Could an epic famine be upon us?
Recent statements from President Biden and other public officials lend credence to a dire prediction
On March 25, President Joe Biden, speaking at a news conference in Brussels, warned of food shortages to come, a consequence of the Ukraine war.
“It's going to be real. The price of these sanctions is not just imposed upon Russia; it's imposed upon an awful lot of countries as well, including European countries and our country as well," the president said. "Both Russia and Ukraine have been the breadbasket of Europe in terms of wheat, for example - just to give you one example.”
These comments from the president came less than two weeks after U.S. Climate Envoy John Kerry warned that the food supply could potentially collapse for 100 million people around the world, leading to major refugee crisis.
On March 29, Sen. Roger Marshall, who serves on the Senate Agriculture Committee, warned that there could be a worldwide famine within the next two years during an appearance on Fox Business.
A few days ago, Canadian Prime Minister Justin Trudeau sounded a similar note:
We've seen... disruptions of supply chains around the world, which is resulting in higher prices for consumers and democracies, like ours, and resulting in significant shortages and projected shortages of food in places around the world. This is going to be a difficult time because of the war, because of the recovery from the pandemic.
On Wednesday, David Beasley, executive director of the U.N. World Food Program, warned the Security Council that the Ukraine crisis has created “a catastrophe on top of a catastrophe” that will have a global impact “beyond anything we’ve seen since World War II.”
The U.N also recently said that spikes in food prices were creating social unrest in the Middle East. The head of the World Trade Organization, meanwhile, told The Guardian that the Ukraine conflict could spark food riots in poor countries. Ngozi Okonjo-Iweala said:
I think we should be very worried. The impact on food prices and hunger this year and next could be substantial. Food and energy are the two biggest items in the consumption baskets of poor people all over the world.
Ukraine and Russia combined export over a quarter of the global supply of wheat, and one-fifth of the world’s corn supply, according to Bloomberg. But there are many underlying co-factors that could contribute to a widespread collapse in food production. The most thorough analysis that I’ve come across on this topic was published last week on the widely read Doomberg Substack.
“We believe we are at the onset of a global famine of historic proportions,” Doomberg wrote.
The tempest caused by the European energy disaster has merged with the hurricane of consequences flowing from Russia’s invasion of Ukraine, forming the genesis of a generational crisis in food that will leave few unaffected. While we’ve been warning about just such a scenario for some time, after spending the past two weeks traveling across the US Midwest and conferring with our contacts in the agricultural sector, even we are a little spooked by what we’ve learned. In a financial crash, the correlation between all asset classes converges to one. The coming crash in global food supply will be driven by a similar phenomenon across virtually every input into farming – they are all spiking to historic highs simultaneously, supply availability is diminishing across the spectrum, and the time to reverse the worst of the upcoming consequences is rapidly running short.
Much has been written about the recent rise in fertilizer prices, but what the Doomberg piece deacribes is a “perfect storm” of scarcity forming among critical inputs into modern agriculture, not all of which are downstream of the geopolitical crisis. I recommmed reading the analysis in its entirety, but here are some key excerpts:
We begin with the price of fertilizer, which has been soaring to record highs across the globe. Key sources of nitrogen, potassium, and phosphorous – important inputs into soil fertility, crop yield, and plant maintenance – have all gone vertical. Ammonia is derived directly from natural gas, and the price of natural gas outside of the US has gone vertical. It's no surprise that the price of ammonia has tripled over the past twelve months. Belarus is the third-largest supplier of potash in the world and its state-owned miner, Belaruskali, declared force majeure after sanctions were imposed by the US and Europe. The number two supplier of potash globally? Russia. Perhaps front-running the Russian move on Ukraine, China halted phosphate exports last fall in an effort to ensure adequate domestic supply.
As expensive as it is to fuel the field equipment needed to farm, keeping them operational at all is becoming an ever-growing challenge. The same chip shortage constraining automobile production has struck the farming equipment industry, making new equipment and spare parts harder to come by.
Compounding these challenges with machinery is a burgeoning labor shortage that is rapidly adding pressure to this brewing catastrophe.
Even generously assuming farmers can cobble together enough fertilizer, herbicide, machinery, and labor to produce a good harvest this fall, they may be left to deal with yet another crisis of supply that few off the field have on their radar: propane.
The oil market, of course, is currently very tight as well, and diesel is another key input into farming. The article, as such, chastises U.S. politicians for “attacking” energy production infrastructure.
Regarding the dire prophesy it lays out Doomberg concludes: “Never have we been more certain in our beliefs while fervently wishing that we are wrong.”
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