The Cost of Climbing the Protein Ladder

By: Richard Mills | Fri, Apr 22, 2011
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As a general rule, the most successful man in life is the man who has the best information

Over the next fifty years, as we add another 4.5 billion people to the world's population, global demand for food will increase almost 70% if population growth predictions are correct.

Already approximately 1 billion people go to bed hungry each night. Somewhere in the world someone starves to death every 3.6 seconds - most are children under the age of five.

Migration is defined as: the long-term relocation of an individual, household or group to a new location outside the community of origin. Today the movement of people from rural to urban areas is most significant.

Migration cause can be explained two ways:

Push factors - conditions in the place of origin which are perceived by migrants as detrimental to their well being or economic security.

Pull factors - the circumstances in new places that attract individuals to move there.

Unemployed, poor and hungry (push factor) people from rural areas are attracted to cities because cities are perceived to be places where they could make more money and have a better life (pull factor).

During the 19th and early 20th centuries urbanization heavily contributed to industrialization. Job opportunities in the cities caused the mass movement of people from the country to the city. These rural to urban migrants provided cheap and plentiful labor for emerging factories.

Nowhere is this rural to urban migration - and a higher degree of industrialization - more evident today than in China and India.

Chinese urbanization

Indian Urbanization

India's GDP growth has averaged an impressive 6.5 percent a year since the economic reforms that began in 1991.

"Every major industrialized country in the world has experienced a shift over time from a largely rural agrarian-dwelling population to one that lives in urban, nonagricultural centers. India will be no different. However India's urbanization will be on a scale, that outside of China, is unprecedented." McKinsey Global Institute's report India's Urban Awakening


Climbing the Protein Ladder

The change of diet among newly prosperous, urban populations in developing countries is the most important factor stoking the rise in global food demand.

A rising income means more money in the household budget. The new middle class consumers forgo plant based calories in favor of adding more protein from meat and dairy products to their diets. It takes up to 8 kilograms of grain to produce one pound of beef - less for pork, chicken, milk or eggs - between 2kg and 6kg. As meat consumption soars, more grain is needed to feed more livestock.

In 1995, the Chinese ate an average of 25kg of meat per person, by 2007, the Chinese were consuming 53kg of meat per person.

Enlarging and diversifying the meat supply is a first step for every developing country.

The Protein Ladder:

5.Grain fed beef

4.Grass fed beef

3.Milk, other dairy products

2.Pork

1.Chicken and eggs

Rice, beans and bread

In 1980, the world ate 133 million tonnes of meat and drank 342 million tonnes of milk. By 2002, consumption had increased to 239 million tonnes of meat and 487 million tonnes of milk. The United Nations Food and Agriculture Organization (FAO) estimates that by 2030 global annual consumption of meat will stand at 373 million tonnes and 736 million tonnes of milk.

The more people there are on this planet and the more Asians, and others, decide they want a western style diet the more grains/oilseeds are needed to feed them. And many of those very same grains are needed to raise the animal protein, the beef, pork and chicken they want - they are also the very same grains the world's poorest people, the ones who can't afford to climb the protein ladder, depend on to survive.


The Cost of Climbing the Protein Ladder

Animal agriculture already takes up 30% of total land area on the planet and uses over 70% of agricultural land worldwide. If the entire world population were to consume as much meat as the Western world does - 176 pounds of meat per capita per year - the global land required would be two-thirds more than what is presently used.

Livestock agricultural reduces the available acreage for direct human grain consumption in two ways:

Currently farmed animals eat one-third of the world's cereal production. In the industrialized world, two-thirds of the agricultural land produces cereals for animal feed. In the United States, farmed animals, mostly cattle, consume almost twice as much grain as is eaten by the entire US population. Over 100 million acres of US agricultural land is used to grow grain for animals and still more is imported.


Food For Fuel

Another systemic cause for the price rise of food is the diversion of food crops for the production of bio-fuels. An estimated 100 million tons of grain per year are being redirected from food to fuel.

Economist Dr. Hazell has said that filling an SUV tank once with ethanol consumes more maize than the typical African eats in a year

A World Bank policy research working paper released in July 2008 states: "large increases in bio-fuels production in the United States and Europe are the main reason behind the steep rise in global food prices."

The World Bank report says that bio-fuels are responsible for raising food prices between 70 to 75 percent. Higher oil prices and a weak dollar were responsible for the rest of the price rise. The analysis disputed the argument that increases in global grain consumption and droughts were responsible for food price increases.

An economic assessment report, also published in July 2008, by the Organization for Economic Co-operation and Development (OECD) found that the effect of bio-fuels on food prices to be much smaller.

Perhaps more telling is the fact the OECD study said current bio-fuel policies would only reduce greenhouse gas emissions from transport fuel by 0.8 percent by 2015.

Ironic that:


Population Growth

According to the FAO the world's population will increase from 6.8 billion today to around nine billion by 2050.

World Population


Conclusion

On the demand side of the world grain production equation there are three sources of growth:

Global grain production is under duress - because of aquifer depletion, severe soil erosion, climate change, severe weather events and the green revolution has run out of steam with no new technological miracles in sight. Inventories of most grains have sunk to historical lows.

Our agricultural regime should be on every thinking person's radar screen. Is it on yours?

If not, maybe it should be.

 


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Richard Mills

Author: Richard Mills

Richard (Rick) Mills
www.aheadoftheherd.com

Richard Mills

Richard lives with his family on a 160 acre ranch in northern British Columbia. He invests in the resource and biotechnology/pharmaceutical sectors and is the owner of Aheadoftheherd.com. His articles have been published on over 400 websites, including: SafeHaven.com, WallStreetJournal, USAToday, NationalPost, Lewrockwell, MontrealGazette, VancouverSun, CBSnews, HuffingtonPost, Beforeitsnews, Londonthenews, Wealthwire, CalgaryHerald, Forbes, Dallasnews, SGTreport, Vantagewire, Indiatimes, Ninemsn, Ibtimes, Businessweek, HongKongHerald, Moneytalks, SeekingAlpha, BusinessInsider, Investing.com and the Association of Mining Analysts.

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