Curious Worldview

Dennis Voznesenski | How Agriculture Explains Geopolitics

• Ryan Faulkner • Episode 222

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Dennis Voznesenski is an Australian analyst who has spent his career deep in the world of global agriculture. He is the author of 'War & Wheat'.

In this conversation, Dennis explains how geopolitical forces, from trade wars to energy policy, ripple through agricultural markets in ways that are difficult to predict but impossible to ignore. 

We discuss the unique position of Australian farmers, who compete on the global stage without the subsidies that prop up producers in the US, Europe, and beyond. The unbelievable masses of production. The efficiency of it. How the America's are basically where it all comes from. We get into why farmers are increasingly investing in on-farm storage as a strategic response to volatile markets, how infrastructure gaps in developing regions are holding back enormous agricultural potential, and the tension between the push for greater productivity and the long-term sustainability of the land itself. 

Dennis also walks us through how historical events provide essential context for understanding where agricultural markets are heading today, and helps explain the current moment through the lens of agriculture. 

Timstamps.

00:00 The Global Landscape of Agriculture
12:11 Insights from the Agricultural Industry
24:38 The Role of Technology and Innovation
31:22 The Impact of Global Events on Agriculture
52:56 Future Prospects and Opportunities

SPEAKER_01

Yeah, so my role's pretty broad. I look at what happens in global agricultural markets. So say over the next twelve months, what's going to happen to pricing? Uh I look at what's going to happen over the next ten years. Uh for example, how is the global biofuel industry, crop-based fuels, how is that going to impact the demand for canola? And then I travel around rural Australia speaking to farmers, food producers, traders, the government on occasion. And in terms of locations, it's the it's pretty broad as well. I could be two and a half hours southeast of Geralton in Western Australia, speaking in a machinery shed to three farmers and five dogs. Uh, or I could be in a conference center in Singapore where there would be traders and flour millers from all across the world. So the job is quite broad.

SPEAKER_00

And it's wheat.

SPEAKER_01

It's agriculture more broadly, but if you look at the Australian ag space, it's about 70% cattle and grain markets. And that's what I focus on. So wheat, barley, canola, pulses, and cattle. That's what we produce of the most. That has the highest dollar value, uh, and that's where I can add the biggest bang for buck.

SPEAKER_00

So it's big on the cow industry as well. I thought you had a narrow niche within wheat.

SPEAKER_01

Well, I I have drilled down as much as humanly possible in the wheat space. There are very few people. How far deep does it go? Very, very deep. I the the book that we'll go into in a little bit, it goes back to World War I and then all the way back to the present. Uh, but I did contemplate at one point going to like Napoleonic Wars and seeing what happened there. But I feel like after a while it all gets repetitive and the same things happen over and over again. You you like if you look at this stuff for long enough, you notice that there's these like laws of commodity sourcing. Like there's laws of physics, there's also laws of commodities. There's only so much that could be grown in the world. And then you start getting into you know why geopolitics does what it does, and frequently it's either to get enough resources from an energy or food perspective.

SPEAKER_00

That's interesting though. It always does what it does. What are the laws of agriculture?

SPEAKER_01

Well, a really interesting one is, and I'm going to delve straight into it, uh, back in World War II, uh, Germany when the when World War II began, Germany realized, and I'm sure they planned this beforehand, uh, they realized that it'll be incredibly difficult to source enough commodities inside of Europe itself. It they won't be able to source from places like Australia, Canada, the US, because they're at war with those countries. And the Germans tried to create a supply chain to South America. So they went to North Africa, took over French colonies there, they went to Tangiers uh to make a refueling point, they they uh imprisoned everyone in between, put their own people in place, and then went to South America and started creating a shipping route. Uh, and the reason they did that is because there's only so many places in the world that produce sufficient volumes of food. And while I'm not comparing the politics of then and now, we're just talking about commodities. You look at where are the largest producers in the world of soybeans and corn? And soybeans and corn, as an example, are just they're the primary sources of feed to feed animals to create meat. Where are they? They are in the US and they're South America. If you're not buying it from North America due to, say, political reasons, you have to buy them somewhere else, and that somewhere else is largely South America. Uh so whether it was 100 years ago or now, there's only so many places in the world you can get food and they're exactly the same as they were.

SPEAKER_00

What are the other geographical hotspots for food? Because you have this insane statistic on soy production, but that wasn't neither North nor South America.

SPEAKER_01

Uh no, so so on the soy front, uh, one thing I think we talked about was we looked at how much China imports every single year of soy. For wheat, they're largely becoming self-sufficient. They've been uh improving their farmer practices, they've been expanding area where they can. Um, and they have improved their self-sufficiency a lot. And when I say self-sufficiency, I'm saying they can produce almost as much as they need to consume, they only have to import a little bit. But for things like soybeans, they don't have the climatic conditions or the area to grow as much as they need. This year, they're gonna import 110 million tons of soybeans. And to give you a bit of context, because that just sounds like a ridiculous number, and I'm not gonna tell you in like in the amount of Teota cameras that is, but out of everything we've produced in Australia, at our utmost, the record year for wheat, barley, canola, pulses, cotton, you you lump it all together, the biggest year we uh and everything we produce, you combine it, 60 million tons. And just of one crop, they're gonna import 110 million tons. And you can largely import that either from North or South America. You can get it slightly from other regions, but uh in comparison, it's quite small.

SPEAKER_00

So I I misunderstood the statistic then. I thought that's what China was growing, but rather they're importing that gargantuan amount. 2x what Australia's entire commodities output might be in one year. Agricultural commodities. For agri, yeah. That's that's right. So is it the case then that North and South America really are the geographical hotspots for food production globally?

SPEAKER_01

For corn and soy, yes. For wheat, it's about 20, 25 percent in the Black Sea. So Ukraine and Russia actually together they probably account for 30%. Um there's this really large uh you don't want to say monopoly, because that's not true. They don't have over 50% uh or or closer to 70. They they have 30%. Uh so for wheat, they're incredibly important. Then you go to Canada, Australia, and the US, they're the next three largest. That's from an export perspective. The countries that produce a lot, like India, but they don't import or export much, they don't really matter to international trade that much. Uh, but if you look at the largest exporters in the world, it is Black Sea, so Ukraine and Russia, um, Europe, Argentina, Canada, US, and Australia. Those are the biggest players. Australia accounts for around 10%. That's roughly as much as Ukraine accounted for just before Russia invaded it uh in back in 2022.

SPEAKER_00

And we export 80% of our wheat.

SPEAKER_01

That's right. So it depends whether West Coast or East Coast, but on a national level, um, on average, probably around that amount, 70-80%. In a really good year, uh, we would be exporting a much higher proportion. Uh, but yeah, we when you look at West Coast versus East Coast, due to the population difference, East Coast maybe around 50-60% is exported, West Coast and South Australia, it's like 80 to 90 percent. Almost everything that we produce, we send overseas.

SPEAKER_00

Because there just isn't a sufficient population center close by to meet those demands.

SPEAKER_01

That's right. And one of the biggest learnings that came from writing this book, and by the way, the way I actually wrote it is I went back and I found a database of old newspaper articles, and I went literally day by day through 3,000 of them from the beginning of World War I to the end of World War II, something you're only like an insane person. Um, and I found that we have an issue right now which is exactly the same as we had 100 years ago when World War I started. We are a tiny population in comparison to how much food we produce, and we're entirely dependent on freight to get it out of the country. We barely have any domestic demand. Like you were just saying, it's like 10%, 15% that stays locally, the rest is exported. And in a scenario where you have a crisis that causes issues with international shipping, we have no way to get any of our crops or any other commodity output out of the country. Uh back then we didn't own any of our own vessels, or very few, and today it's the same exact thing. During a broader conflict, what happens to vessels is they're either sunk by the enemy, they're requisitioned by foreign governments. If it's your vessel, someone might take it, or it's the governments of where those vessels are domiciled. So let's say the majority of vessels are domiciled in places like America or in Europe. Once there is a broader issue globally, a geopolitical issue like a conflict, they call back all those vessels. And suddenly you have Australia sitting here with no vessels and an export-oriented industry. Unless you have demand, that industry will fall apart. And the only way we saved it from falling apart was the government coming in and nationalizing the whole industry, telling farmers you keep producing grain, eventually we need to support our allies and we need the wheat to be able to do that. I know we can't export it at the moment. We'll buy it from you every single year and we'll store it. And eventually there will be freight and we'll we'll get it out of the country. Um, that's what happened. That's where the Australian wheat board came from. The government said, we know what's going to happen if we don't if we don't nationalize the industry, that grain's gonna be produced, it's gonna come to port, there'll be no freight to take it out of the country, prices are gonna collapse, and so is the ag industry uh in general. So that's what they did.

SPEAKER_00

But then why are we in the same spot now? If 100 years ago it was driven by a conflict, what's happening right now?

SPEAKER_01

Well, we're we're in the same spot because we have a small population and we are very productive. Um the question might be, you know, why don't we own any of our own freight, or why haven't we built up domestic demand? And and that's a tricky one, and it depends on the commodity. So from a freight perspective, I I'm not sure why we don't own our any of our own freight. I assume it's just cheaper to just raw economics. Yeah, yeah, I think it's raw economics. And that's the same from a commodity perspective as well. So, for example, why don't we have more domestic demand like flour milling for wheat? Um, well, first of all, you still need to export the flour because we can't consume it all. There's only so many of us. Um only so many donuts or whatever else we can eat. Um, secondly, yeah, flour could be a more efficient thing to export because it requires less freight, because there's a conversion of wheat to flour, and there'll be less flour in terms of tonnage compared to the to the to the raw, unprocessed wheat. But a lot of industries around the world, a lot of countries around the world, they've built their own industries and subsidized their own industries, and they don't want anyone else bringing in already processed, um, already processed product. They want to support their own industries, their own flour mills, their own biofuel industries. Um, one of the industries that we created towards the end of World War II when we ran out of time in World War I because the resources just weren't available was a biofuel industry. It is a biofuel is a crop-based fuel. You can make it out of canola oil, you can make it out of wheat, and it has significant benefits. One is that it creates fuel security. Did you know for Australia? We imported 95% of our jet fuel and road-based fuel last year. 95%. Apparently we have three weeks of reserves, but they're most of it is not here, it's somewhere in America. So jet fuel is just for airplanes. So all the airplane fuel we use, 95% came from overseas, and 95% of anything we use on roads also came from overseas. They're roughly equivalent. It was like 94% or 95%, just averaging out.

SPEAKER_00

Is that because we don't have any domestic production of oil, or is it about the refinery process of the oil?

SPEAKER_01

We have two refineries left. Uh the rest have gone under, and the government supports these.

SPEAKER_00

Um So again, the economics just doesn't make sense. It's cheaper for us to import it.

SPEAKER_01

The economics don't stack up, and this is where you start needing to have a conversation when we move into this more volatile geopolitical environment. This is where the conversation needs to be had of economics is one thing, but national security is another thing. And it has to be it don't get me wrong, onshoring domestic production of fuel. For example, biofuel is expensive. No country in the world produces biofuel at an economically viable level. It's always government support, either to support the farming industry, to create fuel security to lower emissions. There's a broader public good in this, but it doesn't compete with conventional fossil fuel. So it costs money to create things in the interest of national security. So eventually you have to have a conversation of would it be more painful and is it likely that we will end up in a scenario where we can't get enough fuel as an example. Um and how costly will that be? Will it be more costly than actually the like the cost of creating those biofuel facilities, which is gonna be like billions of dollars? Um and there's companies who are willing to do it, but they do need some sort of government support from the sense of maybe there's mandates for using the fuel, so everyone's fuel tank has to have a certain proportion. Um, but yeah, I I I'm doing what I promised I wouldn't, which is going on tangents.

SPEAKER_00

All right. So how did you get into this obscure world in the first place?

SPEAKER_01

Yeah, agriculture in general, right?

SPEAKER_00

Well, sure. But your your work now as an analyst, as someone who's written a book, who goes around Australia speaking as an expert on this subject?

SPEAKER_01

Well, I'll take the book and um and my career as two separate things. I was finishing uni and I had no idea what I wanted to do. Um, as as most people find themselves in that case. Uh I had about three days left of uni and I went to Dimex the bookstore and I just bought a book, one book on everything I've ever found interesting. I bought like seven different books, uh, and one of them had one page. Uh, and this this bloke who's describing his first ever job in agriculture, analyzing markets, and he said, agriculture is like this big, beautiful machine where you plant something, the seed, you harvest it, uh, you feed it to animals, you harvest the animals, you feed it to humans, and it just made so much more sense than anything I learned at university studying economics and finance. That I went on LinkedIn, looked at the say looked for that job, found it, applied for it, interviewed the next day, started the day after. That was that was it. What a run. Yeah. And with the book, um, I I'm I I'm one of those people who like constantly asks why something is what it is until people just break down and tell me or they give up. Um, and I also like I want to know fundamentally what drives what what what drives the things I research and what drives markets. And initially I just went day by day uh looking at say the last 10, 15 years, I think it was like soybean prices, and I I went, okay, there's all these days and all these market moves. Usually it's like half a percent there, 0.2 of a percent, doesn't really matter. So I took out all the ones where there was a less than 3% change from day to day. Uh, and then I was left with the big moves, and I found that the big moves typically happen when there's some sort of crisis, there's some sort of government intervention in markets. And I went, when is the biggest government intervention in markets, and when is the biggest crisis? Must be World War I and World War II. And that's how I started looking into it. And I found that when an industry is stretched to its limitations, you understand exactly how it works, who is relevant in it, um, and why even today it's built the way it is.

SPEAKER_00

Oh, that's such a fascinating insight. Could you could you hypothetically run that playbook for right now, where we're sitting in 2026? Who matters?

SPEAKER_01

Well, it it's also about just dynamics of markets. We can go into Who Matters as well, of course. Like we talked about South America at the beginning of the podcast. Uh, but to give you an example, um, remember at the start I was saying when World War I initially started, we had this massive, we had a really large crop. In fact, initially the government was saying we're gonna need to supply the war uh the the war effort, we're gonna need to supply uh supply the UK, the allies in general, plant as much as you possibly can. Area plant, like we cut down every tree in sight, we planted as much as humanly possible, our production increased 70% compared to the year prior, not seven, not 17, 70% compared to the last record year. Um and what happened is all the shipping suddenly disappeared at the same time, and all the grain just came to port, and the scenario would have been that prices would collapse. And then around the time Russia invaded Ukraine, we started to go into similar into a similar situation locally. Uh, we had three record production years in a row in Australia. It was around I think 2019 or 2020 to 2022. There was three record production years in Australia.

SPEAKER_00

And that's just by virtue of the weather, or is there some policy that drove that?

SPEAKER_01

Yeah, it was weather. We had three horrible drought years in a row from 20, so it was 17, 18, 19, then 20, 21, 22 were record years. Um it was just change of the season. And in that last year, I saw we were going to produce that third consecutive record crop, and Russia inverted Ukraine, global prices skyrocketed, rocketed. And I went, it doesn't matter how high global prices go, we simply do not have the port capacity to get that grain out of the country. And I know at the extreme, when there's just no way to get those that grain in the country, prices collapse. I went, look, it doesn't matter. That prices are gonna skyrocket globally. If we don't have the shipping capacity, we don't have the port capacity, we physically can't get it out of the country. And imagine you are the grain trader sitting at a port and all your shipping slots for the next 12 months are full because you've already got so much grain from the last two seasons. You physically, even if you wanted to ship more, you could not physically do it. You go, you know, farms are still coming to you to sell grain. Why why would you offer a high price? What are you gonna do with it? Um, and that's exactly what happened. Uh, and our local prices traded at something it was like $200 per ton below global level. So global skyrocket is like five, six hundred and our state at four, three hundred dollars per ton. Um, so the dynamics never change, and I think by learning the extremes, I could foresee that happening as well. Oh man.

SPEAKER_00

So that's pretty cool. That's super cool. You must have a bunch of traders in your ear or in your DMs trying to get some sort of advice because that sounds like a perfect scenario for a trader to have a career-defining year.

SPEAKER_01

It I I've since I published the book, uh, yeah, I built up a pretty cool network of people from around the world. So I could be chatting to, you know, a flower miller in Europe or in South America somewhere, or a brewer who uses malt barley um in in the US, or like a mayonnaise manufacturer. Um yeah, it's uh some very niche people uh because the oil, right, yeah. Yeah.

SPEAKER_00

The who matters now. So you you said something I I just want to make sure I can return to one thing I've got here. But first I want to close that. You you made the rousing explanation for why you got into it and why it was so interesting to you and so forth. And you noticed that when you went back and you studied World War One and World War II, or rather just these outlier events that happened to be around these, well, because of these events. Um, you got to learn who who was important and why did it matter. So I wanted to see if you could run that same analysis on a 2026.

SPEAKER_01

Yeah, of course. Well, hey, look at Ukraine, Russia. Uh yeah, 20-30% of global wheat exports go 100 years ago. Russia accounted for 20 to 30 percent of global wheat exports. Hasn't changed. They're still the ones with a significant area and ability to grow this stuff. Um, you look at South America, they're large producers of food back then, and right now they're the largest exporters of soybeans and corn in the world. Um, the US has always been incredibly fertile and production's been plentiful there. Uh, and Australia was always a large export-oriented country, and we've just become more productive and we're exporting more and more and more, but we're still just as relevant now as we were back then. All the same countries that were important back then uh are important now.

SPEAKER_00

There's obviously something geographically significant about these places that grow consistently over time, such huge amounts of whatever agricultural output it might be. Is it possible in Africa as well? And is there a problem that they don't have the institutions and the capital and the infrastructure to support that type of growth? Or is there something about Africa where it doesn't even support good agricultural production?

SPEAKER_01

Uh the defining factor of what allows you to have a good agricultural sector and a thriving one and a growing one is the logistical infrastructure to take that grain out of the country, or at least if it's being exported, or at least to where it's needed, like a flour mill, if you're just trying to be self-sufficient. So if you don't have a good logistical system, uh you end up having significant loss from when the grain is harvested at farm to when it finally gets to the port or to the flour mill. That freight cost becomes incredibly expensive because of all the loss and inefficiencies. And when you have a large freight cost, it eats away at how much the farmer can actually get from the final price of grain. So let's say the price at a port for that grain to be exported, like just a random figure, $400 per ton. If you had the most efficient, amazing infrastructure railway network, you could give the farmer $360 per ton because it only costs $40 to get it to the port. If you are in some countries in Africa, and I was speaking to grain traders there, they're the ones who told me this. It is not $40 per ton, it is like $150 per ton, and half of that grain is lost. So they give you an even lower price because of the freight risk, not only the freight cost. Uh, I was speaking to a to a trader, I I think it was in Nigerian, he was telling me that from the point where you produce the grain to when it actually gets to the flour mills, like half of it or slightly more on occasion is lost. And if you're the farmer getting that small price and you're barely making enough to support yourself, what incentive do you have to become more productive, to expand your production? Um, and then you go, okay, how do you solve this? Well, you need you need investment in the country, and then you go, okay, great, other initias there, and in some countries where there is high corruption, investment money doesn't want to go. Um, so you end up in this kind of death cycle uh where you can't get the investment you need, but you also can't expand the industry unless you get that investment to build the infrastructure.

SPEAKER_00

Assume the logistics were as good as they are in Australia in an African nation. What would be the places that become agricultural behemoths? The countries.

SPEAKER_01

Look, that that's hard to say. Um I I need to dig into it a fair bit more.

SPEAKER_00

Um I know I'm putting you on the spot here. I was gonna start making stuff up. Um something you said earlier really resonated with me, which is you're the type of guy who just wants to keep asking why. Why why why and eventually get to as close as you can the the the driving forces of what was that first domino that ended us up? Yeah, I usually wait until people say I don't know. Yeah. Well, this is the beauty of having chatbots now. They never tire of my pointless questions.

SPEAKER_01

Phenomenal. I know like different views on them. So you know, some days they're good, some days it feels like I'm just talking to a different person when I'm using, say, Chat GPT. Sometimes it's amazing, sometimes it's not. But like I was writing a report a while ago, uh, I was looking at Biofuel, and I think in a day I did as much research as I did in probably a week and a half the last time I researched that topic before Chat GPT. It was unreal.

SPEAKER_00

No, I I totally agree. I think that it's genuinely transformational, and there is before and after these types of tools. But the reason I brought that up was the uh that same instinct that that we have. And um, I've similarly gone through those nooks and crannies and rabbit holes before, and I think at the end of the day, it gets back to energy because energy is even one step further back from agriculture. Everything's just a transference of energy that drives our civilization forward. But after that, it's agriculture. It's where does the food come from, which is the energy source for us, to actually do all the production things that we're doing. And so I'm just um I'm I think I'm identifying with your love for this industry, and I can really see why it's just so unbelievably fascinating. And that's also why I have so much respect for you to self-publish a book on something you're genuinely interested in, which then contributes to your professional output and your further development as becoming definitively an expert in a niche and all the wonderful serendipitous things that that can offer you as well.

SPEAKER_01

Um, I'm gonna start blushing. I think uh my ego can't get any bigger. No, but I really mean it. I think it's cool. Look, I think I fell into a really awesome industry because in agriculture people know that good things take time, they're patient. Like, imagine you're a farmer. You you can't just like put your crop on the ground and then scream at it to make it grow faster. Like if you're in a corporate office in Sydney, it's like get it done. Whereas for farmers, it's like you plant something, you have to take care of it. Um, for it to grow well, you have to put like required pesticide herbicides in it. Um, you have to make sure the weather's gonna be um accommodative as well. You plant based on what your soils are like, like it's a it's like they know good things are gonna take time, it takes a whole season, it takes a lot of care. And I think because of that, that that kind of feeling and that way of looking at the world filters through the whole industry. So there's a lot of really good down-to-earth people um in the ag space. So it's it's just it's fun working there.

SPEAKER_00

And something that we spoke about last time, which I has really stayed with me and something I've been telling other people, not like it was my own stat or whatever, but it just came up and is how Australia doesn't subsidize its agricultural industries, which is extremely unusual on the global stage. Yeah. Yet we still produce surplus agriculture. And the uh conclusion was that we actually just have some of the best farmers in the world, some of the best technology and some of the most really educated and dedicated and committed farmers, also in a country that experiences a bunch of droughts and so forth.

SPEAKER_01

Yeah, we have kind of um a natural selection system uh for our agricultural sector. It's kind of like um, oh geez, I think I'm gonna regret saying it, but it's kind of like a hunger game system where you said natural selection, so it makes sense. Yeah, in in in other countries, you have a safety net as a farmer, at least to some extent, because you have subsidies, you have a government who will uh, for example, in some places offer you a minimum price for your grain. Um uh in some in some countries they even pay you not to plant on occasion because they're like gonna be too much of production. Uh in Australia, it's very minimal. There are some tax, uh, there are some tax benefits uh for farmers, but direct subsidies, not really, but there's largely none. Uh and as a result, farmers don't have anything to fall back on, and they have to be as efficient as humanly possible. They have to follow the market incredibly well, they have to be the they have to implement the newest technology, um, apply their fertilizer, agrochemicals, um, herbicides with as much care as possible so they don't overuse it, so they don't raise their costs. Um, they are, I would say, some of the most switched-on farmers in the world because they know if they screw up, there's nothing to fall back on. Um, and we've seen a really large actual consolidation of farming uh across Australia. So farmers have had to get bigger because the most productive machinery is it's immensely expensive. And the only way you can make it work is if you have the economies of scale to spread the cost over more and more hectares. If you have a really expensive bit of machinery, you have to have the ability to spread that cost and use it over more and more hectares the more expensive that machinery gets. So if you want technology that sprays, that that assesses the crops as it's going and sprays only where it needs to, as opposed to just spraying an entire field. So it literally looks at is this a weed, is this not a weed, and then sprays just the weed as it's going through the field. That sort of technology is immensely expensive. Um, slight tangent. When I was in the US, um, I was doing a global book tour and I went to a few different regions. And in the US, I saw a really cool bit of kit. There, they they're testing it now. It's a plant, it's a it's a big planter that goes along on the field, it plants crops. Usually it just plants one variety, say, of corn. It's just the same type, the exact same type, and it plants it across the whole field. This bit of machinery, it scans the soil, and every single meter it goes, is this the right variety of corn to put in that soil? Will it optimize yields? Will this variety of corn fit with this soil? And if it doesn't, it switches it out to the second one and plants that instead. Because initially the best thing you can do is just spray as efficiently as you can just where it's needed on the field. That's the first way you become more productive and what we've seen as a big technological leap. And now the second one, it seems to me that it's going to be this one where it's planting different varieties of corn depending on the or other crops depending on the like the meter of soil that you're going through.

SPEAKER_00

That's amazing. Yeah. It's like the total efficiency of an industry.

SPEAKER_01

Yeah. And at the end of last year, I know bits and pieces have been used uh for a little while now. They've been tested, but at the end of last year, for the first time, I started to see en masse there must have been a big shipment that came in of fully autonomous spraying machines. So they would go fill themselves up, recharge themselves, and then go spray where it's needed across the field without any human interaction, then go right back to that refilling station, refill, refuel, and go again. It's like I couldn't believe it when I saw it uh on a farm.

SPEAKER_00

But then the sad uh counterside to that is that these regional towns and communities are just getting that there is an evacuation of the people that might live there because the same farm that maybe needed 100 hands before, maybe now only needs 50. That's right. And therefore there's less demand for the pub in the center of town and less housing and so forth. And so this is actually as well quite a devastating thing to balance. And like in Australia, where we don't have the state intervening, and it's just the markets determining the consequences here. What what does that leave for Australia? What happens then?

SPEAKER_01

It is an incredibly big issue, and I saw it pretty much everywhere around the world. There's one place I saw less of it, and I'll tell you about it in a moment, but whether it was Canada, the US, or Australia, in Australia, I think the process is just sped up because there's none of those safety nets, so people leave the industry quicker if something screws up from an operational standpoint. Uh, but it happened it's happening everywhere. And like I said, the kind of the chain of events is to stay competitive on a global scale, because other regions are doing this as well, you have to have the most expensive machinery that's the most efficient. For that, you need to buy your neighbors and make your farm larger so you have economies of scale. And then suddenly you don't need as many farmers because the, for example, those autonomous sprays that go around without any human um human involvement. Uh, yeah, you get less and less people who are required to work on farms, uh, but also you can't survive as a farmer unless you go down that road. Uh so it is incredibly tricky if you uh live in a country that has an industry where it's output focused, and the only place where I saw this slow down quite considerably was in Switzerland. So in Switzerland, the government's subsidies are based not on, for example, output or how many hectares you have, the subsidies are based on whether you adopt certain sustainability practices. And if you do, you get the funding. So you basically stay viable because you're doing what the government tells you from a farm practices perspective. So instead of using agrochemical, I literally saw someone walk around with like large pliers and pull weeds out of the ground. And I remember like I was chatting to the farmer and they're like, Do you do that in Australia? And I'm like, no, no, we have farms which are like 16,000 hectares. That's not a viable option for us. So there are ways to get um out of this um this spiral, but it they don't lead to a productive industry where you're feeding the world, which is what Australia is doing.

unknown

Right.

SPEAKER_00

The global book tour, I wanted to ask you, what was uh what was the single learning that changed most for you, not after you had written the book, but after you had toured the world promoting the book and speaking to all of the people which your book tangentially is about?

SPEAKER_01

Well, I think um, first of all, um, from just like a social or human perspective, I found that regardless of what country you go to, at least out of the ones I went to, farmers are like incredibly good-natured people wherever you go and they'll have a laugh and a chat um and have a beer with you. Um in Canada they eat poutine instead of eating uh sausage rolls and and pies. Uh and they have donuts as well, and like these like rectangular donuts, they were phenomenal. I had them in Saskatoon. I can't remember what they were called, but they'll they'll bloody incredible. Anyway, so slight dietary differences. But apart from that, farmers tend to be phenomenal people regardless of where you go. That was pretty cool. And the other learning I have is that like if you're sitting in one country and you're looking at the rest of the world, it always feels like there's people further away in other countries that know more than you do, whether that's about the market or what's happening globally. And in reality, they're the exact same people sitting everywhere perplexed at what President Trump is gonna do or what China's gonna do, and uh what Australian farmers are gonna do. Are they gonna sell more? Are they gonna keep more in storage? That's what Canadian farmers are thinking, and it's the exact same thing Australian farmers are thinking. So I think the it it kind of leveled the playing field for me because I realized no one knows more than your industry. They're all sitting in their own little pocket. Um, I think that was really cool. Uh, and I started to learn this before, but this really um the trip really allowed me to like embody the understanding that to understand where a market is gonna go, in reality, at least for agriculture, all you need to do and it sounds it sounds like I'm minimizing how large of a task it is, but all you have to do is know at least one person in every part of the supply chain. If you know a farmer uh who's growing something in central New South Wales, you know the grain trader that's getting it to port, you know the person at port, and hence you know how much port capacity there is, you speak to someone in shipping and you realize okay, there's not gonna be any freight issues, and then you go speak to a flour miller from Malaysia and they're like, Yeah, we need a bit of wheat now. You're like, oh, okay, wheat prices are gonna go up. So, like, if you take that on a broader scale, it's it it becomes a lot less daunting to try to understand what's gonna happen in markets if you just speak to everyone in the supply chain. There's no one else there. If you speak to the farmer and then you speak to like the end consumer, there's not much that you that can be hidden. Um, I think like you have animal spirits in markets, and those are crazy and they do crazy things at the time. What's that? What's that? Well, as in like when when there's a lot of fear or there's a lot of greed in markets, uh they can do totally illogical things. Um, and then you have the addition of speculative funds who aren't farmers getting involved and exacerbating price moves. So you can't like you can't grasp that. It's just it's near impossible. But if you're in a somewhat normal time, um when there's not a Russia invading Ukraine tomorrow, uh, and if you speak to everyone in the supply chain, from the farmer to the exporter to whoever's importing it on the other side, um, you can get a pretty good understanding of where markets are going to go in the near term or the medium term.

SPEAKER_00

Did you have any insight into what made the farmers such phenomenal people?

SPEAKER_01

Uh just good-natured people in general.

SPEAKER_00

More I'm I'm trying to get at something a little bit uh esoteric, but is there something special about that line of work, the patience that's required, the fact that a lot of the outcome might be out of your hands, that may be more rural and therefore disconnected from wherever the rhythms of a city might be? Yeah. Was there something that you landed on there that explains why they're great people?

SPEAKER_01

Yeah, well, I think part of it is the um is the environment, and not like environment as in trees environment, but the environments more broadly that they're a part of. Uh imagine a job where for four years in a row you go to work every single day and then you don't get paid at the end because it was too hot. Like imagine that, and you spend money every single year. So that there was a time uh before that record stretch of production from 2020 to 2022, where there was a place called Walgott, northern New South Wales. They had like four to five years of drought in a row. Imagine every year spending a ridiculous amount of money, going borrowing the money if you don't have it, buying seed, buying machinery, fertilizer, all that, planting it, caring for the crop the whole the whole year from April to November. Uh, and then turns out it's too hot and nothing grew, and it will cost you more to get the machines to harvest it than just to let it let it dry out in the field. And imagine doing that four years in a row or five years in a row. It will make like if you stay in it, you end up being an incredibly patient person. Yeah.

SPEAKER_00

Yeah.

SPEAKER_01

Yeah. So I I think the the environment that they're in uh kind of also shapes who they are, uh, which are very good people.

SPEAKER_00

Are you in the business of watching commodity prices on a day-to-day basis?

SPEAKER_01

Yeah, uh I I look at it from a day-to-day basis. I try to do it weekly because there's a lot of noise from day-to-day. Sometimes just nothing happens. Um, sometimes you you look at the news and it's like wheat prices went up for technical reasons. And I'm like, what's a technical reason? But if you at least leave a week, uh there's you there's genuine trends and genuine reasons for things happening. Uh, right now we're in this funny situation where uh wheat prices globally have been in a range uh bound by a very small range at a low level for probably a year now. And I feel like I know part of the reason as to why we are where we are. Um, and again, I'm gonna relate it to a crisis point. So after World War One, there was a lot of countries that were shaken by the food shortages they experienced during the war. So, especially those countries in Europe, um, so like the UK, France, Germany, um Italy, you name it, they were scarred by the food shortages of World War I. And they said after the war, they went, we want to make sure that we're food secure, we never have shortages again. And the governments heavily subsidized their production to a point where it made no economic sense to produce as much as they did, but they did it anyway. Prices fell, and those governments said to their farmers, doesn't matter, the prices are low, we're gonna make sure that you remain economically viable. Our priority is food security, especially as the environment gets worse and worse, and it got worse and worse closer to World War II. So imagine you have countries that are typically large importers who funded their own food security very heavily and suddenly they don't need to import anymore or import very little. What happens if import demand falls, prices fall? And usually if prices fall, farmers start producing less and the prices go back up. The cure for low prices is low prices. But if the government's supporting you to keep producing despite low prices, they don't go back up. And we ended up in a decade of low prices. Um and my worry now from that perspective is what if we're in a scenario where geopolitics is getting more and more volatile? We saw the Houthi rebel attacks in the Red Sea, we saw Russia's invasion of Ukraine, we saw the US bombing Iran, um, and this potential um additional uh if there's a further escalation now, we saw Israel in Iran, uh there's like one thing after the other. And I think like look at it from the perspective of a government of a large import-dependent nation. You're going, well, what if there's another one of these and then I can't feed my people? That's the last thing that they want to happen. So they're starting to prioritize food security more. So you look at uh Egypt, Indonesia, uh China at one point or another, all large wheat importers, they're starting to focus more broadly on food security, not just with wheat. Um, but what if what if production in those importing countries is getting larger than we uh than we are recording? Uh and maybe that uh maybe that's one of the reasons why we have low prices.

SPEAKER_00

Could you lay that out for me a little bit more? Because I think I follow, but I'm not quite sure I do. No, no, of course. Why would the Houthis, why would Iran, why would Israel, why would Palestine, why, why would that change the way that countries are thinking about their food security when Indonesia can just buy from Australia or Latin America hasn't been through this same problem, which is producing so much of the soy, for example. So why does that actually matter?

SPEAKER_01

Well, look at the Houthis rebel attacks uh in the Red Sea. So for a while, uh vessels, unless they were aligned with Iran or Russia or China, they couldn't go through uh the Suez Canal uh and the Red Sea. Uh the most efficient way to get from, say, Australia and get our canola to Europe is through the through the Suez Canal and through the Red Sea. The alternative is moving it around Africa, which comes its own with its own issues such as uh pirate attacks and whatnot. Not that there was many of them, um, but in a more volatile environment, that could be the case. Um and suddenly, say, Europe can't get our canola. Uh, regarding Iran uh and Israel, uh, it create if that escalated and became a broader conflict, if you are a country somewhere in between or nearby and all these countries are getting involved in a conflict, you want to make sure that you have food production because if you can't get it externally, because say shipping routes are blocked off, then you can't feed yourself. Um that is where it starts from. And even if it doesn't directly impact you, you go, you know what, maybe in the future there'll be something near me and I won't be able to source what I need. So why don't we at least have a little bit more food security? And you go all the and then you got all these countries who are going, okay, maybe, maybe we'll just import a little bit less moving forward. Uh and it seems like not a lot, but when you add up all the little bits, it ends up uh reducing import demand. And if imports if if the amount that needs to be imported globally drops, well, then you have less bidders going for the same amount of wheat that's always been available. Um and then prices drop.

SPEAKER_00

Would that be good for Australia then, since we have such an excess?

SPEAKER_01

No, that will be a challenge uh for us. If if countries that we typically export to suddenly start producing more, they won't need as much wheat from us and it may cause lower prices.

SPEAKER_00

Oh, I see. Okay, so because the prices are dropping, they're supporting more of their domestic production.

SPEAKER_01

They're supporting their domestic production because of food consumer food security concerns, then they don't import as much and then prices fall.

SPEAKER_00

Yeah, okay.

SPEAKER_01

Um and to wrap it all up, if you have lower prices, the farmers that survive are the ones that are most efficient, and it just continues to cause that consolidation of farming. Because if prices are low, you need to be even more cost efficient. So you need to spread your costs over even more hectares, and then you get an even accelerated version of that consolidation. I th there are limits to how much consolidation can occur because you know technology isn't isn't making those types of leaps where suddenly we just have one farm in Australia, it's not gonna happen. Uh, but there yeah, uh that's that's uh that's a big big thing that I'm watching. Um and I'm not saying that we're going to a scenario where it is the extreme of geopolitics. I'm just saying this is what happened in history at an extreme and it can help explain um why certain things are happening now.

SPEAKER_00

I can see why you love the industry. Endlessly fascinating.

SPEAKER_01

Yeah, yeah. Uh and I think the one of the main reasons I like it is because it's like it's tangible. Like it's it's physically there. If the weed is not there, prices go up. If it is, prices are low. There's um there's not much you can hide.

SPEAKER_00

I was speaking to a brewer the other day. Really? Uh yeah, he's on my cricket team. Yeah. Uh some English fellow we brought over. He's the head brewer at a small microbrewery in the North Shore. And forgive me, I cannot remember the name of it, um, which is bad. But nonetheless, he was giving me a whole spiel about how specific the barley is and where they can get it from, and how Balter XPA have this amazing beer because they have almost the monopoly over this very particular type of barley, and that's why it can taste a certain way, and it's almost impossible to recreate that flavor unless you have access to that particular barley. And it just it made me think of you actually, but then it also God, it just gave this insane appreciation for how complex and delicate and balanced markets are.

SPEAKER_01

Well, I I have come across I have some close friends. Farmer friends down in South Australia, and I've come across some who, yeah, who they've they've had beer companies reach out and say, Hey, can you grow this specific type of barley for us? Because we need to um say expand our beer production, or we want to try and create a new beer, and this is the type of malt we want to try on on s on on mass. So yeah, um that stuff definitely happens.

SPEAKER_00

What about Trump's trade tariffs? How much did that affect your world?

SPEAKER_01

There is a lot. There is a lot for a while. Uh it's good and bad. The the bad is that you constantly have to be on your toes. The good is that I don't have to think about what I'm gonna write about anymore in terms of uh generally for my day job, because it's just like I just look at what he said for the last week and I can write a whole report about it. Uh so it it has a lot of impacts. Uh, as an example, um Canada a while ago, at under the pressure possibly of Trump, said that they're gonna put tariffs on Chinese electric vehicles. Uh 100% tariffs. In response, China put anti-dumping tariffs on Canadian canola. Uh this year, well, in mid-January, the Prime Minister of Canada went to China, sorted it out, and said, we're gonna lower the tariffs on EVs slightly. Um, well, actually, it's a considerable amount. Uh, and in response, China said, Okay, well then we're gonna lower your Canadian your the the tariffs we have on your canola. China's largest customer for Canadian canola. Um, the deal was announced, and then Trump said he's gonna put 100% tariffs on Canada if they follow through with the deal. And the problem with that is that the second half of Canada's canola is crushed into oil and the oil goes to America. So uh Canada is immensely boxed in at the moment with its two largest buyers both um screaming at it to do what they want, and they're equally important, at least from a canola perspective. Uh so yeah, it it frequently impacts um it frequently impacts my markets, actually very frequently from basically a day-to-day perspective.

SPEAKER_00

You got one or two other examples top of mind?

SPEAKER_01

Yeah. Uh so one is one is remember when Trump came out with that big uh tariff board on the White House lawn? Liberation Day. Liberation Day. That's right.

SPEAKER_00

Dumb as shit.

SPEAKER_01

There was people in helmets and all, yeah. Anyway, um, it was like April, no, well, February, it doesn't matter, early 2025. Um, and he put tariffs on several countries. Uh, from a beef perspective, the U.S. has a massive shortage of beef at the moment. They've had droughts that have caused their cattle herd to shrink substantially. It's like a seven-decade low uh of their cattle herd, and they've been importing a considerable amount of their beef. Prices are at record levels, so they've been sucking up beef from everywhere they could possibly find it. Uh, they put 10% tariffs on us, they put, I believe it was a 10% tariff on Brazil. We were the largest suppliers to the US. And the idea, in theory, was that we would take a haircut on how much we get in order to send it to America. But America's shortage was so high that they just started paying 10% more. Um, and then, in order for President Trump to support the previous president of Brazil, Bolsonaro, who got sent to prison, he put an additional 40% tariff on Brazil. And then the US could no longer import beef from Brazil. Prices skyrocketed. And instead of us being at a negative from his tariffs, our beef prices skyrocketed because there was nowhere else in the world to import beef from. Mexico had a flesh-eating parasite going through their cattle, and usually they sent one and a half million head of cattle into the US to be slaughtered every single year. That was closed. Candle was doing their own herd rebuilding because they had drought for a while as well. Their exports were down 20%, and suddenly the second largest exporter to the US was no longer viable because of the tariffs, and they just imported everything humanly possible from us, and we were at a massive advantage. It's all changed now, it all changed towards the end of last year and early this year. Um, but that's just one example. And then China changed all their import quota systems anyway. I'm gonna go on a tangent, but it's like every single week there's something new.

SPEAKER_00

And if, as you've uh been discussing, if with agriculture the crop you plant today, you know, where they're predicting, might not actually be worth anything for several years. What do you think five, ten years from now, the consequences are going to be of the sheer chaos of the last 12 months and probably the next 24 months as well, because of this constant tariff battle? Are people trying to just grit their teeth and and and soldier on, or are they making fundamental changes to their agriculture?

SPEAKER_01

Um, I think it there's only so many changes you can make. So, for example, in Australia, uh in the winter crop, that's the main cropping season of the year, you plant in April, you harvest November to January. Um, there's only so many crops you can grow. It's wheat, barley, canola pulses. And just because some country puts tariffs on your canola doesn't mean you suddenly can just grow barley everywhere. If you grow too much of one crop, it causes disease issues in your soil. Uh so you can't really deviate that much. Um, you can only grow what you can grow. Uh and if you grow, yeah, if you grow too much of one crop on the same field every single year, instead of shifting out of that crop and going into wheat and then the next year going into barley, you get disease issues and you ruin your soil. So uh you can't change it just based on price. You can, but there's gonna be longer term impacts on your ability to grow anything.

SPEAKER_00

So it's just chaos for the farmers and then payday for the traders?

SPEAKER_01

Uh it's chaos for everyone. Um, because it doesn't matter if you're a farmer or a trader, you don't know what Trump's gonna do. Uh so in the end, you can be caught short on the wrong side. Um, I think for farmers, well, they they've been trying to insulate themselves in certain ways. So, for example, uh a lot of them since COVID, and it was it was partially driven by that instant asset write-off uh that was implemented by the government to boost economic activity. A lot of them invested in on-farm storage. So instead of having to sell your grain at harvest, they now store more of it on farm, and it gives them a the a bit more of an ability to wait and sell when they want to, as opposed to when they're pressured to because there's too much supply around. Um, they're starting to do things which help them help them choose when to sell. And if they can choose when to sell, they can sell into the periods of the year where, say, there is a lot of chaos overseas and prices go up temporarily. So while you can't we could end up in a situation where it's lower for longer prices, it is on average lower. But remember, the reason all these countries are focusing on food security is because they're worried that there's going to be another Russian invasion of Ukraine or significant weather impact due to global warming or whatever, and you have a massive temporary spike in prices. And if farmers have the ability to sell when they want to, they can wait for those parts of the year and sell into them as opposed to just having to do it at one point in the year. So they're they're adapting to it.

SPEAKER_00

Hence the farmer being the best geopolitical analyst.

SPEAKER_01

Well, they're they're all watching this, like they're they are watching the news closer than or as close as I am. They just have less time to do it because they're actually doing a growing food. Um, and they have to be a geopolitical analyst at the same time. Uh, I and these farms they they they have gotten big. You can like I was on one farm, and in Western Australia, they have some of the biggest farms in Australia. Uh, because well, for example, you can have a real a smaller farm on the east coast that has more rainfall but produces the same amount as a very large farm in Western Australia because you need a larger farm there because the land is less productive because you have less rainfall, for example. But I've been on a farm where you're driving like 60 Ks an hour for 30 minutes and it's the same farm.

SPEAKER_00

Like these farms are huge. That's unbelievable.

SPEAKER_01

Don't we have one farm that's as big as Belgium? I think somewhere in the middle of Australia the there is one. Uh, I think it's a cattle operation. But uh the other kind of mind-boggling thing is you see these large operations, and you know, some people will go and and think that it's a large corporate running it. In some cases it is, but in most cases, it's just mum, dad, and two kids. Uh unbelievable. Maybe they have two support workers, that's it. But like for 16,000 hectares, is that that's it. And and there it's a massive corporate level operation, but it's just a family running it um and taking care of it. It's pretty incredible what they're doing.

SPEAKER_00

Before I wrap it up with the two questions I try to ask everyone, I wanted to ask you whether there was something in particular uh that we didn't talk about that you really want to mention.

SPEAKER_01

No, I I think that's it. I think the really interesting one is um that I I just like looking at crisis points because it helps it helps you understand an industry at its core, what it's made of, why it is the way it is now. Um, and because of that, you can understand the future a lot better as well. You know that there's only certain parameters that determine where an industry heads, and you can clearly see if it's going the wrong direction or the right direction. Um, and that's why I did it. I I didn't research this because I I'm gloomy on the world and I think everything's gonna come to an end. Uh, I was looking at it from kind of like a scientific perspective, like what happens at the extremes, and if I know what happens at the extremes, I'll know what happens in between.

SPEAKER_00

I try to ask these questions to as many guests as I can. The first being, what is a country you're particularly bullish on? And given your worldview, uh hopefully it's something to do with a good agricultural future. It'd be interesting to see.

SPEAKER_01

Yeah. Well, remember when we we were talking about what determines a successful agricultural industry, and that is partly its logistical infrastructure. Um for that to occur and to have a successful logistical system, uh, industry in general, you need investment. And then you go, where in the world is money going to flow from an agricultural perspective? And you go, okay, what do you have? You have the Black Sea, money is not going there, there's there's clearly a war. Um, in Europe, there are certain policies being implemented which are suffocating their industry and limiting it from its ability to grow. Um, and then you go, okay, not Europe, not the Black Sea. You go, South America, there's been a phenomenal amount of expansion, but there is also in parts a fair bit of corruption. And that means that you may put your money in somewhere and then suddenly the next day you come back and it's no longer yours. Um, you go to North America, the US is oversaturated with investment because you know, tier one jurisdiction from a legal perspective, what you invest in you can take out. Um, it has a very large agricultural sector already, very productive farmers. Um, but it is saturated from an investment standpoint. Everyone wants to uh and has always wanted to invest there, and then you go, what's left? And you got Candor in Australia and tier one jurisdiction from a legal perspective, phenomenal people, uh, industries that are constantly growing. Uh and from my perspective, yeah, it's it's Candor and Australia that are really positioned to thrive. Um, and it's it's it's funny, yeah. You speak to farmers there and here, or just industry people more broadly. I reckon you can copy and paste a business from Australia into Canada and it will work, and vice versa. Like that's pretty cool. I was looking at grain marketing companies, brokerage firms, grain traders, and I'm just like, you guys do literally the exact same thing we do. You're export-oriented, the people are very good-natured. Uh, government, like, yeah, you have you have Labour Liberal or whatever, and they differ, but in reality, very similar system.

SPEAKER_00

Um huge countries, yeah, similar modern history, similar demographics.

SPEAKER_01

Yeah.

SPEAKER_00

Similar concentration of the populations.

SPEAKER_01

Yeah.

SPEAKER_00

Uh so but given Canada's middleman between China and the US and their disastrous relationship with uh US at the moment, Australia would edge out a little bit as the country you're most bullish on?

SPEAKER_01

Uh I think so. Uh we we also have our own issues with with uh with China and the US. Both uh at times have put tariffs on us. So we have to strike a very fine balance. Uh Canada, I think, is under a lot of pressure because of just its proximity to the US. Their exposure to America is incredibly high because they're literally linked to it geographically. Uh, but I think from a political sense, we we have an equal amount of uh of challenges to to Canada.

SPEAKER_00

Final question, mate. What is the role that serendipity has played in your life?

SPEAKER_01

Serendipity. Oh, well, a big part of my career now is going out and presenting to people. Uh, and I remember when I was back at school and university, like you would need to have a gun to my head for me to go and present. And I remember like in my early 20s, I had uh and and during COVID, I think like everyone, you have a lot of time to think. And one of the things I or just pick up new hobbies. And at one point I started to meditate. And after I started to meditate, I managed to calm myself down to such a point where presenting didn't make me nervous in the slightest. And I if I didn't have those times where I was kind of forced to be at home uh because I couldn't do anything else, uh, I wouldn't have uh calmed myself to a point where I can meditate uh where I can, sorry, where I can present, and now it's like the majority of what I Yeah, it's the majority of what you do now, right?

SPEAKER_00

It's the biggest growth engine for everything that you want to write and and and analyze.

SPEAKER_01

Yeah, and it just gives me such a large ability to engage with a really broad audience, and I wouldn't be able to do it otherwise.

SPEAKER_00

Amazing, mate. Well, you wouldn't be able to tell that you were nervous public speaking.

SPEAKER_01

Uh yeah, that's uh about a thousand presentations later. There's been a lot of versions of this.

SPEAKER_00

All right, Dennis. Thank you so much. Really appreciate it.

SPEAKER_01

Thanks for having me.