Jim Rogers calls a next bubble in food again

[doom&gloom]

Re: Jim Rodgers calls the next bubble - Food

Dairy is a tough operation, no doubt...

[c1ue]

Re: Jim Rodgers calls the next bubble - Food

There are limits to growth...

No doubt, but when? Buying now on this premise means you think the limits have been hit.

If so, it shouldn't be hard to see. No signs yet from what I see.

perhaps but they still gotta eat, and people used to meat diets do not suddely become rice consumers, they try to get even cheap protien into themselves.

Sure, but what they want and what they can afford are not the same thing. Even a switch from beef to chicken frees up 9x (beef = 12x grain input, chicken = 3x).

not necessarily when other factors like water, credit etc come into play.

Can you show me how farm output is dropping? Because that's the issue: unless there's an outright reversal in crop yield trends as opposed to a slowing down of crop yield improvements, the population vs. farm output isn't in shortage.

Starving peole demand food. "resources" will be allocated by governments to ensure food is procured. be it oil, money, whatever.

So you're saying biomass subsidies for fuel will end? And this biomass will be redirected back to food supply? Or the opposite? Unclear to me.

Partly because yields are no longer increasing near exponentially as they had previously. Keep in mind that not too long ago much farming was near sustinence, with people growing on marginal land because that was all they had. Marginal land moves out of production, or even good land gets paved over. that land is just plain lost to outputs either way. in a dynamic system with mutiple wheels, you are stabbing at simplufying something that is much more complex.

Yields have never increased exponentially. Never.

As for subsistence farming vs. corporate farming: the trends shown in the examples were well after urbanization. By 1920 - the US was over 50% urban. We're at 79% now - a major shift but not considering the non-urban population in 1920 was about 50 million and is 59 million today.

So while I may be simplifying a complex process - at the same time I am providing data while you're expounding a theory.

Yes, it IS a real issue. Water has been pegged as one of the more pressing issues in the future. Farmland is a huge consumer of water. We are watching some parts of the US literally dry up, no "buts" about it. We shall see more of that happening over time. And not just here. Water allocation in the Nile Delta is leaving some land dry, the mexicans get almost nothing from the Colorado river anymore, etc. Michael Klare did a nice job of covering some of this in his book Resource Wars -- I suggest you try it.

So you're saying besides credit, water is another 'at risk' factor for ag land as an investment.

Fair enough.

WRONG. try again: http://oilprice.com/Latest-Energy-Ne...-for-2011.html

Hmm interesting example you brought up.

The Argentinean improvement is clearly linked to a government mandate for ethanol content in gasoline - mentioned in the exact article you mentioned. This is a subsidy by any other name.

If that is your point, I agree: government subsidies do help prop up farm output prices, hence farm land value.

In my particular case, and excuse me for erhaps misinterpreting your position, none of that makes any difference to me.

That may be, but again your ongoing refusal to even consider that credit is a factor implies an emotional commitment to this investment.

For those who are considering ag land as an investment, but who do not have an emotional commitment, they might perhaps be more concerned.

[touchring]

Re: Jim Rodgers calls the next bubble - Food

The problem with farmland as an investment is that as an investment, it requires credit.

Thus in many respects farmland shares the same benefit/harm effect of credit growth or shrinkage with residential real estate. There are also other credit effects.

If you have farmland that is producing, and is not dependent on credit for seasonal financing, and is not dependent on energy prices for fertilizer/seeds/machinery operations, then the story might well be very different.

This is what is happening in China right now, people are grabbing swampland to flip, presumably on credit.

[doom&gloom]

Re: Jim Rodgers calls the next bubble - Food

in bold again...

No doubt, but when? Buying now on this premise means you think the limits have been hit.

If so, it shouldn't be hard to see. No signs yet from what I see.

No one knows exactly when the limit is hit, just like with peak oil. Can we hit the timing of ANY investment right at the limit? Or can we take an educated best guess and invest accordingly?

Sure, but what they want and what they can afford are not the same thing. Even a switch from beef to chicken frees up 9x (beef = 12x grain input, chicken = 3x).

and added population then consumes??? modeling all this is like modeling climate science, one simply cannot know all the answers at one time as the variables are always changing. Again, how does one know if we are at "peak" anything? How will we know "peak gold" when it is time to sell? You see this as a bad investment(?), I see it as a good investment. people differ. so it goes.

Can you show me how farm output is dropping? Because that's the issue: unless there's an outright reversal in crop yield trends as opposed to a slowing down of crop yield improvements, the population vs. farm output isn't in shortage.

I am not saying farm output is necessarily dropping, i am saying that science seems tohave wrong about as much output out of current farming practices as is possible as present. That said, in some farming areas, expensive inputs can clearly cause farm output to drop. Lets again look at the brasilian cerrado, shall we? here is abunch of land that requires a tremendous amount of inputs to grow anything, plus a tremendous amount of energy to move that anything to port. what happens when the cost of those inputs rises signficantly? is it still economic to grow that anything, or will some of that land drop out due to input cost concerns? I paid more for my land in uruguay that I would in the cerrado, but my input costs will be the same or less than in brasil, while my transport costs will be far far less. Who will compete better? Again, the dynamic is what is in play. this is just ONE example.

So you're saying biomass subsidies for fuel will end? And this biomass will be redirected back to food supply? Or the opposite? Unclear to me.

No, I am not saying that at all. I am saying in a resource constrained world, be it food, oil, credit, or whatever, governments will do their best to keep their people fed because starving people bring down goverments. When you are gonna die one way or another, you may as well try for some "change" you can believe in, no?

Yields have never increased exponentially. Never.

A bit of hyperbole on my part, but yield have increased significantly from the days prior to bio-engineered crops with built in insecticide genes, and the use of fertilizers in ways never used before has definitely maxed out yields. It does not look good for much more growth in that way.

As for subsistence farming vs. corporate farming: the trends shown in the examples were well after urbanization. By 1920 - the US was over 50% urban. We're at 79% now - a major shift but not considering the non-urban population in 1920 was about 50 million and is 59 million today.

And in 1920 it took a team of horses and a towed mechanical thresher plus loads of men a tremenous amount of time to do what one machine can now do. So what is your point? that labor became redundant, or that people moved off the farm BECAUSE labor became redundant? the age of mechanization brought many to the city and the factory where daily wages were not as dependednt as waiting out a crop cycle. WWII brought many to war, and changed the face of the Great Depression. Dynamics again... And of those who are not living in the cities, but are not farmers -- how many live in rural communities as bankserss, insurance agents, etc. What is the point of the statistic when we all know how ag has become mechanized and the small farmer simply could not compete with large scale agribusiness? The end of subsistence farming only meant that marginal land yielded little and probably was not put back into production, while quality land was explouted to the maximum.

So while I may be simplifying a complex process - at the same time I am providing data while you're expounding a theory.

However your data is half-assed and anecdotal at best. A combine can do to a wheat field what a team of horses and mechanical threshers plus scores of laborers used to do some 80 or so years ago. The data does not draw in all the reasons why. It does not draw in population data and the rise of Chininda. It does not draw in the change in wealth and patterns for more meat consumption. It is just random data.

So you're saying besides credit, water is another 'at risk' factor for ag land as an investment.

Fair enough.

There is plenty 'at risk' in agriculture. You focus on credit, i bring up water, there is hail, frosts, too much or too little rain, insects, fungus blights, etc etc. For the US I see water as being quite a significant issue in the future. Take a read of Cadillac Desert by Marc reisner if you've never done so. Water laws once you get past the mississippi river are about ase senseless and arcane and ass-backward as possible. It is why you have Central Valley CA formers who grow water intensive crops like rice in what is basically a semi-arid land. Because they can and they 'own' the water rights. No one is gonna tke it from them besides the government when they find some rare frog on the guys land or something. Meanwhile the Colorado will keep silting up dams, water levels in Lake Powell will keep dropping, CA and LV, NV will end up with water rationing, but that guy is gonna grow rice till the day he dies. Again, a read of Resource Wars by Michael Klare would be quite an eye opener.

Hmm interesting example you brought up.

The Argentinean improvement is clearly linked to a government mandate for ethanol content in gasoline - mentioned in the exact article you mentioned. This is a subsidy by any other name.

And why is it that countries continue down this foolish road? Perhaps because they believe that they may get stuck in an oil squeeze, and they want to continue down a road that may provide alternatives to oil for fuel? I find it rather sensless myself, unless you are say brasil with plenty of cane sugar for ethanl, where the numbers actually start to make sens. but government and sensical policy rarely seem to go hand in hand. I don't expect anyone to cut these kinds of programs for a long time to come.

If that is your point, I agree: government subsidies do help prop up farm output prices, hence farm land value.

Government subsidies prop up output prices in the US and in parts of the EU, where governments want to ensure that agriculture remains a part of their economy. I would rather there be no government supports anywhere, so we could all get real market pricing of real goods. But we all know that is never gonna happen...

That may be, but again your ongoing refusal to even consider that credit is a factor implies an emotional commitment to this investment.

Again, credit is NOT an issue for me. Never will be. If credit causes financially marginal producers to exit farmng and takes their land out of production, it is only GOOD for me. And since I have farmland not as a flipping invesment, but for a long term hold, I am not particularly concerned about the weekly or annual fluctuations in price. I care more abot the output and yields and returns, not credit. I should add in my prior life I ran a business that did multiple millions of dollars in sales, required multiple millions of dollars of cashflow every year as well, and I never borrowed a nickel from a bank to do so. So credi ti sinconsequentil to me personally in both the short and long term.

For those who are considering ag land as an investment, but who do not have an emotional commitment, they might perhaps be more concerned

If believeing in what you invest in is an emotional committment, then I am guilty not only in ag, but in investing in gold and silver, because I believe in both of them as well. What do you believe in?

.

[touchring]

Re: Jim Rodgers calls the next bubble - Food

c1ue[/B]] Yields have never increased exponentially. Never.

A bit of hyperbole on my part, but yield have increased significantly from the days prior to bio-engineered crops with built in insecticide genes, and the use of fertilizers in ways never used before has definitely maxed out yields. It does not look good for much more growth in that way.

Yield in China has exploded over the last 10 years.

I'm pretty sure that there are new chemicals invented to make fruits and veg grow exponentially faster. Of course, there's still a limit, if they grow too fast, they explode.

[c1ue]

Re: Jim Rodgers calls the next bubble - Food

No one knows exactly when the limit is hit, just like with peak oil. Can we hit the timing of ANY investment right at the limit? Or can we take an educated best guess and invest accordingly?

We were not talking about ag as an investment or even investment in general. We were talking about the limits to growth.

If we are close, there should be some signs: significant downward changes in supply causing price spikes. Increasing hunger.

There have not been any such indications.

and added population then consumes??? modeling all this is like modeling climate science, one simply cannot know all the answers at one time as the variables are always changing. Again, how does one know if we are at "peak" anything? How will we know "peak gold" when it is time to sell? You see this as a bad investment(?), I see it as a good investment. people differ. so it goes.

If I read this correctly - you're saying "one cannot know", yet you're basing investment decisions on knowing we're at the limits to growth?

As I noted above - when near a peak of anything, there are signs.

I am not saying farm output is necessarily dropping, i am saying that science seems tohave wrong about as much output out of current farming practices as is possible as present. That said, in some farming areas, expensive inputs can clearly cause farm output to drop. Lets again look at the brasilian cerrado, shall we? here is abunch of land that requires a tremendous amount of inputs to grow anything, plus a tremendous amount of energy to move that anything to port. what happens when the cost of those inputs rises signficantly? is it still economic to grow that anything, or will some of that land drop out due to input cost concerns? I paid more for my land in uruguay that I would in the cerrado, but my input costs will be the same or less than in brasil, while my transport costs will be far far less. Who will compete better? Again, the dynamic is what is in play. this is just ONE example.

I'd be interested in seeing what the input/output/transport cost differences are between Brazilian cerrado farming and generic Uruguayan farming.

Assertions without data are not very helpful to anyone.

A bit of hyperbole on my part, but yield have increased significantly from the days prior to bio-engineered crops with built in insecticide genes, and the use of fertilizers in ways never used before has definitely maxed out yields. It does not look good for much more growth in that way.

I agree that there don't seem to be any approaches which promise increases in yields, but you're making the assumption that yield is the only variable.

As the historical data I put up shows - a huge amount of land was taken out of production from 1920 to 1997. At least part of this is due to urbanization, but I think it unlikely that it is all urbanization. At least another part is simply due to more marginal land no longer being used for subsistence farming.

Nonetheless higher food prices would permit profitable use of previously marginal land - much as higher oil prices lead to utilization of more marginal sources of oil like tar sands.

In such a case, overall yield degradation might be accompanied by overall higher absolute food output.

And in 1920 it took a team of horses and a towed mechanical thresher plus loads of men a tremenous amount of time to do what one machine can now do. So what is your point? that labor became redundant, or that people moved off the farm BECAUSE labor became redundant? the age of mechanization brought many to the city and the factory where daily wages were not as dependednt as waiting out a crop cycle. WWII brought many to war, and changed the face of the Great Depression. Dynamics again... And of those who are not living in the cities, but are not farmers -- how many live in rural communities as bankserss, insurance agents, etc. What is the point of the statistic when we all know how ag has become mechanized and the small farmer simply could not compete with large scale agribusiness? The end of subsistence farming only meant that marginal land yielded little and probably was not put back into production, while quality land was explouted to the maximum.

My point was that the number of people living in a rural setting has actually gone up. Simultaneously the number of farmers has gone down. Much of this is due to mechanization, but more importantly much of this is due to the low profitability of farming.

Higher prices mean less necessity for gigantic economies of scale such as you see with the gigantic agribusinesses. It would not surprise me if the same dynamic exists in farming as was carried out by Wal-Mart in the retail sector, and the cure for it is the same.

However your data is half-assed and anecdotal at best. A combine can do to a wheat field what a team of horses and mechanical threshers plus scores of laborers used to do some 80 or so years ago. The data does not draw in all the reasons why. It does not draw in population data and the rise of Chininda. It does not draw in the change in wealth and patterns for more meat consumption. It is just random data.

If you wish to assault the data - actually the University of Georgia's - that's your choice. I'd suggest you look it over first.

I'd also note that you haven't actually provided any data thus far, only an assortment of platitudes and assumptions.

but that guy is gonna grow rice till the day he dies.

I'd say that you might consider alternative viewpoints, such as this one by that noted anti-ecology NGO called "The Nature Conservancy"

http://www.calrice.org/Industry+Info...?id=1302578040

The Central Valley is largely composed of desert, true. But it has a large region which was formerly marsh as well. The rice grown there is not just white, but also wild rice.

It wouldn't surprise me if this meme of wasteful Central Valley rice farmers wasn't in some way motivated by the competitors for that water: the city of Los Angeles

If believeing in what you invest in is an emotional committment, then I am guilty not only in ag, but in investing in gold and silver, because I believe in both of them as well. What do you believe in?

I believe in fact and dispassionate analysis.

I believe that being emotionally invested in financial investment leads to major errors, which in turn often lead to major losses.

As you have apparently found an avocation, I think that's great.

To transfer your avocation into recommendations for others, that's not so great.

[Thailandnotes]

Re: Jim Rodgers calls the next bubble - Food

From 1950 to 2000 corn yields in the US rocketed x 6. There's no way that upward slope continues. As for land previously under cultivation being brought back on line, I don't see it happening in rural Virginia or semi rural Thailand. Rice fields once taken out of cultivation are hard to get back. When Thai rice tripled from 2007 to 2009, the government blamed a slowing increase in yield, an inability to bring crop land back into irrigation systems, and historic drought and flooding conditions. The “signs” are confusing. Southeast Asia is definitely worried about dwindling land for cultivation, climate change, and growing population. At the same time, Thai shoppers are marveling at the Chinese garlic you can buy at the Makro super store...one bulb costs 5¢.

[Kadriana]

Re: Jim Rodgers calls the next bubble - Food

Yield in China has exploded over the last 10 years.

I'm pretty sure that there are new chemicals invented to make fruits and veg grow exponentially faster. Of course, there's still a limit, if they grow too fast, they explode.
]

That is just scary looking. It's a big reason why I've been growing more of our own food. I just don't trust China as a food source. I think we'll be able to get food in the future but I'm not sure we'll want to eat it. :/

[c1ue]

Re: Jim Rodgers calls the next bubble - Food

I'm pretty sure that there are new chemicals invented to make fruits and veg grow exponentially faster. Of course, there's still a limit, if they grow too fast, they explode.

Once again, you assume China is doing something new.

Japan did this before with its experiments using gibberelic acid - now termed gibberelins:

http://www.dbi.ufla.br/amauri/fitormonios/Keng.htm

If you buy seedless fruit - these are a result of years of experimentation with gibberelins.

[touchring]

Re: Jim Rodgers calls the next bubble - Food

That is just scary looking. It's a big reason why I've been growing more of our own food. I just don't trust China as a food source. I think we'll be able to get food in the future but I'm not sure we'll want to eat it. :/

A lot of famous brands use Chinese food ingredients and they don't list the source of ingredient. From the strawberries in your cornflakes to ham and bacon on your pizza, they can be from China.

[Kadriana]

Re: Jim Rodgers calls the next bubble - Food

A lot of famous brands use Chinese food ingredients and they don't list the source of ingredient. From the strawberries in your cornflakes to ham and bacon on your pizza, they can be from China.

Luckily I like to bake and cook from scratch but even then, I have to buy a lot of the ingredients. I don't know how much buying 100% organic would even make a difference considering my neighbor sprays his fields.

[jiimbergin]

Re: Jim Rodgers calls the next bubble - Food

That is just scary looking. It's a big reason why I've been growing more of our own food. I just don't trust China as a food source. I think we'll be able to get food in the future but I'm not sure we'll want to eat it. :/

I too am growing more and more of our food. I have always had a garden, but have expanded it. I also now have blackberries (both wild and tame), blueberries, strawberries. Also expect to get fruit from my apple, cherry, peach trees and my kiwi vines next year. Kiwi may be 2 years yet.

[Kadriana]

Re: Jim Rodgers calls the next bubble - Food

I too am growing more and more of our food. I have always had a garden, but have expanded it. I also now have blackberries (both wild and tame), blueberries, strawberries. Also expect to get fruit from my apple, cherry, peach trees and my kiwi vines next year. Kiwi may be 2 years yet.

We have 25 fruit trees now I think. We have 3 different kind of raspberries, 2 kinds of blueberries, gooseberries, grapes and hardy kiwi. We're just started getting fruit on our trees this year. We got about 5 apples, 10 pears and a handful of cherries. I'm looking forward to next year.

I find my hardy kiwi is taking a long time to grow. I think we planted it 3 years ago and still no fruit.

[astonas]

Re: Jim Rodgers calls the next bubble - Food

I find my hardy kiwi is taking a long time to grow. I think we planted it 3 years ago and still no fruit.

If you only have one, that could be the problem. Kiwi plants have gender, and require at least one male and one female plant to fertilize the fruit.

[Kadriana]

Re: Jim Rodgers calls the next bubble - Food

If you only have one, that could be the problem. Kiwi plants have gender, and require at least one male and one female plant to fertilize the fruit.

We have both male and females. I think we have about 8 plants total.