Biden about to get caught flat-footed on another crisis: Ukraine war–generated global food shortages
Anybody want to take bets that Joe Biden will know what to do when the next crisis hits? His presidency is one crisis after another, and his record, well...
The next crisis is bound to be a doozy.
Based on Russia's horrible war against Ukraine, grain and fertilizer prices are skyrocketing, and shortages are on the way. Ukraine's and Russia's customers already are hoarding supplies. Based on the little-discussed stories out there, this crisis is bound to be felt in all countries and looks certain to happen. Joe is nowhere to be found on this, as we shall shortly see.
With its rich black soil, Ukraine's always been known as the breadbasket of Europe. The story is obvious enough in this land rendition of the Ukraine flag — from Lviv:
Ukraine and Russia are huge exporters of grain and fertilizer, accounting for about 30% of world exports.
Start with prices. According to BloombergQuint, which has a dramatic chart:
Wheat futures swung wildly between gains and losses Tuesday after climbing to unprecedented heights as Russia's attack on Ukraine disrupts global food supplies. Prices in Chicago earlier leaped to a record $13.635 a bushel before plunging as much as 7.1%. The world is facing a huge supply shock as the war cuts off shipments from a region that accounts for a quarter of the grain's trade.
Prices in Chicago earlier leaped to a record $13.635 a bushel before plunging as much as 7.1%. The world is facing a huge supply shock as the war cuts off shipments from a region that accounts for a quarter of the grain's trade. Futures have climbed by the exchange limit for the past six days. "Traders are taking their profits, but a turn back to the upside would not be a surprise," CHS Hedging analyst Kevin Stockard said in a blog post.
The United Nations says food prices are likely to rise 20% worldwide as a result of this war. That figure is an average. Obviously, the poorer countries that can't grow their own grain are going to suffer much more. A Russian grain and fertilizer oligarch now under sanctions, who's calling for an end to the war, also warns about coming food shortages.
Reuters adds that it isn't just grain that either can't be planted, harvested, or shipped (the ports are blocked); it's also fuel and fertilizer:
Ukrainian farmers — who produced a record grain crop last year — say they now are short of fertilizer, as well as pesticides and herbicides. And even if they had enough of those materials, they can't get enough fuel to power their equipment, they add.
Elena Neroba, a Kyiv-based business development manager at grain brokerage Maxigrain, said Ukraine's winter wheat yields could fall by 15% compared to recent years if fertilizers aren't applied now. Some farmers warn the situation could be much worse.
Some Ukrainian farmers told Reuters their wheat yields could be cut in half, and perhaps by more, which has implications far beyond Ukraine. Countries such as Lebanon, Egypt, Yemen and others have come to rely on Ukrainian wheat in recent years. The war has already caused wheat prices to skyrocket — rising by 50% in the last month.
As Reuters notes, countries such as Lebanon, Yemen, and Egypt are going to be hit hard by this crisis. But other analysts note that the Pacific nations will be hit, too. Politico reports that the Philippines is making its largest-ever grain orders just to get some kind of cushion for what's coming down the pike.
Making matters worse, some countries that could fill the void, such as Argentina, Hungary, and Turkey, are blocking exports to ensure that they have no shortages of their own.
In the U.S., a major problem of another sort is out there — drought and reduced crops owing to bad weather. That isn't going to be helpful in helping alleviate this problem overseas, either.
While it's tempting for Americans to think that that is their problem, not ours, it's probably not just their problem: last time there was a global grain shortage, and it wasn't as dangerous as this one, was 2008 — the year the Arab Spring happened. That presaged revolts and toppled governments, which pretty well had potential for realigning U.S. alliances and friends, usually not in our direction.
According to BloombergQuint:
The last time the staple grain was near these levels was during a 2008 food crisis that sparked political unrest worldwide. Rapeseed futures in Paris topped 900 euros ($980) a ton for the first time ever, and canola futures also reached a fresh record. Corn has risen by more than a quarter this year.
What do hungry people do aside from revolt about it?
A lot of them head north, to the migrant-welcoming West, and they come in their millions. The countries most likely to be hit by the food shortages, include sub-Saharan Africa and Pacific countries such as the Philippines, are already major exporters of illegal aliens. Don't bet on these countries' poor not leaving their countries in even greater numbers this time, for the understandable reason that they can no longer afford or find a reliable food supply.
So what is Biden's master plan for countering this incipient crisis?
Well, we can start by looking at his previous reactions to food shortages. Here's one 2020 summary:
He blamed President Trump. He blamed companies. He blamed others. And his solution? Harness "the restaurant industry" to feed the hungry. Today, he's substituting Putin. It will be interesting to see how that goes over internationally, as it doesn't include much in the way of solutions.
Politico reports that some activity is taking place — and as one might expect of the Biden administration, it's pretty feeble:
After the wheat market reached an all-time high earlier this week, U.S. Agriculture Secretary Tom Vilsack and agricultural ministers from six other major economies warned on Friday that countries refusing to export food products would only drive further price spikes, saying it "could threaten food security and nutrition at a global scale, especially among the most vulnerable."
The G-7 officials, who met virtually to discuss Ukraine, called on countries to keep their food and agricultural markets open and "to guard against any unjustified restrictive measures on their exports."
Stern warnings all around.
There also was this:
Vilsack said later that Ukrainian Agrarian Policy and Food Minister Roman Leshchenko spoke to the group from a bunker and asked the countries to provide fuel to help Ukrainian farmers harvest and plant new crops this spring, as the nation faces a rapidly escalating humanitarian crisis.
He wants the other guy to do it. He doesn't seem to be offering much from the U.S. to head off the crisis.
There isn't much else going on as the crisis burns through. For Biden, the prices will rise, and the refugees will flow, and it'll be come on in, but don't do it in front of the cameras, as his response. We'll be the ones to pay for it. Based on these responses, anybody got confidence that Joe's on top of this? Don't hold your breath.