The Agriculture Bomb

…Our farm harvest is highly energy dependent. Food in the U.S. travels an average 1,500 miles to end up on your dinner plate. Nitrogen fertilizers are made from natural gas, insecticides are oil-based, tractors run on diesel, and plastic packaging comes from oil. Add in refrigeration and it may take as much as 1,000 calories of oil-energy to produce a calorie of food today, according to some estimates. In 1944, it took just one calorie of oil-fuel to make 2,300 calories of food (horses were still used on many farm fields back then, and they provided fertilizer, too).

So why not go back to horses? Because today’s farmer riding a combine can do in hours what it would take days to do with a horse. Before the mechanical revolution in farming, about one-third of the U.S. population worked on farms, and it wasn’t because they liked the fresh air. It was the only way to get things done and get enough food to feed everybody. If the energy crisis worsens


Another reason that the U.S. shouldn’t rest on its laurels as an agricultural superpower is that we have competition.

If food is the scarce resource of the future, Brazil could emerge as a new superpower. It has plenty of sun, fresh water, and more available arable land than any other country on Earth. Brazil is already the top world exporter of beef, poultry, soybeans, sugar, coffee, and orange juice. John Deere already has 114 showrooms in Brazil and plans to expand to 200 stores by 2010.

Brazil could triple its area under cultivation without cutting one more acre of rain forest. Its secret is taking marginal land and making it productive farmland. But to do that, it needs heavy applications of lime and phosphate-rich fertilizer.

The looming fertilizer crisis is a subject for another whole column. There are fertilizer stocks out there that are woefully undervalued and will probably go much higher from here. Suffice it to say for now that there isn’t enough fertilizer to keep up with a growing global population that also wants to eat better.

Money and Markets