Countries about to start hoarding... FOOD!!!

[jtabeb]

FOOD!!!


Saw this on MSN Money with Jim Jubak.

All I can say is UH-OH!

There is a video


Saudi Arabia gives up . . . wheat farming?
Instead of supplying 2.5 million tons of wheat each year, Saudi Arabia will begin importing 3.4 million tons. That’s not exactly good news for a tight wheat market that’s already panicked by export restrictions from Russia, Kazakhstan and Argentina, says MSN Money’s Jim Jubak. (less)
Related Links


Saudi Arabia gives up . . . wheat farming?


Jubak’s Journal: Where’s the next bubble?
The hot money has moved into commodities; wheat has climbed to $17 a bushel from just $10 at the end of 2007. This sector isn’t big enough to replace the real estate market, says MSN Money’s Jim Jubak -- but with stocks stuck in a trading range, commodities are the best game in town. (less)

Jubak’s Journal: Where’s the next bubble?

[Rajiv]

Re: Countries about to start hoarding... FOOD!!!

Interesting post on this topic by Sharon Astyk - The “Holy Crap” Files

I’m going to guess that most people missed what I think might be the most shocking news of the week.
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the big news got almost no attention, but it should have. It was the revelation that Saudi Arabia has decided to stop growing wheat, and rely entirely on imports because they don’t have enough water to grow their own food.
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“The decision would represent a significant shift in policy for the Saudi administration, which launched an agricultural development programme in the 1970s, including the establishment of irrigation networks, to become self-sufficient for some food supplies.

From producing about 3,000 tons of wheat in 1970, Saudi Arabia became a net exporter and by 1991 production had reached 3.8m tons, according to government figures.
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It is almost impossible to overestimate how significant this is. Think about it - the House of Saud and its government have an enormous investment in keeping their society stable - it is the key to the power of any ruling body, and particularly important in Saudi Arabia, where there is a great deal of such instability. Food riots are the last thing Saudi Arabia can afford.

Now let us assume that this policy shift is being made in full awareness of the present biofuels boom, rise in staple food prices and the associated instability. We’re already seeing food riots in some places, and these seem bound to continue. Absolute shortages are being discussed and Saudi policy makers are clearly aware of climate change and its potential impact on their region. Meanwhile many nations, including Russia, are raising tariffs and exporting less grain because of fear for their own people’s supply, further stressing availability.

There are only two possible explanations for this. The first is that Saudi Arabia’s absolute water shortages are so extreme that they simply cannot afford to use water for agriculture. If this is the case, then it does not bode well for the the Saudi people, or for the long term stability of the government or the region. The fact that the government is willing to risk food shortages in the longer term to protect its limited water supplies now suggests a real and deep and urgent crisis that will likely become more acute if climate change accelerates, as it seems bound to.

The other possibility is that Saudi Arabia is confident of its long term ability to outbid just about anyone for grain production, and is confident that supplies will continue to outstrip demand in the future. This seems just barely possible to me - that the Saudis recognize that their resources will become so valuable that they can outbid car owners, and even nations trying to keep food reserves. But since Saudi Arabia will become an enormous consumer of imported wheat, and already relies heavily on food imports, this strikes me as the less likely scenario. Few nations are willing to give up minimal sovreignty and become dependent - as the article notes, this reverses a long term commitment to independence.

[dbarberic]

Re: Countries about to start hoarding... FOOD!!!

Hmm... No more wheat grown in SA.

Well.... if SA has to import wheat, who has the capacity to actually export? Could the US actually be in a position of trading wheat for oil, rather than worthless dollars for oil?

[Rajiv]

Re: Countries about to start hoarding... FOOD!!!

I think the major reason for stopping wheat production is likely to be salinization of the soil from irrigation water (pdf)

This is a paper published in 1995 -- I presume that the salinity has gone up since then, because without excess irrigation water, adequate drainage and egress of drainage water, soil salinity would have only increased.

Dolam area, which lies on central Saudi Arabia approximately 80 km south east of Riyadh city, is one of the main agricultural areas in the kingdom, It experienced a vast
expansion in the area of liTigated crops during the seventies and eighties, This expansion was accompanied with soil quality degradation due to salt accumulation from liTigation water. The aim of this paper was to evaluate the extent of soil salinization and sodication in the area and their effects on soil suitability for crop production (barley, wheat, maize, berseem, cucumber, pepper, tomato and zucchini).
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The results indicated that 60% of the soil in the area is saline (EC > 4mS/cm); However, 66% of the saline soils does not exceed 6 mS/cm, which means that the osmotic potential does not exceed 2.4 bar in 80% of the soils in the area. Also, 80% of the soils in the area does not reach the salinity threshold value for the reduction of the productivity of wheat and barely. Since saline soils are not suitable for the production of berseem, cucumber, tomato, maize and pepper, only 40% of the soil in Dolam area remams suitable for the production of such vegetables indicating the urgency of starting a suitable irrigation program to ensure the reclamation of the salt-affected soils or at least protect the area from further salinization

Berseem I believe is clover - that would be used as livestock feed, and to fix nitrogen in a good crop rotation scenario.

From eSoil Alert May 2007 (pdf)

Through discussion with Dr. Al-Sheikh Abdullah it was realized that salinity problem is continuously increasing in Saudi Arabia, therefore, a timely action should be taken to mitigate the salinity. Immediately required are; 1) a national salinity action plan to tackle salinity in agricultural farms; 2) introduction of soil salinity section in existing agriculture related departments; 3) capacity building of national manpower in standard procedures of salinity measurement, monitoring, salinity data interpretation and soil reclamation; 4) understanding and improvement of water quality for use in agriculture; and 5) correlation of existing soil survey report of the Kingdom of Saudi Arabia to the latest available standards.

I guess the response of the Kingdom was to stop wheat farming all together -- and concentrate on higher value crops

[GRG55]

Re: Countries about to start hoarding... FOOD!!!

I think the major reason for stopping wheat production is likely to be salinization of the soil from irrigation water (pdf)...

...I guess the response of the Kingdom was to stop wheat farming all together -- and concentrate on higher value crops

If you fly over the Kingdom of Saudi Arabia, as I have regularly for years, you can see (even from high altitude in a commercial jet) the massive irrigation pivots and green crop circles in the central desert (or what was desert until irrigation arrived). Saudi is a large grower of alfalpha, which they use as livestock feed, particularly for dairy cattle. Wheat is easier and cheaper to import than fresh dairy products, so that may be part of the reasoning...