The Yangtze River basin is in the grip of the worst drought it has seen in the past 50 years; in China’s eastern Shandong province it is the worst in 200. Hundreds of thousands of people are without access to water. The vital Yangtze shipping industry has been shut down. Shanghai and other cities in the Yangtze delta face a power crisis. A substantial portion of China’s wheat and rice harvests has been destroyed, a fact that could have a serious impact on volatile and soaring global food prices.
Shandong province, one of the primary sources of wheat grown in China, has seen 12 millimeters of rain since September 2010. In April, it was estimated that 40 percent of the Shandong wheat harvest had been destroyed by the drought. While new numbers are not yet available, the amount of wheat lost to the drought can only have grown since then. With global wheat prices at record highs, the Chinese government looked to the central and southern agricultural regions to replace the lost wheat with rice. The fertile Hubei region of the Yangtze basin was cited as the primary source for the expected additional rice.
Even under ideal circumstances and with a bountiful harvest, these provinces could never have made up for the shortfall in the Shandong wheat harvest. But the Yangtze is suffering a drought of historical proportions as well. Xinhua reported on May 16 that 315,000 people and 93,000 livestock were without access to drinking water. Some 1,400 reservoirs of drinking and irrigation water had gone dry.
China Daily quoted Yu Youqing, 73-year-old farmer in the village of Huashan in Hubei, who said that he had to “carry water in from about two kilometers away”. His entire village had been doing this since February. As reservoirs dry up, the region’s poor will have to walk greater and greater distances.
Given the shortage of water for drinking, none has been used for irrigation. The crops on 1.35 million hectares of land dedicated to rice and wheat production have been damaged or destroyed, according the Office of State Flood Control and Drought Relief. In conjunction with the destruction of the Shandong wheat harvest, this is devastating. China will be importing much of its grain supply in the coming months.
The 6,300-kilometer Yangtze River is the longest in Asia and is a major economic thoroughfare. About 40 percent of all Chinese shipping travels the Yangtze. Large sections of the river have now dropped to 3 meters deep; its width has dwindled by 50 meters. As a result, China has had to shut down shipping on the river. The Chinese press is full of images of boats stranded in the heat-baked mud of the Yangtze littoral. The Yangtze is one of the busiest waterways in the world. Shipping carried coal, freight and parts for the construction, chemical, auto and high tech industries on the banks of the river.
In an attempt to relieve the impact of the drought, officials opened the sluices of the Three Gorges Dam on Monday, discharging 9,500 cubic meters of water per second for 12 hours. The Three Gorges Dam, completed in 2003, is the largest hydroelectric project in the world. As water levels fall, power production is cut. Hydroelectric power accounts of one-fifth of Chinese electricity. The industrial districts west of Shanghai have been hardest hit, and face tight power rationing. The Singapore Straits Times reported on May 17 that the Chinese government had suspended diesel exports as increased power outages would mean that on-site fuel based power generation would be essential to continued manufacturing.
The water crisis has hit Beijing as well. Beijing is approximately 300 miles northwest of Shandong province. The city’s water reserves have fallen to a per capita rate of 100 cubic meters. This is far below the 1,700 cubic meters per capita defined by the International Panel on Climate Change as scarcity, and the 1,000 cubic meters defined as an emergency level.
It is not simply the La Niña phenomenon of cooling sea temperatures and reduced precipitation that is causing this shortage. Xinhua quoted Huang Qi, head of the disaster prevention and reduction office of the Yangtze River Water Resources Committee, as saying, “The water crisis is not because of a scarcity of water but uneven distribution of resources.”
While data on water distribution is hard to come by, there are clear indications that this uneven allocation of resources falls along class lines. Poor neighborhoods in Beijing use reclaimed water to meet their needs. Meanwhile, golf courses dominate the landscape of wealthy sections of Beijing. Golf has been a popular sport among the Chinese elite since it was introduced into the country by Zhao Ziyang, head of the Communist Party in the 1980s. By 2004, there were 38 golf courses in Beijing. In a region frequently afflicted by water shortages this angered many, and the government responded by banning the construction of further golf courses.
Nevertheless, construction has proceeded apace and the government has turned a blind eye to it. The Beijing phone directory indicates that there are 60 golf courses in the area and an aerial survey revealed 170. There are now approximately 600 golf courses in China, according to Xinhua. In a bid to stem public anger, the government arrested two officials responsible for allowing the construction of three golf courses in Yunnan province, according to the May 16 issue of the Chinese People’s Daily. The average golf course occupies 607 hectares and requires 36,000 cubic meters of water a day. While farmers carry their drinking water on their back for miles each day, the wealthy are putting over green grass courses that, on average, consume 360 times more water than is allotted to the average resident of Beijing.
The Chinese government will be compelled to import a considerable portion of its rice supply in the coming months. The global food market has seen massive inflation in the past year, and the escalated prices mean that the majority of the world’s population can barely afford their food. In February, the World Bank described global food prices as having reached “dangerous levels”. Rice was the only commodity which had not sky-rocketed. The Yangtze drought significantly affects the world’s rice supply.
Elsewhere, the ongoing flooding of the Mississippi has destroyed, in Arkansas alone, 10 percent of the US rice crop. The total number of acres of rice either destroyed or which will not be planted as a result of the flood remains to be seen, but this will combine with the impact of the Chinese drought to drive up rice prices.
A mitigating factor in the rise of global rice prices is Burma’s re-entry into the world market. The Burmese government had placed a complete ban on all rice exports in February. That ban was lifted last week. The rice exported from the Irrawady delta is among the cheapest and lowest quality on the market. It is 25 percent broken grains. Burmese rice has been largely marketed to Africa.
Rice is a thinly-traded commodity as the vast majority of rice grown globally is consumed within the country of production. It is also a highly political commodity. Governments commonly impose import or export bans on rice, as the recent case of Burma demonstrates. Sudden shifts in demand in Southeast Asia, where the vast majority of the world’s exported rice is grown, may take on sharp political significance as rice exports become a factor in the region’s geopolitical tensions.
The price of rice, however, is not simply dictated by supply and demand, or by political intervention. It is the subject of financial speculation. Rice futures and options are hotly traded in global commodity markets. On June 7-9, the Rice Traders America conference is scheduled to take place in Panama. The conference brochure eagerly reports, “2011 marks a year when a number of the ‘2008’ features have returned”. This refers to the dramatic food shortages that occurred in 2008. The brochure goes on to assure prospective attendees that they will be given the information necessary to profit from this situation.
The volatility of world food prices finds its cause here—in the capitalist market. In a world-planned socialist economy, even in situations of dire drought, such as that which we now see in China, there would no cause for food scarcities. The shortages of water and food rest not with falling supply or heightened demand, but in inequitable distribution, a lack of planning and an anarchic system that trucks and profits in the labor and hunger of millions.