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.
http://www.heraldextra.com/content/view/269299/59/
