Ukraine War Day #81: Sucks To Be Breadbasket (continued)

Dear Readers:

As promised, it’s time to review this analytical piece by reporter Nikolai Storozhenko, the rather blunt title is:

How The USA Created The World Food Crisis

According to American President Joe Biden, tens of millions of tons of Ukrainian grain are the key to lowering world prices for food. Who is to blame for the increase in prices? Russia, of course. It’s also Putin’s fault that world fuel prices have risen, that just goes without saying. Everybody will be poor and hungry, and it’s all Putin’s fault.

Author points out that the U.S. is itself a grain-exporting nation. In the 2021/22 marketing year the U.S. exported 18.9 million tons of grain. Ignore the fact that this is the lowest amount in the past 20 years, it’s still not to be sneezed at. [Unless you’re allergic to grain.] Fact is, since the 1970’s the U.S. is one of the largest players in the world grain market.

America used to be famous for its “amber waves of grain”

Take wheat. Please. In 2014 the U.S. was the world’s largest exporter of wheat (25.6 million tons). Russian wheat was historically not nearly as successful, although in that same year, 2014 Russia took the bronze medal with 22.1 million tons. But get this: Over the past few years Russia has jumped to First Place. In 2021/22 Russia exported a whopping 39.5 million tons of wheat! This year’s harvest is set to be a “bumper” one, as the Americans say.

In this sense, Biden’s rant against Russia contains a grain of truth (little pun there); in that the world certainly needs Russian wheat. But the deeper question is: what the heck happened to American wheat? And how did it come to this, that wheat blocked in a Ukrainian port is affecting American prices for food? Surely the Americans, with such God-given bounty, can feed themselves cheaply, no matter what is going on in the port of Mariupol.

Instead of blaming Putin, Biden should actually blame Barack Obama, who foolishly started a trade war with China, in 2015. The negative trade balance between China and the U.S. has achieved a whopping sum (by 2021) of almost $400 billion dollars. Trump inherited this problem then doubled-down with his own tariff war against China. China retaliated by placing a deadly tariff on American wheat; with sad results for American farmers. It was this factor which led to Russian nipping in and seizing the crown away from the U.S. (became #1 for the first time in 100 years!), when it came to grain exports. Not only that, but Russia began to successfully compete in America’s “traditional” markets and steal some of their customers away.

Global Controls

Next the author discusses the fact that the American government (Dept of Agriculture) has a really super system for prognosticating international harvests. Their forecasts are highly accurate, even years in advance, and especially for the upcoming year. Thus, they should have no problem controlling the market and adjusting prices for inflation, in the domestic market. They should be able to leverage their own resources and make intelligent decisions, how much to produce. For example, why should they bother growing millions of tons of corn or “forage wheat” if they know that Ukraine is going to produce it.

Differences Between Ukrainian And Russian Grain Exports

Ukraine truly does play a key role in the world grain market. The two countries together, Ukraine and Russia, are the biggest exporters of wheat, corn and vegetable oils. Yet the two economic profiles differ greatly.

Russian harvest: Boy Meets Tractor

For example, Russia trades mainly in wheat, sending roughly half of its harvest to export.

In the Ukraine there are the following categories of grains: There is “human” wheat (продовольственная пшеница), of which around 3/4 of the crop is exported. There is another category, called “forage wheat” which is presumably for animals. Of this it seems like more than two-thirds of the crop is exported. Then there is corn, which is Ukraine’s main grain-type export, and it seems like over 90% of this crop is exported. There is also barley.

Ukraine’s Favorite Son showing off his cob.

In 2021 the Ukraine collected a pretty decent harvest: 30 million tons of wheat (both human and forage); 40 million tons of corn; and 10 million tons of barley. So, around 80 million tons in all, if you count everything. Doing some very rough math, based on the usual rations of harvest kept to harvest exported, it seems like around 21 million tons of the combined wheat types are “owed” to export, along with around 16 million tons of the corn. Hence, Joe Biden may actually have been a kind of autistic math genius when he pulled that number of 20 million tons out of his a**. Which is the amount of wheat that he said Russia was blocking the Ukraine from exporting.

Another way to look at this: Between July 1, 2021 (the start of the “marketing” or fiscal year) and March 1, 2022 (a week after the Russian invasion started), the Ukrainians had already exported around 43 million tons (including all types of grains). The remaining 37 million should include seed needed for the next sowing, plus domestic consumption needs, plus a safety reserve. When you deduct these, then around 20 million tons are waiting to be exported. Just like Biden said. Where Biden is wrong, is that the export has not really stopped. In March and April the Ukrainians were able to ship around 2.7 million tons of grain using the friendly ports of Romania and Moldavia. This is less than the usual monthly average of 5 or 5.5 million tons, but it’s not a complete blockage, either. There is, overall, a shortfall of around 8 million tons which people somewhere in the world were expecting, but will not receive. Due to the war, of course.

[to be continued]

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12 Responses to Ukraine War Day #81: Sucks To Be Breadbasket (continued)

  1. colliemum says:

    I remember the times when the USA actually exported huge amounts of wheat to Soviet Russia. So what happened, why has their wheat production decreased so much? I think there might be two factors: one is that they grew more corn, not for food but for ethanol, tom make their petrol (or gasoline) more ‘eco-friendly’. The other is that possibly large areas have been taken out of production – for ‘solar farms’, for example.
    One of the greatest land owners in the USA is a certain Mr Gates and who knows, perhaps some green insanity might have driven him to do this? I think we simply haven’t yet grasped what green agricultural policies might mean for the market. For example: reducing the number of cattle grown for meat because ‘methane bad – meat bad’ means less wheat is needed for animal feed, so why would farmers not reduce the amount they produce? Not that anyone asks – it’s far easier to blame Putin than admit that green policies may have unintended consequences.

    Like

    • yalensis says:

      I have read a lot of stuff indicating that “Green policies” even when well-intentioned, can have unintended (negative) consequences. Having said that, I don’t understand why Planet Earth produces so much wheat and cattle. I believe that humans should eat much less wheat and cattle. However, please don’t put me in charge, because my radical anti-wheat policies would probably also have many unintended consequences!

      Having said that, I don’t understand why we don’t just eat more small mammals like rabbits, instead of cows. I have eaten rabbit many times, and it tastes really good. It’s nutritious too, from what I understand. And it takes much less infrastructure to grow rabbits. I mean just start with 2 rabbits and a bit of vegetation, and before you know it… [allude to Fibonacci sequence]. Would this not be a more sustainable food source?

      In summary, I believe that people should eat much less cows than we currently do, although a juicy steak once in a while is a marvelous treat. But that should be reserved for special occasions. On a daily basis we should just eat rabbits and lots of vegetables, no wheat or corn (except for popcorn at the movies), no grains in general except for something like barley and legumes; maybe hominy is okay; and then I think we would be healthier, and the planet would be as well. What do you think?

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      • colliemum says:

        I think that, first of all, we ought to eat less – of everything! We certainly managed when there was rationing, more severe in Germany during WWII but certainly quite severe in the UK during that time! Comparing video clips and photos of people then and today it’s staggering to see that there were no fat people about.
        Moreover, meat eating of any kind – cattle, pigs, chicken even, was restricted to one such meal a week, not just during WWII but all the way back to medieval times where ‘white bread’ made from wheat was a status symbol, reserved for the nobility and the very rich merchants.
        So eating less of everything is eminently feasible, humanity clearly survived! It would also be far more healthy.
        There’s one hair in that soup though, beside the vested interests of the ‘food industry’ and the supermarket grocery chains: the feminist cry that housework is terrible, that all women must work outside the home to be regarded as proper persons. That means they don’t have time to shop for fresh stuff and above all to cook, as it’s now called, ‘from scratch’. Just like map-reading that is a skill which is lost to the smartphone generation …

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        • yalensis says:

          Proper cooking is, for sure, a skill that has been lost. People have out-sourced that skill to professional chefs. Other “feminine” skills that have been lost over the centuries include: spinning fibers, weaving on looms, sewing, etc. My sister can still do some of that, even as a kid she always enjoyed sewing, knitting, etc. For the cooking, though, she leaves that to her husband. He is actually a fantastic cook, even though it’s just a hobby for him.

          I worry sometimes that the loss of all these traditional skills will really screw us if and when the Apocalypse comes. Without electricity people would not even be able to have clothing any more. For this reason, I propose that every society reserve a cadre of volunteers who continue to cultivate these essential “feminine” skills and know how to weave cloth and stuff like that. They can have workshops and stuff, but basically they should do this all year round and be supported by the government. I am sure there are lots of people who would be willing to enlist, and who would enjoy this sort of thing. Especially artsy-craftsy people.

          I am not so much worried about loss of the “masculine” skills like hunting and fishing, because there are still tons of people out there who know how to do that.

          Just need to plan for the future Zombie Apocalypse, I reckon.

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          • colliemum says:

            Too right! Spinning isn’t too hard (yes, I tried it) and weaving is also a nice hobby. However, the real ‘meaty skills’ are sewing and knitting. Before the arrival of cheap clothes, women sew and knitted. I made my own dresses, no problem. Still got the sewing machine. However, very quickly the Haberdashery shops and departments vanished from the mid-1980s onwards, so thread, patterns, special scissors, buttons and the rest became unobtainable. The same goes for knitting. I loved knitting: working with fine threads like soft wool, or even alpaca: very sensuous. I was forced to give up when my hands became arthritic.
            There’s one point to all these crafts though: they take time! Time one cannot spend on the smartphone or watching telly in the case of sewing. Yes, one can watch telly, sort-of, while knitting!
            And there’s another skill we ought to resurrect: re-making clothes from dresses, re-knitting jumpers and indeed underwear (we hated those when we were little!) from unravelled older jumpers. I bless my granny and my great aunts who taught me these things and who taught me ‘how to’ – they’d gone through the harsh schools of WWI and WWII where nothing was thrown out because one could use it again or re-purpose it, from food to clothes to wrapping paper and strings.

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      • peter moritz says:

        Yes, rabbits. We used to raise them, and as a German rabbits were often more affordable than pork or beef. I still like them, but I have come to prefer chicken in all its forms you can use it as. Thanks, dinos for the gift.
        We used to raise them ourselves, but now with two persons and limited freezer storage, we buy locally produced meat, but also pork and beef mostly for making soup – bones and boney pieces. Our islands produce all the meat and milk products one wants.
        We always, while residing in Canada, even on rented properties, either raised rabbits, chicken, or both, kept goats for milk and other fowl for meat, from ducks to geese to turkeys (the worst to keep and deserving the bad rap).
        Chickens were also kept to produce eggs, even for sale. And we still make a lot of marmalades or compotes from our garden or buy/trade from the neighbor oranges or loquats, the latter producing a marmalade to die for. My wife especially keeps a garden and we produce a lot of veggies for ourselves, have some bananas, plum trees, blackberry bushes.

        Like

        • yalensis says:

          You and your wife sound like wise and healthy people. Not like me. I live in America and I can’t cook, and I don’t have a girlfriend (currently), so I eat a lot of junk.

          Like

  2. Pingback: May 16, 2022 | Situation Report: The World

  3. peter moritz says:

    First off, it might be a good idea to eat less wheat (I for one prefer bread from mixed grain, especially rye, but love pasta).
    Now, why is wheat of such importance? It delivers starch that the body converts into sugars, such delivers energy that is quite readily available for the body, but if eaten in excess leads to the storage in form of fat.

    It is as grain and even as flour very easy to store at home and industrially when proper precautions are taken (insect and rodent infestations etc., spoilage by fungi) and can be grown easily in many areas of the world. It is also very amenable to the industrial type of agriculture, with vast areas efficiently being cultivated and harvested mechanically. (Apart from environmental problems caused by this type of agriculture) Thus, it is cheaper in comparison to other starchy foods. And for families living often on a tight budget, it is the food that is affordable, and no alternative can beat this, even when the price of wheat rises.

    In consequence – when wheat or other industrially produced grains rise in price, people suffer and there is no way out.

    The problem is not that flour or starches produced by plants deliver energy fast, be it alternatives for gluten-sensitive persons like rice, potatoes, quinoa etc. It all is starch and gives us the energy we need. The problem is the amount we consume.
    And the problem is that we live in a capitalist society, in the case of food the products are traded as speculative objects, and not many nations are able or willing to stockpile foods as they do with oil or gas to take the edge of pricing off in emergencies.

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    • yalensis says:

      Russia traditionally considers both wheat and sugar to be essential and irreplaceable components of the national diet. To be rationed in wartime and secured in peacetime, like their weight in gold.
      Both products are bad for you, so I see a contradiction here. If I were made dictator, I would probably abolish both sugar and wheat, and order the population to grow rabbits and chickens instead. I would replace wheat and corn with sorghum and barley.

      But then I am ignorant, so I would probably end up doing more harm than good, because what do I know? Maybe traditional wisdom is smarter than me, even if it doesn’t seem so, with it comes to nutrition.

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  4. Ben says:

    The trade deficit is not a problem to be solved. It’s what makes the US dollar the global reserve currency.

    Or, well, it was until the US committed suicide by making it clear the the dollar is no longer a safe investment and is subject to completely politically motivated seizure.

    Like

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