Link original: http://www.marketskeptics.com/2009/02/2009-global-food-catastrophe.

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*****Catastrophic Fall in 2009 Global Food Production*****

by Eric deCarbonnel 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. 200 looks to be a humanitarian disaster around much of the world To understand the depth of the food Catastrophe that faces the world this !ear, consider the graphic below depicting countries b! "#$ %alue of their agricultural output, as of 200&.

'ow, 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. )hether !ou watch a %ideo of the drought in China, Australia, Africa, #outh America, or the "#, the scene will be the same* miser!, ruined crop, and d!ing cattle. China The drought in 'orthern China, the worst in +0 !ears, is worsening, and summer har%est is now threatened. The area of affected crops has expanded to ,&, million mu -was ,., million last week/, and ..01 million people and 2., million li%estock are facing drinking water shortage. The scarcit! of rain in some parts of the north and central pro%inces is the worst in recorded histor!. The drought which started in 'o%ember threatens o%er half the wheat crop in eight pro%inces 2 3ebei, #hanxi, Anhui, 4iangsu, 3enan, #handong, #haanxi and 5ansu. Henan China6s largest crop producing pro%ince, 3enan, has issued the highest2le%el drought warning. 3enan has recei%ed an a%erage rainfall of ,0.+ millimeters since 'o%ember 2007, almost 70 percent less than in the same period in the pre%ious !ears. The 3enan drought, which began in 'o%ember, is the most se%ere since , +,. Anhui Anhui 8ro%ince issued a red drought alert, with more than &0 percent of the crops north of the 3uaihe 9i%er plagued b! a major drought. Shanxi #hanxi 8ro%ince was put on orange drought alert on 4an. 2,, with one million people and ,&0,000 heads of li%estock are facing water shortage. Jiangsu 4iangsu pro%ince has alread! lost o%er one fifth of the wheat crops affected b! 2

drought. :ocal agricultural departments are di%erting water from nearb! ri%ers in an emergenc! effort to sa%e the rest. Hebei ;%er ,00 million cubic meters of water has been channeled in from outside the pro%ince to fight 3ebei(s drought. Shaanxi ,.0. million acres of crops across the bone2dr! #hanxi pro%ince are affected b! the worsening drought. Shandong #ince last 'o%ember, #handong pro%ince has experienced 10 percent less rain than the same period in pre%ious !ears, with little rainfall forecast for the future. 9elief efforts are under wa!. The Chinese go%ernment has allocated 7&.1 billion !uan -about <,2.& billion/ to drought2hit areas. Authorities ha%e also resorted to cloud2seeding, and some areas recei%ed a sprinkling of rain after clouds were hit with 2,0 2 rockets and .0 cannon shells loaded with chemicals. 3owe%er, there is a limit to what can be done in the face of such widespread water shortage. As I ha%e pre%iousl! written, China is facing h!perinflation, and this record drought will make things worse. China produces ,7= of the world6s grain each !ear. Australia Australia has been experiencing an unrelenting drought since 200., and ., percent of Australia6s agriculture continues to suffer from the worst drought in ,,1 !ears of record2keeping. The drought has been so se%ere that ri%ers stopped flowing, lakes turned toxic, and farmers abandoned their land in frustration* A/ The >urra! 9i%er stopped flowing at its terminal point, and its mouth has closed up. ?/ Australia(s lower lakes are e%aporating, and the! are now a meter -0.2 feet/ below sea le%el. If these lakes e%aporate an! further, the soil and the mud s!stem below the water is going to be exposed to the air. The mud will then acidif!, releasing sulfuric acid and a whole range of hea%! metals. After this occurs, those lower lake s!stems will essentiall! become a toxic swamp which will ne%er be able to be reco%ered. The Australian go%ernment6s onl! options to pre%ent this are to allow salt water in, creating a dead sea, or to pra! for rain. @or some reason, the debate o%er climate change is essentiall! o%er in Australia. The United States California

California is facing its worst drought in recorded histor!. The drought is predicted to be the most se%ere in modern times, worse than those in , 11 and , ,. Thousands of acres of row crops alread! ha%e been fallowed, with more to follow. The snowpack in the 'orthern #ierra, home to some of the state6s most important reser%oirs, pro%ed to be just . percent of a%erage. )ater agencies throughout the state are scrambling to adopt conser%ation mandates. Texas The Texan drought is reaching historic proportion. $r! conditions near Austin and #an Antonio ha%e been exceeded onl! once beforeAthe drought of , ,12 ,7. 77 percent of Texas is experiencing abnormall! dr! conditions, and ,7 percent of the state is in either extreme or exceptional drought conditions. The drought areas ha%e been expanding almost e%er! month. Conditions in Texas are so bad cattle are keeling o%er in parched pastures and d!ing. :ack of rainfall has left pastures barren, and cattle producers ha%e resorted to feeding animals ha!. Irre%ersible damage has been done to winter wheat crops in Texas. ?oth short and long2term forecasts don6t call for much rain at all, which means the Texas drought is set to get worse. Augusta Region -5eorgia, #outh Carolina, 'orth Carolina/ The Augusta region has been suffering from a worsening two !ear drought. Augusta(s rainfall deficit is alread! approaching 2 inches so far in 200 , with 4anuar! being the driest since , 7 . Florida @lorida has been hard hit b! winter drought, damaging crops, and half of state is in some le%el of a drought. La Nia likely to ake atters !orse Bnough water a couple of degrees cooler than normal has accumulated in the eastern part of the 8acific to create a :a 'iCa, a weather pattern expected to linger until at least the spring. :a 'iCa generall! means dr! weather for #outhern states, which is exactl! what the "# doesn(t need right now.

South A eri"a

Argentina The worst drought in half a centur! has turned Argentina6s once2fertile soil to dust and pushed the countr! into a state of emergenc!. Cow carcasses litter the prairie fields, and sun2scorched so! plants wither under the #outh American summer sun. Argentina6s food production is set to go down a minimum of +0 percent, ma!be more. The countr!6s wheat !ield for 200 will be 7.1 million metric tons, down from ,&.0 million in 2007. Concern with domestic shortages -domestic wheat consumption being approximatel! &.1 million metric ton/, Argentina has granted no new export applications since mid 4anuar!. #ra$il ?raDil has cut its outlook for the crops and will do so again after assessing damage to plants from desiccation in drought2stricken regions. ?raDil is the world6s second2biggest exporter of so!beans and third2largest for corn. ?raDil6s numbers for corn har%esting* 3ar%ested in 2007* +7.1 million tons 4anuar! 7 forecast* +2.0 million tons @ebruar! & forecast* +0.0 metric tons -optimistic/ 3ar%ested in 200 * EEE %araguay #e%ere drought affecting 8aragua!6s econom! has pushed the go%ernment to declare agricultural emergenc!. Crops that ha%e direct impact on cattle food are ruined, and the so! plantations ha%e been almost totall! lost in some areas. Uruguay "rugua! declared an Fagriculture emergenc!F last month, due to the worst drought in decades which is threatening crops, li%estock and the pro%ision of fresh produce. The a worsening drought is pushing up food and be%erage costs causing "rugua!6s consumer prices to rise at the fastest annual pace in more than four !ears in 4anuar!. #oli&ia There hasn(t been a drop of rain in ?oli%ia in nearl! a !ear. Cattle d!ing, crops ruined, etcG Chile The se%ere drought affecting Chile has caused an agricultural emergenc! in +0 rural districts, and large sectors of the econom! are concerned about possible electricit! rationing in >arch. The countries woes stem from the F:a 'iCaF climate phenomenon which has o%er half of Chile dangling b! a thread* persistentl! cold water in the 8acific ocean along with high atmospheric pressure are pre%enting rain2bearing fronts from entering central and southern areas of the countr!. As a result, the water le%els at h!droelectric dams and other reser%oirs are at all2time lows. Horn of Afri"a

Africa faces food shortages and famine. @ood production across the 3orn of Africa has suffered because of the lack of rainfall. Also, half the agricultural soil has lost nutrients necessar! to grow plant, and the declining soil fertilit! across Africa is exacerbating drought related crop losses. 'enya Hen!a is the worst hit nation in the region, ha%ing been without rainfall for ,7 months. Hen!a needs to import food to bridge a shortfall and keep ,0 million of its people from star%ation. Hen!a(s drought suffering neighbors will be of little help. Tan$ania A poor har%est due to drought has prompted TanDania to stop issuing food export permits. TanDania has also intensified securit! at the border posts to monitor and pre%ent the export of food. There are 2.0,000 people in need of immediate relief food in TanDania. #urundi Crops in the north of ?urundi ha%e withered, lea%ing the tin! Bast African countr! facing a se%ere food shortage Uganda #e%ere drought in northeastern "ganda6s Haramoja region has the left the countr! on the brink of a humanitarian catastrophe. The dr! conditions and acute food shortages, which ha%e left Haramoja near star%ation, are unlikel! to impro%e before ;ctober when the next har%est is due. South Afri"a #outh Africa faces a potential crop shortage after wheat farmers in the eastern part of the @ree #tate grain belt said the! were likel! to produce their lowest crop in 00 !ears this !ear. #outh Africans are Fextremel! angr!F that food prices continue to rise. ;ther African nations suffering from drought in 200 are* (ala!i) *a bia) S!a$iland) So alia) *i bab!e) (o$a bi+ue) Tunisia) Angola) and ,thio-ia. (iddle ,ast and Central Asia The >iddle Bast and Central Asia are suffering from the worst droughts in recent histor!, and food grain production has dropped to some of the lowest le%els in decades. Total wheat production in the wider drought2affected region is currentl! estimated to ha%e declined b! at least 22 percent in 200 . ;wing to the drought6s se%erit! and region2wide scope, irrigation supplies from reser%oirs, ri%ers, and groundwater ha%e been criticall! reduced. >ajor reser%oirs in Turke!, Iran, IraI, and #!ria are all at low le%els reIuiring restrictions on usage. 5i%en the se%erit! of crop losses in the region, a major shortage of planting seed for the 20,0 crop is expected.

/ra+ In IraI during the winter grain growing period, there was essentiall! no measurable rainfall in man! regions, and large swaths of rain2fed fields across northern IraI simpl! went unplanted. These primaril! rain2fed regions in northern IraI are described as an agricultural disaster area this !ear, with wheat production falling 702 7 percent from normal le%els. The "#$A estimates total wheat production in IraI in 200 at ,.0 million tons, down .+ percent from last !ear. Syria #!ria is experienced its worst drought in the past ,7 !ears, and the "#$A estimates total wheat production in #!ria in 200 at 2.0 million tons, down +0 percent from last !ear. :ast summer, the taps ran dr! in man! neighborhoods of $amascus and residents of the capital cit! were forced to bu! water on the black market. The se%ere lack of rain this winter has exacerbated the problem. Afghanistan :ack of rainfall has led Afghanistan to the worst drought conditions in the past ,0 !ears. The "#$A estimates 2007J0 wheat production in Afghanistan at ,.+ million tons, down 2.0 million or &0 percent from last !ear. Afghanistan normall! produces 0.+2..0 million tons of wheat annuall!. Jordan 4ordan6s persistent drought has grown worse, with almost no rain falling on the kingdom this !ear. The 4ordanian go%ernment has stopped pumping water to farms to preser%e the water for drinking purposes. ;ther >iddle Bastern and Central Asian nations suffering from drought in 200 are* The %alestinian Territories) Lebanon) /srael) #angladesh) (yan ar) /ndia) Ta0ikistan) Turk enistan) Thailand) Ne-al) %akistan) Turkey) 'yrgy$stan) U$bekistan) Cy-rus) and /ran. La"k of "redit !ill !orsen food shortage A lack of credit for farmers curbed their abilit! to bu! seeds and fertiliDers in 2007J200 and will limit production around the world. The effects of droughts worldwide will also be amplified b! the smaller amount of seeds and fertiliDers used to grow crops. Lo! "o odity -ri"es !ill !orsen food shortage

The low prices at the end of 2007 discouraged the planting of new crops in 200 . In Hansas for example, farmers seeded nine million acres, the smallest planting for half a centur!. )heat plantings this !ear are down about . million acres across the "# and about ,., million acres in Canada. #o e%en discounting drought related losses, the "#, Canada, and other food producing nations are facing lower agricultural output in 200 . ,uro-e !ill not ake u- for the food shortfall

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Burope, the onl! big agricultural region relati%el! unaffected b! drought, is set for a big drop in food production. $ue to the combination of a late plantings, poorer soil conditions, reduced inputs, and light rainfall, Burope(s agricultural output is likel! to fall b! ,0 to ,+ percent. Sto"ks of foodstuff are dangerously lo! :ow stocks of foodstuff make the world(s falling agriculture output particularl! worrisome. The combined a%eraged of the ending stock le%els of the major trading countries of Australia, Canada, "nited #tates, and the Buropean "nion ha%e been declining steadil! in the last few !ears* 20022200+* .1.. million tons 2001* 01.& million tons 2007* 21.. million tons These in%entor! numbers are dangerousl! low, especiall! considering the horrif!ing possibilit! that China(s &0 million tons of grain reser%es doesn6t actuall! exists.

1lobal food Catastro-he

The world is heading for a drop in agricultural production of 20 to .0 percent, depending on the se%erit! and length of the current global droughts. @ood producing nations are imposing food export restrictions. @ood prices will soar, and, in poor countries with food deficits, millions will star%e. The deflation debate should end no! The droughts plaguing the world(s biggest agricultural regions should end the debate about deflation in 200 . The demand for agricultural commodities is relati%el! immune to de%elopments in the business c!cles -at least compared to that of energ! or base metals/, and, with a 20 to .0 percent decline in world production, alread! rising food prices are headed significantl! higher. In fact, agricultural commodities 'BB$ to head higher and soon, to pre%ent e%en greater food shortages and famine. The price of wheat, corn, so!beans, etc must rise to a le%el which encourages the planting of e%er! a%ailable acre with the best possible fertiliDers. ;therwise, if food prices sta! at their current le%els, production will continue to fall, sentencing millions more to star%ation. Co -etiti&e "urren"y a--re"iation #ome obser%ers are anticipating Kcompetiti%e currenc! de%aluationsL in addition to deflation for 200 -nations de%alue their currencies to help their export sector/. The coming global food shortage makes this highl! unlikel!. $epreciating their currenc! in the current en%ironment will produce the unwanted conseIuence of boosting exportsAof food. B%en with export #

restrictions like those in China, currenc! depreciation would cause the outflow of significant Iuantities of grain %ia the black market. Instead of Kcompetiti%e currenc! de%aluationsL, spiking food prices will likel! cause competiti%e currenc! appreciation in 200 . @oreign exchange reser%es exist for just this t!pe of emergenc!. Central banks around the world will lower domestic food prices b! either directl! selling off their reser%es to appreciate their currencies or b! using them to purchase grain on the world market. Appreciating a currenc! is the fastest wa! to control food inflation. A more %aluable currenc! allows a nation to monopoliDe more global resources -ie* the o%er%alued dollar allows the "# to consume 2+= of the world6s oil despite ha%ing onl! .= of the world6s population/. If China were to selloff its "# reser%es, its enormous population would start sucking up the world6s food suppl! like the "# has been doing with oil. ;n the flip side, when a nation appreciates its currenc! and starts consuming more of the world(s resources, it lea%es less for e%er!one else. #o when china appreciates the !uan, food shortages worldwide will increase and prices e%er!where else will jump upwards. As there is nothing that breeds social unrest like soaring food prices, nations around the world, from 9ussia, to the B", to #audi Arabia, to India, will sell off their foreign reser%es to appreciate their currencies and reduce the cost of food imports. In response to this, China will sell e%en more of its reser%es and so on. That is competiti%e currenc! appreciation. )hen faced with competiti%e currenc! appreciation, !ou do ';T want to be the world(s reser%e currenc!. The dollar is likel! to do %er! poorl! as central banks liIuidate trillions in "# holdings to bu! food and appreciate their currencies.

$osted b% &ric de'arbonnel at 4:2# () *elicio+s

Labels: Food_Crisis Key_Entries

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