Global Food Shortages Could "Continue for Decades"

Global inventories of grains are nearing historic lows, while twenty percent of the U.S. corn crop this coming year will be used for ethanol production. Meanwhile wheat, rice and soybean prices have reached all-time highs and corn prices have jumped to a 12-year high. 

Demand for grain continues to increase adding upward pressure on the price of agricultural products. We expect this trend to continue. Recent developments in the sector, found in various publications, include:

• For decades, the industrialized world enjoyed the luxury of producing far more milk, butter and wheat than its citizens could consume. The surplus was exported or was destroyed. Some experts expect this luxury has now come to an end. Europe's mountains of butter have been depleted, its grain silos emptied and its lakes of milk drained. "The era of overproduction is behind us," says Stephane Delodder, an agricultural specialist with Rabobank in the Dutch city of Utrecht.

For the first time, we are seeing the emergence of a global agricultural market driven by the growing demand for grains and a scarcity of supply. Wheat inventories, for example, have reached a 30-year low. In one year inventories in the European Union have plummeted from 14 million to one million tons. The fact is that arable land cannot be increased at will. Over the past three decades, the amount of arable land worldwide has stagnated at about 1.5 billion hectares (3.7 billion acres)...

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