The recent Consumer Price Index (CPI) number and the food shortages remind us how geopolitics and the global trade supply chains reveal themselves at our kitchen tables. The CPI increased 8.5% over the previous year due to price hikes on common commodities Americans rely on for survival and significant repercussions on our groceries from a struggling agriculture supply chain. The war in Ukraine, the China and Russia alliance, and unstable economic and social policies in the US directly contribute to the financial pains faced by families and small businesses across America.
China Betting and Winning the Farm
Wheat, eggs, chicken, and other meat prices continue to rise, wreaking havoc on household budgets. Wheat prices doubled due to the absence of Ukrainian and Russian wheat from the US market, resulting in higher costs for bread, cereals, flour, oils, and other baked goods. On February 8, 2022, 16 days before the Russian invasion of Ukraine, China and Russia announced their agreement for China to import Russian wheat and barley. This should have been an early indicator that Vladimir Putin would take actions that would result in western sanctions coming against himself and Russia and China’s potential foreknowledge. China decided to ease the impact of sanctions on Russia and, on February 24, 2022, publicly called for parties to “exercise restraint” and accused the US of “fueling fire” in the tensions.
China’s interest in agriculture and food supplies dates much further back as their 1.4 billion citizens require China’s close attention to food security and supply. By 2021, China indicated its goals were to possess farmland equivalent to the size of Ireland, which is approximately 16.5 million acres, despite China having less than 10% of the world’s land suitable for substantial revenue-generating crops. As of early 2020, Chinese investors owned an estimated 192,000 acres of agricultural land in the US, valued at $1.9 billion. This farmland is often located close to military bases. China’s Fufeng Group USA is headquartered in Chicago, Illinois, with its corporate headquarters in Hong Kong and most other production facilities in northeastern China. Fufeng Group manufactures bio-fermented products made from corn used in animal feed and pharmaceuticals and is attempting to open a factory 13 miles from Grand Forks Air Force Base, North Dakota. Ross Kennedy, the founder of Fortis Analysis, states, “Grand Forks is home to one of the largest intelligence and surveillance and reconnaissance wings we have anywhere in the world.”
FBI Director Christopher Wray addressed the China Initiative Conference in February 2020, where he described the Chinese threat as “diverse” and “multi-layered.” Wray added, “They’ve shown that they are willing to steal their way up the economic ladder at our expense.”
Beijing Dabeinong Technology Group’s US director for international business, Mo Hailong, and several co-conspirators were arrested in 2013 with Pioneer and Monsanto seed corn samples while trying to board a plane for China. The FBI became suspicious after Hailong was seen crawling through Iowa cornrows on two separate occasions, pocketing transgenic seeds and mailing them to China.
In 2017, the US Customs and Border Protection National Security Division and the US Attorney’s office in the District of Kansas prosecuted Weiqiang Zhang on three counts, including conspiracy to steal trade secrets and interstate transportation of stolen property. Zhang, a Chinese national and US legal permanent resident, worked as a rice breeder for Ventria Bioscience in Junction City, Kansas, and studied biotech crop production at Kansas State University. US Customs and Border Protection officers found genetically engineered rice seed samples, valued at $75 million, in Zhang’s luggage as he prepared to leave the US for China in August 2013. Zhang used USDA letterhead to send counterfeit letters inviting six researchers in China to tour the Ventria facility and several others, including the Dale Bumpers National Rice Research Center in Stuttgart, Arkansas. Zhang’s accomplice, Wengui Yan, worked at the US Department of Agriculture research center as a research geneticist and pled guilty to making false statements to the FBI when questioned about plans to send US rice samples to China.
China’s consistent and relentless drive for hegemonic control solidifies its pursuit of economic, information, and military advantages over the US as the last standing superpower. Their reach into US universities and academic and economic research institutions go far beyond sending their best and brightest to get an American education. China’s Communist Party (CCP) funds Confucius Centers and Cultural Centers in partnerships with US Education Institutions as information and cultural exchanges. At the same time, their strategic purpose is reconnaissance and influence among the students and faculty.
Recent Congressional efforts offer opportunities to deny foreign investment and ownership of US farmland through The Agricultural Foreign Investment Disclosure Act and the Agricultural Intelligence Measures (AIM) Act. AIM intends to establish an intelligence-gathering office within the USDA. However, despite the CCP announcing their plans to take over high-tech industries, with agriculture being at the top of the list, US policymakers, intelligence officials, and the Department of Justice failed to protect our intellectual sovereignty.
Energy Impacts on America’s Economy
The high cost of diesel for farmer’s tractors and gasoline for trucks bringing food and goods to market compounds these price increases. Oil prices and energy markets supply the world’s most important economic factor in fuel for industries to produce goods, trucks and planes for delivery, farming for food, and a variety of other items vital to citizens’ lives and the American economy. The rising gasoline prices will not subside until US policies make it more advantageous for domestic oil companies to meet the surging demand. The supply shortage and the COVID-induced energy consumption pushed the Biden administration back to OPEC, which includes Russia, requesting an increase in oil production. The US imported 700,000 barrels of crude oil from Russia in 2021. Following Russia’s invasion of Ukraine, President Biden signed an Executive Order (EO) banning the import of Russian oil, liquified natural gas, and coal to the US. This decisive action gathered bipartisan and allied nations’ support, depriving Russia of significant economic revenue as the third-largest oil producer behind the US and Saudi Arabia. Over 30 additional countries representing over half the world’s economy supported this ban, announced additional economic sanctions on Russia, and cut off Russia’s access to high-tech technology. The EO removed those 700,000 barrels, and hundreds of thousands more effectively left the global market for the US and those 30 countries. The sanctions and refusal to buy Russian oil had two impacts:
1) The US and those 30 countries will not reduce their oil, natural gas, or coal consumption and will be forced to purchase from other countries or create those inventories themselves. The US reverted to requesting oil imports from Venezuela and likely Iran to offset the drop in supply during a sustained demand. The reduction in supply and sustained, or increased demand, results in increased prices, especially from two adversarial countries of the US closely aligned with Russia and China.
2) Many countries staunchly against the Russian invasion of Ukraine are unable to offset their energy consumption costs without Russian oil. While Russian oil exports to Europe have dropped, Turkey and India took Russia’s oil exports higher, despite President Erdogan calling Russia’s military action on Ukraine “unacceptable” and Turkey continuing to supply its Bayraktar TB2 unmanned aerial vehicles, which carry lightweight, laser-guided bombs used to destroy Russian armored vehicles. Overwatch has not determined if this continued import of Russian oil has the inability to offset their oil consumption through other means or if the presumed reduction of buyers of Russian oil resulted in a negotiated price reduction following supply and demand principles.
While China and Russia impact the US economic standing and stability through trade and market expansion, their actions alone are not the cause of America’s domestic economic position. Expansive and sweeping stimulus spending in response to COVID-19 and the irresponsible price and wage controls led to an imbalance in the volume of US dollars in circulation for the same or decreased amount of goods. Also, the Producer Price Index (PPI) rising faster than the CPI is a historical indicator of more inflation to come. US policy must control government spending and implement price controls to allow the consumer to balance the supply and demand of goods. Additionally, removing constraints on the production industries within the US would lead to more goods in our market and possible exports to countries still enticed to trade with Russia and China.
China and Russia remain aligned to leverage their combined economic, information, and military warfare tactics to erode America’s power and influence around the world and that of other democracies aligned with us. Overwatch edition #2 serves as a good reference for further insight.
US policy concerning Russia and its continued actions will play significant roles in US perception and our economic position and power. The DOJ’s cessation of the China Initiative removed the only public, concerted effort to combat Chinese intellectual property theft, trade secrets, military technology, and continued nationalist propaganda within American businesses and educational institutions. Overwatch will continue monitoring the US midterm elections regarding economic policies and stabilization of the current economic crisis and whether China or Russia will employ propaganda to influence public sentiment and support.
Americans will continue to feel the effects of rising food and energy prices until domestic budgetary prudence and a long-term strategy is enacted to boost the US economy and strengthen our global standing.