You may remember Peter Zeihan’s analysis of world agricultural output in the wake of of deglobalization and the Russo-Ukrainian War, and his forecast of famine late this year.
That was just before the Ukraine export deal was signed. Now he’s looked at the facts and run the numbers, and says it isn’t going to help much.
Takeaways:
“Right now the Ukrainians have about 18 million metric tons stored up in their silos at or adjacent to their ports. That’s a lot that needs to move. That is in excess of half of a normal harvest for the country.”
“On August 1st we got our first ship, the Razoni, to dock to load up and to leave for Lebanon. It’s carrying 26,000 metric tons. So we need 700 more ships of this size if we’re going to get that grain out.”
“The Ukrainian harvest starts in less than 45 days. So you’re talking about needing to get a dozen or so vessels in there every single day. So far we’ve had one. I don’t have a lot of hope for this.” (Note: Since then we’ve had four more.)
“Right now the Ukrainians have nowhere to put it. Their silos are full from last year’s harvest. They weren’t able to export because the war started back in February.
“Even if the farmers were able to work their fields and not be molested by Russian troops (and remember we’ve already had mass evacuations from eastern and southern Ukraine) the problem remains that they can’t get fuel into the country. So you’re talking about needing to harvest industrial levels of wheat without industrial equipment.”
“The likely end result here is that this is the last year that Ukraine participates in international grain markets. They simply don’t have the capacity to get stuff up at a scale. In fact the only place that they might be able to ship stuff is by rail and at most with significant upgrades that have not yet been done. They can probably only ship about one-fifth of their normal produce out that way the rail lines are just not designed for that kind of bulk cargo.”
Bottlenecks have arisen due to the different rail gauge used in Ukraine, dating back to the Soviet era. That means shipments are being transferred to new wagons at the border.
Ukrainian Infrastructure Minister Oleksandr Kubrakov has targeted the upgrading of rail infrastructure in western Ukraine as a priority the EU should focus on. “Rail transport can partially undertake all the transportation of agricultural products, particularly grain,” he said. “However, transporting goods is difficult due to western Ukraine’s low border-crossing capacity, which is not designed for transshipping such volumes.”
“Some 768,300 metric tons of Ukrainian grain was exported by rail between May 1 and May 16.”
Back to Zeihan: “And a lot of them have to transit little territory called Transnistra [in Moldavia], which is under Russian control.”
The sobering conclusion:
You remove the world’s fourth largest wheat exporter from the market and you’re going to look at cascading problems. Not just with food prices and malnutrition, but civil conflict and breakdown, most notably in the Middle East. The last time we had a doubling of global wheat prices, we saw the Arab spring back in 2011. What we’re dealing with is an order of magnitude more complicated and deeper rooted. And to think that we’re only going to have doubling of prices is ridiculously optimistic.
Well, it’s a good thing the Middle East isn’t know for having populations full of unstable hotheads looking for an excuse to kill each other at the drop of a hat…
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8 Responses to “Ukraine Export Deal: Too Little, Too Late”
Based on this, you might want to take another look at what constitutes winning for Russia. If Russia takes Odessa, Ukraine won’t be shipping much of anything.
Another thought on rail difficulties. Most of their locos are electric, powered by overhead lines, and the Russians have been targetting substations as part of their effort to hamstring the AFU’s logistical efforts.
Minimum victory conditions would be Russian forces retreating from the Mariupol-to-Crimea land bridge and most of the Donbass-to-Kharkiv stretch, but keep Donetsk/Lugansk and Crimea.
Maximum victory conditions would be a Ukrainian flag over Sevastopol.
Taking Kherson and not much else could be spun as a technical Ukrainian victory but the Russians would probably be sufficiently encouraged by it to think they could grind out an eventual Ukrainian defeat over years to come. At that point you have to start looking at long-term sanctions effects on the Russian economy, and the cost of the endless bleed of lives at the front.
Stalemate at the present front lines would definitely be considered by the Russians to be a victory, although the preceding conclusion still applies.
There is a 0.0% chance of Russia taking Odessa short of genocide-level extermination of Ukrainians.
I am expecting some sort of clear Ukrainian victory. The trends have been steadily in that direction (although slower than I’d like) since early/mid-March. Russia lost this war before they ever started it, it just didn’t become clear until the repeated failures to take Kiev.
PM is partly correct re: electric locomotives. As you travel farther from Kyiv the electric lines often terminate and the locomotives are switched out for diesel. This 20 minute transition is also the rest stop, smoke break, and chance to buy sandwiches from vendors. They could reallocate locomotives. A more serious problem would be the actual grain hauling cars. Chop, at the western border near Uzhhorod, is a major switching yard for train trucks.
Zeihan has said elsewhere, Odessa is a bit like New York, Baltimore, Los Angeles, and New Orleans combined. If captured by Russia, as he put it, “That’s the end of Ukraine as an economic entity. Period.”
Based on this, you might want to take another look at what constitutes winning for Russia. If Russia takes Odessa, Ukraine won’t be shipping much of anything.
Another thought on rail difficulties. Most of their locos are electric, powered by overhead lines, and the Russians have been targetting substations as part of their effort to hamstring the AFU’s logistical efforts.
The Russians at this point are very very far away from taking Odessa.
The Russians at this point are going to have a very very hard time taking Odessa.
The politicians in the west say they will support Ukraine until victory.
What does victory look like?
Minimum victory conditions would be Russian forces retreating from the Mariupol-to-Crimea land bridge and most of the Donbass-to-Kharkiv stretch, but keep Donetsk/Lugansk and Crimea.
Maximum victory conditions would be a Ukrainian flag over Sevastopol.
Taking Kherson and not much else could be spun as a technical Ukrainian victory but the Russians would probably be sufficiently encouraged by it to think they could grind out an eventual Ukrainian defeat over years to come. At that point you have to start looking at long-term sanctions effects on the Russian economy, and the cost of the endless bleed of lives at the front.
Stalemate at the present front lines would definitely be considered by the Russians to be a victory, although the preceding conclusion still applies.
There is a 0.0% chance of Russia taking Odessa short of genocide-level extermination of Ukrainians.
I am expecting some sort of clear Ukrainian victory. The trends have been steadily in that direction (although slower than I’d like) since early/mid-March. Russia lost this war before they ever started it, it just didn’t become clear until the repeated failures to take Kiev.
PM is partly correct re: electric locomotives. As you travel farther from Kyiv the electric lines often terminate and the locomotives are switched out for diesel. This 20 minute transition is also the rest stop, smoke break, and chance to buy sandwiches from vendors. They could reallocate locomotives. A more serious problem would be the actual grain hauling cars. Chop, at the western border near Uzhhorod, is a major switching yard for train trucks.
Zeihan has said elsewhere, Odessa is a bit like New York, Baltimore, Los Angeles, and New Orleans combined. If captured by Russia, as he put it, “That’s the end of Ukraine as an economic entity. Period.”