Author Topic: The OPEC of Global Grain?  (Read 1433 times)

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fatman

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The OPEC of Global Grain?
« on: June 10, 2008, 02:33:15 PM »

Friday, 06 June 2008 

U.S. is OPEC of global grain market     
Thomas P.M. Barnett 

   
In the global oil industry, there is Saudi Arabia and everybody else. But with the planet experiencing the worst food crisis since the tumultuous 1970s, the question begs, Who is the "Saudi Arabia" of agriculture? Well, it turns out that North America is the OPEC of global grain.

When the professional fear mongers try to scare you with America's "oil addiction," remember this: if the world's got us over a barrel on energy, then we've got the world over a bread basket. Moreover, while global climate change will progressively diminish OPEC's importance as we're forced to improve transportation technologies, it'll only strengthen NAFTA's role as the world's preeminent food exporter.

Here's the lay of the land when it comes to the global grain trade.

There are four net exporting regions: North America exports 105 million metric tons, followed by the former Soviet Union at 21 tons, South America at 18, and Australia/New Zealand at 9. So when it comes to spare capacity, North America accounts for a whopping 68 percent of the world's moveable feast.

Here are the net importing regions: North Africa and the Middle East import 58 million metric tons, followed by Asia at 47 tons, sub-Saharan Africa at 17, and Europe at 12. You want to talk "addicted" to foreign food? The Middle East imports just over three-quarters of its total food supply! Compare this to a North America that imports half that percentage.

Now add in the impact of global climate change and what do we foresee? Basically, the tech-rich regions that are net exporters today will do as well as they do now or better, while the regions that are currently forced into importing will do decidedly worse -- save Europe. Simply put, the further you are from the equator, the less negative -- and progressively more positive -- will be the agricultural impact of global warming.

This is why farmers in the Dakotas are presently tilling fields that have laid fallow for decades, and why land speculators are having a field day in Russia, Ukraine and Kazakhstan, where roughly an entire Idaho-sized chunk of arable land awaits exploitation.

It's also why the Chinese government has launched a not-very-secret plan to buy up arable land around the world, believing -- rather fantastically -- that in some future global food crunch, it will somehow siphon off precious grains from foreign lands with nobody noticing. Good luck with that transparent strategy, because in the current crisis, many of the world's major producing nations have suddenly slapped restrictions on crop exports -- including China. Why such extreme measures?

In industrialized nations, food eats up only about one-tenth to one-fifth of a household's spending, but in developing countries, that share can rise to as high as four-fifths. So if you think it's tough to be poor in fragile states today, global warming will make it a lot harder -- absent globalization's successful expansion into these poorly developed and weakly connected markets.

A lot of things account for today's skyrocketing food prices: bad harvests, immoral Western trade barriers, the rising price of energy, the diversion of crop lands to biofuel production, and increasing demand from rising economic pillars like India and China. None of these factors can be easily curtailed. Indeed, several of them increasingly feed on one another.

Today, only a small fraction of worldwide grain production is traded globally -- for example, only 7 percent of rice and 12 percent of corn. Looking ahead a couple of decades, we're likely to see those percentages rise dramatically, making the global food trade network as important -- arguably far more important-than today's global energy trade network.

Let's abandon any fantasies about "energy independence" in this day and age. Instead, we need to realize what a gold mine we're sitting on: farmland needed to fill the world's hungry bellies more than its thirsty cars.



Thomas P.M. Barnett is a strategist at the Oak Ridge Associated Universities and senior managing director of Enterra Solutions LLC. This was distributed by Scripps Howard News Service.
 


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Xavier_Onassis

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Re: The OPEC of Global Grain?
« Reply #1 on: June 10, 2008, 04:46:11 PM »
The US is not the OPEC of grain, because grain is not really controlled by the government. The closest thing to an OPEC of grain would be the alliance of Bunge y Borne, Cargill and ADM and perhaps a few other grain dealers.

"Time flies like an arrow; fruit flies like a banana."

Plane

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Re: The OPEC of Global Grain?
« Reply #2 on: June 10, 2008, 06:20:59 PM »
The US is not the OPEC of grain, because grain is not really controlled by the government. The closest thing to an OPEC of grain would be the alliance of Bunge y Borne, Cargill and ADM and perhaps a few other grain dealers.




How long would it take to elect a socialist government if we really wanted one? All that production could be nationalised , even the land bought by the Chineese government.

I am betting that we won't want to , we probly can't afford to.

Xavier_Onassis

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Re: The OPEC of Global Grain?
« Reply #3 on: June 10, 2008, 11:32:31 PM »
Nationalizing the land the grain is grown on would not work. Nationalizing agriculture has not worked much of anywhere, and has been a major disaster in places like the USSR and  currently, Zimbabwe. I did not say that the US SHOULD control grain production and distribution, just that the government of the US does not control grain the way that the governments of Saudi Arabia, the UAE, and Kuwait, etc. control oil production.

Calling the US the "OPEC of grain" is just inaccurate. That was my point.

Oil and grain are vastly different in nearly every aspect.

"Time flies like an arrow; fruit flies like a banana."

Plane

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Re: The OPEC of Global Grain?
« Reply #4 on: June 11, 2008, 05:25:37 AM »
Not all of OPEC oil is nationalised either.

All of US grain is raised on territory that the US government can regulate , thus the occasional embargo as a diplomatic wepon or threat.

Xavier_Onassis

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Re: The OPEC of Global Grain?
« Reply #5 on: June 11, 2008, 07:05:25 AM »
All of US grain is raised on territory that the US government can regulate , thus the occasional embargo as a diplomatic wepon or threat.

=========================
They have only restricted sending grain to Cuba. It has had no effect on anyone but the US farmers, since Cuba can buy grain from Canada, Argentina and elsewhere.

As a weapon, grain is a pretty poor one.

"We will starve you" is not the sort of message that makes for a good image of any country.
"We will prevent you from driving huge SUVs" is less likely to attract world sympathy.

Canada and Argentina produce huge amounts of grain beyond what the local markets can use. The US has a really big local market for grain, and as I said, the flow of grain is controlled by multinational conglomerates. If you tell Cargill USA they cannot ship grain to naughty country X, then Cargill Argentina or Cargill Canada will ship it instead.
"Time flies like an arrow; fruit flies like a banana."

Plane

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Re: The OPEC of Global Grain?
« Reply #6 on: June 12, 2008, 12:50:50 AM »

"We will starve you" is not the sort of message that makes for a good image of any country.
"We will prevent you from driving huge SUVs" is less likely to attract world sympathy.



There is more grain from North America availible to move across borders than all the rest of the world can spare.

It would be a great boon to the non participants in an embargo for us to refuse to ship grain , the price of the grain would be huge fast.

"We will starve you and you didn't even realise that you were dependant on our good will did you ?"

Is a bigger threat than "We will make it expensive for you to vacation."

World sympathy is availible?  What is it good for?