The buried treasure: Arable land under our cities

June 24, 2009

Will we see science-fiction urbanism? Will we become urban gardeners?

As the population increases, so does the need for food. In the press, you can read statements like “we will need four Earths by 2050 to feed the world”, although some predict only three.
Fact is that we will not have extra planets to grow our food, and we will either find ways of increasing food production or the world population will regulate itself, be it through famine or wars.
The buried treasure underneath the asphaltInevitably, there will come a time when all apparent arable land will be in use for agricultural production, and there will be a need for more. Already today, we have a vast area of good agricultural land, which is inaccessible, because it is located under cities and roads. This is even more important as the prediction is that the world population will increasingly live in urban areas.
Since the beginning or urbanization, human settlements have developed around the bare necessities, which are water and fertile ground. Today’s major urban centers have been growing from their original core, and they cover a lot of such fertile land. One of the dilemmas for the future will be to accommodate this increasing concentration of population in cities and to keep arable land available. In a later stage, we might have to find ways of recovering this land in some way or another.
In order to conserve arable land from further housing and infrastructure development, we need to think “vertical”. This could mean the end of the individual house, and the further development of higher housing building as the unique model. It is not unthinkable that we will restart agricultural activities in the cities themselves, by allocating some area for gardens both at ground level and suspended on top of buildings, and even the return of farms in the cities. So far, infrastructure had chosen the easy, cheapest and most obvious solution, which was to lay cities and transport on the ground as much as possible. Maybe, we will see an increased redevelopment of roads and transport lines on elevated structures, such as the bridges and the monorail lines that we know today. This could free a huge amount of land for food production. Of course, this sounds like a very costly solution, but food scarcity will make its price skyrocket even more. Another solution, although it seems to go against the trend generally accepted today would be to redistribute the population more evenly between urban centers and agricultural areas.

Copyright 2009 The Happy Future Group Consulting Ltd.

Rabobank: Sourcing grains critical in animal feed-to-food chain

June 22, 2009

This is an article from about a report from Rabobank on their outlook of a growth for meat of 50% between now and 2025 and its consequences on feed-to-food value chains.

Albert Vernooij, author of the Rabobank report ‘Changing Industry Landscapes’ says “The global feed-to-food value chain has switched from being supply driven with a long-term sustainable share for each link in the chain, to being demand driven. This is placing the retail and food service sectors in the leading positions, and farmers and abattoirs (slaughterhouses) have become the weaker links”.

Certainly the retail and food service, because they are the closest to the final consumer have the best position to connect to market demand, but I disagree with his statement that the value chains are demand driven. Most of meat products are commodities and retailers and food service companies buy at the lowest price a rather undifferentiated product. Most slaughterhouses and farmers are still purely production driven, or more accurately put, volume and cost driven, instead of being profit and niche driven. Only very few value chains are really market driven, although most are marketing driven, but that is not quite the same.

Will globalization lead us back to local thinking?

June 22, 2009

This might sound contradictory, but one of the effects of globalization could very well be a new impulse for the development of a local economy, with energy as the main driver.

Let’s review a few things! One driver of globalization has been the search for low wages, therefore making corporations relocating their manufacturing units to the emerging countries. Another pillar of globalization has been the ability to transport goods across the world at a low cost, as energy has been in fact quite cheap. A clear effect of the success created by the above is an economic boom in the emerging countries, where employment has risen and where the standard of living has increased, on average. Currently, we are going through this difficult economic situation, but in the future, we very likely will face an increase in the price of oil. This is the energy effect that I just mentioned. Higher energy costs and food prices will drive inflation higher, although not to alarming levels. Nonetheless, this will be pushing wages up in the emerging countries, while unemployment will stay high for a while in the West, where the main consumer markets are. Therefore, we can expect to see the wage differential between those two groups of countries shrink, while transporting goods will become more expensive. In such a situation, it is not unreasonable to think that some manufacturing will come back closer to the Western consumers market. In addition, in the same time, emerging countries should have been able to develop a middle class that will drive domestic consumption, and thus sustain a certain level of economic momentum, even if their exports decrease in relative volume. An interesting consequence of the above would then be global trend towards a more local economy. The currently emerging countries would produce to satisfy their domestic markets and exporting lower surpluses, while the Western countries would repatriate some of the production units back home since it might be cheaper to produce and to transport goods that way to satisfy their own consumers.

Agriculture has followed the same pattern as other industries, and regions have specialized for the foods that they could produce at the cheapest cost. Of course, the cost of production and of distribution to consumers depends largely on the price of inputs, such as energy, fertilizers, animal feed, etc, but from a pure financial, and also climatic, point of view, it could not make sense to try to produce everything everywhere. Thanks to cheap fuel, the model was to go to global trade and transport foods over long distances. This is quite a change compared with the local agricultural model that dominated until the nineteenth century.

This search for the lowest cost of production will not go away, for a very simple reason. The overwhelming majority of the world population has a limited budget and keeping food affordable is an absolute necessity. We have seen during the sharp food price increase of 2008 that it would not take much to create a panic and riots, because even a slight price increase is almost unbearable for most people, especially in developing countries. This is quite a contrast with the wealthy Westerners who claim that cheap food is a bad thing, and that agriculture should be local and small-scale.

Another aspect that is not addressed very often is the actual carbon footprint of food transport. In the partisan debate, most of the arguments focus on the number of miles travelled, but they rarely look at the qualitative aspect of the transport. Depending on whether we transport food by road, by rail or on water, the results vary greatly. For instance, in Brazil, only 5% of exported products were transported by waterway in Brazil, compared to 61% in the U.S. Conversely, 67% of Brazil’s exported products are transported on highways, compared to just 16% in the U.S. In the European Union, almost 90% of the external freight trade is moved by water, and short sea shipping represents 40% of trade within the European Union in terms of ton-kilometers. As you can imagine, the consequences for the environment, as well as in terms of transportation costs differ greatly.

There are also significant differences between transporting fresh foods or frozen foods. A study carried out by Astrid Scholz, Ulf Sonesson and Peter Tyedmers on salmon showed that consuming frozen salmon transported by sea was the better environmental choice for salmon. To illustrate this, their conclusion was “If seafood-loving Japanese consumers, who get most of their fish via air shipments, were to switch to 75 percent frozen salmon, it would have a greater ecological benefit than all of Europe and North America eating only locally farmed or caught salmon.”

Another important parameter in the environmental impact of the distribution of food is the filling rate of the transportation unit. An efficient fleet of trucks that organize back transport for other goods is more efficient than a small truck used by a farmer to bring his products to the city’s farmers’ market 400 kilometers away and who drives back empty.

As you can see, in the choice between global or local, we need to think in pragmatic terms because the reality is more complex than it may seem at first.

Copyright 2009 The Happy Future Group Consulting Ltd.

The transition from a consumption society towards a maintenance society

June 22, 2009

The days of our consumption society are numbered. We are going to have to find another economic system to prosper in the future as it is part of solving the climate change and CO2 emission issue. Over the last 60 years, all our economy has been based in encouraging consumer demand for goods that have been produced with relatively very cheap energy, very cheap raw materials and as cheap labour as possible, with as cheap credit as possible. This has lead us where we are, which is a group of very wealthy nations wasting very precious resources, to the point of exhaustion and suffocation. If well maintained, Earth will last longAlthough some still try to resist and deny the obvious, this system is no longer sustainable and we must rethink what should drive our economy. In an earlier article, I made a reference of how previous generations used to be very cautious about what and how they consumed. The positive side of the last 60 years has been the incredible progress we have made in science, knowledge and technology, which offers possibilities unthinkable for the previous generations I was referring to. We understand our world and how it functions like never before. We have all the technological solutions to solve the climate issue, but the key is the will and the determination to change and to act. This cannot happen as long as we keep thinking the economy in terms of growth only. Growth will not go on for ever, simply because our space and our resources are limited. As there are more and more people needing more and more energy, food and other goods, the law of offer and demand will rule. Prices will inevitably go up and consumption will slow down. A new time has come. The priority must now be quality, not quantity, we must think about having enough, not having always more. This thinking is not a nostalgia to a past that also had its limitations. It is not about rejecting a market-based economy. It is about looking at the market that has always been here, but that has been pushed in the background for the easier approach of just producing more and selling it. What we will have to bring to market is not so much products as services. These services are the ones that are directly related to making all the natural and industrial cycles run harmoniously in a durable way. Just to name a few examples, I would mention all activities that are related to cleaning the damage we have caused, and recycling activities will become more and more important in our whole economy. In the same way, water treatment is going to be a crucial activity, even more so than it has been so far. Clean industries producing durable goods and services will prevail. This change will also make some jobs disappear and some appear or even reappear. As usual change always brings opportunities. It is to us to recognize them and to take them. The time has come to make the transition from this consumption society, based on wasting resources, and with no future, to a maintenance society, where wealth, and not growth, will be the economic success indicator. By acting today, we can ensure this process to happen in a smoother way than if we wait until we have no choice anymore.

Copyright 2009 The Happy Future Group Consulting Ltd.

Photos from AgriVision 2009 – Feeding the globe in 2050

June 19, 2009

Here is a link on a photo report published in World Poultry about the recent AgriVision 2009 held in the Netherlands.

Their objective was to answer the question of how to feed the world population by 2050, which is the basis of my own quest.

They seem to have come to rather optimistic conclusions. This is good news, but that will require the proper leadership as well from the world of politics as from the business world.

Cod farming: difficult start, but bright future

June 18, 2009

Sometimes success stories do not happen at once. This is my feeling about cod farming. Cod products are in good demand, and unfortunately, wild stocks are in serious trouble, which leaves a huge opening in the market.
Farmed Cod - Courtesy of FiskeriforskningSo far, farmed cod producers have not delivered good financial results and opinions diverge according to whom you listen. Culprit seems to be the “market”, but this is generally a very vague and inaccurate explanation.
Feed companies initiated cod farming, as an extension of the feed business, but not as a standout business. Moreover, the volumes that have been planned initially answered to a production driven approach, and not to a market-driven approach. Production was set up for quite significant volumes, without building up a solid sales plan from an already established market position for cod products. If you read my previous articles “Be always market-driven” and “The consumer must be the focus point of value chains“, you can understand why such an approach delivered poor results.
Recently, I was browsing through the web site of one of the farming companies and, although they claim to have set up a value chain, they have not quite done so. Their value chain needs to integrate much more strongly the marketing/customer end, and I think that they need to rebalance their bargaining position with feed suppliers and customers, in order to obtain a fairer distribution of profits. Today, there are people making good money out of cod farming, but the farmers are not.
Cod filletOnce they refocus their marketing mix to the right countries and the right type of customers, which they will have to do with a reduction of production volumes, then they can grow the business with and for the cod market by being in the driver’s seat.
Considering the demand for white fish and the depletion of the supply of the natural competitor (wild cod), cod farming’s future can only be bright. It would not surprise me if, in the future, cod farming could surpass salmon farming in production volumes. But first, one step back.

Copyright 2009 The Happy Future Group Consulting Ltd.

Managing water is paramount for the future of food production

June 17, 2009

The key for our future food productionWith an increasing population that needs more food and more water to live, we can expect that water is going to become a highly strategic and needed resource. As climate changes, the current rain distribution and geographic availability of water is likely to change dramatically, too. This increasing competition between agricultural areas and urban areas will bring major changes on how we use water for both personal use and for food production. On the personal side, we certainly can expect that current bathroom systems to disappear, as they use too much water. Every time we flush a toilet tank, we actually waste the daily drinking water needs of a couple of people, and local water reserves are gradually depleted as well. Clearly, this has no future. Similarly, we can expect the legislation on water use for lawn sprinkling and car washing to change.

Food production will become more and more focused on water efficiency. The main themes will be about taking what we need, but no more, and about collecting, conserving and recycling water. This will bring us to rethink our crop production, the watering systems we use and develop systems aimed at collecting and conserving water.

Our choice of crops will get under review. Some plants have such high needs for water that their production systems will have to be altered, or maybe even we will have no other choice of limiting them to small selected areas. The use of combined crop productions on the same field is likely to gain some popularity back, as this is a way of saving water and protecting the plants and the soil from excessive evaporation. This, of course, will mean a different look on yields and on harvesting systems. IrrigationMore efficient irrigation systems will replace the old ones. Computerized systems are already in use in wine production, using sensors for humidity and temperature, to determine how much water the plants needs at the most optimal time of the day and deliver it at the exact spot. You can expect that such an optimization approach will prevail. The path that Monsanto follows with the production of genetically modified (GM) wheat that needs only a third of regular wheat varieties is quite interesting. The tricky part is the GM part, as on the contrary to natural “mutations”, such a process does not undergo natural selection, and therefore we do not know what possible side effects it might bring. Nonetheless, this is an attempt to deal with future water shortages. Hopefully, other less controversial solutions can be found that will deliver a similar result. Once again, we can shape our future through continuing innovation.

Food processing, such as slaughterhouses or washing stations for produce, uses large amounts of water. In these sectors, too, new more efficient systems will have to be designed to reduce water use, and they will have to guarantee to meet hygiene and food safety standards. Water treatment and recycling have already been in use for years and they will continue to gain market share.

Next to the above, which is mostly in the hands of individuals and companies, there is a need for political action to address water shortages and water quality issues that expand far beyond the local operations. A number of agricultural areas suffer from drought on a regular basis, such as Australia and some parts of Canada. Other areas have seen the flow of rivers drop dramatically, like for instance the Yang Tse River in China, which has more and more difficulties to reach the sea. In other areas, such in the Arabic Peninsula, the countries realize that traditional irrigation systems are meeting some serious limitations because of the competition between need for drinking water and need for irrigation. Some very interesting projects are in the works to offer alternatives. For example, there are studies to consider the use of floating islands covered with solar panels in order to produce on the spot the energy necessary to desalinize seawater, therefore providing these areas with water that does not originate from underground reserves.

These problems affect the availability, the quality of the water and strongly affect the environment. Failure to address and more importantly to solve such problems properly would have catastrophic consequences for large populations. A balanced plan to offer the availability to water for people, agriculture and industries is absolutely necessary.

Copyright 2009 The Happy Future Group Consulting Ltd.