And to make matters worse, the largest supplier to the World Food Program, which feeds more people than any other agency in the world, is Ukraine. They get about half of all their wheat from Ukraine.
what historically has happened is the market has fixed itself. When food prices are high, farmers are drawn to plant more, to chase the high prices. And the higher supply brings the prices down. But the problem is, to get a good wheat crop, you need fertilizer.
Well, Russia is the world’s single largest exporter of fertilizer. It accounts for nearly 15 percent of the world’s exports. And now because of sanctions, most of that fertilizer is stuck. So we’ve already talked about record increases in food prices, but prices of fertilizers have risen even faster. The cost of all the major fertilizers have doubled or even tripled over the past year. And many of them are now at all-time highs, in large part because of soaring energy prices.
And let me explain. So the most important fertilizer, a nitrogen-based fertilizer, is essentially made with natural gas. And because natural gas has almost doubled in some cases, that has made it unprofitable for some fertilizer plants to produce. And so across Europe, what we’ve seen over the past month is many major fertilizer plants are restricting capacity or shutting down altogether.
And we already had a squeeze in the supply of fertilizer because ahead of the Winter Olympics, China was curtailing its production of fertilizer. And that’s because many major Chinese fertilizer plants are coal-fired, which produce a lot of pollution. And as part of their blue sky policy to reduce pollution ahead of the Olympics, they cut production. So, as a result, what we essentially have is a fertilizer crisis. And that is threatening to worsen what is already becoming a crisis in food.
And what economists and officials are worried about is that the high fertilizer prices are going to cause farmers to apply less fertilizer. And less fertilizer means worse crops, crops that are less in quantity, less in size, lower protein. And when you have, let’s say, corn and soybean, for example — crops that are often fed to animals — when they have less protein, we’re going to have skinnier cattle, skinnier hogs. And that means higher meat prices. So there are all sorts of cascading effects. And this is already playing out.
So, for example, I spoke to a farmer in South Texas. And he told me that because of high fertilizer prices, he’s already stopped applying fertilizer to his pastures. And what that means is the hundreds of cows that graze there are likely going to end up skinnier come slaughter. And that means he’ll have less meat to sell, and less supply means higher prices. And when this plays out across the world, it means that fertilizer could end up resulting in even higher and higher prices.
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they went full apeshit it seems .. are they stuck in the Cold War?
