Sunday, July 29, 2007

WSJ Article - Feeding Billions, One Grain at a Time

From the front page article in this weekend's Wall Street Journal:

"Dan Basse, president of AgResource Co., a Chicago research firm, estimates that as many as 55 million to 70 million acres of additional arable land may need to come on line globally over the next three to four years just to sustain current agricultural stocks -- already at very low levels.

Many of the pressures facing rice have been building in other agricultural products as well, especially in Asia. After years of healthy gains in production, farmers are also now facing constraints in their ability to increase yields on wheat, barley, palm oil and other crops."


"At the same time, demand for some agricultural commodities is expanding at its fastest pace in decades as new markets open up for grains to make ethanol and other types of alternative energy. That has sent grain prices soaring. It also has increased the price of foods that aren't used for alternative fuel, including rice, because farmers are dedicating more land to alternative-energy crops. The amount of land dedicated to rice has fallen to less than 380 million acres from 385 million acres in 1999 and many economists believe it will decline further."

Full article can be read at (subscription required).

Bottom line? We don't have enough grain to feed everyone, and the ethanol/biodiesel push is exacerbating this issue. Stocks are at record lows, and demand is outpacing supply.

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