Friday, August 3, 2012

Is Global Food Crisis on the Way?

With the drought in the Midwestern portion of the United States continuing to devastate the crops in the region, it has brought out the global alarmists who are using the situation to focus on the growing population needs through 2050, when the people on earth are expected to number over 9 billion.

One of the latest to throw his hat into the food crisis ring is Jeremy Grantham, who is the co-founder of the management firm GMO.

Grantham said this about the "food crisis": It “will threaten poor countries with increased malnutrition and starvation and even collapse. Resource squabbles and waves of food-induced migration will threaten global stability and global growth.”

CNBC reported the reasons Grantham believes there will be a food shortage, including "a spike in demand for food from an increasing global middle class, decreasing grain productivity, a tainted water supply, increasing fertilizer and fuel costs and climate change."

Of course this already skews Grantham's model, as there are no man-made climate change problems, as has been proven by the lies and distortions by so-called scientists who have used faulty models and locations to measure temperatures. Most notably are those temperatures measured in urban areas where temperatures are known to be higher than their rural counterparts because of more roads and buildings, among other things, that attract more heat.

As far as the other things, they are accurate, although I'm not sure what he's referring to specifically with the tainted water assertion. This could also be an unproven assumption based upon theories rather than reliable data.

But as far as the world being able to handle the population growth, it isn't a problem of being able to do it, as the boost in crop and animal production has risen exponentially for years. The major problem is corruption in the poor countries where the political entities are extracting what production there is from their people, or forbidding the free market system and entrepreneurs from doing their business without hindrances. This, more than anything, is the real crisis that is being faced. And until that is taken care of, we won't see the alleged food crisis solved.

Having said all that, the food crisis, whatever the cause, will result in higher prices, as will growing demand for raw materials.

Investors do need to look at agriculture over the long term, as they will with other resource sectors which will without a doubt soar in prices over the next couple of decades at least.

The commodity bull market is far from over, although it has taken a brief rest during the economic crisis.

Thursday, August 2, 2012

Drought Results in 1,584 Counties Being Declared Natural Disaster Areas

The ongoing drought has added another 218 counties to the natural disaster list of the U.S. Department of Agriculture, bringing the total in 32 states to 1,584, over half of the counties in those states.

How the USDA determines whether or not to include a county as being a natural disaster is U.S. Drought Monitor. What the designation means for farmers in those counties is being eligible for federal aid.

Agriculture Secretary Tom Vilsack announced that the government will open up as much as 3.8 million acres of conservation land for ranches to use for their livestock.

"The assistance announced today will help U.S. livestock producers dealing with climbing feed prices, critical shortages of hay and deteriorating pasturelands," Vilsack said.

Concerns are the income of farmers will be hit hard, exasperated by the strengthening of the U.S. dollar, which will continue because of the inaction of the Federal Reserve and ECB, which had been expected to take immediate action to stimulate the economy.

That's important because it puts pressure on exports when the U.S. dollar is higher. It also points to how weak the eurozone really is when they've had favorable trading conditions in light of the weak euro.

As for corn, approximately half of the corn crop in the United States is now rated poor to very poor, according to the USDA's National Agricultural Statistics Service.

Soybeans are now under pressure as well, with about 37 percent of the U.S. crop now being considered poor to very poor.