[Scpg] Sharp fall in 2009 global food production
LBUZZELL at aol.com
LBUZZELL at aol.com
Mon Aug 31 07:10:36 PDT 2009
The paragraphs below on Australia and California are especially relevant
for those interested in permaculture, food security and the global climate
change "debate."
Linda
_http://www.marketoracle.co.uk/Article8768.html_
(http://www.marketoracle.co.uk/Article8768.html)
Catastrophic Fall in 2009 Global Food Production
_Commodities_ (http://www.marketoracle.co.uk/Topic3.html) / _Food Crisis_
(http://www.marketoracle.co.uk/News-catid-168.html) Feb 09, 2009 - 07:11 AM
By: _Eric_deCarbonnel_
(http://www.marketoracle.co.uk/UserInfo-Eric_deCarbonnel.html)
After reading about the droughts in two major agricultural countries,
China and Argentina, I decided to research the extent other food producing
nations were also experiencing droughts. This project ended up taking a lot
longer than I thought. 2009 looks to be a humanitarian disaster around much of
the world
To understand the depth of the food Catastrophe that faces the world this
year, consider the graphic below depicting countries by USD value of their
agricultural output, as of 2006.
Now, consider the same graphic with the countries experiencing droughts
highlighted.
The countries that make up two thirds of the world's agricultural output
are experiencing drought conditions. Whether you watch a _video of the
drought _
(http://www.marketskeptics.com/2009/02/videos-of-droughts-around-world.html) in China, Australia, Africa, South America, or the US , the scene
will be the same: misery, ruined crop, and dying cattle.
China
The drought in Northern China, the worst in 50 years, is worsening, and
summer harvest is now threatened. The area of affected crops has expanded to
161 million mu (was 141 million last week), and 4.37 million people and 2.1
million livestock are facing drinking water shortage. The scarcity of rain
in some parts of the north and central provinces is the worst in recorded
history.
The drought which started in November threatens over half the wheat crop
in eight provinces - Hebei, Shanxi, Anhui, Jiangsu, Henan, Shandong, Shaanxi
and Gansu.
Henan
China's largest crop producing province, Henan, has issued the
highest-level drought warning. Henan has received an average rainfall of 10.5
millimeters since November 2008, almost 80 percent less than in the same period in
the previous years. The Henan drought, which began in November, is the most
severe since 1951.
Anhui
Anhui Province issued a red drought alert, with more than 60 percent of
the crops north of the Huaihe River plagued by a major drought.
Shanxi
Shanxi Province was put on orange drought alert on Jan. 21, with one
million people and 160,000 heads of livestock are facing water shortage.
Jiangsu
Jiangsu province has already lost over one fifth of the wheat crops
affected by drought. Local agricultural departments are diverting water from
nearby rivers in an emergency effort to save the rest.
Hebei
Over 100 million cubic meters of water has been channeled in from outside
the province to fight Hebei's drought.
Shaanxi
1.34 million acres of crops across the bone-dry Shanxi province are
affected by the worsening drought.
Shandong
Since last November, Shandong province has experienced 73 percent less
rain than the same period in previous years, with little rainfall forecast for
the future.
Relief efforts are under way. The Chinese government has allocated 86.7
billion yuan (about $12.69 billion) to drought-hit areas. Authorities have
also resorted to cloud-seeding, and some areas received a sprinkling of rain
after clouds were hit with 2,392 rockets and 409 cannon shells loaded with
chemicals. However, there is a limit to what can be done in the face of
such widespread water shortage.
As I have previously written, _China is facing hyperinflation _
(http://www.marketskeptics.com/2009/01/hyperinflation-will-begin-in-china-and.html) ,
and this record drought will make things worse. China produces 18% of the
world's grain each year.
Australia
Australia has been experiencing an unrelenting drought since 2004, and 41
percent of Australia's agriculture continues to suffer from the worst
drought in 117 years of record-keeping. The drought has been so severe that
rivers stopped flowing, lakes turned toxic, and farmers abandoned their land in
frustration:
A) The Murray River stopped flowing at its terminal point, and its mouth
has closed up.
B) Australia's lower lakes are evaporating, and they are now a meter (3.2
feet) below sea level. If these lakes evaporate any further, the soil and
the mud system below the water is going to be exposed to the air. The mud
will then acidify, releasing sulfuric acid and a whole range of heavy metals.
After this occurs, those lower lake systems will essentially become a
toxic swamp which will never be able to be recovered. The Australian
government's only options to prevent this are to allow salt water in, creating a dead
sea, or to pray for rain.
For some reason, the debate over climate change is essentially over in
Australia.
The United States
California
_California is facing its worst drought in recorded history _
(http://www.marketskeptics.com/2009/02/major-droughts-and-dropping-food.html) . The
drought is predicted to be the most severe in modern times, worse than those in
1977 and 1991. Thousands of acres of row crops already have been fallowed,
with more to follow. The snowpack in the Northern Sierra, home to some of
the state's most important reservoirs, proved to be just 49 percent of
average. Water agencies throughout the state are scrambling to adopt
conservation mandates.
Texas
_The Texan drought is reaching historic proportion _
(http://www.marketskeptics.com/2009/02/texas-drought-conditions-becoming.html) . Dry conditions
near Austin and San Antonio have been exceeded only once before—the drought
of 1917-18. 88 percent of Texas is experiencing abnormally dry conditions,
and 18 percent of the state is in either extreme or exceptional drought
conditions. The drought areas have been expanding almost every month.
Conditions in Texas are so bad cattle are keeling over in parched pastures and
dying. Lack of rainfall has left pastures barren, and cattle producers have
resorted to feeding animals hay. Irreversible damage has been done to winter
wheat crops in Texas. Both short and long-term forecasts don't call for much
rain at all, which means the Texas drought is set to get worse.
Augusta Region (Georgia, South Carolina, North Carolina)
The Augusta region has been suffering from a worsening two year drought.
Augusta's rainfall deficit is already approaching 2 inches so far in 2009,
with January being the driest since 1989.
Florida
Florida has been hard hit by winter drought, damaging crops, and half of
state is in some level of a drought.
La Niña likely to make matters worse
Enough water a couple of degrees cooler than normal has accumulated in the
eastern part of the Pacific to create a La Niña, a weather pattern
expected to linger until at least the spring. La Niña generally means dry weather
for Southern states, which is exactly what the US doesn't need right now.
South America
Argentina
_The worst drought_
(http://www.marketskeptics.com/2009/02/major-droughts-and-dropping-food.html) in half a century has turned Argentina's
once-fertile soil to dust and pushed the country into a state of emergency. Cow
carcasses litter the prairie fields, and sun-scorched soy plants wither under
the South American summer sun. Argentina's food production is set to go down
a minimum of 50 percent, maybe more. The country's wheat yield for 2009
will be 8.7 million metric tons, down from 16.3 million in 2008. Concern with
domestic shortages (domestic wheat consumption being approximately 6.7
million metric ton), Argentina has granted _no new export applications_
(http://www.marketskeptics.com/2009/02/texas-and-florida-hit-hard-by-winter.html)
since mid January .
Brazil
Brazil has cut its outlook for the crops and will do so again after
assessing damage to plants from desiccation in drought-stricken regions. Brazil
is the world's second-biggest exporter of soybeans and third-largest for
corn.
Brazil's numbers for corn harvesting:
Harvested in 2008: 58.7 million tons
January 8 forecast: 52.3 million tons
February 6 forecast: 50.3 metric tons (optimistic)
Harvested in 2009: ???
Paraguay
Severe drought affecting Paraguay's economy has pushed the government to
declare agricultural emergency. Crops that have direct impact on cattle food
are ruined, and the soy plantations have been almost totally lost in some
areas.
Uruguay
Uruguay declared an "agriculture emergency" last month, due to the worst
drought in decades which is threatening crops, livestock and the provision
of fresh produce.
The a worsening drought is pushing up food and beverage costs causing
Uruguay's consumer prices to rise at the fastest annual pace in more than four
years in January.
Bolivia
There hasn't been a drop of rain in Bolivia in nearly a year. Cattle
dying, crops ruined, etc…
Chile
The severe drought affecting Chile has caused an agricultural emergency in
50 rural districts, and large sectors of the economy are concerned about
possible electricity rationing in March. The countries woes stem from the
"La Niña" climate phenomenon which has over half of Chile dangling by a
thread: persistently cold water in the Pacific ocean along with high atmospheric
pressure are preventing rain-bearing fronts from entering central and
southern areas of the country. As a result, the water levels at hydroelectric
dams and other reservoirs are at all-time lows.
Horn of Africa
_Africa faces food shortages and famine _
(http://www.marketskeptics.com/2009/01/food-shortages-and-famine-in-africa.html) . Food production across
the Horn of Africa has suffered because of the lack of rainfall. Also, half
the agricultural soil has lost nutrients necessary to grow plant, and the
declining soil fertility across Africa is exacerbating drought related crop
losses.
Kenya
Kenya is the worst hit nation in the region, having been without rainfall
for 18 months. Kenya needs to import food to bridge a shortfall and keep 10
million of its people from starvation. Kenya's drought suffering neighbors
will be of little help.
Tanzania
A poor harvest due to drought has prompted Tanzania to stop issuing food
export permits. Tanzania has also intensified security at the border posts
to monitor and prevent the export of food. There are 240,000 people in need
of immediate relief food in Tanzania.
Burundi
Crops in the north of Burundi have withered, leaving the tiny East African
country facing a severe food shortage
Uganda
Severe drought in northeastern Uganda's Karamoja region has the left the
country on the brink of a humanitarian catastrophe. The dry conditions and
acute food shortages, which have left Karamoja near starvation, are unlikely
to improve before October when the next harvest is due.
South Africa
South Africa faces a potential crop shortage after wheat farmers in the
eastern part of the Free State grain belt said they were likely to produce
their lowest crop in 30 years this year. South Africans are "extremely angry"
that food prices continue to rise.
Other African nations suffering from drought in 2009 are: Malawi, Zambia,
Swaziland, Somalia, Zimbabwe, Mozambique, Tunisia, Angola, and Ethiopia.
Middle East and Central Asia
_The Middle East and Central Asia _
(http://www.marketskeptics.com/2009/02/middle-east-and-central-asia-suffering.html) are suffering from the worst
droughts in recent history , and food grain production has dropped to some
of the lowest levels in decades. Total wheat production in the wider
drought-affected region is currently estimated to have declined by at least 22
percent in 2009. Owing to the drought's severity and region-wide scope,
irrigation supplies from reservoirs, rivers, and groundwater have been critically
reduced. Major reservoirs in Turkey, Iran, Iraq, and Syria are all at low
levels requiring restrictions on usage. Given the severity of crop losses in
the region, a major shortage of planting seed for the 2010 crop is
expected.
Iraq
In Iraq during the winter grain growing period, there was essentially no
measurable rainfall in many regions, and large swaths of rain-fed fields
across northern Iraq simply went unplanted. These primarily rain-fed regions
in northern Iraq are described as an agricultural disaster area this year,
with wheat production falling 80-98 percent from normal levels. The USDA
estimates total wheat production in Iraq in 2009 at 1.3 million tons, down 45
percent from last year.
Syria
Syria is experienced its worst drought in the past 18 years, and the USDA
estimates total wheat production in Syria in 2009 at 2.0 million tons, down
50 percent from last year. Last summer, the taps ran dry in many
neighborhoods of Damascus and residents of the capital city were forced to buy water
on the black market. The severe lack of rain this winter has exacerbated
the problem.
Afghanistan
Lack of rainfall has led Afghanistan to the worst drought conditions in
the past 10 years. The USDA estimates 2008/09 wheat production in Afghanistan
at 1.5 million tons, down 2.3 million or 60 percent from last year.
Afghanistan normally produces 3.5-4.0 million tons of wheat annually.
Jordan
Jordan's persistent drought has grown worse, with almost no rain falling
on the kingdom this year. The Jordanian government has stopped pumping water
to farms to preserve the water for drinking purposes.
Other Middle Eastern and Central Asian nations suffering from drought in
2009 are: The Palestinian Territories, Lebanon, Israel, Bangladesh,
Myanmar, India, Tajikistan, Turkmenistan, Thailand, Nepal, Pakistan, Turkey,
Kyrgyzstan, Uzbekistan, Cyprus, and Iran.
Lack of credit will worsen food shortage
A lack of credit for farmers curbed their ability to buy seeds and
fertilizers in 2008/2009 and will limit production around the world. The effects
of droughts worldwide will also be amplified by the smaller amount of seeds
and fertilizers used to grow crops.
Low commodity prices will worsen food shortage
The low prices at the end of 2008 discouraged the planting of new crops in
2009. In Kansas for example, farmers seeded nine million acres, the
smallest planting for half a century. Wheat plantings this year are down about 4
million acres across the US and about 1.1 million acres in Canada. So even
discounting drought related losses, the US, Canada, and other food
producing nations are facing lower agricultural output in 2009.
Europe will not make up for the food shortfall
Europe, the only big agricultural region relatively unaffected by drought,
is set for a big drop in food production. Due to the combination of a late
plantings, poorer soil conditions, reduced inputs, and light rainfall,
Europe's agricultural output is likely to fall by 10 to 15 percent.
Stocks of foodstuff are dangerously low
Low stocks of foodstuff make the world's falling agriculture output
particularly worrisome. The combined averaged of the ending stock levels of the
major trading countries of Australia, Canada, United States, and the
European Union have been declining steadily in the last few years:
2002-2005: 47.4 million tons
2007: 37.6 million tons
2008: 27.4 million tons
These inventory numbers are dangerously low, especially considering the
horrifying possibility that _China's 60 million tons of grain reserves
doesn't actually exists _
(http://www.marketskeptics.com/2009/02/does-chinas-60-million-tons-of-wheat.html) .
Global food Catastrophe
The world is heading for a drop in agricultural production of 20 to 40
percent, depending on the severity and length of the current global droughts.
Food producing nations are imposing food export restrictions. Food prices
will soar, and, in poor countries with food deficits, millions will starve.
The deflation debate should end now
The droughts plaguing the world's biggest agricultural regions should end
the debate about deflation in 2009. The demand for agricultural commodities
is relatively immune to developments in the business cycles (at least
compared to that of energy or base metals), and, with a 20 to 40 percent
decline in world production, _already rising food prices_
(http://www.marketskeptics.com/2009/01/world-food-prices-are-rising-fast.html) are headed
significantly higher.
In fact, agricultural commodities NEED to head higher and soon, to prevent
even greater food shortages and famine. The price of wheat, corn,
soybeans, etc must rise to a level which encourages the planting of every available
acre with the best possible fertilizers. Otherwise, if food prices stay at
their current levels, production will continue to fall, sentencing
millions more to starvation.
Competitive currency appreciation
Some observers are anticipating “competitive currency devaluations” in
addition to deflation for 2009 (nations devalue their currencies to help
their export sector). The coming global food shortage makes this highly
unlikely. Depreciating their currency in the current environment will produce the
unwanted consequence of boosting exports—of food. Even with export
restrictions like those in China, currency depreciation would cause the outflow of
significant quantities of grain via the black market.
Instead of “competitive currency devaluations”, spiking food prices will
likely cause competitive currency appreciation in 2009. _Foreign exchange
reserves exist for just this type of emergency _
(http://www.marketskeptics.com/2009/02/foreign-exchange-reserves-explained.html) . Central banks around
the world will lower domestic food prices by either directly selling off
their reserves to appreciate their currencies or by using them to purchase
grain on the world market.
Appreciating a currency is the fastest way to control food inflation. A
more valuable currency allows a nation to monopolize more global resources
(ie: the overvalued dollar allows the US to consume 25% of the world's oil
despite having only 4% of the world's population). If China were to selloff
its US reserves, its enormous population would start sucking up the world's
food supply like the US has been doing with oil.
On the flip side, when a nation appreciates its currency and starts
consuming more of the world's resources, it leaves less for everyone else. So
when china appreciates the yuan, food shortages worldwide will increase and
prices everywhere else will jump upwards. As there is nothing that breeds
social unrest like soaring food prices, nations around the world, from Russia,
to the EU, to Saudi Arabia, to India, will sell off their foreign reserves
to appreciate their currencies and reduce the cost of food imports. In
response to this, China will sell even more of its reserves and so on. That is
competitive currency appreciation.
When faced with competitive currency appreciation, you do NOT want to be
the world's reserve currency. The dollar is likely to do very poorly as
central banks liquidate trillions in US holdings to buy food and appreciate
their currencies.
By Eric deCarbonnel
_http://www.marketskeptics.com_ (http://www.marketskeptics.com/)
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Thanks to George Vye for passing this along to us.
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