Here's Why Jeremy Grantham Thinks Billions Of People Are Going To Starve To Death

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Investor Jeremy Grantham of GMO recently went on the Charlie Rose show and described his startlingly depressing outlook for the future of humanity.Grantham thinks the number of people on Earth has finally and permanently outstripped the planet’s ability to support us.

Grantham believes that the planet can only sustainably support about 1.5 billion humans, versus the 7 billion on Earth right now (heading to 10-12 billion).

So, basically, Grantham thinks most of us are going to starve to death.


In part because we’re churning through a finite supply of something that is critical to our ability to produce food: Phosphorus.

Phosphorus is a critical ingredient of fertiliser, and there is a finite supply of it. The consensus is that we will hit “peak phosphorus” production within a few decades, after which point our phosphorus supply will inexorably decline. As it declines, we will be unable to feed ourselves.

Of course, ever since Malthus, a steady stream of doomsayers have predicted a ghastly end to the human population explosion–and, so far, they’ve all been wrong.

So why is a man of Grantham’s intelligence adding his voice to this chorus?

And how real is this threat? Are we all going to starve? Is there any hope?

Humans have been around for a while. But for most of our existence, Grantham observes, our population was small and stable. Then it exploded.

Most of this explosion has come in the past 200 years--just as Malthus predicted. What Malthus did not foresee was the discovery of oil, commercial fertiliser, and other resources, which have (temporarily) supported this population explosion.

For the past 100 years, technology has made these resources cheaper to extract and produce, which has made them ever cheaper. Grantham thinks that trend has now permanently ended.

Why are oil prices rising? Because oil demand is now growing far faster than oil supply. The world's oil production has barely increased since the 1970s, while oil usage has exploded.

Demand is exceeding supply for other commodities, too. Like metals. Here's a hundred-year look at the prices of Iron ore.

But the real problem is food.

Why are crop yields increasing? fertiliser.

In the past half-century, we have used an ever-increasing amount of fertiliser. Not just in total, but per acre. This chart, for example, shows the number of tons of fertiliser used per square kilometer of farmland.

And this leads us to the first problem. 40 years ago, the average growth rate of crop yields per acre was an impressive 3.5% per year. This was comfortably ahead of the growth rate of global population. In recent years, however, the growth in crop yields per acre has dropped to about 1.5%. That's dangerously close to the growth of population.

That brings us to the second problem. We don't have an infinite supply of fertiliser.

Commercial fertiliser requires, among other ingredients, potassium and phosphorus. There are finite quantities of both. Phosphorus, especially, is in short supply.

Phosphorus (P) is essential for life. Plants absorb it from fertilised soil, and then animals absorb it when they eat plants (and each other). When the plants and animals excrete waste or die, the phosphorus returns to the environment. Eventually, given enough time, it gets compressed into rock at the bottom of the ocean.

Phosphate is a critical ingredient of fertiliser, and there is no substitute for it (because plants are partially made from it). This photo shows the difference between corn fertilised with phosphorus (background) and corn without.

Most of the phosphate we use in commercial fertiliser comes from phosphate rock, which was once sediment at the bottom of the ocean. This mine is located in Togo.

In the past ~120 years, we have become completely dependent on phosphate rock for phosphorus used in commercial fertiliser. Before that, our phosphate came from manure.

As the human population grows, and emerging markets get richer and need more food and animal feed, we're consuming more and more phosphorus (red line).

The amount of phosphate rock we use, therefore, continues to climb.

The trouble is that there isn't an infinite amount of phosphate rock. Estimates differ on the amount of reserves available in the world, but they're not unlimited. Some scientists think we have enough to last hundreds of years. Others, however, are far less optimistic.

As phosphorus production drops, crop yields will drop. And then, the concern is, we won't be able to grow enough food to feed ourselves.

So is that it? Are we screwed?

Not necessarily. It turns out that our urine and feces contain a lot of phosphorus--which is why they make good fertiliser. If we got serious about recycling our bio-waste, we could reduce our need for phosphate rock.

But although conservation and recycling will help, they won't fix the problem. Because a huge amount of phosphorus will still be lost to runoff. Phosphate that isn't consumed by plants leaches out of the soil into rivers and then to the ocean.

So, eventually, the finite supply of usable phosphorus could be a big problem.

Jeremy Grantham, by the way, thinks the finite supply of fertiliser and limits of crop yields are starting to affect food prices. Soybean prices, for example, have jumped in the last 10 years.

So have corn prices.

And wheat prices.

So, why is all this happening now, when the global population has been exploding for two centuries? The answer, in part, is the spectacular growth of China, India, and other massive countries. The resource-usage of these countries is mind-boggling. A staggering 53% of the world's cement, for example, is consumed by China alone.

But the optimists hope that science and ingenuity help us find a way to fix the problem. And even Grantham has sounded less cataclysmic of late.

For one thing, the sun can supply us with all the power we need. We just have to wean ourselves off of oil and make renewable energy sources more affordable.

And population growth rates have begun to decline recently, even in countries in which people are known for producing vast numbers of children. Globally, women are now giving birth to an average of 2.47 kids apiece. If that quickly drops to, say, 1.8, Grantham says, we might actually be OK.

But still... shrinking our population naturally from 7+ billion today to, say, 4 billion over the next century will be quite a trick. And it will force us to throw most projections and assumptions about long-term economic growth out the window.

So we're not out of the woods yet.

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