Peak Oil, Climate Change and the threat to food security

Guest post by David Archibald

In May, WUWT kindly hosted a post with slides from a presentation I gave to the Institute of World Politics in Washington. Following are some further slides from a presentation I gave during the week to the triennial Nuffield Conference in Perth, Australia.

Figure 1: US Wheat and Corn prices 1916 – 2011 in 2011 constant dollars

Grain prices fell 70% in constant dollar terms from the Korean War to the end of the 20^th century. In 2008, energy-related inputs relative to total operating expenses were about 60% for both wheat and corn. A $200 per barrel oil price will raise operating costs by 60% from the 2008 level. A similar price response was experienced during the First Oil Shock of 1973. This time the price increase will be permanent.

Figure 2: Tunisian Wheat Consumption 1960 – 2010

The Arab Spring began with a vegetable vendor, but what they mainly eat is wheat. Figure 2 shows Tunisian wheat consumption per capita from 1960. A 2,500 calorie per day diet is 267 kg per annum of wheat and that is shown as the red line in the graph. The population of Tunisia is 10.4 million growing at 1% per annum. On that basis, Tunisian wheat demand is ratcheting up at 28,000 tonnes per annum.

Figure 3: Yemeni Grain Consumption 1968 – 2010

Yemeni agricultural production falls well short of what is required to feed them. While the average per capita consumption of wheat is half that of Tunisia, the median age is also about half that of Tunisia at 18 years. Tunisia’s is 30 years. Similarly, 43% of Yemenis are under 14 years old while the figure for Tunisia is 23%. Therefore Yemen’s biggest wheat-eating years are ahead of it. Note the big jump in grain imports in 1988.

Figure 4: Yemen Oil Production 1982 – 2015

The big jump in grain imports in 1988 is explained by the fact that 1988 was the year that Yemeni oil exports took off. Production peaked a decade ago and is now in steep decline. With or without a civil war, by the end of the decade there will be very little oil production to pay for wheat imports. The population of Yemen is 24 million growing at 2.6% per annum. Population is currently increasing at 630,000 per annum. If we assume that they all make it to adulthood and eat 267 kg of wheat per annum for a 2,500 calorie per day diet, wheat imports are ratcheting up at 170,000 tonnes per annum.

Figure 5: Afghanistan Wheat Consumption 1960 – 2010

As unpleasant as Yemen is, there is a place that is yet more execrable. To paraphrase Mark Steyn, Afghanistan is a pestilential nation of pederasts, the chief exports of which are terrorism and heroin. As Figure 5 shows, the modern history of that country is written in its wheat consumption. Wheat imports started in the mid-1970s when Afghanistan was no longer able to feed itself from its own efforts. Imports keep rising during the early years of the Russian invasion and then collapsed along with domestic production. Population growth didn’t fall below 2% per annum during this period of restricted supply. Wheat imports rose dramatically after the US started its turn at running the country. Afghanistan is very similar to Yemen in having a median age of 18 years and population growth rate of 2.4% per annum. At that rate, the current population of 29.8 million is growing by 715,000 per annum. Thus wheat demand is ratcheting up at about 190,000 tonnes per annum.

Figure 6: Population of Afghanistan from 1960 with a projection to 2025

Heroin is 25% of Afghanistan’s GDP. One day the world may stop paying for that heroin and the Danegeld for its terrorism. So where will the wheat come from then? Another alternative is that there may be a will to send Afghanistan some grain but there will be a physical lack of grain due to a climatic event. Figure 6 shows a possible future for Afghanistan’s population in the event of a sudden cessation of grain imports. Population can be expected to collapse below the natural carrying capacity of the country of about 12 million.

Figure 7: Pakistan Wheat Production 1960 – 2011

Wheat imports into Afghanistan would have to come through Pakistan which would have first call on them. Figure 7 shows that Pakistan’s wheat production profile is quite impressive with a five-fold increase from 1960 to nearly 25 million tonnes per annum.

Figure 8: Pakistan Wheat Production per Capita 1960 – 2032

Figure 8 shows that Pakistan’s per capita wheat production from 1980 has been static in the range of 120 to 140 kg per annum. If population keeps growing at its established trend rate, by 2030 Pakistan will be needing another 8 million tonnes of wheat per annum.

Figure 9: Wheat yields in developing countries 1950 – 2005

The biggest driver of higher wheat yields over the last 60 years has been the development of dwarf strains, pioneered by Norman Borlaug. In a sense, that put off the problem for a generation and made it twice as bad. Wheat yields have plateaued from 1996.

Figure 10: Egyptian wheat and corn consumption by source

Two hundred years ago, Egypt’s population is estimated to have been about 4 million. It is now 82 million and growing at 2% per annum – another 1.6 million Egyptian souls are created each year. As adults, their temporal bodies will want to consume an extra 440,000 tonnes of grain per annum. Figure 10 shows that on established trends, Egypt will be needing to import two thirds of its grain consumption. The projected import requirement matches the current level of US wheat exports.

Figure 11: Egyptian oil production and consumption 1965 – 2020

Food and fuel are subsidised in Egypt. What has helped fund that is Egypt’s oil production. That peaked in the 90s and Egypt’s oil consumption is now higher than its production. Oil and grain imports are now rising in tandem. Whoever controls Egypt from here, either the Muslim Brotherhood or the Army, will have a hard time balancing the budget.

Figure 12: US production of major grains and soybeans 1960 – 2010

The biggest increases in agricultural production in recent years have been from the US and Brazil. The mandated ethanol requirement has increased US corn production by 100 million tonnes per annum. That quantum could feed some 300 million people. In fact total US grain and soybean production could feed some 1,500 million people on a vegetarian diet, with the soybeans offsetting corn’s deficiency in lysine and tryptophan.

Figure 13: Mexican major food imports 1960 – 2010

South of the border, the situation isn’t as rosy. As Figure 13 shows, Mexico imports about half of its food requirement. With a population of 113 million growing at 1.1% per annum, there are another 1.2 million Mexicans created each year who, as adults, will need another 370,000 tonnes of imported grain to feed them.

Figure 14: Mexican oil production and consumption 1965 – 2021

Mexican oil production has peaked and is now falling rapidly towards the level of domestic Mexican consumption. That line will be reached in 2016, beyond which Mexico will have to pay for oil imports as well as increasing food imports, or do without something.

Figure 15: Brazilian sugar and soybean exports 1960 – 2010

Demand pull from China, importing 50 million tonnes of soybeans per annum, has created a supply response in other places. Figure 15, showing a dramatic increase in Brazilian soybean and sugar exports starting in the mid-1990s, begs the question of how much more land in Brazil could be put to the plough. With protein content of 38%, Brazil’s soybean exports equate to 100 million tonnes per annum of wheat in terms of protein content.

Figure 16: Russian wheat production and consumption 1987 – 2010

In accordance with good economic theory, Russian wheat production rose as a consequence of the end of communism in 1990, though it was a very lagged response. The drought in 2010 reduced production by 20 million tonnes and the Russian Government banned exports as a consequence.

Figure 17: World production of major grains in 2009

The World produces about equal quantities of wheat, rice and corn for a total of 2,200 million tonnes. This equates to 311 kg per capita for the seven billion people on the planet. The recent increase of US corn production by 100 million tonnes per annum in response to the price signal from the mandated ethanol requirement suggests that production of grains in the US could increase as the price signal increases. On that basis, there may be the ability to return more land to cropping in the US and increase production by a further 100 million tonnes per annum.

It has been estimated that Brazil has 190 million hectares of currently uncropped land that could be brought into production. Assuming 2 tonnes per hectare, Brazil’s production could rise by a further 380 million tonnes per annum. Similarly, Russia has 40 million hectares of cleared land that could be used for agriculture but currently isn’t. That might provide a further 80 million tonnes of grain per annum. The total is 670 million tonnes per annum of potential further production from the US, Brazil and Russia, which might feed 1,675 million people at 400 kg per capita.

Figure 18: World population growth rates 1950 – 2050

Figure 18 shows the World’s population growth rate from 1950 with a projection in blue to 2050. China’s Great Leap Forward shows up clearly in the chart. 30 million Chinese died as a result of a Government requirement to meet grain quotas while not allowing the peasants to retain enough to live on. This was 5% of China’s population at the time. Assuming that the World could produce a further 670 mtpa of grain and that would feed a further 1,675 million humans, that limit would be reached about two decades from now. There are likely to be some bumps along the way. At one stage in 1816, blocks of river ice from the Mississippi River were encountered by ships 100 kilometres out in the Gulf of Mexico. This was due to the Tambora eruption the year before. As the current de Vries cycle event progresses, the chance that a major volcanic eruption will have an agricultural impact continues to rise.