Sales of premium-priced organic food have slumped this year, with demand for organic vegetables down more than a third, and for fertiliser-free fruit falling nearly 16%. But while that's bad news for the sellers of vegetable box schemes, not to mention Tesco (who sell over £1bn worth of organic food) it might just be good news for humanity. Not only are there no demonstrable health benefits from organic food, it is also incapable of feeding the world.
Organic food yields less per acre, which means you have to plough up more land to produce just as much food. Indeed, "A total abolition of pesticide use would result in an average drop in farming yields of between 10% and 25%", according to a 1999 study by the Danish Environmental Protection Agency. On farms with specialist crops such as sugar beet and potatoes, it comes closer to 50%.
More importantly, even if you used all the organic food material to hand, from animal manures to plant residues and pumped them back in the soil, you couldn't feed more than 4bn people, said Norman Borlaug, who died last week, almost a decade ago.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Borlaugh knew a thing or two about food production. He was the man who developed high yielding varieties of wheat, and became known as the father of the 'green revolution'. And it was thanks to synthetic fertilisers, he pointed out, that global cereal production could triple between 1950 and 2000 but the amount of land used increase by only 10%.
So the next time you buy organic food consider this: the more intensively you farm, the more room you are leaving for the rainforest.
Agriculture-focused companies such as Syngenta, which produces fertiliser, have risen considerably in the current rally and show little short-term promise for investors. On a forward p/e of 18 and yielding 1.34%, GM food developer Monsanto (NYSE: MON), for example, is hardly a catch for investors. So wait for the dips.
If you are a little bit more impatient, then check out Mosaic Co (NYSE: MOS). It produces and distributes crop nutrients in the U.S. and other countries and trades on a forward p/e of 15. And with an Altman Z score of 5.96, is unlikely to go bankrupt any time soon.
-
Water companies blocked from using customer money to pay “undeserved” bonusesThe regulator has blocked three water companies from using billpayer money to pay £1.5 million in exec bonuses
-
Will the Bitcoin price hit $100,000?With Bitcoin prices trading just below $100,000, we explore whether the cryptocurrency can hit the milestone.
-
Beating inflation takes more luck than skill – but are we about to get lucky?Opinion The US Federal Reserve managed to beat inflation in the 1980s. But much of that was down to pure luck. Thankfully, says Merryn Somerset Webb, the Bank of England may be about to get lucky.
-
Rishi Sunak can’t fix all our problems – so why try?Opinion Rishi Sunak’s Spring Statement is an attempt to plaster over problems the chancellor can’t fix. So should he even bother trying, asks Merryn Somerset Webb?
-
Young people are becoming a scarce resource – we should value them more highlyOpinion In the last two years adults have been bizarrely unkind to children and young people. That doesn’t bode well for the future, says Merryn Somerset Webb.
-
Ask for a pay rise – everyone else isOpinion As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why you should do that too.
-
Why central banks should stick to controlling inflationOpinion The world’s central bankers are stepping out of their traditional roles and becoming much more political. That’s a mistake, says Merryn Somerset Webb.
-
How St Ives became St Tropez as the recovery drives prices sky highOpinion Merryn Somerset Webb finds herself at the epicentre of Britain’s V-shaped recovery as pent-up demand flows straight into Cornwall’s restaurants and beaches.
-
The real problem of Universal Basic Income (UBI)Merryn's Blog April employment numbers showed 75 per cent fewer people in the US returned to employment compared to expectations. Merryn Somerset-Webb explains how excessive government support is causing a shortage of labour.
-
Why an ageing population is not necessarily the disaster many people think it isOpinion We’ve got used to the idea that an ageing population is a bad thing. But that’s not necessarily true, says Merryn Somerset Webb.
