Peak wheat

Peak wheat is the concept that agricultural production, due to its high use of energy inputs [IFDC, World Fertilizer Prices Soar, http://www.ifdc.org/i-wfp021908.pdf] , is subject to the same profile as oil and gas production. [Peak Oil, Peak Gold, How About Peak Wheat?, Thomas Tan, Feb 27th, 2008 at http://www.vestopia.com/Blogs/DirectorBlogEntry.aspx?postId=15118&piid=32 ] ["Investing In Agriculture - Food, Feed & Fuel", Feb 29th 2008 at http://www.stockhouse.ca/blogs.asp?page=viewblog&blogid=1482] [ "Could we really run out of food?", Jon Markman, March 6, 2008 at http://articles.moneycentral.msn.com/Investing/SuperModels/CouldWeReallyRunOutOfFood.aspx] [Andrew McKillop (2006-12-13). "Peak Natural Gas is On the Way" ] The central tenet being that a point is reached, the "peak", beyond which agricultural production plateaus and does not grow any further. [Agcapita Farmland Investment Partnership - Peak oil v. Peak Wheat, July 1, 2008, http://www.farmlandinvestmentpartnership.com/pdfs/Agcapita_Newsletter_-_July_1_2008.pdf] In fact production may even go into permanent decline.

An interesting example of peak production is what happens to highly populous countries as they go through industrialisation. In Japan, Korea and Taiwan, agricultural output plummetted as industrial output rose - a combination of the loss of arable land and competing claims by industrial processes on water for irrigation. China's grain output peaked in 1998 at 392 million tonnes and then fell by more than 70 million tonnes to 322 million tonnes in 2003 and is still dropping - this is colloquially known as the "Japan" effect and is a graphic demonstration of the peak wheat concept. [Outgrowing the Earth, Lester R. Brown, 2004] The concern here is that if this trend continues in China it begs the question of where the needed additional grain will come from? Two of the largest exporters in the world, the US and Canada, combined export approximately 50 million tonnes of grain a year.

Based on current supply and demand factors for agricultural commodities (e.g. changing diets in the emerging economies, biofuels, declining acreage under irrigation, growing global population, stagnant farm poroductitivy growth), some commentators are predicting a long-term annual production shortfall of around 2% which based on the highly inelastic demand curve for food crops could lead to sustained price increases in excess of 10% a year - sufficient to double crop prices in 7 years. [Globe Investor at http://www.globeinvestor.com/servlet/WireFeedRedirect?cf=GlobeInvestor/config&date=20080408&archive=nlk&slug=00011064] [Credit Suisse First Boston, Higher Agriculural Prices: Opportunities and Risks, November 2007]

See also

* Peak oil
* Peak coal
* Peak gas
* Thomas Malthus
* Lester R. Brown
* Earth Policy Institute
* Crop yield
* Fertilizer
* Sustainable agriculture
* Agriculture
* World energy resources and consumption
* Hubbert peak theory

References