Angry Rebel Farmers Have Become the World's Latest Climate Enemy
Comment of the Day

December 10 2022

Commentary by Eoin Treacy

Angry Rebel Farmers Have Become the World's Latest Climate Enemy

This article for Bloomberg may be of interest to subscribers. Here is a section:

Farmers are “ordinary people but they feel treated like criminals. Everything farmers do is bad; poison sprayers, environmental polluters, mistreatment of animals,” says Caroline van der Plas, leader of the populist Farmer-Citizen Movement, which stormed onto the Dutch political scene in 2019. “They feel undervalued and have no space to expand or develop their business and are very worried about their future.

Eoin Treacy's view

The Netherlands is one of the most densely populated and space-constrained countries in the world. That means the farming sector has significant pressure to be efficient and not least to provide food at an affordable cost. Talking about the Netherlands and deforestation in the Amazon in the same breadth is a clear logical inconsistency.

There is no getting around the fact that the agriculture sector is dominated by the chemicals sector. Most nitrogen fertiliser comes from natural gas. The irradiation of seeds in Europe and genetic engineering in North America have delivered better yields and lowered the cost of production. That has contributed to sufficiently large food supplies to feed 8 billion people. So how will food supply increase sufficiently to feed another two billion people within the next 30 years?

One thing for sure is forcing farmers to stop producing will have a meaningful impact of both availability and price. It would further enhance Latin America’s position as the bread basket of the world.

The removal of subsidies on agricultural products as part of the original GATT negotiations resulted in a step higher for global agriculture positions. If Europeans decide to produce less, another part of the world will pick up the slack. Finicky urban elites telling people, devoted to the vocation of farming, how to conduct their business is not going to end well.

The Shares MSCI Global Agriculture Producers ETF (VEGI) surged in 2021 and has spent the last year ranging.

The futures-based DB Agriculture ETF is rolling over as contangoes predominate within the soft commodity sector. That suggests there is near-term pressure on prices.

Corn, Wheat and Arabica coffee have been particularly weak of late.

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