The Geopolitics of Wine

YOU CAN LEARN MORE ABOUT SCOTT BASE VINEYARD BELOW

CLICK HERE FOR MORE INFO

Today’s video is fueled by Scott Base Vineyard in Cromwell, New Zealand. After all of the time I’ve spent in New Zealand, this is far and away my favorite winery.

Wine is a top 20 internationally traded commodity by value, so it definitely has some geopolitical backbone to dissect.

The main distinctions in the world of wine come from vineyards being irrigated vs. not. Irrigated growth is relatively new in the world of wine, so Old World vineyards have to compete in new ways, mainly by moving up the value chain in the cellaring process.

Aging demographics are also disrupting the wine industry since capital becomes more expensive as older populations begin sucking money from the system. Wine is highly capital-intensive, especially when a decent yield takes several years after putting vines in the ground.

So countries with access to capital and/or young demographics have a leg up on the world of wine. The Kiwis and Aussies will be all right. Argentina is probably going to hurt. And most of Europe’s wine complex will struggle here soon…except the big dog, France.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
Support medshare's global efforts

Deglobalization’s Impact on Global Food Exports

Image depicting global grain and coffee sacks for export

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?

There are five requirements to sustain successful agricultural exports in a deglobalized world: productive arable land, petroleum for fuel, and three essential fertilizers (potash, phosphate, and nitrogen). If a country doesn’t have access to one these, they might be SOL.

North America is the big winner here, specifically the US and Canada which have almost everything right at hand. Other regions that top the list are Argentina, New Zealand, Australia and South Africa, although these countries may struggle with fuel supplies. Brazilian agriculture will suffer due to poor land quality and heavy reliance on fertilizers coming from China and the former Soviet Union (which are likely to destabilize). Any of those specialty crop producers, especially those in the California’s Central Valley, will likely have to pivot business models due to shrinking markets, high costs, and dependency on Chinese markets.

Deglobalization could cause a potential drop in calorie production by a third and the fallout would be devastating. We’re talking widespread food shortages and catastrophic levels of starvation.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
Support medshare's global efforts

Transcript

Hey everybody, Peter Zeihan here, coming to you from central Yosemite. I’m standing by another mountain lake, which, being unnamed, is now officially called Peter’s Other Lake! And it even has a beach—pretty cool, right?

Anyway, today we’re diving into another question from the Ask Peter forum: what’s going to happen to global agricultural exports in a post-globalized world? Short answer—nothing good.

To sustain agricultural exports, you need five key things:

  1. Arable Land: You’ve got to have a lot of productive land.

  2. Petroleum: Agriculture on a large scale relies heavily on internal combustion engines. There’s talk of electric tractors, but the technology isn’t there yet. Their charge doesn’t last long enough, and they don’t have the power to do meaningful work. So, unless you’re talking about a small electric cart for something like apple picking, we won’t see electric solutions this decade, probably not even next.

  3. Fertilizer: Fertilizer comes in three parts—potash (potassium), phosphate, and nitrogen (usually derived from natural gas). These are sourced from different parts of the world. For instance, about half of the world’s phosphate exports come from China, and that’s already problematic since China might face disintegration. Worse yet, those phosphate deposits are in interior regions prone to secession. So, say goodbye to that supply. Potash is mostly found in Belarus and Russia, but thank goodness for Saskatchewan in Canada. As for nitrogen, which is made from natural gas, it’s more widespread, with the U.S. being the top producer.

Without access to all these elements, growing food at scale becomes much harder. In a post-globalized world, the number of places that can sustain agricultural exports shrinks significantly.

At the top of that list is North America, particularly the U.S. and Canada. Saskatchewan has potash covered, the U.S. has plenty of nitrogen, and both countries boast some of the best farmland in the world. For phosphate, once you move away from China, you’ve got options like Morocco, Israel, Saudi Arabia, and even Florida.

Other regions in decent shape include Argentina, which has highly productive land, and South Africa, New Zealand, and Australia. While these countries, with the exception of Argentina, can’t produce their own fuel, they are outside major conflict zones. So, if there’s fuel and fertilizer available for trade, these are likely destinations, as they can pay in hard currency.

Brazil, however, is in trouble. It has some of the worst land quality globally and is the largest importer of fertilizer, relying heavily on China and the former Soviet Union. Brazil’s status as an agricultural powerhouse isn’t over yet, but you can see the sunset from here. Parts of southern Brazil near Argentina may fare better, but the explosive growth we’ve seen in soy production is temporary.

In the Old World, France stands out. Like Argentina, France has excellent farmland. It’s also far enough from conflict zones to remain relatively safe and close enough to the North Sea for natural gas. If there’s any international trade left, France is one of the few nations with a capable navy to secure its sea lanes.

But that’s still not enough. We’re looking at global calorie production potentially dropping by a third. And that means a lot of starvation.

Now, beyond staple crops like wheat, rice, corn, and soy, there’s also a thriving trade in specialty crops—cherries, apples, alfalfa, and more. In a post-globalized world, many countries will lose the ability to pay for these. If China is your primary customer, it’s time to look for a new market. The country that should be most concerned about this is the U.S., particularly California’s Central Valley. This area has extremely high production costs due to strict regulations and its desert-like conditions, which make input costs (water, for example) sky-high. It’s not naturally fertile land.

As long as inputs are cheap and China is willing to pay top dollar because they’re price-insensitive, this business model works. But that’s not going to be the reality much longer. So, check your specialty crops, see where they’re being sold, and figure out if those markets will hold up as globalization breaks down. If not, you’ll need to either switch markets or find a new crop.

Alright, that’s it for me. See you next time!

Will Climate Change Be the Death of Wheat?

A photo of a wheat in the winter

Although climate change models are still evolving, historical climate data shows a clear warming trend. So, let’s discuss the impacts of climate change, specifically who will be affected the most and who might even benefit from it.

When you think of climate change, think of it as an amplification of current conditions. So, hot and dry areas will likely become hotter and drier. Hot and humid regions are likely to get even wetter and face severe health risks. Agricultural zones in marginal climates will suffer the most, especially those dependent on wheat.

Speaking of wheat – humanity’s primary calorie source – you might want to enjoy that cinnamon roll and pasta while you have the chance…Okay, maybe that’s a bit dramatic, but you can expect production to decline and prices to soar. This will especially impact places like the American Great Plains, central Argentina, the Russian wheat belt, and northern China.

However, regions with dual wind streams are poised to do pretty well amidst the warming climate. Think of zones like the American South and Midwest, parts of Argentina, Uruguay, northwestern Europe, and New Zealand. Unfortunately for the Chinese, their agricultural regions are particularly vulnerable, which will lead to severe food shortages and famine.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
Support medshare's global efforts

Transcript

Hey everybody, Peter Zeihan here, coming to you from Blue Lake at the border between Yosemite National Park and the Ansel Adams Wilderness. That’s the Pinnacles behind me, and let me tell you, the hike up here was quite the challenge! Today, we’re tackling a question from the Ask Peter forum: with climate change, where are we going to feel it first? Who’s going to be hit the hardest, and is there anyone who might actually benefit?

First off, let’s remember that our understanding of climate change is still developing. Yes, there are plenty of smart people studying it, but when it comes to understanding how the atmosphere works on a global scale, we’re learning as we go. I find it most reliable to look at the past rather than just the projections. We have over a century of climate data from most locations, tracking temperature, wind, and precipitation. If you look at what’s happened over the last 140 years or so since industrialization began, there’s been a clear uptick in temperatures.

By the time my fourth book, The End of the World Is Just the Beginning, was published, that temperature increase was 1.1°C over the entire period. In the last few years, it’s ticked up to 1.2°C. This doesn’t just mean that the world is getting warmer; it’s getting warmer in different areas at different rates. One key thing to remember about precipitation is that while warmer air can hold more moisture, it also requires more moisture before precipitation occurs. So, hot and dry areas are getting drier, and wet and hot areas are getting wetter.

As long as you have electricity, a degree Celsius isn’t a big deal. Take the United States, for example—back in the 1930s and 40s, Florida and Iowa had similar populations. Now, Florida’s population is about eight times that of Iowa, thanks to air conditioning and reliable electricity. But I’m more concerned about two specific regions.

First, the developing world areas that are already hot and humid, like Brazil, the northern coast of South America, sub-Saharan Africa, Southeast Asia, and the Indian subcontinent. These regions are already very wet, humid, and hot, and adding even a little more heat could be a serious health risk.

The second area of concern is agricultural zones that are already hot and dry. Agriculture tends to be concentrated in regions where specific crops grow best—avocados in California, wine in southern France, and so on. Wheat is the exception because it’s essentially a weed and will grow almost anywhere. As the world has diversified its agricultural production and globalization has spread crops globally, wheat has steadily been pushed to the margins, except in places like northern France, Quebec, and parts of Pakistan and India where it’s tied to cultural or food security.

Wheat is now grown in cold and dry or hot and dry regions like the American Great Plains, central Argentina, the Russian wheat belt, and northern China. This means that when climate change starts reducing moisture in these areas, wheat production will collapse, and prices will skyrocket. And since wheat has been humanity’s number one calorie source for millennia, this is a big deal.

But it’s not all doom and gloom—some places might actually benefit. Regions that receive moisture from two different wind streams, like the Gulf Stream and the monsoons, are less likely to suffer catastrophic crop failures because both wind systems are unlikely to fail in the same year. This is good news for the American South, the American Midwest, northern Argentina, Uruguay, northwestern Europe (especially the UK and France), and New Zealand.

However, most of the world relies on a single wind current, so even minor climate changes could have outsized impacts on agriculture, especially wheat.

Now, on my way down from the hike, it hit me that there’s a country out there with both monsoonal and jetstream moisture, and that’s not necessarily a good thing. In the American Midwest, both hit the same region, but in China, the monsoon affects the southern rice belt, while the west-east jetstream waters the northern wheat zone. This is bad news for China. Everything I said about wheat applies, but it gets worse because rice requires meticulous water management—flooding and draining the fields multiple times. If rain comes at the wrong time, the entire crop can be lost. So, no matter how climate change unfolds in the next few decades, we can be sure that hundreds of millions of Chinese people will be at risk of starvation.

Alright, now I’m really done. See you next time!

How Tariffs and Drones Saved Ukrainian Agriculture

Ukrainian agricultural exports are finally having the boot lifted from their throats thanks to new tariffs on certain goods in the EU and Ukraine’s adoption of water based drones.

Exporting Ukrainian agricultural products has been no easy feat; between Russian bombardment, infrastructure attacks, and European interdictions on Ukrainian goods, there wasn’t much movement early on in the conflict. Between the proposed tariffs by the French and some recent success with water-based drones, Ukraine might finally be able to get some product out.

These new tarrifs will free up the markets for Ukraine’s primary revenue generating products, wheat and sunflower. The recent water-based drone attacks on Russian vessels have helped to reestablish the grain corridor through NATO territories, easing pressure further.

Although this is just a small victory for the Ukrainians, restoring their ability to earn through agricultural exports could help ease tensions across the board.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
Support medshare's global efforts

TranscripT

Hey, everyone. Peter Zeihan here coming to you from Colorado. quick update on the trade and war situation in Europe, specifically Ukraine. it appears we have or they have solved the problem of getting Ukrainian agricultural goods to market. So the quick backdrop is that because of the Russian war, the Russians were bombing places like Odessa and interdicting ships on the Black Sea.

And by water is how the Ukrainians ship out. Well over 80% of their agricultural output, or at least before the war, it was, but nobody wanted to get hit by a Russian missile. So basically everyone got locked up in port and we had backlogs, throughout the entire system. the Ukrainians started to ship things by rail west into the European Union.

they couldn’t get nearly as much out at most one third of what they could do, based on product and some products, less than 10%. But every kilometer that the, Ukrainian stuff was in a rail car, was a kilometer of ton rails that the Europeans could not use. So the Romanians, the Hungarians, the Slovaks and the poles, the border states in particular, were getting cheesed off because their farmers were having a hard time getting their crops to market.

And so they would say, you could transit, but you can’t actually sell that here. Well, if you have to go all the way to Germany, that’s a lot of ton miles that were suddenly not available for everything else. So it wasn’t a very tenable such solution. So these countries may on the whole be very pro Ukraine, but they don’t want to destroy their own agricultural sectors to do it.

So two things have changed. First, the French, the French have gotten involved. Though the French are arguably among the most agriculturally protectionist countries in the world. and none of this stuff was coming to France, but, the French economy is roughly as large as all of the border states put together. And so when the French did decide to get involved, it had an impact at the European level very quickly.

And they were looking at some of the secondary products that were coming in, things like poultry and eggs and honey and corn and oats, and they’re like, okay, we produce all of these things, and now all these things aren’t necessarily making it to France. They are making it to Central Europe, which is depressing. Prices within the European Union.

So how about we do this? We do it. We give everyone in Europe the ability, put tariffs on the products that we care about. And in doing that, we then open up the ability for everything else, most notably wheat and sunflower, which are, the Ukrainians, big money makers. now everyone in the border states grows wheat, but by freeing up some categories, then things could go elsewhere and things could basically be shuffled around.

The French got happy, and it took some of the pressure off of everything else. That was part one. Part two is a Ukrainian military strategy using drones. they basically been refitting small jet boats and jet skis and going in force after Russian vessels, especially Russian landing vessels. well, in the last few days, they’ve taken out another two or at least heavily damaged another two, as long as as well as a spy ship that allows the Russians to identify where launch sites and radar sites are.

And what this has had the net effect of doing is clearing the entire western half of the Black Sea of Russian vessels, and forcing the Russians to fall all the way back to an over a cease, and maybe even even to offshore on the eastern side of the Black Sea, which ports most of the western half of the Black Sea, out of range of even Russian missiles.

So this is opened up a grain export corridor going down the western side of the Black Sea through NATO territory, specifically Romania and Bulgaria, Turkey, to the Turkish Straits and out to the Aegean and the wider world. You do that, you take pressure off those bulk commodities like sunflower and wheat. So I don’t mean to suggest that this is solved, and I don’t mean to suggest that everyone has gotten everything that they want.

But a lot of the pressures that we were seeing that were locking up the cargo shipments are now gone, or at least severely ameliorated. And all of a sudden, Ukraine again has its single largest line item export earner back. and that will help everyone, because the more that the Ukrainians can put their own money into the war, the less pressure there will be politically on everyone else.

Europe’s Latest S*** Show: Farmers On Strike

If you’ve seen the videos of tractors driving through city centers and spraying manure on government buildings, then you’re well aware of the farmer protests happening throughout Europe…but why are they protesting?

The protests, which started in France, are in response to regulatory changes and reduced funding for agriculture in the EU. The Common Agricultural Program has seen drastic cuts to funding and increased restrictions facing farmers.

Despite Europe being a very strong agricultural zone, countries like the US and Brazil stack on the pressure for these European farmers with their higher yields and lower price points. We’ll continue to monitor and release updates as this situation unfolds.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
Support medshare's global efforts

A North Dakota Love Story: Agriculture and Railways

For all those with an aversion to woodchippers…today’s video is for you. That’s right, I’m in Fargo, North Dakota and we’re discussing the state’s agricultural prowess despite a lack of water access.

While most Midwest states rely on river systems for shipping, North Dakota has built an extremely robust rail system that facilitates the transportation of their agricultural products. These railways connect to both the Mississippi River and the Pacific Coast, which broadens and diversifies market access.

As impacts to global agricultural markets increase, the importance of North Dakota foodstuffs will only grow. However, the shale revolution has introduced some competition for rail space between the agriculture and energy industries, but that’s a story for another time.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
Support medshare's global efforts

The Geopolitics of Winter: Snow’s Impact on Agriculture

Some of you out there might grovel when the first snowflakes of the season fall, but I’d be willing to bet that the geopolitical significance of that snow hasn’t crossed your mind. Today, we’ll be exploring winters impact on agriculture and global food security.

If you think of all the great agricultural zones in the world, most of them have a winter season. At face value, that might seem irrelevant, but the snow and moisture that winter brings serves as insulation for the ground and facilitates biological processes critical for agriculture.

Historically, regions with a cold winter season have been more conducive to growing crops capable of feeding large populations, such as soy, wheat, rice, and corn. However, the industrialization and development of fuels and fertilizers has enabled these crops to be grown in areas previously unsuitable for agriculture.

These advances gave way to increases in population and the cultivation of new lands, but is it sustainable? As soon as places like Brazil or China can no longer import the inputs necessary to grow enough crops to feed their populations, we’re in for a rude awakening…

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
Support medshare's global efforts

TranscripT

Hey everybody. Peter Zeihan here coming to you from snowy Colorado, where in the last 18 hours we’ve gotten 18 inches of snow, which means that this morning is a time for clearing and shoveling, but there is more to winter than shoveling and icicles. There is also the fun and games that comes with agriculture. In fact, winter is arguably the single biggest factor for how our world got to be in the shape it is, more or less the century and less century.

The issue is that when winter hits, everything stops and you have a layer of moisture that then insulates the ground. This is two things. Number one, it preserves a little bit moisture in there and then will grow a little bit back in the spring. But more importantly, the thicker the snow, the greater the insulation. And so you actually still have biological processes going on under the surface, even if right there in the topsoil.

Basically, you’ve got organic material that is decaying or as farmers like to call it, the formation of free fertilizer. If you look at the map of the world’s agricultural zones, before roughly 1900, the pre-industrial era, you’ll notice certain patterns. The American Midwest to a degree, the American Piedmont, Northern Europe, Central Eurasia, the real plot to basin in South America and the southeastern part of Australia and South Africa.

sorry, I forgot. Northern China as well. What are these areas all have in common? It’s cold. You get some snow and so you get that recharge system. There are temperate climates where the free fertilizers kind of baked into the cake. If you go outside of those zones, pre 1900, it’s not that there’s not agriculture, but by definition it’s almost not large scale.

And most of the crops that feed most of humanity. So you’re talking rice, soy, wheat and corn. Those four crops grow best in those conditions. You move out of those zones and you’re talking different crops, things like sweet potatoes or yams. And it’s not you can’t support a population with those things. It’s that you can’t support a large population with those things.

So they’re not nearly as amenable to road crop edge. It’s more subsistence farming as a rule. Now, that, of course, changed, right, right around between 1900, 1945 for some countries and then between early 1990 and 1985 for the rest. What happened there was first the development and then the mass application of industrial level agricultural inputs, things like fuels and fertilizers, which allowed you to plant more traditional crops in zones that normally weren’t really great for it.

In addition, those lower output crops per acre. If you started putting things like fertilizer, they would do a lot better. As a rule, the industrialization of agriculture had a bigger impact on marginal lands than it did on the Prime lands. The prime land still saw their output increase by 50% to 150%. But it’s the marginal lands that saw a tripling, quadrupling or even more.

Now, something to keep in mind with all those secondary lands, if you’re talking about, say, a step where it’s just dry with agriculture, doesn’t it? Nothing really happens. If you’re talking about the tropics, yes, you have a riot of growth, but the nutrients are consumed by that growth as soon as the growth rots. So if you clear the jungle and the rainforest, the soil that’s left behind is almost nutrient non-existent.

And without those industrial level inputs, you really can’t grow crops at scale in these zones. Now, because of industrialization, of agriculture, we haven’t simply seen that the part of the world that humans cultivate expand by a factor of three. We seen the population expand by a factor of three as well. My concern is that we’re entering an era where the supply chains that allow those industrial inputs to function to exist are going to break down.

And for countries like China or Brazil who import the vast, vast, vast majority of those inputs, that means the ability to sustain post 1900 levels of population are going to be hugely hit. In the case of Brazil, they still have portions of the country that are still temperate. It’s not like they’re going to starve, but they’re no longer going to be a massive agricultural exporter to places like Brazil.

So for those of you who live in a place where you don’t have snow, yes, you get more time on the beach and you don’t have to shovel. But it also means the security of your food supply is decided by people in different climate zones with supply chains that are a continent away that you have no ability to protect or even influence.

And the world we’re going into, that’s going to be a little rough.

Processing: The Greatest Threat to US Economic Security

As we continue down the path of deglobalization, the US has checked most of the boxes needed to thrive in a disconnected world. Between shifting supply chains and moving manufacturing closer to home, there is still one box that the US hasn’t checked off – processing.

That unchecked processing box just so happens to be the most significant threat to economic security for the US. The US needs to flesh out its processing capabilities in three major areas of concern: industrial materials, agriculture, and oil.

The US must develop processing capabilities and partnerships for materials like lithium, copper and iron ore to support the industrial buildout. To improve food security and avoid famines down the road, finding ways to add value and expand food production close to home will be essential. The US is already a significant oil refiner and exporter, but there is a mismatch in the type of crude produced domestically and what US refineries can process; to reduce import dependency, the US will need to retool its refineries to process domestic crude.

Overcoming these processing challenges will prove crucial for the future of the US and its continued economic security. Regardless of political, ideological, or environmental stance, developing these processing capabilities will allow the US to prop up various industries and avoid catastrophe down the road.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
Support medshare's global efforts

Transcript

Hey everyone. Peter Zeihan here coming to you from the road in Colorado. Yesterday I gave you a quick talk about what I saw as the greatest national security threat to the United States for the next foreseeable future. I’d like to do the same thing now for economic security and in a word, processing. Before I explain what I mean by that, let’s go back a little bit.

The whole idea of globalization is that any product can go anywhere, take advantage of whoever can produce that product, the lowest cost and the highest quality, or at least that’s the theory in practice. As soon as countries realize they can reach into any economic space. They take steps to benefit themselves. Maybe they put in trade restrictions or in the case of processing, maybe they subsidize.

So different countries around the world are throwing a lot of money at making sure that certain industries are headquartered, or at least heavily emphasized in their own places. So Taiwan, Korea, Japan, they do this heavily with semiconductors to the tune of hundreds of billions of dollars of subsidies. The Russians use a lot of the d’etre is from the Soviet system, which used to supply a an empire which now only supplies them.

And, you know, they’re pretty economically backward. So they use all the extra stuff to produce things for export or in the case of the Chinese, in order to ensure mass development and mass employment. They throw basically bottomless supplies of capital at industries, really anything that they think that technologically they can handle. They want to be able to produce and if they can, cornered the market.

What this means is that other countries, United States, are reliant on countries that have put their thumb on the scales in order to participate by anything else. And now the globalization is breaking down. The United States is facing a double threat. Number one, a lot of manufacturing that used to be done here or could be done here or, you know, from an economic efficiency point of view should be done here, is done other places.

And so a lot of that has to be reshore at or near shore to French. Second, none of this works unless you have the processing. If you have iron ore, but you don’t have the processing to turn it into steel, you can’t do construction. If you have silicon, you don’t have the ability to process it in the silicon dioxide.

You can’t play in the semiconductor space and on and on and on. So things kind of fall to three general categories. The first are industrial materials like lithium and copper and iron ore and the rest. The United States in most of these is a bit player in the production and nearly a non-player in the processing. And since the United States is now attempting a mass industrial buildout, it needs to get good at that again.

It needs to make partnerships with the countries that have the raw materials. Australia is at the top of that list. Brazil’s probably close second. And then it needs to work with those countries either to do the processing in them or at home. Now, one of the things that I do like about the Biden administration’s economic policies and there aren’t a lot, is that the Inflation Reduction Act prioritizes this and says that in order to qualify for certain subsidies for things like EVs, the materials that go into them must be processed within a NAFTA country or an ally that is identified by negotiations such as Australia.

So we are moving in the right direction there, but we need to think of a much broader net. So for example, aluminum not only to the Russians and the Chinese dominate about three quarters of aluminum production in the world. Aluminum as a byproduct, generates a lot of trace materials like, say, gallium, which are really useful for solar panels.

Same thing with silver. Silver processing or copper processing generate a lot of the stuff that you need for rare earth metals. All of this stuff needs to be recaptured in some way. Otherwise, the industrial rail building that the United States is attempting really isn’t going to go anywhere. Because if you don’t have the materials to do it in the first place, it’s going to be kind of a pointless endeavor simply to build up what you would need to make them every single day.

That’s number one. Number two is food. The United States is the world’s largest food exporter and is the number one exporter of any number of materials and food products. But we don’t do a lot of the value add as part of those exports. This is missing a lot of really low hanging fruit. And if you look at the world writ large, the same thing that applies to globalization and processing applies to agriculture.

Lots of countries for food security issues, national security issues, protection issues whose have made it very difficult for the United States to export, say, soybean meal. But they still allow the import of soy by expanding the footprint in American agro industry so that we do more of the processing here. Not only do we get a higher value added product, but as global fertilizer markets around the world get problematic, a lot of major food producers are simply going to vanish because most food production outside of certain areas that have been producing it for centuries can only do so with massive applications of fertilizer.

Again, in China is the case in point. The EU’s about five times as much nitrogen fertilizer as the global average. So not only with the United States earn a little bit more money and have more food security. If we did this, we’d also be able to step in and help other places that are suffering from famine more quickly because we’d actually have semi-finished or even finished food products rather than just the raw material.

And then the third one is one that the Biden administration is not going to like to hear about, and that is oil. Oil by itself is useless. It has to be refined into diesel and gasoline and naphtha and the rest. And the United States is the world’s largest oil refiner and the world’s largest exporter of refined product. However, there’s this huge mismatch within the American energy sector.

Back in the seventies, in the eighties, when we were all running out of oil, American refiners became convinced with good reason, that the future of global crudes were very heavy, very sour, very polluted crude streams. And so what they did was they refined the entire American refining complex to run on the crappiest crude you can imagine, stuff that’s just goo or even solid at room temperature.

But then we had the shale revolution. And the shale revolution is different in that the crude that is produced from it is super light and super sweet. So right now, American refiners prefer to import the heavy crap stuff from the white world, leaving the light sweet stuff. We produce ourself available for export. So the smart play here would be to retool or even better expand the American refining complex in order to process not just the crappy stuff in the world, but also the stuff that we produce ourselves.

So we are less dependent upon the inflows and outflows of exports and imports in order to keep our refining complex alive and keep fuel the tanks. And for those of you who are super ultra mega greens, who are convinced that the internal combustion engine is not the way of the future, that’s fine. Consider that the most aggressive, realistic plan.

And it’s not very realistic for getting the EVs on the road and and stopping the production of internal combustion engine vehicles is now before 2040, which means as late as 2050, the majority of the vehicles that are still on the road are still going to be internal combustion. So even in the most aggressive plan, we are still going to need tens of millions of barrels of gasoline and diesel and the rest for decades to come.

If we’re going to avoid an energy shock where the whole system just cuts down. All right. That everything. Yeah, I think that’s everything. So processing it. Lots of processing. Oh, yeah. And even if you don’t buy into the green transition or even climate change, we still need to do this because without the Chinese and the Germans and everyone else in global manufacturing, North America has to at least double the size of its entire industrial plant.

That’s a lot of steel, a lot of aluminum, a lot of copper and all the rest. So really, it doesn’t matter what your ideology is. We don’t have enough of the intermediate stage of process stuff that we need to even attempt to do everything else. So let’s focus on that first and then.

The End of Ukrainian Agriculture

Today’s video comes to you from Pine Creek in the Collegiate Wildnerness of central Colorado.

Russia has pulled out of the grain deal brokered by Turkey and the UN, and the countdown on Ukrainian agriculture has officially started.

The Russians are wasting no time, as attacks have already begun on the physical infrastructure that allowed Ukrainian wheat, corn, and sunflower to reach international markets by ship. Unfortunately, none of this is new; Russia is looking for any way to crush the Ukrainian economy and kickstart a famine in the region.

Efforts to export these products via other channels are somewhat futile, considering the cost breakdown and the risk involved. With exports already down by 2/3 before this deal was abandoned, this winter wheat crop will likely be the last one of size to hit international markets.

And it doesn’t stop there. As Russia continues to target agricultural infrastructure, Ukraine will lose the capacity to provide for its own population and become a food importer within the year.

To that tune, I encourage you to donate to MedShare or a charity of your choice. We must support these organizations that are working aggressively to alleviate some of the human suffering caused by this war. Learn more below.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

How a New Strain of Wheat Could Boost Brazil

What if I told you that Brazil’s new tropical strain of wheat could cause the most significant shift to the technological power balance the world has seen in the past five centuries? I know it’s hard to believe that wheat could have the same impact as industrialization, but hear me out.

Wheat has been the world’s go-to crop because it’s easy to grow and calorie-dense. Brazil is tropical, and much of the soil isn’t conducive to growing much of anything. Supporting a growing population becomes difficult without food security, which inhibits economic and technological growth.

Within the next few years, we will know if this new strain of wheat is successful. And if it is…food security will rise, populations will grow, and the core reason for the world’s regional power imbalances will begin to dissipate. This isn’t going to be a fast process, but a new strain of wheat might change the world.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY