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Getbig Main Boards => Politics and Political Issues Board => Topic started by: Butterbean on June 30, 2009, 02:05:08 PM
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What are your thoughts on this article please?
The Real Crisis Is Food: The Real Crisis Is Food: Beginning of the Bull for Agriculture
by: Graham Summers June 22, 2009
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.
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.
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.
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ok now...
Lets hear from all you hippie crusaders who want to bash outfits like Monsanto all the time... :D
Where do they figure it takes 17 lbs of grain to make a pound of beef? By that logic, it takes over 3 tons of grain each to feed cattle to harvest weight?
The population explosion is going to have to get controlled somehow, or else the planet is not going to be able to feed itself without totally destroying the natural processes.
At any rate, be prepared for millions of starving wretches in the third world in the intermediate future...
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Interesting. Definitely something to be concerned about. Hadn't thought about how rapidly the worldwide population is growing. Amazing.
As with many issues, this will not be a crisis until it hits our shores.
All you carnivores should be worried. :)
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until the next, tomato, spinach or whatever vegetable outbreak miraculously appears
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you know what I think about this... :)
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Hey guess what..u can't grow shit in the Middle East or Africa...and u can't eat oil. Fuck em.
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Hey guess what..u can't grow shit in the Middle East or Africa...and u can't eat oil. Fuck em.
hahaha, you're a very angry individual... I like that...
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The hate keeps me warm.......quick what movie. Anyway plenty of farmland in good old America.
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Hey guess what..u can't grow shit in the Middle East or Africa...and u can't eat oil. Fuck em.
A good source of future slaves, no?
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We have our own crosses to bare without importing slaves...but it all makes nice vacation land with people.
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The hate keeps me warm.......quick what movie. Anyway plenty of farmland in good old America.
"All that hate is gonna burn you up"
"The hate keeps me warm...."
RED DAWN.
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Ah yes....good man..good man.
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Americans need to re-evaluate the wasted food, plus the government not paying farmers to farm. Also, 3rd world countries need to become more self-dependant when it comes to it's agricultural infrastucture. Stop sending sally struthers to africa, the bitch eats too much to be there. If restaurants, schools and the average home would serve proper serving sizes the food stuffs around the world would be stretched. Also take into account that there are people that do grow their own veggies and that helps to a degree, there is also the viability of genetic engineering and those benefits.