Guest Post: Very Few People Understand This Trend...

Tyler Durden's picture




 

Submitted by Simon Black of Sovereign Man blog,

There are only a few people who get it: the era of cheap food is over.

Global net population growth creates over 200,000 new mouths to feed ever single day. Yet supply of available farmland is diminishing each year due to development, loss of topsoil, peak production yields, and reduction in freshwater supply.

Then there’s bonehead government policy decisions to contend with... like converting valuable grains into inefficient biofuel for automobiles. Paying farmers to NOT plant. Banning exports. Etc.

Of course, the most destructive is monetary policy. The unmitigated expansion of the money supply has led to substantial inflation of agriculture commodities prices.

These fundamentals overwhelmingly point to a simple trend: food prices will continue rising. And that’s the best case. The worst case is severe shortages. This is a trend that thinking, creative people ought to be aware of and do something about.

One solution is to buying farmland overseas. It provides an excellent hedge against inflation, plus it’s one of the best (and most private) ways to move money abroad, out of the jurisdiction of your home government.

In a way, overseas farmland is like storing gold abroad. But unlike gold, it produces a yield, ensures that you have a steady food supply, and even provides a place to stay in case you ever need to leave your home country.

So where are the best places to buy?

After travel to over 100 countries, looking at more properties than I can count, and investing in quite a few of them, I’ve come up with a few top picks that meet the following criteria:

  • cheap land costs
  • low operating costs
  • highly productive soil
  • low political risk (confiscation, regulation, market interference)
  • foreigner-friendly ownership rules
  • clear water rights
  • climatic stability

Believe it or not, these simple requirements eliminate most of the world. Much of central and Eastern Europe is too politically risky. Western Europe and the US tend to be cost prohibitive. Most of Asia disallows foreign ownership of farmland. Etc.

But there are still several places that remain. I’ll share two of them:

1. Chile. No surprises, Chile ticks all the boxes. Land costs are very reasonable, and operating costs are low. The soil in regions 6, 7, and 8, is some of the most productive on the planet. And best of all, Chile has some of the clearest, most marketable water rights in the world.

 

Another great thing about Chile is its location; it’s counter-seasonal to the northern hemisphere, so Chilean harvests tend to come at a time of tighter global supplies, pushing up prices.

 

As an example, we’re currently harvesting blueberries at our farm in Chile’s 7th region. Global blueberry supply is tight in November, so the price we receive is 35% higher than if we were in the northern hemisphere.

 

See www.chile-farmland.com for more information, it’s a fantastic resource.

 

2. Georgia. This may be shocking to some, but Georgia is a stable, growing country that’s definitely worth betting on.

 

Putting boots on the ground there, it’s clear that Georgia is on an upward trajectory with a bright future, much like Singapore was decades ago. Taxes are low, and the country is open to foreigners.

 

In fact, the government realized that they have tremendously high quality farmland, yet limited expertise in farming. So while most nations shut their doors to foreigners owning strategic farmland, Georgia went abroad actively seeking foreigners to come to their country.

 

They hit the jackpot in South Africa, offering land, financial incentives, and even citizenship opportunities to South Africans who would move to Georgia and work the land.

 

Land costs in Georgia are very low; top quality crop land costs about $3,000 per acre, compared to $10,445 in Iowa, or $12,000 in California. Yet simultaneously, yields are very high for everything from corn to wine gapes to peanuts, on par with both of those states.

 

It’s definitely a contrarian agricultural investment worth considering.

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Fri, 11/16/2012 - 18:45 | 2989920 francis_sawyer
francis_sawyer's picture

Surely, the only answer to your potential hunger problem is to jet around the globe and eat 5-star meals in 3rd world countries while typing on your keyboard...

Fri, 11/16/2012 - 18:52 | 2989929 no taste
no taste's picture

Have you ever seen Karl Rove try to jog?  I didn't think so.

Expensive food and no job prospects mean that Karl Rove is consuming his lard ass.  Fortunately for Karl, there are years' of calories stored away.

Fri, 11/16/2012 - 19:52 | 2990052 TruthInSunshine
TruthInSunshine's picture

I have some pretty strong opinions, but I really believe that my saving grace (unlike some others who possess similarly strong opinions) is that I can admit when a) I don't know something (and who can possibly know much with certainty?), and b) I was wrong.

With that preface/caveat out of the way, I believe that this article vastly oversimplifies what it purports to be the biggest emerging determinants in the real price of food crops.

Many factors, although clearly not all factors, that are key determinants in the real price of food (and commodities) pertain to things that mighty mankind still is unable to control, even with all of its knowledge and tools, such as weather patterns, true breakthroughs in research (e.g. technologies pertaining to boosting yields per acre) and other such things.

If Jesse Livermore, who was truly one of the all time great traders & ended up blowing his head off, were alive today, he'd PROBABLY (although it's just speculation on my part) advise others that commodity plays are one of if not the most dangerous kind.

 

p.s. - Whisper rumor that Simon black sent this from his bamboo whittled "smart phone" with carrier pigeon technology, while shacked up on the tax-free paradise that is an undisclosed smaller island off the larger Haitian one, with concubine made margarita in hand (made with liquor that he distilled himself and citrus fruit that he grew hydroponically, using solar & wind technology).

Fri, 11/16/2012 - 19:56 | 2990095 NotApplicable
NotApplicable's picture

Nah, I think Simon is hiding in a flyover state, given his "ever day" line.

Dat dere, is a tell.

Fri, 11/16/2012 - 20:05 | 2990126 TruthInSunshine
TruthInSunshine's picture

hmmmm...Simon Black in Gary City, Indiana?

Fri, 11/16/2012 - 20:14 | 2990162 dracos_ghost
dracos_ghost's picture

Why all the travel. Disneyland. Done. Game over. Finito. Saved on Carbon Credits too. Add in the cartoon entertainment as a bonus and it's a no brainer.

Just curious how much of a nut one needs to enact Simon's Robinson Crusoe jaunt of agrarian bliss.

 

Fri, 11/16/2012 - 21:08 | 2990330 francis_sawyer
francis_sawyer's picture

@TIS

LMFAO... Simon Black = The Admirable Crichton

http://en.wikipedia.org/wiki/The_Admirable_Crichton_(film)

Sat, 11/17/2012 - 10:35 | 2991461 Enslavethechild...
EnslavethechildrenforBen's picture

What? Food grows in the dirt?

Fri, 11/16/2012 - 22:17 | 2990525 Diogenes
Diogenes's picture

Jesse Livermore liked commodities and made fortunes speculating in cotton, wheat and oats. He also felt that commodities were a more legitimate business than stocks.

Fri, 11/16/2012 - 22:35 | 2990576 TruthInSunshine
TruthInSunshine's picture

That's not to say he didn't view commodity speculation (and he was a pure speculator, after all) didn't have among the highest, if not absolutely highest, beta relative to the other asset classes available to speculate upon during his career.

JL lived for the thrill, so it's all perfectly consistent.

Sat, 11/17/2012 - 01:25 | 2990939 Lore
Lore's picture

Many factors, although clearly not all factors, that are key determinants in the real price of food (and commodities) pertain to things that mighty mankind still is unable to control, even with all of its knowledge and tools, such as weather patterns..."

Poor throwback.  Clearly, you still believe in MARKETS and haven't been listening to the all-wise, all-knowing "Green" PROPHETS (profits?) OF SCIENCE.  The PROBLEM is YOU and your nasty CAR and your BREATHING and your ICKY CARBONIFEROUSNESS. You, YOU YOURSELF, are destroying the planet.  You're "UNSUSTAINABLE."  SURRENDER YOUR RIGHTS, MOVE INTO A SHOEBOX CONDO AND PAY CARBON TAXES IMMEDIATELY.

http://www.postsustainabilityinstitute.org/what-is-un-agenda-21.html

Sat, 11/17/2012 - 05:25 | 2991202 Svendblaaskaeg
Svendblaaskaeg's picture

"..and citrus fruit that he grew hydroponically, using solar & wind technology)."

a windmill to power the ventilating system and solarpanel to power the HPS lamp? - yes that would be funny hehe...

 

Sat, 11/17/2012 - 07:04 | 2991247 Snidley Whipsnae
Snidley Whipsnae's picture

I especially disliked this one... "foreigner-friendly ownership rules"

Ask the mining corporations how fast "foreign friendly ownership rules" can turn to nationalization of mines.

Ask the non state owned oil companies how fast all oil extraction can be nationalized.

Does the author believe that Georgia will stand by and let foreign owners buy up all the productive farm land and reap large profits? Georgia isn't full of fools... Stalin was from Georgia!

Sans nationalization, an extreme tax ramp up accomplishes the same thing as nationalization and leaves in place the expertise of private companies and individuals.

Any time any gov sees 'exhorbitant' (in their opinion) profits being made by any individual, that gov will slap a new tax on the profitable sector.

Multi-national companies were created in large part, or evolved, in an attempt to avoid such ramp up in taxation by govs.

Sat, 11/17/2012 - 07:36 | 2991267 Smiddywesson
Smiddywesson's picture

"If Jesse Livermore, who was truly one of the all time great traders"

That's like saying Batman was the greatest American hero.  The person depicted in that book wasn't Livermore.  It was just a character in a book, and although it's my favorite book, it still isn't reality.  

The character of Larry Livingston isn't even the greatest trader of all time.  He spends the whole book prattling on about how to trade and then blows out repeatedly.  Each time he does, he lamely explains that he failed to follow his rules.  No shit Sherlock.  Livingston never recognizes that his core problem was you never bet money you can't afford to lose, because that's exactly when a primate breaks his rules.  Livingston could throw around millions, but when the money became important, he was no better a trader than any other ape.

In life, Livermore was a deeply flawed person who self promoted and cultivated an image because he wanted to make a name for himself in market history.  Some of the stories in the book are fictional, and some are bastardizations of the truth.  For example, the story of the fur coat is probably based on the event where Livermore's wife was stopped at customs and hit with a heavy fine for jewelry she didn't declare at the border.  Livermore went home and tried to make the market pay that fine, blowing out in the process.  The moral of the fur coat story is never force the market to pay you.  I'm not saying Livermore was a bad guy, but his track record sure doesn't make him the greatest trader of all time.  

The greatest trader ever was probably LeFevre.  Anyone who could put together a book like that obviously understood trading, but surprisingly, there's no record of him trading.

Sat, 11/17/2012 - 13:52 | 2991861 goldfish1
goldfish1's picture

 

Physical gardens bitchez.

Sun, 11/18/2012 - 06:14 | 2993253 Svendblaaskaeg
Svendblaaskaeg's picture

"Physical gardens bitchez"

Physical Golden Shower bitchez!

Fri, 11/16/2012 - 21:50 | 2990460 Marge N Call
Marge N Call's picture

Did Karl fuck you in the ass and not give a reacharound? Sorry dude, I agree that's bad taste, but get over it.

He's still richer and smarter than you.

Sat, 11/17/2012 - 05:25 | 2991203 Lord Koos
Lord Koos's picture

And he's fatter, too.

Sat, 11/17/2012 - 13:55 | 2991871 goldfish1
goldfish1's picture

Smarter? Perhaps if the expectaion of a moral code is removed.

Fri, 11/16/2012 - 20:14 | 2990159 4shzl
4shzl's picture

Fantasy investing -- almost as much fun as fantasy football: NOT.  You think you're going clip agro-coupons from afar while the local serfs till your land and harvest your crops?  LOL.  Good luck with that.

 

You want to really own farmland: you live on the land, you work the land, and THEN you get to own it.

 

 

Fri, 11/16/2012 - 20:48 | 2990275 toady
toady's picture

Sure you get to own it, but can you keep it?

Now that the growing season is done my mind goes (as always) to 'can I stop the enemy from taking it from me'.

Another highly successful year on the farm. I have so much stuff canned that I'll probably give a case or two to my brothers & sisters for Christmas.

I'm just always worried that refugees or zombies or paratroopers will show up when the shtf.

Fri, 11/16/2012 - 23:14 | 2990670 wee-weed up
wee-weed up's picture

Got a pantry (or hopefully something larger) - stock it! Got a gun - clean it, and get more ammo... a lot more!

Sat, 11/17/2012 - 01:19 | 2990942 no taste
no taste's picture

This character "wee-weed up" is a sock puppet.

Fri, 11/16/2012 - 20:18 | 2990176 stocktivity
stocktivity's picture

I'm going to freeze a bunch of twinkies. A year from now I'll sell them and bet I do better than the 35% blueberries in Chile.

Fri, 11/16/2012 - 21:19 | 2990365 Kreditanstalt
Kreditanstalt's picture

36 economically-envious socialists gave this comment a thumbs up...sorry, not me!

Perhaps you should assess whether what he's SAYING makes sense - not who's saying it.

Fri, 11/16/2012 - 21:25 | 2990378 zippy_uk
zippy_uk's picture

Why not just nuke a few cities - leaves the farm land intact and solves the more mouths to feed problem. You can always call it in after reviewing the candidate city from the comfort of the five star hotel, just before you board the plane at the airport.

Fri, 11/16/2012 - 18:46 | 2989921 ACP
ACP's picture

The Fed will keep pushing down, distorting until there's no way they can hold down the price any more. Won't be like letting go of a balloon underwater (a la Schiff), be more like a Trident II launching out of the water.

Fri, 11/16/2012 - 18:46 | 2989922 Oldwood
Oldwood's picture

The proof is to just look at what a ding dong costs on ebay!

Fri, 11/16/2012 - 18:54 | 2989942 ShrNfr
ShrNfr's picture

The Dip Dreks in Washington will cost you more, like it or not. You are ordered to buy under penalty of law.

Fri, 11/16/2012 - 19:42 | 2990041 GMadScientist
GMadScientist's picture

Giving or receiving?

Fri, 11/16/2012 - 23:10 | 2990656 willwork4food
willwork4food's picture

I can sell my empty bottle of Heineken for $25 on Ebay, whether some idiot will buy it is another story.

Fri, 11/16/2012 - 18:52 | 2989935 Michelle
Michelle's picture

Farm ground is in a bubble in some areas and are propped up by insurance companies buying it up. Like everything, equilibrium prevails. Commercial growers will buy when the prices make economic sense and use their economies of scale to make the land profitable thus driving down food prices.

 

Fri, 11/16/2012 - 19:28 | 2989998 MachoMan
MachoMan's picture

Even as bubblicious as it may be, you can get the best rice ground in the united states, precision leveled for ~$3-4k/acre...  with pretty solid water to boot.  I'm not sure simon actually looks at anything...  I know I'd go to georgia for damn sure when I can get the same thing here...  jfc bud. 

Fri, 11/16/2012 - 18:53 | 2989938 zapdude
zapdude's picture

Simon Black jumping the shark on this one? 

Every Malthusian prophecy has promptly slid into the dustbin of history.

Fri, 11/16/2012 - 19:08 | 2989961 Toxicosis
Toxicosis's picture

Right, so because it has never happened yet, it never will.  Your assessment of the situation is exemplary I must say.  Please inform me of your courses in ecological subsystems management you will be teaching next semester, cause I'm all in!!!!!  And I can't wait to see your math lessons on population and species ecology since you seem to have a grasp far over and above those ludricous scientists who do these things for a living each and! every day ad nauseam.

Fri, 11/16/2012 - 20:04 | 2990124 NotApplicable
NotApplicable's picture

Here's a thought: those models? All linear.

Reality never is.

As always, any equation has to account for the question, "At what standard of living?"

Yet all I see are aggregates that assume there's no such thing (X number of people divided by Y amount of food).

As long as free choice exists, we will all fit into reality the best we can. Without free choice? Well that's hardly a Malthusian question now, is it?

There's a reason that Lenin, Stalin and Mao ALL failed, and it isn't one of scarce resources (other than liberty).

Fri, 11/16/2012 - 21:43 | 2990441 Toxicosis
Toxicosis's picture

All these models are linear eh?  Ever heard of exponents and multi-variant studies?  Oh and yeah this silly little scientific and social/ethical concept referred to as the 'precautionary principle' might just come into play every once in awhile.  Choice also comes with responsibility and unless you're asleep at the wheel fully scarce resources are here, whether you like it or not.

Sat, 11/17/2012 - 00:37 | 2990875 Zero Govt
Zero Govt's picture

Tox  -  the precautionary principle is academic theory and stupid because of it. Each and every enterprise understands its business better than this academic dribble attempt to (mis)manage the economy, each enterpirse weighs its own risk as a natural course of their business.

The free market is the greatest solution to any problem, we do not need dipshit academics (or Govt), they can teach nobody nothing because they are no-nothings 

if there's a food shortage anywhere the market will rush in and fill the hole. It's about time we rolled back the cancer that is Govt in agriculture, water, energy and meddling in every other market and allowed the free (from Govt meddling) market to get on with it

we'll be massively better off once the dumb inept parasite gets off everyones backs

Sat, 11/17/2012 - 01:34 | 2990949 Toxicosis
Toxicosis's picture

So academic scientific based theories are based in stupidity, at least according to your assumption.  Can you possibly quantify a statement you make as such?  Without science and the testing of hypothesis and theory the computer and electronics you use today would not have come into existence.  Science cannot be convenient only when you would like it to be.  The free market no matter how much you praise it is still limited by the ability of the earth to provide it.  Natural disasters and climactic disturbances can wipe out viable crops and erode topsoil for many years, unless you have some sort of data and facts to dispute this.  The free market only exists because the products are available.  There are limitations whether you accept it or not.

Sat, 11/17/2012 - 01:33 | 2990970 Toxicosis
Toxicosis's picture

In addition your disrespect for science and those who study and practice it's multiple disciplines speaks volumes of your own cherry picking mentality as you betray your own conduct by benefiting from the many products that science has provided for you. In the last one hundred years extensive academic work in the sciences has been accomplished and yet you pontificate that all this was easy to achieve and is really smoke and mirrors or magic of some sort and that the common scientifically uneducated man is just as capable.  What bullshit.  Time to get yourself educated or become amish, because if not, the only soapbox you stand on is largely hypocritical.

Sat, 11/17/2012 - 07:59 | 2991286 Lord Koos
Lord Koos's picture

"If there's a food shortage anywhere the market will rush in and fill the hole." 

Stupidest post of the day.  And that's saying something.

Fri, 11/16/2012 - 18:56 | 2989944 MiguelitoRaton
MiguelitoRaton's picture

If http://chile-farmland.com/ is an fantastic resource, then Simon Black offers unique and valuable insights...niether is true.

Fri, 11/16/2012 - 20:13 | 2990157 MiguelitoRaton
MiguelitoRaton's picture

^^^ One negative vote above...I see Simon Black is active in the comments ;-)

Fri, 11/16/2012 - 18:57 | 2989947 Seasmoke
Seasmoke's picture

Wise foods is a must

You can thank me when you are not starving to death

Fri, 11/16/2012 - 19:09 | 2989966 DaveA
DaveA's picture

Just one little problem. Some friends of my parents bought a nice little farm in Guatemala to retire on. They did all the planting and weeding, but their neighbors did all the harvesting.

Fri, 11/16/2012 - 19:26 | 2989995 SmittyinLA
SmittyinLA's picture

Guatemala is full of asshole tribal commie indians, any "private investment" in their country is a "donation" like most of Latin America.

Fri, 11/16/2012 - 23:11 | 2990658 Cathartes Aura
Cathartes Aura's picture

colonisation, coups & corporations - do some research p'haps?

I'll give you some help, start with United Fruit Company.

amrka, so much to be known for, globally. . . the future will reap what you've sown.

Fri, 11/16/2012 - 19:10 | 2989967 Reptil
Reptil's picture

two words: heirloom seeds

Fri, 11/16/2012 - 20:06 | 2990130 NotApplicable
NotApplicable's picture

Monsanto will eventually have them fully exterminated thanks to the air filled with GMO pollen.

Since we are human, and it is not, time is on its side.

Fri, 11/16/2012 - 21:00 | 2990286 Ident 7777 economy
Ident 7777 economy's picture

Circling the drain on that one ... to my knowledge no one has demonstrated any downside to GMO yet.

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