Chinese Food Prices Skyrocket after Drought and now Flooding

 

By John Galt
June 19, 2011

The crisis of the drought causing massive problems within Chinese agriculture in the central and northwestern portions of the country are now being complicated further by floods in the Southern part of the nation. Meanwhile, as outlined in a story from Xinhau this morning, Heavy Downpours damage farmland, inflates food prices in Eastern China, a substantial portion of production has already been impacted with little relief in sight. From the story:

“This is the biggest flood I’ve ever seen in 20 years,” Fu said, who has more than 25 hectares of rice fields in Longyou County. “The crops were looking good, but now they’re under about two meters of water.”

Fu is working day and night, trying to drain away the water. “I can only save 20 percent of the crops at most, and the flood will at least lead to an economic loss of 500,000 yuan (77,279 U. S. Dollars),” Fu said with a sigh.

Fu’s frustration is shared by many farmers as several rounds of torrential rains have swept the province since June 3, flooding vast swaths of farmland and driving the Qiantang River to the highest flood peak since 1955.

The Zhejiang Flood Control and Drought Relief Headquarters said that by Saturday the disaster had afflicted about 2.59 million people and caused an economic loss of nearly five billion yuan.

According to statistics released by the agricultural department of Zhejiang Province, the rainstorms have reduced the vegetable production by about 20 percent.

The deepening flood crisis has also pushed up the prices of vegetables, fruits and grains in Zhejiang.

At the Wanshouting food market in Hangzhou City, the provincial capital, the prices of the green vegetables have risen by 40 percent on average.

Jin Changlin, an official of the Agricultural Department of Zhejiang, said, “The heavy rains have ruined much farmland, which has brought up the food prices, and it’s estimated that prices will continue to rise for about two weeks.”

With CPI already continuing to march upwards in China:

(from TradingEconomics.com)

 

the resulting double hit of massive flooding and a drought will certainly force China to immediately deploy its massive foreign reserves to start purchasing foodstuffs on the open market across the board, putting a further squeeze on consumers not just in third world nations, but in the United States as well. With the Chinese already forward purchasing production from American farmers, as their nations sees the food shortage crisis expand, look for our corporate agriculture juggernaut to exploit this and increase prices dramatically since they now have a guaranteed buyer in lieu of the U.S. consumer.

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