Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20
China Recovered in Q2. Will the Red Dragon Sink Gold? - 23rd Jul 20
UK Covid19 MOT 6 Month Extensions Still Working Late July 2020? - 23rd Jul 20
How Did the Takeaway Apps Stocks Perform During the Lockdown? - 23rd Jul 20
US Stock Market Stalls Near A Double Peak - 23rd Jul 20
Parking at Lands End Car Park Cornwall - UK Holidays 2020 - 23rd Jul 20
Translating the Gold Index Signal into Gold Target - 23rd Jul 20
Weakness in commodity prices suggests a slowing economy - 23rd Jul 20
This Stock Market Stinks - But Not Why You May Think - 22nd Jul 20
Protracted G7 Economic Contraction – or Multiyear Global Depression - 22nd Jul 20
Gold and Oil: Be Aware of the "Spike" - 22nd Jul 20
US Online Casino Demographics: Who Plays Online For Money? - 22nd Jul 20
Machine Intelligence Quantum AI Stocks Mega-Trend Forecast 2020 to 2035! - 21st Jul 20
How to benefit from the big US Infrastructure push - 21st Jul 20
Gold and gold mining stocks are entering a strong seasonal phase - 21st Jul 20
Silver Eyes Key Breakout Levels as Inflation Heats Up - 21st Jul 20
Gold During Coronavirus Recession and Beyond - 21st Jul 20
US Election 2020: ‘A Major Bear Market of Political Decency’ - 21st Jul 20
Summertime Sizzle for Gold and Silver - 21st Jul 20
Overclockers UK Custom Built PC Review - Delivery and Unboxing (3) - 21st Jul 20
Will Coronavirus Vaccines Become a Bridge to Nowhere? - 20th Jul 20
Stock Market Time for Caution?  - 20th Jul 20
ClickTrades Review - The Importance of Dynamic Analysis and Educational Tools in Online Trading - 20th Jul 20
US Housing Market Collapse Second Phase Pending - 20th Jul 20
Capitalising on the AI Mega-trend - 20th Jul 20
Getting Started with Machine Learning - 20th Jul 20
Why Moores Law is NOT Dead! - 20th Jul 20
Help the Economy by Going Outside - 19th Jul 20
Stock Market Fantasy Finance: Follow the Money - 19th Jul 20
Did the Stock Market Bubble Just Pop? - 19th Jul 20
Quick Souring of the S&P 500 Stock Market Mood - 19th Jul 20
The Six-Year Jobs Recession - 19th Jul 20
Silver Demand Exploding! - 18th Jul 20
Tesco Scraps Covid Safe One Way Arrow Supermarket Shopping System - 18th Jul 20
The Rise of Online Pawnbroking - 17th Jul 20
Gold Rallies Together With U.S. Covid-19 Cases - 17th Jul 20
Gold & Silver Measured Moves - 17th Jul 20
The Bizarre Mathematics Of How Negative Interest Rates Create Stratospheric Profits - 17th Jul 20
From a Stocks Bull Market Far, Far Away, Virus Doomsday Scenerio! - 16th Jul 20
Fiscal Cliffs and the Self-destructing Treasury - 16th Jul 20
Dow Stock Market Crash Watch - Update - 16th Jul 20
Gold & Silver Gaining on US Dollar Weakness - 16th Jul 20
How to Find the Best Stocks to Invest In - 16th Jul 20
Overclockers UK Custom Build PC Review - 2. System Build Changes Communications - 16th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

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