You don’t realize how fragile the current U.S. food economy is. There are multiple ways that the food production and distribution system could fail. Here are 7 possible disaster scenarios:
1. Congress bans GMO foods
That doesn’t sound so bad. But most people don’t realize that more than 90% of our corn, soy, cottonseed, and as a result more than 80% of our domestic vegetable oil is from GMO crops. Also, the vast majority of our livestock food is based on GMO corn and soy. Disrupt the livestock feed system, and we could find ourselves with a shortage of meat, poultry, and dairy. Banning GMO crops could seriously mess with our supply of vegetable oil, meat, poultry, and dairy.
Sure, Congress could, hypothetically, skillfully craft a complex yet subtle law that gradually phases out GMO foods. But that’s not how Congress works. They wield a sledgehammer, not a scalpel.
2. Livestock Feed Price Collapse
Most of our domestic vegetable oil comes from soy and corn. Farmers use expensive inputs (irrigation, fertilizer, chemicals, machinery, labor) for those crops to produce a high yield. And these two crops are lucrative because each is used to produce two products: vegetable oil and livestock feed.
Unfortunately, this means that our vegetable oil supply is largely dependent on the livestock feed market. If prices for livestock feed plummet, these two crops will sell for much less. So farmers won’t be able to afford as high a level of inputs. This will cause yields to fall dramatically, further reducing inputs and yields. Yields could crash so low that farmers could not afford to grow corn or soy.
In 2014, domestic vegetable oil production consisted of soybean oil, 73.4% of the total; corn oil, 15.9%; canola oil, 6.1%; cottonseed oil, 2.3%; sunflower oil, 1.4%. All other domestic vegetable oils were less than 1% of the total. Soy and corn together were 89.3% of the total. If the corn and soy market collapses, we will lose the vast majority of our vegetable oil.
3. The Drought Continues
The drought in California has continued for over 3 years now, with the last 2 years being particularly intense. And now the drought is worsening in neighboring states: Oregon, Washington, Idaho, Utah, Nevada, and Arizona. See the latest drought map here.
Farmers are pumping the groundwater supply dry, to make up for the lack of rain. This approach is unsustainable. Desalinated water is too expensive to use for crops. River water is needed for city and town water supplies. Without a drastic change in the weather pattern, the entire West Coast faces a severe agricultural collapse.
And we cannot bring large areas of untilled land into agricultural production where there is sufficient rainfall, in the eastern third of the nation. It takes many years for land to be developed so that high yields are possible. Another issue is that land is expensive, since it is in demand for many different purposes. There is not much open land that could be converted to agricultural use. Farms today need to be large to be successful.
4. Overseas Economic Disaster
We are becoming progressively more dependent on imported food. The amount of every type of food that we import has been continually increasing over the past few decades. If some overseas economic collapse, or war, or another problem causes a sharp decline in food imports in the U.S., we have nowhere to go to make up the shortfall.
5. U.S. Economic Disaster
The food system in the U.S. and almost everywhere else is a commercial system. So an economic disaster inevitably affects food. Gone are the days when small local farms produced most of our food. Most home-owners do not have enough land on their property — even if the expanded their garden to cover every square foot of open land — to grow their own food. So if an economic disaster disrupts the food supply, we cannot easily recover.
Farmers need a certain amount of money to grow any crop. They sell the crop to pay back the expense of growing it, and to make a modest profit. Most farms operate on a profit margin of less than $100 per acre (sometimes far less). A ten-acre farm makes less than $1000 per crop. A 100 acre farm makes less than $10,000 per crop. These thin margins imply that economic problems can easily cause farms, especially small ones, to go bankrupt. It doesn’t matter if demand for food is high. The agricultural system is so complex that small farms could fail despite high prices and high demand for food.
Economic problems could cause farmers to spend less money on inputs, causing yields to crash. The farmer has to make decisions based on money. He does not strive to feed as many persons as possible on as little land as possible. He strives to pay the bills. Lower inputs costs less, and might be necessitated despite lower yields. For example, some farmers grow canola for vegetable oil. Canola has high yields, but requires high inputs. Other farmers grow camelina for vegetable oil. Camelina has lower yields, but is much cheaper to grow due to lower inputs. A farmer might make a larger profit growing camelina instead of canola, but he also produces less food.
6. Collapse of the Yield Bubble
In the 1940′s and 1950′s, an agricultural disaster of epic proportions was averted, largely by the work of one man, Norman Borlaug. He is the father of the green revolution — changes to agriculture which sharply increased yields, allowing the world agricultural system to feed a growing world population. He has been called “the man who saved a billion lives” because the green revolution prevented mass starvation.
But the green revolution has also led to our current predicament, which no one but me seems to have noticed. Initially, crop yields increased by the use of new varieties of crops, artificial fertilizer, irrigation, and the use of chemicals to control pests and plant diseases. This happened in the 1940′s and 1950′s. But since 1960, crop yields have continued to increase.
For example, from 1926 to 1940, corn yields in the U.S. were flat at between 20 and 30 bushels/acre (56 lbs/bushel). Then the green revolution increased yields gradually from 30 all the way to the low 50s (bushels/acre). That should have been the end of the increase, once all the elements of the green revolution were firmly in place. But yields for corn and many other food crops continued to increase, gradually, until the current level: about 170 bushels per acre. Before the green revolution, 30 bushels would be a bumper crop. During the green revolution, 50-something bushels would be a high yield. Now the expected yield is over 150 bushels/acre, and in some places, with irrigation, over 200 bushels/acre.
This increase in yields has also occurred for wheat, soybeans, and many other crops. And there is no indication that yields are leveling off. What is causing this continuation of the green revolution? My theory is that information is driving yields: the timing for planting and harvesting, the seeding rate, the distance between rows and between plants within each row, the type and timing of fertilizer, the irrigation schedule, the types and timing of chemicals to control pests, crop rotation, soil amendment and other decisions can all affect yields. Over time, improvements in these decisions based on information (largely disseminated by modern means of communication) has caused yields to increase.
But the downside is that we are feeding ever more persons on ever less land. If the land produces far more food than it formerly did, we need far less land to grow food. And the commercial nature of the system means that we don’t keep large swaths of arable land in reserve; that would be too costly. So if/when the yield bubble bursts, we will not have anywhere enough land to feed our population.
What could cause the yield bubble to burst? Any of a number of different factors. As yields increase due to an ever more precise control over all the factors that affect yield, the yields become more unstable.
A modest disruption in these factors can drop yields drastically. For example, in 2012, the drought in the Midwest caused corn yields to fall to a national average of 123 bushels per acre, instead of 150 bushels/acre or higher. And that’s the national average. In the Midwest, where the drought was strongest that year, yields were even lower.
Eventually, a collapse will be inevitable. It is analogous to the stock market. A bull market of increasing stock prices cannot continue forever; corrections and occasional crashes are unavoidable. And the agricultural system is long overdue for a correction.
7. Panic Buying
I’ve discussed this in a previous post: Panic Buying When The SHTF. Whether the buying is prompted by a real disaster, or an overreaction to a perceived threat, the result is the same. Our just in time food production and delivery system cannot compensate for a sudden sharp increase in food buying. Panic buying at the retail level will wipe out supermarket shelves in a matter of days, if not hours. And we cannot restock the shelves as if the supply of food were unlimited. The system only has so much food in the pipeline. We only have so much agricultural land. If demand sharply increases, it would take years to bring new agricultural land into production, and then grow the crops, process the food, and deliver it to markets — literally years. So panic buying by itself could cause a food shortage.