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.
There are already several waste burners around the country. Ames, Iowa uses garbage to generate electricity. This unit has been on-line since about 1980 or so. I don’t have a problem with other contributions to our energy needs. Corn based ethanol has the added advantage of the high-protein by-products for use in livestock rations.
I was watching Modern Marvels on the History Channel about corn and they stated that the American farmer produces enough corn to supply every human on the planet with around 120 pounds of corn per year.
1.1 billion? Is this counting Death Valley, mountains and the arctic tundra?
We consume more oil than they do oil.
Indeed, the feed part of the ethanol plant is a big profit center. You can not run a profit if the feed price is to low.
Guess what, with all the plants going up, there is WAY to much feed on the market. And there are plants closing up and scaling back.
We have a lot sitting fallow for many reasons. Including a bunch of planet worshiping idiots who keep reducing the amounts of land free.
The entire US is 2.2 billion acres. Only 18% of it is arable land or a little over 400 million acres. That includes the land already in farm use.
https://www.cia.gov/library/publications/the-world-factbook/geos/us.html
I noticed that U of Illionis has a 44,000 plant per acre project that should be nearly finished. Could be an interesting yield in raw bushels.
There is a fine line between excessive plant population and optimizing yield. Check out the guy from Missouri raising the 154Bu/acre beans. I don’t think his plant population was excessive, but his attention to his plot certainly was.
Concerning your tag line — Rugby and Bullriding are tough sports, but I suggest you add extreme fighting (aka mixed martial arts) and college wrestling to the list. Extreme fighting is dominated by former college wrestlers. I would hate to wrestle a bull.
Pioneer has some plots that have shown a net yield decrease at 36,000 plants per acre and I am wondering if the U of I did something different that may have extended net yield..
Is that the guy who has been giving weekly updates on his beans on Growing Point (Pioneer)?
I did not know he was at 154 bushels per acre. Wow.
The fine line of yield versus plant density becomes much finer when you look at the cash yield at various levels of planting (Iowa State University has some interesting insight on this cash fine line). An interesting subject, to say the least.
I don’t know if that is the guy on TV, but I do know the beans are a Pioneer variety.
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