An outbreak of sharp eyespot disease (SED), which affects cereals, is threatening 72.46 million mu (4.83 million hectares) of wheat in China's major producing regions, according to local agricultural authorities.
This is exactly what I warned about in earlier diaries on the grain situation. With grain inventories at 40 year lows and demand booming the earth cannot afford any crop failures or outbreak of diseases that will lower yields. All we need is a drought here and a pestilence there, and we're toast.
Do you know if the Democrats have a plan of action 'cause we sure can't rely on the repukes to come up with anything except showering bombs anywhere in the Middle East.
SED might erode the wheat output by 10% to 20%, while a more serious epidemic could cut output by as much as 50%, officials from the Henan Oil and Grain Product Quality Inspection Center told Interfax. "As it is still the early growth stage for wheat, the impact on output might be reduced, although wheat quality may be downgraded," an official from the center said.
The outbreak is being blamed on remnants of the disease from last year, coupled with favorable conditions, including plentiful water supplies in some regions and weakened resistance caused by a cold snap earlier this year.
Another batch of negative news is coming for China’s 2008 wheat crop in 2008 with parts of Henan and Hebei reported serious drought while the Wheat Sharp Eyespot Disease is threatening Hennan, Shandong, Jiangsu, Anhui, Hubei and Shanxi.
Some unexpected events, like the January snowfall and cold snap, might affect wheat market fundamentals - considering China’s grain supply is already at a fine balance.
In the past 12 months, wheat prices have almost doubled. The specter of food riots worries many poor countries where food bills have already risen by more than 33 percent. The African continent, already hit by a plethora of serious conflicts, may be paying more than $33 billion for cereal import by the end of this year’s summer even though the actual quantity they import may fall. The US agriculture department has assessed that India will have to import about two million tonnes of wheat in 2008-09 as the buffer stocks are likely to fall below four million tonnes. Any setback in wheat crop at this stage will decidedly see a sharp rise in prices, perhaps by 50 percent.
The decline in wheat production is a global phenomenon. Big suppliers like Argentine, Australia and Russia all have been reporting a decline in their output because of drought or other climate related problems (take note, Sen. Inhofe). When the output falls the quantity available for export also falls; some countries ban exports. A comparatively smaller wheat producer like Kazakhstan has joined Russia and Argentina in banning exports even as wheat prices reached a record of $24 a bushel from about $10 a bushel in December 2007.
In the US, the wheat inventories have fallen to their lowest levels in 60 years. North China, which used to be the country's main wheat basket, has been hit by drought, as reported above, as is Australia, a country that sells nearly half its total wheat crop in the international market. Climate change is damaging crops everywhere. The demand from the nascent bio-fuel industry is also blamed, as is the rising living standards in countries like China. Apparently, the demand for grain has also gone up to feed the livestock.
It may all be seen as a vicious circle of demand and supply. But the end result is spiraling prices of wheat and other food grains. There is a great need to tackle many problems here, and it will have to be done through political means.
The world's food needs cannot be neglected.