Agriculture's role in China's War
The planting season for corn is just about closed. As of June 2, this is what the crop looked like for the eight largest corn-producing states with production for the 2016 crop year:
Those eight states account for 74% of U.S. corn production. Based on the percentage planted, production will be down by about 26%, assuming that crop quality remains the same. Estimates from farmers are that the crop will be down by about 30%. Soybeans are similarly affected.
A 26% reduction equates to about 4,000 millions of bushels. Carryover stocks from the 2018 year were 1,781 millions of bushels, and projected use in ethanol production is 5,600 millions of bushels, so there is plenty of buffer that could be used to stop a dramatic flow through to food prices. There will be no buffer at the end of the year, though, if the 2020 season is also weather-affected.
One country that will be following crop reports from the Midwest closely is China, which has a policy of being able to feed itself from domestic production. The Chinese could do this on an almost completely vegetarian diet. But with the rise in their standard of living over the last 20 years, they started importing grain and soybeans to feed pigs and chickens. Processed through those animals, imported grain and soybeans supply 20% of Chinese protein consumption. That will disappear in a war, and the Chinese will go back to being involuntary vegetarians.
China also has some problems of its own. An insect called the fall armyworm, a major crop-eating pest, entered the country from Southeast Asia in January this year and has spread to 18 provinces. It could reach the northeast of the country by July. The other major disruption is an outbreak of African swine fever, expected to kill up to 200 million pigs out of a total Chinese pig herd of 360 million animals.
China is responding by putting 7 million tons of soybeans bought from the U.S., but not yet delivered, into storage. It will need every ton it can get its hands on if the war it wants to start with its neighbors and the U.S. doesn't turn out to be short and glorious. The heartbeat of war in Asia is Chinese government–funded incursions into Japanese waters around the Senkaku Islands:
For the first four months of the year, that was a steady 12 incursions per month. War is still coming.
David Archibald is the author of American Gripen: The Solution to the F-35 Nightmare.