“Peak Farmland” may be closer than we thought. Peak farmland is the simple notion that at some point, we can reduce the amount of land that we devote to farming. Technological change in farming pushes yield per acre up. If yields grow at a faster pace than consumption, then supply will grow faster than demand. Marginal farmland will be abandoned and will revert to grasslands or forests. This idea was advanced in a path-breaking paper by Jesse Ausubel, Iddo Wernick and Paul Waggoner.

The peak is not here yet because the world isn’t quite that simple. The economic progress of billions of people has shifted diets toward more meat. Very poor people want more calories. Those transitioning from poverty to middle class want more beef, chicken, pork and fish. Meat may be tasty, but it is a less efficient way for humans to get calories. In some cases, it takes ten ounces of feed grain to produce one ounce of meat. The economic gains of the world’s poor have pushed up demand for meat, and thus for grain, and thus for farmland.

Last year I expected peak farmland to be about two decades away. By then, the greatest transition from poverty to middle class would be over. However, the latest news brings peak farmland possibly closer. Muufri is a company trying to eliminate the middle-man, or more accurately, the middle-cow, in milk production. (It is pronounced “moo free”.) The company is using chemical engineering to convert plant matter into milk without the help of a cow. (More information is in Ronald Bailey’s The End of Farming.)

Cow image courtesy of Cgoodwin.

 They say: “For millennia, many of the world’s favorite products have been ‘cultured’ – including beer, wine, yogurt, cheese, and bread. We use these same principles to nurture and feed animal cells, creating high-quality products without the animal sacrifice and environmental harms of factory farming.”

These companies may or may not succeed, but it seems inevitable that someone will succeed at these challenges. A cow is a time-tested processing facility, but if we primarily want meat, milk and leather, perhaps we don’t have to buy the bones, hooves and manure too. That means we can use less plant matter per ounce of final product. That means less land devoted to agriculture. It won’t happen this year, or perhaps even this decade, but one of these years the world will hit peak farmland. It will be a good thing.

Business implications of peak farmland:

Investments in agricultural land make less sense with the time of peak farmland coming closer. Industries that serve agriculture, including seeds and implements, will see less growth than otherwise. The phrase “than otherwise” is critical here. A great deal of land in Asia, Africa and Latin America is now farmed in a fairly primitive manner. The transition to modern production techniques may last beyond the time of peak farmland, so the agribusiness companies may have a good long time to expand.