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martes, 31 de mayo de 2022

Dimitry Orlov: Engineering World Hunger

The latest fake Western narrative, emanating from some secretive tiny brain located, most likely, somewhere in suburban Virginia, is that Putin is responsible for looming world hunger because of the war in the Ukraine. "Putin Blocks Ukraine Grain Exports! World Hunger Looms!" screams the expertly concocted fake newspaper headline. A very simple analysis of the available numbers is enough to prove that this narrative is a fake.

In 2021 Russia and the Ukraine together supplied the world market with 75% of its sunflower oil, 29% of barley, 28% of wheat and 15% of corn. Almost 50 countries depend on Russia and the Ukraine for at least 30% of their wheat, of which 26 depend on them for more than half. Last year's grain harvest in the Ukraine was unprecedentedly huge: 107 million tonnes, of which, in round numbers, there was 33 million of wheat, 40 million of corn and 10 million of barley, surpassing the 2020 harvest by 22% in tonnage and by 23% in yield. Annual wheat consumption in the Ukraine is only around 4 million tonnes. Unsurprisingly, the Ukrainians decided to export 70 million tonnes. This was a forced decision: there is nowhere to store this amount of grain. The top 15 grain elevators, all foreign-owned, add up to less than 21 million tonnes. All of these elevators are in the center and west of the country and remain unaffected by Russia's Special Operation in the east.

By July 1st of this year the Ukraine is hoping to export at most 47 million tonnes of grain. Could it possibly export more? No, it couldn't. And this has nothing to do with the evil Russians. In the respected opinion of the Ukrainian Grain Association and its head Nikolai Gorbachëv, the grain export capacity of Ukrainian ports is only around 1.2-1.5 million tonnes per month. They could summon every navy in the world to provide security, and they still wouldn't be able to ship more than 1.5 million tonnes per month. Nor does rail provide any sort of alternative. The route through Poland is complicated by a difference in rail gauge while hauling grain to the now largely disused Lithuanian port of Klaipeda would take it through Belarus. Sure, Alexander Lukashenko would be happy to allow such transit—as soon as the West lifts all sanctions against Belarus and compensates it for the losses they have caused. All that remains is road transport heading west, which is now being used very extensively, adding up to... just over 1 million tonnes over the past few months.

To sum up, the Ukraine was completely unprepared for last year's bumper crop. Whatever resources it had to prepare for it were squandered on preparing for an epically unsuccessful military operation against its Russian eastern and southern provinces. And then it shot itself in both feet by mining the approaches to the port of Odessa. Not only that, but it mined them incompetently: some of the mines lost their anchors in a storm and are now drifting about the Black Sea, one making it as far as a sea lane near Bosphorus in Turkey.

Does this mean that because of these difficulties with Ukrainian grain exports the world is doomed to hunger? Oh, please! Even if the Ukraine successfully exports the remaining 11 million tonnes of wheat as it had planned, this wouldn't save anyone because that would be just 4% of world demand. Similarly with corn: global demand is 200 million tonnes while Ukrainian exports are generally around 30-35 million tonnes. So, let's concede that the Ukraine and the situation around it have nothing much to do with the looming threat of world hunger. What does it have to do with, then?

Let's turn it over for a moment for those pro-Russian propagandists at The Food and Agriculture Organization of the United Nations. According to their experts, in February of 2022, before the start of Russia's operation in Eastern Ukraine, prices of agricultural products reached yet another peak, 2.2% above February of 2011 and 21% over 2021. This happened not because of Russia at all, but because of pandemic-related money printing and high prices for energy, fertilizer and other agricultural resources. In addition, since the beginning of the military action in the Ukraine, 23 countries have imposed strict limits on agricultural exports. Most significant among them is India, which forbade grain exports because of a terrible drought.

The only thing for which Russia can be said to be responsible is for restricting its exports of certain fertilizers, which it did to protect the supplies of its farmers. In 2020, Russia was the leading exporter of nitrogen fertilizes, second-largest of potassium and third-largest of phosphorus. The world market is now short of about a quarter of its fertilizer needs, and if this problem isn't fixed, hunger is indeed inevitable for many countries. But even here Russia is only partially to blame: it was anti-Russian sanctions that caused very high prices for natural gas, which is the main feedstock for nitrogen fertilizer production.

To conclude: some idiots decided that using Covid as an excuse to litter the planet with helicopter money, smashing the European natural gas market, imposing "sanctions from hell" on Russia and then blaming it all on Russia is, somehow, a winning strategy. Well, idiots, is it? To top it all off, there is now a severe wheat flour shortage in the yet-to-be-liberated parts of the former Ukraine: what there is for sale there has been imported from Turkey! Is this idiocy contagious?

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