On today’s show and every day this week we are talking about food. You might be wondering what food and real estate have to do with each other. Hopefully by the end of the week, I’ll connect the dots for you in what is an extremely important topic.

Successful investing, just like in team sports requires a strong offence. But equally important and far less exciting is a strong defence. That conservative defensive posture requires an understanding of the risks.

We are hearing about how the war in the Ukraine is leading to food shortages all over the world. But I’m here to tell you that the seeds of food shortages have been building long before the war in the Ukraine. In fact, the conditions have been building for many years. On today’s show and all of this week we are going to look at different aspects of why we have food shortages.

If you go back to the 1980’s, our global population has been growing at about 1.5% per year. Our demand for agricultural grains has also been growing at about 1.5% per year roughly in line with global population growth.

But since 2000, the global demand for grain has been growing at about 2.5% per year, faster than the population is growing. So the question is why? Are we all just eating more? Are we all just going to get fat?

It turns out that in poor countries where per capita GDP is around $500 per year, the population largely subsists on a starch based diet consisting of rice and wheat based foods.

But in the most developed countries, we find that diet is largely based on animal protein. When all of a sudden, instead of $500 per capita GDP, you’re up at $2,000 per capita GDP and then a $5,000 per capita GDP, you begin to actually want to consume a lot more animal protein. There are only a few countries that have managed to break above the $2,000 per capita GDP. The good news is that we have made dramatic steps to erase poverty in a number of countries.

Raising animal protein requires much more resources than growing plant based food. Cows for example consume 70% of the intake by foraging on grass that would not be suitable for human consumption. The remainder consists of grains. It takes 2.5 times the weight in grain to raise a single amount of meat. So as people in developing countries change their dietary preference to consuming more meat, the demand for grain is rising faster than the population.


Host: Victor Menasce

email: podcast@victorjm.com