It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Monday, June 27, 2022
A shale booster shot: 'Re-fracs' rise as cheap way to lift U.S. oil output Workers connect hoses between a pipeline and water tanks at a Hess fracking site near Williston
Sun, June 26, 2022 By Liz Hampton
(Reuters) -U.S. shale oil producers are returning to existing wells and giving them a second, high-pressure blast to lift output for a fraction of the cost of a finishing a new well.
These "re-fracs" are taking hold as shale oil producers look to take advantage of $100 a barrel crude without making big investments in new wells and fields.
A global oil shortage has triggered calls from U.S. President Joe Biden for shale producers to spend more of their profits on increasing output. But shale firms have been under pressure for years from shareholders to focus on returns rather than production growth.
Their reluctance to invest in more output has led to tensions between the oil industry and the White House, which is under pressure to rein in record $5 per gallon fuel prices that have contributed to decades-high inflation.
Re-fracing can be something of a booster shot for producers - a quick increase in output for smaller investment than a new well. While some producers have dabbled in re-fracturing wells in the past, the technique is winning broader adoption as technology improves, aging oilfields erode output, and companies try to do more with less.
Shortages of steel, diesel, frac sand and workers have doubled oilfield inflation since January, making this discount method of boosting output even more attractive.
A re-frac can be up to 40% cheaper than a new well, according to experts. More importantly, it can double or triple oil flows from aging wells, said Garrett Fowler, chief operating officer for ResFrac, which helps producers optimize the technique. His firm has seen about twice as many inquiries related to re-fracs compared to prior years.
For oil producers, re-fracs are a cheap way to add output to existing pipelines. Their shorter completion time means re-fracs can be scheduled between work on new wells, said Catherine Oster, who manages Devon Energy's mid-continent properties.
"You go back and find where you maybe under-completed and under-fracked in the beginning," said Oster. Besides, "we’ve made the infrastructure investment. As you learn about your resource, you get those technical learnings" that help decide which wells will benefit from a second shot, she said. HOW RE-FRAC WORKS
The most common re-frac method involves placing a steel liner inside the original well bore and then blasting holes through the steel casing to access the reservoir. In some cases, the process uses half as much steel and frac sand than a new well, said ResFrac's Fowler.
U.S. oil production remains about a million barrels per day (bpd) below the 12.8 million bpd peak in early 2020. Limiting output is the rapid decline rate of shale wells, which can see production fall by 70% in their first nine months. Flat spending could restrain output to current levels.
While U.S. oil futures are around $104 per barrel, up 40% from a year ago, production costs are higher on material and labor shortages. Some producers are holding back new spending over fears of a recession.
Drill pipe, labor and frac sand costs have driven drilling and well-completion service costs about 20% higher from a year ago, Texas shale producer Callon Petroleum said this month. Callon and Hess Corp, which drills in North Dakota's Bakken shale, recently hiked capital spending budgets over the costs. Hess added $200 million to its spending, half due to inflation, while Callon added about $75 million.
"Techniques like re-fracturing will allow the industry to continue to harvest the oil and gas out of these reservoirs," said Stephen Ingram, a regional vice president at top U.S. hydraulic fracturing firm Halliburton . Another benefit, say oil service executives, is re-fracs do not require additional state permits or new negotiations with landowners. The disruption to the environment also is less because well sites will already have road access, they said.
"Considering inflation, supply chain issues, and rising wages, now is a great time for operators to start looking at wells for re-frac opportunities," said Matt Johnson, CEO of energy consultancy Primary Vision Network.
(Reporting by Liz Hampton in DenverEditing by Marguerita Choy)
FORWARD TO THE PAST Germany Pushes for G-7 Reversal on Fossil Fuels in Climate Blow
Sat, June 25, 2022
(Bloomberg) --
Germany is pushing for Group of Seven nations to walk back a commitment that would halt the financing of overseas fossil fuel projects by the end of the year, according to people familiar with the matter. That would be a major reversal on tackling climate change as Russia’s war in Ukraine upends access to energy supplies.
A draft text shared with Bloomberg would see the G-7 “acknowledge that publicly supported investment in the gas sector is necessary as a temporary response to the current energy crisis.”
The caveat in the proposal is that such funding is done “in a manner consistent with our climate objectives and without creating lock-in effects.”
The text remains under debate and could change before G-7 leaders hold their summit in the Bavarian Alps starting Sunday hosted by Chancellor Olaf Scholz. The UK opposes the proposal, two of the people said. A German government spokesman declined to comment.
A person familiar with the discussions said Italy wasn’t actively opposing the German proposal. Italy, like Germany, is highly dependent on Russian gas. On Friday, speaking during a press conference in Brussels, Prime Minister Mario Draghi said Italy has managed to reduce Russian gas imports from 40% last year to 25% at the moment. This has been possible also by signing new gas deals in countries including Congo, Algeria and Angola.
A government spokesperson said Italy did not support Germany’s idea.
Asked about the proposal on Air Force One as US President Joe Biden flew to Europe, National Security Council spokesman John Kirby said he did not want to preempt discussions at the summit. “Our position last May was that the president was clear that he did not feel like these investments were the right course of action,” he told reporters. “I know of no such change to that policy.”
Canada, the world’s sixth largest energy producer, has shown it’s willing to support new fossil fuel infrastructure if it fits within the country’s overall emissions reduction plan, a senior official said. But the official would not say if Canada supports the language in the German proposal, stressing it’s a preliminary document.
The debate comes as Europe in particular struggles for alternative sources of fuel to Russian gas. The German government has warned that Russia’s moves to limit supply risk a Lehman-like collapse in the energy markets, with Europe’s largest economy facing the unprecedented prospect of businesses and consumers running out of power.
Germany has responded to the cuts by reviving coal plants and providing financing to secure gas supplies, while continuing with plans to phase out nuclear energy. The World Nuclear Association, an industry lobby group, is urging the G-7 to boost access to nuclear technologies.
Germany Warns of Lehman-Like Contagion From Russian Gas Cuts
Italy has said it will monitor the potential need to trigger emergency energy plans. Any such move could also see it boost coal production.
A G-7 shift from a commitment initiated last year and firmed up in May would be a u-turn in global efforts to fight climate change. It would make it harder to rally the rest of the world around more stringent targets and direct investments toward cleaner sources of energy.
It would also go against International Energy Agency advice that no new oil and gas projects should be developed if the world is to limit global warming to 1.5 degrees Celsius.
G-7 ministers, in making their commitment to end direct international financing of fossil fuels by the end of 2022, acknowledged for the first time that fossil fuel subsidies were incompatible with the Paris Agreement. The group also reaffirmed a commitment to end “inefficient” fossil fuel subsidies by 2025.
The ministers acknowledged, however, that investment in the LNG sector was a necessary response to the current crisis “in a manner consistent with our climate objectives and without creating lock-in effects.”
“This would be a huge setback from the progress we made last month at the G-7 energy and environment ministers when we finally brought Japan, the last G-7 holdout, into the commitment to end such financial support for fossil fuels,” said Alden Meyer, a senior associate at climate change think E3G.
“Where we saw Chancellor Merkel being the climate chancellor at the last G-7 summit Germany hosted, Scholz could go down in history as the climate backtracking Chancellor, which I think would be a real mark on his record, and we don’t need to do this,” he added.
Exclusive-Japan pushes to remove zero-emission vehicle target from G7 statement, draft shows
Mon, June 27, 2022 By Makiko Yamazaki and Kate Abnett
TOKYO/BRUSSELS (Reuters) - Japan is pushing to remove a target for zero-emission vehicles from a G7 communique expected this week, according to a proposed draft seen by Reuters, a move that would water down language on climate change from the leaders' summit in Germany.
The pressure from Tokyo, an influential member of the Group of Seven rich nations, comes as the Japanese auto industry has faced scrutiny from green investors who say it has been slow to embrace zero-emission vehicles and lobbied against regulations that would encourage quicker transition to the technology.
Reuters reported last week that Toyota Motor Corp's head lobbied the Japanese government to make clear it supported hybrid vehicles as much as zero-emission battery electrics. G7 leaders are meeting in the Bavarian Alps for a summit where climate change figures on the agenda.
Japan has proposed removing a reference to a "collective goal of at least 50% zero-emission vehicles by 2030", according to a draft of the communique reviewed by Reuters.
In its place it has proposed a less concrete target of "significantly increasing the sale, share and uptake of zero-emission light duty vehicles recognising the range of pathways that members are adopting to approach these goals", according to the draft.
A person familiar with the matter confirmed that Japan had proposed the changes, declining to be identified because of the sensitivity of the issue. It was not clear whether the proposed changes would be in the final version of the communique, which is due to be released at the end of the summit on Tuesday.
Japan's foreign ministry said it was not immediately able to comment.
AUTO INDUSTRY WANTS RANGE OF OPTIONS
Separately, Japan had pushed to remove a goal for all new car and van sales in G7 countries to be "zero emission vehicles" by 2035, in the G7 climate ministers' communique in late May, according to sources familiar with the discussions and a draft communique seen by Reuters.
Ultimately the 2035 target was not included in the final statement, which pledged instead to achieve a "highly decarbonised road sector by 2030" by "significantly increasing" zero-emission vehicle sales.
Reuters reported last week that Toyota Motor Corp's head lobbied the Japanese government to make clear it supported hybrid vehicles, which burn fossil fuels, as much as zero-emission battery electrics.
Both Japan's auto industry lobby and leading automaker Toyota say automakers should not be limited to specific technologies and needed to keep a range of options towards reaching a goal of carbon neutrality by 2050.
Toyota, the world's biggest automaker by sales, has said fossil fuels, not internal combustion engines, are the problem. As well as the hybrids it popularised more than two decades ago with the Prius, it also champions hydrogen technology, although that has so far not caught on the way battery-electric cars have.
Energy and climate think-tank InfluenceMap has rated Toyota the worst among major automakers for its lobbying record on climate policy, which includes public statements and interaction with governments.
(Reporting by Makiko Yamazaki in Tokyo and Kate Abnett in Brussels; Additional reporting by Kiyoshi Takenaka; Editing by David Dolan and Alex Richardson)
Climate activists block IMF Paris office doors
Mon, June 27, 2022
Climate activists on Monday blocked entry to the International Monetary Fund's Paris office with some gluing their hands to its doors, demanding developing countries' debt be scrapped to help tackle climate change.
The Paris protest is part of a "Debt for climate" global campaign calling on wealthy-nation leaders attending the G7 summit in Germany to cancel the debts of poorer and less industrialised countries, known as the global south.
While low-emitting countries in the global south contribute the least to climate change, they tend to be the hardest-hit by the consequences, experts say.
"We need to give these countries the resources to fight against the climate crisis. They are the first victims and the last ones responsible," said an Extinction Rebellion activist calling herself "Chalou", one of dozens in front of the IMF building in Paris' wealthy 16th district.
Several activists from Extinction Rebellion, Youth for Climate and 350.org glued their hands to glass doors at the building's entrance, while others sat in front with their arms linked together inside tubes to make it harder to move them.
The group spread a banner reading "G7 responsible, IMF guilty" in front of the building, while some activists scattered fake banknotes marked with the slogan "Stop fossil fuels".
"The debt crisis is first and foremost the result of an unjust financial system dominated by the richest countries," activist groups Extinction Rebellion, Attac-France and Youth for Climate France, who organised the Paris action, said in a statement.
"The G7, the IMF and the World Bank have historical responsibilities in the development of this vicious circle of debt (and) over-exploitation of resources", they added.
Environmental activists have organised a string of protests in recent weeks to refocus attention on climate change, as the energy crisis and war in Ukraine dominate the news agenda.
tmt-abd/ech/tgb/lth
‘Stop financing wars’: Protesters at G7 demand concrete action
By Daniel Niemann and Kirsten Grieshaber
The Associated Press Posted June 25, 2022
At a news conference in Berlin on Wednesday, German Economy Minister Robert Habeck accused the Russian-owned Gazprom of reducing its gas supplies to Germany as “a political decision and not a technical, justifiable decision.” Stating that Germany is not affected by a gas-supply problem at the moment, he also warned that there was still a possibility of further energy supply restrictions from Russia, saying that “it is not over yet. It may just be the beginning.” – Jun 15, 2022
About 4,000 protesters gathered in Munich as the Group of Seven leading economic powers prepared Saturday to hold their annual gathering in the Bavarian Alps in Germany, which holds the G7 rotating presidency this year.
Organizers had hoped to mobilize up to 20,000 protesters in the Bavarian city and were disappointed by the low turnout at Munich’s Theresienwiese park, German news agency dpa reported.
Uwe Hiksch, one of the protest organizers, theorized said that potential participants might consider it inappropriate to challenge the world’s wealthiest democracies during Russia’s war in Ukraine.
“We have the impression that many people are unsettled by the war in Ukraine,” Hiksch told dpa.
Seven years ago, 35,000 people participated in protests when the G-7 held a summit at the same site in Bavaria.
The G-7 leaders — from the United States, Britain, Canada, France, Germany, Italy and Japan — are expected to start arriving in Germany on Saturday afternoon. Their summit agenda includes issues such as Russia’s war on Ukraine, climate change, energy and a looming food security crisis.
“Russia’s brutal war against Ukraine is also having an impact here,” German Chancellor Olaf Scholz said in a video podcast Saturday, referring to rising prices for groceries, gas and energy.
Fifteen groups critical of globalization, from the international Attac network to the environmental organization WWF, called on people to participate in demonstrations for this weekend’s summit.
Their demands included a phase-out of fossil fuels, the preservation of animal and plant diversity, social justice and a stepped-up fight against hunger.
“My demands for the G7 are that they have a clear commitment to energy transition, that is, the exit from fossil fuels, all forms of fossil fuels, by 2035 at the latest, so we can stop financing wars and conflicts,” said Kilian Wolter from the environmental group Greenpeace.
Earlier Saturday, during a separate protest demanding more global equality members of the antipoverty organization Oxfam wore oversized heads of the G-7 leaders.
“We need concrete action to cope with multiple crises of our times,” Oxfam spokesperson Tobias Hauschild told The Associated Press. “That means the G-7 have to act immediately. They have to fight hunger, inequality and poverty.”
A total of around 18,000 police officers are deployed around the summit site and the protests.
Scholz said the G7 leaders would discuss the current situation triggered by the war in Ukraine “and at the same time ensure that we stop manmade climate change.”
The chancellor was set to welcome the leaders at the Elmau resort near Garmisch-Partenkirchen on Saturday evening.
The G7 summit itself will take place in Bavaria’s Elmau from Sunday through Tuesday. After the meeting concludes, leaders of the 30 countries in the NATO alliance will then gather for their annual summit, which is being held Wednesday through Thursday in Madrid.
Thousands protest in Madrid against NATO summit
Sun, June 26, 2022 By Elena Rodriguez and Michael Francis Gore
MADRID (Reuters) - Carrying the hammer and sickle flags of the former Soviet Union, thousands protested in Madrid on Sunday against a NATO summit which will take place in the Spanish capital next week.
Amid tight security, leaders of the member countries will meet in Madrid between 29-30 June as the organisation faces the unprecedented challenge of the Russian invasion of Ukraine.
NATO is expected to consider the bid, opposed by alliance-member Turkey, for Finland and Sweden to join.
The Nordic nations applied in the wake of the Russian assault on Ukraine. Russian President Vladimir Putin calls the war a special military operation he says in part responds to the accession to NATO of other countries near post-Soviet Russia's borders since the 1990s.
"Tanks yes, but of beer with tapas," sang demonstrators, who claimed an increase in defence spending in Europe urged by NATO was a threat to peace.
"I am fed up (with) this business of arms and killing people. The solution they propose is more arms and wars and we always pay for it. So, no NATO, no (army) bases, let the Americans go and leave us alone without wars and weapons," said Concha Hoyos, a retired Madrid resident, told Reuters.
Another protester, Jaled, 29, said NATO was not the solution to the war in Ukraine.
Organisers claimed 5,000 people joined the march, but authorities in Madrid put the number at 2,200.
Spain's Foreign Minister Jose Manuel Albares said in a newspaper interview published on Sunday that the summit would also focus on the threat from Europe's southern flank in Africa, in which he said Russia posed a threat to Europe.
"The foreign ministers' dinner on the 29th will be centred on the southern flank," he told El Pais newspaper.
(Reporting by Graham Keeley, additional reporting: Elena Rodriguez, Michael Gore, Nacho Doce; Editing by Frank Jack Daniel)
'Off the charts' chemical shortages hit U.S. farms
Soybean fields in Wisconsin are pictured in 2018
Mon, June 27, 2022 at 4:08 AM·5 min read By Tom Polansek
CHICAGO (Reuters) - U.S. farmers have cut back on using common weedkillers, hunted for substitutes to popular fungicides and changed planting plans over persistent shortages of agricultural chemicals that threaten to trim harvests.
Spraying smaller volumes of herbicides and turning to less-effective fungicides increase the risk for weeds and diseases to dent crop production at a time when global grain supplies are already tight because the Ukraine war is reducing the country's exports.
Interviews with more than a dozen chemical dealers, manufacturers, farmers and weed specialists showed shortages disrupted U.S. growers' production strategies and raised their costs.
Shawn Inman, owner of distributor Spinner Ag Incorporated in Zionsville, Indiana, said supplies are the tightest in his 24-year career.
"This is off the charts," Inman said. "Everything was delayed, delayed, delayed."
Shortages further reduce options for farmers battling weeds that developed resistance to glyphosate, the key ingredient in the commonly used Roundup herbicide, after decades of overuse in the United Sates.
Prices for glyphosate and glufosinate, another widely used herbicide sold under the brand Liberty, jumped more than 50% from last year, dealers said, padding profit at companies like Bayer AG, BASF SE and Corteva Inc.
The U.S. Agriculture Department said it heard from farmers and food companies concerned about whether agribusinesses are hiking prices for goods like chemicals, seeds and fertilizer to boost profit, not simply because of supply and demand factors. The agency has launched an inquiry into competition in the sector, and some watchdog groups said it is moving too slowly.
Agrichemical companies blame the COVID-19 pandemic, transportation delays, a lack of workers and extreme weather for shortages. Fertilizer and some seeds are also in short supply globally.
SUPPLY CHAIN STALLED
More difficulties are on the horizon, as BASF, which formulates glufosinate, told Reuters the supply situation will not improve significantly next year.
"It's going to take more time than what our customers, farmers and retailers would have thought," said Scott Kay, vice president of U.S. crops for BASF.
Tennessee farmer Jason Birdsong said he abandoned plans to plant soybeans on 100 acres after waiting months to receive Liberty he ordered from Nutrien Ag Solutions. He ultimately received less than half his order for 125 gallons and planted corn on the land instead. Birdsong said he is better able to control weeds in corn than soybeans.
Nutrien said numerous events stalled the supply chain during the pandemic and the company provided alternate solutions to customers.
Birdsong said he needed Liberty to fight weeds that are resistant to glyphosate in soy fields. He said he ruled out a third option, a dicamba-based herbicide from Bayer, because of extensive federal restrictions on when and where dicamba can be sprayed.
"With the dicamba technology being so strict, Liberty is the go-to," Birdsong said.
The Environmental Protection Agency approved new restrictions on dicamba use this year in Iowa and Minnesota, two major farm states. The herbicide, approved in 2016, faces stricter regulations because it drifts onto neighboring farms and damages crops other than Bayer soybeans engineered to resist dicamba.
The rise of a rival Corteva soybean variety, Enlist, is further adding to glufosinate demand because the crop can be sprayed with glufosinate, among other chemicals, dealers said.
Generic versions of glufosinate-based Liberty sold for about $100 a gallon, up from $32 a gallon last year, said Dion Letcher, owner of Letcher Farm Supply in Garden City, Minnesota. The increase reduces farmers' profits from lofty crop prices.
Shortages of Liberty and other products began last year as distributors used backup supplies to offset supply disruptions in 2021, Letcher said. Now, there are no reserves, he said.
"Anything from BASF is short this year," Letcher said. "I'm worried about next year."
AGRICHEMICAL PROFITS CLIMB
For glyphosate, prices reached $50 a gallon to $60 a gallon, up from less than $20 a gallon in mid-2021, said Inman, the owner of Spinner Ag Incorporated.
Bayer reported sales of glyphosate-based products were "particularly strong" in the first quarter as prices increased and volumes declined. Overall, its herbicide sales soared 67% from a year earlier to 2.5 billion euros ($2.64 billion).
BASF's agricultural solutions unit posted quarterly sales of 3.4 billion euros, up 21% from a year earlier. Corteva also sold more than $2 billion worth of crop-protection products, up 23% from a year earlier, as prices rose 11%.
BASF is seeking to acquire raw materials earlier to avoid future shortages, Kay said. Bayer said it broadened its supplier base for raw ingredients and added bulk trucks to deliver products more efficiently. Farmers who cannot find glyphosate and glufosinate are switching to alternatives, Corteva said.
The supply limitations have caused practical headaches for growers.
Indiana farmer Denny Bell said he did not receive Liberty in his usual 250-gallon containers. Instead, he spent seven hours emptying 2.5-gallon jugs into a larger vat before spraying. Bell said he also waited six months for a popular BASF fungicide, Veltyma.
Reduced usage of herbicides this summer could allow weeds that escape crucial early sprayings to grow and spread their seeds in fields, leaving farmers with more weeds to fight for the next two years as the seeds sprout, said Scott Nolte, Texas A&M University weed specialist.
Iowa corn and soy grower Brent Swart said he is opting to use less glyphosate in the mix of chemicals he sprays due to short supplies, but does not expect it to hurt yields.
"There's definitely a different feel to this year," Swart said. "We've never seen as much supply issue."
($1 = 0.9488 euro)
(Reporting by Tom Polansek in Chicago; Editing by Caroline Stauffer and Matthew Lewis)
US wants farmers to boost wheat production amid a global food shortage. They can't afford to
Joey Garrison and Michael Collins, USA TODAY
Clay Schemm's great grandfather moved to Kansas in the 1920s with a tractor and not much else.
Today, Schemm, 26, continues that tradition at farms in his home of Sharon Springs, Kan. near the state's western border and a few hundred miles away in eastern Kansas.
But Schemm said it might not be realistic for many reasons: growing seasons that are slow to respond to the unfolding crisis, federal incentives for double-cropping that aren't viable in most of his acres and a volatile wheat market. Wheat prices have fluctuated wildly after it soared for weeks following Russia's February invasion of Ukraine.
"Even that little bit drop in price has me very hesitant to go back in with wheat in the eastern farms," Schemm said.
Biden heads Saturday to Germany for a meeting of the world's most powerful nations that make up the Group of Seven, or G7, where among the top priorities is addressing a global wheat shortage caused by Russia's war in Ukraine.
International organizations warn that current supply disruptions caused by the war are aggravating already high prices, which complicates access to food in some Northern African countries and parts of Asia that are dependent on Ukraine's wheat supply.
Farmer Andriy Zubko checks wheat ripeness on a field in Donetsk region, Ukraine, Tuesday, June 21, 2022. Russian hostilities in Ukraine are preventing grain from leaving the "breadbasket of the world" and making food more expensive across the globe, threatening to worsen shortages, hunger and political instability in developing countries.
Yet even U.S. farmers like Schemm who want to ramp up their production can't do so easily, raising doubts that the U.S. can fill much of the void from Ukraine's wheat supply.
"It's not like in the U.S. we have all these unplanted acres, fields just lying fallow," said Veronica Nigh, senior economist with the American Farm Bureau Federation,which lobbies on behalf of farmers. "That's frustrating. Farmers want to do more. They want to be able to help to respond."
Limits to the push for more double-cropping
Droughts in the Great Plains and heavy rain in Minnesota and the Dakotas have slowed the production of wheat this year. Fertilizer costs have spiked as a result of the war. And the farming calendar presents another problem: Seventy percent of wheat in the U.S comes from a winter harvest – planted in the fall but not harvested until the spring, putting it off track with the immediate crisis in Ukraine.
There are also questions about the effectiveness of how the Biden administration is looking to expand wheat productions.
U.S. Agriculture Secretary Tom Vilsack met with United Nations members last week and relayed efforts by the federal government to encourage a farming process called double-cropping to boost the production of wheat. As an incentive, the Agriculture Department is working to extend federal insurance available to farmers to double-crop wheat to 681 additional counties.
President Joe Biden heads to Germany on Saturday for a meeting of the Group of Seven nations where a global food shortage will be among the top priorities.
Farmers double-crop when they plant a second crop after harvesting a different crop on the same field within the same growing year. It often involves soybeans and then wheat, or vice versa, and depending on the part of the country, can be wheat on top of wheat. It's a financially risky endeavor for farmers, who aren't likely to pursue double-cropping without insurance.
But the incentives aren't expected to move the needle much because double-cropping is typically only an option in heavy-moisture areas east of the Mississippi River like Michigan, Ohio, Kentucky and Illinois – not in states like Kanas, Oklahoma and Texas that produce the most wheat in the U.S.
"If they're really wanting to replace the Ukrainian crop, they need to be able to hit our big wheat-producing states as a whole," Schemm said. "And these policies just aren't quite hitting that mark."
A $40 billion Ukraine package that Congress approved in May originally had $500 million earmarked for increasing the domestics production of wheat and other crops through expanded marketing loan rates and double-cropping incentives. The measure was scrapped before the bill's passage over concerns about the practicality of the loan program when it become more expensive amid high inflation.
Chandler Goule, CEO of the National Association of Wheat Growers, said if there is an increase in wheat production it would come from the upcoming winter harvest, but cautioned, "You're not going to see a 10%, 15%, 20% increase."
Wheat produced this year in Kansas, Oklahoma and Texas, three of the nation's largest wheat-producing states, is in "very poor to fair" condition as result of the droughts, according to Goule. All three states are lagging behind their three years averages in production. The heavy moisture in the upper Midwest has put Minnesota and the Dakota states behind as well.
Wheat prices are up 27% since the beginning of the year and 11% since Russia's invasion, according to the Department of Agriculture. Many wheat farmers are spooked by a volatile market. Goule said those who do not farm might wrongly assume wheat growers are "falling over themselves to get out there in the field to plant more" to cash in on the high prices.
"Just as fast as that market went up, it has the potential of coming back down," Goule said. "And so really what it does to growers is is the opposite – planting probably less wheat."
What does the rise of wheat prices mean for grocery shopping?
Rattling the global wheat market further, India banned wheat exports in May after excessively hot weather hurt its harvest. Because the U.S. produces most of its wheat domestically, Americans have not faced a shortage like other countries, but the price of wheat in the U.S. has soared nonetheless.
Wheat prices were already on the rise before the war in Ukraine as a result of droughts in the West and Canada, said Chad Hart, an agricultural economist at Iowa State University.
“Then you put this war on top of that, and that sort of is an accelerant to what we’ve seen in terms of prices," he said.
Following Russia's Feb. 24 invasion of Ukraine, wheat prices jumped 20% to 25% almost immediately. Since then, price increases have come in waves, with the highest happening in May amid Russia’s blockade of wheat in Ukraine and concerns about Ukrainian wheat producers’ ability to harvest their crop, Hart said.
The price of cereals and bakery products was up 11.6% in May over last year, according to the Labor Department, a slightly higher percentage than the overall 8.6% jump in inflation. But that’s still less than other food items. Eggs, for example, cost 22.6% more than last year. Poultry is up 15.3%, beef and veal jumped 14.3%, and fish and seafood rose 11.9%.
Even American farmers who want to ramp up wheat production can't do so easily, raising doubts that the U.S. can fill much of the void from Ukraine's wheat supply.
Agriculture Department officials said they are tracking the price of wheat "closely" and acknowledged it could increase more in the coming months.
While food prices could continue to spike as well, it might not be a direct result of wheat.
The reason: food prices in the U.S. are tied more closely to other factors than commodities. Hart predicted the price of wheat will remain elevated for the next 18 months, having some impact on food prices in the U.S. "but not nearly at the scale that you would think.”
“When we look at that dollar we spend at the grocery store, on average only about 15 cents of that dollar actually goes back to buy the commodity from the farmer,” he said. “The other 85 cents is the transportation, the packaging, the advertising, the labor at the grocery store and up the warehouse chain. I make the joke – and it's actually fairly close to true – that we pay more for the cardboard in a box of cornflakes than we do for the corn that's in the box of cornflakes.”
True impact on U.S. wheat from war in Ukraine won't be clear until next year
Rising fertilizer costs have compilated farmers' decisions.
The price of fertilizer, a major Russian export, has more than doubled since last year – an increase the Agriculture Department attributes to multiple factors, including the war in Ukraine. Prices dropped in May but remain higher than normal.
Eddie Melton, a fifth-generation farmer from Sebree, Ky. in the western part of the state, said he expects more wheat planted in Kentucky this fall, but said farmers must also weigh the rising cost of fertilizer and fuel.
“The prices have tripled on a lot of those things, so it’s all kind of relevant,” said Melton, first vice president of the Kentucky Farm Bureau Federation.
Ukraine typically exports most of its wheat through the Black Sea, but blockades by Russian forces along the Ukrainian coast have prevented grains from entering the world market.
John Kirby, National Security Council spokesman, said the U.S. and other G7 countries will use meetings on food security in Germany to discuss ways to get around the blockade. Biden has mentioned building temporary silos on the Ukrainian border, including in Poland, to help facilitate exports.
Kirby also said the U.S. welcomes new involvement by Turkey to try to broker a deal to get grain out of Ukraine.
Melton, who raises corn, soybeans, wheat and beef cattle in Kentucky, said he empathizes with Ukrainian farmers who have seen their operations interrupted because of war.
“Farming is a stressful job in itself, but I can’t imagine what those farmers are going through in Ukraine right now,” he said.
In April, the Biden administration announced plans to provide $282 million in food assistance through the Bill Emerson Humanitarian Trust – draining its entire balance – to countries affected by Russia's war in Ukraine. The fund, created in 2018, is the primary way the U.S. provides food-insecure countries direct aid during crises.
But those dollars can only go so far.
With the U.S. wheat supply down slightly because of weather challenges, the Department of Agriculture expects U.S. exports to drop as well over the next year to about 775 million metric tons, down from 779 million metric tons. The wheat harvested this summer – soon to be going on the market – was planted last fall before the war in Ukraine.
The first true picture of the war in Ukraine's impact on U.S. wheat production won't be known until this fall, when wheat farmers make their decisions about the winter harvest. It will be the first major harvest since the Russian invasion.
"That decision will be made in the next couple of months," said Nicole Berg, a fourth-generation wheat farmer in Paterson, Wa., who hopes the past year's weather troubles don't repeat itself.
"Farmers, luckily, are internal optimists," Berg, who serves as president of the National Association of Wheat Growers, added. "We always think we're going to get that best price."
Schemm, who spent $67,000 more on fertilizer this year than last, said other farmers he knows are "cautiously optimistic" that they will be able to devote more acres to wheat. He said more farmers are "starting to look at wheat again" and he knows "farmers are interested in it."
But their decisions will come down to many factors, Schemm said. And the uncertainty, sure doesn't help.
Reach Joey Garrison on Twitter @joeygarrison and Michael Collins @mcollinsNEWS.
Gustavo Petro has been elected as the Latin American country’s first leftist leader. But he faces a huge challenge if he is to deliver on his promises, says Joe Parkin Daniels
Throughout Latin American history, as leftwing parties have taken power across the continent, one country has kept them out of office, very often through force: Colombia.
Last week that changed – and when Gustavo Petro formally takes over in August, Colombia will have its first leftist leader.
As Joe Parkin Daniels tells Michael Safi, the new president is promising to end the decades-long war on drugs, change Colombia’s relationship with the US, and shift the country’s economy away from gas and oil. It’s a tall order, especially as Colombia’s presidents are limited to a single term of four years.
And the challenges he faces are not just the political ones resulting from a slender margin of victory: after the result, he gave his speech from behind bulletproof glass, in a chilling reminder of the dangers that leftwing candidates face in Colombia.
Latin America’s new new left
The recent election in Colombia has produced new hope for the country--and for the whole region.
Perhaps the most radical statement from Gustavo Petro, the newly elected president of Colombia, has been his promise to keep fossil fuels in the ground. Petro has said that he will not issue any new licenses for hydrocarbon exploration, will stop fracking pilot projects, and will end the development of offshore drilling.
Petro has called for “a transition from an economy of death to an economy of life,” saying that “we cannot accept that the wealth and foreign exchange reserves in Colombia come from the export of three of humanity’s poisons: petroleum, coal, and cocaine.” Since oil and coal are Colombia’s largest export earners—and the country remains the largest cocaine producer in the world—this is not going to be an easy transition for a Colombian politician to implement or sell to the public.
But Gustavo Petro is no ordinary politician. He began his political career as an urban guerrilla, joining the revolutionary group M-19 as a 17-year-old. He was never part of the inner circle, but he did spend time in prison for his involvement in underground activities. Later, after becoming an economist, he served in the Colombian parliament and as the mayor of Bogota.
He has been fearless as a politician, exposing himself time and again to criticism and worse. He broke with his political colleagues in 2009 to form a new party. As a member of parliament, he exposed corrupt deals between his fellow senators and various death squads. Further revelations implicated the conservative Uribe government and the country’s spy agency.
As a parliamentarian and then as a candidate for president in 2010 and 2018, Petro received numerous death threats. The result has been bodyguards and security details, precautions he followed even when he came to Washington, DC to accept a Letelier-Moffitt Human Rights Award in 2007.
Running for president for a third time this year, Petro was even more careful. At one campaign stop, The Washington Postreports, “When Petro walked up, the crowd could hardly see him. He hid behind four men carrying large bulletproof shields. And as he spoke, the armor remained on either side of him, reminding those in the plaza of what it means to run for office in this South Americancountry.” In the last 35 years, four presidential candidates in Colombia were assassinated, three of them on the left.
Vice-President-elect Francia Márquez has been equally courageous. A Goldman Prize-winning environmentalist, she led the fight against illegal gold mining in Colombia. What might be simply challenging work in another country is extraordinarily risky in Colombia where 138 human rights defenders were killed last year.
Standing up to a sometimes-violent right wing is par for the course in Colombia and elsewhere in Latin America. Dealing with a corrupt establishment is also, unfortunately, routine.
But politicians like Petro and Márquez, as well as newcomer Gabriel Boric in Chile, must also navigate their way through the various layers of the Latin American left. In so doing, they are helping to build a new progressive movement that is significantly different from the old left (Castro and Cuba) and the new left (Lula and Brazil). Transformed by social movements, Latin America’s new new left is showing the world how progressives can wield power justly and judiciously in an age of climate change and political polarization.
Fixation on Growth
Going back to the dawn of progressivism, the left has always been preoccupied with the issue of economic justice. Once in power, left parties have been united in their belief that to achieve a more equal distribution of wealth and power, the economy must grow—and fast. The Soviet Union set the precedent with Five Year Plans devoted to transforming a largely agrarian society into an industrial giant. Social Democratic governments in Europe also supported economic growth in the belief that a rising tide would lift all boats, as a similar-minded John F. Kennedy would later say. Communists embraced economic growth as a way to catch up to the West; middle-of-the-road leftists wanted to grow the economy to boost employment rates and have more resources available for social welfare programs.
This year marks the fiftieth anniversary of the Club of Rome report, Limits to Growth. Before climate change was a thing, 30 experts from around the world issued a stern warning that the planet couldn’t support the exponential growth of human activity because of the limits of arable land, mineral resources for industry, and the consequences of pollution. Except for the Greens, progressives have been slow to come to terms with these limits to economic growth.
In Latin America, Green parties never took off. Instead, progressives have traditionally followed one of two paths. Cuba followed the Soviet model of rapid growth with a command economy and state-owned enterprises, though it ultimately had to abandon large parts of that approach when the Soviet Union collapsed and subsidies from Moscow largely withered away. Flush with oil money, Hugo Chavez adopted a similar approach in Venezuela.
The new left in Latin America, by contrast, was firmly committed to operating within democratic institutions, beginning with the ill-fated Allende administration in Chile and continuing through the Workers Party governments in Brazil. Although the new left diverged from the old left on democracy and human rights, it also equated unrestrained economic growth with progress, particularly during the “pink tide” of the 2000s. The growth rate in Brazil under Lula, for instance, skyrocketed from 1.9 percent to 5.2 percent and the trade surplus more than doubled. In Argentina, left-leaning Peronist Nestor Kirchner also pushed to expand the economy in his initial years by devaluing the peso and severing the country’s dependence on the IMF. Uruguay, under the progressive Frente Amplio, underwent significant economic expansion, particularly in its first decade in power. In Bolivia, Evo Morales boosted his country’s extraction industries and achieved an average of nearly 5 percent growth annually across his 13 years in office.
But a different kind of left was also emerging in those years, one that reflected the demands of indigenous communities and environmental activists.
In 2007, Rafael Correa presented the world with an innovative proposal. The Ecuadoran president pledged to leave the oil underneath the Yasuni National Park, a vast reserve of biodiversity, if the international community came up with $3.6 billion in compensation (about half what Ecuador could have received by selling the oil). The fundraising began in 2011 and reached about 10 percent of the target figure a year later. But the effort fizzled out, and the Ecuadoran government ultimately teamed up with a Chinese firm to begin drilling for the Yasuni oil in 2016, a partnership that has only expanded under the current conservative government.
But Correa’s initial approach at least hinted at a new progressivism that did not put unrestrained growth at the center of economic policy. That approach has been reflected, for instance, in the shift in the politics in Uruguay where, despite conventional pro-growth economic policies, the left-wing government made huge investments in clean energy, with nearly 95 percent of electricity provided by renewable sources by 2015. Costa Rica, under several social democratic leaders, has followed a similar path of decarbonization.
Latin America remains a key supplier of both dirty energy and resources like lithium, which power a “clean” energy transition. The new wave of left politicians must grapple with the challenges generated by climate change as well as the economic precarity aggravated by the pandemic. They don’t have a lot of room for maneuver. A far-right populism—embodied by Brazilian President Jair Bolsonaro and the two losing challengers in Chile (Jose Antonio Kast) and Colombia (Rodolfo Hernández)—remains powerful and at the ready if the new new left falters.
A Post-Pink Wave
The U.S. government is reserving judgment on the victory of Gustavo Pietro and Francia Márquez. Not so The Washington Post, which recently editorialized: “There is much cause for concern in the policy direction Mr. Petro has articulated, in particular his call for an end to new oil exploration, a potential blow to the country’s industry likely to do much damage to export revenue and little good for the global environment.”
The Post, which continues to publish full-page ads for fossil fuel companies instead of following the divestment lead of The Guardian, is being obtuse here. Yes, an end to new oil exploration will hurt Colombia’s export revenues, but The Post is probably more concerned about the impact on U.S. oil companies and the price of gas in America. As for doing “little good for the global environment,” if Colombia indeed phases down fossil fuel production under Petro, it would be the largest global producer to follow through on such a commitment. That would be hugely significant.
That’s not all. Petro wants to work with other progressive leaders in Latin America on a region-wide transition. One of those leaders is the recently elected president of Chile, Gabriel Boric, who has put environmentalism at the top of his agenda. One of his first acts was to reverse the policy of the previous administration by signing the Escazu Agreement, which focuses on access to information and environmental justice. He appointed scientists to top positions in his administration, including climatologist Maisa Rojas as minister of the environment. Climate change is not an abstract issue for Chile. The country has been experiencing a decade-long drought, among other conditions aggravated by global warming.
One of the major challenges that Boric faces is Chile’s lithium industry, which has the world’s largest reserves of this valuable commodity. He has promised to nationalize the sector, which could enable the government to regulate the mines more rigorously in terms of labor and environmental considerations. He is also eying the possibility of creating more value-added processing—rather than simply exporting raw materials—that would in turn mean more and better-paying jobs.
Across a range of issues, Boric faces a vocal conservative opposition. But he also must deal with an uncompromising left that is not happy with his willingness to talk with his political adversaries, for instance in championing a new constitution for the country. That kind of negotiating is essential in a democracy, and Boric is committed to the democratic process—both inside Chile and outside.
“No matter who it bothers, our government will have total commitment to democracy and human rights, without support for any kind of dictatorship or autocracy,” Boric has tweeted. He has criticized the human rights records of Cuba, Nicaragua, and Venezuela. Nicolás Maduro, Venezuela’s leader, countered by calling Boric a member of the “cowardly left.”
But “cowardly” is the least apt word to describe Boric. Like Petro and Márquez in Colombia, Boric is not afraid to chart an entirely new path for his country. Together, these leaders are willing to challenge many of the tired, outdated policies that characterized the previous pink wave.
“The Colombian victory is providing oxygen for a Latin American politics that has been characterized by a lack of vision,” write Argentinian environmentalists Maristella Svampa and Enrique Viale. “This has been visible in the obstinate progressivism in Argentina, Bolivia and most probably Brazil as well if Lula triumphs in the next elections. They are interested neither in promoting an ecosocial agenda nor in discussing a Just Transition. Consequently, they are significantly reducing the prospects for democracy and a life of dignity and sustainability.”
Although still within the big tent of Latin American progressivism, Petro, Márquez, and Boric represent something new. And it’s not just happening at the level of elite governance. Svampa and Viale helped create the Ecosocial Pact of the South, which has also challenged the growth paradigm, criticized the authoritarian tendencies of the old left, put environmentalism front and center, and insisted on amplifying voices of social movements from indigenous communities and feminists to LGBTQ and anti-racism activists.
These are grim times when some of the least competent and most outrageous men and women have risen to positions of power in some of the largest countries in the world. Maybe Latin America can show us a way out of this predicament. Led by Petro, Márquez, and Boric from above and pushed by the Ecosocial Pact from below, the region has a real chance to undo this extraordinary mismatch between the needs of the moment and the capacities of our leaders.
Antal Attila
