Peak theories ‘trashed’

PEAK theories – peak phosphorus, peak oil, peak potassium – are, in the words of Mick Keogh, being “trashed by the cold, hard and ruthless rules of economics”.

 

In a blog post, the Australian Farm Institute’s executive director argued that these peaks were projected on questionable statistics, “and ignore some some basic economics”.

 

“A number of these projected peaks have stubbornly refused to materialize – especially peak oil, and peak land. In fact, despite all projections, each time grain prices look like experiencing a sustained increase, more land is sown to crops and down go grain prices once again.”

 

Mr Keogh took on potassium and phosphorus, two elements essential to agriculture that in recent years have been the subject of reports suggesting the peak of their economic availability was looming or past.

 

Price spikes for these inputs have triggered a predictable response, Mr Keogh said: reserves were reappraised, investors opened up new mines, supplies grew and prices dropped.

 

“The ‘peak’ concept is very easy to sell to the media, and stories of impending doom are certainly very popular. The reality, however, is more often the old adage that ‘the best fix for high commodity prices is high commodity prices’.”

 

But phosphorus researcher Dana Cordell said the basic issue remains the same: the quality and accessibility of remaining reserves are decreasing and costs of extraction will increase.

 

While the known extent of reserves has grown since the price spike of 2008, just how much extractable phosphorus is available to agriculture is largely shrouded in commercial-in-confidence secrecy by mining companies.

 

In a review of the peak phosphorus concept, to which they made a large contribution, Dr Cordell and Professor Stuart White of the Institute for Sustainable Futures at the University of Technology Sydney said there is now so much uncertainty over phosphorus reserves that estimates of the mineral’s depletion range from 30 to 300 years.

 

Depletion differs from “peak P”, which would occur long before reserves run out.

 

This uncertainty has made the authors reconsider an earlier work in which they suggested “peak P” could occur sometime around 2033 – but not that peak P will be a reality.

 

They observe that the neoclassical economic theory that challenges the notion of “peak anything” – because the market will automatically move usage to a more economically favourable outcome – does not acknowledge the finite nature of non-renewable resources like phosphate rock or oil.

 

Instead, they wrote, “the (phosphorus) peak is likely to be an extended and ‘lumpy’ plateau, rather than providing a specific year, in much the same way as the peak of oil production”.

 

Mr Keogh, in response to a query from Rural Press, said this plateau is some way off.

 

“As the US Government survey data highlights, it is likely that there would be an awful lot of existing known reserves mined and made available before any real shortages occurred. Based on those figures, it is hard to see this being a major issue for farmers for the foreseeable future – especially given the extra supplies that have become available with even a short-lived price spike.”

 

But Dr Cordell and Prof. White said now is the time to consider whether the world’s agriculture wants a hard or soft landing when the peak arrives.

 

Without intentional change now, they forecast a hard landing.

 

“Not only will the gap between demand and supply widen, but the environmental and economic costs will continue to grow.”

 

“For example, even if reserves are larger than previously thought, the geopolitical concentration of the reserves and increasing costs means importing nations and their food production systems are still highly vulnerable to fluctuations in availability and price volatility.”

 

They advocate that phosphorus-importing nations – such as Australia – develop strategies to diversify sources of P – for instance, extracting it from human waste – and developing techniques to minimise its use.

 

In this, they are on the same page as Mr Keogh, who said that P doesn’t vanish, it just assumes different forms that can be accessed.

 

The difference seems to be that whereas Mr Keogh believes the market will force the necessary adjustments, the scientists call for an “an integrated and globally coordinated approach to managing phosphorus”.

farmonline.co.nz