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China Drought Threatens Wheat Belt,
Raising International Food Alerts;
Globalists Salivate

Feb. 8, 2011 (EIRNS)—This release was issued today by the Lyndon LaRouche Political Action Committee.

The UN Food and Agriculture Organization (FAO) issued an alert on Tuesday that a severe drought threatens the wheat crop in China. The FAO said that 5.16 million hectares of China's 14 million hectares of wheat fields had been affected by the drought, and that 2.57 million people and 2.79 million head of livestock faced shortages of drinking water.

The wheat crop threat itself is not "news;" Chinese farmers and officials have been closely watching the aridity, temperature, and conditions in the wheat provinces. Last week President Hu Jintao and Prime Minister Wen Jiabao made separate visits to wheat provinces. (Winter wheat—which is 95% of China's crop, is planted in the Fall and harvested in June). Once the plants come out of Winter dormancy, potential rains in the coming weeks could even mitigate crop damage in China. Otherwise, there will be huge losses.

What the new FAO alert on China does—besides abetting those who are demonizing China for being a nation of "excessive demand" for food (Bernanke, Feb. 3)—is to spotlight how crazy it is to call it a food security policy, to expect good crop weather in all farm belts all at the same time. Yet, on National Public Radio in the U.S. today, FAO Senior Economist Abdolreza Abbasian referenced this fantasy of concurrence of good weather, in his explanation for record food-price inflation. "The most important factor was weather development in 2010." (NPR, Feb. 7 interview).

If proper infrastructure had been built in recent decades, there would be no need to fear simultaneous harvest disasters for any crop, as occurred for wheat this year, with crop losses in Russia, Australia, Canada, Europe, Pakistan and elsewhere. The only sane agriculture policy is LaRouche PAC's drive to reinstate Glass-Steagall and all that goes with it—stopping speculation, and launching a credit system for NAWAPA-scale improvements.

Without that, yesterday's FAO alert become the predictable occasion for yet another round of speculation. Today, wheat futures on the Chicago Board of Trade, the Kansas City Board of Trade, and the Minneapolis Grain Exchange shot up, to a 30 month high. (Soft red wheat, March delivery, touched $8.8075 a bushel.) Wheat prices have risen 76 percent over the last 13 months.

China alone accounts for over 17% of annual world wheat production. In 2009/2010, China produced 115.12 million metric tons, out of the world total production of 682.6 mmt. But in the current crop year 2010/2011, world output is projected to be way down, at 646.51 mmt, with China's output doubtful to reach 114 mmt. Committed to food self-sufficiency and a grain reserve, China grew and consumed its crops, with negligible wheat imports. Now, all that is in question.

"China's grain situation is critical to the rest of the world —if they are forced to go out on the market to procure adequate supplies for their population, it could send huge shock waves through the world's grain markets," said Robert S. Zeigler, the director general of the International Rice Research Institute in Los Banos, the Philippines. Zeigler, an opponent of the Malthusian outlook, has repeatedly called for national infrastructure to reliably supply all nations with the grains they need—wheat, rice, and corn. He reminded people this week that China's grain self-sufficiency three years ago, helped dampen world food prices from spiking even higher. But today is a worse, extenuated situation. He said of China, "They can buy whatever they need to buy, and they can outbid anyone." - Drought Dire - Chinese state media are describing the drought in increasingly dire terms. "Minimal rainfall or snow this winter has crippled China's major agricultural regions, leaving many of them parched," the official news agency Xinhua said Monday. "Crop production has fallen sharply, as the worst drought in six decades shows no sign of letting up." Data from the Shandong provincial meteorological bureau showed that the drought would be the worst in 200 years if there were no substantial precipitation by the end of this month.

The Chinese government has been putting every possible measure into effect to help ensure the coming year's harvest. For example, directives have been issued to ensure that there is no disruption for any reason to the supply of fertilizer and agricultural chemicals to farmers. But, while there are long-term projects to bring additional water to the often-parched North China plains, they will not be completed soon enough to aid in this emergency, and the other emergency measures can not supply vital water.