Demand for Food, Other Natural Resources Booming
Larry Edelson discusses the growing demand for food and natural resources in China and India. In this issue of Money and Markets, Mr. Edelson takes a closer look at the growing populations overseas and what that means for supply and demand for natural resources.
Jupiter, Fla. (PRWEB) December 17, 2007
Larry Edelson discusses the growing demand for food and natural resources in China and India. Mr. Edelson takes a closer look at the growing populations overseas and what that means for supply and demand for natural resources.
Food prices are at their highest levels since 1845, that's a 162 year high according to the widely respected Economist magazine and its food-price index.
In large part, the weak dollar is why food prices are soaring. Wheat, corn, soybeans and even meat products are priced and traded in dollars, so when the dollar falls, the prices of these commodities typically rise in value. But the weak dollar is just one part of the equation. Growing populations overseas have also produced a large demand in many other natural resources: Oil, gold, silver, copper, uranium. Now the demand is surging full force when it comes to food products. And like other natural resources, the strongest demand for food is coming from Asia.
Consider China, for example:
Although it still maintains its one-child-per family policy in the cities, it's not illegal to have more children, provided the family effectively pays its own way for education and other social services. And with increasing household incomes in the urban areas, many more couples are opting to do just that.
China expects its population to increase 300 million to 1.6 billion by 2050.
That's the equivalent of adding the entire population of America. Meanwhile, domestic supplies of food in China have been shrinking: China's grain harvests, including wheat, corn and rice, have declined in four of the last five years because China's arable land is shrinking at the rate of 2.47 million acres a year. Construction is eating up land once used for growing crops.
Aquifers have been dropping rapidly, reducing irrigation water supplies. Farmland near urban centers is being converted from grain production to higher value crops like fresh fruits and vegetables. Urban migration is depleting the countryside of able-bodied field workers.
As the imbalance in supply and demand has become more pronounced, China has been turning to imports for its grain supplies.
Meanwhile, much the same is happening in India, the world's second most populous country. Over the next 15 years, India's burgeoning population of one billion is expected to increase 30%. Plus, like China, India is also experiencing mass migration to urban centers like Mumbai, Calcutta, and Delhi. That means fewer farmers growing less food.
And although China and India are by far the biggest consumers of grains and soybeans, they are not the only sources of burgeoning demand for agricultural goods. By 2030, there will be another 1.4 billion more new mouths to feed from other corners of the globe. Sub-Saharan Africa is one of the demographic hotspots. The population there is going to explode from 642 million today to 1.4 billion in the next 25 years.
Another factor pushing grain prices higher is that populations are changing their food habits. According to the Rural Industries Research and Development Corporation, by 2020 demand for meat, poultry, and dairy products in 12 Asian countries will soar as much as 55%. Beef consumption will increase by 50%, pork 30%, chicken 40%, and dairy 55%.
Already, since 1985, per capita consumption of animal protein calories in China has more than doubled, rising from 44 pounds to 110 pounds. Among developing economies around the world, demand for meat has shot higher, doubling in just the last 20 years. It would be one thing if demand for meat was rising as demand for other foodstuffs such as seafood, grains, even rice, was falling. But that's not happening. Demand for all foods is rising across the board.
Moreover, increased demand for meat puts additional upward pressure on grain prices. That's because it takes about two kilograms of feed grain to produce one kilogram of chicken. For pork, it takes three kilos of grain, and for beef, eight.
"All told, the anticipated rise in meat demand over the next 13 years will require as much as a 30% increase in global grain production to meet demand.
"Bottom line: A rapidly growing population translates into increased demand for food. Changing food habits are compounding the problem. And the falling dollar is like gasoline on the fire," Mr. Edelson states.
To read this issue online, please visit:
Http://www. moneyandmarkets. com/Issues. aspx? NewsletterEntryId=1266 (http://www. moneyandmarkets. com/Issues. aspx? NewsletterEntryId=1266)
About Larry Edelson and Money and Markets:
With nearly three decades of experience in precious metals and natural resources markets, Larry Edelson has played a pivotal role in training Weiss Research staff and in guiding Weiss Research's customers to prudent investments in the sector. His Real Wealth Report, Gold Trader Hotline and Energy Options Alert provide a continuing education on natural resource investments, with recommendations aiming for both profit and risk management. His team of technical analysts helps enhance the timing of investment recommendations with the aim of continually improving the performance results for investors.
Mr. Edelson is also a regular contributor to the daily e-letter, Money and Markets. Recognized as an expert in precious metals and natural resources, he is often called upon by the media for his investing views. Mr. Edelson has been featured on Bloomberg, Reuters, and CNBC as well as The New York Times, New York Sun, and Marketwatch. com
Mr. Edelson holds a B. A. degree from Columbia University.
Money and Markets (www. moneyandmarkets. com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit www. moneyandmarkets. com.
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