Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Choosing the Best Garage Floor Containment Mats - 23rd Jan 20
Understanding the Benefits of Cannabis Tea - 23rd Jan 20
The Next Catalyst for Gold - 23rd Jan 20
5 Cyber-security considerations for 2020 - 23rd Jan 20
Car insurance: what the latest modifications could mean for your premiums - 23rd Jan 20
Junior Gold Mining Stocks Setting Up For Another Rally - 22nd Jan 20
Debt the Only 'Bubble' That Counts, Buy Gold and Silver! - 22nd Jan 20
AMAZON (AMZN) - Primary AI Tech Stock Investing 2020 and Beyond - Video - 21st Jan 20
What Do Fresh U.S. Economic Reports Imply for Gold? - 21st Jan 20
Corporate Earnings Setup Rally To Stock Market Peak - 21st Jan 20
Gold Price Trend Forecast 2020 - Part1 - 21st Jan 20
How to Write a Good Finance College Essay  - 21st Jan 20
Risks to Global Economy is Balanced: Stock Market upside limited short term - 20th Jan 20
How Digital Technology is Changing the Sports Betting Industry - 20th Jan 20
Is CEOs Reputation Management Essential? All You Must Know - 20th Jan 20
APPLE (AAPL) AI Tech Stocks Investing 2020 - 20th Jan 20
FOMO or FOPA or Au? - 20th Jan 20
Stock Market SP500 Kitchin Cycle Review - 20th Jan 20
Why Intel i7-4790k Devils Canyon CPU is STILL GOOD in 2020! - 20th Jan 20
Stock Market Final Thrust Review - 19th Jan 20
Gold Trade Usage & Price Effect - 19th Jan 20
Stock Market Trend Forecast 2020 - Trend Analysis - Video - 19th Jan 20
Stock Trade-of-the-Week: Dorchester Minerals (DMLP) - 19th Jan 20
INTEL (INTC) Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 18th Jan 20
Gold Stocks Wavering - 18th Jan 20
Best Amazon iPhone Case Fits 6s, 7, 8 by Toovren Review - 18th Jan 20
1. GOOGLE (Alphabet) - Primary AI Tech Stock For Investing 2020 - 17th Jan 20
ERY Energy Bear Continues Basing Setup – Breakout Expected Near January 24th - 17th Jan 20
What Expiring Stock and Commodity Market Bubbles Look Like - 17th Jan 20
Platinum Breaks $1000 On Big Rally - What's Next Forecast - 17th Jan 20
Precious Metals Set to Keep Powering Ahead - 17th Jan 20
Stock Market and the US Presidential Election Cycle  - 16th Jan 20
Shifting Undercurrents In The US Stock Market - 16th Jan 20
America 2020 – YEAR OF LIVING DANGEROUSLY (PART TWO) - 16th Jan 20
Yes, China Is a Currency Manipulator – And the U.S. Banking System Is a Metals Manipulator - 16th Jan 20
MICROSOFT Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 15th Jan 20
Silver Traders Big Trend Analysis – Part II - 15th Jan 20
Silver Short-Term Pullback Before Acceleration Higher - 15th Jan 20
Gold Overall Outlook Is 'Strongly Bullish' - 15th Jan 20
AMD is Killing Intel - Best CPU's For 2020! Ryzen 3900x, 3950x, 3960x Budget, to High End Systems - 15th Jan 20
The Importance Of Keeping Invoices Up To Date - 15th Jan 20
Stock Market Elliott Wave Analysis 2020 - 14th Jan 20
Walmart Has Made a Genius Move to Beat Amazon - 14th Jan 20
Deep State 2020 – A Year Of Living Dangerously! - 14th Jan 20
The End of College Is Near - 14th Jan 20
AI Stocks Investing 2020 to Profit from the Machine Intelligence Mega-trend - Video - 14th Jan 20
Stock Market Final Thrust - 14th Jan 20
British Pound GBP Trend Forecast Review - 13th Jan 20
Trumpism Stock Market and the crisis in American social equality - 13th Jan 20
Silver Investors Big Trend Analysis for – Part I - 13th Jan 20
Craig Hemke Gold & Silver 2020 Prediction, Slams Biased Gold Naysayers - 13th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Peak Food Island Earth

Commodities / Agricultural Commodities Sep 29, 2015 - 02:49 PM GMT

By: Ned_W_Schmidt

Commodities

Island Earth is our latest article on the concept of Peak Food, which was introduced in two previous articles. We do recommend reading those other two articles in conjunction with this one: Peak Food 2 and Peak Food, An Introduction

Below we will observe that Island Earth is a major component of Peak Food. Reality is that Island Earth, combined with a myriad of other factors, has serious negative implications for our world's ability over time to satisfy human demand for food at affordable prices. Today, many ignore the reality of Peak Food. For the farsighted investors, Peak Food offers an investment opportunity that can provide benefits for generations.


Peak Food was the name given to the results of research by Seppelt, et al(2014) published as "Synchronized peak-rate years of global resources use" in Journal of Ecology and Society. That research was made popular in "Have we reached 'Peak Food'? Shortages loom as global production rates slow" (Bawden,2015). For that reason we creditBawden with the term Peak Food.

As we have mentioned previously, Thomas Malthus, author of An Essay on the Principle of Population(1798), lived in England. The dominant geographical feature of England is that it is an island. Malthus made some very obvious observations about island England. The size of the land area is fixed, and does not change. Further, only part of that land area is suitably for the raising of food for human consumption, and that for all practical purposes the agricultural area cannot be materially altered. For example, the top of a mountain is not suitable for raising wheat.

We have noted that the Earth is an "island" in the universe. Just as water is the boundary for island England, space is the boundary for Island Earth. The surface area of the Earth is fixed. We are not going to wake up ten years or a hundred years or a thousand years from now to an Earth that is larger. In the geological short-term, the resources of the Earth, including land area, are fixed. That reality does not mean that some natural resources may exist far in excess of those that humans can consume in the "short-term".

Agricultural area is that land which can support the production of Agri-Foods of some kind. Some of that land is suitable for crops like corn and rice while some is only suitable for growing cattle or goats. Other land might be best used for growing walnuts, apples, or olives. Agricultural area is one term used to describe all that land that can be used for the production of some type of agricultural product, from soybeans to sheep.

Size of total land area on Earth is fixed. A more relevant measure though for our purposes is that land which can be used or could be used to grow food, or actual agricultural area. Sometime in the future world may be able to make land we cannot today use to produce food able to do so or we might be able to "farm" the oceans. However, time frames for such events are not relevant today, tomorrow, or in the next decade.

The following graph plots the total agricultural area of the world. Data used to produce this graph comes from the U.N. Food and Agriculture Organization(FAO) data base(FAOSTAT). Scale on left axis is millions of hectares(2.47 acres), and begins in 1961.

World Agricultural Area

As can be observed in chart, worldwide, total agricultural area has ceased expanding, and a peak is in place. Our world's agricultural area began to cease expanding in 1994 and an absolute peak was put in place in 2000. Since the year 2000 world agricultural area has not expanded, and actually has shrunk slightly. Given a plethora of land management issues, from irrigation to inadequate maintenance of organics as well as other issues, we expect world's agricultural area to continue shrinking. We consider this chart strong validation of our Agri-Food thesis.

Implications of this situation should not be minimized, or dismissed. Growth in global food production is the product of percentage change in agricultural acreage times the increase of per acre production, or productivity growth. If global agricultural acreage is not expanding, the only source of increased food production is through an increase in productivity per acre.

If the size of the agricultural land on Earth has indeed reached a limit, at a minimum for the life span of most investors, then several implications are discernable. First, quite obviouslyAgri-Land values should rise over time, subject to short-term cycles. Second, as consumption of food rises due to increasing demand from China, Asia-Pacific region, and India. prices for Agri-Foods will increase over time. Thirds, those businesses, Agri-Equities, that create and sell technology and/or services to increase productivity of Agri-Land and farmers will benefit from a rising revenue stream. Investors participating in these areas should be well rewarded.

In our second article on Peak Food we introduced some of the relevant conclusions on peak years for production of important Agri-Foods. In the table below we have extracted from that previous table a selection of Agri-Foods. Second column is the estimate of Peak Year by Seppelt, et al(2014). Third column is absolute peak year of total world production for that Agri-Commodity if one is evident in the data. Final column is size of current crop relative to the crop in the absolute peak year.

Peak Production Summary*
(Revised: 25 Sep 2015)

Crop Statistical Peak Year
of Production Gain
Absolute Peak Year
Total Production**
Current Crop Year
vs. Abs. Peak Year
World Agricultural Area No Estimate 2000 - 0%
Canola 2009-2011 [Est.] 2014 -10%
Corn 1985-2007 2015 - 3%
Cotton 2004-2011 2012 -15%
Rice 1988-2008 2015 - 13%
Soybeans 2009-2011 2016 ?  
Wheat 2004-2011 2016 ?  

 

References:

Bawden, T. (28 January 2015).Have we reached 'Peak Food'? Shortages loom as global production rates slow. The Independent.

Malthus, T. (1798). An Essay on the Principle of Population. Amazon Kindle.

Seppelt, R., et al. (December,2014). Synchronized peak-rate years of global resources use. Journal of Ecology and Society.

Ned W. Schmidt,CFA is publisher of The Agri-Food Value View, a monthly exploration of the Agri-Food Super Cycle, and The Value View Gold Report, a monthly analysis of the true alternative currency. To contract Ned or to learn more, use either of these links: www.agrifoodvalueview.com or www.valueviewgoldreport.com

Ned W Schmidt Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules