Geopolitics, The Sinking Ruble And A Boom In Home Farming

Eggs from the dacha, anyone?
Eggs from the dacha, anyone?
Igor Abakumov

MOSCOW — I'm going to share my own observations about myself, yes, but also about my neighbors in the countryside.

I spent last summer in a 100-year-old house outside of Moscow. In between writing articles, I maintained two beehives and pruned old apple, cherry and currant trees. I harvested. I made jam and extracted honey. I went to the store to get canning jars, a store that used to have just a small jar selection but now features a huge display with a wide selection of canning options.

The saleswoman said demand is booming. Buyers are mostly city people who inherited a house in the area. We're buying for more or less the same reasons: Some people raise cows and are selling milk; others are making goose, duck and chicken meat conserves. My neighbor to the left has a huge apiary, my neighbor to the right sells quail eggs. Both of them are city people I've known for more than 30 years.

But it was just in the past two years that they've started these businesses. Basically everyone I've met tells me that they got the idea to enter the agriculture business more or less two years ago.

There are two reasons for this. Toward the end of 2012, the economy started to tank and companies began laying people off. Second, and no less important, it was the time when mobile Internet arrived. It became possible to work "in the countryside" as an accountant, an architect, a lawyer or an engineer. Once you live in the country, you end up growing stuff — whether you want it or not. Then it will become a burning need, first for yourself, then for your city friends. No need to go sell your products at the market: People come from the city themselves and buy everything, for the simple reason that all these fresh goods are unbelievably delicious!

Six months ago, Russian President Vladimir Putin signed an order blocking food imports from our former "Western partners," as a reaction to the sanctions imposed by those countries on Russia. What happened then? The imports from Europe, the U.S. and Australia were replaced by imports from Belarus, Kazakhstan, North and Central Africa, Southeast Asia, Turkey and other countries — about 40 in total. To give credit where credit is due, our shelves are not empty. Instead, one importer has been replaced by another.

The president's order also included a provision to increase the country's domestic output of agricultural products. But here's the thing: Half a year since the order was issued, prices have increased exponentially. Even basic goods that are produced locally, like potatoes, eggs and oil, have gone up in price.

Photo: Pavel Grabalov

Part of this is because Russian agriculture is, to a large extent, assembled from foreign components. Seeds, pedigree cattle and poultry, and equipment all come from abroad, and the devaluation of the ruble led their prices to rise.

The second reason has to do with supermarket chains and the way they advertise, displaying large signs touting "local products," and selling Russian jam that is even more expensive than imported jam.

Cheap seeds

The prosecutor's office has been told to find culprits in the massive food inflation, but they don't have clear criteria. What are valid reasons? Can you blame a miller for the increase in flour prices when he's paying 30% interest on the credit he takes out to buy grains? But then the increase in flour prices drives up the price of bread. The average price of buckwheat was 10 rubles per kilo in 2014, and what we see now on the market is outrageous.

But who is in charge of controlling the prices? In Europe, there are clear rules that have to be followed, not merely those of the so-called "invisible hand."

People say that the biggest risk for the 2015 harvest is the simple lack of available cash. The credit market has shrunk, and banks will no longer take real estate as collateral at realistic prices. The lack of credit means that farmers bought less expensive seeds, which often offer less protection from weather variations and diseases. As a result, the agriculture ministry's projections for this year's grain harvest span a huge range of possible harvest amounts: anywhere between 68 million tons and 100 million tons.

Photo: Olga Pavlovsky

Our yearly grain consumption is around 73 million tons. After crunching the numbers, the market for everything that is based on grains and feed — milk, meat and bread — is reacting with price increases. The agricultural ministry, in its joy over last year's record harvests, missed the chance to buy up grain reserves at low prices last summer and then release the grain onto the market when the prices increased.

The speaker of the Council of the Federation said that these price increases and potential deficits should be countered by eliminating grain exports. Yet, just in February, the agricultural ministry announced the possibility of a record year for grain exports, of up to 30 million tons.

There is a new but obvious risk: the lack of a light at the end of the tunnel that this current economic crisis may represent. That risk is no less important than the financial risk everyone has been talking about recently. There has been no serious discussion of the modernization of the infrastructure in the agriculture industry. Most of the production is still controlled by private agro-holdings, which have played a role in providing the country with meat but only provide about half of the country's milk.

Talks about providing support for building cooperative businesses for the farmers, former collective farms and other private owners that provide the other half of the country's milk supply remain nothing more than words.

Personally, come spring, I'm going to be expanding my vegetable garden.

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7 Ways The Pandemic May Change The Airline Industry For Good

Will flying be greener? More comfortable? Less frequent? As the world eyes a post-COVID reality, we look at ways the airline industry has been changing through a pandemic that has devastated air travel.

Ready for (a different kind of) takeoff?

Carl-Johan Karlsson

It's hard to overstate the damage the pandemic has had on the airline industry, with global revenues dropping by 40% in 2020 and dozens of airlines around the world filing for bankruptcy. One moment last year when the gravity became particularly apparent was when Asian carriers (in countries with low COVID-19 rates) began offering "flights to nowhere" — starting and ending at the same airport as a way to earn some cash from would-be travelers who missed the in-flight experience.

More than a year later today, experts believe that air traffic won't return to normal levels until 2024.

But beyond the financial woes, the unprecedented slowdown in air travel may bring some silver linings as key aspects of the industry are bound to change once back in full spin, with some longer-term effects on aviation already emerging. Here are some major transformations to expect in the coming years:

Cleaner aviation fuel

The U.S. administration of President Joe Biden and the airline industry recently agreed to the ambitious goal of replacing all jet fuel with sustainable alternatives by 2050. Already in a decade, the U.S. aims to produce three billion gallons of sustainable fuel — about one-tenth of current total use — from waste, plants and other organic matter.

While greening the world's road transport has long been at the top of the climate agenda, aviation is not even included under the Paris Agreement. But with air travel responsible for roughly 12% of all CO2 emissions from transport, and stricter international regulation on the horizon, the industry is increasingly seeking sustainable alternatives to petroleum-based fuel.

Fees imposed on the airline industry should be funneled into a climate fund.

In Germany, state broadcaster Deutsche Welle reports that the world's first factory producing CO2-neutral kerosene recently started operations in the town of Wertle, in Lower Saxony. The plant, for which Lufthansa is set to become the pilot customer, will produce CO2-neutral kerosene through a circular production cycle incorporating sustainable and green energy sources and raw materials. Energy is supplied through wind turbines from the surrounding area, while the fuel's main ingredients are water and waste-generated CO2 coming from a nearby biogas plant.

Farther north, Norwegian Air Shuttle has recently submitted a recommendation to the government that fees imposed on the airline industry should be funneled into a climate fund aimed at developing cleaner aviation fuel, according to Norwegian news site E24. The airline also suggested that the government significantly reduce the tax burden on the industry over a longer period to allow airlines to recover from the pandemic.

Black-and-white photo of an ariplane shot from below flying across the sky and leaving condensation trails

High-flying ambitions for the sector

Joel & Jasmin Førestbird

Hydrogen and electrification

Some airline manufacturers are betting on hydrogen, with research suggesting that the abundant resource has the potential to match the flight distances and payload of a current fossil-fuel aircraft. If derived from renewable resources like sun and wind power, hydrogen — with an energy-density almost three times that of gasoline or diesel — could work as a fully sustainable aviation fuel that emits only water.

One example comes out of California, where fuel-cell specialist HyPoint has entered a partnership with Pennsylvania-based Piasecki Aircraft Corporation to manufacture 650-kilowatt hydrogen fuel cell systems for aircrafts. According to HyPoint, the system — scheduled for commercial availability product by 2025 — will have four times the energy density of existing lithium-ion batteries and double the specific power of existing hydrogen fuel-cell systems.

Meanwhile, Rolls-Royce is looking to smash the speed record of electrical flights with a newly designed 23-foot-long model. Christened the Spirit of Innovation, the small plane took off for the first time earlier this month and successfully managed a 15-minute long test flight. However, the company has announced plans to fly the machine faster than 300 mph (480 km/h) before the year is out, and also to sell similar propulsion systems to companies developing electrical air taxis or small commuter planes.

New aircraft designs

Airlines are also upgrading aircraft design to become more eco-friendly. Air France just received its first upgrade of a single-aisle, medium-haul aircraft in 33 years. Fleet director Nicolas Bertrand told French daily Les Echos that the new A220 — that will replace the old A320 model — will reduce operating costs by 10%, fuel consumption and CO2 emissions by 20% and noise footprint by 34%.

International first class will be very nearly a thing of the past.

The pandemic has also ushered in a new era of consumer demand where privacy and personal space is put above luxury. The retirement of older aircraft caused by COVID-19 means that international first class — already in steady decline over the last decades — will be very nearly a thing of the past. Instead, airplane manufacturers around the world (including Delta, China Eastern, JetBlue, British Airways and Shanghai Airlines) are betting on a new generation of super-business minisuites where passengers have a privacy door. The idea, which was introduced by Qatar Airways in 2017, is to offer more personal space than in regular business class but without the lavishness of first class.

Aerial view of Rome's Fiumicino airport

Aerial view of Rome's Fiumicino airport

Hygiene rankings  

Rome's Fiumicino Airport has become the first in the world to earn "the COVID-19 5-Star Airport Rating" from Skytrax, an international airline and airport review and ranking site, Italian daily La Repubblica reports. Skytrax, which publishes a yearly annual ranking of the world's best airports and issues the World Airport Awards, this year created a second list to specifically call out airports with the best health and hygiene standards.

Smoother check-in

​The pandemic has also accelerated the shift towards contactless traveling, with more airports harnessing the power of biometrics — such as facial recognition or fever screening — to reduce touchpoints and human contact. Similar technology can also be used to more efficiently scan physical objects, such as explosive detection. Ultimately, passengers will be able to "check-in" and go through a security screening anywhere at the airports, removing queues and bottlenecks.

Data privacy issues

​However, as pointed out in Canadian publication The Lawyer's Daily, increased use of AI and biometrics also means increased privacy concerns. For example, health and hygiene measures like digital vaccine passports also mean that airports can collect data on who has been vaccinated and the type of vaccine used.

Photo of planes at Auckland airport, New Zealand

Auckland Airport, New Zealand

Douglas Bagg

The billion-dollar question: Will we fly less?

At the end of the day, even with all these (mostly positive) changes that we've seen take shape over the past 18 months, the industry faces major uncertainty about whether air travel will ever return to the pre-COVID levels. Not only are people wary about being in crowded and closed airplanes, but the worth of long-distance business travel in particular is being questioned as many have seen that meetings can function remotely, via Zoom and other online apps.

Trying to forecast the future, experts point to the years following the 9/11 terrorist attacks as at least a partial blueprint for what a recovery might look like in the years ahead. Twenty years ago, as passenger enthusiasm for flying waned amid security fears following the attacks, airlines were forced to cancel flights and put planes into storage.

40% of Swedes intend to travel less

According to McKinsey, leisure trips and visits to family and friends rebounded faster than business flights, which took four years to return to pre-crisis levels in the UK. This time too, business travel is expected to lag, with the consulting firm estimating only 80% recovery of pre-pandemic levels by 2024.

But the COVID-19 crisis also came at a time when passengers were already rethinking their travel habits due to climate concerns, while worldwide lockdowns have ushered in a new era of remote working. In Sweden, a survey by the country's largest research company shows that 40% of the population intend to travel less even after the pandemic ends. Similarly in the UK, nearly 60% of adults said during the spring they intended to fly less after being vaccinated against COVID-19 — with climate change cited as a top reason for people wanting to reduce their number of flights, according to research by the University of Bristol.

At the same time, major companies are increasingly forced to face the music of the environmental movement, with several corporations rolling out climate targets over the last few years. Today, five of the 10 biggest buyers of corporate air travel in the US are technology companies: Amazon, IBM, Google, Apple and Microsoft, according to Taipei Times, all of which have set individual targets for environmental stewardship. As such, the era of flying across the Atlantic for a two-hour executive meeting is likely in its dying days.

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