First, let me clarify something – a forecast or prediction is just that, an unreliable guesstimate. Nonetheless. We’ve been hearing a lot of interesting background noises lately. Last December, the prestigious British magazine The Economist had the eye-catching, attention grabbing title “The End of Cheap Food”. Could it be that agriculture, this ageing, mature industry, abandoned by the younger generation and the dread of the university crowd is finally moving free of its lethargy?

A few weeks ago I attended an agribusiness seminar in Boston organized by the University of Harvard. There were about 200 agricultural leaders present, our group was comprised of a few consultants and professors, some talented young managers, but most were high level executives working for large agrifood corporations: Cargill, Bunge, McDonald, Mark & Spencer, Syngenta, Altech, Vegpro, Viterra, Mid-Missourri Energy (a coop), North Dakota Wheat Growers (another coop!).

Harvard. Let me tell you something about this noble institution, the oldest (1639) and most prestigious in America. Endowments of 35 billion dollars! The fourth largest library in the world. Only 9% of its candidates are accepted. Tuition is $45,000 per year, with only 18,000 students and 2,400 professors (several earn in excess of $500,000 per year). The institution is home to some 20 Nobel prizes and 15 Pulitzers. Think of it as the equivalent of a herd producing 35 exceptional cows!

And in this most fortunate and privileged environment, with the help of learned professors, we divided into small work groups to study and analyze actual cases, we debated proposed solutions, and shared our opinions. From this initial meeting I take away six basic notions.

Agriculture is mutating. Economists talk about structural changes rather than a change in economic trends. The demand for agricultural products is on the rise. China is consuming more and more, the United States is using one third of its maize production to make ethanol, Europe is investing massive amounts to produce biofuels, and even Africa, which is currently experiencing positive economic growth, is increasing its consumption of protein foods. Not surprising that grain, canola, maize and soy prices are reaching such highs.

Grain stocks are low. At less than 35 days, this is distressing. The slightest drought, the smallest climactic incident could result in a price explosion. But I already wrote about this in my previous article. I guess I’m getting old since I seem to be repeating myself. Let me share an anecdote: fearing shortages and an upcoming apocalypse, leaders of the Mormon church – one of whom was present at the Harvard conference – asked its followers to stock up on grains and foodstuffs!

The price of land is also increasing all over the world. Land is once again as good as gold and is a precious asset that should not allowed to waste in the hands of suburbanites!

As for the pork industry, China has maintained its demand thanks to the 2008 Olympics and the overall growing wealth of its population. But supply is still very strong. However, because of the rising price of grain, we expect to see significant shrinkage in livestock towards the end of 2008, early 2009. Large American integrators are losing $35 per pork and their competitive positioning is no longer quite as good.

Without any subsidies, world agricultural production would move in the direction of low cost producers, most notably South America and especially Brazil. Americans and Europeans aren’t looking forward to such dependency. They are more anxious about their food sustainability than they are about their oil! With this in mind, WTO negotiations will not be going anywhere soon! But who knows what goes on in the minds of these negotiators living their lives in a protected bubble in Geneva.

Is this all lipstick on a pig? Lord only knows that the numbers are impressive and not always accurate – a worldwide recession originating in Asia is always a possibility and would counter all of these trends – encouraging poetry perhaps! Hang on!

There is light on the horizon.