Tipping Point for Global Food Supply?
Regular readers will know that I bang on quite a bit about food supply and food prices, and for good reason: Increases in food prices rapidly bring down weak societies, which leads in turn to war (or internal conflicts), sickness, forced migration, etc. Global food prices are our best single indicator of the relative peace, safety, and stability of the seven billion plus people on this earth and by that measure, the future looks extremely grim.
The problem is two-fold: First, that weather and climate shifts are causing adverse growing conditions in many key food-growing regions around the world (there are other critical problems too, such as aquifer depletion, but the impact of adverse weather and climate shifts is immediate), and second that our population has kept growing and needs more food each year. Productivity gains are no longer rescuing us (in other words, getting more and more and more out of the same acre) because the gains from new strains, new pesticides and new fertilization methods have leveled off and may not be keeping pace with population growth. At the same time, actual production of food has decreased remarkably in the last three years. Granted, three years ago some parts of the world were experiencing bumper crops, but even with the peaks averaged out crop production has declined. The shortfall is due to droughts in the US, Australia, Russia and elsewhere. Around the world, strategic grain reserves are worrying low.
Adequacy of supplies next year will largely depend on three things: The harvest in Australia (which is expected to decline about 10% year on year), the winter in Russia (where winter wheat, which grows a bit in the fall after being planted, lies dormant under a blanket of snow, and then matures rapidly in spring and early summer), which is brutally cold and dry, and the winter and spring rains in the US. In Russia (the third largest wheat exporter in the world), the brutally cold and dry weather is “burning up” the winter wheat, which needs a blanket of snow to protect it. Even if the shoots do survive, they were planted in parched earth and desperately need melting snow to give the ground enough moisture for the wheat to mature. The situation is fraught with risk. In the US, the drought that the grain-growing states experienced in the summer and fall is ongoing (even if you have not heard about it) and in fact has intensified with the lack of rain through the fall. If there is not an abundance of snow during the winter (make that a super-abundance) you can expect to see the wheat and corn crop harvest significantly reduced.
Governments understand that food price spikes lead to societal disruptions such as rebellions, strikes, conflicts, etc. (the Romans recognized this and had a “bread and circus” strategy). This is one reason governments keep strategic grain reserves. But, as I said above, those reserves are seriously depleted. On simply the strength of the risks, some in the market are expecting wheat prices to advance by about 20% through next June. Unless there are dramatic reductions in the costs of other staples that in effect offset this price increase, you can expect to see political disruptions in a few very weak societies (think central Africa). If we continue heading toward a worst-case scenario, you can expect to see more wide-spread societal disruptions. For more in-depth pricing and supply information, you might consider reading this article. But all of this is focused on the short-term. The real question is whether or not we have reached a tipping point and are seeing a long-term trend toward decreased food production on a global basis. The answer might be “yes”.
I use courteous, sterile terms like “societal disruption” too often. Let me try to be clearer: If we continue heading toward the worst-case scenario, we will see more wars, more forced migration, far more deaths from hunger, much more poverty (and crime and desperation). There are 3.5 billion people on the earth who earn less than $2.50 per day and who simply cannot afford to experience an increase in the price of food. The shortage in supply could be transient and it might be that the reckoning is saved for a later date. Or, it could be that global food production has peaked and is heading down, with disastrous results that are nothing less than the fulfillment of prophecy in Matthew 24:6-8. Let me say that again: we are seeing prophecy fulfilled in our age (for more on this subject, see other posts on this blog). The situation is extremely serious and I will occasionally give updates through the winter and spring.