by Bonnefield Financial | Mar 31, 2015 | Opinion Matters
A number of recent reports about population growth, climate change, decreasing crop yields, droughts and farmland loss suggest that these problems are getting worse, not better. These long-term trends suggest that the farmland investment thesis for Canada is still very much intact:
- Population growth – a recent report by the United Nations warned that global population could reach 11 billion by the end of the century, significantly above previous estimates of potential maximum global population of 9 billion.
- Increasing food demand – the USDA recently predicted that the world must grow an additional 50 million acres of corn, soy and wheat in the next decade to meet worldwide demand.
- Declining crop yields – The University of Nebraska recently released a studythat found soy yields in the US to be 30% lower than they should be due to climate change impacts.
- Farmland loss – Statistics Canada recently reported that nearly one million hectares of dependable Canadian agricultural land has disappeared from cultivation in the past 10 years – much of this loss was due to urban expansion and much of that urban expansion occurred on some of the best farmland in Canada – located near urban areas of the GTA in southern Ontario.
Much has been written recently about the potential impact that current low crop prices may have on farmland investment returns, however, none of these long-term trends are reversed by the current short-term crop price environment that resulted primarily from two consecutive years of back-to-back record harvests in the United States (2013 and 2014). And it is helpful to keep in mind just how rare the current environment is: according to USDA statistics, the bumper crops of 2013 and 2014 were the first such back-to-back record harvests in the US in more than 30 years.
So while it is indeed likely that farmland investment returns will cool somewhat from the outsized gains recorded in recent years, the long-term outlook for Canadian farmland remains bright – in contrast to the dark picture painted by worsening global trends.
by Bonnefield Financial | Jan 15, 2015 | Opinion Matters
Believe it or not 2015 has been named “International Year of Soils” by the Food and Agriculture Organization of the United Nations (“UNFAO”). Surely the UN must have something better to do?
Before you roll your eyes consider that, according to a German organization called the Institute for Advanced Sustainability Studies (IASS), the world loses something like 24 billion tonnes of fertile soil every year through misuse, pollution, erosion and urbanization. The UN predicts that the world will reach the limits of ecologically sustainable land use by 2020 – that’s just 6 years from now. With only 1.4 billion hectares of arable land at the world’s disposal, each person will have to make do with just 2,000 square meters – less that one-third the size of a soccer pitch.
For the last three years the IASS has organized a “Global Soil Week” each April to promote better understanding, research and management practices related to soil protection. They have produced a Global Soil Atlas to illustrate the worldwide significance and threats to soil and agriculture. The recently released 2015 Global Soil Atlas makes very compelling reading – not only for its outstanding use of graphics, but especially for the sad story it conveys. Some of its findings:
- The world is a big place – but we are rapidly running out of room to grow our food and we are using it in the wrong way.
- Soils face threats from pollution, desertification and drought, deforestation, soil degradation, loss of species, erosion, scarcity, flooding and rising sea levels and water shortages. On almost all of these measures, Canadian soils are under less threat when compared to the rest of the world.
- Poor agricultural management is the biggest contributor to soil loss worldwide, especially the improper use of fertilizers.
- Soil loss and degradation have serious implications for climate change and vice versa – climate change degrades soils and degraded soils are less able to capture and hold carbon, thereby accelerating climate change.
- Not only does urbanization pave over useful soils, it leads to additional soil problems by increasing rain runoff and evapotranspiration, and all that pavement prevents moisture from penetrating back into the ground to replenish groundwater reserves.
And while Canada ranks better (or suffers less) from many of the soil problems faced by the rest of the world, we face or our own troubling issues. In a survey of Canadian agriculture released by Statistics Canada in late 2014, it was pointed out that nearly one million hectares of dependable Canadian agricultural land has disappeared from cultivation in the past 10 years. Much of this loss was due to urban expansion and much of that urban expansion occurred on some of the best farmland in Canada – located near urban areas of the GTA in southern Ontario. This stunning loss appears all the more tragic after reading the Global Soil Atlas and realizing that those lost Canadian soils were some of the best the world had to offer. And now they are gone forever.
So maybe the UN doesn’t have better things to do after all.
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