Worsening Food Crisis Part 2/2
Worsening situation
In all of Europe, food prices have risen by 20%-70% in the last 3 months and there are rationed restrictions on many products.
- In the US, a severe outbreak of avian flu has killed 22 million birds, and America is having one of the worst years for the winter wheat crop due to the severe drought, which of course will cut food supplies even further and drive up food prices even higher in the US. In the U.S., a number of food processing centers have been destroyed in relatively recent times, and as a result, wheat futures have risen about 60% this year, thereby raising the cost of basic foodstuffs such as bread.
- China is stopping factories (including food) due to the new Covid-19 outbreak, on top of that the winter crops are also suffering (minus 20% of the crop).
- In England, rising energy prices leave greenhouses empty. In the southeast of England, huge greenhouses are standing empty, and rising energy costs are preventing their owners from using the heat to grow vegetables for the British market.
According to the U.N. food agency, global food prices rose to a record high in February, up more than 20.7 percent year-over-year, while many markets have continued to rise so far.
Global grain production will also fall substantially this year as production of fertilizers, which help boost yields, is severely curtailed by rising energy prices. At the same time, the cost of some fertilisers has gone up 300% this year.
The fertilizer situation
We remind you that Ukraine and Russia are some of the largest suppliers of fertilizers in the world and, again for obvious reasons, these supplies are gone. Also, a number of major fertilizer producers in the EU, including Yara International ASA, are also cutting production due to prohibitively expensive raw materials (natural gas).
Another supply trouble...
Recently (May 22), a Canadian Pacific freight train carrying potash fertilizer derailed in Alberta. Canada is the world's largest producer of potash, a key ingredient for nitrogen-based fertilizers, followed by Russia and Belarus.
Many farmers in Africa won't be able to afford fertilizer at all this year, and it's projected to cut agricultural production by 30 million tons, enough to feed 100 million people.
Bottom line
Also, as we wrote in the last Economic Review, there are a lot of complicating factors with the supply of provisions, unlike with gas or oil, you can't dramatically increase the production of provisions, especially in such huge quantities that you may soon need them.
All these factors inevitably lead to a multiple increase in the price of food and its shortage, which means hunger of the low-income population and, consequently, popular protests. At the moment there are about 1 billion. 600 million people, 250 million of whom are already in a very sad situation.
Map of Hungry Countries
The conflict between Ukraine and Russia and the interruption of food and fertilizer supplies from these countries already threatens a food crisis for 400 million people around the world. In particular, the EU, the Middle East and North Africa are heavily dependent on these supplies.
Increasing food protectionism by countries and their banning of food exports only exacerbates the overall situation.
There are also warnings that if the world situation does not change by the fall of 2022, a large wave of emigrants and refugees to the EU from the Middle East and North Africa may flood in.
There are many unrelated events happening around the world that directly increase the likelihood of a severe food crisis (starvation) for more than 1.5-2 billion people worldwide by the end of 2022. All of these simultaneously contribute to economic and supply chain collapse on a global scale.
A series of events occurring in such a short time will begin to seem like too much of a coincidence to occur at the same time. Global change is at hand.
How serious is it?
As in any crisis, it is impossible to give an exact answer about the consequences of this crisis, since a number of unpredictable factors may still play a role, which may or may not announce themselves at all. An example of this was the expectation of mass emigration from North Africa to the EU during the Covid-19 epidemic, which in the end did not happen.
But what can be said for sure?
It will not be fatal for the countries whose population does not spend most of their income on food, but rather inconvenient, because they will have to save a lot more.
The less well-to-do countries will have a harder time, more hardship, saving and frugality, but there will be no hunger.
Poor countries, on the other hand, will have a really hard time. Expenditures on food will increase dramatically, and as a consequence, spending on other needs will decrease, which in turn will affect employment as demand decreases, which means layoffs, mass unemployment and a drop in incomes, and so forth in a spiral.
Will this effect be long term?
The answer is NO.
The good news is that mankind is far advanced in food production and developed countries produce far more than they need. In time, the resulting shortage will simply lead to an explosion of agricultural production and the crisis will resolve itself, as it has done more than once throughout history.
In practice, we will face what we have already seen many times in history: a local time warp between supply and demand due to a supply shock. Such distortions can be large-scale, they can be very large-scale, like the oil crisis of the 1970s, but they are never long-term, simply because of the nature of the market economy.
On the other hand, for most people at this point in time, it will indeed be a very serious challenge, but we roar that we can overcome it all and hope that humanity will draw conclusions and be able to make hunger disappear as a phenomenon from planet Earth.
Keep your nose to the wind and know that Fortune, Fortune and Success always favor you when you are with us!
Always yours C.J.
All the above is not a financial advice, but only a subjective opinion of the author. If you doubt anything, do your own research and double-check the information yourself. WARNING! Information from Crypto Joker channels can change your thinking and open your eyes to what is hidden from most people. And know, there are storms the size of the Earth on Jupiter, and there are lies the size of the ocean on Earth.
