Jim Rogers calls a next bubble in food again

[Southernguy]

Re: Jim Rodgers calls the next bubble - Food

Sorry, made a mistake: "So, for people with enough capital and expertise the alternative to just speculating by buying and holding for a long period of time gold and other commodites is always a valid one."
Should have said: so for people with....etc; buying land as a productive investement business, so as to derive a profit in the long term is always a valid one. In places with good transportation facilities rent shall always be positive, albeit, or course variable.

[c1ue]

Re: Jim Rodgers calls the next bubble - Food

You have mentioned in a few posts that you are not a "gold bug" . . . but I'm not sure what you mean by it.

Does it mean someone who thinks the gold standard is going to return? Or simply that gold will be going very high? Would you consider the iTulip position in the gold-bug category?

Some tests to see if you are a gold bug:

1) Gold will solve all our financial/social/economic problems if we just go to a hard money/100% gold standard
2) Gold IS money

There are others, but I think they all arise from one or both of these sources.

[LazyBoy]

Re: Jim Rodgers calls the next bubble - Food

FWIW,

http://scienceblog.com/47880/cities-...e-land-masses/

Cities Gobbling Up Huge Land Masses

SEPTEMBER 18, 2011
In the next 20 years, more than 590,000 square miles of land globally — more than twice the size of Texas — will be gobbled up by cities, a trend that shows no signs of stopping

[LazyBoy]

Re: Jim Rodgers calls the next bubble - Food

Over the last 5 years the value of U.S. farm land has appreciated well over 1 Trillion dollars and the typical farmer has had a little over a one million dollar windfall. It's the biggest boom the world over and we're still subsidising farms to buy votes. The U.S.D.A. survey of Iowa farm sales indicated an acre trading at 1857 in the year 2000. Today the price is just over $7400! The average farmer has seen his income increase from 80,000 a year to almost 340,000 a year.

http://business380.com/2011/03/22/io...7-in-6-months/

The skyrocketing costs of farmland are not a windfall for farmers unless they want to sell their land and stop being farmers. It's an increase in costs. They can't buy (more) land and their taxes go up.

The article you link says nothing about income, so I don't know where you got that claim. If it's true, I would bet it's because the little guys were squeezed out.

[c1ue]

Re: Jim Rodgers calls the next bubble - Food

In the next 20 years, more than 590,000 square miles of land globally — more than twice the size of Texas — will be gobbled up by cities, a trend that shows no signs of stopping

Deliberate or not, this is a play on the fallacy of large numbers.

590,000 square miles seems like a lot until you put it in perspective:

Total land area of Earth: 59,491,000 square miles
Total arable land (i.e. permanent farms or pasturage): 5,330,169 square miles
Total agricultural land (i.e. used for agriculture in some form): 18,852,095 square miles

Source: Wiki

In geography, arable land (from Latin arare, to plough) is an agricultural term, meaning land that can be used for growing crops.^[1] It includes all land under temporary crops (double-cropped areas are counted only once), temporary meadows for mowing or pasture, land under market and kitchen gardens and land temporarily fallow (less than five years). The abandoned land resulting from shifting cultivation is not included in this category. Data for arable land are not meant to indicate the amount of land that is potentially cultivable.^[2] As such, it has to be distinguished from "agricultural land", which, according to FAO definition, additionally includes land under permanent crops as well as permanent pastures. In 2008, the world's total arable land amounted to 13,805,153 km², whereas 48,836,976 km² was classified as "agricultural land".^[3]

So 590,000 square miles of urbanization is a factor, but not as large as comparing to Texas makes it seem.

[FRED]

Re: Jim Rodgers calls the next bubble - Food

Deliberate or not, this is a play on the fallacy of large numbers.

590,000 square miles seems like a lot until you put it in perspective:

Total land area of Earth: 59,491,000 square miles
Total arable land (i.e. permanent farms or pasturage): 5,330,169 square miles
Total agricultural land (i.e. used for agriculture in some form): 18,852,095 square miles

Source: Wiki



So 590,000 square miles of urbanization is a factor, but not as large as comparing to Texas makes it seem.

On a related topic:

More trees than there were 100 years ago? It's true!

Protection and responsible harvesting are the reasons behind the success story.

By Starre Vartan Wed, Feb 09 2011 at 6:00 AM EST

The numbers are in.

In the United States, which contains 8 percent of the world's forests, there are more trees than there were 100 years ago. According to the Food and Agriculture Organization (FAO), "Forest growth nationally has exceeded harvest since the 1940s. By 1997, forest growth exceeded harvest by 42 percent and the volume of forest growth was 380 percent greater than it had been in 1920." The greatest gains have been seen on the East Coast (with average volumes of wood per acre almost doubling since the '50s) which was the area most heavily logged by European settlers beginning in the 1600s, soon after their arrival. more...

[zoog]

Re: Jim Rodgers calls the next bubble - Food

On a related topic:
More trees than there were 100 years ago? It's true!

Yeah but one of these


does not equal one of these

[Verrocchio]

Re: Jim Rodgers calls the next bubble - Food

Deliberate or not, this is a play on the fallacy of large numbers.

590,000 square miles seems like a lot until you put it in perspective:

Total land area of Earth: 59,491,000 square miles
Total arable land (i.e. permanent farms or pasturage): 5,330,169 square miles
Total agricultural land (i.e. used for agriculture in some form): 18,852,095 square miles

Source: Wiki



So 590,000 square miles of urbanization is a factor, but not as large as comparing to Texas makes it seem.

Many factors go into the value of agricultural land, and I do not know whether the price of flat and black will go up or down from here. Having said that, I find the ratio of ag land to the population of some interest.

United States

Farmland 1997 - 954,752,502 acres 2007 - 922,095,840 acres
Population 1997 - 266,490,000 people 2007 - 301,579,895 people
Ratio 1997 - 3.58 acres/person 2007 - 3.06

Data are from US Census Bureau and US Dept of Ag

[c1ue]

Re: Jim Rodgers calls the next bubble - Food

Yeah but one of these


does not equal one of these

True, but the article talks about volume as well as number.

There's no doubt that there is less overall tree mass in the United States today vs. say, 1600.

However, today vs. 1900 is much, much less clear.

One dirty secret of environmentalism is that the establishment of the Park system came in no small part due to the shift from wood to coal as a residential energy source, soon afterwards replaced by electricity and gasoline/oil.

Many factors go into the value of agricultural land, and I do not know whether the price of flat and black will go up or down from here. Having said that, I find the ratio of ag land to the population of some interest.

United States

Farmland 1997 - 954,752,502 acres 2007 - 922,095,840 acres
Population 1997 - 266,490,000 people 2007 - 301,579,895 people
Ratio 1997 - 3.58 acres/person 2007 - 3.06

Data are from US Census Bureau and US Dept of Ag

True, but again the point is that the US is a very large net exporter of agricultural products.

So while the absolute value of the amount of farmland has decreased, it can be argued that was remains is the best farmland. All of the lesser productivity farmland has been taken out of use due to low ag output prices and/or capitalization issues, but in turn could as easily return to production should true food scarcity arise.

And note: food scarcity today is not a supply issue - it is a cost and/or distribution issue.

[doom&gloom]

Re: Jim Rodgers calls the next bubble - Food

And note: food scarcity today is not a supply issue - it is a cost and/or
distribution issue.

really? Ok, prove it.

[doom&gloom]

Re: Jim Rodgers calls the next bubble - Food

Jim Rogers has made some truly excellent calls I wish I would have heeded, and made them publically for all to see and criticize. he was spot on on the banks, Fannie, Freddie, and has been ponding the table on ag now for something like a decade. He gets paid nothing for this, and if you listen to some of the people who interview him, they are complete fools with no real knowledge of the questions they ask him.

When I see him on TV, I htink of him more as an evangelist preaching his view to the uneducated masses. He may not always be right, but he sure holds himself out on accountability like few others.

Wish Bernanke had half the mans smarts...

[doom&gloom]

Re: Jim Rodgers calls the next bubble - Food

Below in bold...

I've never pretended to be farmer.

Good for both of us.

That's why I asked you for your understanding.

My understanding is that I am a LONG_TERM investor in productive farmland, and have bought into it for a number of previously stated reasons. They may not all pan out, but enough should be sufficient that I can continue to derive income off my land, and have that land remain relatively stable in value against inflation. You may believe otherwise, and you are welcome to do so, but you have yet to disprove ANY point in my thesis for why I got into ag, no matter how you spin it.

However, it is quite clear that your understanding is based on a combination of what seed companies/hedge funds tell you and an unwillingness to accept actually examine the details on the trends you think exist.

My understanding is based uppon plenty of research, and the information I extracted, mulled over, and distilled in my head. I have entered one of the oldest professions on the planet, and it will still exist long after HFT's, insurance salesmen, and the like have passed into history. It i a part of why I chose it. You have obviously NOT read what I have written carefully in the past.

I don't need to be a farmer to understand that world population is going up slower than worldwide farm yield.

Now i'm sorry, but that is a plain simplistic and dare i say totally stupid comment in light of all the facets in ag. really, if you don't want me to call you out on stupid stuff, don't even go there.

I don't need to be a farmer to understand that farming is heavily dependent on fuel prices.

Finally we are making progress! YES, it IS dependent on fuel prices! Good for you. That is part of the reason I WANT to be a farmer. Because whle you talk about credit, I do not NEED credit. So farming is good for me when marginal farmers are forced out of the business. Prices go up on inputs, marginal producers leave, total yields drop, prices for what is left rise. Simple economics. I am not a leveraged up kind of guy, but I have already noted that for you in the past.

I don't need to be a farmer to understand that worldwide currency depreciation has led to all commodities increasing in price.

AGAIN, GOOD for YOU! That is ANOTHER reason I stated to wanting to be a farmer, to hedge inflation. We are making MORE progress here.

There may indeed be a trend in ag output prices and/or farmland, but you have done a terrible job in showing that ag output prices are in some way fundamentally different than other commodities.

I have NEVER attempted to contrast ag prices to any other commodities, so there you go again putting words in my mouth, or examples I might say, when I have offered none nor ever broached the subject.

Upon this shaky foundation you then assert that ag land prices must inexorably go up.

NO, again I have NEVER said that land prices will inexorably go up! WTF dude, do you have reading comprehension issues? Seriously. I'm not even kidding here. The statement I made about land prices was a belief that they will (somewhat) hold their value against inflation, as most real and valluable asstes tend to do. trees do not grow to the sky, housing prices will not go up forever, nor will farm prices.

Well, I hope for your sake that this is true.



Given that a Jim Rogers' pronouncement is the basis for this thread, and furthermore that Jim Rogers is in fact a spokesmodel (and I use that term deliberately) for the entire ag output/ag land investment proposition, I do think there is relevance to this information.

Jim Rogers no more represents the entire ag industry then Jessie Jackson represents all black people. Sheesh, you really do have a hard on for the guy.

I'm sure that's true.

But you've failed to demonstrate that any of this is in fact exceptional.

Where have I EVER claimed anything about ag to be EXCEPTIONAL?! We are back to reading comprehension issues again. Maybe you should go back and re-read my thesis for why I believe in ag again, because so far you have tried to stuff words and statements in my mouth several times in the response, and have been agreeing with me on points I already stated in the past.

A look at this list for example shows weather related catastrophes: famines, floods, droughts, etc etc going backwards from 1900 - nearly 2000 years in which every year sees some type of event: http://www.breadandbutterscience.com/Weather.pdf

Yes, there are always weather issues, I have said so already. Some years are worse than others. In a macro environment with food price inflation, increasing demand (which you will never admit or recognize), greater investor speculation, and a host of other factors, any significant weather issue (such as the Russian what embargo) will have an adverse affect around the globe. It will not happen every year, but in a system under greater strain, it will have a large impact than normal when it does happen.

Crop prices going up, as I've noted previously, can be for a number of reasons.

That is correct. We are in agreement here.

After all, all non-crop commodity prices have also been going up for a decade.

Hmmm... get the hint that maybe commodities have been a good hedge against inflation?

To assert that crop prices are unique - you'd need to show some fundamental difference in behavior which you've failed to do.

NEVER have I asserted crop prices are unique. EVER! We are back to your reading comprehension issues again.

Gold, for example, has shown a fundamental difference in behavior. It isn't immune to the commodity cycle, but there is clearly some underlying factor which is being expressed in a divergence between gold price behavior and commodity price behavior.

That has so far been correct. Gold has unique aspects to it that grains, sugar, and a ost of other commodities do not. I am sure you know that so I will not bother repeating them unless you ask me to do so.

No, I do not expect everything to mirror gold - for one thing I'm not a gold bug.

What is a gold bug? What is an investor who invests in gold but not a gold bug?

I merely use gold as an example because it is traded as a commodity, yet clearly has some differentiating factor which must explain why gold prices are double in 2011 what they were in 2008 - the GFC period being when most commodities went into the tank and sat there for quite some time: not just food/ag output but also oil, metals, etc etc.

Do you KNOW what those properties are? I am curious.

You can't say this about ag output prices, or oil prices, or industrial metal prices with the possible exception of silver.

That is correct, nor have I ever attempted to make such a case. And your point is?

I keep asking you to justify your belief in some quantifiable way, and you keep responding with ad hominem attacks and links which are suspect at best.

You are asking me to prove what cannot be easily proven. I have offered to have you pay me to do a dissertation on the subject if you want, and I have given you loads of links (and there are many many hundreds of hundreds more) to support some of my beliefs, but you choose to cherry pick what best suits your own arguement, and deny everything else. Sorry, you have proven NOTHING, and I will not do a dissertation of data on the net for you without you paying me to do so. I have better things to do with my time.

I have asked YOU time and again to PROVE ME WRONG, yet in this very post, I am finding you are agreeing with points of my thesis. The way I see it, the longer this goes, the greater the eventuality you will actually see things my way.

The purpose of this discussion was to demonstrate the merit behind ag land as an investment.

NO! The purpose of the debate between you and me has changed as many times as you have responded. There was a time you were claiming this was all some 'credit issue', but I diffused that ridiculousness when I told you in my case credit is not an issue. I have NEVER made the case fo ag land as an "investment" other than to farm it and use it as a hedge against inflation. I have stated as much previously. Go look it up. We are again having reading comprehension issues.

From my view, you've not accomplished this goal.

It never was my goal. If anything, you have missed my goal completely. My own personal goal is to have farming as more of a hedge against peak 'cheap' oil than anything else. To ensure I was in a business that would not get cut off from fuel if and when it gets rationed, because this business is a critical component to human survival. You missed that one by a mile.

This may be either a function of your inability to communicate or a function of lack of merit, but whatever it is I wish you well.

No c1ue, is a function of your reading comprehension issues, and your inability to understand what I stated many posts ago as you continue to twist and turn and SPINNNN in an attempt to win something for God knows what. Go back and re-read my thesis again, because you have so mischaracterized my position so many times I am astounded.

[c1ue]

Re: Jim Rodgers calls the next bubble - Food

My understanding is that I am a LONG_TERM investor in productive farmland, and have bought into it for a number of previously stated reasons. They may not all pan out, but enough should be sufficient that I can continue to derive income off my land, and have that land remain relatively stable in value against inflation. You may believe otherwise, and you are welcome to do so, but you have yet to disprove ANY point in my thesis for why I got into ag, no matter how you spin it.

That's great - but there are plenty of reasons why you can be successful in a business over and beyond fundamental factors.

The point of this discussion wasn't your acumen as a farm manager, the point of this discussion was ag land as an investment. While business development is an investment of sorts, it is a very different type of investment than ag land as a passive investment.

For the vast majority of investors, this is the category ag land falls into.

My understanding is based uppon plenty of research, and the information I extracted, mulled over, and distilled in my head. I have entered one of the oldest professions on the planet, and it will still exist long after HFT's, insurance salesmen, and the like have passed into history. It i a part of why I chose it. You have obviously NOT read what I have written carefully in the past.

It is because of your purported research that I've asked for you to show this data.

What research you've shown thus far has either been from a hedge fund manager selling his product, or an ag company selling its product, or generic industry information which frankly does not support your thesis, this thesis being that the underlying factors due to population, increase in meat demand due to BRIC/emerging economy, farm yield lack of improvement, etc are far and above supply (population/meat demand) or demand (ag yields).

So while you keep saying you've done much research, all I can say is that I haven't seen the convincing part of it.

Now i'm sorry, but that is a plain simplistic and dare i say totally stupid comment in light of all the facets in ag. really, if you don't want me to call you out on stupid stuff, don't even go there.

Interesting, you're now attacking your own data source. The paper you cited clearly showed ag yields increasing at 1.4% per year, while population is only increasing 1% per year.

The paper attempted to disguise this by saying ag yields are behind the curve of having to double by 2050, but of course population isn't going to double by 2050.

So I'd say the person being simplistic isn't me.

Neither is the person who is failing to read carefully what is in front of them.

Finally we are making progress! YES, it IS dependent on fuel prices! Good for you. That is part of the reason I WANT to be a farmer. Because whle you talk about credit, I do not NEED credit. So farming is good for me when marginal farmers are forced out of the business. Prices go up on inputs, marginal producers leave, total yields drop, prices for what is left rise. Simple economics. I am not a leveraged up kind of guy, but I have already noted that for you in the past.

Farming being dependent on another commodity is not a good thing. It means yet another variable - besides credit, weather, competition, etc - which farmers must be concerned about.

On the one hand, this will hurt marginal farmers. This may be great for you.

On the other hand, this is a huge knock on farming as a passive investment, and thus ag land as a passive investment.

Where have I EVER claimed anything about ag to be EXCEPTIONAL?! We are back to reading comprehension issues again. Maybe you should go back and re-read my thesis for why I believe in ag again, because so far you have tried to stuff words and statements in my mouth several times in the response, and have been agreeing with me on points I already stated in the past.

You've said there was going to be more demand than supply due to several causes:
1) That population was rising faster than ag yields
2) BRICs and emerging economies were switching to meat

Do you dispute this?

These are categorical statements which are not borne out by the data you yourself supplied.

Yes, there are always weather issues, I have said so already. Some years are worse than others. In a macro environment with food price inflation, increasing demand (which you will never admit or recognize), greater investor speculation, and a host of other factors, any significant weather issue (such as the Russian what embargo) will have an adverse affect around the globe. It will not happen every year, but in a system under greater strain, it will have a large impact than normal when it does happen.

If weather events are common, then why is it different this time?

And furthermore you keep asserting the system is under strain, but you've not actually demonstrated this.

It is your assumption that the system is under strain.

This may be true, but so far you've failed to show this.

It never was my goal. If anything, you have missed my goal completely. My own personal goal is to have farming as more of a hedge against peak 'cheap' oil than anything else. To ensure I was in a business that would not get cut off from fuel if and when it gets rationed, because this business is a critical component to human survival. You missed that one by a mile.

It is interesting that now you're changing to 'hedge against peak oil', when previously you were saying ag land was good because of too many people/too little food, bad weather, not enough water, too much meat demand, etc etc.

You then agree that there are no fundamental factors which dictate that ag land will keeping going up in price, hence making it a risky passive investment?

[Verrocchio]

Re: Jim Rodgers calls the next bubble - Food

You then agree that there are no fundamental factors which dictate that ag land will keeping going up in price, hence making it a risky passive investment?

The factors that allow the risk of an investment are dynamic. Farm sector commentators have claimed that the increase in farmland prices is largely fueled by farmers, who have largely self-financed their purchases. Assuming that this is true, they may have indeed taken on a risky investment. On the other hand, for those who have borrowed to buy their land, does the ability to repay the borrowed dollars with inflated, perhaps much inflated, dollars a few years later offset the risk factors?

To the extent that this becomes true, frugal farmers, such as DoomandGloom, who self-finance their capital and operating costs, could find they have missed a fine opportunity.

[doom&gloom]

Re: Jim Rodgers calls the next bubble - Food

The factors that allow the risk of an investment are dynamic. Farm sector commentators have claimed that the increase in farmland prices is largely fueled by farmers, who have largely self-financed their purchases. Assuming that this is true, they may have indeed taken on a risky investment. On the other hand, for those who have borrowed to buy their land, does the ability to repay the borrowed dollars with inflated, perhaps much inflated, dollars a few years later offset the risk factors?

To the extent that this becomes true, frugal farmers, such as DoomandGloom, who self-finance their capital and operating costs, could find they have missed a fine opportunity.

That is entirely possible, and most probable in my estimation. That said, I know what debt and leverage can do to you, and have shyed away from it my entire life. Look at those who got blown out of the markets this week. Look at the gold manipulation that brought prices down hundreds of dollars in no time. Had I been leveraged into that, I could lose everything. Better to have a plan, stick to it, and minimize risks. So that is what I do.