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Africa, Australia, China, droughts, Export Bans, Exports, famines, Fires, Floods, Food, Imports, Niger, wheat
The world is closer to a major famine today than it has been in decades. In the current era, there have been smaller cases of famine in the world such as Niger in ‘05 and again in 2010. The western African region is exposed to drought-based famines on a fairly regular basis.
The changing weather patterns from El Nino to La Nina in the Pacific, however, have been the primary driver for this round as rain patterns change due to a cooling or heating of the mid Pacific.
The rains occurring in normally dry Australia and droughts in locations like China were, in the past, linked to a La Nina phase. We have moved from a El Nino 2010 into a La Nina 2011. The current La Nina is a deep one with no sign of it ready to end yet.
China has documented history of over 1,800 famines (nearly 1 per year) over the past 2000 years. The four famines of 1810, 1811, 1846 & 1849 are reported to have killed no fewer than 45 million people in China over a 39-year period.
The largest famine in modern times was the Chinese famine of 1958 – 1961, during the “Great Leap Forward” period in China. The death total is estimated to have been between 36 to 45 million people with an estimated additional 30 million canceled or delayed births.
The use of modern technology and fertilizers, along with growing scales of economy has helped to lower the risk of a global famine. The world has not faced a real significant famine event in decades.
This brings us to today. The fires of last summer in Russian wheat fields significantly lowered the total harvest for the Russian market. Russia, a net exporter of wheat has found itself needing to import grain for next year’s planting season. Today, Russia has an export ban in place for most grains.
The rains of November and December have flooded large parts of Australia, and those who were able to harvest their wheat, watched it rot in silos during the floods.
The drought in China’s Northern Province is currently the worst it has been in the last century. Beijing is at 88 days and counting since rain. The change in weather pattern, to a wet one is not expected soon.
Experts say that if the drought continues over coming weeks with no effective measures to combat it, the winter wheat crop, which accounts for more than 90 percent of the country’s wheat harvest, could be hurt significantly.
GuoTiancai, deputy chief of the agriculture ministry’s wheat experts group, said the dry weather had not hurt the winter crop for now, as earlier irrigation was providing enough moisture.
“But as the temperature warms up in spring and wheat grows faster, any measures which are not in place during the period could cause big losses to the final yield … immeasurable losses.”
In Shandong, there are locations that have not experienced a drop of rain in the last four months. The district is 86% below average since October. This drought has caused the local governments to use fire trucks to deliver water to 240,000 people and over 100,000 livestock.
The shift in weather patterns has sent freezing rain and snow to the south, normally the warmer areas of the nation.
“It is of great significance for the people’s basic lives and the social and economic development to combat the current drought and ensure agricultural production,” Wen said.
Beijing Water Authority states that Beijing has been in a drought for the last 12 years. The estimated loss of rainfall would add up to about 20 billion cubic meters (or 200 billion cubic feet) of water.
Sea ice off China’s east coast is starting to hamper shipping, as smaller boats and ships are kept in port, and larger ships wait off shore for a break in the ice. The drought on shore having impacted 17% of the winter wheat crop already. 90% of the nations wheat supply is grown in the winter, making this springs rains extremely important.
The planet has been increasing its population exponentially, while the area under cultivation has been stable to dropping over the longer term as productive increases allowed a greater concentration of food production by a smaller and smaller number of workers. This process has seen productive land turned into housing tracks in the California food basket.
The British Government’s Chief Scientific Adviser John Beddington believes the system is failing now. He is also Professor of Applied Population Biology at Imperial College, London.
‘Firstly, it is unsustainable, with resources being used faster than they can be naturally replenished,’ he said.
‘Secondly a billion people are going hungry with another billion people suffering from “hidden hunger”, whilst a billion people are over-consuming.’
The USDA releases a World Agricultural Supply and Demand Estimate. The latest edition was released January 12th. It is a great resource for following the world food storage estimates. After the fire in Russia last summer, the rains in Australia, and now the drought in China, wheat buyers have ran out of sources of wheat in volume.
WHEAT: U.S. wheat ending stocks for 2010/11 are projected 40 million bushels lower this month as a reduction in expected feed and residual use is more than offset by higher projected exports. Feed and residual use is projected 10 million bushels lower as December 1 stocks, reported in the January Grain Stocks, indicate lower-than-expected disappearance during September-November. Exports are projected 50 million bushels higher reflecting the pace of sales and shipments to date and reduced competition with lower foreign supplies of milling quality wheat. At the projected 1.3 billion bushels, exports would be the highest since 1992/93…
The worldwide supply of wheat is estimated to climb in 2011, as nations around the world focus on rebuilding their reserves. The full impact of the floods in Australia are not known yet, as most of their crop was out of the field, but was in silo’s at this stage.
The last estimate lowered Australian production due to the flooding.
…More than offsetting these increases are reductions for Kazakhstan and Australia. Kazakhstan production is lowered 1.3 million tons based on the latest government reports. Australia production is lowered 0.5 million tons as heavy late-December rains and flooding further increased crop losses in Queensland.
The global rain patterns are expected to stay in a La Nina phase for a few more months exacerbating the water drought in China. If the rains do not return in the spring, China will have to find new sources of wheat to purchase for its population by this fall.
The world has enough food for its population currently, but after the fires in Russia last summer, the flooding in Australia this winter, and now the on going drought in China is starting to drain the worlds reserves. If the crops of 2011 are sub par or worse damaged due to weather related conditions, the planet could be looking at a real famine issue in 2012.
Links of interest to the story
- Zerohedge On the ground
- Reuters China Province faces worst drought in a Century
- BBC Crop Warning over China Drought
- Peoples Daily Premier Wen urges efforts to fight drought, ensure agricultural production
- Wikipedia Famine&Great Leap Forward
- Daily Mail Food Prices Rocket by 50% as global hunger epidemic causes riots and famines
- Beijing Review Beijing Dries Up
- NTDTV Drought and Sea Ice Threaten Eastern China
- USDA World Agricultural Outlook Board&Weekly Supply and Demand Estimates
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with the SOTU tomorrow a thought on politics of food. looks like ag subsidies are gonna be a place where republicans and democrats can agree, if only cause its something repubs are willing to give a lil on. if US ag subsidies are cut, we’ll get less production in this country, and seeing how we’re the marginal producer of any ag product in the world, i reckon cutting US subsidies, should it happen, would lay the groundwork for sustained higher prices globally. a weird thought, but ag subsidies are probably a decent use of our money considering that outcome.
Ahhh Steak my friend, the question is this. If world food prices are currently at all time highs, and they are, why in the world would farmers need subsidies?
Jack
Farmers and the food industry can’t pass costs increases on to customers, at least not all of them, because the latter are financially strapped.
It is difficult to know the real situation; there are huge stockpiles in some places, like Europe, which has been buying crop surpluses for decades.
The question is: can these stockpiles be used to feed the population and how?
As usual, it is the poorest (countries and people) who will be affected the first and will suffer the most.
Being in Thailand, I am surprised by the fact that the price of rice has not been affected by the recent disasters in many producing countries, such as the Philippines or Sri Lanka. But here also, there are huge stockpiles controlled by governments who can thus keep prices low, at least for the time being.
Brunolem,
I am all for the US Gov to stockpile supplies, I believe that is prudent. I have no problem with government purchases of raw supplies at fixed prices.
I am against paying farmers to fallow land. The land being paid for is the most marginable and least productive anyway. It is a pure waste of money. Farmers can decide to use that land or not, but there is no reason to pay them to park land they would not farm anyway.
Best,
Jack
“As for food prices, that `record high’ is nothing of the kind – if you take inflation into account. Food prices are up in real terms since 2000, but they are still about 30% below the level in 1980 and 85% down since 1900. In terms of wages, the decline has been even steeper.”
For full article please see http://www.rationaloptimist.com/blog/feeding-nine-billion
This is somewhat unrelated, but it follows a similar theme.
I know Brazil right now has a case against the United States for their cotton subsidies. Basically I believe they have won the same case 3 times now being that the United States is illegally subsidizing it’s cotton farmers with subsidies.
It’s my understanding that the United States is doing this with not only cotton, which is what makes it a big deal for farming. I know that United States due to a lot of these subsidies are largest exporters of a lot of crops.
My question is because of these events is that….
Do you think that these recent WTO rulings could lead to farming on more arable land than that of United States? I know that Latin America and Africa make up over half of arable good farm land, but are relatively underutilized considering their potential.
Jake,
The stability of the heartland of the US, is one of the reasons it is so productive. The US, gang warfare aside, does not have large bands of roving looters, nor a history of it.
A commercial farming operation needs access to massive doses of capital. A farmer running a real operation may need to leverage his property 2-3 times during a full year. Seed purchases, new combines, any bad crops. These capital draw downs are part of the business model, offset by huge cash inflows.
That is the reason the locations you have mentioned have not developed into incorporated commercial projects. You need healthy dirt, massive doses of capital, and real long term stability. We are taking multiple generations of stability.
Look at what happened to Rhodesia/Zimbabwe over the last few decades. It was the breadbasket of Africa. The following quote is from a former Zimbabwe commercial farmer who lost his property, and started up a construction business that was later hired by the same government to attack illegal housing in Zimbabwe.
This is an interesting overview of the global food situation from the perspective of current weather patterns. Given that the food systems which feed the global population are, far and away, rooted in oil-based agricultural techniques, how might the confirmed global reduction in oil production ( http://www.theoildrum.com/node/6912, http://www.jfcom.mil/newslink/storyarchive/2010/JOE_2010_o.pdf, http://www.cnas.org/files/documents/publications/CNAS_Fueling%20the%20Future%20Force_NaglParthemore.pdf) affect the future of the world’s food supplies?
Deni,
The world has hit a peak in Light Sweet Crude, but it has not reached a peak in BTU’s yet. Stranded Natural Gas via LNG being priced at spot prices is now increasing the total BTU’s produced. When you convert them on a BTU basis of 6/1, the US total BTU count is climbing again.
The US gross Natural Gas production is up 7.7% Year over Year. This has made the US the single largest producer of NG in the world. The shale wells are coming online at staggering flow rates. The multi frac process has unlocked 1-2 centuries of current production rates.
The developed world is about to be flooded with a cheap long life hydrocarbon source of BTU’s. Europe has large shale basins that will be unlocked by Exxon and equivalent megacaps. They are quietly buying up reserve rights in major shale basins around the world.
Russia is about to loose its strangle hold on European NG demand. 5 -7 years from now, the energy profile of old Europe will have changed drastically. As the world’s supply of light sweet winds down, the world will transition to NG for a replacement source.
Green energy sources like solar needs a NG Combined Cycle type of electrical power plant to be paired with it, allowing a constant base load available between the two sources. NG is the future, it has the reserves and technology to replace light sweet.
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