Food Costs Likely To Rise as Farmers’ Expenses Shoot Up

Famine is one the four horsesmen of the end-of-the world. It was a companion in most of humanity’s history. Innovations in agriculture and increased prosperity have reduced the threat of famine in recent years. However, the policy-inflicted disruptions to the economy of the last two decades partially reversed any progress toward alleviating poverty and providing food for the planet. With food prices rising, the danger is that there will be more hunger. 

Svein Holsether (CEO and President of fertilizer giant Yara International) said: “I want it to be loud and clear now. We risk a very poor crop in our next harvest.” WarnedNovember “I am afraid that we are going to experience a severe food shortage.”

Holsether was concerned about rising energy costs, especially natural gas. This is necessary to produce ammonia. From which, urea is made, Holsether is worried.

“Prices for the humble chemical — yes, the stuff in urine — are soaring to levels not seen in over a decade,” The New York Times We are in agreementOne month later. The shocks are affecting all industries and people.

It is a combination of bad policy and unpredictable nature. Busted supply chains are also a major factor. From policy decisionsPrices for natural gas, and other products have risen dramatically. Demand and other political factors are both driving up prices for alternative urea. In December, the U.S. Treasury reached an agreement to Suspend sanctions against potashBelarus is the source of about 20% of world supply. But there are also high trade barriers. Keep your placeFor fertilizer and its constituents. This means that the major inputs to produce the food we consume are getting more expensive.

According to the American Farm Bureau, “Among ranchers and farmers, few topics are as discussed as the skyrocketing costs of fertilizer or increasing concern about its availability. Reports.

It’s not only frightening for American farmers, but also for those who eat their products. This could spell doom for the rest the world. 

The World Bank stated that high fertilizer prices can cause inflationary pressures to increase food prices. This is at a time where the COVID-19 pandemic as well as climate change make it more difficult for people to access food. Notifications.

This cautious tone may be a little out-of-date, considering that global food prices had already risen by an average 27.3 percent compared to a year prior at the November end, according the UN Food and Agriculture Organization. Index of food prices. Worse, people’s ability to cope with rising food prices has been hit by pandemic-policy-induced setbacks to decades of increasing prosperity.

The World Bank reports that in 2021 the incomes of those in the lowest 40 percent of global income distribution will be 6.7 percent less than the pre-pandemic projections. However, they will still have a 2.8 percent drop for the top 40 percent. NotedIn October 

The dangerous combination of growing poverty and high food prices makes for an unstable planet.

In a recent report by Rabobank, Holland’s agricultural-oriented bank, it predicts that “higher farm input cost, high shipping costs and strong demand will make for a terrible combination.” Outlook 2022: Hell in the Handbasket. These inflationary pressures should move downstream along the supply chains to consumers in 2022. There are uncertain social implications.

None of these factors were unavoidable or possible. No one could have predicted that Hurricane Ida would cause a disruption in natural gas production “more than any other hurricane during the last ten years.” These words of the U.S. Energy Information Administration. It is impossible to have known this. Low windThis would either hinder Europe’s increasing reliance upon renewable energy, or cause a drought. Hydropower from the kneecapChina and others, dumping these regions to fossil fuels in opposition with other global users. 

What WasHowever, it is impossible to predict that nature will be unpredictable. Plans that depended on the weather to adhere to production plans were bound to fall. They failed because policymakers had disrupted shipping and manufacturing in the wake of COVID-19. This was an inevitable outcome.

“In the autumn, rising electricity demand caused the Yunnan province in the southwest, which is a major phosphate producer to ordain drastic production cuts by energy hungry industries including fertilizer.” The New York Times reported.

BloombergQuint reports that major fertilizer producers Yara International ASA, and CF Industries Holdings Inc. have had to halt production of essential nutrients for crop growth because of rising energy prices. NotedThese are the results of Europe’s high energy prices.

Exports of fertilizer are subject to restrictions China RussiaThe problem is compounded by the fact that the governments of these countries have limited supply for their own internal markets. Trade barriers against foreign products are a self-inflicted injury for the U.S.

Mosaic almost created an unsurmountable tariff barrier in order to maintain its independence. Top competitors in Morocco, Russia out of U.S.phosphate market,” National Corn Growers Association protested in a December letterMosaic fertilizer giant was accused of cultivating friends in policy making. The U.S. now receives only 15% of its phosphorous imports without any tariffs.

Auch the Biden administration Prohibits fossil fuel production. The idea behind it is encouraging a move towards renewable energy in the country. However, one consequence (possibly) of this policy is tightening the availability of fertilizer required to grow food.

Philip Pilkington (British economist) stated that “heavy-handed interference with market economies tends produce the same pathologies as we see in socialist nations, including shortages or inflation.” CommentThis was earlier in the year.

It is tempting to think that government officials see the world as something they control. They are often proven right, but not always in disastrous ways. However, this time economic interference appears to be amplifying natural unpredictability in order to usher into a hungry new Year.