Is a Global Food Crisis The New Normal

[Nataliia Shulga/Al Jazeera]

But India said its hand was forced by “high international prices due to geo-political scenario[s], El Nino sentiments and extreme climatic conditions in other rice producing countries”. The export ban affects one-fourth of the country’s rice exports. Coming soon after Russia walked out of the Black Sea grain deal amid its continuing war in Ukraine, the curbs on India’s exports threaten to trigger a broader food crisis.

Yet, the ban raises deeper questions. Unusual weather patterns, geopolitical tensions and low yields due to climate-related factors are colliding with increasing frequency, leading to spiralling prices and mounting prospects of hunger.

A searing heat wave in 2022 crushed India’s wheat production: New Delhi imposed a ban on exports that the world’s second-largest wheat producer still has not lifted more than a year later. This is also the second year in a row that India has restricted rice exports……Continue reading

Source: Is a global food crisis the new normal? | Food | Al Jazeera

Critics:

During the 20th century, an estimated 70 to 120 million people died from famines across the world, of whom over half died in China, with an estimated 30 million dying during the famine of 1958–1961, up to 10 million in the Chinese famine of 1928–1930, and over two million in the Chinese famine of 1942–1943, and millions more lost in famines in North and East China.  The USSR lost 8 million claimed by the Soviet famine of 1930–1933, over a million in both the Soviet famine of 1946–1947 and Siege of Leningrad, the 5 million in the Russian famine of 1921–1922, and others famines.

Java suffered 2.5 million deaths under Japanese occupation during World War Two. The other most notable famine of the century was the Bengal famine of 1943, resulting both from the Japanese occupation of Burma, resulting in an influx of refugees, and blocking Burmese grain imports and a failure of the Bengali provincial Government to declare a famine, and fund relief, the imposition of grain and transport embargoes by the neighbouring provincial administrations, to prevent their own stocks being transferred to Bengal, the failure to implement India wide rationing by the central Delhi authority, hoarding and profiteering by merchants, medieval land management practices.

an Axis powers denial program that confiscated boats once used to transport grain, a Delhi administration that prioritised supplying, and offering medical treatment to the British Indian Army, War workers, and Civil servants, over the populace at large, incompetence and ignorance, and an Imperial War Cabinet initially leaving the issue to the Colonial administration to resolve, than to the original local crop failures, and blights.

A few of the great famines of the late 20th century were: the Biafran famine in the 1960s, the Khmer Rouge-caused famine in Cambodia in the 1970s, the North Korean famine of the 1990s, and the Ethiopian famine of 1983–1985. Approximately 3 million died as a consequence of the Second Congo War. The latter event was reported on television reports around the world, carrying footage of starving Ethiopians whose plight was centered around a feeding station near the town of Korem.

This stimulated the first mass movements to end famine across the world. BBC newsreader Michael Buerk gave moving commentary of the tragedy on 23 October 1984, which he described as a “biblical famine”. This prompted the Band Aid single, which was organized by Bob Geldof and featured more than 20 pop stars. The Live Aid concerts in London and Philadelphia raised even more funds for the cause. Hundreds of thousands of people died within one year as a result of the famine, but the publicity Live Aid generated encouraged Western nations to make available enough surplus grain to end the immediate hunger crisis in Africa.

Some of the famines of the 20th century served the geopolitical purposes of governments, including traumatizing and replacing distrusted ethnic populations in strategically important regions, rendering regions vulnerable to invasion difficult to govern by an enemy power and shifting the burden of food shortage onto regions where the distress of the population posed a lesser risk of catastrophic regime de-legitimation.

Until 2017, worldwide deaths from famine had been falling dramatically. The World Peace Foundation reported that from the 1870s to the 1970s, great famines killed an average of 928,000 people a year. Since 1980, annual deaths had dropped to an average of 75,000, less than 10% of what they had been until the 1970s. That reduction was achieved despite the approximately 150,000 lives lost in the 2011 Somalia famine.

Yet in 2017, the UN officially declared famine had returned to Africa, with about 20 million people at risk of death from starvation in the northern part of Nigeria, in South Sudan, in Yemen, and in Somalia. On 20 April 2021, hundreds of aid organisations from around the world wrote an open letter to The Guardian newspaper, warning that millions of people in Yemen, Afghanistan, Ethiopia, South Sudan, Burkina Faso, Democratic Republic of the Congo, Honduras, Venezuela, Nigeria, Haiti, Central African Republic, Uganda, Zimbabwe and Sudan faced starvation.

Organisations including the International Council of Voluntary Agencies and the World Food Programme said: “Girls and boys, men and women, are being starved by conflict and violence; by inequality; by the impacts of climate change; by the loss of land, jobs of prospects; by a fight against Covid-19 that has left them even further behind.” The groups warned that funding had dwindled, while money alone would not be enough by itself. Governments should step in to end conflicts and ensure humanitarian access, they said.

“If no action is taken, lives will be lost. The responsibility to address this lies with states”, they added. In November 2021, the World Food Programme reported that 45 million people were “teetering on the very edge of famine” in 43 countries, and that the slightest shock would push them over the precipice. This number had risen from 42 million earlier in 2021, and from 27 million in 2019. The slightest shock — be it extreme weather linked to climate change, conflict, or the deadly interplay of both hunger drivers — could push tens of millions of people into irreversible peril, a prospect the agency had been warning of for more than a year.

Afghanistan was becoming the world’s largest humanitarian crisis, with the country’s needs surpassing those of the other worst-hit countries — Ethiopia, South Sudan, Syria and even Yemen. A notable period of famine occurred around the turn of the 20th century in the Congo Free State. In forming this state, Leopold used mass labor camps to finance his empire. This period resulted in the death of up to 10 million Congolese from brutality, disease and famine.

Some colonial “pacification” efforts often caused severe famine, notably with the repression of the Maji Maji revolt in Tanganyika in 1906. The introduction of cash crops such as cotton, and forcible measures to impel farmers to grow these crops, sometimes impoverished the peasantry in many areas, such as northern Nigeria, contributing to greater vulnerability to famine when severe drought struck in 1913.

A large-scale famine occurred in Ethiopia in 1888 and succeeding years, as the rinderpest epizootic, introduced into Eritrea by infected cattle, spread southwards reaching ultimately as far as South Africa. In Ethiopia it was estimated that as much as 90 percent of the national herd died, rendering rich farmers and herders destitute overnight. This coincided with drought associated with an El Niño oscillation, human epidemics of smallpox, and in several countries, intense war.

The Ethiopian Great famine that afflicted Ethiopia from 1888 to 1892 cost it roughly one-third of its population. In Sudan the year 1888 is remembered as the worst famine in history, on account of these factors and also the exactions imposed by the Mahdist state. The oral traditions of the Himba people recall two droughts from 1910 to 1917. From 1910 to 1911 the Himba described the drought as “drought of the omutati seed”, also called omangowi, the fruit of an unidentified vine that people ate during the time period.

From 1914 to 1916, droughts brought katur’ ombanda or kari’ ombanda ‘the time of eating clothing’. In modern times, local and political governments and non-governmental organizations that deliver famine relief have limited resources with which to address the multiple situations of food insecurity that are occurring simultaneously. Various methods of categorizing the gradations of food security have thus been used in order to most efficiently allocate food relief.

One of the earliest were the Indian Famine Codes devised by the British in the 1880s. The Codes listed three stages of food insecurity: near-scarcity, scarcity and famine, and were highly influential in the creation of subsequent famine warning or measurement systems. The early warning system developed to monitor the region inhabited by the Turkana people in northern Kenya also has three levels, but links each stage to a pre-planned response to mitigate the crisis and prevent its deterioration

The experiences of famine relief organizations throughout the world over the 1980s and 1990s resulted in at least two major developments: the “livelihoods approach” and the increased use of nutrition indicators to determine the severity of a crisis. Individuals and groups in food stressful situations will attempt to cope by rationing consumption, finding alternative means to supplement income, etc., before taking desperate measures, such as selling off plots of agricultural land.

When all means of self-support are exhausted, the affected population begins to migrate in search of food or fall victim to outright mass starvation. Famine may thus be viewed partially as a social phenomenon, involving markets, the price of food, and social support structures. A second lesson drawn was the increased use of rapid nutrition assessments, in particular of children, to give a quantitative measure of the famine’s severity.

Since 2003, many of the most important organizations in famine relief, such as the World Food Programme and the U.S. Agency for International Development, have adopted a five-level scale measuring intensity and magnitude. The intensity scale uses both livelihoods’ measures and measurements of mortality and child malnutrition to categorize a situation as food secure, food insecure, food crisis, famine, severe famine, and extreme famine.

The number of deaths determines the magnitude designation, with under 1000 fatalities defining a “minor famine” and a “catastrophic famine” resulting in over 1,000,000 deaths. Famine personified as an allegory is found in some cultures: Famine is one of the Four Horsemen of the Apocalypse in Christian tradition, a man riding a black horse holding a balance scale; the fear gorta of Irish folklore; or the Wendigo of Algonquian tradition. 

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With Russia’s Help, China Becomes Plastics Making Power In Pandemic

After giving up on recycling — American recycling that is — China is still in love with the plastics biz. In fact. their companies are becoming dominant in all things plastic, one of the most important supply chains in the world.

In other words, it will be yet another segment in global business that the world will need Chinese companies to get supply.

The pandemic has helped the petrochemicals industry make up for losses in oil and gas demand. Plastics are tied to the fossil fuels industry. Stay-at-home orders throughout the U.S. and Europe has led to more take-out food orders and a lot of that is being placed in plastic containers.

I’d like to highlight one thing though: China’s Sinopec is the behemoth in this space, and although you can buy into Sinopec on the U.S. stock market, if the incoming Biden Administration makes good on a Trump order to delist Chinese companies that are not compliant with the financial audit rules under the Sarbanes-Oxley Act of 2002, then Sinopec will probably leave the NYSE.

According to industry consultant Wood Mackenzie, petrochemicals will account for more than a third of global oil demand growth to 2030 and nearly half through 2050.

The growth in both plastics consumption and production is mostly coming from Asia where economies are catching up with the western levels of plastics consumption, and becoming a source for plastics exports to the U.S. and Europe.

Within Asia of course, China is the powerhouse. Last year Exxon Mobil XOM -4.8% began constructing its $10 billion petrochemical complex in Huizhou, China.

Russia Joins China, Wants To Be ‘Indispensible’

Russia’s petrochemical giant Sibur is also locked into China, mainly through a Sinopec partnership. The two companies began work on one of the world’s largest polymer plants for plastics making last August, spending $11 billion on the Amur Gas Chemical Complex in Russia.

The two sides are intimately connected in the global plastics biz.

“Amur is a milestone in the cooperation between Sinopec and Sibur,” Zhang Yuzhuo, chairman of Sinopec, says in a press statement, calling it a “model for Sino-Russian energy cooperation.”

The entire industry, while not exactly the sexy and green industry the Davos crowd is promoting heavily in the Western world, is seen by China and still-emerging markets like Russia — as a development tool for regions far away from the big city hubs of Moscow or Shanghai. This is as much about job creation as it is pumping out plastic molds and the ethylene needed to make it.

Russia recently introduced negative excise tax on LPG and ethane used in petrochemicals which was a meaty financial bone thrown to Sinopec and Sibur’s Amur project, among others in the Russian far east. 

The Sibur Russia angle has gained momentum recently due to the ramp up in production from the new ZapSib Siberian facility last year. They make polyethylene and 500 thousand tons of polypropylene there; all must-have ingredients for plastics manufacturers.

Their relationship with Chinese investors, buyers and counterparties was one of the main reasons to even build that manufacturing plant in the first place, and is something the Moscow market likes to give as one of the best reasons to be bullish about a rumored initial public offering for Sibur.

Sibur has said in press statements that they expect “another jump in scale” of plastics chemicals output with the addition of the Sinopec project, Amur.

“Sibur has long built relationships with Chinese clients, partners, and investors and Sinopec has been our strategic partner since 2013,” says Dmitry Konov, Chairman of the Management Board for Sibur. Konov told Reuters recently that there was no timeline for any IPO in the Moscow Exchange. Moscow was home to one of the top four largest IPOs last year, shipping firm Sovcomflot.

Konov said their logistical advantages in the far east, near China, and competitive pricing for its polymers means they will “scale up these relationships to further expand the delivery of high-quality petrochemicals from Siberia to China.”

VTB Capital, a Russian investment bank, says those projects would allow Russia to become one of the world’s top four producers of ethylene by 2030. Russia wants to position itself as the indispensable partner to China in this space, much in the way that China has positioned itself as the key source for numerous key inputs, whether its cobalt used in electric vehicle car batteries, or solar panels now expected to criss-cross the U.S. in the Biden Administration.

Due to the pandemic, China has been focused on industries of the future alongside those needed to get itself, and its trading partners, out of the pandemic rut — those polypropylene Olive Garden to go containers might not come from China, but the plastics that made it sure might.

China remains the place for growth in this space, too. Plastics-use patterns and penetration are rising. Figure the Asians are a good 10 to 20 years behind the U.S. in terms of plastics use. They’re gaining fast.

China As Plastics Demand Driver

Plastics aren’t made from tree bark, that’s for sure. It comes from fossil fuels and non-organic chemical compounds that make the stuff designed to last hundreds of years.

And China now accounts for roughly 40% of the demand for the chemicals used in making it, an increase of just 20% in 2005. 

China’s ethylene demand grew by 8.6% between 2014-17 while global demand grew by only half that. 

Looking out five years, Deutsche Bank industry analysts said in a November 25 report that China will account for over half of global consumption growth for ethylene (to which Sibur and Russia are happy as their go-to for now). 

China has 50% self-sufficiency in ethylene and derivative products – the domestic desire to expand capacities and increase self-sufficiency remains high. Russia is a solution. But Sinopec will invest domestically, as will the big Western multinationals who are frowned upon doing similar work back home. Exxon is case in point.

China was a relatively late entrant to the global petrochemical industry, but that does not mean much. They ramp up, and rev up fast due to state subsidies and state-owned companies’ ability to obtain raw materials and pass them along downstream for pennies on the dollar. These are loss leaders, but China doesn’t care about that stuff. They are looking to produce plastics for the locals, and for the export markets, especially U.S. and Europe, which are increasingly disinterested in anything fossil fuels related, at least on paper. 

In the 1990s, the Chinese petrochemical industry was significantly smaller than the U.S. In 1995, China’s ethylene capacity totaled 3% of global capacity. In comparison, Japan had 9% of global ethylene capacity and Korea had 5% of global capacity. Ethylene is naturally occurring.

During the 2000s, China’s petrochemical industry grew substantially driven by government support and strong demand from government-directed infrastructure spending, a burgeoning middle class with rising disposable incomes, expanding residential construction and exports of course.

Between 2004 and 2012, China’s ethylene capacity — the flammable gas used to make ethanol for cars, fruit ripeners, and — more importantly, plastics — doubled to 11 million tons per year. Within 25 years, China’s capacity has moved from 3% of global to 16% of global. Who thinks they’re going to slow that down? Need plastic? China will have it. For now, Russia has the chemicals. China might just gain on that next. Follow me on Twitter or LinkedIn

Kenneth Rapoza

Kenneth Rapoza

I’ve spent 20 years as a reporter for the best in the business, including as a Brazil-based staffer for WSJ. Since 2011, I focus on business and investing in the big emerging markets exclusively for Forbes. My work has appeared in The Boston Globe, The Nation, Salon and USA Today. Occasional BBC guest. Former holder of the FINRA Series 7 and 66. Doesn’t follow the herd.

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