In the most recent installment of Energy Investing Weekly, we explained how regulatory mandates for blending ethanol volumes into gasoline have bolstered domestic demand for corn, prompting the US to allocate between 35 and 40 percent of its annual corn crop to this purpose.
And corn isn’t the only foodstuff that’s destined for our gas tanks. According to recent projections published by Iowa State University’s Agricultural Marketing Center, US farms will need to allocate as much as 15.7 percent of their soybean acres for biodiesel production, compared to about 4.5 percent during the 2009-10 harvest.
Although the US isn’t the only country to mandate biofuel production, converting such a large proportion of the world’s biggest corn crop into ethanol has global implications–particularly in a world where global meat consumption continues to expand at a rapid pace.
Feeding the world’s expanding population is complicated by the agricultural intensity of our growing appetite for meat; since 1960, consumption of beef, veal, pork, chicken and turkey has more quintupled to more than 250 million metric tons of carcass weight equivalent.
In fact, global protein consumption has increased at an average annual rate of 3.33 percent over the past 53 years–more than double the population growth rate over the same period. But population trends aren’t the primary driver of rising meat consumption; rather, this secular shift in diet has tracked improving living standards and the expansion of the middle class. Check out this graph that compares protein consumption to per capita gross domestic product (GDP) in a wide range of nations.
Source: World Bank, UN Food and Agriculture Organization
Nations with higher GDP per capita tend to consume more meat per person than countries at the opposite end of the spectrum. This wealth effect is most evident in China, where the rapid economic development of the past 15 years has fueled a corresponding boom in protein demand.
Your complete guide to energy investing, from growth stocks to high-yielders.
In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.
Elliott and Roger on Sep. 26, 2017
Balanced portfolios of energy stocks for aggressive and conservative investors.
Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.
Our assessment of every energy-related master limited partnership.
Roger Conrad’s coverage of more than 70 dividend-paying energy names.