by Peter Zeihan
The Ukraine War is having dozens – hundreds – of follow-on impacts across the world, with the most dramatic about to be felt in the world of food. Whatever you think will happen, the reality is almost certainly worse.
Let’s start with a point of reference:
In 2010, dry weather across Western Siberia prompted concerns about the Russian wheat crop. In preparation for a poor harvest, Russian President Vladimir Putin ordered temporary export limitations for wheat, Russia’s primary agricultural product. Within weeks global wheat prices had doubled; Prices tripled in Russia’s primary export market, the Middle East. Those increases contributed to the series of protests, riots, coups, revolutions and wars we now know collectively as the Arab Spring and the Syrian Civil War.
What’s happening this time around is far, far worse. Roughly three weeks ago the Russian army poured across Russia’s western frontier into Ukraine. As viewed from an agricultural point of view, the world’s largest wheat exporter invaded the world’s fourth-largest wheat exporter. That alone condemns the Middle East to its most volatile and violent period in at least the last century.
Unfortunately, this is just the beginning of the story.
In order to pacify a seriously overperforming Ukrainian resistance, the Russians have already reached for a tactic they pioneered in Groznyy during the Chechen War, and honed in Aleppo during the Syrian Civil War: the complete obliteration of all civilian infrastructure that would-be rebels might hide in. We’ve all seen – vividly – what such tactics can do to major cities such as Kyiv and Kharkiv and Mariupol. In time Russia’s southern thrust along Ukraine’s Black Sea Coast will reach the port city of Odessa, which serves as Ukraine’s agricultural gateway to the world. No Odessa, no exports. At all.
The deeper damage lies elsewhere. Russia forces are using the same scorched earth assaults in Ukraine’s omnipresent small towns and villages. Without the logistical sinew these towns provide, Ukrainian farmers won’t be able to plant this year. Ukraine isn’t simply disappearing from the ranks of the world’s major global exporters, this year and for years to come it will be an importer.
There’s a much bigger problem cresting the horizon.
The Industrial Revolution brought us no end of magical advances which make modern life possible, but none are more important than the ability to apply fertilizer to fields and in doing so triple the land’s ability to produce the food we eat. Our fertilizer usage breaks down into three broad categories.
The first is phosphate. This time the problem isn’t Russian, but instead uniquely Chinese. A couple years back the Chinese hog herd suffered from a nationwide outbreak an ebola-like disease: African Swine Fever. China culled about the same number of pigs that the rest of world has in total, yet failed to purge ASF from its territory. The only way the Chinese Communist Party can guarantee food security is to rely upon its culture’s primary staple: rice. So Beijing has banned the export of phosphate, the fertilizer type most useful for rice paddies. Until that occurred, China was the world’s largest phosphate source. The export ban is certain to last until Chinese agriculture can be supported by at least one other pillar. That won’t be in 2022. Or 2023.
Phosphate is the best story I have to tell.
In 2014 a narrative took hold cross the world’s many financial centers that fossil fuels were doomed, so why invest in their production? Consequently, global oil and natural gas investment plunged by 60%, landing us with near-global natural gas shortages, accompanied by the price surges one would expect.
We do more with oil and natural gas than burn it for power. We also transform natural gas into nitrogen-type fertilizers. As of February, nitrogen fertilizer prices had already significantly increased compared to a year earlier. On top of the preexisting global natural gas and nitrogen crunch, Russia is the world’s largest exporter of natural gas, most of which is sold to Europe. The day before the Ukraine War began, natural gas prices in Europe had already risen fivefold form last summer’s lows. European fabricators of nitrogen-type fertilizers have already suspended production due to high input costs.
The third and final type of fertilizer – potash – is…straightforward. Russia plus Belarus (and we need to think of the two as the same country since Russia effectively annexed Belarus in the war’s first week) is the world’s largest potash exporter, providing roughly 40% of global totals.
If that weren’t enough, Russia isn’t only the world’s biggest source of the inputs for fertilizers, it is also the world’s biggest supplier of the actual finished product as well.
Famine sucks, but a perfect way to get everyone on digital rationing. Just like the rationing books of WW2, only different.
Who controls this digital rationing? What else can they/will they attach?
Brought to you by election fraud, idiot Biden and terrible left wing woke green policies.