How To Feed One Billion New Mouths
The solution is simple… the execution of that plan? That’s another story…
The UN just released an updated report on population growth, which projects that there will be 8.6 billion people on earth by 2030.
This is up from the previous estimate of 8.5 billion by 2030.
With the world’s current population at 7.6 billion, that’s 1 billion more people on earth in just over 10 years!
Oh, and that’s just the estimate.
The UN has had a track record of consistently underestimating population growth since 1950.
Source: OWID
Source: OWID
How are all of these mouths going to be fed?
I think we all know the answer to that: We need to produce more food!
Source: AFW
And that’s exactly what China is on a mission to do.
The Chinese have been acquiring agriculture land or investing in food production throughout the world. North America, South America, Europe, Africa, Australia, Asia, you name it and they have probably spent money there.
Source: Bloomberg
And that’s in addition to what is already being produced in China.
So, while China may be the first society to deal with this food crunch, the inevitable spread of food shortages to other growing nations is only a matter of time.
Source: DataTopics
Now, I have no doubt that we humans will overcome this challenge. We will figure out how to produce more food for our growing population.
To do this, there are several things that are inevitably going to happen:
- Farming must get more efficient. The actual process of growing and harvesting produce will become more streamlined with higher output and less waste.
- Food consumption must get more efficient. The transportation and consumption of food will become a bigger issue as waste will simply not be tolerated – it won’t be affordable.
- Agricultural land will become more valuable. This is simple supply and demand economics. Prices will go up as demand increases and supplies decrease.
From an investing standpoint, this is an area that you should start to expose yourself to.
Commodities are trading at historical lows, which has lowered the entry price of many agricultural investments.
A simple way to invest in this area is to look at agriculture ETFs $JJG and $DBA.
However, an even better way to invest in this area is to actually buy positions in operating farms. This will provide returns over 10% per year, even with current depressed prices. If (when) prices go up, the returns go up as well.
Next week I’ll have an actual agriculture investment that you can buy into.
I once visited a potential client for a new project he wanted to hire me for (in Belgium). Once I had done my personal sale presentation, he informed me that he wanted to meet me for eventual future opportunities in another business he was just starting, in 2016. He was now selling LED lighted in-house greenhouse food growing rack systems, installed in self-contained portable 20 feet or 40 feet sea containers, or stacked up in larger high storage buildings that you see spread around any large town. I asked him why bother with this? He answered me: because there is no enough real agriculture land to exploit anymore, unless you want to cut down the Amazon and the remaining forests to turn it into proper farmland. And he said, if we do that, we won’t be out of the woods, since that is only a temporary solution too, given human population growth curves. The only solution is doing this thing, he said. I grow lettuce and 160 other type of vegetables or cereals in one month, while it takes 3 to 6 months outdoors to get them at the same size and growth level. I get that result because the special LED lighting provide them 24/7 the light spectrum they need, while growing in a controlled perfect temperature and moisture regulated environment. I do not use pesticides while outside you have to use them to keep at least some of your crops till harvesting time is there. Long story short, he can grow 10x more food per measuring unit of space per year than any farmer out there right now with his system, since he does not care about growing seasons, he grows all year round in Europe, even in winter time. And his system can go up in height, no limits, and is far cheaper than farming outside, since it provides 10x more crops per unit of space and farmland is not cheap. His market ? Large cities. Fill up top of buildings and build some storage areas around every big city, and you make them food independent, by growing all what they need a few feet from where they live. And since the only inputs are a bit of solar PV panels provided electricity for the special LED lighting and some pumped recyclable water with food nutrients for the roots, you have yourself a cheap re-usable food providing system, to be installed near the largest group of humans: by 2040, half the world population will be living in cities…. So I fear that your farmland approach is only part of the solution. Just my two cents. And no, there are no stock market listed companies in that endeavor, I already looked it up, it is all in private hands. So if you find one, let me know once you have invested in them.
We actually have an upcoming investment in this space… it’s still in the early stages of due diligence.
But, just to calm your fear about the farmland approach… this only works with small plants. Try growing timber or large fruit trees in a warehouse 😉
Thanks for the comment, Al!
” But, just to calm your fear about the farmland approach… this only works with small plants. Try growing timber or large fruit trees in a warehouse ”
I don’t have any fears. I just point that growing food that you find in your grocery store can be done in various ways, and that humans can be perfectly well fed without needing to stress about the future, or lack of large fruit trees or timber.
And large fruit tree plantations are also not always a safe investment, just look at the huge banana plantations in Central America in the 1950’s and 1970’s that went to way of the dinosaurs, because the farmers relied on a sole specific “brand” (cavendish bananas if I recall well). Sole brand that proved to be not resistant to some fungus pest that popped up later on, wiping out the cavendish bananas over the whole planted mega area.
They did show that they didn’t learn anything, by then switching to another sole brand of bananas being planted over the whole area (instead of mixing several brands, to reduce monoculture issues), that later on also got wiped out by yet another type of pest, bankrupting the corporation that owned it all.
I also think you are way too late for the purchase of agricultural land anywhere, you should have done that a decade and half ago, before the money printing bonanza started to lift all land prices to the stratosphere. In fact, I read somewhere that agricultural land prices in the USA are now going back down after some serious climb, simply because there is oversupply of food everywhere you look, and supply and demand and buffer inventories are all out of balance to the supply side, leading to very low agricultural prices.
Just look at your food commodity price charts, they are all low again now, and can stay that way for a very long time. Just my two cents. Now excuse me, I have to get me some warm green thee mixed with some sugar and a cloud of milk…
Good point about diversifying crops.
Yes, ag prices in US are expensive. But, in foreign countries it’s selling for historical lows. Combine a strong dollar and cheap commodities and the land is extremely cheap. Ag land is yielding 20%+ with low food prices… doesn’t matter if prices don’t go up, still a great return. If they do go up, yield gets even better.
” Ag land is yielding 20%+ with low food prices… ”
It depends where you look. I saw several farms in western Belize (of all places) that were abandoned, because the yields were not interesting, even when the land was at historical super low prices and you just had to wait for the already planted trees and other stuff to start delivering in two years max …
Anyway, it is your money, and I won’t bother you anymore. I suspect that you have done your homework and are confident to do a great deal, otherwise you wouldn’t advertise it. I have lived a whole time in third world countries ( in cental black Africa), and won’t touch it with a barge pole, unless I marry the daughter of the lifetime president of the land. Yeah, you understand where I am going, uh gringo… :=))
Hasta luego, hombre. Great blog, by the way.