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China's Pursuit Of Food Security Comes As Crop Conditions Set To Be "Worst In History" 

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by Tyler Durden
Friday, Mar 25, 2022 - 03:20 AM

In September 2020, Michael Every of Rabobank floated the questionWhat possible disruption is coming that requires China to start massive stockpiling of all possible commodities? 

It was no secret by 2021, China panic hoarded half of the world's maize and other grains resulting in increased food inflation

China's buying spree of all commodities left many market observers puzzled by Beijing's stockpiling motives. Now we understand the second-largest economy in the world was forecasting a global catastrophe of widespread famine due to disrupted food supply chains. 

Global food supplies were already tight on a post-COVID basis due to snarled supply chains and adverse weather conditions in key growing areas worldwide. The Ukraine invasion by Russia was a shock. It fractured global food supply chains and sent food prices to record highs with the very risk shortages will materialize in emerging market economies dependent on the eastern European country. 

Ukraine is one of the world's largest agricultural exporters of corn and wheat. Before the invasion, Ukraine was the second-largest supplier of grains for the European Union and one of the largest suppliers for emerging markets in Asia and Africa. Breaking down the numbers, Ukraine produced 49.6% of global sunflower oil, 10% of global wheat, 12.6% of global barley, and 15.3% of global maize. This year harvest will be severely reduced because of war. 

Last week, the United Nations (UN) World Food Programme (WFP) warned that disruptions in Ukraine "risk imminent famine and starvation in more places around the world." 

So it's apparent President Xi Jinping made the right decision in prioritizing food stockpiling ahead of the global food supply chains fracturing. However, Xi has an emerging food production problem. 

Bloomberg cites Tang Renjian, China's agriculture minister, who warned that last year's record-breaking floods had sparked "big difficulties" with food production. 

 "China faces big difficulties in food production because of the unusual floods last autumn. 

"Many faming experts and technicians told us that crop conditions this year could be the worst in history," he said. 

Next, food protectionism may flourish in agricultural-centric countries that want to first satisfy domestic supplies before exporting. This is already beginning and may increase food prices and induce shortages. 

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