Does wood bioenergy help or harm the climate?

"To avoid the worst harms from climate change we must
not only keep the vast majority of remaining fossil carbon
in the ground, but must also keep the vast majority of the
carbon in forests on the land."

In the most financially successful version of biomass technology to date, huge swathes of forests in North America are clearcut and all the vegetation ground and compressed into dense little chips that look like the feed pellets available at the corner pet store. After it’s been processed into these generic pellets, the wood is relatively easy to use as a replacement for coal: the wood (or any other organic material) is made to behave as much as possible like very small, broken-up pieces of coal in a furnace. Logs and wood pellets 

image courtesy of VisionTIR

LONG READ

By John Sterman, William Moomaw, Juliette N. Rooney-Varga, Lori Siegel, 

May 10, 2022

In the 2015 Paris climate accord, 197 countries agreed to limit warming to “well below 2 degrees Celsius,” and to strive for 1.5 degrees Celsius. To have even a roughly 50 percent chance of achieving this goal, net global greenhouse gas emissions must be cut by nearly half from 2010 levels this decade and reach zero by mid-century (UNFCCC 2021). Consequently, at least 140 countries, accounting for about 90 percent of global greenhouse gas emissions, have pledged to reach net zero emissions around the middle of this century (Climate Action Tracker 2021). But few have specified how they will do so. A growing number, including the European Union, the United Kingdom, and the United States, have declared wood bioenergy to be carbon neutral, allowing them to exclude the carbon dioxide generated from wood bioenergy combustion in their greenhouse gas accounting. Many subsidize wood bioenergy to help meet their renewable energy targets (Norton et al. 2019). The appeal is intuitive: burning fossil fuels adds carbon that has been sequestered underground for millions of years to the atmosphere, while forests might regrow, eventually removing carbon dioxide from the atmosphere.

But can burning trees—including not just the trunk, but also the bark, branches, needles or leaves, roots, stumps, mill waste, sawdust, and all the other vegetative materials known as “biomass” that make up a forest—help cut carbon emissions in time to prevent climate catastrophe?

The bioenergy industry and many governments argue that wood bioenergy is carbon neutral. The “Claims and Facts” tables throughout the text below list some of the common claims the industry makes, together with the science showing these claims to be incorrect. For example, the UN Food and Agriculture Organization claims that “While burning fossil fuels releases CO2 that has been locked up for millions of years, burning biomass simply returns to the atmosphere the carbon dioxide that was absorbed as the plants grew” (Matthews and Robertson 2001). But the fact that the carbon in wood was previously removed from the atmosphere as the trees grew is irrelevant: A molecule of carbon dioxide added to the atmosphere today has the same impact on radiative forcing—its contribution to global warming—whether it comes from fossil fuels millions of years old or biomass grown last year. When burned, the carbon in those trees immediately increases atmospheric carbon dioxide above what it would have been had they not been burned.



To illustrate, consider a forest that was harvested for lumber, pulpwood, or energy 50 years ago, and has been regrowing since then. (Few forests in the United States and Europe are mature, “old growth”—most are “working forests” and go through cycles of harvest, regrowth, and reharvest [see US Forest Service 2014]). What happens if that forest is now cut and burned for energy? When the wood is burned, the carbon it contains is emitted as carbon dioxide into the atmosphere. If the forest regrows, after another 50 years it will have removed about the same amount of carbon dioxide it emitted when it was cut and burned for energy. Until then, there’s more carbon dioxide in the atmosphere than if it had not been burned, accelerating climate change.

But the situation is worse: If the forest had not been cut, it would have continued to grow, removing additional carbon from the atmosphere. Compared to allowing the forest to grow, cutting it for bioenergy would increase carbon dioxide emissions and worsen global warming for at least half a century—time we do not have to reach net-zero emissions and avoid the worst harms from climate change.

But what if the wood used to generate electricity reduces the use of fossil fuels? Wouldn’t total carbon dioxide emissions then fall? That depends on how much carbon dioxide is emitted from wood relative to the fuel being displaced. To determine whether wood bioenergy can slow climate change, we therefore need to know answers to a series of questions:

How much carbon dioxide does burning wood for energy add to the atmosphere?

Burning wood to generate electricity emits more carbon dioxide per kilowatt-hour generated than fossil fuels—even coal, the most carbon-intensive fossil fuel. Although wood and coal contain about the same amount of carbon per unit of primary energy—the raw energy in the fuel—(EPA 2018), wood burns less efficiently, in part because it contains more water than coal. The higher the water content, the larger the fraction of the energy of combustion goes into vaporizing that water and up the flue instead of producing the heat needed to make the steam that powers the turbines and generators (Dzurenda and Banski 2017, FAO 2015).

Carbon dioxide emissions from the wood supply chain also exceed those from coal. Wood must be harvested, transported to a mill, dried, processed into chips or pellets, and transported to a power plant (Figure 1). These activities emit carbon dioxide from fossil fuel-powered vehicles and machinery, plus emissions from burning wood or fossil fuels to reduce the water content of chips and pellets from approximately 50 percent for raw wood to about 10 percent for dried pellets. About 27 percent of the harvested biomass is lost in the wood pellet supply chain, of which the largest share—18 percent—arises from burning some of the biomass to generate heat to dry pellets (Röder et al. 2015). In contrast, coal processing adds only about 11 percent to emissions (Sterman et al. 2018a).

The situation is worse if wood displaces other fossil fuels: Wood releases about 25 percent more carbon dioxide per joule of primary energy than fuel oil, and about 75 percent more carbon dioxide than fossil (so-called “natural”) gas (EPA 2018). Wood bioenergy therefore emits more carbon dioxide per kilowatt-hour of power generated than all fossil fuels, including coal (PFPI 2011), incurring a “carbon debt”—an immediate increase in carbon dioxide in the atmosphere, worsening climate change every year, unless and until that carbon debt is repaid later by forest regrowth. 

Figure 1. Life cycle emissions from wood bioenergy. Every stage of the supply chain adds CO2 to the atmosphere, from cutting the trees through transport, processing the wood into chips or pellets, transporting them to a power plant, and combustion. CO2 is removed only later, and only if, the harvested land regrows. Photo credits, left to right: Power Plant, courtesy of Paul Glazzard, Creative Commons Attribution-ShareAlike 2.0 license. Transport: Handymax bulk carrier, courtesy of Nsandel/Wikimedia/Public Domain. Pellet mill, Truck Transport, and Forest images all courtesy of Dogwood Alliance, used with permission.

Will the forests harvested for bioenergy regrow? If so, how long will it take?

The wood bioenergy industry claims to practice sustainable forestry and be carbon neutral (e.g., Drax 2021, Enviva 2021). The most important claim is that wood bioenergy is carbon neutral because the harvested forests will regrow, removing the carbon they add to the atmosphere when burned (Table 1). However, regrowth is uncertain, and regrowth takes time.

Regrowth is uncertain: Land harvested for bioenergy might be converted to pasture, cropland, or development, preventing regrowth. The carbon dioxide emitted when the trees are burned is then never taken back up by forest regrowth on that land. Even if the harvested land is allowed to regrow, the trees may be harvested again, legally or illegally. The carbon dioxide released in each rotation returns to the atmosphere, where it worsens climate change.

Even if the recovering forest is somehow protected against all future harvest, the trees face risks from wildfire, insects, disease, extreme weather, and drought, all increasing as the climate warms (Brecka et al. 2018; Xu et al. 2019, Boulton, Lenton and Boers 2022). These factors slow or prevent carbon dioxide removal from the atmosphere by forests and may even convert forests from carbon sinks to carbon sources (Gatti et al. 2021). These growing risks to regrowth would limit the future removal of the carbon dioxide emitted by burning wood, permanently worsening climate change.

Regrowth takes time: Even if land conversion, repeated harvests, fire, drought, disease, and other adverse events never arise, regrowth takes time. The time required for regrowth to remove the carbon dioxide emitted when wood is burned for energy is known as the “carbon debt payback time.”


Are the forests harvested for bioenergy growing and removing carbon dioxide now?

The US bioenergy industry uses the fact that many US forests are growing today to claim that wood bioenergy is carbon neutral. For example, Enviva, the largest US pellet producer, with multiple mills in the Southeast United States, falsely argues that “…continued forest carbon gain across the landscape… means that products from the Southeast U.S., including wood bioenergy, are not adding carbon emissions to the atmosphere. As a result, when wood pellets from this region are used to generate energy, we can set stack emissions to zero.” (Enviva, nd; see Table 1).
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It is true that forests in the Southeast US are acting as carbon sinks today as the result of intensive management and recovery from prior harvests. But these and other forest carbon sinks are already accounted for in the national greenhouse gas emissions inventories required under the United Nations Framework Convention on Climate Change, which sets the rules for greenhouse gas accounting under international agreements (e.g., UNFCCC 2014). Therefore, what counts is what happens to emissions on the margin—that is, the incremental impact of harvesting forests for bioenergy compared to allowing those forests to continue to grow and serve as carbon sinks. Typical rotation periods for working forests are far shorter than the time required for them to reach maturity and maximum carbon storage (Moomaw, Masino, and Faison 2019, Sohngen and Brown 2011, US Forest Service 2014). The younger the forest and faster it is growing when harvested for bioenergy, the more future carbon sequestration is lost.

A dynamic lifecycle assessment of wood bioenergy

To determine the impact of wood bioenergy on carbon dioxide emissions we developed a model for dynamic lifecycle assessment of wood bioenergy (Sterman et al. 2018a; Sterman et al. 2018b). The model includes carbon dioxide emissions from bioenergy, carbon dioxide uptake by regrowth, and carbon dioxide emissions avoided if wood displaces fossil fuels. Supply chain emissions for both wood and fossil fuels are included. Model parameters were estimated from data on forest regrowth in a wide range of forests in the southern and eastern USA, regions increasingly supplying wood for pellets, much of which is exported to Europe and the United Kingdom.

Figure 2. Impact of harvesting wood for bioenergy in 2025 from a 50-year-old oak-hickory forest in the south central USA. Top: Change in carbon on the harvested land (tons C per hectare). Brown: carbon in soils and dead organic matter; Green: carbon in living biomass. Dotted line: the total carbon stock (living biomass and soils) if the forest were not harvested in 2025. The forest would have continued to grow and remove carbon from the atmosphere but for being cut for bioenergy. The difference between the dotted no-harvest line and the top of the green band is the carbon emitted into the atmosphere by the harvest. Bottom: Change in atmospheric CO2 resulting from the harvest and combustion of the wood. Solid line: wood displaces a zero-carbon energy source. Dotted line: wood displaces coal. Scale: the initial rise in atmospheric CO2 when wood displaces zero-carbon energy is normalized to 100%. The initial rise in atmospheric CO2 when wood displaces coal is about 50% less due to the emissions avoided by the reduction in coal use.

Figure 2 (above) shows the impact of wood harvested for bioenergy from an oak-hickory forest, “perhaps the most extensive deciduous forest type of eastern North America” (Dick 2016). The simulation parameters are estimated for oak-hickory forests in the south central United States, among the forests used to supply wood pellets for bioenergy, including exports to the United Kingdom (Buchholz & Gunn 2015; Sterman et al. 2018a 2018b report results for other forests in the southern and eastern US). Most forests in the United States have been cut multiple times. We assume the last prior harvest was 50 years ago. To assess the dynamic impact of wood bioenergy use, Figure 2 traces the impact of a single harvest in 2025, showing the stocks of carbon in the biomass and soil and the resulting change in the concentration of carbon dioxide in the atmosphere. We consider two scenarios:The harvested wood is used to generate electric power that replaces an equivalent amount of energy generated from coal, the most carbon-intensive fossil fuel.
The harvested wood is used to generate electric power that replaces an equivalent amount of energy produced by zero-carbon sources (e.g., wind and solar).

The top panel of Figure 2 shows the stock of carbon on the land harvested for bioenergy (metric tons of carbon per hectare), including the carbon in the living biomass and in soils and dead organic matter. The harvest and combustion of wood for energy immediately reduces the stock of carbon in living biomass on the land and increases atmospheric carbon dioxide. The stock of carbon in dead biomass and soil also begins to drop: the wood harvest reduces the flux of carbon from living biomass to soils, while heterotrophic respiration by bacteria, fungi, and other organisms continues to release the carbon in dead biomass and soils into the atmosphere. After the harvest, the forest begins to recover. Soil carbon continues to drop for some time, however, until the flux of carbon transferred to the soils from living biomass exceeds the flux of carbon emitted to the atmosphere from the soil by heterotrophic respiration.

The simulation assumes the land is harvested 50 years after the last rotation. The forest at that time is still recovering. The dotted line in the top panel of Figure 2 shows that the total stock of carbon on that land would have continued to grow through 2200 (and beyond), but for the harvest for bioenergy. The difference between the no-harvest and harvest cases is the quantity of carbon lost to the atmosphere due to the bioenergy harvest. The bioenergy harvest not only adds the carbon extracted and burned to the atmosphere, but prevents the additional growth that would have occurred had the forest not been harvested.

The bottom panel of Figure 2 shows the change in the concentration of carbon dioxide in the atmosphere for the two scenarios above. The figure shows the evolution of atmospheric carbon dioxide relative to the no-harvest case, scaled relative to the magnitude of the initial change in carbon dioxide when the wood displaces zero-carbon energy such as wind and solar (the absolute change in atmospheric carbon dioxide depends on the amount of wood harvested and burned). Cutting and burning trees for bioenergy immediately increases the concentration of carbon dioxide in the atmosphere. The jump in atmospheric carbon dioxide when wood displaces coal is approximately half as much as when the wood displaces zero-carbon energy. The impact of displacing other fossil fuels such as fuel oil or fossil (“natural”) gas lies between the coal and zero-carbon scenarios because these fuels emit less carbon dioxide per kilowatt-hour than coal, but of course more than wind or solar.

Note that, in both cases atmospheric carbon dioxide continues to increase through approximately 2040, 15 years after the assumed harvest in 2025. Although the harvested land begins to regrow immediately, seedlings and saplings have much smaller leaf area for photosynthesis and accumulate carbon slower than older trees. Consequently, the carbon sequestered by regrowth is initially less than the carbon the forest would have stored had it not been harvested.


After approximately the year 2040, the excess carbon dioxide in the atmosphere from the harvest and combustion of the wood begins to fall as regrowth outpaces the growth in carbon in the no-harvest case. However, atmospheric carbon dioxide remains above the level it would have had but for the harvest well beyond the year 2100. Even when wood displaces coal, the excess carbon dioxide is not taken back up by forest regrowth until after the year 2140: The carbon debt payback time in this scenario is approximately 115 years. When the wood displaces zero-carbon energy, atmospheric carbon dioxide remains above its initial level well past the year 2200.

The simulation shows the impact of clearing a stand of forest and using the wood for bioenergy. The bioenergy industry claims that they practice what they call “sustainable” forestry—avoiding clearcutting, taking only residues from lumber and pulpwood harvests, or thinning forests by taking only small or diseased trees. Environmental groups, however, have documented the harvest of large trees and clear-cutting by the industry (Norton et al. 2019; Stashwick et al. 2019; Stashwick et al. 2017). To address this issue, we also simulated the impact of thinning, in which only 25 percent of the living biomass is removed from the harvested forest (Sterman et al. 2018a 2018b). Across all the forests examined, thinning reduces the carbon debt payback times somewhat. For example, in the scenario shown in Figure 2, thinning reduces the carbon debt payback year from 2140 to 2115—still too late.

The simulations favor wood bioenergy. We assume that the land remains forested, that the forest grows back without any subsequent harvest, and that it suffers no losses from wildfire, disease, insects, extreme weather or other threats to regrowth. We do not consider additional carbon loss from soils due to the disturbance caused by the harvest. We do not consider non-climate harms from wood harvest and bioenergy production, including habitat fragmentation, loss of biodiversity, and the health effects of exposure to particulates and other pollutants from wood processing and power plants.

To track the impact of wood bioenergy, the simulation shows the impact of harvesting and burning wood for energy in a single year. But the bioenergy industry is growing rapidly, stimulated by the false declaration that wood is carbon neutral and resulting subsidies in many nations. The International Energy Agency reports primary energy from biomass for electricity generation grew at an average rate of more than 6 percent per year between 1990 and 2018 (IEA 2020). The IEA’s “Net-Zero by 2050” scenario projects modern bioenergy—which includes wood—will grow by more than a factor of four by 2050 (IEA 2021b).

What happens to atmospheric carbon dioxide in the realistic case of growing wood bioenergy use? Each year the carbon dioxide emissions from cutting and burning wood would exceed the removal of carbon dioxide by regrowth, continually increasing the concentration of carbon dioxide in the atmosphere, just as filling your bathtub faster than it drains will continually raise the level of water in the tub (until it overflows and damages your home).

The situation is analogous to a government that runs a continually growing fiscal deficit. The outstanding debt rises every year even if the government fully repays every bond it issues at maturity. In the same way, the growing use of wood bioenergy adds more carbon dioxide to the atmosphere every year, increasing the outstanding carbon debt, even if the forests are managed sustainably and all harvested lands eventually recover enough to fully repay the carbon debt incurred when the wood was extracted and burned.


Eventual carbon neutrality is not climate neutrality

Even under the best case where wood displaces coal, regrowth does not remove the excess carbon dioxide emitted by wood for many decades or more, and far longer if the harvested forests are growing today—as most are—and far more if wood displaces other fossil fuels. At that future time, wood bioenergy can be said to have achieved carbon neutrality. Until then, wood bioenergy increases the level of carbon dioxide in the atmosphere above what it would have been, accelerating global warming.

But is the climate impact of that additional warming reversed if regrowth finally removes the excess carbon dioxide? Is eventual carbon neutrality the same as climate neutrality?

The answer is “No.”

Even temporarily elevated levels of atmospheric carbon dioxide cause irreversible climate damage (IPCC 2022; Solomon et al. 2009). The excess carbon dioxide from wood bioenergy begins warming the climate immediately upon entering the atmosphere. The harms caused by that additional warming are not undone even if the carbon debt from wood energy is eventually repaid: The Greenland and Antarctic ice sheets melt faster, sea level rises higher, wildfires become more likely, permafrost thaws faster, and storms intensify more than if the wood had not been burned. Eventual full forest recovery will not replace lost ice, lower sea level, undo climate disasters, put carbon back into permafrost, or bring back homes lost to floods or wildfires. The excess warming from wood bioenergy increases the chances of going beyond various climate tipping points that could lead to runaway climate change: emissions “pathways that overshoot 1.5°C run a greater risk of passing through ‘tipping points’, thresholds beyond which certain impacts can no longer be avoided even if temperatures are brought back down later on” (IPCC 2018, p. 283). Carbon neutrality is not climate neutrality.

Why does it matter? We have already raised global average surface temperatures about 1.1 degrees Celsius (2 degrees Fahrenheit) above preindustrial levels, and most of humanity already suffers from its effects (Callaghan et al. 2021, IPCC 2022). The consequences of warming beyond 2 degrees Celsius are expected to be devastating. Sea levels could rise by well over a meter by the end of this century, exposing millions of people to coastal flooding (Kulp & Strauss 2019). More than half the world’s people would be exposed to deadly heat waves (Mora et al. 2017). The yields of crops including wheat, maize, rice, and soy would fall even as the United Nations projects that world population will grow by billions (Zhao et al. 2017, United Nations 2019). Droughts, wildfires, and intense storms will become more frequent and extreme (IPCC 2018). Warming could push the Earth beyond various tipping points that could lead to irreversible harm (IPCC 2018). These impacts would intensify hunger, economic disruption, mass migration, civil conflict, and war (Burke et al. 2015; Hsiang & Burke 2014; Koubi 2019; Levy 2019). Scientists and nearly all nations on Earth therefore agree that global greenhouse gas emissions must fall as deeply and quickly as possible, reaching net zero by approximately midcentury.

Wood bioenergy moves the world in the wrong direction.

Policy implications

What can be done? First, policies that treat wood bioenergy as carbon neutral must end. These policies allow power plants and nations to ignore the carbon dioxide they emit by burning wood on the false assumption that those emissions are quickly offset by forest growth somewhere else, creating a “critical climate accounting error” (Searchinger, et al. 2009). The carbon dioxide emitted from wood should be counted the same way emissions from other fuels are: fully, at the point of combustion.

Second, subsidies for wood bioenergy must end. Subsidizing wood bioenergy means taxpayers are paying pellet and power producers to make climate change worse.

Third, the fact that wood bioenergy is worse than coal in no way justifies the continued use of coal or any fossil fuel. To avoid the worst harms from climate change we must not only keep the vast majority of remaining fossilized carbon in the ground, we must also keep the vast majority of the carbon in our forests on the land.

The good news is that existing technologies such as energy efficiency, and the use of renewables such as solar, wind, and geothermal energy, can meet people’s needs for comfort, light, mobility, communication, and other purposes. The costs of these technologies are falling rapidly, and in many places are already lower than fossil fuels (IEA 2021a). Innovations in clean energy, energy storage, smart grids, and other technologies are expanding our ability to meet everyone’s energy needs affordably. Unlike wood bioenergy, these technologies allow forests to continue growing and sequestering atmospheric carbon dioxide. Investments in energy efficiency and clean energy also generate multiple co-benefits including increased community resilience, jobs, and improved health and economic well-being, especially for low-income individuals and households (Belesova et al. 2020; Burke et al. 2018; IEA 2021a; IPCC 2018; Pollin et al. 2014; Shindell et al. 2018). In contrast, particulate emissions and other pollutants from wood bioenergy damage human health (Allergy & Asthma Network et al. 2016).

To keep global warming under 2 degrees Celsius, net greenhouse gas emissions must fall to net zero by approximately mid-century, less than 30 years from now. Wood bioenergy increases greenhouse gas emissions and makes climate change worse during these critical years and beyond, even if the wood displaces coal. More effective ways to cut greenhouse gas emissions and meet human needs are available and affordable now. Ending subsidies and policies that promote wood bioenergy will reduce emissions and allow forests to continue to grow, preserving their vital role as carbon sinks that moderate climate change.

Disclosure Statement

No potential conflict of interest was reported by the authors.

Funding

Authors John Sterman and Lori Siegel received no specific grant from any funding agency in the public, commercial, or not-for-profit sectors for this work. Author William Moomaw was supported by a grant from the Rockefeller Brothers Foundation. Author Juliette N. Rooney-Varga was supported by the National Science Foundation under grant ICER-1701062.


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RELATED:
Wood-burning: carbon hero or carbon villain? Q&A with forest modeling scientist Michael Ter-Mikaelian


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PROFITEERING

Investors cash in on food commodities as the poor go hungry

As food prices rose and war broke out in Ukraine, investors looking for a sure bet flocked into food commodities. The trend could be pushing prices up even further, with live-or-die consequences for the world's poor.

The war in Ukraine has had a huge impact on food prices around the globe

Rising consumer prices are aggravating food shortages around the globe, and investors looking to make a buck off food commodities could be making matters worse.

Food prices have risen sharply after the coronavirus pandemic disrupted global supply chains, causing shortages around the world. The price of food spiked even higher following Russia's invasion of Ukraine. Both countries are major global suppliers of agricultural commodities, like wheat and sunflower oil.

"In Uganda, wheat and fuel prices have skyrocketed, making everyday goods like bread almost unaffordable to an ordinary citizen," Anna Slattery, external affairs manager at The Hunger Project, a nonprofit that works to end world hunger, told DW.

"In Malawi, our teams are reporting that the prices of maize grain, soybeans and cooking oil have increased significantly, over 50% in some places. The increase in prices is making it difficult for people to access these vital food items." 

An appetite for commodities

Investors trying to make money off the high demand for food and other commodities could be putting even more pressure on prices.

After the war broke out in February, commodity-linked "exchange-traded funds (ETFs)," a type of investment fund open to the public, saw a huge uptick in activity: By April, investors had pumped $1.2 billion (€1.12 billion) into two major agricultural ETFs, compared to just $197 million for the whole of 2021, Lighthouse Reports, an investigative journalism NGO, found out.

According to the news website The Wire, the Paris milling wheat market, the benchmark for Europe, has also seen a significant increase in the share of speculators — that is, investors whose primary aim is to turn a profit — buying up its wheat futures contracts. That's in place of commercial traders or hedgers, i.e. market players who have an interest in buying the commodity itself, for example to secure a wheat supply for a bread factory. 

Activity at the Chicago Board of Trade, one of the world's leading futures exchanges, also reflects this trend. A recent study by the Center for Development Research (ZEF) at the University of Bonn found that the share of speculators in hard wheat and maize had risen with the price of the commodities, and that it had gone up sharply since the end of 2020. The researchers also found that the volatility of futures prices had increased significantly since the end of 2021, a sign of market irregularities that can lead to excessive speculation.

A sure bet

The ZEF report warned that more speculation could see prices decoupling from fundamentals, like supply and demand for example. It pointed to similar trends leading up to the global food crisis that emerged in 2008.

In April, analysts at investment bank JPMorgan Chase suggested that commodities prices could surge as much as 40% as traders pile in, creating an attractive return for investors.

Traders tend to move away from riskier investments, like tech stocks and cryptocurrencies, in times of economic uncertainty, favoring safer bets, like food and other hard commodities, like oil and fertilizer. Food commodities, like wheat, corn and rice, can also be adversely affected by market uncertainty.

"The more uncertainty in the market, the more demand for risk trading exists," Lukas Kornher, economist and ZEF project manager, told DW. "That is why we see the influx of speculative traders in the market."

It will take a huge effort by the international community to curb hunger in many parts of the world

Excessive trading

"[Speculative traders] basically try to jump on a bandwagon of increasing prices," said Kornher. "And then they start trading with each other instead of meeting the hedging demand of commercial producers or traders."

The price of the commodity can then become disconnected from its physical supply and demand.

Excessive speculative activity in commodities markets is "a double-edged sword," Dirk Bathe, press officer at World Vision Germany, a humanitarian aid group, said.

"On the one hand, speculation on scarce commodities can lead to drastically rising prices," he told DW. "On the other hand, this market functions like an early warning system," giving businesses and policymakers time to react.

Millions more pushed into poverty

The current price inflation and record-high prices at the commodities futures markets signal an expected scarcity within a couple of months, according to Kornher, who said the world was likely "on its way" to a food crisis.

The Food and Agriculture Organization (FAO)'s food price index was up 36% in April compared with the same month a year before, after hitting an all-time high in March. The World Bank's Agricultural Price Index also hit an all-time nominal high in the first quarter of the year, up 25% over a year ago. According to a World Bank analysis, for every one percentage point increase in food prices, 10 million more people are pushed into extreme poverty.

Experts have called for measures to protect food systems against speculation. Banks and investment funds could abstain from food speculation as part of their environmental, social and governance (ESG) policy, for example. They've also warned against countries responding to high food prices by turning to protectionist policies.

"We need to make sure that countries don't take export restrictions, don't take export bans that will only exacerbate the food insecurity we're seeing today," Arancha Gonzalez, trade expert and the former foreign minister of Spain, told DW. "This is what we learned in 2008."

With 100 Million Refugees, the Migrant Crisis Has Barely Begun

Analysis by Andreas Kluth | Bloomberg
May 29, 2022 

“When a stranger resides with you in your land, do not molest him,” a credible authority tells the Israelites in Leviticus. “You shall treat the stranger who resides with you no differently than the natives born among you; for you too were once strangers in the land of Egypt.”

The tension God was referring to is timeless. We all may one day need to flee from injustice, tyranny, violence, hunger or other calamities. And then we’ll need help. In turn, even if we’re lucky enough (for now) to live in stability, we should offer asylum to those fleeing to us. And yet we often don’t.

For the first time ever, more than 100 million people worldwide have been “forcibly displaced,” in the jargon of the UNHCR, the refugee agency of the United Nations. Millions of Ukrainian women and children have fled from Russia’s war of aggression in just the past three months. Millions more — often less conspicuous in the Western media — have run from violence in places like Ethiopia, Burkina Faso, Myanmar, Afghanistan or the Democratic Republic of the Congo.

Both the numbers and the suffering are about to get worse. Also owing to the Russian attack on Ukraine — a “bread basket” that now can’t export its wheat and other staples — a global food crisis is imminent. Most people in Western countries will feel it as a painful rise in prices. But those who are already hungry — in Africa, the Middle East and elsewhere — will face starvation.

Margaritis Schinas, the European Union’s commissioner in charge of migration, told Bloomberg that he’s expecting another refugee crisis. In this one, people will be coming in dinghies across the Mediterranean, rather than on trains through Ukraine and Poland. It’ll be “more messy,” Schinas reckons. As if all those other crises hadn’t been messy enough.

I’ve never been a refugee, but as a journalist, I’ve occasionally witnessed the human toll of migration. I picked grapes in California’s Central Valley with undocumented farm workers from south of the border to hear their stories. They’re the heirs to the “Okies” who once fled America’s Dust Bowl, as described so hauntingly by John Steinbeck in “The Grapes of Wrath.” Except that they’re not only desperate and poor but also alien and unwelcome.

In 2015-16, I covered Europe’s refugee crisis. The migrants at that time were largely Syrians fleeing from their own murderous tyrant. I remember the range of reactions in Europe as they arrived.

At the train station in Munich, many Germans greeted the newcomers with bottled water, teddy bears and hugs. Other Germans were outraged about the chaos and wanted to keep the refugees out. Most were quietly apprehensive. A similar split in attitudes rent all of Europe. Countries such as Hungary turned the refugees back with barbed wire and water cannon.

This spread between hospitality (xenia in ancient Greek), xenophobia (literally, fear of strangers) and all the nuances in between has greeted aliens everywhere and at all times. It’s what God was talking about in Leviticus.

In my experience, the “xenophobes” are sometimes racist or callous but more often just anxious. In Germany in 2015, for example, the backlash against migrants was worst in what used to be the communist East, which has also become the bastion of the populist far right. In a meme I heard often, these Easterners felt that German reunification had turned them into second-class citizens in their own country.

Now they were watching exotic-looking foreigners arriving by the busload and — as they chose to interpret the situation — “skipping the line.” The aliens, in this narrative, were threatening to demote the Eastern Germans to third-class citizenship, and depriving them of nebulous rights — perhaps welfare, attention or compassion — that should belong only to the native-born.

The Scotch-Irish in 19th-century America probably felt the same way when the German immigrants arrived, until the Germans said all this about the Irish, who then repeated it with the Italians, then in succession, the Russians, the Jews, the Chinese… So it goes.

Part of human nature is to distinguish between in-groups and out-groups, and to show the ins more empathy than the outs. Even Benjamin Franklin, ordinarily an open-minded type, looked askance at German and other non-English immigrants, whom he considered “swarthy” and suspect.

That might explain the about-turn in Polish policies and attitudes between the 2015 crisis and this year’s. Back then, the refugees were dark-skinned Muslims, and Warsaw slammed its borders shut. Now they’re fellow Christians and Slavs, and Poland has warmly welcomed more than half of the 6.7 million Ukrainians who’ve fled abroad.

So there we are, forever stretched between dueling human impulses: on one side, openness, compassion and altruism; on the other, suspicion, prejudice and nativism. Some of us emphasize optimistic stories of migrants integrating well into their adopted societies, playing by the rules and just rebuilding their lives. Others dwell on those other tales — of traumatized refugees becoming a burden to their host country or committing crimes.

All these stories exist, and all are equally worth hearing. Then again, the exact same range of biographies exists for the native-born as for migrants. Ultimately, they’re just a reminder that we’re all — aliens and natives alike — human, as Leviticus understood.

The biggest refugee crisis in history is still ahead of us. War, famine and plague will not only stay around, but spread and become worse, because of climate change. What will that do to our societies, and to us as individuals?

All of us, since our common ancestors trudged out of the East African rift valley, descend from migrants. If we go back far enough, we all have refugees among our forebears. And all of us, if we’re not already displaced, can be sure to have descendants who will flee from something. We all were, are or will be natives and aliens somewhere, at some time.

There are no easy answers. Speaking for most Germans in 2015, the country’s president at the time, Joachim Gauck, expressed the dilemma well: “We want to help. We are big-hearted. But our means are finite.” It’ll be important to keep both parts of that sentiment in mind — the magnanimity and the limits. But when in doubt, we should heed Leviticus, and keep our hearts big.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Andreas Kluth is a Bloomberg Opinion columnist covering European politics. A former editor in chief of Handelsblatt Global and a writer for the Economist, he is author of “Hannibal and Me.”

The Brief Life and Watery Death of a ’70s Libertarian Micronation

A wealthy American wanted to build an island republic. The king of Tonga had other ideas.

BY RAYMOND CRAIB

MAY 21, 2022
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Stamps issued by the kingdom of Tonga commemorating taking possession of the Minerva Reefs. Photo illustration courtesy PM Press. Stamps from the collection of Raymond Craib.

Once upon a time, a wealthy man set out to establish his own country. He found a shallow reef over which the waters of a vast ocean had lapped since time immemorial. He hired a company to dredge the ocean floor and deposit the sand on the reef. An island would be born, upon which the man had a concrete platform built, a flag planted, and the birth of the Republic of Minerva declared. The monarch of a nearby island kingdom was not impressed. He opened the doors of his kingdom’s one jail and assembled a small army of prisoners. The monarch, his convicts, and a four-piece brass band boarded the royal yacht and descended upon the reef, where they promptly removed the flag, destroyed the platform, and deposed, in absentia, the man who would be king. And Minerva returned to the ocean

The story of Michael Oliver, his short-lived 1972 Republic of Minerva, and the response of the king of Tonga is not the stuff of fairy tales. Nor is it an uncommon story, an isolated event ripe for consumption as a chronicle of crazy rich Caucasians. In the U.S. after World War II, with the dramatic geopolitical changes wrought by decolonization and the Cold War, battles were waged over the meaning of ideals such as democracy and freedom, often pitting those who believed individual liberty to be more important than social equality against those who prioritized the latter over the former. In the midst of such struggles, individuals concerned with protecting their wealth, their safety, and their freedom from what they perceived to be an overbearing government and a threatening rabble sought to exit the U.S. and to establish their own independent, sovereign, and private countries on the ocean and in island spaces. It usually did not end well.

The location of the Minerva Reefs. John Wyatt Greenlee, copyright 2022

Experiments in libertarian exit—abandoning one’s country of residence for a private territory where social relationships are structured largely through contract and exchange—like the one Michael Oliver undertook were not unusual in the America of the 1960s and 1970s. They proved common enough that writers for the Los Angeles–based libertarian Innovator Magazine priced out the costs of various forms of exit, from “clandestine urban” and “underground shelter” to “sea-mobile nomad.” It was only a small step to imagine a commune on the high seas rather than in Northern California, or a private island in the Caribbean rather than a gated community in Orange County. Libertarian-inspired exit projects proliferated to the degree that one might recast the 1960s not as the dawning of the Age of Aquarius, but as the Age of Atlantis, the favored island reference point for libertarians.

The name itself was ubiquitous. The “Republic of New Atlantis” arose, albeit briefly, in 1964 when Ernest Hemingway’s younger brother Leicester parked an 8-by-30-foot bamboo raft, anchored to an old Ford engine block buried in the sand, 8 miles off the coast of Bluefields, Jamaica. He declared the birth of his new republic with a bottle of Seagram’s 7 in hand. Having encouraged birds to defecate on one end of the raft, he ceded that portion of it to the U.S. under the criteria established in the 1856 Guano Islands Act, which allowed citizens to claim possession of unoccupied islands, rocks, or keys that contained guano on behalf of the U.S. The raft’s other half became his own private country, albeit only briefly; a hurricane soon sank the vessel. Pharmaceutical engineer Werner Stiefel, whose family had fled Nazi Germany in the 1930s, founded “Operation Atlantis” in 1968 in a motel next to I-87 in upstate New York. He recruited libertarian “immigrants” to collectively build a vessel that they would sail down the Hudson River to the Caribbean where they would establish a libertarian micronation. Like its namesake, it met a watery fate. Upon launch on the Hudson, the vessel capsized and caught fire. The Atlanteans, undeterred, repaired the ship and sailed it to the Bahamas, where it promptly sank during heavy weather.

A kind of iconoclastic curiosity could underpin some of these schemes, but it was more frequently unease and fear that drove exit projects. Apocalyptic scenarios of demographic, ecological, and monetary collapse proliferated in the 1960s, along with fears of nuclear annihilation. Works such as Paul and Anne Ehrlich’s The Population Bomb and Garrett Hardin’s “The Tragedy of the Commons” were only the most prominent of a corpus of works that warned of an approaching disaster due to unchecked population growth and ostensibly unmanaged resources. Harry Harrison’s novel Make Room! Make Room! was reworked into the 1973 film Soylent Green, starring Charlton Heston as New York City detective Robert Thorn who, in the year 2022, discovers that the Soylent Corporation’s protein pills, allegedly created from ocean plankton, are made of human corpses. Ayn Rand and libertarian fellow travelers forecast monetary collapse due to government meddling, and encouraged listeners to instead invest in gold, a libertarian prediction and prescription that is now so often reused as to seem like parody. But just as prominent in the minds of exiters such as Michael Oliver as these apocalyptic concerns was a fear of social unrest and totalitarianism.

Born Moses Olitzky in Kaunas, Lithuania, in 1928, Oliver had survived German massacres of Jews in his hometown, and then the Stutthof and Lager 10 concentration camps. Rescued by U.S. troops in 1945 while on a forced march from Dachau, he spent two years in a displaced persons camp before emigrating to the United States in 1947. His parents and four siblings all had been murdered. Once in the U.S., Olitzky changed his name to Michael Oliver and set roots down in Carson City, Nevada. He owned and operated a land development company as well as the Nevada Coin Exchange, specializing in the sale of gold and silver coins, which he advertised as security investments in the pages of the Wall Street Journal, Barron’s, and Innovator.

Over the course of the 1960s, Oliver became quite wealthy and began to translate that wealth into a hedge against a perceived rise of totalitarianism in the U.S., which he discerned in riots and protests around the country. Although he railed against “social meddlers” who opposed the free enterprise system and criticized how the government robbed society’s producers by creating welfare programs or pursuing inflationary policies and deficit spending, it was the masses and their supposed susceptibility to demagoguery that most concerned him. While he could have identified the populist, often apocalyptic and violent, politics of the right—the John Birchers and the Minutemen, the Ku Klux Klan and the Christian anti-Communist crusaders—as the existential threat, it was populations acting in the name of “liberalism” and “freedom now” whom he accused of employing “Storm Trooper tactics.” His libertarianism dovetailed with the socially conservative property-rights movement that took shape around Barry Goldwater’s 1964 presidential candidacy, and has grown ever more potent in recent decades.

Roger Griffith/Wikimedia Commons

Roger Griffith/Wikimedia Commons

Oliver ignored calls to stay put and fight for liberty at home. Instead, he sought to escape what he saw as the approaching storm of social unrest and revolution by creating a new country. Its structure he outlined in a self-published 1968 book, A New Constitution for a New Country. Oliver crafted his constitution for an imagined libertarian territory freed from bureaucratic constraints and the regulatory apparatus of the welfare state. The book contained a declaration of purpose, a plan of action, and a constitution with 11 articles. Oliver designed the constitution as an improved version of the United States Constitution—improved in that it would “spell out the details whereby government can, at the same time, properly protect persons from force and fraud and also be prevented from exceeding this only legitimate function.” The argument that the sole function of government is to protect individuals from force and fraud echoed mainstream libertarian thinking of the time, found in the work of novelist Ayn Rand, economists Milton Friedman and Ludwig von Mises, and philosopher Robert Nozick. Although its proponents describe the ideal government as a “nightwatchman” or “ultra-minimalist” state, it would be a mistake to understand this as a call for a smaller state. Its minimalism had little to do with the size of its apparatus or budget, but rather with the limitations placed on the range of its functions: national defense, policing, and a legal infrastructure dedicated to the protection of property rights and enforcement of contract.

Published in February of 1968, Oliver’s book sold out quickly, and a second edition appeared in May of that same year. Admiring readers found the book via word of mouth and advertisements in libertarian magazines and soon convinced others of Oliver’s vision. Among these acolytes were Wichita wheat magnate and World Homes chief executive Willard Garvey, millionaire horologist Seth Atwood, famed banker and fund manager John Templeton, and former placekicker for the undefeated 1954 Ohio State football team (and inventor of the eponymous WEED tennis racquet) Tad Weed. They helped bankroll efforts to put Oliver’s new country idea into action through his Ocean Life Research Foundation.

The foundation’s name is revealing. In order to build a self-governing, private territory in which the very promises of libertarian theory could be fulfilled, Oliver required a locale not already under the sovereign control of another state, or that a state would be willing to sell for such purposes. In the high era of decolonization—between 1945 and 1960 alone, the number of nation-states represented in the United Nations doubled, and over the course of the 1960s grew further due to decolonization in Africa, the Caribbean, and the Pacific—Oliver seemed assured that he could find a government with which to negotiate. “A surprising number of nearly uninhabited, yet quite suitable places for establishing a new country still exist,” he informed readers of his Capitalist Country Newsletter in 1968. “Many such places are scarcely developed colonies whose governmental or other activities are of little or no concern at all to their ‘mother’ countries. There will be little problem in purchasing the land, or in having the opportunity to conduct affairs on a free enterprise basis from the very beginning.”

This was an optimistic evaluation, as Oliver would repeatedly learn in the coming decade. Between 1968 and 1971 alone, he or his associates made exploratory visits to the Bahamas, Turks and Caicos, Curaçao, Suriname, New Caledonia, French Guiana, Honduras, and New Hebrides to gather information on climate, taxation, and land quality and to explore the possibilities of building a libertarian country. Such visits revealed the difficulties confronting any would-be world builder looking to land on distant shores. Purchasing land was no problem. But purchasing sovereignty was. And so his first real effort unfolded on a space long seen as open: the ocean.

“There will be little problem in purchasing the land, or in having the opportunity to conduct affairs on a free enterprise basis from the very beginning.”— Michael Oliver, founder of the Republic of Minerva

That oceans and islands have figured prominently in exit efforts should come as no surprise. Both have long constituted spaces upon which to situate arguments and plot fantasies about the market, exchange, politics, and society. It was under the ocean (not upon it) that Captain Nemo, antihero of Jules Verne’s Twenty Thousand Leagues Under the Sea, sought to escape the tyranny of nation-states. On the ocean proved as appealing as under it. In one of his less well-known works, The Self-Propelled Island, Verne described the geography of the island Pacific by using as his primary narrative device a large, artificial floating island inhabited solely by bickering billionaires—a prescient vision of 21st century seasteading. The high seas were and are still frequently invoked, even if mistakenly, as spaces of nonsovereignty and lawlessness, the last great frontier for those seeking freedom from the state, whether it be to profit through illegal fishing and exploitation of labor or to experiment with new forms of political and social life.

Similarly, “remote” and small islands have provided a place for imaginative experiments in political, legal, and social engineering, from Francis Bacon’s New Atlantis and Thomas More’s Utopia to H.G. Wells’ The Island of Doctor Moreau and William Golding’s Lord of the Flies. As clearly defined, circumscribed territorial entities, small islands can seem like natural laboratories in which political and social experiments can unfold without the noise of contingency, the burden of history, or the taint of politics. Given that one of classical liberalism’s founding myths, Robinson Crusoe, grew out of the fertile soil of a distant archipelago, it is not surprising how much islands figure in libertarian exit fantasies. Alexander Selkirk’s four-and-a-half-year struggle as a castaway isolated on the Juan Fernández Islands off the coast of Chile served as the historical basis for Daniel Defoe’s novel, a story that made remote islands an ideal libertarian political ecology: an overdetermined geographic form upon which the drama of individualism, of man alone, could be staged.

Islands and ocean spaces have been attractive not only because they are conceived of as laboratory spaces but also because they are very often sites that seem ripe for speculation and planning for new countries. In the post–World War II world, many island territories were the last to decolonize. Much of the Pacific remained under colonial control into the 1970s, and a significant portion still exists somewhere between dependence and independence. Such political opacity and geopolitical vulnerability made them attractive locations for those looking to get some territorial purchase on their libertarian dreams.

By 1971, Garvey, Atwood, Oliver, and their associates had set their sights on the Minerva Reefs. They did so after having rejected the option of another southwest Pacific atoll, the Conway Reef, when they learned that an Australian consortium intended to develop it for the construction of a casino. The Minerva Reefs were more attractive. They seemed to sit within neither the territorial waters of Aotearoa New Zealand to the south, nor Fiji or Tonga to the north. In August 1971, the Ocean Life Research Foundation arrived at the Minerva Reefs and began the arduous process of building an island in the southwest Pacific. A dredging vessel piled sand on the reef, while a small crew erected two mounds made from coral wrapped in chicken wire and encased in concrete, upon which they then constructed 26-foot vertical markers topped by a flag representing the Republic of Minerva.

These steps laid the groundwork for the new country, which would operate as an offshore financial center and house 30,000 settlers. Funds for the country came from settlers who would pay a base rate for a 3-acre plot of land, and from investors who, rather than settle in Minerva, would back the project and share in the profits. A corporation and board of directors would steer the process and review every settler application. “Capability of self-support,” Oliver wrote, “or sufficient assets shall be one of the requirements for acceptance.” Other conditions also applied: “collectivists […] criminals, nihilists, or anarchists” would not be welcome, regardless of their purchasing power.

Anarchists and nihilists turned out to be the least of their worries. 

By early 1972, the king of Tonga, Tāufaʻāhau Tupou IV, had caught wind of the project, and began to voice concerns. The Minerva Reefs may have sat at a substantial distance from the core of the Tongan archipelago and beyond its territorial waters, but that hardly meant they were not a part of Tonga’s political and cultural horizon. The reefs had long served as seasonal lobstering and fishing grounds for Tongans and Fijians. Historical and human connections to the reefs ran deep.

Anarchists and nihilists turned out to be the least of their worries.

One incident in particular tied Tonga and the reefs together. In 1962, the Tuaikaepau, a 50-foot, 20-ton cutter bound for Aotearoa New Zealand from Tonga, struck the northwestern edge of South Minerva Reef. Capt. Tevita Fifita, the crew, and the passengers—all Tongan and all of whom survived the initial impact and a night struggling with the thunderous high tide—knew they were in serious trouble. Far from shipping lanes and subject to the cold winds that blew north from Antarctica across the Tasman Sea, the Minerva Reefs saw visitors infrequently. For three months the group struggled, holed up in the shell of a rusting Japanese fishing vessel that had foundered on the reefs two years earlier. They survived on fish, crayfish, and the small amounts of water they could either produce with a homemade still or catch from infrequent rains. Most of them suffered from various ailments, and in early October, in the span of only two days, three men died. The men buried the body of the first person to die in the reef. They wrapped his body in layers of canvas to protect it from crabs and fish. They marked the grave with a cross. Soon after, Fifita made the decision to build an outrigger canoe from the remains of available wreckage, and, along with his son and the ship’s carpenter, they paddled to Kadavu, Fiji, where their vessel capsized while attempting to navigate the reefs. Fifita’s son drowned. The remainder of the rescue party succeeded in reaching help.

Tongans mourned the tragedy and celebrated the rescue. Queen Sālote declared a national holiday and wrote a poem in the crew’s honor. The Minerva Reefs became indelibly attached to the memory of Tuaikaepau and the history of its crew and passengers. In 1966, Fifita returned to the reefs and attached a Tongan flag to a buoy there, an act that took on the important appearance of a ceremony of annexation. Then, in 1972, conflict with the Ocean Life Research Foundation erupted. As word of the exiters’ activities spread, King Tupou began investigating. In February 1972, he sent a fact-finding mission to the reefs. The participants established a refuge station on the South Minerva Reef, but the king’s government made no immediate claim of possession or sovereignty. In May, he himself sailed to the reefs with the brass band and freed convicts accompanying him. He ordered the building of a structure on each reef that would remain permanently above the high-water mark. The king then used these built structures as the basis for a claim of possession on June 15, 1972.

The king’s assertion of sovereignty had the potential to stoke conflicts, particularly with neighboring Fiji, but at the intergovernmental 1972 South Pacific Forum meeting, convened for Southwest Pacific trade discussions and cooperation, heads of state from Fiji, Nauru, Western Samoa, and the Cook Islands agreed that Tonga had a long-standing historical association with the reefs, and that any other claim to sovereignty, and in particular “that of the Ocean Life Research Foundation,” was unacceptable. The king could count on regional support from other heads of state because they, too, feared that any successful libertarian colonization would open up dozens of Southwestern Pacific seamounts and atolls to claims of ownership. The question reached well beyond the bounds of one nation. As Oceanian decolonization proceeded, questions of archipelagic territorial rights to the ocean—never adequately addressed in early U.N. conferences on the sea—arose and led to the writing over the course of the 1970s of a series of Archipelagic Provisions that would be adopted at the 1982 Conference on the Law of the Sea. Such provisions accentuated what islanders themselves had long understood: that the ocean was a human space.

Oliver and his backers withdrew. For the founders of the Republic of Minerva, the reefs were a space of legal liminality, one of the few areas where establishing a new country seemed possible. With terra firma firmly divided among nation-states, the oceans seemed to be the only empty spaces left. Yet, as has so often been the case, spaces perceived by distant colonizers as open for the taking are in fact places that sit within the social and cultural horizon of nearby peoples. For Tongans, the reefs were part of a history of navigation and settlement, of rescue and loss, of meaning and mourning, and part of a geography of identity and livelihood where sea and land entwined. Rather than distant atolls, they were places of provision and poetry and history. No doubt one day, maybe a thousand years hence, a natural island will come to be in Minerva, a result of processes of the kind that had built up the reefs themselves. But not until then. The only invisible hand at work among the atolls and seamounts of the Native Pacific will be that of the ocean.




Adventure Capitalism: A History of Libertarian Exit, From the Era of Decolonization to the Digital Age

By Raymond B. Craib. PM Press.

CANADA

Stakes are high for farmers as 2022 crop shapes up to be most expensive in history



The Canadian Press

CALGARY — The stakes are high as Canadian farmers take to the fields to plant 2022's crop, which some are saying could find a place in the record books as "the most expensive ever."

On her family's farm northeast of Calgary near Acme, Alta., where she farms with her husband Matt, Tara Sawyer already knows she's going to need a better-than-average crop this year just to break even.

All of her input costs have surged since last year due to inflationary pressures, spiking energy costs, and the war in Ukraine. The price of fertilizer is more than double what it was last year, and the diesel used to power her farm equipment also costs nearly twice what it did last year at this time.

But getting that above average crop could be a challenge. Last year, Sawyer's farm was hit hard by the widespread drought that reduced crop yields across Western Canada and there are fears already that this could be another dry year.

"Most farmers, including us, saw a 30 per cent reduction in our yields, so we need to be able to have really good yields come out this year in order to pay for that," she said. "But in our region, we're already horribly dry, so we're concerned."

But it's not all bad news. While the cost of everything from seed to herbicides to tractor tires has increased in 2022, so too have crop prices. Sawyer, for example, grows wheat, barley and canola — all of which are hot commodities right now due to supply pressures created by the Russia-Ukraine war and the aftermath of last year's drought.

“There’s a number of crops that are sitting at all-time highs, or near all-time highs," said Jon Driedger, of Manitoba-based LeftField Commodity Research. "If you go back two years, the price of canola has doubled, almost tripled. Wheat's higher than it's been in 20 years, corn's pushing up against a record high. It's really across the board."

In fact, Driedger said crop prices are high enough that any farmer able to produce a "normal-sized" yield should still be able to earn a sizable profit. But in addition to the dry conditions in Alberta, many farmers in Manitoba and eastern Saskatchewan have the opposite problem and haven't even been able to get onto the land yet due to flooding and excess moisture.

The acres seeded by Canadian farmers this spring will not only be the most expensive in history, but in some ways, the riskiest as well, Driedger said.

“For those farms that are fortunate enough to harvest a normal crop or even better, it could be a great year. But there’ll be a lot of farms for whom that’s looking awfully precarious right now.”

Cornie Thiessen — general manager of ADAMA Canada, a Winnipeg-based company that sells crop protection products like fungicides, herbicides and insecticides — said some of these inputs have become significantly more expensive and harder to find due to supply-side factors like COVID-driven disruptions at manufacturing plants and shipping delays. But he added the war in Ukraine is also increasing demand for these products, as farmers get the message that this year, their work is more vital than ever.

“Very high crop prices change the economics for farmers of how much they invest to protect the crop," Thiessen said. "With really high prices like we're seeing right now, it sends a message to farmers that the world really needs your crop so you need to make it as big as possible. You need to spend more on fertilizer and herbicides to maximize those yields."

Thiessen said 2022 will likely be the most expensive crop ever planted in Canada, and there's a lot riding on it.

"For the individual farmer, certainly there is an opportunity to take advantage of these high prices, but it's a bigger investment than before," he said. "If the weather works against them and they have a poor crop, that's where the downside risk comes in."

"And for the world, to help alleviate concerns about food security, we really do need Canada to produce a great crop this year," Thiessen added. "If Canada's crop isn't as strong as possible this year, it will further exacerbate concerns about food security."

This report by The Canadian Press was first published May 20, 2022.
Amanda Stephenson, The Canadian Press

Weather conditions continue to affect agriculture industry in Saskatchewan

From rain to snow to nothing at all, Saskatchewan weather is leaving many farmers wondering if they will be able to seed at all this season.


© Global News

Many fields in the eastern half of the province are still too wet to allow producers to seed, however some areas are desperate for rain, which brings mixed emotions from farmers across the province.

Kayla Guerrette - Yesterday 
Global News

It truly is a tale of two worlds. East Saskatchewan has too much moisture in its soil while the west is hoping to get even one rainy day. It's a challenge farmer Clinton Monchuk understands firsthand having farmland near the Lanigan area.

"We've probably had a little over three inches of rain since the beginning of May," Monchuk said. "So it is a little bit wetter and we're just having a little bit more of a tough time getting seeding done."

Read more:

Industry in peril: Manitoba bee farmers suffer big losses due to bad weather

It's a reality faced by farmers across the province. On average, more than half of the seeding process is complete by this time. But, this year it's a different story.

Ian Boxall, president of the Agriculture Producers Association of Saskatchewan. has farmland near Tisdale.

"It's raining here today and it snowed this morning," Boxall said. "We're way far behind. Normally we would start seeding on May 1 and now I haven't started and it's the 19th of May so we are behind.

"I am not panicking yet but if it doesn't straighten up soon, I am going to start to panic."

According to Boxall, the seeding deadline is June 20. He says for producers in the west of the province with no moisture to be found on their land, it's a deadline they may not meet.

"Once it warms up we'll have a good crop started and out of the ground," said Boxall. "But those guys in the west, they really need rain to get that germinated and get that crop going over there so my concern is with them."

Video: Wet grounds slowing seeding in Saskatchewan

But seeding is not farmers' only concern. For Monchuk, it's the cost to farm. With inflation continuing to rise it's becoming more and more expensive to get their products out to the public.

Read more:

‘Very stressful’: Cold weather delays crops for many B.C. farmers, but no relief in sight

"We know as we move forward food inflation is going to get higher," said Monchuk. "We are seeing some of those shortages so this is some of the reasons, some of the extra cost that we have now. It does filter down and will result in higher prices of food as we move forward."

Video: Sticker Shock: Navigating the increasing food costs

CN Railway braces for surge in grain shipments as optimism grows for harvest

Jake Edmiston - Yesterday 
Financial Post


© Provided by Financial PostAfter a tough year in Canadian agriculture, CN Rail believes farmers will see a better crop this year.

Canada’s largest railroad is bracing for a surge in grain shipments across the country this year — a sign of hope that this year’s harvest will be better than the last one, when extreme drought devastated crops across the Prairies.

“Every kernel that’s harvested this year is going to want to move,” Canadian National Railway Co.’s new CEO Tracy Robinson told the Bank of America’s transportation conference on May 17. “We need to be ready for that.”

After a tough year in Canadian agriculture, CN believes things are starting to look up, judging from soil moisture levels this spring that suggest a more normal grain crop is coming.

“It would be a good thing for the world, wouldn’t it?” Robinson said. “A lot has to happen right from here. But I think we’re starting out in a positive way.”

The shot of optimism comes as the world faces a food crisis driven in large part by Russia’s invasion of Ukraine. The conflict has destabilized one of the most important regions in the world for grain exports, causing major spikes in commodity prices that have contributed to a troubling burst of inflation. Prices are likely to stay high for months due to global supply issues, the United Nations’ Food and Agriculture Organization warned last week.


© Dave BishopA farmer plants durum wheat in a field on his farm by Barons, Alta.

And no matter how good Canada’s crop turns out to be, it won’t be enough to alleviate those issues on its own. The country’s agricultural output — even with a bumper crop — isn’t large enough to make a major impact on global supply, according to Ted Bilyea, a former executive at Maple Leaf Foods Inc. who is now a distinguished fellow at the Canadian Agri-food Policy Institute.

“I don’t think I see it moving the needle much,” Bilyea said. “We need a good crop just to keep things going where they are. … We’ve got to hope that the rest of the world has a good crop.”

Richard Grey, an agricultural economist at the University of Saskatchewan who helps his son run a family farm in Indian Head, Sask., was checking prices for canola on May 18. He could lock in a contract at about $24 a bushel, to be harvested and delivered to a shipper in November.

“That’s double what it was last year,” Grey said, adding that higher gasoline prices are driving up demand for ethanol and biofuel, which in turn drives up prices for grain and oilseeds, such as canola. “This is all to do with the international situation.”

Statistics Canada reported May 18 that food inflation is accelerating at a pace not seen since 1981. The consumer price index found grocery bills in April shot up 9.7 per cent compared to last year, with bread up 12.2 per cent, cereal up 15 per cent, pasta up 19.6 per cent, and cooking oil up 28.6 per cent.

“High inflation is here to stay in 2022,” Bank of Nova Scotia analyst Patricia Baker wrote in a note to investors. “Supply constraints and geopolitical conflict are expected to impact the energy, agriculture, and commodity markets.”

While Canada’s crop is expected to be better than last year, it’s not guaranteed to be good. In the middle of the spring planting season, farmers in Manitoba and southeastern Saskatchewan are facing fields so wet that they’re struggling to get seed in the ground. In southern Alberta, however, it’s too dry.

“Those that are saying we’re poised to have at least an average crop wouldn’t be out of line,” said Tom Steve, general manager with the Alberta Wheat and Barley Commissions. “To say that it’s going to be what we call a bumper crop, that’s pretty early to be saying that.”

CN’s chief executive agreed. “Now listen, I come from a farm in Saskatchewan,” she told the Bank of America conference. “And my father likes to say to me, `You’d like to get really excited about the grain crop, but so far we’ve never harvested one before we’ve seeded it.'”

Still, CN is preparing for an “inevitable surge” in grain shipments in the latter part of the year, investing in high-capacity hopper cars that can carry 10 per cent more grain, Robinson said. The railway confirmed it has added 3,000 hopper cars since 2019, with another 1,250 expected between 2023 and 2024.

“Getting this running is not just about the railroad getting ready,” Robinson said. “We need our partners, the terminals, and we need our customer facilities to be (ready) … We’re optimistic, for all of our sake, that this happens.”

The grain industry has been at odds with the railways this year, with grain companies complaining that CN and Canadian Pacific Railway Ltd. haven’t been able to meet demand for railcars despite a 30-per-cent drop in crop yields due to last summer’s drought. The railroads counter that they have been facing challenges since late last year, when massive floods in British Columbia washed out rail lines and then extreme cold forced trains to slow down.

“Their performance has been absolutely abysmal this past crop year,” said Steve at the Alberta Wheat and Barley Commissions. “It was just horrible. They couldn’t move the crop that we had. So they’re telling their investors and shareholders that they’re going to do better? We’ll believe it when we see it.”

• Email: jedmiston@nationalpost.com | Twitter: jakeedmiston

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