Time, Water Running Out for America’s Biggest Aquifer

AOL news reports that time and water are running out for America's biggest aquifer.

(emphasis mine) [my comment]

Time, Water Running Out for America's Biggest Aquifer
Updated: 17 hours 43 minutes ago
Dave Thier Contributor
AOL News
(April 21) -- In 1823, a government surveyor named Stephen Long was working to map out the Great Plains, an expanse of land acquired along with the Louisiana Purchase of 1803. He was unimpressed by what he saw. As his geographer wrote in the report that accompanied the expedition:

I do not hesitate in giving the opinion that it is almost wholly unfit for cultivation, and of course, uninhabitable by a people depending upon agriculture for their subsistence.

Long would have been shocked to see what the region looks like today -- not merely fit for cultivation, but in fact one of the most fertile and productive areas of the world. Since World War II, dramatic leaps in technology have allowed farmers to pump groundwater for irrigation and extend America's breadbasket through the entire Great Plains, transforming what Long called "The Great American Desert" into an expanse of green circles defined by the reach of central pivot irrigation systems.

But that water is not infinite, and many are becoming concerned that Great Plains agriculture is a more precarious proposition than it appears -- meaning Long's report may have been not just a description, but a prediction.


Charlie Riedel, AP
A sprinkler sprays a field near Hoxie, Kan. Water for Great Plains irrigation comes from the Ogallala Aquifer, a vast underground lake that is being drained at an alarming rate.

That groundwater for irrigation comes from the Ogallala Aquifer, a massive underground lake that stretches from southern South Dakota through northern Texas, covering about 174,000 square miles. It is being drained at alarming rates, and some places have already seen what happens when local levels drop below the point where water can no longer be pumped.

"You go to areas where the aquifer has been depleted, [they] look pretty poor now," David Brauer, program manager for the U.S. Department of Agriculture's Agricultural Research Service Ogallala Aquifer Program, told AOL News. "And it only takes a few years.

"The magnitude of this is incredible," he continued. "We're talking about, for the last 20 years, 20 percent of the irrigated acreage of this nation is over the Ogallala."

For an idea of what a severe drought could do to the communities of the Great Plains, consider the Dust Bowl of the 1930s, when gigantic "black blizzards" ravaged farms and forced thousands of families to give up their land and try to make a living elsewhere.

But the implications of ceasing irrigation on the Great Plains go far beyond local communities. The farming areas fed by the Ogallala supply such large quantities of grain that any drastic changes to that economy would ripple across the world -- as seen in 2007, when fuel costs drove up corn prices and sparked a food crisis in other countries, most notably Mexico.

People have been warning about the aquifer's depletion for years, but coordinating conservation programs among farmers has proved difficult.
Recently, Texas has imposed state controls on the amount of groundwater that farmers can pump, requiring 16 groundwater districts to each provide a target for an acceptable groundwater level in 50 years.

Such measures, however, are mostly designed to delay the inevitable, since the recharge rate for the Ogallala Aquifer is small enough to be considered negligible. And so, Brauer says, as a natural resource the Ogallala is comparable to a vein of coal: What you take out doesn't get put back in. "All we're doing is buying time," he says.

Buying time is important -- it will allow farmers to develop dry-farming techniques and give the biotech industry a chance to deliver on the promise of drought-resistant crops. But without groundwater irrigation, crop yields will almost certainly drop, and the local, national and global economies will have to adjust.

My reaction: Time and water are running out for America's biggest aquifer.

1) Since World War II, dramatic leaps in technology have allowed farmers to pump groundwater for irrigation and extend America's breadbasket through the entire Great Plains.

2) That groundwater for irrigation comes from the Ogallala Aquifer, a massive underground lake that stretches from southern South Dakota through northern Texas, covering about 174,000 square miles

3) Ogallala Aquifer' s water supply is not infinite and is being drained at alarming rates.

4) The recharge rate for the Ogallala Aquifer is small enough to be considered negligible.

"The magnitude of this is incredible"

1) 20 percent of the irrigated acreage of the US is over the Ogallala.

2) Without this groundwater irrigation, crop yields will almost certainly drop.

3) The farming areas fed by the Ogallala supply such large quantities of grain that any drastic changes to that economy would ripple across the world.



Conclusion: Dwindling water supplies is one of the biggest reasons to be bullish on agriculture. As I have written about this before, America isn't the only nation facing water shortages:

*****the geopolitics of food scarcity*****
*****Disaster Feared As Desertification Spreads*****


To make matters worse, water shortages are only half of the problem with the world' s food supply. The other half is rapidly rising demand.

Rising demand from China

Truthabouttrade.org reports about China' s Changing Diet Demands.

Will Changing Diet Demands in China Lead to Runaway Food Prices?
By Patrick Westhoff

Since Lester Brown' s book Who Will Feed China? Wake-Up Call for a Small Planet was published in 1995, concerns about China' s effect on world food markets have waxed and waned. When prices for food, oil and other commodities were soaring in 2007 and early 2008, many people pointed to demand growth in China as a major culprit. Some worry that
the current recession is just a brief respite and that rising Chinese demand will soon push commodity prices sharply higher again.

In the case of food, the basic argument is pretty simple.
As the incomes of Chinese consumers rise, they will want to eat more meat. To supply that additional meat, more hogs, cattle and chickens will consume more corn, soybean meal and other feeds. Because China is such a large country, this increase in food demand will put enormous pressure on the world food system, and the inevitable result is higher food prices for everyone on the planet. [what I have been writing about for a while now]

This simple story is not far-fetched, and it is very possible that rising incomes in China and other countries will make it hard for world food supply to keep up with demand.
It is easy to find a wide range of supporting statistics. Here are just a few to set the stage, all based on USDA-reported data:

1. China already consumes a lot more meat than the United States. While per-capita consumption remains much higher in the United States,
China' s population is more than four times as large.
2. The increase in Chinese consumption of pork between 1998 and 2009 was greater than total U.S. consumption of pork in 2009. Chinese beef, poultry and dairy product consumption are also growing at phenomenal rates.
3. More than half of the world' s hogs live in China.
4. China is already the world' s largest consumer of wheat, rice and soybean meal, and trails only the United States in the case of corn.


[read rest]

Visible impact of Chinese demand

Business Week reports that Soybeans Rises to Three-Month High.

Soybeans Rises to Three-Month High on China Food-Demand Gains
April 22, 2010, 3:34 PM EDT
More From Businessweek
By Jeff Wilson

April 22 (Bloomberg) --
Soybeans rose for a third day, reaching a three-month high, on speculation that China will increase purchases of U.S. supplies to make cooking oil for a growing population and livestock feed to produce pork.

China, which suspended soybean-oil imports from Argentina more than a week ago, won' t resume purchases until producers “increase the quality and safety of the product,” the official Xinhua News Agency said today, citing Jiang Yaoping, the vice minister of commerce.
Demand for soybean meal in China, will rise as farmers expand hog herds, the country' s National Grain & Oils Information Center said.

“It' s all about rising Chinese demand for U.S. soybeans,” said Don Roose, the president of U.S. Commodities Inc. in West Des Moines, Iowa. “The trend is definitely higher.”

Soybean futures for July delivery rose 9 cents, or 0.9 percent, to $10.15 a bushel on the Chicago Board of Trade, after earlier touching $10.1575, the highest level for the most-active contract since Jan. 11.

Soybean futures in backwardation again, indicating shortages

The summer hasn' t even begun and soybean futures contracts are already in backwardation. The last time soybeans were backwardation was last August, right before the fall harvest.

By the end of August, grain movement in the US came to a virtual standstill, with farmers sold out of soybeans. Those few soybean end-users (ie: feedmakers and poultry producers) which caught short were forced to pay prices as high as they paid at the very height of the bull market in 2008.

The struggle to secure quick-delivery soybeans in the US cash markets sent soybean futures into intense backwardation (
backwardation is when cash prices are higher than future prices). Desperate Midwest crushers were bidding up to $2.72 a bushel over CBOT September futures contracts to acquire scarce soybean supplies. Some processors in the heart of the Midwest soy belt grew so desperate for soybeans to crush that they paid to transport some of the early harvest from the Mississippi River Delta northward to Illinois.

The chart below shows the backwardation in soybean futures. While backwardation isn' t very intense YET, summer hasn' t even begun and we are months away from next fall' s harvest. This backwardation shouldn' t be happening if the USDA figures were truly accurate.



The soybean backwardation confirms that we are headed food crisis this summer. The soybean market will continue to tighten driving prices higher. By the end of June, the shortages will cause panic as prices hit multi-year highs, marking the beginning of the 2010 food crisis.


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I' ve moved to Russia and have launched a fund to Invest in Russian Black Earth farmland. I believe owning hard assets, especially agricultural assets, outside the US financial system is going to become very attractive in the near future. Please email me if you' re interested.

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