Earth Policy Institute

In the competition for water between farmers on the one hand and cities and industries on the other, the economics do not favor agriculture

As China’s appetite for meat, milk, and eggs has soared, so too has its use of soybean meal. And since nearly half the world’s pigs are in China, the lion’s share of soy use is in pig feed.

Land acquisitions, whether to produce food, biofuels, or other crops, raise questions about who will benefit. Even if some of these projects can dramatically boost land productivity, will local people gain from this?

Since 1970, the earth’s average temperature has risen more than 1 degree Fahrenheit. If we continue with business as usual, burning ever more oil, coal, and natural gas, it is projected to rise some 11 degrees Fahrenheit (6 degrees Celsius) by the end of this century.

Some of the factors influencing grain yields are natural, while others are of human origin. Natural conditions of inherent soil fertility, rainfall, day length, and solar intensity strongly influence crop yield potentials. Several areas of cropland with inherently high fertility are found widely scattered around the world: in the U.S. Midwest (often called the Corn Belt), Western Europe, the Gangetic Plain of India, and the North China Plain.

Sometime within the last century, soil erosion began to exceed new soil formation. Now, nearly a third of the world’s cropland is losing topsoil faster than new soil is forming, reducing the land’s inherent fertility.

The most recent U.N. demographic projections show world population growing to 9.3 billion by 2050, an addition of 2.3 billion people. Most people think these demographic projections, like most of those made over the last half-century, will in fact materialize. But this is unlikely, given the difficulties in expanding the food supply, such as those posed by spreading water shortages and global warming. We are fast outgrowing the earth’s capacity to sustain our increasing numbers.

The world is in transition from an era of food abundance to one of scarcity. Over the last decade, world grain reserves have fallen by one third. World food prices have more than doubled, triggering a worldwide land rush and ushering in a new geopolitics of food. Food is the new oil. Land is the new gold.

The world produced 2,241 million tons of grain in 2012, down 75 million tons or 3 percent from the 2011 record harvest. The drop was largely because of droughts that devastated several major crops—namely corn in the United States (the world’s largest crop) and wheat in Russia, Kazakhstan, Ukraine, and Australia. Each of these countries also is an important exporter.

Global demand for soybeans has soared in recent decades, with China leading the race. Nearly 60 percent of all soybeans entering international trade today go to China, making it far and away the world’s largest importer.

High temperatures have combined with the worst drought in half a century to wreak havoc on American farms and ranches. Some 80 percent of U.S. farm and pasture land experienced drought.

Over the last two months, the price of corn has been climbing. On July 19th, it exceeded $8 per bushel for the first time, taking the world into a new food price terrain. With heat and drought still smothering the Corn Belt, we may well see more all-time highs in coming weeks as the extent of crop damage becomes clearer.