We have been forecasting a very "challenging" environment for agricultural production and the food supply for several years. Back in 2005, my friends and colleagues on Wall Street would tell me to "tone it down, you sound like some kind of nut". That may or may not be true, but the food crisis that is rocking Asia right now could easily be visited upon North America sometime in the next decade - and as early as 2010.
Already 28 million Americans receive food assistance, slightly less than one out of ten Americans - and thankfully, we are currently capable, but just barely, of rendering that assistance. This could change quite suddenly.
While the price of crude oil has risen over 10 fold, 1000%, in less than 10 years. Natural Gas has gained "only" 400%, and it is Natural Gas that is the primary feedstock for fertilizer. This important input, and its important correlation to total food production is under great pressure, and that pressure is increasing. Americans should look overseas to see what their own future might (will) hold.
Mentatt (at) yahoo (dot) com
6 comments:
It is my understanding that we are no longer producing meaningful amounts of nitrogen fertilizer in US because the feedstocks of NatGas have been too expensive for us to justify this production recently. The production of fertilizer has already moved off shore. It is cheaper and easier to move fertilizer then LNG which requires specialty ships and regasification facilities. I have worked in Japan for Nisho Iwai and have studied their LNG business where they moved LNG in the big carriers from Pertamina in Indonesia. It is a huge and very expensive process. It would not likely be viable with US. I think the country has already been written off by the global elite. The money and productive capacity has been moved offshore. The remainder will be bought on fire sale after the economy tanks. Asset strippers will move in and tear down the infrastructure and sell it for scrap metal. It is very sad but the country is likely too expensive to maintain. It is widely dispersed with poor infrastructure. To modernize it would take too much capital. The Europeans are more densely populated and have better rail and other transportation. Perhaps they will have a better chance but the problems they will have is containing the invasions from Africa and Middle East. But even so, since no one here gets out alive I wouldn't worry too much about it. As someone said before a battle "Don't be afraid. One death, no one can escape and two are not given to anyone either." No worries here mate.
Best,
Chuck H.
Thanks you for your cheery comments!
I hadn't really been focusing in on the challenges and opportunities on the other side of the energy shortfall. Perhaps I will.
You can just imagine how fun I am at parties. A regular hoot!
Best,
Chuck H.
Chuck H's comments are indeed sobering! But there is another side of this same coin of the USA's low population density and poor infrastructure: when things get really bad and fuel becomes too expensive/runs out, the cities will suffer badly but the rural areas can still support basic agriculture for as many people who can get their act together.
It's the transition which will be hard to watch.
Dear Donald:
I agree with you on the benefits of sparse population. What we will find I think is that it will not be as sparse as it is now in the desirable farming areas. Where are the people from Phoenix and Las Vegas going to go? Not to San Diego and LA. No one is going to have water in the desert or for that matter in CA either. The highest use of electricity in CA is pumping water. I would expect a migration to the Midwest from the coasts and the hot states.
What most people fail to appreciate is that farmers are just as vulnerable as anyone else in the transition. The strength of the farmer is their control of the productive capacity of land. The weakness is all their eggs are in one basket so to speak. They are attached to that land and if they are not able to keep it due to inability to service existing loans or inability to pay taxes they will be dispossessed.
If tehy manage loan service and taxes there not out of the woods yet. Although they will have food for their family and possibly some trade able surpluses that food may be taken away from them by force or coercion. Here I am not talking about the marauding herds from the cities (not impossible though, look at Darfur, Afganistan and Somalia for examples of warlords). Farmers are good about banding together to battling these types of threats. Sure there will be some theft and burglaries by single or small groups of criminals but that is not likely to be the dominant problem. I would be more concerned about the ability of governments to take away private land and divide it through land reform/collectivization types of programs. I hate to go back in history again but this was done multiple times in Russia and most recently Zimbabwe. All with catastrophic results. There is nothing a farmer can do to defend against their own government. Arming oneself will only lead to death. The number of people killed by their own governments throughout history is higher then that of wars. So my feeling is that a farmer is a sitting duck. They are easily identified, you know how much land they have, type of farming they do and you know exactly where they are. If you want what they have you don't have to go looking for them. They will stay put and keep things tidy until you are ready to take what they got. Conveeenient, isn't it? Staying nimble and being ready to move with portable wealth in multiple hidey holes is the potentially better strategy although there are no guarantees. This is uncharted territory.
More cheerful news from yours truly, Chuck H.
Ouch!
The news is not all bad for the U.S. on the agriculture and food production front... but it is just plain terrible for most of Africa and much of Asia.
The U.S. ability to provide food using tax dollars is, in the future, very vulnerable. I am counting on folks to take the correct action - Lack of food is a tremendous motivator.
Post a Comment