Did you know? The heat in the upper six miles of the earth’s crust contains 50,000 times much as energy as found in all the world’s oil and gas reserves combined. Despite this abundance, only 10,500 megawatts of geothermal generating capacity have been harnessed worldwide. For more information view the text and data in Chapter 5 of Plan B 4.0: Mobilizing to Save Civilization.
Click here to view the most recent Grain Harvest Indicator and Data
The 2001 world grain harvest of 1,853 million tons was up 1 percent from the 2000 harvest, but below the all-time high of 1,880 million tons in 1997. (See Figure below.) The U.S. Department of Agriculture reports that the harvest in 2001 fell 40 million tons short of estimated consumption. This comes on the heels of a poor crop in 2000, when output was 36 million tons short.
These two consecutive disappointing harvests have reduced this year's projected world carryover stocks of grain, the amount in the bin when the new harvest begins, to 24 percent of annual consumption, the lowest level in 20 years. With stocks at such a low level, all eyes will be on the harvest in 2002. Another shortfall could lead to rising grain prices and higher prices for bread, meat, milk, eggs, and other products derived directly or indirectly from grain.
The poor harvests of the last two years were largely due to weak grain prices, drought, and spreading water shortages. Grain prices among the lowest in two decades have discouraged farmers from investing in production-boosting measures.
Prices that are too low to stimulate adequate production can be quickly remedied as the market responds to tighter supplies. But dealing with the water shortages that result from drought, aquifer depletion, and the diversion of scarce water to cities is much more difficult.
Water tables are now falling in key food-producing regions—the North China Plain, the Punjab in India, and the southern Great Plains of the United States. The North China Plain accounts for a quarter of China's grain harvest. The Punjab, a highly productive piece of agricultural real estate, is India's breadbasket. And the southern Great Plains helps make the United States the world's leading wheat exporter.
In an increasingly integrated world economy, water shortages are crossing national boundaries via the international grain trade. Since it takes 1,000 tons of water to produce 1 ton of grain, the most efficient way for water-deficit countries to import water is to buy grain from elsewhere.
The fastest-growing grain import market in the world today is North Africa and the Middle East, the region with the most serious water shortages. Virtually every country in this region—stretching from Morocco across the northern tier of Africa and the Middle East through Iran—is facing water shortages. With supplies limited, countries satisfy the growing demand for water in cities and industry by taking it from agriculture. Then they import grain to offset the loss of production capacity.
In recent years, grain imports into Iran, a water-short, grain-deficit country, have eclipsed those of Japan, long the world's leading wheat importer. Last year, Egypt also moved ahead of Japan. Both Iran and Egypt now import over 40 percent of the grain they consume. The populations of both countries are continuing to grow, but their water supplies are not.
Grain exporters are, in effect, water exporters. Canada, where water exports are a politically sensitive issue, is one of the world's leading exporters of water in the form of grain. The 18 million tons of grain, mostly wheat, that it ships abroad each year embody 18 billion tons of water. Similarly, U.S. annual grain exports of 90 million tons of grain represent 90 billion tons of water, an amount that exceeds the annual flow of the Missouri River.
The adequacy of food and water supplies are closely linked. Some 70 percent of all water that is pumped from underground or diverted from rivers is used to produce food, while 20 percent is used by industry and 10 percent goes to residential uses. With 60 percent of the world's grain harvest produced on irrigated land, anything that reduces the irrigation water supply reduces the food supply.
The wild card in the world grain market is China. It accounted for virtually all of the world grain harvest shortfalls in 2000 and 2001. Indeed, in two years, it has reduced grain stocks by nearly 80 million tons.
Among the forces shrinking China's grain harvest are severe drought in northern China during the last two years, spreading irrigation-water shortages as aquifers are depleted and as water is diverted to cities, and a lowering of support prices. The drought will eventually end, but water shortages will not. In a country dependent on irrigated land for 70 percent of its grain, water shortages are fast becoming a security issue.
In 1994, in an ambitious and successful effort to be self-sufficient, China raised grain support prices by 40 percent. Unfortunately the drain on the treasury was too great, so the support prices were eventually lowered, dropping close to world market levels.
China has absorbed the harvest shortfall of the last two years by drawing down stocks, but there are signs that supplies are now tightening. If this huge nation has another large harvest shortfall, it will likely have to import substantial quantities of grain to maintain food price stability.
If the 2002 world grain harvest falls short of consumption when stocks are at a near-record low, prices will rise. Higher prices will curb demand, particularly the feeding of grain to livestock, and will encourage production. Supply and demand will again be in balance, but at a higher price.
If world grain demand continues to grow during this coming year at the 16-million-ton-per-year pace of the last decade, then the 2002 harvest will have to jump by 70 million tons to avoid a further drawdown in stocks. Whether this can occur, in the face of spreading water shortages, remains to be seen. The new reality is that if the world is facing water shortages, it is also facing food shortages.
A review of the demographic map reveals another troubling reality. Most of the 80 million people added to world population each year live in countries that already have water shortages. Restoring a balance between water supply and needs worldwide may now depend on stabilizing population in water-deficit countries.
Copyright © 2002 Earth Policy Institute