King Morocco

The protein consumption boom currently underway in the emerging markets is offsetting plateauing protein demand in several developed nations. The result, seen below, is a remarkably stable trajectory of animal protein consumption.


Source: Tysons 2013 Factbook, USDA, FAO, and OECD


So what? Food writer Michael Pollan noted that “you are what you eat eats” in his NY Times bestseller The Omnivore’s Dilemma, highlighting the fact that rarely is the food we consume the beginning of a food chain. So let’s investigate what our protein sources are consuming.

According to the Tyson’s 2013 Factbook (available HERE), each pound of chicken required 1.96 pounds of feed. This compares to almost 4 pounds for pork and approximately 8 pounds for beef. These metrics (~2x, ~4x, and ~8x), referred to by industry participants as the feed conversion ratios, provide some insight into the potential boom forthcoming in the demand for grains that go into the feed. If you are what you eat eats, then you are de facto consuming as much as what you consume consumes. Imagine thinking of your steak as 8 times as much grain!

Continuing the logic further leads to an investigation of what grains eat…and this takes us to a very problematic component that underpins much of the grain complex today – fertilizers. The three key ingredients needed to support plant growth are nitrogen, potassium, and phosphorous. Nitrogen in plentiful, but requires significant energy to “fix” into a usable form for plants. Water soluble potassium, know as potash, is geographically dispersed, but ~80% of reserves found in Canada, Russia, and Belarus. Water soluble phosphorous is mined as phosphate rock and is shockingly concentrated in a very few countries. According to the US Geological Survey (data HERE), more than 70% of proven phosphate rock reserves are currently in Morocco, a share that implies market power in fertilizers, food, and protein that is greater than that of Saudi Arabia or OPEC in the oil market.

Most economists, strategists, policymakers, and investors dismiss the seeming irrelevance of Morocco with a “Frankly, my dear, I don’t give a damn…” but with respect to today’s Casablanca, the phrase has outlived its useful life.