By David J. Olney
Senior Analyst International Security, SAGE International (SAGE),
Member of the SAGE Advisory Board
First published 24/06/2022 on: https://davidolney.com.au/the-federal-election-was-a-victory-for-australian-democracy/
People across the world are becoming progressively more concerned about how they are going to cope with ever increasing food and fuel prices. Unsurprisingly, they are voicing their concerns and expectations that governments should do something right now to reduce cost of living pressures. Also unsurprisingly, governments across the world are discovering how little they can do, and how unprepared they were to deal with these additional costs of living pressures on top of all of the inflationary pressures unleashed by the COVID-19 pandemic. Politicians and economists are chattering endlessly about how hard they should pull on the interest rate lever, but, at least so far, they are not speaking seriously about what they are going to do about genuine and increasing scarcity.
Even though COVID-19 is prevalent everywhere, most of the mass media and populations across the world have wanted to believe that 2022 would be the year when everything gets back to normal. The Russian invasion of Ukraine threw a spanner in the works of everything getting back to normal, and the media and our political elites do not yet appear to have pondered just how much damage this spanner in the works has already done to the global food and fuel system.
Oil production is already down at least one million barrels per day, and OPEC shows no sign of increasing oil production to make up for Russia not being an acceptable supply option for many countries. After the downturn in oil consumption during the early phase of the pandemic, OPEC is putting cash back in its coffers while it can. Whether this is being done to make up for recent tough times, or in preparation for harder times ahead, is not clear. Either way, OPEC has no compelling reason to increase production to reduce oil prices.
Food prices have already increased consistently across the world, which is having a particularly adverse impact on populations who rely heavily on imported food. The costs of buying and shipping last year’s crops are raising the price of staples (such as wheat, rice, and cooking oils) to a level at which food riots appear probable before the onset of winter in the northern hemisphere. Even in places where local food production should be plentiful and affordable, the production of food is already being adversely affected by the rising costs of fuel, seed, and fertilizer.
Many of us are familiar with the phrase “winter is coming” from a famous fantasy series. The phrase is used liberally throughout the series and takes on a particular portent of disaster when uttered by characters who understand its deeply unsettling implications. Of course, winter is always coming, and winter has always been a difficult and lean time of year. Nonetheless, winter is coming, and it is going to be difficult this year and potentially disastrous in 2023-24.
During winter 2022-23, the world’s population will be eating the remains of last year’s crops and trying to work out how to live while using less fuel. It will be difficult and expensive, but exorbitantly priced food will still be available to purchase and/or fight over.
In contrast, during winter 2023-24, there may be extraordinarily little food, which might become unattainable for all but the wealthiest communities. The war in Ukraine is disrupting the local planting of wheat and sunflower crops, and the sanctions on Russia are disrupting affordable global access to fertilizer and fuel for agricultural machinery. If more food is not planted immediately, there will be a massive global shortage of food by winter 2023-24. Even if the war in Ukraine is over by the end of 2022, which seems highly unlikely, the damage to global food supplies will already be devastating.
President Putin has promised to ship food to Africa so that millions of people will not starve this year, but it is unclear how this can be achieved. The Chinese Communist Party started buying up global food stocks in 2021, but this food will run out before winter 2023-24. It is interesting that the CCP started preparing for a famine one year before the Russian invasion of Ukraine, and I imagine we will never know how long the senior echelon of the party thought the war in Ukraine would take. India has ensured Egypt’s access to wheat, at the cost of its own food security, which raises some interesting questions about how the two countries could control the choke points for Arab oil exports. A few countries are preparing for this year, and a few more countries are preparing for next year, but most countries are in no position to successfully weather winter 2023-24.
And then we have my home, Australia. Australia is a food bowl, should be a major fertilizer producer, and should have genuine contingencies for maintaining the supply of fuel to agriculture and mining industries. Sadly, we are not going to be the food bowl that we should be over the next few years. Australia hasn’t secured its possible position as a major fertilizer producer, and we appear to have no idea what to do about rising fuel costs (and eventual fuel scarcity). The new ALP federal government is sending ministers everywhere to speak with everyone, which is better than the previous coalition government, but they are talking when they should be doing. As usual, Australia will agonize when it should act, and, as a consequence, we will let our neighbourhood down. Australia should provide affordable food and fertilizer to any of our neighbours who need them, and we should bring stability to our region. Australia consistently claims to be a middle power, but we are not ready to act like a properly capable middle power.
Winter is coming, and it will be harder this year than it was last year. Indeed, winter 2023-24 is shaping up to be a harder winter than anyone can remember, and I don’t see any evidence that the world is doing what it needs to do to avoid disaster. Many countries have no choice but to import most of their food, fuel, and fertilizer, and it is up to countries like Australia to do what they can to take the sting out of the coming winter. If we don’t take the sting out of winter, we are all going to have to live with disastrous consequences.