WSJ: Food Crisis Forces New Look at Farming

We've been on this beat for a long time, but more and more the world is waking up to the crisis ahead. We need higher yields, immediately - worldwide. And will continue to need higher yields to support all these humans coming online, especially the ones moving to middle class. [Apr 30: Finally, a Year Late Fertilizer Hits the Front Page of the NYTimes]

... again, I state this planet is not well suited for 6.5 Billion people unless 4.5 Billion live in abject poverty. The more wealth in this world and the more people move from poverty to "middle class" (we wouldn't call it that necessarily in the US), the more strains on the globe. We will have crisis after crisis until/if/when technological breakthroughs happen... but I believe the next 1-10 years will be fraught with crisis after crisis as world governments (especially ours) are reactive, not anticipatory. Even in the longer run the technological breakthroughs are going to be like plugging holes in a dam waiting to burst...

The problems we are beginning to encounter are global in nature and require cross border cooperation. If I know human nature, we will turn into a much more protective and nationalistic globe, not cooperative as each nation serves to protect its own. We've already seen this in grains as country after country has restricted exports and/or slapped tariffs. Even mighty United States puts enormous tariffs on Brazilian sugar ethanol so it can protect its own corn producers. We're just in the pre game warm up of this thesis.... first pitch has yet to really be thrown out. And as for those 6.5 Billion humans? Well we are headed for 9 Billion by 2042. So we have to cram another 40%+ people onto this globe....

As an aside as we wrote back in the spring multiple times, corn is headed for a disaster [Apr 3: Corn Jumps to $6 - Start Stocking up on Soda Pop] Already up over 10% since early April. No easy way to directly play corn futures for US investors unfortunately - unless you have access to the London exchange or have a commodity trading account.

• Corn prices rose to record highs on Monday and looked set to climb further as torrential rains threatened to reduce further U.S. crop prospects in a market already facing tight supplies and surging demand.
• The lead July 2008 corn futures contract rose as high as $6.73 per bushel, up more than 3 percent and a record for a spot contract.
• "We've got some rain in the United States that could reduce some of the plantings and yields for corn. Combine that with the drive into ethanol and you can see why corn is going to spike up," said analyst David Hart of Fat Prophets.
• "I am still very bullish. I think $7, $8, $9 corn is well within reach," said Commerzbank analyst Edward Hands.

Back to the Wall Street Journal article...

• Leonid Eustache coaxes a small rice crop out of his tiny plot here, but he could use some help from his government. He can't afford fertilizer. His only tool is a hoe. And half of his crop rots because nearby drainage canals are filled with water hyacinth.
• Haiti is one of many developing nations where a global food crisis is causing both donors and recipients of anti-poverty aid to rethink doctrines about the role of agriculture -- and whether poor nations should grow their own food or rely on the world's trading system.
• For decades, poor nations were discouraged from investing too much in agriculture, which was seen as a problem rather than a solution to fighting poverty. Many free-market economists came to believe that the reason billions of people are poor is because they are shackled to subsistence farming. The economists' solution: find something else for them in manufacturing, tourism or services so that they can make money to buy food instead of growing it. (lesson, never trust rich countries or economists... and especially economists from rich countries!) :)
• Now, with grain stocks depleted, China and India gobbling food as never before and food prices soaring, many poor countries are turning their back on the old ideas and installing government programs designed to support local farmers. These include cash subsidies to poor consumers, increased efforts to improve local seed varieties, and government-sponsored handouts of fertilizer and seeds.
• The food crisis has also contributed to a major rethink among the advice givers. Institutions such as the World Bank and International Monetary Fund are once again treating investment in poor farmers as a promising development strategy. A growing number of World Bank economists are now convinced most poor nations need a healthy farm sector as the basis of a robust economy.
• For many nations, food security has become a matter of national security.
• Only recently has the World Bank acknowledged the damage caused by its advice.