GLOBAL RESOURCES ANALYSIS


SHORTAGES | FOOD


Current global agriculture system uses very intensive fossil energy, water and fertilizers. Fossil energy prices rise with more 50% a year. Water is becoming more and more scarce and therefore more and more expensive. Fertilizers are almost complete manufactured based on the Haber Process, and therefore mainly dependent on natural gas, which is also strong rising in price and is very limited in supply and must compete with other global demands for it (large is widely used for heating and power generation purposes). Oil (+ 30% more energy needed) and coal (+70% more energy needed) can be used to produce fertilizer by first converting them to synthetic gas, but are much more energy inefficient in use. An other food facet is geopolitical: Russia and Iran are by being the major natural gas suppliers of the world, the two nations that within 5 years from now will be the origin of our current food production system. The certainly are developing a natural gas cartel on the moment. More concrete: 5 years from now Russia and Iran will control the fertilizer market completely (just by having the natural gas reserves needed for production off fertilizers). Fertilizer plants in other countries are closing for energy price driven economic reasons in too high speed. This major development is widely unrecognized and can lead to severe geopolitical power balance swifts and also to severe geopolitical tensions. Nobody hit the hand that feeds; each government will be friends than with Russia and Iran. They also can decide to declare fertilizer embargo's to certain nations, shutting of these nations remotely from food supply. Resources and geopolitics are the two sides of the same coin. A reversed example: In the midst eighties the USA under the Ronald Reagan and George Bush Sr. lead Administration has asked the Saudi Royal Family to oversupply (with price difference guarantee of the USA) the oil market for some years, so that lower oil prices would cause the USSR her bankruptcy. The low oil prices as result of this market over supply had cut the USSR of their major export income and lead to the bankruptcy of that federal nation. The USA has compensated the Saudi Royal Family for the missed income, but that was a bargain compared with the cost of operating a Cold War. Russia (as remaining state of the USSR) has not forgotten this event. It's still on the geopolitical 'balance sheet' between the USA and Russia. When the USA is completely depended on Russian, Qatari and Iranian produced fertilizer, two of those three –as being not so good friends of the USA- can draw this huge wildcard in geopolitics. The USA Administrations depends too much on their military power, forgetting that real friendship between nations is based on trust and mutual benefit instead on force. The USA can maintain their current only global superpower status just for one reason and that is the market dominance of the dollar. But this market dominance of the dollar is weakening each year, undermining the USA unlimited capital supply. The War on Iraq was not for WMD (weapons of mass destruction), nor for the brutal dictatorship of Saddam Hussein, but tree other reason (getting the oil of Iraq, getting regional exposure and -last but not least- to undo the change from payment of dollars to euros Saddam Hussein has did. The USA can maintain their military power only as long this is feed/financed by the dollar dominance. This dominance was long time reasonably based on a solid economy of the USA. But since there are severe second thoughts about the health status and foresight of the USA economy more and more nations replace the dollar as their main reserve currency and more and more commodities are no longer traded in dollars. The USA Administration certainly needs to make very quickly some real friends (before their economic over-stretchiness -and therefore their military over-stretchiness- will be phased out by the world economy) otherwise they will certainly face severe food/nutrition problems for the economic lower half of their society/population. And less wealth is something these less economic part of society are used to, but less food will certainly lead to severe societal unrest. And of course the world needs very quick (as in: yesterday) a replacement for the worldwide mostly on natural gas depending Haber Process production method that is currently the mainstream production method. Oil (+30% more energy needed) and coal (+ 70% more energy needed) can be used, but are much more energy inefficient in use. Because otherwise organic (dual focused: flora and fauna combining) agriculture is the only remaining option and the world certainly can't change very quickly to this system, because it's structural different. And also in these systems there will be more taking from the soil than be giving to the soil. Research for mixed production of fertilizers by algae in waste water grown, or (and this will be the solution we by Indus think) by algae that can be spread on soil and then capture on the soil surface the N2 (nitrogen) in the air to the soil, or by algae in air brushed sweet water algae farms, or by N2 capturing flora in more polyculture based agriculture is a very urgent need for maintaining world food supply. Climate changes (as in: conjectural more extreme weather conditions and as in: structural change in type of weather) could also have heavily effects on food production levels and therefore on food shortages. By all these facets certainly food will demand evocable in the next years a lot more space in family budgets (and therefore in national economies), pushing partial other spending out of the budget, because each dollar/euro can be spend only ones.


Author: Gijs Graafland


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