The World Needs To Get Ready For A Large Food Crisis

           Every Friday morning I sit in a meeting with Zanny Minton Beddoes, editor, The Economist magazine. This publication has been around since 1843. It does not have "a political ax to grind."

     This meeting is always about Ukraine. It is never a happy meeting. What really caught my attention yesterday was a prediction of a worldwide food crisis and shortages coming due to the war in Ukraine and sanctions.

    Ukraine produces 12% of the world's wheat. The farmworkers who would harvest this crop later this year are all on military duty. This year's wheat production is lost.

    When Russia was the old Soviet Union, its agricultural sector was a failure. They were constantly having to import agricultural products from the West. Since the Soviet Union failed, the agricultural sector has seen vast improvements. Russia now produces 25% of the grain in the world. In normal times, a lot of this wheat production would go on ships and be sent to countries like Turkey that are totally dependent on Russian wheat. Sanctions against Russia vastly complicate any export shipments. Surprisingly, the big problem is the insurance companies that provide insurance coverage to ship owners. They will decline to write an insurance policy on a ship carrying Russian wheat. No ship owner will risk their ships to carry Russian products. People inside Russia will still get wheat (if they can afford it with the crashed Russian Ruble.)

    Many people including Elena have pointed out that countries like Argentina, Brasil, Holland, Australia, the US, and Canada can step up the production of grains to make up for this large deficit. This is correct to a point. It would take time to get this production going.

     We have another huge problem facing food production. Every farmer uses fertilizer to fertilize crops and increase the yield per acre of farmland. Natural gas and potash are key components of fertilizer. Russia produces massive quantities of both these commodities. Sanctions could stop a lot of exports and drive-up prices.

      This will keep fertilizer prices high. It will keep grain prices high. It will make the prices of other crops go up. It is also a problem for meat production as grain is often used to feed farm animals.

     We are going to see food inflation. For more affluent societies, this will cause some discomfort and inconvenience. In poorer countries, people will go without enough food for a healthy diet. In very poor countries, you're going to see mass starvation. All this will lead to increased levels of violence and social unrest.