The world’s biggest problems are the world’s biggest business opportunities.- Peter Diamandis
This is the second installment in our ongoing series investigating how investments in food security present some of the biggest opportunities for investors this century. If you missed part one, click here.
Last week we left off on our discussion assessing food (in)security across the world. We started by looking at the known facts and understanding that according to our best estimate about 800 million people are experiencing food insecurity each year. That’s already a lot of people but as we look at the four dimensions of food insecurity we are seeing that the problem could potentially affect hundreds of millions more within the next decade if we continue on our current path with our current practices. We left off investigating the most critical component of growing food, water, all across the world is being threatened and being used at alarming rates. Today we’ll look at other resources needed to go into food and how they play into overall food security.
It’s not just the water.
Many other resources are needed to grow food. From fertilizer and soil additives to crop treatments there’s a lot that goes into growing something from a seed to something you can eat.
Fossil Fuels are the Backbone of our Current Food Ecosystem.
Many don’t realize it but fossil fuels are used in almost every aspect of standard field agriculture food production. First, you use a tractor to plow and then to plant a field to grow your crops. Then you typically add petroleum based fertilizers to grow crops because of nutrient depleted soils. Next, you’ll control insects, weeds, and disease with petroleum based pesticides, herbicides and fungicides. Then you harvest your crops using petroleum powered harvesters. Once your crop is harvested you have to drive it in your gas-powered vehicle to be processed at a facility that runs on power or oil. Then you drive the processed product to the distributor or maybe the store where it can be bought. Then that thing gets purchased and we have to drive it home to the plate it will find itself on. There’s petroleum based resources used in every single step of the process with our current model (Bernstein, 2011).
Food security in this model is dependent on cheap fossil fuels, unlimited water, and a stable climate. None of which is currently the case.
Climate Change- The biggest threat yet to food security?
After seeing how much petroleum goes into producing a crop it is probably not surprising that agriculture is one of the biggest contributors to climate change. In addition to the crops we produce in today’s current industrial agriculture model that predominates our food production systems around the world, we are also harvesting carbon dioxide, nitrous oxide, and methane. Carbon-dioxide gets released by the fuels we use to plant, harvest and transport our crops. Nitrous oxide, which has 296 times the global warming potential of carbon dioxide, comes from the chemical-based fertilizers we use to grow our crops. Methane comes from livestock operations and has up to 25 times the global warming potential of carbon dioxide.
Experts debate back and forth on “peak oil” but there is no debate that oil is a finite resource, being used way faster than it can be replenished. Our reliance on a finite resource, that gets costlier as it gets more finite, puts our collective food security in serious jeopardy until we can find an alternative to petroleum based products and machines to grow food at mass scale. And in the meantime, we’ll keep using these things which the majority of scientists agree are contributing to climate change.
How bad is Climate Change?
In a joint statement made by 21 national science academies to the 2007 G8 summit declared, “It is unequivocal that the climate is changing, and it is very likely that this is predominantly caused by the increasing human interference with the atmosphere.” (National Science Academy, 2007). Regardless of politics or personal viewpoints on the cause of climate change, the important part of that statement is ‘it is unequivocal that the climate is changing’. There is no room for debate there we have a changing climate and as a result, farmers all over the world are experiencing crop failures due to unexpected changes in their climate.
Climate change is more than just warmer summers. Increasing temperatures also result in changing wind patterns, the amount and type of precipitation and the types and frequency of severe weather events. The Food and Agriculture Organization warns that a global temperature increase of 2-4 degrees Celsius over pre-industrial levels (which we are already projected to surpass) could reduce crop yields 15 to 35 percent in Africa and Asia and 25 to 35 percent across the Middle East. This ‘unequivocal’ change in our climate threatens our food production capacity under our current paradigm. It’s going to add hundreds of millions of more people to the 800 million already affected by food (in)security every year.
Population: Table For 10 Billion?
The world population will reach 9.9 billion in 2050, up 33 percent from an estimated 7.4 billion now, according to projections included in the 2016 World Population Data Sheet from the Population Reference Bureau (PRB). 2.5 billion more mouths to feed! It also estimates that there will be another billion by 2030, a little more than a decade from now. So this isn’t an issue for 2050, it’s an issue for now. The World Health Organization predicts that 70% of this population will be urbanized or living in cities. This influx to cities will result in urban sprawl taking up already valuable farm land as cities grow to accommodate their influx in population.
This same PRB report draws comparisons between the developed world and the undeveloped. The combined population of the world’s least developed countries in the world will double by 2050 to 1.9 billion. There are 48 least developed countries, based on United Nations criteria, most of which are in Africa. The population in 29 countries will more than double. Nearly all of these countries are in Africa. These nations are where a large majority of the 800 million people experiencing food insecurity already live. They already aren’t meeting their food needs and their populations are set to double! That’s going to mean hundreds of millions more becoming food insecure. Eliminate all other factors mentioned previously and this fact alone will bump food security into the billion person problem category.
Can the Earth Even Support 10 Billion People?
While population growth isn’t an inherently bad thing, humanity has always been growing and we’re actually declining the rate of population growth compared to the previous few decades, it is harmful if we already reached our capacity to feed the people here. Now a large part of that is logistics, there’s enough food grown in theory but much of it gets wasted and a lot of perfectly good food gets thrown out because it doesn’t look good enough to get sold at the grocer. Still, in 2008, the World Wildlife’s Fund Living Planet Report states “humanity’s demand on the planet’s living resources, its Ecological Footprint, now exceeds the planet’s regenerative capacity by about 30 percent! This is due to human demand on the biosphere more than doubling between 1961 and 2007.
The huge issue with all this new population growth is that we are perhaps already beyond our planet’s ability to even support the life we have now. More than 40% of the earth’s land has already been cleared to agricultural production. Agriculture currently uses 60 times more land than urban and suburban areas combined. Agriculture land covers an area the size of Africa (Bernstein, 2011). With more people, we will need even more land.
What About the Oceans… Can They Help Us?
It’d be nice if land was our only need, but turns out we may need more ocean as well. In the groundbreaking documentary The End of the Line it informs us we are quickly emptying our oceans of fish. We have lost over 2048 known fish species due to overfishing. Over 70% of fish species are endangered because of overfishing. Barring significant changes in practice scientists projected that the oceans would become barren of fish by 2048. According to some estimates, because of the practices in place, 85-95% of the fish caught by commercial fishers is bycatch. We only end up eating about 10% of all the marine life that is killed in order to feed us the fish we do like to eat (Backyard Aquaponics Magazine, 2009). The rest is just accidentally harvested by commercial trawlers.
We essentially have become too good at catching fish for our own good. According the End of the Line documentary, we now have the technology and fishing fleet capacity to catch four-times the current supply of fish. Unfortunately, aquaculture isn’t the savior that we think it is. The feed used in most aquaculture operations is fish meal, where does that fish meal come from… you guessed it; the oceans! In some cases it takes 3 pounds of fish to grow out every pound of aquaculture raised fish. Again not all cases, but in general standard aquaculture practices, especially the large operations are not actually helping the fish populations of our oceans.
So we’re running out of food in our oceans, we’re running out of arable land on our continents, we’re running out of water to grow our food, we’re running out of petroleum currently used to raise our food, treat our food for pests and disease, and transport it from the farms to our stores and tables. It’s a confluence of factors that without significant and drastic wide reaching change, that 800 million food insecure people worldwide statistic is going to seem small in ten years. It’s safe to say that food-security is definitely a billion person problem. It’s a 7.4 billion person problem that by 2050 is going to be a 9.9 billion person problem!
Somewhere there’s a silver lining right… What’s The good news?
We met criteria number one for what makes food-security a good investment; it affects more than a billion people. Our next criteria to investigate will be can we bring solutions to this problem within a decade. Not only is that Peter Diamandis’s requirement for it being a good investment, but as we now know, by 2030 we will already have another billion mouths to feed. Next week we’ll continue our investigation and look at whether the technologies, inventions, innovations, companies and infrastructure can all be implemented within a decade. If it can, it just might be that food-security is one of the best investment opportunities of the 21st century. But more importantly, if it’s a good investment, it means that most or all of these alarming issues can be addressed. Despite the bleak picture we painted today our future actually looks very bright, so long as we stay focused on the task at hand, get the support needed, we can find a way to feed the almost ten billion hungry mouths by 2050.
Next week we’ll continue our investigation and look at whether the technologies, inventions, innovations, companies, and infrastructure can all be implemented within a decade. If it can, it just might be that food-security is one of the best investment opportunities of the 21st century. But more importantly, if it’s a good investment, it means that most or all of these alarming issues can be addressed. Despite the bleak picture we painted today our future actually looks very bright, so long as we stay focused on the task at hand, get the support needed, we can find a way to feed the almost ten billion hungry mouths by 2050.