Interesting Links

Farm Land as an Investment

Booming Food Prices & Appeal of Farm Land Investments

Some Countries Renting & Buying Farm Land Abroad

Favorable Farm Land Fundamentals

Investors Plowing Money into Farms

Pension Fund Investments in Agriculture

Private Equity Seeks Farm Land for Profit

Ethanol Production, Yea or Nay ?

An Earfull on Ethanol, Production Problems & Rising Food Prices

Ethanol Revolution Links Energy & Food

Ethanol from Timberland Wood, Yeah !

Energy from Wood is Happening Now

Time to move to a Second Generation of Biofuels

A Great Argument for Biofuel from Wood

Related Oak Ridge National Labratory Report

Farm Land and Timberland Investments - "Energy Stocks" for the future?

Inflation, Skyrocketing Food & Energy Prices, Economic Recession...

Would you consider the above global economic problems as doomsday trends or would you prefer to benefit from the inevitable coming changes while contributing to solutions for those problems ?

Land and Energy

Significant changes from the oil driven economy of the past century are certain. While substantial economic changes are certain, there will be economic constants that remain. No economic system can function without energy, which is a constant from the past and certainly into the future. Of course the market components of production, transportation, consumption, etc. are required for any economy as well, but this is not an economics course. Note "transportation" which translates to energy, whether in the form of an ox or a diesel engine. Another primary economic constant is land which is even more basic than energy. As with all base components of economic production, primary energy sources have always come from land as is likely to be the case into the foreseeable future. Viable hydrogen extraction from water is probably in the future for some energy requirements but I wouldn't bet on that replacing the need for more conventional types of energy on a wide scale anytime soon. The entire world economy is built around oil & other fossil fuels and none moreso than that of the United States which, according to some reports, consumes approximately 25% of total world oil production.

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Food Shortages, World Hunger and Rising Energy Costs

World hunger and food shortages are global problems we are constantly reminded of in the news. Generally, in the past, there hasn't been that much of a shortfall in total world food production, it's just that the hungry mouths are not necessarily where the food is (transportation). As though skyrocketing energy prices are not enough of a burden on the production and delivery of food to the world population, we now have governmental policies thoughout a large portion of the economically developed world which place energy and food in direct competition with each other. As everyone knows, food prices are rising about as drastically as oil prices. This is an inescapable fact due to the underlying rising costs of energy for production as well as transportation of food. Rising energy costs must eventually drive all goods and products higher. "Energy, Energy, Energy". To what degree that is being caused by governmental subsidies for energy production from food stocks, I will leave to people much more knowledgable on the subject than myself but suffice it to say that the current energy policies are a significant factor in driving up food prices. With the climate and available land in North America, food production could probably be quadrupled, provided proper economic incentives are present. However, that would require conversion of significant amounts of timberland to farmland, much greater demand on ever tightening water supplies and net loss of the beneficial environmental contributions to the atmosphere by forests versus crops.

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Food versus Energy

Will we eat or drive our cars? World oil reserves are dwindling while World energy consumption is drastically increasing. World food demand is also exploding, particularly for better diets in expanding middle class populations over a large portion of the world. There is little question that our primary energy source, oil, is being diminished at an astounding rate. Undiscovered reserves of significance are a possibility but, given the rate of increasing consumption worldwide, the pressures on prices are not likely to be significantly diminished over any longer term scenario. Opening up restricted drilling areas in Alaska and other areas would offer limited shorter term relief at best. Economic recession or depression on a worldwide scale could serve to stabilize or even reduce energy prices short term but the problem still exists and is not likely to subside for more than a few years at most. It is my guess that some level of reduced demand will "burst" the energy "bubble" and prices will drop to some degree along with reduced investment speculation. However, for the long haul, ethanol is seen as the most viable alternative to oil by some and is likely to continue to be subsidizied by the U.S. Government at least to some degree. It is even likely that a new administration will step up efforts for subsidizing and making tax breaks available for all types of alternative energy production. Of existing crops grown in the United States, sugarcane produces the highest energy ratio from conversion to ethanol, but the amount of sugarcane that may practically be grown in the U.S. is almost insignificant in relation to the country's level of energy consumption. For the U.S. sugarcane that is grown, government subsidies for raw sugar production yields a higher return to producers than can be realized from conversion to ethanol. Brazil is far ahead of the U.S. and leading the way in production of ethanol for reducing dependence on oil imports. Brazil is successfully achieving this with a more favorable climate for sugarcane production than exists here. Corn is probably the highest ethanol yielding crop that can be grown widely in the U.S. at production levels significant enough to have any impact on energy imports at all. The energy ratio realized with ethanol production from corn is much less than from sugarcane but is, nevertheless, being subsidized by the government, for better or for worse, due in part to the midwest farm states lobby. This, along with oil prices, is a significant factor in escalating food prices. Higher grain prices result in significantly higher meat, egg, poultry and dairy product prices as well as those for direct grain based food products. With these seemingly inescapable economic realities, we may now only be seeing the early phases of substantial long term upward pressures on food prices aggravated by competition for use of food stocks in ethanol production. In the case of the Ox of 1000 years ago, food stocks had to be wisely proportioned between "transportation" energy or self sustenance. From that perspective it seems we have come full circle, with the apparent necessity of how to best proportion our food stocks between the diesel engine and our consumable food supplies.

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Second Generation Ethanol Production from Non-Food Sources - NOW !

It has become apparent to many, and even the U.S. Government, that maybe ethanol production from corn or other food stocks may not be the best plan for alternative energy sources. Technological development for biofuels production from wood and other cellose materials is underway and will likely prove the more viable alternative energy production method. This would include production capability from corn stalks and agricultural waste materials that are being grown anyway in food production and would not result in direct competition of energy with food. The only real negative for this method is that it would consume materials that are currently being reintroduced into fields for replenishment of the soils. Though that is somewhat of a negative, this method seems much less destructive to the environment and much more favorable with respect to pressures on food stock supplies and food prices. An even better benefit of this technology would be that energy could be produced from wood byproducts or from rapid growing trees while not reducing the amount of existing land available for food production. As if there weren't enough problems with land available for food production versus energy production, note the June 2008 floods in the Midwest. Trees are a great benefit for the environment in that they reduce carbon from the atmosphere, do not require fertilizer input and use much less relative energy in production as opposed to crops. It would certainly seem to be the wiser choice to develop this technology and reduce production of ethanol from corn and other food stocks. This technology exists and is being utilized in Germany now, as per the "Energy from Wood is Happening Now" Link in the left hand column. There will be cellulose ethanol production plants coming to the United States soon. The Southeastern U.S. will be a prime target for these due to the suitable climate for quick tree growth.

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So what is the common Thread ?

You guessed it - "Land, Land, Land". Given all the economic realities, both food and energy are likely to be under long term upward pressure in prices. For both, high demand and relative scarcity are apparently inescapable and, unfortunately, the two are likely to continue to be in direct competition with each other. There are already to many "Irons in the Fire" to reverse production of ethanol from food sources anytime soon. Common sense would dictate that land suitable for production of crops such as corn will become much more valuable over time regardless of the directions for production of alternative energy sources. In any case, it would appear that land suitable for either crop or timberland production would be an absolute no lose situation. Lands with good irrigation sources and higher quality soil conditions should be of particular importance. Land has always been one of the best hedges against inflation and that should be even more pronounced over the next several years, as land becomes an increasingly more vital asset necessary for meeting exploding demand for both food and energy.

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Invest in Land, Food and Energy Futures - It's a Trifecta!

Crop Production Land:

Along with much current use crop land, Alabama, and the Southeast in general, has significant amounts of land suitable for agricultural production which is not currently being utilized for that purpose. In many cases, vast acreages once utilized for cotton crops were allowed to be reclaimed by forests, courtesy of the boll weevil. Due to the climate and quick tree growth in this region, timberland has been as viable a highest and best use as any for these lands but the economic demands of the future could change that. Much of this land has been replenished by mother nature for around 100 years and some are within the "black belt", which has crop producing potential roughly similar to the corn growing regions of Iowa and the Mid-West. The climate is great for corn or other crops and, with an adequate irrigation source, production is almost failsafe against most climate variances. Rivers and high volume creeks are plentiful in Alabama and irrigation does not deplete any aquifers. Most years irrigation would not even be needed, or only so on a limited supplemental basis. Though crop production potential would be key to the intended investment value of these type properties, no farming experience or expertise would be requisite to ownership. Worst case scenario would be that a decision be made to leave the land as timberland for which any negotiated price would be reflected in the first place, along with other value relevant land and locational characteristics.

Timberland for the Coming Second Generation of Ethanol Production from Wood:

There is no better climate in the U.S. for producing and replenishing trees than in the southeastern states. Vast acreages of managed and non-managed timberland are here now and waiting for the cellulose production plants that should be arriving in the not to distant future.

Suitable properties of this nature are not generally listed or advertised for sale but require research and pursuit. Some suitable potential property candidates are identified and pending proposals to current ownership. Email kbrothers@forlandsake.com or call 800.530.6944 to explore investing in land of this nature. I am a licensed real estate broker in Alabama (Charles K. Brothers - 043737) and interested in either brokerage services for investment candidates or forming partnerships for investment in these type properties. Could there be a more sound long term investment than covering land, food and energy under one umbrella? Throw in existing timber & timberland base value along with potential government subsidies and incentives - which are likely to only get more enticing and .... You be the judge!

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