Rust to fertilize food price surge

By F William Engdahl - Asia Times April 4, 2008

A deadly fungus, known as Ug99, which kills wheat, has likely spread to
Pakistan from Africa, according to reports in the British New Scientist. If
true, that threatens the vital Asian bread basket, including the Punjab
region. The spread of the deadly virus, stem rust, against which an
effective fungicide does not exist, comes as world grain stocks reach the
lowest in four decades and government subsidized bio-ethanol production,
especially in the United States, Brazil and the European Union, are taking
land out of food production at alarming rates. Stem rust is the worst of
three rusts that afflict wheat plants. The fungus grows primarily in the
stems, plugging the vascular system so carbohydrates can't get from the
leaves to the grain, which shrivels. Ug99 is a race of stem rust that blocks
the vascular tissues in cereal grains including wheat, oats and barley.
Unlike other rusts that may reduce crop yields, Ug99-infected plants may
suffer up to 100% loss. During the Cold War, both the US and the Soviet
Union stockpiled stem rust spores as a biological weapon. In the 1950s, the
last major outbreak of stem rust destroyed 40% of the spring wheat crop in
North America. At that time governments started a major effort to breed
resistant wheat plants, led by Norman Borlaug of the Rockefeller Foundation.

After the 1954 epidemic, Borlaug began work in Mexico developing wheat that
resisted stem rust. The project became the International Maize and Wheat
Improvement Center (in Spanish, CIMMYT). The rust-resistant, high-yield
wheat it developed ended stem rust outbreaks, led to the Green Revolution,
and won Borlaug the Nobel Peace Prize in 1970. It also resulted today in
there being far fewer varieties of wheat that might resist a new fungus
outbreak. When Ug99 turned up in Kenya in 2002, Borlaug, now 93, sounded the
alarm. "Too many years had gone by and no one was taking Ug99 seriously," he
says. He blames complacency and the dismantling of training and wheat
testing programs after 40 years without outbreaks, according to the New
Scientist report. The first strains of Ug99 were detected in 1999 in Uganda.
It spread to Kenya by 2001, to Ethiopia by 2003 and to Yemen when the
cyclone Gonu spread its spores in 2007. Now the deadly fungus has been found
in Iran and according to British scientists may already be as far east as
Pakistan. Pakistan and India account for 20% of the annual world wheat
production. It is possible as the fungus spreads that large movements could
take place almost overnight if certain wind conditions prevail at the right
time. In 2007, a three-day "wind event" recorded by Mexico's CIMMYT had
strong currents moving from Yemen, where Ug99 is present, across Pakistan
and India, going all the way to China. CIMMYT estimates that from two-thirds
to three-quarters of the wheat now planted in India and Pakistan are highly
susceptible to this new strain of stem rust. One billion people who live in
this region and they are highly dependent on wheat for their food supply.
These are all areas where the agricultural infrastructure to contain such
problems is either extremely weak or non-existent. It threatens to spread
into other wheat producing regions of Asia and eventually the entire world
if not checked.

The 2007 World Agriculture Forecast of the United Nations Food and
Agriculture Organization (FAO) in Rome, just released, projects an alarming
trend in world food supply even in the absence of any devastation from Ug99.
The report states:

"Countries in the non-OECD [Organization for Economic Cooperation and
Development] region are expected to continue to experience a much stronger
increase in consumption of agricultural products than countries in the OECD
area. This trend is driven by population and, above all, income growth -
underpinned by rural migration to higher income urban areas ... OECD
countries as a group are projected to lose production and export shares in
many commodities. Growth in the use of agricultural commodities as feedstock
to a rapidly increasing biofuel industry is one of the main drivers in the
outlook and one of the reasons for international commodity prices to attain
a significantly higher plateau over the outlook period than has been
reported in the previous reports." The FAO warns that the explosive growth
in acreage used to grow fuels and not food in the past three years is
dramatically changing the outlook for food supply globally, and forcing food
prices sharply higher for all foods from cereals to sugar to meat and dairy
products. The use of cereals, sugar, oilseeds and vegetable oils to satisfy
the needs of a rapidly increasing bio-fuel industry, is one of the main
drivers, most especially the large volumes of maize in the US, wheat and
rapeseed in the EU and sugar in Brazil for ethanol and bio-diesel
production. This is already causing dramatically higher crop prices, higher
feed costs and sharply higher prices for livestock products. In the US this
year according to the United States Department of Agriculture, some 25% of
the corn crop will go to bio-ethanol. Ironically, the current bio-ethanol
industry is being driven by US government subsidies and a scientifically
false belief in the European Union and US that bio-ethanol is less harmful
to the environment than petroleum fuels and can reduce CO-2 emissions. In a
Swiss NZZ newspaper interview on March 23, Nestle's chief executive Peter
Brabeck warned that the dramatic conversion of agriculture acreage to
bio-fuels in the recent period was "political madness". He pointed out that
its impact would be seen not only in exploding world wheat prices.

"Just as serious," he added, bio-fuel production "threatens our water
supply. In order to produce one liter bio-ethanol we need 4,000 liters
water. And water is a more serious problem than CO-2 emissions." The huge
expansion of global acreage now planted to produce bio-fuels is creating
other ecological problems and demanding far more use of pesticide spraying,
while use of bio-fuels in autos releases even deadlier emissions than
imagined. Bio-ethanol has little if any effect on exhaust-pipe emissions in
current car models. But it gives significant emission of some toxins
including formaldehyde and acetaldehyde, a suspected neurotoxin that has
been banned as carcinogenic in California. The most alarming effect of the
recent bio-fuels boom, however, has been a catastrophic shift down in world
grain stocks at the same time that the EU and US have enacted policies that
drastically cut traditional emergency grain reserves. For the past several
years, both the EU and US have passed legislation dramatically reducing
reserve stocks of cereals. In the EU this has been through reform of the
grain price supports of the Common Agriculture Program and in the US through
a similar policy via the FAIR act (Federal Agriculture Improvement Program)
to remove or greatly reduce price supports for cereals.

Combined with severe drought in the past two to three years in major growing
areas from the US to Australia and parts of Asia, as well as the expanding
acreage competition from bio-fuel plantings in especially the US, Brazil and
the EU in the past three years, world cereal stocks, including wheat, have
hit lows not seen in decades. In the enlarged EU of 27 members, a lower than
expected harvest in 2006, 265.5 million tonnes, led to tightening supplies
at the end of marketing year 2006/2007 and to historically high prices.
Intervention stocks have shrunk to around 1 million tonnes now from 14
million tonnes at the beginning of 2006/2007. In short, with severely low
grain stocks worldwide, expanding acreage set aside to grow grains for
burning as fuel not food, spread of a deadly wheat fungus is a scenario
pre-programmed for catastrophe. Given the fact that the scale of the growing
US biofuel industry is well known, some suggest that the Washington
Administration has other priorities than abating world hunger. It is
certainly clear that we face a crisis of serious proportions even absent a
new deadly wheat fungus threat. One of the consequences of the spread of
Ug99 is a new effort by Monsanto Corporation, the Swiss agrichemical concern
Syngenta and other major producers of genetically manipulated plant seeds to
promote introduction of genetically modified organism (GMO) wheat varieties
said to be resistant to the Ug99 fungus. Biologists at Monsanto and at the
various GMO laboratories around the world are working hard to patent such
Ug99 resistant varieties. In 2004, Roundup-ready wheat, poised to be the
first biotech trait in wheat released to growers, was mothballed by
Monsanto. The company cited strong resistance from US and Canadian wheat
growers who feared losing export markets if US wheat was known to be GMO.

That GMO technology would have allowed farmers to apply Monsanto's Roundup
herbicide, glyphosate, over a growing crop to kill weeds. Were Monsanto now
to unveil a patented Ug99 resistant wheat variety, large new seed markets
formerly hostile to genetically engineered wheat would open. Syngenta, which
has developed a biotech trait that provides resistance to fusarium head
blight or scab, is also seeking regulatory approval. Now their attention is
turned to Ug99. Borlaug, the former Rockefeller Foundation head of the Green
Revolution, is active in funding research to develop a fungus resistant
variety against Ug99, working with his former center in Mexico, the CIMMYT
and ICARDA in Kenya, where the pathogen is now endemic. So far, about 90% of
the 12,000 lines tested are susceptible to Ug99. That includes all the major
wheat cultivars of the Middle East and west Asia. At least 80% of the 200
varieties sent to CIMMYT from the United States can't cope with infection.
The situation is even more dire for Egypt, Iran, and other countries in
immediate peril.
Even if a new resistant variety were ready to be released today it would
take two or three years' seed increase in order to have just enough wheat
seed for 20% of the acres planted to wheat in the world, CIMMYT agronomists
estimate. Work is also being done by the USDA's Agricultural Research
Service (ARS), the same agency that co-developed Monsanto's Terminator seed
technology. The spreading alarm over the Ug99 fungus is encouraging Monsanto
and other GMO agribusiness companies to demand that the current voluntary
ban on GMO wheat be lifted to allow spread of GMO patented wheat seeds with
the argument they are Ug99 stem rust resistant.
The influential USA National Association of Wheat Growers reportedly is
softening its opposition as fears of the deadly Ug99 spreading to North
American wheat increase.

I smelt a rat not long after starting to read this and began thinking that
Monsanto would be involved somewhere and sure as eggs are eggs



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