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Iran’s oil, Europe’s oil imports, many threats, upward prices

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Iranian President Ahmadinejad punches the air in front of a banner of Iran's Supreme Leader Ali Khamenei during rally to mark the anniversary of Islamic Revolution in Tehran. With its threat to block the Strait of Hormuz, Iran is responding to the United States' decision to impose sanctions on financial institutions that deal with Iran's central bank. Photo: Der Spiegel / Reuters

The concern about the multi-bloc confrontation with Iran (the Islamic Republic of, to use the official name) has continued from December 2011 into January 2012. Oil prices and petroleum products markets have been affected. There have been oft-repeated and serious concerns that there could be some armed confrontation, especially involving Israel and Iran. There has also been speculation that Iran’s government would block the Strait of Hormuz, through which about a third of all crude oil shipped worldwide passes. Some of these concerns have abated in the last week, but only partially.

Now, Der Spiegel has reported that although the European Union embargo on Iranian oil will only come into effect in six months, the leadership in Tehran wants to act first: Exports to Europe are set to be halted immediately. It is a move which could mean added difficulties for struggling economies in southern Europe. The Iranian government wants to present a bill to parliament this weekend calling for an immediate halt to oil deliveries to Europe. The move, with most reports citing the Iranian news agency Mehr, has come about in response to the EU agreement to impose sanctions against Iran, which were announced earlier this week.

The sanctions banned any new contracts for buying oil from Iran, but allowed existing deals to continue until July in order to give countries time to find other sources. But that process is now at risk after the latest move from Tehran, a step the Iranian government had already threatened. “If this bill is passed, the government will be forced to stop selling oil to Europe before the actual implementation of their sanctions,” said Emad Hosseini, spokesman for the Iranian parliament’s energy commission, reportedly said. The bill is set to become law on Sunday.

An oil tanker is seen docked next to Iraq's vital al-Basra oil terminal, in Persian Gulf waters. Four decades after the 1973 oil shock, Iran and the West are once again embracing oil as a weapon. Tehran is threatening to block the Strait of Hormuz, while the industrialized countries are considering a boycott of Iranian oil. Photo: Der Spiegel / AP Photo/Kamran Jebreili

The EU sanctions allow for oil deliveries from Iran until July 1. Any pre-empting of this timescale by Tehran could prove problematic for countries like Italy, Greece and Spain, who would need to urgently find new suppliers. China, meanwhile, a major importer of Iranian oil, has also criticized the EU sanctions. The Xinhua news agency quoted the Chinese Foreign Ministry on Thursday as saying: “To blindly pressure and impose sanctions on Iran are not constructive approaches.” Many members of the EU are now heavily dependent on Iranian oil. Some 500,000 barrels arrive in Europe every day from Iran, with southern European countries consuming most of it. Greece is the most exposed, receiving a third of all its oil imports from Iran, but Italy too depends on Iran for 13 percent of its oil needs. If this source were to dry up abruptly, the economic conditions in the two struggling countries could become even worse.

Iran holds around 137 billion barrels of proven oil reserves, or nearly 10 percent of the world total, according to the BP Statistical Review of World Energy 2011. Despite sitting on the world’s second largest reserves of natural gas, Iran’s growing appetite for its own gas, combined with tightening international sanctions that have throttled its fledgling liquefied natural gas (LNG) programme, have made it a net gas importer for most of the last decade. Natural gas accounts for 54 percent of Iran’s total domestic energy consumption, while most of the remainder of energy consumption is attributable to oil, according to the U.S. Energy Information Administration (EIA).

Graphic: Der Spiegel / Reuters

The Gloria Center’s Barry Rubin has said that the claim of Israel being about to attack Iran repeatedly appears in the media (see his article, ‘Israel Isn’t Going to Attack Iran and Neither Will the United States’). “Some have criticized Israel for attacking Iran and turning the Middle East into a cauldron of turmoil (not as if the region needs any help in that department) despite the fact that it hasn’t even happened,” he said. “On the surface, of course, there is apparent evidence for such a thesis. Israel has talked about attacking Iran and, objectively, one can make a case for such an operation. Yet any serious consideration of this scenario—based on actual research and real analysis rather than what the uninformed assemble in their own heads—is this: It isn’t going to happen.”

Rubin said that the main leak from the Israeli government, by an ex-intelligence official who hates Prime Minister Benjamin Netanyahu, has been that the Israeli government already decided not to attack Iran. Israeli Defense Minister Ehud Barak has publicly denied plans for an imminent attack as have other senior government official. “Israel, like other countries, should be subject to rational analysis. Articles being written by others are being spun as saying Israel is going to attack when that’s not what they are saying.”

So why are Israelis talking about a potential attack on Iran’s nuclear facilities, Rubin has asked. Because that’s the only way Israel has to pressure Western countries to work harder on the issue, to increase sanction and diplomatic efforts, is his answer.

A satellite image of the Persian Gulf. About a third of all the crude oil shipped worldwide passes through the Strait of Hormuz between Iran and Oman. Photo: Der Spiegel / DPA / NASA / The Visible Earth

Bloomberg provided a round-up of Iran-related oil and prices news – oil declined a second day in New York as rising U.S. crude inventories countered data showing gasoline demand increased last week in the world’s largest oil consumer. Futures fell as much as 0.9 percent after dropping 0.6 percent yesterday. Crude stockpiles probably rose last week as imports rebounded, according to a Bloomberg News survey before an Energy Department report today. U.S. gasoline demand grew for a second week, MasterCard Inc. data showed yesterday. The European Union embargo on Iranian oil supplies will “bear bitter fruit,” Iran’s Foreign Affairs Ministry said this week.

Ria Novosti, the Russian news agtency, quoting a CNN report, said the United States will use all available options to prevent Iran from getting a nuclear weapon, President Barack Obama said in his State of the Union address on Tuesday. “Let there be no doubt: America is determined to prevent Iran from getting a nuclear weapon, and I will take no options off the table to achieve that goal,” Obama said.

The New York Times reported that as the Obama administration and its European allies toughened economic sanctions against Iran on Monday — blocking its access to the world financial system and undermining its critical oil and gas industry — officials on both sides of the Atlantic acknowledge that their last-ditch effort has only a limited chance of persuading Tehran to abandon what the West fears is its pursuit of nuclear weapons. “That leaves open this critical question: And then what?”

Fox Business has reported that the International Monetary Fund warned on Wednesday that global crude prices could rise as much as 30 percent if Iran halts oil exports as a result of U.S. and European Union sanctions. If Iran halts exports to countries without offsets from other sources it would likely trigger an “initial” oil price jump of 20 to 30 percent, or about $20 to $30 a barrel, the IMF said in its first public comment on a possible Iranian oil supply disruption.

Graphic: Der Spiegel / Reuters

Impacts on refining in Europe was reported by Bloomberg – the European Union’s embargo on Iranian oil threatens to accelerate refinery closures in Europe, the head of Italy’s refiners’ lobby said. “Asian countries not applying the embargo could buy the Iranian oil at a discount and sell cheap refined products back to us,” Piero De Simone, general manager of Unione Petrolifera, said in an interview in Rome. “Italy already risks the closure of five refineries and at a European level we’re talking about 70 possible shut downs.”

Brinksmanship over Iran’s threat to close the Strait of Hormuz sparked a rally in oil prices at the end of last year, The National of UAE reported, with sabre-rattling by Iran and the US sending the price of Brent crude futures to highs of US$111.11 per barrel. Saudi Arabia looks set to benefit from sanctions against Iran as the kingdom is one of the few oil producers with capacity to make up any shortfall they will cause. Meanwhile India’s oil minister said Wednesday the energy-hungry nation was continuing to import oil from Iran and was not bound by new sanctions imposed by the European Union.

Reuters provided a factbox about Iran’s oil exports as OPEC’s second largest producer. Iran sells large volumes of oil to China, India, South Korea, Japan and Italy. But Greece, Turkey, South Africa and Sri Lanka rely most heavily on Iranian oil as a percentage of imports. Sri Lanka imported 39,000 bpd in the first half of the year, IEA data shows. It is completely reliant on Iranian oil.

EU figures show imports of Iranian crude were up more than 7% in the third quarter of 2011 compared to the second quarter. The EU says it imported about 700,000 bpd of Iranian crude oil in the third quarter of 2011, compared to about 655,000 bpd in the second quarter.

The European Union agreed on Jan. 23 to ban Iranian oil imports, but the embargo will not be fully implemented until July 1, to avoid harming economies to whom Iran has been a major supplier. The EU move follows new financial sanctions signed into law by U.S. President Barack Obama on Dec. 31, which aim to make it difficult for countries to buy Iranian oil in an attempt to discourage Tehran’s nuclear programme.

Iran produces about 3.5 million barrels per day (bpd) of crude with another 500,000 bpd of condensate – light hydrocarbon liquids. Iran exports about 2.6 million bpd, of which about 50,000 bpd is refined products, the International Energy Agency (IEA) estimates. The top 10 buyers of Iranian crude last year were as follows:

An Iranian oil technician makes his way at the oil separator facilities in Azadegan oil field, near Ahvaz, Iran. Photo: Der Spiegel / AP Photo/Vahid Salemi

Country – Imports (bpd) – % Imports
1. China – 543,000 – 10
2. India – 341,000 – 11
3. Japan – 251,000 – 5.9
4. Italy – 204,000 – 13.2
5. South Korea – 239,000 – 7.4
6. Turkey – 217,000 – 30.6
7. Spain – 170,000 – 16.2
8. Greece – 158,000 – 53.1
9. S.Africa – 98,000 – 25
10.France – 75,000 – 6.0

[Figures for EU countries are from the bloc's Eurostat office and are for the third quarter. Figures for other OECD countries are from the IEA and for the second quarter. Figures for China, India and South Africa are for the first half of 2011 from the U.S. Energy Information Administration (EIA).]

Asia takes the research and development lead

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Ten Asian countries, including some developing countries in South-East Asia, have, as a bloc, caught up with the global leader in research and development (R&D) investment, the United States, a report by Scidev.net has said.

The report quoted is the National Science Board’s ‘Science and Engineering Indicators 2012′ which is a broad base of quantitative information on the U.S. and International science and engineering enterprise. The National Science Board (NSB) is the policymaking body for the USA’s National Science Foundation (NSF).

The NSB report has said that total science spend of China, India, Indonesia, Japan, Malaysia, Singapore, South Korea, Taiwan, Thailand, and Vietnam rose steadily between 1999 and 2009 to reach 32 per cent of the global share of spending on science, compared with 31 per cent in the US.

“This information clearly shows we must re-examine long-held assumptions about the global dominance of the American science and technology enterprise,” said NSF Director Subra Suresh of the findings in the ‘Science and Engineering Indicators 2012′. “And we must take seriously new strategies for education, workforce development and innovation in order for the United States to retain its international leadership position,” he said.

Well over a year ago (2010 November), the UNESCO Science Report 2010 had as its primary message stated that Europe, Japan and the USA (the Triad) may still dominate research and development (R&D) but they are increasingly being challenged by the emerging economies and above all by China.

The report depicted an increasingly competitive environment, one in which the flow of information, knowledge, personnel and investment has become a two-way traffic. Both China and India, for instance, are using their newfound economic might to invest in high-tech companies in Europe and elsewhere to acquire technological expertise overnight.

The USA's National Science Foundation (NSF) launched a number of new initiatives designed to better position the United States in global Science and engineering. Photo: National Science Board / Richard Lerner

Other large emerging economies are also spending more on research and development than before, among them Brazil, Mexico, South Africa and Turkey. If more countries are participating in science, the UNESCO Science Report 2010 saw a shift in global influence, with China a hair’s breadth away from counting more researchers than either the USA or the European Union, for instance, and now publishes more scientific articles than Japan.

A “major trend has been the rapid expansion of R&D performance in the regions of East/Southeast Asia and South Asia,” according to the biennial report ‘Science and Engineering Indicators 2012′ produced by the National Science Board, the policy-making body of the US National Science Foundation, which drew upon a variety of national and international statistics. The report also mentions that the share of R&D expenditure spent by US multinationals in Asia-Pacific has increased.

According to the new Indicators 2012, the largest global S&T gains occurred in the so-called ‘Asia-10′ – China, India, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand – as those countries integrate S&T into economic growth. Between 1999 and 2009, for example, the U.S. share of global research and development (R&D) dropped from 38 percent to 31 percent, whereas it grew from 24 percent to 35 percent in the Asia region during the same time. In China alone, R&D growth increased a stunning 28 percent in a single year (2008-2009), propelling it past Japan and into second place behind the United States.

“Asia’s rapid ascent as a major world science and technology (S&T) centre is chiefly driven by developments in China,” says the report. “But several other Asian economies (the Asia-8 [India, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan and Thailand]) have also played a role. All are intent on boosting quality of, and access to, higher education and developing world-class research and S&T infrastructures. The Asia-8 functions like a loosely structured supplier zone for China’s high-technology manufacturing export industries. This supplier zone increasingly appears to include Japan. Japan, a preeminent S&T nation, is continuing to lose ground relative to China and the Asia-8 in high-technology manufacturing and trade,” the report says.

International R&D highlights
(1) The top three R&D-performing countries: United States, China – now the second largest R&D performer – and Japan represented just over half of the estimated $1.28 trillion in global R&D in 2009. The United States, the largest single R&D-performing country, accounted for about 31% of the 2009 global total, down from 38% in 1999.

(2) Asian countries – including China, India, Japan, Malaysia, Singapore, South Korea, Taiwan, and Thailand – represented 24% of the global R&D total in 1999 but accounted for 32% in 2009, including China (12%) and Japan (11%). The pace of real growth over the past 10 years in China’s overall R&D remains exceptionally high at about 20% annually.

(3) The European Union accounted for 23% total global R&D in 2009, down from 27% in 1999. Wealthy economies generally devote larger shares of their GDP to R&D than do less developed economies. The U.S. R&D/GDP ratio (or R&D intensity) was about 2.9% in 2009 and has fluctuated between 2.6% and 2.8% during the past 10 years, largely reflecting changes in business R&D spending. In 2009, the United States ranked eighth in R&D intensity – surpassed by Israel, Sweden, Finland, Japan, South Korea, Switzerland, and Taiwan – all of which perform far less R&D annually than the United States.

(4) Among the top European R&D-performing countries, Germany reported a 2.8% R&D/GDP ratio in 2008; France, 2.2%; and the United Kingdom, 1.9%. The Japanese and South Korean R&D/GDP ratios were among the highest in the world in 2008, each at about 3.3%. China’s ratio remains relatively low, at 1.7%, but has more than doubled from 0.8% in 1999.

“India’s high gross domestic product (GDP) growth continues to contrast with a fledgling overall S&T performance.” The figures show that China, while still a long way behind the United States, is now the second largest R&D performer globally, contributing 12 per cent of the global research spend. It has overtaken Japan, which contributed 11 per cent  in 2009. The proportion of GDP that China devotes to science funding has doubled since 1999 to 1.7 per cent and China’s pace of real growth in R&D expenditure “remains exceptionally high at about 20 per cent annually,” the report says. Overall, world expenditures on R&D are estimated to have exceeded US$1.25 trillion in 2009, up from US$641 billion a decade earlier.

“Governments in many parts of the developing world, viewing science and technology as integral to economic growth and development, have set out to build more knowledge-intensive economies,” it says. “They have taken steps to open their markets to trade and foreign investment, develop their S&T infrastructures, stimulate industrial R&D, expand their higher education systems, and build indigenous R&D capabilities. Over time, global S&T capabilities have grown, nowhere more so than in Asia.”

The scientific landscape is not conveniently demarcated by blocs, whether formed by states or by private sector interests. As UNESCO has said, even countries with a lesser scientific capacity are finding that they can acquire, adopt and sometimes even transform existing technology and thereby leapfrog over certain costly investments, such as infrastructure like land lines for telephones. Technological progress is allowing these countries to produce more knowledge and participate more actively than before in international networks and research partnerships with countries in both North and South. This trend is fostering a democratization of science worldwide. In turn, science diplomacy is becoming a key instrument of peace-building and sustainable development in international relations.

After Jong-il, what now for DPR Korea?

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In this 9 September 2011 picture, North Korean leader Kim Jong Il attended the Kim Il Sung Stadium in Pyongyang to celebrate the 63rd anniversary of the founding of the Workers' and Peasants Red Guards parade. Photo: Xinhua News Agency / Central News Agency

The DPRK’s official KCNA news agency reported on Monday that Kim Jong-il, top leader of the Democratic People’s Republic of Korea (DPRK), passed away on Saturday at the age of 69. Kim, who was general secretary of the Workers’ Party of Korea (WPK), chairman of the DPRK National Defence Commission and supreme commander of the Korean People’s Army (KPA), died “from a great mental and physical strain at 08:30 (2330 GMT Friday) on December 17, 2011, on a train during a field guidance tour,” said the report, quoted by China Daily.

Citing a notice released by the WPK Central Committee and Central Military Commission, DPRK National Defence Commission, Presidium of the Supreme People’s Assembly and Cabinet, the KCNA said that the “Korean revolution” is led by Kim Jong-un now and that the party members, servicepersons and all other people should be faithful to his leadership. “All the party members, servicepersons and people should remain loyal to the guidance of respected Kim Jong-un and firmly protect and further cement the single-minded unity of the party, the army and the people,” said the notice.

People gathered in downtown Pyongyang, DPRK, in Mansudae at the statue of former President Kim Il Sung, to mourn the death of Kim Jong Il, according to the Korean Central News Agency. Photo: Xinhua News Agency

The National Funeral Committee, led by Kim Jong-un, has been set up, and the body of Kim Jong-il will be placed at the Kumsusan Memorial Palace. The DPRK will be in a period of mourning till December 29 and condolence will be accepted from Tuesday to December 27, said the report, adding that the farewell ceremony will be held on December 28 and the National Meeting of Memorial will be held on December 29.

Xinhua has reported that immediately after the DPRK’s KCNA news agency reported that Kim died Saturday on a train, South Korean President Lee Myung-bak convened the National Security Council (NSC) to discuss follow-up measures with Cabinet ministers including the foreign minister and the defence chief. Lee also ordered all government employees be on emergency alert, a measure that would restrict their unauthorized leaves and put them on standby.
“The government will keep a close eye on situations in North Korea (DPRK),” Ahn Kwang-chan, a senior presidential secretary for national crisis management, said after the NSC meeting, adding ” president Lee asked South Koreans to remain calm and focus on daily economic activity.”

The North Korean flag at half mast atop the Embassy of the DPRK in Beijing on 19 December. Photo: Xinhua News Agency

A video capture of a Korean Central Television broadcast on the death of Kim Jong Il. Photo: Xinhua News Agency

South Korea’s military was also quick to respond to the news. The Joint Chiefs of Staff (JCS) put military on emergency alert shortly after the news hit the press and called an emergency meeting. The JCS has stepped up border surveillance, but no unusual activity has been detected, according to Seoul-based Yonhap News Agency. South Korea’s JCS chief Jung Seung-jo and James D. Thurman, commander of the U.S. Forces Korea, agreed not to raise the level of the Watchcon surveillance status, according to Yonhap. “Since North Korea is in a lot of shock after passed away of its leader. The generals decided South Korea and the United States shouldn’t create an unnecessary sense of crisis,” Yonhap quoted a military official as saying.

Earlier this year, the Chosunilbo (of South Korea) reported on ‘How N.Korea’s Fate Hangs on Kim Jong-il’s Health’. The fate of North Korea seems to depend to a great extent on the health of its ailing leader Kim Jong-il, who turned 70 this week. “The situation in North Korea could shift drastically depending whether Kim dies suddenly, falls into a coma or sees his health get steadily worse,” a South Korean intelligence official said.

In this 18 November 2010 picture, North Korean leader Kim Jong Il visited the North Road, Chang Ping City County plant. Photo: Xinhua News Agency / Central News Agency

Sudden drastic change could happen at any moment, and experts are urging the South Korean government, military and public to be prepared. If Kim Jong-il dies suddenly, North Korea is widely expected to be ruled by the military together with Kim’s inner circle consisting of his third son Jong-un, brother-in-law Jang Song-taek and sister Kim Kyong-hui, who stepped in when Kim Jong-il collapsed in August 2008. The situation at the time “was stable,” said Ryu Dong-ryeol of the Police Science Institute, and the same crisis management team will go to work.

Lee Jo-won of Chungang University warned the new regime “could adopt an even more hardline and reckless foreign policy than Kim Jong-il to prevent internal chaos.” There is also the possibility of Jang seizing power or the military ousting the Kim family and taking control of the regime. In that case, North Korea could face a civil war.

Opinions differed over whether the hereditary transfer of power to his third son Jong-un would face any obstacles in the communist state, which Kim had ruled with an iron fist since his father and national founder Kim Il-sung died in 1994. According to this Korea Herald opinion article, some argued that the process will proceed as planned given years of “systematic” preparations, while others floated possibilities of power struggles among the elite given his lack of experience and a relatively short grooming period.

The Kim family (DPR Korea) tree. Graphic: Korea Times

In this 4 November 2010 picture, Kim Jong Il inspected the construction of hydropower stations in northern Chi Chuan Jiang Daoxi. Photo: Xinhua News Agency / Central News Agency

The North claims that Swiss-educated Jong-un, who was internally tapped as heir apparent in 2009, was born in 1982. Kim Jong-il had 20 years of preparation before taking power, while it has been only several years since Jong-un started being groomed. On the surface, the succession plan appears to be well under way. Following the announcement of Kim’s death, state media reported that the North’s military and people pledged to follow the leadership of the heir. Jong-un’s name also appeared on top of the funeral committee member list, which reflects his position in the power echelon.

Yang Moo-jin, a professor at the University of North Korean Studies, raised the possibility that for the time being, a group of elites from the ruling party may collectively lead the country. “As he is young, a group of elites from the party leadership may lead the country for the time being. However, there would not be power struggles that threaten the legitimacy of Jong-un as North Koreans believe he is in their community sharing a common destiny,” he said. Yang also pointed out that the North would have a lengthy mourning period to stall for time for a stable power transition.

World crop estimates 2011 November – more wheat, China corn, less rice

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The November data and major crop summaries from the World Agricultural Supply and Demand Estimates (WASDE, US Department of Agriculture, Economic Research Service) are out today. Here are the highlights:

Wheat - Global wheat supplies for 2011-12 are projected 2.6 million tons higher mostly reflecting higher production in Kazakhstan and EU-27. Kazakhstan production is raised 2.0 million tons as an extended harvest period capped off a nearly ideal growing season, confirmed by the latest government reports. EU-27 production is raised 1.2 million tons with further upward revisions for France and Spain and higher reported production in the United Kingdom and Czech Republic. Partly offsetting these increases is a 0.5-million-ton reduction for Argentina and 0.3-million-ton reductions for both Algeria and Ethiopia.

World wheat trade is raised for 2011-12 with higher expected imports for China, a number of African countries, including Morocco and Algeria, as well as for Brazil and several FSU-12 countries neighboring Kazakhstan. Partly offsetting is a reduction in projected imports for South Korea where more corn feeding is expected. Exports are raised 1.0 million tons each for EU-27 and Russia reflecting larger supplies in EU-27 and the continued heavy pace of shipments from Russia.

Global wheat consumption for 2011-12 is raised 2.4 million tons with increased feeding expected for Kazakhstan, Brazil, and Serbia. Larger crops in Kazakhstan and Serbia support more wheat feeding. Recent rains in southern Brazil have reduced wheat quality in some areas raising the potential for more feeding. Higher consumption is also expected for EU-27, Ethiopia, Kenya, and several smaller FSU-12 countries. Global ending stocks are projected 0.2 million tons higher. Rising stocks in Kazakhstan, China, and Morocco are partly offset by reductions in major exporting countries including Russia, Argentina, and EU-27.

You can get the WASDE 2011 November outlook here [pdf] and the 2011 November Excel file is here [xls]. Current and historical WASDE data are here.

Coarse grain - Global coarse grain supplies for 2011-12 are projected slightly lower with reduced U.S. corn production and lower EU-27 rye production more than offsetting higher Argentina sorghum production, higher EU-27 corn, barley, oats production, and higher Kazakhstan barley production. Corn production is lowered for a number of countries with the biggest reduction for Mexico where production is lowered 3.5 million tons. A late start to the summer rainy season and an early September freeze in parts of the southern plateau corn belt reduced yields for Mexico’s summer crop. Lower expected area for the winter crop, which will be planted in November and December, also reduces 2011-12 corn production prospects. Reservoir levels are well below those necessary to sustain a normal seasonal draw down in the northwestern corn areas which normally account for 70 to 80 percent of Mexico’s winter corn crop.

Increases in 2011-12 corn production for a number of countries partly offset reductions in Mexico, the United States, and Serbia. Corn production is raised 2.5 million tons for China with increases in both area and yields in line with the latest indications from the China National Grain and Oils Information Center. EU-27 corn production is raised 1.9 million tons mostly reflecting higher reported output in France, Romania, and Austria. Argentina production is raised 1.5 million tons with higher expected area. FSU-12 production is raised 0.7 million tons with higher reported yields in Belarus and Russia. There are also a number of production changes this month to corn and sorghum production in Sub-Saharan Africa which reduce coarse grain production for the region.

World coarse grain trade for 2011-12 is raised with increased global imports and exports of barley and corn. Barley imports are raised for Algeria, Saudi Arabia, and Jordan with exports increased for EU-27 and Russia. Corn imports are increased for China, Mexico, and South Korea. Higher expected corn exports from Argentina and EU-27 support these increases. Higher sorghum exports from Argentina offset the reduction in expected U.S. sorghum shipments. Global corn consumption is mostly unchanged with higher industrial use and feeding in China and higher corn feeding in EU-27 and South Korea offsetting reductions in Mexico and the United States. Global corn ending stocks are projected 1.6 million tons lower with reductions in EU-27, Mexico, Brazil, and the United States outweighing increases for China and Argentina.

RiceGlobal 2011-12 rice supply and use are lowered from a month ago. World 2011-12 production is forecast at a record 461.0 million tons, down 0.4 million from last month due mainly to decreases for Burma, Cambodia, Laos, and Thailand, which are partially offset by an increase for China. Thailand’s 2011-12 rice crop is lowered nearly a million tons as losses in the main-season crop from recent flooding are partially offset by an expected re-planting of some of the main season crop in the Northern Region along with an expected record dry-season crop. Flooding also lowered crop prospects in Burma, Cambodia, and Laos. China’s 2011-12 crop is raised 2.0 million tons to a record 141.0 million, due to an increase in harvested area. Harvested area is increased based on recent indications from the government of China. The increase in global consumption is due mostly to an increase for China. Global exports are lowered slightly due to reductions for Burma and Cambodia, which are partially offset by increases for Argentina and Brazil. Global ending stocks for 2011-12 are projected at 100.6 million tons, down 0.8 million from last month, but an increase of 2.6 million from the previous year.

Fukushima nuclear emergency, Japan

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18 December 2011: You will find the Updates archive, info links, video clips and pictures on the Japan emergency page.

Street lights shine in the abandoned town of Iitate, outside the 20 kilometre exclusion zone around the Fukushima No. 1 Nuclear Power Plant, in northeast Japan. Residents were forced to evacuate the town after radiation levels from the leaking plant exceeded those inside the exclusion zone. Nov. 20, 2011. Photo: Mainichi Daily News / AP Photo / Greg Baker

More than nine months have passed since the 11 March earthquake and tsunami that devastated northeastern Japan and triggered a still-unresolved disaster at the Fukushima No. 1 Nuclear Power Plant. This set of news reports, news features and editorial in the Mainichi Daily News reveals the chronic deception and criminal corporate irresponsibility that continue to hinder all meaningful effort to mitigate the meltdown, and to obstruct at all costs the truth.

Mainichi Daily News has said that the government has declared a stable “cold shutdown” at the plant, representing a major milestone in its handling of the disaster. The public has keenly waited for the nuclear reactors to be brought under stable control, but Japan is still standing on thin ice and is miles away from a situation where it can really declare that the crisis is under control.

In the meantime, rebuilding the lives of residents near the crippled plants has been an urgent critical challenge. On the occasion of its latest political declaration, the government needs to renew its resolve to settle the crisis and achieve regional recovery. The disaster-hit reactors are certainly now in a more stable condition. However, the phrase “cold shutdown” usually refers to suspension of a sound reactor. The fact that the government is attempting to apply this term in a severe accident in which three reactors have suffered core meltdowns should be called into question. The government should rather explain in detail the possibility of any additional explosions and whether a recriticality accident has been ruled out.

Police on duty at a roadblock at the edge of the 20 kilometre exclusion zone around the crippled Fukushima No. 1 Nuclear Power Plant, at Namie, in northeast Japan. Nov. 20, 2011. Photo: Mainichi Daily News / AP Photo / Greg Baker

Simulations suggest that nuclear fuel has melted inside the reactor containment vessels, eroding their concrete floors. Although Tokyo Electric Power Co. (TEPCO), the operator of the stricken nuclear plant, has indicated that melted fuel has also been cooled down by water, this is nothing but speculation. We urge the utility and the government to find a way to ascertain the precise condition of the fuel.

Mainichi Daily News has reported that conditions at the Fukushima No. 1 nuclear plant are far worse than its operator or the government has admitted, according to freelance journalist Tomohiko Suzuki, who spent more than a month working undercover at the power station. “Absolutely no progress is being made” towards the final resolution of the crisis, Suzuki told reporters at a Foreign Correspondents’ Club of Japan news conference on Dec. 15. Suzuki, 55, worked for a Toshiba Corp. subsidiary as a general laborer there from July 13 to Aug. 22, documenting sloppy repair work, companies including plant operator Tokyo Electric Power Co. (TEPCO) playing fast and loose with their workers’ radiation doses, and a marked concern for appearances over the safety of employees or the public.

An earthquake-damaged grave is seen at a cemetery in the abandoned town of Katsurao, outside the 20 kilometre exclusion zone around the Fukushima No. 1 Nuclear Power Plant, in northeast Japan. The town was abandoned when radiation levels became unsafe for long term exposure. Nov. 20, 2011. Photo: Mainichi Daily News / AP Photo / Greg Baker

For example, the no-entry zones around the plant – the 20-kilometer radius exclusion zone and the extension covering most of the village of Iitate and other municipalities – have more to do with convenience that actual safety, Suzuki says. The situation at the plant itself is no better, where he says much of the work is simply “for show,” fraught with corporate jealousies and secretiveness and “completely different” from the “all-Japan” cooperative effort being presented by the government.

“Reactor makers Toshiba and Hitachi (brought in to help resolve the crisis) each have their own technology, and they don’t talk to each other. Toshiba doesn’t tell Hitachi what it’s doing, and Hitachi doesn’t tell Toshiba what it’s doing.” Meanwhile, despite there being no concrete data on the state of the reactor cores, claims by the government and TEPCO that the disaster is under control and that the reactors are on-schedule for a cold shutdown by the year’s end have promoted a breakneck work schedule, leading to shoddy repairs and habitual disregard for worker safety, he said. “Working at Fukushima is equivalent to being given an order to die,” Suzuki quoted one nuclear-related company source as saying.

At a Tokyo market, a smartphone shows radiation test results by the grower of a package of Maitake mushrooms, showing them as free of radioactive contamination. Many consumers worry about the safety of food from Fukushima and surrounding prefectures, although produce and fish found to be above government-set limits for contamination are barred from the market. Mushrooms, for example, harvested in and around Fukushima are frequently found to be contaminated and barred from the market. Sept. 12, 2011. Photo: Mainichi Daily News / AP Photo / Shizuo Kambayashi

Kenichi Oshima is currently a professor at Ritsumeikan University. After long years of nuclear power research, he had learned that the actual cost of maintaining nuclear power in Japan was twice as high as what government and electric power companies had publicly announced, the Mainichi Daily News has reported. In March 2010, published his findings in a book, but found himself under fire at a time when pro-nuclear energy was becoming even stronger. In September the same year, during a meeting of the Japan Atomic Energy Commission, his comments were rejected and even mocked. “Do you call this research?” he was told and few even cared to look at his findings.

Following the nuclear disaster at the Fukushima No. 1 power plant, triggered by the March 11 earthquake and tsunami, Oshima’s situation drastically changed. He was selected as a member of two expert governmental committees to serve as a critical analyst of Japan’s current nuclear power stance. The group will openly release all internal debates and documents, Oshima says. He is now more optimistic than ever that the time to destroy the “cheap and safe” nuclear power myth will eventually come.

Workers in protective suits and masks wait to enter the emergency operation center at the crippled Fukushima No. 1 Nuclear Power Plant in Okuma, Japan. Nov. 12, 2011. Photo: Mainichi Daily News / AP Photo / David Guttenfelder, Pool

A sober and critical editorial in the Mainichi Daily News has said that Britain has already abandoned developing fast-breeder nuclear reactors, and is set to give up nuclear fuel reprocessing as well. Moreover, its planned construction of a facility to dispose of radioactive waste including plutonium is likely to materialize even though it is still at a planning phase.

In contrast, there are no prospects that Japan can build a disposal facility. However, for Japan to call for operations at the Monju prototype fast-breeder nuclear reactor in Fukui Prefecture and the nuclear fuel reprocessing plant in the Aomori Prefecture village of Rokkasho to be carried out as planned, would be like putting the cart before the horse as it appears the country is incapable of building a disposal facility.

Plutonium is directly related to security issues. The U.K. possesses nuclear weapons but Japan does not. One may wonder whether Japan’s independence will be threatened if it abandons nuclear fuel recycling and loses its ability to produce plutonium. Even though it is an important point of contention the issue should not be used as a reason to underestimate the harm of plutonium.

Economy, Trade and Industry Minister Yukio Edano who is in charge of energy policy, Goshi Hosono, state minister for handling the nuclear crisis, and Yoshito Sengoku, second-in-command in the ruling Democratic Party of Japan’s Policy Research Committee, have been hearing the views of experts on the issue. It is not enough for the government to talk only about the dream of “prosperity” built on dependence on nuclear power. Japan’s ability to overcome the mess that follows such prosperity is now being tested.

More updates, info links, video clips and pictures on the Japan emergency page.

Written by makanaka

March 17, 2011 at 22:20

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Food reserves, strategic foodgrain stocks and port protests

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Sujit Kumar Mondal sailing to his floating garden - one of the initiatives cited for Bangladesh's success in fighting under-nutrition. Photo: IRIN/Peter Murimi

Sujit Kumar Mondal sailing to his floating garden - one of the initiatives cited for Bangladesh's success in fighting under-nutrition. Photo: IRIN/Peter Murimi

Food inflation and industrial action have come together in a new signal about the unsustainability of consumption. Port workers in Argentina had stopped, for three days, the loading of vessels with soya, of which Argentina is a major producer. Their reason is the continuing high cost of food in their country, which in this Reuters report on the matter is recorded as having been 25%. They struck work and blocked loading to demand higher wages so they could afford to buy their household food needs. They’re also directly responsible for loading an East Asian food staple. Block food to buy food.

The blockade by members of Juarez’s cooperative targeted a terminal north of the city of Rosario shared by Bunge and Argentina’s AGD, and at another nearby facility operated by Cargill. Argentina is the world’s No. 3 soybean exporter and a major supplier of corn and wheat. About 80 percent of its soyoil and meal is produced around Rosario, located 180 miles (300 km) north of the capital Buenos Aires.

The two terminals account for about 16 percent of the South American country’s soyoil-processing capacity. Argentina is the world’s biggest supplier of soyoil and soymeal. Earlier on Friday, port workers suspended a brief protest that halted shipping activity in the southern grains ports of Quequen and Bahia Blanca, SOMU shipping workers’ union Omar Suarez told Reuters. He said the union wanted exporters to use a logistics company that hires its members, but had called off the protest following a request from the government.

Major grain importing countries are set to build more storage silos and expand strategic stocks after seeing the role played by record food prices in political upheaval in the Middle East and North Africa, Reuters has reported. Egypt, South Korea and Saudi Arabia are among nations which have already unveiled strategic plans as grain markets adjust to the prospect of further supply crunches over the next few years.

Global demand for grain has risen steadily as consumers in emerging economies grow richer and suppliers have struggled to overcome erratic climatic conditions, which last year included Russia’s worst drought in decades and heavy rains in Australia. The upshot has been a near-60 percent surge in key US wheat prices in the year to March, while global food prices as measured by the United Nations hit their second straight record high in February.

Importers also no longer have the safety net of large stocks held by exporters such as the European Union, which has sold off the grain mountains it first accumulated in the 1980s and moved to more market-oriented policies. Nomani Nomani, vice chairman of the General Authority for Supply Commodities (GASC) in top wheat exporter Egypt, said in February it was looking to improve and boost storage capacities.

“We have a long-term plan to improve storage capacity in Egypt and to build a network of silos that would allow GASC to purchase at the suitable time. We are also seeking improving performance of storage,” he said. South Korea, the world’s fourth-largest grain importer, is also among those building a strategic grain reserve, while another major importer Saudi Arabia hopes to double wheat reserves within three years. International Grains Council figures issued last week show a major shift in stocks from exporting to importing countries, said the Reuters report.

China is expected to hold 114.6 million tons of grain by the end of 2010-11, more than the combined total of 104.5 million tons held by all the major exporters, according to IGC estimates. Nie Zhenbang, state administration of grain head, said in an interview with the official Ziguangge magazine that China would continue to build up local government reserves of grains and edible oils and expand stockpiling capacities.

Mexico, the world’s second-largest maize importer, has not yet expanded its stocks but has plenty of space if necessary. Maize stocks currently total around 2 million tons, little changed from previous years, but the national association of warehouses (AAGEDE) estimates there is storage space for about 11 million tons. AAGEDE director Raul Millan said there is no deficit in storage space but that infrastructure is lacking in the southern part of the country where warehouses are not as well equipped. Mexico has no strategic reserves of grain, although there are some stocks held by the government to hand out to the poor.

In India, the government maintains a ‘Food Security Reserve’ of 3 million tons of wheat and 2 million tons of rice. This reserve – maintained from 2008 – is part of what the Indian government calls ‘buffer’ norms’. The buffer stock norms are recalibrated four times a year and as on 2010 October, the ‘buffer stock norms’ stood at 14 million tons for wheat and 7.2 million tons for rice. Against these norms, the government’s actual stocks were 27.7 million tons of wheat and 18.4 million tons of rice. From 2009 July, the actual stocks of total foodgrains in India has been held at around 50 million tons, much above what the government calculates it needs for the Public Distribution System and other welfare programmes.

East Asia food – noodle wheat shortage and ginger-garlic speculation

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Supermarket 'udon', similar to Ramen. Photo Wikipedia

Noodle wheat? Japan and South Korea need a lot of it every year, about 800,000 tons according to industry estimates from West Australia. Noodle grade wheat requires careful blending to produce the appropriate flour. Japanese and South Korean-type noodles, such as the ‘udon‘ variety, require specialist wheat grades unlike the noodles commonly seen elsewhere, which are made from a more standard flour.

But, as Agrimoney reports, the drought in Western Australia threatens to land Japan and South Korea with a noodle shortage unless supplies of specialist wheat are carefully administered. Agrimoney has quoted top exporter CBH Group, which handles virtually all Western Australia’s grain harvest. West Australian wheat producers are worrying about how to supply noodle-grade wheat while dealing with a near-halving, to below 4m tonnes, in the state’s wheat production.

Noodle wheat typically accounts for 13-14% the state’s wheat crop. Now the shortage means noodle wheat is commanding a premium, currently at Aus$35 a tonne, which is likely to attract “opportunistic” merchants with little experience of handling the blend. Wheat growers in West Australia are being warned to avoid selling to a merchant whose bad handling of the blend might unsettle West Australia’s valuable grain trade relations with two important Asian clients.

Meanwhile, the Economic Observer of China (English) examines produce speculation in China’s agricultural market. Products being targeted according to the newspaper are garlic, ginger, honeysuckle and green beans.

Like many Japanese noodles, udon noodles are served chilled in the summer and hot in the winter. Photo Wikipedia

Shandong’s Jinxiang produces over 6 million ‘mu’ (a ‘mu’ is about 800 sq metres) of garlic. “Garlic is a reliable crop and garners steady expectations and consequently produces strong market liquidity,” said the Economic Observer. “Strong market liquidity and the availability of rural brokers, all contribute to the rapid influx of hot money. The rising price of garlic has attracted local and outside speculators.” Ginger prices have fluctuated significantly in the past few years. The newspaper reports that ginger prices were at a low of 0.4 yuan/kilo in 2008, and then skyrocketed to 4.6 yuan/kilo this year. “Speculating on ginger can generate huge profits. Like the garlic market, most of the money goes to brokers and middlemen.”

One third of prescription medications in China list honeysuckle as an ingredient; 70% of cold and flu medications use honeysuckle. “The price of honeysuckle has risen 400% this yearm” reports the Economic Observer. “Annual national demand is at 20 million kilograms but actual output hovers at 8 million kilograms. Supply of honeysuckle is dependent on distributors, who are hoarding.” Prices of green beans have surged in the past year, from 6.8 yuan/kilo to 24 yuan/kilo. “The green bean trading volume in Taonan has reached over 40 million tons, one fourth of the entire domestic market. However, most farmers have not profited from the market surge because of poor timing, pressure to pay back loans, and planting costs.”

The food-agritech-aid stakes, a return to the 1950s

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Undernourished population (image: Nature)At the end of July 2010, the United States government together with the Bill & Melinda Gates Foundation made an announcement that has far and wide implications for the agriculture and development sectors. The announcement was the launch of the ‘Global Agriculture and Food Security Program (GAFSP)’. The US Under Secretary for International Affairs (Lael Brainard) and the president of the Global Development Program at the Bill & Melinda Gates Foundation (Sylvia Mathews Burwell) met ambassadors and embassy officials from more than a dozen African countries to discuss how they could use the new fund.

Described as “a new fund to tackle global hunger and poverty”, the GAFSP was created following the meeting of the G20 in Pittsburgh, USA, in 2009. Launched in April 2010 with US$880 million in commitments from the United States of America, Canada, South Korea, Spain, and the Bill & Melinda Gates Foundation, the GAFSP “represents a global effort to aid vulnerable populations afflicted by hunger and poverty”.

Calorie availability (image: Nature)Moreover, it is being positioned as a key element of the Obama Administration’s initiative to, in its own words, enhance food security in poor countries, raise rural incomes and reduce poverty. Laudable aims, but food and food aid and agricultural technology has for most of the 20th century been a tool of foreign policy. South Asia knows that well with the role of the American philanthropic foundations and their role in ushering in the Green Revolution.

The fund’s first round of grants (total US$224 million) were awarded in June 2010 to Bangladesh, Haiti, Rwanda, Sierra Leone and Togo. In October 2010, approximately US$120 million will be available for allocation to countries “eligible” for the GAFSP. More than 25 countries are expected to apply for assistance, but there are conditions. Funding “will be prioritised” for those countries that demonstrate the highest levels of need, the strongest policy environments and the greatest level of country readiness. What does readiness mean? The country will need to draft and frame an agricultural development strategy and country investment plan.

Agriculture research (image: Nature)Rural realities and living conditions are usually very different from the sketches contained in funding documents. Poverty is the main source of hunger now, not a lack of food. Efficiency has become a central theme, which means getting higher yields on small plots with fewer inputs of water and chemical/synthetic fertiliser. It hasn’t helped that government investment in basic research and development on agriculture, in the countries of the South, is very little.

1. In 2009, more than 1 billion people went undernourished — their food intake regularly providing less than minimum energy requirements — not because there isn’t enough food, but because people are too poor to buy it. At least 30% of food goes to waste. Although the highest rates of hunger are in sub-Saharan Africa — correlated with poverty — most of the world’s undernourished people are in Asia and particularly South Asia.

Global undernourishment (image: Nature)2. The percentage of hungry people in the developing world had been dropping for decades even though the number of hungry worldwide barely dipped. But the food price crisis in 2008 reversed these decades of gains.

3. Scientists long feared a great population boom that would stress food production, but population growth is slowing and should plateau by 2050 as family size in almost all poorer countries falls to roughly 2.2 children per family. Even as population has risen, the overall availability of calories per person has increased, not decreased. Producing enough food in the future is possible, but doing so without drastically sapping other resources, particularly water, will be difficult.

4. An outlook published in 2009 by the Food and Agriculture Organization (FAO) of the United Nations and the Organization for Economic Cooperation and Development (OECD) says that current cropland could be more than doubled by adding 1.6 billion hectares — mostly from Latin America and Africa — without impinging on land needed for forests, protected areas or urbanisation. But Britain’s Royal Society has advised against substantially increasing cultivated land, arguing that this would damage ecosystems and biodiversity. Instead, it backs “sustainable intensification,” which has become the priority of many agricultural research agencies.

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