The Future of Geopolitics: Biofuels or Food

The significant growth in food consumption is caused not only by the increase in the number of people on the planet, but also by the equalization of the average standard of living between developed and developing countries in the global economy. Global analysts are already predicting a trend of equalization between the share of a country's GDP in the global economy and its share in the global population. This means that the consumption of raw materials in countries such as India and China will grow faster than in other countries.

The problem of limited resources has been articulated since the 1960s. The prophet here was Professor Albert A. Bartlett, who gave 1600 lectures on this topic under the title "Arithmetic, Population and Energy". And he began each of them with the words: "Humanity's greatest shortcoming is its inability to understand the exponential function." This function is still not understood today. Consumption of food and resources is increasing exponentially, while the technologies for their increase and efficient use are much slower. This leads to enormous price increases and resource overspending. 

Back in the eighteenth century, the Englishman Thomas Malthus derived the formula of the "Malthusian trap," according to which the population grows faster than the yield of major crops. This gave rise to the ideas of social Darwinism to limit population growth by artificial means. In Malthus's model, after a decline in the birth rate, a demographic turning point occurs (when mortality exceeds birth rates) and a natural population decline begins. At the same time, ceteris paribus, per capita income begins to grow, and the economy finds a new equilibrium point at a lower population level and a higher income level (per person).

Malthus's theory was fiercely criticized by Marxists, who spoke of the conditionality of the low incomes of the proletariat, when some workers form a labor reserve to put pressure on the employed to agree to the appropriation of part of the surplus value by capitalists. Then the sharp growth of agricultural technology was able to compensate for the increase in population for a while. But in the XX-XXI centuries, it was time for the next wave of neo-Malthusians to emerge, using Brodel's term "demographic overload." The model of outstripping growth and accelerated modernization of developing countries has once again jeopardized the balance of consumption in the global economy.

The statistical and analytical basis was formed by the Club of Rome and the concept of "zero growth" to slow the dynamics of the development of the Third World, which emerged as a side branch outside the Club. For example, Nobel laureate in economics Jan Tinbergen justified the model of birth control to overcome the "vicious circle of poverty" in developing countries. Everything was formalized in the report "The Limits to Growth" (1972), written on the basis of the cybernetic model of Dennis Meadows and a group of scientists from the Massachusetts Institute of Technology.

This is almost a confirmation of the concept of the new institutionalists, in particular Daron Acemoglu and James Robinson, who put forward the theory that the medieval plague in Great Britain, which halved the country's population, played a key role in weakening serfdom and developing more progressive capitalist relations (peasants took advantage of the fact that there were few of them left and kept more of the harvest than before the epidemic, and landowners were forced to agree).

Meadows' model turned out to be generally correct, as confirmed by the new World3 version of 2004. From 1950 to 2000, consumption of basic natural resources increased 10-fold, while the population increased 2.5-fold. According to the model, starting in the 2020s, the global economy will begin to slow down and stagnate, and the peak of development will be reached no later than 2100. The critical number of the planet's inhabitants is 12 billion people, and after reaching this figure, a large-scale civilization crisis and a population decline to 1-3 billion people are possible. Favorable variants of the model are no longer achievable, and the first signs of systemic collapse will be felt during the lifetime of the current generation.

The optimal model of development for the global economy in this concept is a synergy in the form of "Growth Restraint + Advanced Technology". The main element of the "zero development" strategy that ensures the viability of the model is to curb the growth of per capita production of goods and services while increasing the yield of major crops.

According to Graham Turner, who analyzed the limits of the global economy, since 1990, the area of arable land in the world has not increased significantly. The search for "new virgin lands" leads to the plowing of less fertile plots, which results in higher production costs, erosion and desertification, as in Africa. By 2050, it will be necessary to increase food production by 60% on the already reached maximum of arable land, against the backdrop of global warming and increased natural disasters. In this context, the real reasons for opening the land market in Ukraine are quite different. After all, the export of agricultural raw materials is also an indirect export of moisture.

Ukraine's New Subjectivity

Ukraine's subjectivity in the context of its global role was clearly manifested during the war on the international food market. 

If we take the total share of the Ukrainian economy in the structure of the world economy, it is not significant (less than 0.2%). At the same time, Ukraine plays a leading role in certain product niches on the international food and agricultural raw materials market.

Ukraine is the world's No. 1 exporter of sunflower oil. It is among the top three grain exporting countries, primarily corn, among the top five countries in terms of chicken eggs exports, and among the top ten poultry exporting countries, primarily chicken.

It is Ukraine's subjectivity in the global food market that explains the price crisis of agricultural "goods" and the threat of famine in some countries of Asia and Africa. 

Russia's war against Ukraine and the related blockade or occupation of Ukrainian seaports have led to an increase in international wheat prices to $500 per ton.

In general, Ukraine's role in the development of the global food market is to directly and indirectly influence the nutrition of approximately 800 million people in the world, while the country's own population is just over 40 million. Overall, the Black Sea region accounts for approximately 12% of the world's food calories sold.

Ukraine has the potential to become a global leader in the segment of the "green" agricultural model of the economy based on organic products and raw materials.

Today, the structure of agricultural exports in Ukraine is mainly raw materials, with the formation of asymmetric markets, when our country both shapes the price dynamics of agricultural raw materials and meets the narrowly segmented demand for certain types of these raw materials. 

Over the past few decades, there has been a clear correlation between the prices of major export crops and oil and oil products. 

These price flows have been formed as a result of the active use of bioethanol and biodiesel. 

In simple terms, the higher the price of gasoline produced from oil, the greater the demand for raw materials for biofuel production and, accordingly, for basic agricultural crops. 

Thus, the higher the growth of oil and natural gas prices, the more dynamically prices for agricultural raw materials grow, forming the so-called "agrarian inflation" in the world, which Western analysts first started talking about in 2008.

In this context, Ukraine is becoming a key economic actor that also provides certain links in the global "green transition," shaping the global economy's capabilities in the biofuel segment, particularly for countries such as China and geopolitical alliances such as the EU. 

It can be argued that the role of Brazil or Ukraine in the biofuel market in the coming years will resemble the influence of the Persian Gulf countries on the markets of classical fossil fuels in the 70s and 80s of the last century.  

It should be noted that the use of biofuels in the world will grow, and thus Ukraine's economic subjectivity will increase.

The United States, for example, has adopted the Energy Policy Act of 2005 and the Renewable Fuels Standard, which provide for the production of ethanol from grain and cellulose.

The war has limited access to Ukrainian agricultural exports for the largest importers. Accordingly, we are already talking about strengthening Ukraine's role both at the regional level (food security of individual countries) and at the global level (dynamics of world prices for agricultural raw materials). Ukraine will also have a significant impact on the implementation of global strategies, in particular, the Green Deal in the context of biofuel production and related raw materials.