FORECASTS & TRENDS E-LETTER
by Gary D. Halbert
April 26, 2022

IN THIS ISSUE:

1. Food – Some Interesting Thoughts

2. Introduction: The Geopolitics of Food

3. We’re Getting Fatter & Waste Is Rampant

4. Food Production Must Increase Dramatically

Overview: Food – Some Interesting Thoughts

To start this discussion, here are three interesting facts which don’t seem to go together. Fact #1: According to the United Nations and other sources, 690 million to 811 million people worldwide were “chronically undernourished” in 2019 – depending on whose statistics you believe. Plus, they all say it’s gotten worse since then.

Fact #2: Almost 40% of people in the world over the age of 18 years old are overweight. This seems high but look around you; it seems pretty obvious, sadly. But how can both of these facts be simultaneously true? I’ll come back to that question.

Fact #3: The USDA estimates food waste in the US is equivalent to 30 to 40% of the food we produce, corresponding to roughly 133 billion pounds of food annually worth $161 billion. According to an EPA estimate from 2010, the average American wastes 219 pounds of food every year.

These three facts don’t seem to go together. Or do they? Despite incredible advances in food production over the past several decades, at least 690 million people worldwide are still undernourished. I think this number is significantly understated based on other sources I read. Yet 40% of adults are overweight, and that number may be low. How can this be?

It seems absurd – undernourished and overweight simultaneously – but somehow we all know most of it is true. But do we really waste 30%-40% of the food we produce? The USDA says we in the US and most other developed nations do. The United Nations and other sources also quote studies which say we waste one-third or more of all the food which is produced.

I do almost all the cooking in our family, and I know I waste some food, but 30%-40% seems extremely high to me. That doesn’t happen in my kitchen. But who knows what happens elsewhere?

The facts above are what we’ll talk about today. The facts and figures which follow were first disseminated by Lykeion, a financial publishing group, in March and more recently in RealClearWorld.com in an article written by Jacob Shapiro of Princeton University.

Introduction: The Geopolitics of Food

The global agricultural system as it exists today is a manifestation of hundreds of years of geopolitical competition. The world produces enough food to feed everyone, yet hunger is rising, people are getting fatter and we waste up to 40% of the food we produce.

How can all that be true? Apparently, it is and has been for some time in the developed world.

When you think about it, food is the essence of geopolitics. There is no more basic human need than securing access to food and water, and as a result, there is no more important geopolitical imperative for national governments than to ensure their people do not starve. A government that fails to provide a good environment for food security will not stand long.

For purposes of this discussion, the question is where to start. Let’s start here.

We are all used to going to the grocery store and getting all the food we want, increasingly including non-GMO organic food and free-range meat whenever we fancy it. In most cases, especially in our mega superstores, the choices are endless.

Most humans who have ever lived have not enjoyed the predictable and stable access to food we treat as commonplace today in the Western world. And yet global hunger has been on the rise for years. How can this be? I’ll attempt to explain below.

The global food system today has lots of problems. For decades, a combination of rising incomes, record harvests, liberalized trade and lower food prices helped decrease global hunger rates significantly. Global progress was so good that in 2015, the United Nations set a goal of eliminating world hunger by 2030. But then things changed.

Even before the COVID-19 pandemic, problems with hunger began to intensify. In 2015, almost 630 million people were chronically undernourished according to the UN, which defines undernourished people as individuals whose food intake falls below the minimum level of dietary energy requirements.

"630 million people" sounds like a lot, but it actually reflected real progress, as it was equivalent to a 23% decline from undernourishment levels in 1990-1992. That number, however, increased to 690 million in 2019 and is expected to increase more over the next 20-30 years.

I’ll come back to this below, but first let’s turn to a couple of different but related points.

We’re Getting Fatter & Food Waste Is Rampant

Even as hunger is increasing, people are getting fatter. Worldwide obesity rates have tripled since 1975. More than 1.9 billion adults are overweight. Almost 40% of people in the world over the age of 18 years old are overweight, according to the UN and our own USDA. 

American adults in particular continue to put on the pounds. Data shows nearly 40% of US adults were obese in 2016, a sharp increase from a decade earlier, and health officials agree it’s gotten worse since then.

The World Health Organization (WHO) and others define “overweight” as a Body Mass Index (BMI) of 25 or greater and “obese” as a BMI of 30 or greater.

Perhaps the most depressing of all the food statistics is this: An estimated one third or more of the world’s food is lost or wasted each year. The USDA estimates that food waste in the US is equivalent to 30% to 40% of the food supply, corresponding to roughly 133 billion pounds of food annually, or $161 billion. As noted above, the average American wastes 219 pounds of food every year, according to the UN and the USDA. The US wastes more food annually than any other country.

Yet millions of people suffer from food insecurity and don’t have enough food to eat; nevertheless, nearly 146 million tons of food end up in landfills in the United States each year. Not only does that valuable food not go to people who need it, but we’re also told it contributes to climate change through the methane gas food gives off while decomposing in the landfill. In addition, it wastes the water which was used to grow that food, and ends up costing you more money than necessary since you pay for more food than you need.

Food Production Must Increase Dramatically

The United Nations estimates that, to satisfy the growing demand driven by population growth and dietary changes, global food production has to increase by 60% by 2050. The good news is we could get most of the way there by just eliminating waste, increasing yields with modern technology and building better infrastructure in developing markets. But it remains to be seen if that will happen.

Our global food system – which has been wildly successful at increasing production and decreasing human suffering – is a manifestation of the rise of the United States as a dominant global power – one whose interests were best served by liberalizing global trade and exporting large amounts of its agricultural products abroad to developing countries.

It is not a coincidence that geopolitics – the discipline of understanding how nation-states will behave based on their imperatives and constraints – emerged around the same time that a revolution was taking place in global agriculture.

The global agricultural system as it exists today is a manifestation of over 100 years of geopolitical competition. It works when all countries agree to buy in – that is, it works when protectionism is avoided, trade is liberalized and a single power (in this case, the US) guarantees the security of global trade. That’s the good news.

The bad news is, the fear of potential food shortages can also become a self-fulfilling prophecy because rising food prices and fears of supply cause governments to enact more protectionist measures to protect their own security of supply, exacerbating the situation for other countries. So far, this hasn’t been a critical problem, but we’ll have to see how it goes.

Finally, it should be clear that our global system of food production, transportation of same and distribution to consumers is a complicated and delicate mechanism, based on geopolitical cooperation and competition at the same time. While far from perfect, this system has worked remarkably well despite some serious bumps along the road.

Of course, a lot of big changes are headed our way and it will be interesting to see how the system handles the necessary adjustments. At the end of the day, I’m optimistic we’ll work through it and manage to increase food production significantly to continue to feed the world.

But it won’t be easy and there will be setbacks along the way. Hopefully, they’re not too serious and continued technological innovations will rule the day. Let’s hope I’m right!

All the best,

Gary D. Halbert

SPECIAL ARTICLES

World Population: Past, Present & Future

Americans Got Fatter Over the Past Two Decades

Americans Waste More Food Than Any Other Country

Gary's Between the Lines column: Biden Plan To Draw Down Strategic Petroleum Reserve

 

Forecasts & Trends E-Letter is published by Halbert Wealth Management, Inc., a Registered Investment Adviser under the Investment Advisers Act of 1940. Information contained herein is taken from sources believed to be reliable but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgement of the named author and may change at any time without written notice. Market opinions contained herein are intended as general observations and are not intended as specific advice. Readers are urged to check with their financial counselors before making any decisions. This does not constitute an offer of sale of any securities. Halbert Wealth Management, Inc., and its affiliated companies, its officers, directors and/or employees may or may not have their own money in markets or programs mentioned herein. Past results are not necessarily indicative of future results. All investments have a risk of loss. Be sure to read all offering materials and disclosures before making a decision to invest. Reprinting for family or friends is allowed with proper credit. However, republishing (written or electronically) in its entirety or through the use of extensive quotes is prohibited without prior written consent.