Pro Perspectives 3/25/22
March 25, 2022
Yesterday we talked about the coming food crisis. Suddenly, the Biden administration is sending warning signals on this eventuality.
Yesterday in Brussels, Biden said the food shortage "is going to be real." Today, Janet Yellen (Treasury Secretary) said she's "concerned about countries dependent on wheat" due to rising prices from the Ukraine situation.
Remember, yesterday we looked at the inflation-adjusted chart of food prices. We are now matching the record peak in inflation-adjusted prices from 1974. The significance of 1974? It was the period of the last major global food crisis.
With this in mind, an annual agriculture report from the Congressional Almanac gives seven reasons for the food crisis. Here are four of them:
> Apparent changes in the world climate, "which may have a catastrophic effect on food production." (this quote was from a Harvard nutritionist).
> The Russians' decision in 1972, after a poor crop year, to buy massive amounts of grain from the U.S. and Canada.
>Natural and political disasters, such as war in Bangladesh.
>The sudden drastic rise in oil prices in 1973, which impaired the ability of poor nations to obtain fertilizer.
So, fear (my interpretation) of climate change, hoarding of grains by one country, natural and political disasters, and an oil crisis.
On the hoarding front, guess who has been importing record amounts of grains (among many other commodities) over the past two years? China.
Guess who had the largest reserve of grains back in 1974, from which the world (while in crisis) received allowances? The United States.
Guess who has the largest reserve of grains now, to the tune of 50% of world supply? China.