People describe oil as being akin to ‘black gold’. However, oil has only become more valuable because the demand for it in such large volumes has risen sharply over the past century due to its usage across industries for various purposes (whether that be in the production of car or jet fuel, the production of plastics or electricity, for example).
The use value and market value of oil are undeniable. Several Middle Eastern economies have become extremely wealthy as a result of their oil reserves, discovered and exploited in a timely manner. However, what could be the next commodity that can shoot up in value in this way? Milled rice could, over time, become ‘white gold’.
According to Ricepedia:
“More than 90% of rice is produced and consumed in Asia. In terms of food consumption, what distinguishes Asia from the rest of the world is its great dependency on rice: it is the basic staple for the majority of the population, including the region’s 560 million poor. Other regions rely more heavily on other cereals.”
Looking at the following chart, it is clear that although rice price has declined since its peak in 2008, it has still increased since the 1980s:
Globally, people are growing increasingly anxious about a freshwater supply crisis/shortage (and, indeed, many are betting on it). Some are even saying that water scarcity is a significant causal factor for (civil) wars.
The World Economic Forum similarly suggested in its 2015 Global Risk Landscape Report that ‘Water Crises’ would have the most ‘impact’ amongst all the global risks (and a very high likelihood too). Climate change also threatens freshwater supplies.
“Irrigated rice receives about 40% of the world’s irrigation water and 30% of the world’s developed freshwater resources.”
Chemists have repeatedly sought to develop economical desalination methods to no avail and, notwithstanding a breakthrough in this regard, the price of rice will fundamentally face ever-increasing upward pressure (though an economic slowdown in Asia could relieve some of this pressure).
Although the IMF has forecasted that growth in the Asia-Pacific economies will decelerate slightly to 5.3% during 2016/2017, this is still a significant growth rate.
This increase in incomes across the Asia Pacific (and, furthermore, South Asia) will sustain an upward pressure on rice prices (because consumers will only substitute away from rice consumption to a certain degree).
Why ‘Milled’ Rice?
Whereas unmilled brown rice and has a relatively diminished shelf life, polished, stored and sealed properly white rice could have a shelf life of 25-30 years.
As such, it is possible to profit from spikes in demand as a result of freshwater scarcity over time (if one is so inclined) over the medium or long-term. As such, like real gold, it is portable and, to some degree, durable.
People should prepare for various eventualities and risks, invest in methods that can avert or alleviate global water crises and/or plan for a shortage that could lead to a devastating knock-on impact throughout industries (rice being just one vital one) and, therefore, people’s lives.
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