A strong El Niño in 1965 and 1966 changed the world. This reoccurring climate phenomenon did not make the change all by itself, but was the beginning of the change that is still being felt today, some 50 years later.
If you were a marine biologist with a keen eye and on vacation at the beaches of Peru at that time, you might have noticed a small crab in abundance that should not have been there. You would have immediately canceled your trip, and immediately returned to your home country. Upon your arrival you would have contacted a commodity futures broker and placed a “Buy” order that would have made you wealthy.
The Peruvian anchoveta has been characterized as the most heavily exploited fish in world history, and most of the catch was for making fishmeal used as an animal feed. The 1966 El Niño (and again in 1972) disrupted the breeding cycle by reducing the anchoveta food source and allowing crab predators to flourish.
About the same time as the 1972 El Niño, an advancement was made in growing soybeans that significantly increases production. That was a good development as soybean meal was rapidly becoming the replacement of choice for the shortage of fishmeal. From about $2.30 a bushel in 1965, the price soared to $3.68 by the end of 1966. In 1973, the price peaked at about $12 because of demand and in spite of the first wave of increased production.
Your profit on one soybean futures contract would have been about 4,000 percent. The Peruvian fisheries industry collapsed.
The Black Death or Bubonic Plague of 1346 to 1353 killed somewhere between 75 million and 200 million people in Europe and Asia. Between 30 and 50 percent of the European population was wiped out. However, the resulting labor shortage ended serfdom and the feudal lords were forced to pay wages for farm labor. This created the first sustainable middle class in 1,000 years. No longer could the nobles offer food and free housing. They had to actually pay real money. And the “peasants” were able to save and build small businesses. That is capitalism. Serfdom is “socialism.”
You cannot do anything about the cards that you are dealt but you have a choice on how to play the hand.
Note that the African swine fever has killed as many as half of China’s pigs, an estimated 300 million, since the disease took hold 13 months ago. It is estimated that as much as 70 percent of China’s pigs will die, and China has half of all the world’s pigs. Effectively, more than one quarter of the world’s pigs have been wiped out by the disease. Once the African swine fever is “controlled,” it will take from four to six years to rebuild China’s herds. This is a global plague unlike anything we have ever seen before.
This is putting a tremendous strain on the global protein supply as other sources will be substituted for pork and it will only get more severe. It is anyone’s guess what the eventual effect will be on the Philippines.
However, there are always profit opportunities from adversity for those that are smart enough and creative enough to figure out how to survive and prosper. “It is better to light a candle than to curse the darkness.” Wrong. It is better to be the candle maker.
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