US a big winner of China-Australia trade war

American exporters are emerging as winners from the China-Australian trade war. US goods filling market openings caused by Beijing’s punitive tariffs on Australian goods

Statistics from the Chinese Commerce Ministry, General Administration of Customs of China and trade associations in Australia all show deep dives in the value of Australian exports to China in recent months. 

Australian exporters have been ensnared in a wider geopolitical feud over everything from Huawei’s reputed security risks to the pandemic to alleged foreign interference in local politics. Beijing has taken particular umbrage to Australia’s call for an independent investigation into Covid-19’s origins.

At the same time, American exports ranging from wine, beef, cotton, timber to coal have seen their market share in China grow since last year. US producers are filling the void left by the China-Australia trade row. Beijing has also pledged to buy more from the US as part of its first-stage deal to ease trade tensions with the US. 

Winemakers in Australia who compete with American producers worldwide for market share are particularly being hung out to dry. They exported wines worth a paltry A$12 million (US$9.1 million) to China between December 2020 and this March, representing just 4% of the amount shipped in the same period a year ago.

Chinese tariffs as high as 218.4% on Australian wines have slowed shipments to its usual largest overseas market to a trickle, according to the Australian government’s Wine Australia portal. 

Dramatic changes in the past 12 months

Australian wines used to enjoy zero-duty treatment under a free trade pact between Beijing and Canberra ratified in 2015. Canberra is now seeking redress from the World Trade Organization as it contests Beijing’s sanctions against its wines and other exports.  

Meanwhile, Australian barley and other agricultural products face tariffs of up to 80.5%, after Beijing concluded in May 2020 that China’s annual import of A$2 billion worth of such cereal grain from Australia as animal fodder and beer and beverage ingredient put Chinese farmers at a disadvantage due to Canberra’s supposed “rampant trade subsidies.”

China Customs data also show the nation’s meat imports from Australia dropped 8.5% in the first four months of this while Xinhua said China had stopped importing live lobsters since October as a precaution against “food safety risks.”

Recent price surges of iron ore, which represents the bulk of Australia’s exports to China, have helped to offset slumps across other categories and pushed the total value of exports to China in May up 55.4% to US$13.6 billion. 

American barley has become the new favorite of Chinese brewers and fodder producers after Beijing opened the door for more US agricultural products in May 2020. In March, the US Department of Agriculture also hailed a new monthly high in beef exports to China, hitting 14,552 tons.

The final quarter of 2020 was also a blowout season for American coal exporters when Chinese power plants were told to boycott Australian mined coal and tap other nations’ supplies.

Not just agriculture is hit

A power shortage at the time caused China’s imports of American coking and thermal coal to soar more than sevenfold over the previous quarter. The momentum lasted well into the first quarter of this year, with monthly average imports hovering at around 280,000 tons, according to Xinhua which cited data from China Customs. 

Altogether China imported US$73.59 billion worth of goods from the US in the first five months of 2021, up a whopping 59.8%. Australia’s corresponding total stood at US$62.37 billion, up 33.3%, the latest data from the General Administration of Customs show. 

Xinhua and state broadcaster China Central Television have suggested in recent op-eds and current affairs programs that Beijing should leverage its purchasing power to drive a wedge between Canberra and Washington as Australian businesses and politicians complain about US exporters exploiting their woes and undercutting their markets in China. 

Russia squeezing US out as agricultural superpower

The US is being pushed out of the grain market as Russia’s bumper wheat harvest has dragged down prices to record lows. Russian agricultural exports are booming thanks to a weaker national currency and massive investment.

“We are pushing America aside in some markets, and we are satisfied with this,” said Russia’s Agriculture Minister Aleksandr Tkachev.

This year Russian farmers are expected to harvest the biggest crop in over a century. Russia will produce at least 83 million tons of wheat in the current growing season, according to estimates by The Wall Street Journal.

Lower prices and close proximity to large markets gives Russia an advantage, according to the General Director of the Institute for Agricultural Market Studies Dmitry Rylko.

“A relatively weak ruble is good for the Russian wheat market. We see either gradual or rapid growth for our exports,” the expert told RT.

However, the figure announced by the Russian government earlier this year is much more impressive. The Moscow-based grain consultant ProZerno estimates a harvest of over 130 million tons. It is 2.6 percent more than the previous record set in 1978 before the Soviet-Afghan War.

“Today our task is to set reasonable prices across the country. The grain crop of 130 million tons, there is more to come. It may reach up to 200 million tons. The main thing is to find new sales markets,” said Tkachev.

The US agricultural sector has faced lousy weather this season, meaning fewer acres of wheat were sowed in 2017 than ever before. US wheat output is expected to decline by a quarter compared to the previous season.

Unfavorable conditions along with Russia’s resurgence pushed wheat prices at the Chicago Board of Trade down almost 25 percent to $4.19 a bushel (about 27 kilograms) compared to July, when Russia began a record wheat harvest. The US Wheat Associates trade group announced the shutdown of its office in Egypt, the world’s biggest wheat importer.

“We literally can’t compete on the price of wheat in those markets compared to Russia,” said the trade group’s spokesman Steve Mercer, as quoted by the WSJ.

According to the US Agriculture Department, American wheat will make up just 15 percent of global exports in 2017, down from half four decades ago. The plunge was also caused by more grain grown in Europe and India. The US will produce half as much as Russia, according to the department.

Last year, Russia managed to become the world’s leading producer and exporter of grain, after shipping 34 million tons from its 119 million ton harvest. Exports of Russian wheat are expected to increase to 40 million tons this year, according to the agriculture ministry.

“No one is leaving the market. The Americans are rather better at corn and soybean farming, and they are successfully doing that while losing position in wheat,” Rylko told RT.


Russians love Made in Russia

President Vladimir Putin has led the national charge toward self-sufficiency, arguing food generates more export income for Russia than arms. He has even vowed to become the world’s biggest supplier of organic food, ushering in a potential culinary Cold War with the bio-engineered mega-farms of the U.S.

Agriculture Minister Alexander Tkachev captured the mood in late September when he announced Moscow’s ban on European food was having such a positive effect in bolstering domestic output that he wanted sanctions to last longer. “We are interested in keeping them for another five years,” he told the Rossiya 24 TV channel, backsliding into one of the Kremlin’s more traditional timetables for economic plans. “Russian consumers are now happy to be looking for Russian-made goods in shops,” he added.

Russia hasn’t eradicated foreign products from supermarket shelves, but it has moved toward greater self-sufficiency. The country imported 36 percent of its food in 2013, before the EU’s sanctions and Moscow’s retaliatory embargo. In 2015, that figure dropped to 28 percent. In 2016, according to preliminary data, that fell again to 24 percent in the first quarter and 22 percent in the second.

Where Russia struggles to make up the shortfall — in fruit and dairy, for example — it has scrambled to find new trading partners. Moscow has approved dairy imports from New Zealand and has opened up to Asian dairy investments from Vietnam and Thailand.

Russia – Agriculture – Western Sanctions Keep on Giving

Russian agriculture sector flourishes amid sanctions

Agriculture has overtaken arms sales to become Russia’s second-biggest export secto

When the EU and US imposed sanctions on parts of Russia’s economy following military intervention in Ukraine 2014, some local officials portrayed the blockade as an opportunity. Together with a falling rouble, they said, it would boost development of domestic business by encouraging import substitution and making exports more competitive.

Many western analysts and investors were cynical. But in at least one area of the economy — agriculture and associated sectors — the optimism has been vindicated. Russia last year became the world’s biggest exporter of grains, at more than 34m tonnes. Total Russian grain production hit a record 119 m tonnes. The turnaround is striking since as recently as 15 years ago — and for a couple of decades before during the Soviet era — Russia was a net importer. The success goes beyond grain. Russia has fully substituted imports with domestic production of pork and chicken. It has become a top producer of sugar beet; greenhouse vegetable production last year was up 30 per cent on the year before. While agriculture remains far below oil and gas, the sector has overtaken arms sales to become Russia’s second-biggest exporter.

Globally, a weak agricultural commodities market has hit demand and prices for fertilisers at the same time as new capacity is coming online. But PhosAgro and other Russian fertiliser companies are benefiting from the domestic agriculture boom, with Russian consumption of crop chemicals up 16 per cent last year, against global growth of 2.2 per cent, according to preliminary data from the International Fertilizer Association. There are relatively few large quoted Russian agriculture companies. But since March 2014, when sanctions were imposed, shares in Cherkizovo, the meat processor, have jumped 63 per cent, well above the 45 per cent increase in the rouble-denominated Micex index. PhosAgro’s shares have risen 85 per cent in rouble terms in that period, and shares of Acron, another mineral fertiliser producer, have tripled. Growth in Russian agriculture and linked sectors could potentially continue to be strong as rising profits allow farm groups to invest in technology and more fertilisers to improve sub-par productivity. The most exciting opportunity lies in Asia, where Russia has a band of fertile land along its border with China. There, the soil and climate — on a similar latitude to the big grain-growing areas of the US — is good for soyabean cultivation. With food exports to China still in their infancy, developing that sector could take years, or even decades. Even without it, however, Russia’s agriculture boom shows that, despite sanctions and the poor state of east-west relations, there are pockets of value and opportunity to be found in the Russian market.

Source:

https://www.ft.com/content/422a8252-2443-11e7-8691-d5f7e0cd0a16


 

Russian Agriculture Thrives Amid Restrictions

Russia’s agricultural boom continues to pick up steam. The government has committed 13.7 billion rubles in new subsidies to farmers, which will help them with the purchase over 21,000 new pieces of equipment, including tractors and seeders. The agricultural sector has only seen benefits from the three year sanctions war between Russia and the West.

The Russian government expects the 13.7 billion rubles in new assistance to help not only farmers, but the domestic agricultural machinery sector as well. In the first six months of 2016, Russia produced 35% more tractors and harvesters than it did in the same period in 2015, with farmers ever-hungry for new equipment. The Cabinet seems to be hoping to continue that trend.

Russia has enjoyed an agricultural boom since 2014, with the trend setting to enter its third straight year. In 2014, in response to a series of sanctions by the US and Europe on Russian companies and individuals, Moscow slapped a ban on the import of some agricultural products from the countries which introduced the anti-Russian restrictions.

The sanctions have hit Europe particularly hard, with estimates in mid-2016 indicating that the countersanctions had cost European producers $65 billion in lost revenues. Some countries, like the Baltic states, were hit especially hard: their dairy farms and fisheries have suffered catastrophic declines of 30% or more.

Russian farmers, on the contrary, only benefited from the restrictions, producing record harvests and even becoming the world’s leading exporter of wheat and other grains.

Russian food security also stood to benefit. In 2016, Russia imported 22% of its total consumption of agricultural products, down from nearly 40% in 2013.

Growth in the domestic production of pork and poultry products has already come to negate the need for imports. Fresh vegetable output grew 30% in 2016 compared to the year before, with the use of greenhouses allowing imports to decline dramatically even in winter, from 70% before the countersanctions took effect to 35% today. In a year’s time, the Russian Institute of Agricultural Marketing expects imports to fall to less than 20%.

The agricultural boom has been so strong that it even defied the overall recession facing the Russian economy over the last year and a half. In 2015, when GDP contracted by 3.8%, the agricultural sector grew 2.2%. In 2016, when the decline stopped and economic growth inched forward 0.3%, agriculture jumped by 4.8%, becoming the leader among those industries showing dynamic growth.

Even Western financial observers have been forced to begrudgingly admit the futility of Western countries’ sanctions policy. The Financial Times recently reported that agriculture has overtaken arms to become Russia’s second-largest category of exports. Sanctions, FT noted, only served to fuel the development of Russian agricultural companies, with government and producers focusing their efforts on import substitution. Amid the devaluation of the ruble and falling fertilizer and fuel prices, the profitability of the sector skyrocketed, according to the newspaper.

Speaking to RIA Novosti, Timur Nigmatullin, an analyst at Moscow-based Finam, a financial services company, pointed out that in contrast to other industries, the Russian farming sector doesn’t require a lot of investment to get going. This was a key component to its success, he said.

“The industry itself is not very capital intensive. To start production, for example, on the open field, does not require a large amount of capital, in contrast to the construction of say a factory. It’s possible to start producing relatively quickly if the demand is there,” Nigmatullin noted.

For now, the analyst added, the sector still has a long way to go to reach its full potential, with agriculture still occupying a very small share of total GDP – about 3.5%.

The Russian government seems to realize the importance of countersanctions in improving the outlook for agriculture. Last month, Russian Minister of Agriculture Alexander Tkachev proposed extending the food embargo for another decade. The minister insisted that given a few more years, Russia can become a net exporter of food, and not only in grains.

Nigmatullin agreed, saying that given the right conditions, agriculture, which accounts for 5% of total exports, can continue to strengthen its position in Russia’s export balance, outpacing chemicals and rubber goods (6%), and perhaps even metals and metal products (10%).

Best of all, the boom is expected to lead to lower prices for Russian consumers. Amid the shocks accompanying the decline of the ruble’s value in 2015, prices for many food products have also crept up. However, according to Institute of Agricultural Marketing director Elena Turina, domestic production has already helped to stabilize prices, and even bring some of them back down.

“A similar situation is already being seen in the pork and poultry markets. The growth in production has led to stable prices, with prices even falling in some categories. We can expect the same thing to occur in the market of greenhouse-grown vegetables,” Turina said.

Furthermore, the analyst noted that Russia is now investing in new categories where it previously had limited experience, including the production of new kinds of mushrooms (champignons and oyster mushrooms), orchards and viticulture. “In two years, we will reduce the import of stone fruit (plums, cherries, black cherries) and pome fruits (apples and pears),” the expert promised.

Source:

https://sputniknews.com/russia/201704201052809125-russian-farmers-like-sanctions/

What is The Crop Trust?

By editor of The International Reporter

 

The most important bank in the world received a huge deposit of 50,000 last week. Not 50,000 dollars; 50,000 seed samples. The most important bank in the world is, of course, the Svalbard Global Seed Vault, a repository of the planet’s genetic legacy dug into the permafrost in the side of a sandstone mountain on Svalbard, a Norwegian archipelago halfway between mainland Norway and the North Pole

The seed vault’s administrator, The Crop Trust, describes the vault as “a fail-safe seed storage facility, built to stand the test of time—and the challenge of natural or man-made disasters,” and boasts that it “represents the world’s largest collection of crop diversity.”

Informally known as the “Doomsday Seed Vault” the idea is that the permafrost of a remote North Atlantic archipelago is a safe place to store copies of the most important seed varieties on the planet, including some of the world’s most important staple crops like potato, rice, wheat, lentil and chickpea.

The latest deposit of 50,000 seed samples come from Benin, India, Pakistan, Lebanon, Morocco, the Netherlands, the U.S, Mexico, Bosnia and Herzegovina, Belarus and the U.K. and include 15,000 samples that were withdrawn from the bank in 2015 and returned by researchers who had lost access to their own gene bank in Syria during the ongoing terrorist insurgency.

But here’s the real question that you don’t see addressed in any of the fake news coverage of this recent deposit in the establishment press: What “natural or man-made disasters” does The Crop Trust envision wiping out the genetic heritage of the earth, exactly, and who is “The Crop Trust” anyway?

Well, the second part of that question is easy enough to answer.

As researcher William Engdahl noted in his article on the vault a decade ago:

The first notable point is who is sponsoring the doomsday seed vault. Here joining the Norwegians are, as noted, the Bill & Melinda Gates Foundation; the US agribusiness giant DuPont/Pioneer Hi-Bred, one of the world’s largest owners of patented genetically-modified (GMO) plant seeds and related agrichemicals; Syngenta, the Swiss-based major GMO seed and agrichemicals company through its Syngenta Foundation; the Rockefeller Foundation, the private group who created the “gene revolution” with over $100 million of seed money since the 1970’s; CGIAR, the global network created by the Rockefeller Foundation to promote its ideal of genetic purity through agriculture change.

And as I wrote in these pages in 2015:

So who is the “Global Crop Diversity Trust” which oversees the project? Describing itself as an “established independent organization under international law,” the Trust “was founded in 2004 in Rome, Italy, by the Food and Agriculture Organization and Bioversity International on behalf of the CGIAR international agricultural research consortium. The Crop Trust concluded a Headquarters Agreement with the Government of the Federal Republic of Germany in December 2012 and transferred its headquarters to its permanent location in Bonn in 2013.” The GCDT was chaired until 2012 by Margaret Catley-Carlson, a former President of (you guessed it) the J.D. Rockefeller III-founded Population Council (aka American Eugenics Society). No matter where you turn in this field, you always end up back at the doorstep of the same elite eugenics-obsessed families and the corporate oligopoly they helped to bring into existence.

Surprise, surprise. And given that it is the very same eugenics-obsessed families and foundations behind the GMO revolution that are behind this seed vault, do we really have to puzzle over why they are so concerned about the possibility of an ecological disaster that could wipe out all of the heirloom, non-GMO seed strains on the planet? The question, framed properly, answers itself.

So the good news is that another 50,000 seed samples will be left for whoever survives the coming biological disaster. The bad news is that the real founders and funders of the Svalbard Global Seed Vault probably aren’t going to be saving any life rafts for you.

Source:

https://theinternationalreporter.org/2017/03/02/the-most-important-bank-in-the-world-gets-another-deposit/

Russia Becomes a Grain Superpower as Wheat Exports Explode

By 

Almost 25 years after watching the Dawn of Communism collective farm where he grew up land in the dustbin of history, Andrey Burdin is helping turn Russia into something the communists never could: a grain-export powerhouse.

Over the last few years, Burdin has tripled the size of his farm on the steppe near the Black Sea, winning prizes from the local government for how much wheat he’s produced from the rich soil here and pumping profits back into new tractors and sprayers.

His harvest this season will be a third bigger than what it was just five years ago, helping fuel an explosion in grain exports that has allowed Russia to displace longtime global leaders like the U.S. and European Union.

Long known for its oil and gas, Russia is now moving to retake leadership in the world wheat trade it last held when the Czars ruled. In the process, it’s reshaping the market for one of the world’s most important traded food products.

“People have started to think about the future,” said Burdin, 42 years old, new tractors lined up outside the window of his office. “Before, everyone just lived day to day.”

Farm Renaissance

He plans to buy a Deere & Co. sprayer for 20 million rubles ($311,000) to add to his fleet in time for planting next spring, he said.

From the Black Sea coast and the Volga River heartland to the sun-scorched steppes of Siberia, Russia’s farm belt is enjoying a renaissance, with grain at the leading edge. Turbocharged by the 45 percent drop in the ruble against the dollar over the last few years and bumper crops, local producers are crowding into export markets long dominated by big western players.

Last season, Russian topped the U.S. in wheat exports for the first time in decades and is expected to extend those gains to displace the EU from the top spot this year, according to the U.S. Department of Agriculture. Investors from local farmers to billionaire tycoons are pumping money into the business.

Russian wheat has crowded out U.S. supplies in Egypt, the world’s biggest buyer, and is gaining footholds in some other countries, such as Nigeria, Bangladesh and Indonesia. That’s four decades after the Soviet Union turned to U.S. shipments of wheat and corn to offset shortfalls in its own harvests. Over the last decade, Russia has been the biggest single source of growth in wheat exports, vital to meeting surging global demand.

“Russia will be among the top exporters for a long time, especially given the potential advances in productivity there,” said Tom Basnett, general manager at Market Check, a Sydney-based commodity consultant. “Other producers need to fight harder to maintain their traditional markets.”

The boom in Russia is attracting some of the world’s biggest trading houses, with Olam International Ltd., Cargill Inc. and Glencore Plc investing into everything from silos to export terminals.

Rich soil, government support and proximity to Black Sea ports for shipping means Russian costs can be as little as half those of major competitors supplying key import markets in the Middle East, according to researchers at Kansas State University.

Rivals Shift

Many growers in the U.S. and Europe have turned to higher-quality wheat to compete with the Russian supplies, which are mostly softer varieties that fetch lower prices. Some have also cut wheat plantings, which in the U.S. are expected to be the lowest next year since 1919, according to The Scoular Co., a Kansas grain supplier.

Limited storage capacity means most of the Russian crop is sold shortly after it’s harvested, further depressing prices. Moscow has also imposed export tariffs and even a ban in the last several years in an effort to keep domestic prices down, scaring foreign buyers. The 2010 ban sent prices skyrocketing in key markets like Egypt, fueling unrest that contributed to a revolution.

But exports have been growing since Russia first returned in volume to the global wheat market in 2002. Over the first seven months of this year, farm and food exports were 5.5 percent of Russia’s total, still far behind top-ranked oil and gas but the highest share in at least 15 years and more than big earners like weapons, according to official data.

“With our nature and climate, it’s our destiny to be an exporter,” said Arkady Zlochevsky, president of the Russian Grain Union, an industry group.

The price of Russian wheat for export from Black Sea ports dropped to the lowest in at least six years in July and was last at $169 a metric ton as of Sept. 30, according to the Institute for Agricultural Market Studies. Wheat for December delivery added 0.4 percent in Chicago on Friday.

Farmers trace the roots of the rebound to the Kremlin’s move a decade ago to allow land to be bought and sold freely. That set off a wave of investment in new equipment, fertilizers and expansion of farms into lands long left fallow. Government subsidies and the ruble devaluation, along with good weather, have added to harvests in recent years.

Burdin was granted five hectares of land for his own use in the early 1990s, when his collective farm collapsed in the wake of the demise of the Soviet Union. After working as a hired hand, he struck out on his own in 2005. He traded his old Lada for a used Russian tractor. He said he barely earned enough for food. “It was hard when we started out.”

Now he drives a late-model Ford pickup. His fleet includes a half-dozen imported tractors and four combines, along with a German machine to spread the fertilizer that’s helped him to victory in local wheat-yields contests. He owns 200 hectares (500 acres) of land and rents another 1,500.


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