Tuesday, November 22, 2011

We are running out of soil

“Taking the long view, we are running out of dirt.” —David R. Montgomery, geologist

"The estimate is that we are now losing about 1 percent of our topsoil every year to erosion, most of this caused by agriculture," said David Montgomery, a geologist at the University of Washington and the author of the book "Dirt."

Jeremy Grantham, the curmudgeonly head of the money manager GMO, wrote about soil depletion in his last quarterly letter. “Our farmers are in the mining business! Yes, the soil is incredibly deep, but it is still finite.”

“Globally, it’s clear we are eroding soils at a rate much faster than they can form,” notes John Reganold, a soils scientist at Washington State University.

There are many reasosn to be worried about the future of agriculture and soil as well as water are near the top of the list. The National Academy of Scinces states that we are losing soil 10 times faster than replacement. The UN would argue that the lose rate to replacement is even higher.  It takes 2 bushels of soil to produce one bushel of wheat. The top soil is only about three feet deep around the world so erosion can have a significant impact. The replacement is only about 1- 2 inches per 100 years.

This is not an issue that will effect prices in the short-run, but it will have long-trerm effect and suggests that holding agricultural assets will be a good long-term play.

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