Running out of food? You're smoking POT, MON
Jon Markman, in his article Could We Really Run Out of Food, lays out a case for the possibility of a global food shortage due to increased demand, possible crop failures, the feeding of animals, weather in Australia, La Nina, and the production of ethanol. I really like reading Jon Markman, and I really hate to disagree with him, but on this one I think he is dead wrong.
Markman says, "The very idea that the modern world could run out of food seems ludicrous". I got news for you, Jon. It is ludicrous, barring thermonuclear war or the abolition of democracy and capitalism around the world. I guess those that espouse ideas from The Population Bomb by Paul R. Ehrlich probably agree that it is all misery from here on out, but I beg to differ.
Food shortages and famines are caused by political thugs, not high demand.
When is the last time a democracy experienced famine? I'm really not sure . . . the SLO bloggers will need to help me out with that one. India pre-1967? That's the great thing about free markets. When the price goes up, more people strive to get in the game to get a piece of the action. Prices will go up, and people will pay more for food, but there won't be mass starvation. The simple truth is that if doomsday ever did come, the developed world would be the last to starve.
Markman also says, "Unlike energy, you can't drill deeper in the ocean or under Arctic tundra for more food."
Though this is a true statement, he is missing a giant piece of information: higher yields from the same amount of land. There is a reason I said, "You're smoking POT, MON". POT and MON are just two of a great number of companies that create products so farmers can get higher yields from their crops. Why have both companies been on fire lately? They are filling the global demand to meet higher yields. How is it that US farmers "feed the world"? That 17 year streak of no major crop failures is only part of the reason. As an aside, how is it that the US has been able to have a 17 year streak in the first place? It wouldn't be because agriculture companies crank out products that make us grow, protect, and harvest better than everyone else, is it? God provides the sunshine and rain, but he also provides us with the smarts to make the most out of every acre. That is true from the CEO of ADM down to the 10 year old farmer's son waking up before dawn. Again, barring thermonuclear war, we are going to be able to eat. High world demand is the least of our worries.
Another bit of comedy within Markman's article is when BMO Financial Group strategist Don Coxe claims that all ethanol plants will be shut down when doomsday arrives. Earth to Don Coxe; free markets respond in real time, buddy. Ethanol would either die a slow death, or farmers would figure out how to meet the demand so we could eat and use ethanol both. Oh yeah, I forgot . . . we still can drill for oil (or get it out of sand, or get it out of shale . . .) and refine it into gasoline in order to drive. Amazing how that works!
The only part of the article that I agree with is when he stumps for Ag companies at the end. Commentators and bloggers have talked about all of the companies and ETFs at length. I just wish he could have spared us the doom and gloom leading up to the final pitch. I love ya, Jon, but you struck out on this one.
--Jonathan
Comments: View Comments | Thursday March 6, 2008 | Stocks: MON, POT,
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Archive Comments (5)
Hehe. I read the article too and posted on it last night. To me, the article was about why the "agflation" is not speculative. It's driven by demand, a theory I support. More mouths to feed, people eating better, wierd weather patterns, AND BURNING OUR FOOD in greater quantities continue to contribute to this trend.
The ag play is a trend, not a bubble. The only thing I worry about now is that others are figuring this out which makes me consider bailing. It seems we agree on opposites of the argument. lol
Uncle John
Posted by Uncle John March 6, 2008 7:32 PM
Jonathan,
You could not be more right. Even with population growth and all that comes with it, we could not use all the farm land given up by tobacco. In PA we pay farmers not to grow in thier fields. They get a check if they do not plant. If we were near any problems I believe they would stop that program. Thanks for bringing that to attention, Good article.
Ric Bottorf
Posted by Ric Bottorf March 6, 2008 10:05 PM
Nice work Jonathan, I agree with you. There is no way that this country would run out of food. We are the most blessed nation in the world. One of the biggest parts of this blessing is the abundant fertile land we have. We could probably produce enough food for the whole rest of the world with modern technology, but since food is one of our biggest exports, it is to our advantage to keep food prices within certain levels. Just like OPEC does with oil. The difference is that eventually the world won't need oil but we will always need food.
Posted by familyman March 7, 2008 3:22 AM
PS: We should worry more about running out of clean water than anything else, since it is the foundation for all life on earth, as you stated above, along with the sun.
Posted by familyman March 7, 2008 3:30 AM
John,
You are "Corect, Sir" - as Ed McMahon was known to say to Johnny Carson.
The World never has had a shortage of people who cannot afford food to eat, however.
When the U.S. went Eco-Stupid about making Bio-ethanol for gasoline from corn - the global price of corn rocketed by a factor of about 3.
Hungry people on subsistence diets Rioted on the streets of Mexico City. The Mexican government ( in the face of being de-stabilized and with the prospect for more civil Unrest ) agreed to subsidize corn products used to make such staples as Tortillas and corn flower. There will soon be ( Oh, HORRORS !) a shortage of Tequila as the Mexican farmers tore out their Aguave Cactus
fields to plant CORN, as the economics was "warped" by the "Ugly American" feel-good domestic policies.
We import plastic crap from China for Wal-Mart and export MISERY.
Here's a little known fact - two years ago the value of U.S. food Imports ( fruits & vegetables from South America & other places, etc ) Exceeded the value of U.S Exports of foodstuffs mainly because "unprocessed " Grains have no "Value-added' component and because of the Mad-Cow / bird flu / etc scare. By the food trade deficit numbers - America can not ( on - balance ) even feed itself. France grows more wheat. China grows more corn.
Food shortages are never due to lack of food - it's about economics & distribution ( transportation, the ability to refrigerate & store, etc ) and the BIG One - WAR and Civil
DisOrder.
The fertilizer stocks have run up to an insupprtable level --- these "Running-out-of-food " rumours are sucker-bait for throwing good money after bad in further speculation of more of the same. Why, for instance, would you put fertilizer on a field in the MidWest which is suffering drought due to EL Nina, as is predicted for this year ( after 7 years of FAT with no major crop failures which is unprecedented in modern history ) ?????
MY agriculyure-related favorites - LNDC, FDP,NTRZ,TSN,ANDE,HRL,AG, YARAYY & a few others that I can't recall in the 'white heat' of pecking out this comment. Also - CAT - did you know that CAT markets a Combine with a 150 foot swath - the largest & most productive in the WORLD.
Don L. Ferk ( fka - RoiRRawGnIkIV )
PS :
I have relatives who own a farm near Fargo, N.D. -- mailing address --- WHEATland. Thay have complained for years that the farmer only gets a few pennies out of the price of a loaf of bread. The rest goes to transportation, processing, baking, distribution, middlemen and Grocery retailers.
Question of the DAY --- who makes the most money in the " FOOD CHAIN " and would that not be the place to invset. AG INPUTS, Farmland, down-stream " Value-ADDERS ". Pick ONE - go with it. Kellogg's, Archer-Daniels Midland, Tasty-Cake Bakery, Wonder Bread, Food Lion & Kroger.
The list is endless - because it is such a large part of any economy.
Man can not live by bread alone - he must have peanut butter ( and Oreo Cookies ).
I have SPOKEN !!!!!!!!!
Posted by don ferk March 9, 2008 9:32 AM