For most of the modern era, the story of food was scarcity. More people meant more demand, higher prices, and ever-expanding markets for farmers.

That part of human history has now come to an end.

For the first time, global population growth is slowing sharply at the same time as global food production continues to rise. The implications for agriculture — particularly for bulk grain and meat producers like Australia — are profound, under-discussed, and should concern anyone planning to buy land at current prices.

Since the early 1970s, global grain output has risen from around 1.2 billion tonnes to just under 3 billion tonnes today. That is a remarkably steady expansion — roughly 1.7–1.9 per cent a year in total production over five decades — sustained through oil shocks, wars, financial crises and pandemics. (Yield growth has been closer to 1–1.2 per cent a year; the rest has come from area expansion.)

Like peak oil, the doomsayers keep predicting we have hit peak grain. It never seems to arrive. Economists now argue the world could comfortably produce 4 billion tonnes of grain with current technology as a near-term milestone, and by 2100 could easily double production — and more again if prices ever returned to sensible real levels.

If wheat were $1,000 a tonne, grain would pour out of every marginal paddock on earth. Show me the money and I’ll show you the grain.

The problem, of course, is that pricing like that is always over the horizon — and even if it briefly appears, bad governments have a habit of standing in front of the gate.

In fact, there is no reason why $1,000 wheat is absurd. In real terms — after stripping out inflation — grain prices have fallen by roughly 75 per cent over the past 75 years. If wheat had simply held its post-war real value, today’s $330-a-tonne wheat would be closer to $1,300.

That 75 per cent decline equates to about 1.7 per cent a year, compounded. It sounds harmless until you realise it halves the real value of grain roughly every 40 years, meaning you must double production just to stand still.

It’s a brutal game — and it is about to get harder.

As production has grown, trade has expanded alongside it. Global grain exports have increased from well under 150 million tonnes a year in the early 1970s to around 440 million tonnes today. Roughly 17 per cent of all grain produced is now traded internationally. Farmers no longer compete with neighbours or regions, but with producers across oceans.

Now consider consumption. Today’s 3 billion tonnes of grain spread across a global population a little over 8 billion people equates to roughly 350–370 kilograms per person. At current long-run growth rates of 1–1.2 per cent a year, global production reaches 6–7 billion tonnes by 2100 — or 600–750 kilograms per person, roughly double today’s per-capita availability.

Which raises the obvious question: who exactly is going to double their consumption of grain or meat, and where are all these new rich consumers supposed to come from?

At some point this century, the old equation — growing population × rising GDP = farmers making money — flips to falling population × stagnant GDP = farmers losing money.

This is the critical shift. Population growth is slowing faster than anyone expected, while the world’s capacity to grow grain continues to expand faster than anyone expected. Food output is steadily outstripping population growth, and the long-standing assumption that increasing numbers of mouths would reliably absorb rising production is breaking down.

This demographic shift did not begin yesterday. Global fertility peaked around 1963 at roughly five children per woman. Today it sits near 2.3 and continues to fall. More than 60 countries are already in population decline, including almost all of Europe, Japan, South Korea and much of East Asia.

Global population growth has slowed to under 1 per cent — the lowest rate since 1950 — notably below the long-run growth rate of grain production. The world reached 8 billion people in November 2022. It took 12 years to grow from 7 to 8 billion; it will take about 15 years to reach 9 billion. The slowdown is real, measurable and accelerating.

The United Nations projects that 61 countries will see their populations shrink by at least 1 per cent between 2022 and 2050. Of those, 26 are expected to lose more than 10 per cent. China has already begun declining after peaking at 1.426 billion in 2022 and is projected to lose tens of millions by mid-century — potentially halving its population to 500–700 million by 2100.

By the end of the century, fertility rates are expected to fall below replacement in 183 of the world’s 195 countries. Two-thirds of humanity already lives in a country below replacement fertility. This is the automatic solution to carbon emissions, not the madness of renewables and carbon taxes but that’s for another day.

Yes, population growth will continue in parts of South Asia and Africa. India is projected to grow to around 1.67 billion by 2050 before declining. Africa is the outlier, expected to account for more than half of global population growth in coming decades.

But here is the awkward economic truth farmers are not told, population growth alone does not create food demand otherwise Indonesia and India would be the only markets we need. Income does.

Pick any of the fastest-growing populations that are in regions that have failed miserably, to build the institutional stability, human capital and industrial base required to compete in a modern global economy. Pick your explanation — governance, education, corruption, religion, culture, conflict, colonialism, communism, or a mixture of the lot — but certain parts of Central Asia, the Middle East and Africa have repeatedly failed to replicate the economic trajectories seen in parts of East Asia, parts of Europe and all of North America.

Blaming colonialism or the Americans may satisfy the progressive left, but it does not explain why countries with similar histories have produced radically different outcomes. Ironically, the most successful countries are often those entering demographic decline first — with Canada, the UK, the US and Australia notable exceptions, propped up by immigration.

If an economy cannot design, assemble or export complex manufactured goods, it is unlikely to generate the incomes required to buy large volumes of Australian grain at world prices. Governments may import grain to prevent unrest — and often do — but that is not the same as building a deep, growing consumer market. Africa is not about to replace China or the Middle East as Australia’s next great demand engine.

Meanwhile, the regions experiencing the fastest population decline also happen to be major grain producers. When populations fall, grain output does not politely contract. Surplus looks for a home.

China, Russia and Eastern Europe illustrate the problem. China peaked at about 1.43 billion people in 2022. By 2050 it is projected to fall to around 1.31 billion, and by the 2070s closer to 1.0–1.1 billion. Halving the population does not create scarcity — it creates surplus.

Russia tells a similar story. Despite a shrinking and ageing population — accelerated by war — it is now the world’s largest wheat exporter, with yield headroom still available. Fewer people at home means more pressure to sell grain abroad.

Eastern Europe is declining faster still. Ukraine, Romania, Bulgaria, Hungary and the Baltics are all expected to lose 10–30 per cent of their populations by 2050, even as farm consolidation and infrastructure upgrades lift exportable surpluses.

What matters for grain markets is not just fewer people, but fewer new consumers. Domestic demand weakens while exportable surplus grows. Global markets become more crowded.

For Australia, the implication is uncomfortable but clear. Our competitors are not running out of grain — they are running out of customers. Over the next 50 years, that demographic squeeze is likely to drive more aggressive export behaviour from some of the world’s lowest-cost producers, placing persistent downward pressure on prices.

This matters because farming is a multi-generation investment. Land values assume expanding markets. But if demand growth flattens while supply keeps rising, today’s $300-a-tonne wheat may be the new normal — before becoming $200 later this century.

Some argue an ageing world will be a richer one. Perhaps. But older societies consume differently: fewer bulk calories, more services. Having travelled through Italy and Japan, past empty villages and pensioners sitting quietly in the sun, it is hard to see them rescuing global pasta and rice markets.

Others point to biofuels. Yet global biofuel production has absorbed only a fraction of recent grain growth. Physics, food maths and fiscal reality have a habit of asserting themselves.

The uncomfortable truth is this: unless rich countries start eating a lot more, Africa suddenly wakes up and industrialises at scale, or governments stop distorting markets, global grain production is likely to continue outpacing demand. Which does not bode well for buying expensive farm land that takes decades to pay off.

Before you panic and put the farm on the market, next week I’ll explain where the upside might still be.