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Progress! ‘About half as many people face hunger today as in 1970.  This is a truly remarkable achievement’

https://envmental.substack.com/p/hunger-games

“I would rather take care of the stomachs of the living than the glory of the departed in the form of monuments.” – Alfred Nobel

Norman Borlaug, Father of the Green Revolution, won the Nobel Peace Prize in 1970 for his scientific achievements genetically modifying crops and dramatically increasing cereal grain crop yields. At the time, half the world’s population faced chronic hunger.

By the late 1990s, these achievements were believed to have prevented a billion deaths. More than a quarter century later, the figure is almost certainly far higher.

In his Nobel acceptance speech, Borlaug stated, “it is true that the tide of the battle against hunger has changed for the better during the past three years. But tides have a way of flowing and then ebbing again. We may be at high tide now, but ebb tide could soon set in if we become complacent and relax our efforts.”

Decades earlier, a problem solved by two German scientists created the preconditions for Borlaug and other genetic scientists to achieve incredible advances in food production in the second half of the twentieth century. Fritz Haber and Carl Bosch won Nobel Prizes in 1918 and 1931 respectively for what is known today as the Haber-Bosch process, a large scale means of efficiently fixing atmospheric nitrogen by reaction with hydrogen from natural gas (originally from coking coal) to create ammonia. Ammonia is a key ingredient in nitrogen-based agricultural fertilizers.

Today, the percentage of the global population facing chronic hunger has been reduced from ~50% to about 9%. At the time of Borlaug’s Nobel award, global population was around 3.7 billion.

While there are still too many hungry people in the world, despite global population more than doubling to over 8 billion, about half as many people face hunger today as in 1970.  This is a truly remarkable achievement.

There are about 500 Haber-Bosch plants operating around the world today in over 60 countries, supplying the world with ~185 million metric tons of ammonia annually. About 70% of that ammonia is used to make agricultural fertilizers.

If you are reading this in an advanced nation with abundant food, Haber-Bosch plants are responsible for about half of the nitrogen molecules in your body.  Put differently, without the fertilizer enabled by these plants, it is difficult if not impossible to conceive of world food production supporting even half the planet’s current population.

That reality alone should temper the enthusiasm with which Western “environmentalists” pursue their war on all fossil fuels and all CO2 emissions at all costs.  The fact that it doesn’t contributes to our view that modern environmentalism contains a sect of dangerous overpopulation Malthusians.  No natural gas, no Haber-Bosch. No Haber-Bosch, less global grain (and protein) production. Less food, fewer people. How inconspicuously, dangerously convenient.

The global fertilizer landscape is changing rapidly due to the war in Ukraine, the disruption to natural gas flows from Russia, and shifting natural gas markets. The dramatic spike in natural gas prices in Europe in summer 2022 led to more than half of European ammonia production being shut down, some temporarily, others permanently.

The spike in natural gas prices drove up fertilizer prices, which led to reductions in usage in some regions, crop substitution (e.g., soybeans naturally fix nitrogen more efficiently than corn, requiring less fertilizer), and other adaptations.  For many farmers in the developing world, where yields per acre are already lower than advanced western nations, the cost increases led to using less or in some cases no chemical fertilizers.

Nosebleed natural gas prices in Europe are down (from nearly $300/Mwh in September 2022, Nordstream pipeline panic) over the last year, providing some relief to domestic fertilizer producers.  But the cost of key agricultural fertilizers is still more than double what they were in September 2019, six months before Covid-19(84) changed the world and more than two years prior to Putin’s invasion of Ukraine:

Increasing European natural gas prices in 2021 are evident above in rapidly increasing fertilizer prices prior to the war.  While some of this can be attributed to pandemic recovery, Europe’s energy and environmental policies are greatly responsible.

The dramatic increase in fertilizer prices corresponds with increases in hunger and the percentage of the world’s population classified as “undernourished” and suffering from acute food insecurity. Since 2019, these conditions are documented by virtually all of the prominent global humanitarian organizations, including the United Nations Food and Agricultural Organization (FAO), the World Food Programme, Welt Hunger Hilfe & Concern Worldwide’s Global Hunger Index (GHI), the EU’s Food Security Information Network (FSIN), and many others.

In its May press release noting the EU FSIN’s “Global Report on Food Crises 2023” (GRFC 2023), the World Food Programme stated (emphasis added):

“…the number of people experiencing acute food insecurity and requiring urgent food and livelihood assistance is on the rise. The report indicates that over a quarter of a billion people are facing acute hunger, with economic shocks and the Ukraine war contributing to the increase. In 2022, around 258 million people across 58 countries and territories faced acute food insecurity at crisis or worse levels (IPC/CH Phase 3-5), up from 193 million people in 53 countries and territories in 2021.”

The following graph depicts the increases in hunger, undernourishment, and acute food insecurity at crisis or worse levels growing since 2019:

The word “Fertilizer” appears 65 times in GRFC 2023, overwhelmingly in relation to higher prices and supply constraints. Fertilizer is listed as a contributing factor in 24 of the 42 GRFC countries in “major crisis”.  Fuel is listed as a contributing factor in 14 of the remaining 18 countries.

Below are a few examples (emphasis added):

Cameroon: “nearly three out of every four crop producers said that they had experienced production difficulties due to lack of access to fertilizers.”

Guatemala: “Worsening socioeconomic conditions compounded by the previous years’ extreme weather events and rising global foodfuel and fertilizer prices pushed the number of people facing Crisis or worse (IPC Phase 3 or above) to 4.6 million in June–September 2022. This is the highest in the history of GRFC reporting.”

Guinea: Food and fertilizer price increases linked to the war in Ukraine threatened the fragile post-pandemic recovery of the non-mining sector. As a result of the spike in international prices, domestic fertilizer prices increased by more than 300 percent (IMF, November 2022).

Sri Lanka: “The unprecedented levels of acute food insecurity in 2022 reflected soaring food prices, reduced income opportunities, poor harvests and severe disruptions to the food supply chain, including shortages of fuel, fertilizers and imported foods, triggered by severe macroeconomic challenges.”

In one of our earliest posts, we noted the excellent adventure of Sri Lankan President Gotabaya Rajapaksa. Encouraged by Western ideals of “sustainable” agriculture and “organic” farming, he attempted to eliminate chemical fertilizers synthesized from natural gas from Sri Lankan agriculture.  As we wrote at the time:

“What ensued over a little more than a year is a cautionary tale about “organic” farming and the connection between petroleum hydrocarbons (natural gas is a key ingredient in modern agricultural fertilizers), global food production and human prosperity. A country that three years earlier had been a net food exporter and one of the world’s leading tea exporters suffered what might be the quickest collapse of a nation’s agricultural sector not caused by weather or war in modern history, simply by the choice to ban chemical fertilizers and pesticides.”

Stresses on the current global food supply and increased hunger are the result of the confluence of many factors identified in the reports noted above. The pandemic disrupted production and supply chains and recovery is uneven and incomplete. Regional conflicts in Africa and the Middle East continue to increase food insecurity. Floods, droughts, heat, cold and other weather events – perennial uncertainties in agriculture – have reduced acres/hectares in production, harvests and yields in various regions across the world over the last several years.  Reductions in some areas have been partly offset by surpluses in others. What is not reflected in these reports are the consequences of Europe’s and the West’s energy and environmental policies.

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Most of the developed world has rightly focused on the human carnage of Russia’s invasion of Ukraine and the impact on global energy prices and European economies.  But for billions in the developing world, the impact on food inflation, availability, and hunger is a very real, immediate, and ongoing threat.

As we noted in our very first content piece on Substack last December, Putin’s invasion of Ukraine did not cause Europe’s energy crisis, it merely exposed, advanced and exacerbated it. Europe’s energy crisis is self-inflicted. Europe made a bad bet to transition rapidly from fossil fuels to wind and solar, eschew (and close) nuclear power plants, and rely on Russia for natural gas to compensate for wind and solar intermittency problems.  This gave Putin leverage to believe he could attack Ukraine and limit the economic consequences to Russia, while gaining credibility selling energy to the West and funding his war machine. The rest is history.

In addition to throwing global energy markets into chaos and risking long-term deindustrialization in Europe, increases in fuel costs have a direct and deleterious impact on agriculture.  Increases in natural gas prices raise ammonia and fertilizer prices.  According to the US Department of Agriculture (USDA), these commonly make up around 35% of farmer’s operating costs for corn and wheat. Fuel accounts for around 3-5% of cereal grain farm costs in advanced nations and diesel is the life blood of agriculture in advanced nations. Even with price of fuel and fertilizer both easing since the summer of 2022, we are concerned about a lag effect with price spikes in energy and fertilizer that is not yet fully realized.

Favorable conditions for new Haber-Bosch plants and the natural gas they require do not exist where western environmentalists are hell bent on reducing all forms of fossil fuel production and use. Those same political choices and pressures do not bode well for diesel.

Days before this post, Putin refused to revive the Black Sea Grain Initiative to safeguard passage of Ukrainian grain through the Black Sea. Having demonstrated his willingness to use energy as a geopolitical weapon when given the opportunity, we have growing concerns he will attempt to do the same with grains exports and fertilizer. We have similar concerns China may attempt to do the same.

According to UN FAO data shown below, Russia, Ukraine, and China combined produce ~32% of global wheat production. Russia and China, alone account for almost 28% of the global total.

China (the world’s second largest corn producer behind the U.S.), Russia and Ukraine produce about 27% of the global corn total, with China and Russia alone accounting for nearly 25%.

As much as half of Ukraine’s wheat production and around 40% of its corn production have been lost to the war.  About 5 million hectares or ~15% of Ukrainian farmland is believed to have been mined. This will take a decades or more to clear and cost billions of dollars.

The world is heavily dependent on Russia and China for key fertilizer inputs. The following chart from the US Department of Agriculture demonstrates the concentration of the key elements in the global fertilizer supply chain originating in Russia and China:

Source: U.S. Department of Agriculture

At the peak of Europe’s energy crisis in summer 2022, as much as 67% of European fertilizer manufacturing was shuttered. As the price of natural gas eased by early 2023, some plants restarted production, but for many European manufacturers the writing was on the wall. Plant shutdowns and closures and have continued throughout 2023, including major European firms BASF, as well as Yara and Eurochem.

Global food supply conditions appear precarious enough over the next few years without factoring in China and Russia using food and/or fertilizer as geopolitical weapons. Russia used leverage over one key commodity (natural gas) to invade Ukraine.  China recently restricted exports of key commodity metals necessary to support the West’s “alternative energy transition”, defense and semiconductors. We would not bet against either or both of them using food and fertilizer in a similar geopolitical fashion in a malevolent form of Hunger Games.

Never one to miss out on any 21st century opportunity to make things worse with bad energy and environmental policy decisions, the EU is on an environmental mission to reduce nitrogen emissions from farming and livestock. The Netherlands, the EU’s largest food exporting country is ground zero and the scene of widespread farmer protests.  We are the first to admit that nutrient loading to water bodies is a non-trivial environmental problem everywhere it occurs.  But with hundreds of millions more people facing hunger than before the pandemic, prioritizing CO2, methane, and nitrogen emissions over hunger is openly Malthusian and asking for a humanitarian tragedy.

Further exacerbating an already tenuous situation, large areas of the U.S. and Canadian grain-producing regions are currently under substantial drought. Using 33%-40% of the U.S. corn harvest to produce fuel ethanol (a policy we’ve noted has been supported by politicians in both parties across Democrat and Republican administrations since 2007) in the midst of drought and growing global hunger seems ignorant and tone deaf. A Bloomberg story last month noted that Brazil has passed the U.S. as the world’s largest exporter of corn, something that would have been virtually unthinkable prior to the 2007 ethanol mandate.

Below is the most recent U.S. drought map. Note the “abnormally dry” to “extreme drought” conditions across much of the U.S. grain belt in the Mississippi and Missouri river states:

And note the widespread drought conditions in the key grain producing Canadian Provinces of Alberta, Saskatchewan, and Manitoba:

Finally, since the war in Ukraine, growing food security concerns have led a number of nations to restrict or even ban exports.  For example:

·       In May 2022, India announced an export ban on wheat and sugar.

·       In January 2023, Mexico announced a temporary 50% tax on white corn exports, arguing the need to guarantee domestic supply and stabilize prices.

·       In May 2023, India announced the continuation of its wheat and export ban.

·       In July 2023, India announced a ban on the export of non-basmati rice.

·       In July 2023, Russia announced a ban on the export of rice and rice groats.

·       In August 2023, India imposed a $1,200 per ton minimum export price (MEP) on basmati rice shipments in an effort to calm local prices ahead of key state elections.

At the present moment in time, Western “environmentalists” should carefully consider whether their policies are exacerbating an already tenuous situation for hundreds of millions of hungry people worldwide. Constraining diesel (the life blood of modern farming) and natural gas (the key input into modern fertilizers) condemns the world to dramatically lower food production while inviting Russia and China (who will constrain neither) to use energy, food and fertilizer as geopolitical leverage at continued expense to the world’s poorest.

On podcasts and in posts, Doomberg often states “on the road from prosperity to starvation is riots”. We wonder what Dr. Borlaug, who died 14 years ago next week, would think about the western world’s priorities at a time like this.

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