My tentative view on what is causing it and what to do about it. This is NOT caused primarily by the conflict in Ukraine and a sudden peaceful solution to the conflict will not avert it.
Disclaimer: None of this is advice, financial or otherwise. I am sharing my ideas. Please make your own decisions carefully.
I am increasingly convinced that this year will bring, in the best-case scenario, much higher food prices than we are seeing now, and, in the worst-case scenario, a “global famine of historic proportions,” as Doomberg put it.
The primary causes of this emerging food crisis are not resulting from the conflict in Ukraine, although that conflict is making the issue worse. A peaceful resolution to that conflict will not avert the food crisis, although it could shift the outcome toward a less terrible direction.
Over the next month, I will conduct a series of interviews and panel discussions on my podcast in an effort to better understand the issue and what to do about it. Relying primarily on interviews will allow me to better understand the issue while staying focused on finishing my vaccine research so I can ultimately return to finishing my book.
What lies herein is my current, tentative view on what is causing the emergence of this crisis and what we should do about it. The reason I am writing this now rather than waiting till I learn more from my interviews is that right now (biased as I am toward my region in the northeastern United States) is a critical time to offer support to our local farms before the growing season begins in earnest.
What Is Causing the Crisis?
This past weekend, the Doomberg team published Farmers on the Brink, a collection of insights gleaned from two weeks traveling the American midwest talking to farmers about the issues they face.
Based on this article and several of their previous articles to which they link therein, I would summarize their argument as follows:
1. Europe has long been building over-reliance on intermittent sources of energy such as wind in pursuing renewable energy, making grids more vulnerable to fluctuations in demand or in wind power. Corporations have also been pressured by speculators to not vertically integrate in ways that would lead to better stability. These have led to a shortage of natural gas, and downstream from this a shortage dry ice for frozen transport and of ammonia for fertilizer.
2. Production of fuel generally and especially oil has not fully recovered from the COVID lockdowns as fast as demand has. The rising price of oil has led to further overconsumption of natural gas, further taxing fertilizer production.
3. Oil is also the source of diesel, and natural gas is used to clean diesel of sulfur, and diesel is the major fuel for farm equipment. So it is now very expensive to produce diesel in Europe where natural gas prices are very high, leading to less diesel being produced overall in the global market.
4. The high price of oil has made it more expensive to mine phosphate for fertilizer, and China banned phosphate exports last year because it didn’t even have enough for itself.
5. Ammonia and phosphate are inputs into the synthesis of glyphosate (Round Up), which is running short. While this means less poison, it also means poor weed control in glyphosate-dependent fields this year, and one year of bad weed control can set back crops in that field for several years.
6. The chip shortage caused by the COVID lockdowns is making farm equipment next to impossible to fix or replace.
7. Vaccine mandates for international workers is causing a labor shortage. Americans not only don’t want to work on farms to replace them, but the COVID policy-induced Great Resignation has made a shortage of Americans even looking for jobs.
8. 80% of grain drying in the US runs on propane, and propane stores are running low, while politicians are trying to cut off propane supplies further.
9. The conflict in Ukraine is just the bitter cherry on top. Potash for fertilizer comes most abundantly from Russia, Belarus, and Canada, and on top of the military conflict and sanctions even the Canadian supply is now threatened by a dispute with the Teamsters.
Other news rolling in to add more bitter cherries include avian flu outbreaks.
The rising price of food, of course, will also be influenced by labor shortages and fuel prices for transporting the food.
This all falls on a backdrop of the great expansion of the money supply the Fed made in response to the COVID crash. My impression is that, on top of the free money given to consumers that chased after food products, the speculative money that had blown up the tech bubble is now pouring out of that bubble as it deflates and into commodities as a result of their unavoidably increasing prices.
Which Farms Will Be Most Resilient?
Since the emerging food crisis is being driven primarily by low supplies of fuel, chemical fertilizer, glyphosate, labor, and properly working equipment, it follows that the farms most dependent on these factors will suffer the most while farms least dependent on these factors will be the most resilient.
At one extreme, a small family farm using the family’s own labor, using horses in place of fuel-operated vehicles, exclusively using manure and compost as fertilizer, relying exclusively on non-chemical weed management, and selling all the food out of an on-farm store, would be the most immune.
Having animals spread out on pasture would even help protect against the spread of pathogens like avian flu.
At the other extreme lies the bulk of industrial farming.
Most authentic organic farms (filter brands by authenticity here), I would imagine, lie somewhere in between the two extremes. They may have lower fossil fuel inputs, but they probably still have diesel-operated farm equipment and need to transport their food.
Still, even the horse-powered family farm will have to deal with the rising prices of most of their other expenses in this inflationary environment, so while this would be the extreme case of resilience, no farm will be immune from rising costs.
My best guess is that the price of all food will go up, but the price of conventional food will go up much more than the price of authentically organic food, and the price of food at small, local farms with low fossil fuel inputs will rise the least. Just throwing numbers out off the top of my head, maybe the $7 eggs go to $9, while the $1 eggs go to $5.
What Should We Do?
I believe our first duty must be to prepare to be able to continue to feed ourselves and our families. Where we can do this and in doing so also support our communities and ease the effects of the crisis on others, we must.
I believe the best intersection between these two goals is to buy a share in a community-supported agriculture (CSA) arrangement. In these arrangements, you commit ahead of time to purchase a proportion of what the farmer produces for the season. You get a lower price for fresher, higher-quality food, while the farmer gets stability of cash flow.
One of the problems we have is that no matter how resilient regenerative agriculture may be in the face of this crisis, this is awfully short notice for the world to move in that direction. If a large number of people buy CSA shares now, perhaps the increased frontloaded investment in these farms will allow them to expand their operations, thereby moving our farming landscape in the direction of greater resilience before the thick of the crisis hits.
Stocking up on foods that have long shelf-lives is another way to find this intersection. If the price of food will increase, buying it now to stock up saves money in the long-run. Buying it from farmers doing the right thing, moreover, will help capitalize those farmers and hopefully expand their operations to move us in the direction of greater resilience.
The Shire App can be used to locate sources of high-quality food near you. Dried foods will have the longest shelf-life, while frozen and lacto-fermented foods are also stockable.
On a personal level, I think it is important that we stock up on foods with long shelf-lives that we know are important staples for us and our families, as protection against rising prices. For me, these include Paleovalley beef sticks, sprouted lentils, sprouted brown rice, and Fody bars (which are admittedly snack foods but they treat my digestive system well and are very useful to me in a pinch).
The Paleovalley link is an affiliate link, which earns me a commission if you purchase. However, if you join the Masterpass before purchasing and follow the instructions in the “Exclusive Discounts” section I give my commission back to you as a rebate. If you get a paid subscription to my Substack you get a 50% discount on the Masterpass membership fee.
How far ahead does it make sense to stock up for?
This depends on the shelf-life of your food, the space you have for storage, and what you believe about the long-term trend of inflation.
For a while after the COVID pandemic started, I had been listening to many conflicting voices on inflation. I felt uncertain whether prices would go up or down, and felt most sure that there could be supply chain disruptions leading to short-term shortages. As such, I aimed to keep a three-month supply of most consumables. Living in the city where space is hard to come by, this was about the maximum of my storage space. I figured it would help give me a little buffer against price fluctuations while also making sure I didn’t run out of something when a surprise shortage emerged.
However, from listening to many voices on RealVision (especially Lyn Alden, Darius Dale, Tony Greer, Warren Pies, and Michael Howell), I now believe that inflation may decelerate later in the year as a global recession and credit crisis are thrown on top of our military conflicts and food and fuel crises, but that inflation is nevertheless likely to be dominant for at least five if not ten years. Inflation decelerating later in the year does not mean prices will go down, just that the price growth will slow for a time, although extreme food shortages might make that untrue for food prices specifically.
Given the likelihood of decelerating inflation later in the year, I see no basis to think we are headed for any kind of wild and sudden hyperinflation that should make us panic to immediately store years worth of food.
Rather, I think it makes sense to start with a base of a three-month supply and then work gradually over time to put extra money toward expanding this supply slowly toward the limits of what your space can accomodate, all the while making sure not to buy food that you won’t eat before it spoils.
On the other hand, I do find it likely that we get another round of stimulus checks to help us through unaffordable food and gas prices. In that case, I think whatever deceleration in inflation occurs may reverse, and that might be a time to be more aggressive in stocking up.
As to what society should do, we need an all-out effort to increase domestic energy production in all forms, especially oil and natural gas. While we definitely need to work toward less dependence on fossil fuels, risking a global famine to get there is horrific and should be completely off the table. Increasing supply while we reduce demand will help avert shortages. Antagonizing domestic supply while giving tax cuts and stimulus checks to deal with high prices will do the opposite.
Please note that these are my tentative views, subject to revision as I learn more from relevant experts I interview on my podcast. I will be sure to update you as my views evolve.
Disclaimer: None of this is advice, financial or otherwise. I am sharing my ideas. Please make your own decisions carefully.
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