The Peter Zeihan Podcast Series - Deglobalization's Impact on Global Food Exports || Peter Zeihan

Episode Date: September 5, 2024

Globalization has allowed us (meaning humans as a species) to make some of the worst lands farmable, inhabitable, and even prosperous. But what happens to global food exports when globalization ends? Full Newsletter: https://mailchi.mp/zeihan/deglobalizations-impact-on-global-food-exports

Hey everybody, Peter Zine here coming to you from central Yosemite. It's another mountain lake. It is also unnamed. So it is from now on going to be known as Peter's other lake. It even has a beach. Isn't that awesome? Anywho, today we're going to take another entry from the Ask Peter Forum, specifically what's going to happen to global agricultural exports in a post-globalized world.

And the short version is, well, nothing good. In order to have agricultural exports, you basically have to have five things. One, a lot of arable land that's productive. Number two, petroleum to use as fuel. There really isn't any sort of agriculture that is produced at scale that doesn't use internal combustion engines. Yes, yes, yes. They're talking about having electric tractors and everything, but they suck. The charge doesn't last long enough to do anything useful.

There isn't enough power to tow anything. And so unless you're talking about an electric cart to like go along as people are picking apples, no. Not this decade, probably not next decade. Third, you need fertilizer. Now, fertilizer comes in three parts, and nobody has all of them. You've got potash, which gives us potassium. You've got phosphate, and then you've got nitrogen. Nitrogen is normally made from natural gas, so there's something else you can add to your list.

These things are scattered around the world, but in, unfortunately, some concentrations in places that are problematic. So, for example, roughly half the world's phosphate exports come from China, which is bad enough in a world where China is likely to bring. apart, but it's even worse because the phosphate is in the interior regions that are more likely to be secessionists. So you can just kiss all that goodbye. For potash, the world's largest concentrations are in Belarus and Russia. Thank God the third one is Canada. Oh my God, Saskatchewan. So, you know, as the Canadians like to say, tits. And then third, nitrogen, since it's made from natural gas, comes from a much broader array of places, with the United States far and away being number one.

Now, you need all of these things to grow food. The fertilizers, of course, different volumes of each one based on the soil type of where you are and what it is you're trying to grow. But, yeah, there's no way to do this without all five of those things. And in a post-globalization world, the list of places where that is possible is just pretty short. So at the top of the list, by far is North America, specifically Anglo America, the United States and Canada. Between Saskatchewan for the potash and the United States for the nitrogen were in pretty good shape, some of the best agricultural land in the world. And for phosphate, once you get out of the China orbit, there are a number of other options, Morocco, Israel, Saudi Arabia, Florida, of all

places. So North America looks pretty good. Other newer world places that look good, Argentina, some of the most productive agricultural land in the world and New World countries like Argentina, South Africa, New Zealand and Australia, the land is good. Most of them, with the exception of Argentina, can't provide their own fuel, but these are places that are not likely to be in conflict zone. So if there is any fuel and fertilizer to be had for international trade,

these are some of the places it is likely to go because they're going to be able to pay in hard currency. Brazil does not look good. Brazil has some of the worst. sled and quality in the world and is a massive importer of fertilizer, the world's largest by far after China, most of which comes from either China or the former Soviet Union. So, you know, do the math there. So Brazil's day as an agricultural power is not yet over, but you can see the sunset from here. There are parts of Brazil down south near Argentina that will probably do a little bit better.

But for the most part, the Cerrado, this explosive growth we've seen, especially in things like soy. That's temporary. Let's see. who else? New World. That's everybody in the new world, I think. Old world. France. Kind of like Argentina has great land, kind of like Argentina, New Zealand, Australia, and South Africa. It's far enough away from the conflict zones that it's probably going to be okay. It's close enough to the North Sea to get nitrogen from the natural gas there. And if there is any trade to be had, France is going to be one of the few powers that's going to be able to play because they

actually have a Navy and can actually patrol their own sea lanes, which is a relatively rare thing. So that's about it. That's all of them. That's all of them. that's not enough. We're looking at global calorie production probably dropping by a third. You know, that's a lot of starvation. One other thing, there's more to agricultural exports than the things that I normally care about, you know, wheat, rice, corn, soy, where we get most of our calories. There's also a booming agricultural trade today in specialty crops,

whether it happens to be cherries or apples or alfalfa or whatever. keep in mind, excuse me, mosquito, that in a post-globalized world, the ability of countries to pay for specialty crops is going to collapse, especially if they're going to China. So if you are an agricultural producer and China is your ticket, it's time to figure out where to get a different ticket. I'd say in the United States, the part of the country to be most concerned about is California's Central Valley. This is an area with extraordinarily high production costs, in part because it's California, and regulations are very, very strict, in part because the Central Valley is erred to desert almost everywhere, so the input costs are very, very high. This is not fertile land. This is kind of like the American equivalent of the Cerrado on Brazil to a certain degree. Now, as long as the

inputs are relatively inexpensive, and as long as China is paying top dollar for everything, because they're price insensitive, this is a great business plan. But that That's not the world we're going to be in much longer. So check your specialty crops, see where they're going, see if this is a country that will do well as globalization breaks down. And if not, you either need to find a new destination or a new crop. All right, that's it for me. See you next time.