On the Shortages
Will you be stuck in the breadline?
What is Happening?
There has been alot of talk about the supply chain and shortages around the World. Between inflation and the talk of shortages it’s spelling disaster for the middle class.
Should we be alarmed, or are the people suggesting disaster crying wolf once more?
Compiled below is the data and the numbers about these shortages.
Here are the facts:
Grains
As many of you know the War in Ukraine is impacting grain prices with Ukraine and Russia making up a total of 30% of Global supply. This is most likely to affect poor countries.
The World Bank said in its latest Trade Watch report that Gambia, Lebanon, Moldova, Djibouti, Libya, Tunisia, and Pakistan are the most exposed to the disruptions of wheat exports from Ukraine, which make up roughly 40% or more of their wheat imports.
India has the potential to fill some of this gap. However it will only alleviate some of the surrounding areas. Per Bloomberg:
India is in final talks to start wheat shipments to Egypt, the world’s top buyer, while discussions are in progress with countries such as China, Turkey, Bosnia, Sudan, Nigeria and Iran
India only plugging some of that Gap, because it has been a bumper crop year for them. India is punching well above its weight and right now this is good news. Yet the amount India is producing still leaves a shortfall. On top of that increasing prices will lead to uneven distribution of the harvest. If you noticed above those two lists don’t match. We’re now getting into the geopolitics of food and supply chains.
Since the good fortunes of India do not plug everything, for that it is down to the Northern Hemisphere countries also in planting season. But they have their own problems, one of which being fertilizer.
Fertilizer
Combined, Russia and Belarus accounted for more than 40% of global exports of potash last year, one of three critical nutrients used to boost crop yields, Dutch lender Rabobank said this month. Additionally, Russia accounted for about 22% of global exports of ammonia, 14% of the world's urea exports and about 14% of monoammonium phosphate (MAP) - all key kinds of fertilizers.
With Russian and Ukrainian Potash and Ammonia fertilizer out of the picture the Americans and Europeans will need to turn to the Canadians for some help. The third largest producer of potash. For the second largest producer of potash fertilizer, China like Russia, has banned fertilizer exports till the end of 2022. (Probably 2023 aswell)
Farmers are already adjusting, via Reuters:
Some growers are contemplating switching to crops that require fewer nutrients. Others plan to cultivate less acreage. Others say they'll simply use less fertilizer, a strategy crop experts predict will hurt yields. Production is most at risk in developing nations, whose farmers have fewer financial resources to weather the storm
Lower production with already tight markets isn’t something we want to be hearing. Neither is switching crops for that won’t alleviate the shortages we currently face.
But many cannot adjust:
Brazil, the world's biggest soybean exporter, relies on imported fertilizer such as potash, which accounted for 38% of the crop nutrients it used last year. Russia and Belarus were the source of half of those shipments. Brazil which already reduced it’s corn plantings due to fertilizer will reduce
On March 19th, Peru declared a state of emergency in its agriculture sector over fears of food insecurity. More countries will follow suit.
Between climate instability and fertilizer shortages it will be a tight year at best. With seeds already purchased, or in the ground commodity shortages are a slow moving disaster that seems likely.
Overall in a tight commodity market developed countries will raise their bridges leaving the Second and Third World to fend for themselves. And they have done just that.
The U.S. Agriculture Department projects global stockpiles for 2021-22 to equal 35.8% of projected annual consumption -- a roughly four-month supply. But half of that stockpile is in China, which consumes most of its wheat, meaning availability for the rest of the world may be lower than the figure suggests.
via Nikkei Asia
As reported on earlier this year, China has been hoarding a massive stockpile of foodstuffs.
Just grains alone the World is going to be short. Simply due to the knock on effects of the aforementioned fertilizer and climate conundrums. And we haven’t even touched other crops yet…
US Corn planting is down, and corn is used practically in everything. Industrial production of food is going to either be limited, inflate in price or both.
Rice is no better.
Via Bloomberg:
Prospects for rice self-sufficiency vary by country. Thailand and Vietnam produce more than they consume, while Indonesia and the Philippines “have struggled consistently” to meet rice demand from their own production, relying on imports, the researchers said.
It’s particularly crucial for regions like sub-Saharan Africa and the Middle East that Southeast Asia continues to produce a large surplus of rice.
It is doubtful that they will be able to meet all the demand. There’s already a shortage of rice in the Philippines.
With major cereal and grain crops compromised or stuck in ports. Food insecurity and shortages are a real threat to both the everyday consumer and national security. With the majority of calories for people in jeopardy, this would be a crisis by itself.
Unfortunately we are not that lucky.
Meat
With regards to meat shortages around the World are looking Grim. A shortage of crops is leading to a shortage of feed which is driving up prices. Combined with other factors such as the increase in the price of transportation, and processing meat prices are also skyrocketing and not just because of inflation.
Chicken is particularly going to be increase drastically due to poor circumstances. Chicken is being ravaged by avian flu, around the World.
We’ll start with France.
From Reuters
France is facing its worst bird flu crisis in history as a rare rebound in outbreaks of the highly contagious virus reached the country's largest poultry producing regions with cullings topping more than 12 million birds.
Further information via Poultry Site
The H5N1 virus has spread rapidly in the Pays de la Loire region since last month and hit Brittany mid-March, further up the Atlantic coast. The two regions are France's largest poultry producers.
By 23 March, nearly 11 million birds had been culled in France since the first outbreak on 26 November, OIE data showed, making it the most severe avian influenza crisis ever in the country.
Since then, outbreaks rose by another 13% in just one week, to 1,098 by 30 March, government data showed.
Avian Flu has also been quietly damaging the shaky supply chain in the United States. It has infected 23 US States including: Wyoming, Iowa, North Dakota, and Wisconsin. The CDC reports a minimum of 17 million chickens have been infected. Millions more must be slaughtered to ensure the contagion is contained.
This is the worst Avian flu to hit the United States since 2015 where 50 million bird were culled. And this has already begun to affect suppliers such as Costco:
For Costco, which sources an estimated 400 million chickens a year, losses to bird flu have been small. The virus spreads quickly through factory farms, however, so the chain of warehouse stores is still in the danger zone.
Everyone is on pins and needles if this will be a detrimental a the 2015 outbreak. Even if it isn’t the major shock to egg and chicken production with an already constrained supply chain it is only adding to the house of cards.
Global failures in one of the major protein supplies, will lead to an increased pressure on more consumers look for alternative choices. But they will find no better pastures as Beef prices are no better, due to inflation, feed prices and the shortage of slaughterhouses, workers and shipments.
Coda
This isn’t even mentioning the American Dairy Shortage. EU food rationing by both corporations and governments or the numerous other problems happening around the World.
Grains, and meats are experiencing unprecedented catastrophes resulting in both increased prices and shortages. Furthermore even if we could grow or produce more, the basic building blocks such a fertilizer are unavailable to help alleviate the shortages we face.
The Supply Chain is in shambles and the World will be feeling these effects for many years to come even if everything was fixed tomorrow. The unfortunate nature of the global supply chain is that we are all interdependent on each other; and the scale in which we are operating on is so vast that one hiccup has major knock on effects.
The shortages are real, the bears for once are right.
Hold on.
Create your profile
Only paid subscribers can comment on this post
Check your email
For your security, we need to re-authenticate you.
Click the link we sent to , or click here to sign in.