Chase for raw materials

April 22, 2022. – The famous quote by the American author Mark Twain says “Buy land, they’re not making it anymore.”. Every time I hear it, which is in a few years’ intervals, I think about how the quote fits the world today. In 2022, it fits well.

The land is the platform to build new homes, roads, cinemas, factories, and hospitals. The land is also the place where you grow rice and vegetables, sheep and cows. And, the land is the home of trees. When we jump three steps forward, the lack of land is the reason why the log yard is empty and plywood deliveries are late.

The business forecast for land is easy to make in the footsteps of Mark Twain. There are a few reasons behind the future demand. The growing population is fairly permanent while the other reasons are more occasional in nature.

The latest research says that the world’s population grows until the 2060s. By then, many of us are nutrition for new trees which also means that we will see more and more world citizens for the rest of our lives.

In times of high economic growth, there is a lack of almost all raw materials and buying land sounds like great advice. In a recession, Twain’s quote doesn’t resonate so well, because enough wood, minerals, and cheap oil are available. That gives a feeling that the resources are again unlimited, although the shortage times were not that long ago.

The growing population needs more natural resources in long term. Economic growth needs more resources in short term. Market shocks, like natural disasters or the Ukrainian war, upset the raw material balance instantly. 

In case of a sudden shock, the established supply chains get disturbed and blocked. Some part of the supply is out of the game and the demand has to be met by a smaller number of suppliers and areas. The one who has “land” in the free world is the king. Today, the land means birch logs, wheat, oil and gas. The raw material chase is on.