February 6 (Bloomberg) -- Thomas Malthus, history’s celebrated pessimist, wrote in 1798 that, should war and disease fail to claim humanity, “gigantic inevitable famine stalks in the rear, and with one mighty blow levels the population with the food of the world.”
The concept of "peak food," that the production will reach an apex that can't be topped, is more a function of population than of agricultural limits. The world should be able to produce enough food to feed everyone when the human numbers peak late this century, says José Graziano da Silva, director general of the United Nations Food and Agriculture Organization (FAO). However, the strains on the global pantry are real. While the Earth has plenty of natural inputs -- land, nutrients and water -- humans face a growing challenge to manage them.
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The human population is headed to 9.3 billion by 2050, with the middle class expanding from 1.8 billion to 4.9 billion consumers, according to estimates by the UN and the Organization for Economic Cooperation and Development. Global farm output must rise 70 percent by 2050 to nourish everyone, as more people seek a higher calorie count every day, according to the FAO.
“We need to improve production," Graziano da Silva said. "The problem is how to do that without destroying the natural reserves, as we are doing now, wasting water, erosion of soils, destroying forests."
For the last five years, assurances by agriculture specialists that food production will hold up were overshadowed by surging food bills, price swings and shortages, caused mostly by drought and flooding, that prompted social unrest. During the food price spike in 2007-2008, more than 60 food riots occurred from Haiti to Egypt. Anger over food prices fueled the Tunisian unrest that toppled dictator Zine el Abidine Ben Ali in January 2011.
The food-price index tracked by the FAO since 1990 peaked in February 2011 at 237.9 points. It averaged a record 228 points last year, 23 percent more than in 2010 and 14 percent more than in 2008. Some food price relief came by the end of last year, but the cost of food remains historically high. Prices will probably decline this year, Graziano da Silva said last month.
Unrest is likelier today because there’s less slack in the global food system. Inventories of wheat, corn and rice are lower than a decade ago, even as the world added more than 700 million people. Rising prices, declining crop yield growth and increasing fertilizer use have caught the attention of major investors concerned about economic, social and environmental sustainability.
“These trends do not suggest much safety margin,” wrote GMO LLC founder Jeremy Grantham in an April 2011 note titled “Time to Wake up: Days of Abundant Resources and Falling Prices Are Over Forever.” Grantham is no Malthusian, but his ominous concerns have reverberated among the band of institutional investors who are leading the push for sustainability strategy as a hedge against large-scale risks.
Grantham's research conveys urgency, particularly in laying out the demand picture. In 2009, China's booming economy helped its citizens devour 25 percent of the world’s soybeans, 37 percent of its eggs and 46 percent of its pig meat, according to GMO’s research.
The natural systems that enable this growing consumption are showing signs of strain. The Millennium Ecosystem Assessment, a report created by 1,360 international experts, identified 15 of 24 natural systems that “are being degraded or used unsustainably," including fresh water, climate stabilizers and protections against natural hazards and pests. The report also warned that changes in ecosystems are increasing risks of large, unpredictable changes, such as fishery collapses and climate change.
An October 2011 study in the Proceedings of the National Academy of Sciences concluded there's an 80 percent probability that the crop-wasting Russian drought of 2010, which shut down the nation’s wheat exports, could not have happened without climate change.
Ecological stability provides farmers with what amounts to a natural subsidy that enables agriculture but is largely unrecognized by prices. Economics does not account for these ecosystem services, and scientists are just beginning to quantify them in a way that might allow pricing. As Pavan Sukhdev, a Deutsche Bank investment banker turned Yale environmental economist, says, “Bee pollination is worth $190 billion. But when did a bee ever send you an invoice?”
One area where farmers do face peak supply is in phosphate, a fertilizer that is increasingly scarce, yet “essential for rejuvenating soils,” according to Olivier de Schutter, the UN adviser on the right to food. The Global Phosphorus Research Initiative estimates the world might have only 30 years of mineable phosphorus left before availability peaks.
“Without phosphorus, clearly productivity would suffer,” said Martin von Lampe, senior agricultural economist at the Organization for Economic Cooperation and Development. Farm run-off of phosphorus and nitrogen, another key fertilizer, collects in rivers and bays, creating oxygen-deprived dead zones for fish, such as the 7,000-square-mile region where the Mississippi River empties into the Gulf of Mexico.
Nitrogen pollution, biodiversity loss and climate change are already outside sustainable limits, according to the Stockholm Resilience Centre, which estimates “planetary boundaries” that humanity can't cross without taking on large-scale risks to ecosystem and economic health.
People farm about 38 percent of the Earth's total non-iced land. There's room for growth. The total arable earth is 4.2 billion hectares, 2.7 times the area now in use. However, that unused land includes forest and pastures, and converting those areas into cropland has consequences. Deforestation contributes to climate change by removing trees’ consumption of carbon dioxide.
Agriculture shouldn't run into foreseeable natural limits, as long as the Earth's resources are managed effectively, said Josef Schmidhuber, deputy director of the FAO. “If everything we know today about population growth and consumption levels is somewhere close to reality, then it’s a finite problem,” Schmidhuber said. “We’ll be able to feed the world in the future.”
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