Howdy.
Sorry to keep ranting on about agriculture. Anyone can ignore my rantings if they like. Not much point in talking about a subject I know nothing about.
Wow, this climate change debate has taken off hasn't it. I've just recently watched All Gores 'An inconvenient truth'. Yep, very interesting, and it seems like the debate is almost over. That is, there is nothing much left to debate. Climate change is happening, and it is probably man made. Google 'climate Change' and the whole world is talking about it today.
http://www.smh.com.au/news/National...s-for-Australia/2007/02/03/1169919565262.html
Whether the dire predictions are going to happen, or if there is some exageration going on, I haven't made my mind up, however I must say that even a few months ago I would have considered a low level water front property as an investment, however, today I think I would play it safe and give it a miss. Plenty of other investment opportunities out there without gearing into something that could end up worthless.
Now, Agriculture.
I've always tried to keep a contrarian thinking as many would know on here. I'm betting that the average person is thinking that a farm right now would be the worst thing someone could own. I'm not so sure about that.
I will go out on a limb here and say that agriculture will be the new boom industry. It is definately getting more difficult with bigger storms and more extreme weather events. This is making agricultural production harder. This is only going to be good for farmers in general. Food in recent times has been at ridiculously low levels. Just 18 months ago grain prices were at below cost of production, especially after the run up in oil and other energy prices. This was obvious by the ethanol craze that has happened. It shouldn't be possible to make ethanol out of grain at a huge profit due to the huge amount of energy it takes to produce grain. But it was. Grain has since doubled. In the next few years the US will be converting almost half of it's corn crop into ethanol. Grain that in the past has been exported to feed developing nations. Oh dear. I wouldn't want to be starving in Africa. But the US gets to buy less oil off the Middle East. It is the US's grain, they can do what ever they like with it.
Why do dairy farmers only get 30c per litre for milk? It's because they can get screwed down to that level. Dairy producers are highly subsidised in the rest of the developed world, besides Australia and New Zealand. There is over production. But now the poor Aussie dairy farmer has been hit with twice the feed costs. Current milk prices are not sustainable. Dairy farmers are planning a 'tip out' day. Where they tip out a days production on to the ground to alert people of their plight.
Egg producers get a few cents per egg. Their feed costs have doubled. Eggs will simply stop being produced until it is economic again. Thus egg prices will rise.
It takes a thousand tonnes of water to grow a tonne of grain, wheat or corn. Even more for rice. The three big food staples, and the building block of the food chain. It takes a thousand tonnes of water to produce a couple of hundred kilos of meat. Australia in a normal year has about the biggest food excess of any nation. We export two thirds of what we produce. This means we are the biggest exporter of water overseas.
Now this is only possible because, believe it or not, if you work out our land area, times it by the rainfall, and divide it by the population, we would be the wettest continent per person. This has to be the case otherwise we couldn't export so much water as food.
Aquifers are going dry everywhere due mainly to overuse, but also more efficent and more productive agriculture. The more productive plant growth means less runoff. The food produced from irrigation will soon be in decline. Add to that global warming which means less water seeps into the ground.
The oceans food catch is getting smaller due to overfishing. This will place more demand on the grain fields of the grain producing exporters like the US, Canada and Australia, to fill in the gaps, plus aquaculture will take off. Aquaculture needs grain as a feed source.
Heatwaves are getting more common. A couple of stinking hot weeks will slash grain production, and it has done in the last decade, hence the worlds falling grain supplies.
Agricultural land around me continues to rise in value. I think plenty of people, a lot of it the smart money can see what is coming. I don't want agricultural land prices to rise, as it makes it harder for me to expand. A lot of the land is being bought by outside interests, thus I may get to farm some of it without owning it, which is what I am already doing.
A doubling in a price of a commodity, means that a producers profit can go through the roof. Look at what has happened with mining companies. Farms will be the same as long as the production doesn't drop too much.
I have no doubt the current dry conditions are just a normal drought. If I'm wrong, and Australia has been plunged into a permanent drought, then, yes, Aussie farmers are stuffed. Our climate may get slightly hotter and drier, but this is a drought right now. There is a lot of money betting it's just a drought that will soon end. Interestingly, on the movie 'An inconvenient truth' there is a map of Australia showing it mostly getting wetter over the long term, and this is a fact over a century. Most of Africa was getting drier. Once again, glad I'm here and not there.
The green revolution has seen 50 years of agricultural oversupply. Farm subsidies were introduced to most western nations to keep farmers farming. In Australia we just simply had to get bigger and more efficient and make do without subsidies. I think the oversupply of food could be coming to an end. If oversupply turns to undersupply, the ramificatios for prices are huge. Farm subsidies will get dropped in Western countries which will be a boon for Aussie and Kiwi producers.
Coversely, the high grain prices will see farmers everywhere planting wall to wall grain. It will be interesting to see if the supply can be ramped up enough. Similtaineous bumper crops around the world will see prices plumit.
Lets see what happens next.
As per usual, this could all be rubbish. Make up your own mind.
See ya's.
Some sobering reading.
http://www.greatlakesdirectory.org/zarticles/080902_water_shortages.htm
http://www.earth-policy.org/Updates/Update22.htm
Sorry to keep ranting on about agriculture. Anyone can ignore my rantings if they like. Not much point in talking about a subject I know nothing about.
Wow, this climate change debate has taken off hasn't it. I've just recently watched All Gores 'An inconvenient truth'. Yep, very interesting, and it seems like the debate is almost over. That is, there is nothing much left to debate. Climate change is happening, and it is probably man made. Google 'climate Change' and the whole world is talking about it today.
http://www.smh.com.au/news/National...s-for-Australia/2007/02/03/1169919565262.html
Whether the dire predictions are going to happen, or if there is some exageration going on, I haven't made my mind up, however I must say that even a few months ago I would have considered a low level water front property as an investment, however, today I think I would play it safe and give it a miss. Plenty of other investment opportunities out there without gearing into something that could end up worthless.
Now, Agriculture.
I've always tried to keep a contrarian thinking as many would know on here. I'm betting that the average person is thinking that a farm right now would be the worst thing someone could own. I'm not so sure about that.
I will go out on a limb here and say that agriculture will be the new boom industry. It is definately getting more difficult with bigger storms and more extreme weather events. This is making agricultural production harder. This is only going to be good for farmers in general. Food in recent times has been at ridiculously low levels. Just 18 months ago grain prices were at below cost of production, especially after the run up in oil and other energy prices. This was obvious by the ethanol craze that has happened. It shouldn't be possible to make ethanol out of grain at a huge profit due to the huge amount of energy it takes to produce grain. But it was. Grain has since doubled. In the next few years the US will be converting almost half of it's corn crop into ethanol. Grain that in the past has been exported to feed developing nations. Oh dear. I wouldn't want to be starving in Africa. But the US gets to buy less oil off the Middle East. It is the US's grain, they can do what ever they like with it.
Why do dairy farmers only get 30c per litre for milk? It's because they can get screwed down to that level. Dairy producers are highly subsidised in the rest of the developed world, besides Australia and New Zealand. There is over production. But now the poor Aussie dairy farmer has been hit with twice the feed costs. Current milk prices are not sustainable. Dairy farmers are planning a 'tip out' day. Where they tip out a days production on to the ground to alert people of their plight.
Egg producers get a few cents per egg. Their feed costs have doubled. Eggs will simply stop being produced until it is economic again. Thus egg prices will rise.
It takes a thousand tonnes of water to grow a tonne of grain, wheat or corn. Even more for rice. The three big food staples, and the building block of the food chain. It takes a thousand tonnes of water to produce a couple of hundred kilos of meat. Australia in a normal year has about the biggest food excess of any nation. We export two thirds of what we produce. This means we are the biggest exporter of water overseas.
Now this is only possible because, believe it or not, if you work out our land area, times it by the rainfall, and divide it by the population, we would be the wettest continent per person. This has to be the case otherwise we couldn't export so much water as food.
Aquifers are going dry everywhere due mainly to overuse, but also more efficent and more productive agriculture. The more productive plant growth means less runoff. The food produced from irrigation will soon be in decline. Add to that global warming which means less water seeps into the ground.
The oceans food catch is getting smaller due to overfishing. This will place more demand on the grain fields of the grain producing exporters like the US, Canada and Australia, to fill in the gaps, plus aquaculture will take off. Aquaculture needs grain as a feed source.
Heatwaves are getting more common. A couple of stinking hot weeks will slash grain production, and it has done in the last decade, hence the worlds falling grain supplies.
Agricultural land around me continues to rise in value. I think plenty of people, a lot of it the smart money can see what is coming. I don't want agricultural land prices to rise, as it makes it harder for me to expand. A lot of the land is being bought by outside interests, thus I may get to farm some of it without owning it, which is what I am already doing.
A doubling in a price of a commodity, means that a producers profit can go through the roof. Look at what has happened with mining companies. Farms will be the same as long as the production doesn't drop too much.
I have no doubt the current dry conditions are just a normal drought. If I'm wrong, and Australia has been plunged into a permanent drought, then, yes, Aussie farmers are stuffed. Our climate may get slightly hotter and drier, but this is a drought right now. There is a lot of money betting it's just a drought that will soon end. Interestingly, on the movie 'An inconvenient truth' there is a map of Australia showing it mostly getting wetter over the long term, and this is a fact over a century. Most of Africa was getting drier. Once again, glad I'm here and not there.
The green revolution has seen 50 years of agricultural oversupply. Farm subsidies were introduced to most western nations to keep farmers farming. In Australia we just simply had to get bigger and more efficient and make do without subsidies. I think the oversupply of food could be coming to an end. If oversupply turns to undersupply, the ramificatios for prices are huge. Farm subsidies will get dropped in Western countries which will be a boon for Aussie and Kiwi producers.
Coversely, the high grain prices will see farmers everywhere planting wall to wall grain. It will be interesting to see if the supply can be ramped up enough. Similtaineous bumper crops around the world will see prices plumit.
Lets see what happens next.
As per usual, this could all be rubbish. Make up your own mind.
See ya's.
Some sobering reading.
http://www.greatlakesdirectory.org/zarticles/080902_water_shortages.htm
http://www.earth-policy.org/Updates/Update22.htm
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i think you should try it! seeing as you're a new-wave and a contrarian and all that! then, if it works, give me free food for life!
