While my intention was to publish what would be the second part of the piece below, all aspects of the global dynamics are cascading at such speed I thought it would be wiser to just write this one. Somewhat an update on different aspects of the last one. There are too many points to cover, so if you want a refresher just refer back to the aforementioned piece.
Food (In)Security
There are too many aspects of the growing food “inequality” and insecurity to stitch it together in a way that is intellectually enticing as often I attempt to do. As I covered in the past 8 weeks, the growing trends of drought in the US especially on its agricultural powerhouses would have a severe impact not only on corn, but rice, cotton, and other crops. Surprised I was finding out that the supplies of soy are also lower than expected by the entire market.
According to the current estimate, use of soybeans will exceed production for the third crop season in a row, said Jake Hanley, senior portfolio strategist at Teucrium Trading.
Meanwhile, the global wheat crop is getting bigger. The US raised world production by about 4 million tons…
While most of the time I tend to write less opinion even on opinionated pieces, now I feel obligated to share my own long-term observations. After this Substack endeavor, and going back to analyzing more data and writing, I came to observe something pointed out to me by a friend. The future market is heavily manipulated, a lot of “memetic warfare” going on, and more often than not, at least in recent years, it hardly reflects the actual state of farming and crops.
Why do I bring this up ? Because for months I kept reading in many outlets how soy was breaking records, that X, Y, Z, and look at it now ? Same with corn and we now know how the corn situation in America truly is.
And while we are at America and drought, how about we talk about rice ? The picture below is one of California’s rice “fields”, which looks much more like Nothern Brazil than what most came to known the state for.
As drought endures for a third year with record-breaking temperatures and diminishing water supplies, more than half of California’s rice fields are estimated to be left barren without harvest — about 300,000 out of the 550,000 or so in reported acres, provisional data from the U.S. Department of Agriculture shows. This year, rice is estimated to account for just 2% of total planted acres across the state.
California rice is of the Japonica type, and as the name implies it is often used in Asian and Mediterranean cuisine, California is the second biggest producer of rice in the US, only behind Arkansas. This drop in production will not only affect the farmer for the entire next year probably attempting to switch to something else but restaurants and the local industry but importing countries too.
Food (In)Security
There are too many aspects of the growing food “inequality” and insecurity to stitch it together in a way that is intellectually enticing as often I attempt to do. As I covered in the past 8 weeks, the growing trends of drought in the US especially on its agricultural powerhouses would have a severe impact not only on corn, but rice, cotton, and other crops. Surprised I was finding out that the supplies of soy are also lower than expected by the entire market.
According to the current estimate, use of soybeans will exceed production for the third crop season in a row, said Jake Hanley, senior portfolio strategist at Teucrium Trading.
Meanwhile, the global wheat crop is getting bigger. The US raised world production by about 4 million tons…
While most of the time I tend to write less opinion even on opinionated pieces, now I feel obligated to share my own long-term observations. After this Substack endeavor, and going back to analyzing more data and writing, I came to observe something pointed out to me by a friend. The future market is heavily manipulated, a lot of “memetic warfare” going on, and more often than not, at least in recent years, it hardly reflects the actual state of farming and crops.
Why do I bring this up ? Because for months I kept reading in many outlets how soy was breaking records, that X, Y, Z, and look at it now ? Same with corn and we now know how the corn situation in America truly is.
And while we are at America and drought, how about we talk about rice ? The picture below is one of California’s rice “fields”, which looks much more like Nothern Brazil than what most came to know the state for.
As drought endures for a third year with record-breaking temperatures and diminishing water supplies, more than half of California’s rice fields are estimated to be left barren without harvest — about 300,000 out of the 550,000 or so in reported acres, provisional data from the U.S. Department of Agriculture shows. This year, rice is estimated to account for just 2% of total planted acres across the state.
California rice is of the Japonica type, and as the name implies it is often used in Asian and Mediterranean, cuisine, California is the second biggest producer of rice in the US, only behind Arkansas. This drop in production will not only affect the farmer for the entire next year probably attempting to switch to something else but restaurants and the local industry but importing countries too.
“But John, the US isn’t that big of an exporter, it will mostly impact just a few places”. Besides the impact of the already fractured internal market and economy, what did I say if India did create some measure to curb exports would happen with most rice importing countries ? Because they just did.
Rice loading has stopped at Indian ports and nearly one million tonnes of grain are trapped there as buyers refuse to pay the government's new 20% export levy on top of the agreed contract price, five exporters told Reuters on Friday.
India banned exports of broken rice and imposed a 20% duty on exports of various other types on Thursday as the world's biggest exporter of the grain tries to boost local supplies and calm prices after below-average monsoon rainfall curtailed planting.
Being one of the biggest exporters of rice on the planet, such measures to secure their own prices and supply is completely understandable in the current dynamics, yet it will affect a lot of countries in Asia, such as North Korea. The entire world is walking into food scarcity to put it lightly and this will bring about unrest and popular revolts as I keep warning most of my readers. The Philipines find themselves in a very tough spot, in a tight market and they have to import couple million tons of rice probably soon at a premium, and fertilizers in the country are now 3 times more expensive.
Philipines are also experiencing a sugar and salt shortage.
This is to exemplify that similar dynamics and responses are at play in almost every country on the planet, be it farming, logistics, or fuel/energy. I won’t cover the energy side of things on this one, but the situation in Europe is so bad, that among other cascade effects, there won’t be salad anymore for a while.
Across Europe, farmers and food businesses are cutting production as they struggle to cope with soaring energy costs. Montalbano said his energy bill was about five times what it was this time last year. The prospect of seasonal food shortages has prompted industry warnings and frantic calls for government support, at a time when Russia’s president Vladimir Putin has cut gas flows in response to western sanctions.
Pekka Pesonen, secretary-general of Copa-Cogeca, which represents EU farmers, said this week that the knock-on effects of high bills had been more severe than expected.
But it is already too late for many. Jimmy Russo, co-owner of UK-based Valley Grown Salads, said: “I suspect that 75-80 per cent of UK salad growers will not plant next year . . . because it doesn’t make any economic sense. It’s fair to say the salad sector has been abandoned.”
Copa-Cocega in the last couple of weeks has been putting a lot of public statements and some interviews announcing the real state of affairs and the possible outcomes of past and present European Union choices. There is just too much going on in Europe and in regards to the European Union, their decisions, and the politics involved within it to cover in a few, let alone one piece in a meaningful and coherent way.
Now even “normies” are now aware of the significant likelihood of Europe facing food shortages at a scale big enough to cause death. It might sound like an exaggeration but as we cover more and more data, more of the global dynamics, and the substantial loss of yield on all food stables, adding everything, this won’t sound or look so far-fetched within a short time.
Another massive threat to global stability and recovery is the African food crisis, which not only persisted for years, but has intensified because of the same reasons elsewhere, and a 5-year streak of severe drought didn’t help the situation. Without international aid (and somewhat of a miracle given the incompetence present in Western countries right now) Africa will experience a once-in-a-century famine in the next year or two, which what I wrote quite a few times will happen. At scale.
This mass exodus might happen sooner than even I expect, Somalia just declared a state of famine, and Pakistan was quite literally destroyed by constant floods half the country, destroying a lot of its farmlands which employ 40% of the workforce in the country and is a decent producer of wheat, and cotton, I will get back at the last crop soon, but what this entail is not just local destabilization, but mass migration. And both countries are factually hotbeds for extremists and terrorism, famine will not only “export” cheap labor to richer countries, but terrorism in its many forms. Kenya and other African countries are verging into the same state of mass famine. Tunisia is experiencing strong food shortages. “There are widespread shortages of sugar, cooking oil, milk and butter, coffee, tobacco and bottled water”
Before I write about the two last points I find more pertinent to the subject of this e-mail I leave the reader with the following question. What happens when at least a couple million migrants just decide to go as a massive horde to Europe, in which Turkey won’t be able to hold them for even an hour (they can’t even accept Syrians and 100.000 of them are now attempting to emigrate to Europe), and this couple million reach Europe, they disperse.
Ignoring the intracontinental security said of things, how the European continent will feed 2 million extra mouths if they won’t have enough food production to feed or control the current number of residents in the continent ? This will lead to more civil strife and revolt, especially from the migrant portion of the habitants. I keep bringing this point on because migration will be one of the most powerful “powder kegs” in the next few years, and it will give rise to things most people would prefer to relegate to the past. But history doesn’t repeat itself. And neither does rhyme, it cycles.
To my last two meaningful points. Another crop that got severely damaged in California, and elsewhere is cotton, which brings me to a point I have been wanting to make for weeks now, but life and research on virus “stuff” gets in the way.
America’s Cotton Shortage Might Take The Shirt Off Your Back
Farmers will harvest an estimated 7.13 million acres, abandoning approximately 5.35 million acres due to an ongoing drought hammering southern U.S. states, representing an estimated abandonment rate of 42.87%, according to the National Cotton Council of America, who based their analysis on U.S. Department of Agriculture (USDA) data. This represents the smallest harvest by area since 1868, The Wall Street Journal reported
The economic impacts of a cotton shortage are felt in a variety of industries, with the ginning, warehousing, and milling industries that process cotton all being the most immediately affected, the WSJ reported. Cotton also accounts for 90% of the materials in denim goods, such as jeans, representing about 20% of the cost to make a pair of Levi jeans CNBC reported.
The cost of apparel was up 5.1% year-on-year in July, according to the Bureau of Labor Statistics.
Both India and Brazil are seeing lower production because of the erratic weather affecting the entire world, India because of excessive rains, and Brazil because of drought. Both Brazil and the US are expecting to see a plunge of 27-28% , and that is a lot.
The above was to exemplify there is a growing threat of a global cotton shortage that might affect many industries including the price of clothing itself (and paper btw, which has been experiencing shortages for months, and there is no end in sight), while the global economy is slowing down and that is a nice way to put it, demand destruction will also happen because of it, I don’t think this will inflict a dent big enough to bring down prices enough at least short-term.
Sadly most experts are usually 3 months behind, and they often look merely into “weeks ahead”, if much by season, and rely on averages, which is great if there is no hitches on the system, you tell me, is there any hitches in the system right now ?
And last, one of the most important developments in the last few days.
How a railroad strike could send food prices soaring
The nation’s supply of food could take a hit if railroad workers go on strike, driving up prices at the grocery store and limiting U.S. grain exports to countries facing famine.
As soon as next week, 115,000 freight rail workers could walk out if they cannot reach a new contract with railroads, potentially shutting down the national rail network that transports 20 percent of all grain shipments.
While unions say they want to avert a strike, and Congress has the power to block it, the U.S. food sector is rattled by the prospect of a national railroad shutdown in the middle of peak harvest season.
A ‘devastating ripple effect’
Even a short-lived interruption “would create a devastating ripple effect” on the nation’s fragile supply chains, said Lee Sanders, senior vice president of government relations and public affairs at the American Bakers Association.
“Rail-dependent facilities would be unable to receive materials and ingredients, and millions of Americans a day would be unable to receive the baked goods they rely on to feed themselves, their families, and communities,” she said.
A railroad shutdown in mid-September would quickly overwhelm grain storage facilities, leaving farmers with few options to store their crops and boosting the chance of spoilage. Many grain processors would shut down, raising the price of bread and other common items, while farmers would be saddled with huge crop quantities and lower commodity prices.
If this strike happens for even a small amount of time, the ripple effects will in both 2020 and 2021 woes look small compared to the effects of this one, because the entire logistical system right now is in a process of recovering but is still very fragile and extremely prone to disruption.
This will not only disrupt global trade, but it will deeply affect and impact the US, everything that is important for both national security travels by rail, fertilizers being the one I put most importance. Continuously missing fertilizer usage, pushing the prices upwards will further diminish yields that are already suffering in many parts of the US.
In case of any development in regards to this, I will just send a quick e-mail, but now my American readers have been warned, in fact, most of you probably know by now. In the end, I will just repeat myself.
You should think long and hard about “preparing” yourself or at least stocking some food, there is still time in the chance I am right. If I am wrong, you saved a bunch of money by beating the inflationary trend that will persist globally for 2023.
Until the next one and have the best week possible.
Deep gratitude to all supporters in Substack and Kofi, you enable me to do this.
This is frightening. The issue is that Cali has had hundred-year droughts in the past. Who knows if that might happen again soon. Why the hell would you plant cotton in places that don´t rain much?. I love it also how people talk about "the dams were never this low", yes possibly true, but we have 5x the population plus cotton and almond farming taking water from them now.
We are going to be in for a shock. Urea is hitting 2000 Euro/t in Europe. it used to be 200ish. I think ice berg salad will be something only hipster will buy for 8 bucks a pop just to talk about how environmental they are.
I am laughing my head off now at EV owners in Europe. It is now officially more expensive in most countries to fill up the EV than to put unleaded into your ICE car even with record gas prices.
We could produce all the food we wanted if we had nuclear everywhere. If we had cheap electricity we could have green houses, RO water pulled out of the ocean, getting phosphorous etc. We cannot do this with windmills and shitty solar panels from China.
Thank you for this piece. I have been slowly accumulating food for myself and animals. My Son thinks I nuts but I won’t risk it. This is dreadful. I am mourning already for the lose of life.