the author is merely ignorant. He seems to know nothing about farming, for instance.
If we should enter a Dalton-like minimum, and it’s beginning to look more likely, the grain-producing regions of the world (Canada, northwest U.S., and North China) will be greatly affected and much of the world will starve. We won’t have any grain left over to sell to China (or anyone else) after feeding ourselves, and we may not have enough to feed ourselves.
"'Global warming hype could be masking a more immediate climate problem. A problem that could have a larger impact on our lives than global warming over the next 20 years. Solar scientists have predicted the return of the Dalton Minimum, which was the result of two low intensity sunspot cycles lasting over 28 years. During the early 1800s the average temperatures in the Mid West were 2-4 degrees cooler than the 20th Century average. In many areas it was much dryer than average, especially along the California coast. We have already started to see some ocean cooling as we leave sunspot cycle 23 and enter sunspot cycle 24, the first of the two predicted minimum cycles...'
In any case, ethanol production required only a very minor portion of total grain production ~ which is probably why the guy didn't focus on that.
The real issue is NO SUN SPOTS, COOL DRY WEATHER (which, BTW, carries with it rainbands which ruin crops anyway ~ see what happened in the cornbelt this year), and 3 billion extra people.
As they say in the old country: "Gooberbama, the Traveller! He will come in one of the pre-chosen forms! During the Rectification of the 2009 Budget, the Traveler came as a large and moving Torg! Then, during the Third Reconciliation of the last of the Earmarx, they chose a new form for him: that of a giant Sloar! Many Shubs and Zuuls knew what it was to be roasted in the depths of the Sloar that day, I can tell you!"
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