Is there a Food Crisis coming?

Macro Perspectives: Fri 04 Mar 22

A predicted-future climate crisis has led to policymaking that has created an immediate energy crisis.

Next up, it looks like a food crisis.

As you can see in this chart, food prices are near record highs already. This is a squeeze on the standard of living for rich countries. For poor countries, it's a full blown crisis. This time it looks like an uglier, more widespread impact is coming.

Unfortunately we have a supply crunch in all three major inputs;

• We know the energy input isn't improving anytime soon.

• Nor is transportation (from both energy and supply chain disruptions).

• Labor costs are just in the early to middle innings of an adjustment.

What about fertilizer? Nitrogen, Phosphorous, Potassium: All higher, over double the cost of this input from 2020.

Now we add in a supply shock from Russia and Ukraine - which combine for a quarter of the world's wheat exports.