The Chinese government has begun a process of buying wheat around the world, a sure indication that they do not expect their winter wheat crop to survive the drought that is currently devastating central China. This is not going to affect food supplies in the United States or anywhere else in the first world, but it is going to cause severe food shortages throughout the third world, and there is likely to be extensive unrest worldwide.
It will mean higher food prices in the first world, of course, but the efficiently organized developed world has sufficient food supplies and a robust enough economy to weather this particular storm. However, if there should be a serious failure of any North American crop from winter wheat through corn to summer wheat, actual food shortages will appear in countries get their supplies from the U.S. and Canada.
Right now, most world populations are strong and healthy. In the third world, the young far outnumber the old. This means that the coming scarcities represent a volatile situation. In the Middle East, already in upheaval due to dramatic increases in food prices, shortages are likely to worsen, possibly dramatically.
36% of the U.S. corn crop now goes to ethanol production and Secretary of Agriculture Tom Vilsack said on Thursday that there is no expectation that this percentage will drop.
US farmers expect to plant a record soybean crop and the second largest corn crop ever planted in this country, but even so, it will not make up shortages elsewhere enough to lower prices. Should adverse weather conditions this summer damage the American crop, corn will have to be diverted from ethanol production to food use. Even so, scarcity and high prices in the third world will become desperate by the spring of 2012.
It is important to keep a close eye on this situation, because young people around the world are going to take inspiration from the Tunisians, the Egyptians and the Lybians and take to the streets if they do not have enough to eat. As the world begins to starve, it will also begin to burn.
A strong American harvest is, as never before, the key to stability on planet earth. I will be watching weather condtions carefully and providing additional warning as appropriate.