Agriculture measured in barrels not bushels.

With the recent run up in oil it is particularly timely to look at the impact of higher oil prices on agriculture.  Long term our current structure of industrial large scale agriculture is not sustainable to keep prices low on commodity crops.  Since WWII production has been increasing per acre quite dramatically.  Pesticides, cheap synthetic fertilizers and a low cost transportation system boosted yields at the same time crop prices moderated even as populations globally soared. 

(ratio of corn out/energy in):

Ratio in 1945 = 3.5
Ratio in 1983 = 2.5

Between 1910 and 1983, corn yields in the US increased by 346% (on a per area basis), which the energy inputs increased by 810%, also on a per area basis!
That is, we are putting more and more fossil fuel energy into production for a given level of output! Viewed slightly differently, we're not getting as much more corn out as we are putting extra energy in; the efficiency ratio is worsening over time!

As you can see the large gains in agricultural yields has been on the back of an expanding oil supply and better technology.  While I am not in the camp that we are running out of oil, we are running out of "cheap" oil namely light sweet crude which is easier and cheaper to refine than heavier varieties.  Also many of the land based oil fields are maturing making oil more costly to extract in new areas such as off shore.

Wikipedia:

Switching to natural gas could help blunt the impact of an oil price spike.  New natural gas fields are being found and new technology has greatly increased recovery rates.  Natural gas is cleaner than oil but we are still looking at supply constraints to keep up with the current trajectory of food production needed for population growth.  Natural gas is used extensively in ammonia fertilizer production.Ammonia production depends on plentiful supplies of natural gas, a finite resource, to provide the hydrogen. Due to ammonia's critical role in intensive agriculture and other processes, sustainable production is desirable. This is possible by using renewable energy to generate hydrogen by electrolysis of water. This would be straightforward in a hydrogen economy by diverting some hydrogen production from fuel to feedstock use. For example, in 2002, Iceland produced 2,000 tons of hydrogen gas by electrolysis, using excess electricity production from its hydroelectric plants, primarily for the production of ammonia for fertilizer.^[3] The Vemork hydroelectric plant in Norway used its surplus electricity output to generate renewable ammonia from 1911 to 1971.^[4] In practice, natural gas will remain the major source of hydrogen for ammonia production as long as it is cheapest.

As you can see keeping ammonia inexpensive and plentiful will be difficult.  If we look to electrolysis for hydrogen production we need to produce more clean electricity.   Cost of new energy for electricity will become more expensive as fossil fuel prices continue to rise.  My feeling is that until alternative energy picks up the slack for higher oil prices, natural gas will step in as an acceptable alternative.  Increased natural gas demand will keep fertilizer prices  increasing. 

What are the alternatives.  Swing the pendulum back towards more small farms, less monoculture and more local production.  It may cost more to grow a tomato in the north than in Mexico but the increasing price of transportation will keep smaller local farms economically viable.  Much more study must be done to improve a poly-culture approach to agriculture.  What crops grow best together?  What can be used on the farm to provide its own fertilizer? 

I am very optimistic on agriculture and farming in the long term.  It will be a struggle to deal with higher fossil fuel cost but eventually we will be more sustainable and less dependent on fossil fuels.