Senate Doom N Gloom Report: - "On the verge of a global food crisis"

We've already mentioned the connection between the stagnation that occurred from the early 1970s onward with the peak in U.S.'s oil production in the lower 48 states in 1970. However, I couldn't help but notice that the peak for the U.S.'s global share of nominal GDP occurred in the same year that the U.S. officially became a debtor nation. In addition, our peak in global GDP in terms of PPP seems to have taken place almost exactly at the start of the current commodities bull market.

In fairness, it should be pointed out that being a debtor nation is not always bad. The U.S. built itself up during the 19th century by borrowing from abroad. The essential criteria for determining whether or not debt is "good debt" or "bad debt" is to see what is was invested in. As long as you borrow to soundly invest in productive capacity, there is no problem. One also cannot discuss the 1999 peak without mentioning the climax of the tech bubble. I suspect that one of the big trade-offs we've experienced due to the monetary authorities flooding the world with cheap money and driving down interest rates in response to the 2001 recession has been to exacerbate the rise in commodity prices resulting from global supply constraints.

We've been fortunate thus far to have not seen high commodity prices spill over into consumer prices. While it is true that food and energy prices have skyrocketed in the past ten or twelve years, a large portion of the the consumer basket, as measured by the bureau of labor statistics, has not been impacted to the same degree. To illustrate this point further, take a look at this chart: chart

You'll notice that the U.S. received a windfall through the 1980s and 90s of cheap commodities which allowed for an unprecedented debt explosion for households, state governments, federal governments, and corporations without having to deal with typical fallout of inflation. The large spread between the Consumer Price Index and the Producer Price Index allowed for both good profit margins and lower rates of inflation. Former Federal Reserve Chairman, Paul Volcker, deserves enormous credit for making the tough choices needed to wring inflation out of the system during his tenure. However, a large part is also due to the initiation of a long-term commodities bear market circa 1982.

One of the things that I'm sure you're as concerned about as I am, Jabba, is the narrowing of that spread in recent years.

 

Absent the uptic in the 90s, median family income might actually be lower today than it was in 1973. In the 90s the complete saturation of the DOS and then Windows PC into the workplace provided a real productivity boost (the internet actually hasn't measured up to this earlier innovation, at least not yet). Another accomplishment of the 90s was the eradication of middle class labor costs and the externalization of more of the environmental costs of producing consumer goods via globalization.

The only thing left to the middle class after that last productivity boost and that last eradication of high manufacturing labor costs from the cost of consumer goods was massive consumer leveraging, enabled by the Greenspan monetary era as well as the Clinton era financial deregulation that led to all the amazing "innovations" in financial products which in turn ultimately led us to the real estate bubble collapse and all the vertigo-inducing events of 2008.

What the world is facing now is a global energy plateau that we have been on since about 2005. IT was I think the exigencies of the energy plateau that popped the financial bubble, now artificially and partially reinflated by government bailouts, QE2 and so on.

As far as the PPI/CPI spread, it's what you'd expect. Heady economic growth in China is the global driver now of high energy/commodity prices. U.S. consumer demand is no longer driving the bus and may never do so again in our lifetimes. If we cannot escape the energy plateau, or if we exit the plateau going in the wrong direction, it's easy to imagine a seemingly endless series of commodity/energy price shocks hammering away at the OECD countries, with China immune for a little while, but not indefinitely.

 

There is, for the moment, still plenty of time to hope that things come together. The slow decline and fall of modern civilization - or the rapid decline and fall - is still a possibility, but we can also dig our way out. Of course, the solutions might be considered worse than the problems by some. For example, say that the governments of Canada and the United States put money into nuclear power, raising taxes by say 10 to 15% (OMG! 1950s levels of taxation!) and building a massive reactor complex in say, Churchill Manitoba to power the continent. Alongside it, build some desalinization plants to start pumping water from Hudson Bay into the water tables of the western US and Canada. Meanwhile, phase out gas powered vehicles as quickly as possible, rebuild national rail lines that will be able to take most of the burden off of long haul trucking, etc. Switching over to nuclear like that would take at least a decade, but if the switch is made then we're looking at over a century of nuclear power before we need to figure out what's next.

I said Churchill, Manitoba based on proximity to current sources of Uranium, the proximity to areas where the waste product can be safely disposed of, the seismic stability of that part of the world, the remote nature of that part of the world to help reduce the chance of terrorist action, etc. But it's just one possibility.

Food and electricity are the two single largest factors that need to continue for us to continue our current lifestyle. Almost everything else, we can work around, to one extent or another. But no power and no food? We'll be sunk. Water for the North American breadbaskets, power for our cities. A megaproject like this would be enormously expensive, but probably not much more so than the US military itself, and it'd ensure continued North American economic dominance in the century ahead - when cheap oil runs out, if we're humming along fully powered and other countries aren't, manufacturing jobs will return.

 

Food and electricity are the two single largest factors that need to continue for us to continue our current lifestyle. Almost everything else, we can work around, to one extent or another. But no power and no food? We'll be sunk.

Well, power in what capacity?

If we're talking just electricity, there are alternatives, be they hydro, nuclear, etc. Not to mention the fact that I'm not really sure research in this department has ever been as urgent as, say, the Manhattan Project.

But if we're talking about a replacement for oil in the same capacity, it's perhaps more problematic.

As for food resources -- does that depend more on where you live, or are there actually concerns about enough fertile land to feed the population?

The closest comparison we might have is comparing to the last quarter of the BBC Docu-drama "Threads". Because that society goes through a great shock of nuclear warfare, we're not looking at anything that bad: there's not a concern of fallout, etc. But that society does have to concern itself with not having gasoline to feed the machines that make a proper harvest.

Again, even worst case scenario it wouldn't get that far, of course: the vital thing that makes that scenario so bad is that you're thrust into a situation you need a year or two to prepare for at a national level, the sort of time only an idiot would not give themselves in an energy crisis. This isn't likely to sneak up on us so literally. But the end of that docu-drama could server as worst case: take a look at that. Will it be that bad? No? Ok, so work up from there: what CAN we expect?

 

The challenge I think is that population overshoot implies that humans will have to deal with not just one or two crises that threaten civilization, but a complex of interrelated crises that hit simultaneously: climate change, water depletion, oil depletion, depletion of ocean life, exhaustion of vital mineral resources.

It seems to me that at nearly 7 billion people, we're already in population overshoot. Not because we can't feed ourselves, but because the effort to feed us and supply us with energy and material resources is already on a path to exhaustion. At current human population levels, even if the population stopped growing today, we are still going to fish and pollute the oceans to extinction, exhaust our surface and underground water supply within a few short decades in much of the world, and burn enough coal and oil to do serious damage to our climate in addition to whatever damage we've already caused.

Liebig's law of the minimum states that the expansion of the food supply is limited not by the totality of available resources but by the one resource that is most limited. In the case of India and Chinese agricultural production, it's water. When the wells run dry in India and China, as they will soon, agricultural production in those countries will crash. China will be in a better position to force a program to introduce drip irrigation, and they may succeed, but Indian agriculture will crash, and when it does 300 million people will starve around the world, and not just in India.

But before that happens crop yields around the world will go into irreversible decline as global oil exports fall toward zero. By the time 300 million Indians and possibly that many Chinese starve to death, another 100 million in Africa will have begun to starve as international food relief disappears and they are priced out of the market for imported grain. And as that happens places like the Philippines will see their critical seafood supply go into terminal decline.

The human population may never get to 7.5 billion before it settles back to 1.5 billion or so.

On the other hand, human beings have evolved to wage war. Warfare is as natural and instinctive to us as reciprocal altruism. More than a few of those 6 billion people may decide not to shuffle off this mortal coil quietly and peacefully. If it comes to resource wars, then really the sky's the limit for worst case scenarios.

That's one speculative theory about why if the universe is teeming with life we've never been contacted by an advanced extraterrestrial species: a marker for intelligent life is its ability to coopt the resource base of an entire planet. The downside is that intelligent life inevitably dies off once it exhausts that resource base. There is no escape to the stars because no intelligent life form has ever found the key to free and limitless energy.

 

Ah, but that theory doesn't account for civilizations (not) sending radio transmissions or unmanned probes. The lack of any contact at all offers a glimmer of hope for our pale blue dot.

 

I'm not sure how you get past a lack of water. If India is looking at that, then India has major, major issues coming down the pipe.

But if a reliable replacement for oil can be found that is sufficient to run agricultural machinery, things might not be all that bad: all you'd need is for the industry to recognize the problem, have an alternative, and re-tool. If you could create machines that ran on electric batteries, for instance -- but I don't know how well that would suffice.

 

There are possible solutions.

The DOE-sponsored Hirsch Report remains to-date the gold standard attempt to define the parameters of mitigating declining global oil production.

Basically, the report boils down to this: throw as much coal at the problem as possible. We triple or quadruple the number of coal-fired electrical plants around the world and OECD nations undertake crash programs to build hundreds of coal-to-liquids plants using the Fischer-Tropsch process so we have liquid transportation fuel for aircraft. To do that we have to abandon any and all efforts at mitigating climate change.

Instead of using 40% of the U.S. corn crop for ethanol, we could also use 100% of it to fuel agricultural production and food transportation.

There's a third option, and that's curtailing other economic activity to free up fuel for agricultural production. In the U.S. at least, much of the energy in food is tied up in processing and packaging. As population and energy pressures increase food prices, it's likely that the food processing industry will go into rapid decline. Eventually, the U.S. can move back toward a food distribution system focused on produce and local bakeries rather than on heavily packaged, processed foods. When that happens the national obesity, diabetes, stroke and heart failure epidemics will come to a resolute end.

Right now, 60% of the American population is malnourished. From a public health perspective it would be acceptable to trade that all away in return for 10% of the population struggling with being undernourished.

But killing the packaged and processed food industry will also eradicate a significant chunk of the U.S. economy. And it will make us all poorer. But at least we will be fed and in reality we will probably have healthier diets.

We have a tremendous amount of literal and figurative excess fat that we can carve out our food economy. Western Europeans have less of that, India and Asian populations have even less and the African countries and places like Haiti have the least of all.

Maybe a fourth option for the United States is that we attempt to preserve our current way of life for a while longer, and to do that, we just stop producing extra food for export. The day after that happens, a billion people around the world would begin to starve.

And when 80 million Egyptians realize they can't feed more than 20 million Egyptians with their available resource and can no longer import wheat because no nation on earth is in a position to export food, they won't go cannibal right away. The first thing they will do is wage war on their neighbors.

Think of it as a worldwide Irish potato famine that goes on year after year with no place to emigrate to, no safety valve of virgin landscape and unexploited resources.

The MENA region is as unstable now as it has ever been in our lifetimes with the one blessing that Israel is not at war with any Arab states. But we will eventually find out whether political unrest in MENA a unique nexus of one-time events or the beginning of a more or less permanent food and energy crisis.

 

Rush to Use Crops as Fuel Raises Food Prices and Hunger Fears

I learned something completely new about biofuels from this article:

The Chinese calculated their ability to trade away food security for biofuel production, and in 2007 banned the use of grains for biofuel. Instead, they pioneered ethanol production from cassava. Now, they are buying up nearly all of Thailand's cassava root exports and are purchasing cassava from Laos and Cambodia as well.

With oil prices approaching 2008 highs, this summer may be very interesting for food prices and global grain export markets. Significant droughts anywhere in the world could tip the balance toward crisis. Disruptions to Japanese agricultural production alone may be enough all by itself to create serious supply challenges. I see pressures on wheat as the result of inventory exhaustion due to last year's Russian drought, price pressures on corn because of U.S. corn-based ethanol demand, and price pressures on rice potentially as the result of the Japanese earthquake/tsunami/nuclear disaster.

 

I saw this and thought I'd post it here:

Future farm: a sunless, rainless room indoors

Farming is moving indoors, where the sun never shines, where rainfall is irrelevant and where the climate is always right.

The perfect crop field could be inside a windowless building with meticulously controlled light, temperature, humidity, air quality and nutrition. It could be in a New York high-rise, a Siberian bunker, or a sprawling complex in the Saudi desert.

Advocates say this, or something like it, may be an answer to the world's food problems.

"In order to keep a planet that's worth living on, we have to change our methods," says Gertjan Meeuws, of PlantLab, a private research company.

The world already is having trouble feeding itself. Half the people on Earth live in cities, and nearly half of those ? about 3 billion ? are hungry or malnourished. Food prices, currently soaring, are buffeted by droughts, floods and the cost of energy required to plant, fertilize, harvest and transport it.

And prices will only get more unstable. Climate change makes long-term crop planning uncertain. Farmers in many parts of the world already are draining available water resources to the last drop. And the world is getting more crowded: by mid-century, the global population will grow from 6.8 billion to 9 billion, the U.N. predicts.

To feed so many people may require expanding farmland at the expense of forests and wilderness, or finding ways to radically increase crop yields.

Meeuws and three other Dutch bioengineers have taken the concept of a greenhouse a step further, growing vegetables, herbs and house plants in enclosed and regulated environments where even natural light is excluded.

In their research station, strawberries, yellow peppers, basil and banana plants take on an eerie pink glow under red and blue bulbs of Light-Emitting Diodes, or LEDs. Water trickles into the pans when needed and all excess is recycled, and the temperature is kept constant. Lights go on and off, simulating day and night, but according to the rhythm of the plant ? which may be better at shorter cycles than 24 hours ? rather than the rotation of the Earth.

In a larger "climate chamber" a few miles away, a nursery is nurturing cuttings of fittonia, a colorful house plant, in two layers of 70 square meters (750 sq. feet) each. Blasts of mist keep the room humid, and the temperature is similar to the plants' native South America. After the cuttings take root ? the most sensitive stage in the growing process ? they are wheeled into a greenhouse and the chamber is again used for rooting. The process cuts the required time to grow a mature plant to six weeks from 12 or more.

The Dutch researchers say they plan to build a commercial-sized building in the Netherlands of 1,300 square meters (14,000 sq. feet), with four separate levels of vegetation by the end of this year. After that, they envision growing vegetables next to shopping malls, supermarkets or other food retailers.

Meeuws says a building of 100 sq meters (1,075 sq. feet) and 14 layers of plants could provide a daily diet of 200 grams (7 ounces) of fresh fruit and vegetables to the entire population of Den Bosch, about 140,000 people. Their idea is not to grow foods that require much space, like corn or potatoes. "We are looking at the top of the pyramid where we have high value and low volume," he said.

Sunlight is not only unnecessary but can be harmful, says Meeuws. Plants need only specific wavelengths of light to grow, but in nature they must adapt to the full range of light as a matter of survival. When light and other natural elements are manipulated, the plants become more efficient, using less energy to grow.

"Nature is good, but too much nature is killing," said Meeuws, standing in a steaming cubicle amid racks of what he called "happy plants."

For more than a decade the four researchers have been tinkering with combinations of light, soil and temperature o

 

This Foreign Policy article from January gives a great summary for the 2011 Doom N Gloom case for 2011.

The Great Food Crisis of 2011

It's time for a first quarter doom n gloom update:

-Oil prices are near record highs and will continue to drive up food production and distribution prices through the northern hemisphere's growing season. Oil prices are sustained by both a fear premium as the result of middle east unrest as well as ongoing demand pressure from India and China.

-food price protests that helped spark the problems in the middle east have now spread to other parts of Africa

Kenya, Uganda protest as maize prices skyrocket

But no region has been hit harder by rising food costs than Africa over the last three months. Wheat costs 87 percent more in Sudan. Rice is up 30 percent in Chad. Maize has risen at least 25 percent in Uganda, Somalia, Mozambique and Kenya.

What's ahead for the second and third quarters?

I see food price protests potentially spreading into Asia in the spring and summer, caused by a number of factors:

- food price inflation in China. The effects of China's efforts to control food prices may have serious short term consequences for its neighbors. In February 2011, food price inflation in Vietnam, Indonesia, and China was 17%, 15%, and 11%, respectively, and in single digits in the Philippines, Thailand, and Malaysia.

One of the causes of the food crisis of 2008 was bad neighbor policies. China's regional purchasing power gives it the ability to export some of its food price inflation to the countries listed above, in particular Vietnam, Indonesia, Thailand and Malaysia.


-the rippling effects of the Japanese earthquake/tsunami/nuclear crisis. There are likely going to be significant problems for Japanese agricultural/food production this summer.

On the plus side, India expects normal rains and a good growing season this year.

In the U.S., a drought in the Southwest will help keep the pressure on.

 

We can ease that crisis by giving up corn-based ethanol, and going with ethanol from a different source.

It never made sense to burn a basic food crop (corn) as fuel for a car.

We probably need to find a new source for ethanol that does NOT come from a basic food crop. Perhaps switchgrass, miscanthus, and poplar would be much better sources.

 

Corn-based ethanol is a loser in every sense you can think of except its ability to lure midwestern politicians into shoveling out taxpayer dollars to prop it up and conceal its fatal flaws as a business model and an energy source.

I don't know if we will be able to build out any biofuel to a significant level without having a potentially serious impact on the food supply, however there are definitely better choices than corn if it has to be done.

 

I don't think switchgrass and poplar would conflict with the need for food.

 

Watch it, JS, you're starting to sound like a progressive!

I'm not a big fan of biofuels in general, but our options keep getting more and more limited (without some research breakthrough) so I'm open to using some biofuels. But you're right that burning corn and other food crops makes absolutely no sense.

 

Yes, I agree with you Smuggler. Hugs all round. My point about the switchgrass is that on a large enough scale almost anything we might grow as biofuel, other than possibly algae, will encroach on land that might otherwise be needed for food production, even if the thing produced for biofuel is not actually wanted for food.

 

We ought to look into algae, as well.

But the other answer is to look at the major deposits of coal and oil shale in the US as well. Shell's development efforts were looking to be a huge game-changer until the Obama Administration just put the brakes on. We're talking over a trillion barrels of oil. That's enough to pull out of the Mideast/Persian Gulf.

 

I agree with all of that, JS. Algae and shale both.

Part of the reason we're so big into corn-based ethanol right now is because it's such a huge boon the corn lobby and those they represent. And, because presidential primaries start in Iowa, no Presidential contender is likely to suggest moving away from corn anytime soon.

 

^^

No, the reason we're using corn is because nothing else is feasible in the US. Switchgrass would trump every other competitor for use in ethanol production, provided that it were technically feasible. There are means to extract the fuel on a very minimal scale, but it's orders of magnitude more expensive than corn-based ethanol. The problem isn't politics alone, but that no real alternative exist. If we had an economic means to take advantage of switchgrass, we would use it. If our climate was right for growing sugar cane, than we very likely would be using it instead of corn.

As it stands, the only nation I know of with a practical system of producing large quantities of domestic ethanol is Brazil. They could do this because they had an abundant source of sugar cane, but the other major difference is that they don't use as much energy per capita as in the US. Even if we could switch over to a better alternative like switchgrass, it's still uncertain how large a fraction it would represent of our energy demands.

 

Brazil uses sugarcane to produce ethanol. It is more easily processed, there by more cost effective. Then again we can thank are congressmen from the mid-west who got us on the corn wagon.
Does anyone remember the Glomar Explorer and its fictional use to suck up the riches of the deep, when in fact it was used to recover the K 129? The bottom of the ocean is covered with solidified methane, the History Channel evan has a world-ending scenario in on their show Mega Disasters about that methane being turned gaseous and filtering into the atmosphere and being ignited by electrical storms. If it is down there, there has to be away for us to collect it and process it for use as natural gas. That would help.

 

There's a good chance that natural gas hydrates will never be extracted economically from the ocean floor. If we could, we could potentially double the amount of carbon in the atmosphere. I'm not sure that would be a good idea either.

Also, not sure what that has to do with the Glomar Explorer? I saw the documentary - fascinating! As far as we know, and possibly excluding some of the botched spy satellite launches, this must rank as the most expensive CIA engineering failure in history, albeit a spectacular and amazing failure. But trying to relate it back to the topic, it does goes to show you that even with a seemingly unlimited budget at your disposal, it's not so easy to scoop **** off the ocean floor.

 

The famine in Somalia has sent 500,000 refugees into Kenya, reminiscent of the horrific third world famines of my childhood in Bangladesh and Ethiopa.

 

The Somalian famine is probably the biggest humanitarian crisis of the 21st century to date. Interesting how little news play it's getting. It dwarfs the Indian ocean Tsunami and the Japan earthquake/tsunami/nuclear crisis. 750,000 people may starve.

Meanwhile, the scariest thing about Halloween - it's the unofficial day we celebrate 7 billion people on planet Earth.

The UN's new population report gives a high population estimate of 15 billion by 2100.

 

Its shocking how little coverage the famine is getting, and how little knowledge there is in America about it. Only 40% of Americans know anything about it!