Preparing for Higher Food Prices
by Gregor Macdonald, contributing editor
Tuesday, January 3, 2012
Executive Summary
- How urbanization is accelerating the loss of the world’s arable land
- The three major trends that will impact global food prices and potentially create even more volatility in the next few years
- How virtual water introduces a new threat of resource conflicts
- Why our government’s actions to revive the economy translates into higher prices for food and other hard assets
- Why greater volatility in food prices lies ahead
- Defensive strategies against higher food prices
Part I: A Punch to the Mouth: Food Price Volatility Hits the World
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II: Preparing for Higher Food Prices
Close-up: The Loss of Arable Land Per Capita
Recent data from the World Bank shows that arable land per capita has been declining globally for 40 years. This has been true in most countries, especially the juggernauts of India and China. But we have compensated for that decline with fertilizer. As Julian Cribb points out in his book (page 72), it has been asserted that “over two billion people would not be alive today, were it not for the invention of the industrial process for making nitrogen fertilizer.”
Indeed, we know that 2008 was an important milestone in the history of humankind: That was the year that the majority of the world population, for the first time, lived in urban centers. The rapid urbanization — and therefore loss of farmland — in Non-OECD countries may have produced wonderful stock market returns for the past two decades as developed-nation capital hooked in to such rapid growth. However, it is not clear that this process has upgraded humanity’s overall quality of life. Energy inputs do upgrade diets. And energy inputs also can reduce the suffering of burdensome, human-powered labor. But the associated pollution and environmental destruction exacts a heavy price for such a transition.
Between 1961 and 2009, arable land, as measured in hectares per person, declined by nearly 50% in China. I suppose this is not terribly surprising; by combining urbanization (loss of farmland) with population growth, the two forces produced a rather ferocious delta (change). The decline is even worse in India, which fell in the same period from .35 hectares to .13 hectares per person. And let’s not leave
by grover 
