Goodbye Petrodollar, Hello Agri-Dollar?

Tyler Durden's picture

When it comes to firmly established, currency-for-commodity, self reinforcing systems in the past century of human history, nothing comes close to the petrodollar: it is safe to say that few things have shaped the face of the modern world and defined the reserve currency as much as the $2.3 trillion/year energy exports denominated exclusively in US dollars (although recent confirmations of previously inconceivable exclusions such as Turkey's oil-for-gold trade with Iran are increasingly putting the petrodollar status quo under the microscope). But that is the past, and with rapid changes in modern technology and extraction efficiency, leading to such offshoots are renewable and shale, the days of the petrodollar "as defined" may be over. So what new trade regime may be the dominant one for the next several decades? According to some, for now mostly overheard whispering in the hallways, the primary commodity imbalance that will shape the face of global trade in the coming years is not that of energy, but that of food, driven by constantly rising food prices due to a fragmented supply-side unable to catch up with increasing demand, one in which China will play a dominant role but not due to its commodity extraction and/or processing supremacy, but the contrary: due to its soaring deficit for agricultural products, and in which such legacy trade deficit culprits as the US will suddenly enjoy a huge advantage in both trade and geopolitical terms. Coming soon: the agri-dollar.

But first, some perspectives from Karim Bitar on CEO of Genus, on what is sure to be the biggest marginal player of the agri-dollar revolution, China, whose attempt to redefine itself as a consumption-driven superpower will fail epically and very violently, unless it is able to find a way to feed its massive, rising middle class in a cheap and efficient manner. But before that even, take note of the following chart which takes all you know about global trade surplus and deficit when narrowed down to what may soon be that all important agricultural (hence food) category, and flips it around on its head.

Karim Bitar on China:

Structurally, China is at a huge disadvantage as it accounts for 20% of the world’s population, but only 7% of arable land. Compare that with Brazil which has the reverse of those ratios. What that does for a country like China is to incentivise the adoption of technification. Let’s look at their porcine market, which represents 50% of global production and consumption. In China, to slaughter roughly 600 mn pigs per year, which is about six times the demand in the US, they have a breeding herd of about 50 mn animals. In the US, the comparable number is only about 6 mn so there is a huge productivity lag.


Owing to its structural disadvantages, China is much more focused on increasing efficiency. For that, it needs to accelerate technification. So, we’re seeing a whole series of government incentives at a national level, a provincial level and a local level, focusing on the need to move toward integrated pork production because that’s a key way to optimise total economics, both in terms of pig production, slaughtering, processing and also actually taking the pork out into the marketplace.


The Chinese government is important as a customer to us because of its clarity of vision on food security. It has seen the Arab Spring, and it is cognisant of the strong socio-political implications of higher food prices. Pork prices could account for about 25% of the CPI, so it knows it can be a major issue. It’s because of all these pressures, that China is more focused on responding to the food challenge. It’s a sort of a burning platform there.


...Take milk production in China and India. China is basically trying to leapfrog and avoid small-scale farming by adopting a US model. In the US, you tend to have very large herds. Today about 30% of US milk production is from herds of 2,000 plus, and we expect that to reach 60% within the next five years. Today in China, there are already several hundred dairy herds of over 1,000. However in India, there’ll be less than 50. The average dairy herd size is closer to five, so it’s very fragmented. So the reality is that a place like China, because of government policies, subsidies and a much more demanding focused approach to becoming self-sufficient, has a much greater ability to respond to a supply challenge rapidly.

The problem for China, and to a lesser extent India, however one defines it, is that it will need increasingly more food, processed with ever greater efficiency for the current conservative regime to be able to preserve the status quo, all else equal. And for a suddenly very food trade deficit-vulnerable China, it means that the biggest winners may be Brazil, the US and Canada. Oh and Africa. The only question is how China will adapt in a new world in which it finds itself in an odd position: a competitive trade disadvantage, especially its primary nemesis: the USA.

So for those curious how a world may look like under the Agri-dollar, read on for some timely views from GS' Hugo Scott-Gall.

Meaty problems, simmering solutions

What potential impacts could a further re-pricing of food have on the world? Why might food re-price? Because demand is set to rise faster than supply can respond. The forces pushing demand higher are well known, population growth, urbanisation and changing middle class size and tastes. In terms of economic evolution, the food price surge comes after the energy price surge, as industrialisation segues into consumption growth (high-income countries consume about 30% more calories than low income nations, but the difference in value is about eight times). Here, we are keenly interested in how the supply side can respond, both in terms of where and how solutions are found, and who is supplying them. We are drawn towards an analogy with the energy industry here: the energy industry has invested heavily in efficiency, and through innovation, clusters of excellence, and access to capital has created solutions, the most obvious of which are renewable energy and shale. The key question for us is, can and will something similar happen in food?

It’s hard to argue that the ingredients that sparked energy’s supply-side response are all present in the food supply chain. In food, there’s huge fragmentation, a lack of coordination, shortages of capital in support industries (infrastructure) and  only pockets of isolated innovation. We suspect that the supply-side response may well remain uncoordinated and slower than in other industries. But things are changing. Those who disagree with Thomas Malthus will always back human ingenuity. As well as looking at where the innovators in the supply chain are (from page 10), and where there are sustainably high returns through IP (e.g., seeds, enzymes etc.), we need to think about the macro and micro economic impacts of higher food prices, and soberingly, the geo-political ones.

Slimming down

Could the demand destruction that higher energy prices have precipitated occur in food? There are some important differences between the two that make resolving food imbalances tougher. Food consumption is very fragmented and there is less scope for substitution.

Changing eating habits is much harder than changing the fuel burnt for power. And, ultimately, food spend is less discretionary that energy, i.e., the scope for efficient consumption is more limited and consumers will not (and cannot) voluntarily delay consumption, let alone structurally reduce it. This means that higher food prices, especially in economies where food is a greater portion of household spending, will lead to either lower consumption of discretionary items or a reduced ability to service debt (with consequent effects on asset prices). When oil prices spiked in the late 1970s, US consumers spent c.9% of their income on energy vs. an average of 7% over the previous decade. And yet, the total savings rate rose by c.2% as they overcompensated on spending cuts on other items. 2007-09 saw a similar phenomenon too. Even the most cursory browse through history shows that high food costs can act as a political tinderbox (so too high youth unemployment), and we believe there is a degree of overconfidence with regard to the economic impact of food prices in the West: food costs relative to incomes may look manageable, but when there is no buffer (i.e., a minimal savings rate) then there are problems. Food spend as a percentage of total household consumption expenditure is a relatively benign 14% in the US, versus c.20% for most major European nations and Japan. This rises to c.40% for China and 45% for India. Of course, as wages rise, the proportion of food within total consumption expenditure falls, but that is only after consumption hits a ceiling. Currently, India and China consume about 2,300 and 2,900 calories per capita per day, compared to a DM average of about 3,400. If the two countries eat like the West, then food production must rise by 12%. And if the rest of the world catches up to these levels then that number is north of 50%.

The scramble for Africa’s eggs

In terms of ownership of resources, food, like energy, can be broken into haves and have-nots. While there are countries  that have been successful without resources, it is quite clear that inheriting advantages (in this case good soil, climate and water) makes life easier. But that, of course, is only half the battle; what is also required is organisation, capital, education and collaboration to make it happen. Take Africa. It has 60% of the world’s uncultivated land, enviable demographics and lots of water (though not evenly distributed). Basic infrastructure, consolidation of agricultural land and minimal use of fertilisers and crop protection could do wonders for agricultural output in the region. But that’s easier said than done. Several African economies also need better access to information, education, property rights and access to markets and capital. Put another way, it needs better institutions. If Africa does deliver over the coming decades, rising food prices will alter the economics of investing in the region. The next scramble for Africa should be about food (while it is about hard commodities now and in the late 19th century it was about empire size). Fertiliser consumption has a diminishing incremental impact on yields, but Africa (along with several developing economies elsewhere) is far from touching that ceiling. Currently, Africa accounts for just 3% of global agricultural trade, with South Africa and Côte d'Ivoire together accounting for a third of the entire continent’s exports. But if the world wants to feed itself then it needs Africa to emerge as an agricultural powerhouse.

Higher up the production curve is China, which has been industrialising its agriculture as it seeks to move towards self sufficiency. Power consumed by agricultural machinery has almost doubled over the last decade, while the number of tractors per household has tripled, driving per hectare output up by an average of more than 20% over the same period.

Even so, in just the last 10 years China has gone from surplus to deficit in several meat, vegetable and cereal categories. So a lot more needs to be done, and a shortage of water could also prove to be an impediment, especially in some of its remote areas.

The power of the pampas

With significant surpluses in soybeans, maize, meat and oilseeds, Brazil and Argentina have led the Latin American  continent in terms of food trade. Current surpluses are 6x and 3x 2000 levels, versus only a 30% increase in the previous decade, and are rising. A key impediment to boosting exports is infrastructure. Food has to travel a long way just to reach the port, and then further still to reach other markets. Forty days is possibly acceptable for iron ore to reach China on a ship from Brazil, but that would prevent several perishable food items from being exported. And hence, solution providers in terms of durability, packaging, refrigeration and processing will be in demand. Also, while you could attribute a lot of the agricultural success of LatAm economies to good conditions, they have also benefitted from the adoption of agricultural innovation. For instance, more than a third of crops planted in the region are as seeds that are genetically modified, versus more than 45% in the US and about 12% in Asia. Genetically modified crops are not new. They provide solutions to some of the most frequent constraints on agricultural yields (resistance to environmental challenges including drought and more efficient absorption of soil nutrients, fertilisers and water) or add value by enhancing nutrient composition or the shelf life of the crop. And while the adoption of GM crops and seeds is far from wholehearted, particularly in Europe, it’s most certainly a key part of the solution in economies that are set to face a more severe food shortage.

The last mango in Paris?

Europe’s deficit/surplus makes for interesting reading. Seventeen of the 27 EU countries face a food trade deficit, and yet, the EU overall recorded a surplus (barely) in 2010 for only the second time in the last 50 years (see chart). Broken down further, the UK is the largest food importer, followed by Germany and Italy, while the Netherlands and France lead exports thanks to their very large processing industries. If Europe’s future is one of relative economic decline, then reduced purchasing power when bidding for scarce food resources is an unappetising prospect. Therefore, it needs all
the innovative solutions it can muster, or import substitution will have to increase. It’s important to note that being in overall surplus or deficit can mask variety at the category level, i.e., Europe is a net importer of beef, fruit & vegetables, and corn, while its exports are helped by alcohol and wine specifically. Japan, in particular, is very challenged. It is the only country in the preceding table to show a deficit in every single food category.

We conclude our trip around the world in North America. Large-scale production, access to markets, a home to innovation
and favourable regulation has meant that the US (and Canada) continues to dominate some of the key agricultural resources such as soybeans, corn, fodder, wheat and oilseeds. Put this self sufficiency together with the medium-term potential for energy self sufficiency and relatively good demographics (better than China), and a rosier prognosis for the  US, versus the rest of the Western world and parts of Asia, begins to fall into place.

Agri-dollars on the rise

Before we conclude, we need to devote a few lines to the geo-political and macro economic consequences of higher food prices. It’s likely that countries will act increasingly strategically to secure food supply, and that protections (e.g., high export tariffs) may well rise. It is also likely that there are special bi-lateral deals to access stable and secure food supply.

This could obviously damage the integrity of the WTO-sponsored system. Another consequence might be the emergence of agri-dollars, in the same way that petro-dollars emerged in the 1970s. This may seem far fetched (the value of the world’s energy exports is US$2.3 tn compared to US$1.08 tn for agriculture) but it’s important to think through the consequences. The big exporters, especially those with the scope to grow their output, may well have sustainable surpluses that can be reinvested into their economies (or extracted by a narrow part of society). Similarly, the consequence of being a net importer will be an effective tax on consumption: disposable income in the US would jump if oil was US$25/bbl.

As we have said, we would expect the big gainers of a meaningful rise in food prices in real terms to be Brazil, the US and Canada, while Japan, South Korea and the UK would face challenges. The top chart is important: look how China’s surplus has turned to deficit. What will happen if the Chinese middle class swells as it is expected to? And that’s  the rub; what we have been used to in terms of food’s importance is set to change. How food moves around the world is likely to change, and the flow of currency around the world will also likely be impacted.

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Dr. Sandi's picture


America’s prestigious Georgia Institute of Technology

I'm willing to go along with any gag up to a point, but really, PRESTIGIOUS?'s picture




Georgia Tech is consistently ranked among the best universities in the United States and the world. For over a decade, Georgia Tech has remained in the top ten public universities in the United States.[55] In 2008–2010, U.S. News & World Report ranked Tech as the No. 7 public university, and No. 35 among all universities.[55] In 2010, The Times Higher Education World University Rankings ranked Georgia Tech 19th in the United States, 27th in the world, 10th in Engineering & IT, 20th in North America, and 5th among public universities.[56] Tech has the No. 4 undergraduate engineering program, and the No. 4 graduate engineering program.[55] All of Tech's undergraduate engineering programs are among the Top 10 in their field including its Schools of Industrial Engineering (1st), Mechanical (2nd), Aerospace (2nd), Biomedical (3rd), Civil (3rd), Electrical (5th), Environmental (5th), Computer (6th), Materials (6th) and Chemical (9th),[55][57] and Industrial Engineering (1st), Biomedical (2nd), and Aerospace (2nd) at the graduate level.[58] In 2010, Georgia Tech’s College of Business rose from 31st the previous year to 28th, continuing its rapid upward trend[59] Diverse Issues in Higher Education has ranked Tech No. 1 at the bachelor's level, No. 2 at the master's level, and No. 1 at the doctoral level in terms of producing African American engineering graduates.[41] In 2010, U.S. News & World Report ranked Tech as the No. 26 "MBA" program.[60] Tech also boasts the No. 30 Physics program in the nation, specializing in Nonlinear Dynamics (in which it ranks 5th nationwide) and Condensed Matter Physics.[61][62] U.S. News & World Report ranked the graduate chemistry program at No. 26 overall with the Physical Chemistry specialty ranked at No. 14.[63] The Math department is ranked at No. 30 overall and at No. 8 in Discrete Math and Combinatorics.[64] It is known as the best public university in the southern United States, as well as the best return on investment among all U.S. universities.[65]

Hulk's picture

Educated crakas, whod a thunk it ???

Dr. Sandi's picture

Okay, didn't mean to step on too many toes with that. I don't get out much anymore.

I tend to think of prestigious tech schools with monkiers like MIT, Stanford, Michigan, and the ever popular nerd paradise Rensselaer Polytechnic Institute.

I sit corrected.'s picture

It was news to me as well. I'm from Pennsylvania although on occassion I do eat a peach.


 "There ain't no revolution, it's evolution, but every time I'm in Georgia I eat a peach for peace." -- Duane Allman

DavidC's picture

"Structurally, China is at a huge disadvantage...In China, to slaughter roughly 600 mn pigs per year, which is about six times the demand in the US, they have a breeding herd of about 50 mn animals. In the US, the comparable number is only about 6 mn so there is a huge productivity lag."

Sorry, your maths is wrong there.

Demand in China 600M, herd of 50M. Multiple of demand to herd - 12 to 1 Demand in US 100M, herd of 6M. Multiple of demand to herd - 16.7 to 1.

So the US is actually worse than the US, NOT the other way round.

But, certainly the amount of arable land used in China is sobering.


Invisible Hand's picture

I think the author's point was that the smaller the breeding herd size relative to the number of animals slaughtered, the better.  You have the math right but the reasoning backward.

Mike Cowan's picture

Tell me when I can make the house payment in Wheaties.

Joe A's picture

Intensive agriculture with intensive use of fertilizers leads to soil exhaustion and polution of ground and drinking water. Lack of wind breakage leads to soil erosion. Both will lead to soil degradation. Think dust bowl.

Money Squid's picture

Jose A, where is Hose B?

Joe A's picture

Still in Mejico, hombre

Joe A's picture

Aqua-dollar might be more appropriate. That is why Coca-cola, Nestle, etc. are buying up producers of mineral water everywhere. Some CEO of Nestle ones said that "there are people out there who say that water is a basic human right but in my opinion it is a tradeble commodity" or something like that. Deprive them of water for a few days and see if they still think that.'s picture

Just because something is necessary does not make its availability a right. A right is not something which must be supplied to an individual through the industry of others. Rights protect an individual's ability to employ his own body and property as he sees fit.

Those who think that water availability may become a problem should make an effort to secure their own supply either as individuals or through a co-operative effort.

Joe A's picture

Some say that future wars will be just about that: the availability of water. Of all the fresh water in the world less than 2% is fit for human consumption. The problem with 'industry of others' is that these 'others' often set out to dominate the availability of something in order to set whatever price they can. 'Industry of others' also often implies stealing, bribing, defrauding or otherwise acquiring things from rightful owners. It is called monopoly. By denying access to a resource prices can be propped up. Can be found anywhere in the world. Africa in the 80s was a good example: food was rotting in the harbours because warlords confiscated the stuff and were extorting the locals and the foreign aid organizations that wanted to feed the hungry. It is called the Hunger Games. Anybody who does these kind of things, sees humans as commodities. It is deeply frightening if people don't see anything wrong or immoral with this. I guess that these people would respond by saying that morality is subjective.

There is no such thing as a free market cause some are more free than others and the playing field is not level. Adam Smith warned about monopolies and advocated oversight.'s picture

The problems caused by warlords in Africa are the same problems caused by state warlords, also known as government. If water is to be rationed it will be rationed by the government which will allow you to vote for the lesser of two evils who will then make sure that the elites get clean water and you don't.

Only when individuals take the responsibility of making their own voluntary arguments for security and adjudication will the little guy have the resources to fend off the warlords be they in Africa or in your state or national capital. One can not give a group of elite strangers the right to make decisions of life and death for everyone and expect to benefit from the deal except by kissing the asses of the warlords and joining them in pillaging one's neighbors.

Live free or die. That's your choice. Look into the eyes of your fellow holiday shoppers and ask yourself is that the look of life or of living death?


Here's how my home state of Pennsylvania keeps evil corporations at bay and makes sure that the little guy has access to clean water:


The Pennsylvania Department of Environmental Protection produces incomplete lab reports and uses them to dismiss complaints that Marcellus Shale gas development operations have contaminated residential water supplies and made people sick, according to court documents.

Joe A's picture

Thanks for the link. We are one the same level. Big government is in bed with big corporations. I am all for true 'people's power': people having control over their own lives and not be dominated by either government or corporations or both as it is now. Land reform where land is ex-appropriated from both government and big land owners and redistributed over small farms combined with good agricultural practices, will lead to increased production and will employ more people. Land reform is actually a liberal idea (liberal in the true meaning of the word, not associated with leftism).

Edit: read the article and it is an outright scandal. Someone belongs in jail.'s picture

I wouldn't take from big land owners. If they gained their wealth through cronyism or fraud rather than by skill and prudence they will lose the land soon enough in a free market. Government land could be problematic as overseas creditors could swoop in and lay claim to it depending on the scenario involved. Otherwise I'd let folks have at it. Not that it would be my decision.



Dr. Sandi's picture

Are those things still there? I thought they'd already been diverted to the Los Angeles DWP reservoirs.

Clint Liquor's picture

Government confiscation of farmland? Stalin did that when he starved to death 9 Million Ukranians and collectivised their Farms. Production on those Farms plummeted. Farmers who own their land stay awake at night trying figure a way to gain a half of a percent more productivity. Workers of Collective Farms just don't give a fresh fuck.

Joe A's picture

That's right but I think the number of dead was even 12 million. Big landownership -whether government or private- leads to inefficiencies. The Stalin example is a good one of government agriculture gone really bad (and some say it was part of a campaign to subdue the Ukranians). Big private land ownership in Latin America for instance also shows that that is inefficient: the land does not live up to its potential. More over, it deprives people from work and income because everything goes to a happy few. In the 50s, (after Stalin died), Russia experimented with redistributing land to small farmers: as you say, farmers that own their land are willing to go the extra mile. Also, in a market society it opens up opportunities to attract investment using the land as collateral. Land should not be in the hand of either big government or big corporations.

booboo's picture

A billion china men eating their way to Moscow. The commies are not as monolithic as you think.

shovelhead's picture

The Muppets will eat Miss Piggy.


Money Squid's picture

Seriously? It is delusional to think the dollar will be back by broccoli. Oil is the basis for the western economic system as it provides the energy and raw materials for plastics. The price of a barrel of oil was dramatically increased in the early 70s with the phoney Saudi Arabian oil embargo. This was done to increase the value of the oil markets so that oil would be used in place of gold. Oil can only be produced where it exists and most of the easily found and produced oil has been produced and massive capital expenditures are required to produce what is left. If the price of broccoli increases significantly people will do with out or will grow their own. Broccoli and its tasty friends have no chance of replacing oil and the basis for the dollar.

What ZH should be focussing on is the flow of gold, petrodollars and other currencies as the dollar continues to lose its world reserve status. The bullshit on wallstreet is only pennies compared to petrodollars and its the petrodollar that is keeping the US from imploding.

DosZap's picture

The price of a barrel of oil was dramatically increased in the early 70s with the phony Saudi Arabian oil embargo. This was done to increase the value of the oil markets so that oil would be used in place of gold. Oil can only be produced where it exists and most of the easily found and produced oil has been produced and massive capital expenditures are required to produce what is left.

The real reason for the OIL shortages(laugh), was WE were guinea pigs of the Govt.

The entire event was staged and planned, the endless lines, and the odd/even lic plate days................................WHY???................To see how WE would react to the crisis.

The Federal Govt caused the entire fiasco.

Had a bud back then,when the "SUPPOSED" shortages were happening, NOT ONE hole in the ground, not one reservoir was empty,in fact they were filled NATIONWIDE to capacity.

While WE were in lines, and paying higher prices.

Dr. Sandi's picture

B b b but Santa is real, right?

Seasmoke's picture

the only thing more important than food........WATER

Urban Redneck's picture


Infrastructure per se is not an impediment to increasing agricultural exports from developing countries.  The shift in investment paradigms is from raw material extraction and direct export, to adding value domestically prior to export, which isn't entirely clear from the article's language.  

A key impediment to boosting exports is infrastructure. Food has to travel a long way just to reach the port, and then further still to reach other markets. Forty days is possibly acceptable for iron ore to reach China on a ship from Brazil, but that would prevent several perishable food items from being exported. And hence, solution providers in terms of durability, packaging, refrigeration and processing will be in demand. 

blunderdog's picture

It's probably worth considering whether increasing food exports from starving countries is a worthwhile endeavor in the first place.

Urban Redneck's picture

They need jobs, hard currency (harder than the local banana bux), and a positive trade balance to enable even a minimal social safety net.  So the options for meeting those needs are resource extraction, agriculture, and manufacturing.  In the more undeveloped economies manufacturing for export isn't usually viable.  Unless you advocate them abandoning their cities and devolving to economies based entirely on subsistence agriculture.

Most of projects I've looked at follow a rational growth model of producing first for the domestic market, then expanding to include export to regional neighbors, and finally expanding to export to developed markets.  

People aren't starving because the volume of food production is insufficient, the are starving because of inadequate allocation and distribution systems, coupled with economic poverty and government corruption.  There are specific issues that can arise when large-scale FDI displaces a local population that exists by subsistence agriculture, but in that case the underlying problem is either the legal system or the usurpation of the legal system, not agriculture itself since the large-scale FDI could just as easily be for a mining project as an agriculture project.

Quinvarius's picture

Not if we have another drought every year.  And as warm as this winter is shaping up to be, it is going to be a trend.

buzzsaw99's picture

A balmy -5 degrees in Int'l Falls, MN right now. Winter doesn't start for three more weeks.

Yen Cross's picture

 The brain ages more slowly in cold climates buzz... That's why you are in the (1 percentile) of intelligence... What the hell are you doing in the " Bad Lands" anyways?  I thought you were Western European...  John Deere trade show?

buzzsaw99's picture

Hello Yen. I copied that tweet from someone else. I am a (frost resistant) MN transplant living in Oklahoma.

Yen Cross's picture

 Lets go Ice Fishing Ehh? I personally shopped this tune for you...  All aboard/ the Express Kundalini! 

 Love and Rockets Kundalini Express live Lollapalooza 2008 - YouTube

evolutionx's picture

DHS Orders 450 Million Hollow Point Bullets

Homeland Security buys .40 caliber ammunition, orders 450 million hollow point bullets. The high performance HST bullets are designed for law enforcement and ATK says they offer “optimum penetration for terminal performance.”


Dr. Gonzo's picture

Will you be able to eat an Agri-Dollar when hungry?  Whenever I get hungry I try to eat a gold coin but I can never chew it. I'm really starting to wonder why I bought it. I'm glad somebody's finaly trying to make money edible. I'm starving and my teeth are all chipped.

Dr. Sandi's picture

Switch to the gold coins with the queen on them. Much less copper, easier on your teeth!

Vegetius's picture

Good to see people writing articles about things they no nothing about, 1,000 head dairy farms = grain fed cattle feedlot farming needs energy and lots of it. Go ask the Amish how they can make more money per acre than your industrial farm or maybe ask the Irish who are gearing up in dairy to become the biggest exporter of milk products in the world by 2020. Their farm size is 200 -400 head at the bigest scale.

What about the damage done to the farm land in Brazil the nasty problems that are starting because of GMOs. So in short, stick to shares in GM farming latifundia type farms is a bad idea ask the Romans.

“Good farmers, who take seriously their duties as stewards of Creation and of their land's inheritors, contribute to the welfare of society in more ways than society usually acknowledges, or even knows. These farmers produce valuable goods, of course; but they also conserve soil, they conserve water, they conserve wildlife, they conserve open space, they conserve scenery.”

blunderdog's picture

Nonsense.  The only things worth doing are things which produce profits.

That's why we don't bother trying to educate our kids in the US.  No one's found a good way to make a buck doing that, so fuck it.  We'll just hire educated people from other places where they're cheaper to manufacture.

gnomon's picture

West of the Missouri River agricultural land is primarily a tax liability and an oil play due to much more frequent periodic droughts which can wipe out all of the gains of the previous years.  And as we descend further into Banana Republic status  all of the agricultural land in the U.S. will be subject to terror and confiscation much as has happened and is happening in former Rhodesia and South Africa.

There is no safety in this asset when Rule of Law has been undermined and the mob rules.  And the average age of the American farmer is 55 years of age with no one in sight with the expertise to properly take over.  It is all downhill from here.

As the song intones, it is all "dust in the wind" because the most important ingredients for stability and growth in food production have rotted out, those being our Constitutional System and the Electorate.

MachoMan's picture

While large scale/professional farming is incredibly complicated, at the end of the day, it doesn't have insurmountable barriers to entry.  Necessity will be the mother of invention and younger people will pick up the trade as the incentives become better.  The land will not lie dormant for failure of a person desiring and capable of farming it.

grid-b-gone's picture

Suburban America can pretty easily switch from farming its lawns to gardening. This can happen at no additional expense since fertilizer is already being consumed (wasted) growing grass. 

"Necessity" is the key. With the U.S. so far down on the rankings of income spent on food, and grocery stores so conveniently located in suburbia, it would take even tougher times for gardening to be a major trend.

Reserve ag land in the form of lawns is a major dormant asset.

Gardening is 'local' in the extreme. Two-earner families made the average family more dependent on commercially-grown food. This extended recession could change that trend, especially if multi-generational living situations continue to grow, providing expertise and extra available labor for tending and picking. 

MeBizarro's picture

Exactly and you are starting to see this trend already in the US with the number of households who say they have a garden at their house or in a community tract has exploded since '08.  Until WW2, a majority of US homes did have a garden that was a key source of food and a majority of food was supplied locally within a 100 to 150-mile radius of the city.  It meant their was a lot less variety in the winter time but people dealt with that by canning and drying food.