Global Starvation Imminent As US Faces Crop Failure by Marc Davis Sott.net 19th June 2009

Global Starvation Imminent As US Faces Crop Failure
By Marc Davis
Sott.net
19th June 2009

The world faces "mass starvation" following North America's next major crop failure. And it could even happen before year's end. So says Chicago-based Don Coxe, who is one of the world's leading experts on agricultural commodities, so much so that Canada's renowned BMO Financial Group named the fund after him.

Climate change will cause shorter crop growing seasons and the world's under-developed farming sector is ill-prepared to make up for the shortfall, Coxe says. He has been following the farming industry for many years and benefits from more than 35 years of institutional investment experience in Canada and the U.S. This includes managing the best-performing mutual fund in the U.S., Harris Investment Management, as recently as 2005.

In particular, an imminent crop failure in North America will have particularly dire consequences for major overseas markets that are highly reliant on U.S. crop imports, Coxe cautions. Sadly, this scenario could have been avoided had successive North America's governments not weakened the farming industry with too much political interference, he suggests.

"We've got a situation where there has been no incentive to allocate significant new capital to agriculture or to develop new technologies to dramatically expand crop output. We've got complacency," he told BNW News Wire. "So for those reasons I believe the next food crisis - when it comes - will be a bigger shock than $150 oil."

As the key strategist for the Coxe Commodity Strategy Fund (TSX: COX.UN), he has an astute understanding of the mounting challenges that the farming industry has contended with in recent years. Prior to entering the investment business, he served as General Manager for the Ontario Federation of Agriculture and General Counsel for the Canadian Federation of Agriculture.

He notes that farmers, not just in North America, but the world over are still reeling from the global economic meltdown and have consequently curtailed their output. Thus, the inauspicious prospect of a drop in global food production this year - the first annual dip in living memory - means that farmers will not be able to keep pace with current grain demand.

"And when we have the first serious crop failure, which will happen, we will then have a full-blown food crisis, which we will not be able to get out of because we will still be struggling to catch up (as a result of diminished crop yields)," he says.

Furthermore, the prospect of a near-term global food crisis has been exacerbated by a surge in demand for high-quality protein (meat) in emerging super-economies such as China and India, Coxe says. This means that burgeoning global demand for crop staples is already beginning to outstrip supply.

"During this decade, the annual increase in hectares of global cultivated farmland has been roughly 1.5 per cent, at a time global demand for grains and soybeans has been growing at double that rate," he says. "We will be dealing with mass starvation with the first serious crop failure. It could happen as early as this fall if for instance we have a killing freeze in Iowa in August."

In recent years, North America has been blessed with ideal weather conditions for crop cultivation, leading to bumper harvests, Coxe says. But he believes that climate change will soon lead to a trend towards shorter dry cycles, beginning maybe as early as this fall, which will exacerbate a supply-demand squeeze.

"We've been incredibly lucky with the weather up to this point. But if you cut the growing cycle by four weeks, that will dramatically reduce yields," he warns. "People assume that the good times will last forever. There's a sense that food has always been readily available and that it will always be there."

Yet, we only need to look as far a back as the mid 1970s to an era when food staples suddenly became far less plentiful due to poor crop yields resulting from adverse weather, he says.

"There were major food surpluses going into that era. Yet, they were gone so fast," he adds. "In fact, the major inflation of the 1970s was driven more by food than by oil."

If society is to avoid a far worse situation than the food crisis of the 1970s, especially with the onset of a global population explosion in emerging economies, then the world has to dramatically ramp-up crop production. Especially crops like corn and soybeans, which are the best forms of livestock feed for producing animal protein, he adds.

Hence, the world can no longer settle for anything less than optimal crop yields, which requires exponential growth in fertilizer applications, he says. Yet, the under-application of such crucial nutrients, particularly indispensible potash-based fertilizers, has been a pronounced problem for decades in the world's most populous nations such as China, India and Malaysia.

Without the long-overdue doubling of fertilizer applications, as well as a greater societal emphasis on preserving and nurturing the world's arable land, the next global food shortage promises to be both pronounced and prolonged. And that could topple governments and destabilize the world's political order, Coxe further warns.

An ominous omen of humanity's first great challenge of the new millennium came just last year. This was when a short-lived spike in the price of food staples led to widespread hunger and ensuing political unrest in some emerging economies, including food riots.

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Comment: The constant refrain to India and China's "exploding population" in this article attributes blame to their voracious appetites. This racial undertone was similarly expressed by Germany's Angela Merkel last year:

Bad agricultural policies and changing eating habits in developing nations are primarily to blame for rising food prices, not biofuel production as some critics claim, German Chancellor Angela Merkel said on Thursday...

But Merkel, whose country is Europe's largest biofuel producer, said the rise in food prices was not mainly due to biofuels but to "inadequate agricultural policies in developing countries" as well as "insufficient forecasts of changes in nutritional habits" in emerging markets.

"If you travel to India these days, then a main part of the debate is about the 'second meal'," Merkel said.

"People are eating twice a day, and if a third of one billion people in India do that, it adds up to 300 million people. That's a large part of the European Union," she said.

"And if they suddenly consume twice as much food as before and if 100 million Chinese start drinking milk too, then of course our milk quotas become skewed, and much else too," she said referring to EU limits on dairy production....

The reality is that most of the world's starving people are in Asia. Most of the world's largest consumers are in the West, from where corporations backed by military force are hoarding what remains of arable land in the poorest countries. The 'food rush' is exaccerbating an already precarious situation as cooling temperatures threaten shorter growing seasons.

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Add The Market Manipulations Into This Equation.
By: gdpetti

It is said to be extremely large as the contracts are played up and down with the hedge funds gambling with trillions in derivative contracts and the obligation concern is ignored. Seems the 'fear' game is being played as usual, even if based in real concerns. Typical manipulation game. How much longer can it play without someone to bail them out?

Added: Fri, 04 Sep 2009 16:48 UTC

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Gee Wizz!
By: Ruth

Anybody would think that America is running the planet and is the only country that can ruin a global ecconomy or cause the world to starve.

Thank God there are other countries in the world who might have more luck at running their own countries and not wrecking things in the process.

It does seem somewhat of an ethnocentric view.
Added: Sat, 05 Sep 2009 08:49 UTC

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A Special Breed Of Investor
By: Stowaway

boasting about bets placed in favor of human misery.

malice - noun [Link]
1. A desire to harm others or to see others suffer; extreme ill will or spite.

2. Law: The intent, without just cause or reason, to commit a wrongful act that will result in harm to another.

spite, animosity, enmity, hate, hatred, bitterness, venom, spleen, rancour, bad blood, ill will, animus, malevolence, vindictiveness, evil intent

Added: Sat, 05 Sep 2009 21:47 UTC

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Crikey!
By: mallee
mallee

Better get those GMOs in the ground STAT!
Added: Tue, 08 Sep 2009 04:44 UTC

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