[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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