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Food and water scarcity: Call it an alarmist's investment theme for the future. As weather...

Food and water scarcity: Call it an alarmist's investment theme for the future. As weather conditions induce a "supply shock" across much of the agricultural spectrum, commodity and natural resource investors insist that it reinforces the thesis that the world's resources are being stressed to the breaking point. “You can’t triple a population in a lifetime without consequences,” says Jeremy Grantham. Supply simply can't keep up with demand, and our hungry and thirsty world just keeps growing.
Comments (41)
  • Anyone who has taken a high school physics course knows that Grantham's comment is horse pookie.


    The planet has the capacity to provide energy,food,and water for an almost unlimited population for many centuries into the future.


    the problem is public policy. So the way to invest is to find the smartest people (read "best of breed") and let them manage your money by buying their stock. Whatever problems the world's politicians create will be best dealt with by the brainiacs.
    21 Jul 2012, 10:52 AM Reply Like
  • "Anyone who has taken a high school physics course knows that Grantham's comment is horse pookie."


    And anyone who has taken college level calculus and studied log or amortization tables knows that he is likely correct, especially in the near term.


    Per Monsanto: To keep up with population growth more food will have to be produced in the next 50 years as the past 10,000 years combined.
    21 Jul 2012, 11:40 AM Reply Like
  • In theory, based on the Malthus model, food supplies increase arithmetically (adding 1 each time), but population growth increases geometrically (multiplying by 2 each time). Hence, population doubles in shorter and shorter time periods. Graphically, the increase in food supplies over time is a linear slope (straight line tilted slightly up) where the slope is constant, while population growth is a logarithmic curve with an increasing slope over time. However, birth control, immigration, emigration, food technology, and social factors affect the curves so that the growth rate of a population declines as the population itself increases (Japan would be an example as well as many of the Western nations).
    21 Jul 2012, 11:38 PM Reply Like
  • Unfortunately, the methods that we produce foods ( farming) have not changed in more than 2000 years. We have the technology (hydroponics, LED lighting, indoor climate control) to fundamentally change how food is produced, but there are those with a vested interests (cultural, financial, political) in the current system that refuse to promote change,
    21 Jul 2012, 10:56 AM Reply Like
  • "Unfortunately, the methods that we produce foods ( farming) have not changed in more than 2000 years." That quote shows phenomenal ignorance of the subject.


    Today's farmer feeds about 129 people. In 1960 that number was 25.8 - most of that productivity increase is due to improvements in farming methodology and technology.


    And there are no conspiratorial "vested interests" blocking the adoption of the technologies you mention, hydroponics is used widely where it is cost effective, the others are simply not yet cost effective for most agricultural purposes.
    21 Jul 2012, 11:26 AM Reply Like
  • You're kidding, right? The green revolution has doubled agricultural productivity and then doubled it again. There are still parts of the world using obsolete techniques, and those represent enormous opportunity to further increase production. Today's artisanal organic farm or ranch is many times more productive than the best medieval analogue. The industrial operations are more productive still. It would cost far, far less to modernise hopelessly inefficient and often dangerous operations in Asia and Africa than it would to "fundamentally change" how food is grown in the industrialised world, and it would generate a much larger increase in production. The reasons it's not happening as quickly as you'd like are manifold: politics, lack of capital, inefficient deployment of capital, politics, corruption, insufficient local demand, inefficient transport networks, and especially politics.


    Even if one believes Grantham's thesis, investing in food and water is foolish. The only sector with more official manipulation is financials. Today's slam dunk investment is tomorrow's victim of subsidies. That water project to quench parched throats and irrigate would-be farmland will become an entitlement to be confiscated by the government. The more you believe in this weak supply, strong demand thesis, the more likely it is that your business will be destroyed or confiscated by a government. People who are desperate for food and water care little for the property rights they promised you as an incentive to grow food for them.


    If you want to invest in this area, invest in things people need to grow more food or make better use of water. They're traded on more global markets and it's harder for governments to confiscate them or subsidise them out of business. Lower-level things like farmland and water rights, historically the best and most fundamental investments available, are all but worthless in an era of fighter jets, missile submarines, and heavy armour. They're literally not worth the paper they're printed on, and while you could plausibly defend them 500 years ago, that's hopeless today.
    21 Jul 2012, 11:31 AM Reply Like
  • If U.S. farmers used crop production practices from 1931 to produce an amount of corn equivalent to the 2008 crop, it would require 490 million acres—an area more than 120 million acres larger than the state of Alaska. Farmers today grow five times as much corn as they did in the 1930s — on 20 percent less land. That is still 13 million acres, or 20,000 square miles, twice the size of Massachusetts.
    21 Jul 2012, 11:33 AM Reply Like
  • These sorts of leaps forward in farm productivity that the US has seen are not being seen in China, India, or Africa yet. The US has been beginning to export our knowledge of both farming and raising livestock to these regions, and they will become more efficient as modern technology replaces the plow and ox. I think the last number I saw was that farms in the US produce something like 5 times as much corn per acre as China currently does. Those gaps will close.


    Malthus predicted we'd run out of food some 200 years ago, these sort of doomsday predictions forget that humans have become quiet adept at adapting.
    21 Jul 2012, 02:00 PM Reply Like
  • "Farming hasn't changed in...2000 years:"We have GMO's tractors, combines, threshers etc. What hasn't changed is that humans do not control the weather (nor effect global climate change) as any farmer from antiquity till now can attest to.


    If you think food is scarce or expensive now then contemplate the acreage necessary to be placed under LED or climate controlled or the volume of water necessary for hydroponics to feed the word


    Maybe someday, and we should keep exploring but Malthus and his progeny fail to account for technology and the preservation instincts of the strong.
    21 Jul 2012, 07:28 PM Reply Like
  • To all who disagree wirh me: We have made incremental improvements in each process, but not the entire process. We still go outside, plow, plant, water, wait, and harvest. Our fertilization tecniques have improved vs. slash and burn, and we do have pesticides (good or not?). But farming is still subject to weather, and land availability. And lead times are long (seasons).
    22 Jul 2012, 10:56 AM Reply Like
  • All those problems could be easily overcome if humanity could figure out how to produce energy properly.
    22 Jul 2012, 12:09 PM Reply Like
  • "All those problems could be easily overcome if humanity could figure out how to produce energy properly."


    We actually know that now, its just that politician's, greenies, and liberal socialist's don't have a chance unless they can produce irrational fear to supper their case.
    22 Jul 2012, 01:28 PM Reply Like
  • It's about time for a new Thomas Malthus nut case, as it's been 214 years since the last one. I'm sure the more pessimistic and hysterical types will jump right on board. They won't make any money, of course.
    21 Jul 2012, 12:25 PM Reply Like
  • Tack,


    Sadly, Grantham has some excellent market insights and a great track record of investing but this stuff makes him look like a raving kook and calls into question his whole judgment on a wide range of issues.


    He is a religious zealot who is a firm believer in the cult of man-made global warming which explains his incessant ranting on this stupid issue - he thinks humans are a plague on the earth.


    Anyway, ever hear of desalination?


    We have literally endless amounts of water and strangely for someone who should know better, the "water cycle" means we don't "use" water anymore than we use air.


    Grantham proves that man-made global warming has replaced religion as the opiate of the masses for the gaiists among us.
    21 Jul 2012, 12:44 PM Reply Like
  • Galt:


    Well stated.


    "Global warming" is living proof that man remains as unchanged at his core as when he believed the Earth was flat. That, too, was ingrained in religion, literally, and heretics who suggested otherwise were often sent to the stake.


    A tidbit for the most hysterical of the hysterical types, Americans, the Great Lakes, alone, possess 21% of all the fresh water on Earth, not even addressing salt water, which is unlimited in practical terms. Of course, if we make plans to use any of that water, then, the screams will be that "selfish" Americans are depleting a disproportionate share of the Earth's "limited" resources.


    Some people squander their entire lives by insisting on being pessimistic and angry, not to mention wrong, about almost everything.
    21 Jul 2012, 01:02 PM Reply Like
  • ". . . the screams will be that "selfish" Americans are depleting a disproportionate share of the Earth's "limited" resources."


    This is the problem. The wacko's have got everyone believing that water goes away. There is no way to deplete any significant amounts of water. Now it can evaporate (but then it rains back to earth). It can be flushed down the toilet or drain (but then it gets cleaned up and put back into some river). It can be used to water my really good looking lawn (but then it seeps into the underground reservoir.)


    You get the idea. Water does not go away. Does it migrate from some places on earth to others. Yes it does. The dry places are called deserts and humans should not live there unless they can live without much water. Do the dry places change. Yes they do. And like our ancestors, when they do, the humans should move also.


    That's just common sense for mortals, but admittedly it's not common sense for god like liberal socialists.
    21 Jul 2012, 03:37 PM Reply Like
  • Be nice to divert some of the midwest floodwaters every few years to drying lakes in the south and west. That would take government initiative though and we'd get yelled at for a government takeover of water. Tea Partiers would protest in front of municipal water plants for government to keep it's hands off our water.
    21 Jul 2012, 12:37 PM Reply Like
  • Yeah, that shouldn't be too hard. Let's "divert" some Mississippi water to Arizona, mountains be damned!


    Given that implicit in your assertion is that I have the right to water where ever I choose to live- perhaps we could divert the Mississippi to the Mojave- it's beautiful. But dry. So, clearly it's the government's responsibility to take the "initiative" and get me some agua (and food, and a house, not to mention a job, and some spending cash would be nice).
    21 Jul 2012, 01:05 PM Reply Like
  • JG:


    Applying your simplistic logic, perhaps, we should limit the use of oil only where we "find it." Or, any other resource, for that matter.
    21 Jul 2012, 01:08 PM Reply Like
  • "Be nice to divert some of the midwest floodwaters every few years to drying lakes in the south and west."


    The problem is that the floodwaters are being diverted now.


    For the last 100+ years, we have stopped storing fresh water in the underground reservoirs by straightening the flow of rivers to preventing flooding (and the associated refilling of reservoirs). How stupid is that?
    21 Jul 2012, 03:44 PM Reply Like
  • So apparently we can't grow enough food for the world but we somehow can burn half our corn crop as fuel?


    Which I might add is a misguided policy directly resulting from following the fraudulent science of man-made global warming.


    We get the worst of both worlds, insane policies, higher prices for food and fuel, and more death in the rest of the world because people starve from higher food and energy prices.


    But hey you believers in this nonsense are the compassionate ones among us, aren't you?
    21 Jul 2012, 12:55 PM Reply Like
  • Corn ethanol subsidies began in earnest during Hillary/Obama's DNC nomination in 2007, which was merely a ploy to win Iowa. Hillary went all-in on ethanol, committed to buying that state's vote at all cost.


    You win Iowa, more money flows into your campaign as donors instantly become fair weathered fans to piggyback on the leader and get into their good graces.


    Still can't believe there are people who think ethanol was ever legit. The corruption in american politics is staggering. Bush wasn't any better with his idiotic 'switchgrass'. And Obama isn't any better with his 'algae'.


    These sick freaks are priests of the new secular left church's environmental inquisition against growth & free markets. And all of it to purchase votes through donors whether PACs or Sierra Club iterations aplenty.


    None of these solutions are real.


    The politics behind them are.
    21 Jul 2012, 01:19 PM Reply Like
  • W J algae is legit from your list but will need the processing commitment it does not have at this time.
    21 Jul 2012, 01:42 PM Reply Like
  • heh


    'Processing commitment' = taxpayer subsidies.


    Nice try.


    Solar and wind are also very real too, as long as they have your involuntary commitment propping them up.


    The real crime here with corn ethanol however(yes, I did say 'crime') is how it led to jacking up the price of corn against all objections of India at the time. Hillary didn't care. Starving Indians did not matter one whit to her. Getting Iowa did.


    The free market desperately needs to be tried. Perhaps sometime in my lifetime. We'll see.
    21 Jul 2012, 02:00 PM Reply Like
  • Wyatt, agree it is a crime
    Now if liberals could only make wheat ethanol we could get bread up to $10 a loaf and blame Bush for it.
    21 Jul 2012, 02:13 PM Reply Like
  • W J I don't want the Tax payers hit with the start up cost if Exxon wants to be shady. I just commented on the legitimacy of the algae fuel. It is solid so a change to algae could happen for a time till better tech is in the market. Best Wishes
    21 Jul 2012, 08:35 PM Reply Like
  • Perhaps you should look at the cost of "algae fuel" - the batch the Navy bought from Solazyme and friends came in at $26 /gallon. That is not even close to being competitive. I suspect you may not know what you're talking about.


    disclaimer: long SZYM - I think it has a future, but it will be years before it competes as a fuel. SZYM has been smart about that, and is also exploiting near term markets like cosmetics as a market for its algae based oils.
    21 Jul 2012, 10:37 PM Reply Like
  • Robgra I hear you the Navy excuse is to help bring diverse fuel sources to market to not be held hostage by OPEC or other groups. It was way to expensive. It should have been 3-5 tops. Ciao & Best Wishes
    22 Jul 2012, 02:17 PM Reply Like
  • Your ETF in this space is (PHO).
    21 Jul 2012, 01:26 PM Reply Like
  • Its all a hype so they can jack up commodity prices. 2/3 of earth is covered with water. New technology for growing crops also helps.
    It's like Goldman peak oil hype to unload their oil contracts on poor retail.
    21 Jul 2012, 01:43 PM Reply Like
  • If you look behind the hype you will find Goldman.
    21 Jul 2012, 01:45 PM Reply Like
  • The sky is falling! The sky is falling!
    21 Jul 2012, 01:53 PM Reply Like
  • It's Bush's fault.
    21 Jul 2012, 03:24 PM Reply Like
  • yes the ethanol hype is over, we dont need to grow all this grain GM corn soy roundup ready we waste so much food and are feeding so much to factory farmed cattle chicken pork a more vegetarian diet would do the world good
    songbirds disappearing, butterflies, bees... in just 150 years 100's of millions of years of evolution squashed by the great builders of society


    not one comment on the loss of wild lands wildlife habitat healthy soils for what? more obesity for the over 7 billion members of one species?


    the cult of man knows no boundaries
    21 Jul 2012, 06:39 PM Reply Like
  • "the cult of man knows no boundaries"
    And the cult of Gaea does?
    21 Jul 2012, 10:40 PM Reply Like
  • There is nothing to worry about in the US.. You guys can form an army and attack Glenn Beck's compound in Texas and get enough food for years ! DL


    Not for nothing,but, i'm real old and fighting the clock. I dont give a poop about stocks. Suckers game,but, I am buying as many farms in LA as I can get ! Thousands of hectors in the last 3 months and I hope to buy as many chunks as I can get. I want my foundation to exist for 100s of years ! With wet land i'll be assured !
    21 Jul 2012, 06:56 PM Reply Like
  • are buying in Louisiana not Los Angeles? LA...wetlands...yes I see. Another such investment is the stock company JOE in the Florida panhandle.
    21 Jul 2012, 10:46 PM Reply Like
  • Ray, I left the USA for good.I took the Foundation to Latin America and gladly paid the US embassy to get rid of the US Passport...


    Not for TAX avoidance as Foundation's are not taxed ! Costa Rica,Panama and Colombia have vast tracts of great wet land and a warm climate.. The buying is 100% in Panama & Colombia. My wife passed years back,but, she was a tica and her family left 1000s of hectors. I put it all in our Foundation ! pura vida, DL
    22 Jul 2012, 08:36 AM Reply Like
  • I blame the meat & dairy industries. It takes TONS & TONS more resources to make meat than it does to make fruits/vegetables. 80% of US grown corn and 85% of world grown soy is for livestock feed. That is a ridiculous amount of waste that could feed billions more people than are currently being fed.
    22 Jul 2012, 12:06 AM Reply Like
  • People have been touting this as an ivestment theme for years.


    Nobody has made a dime on it.


    Do a 5 yr chart on VE. (as only one example.)


    How'd that work out.
    22 Jul 2012, 09:31 AM Reply Like
  • 1980xls-2.0 Bad management is never a good thing. the tech matters just get rid of the wrong people who can't take care of the business. Best Wishes
    23 Jul 2012, 07:49 PM Reply Like
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