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Every day it goes by we are learning that things are getting even worse than we originally thought. Global supply chains are in utter chaos and the situation is being aggravated by a number of different factors, so it doesn’t seem this crisis will be reversed any time soon. Now, widespread crop failures are being registered across several key agricultural countries, and, as a result, global supplies of corn, wheat, and soybeans have been shrinking.
More worryingly, prices for all three commodities are soaring and hunger is fast spreading all over the globe, threatening to spark more social turbulence and unrest over the coming months. Those three supplies are the world’s most important grains. They are used for almost everything you can imagine. From food for both animals and humans to fuels like ethanol and biodiesel, from cooking oils to wheat for bread and pasta.
On top of that, recent reports have been exposing that the impacts of the crop failures that happened in China last year have just started to show on global markets. China is far from alone. Over the past 17 months, extreme weather has destroyed millions of acres of crops and distressed agricultural production all over the globe. Conditions have been particularly dire in Brazil right now due to unusually dry weather conditions. As a consequence, Brazil’s coffee and orange crop are registering a decline for the second consecutive year. Brazil’s current orange crop shrunk 31% from the previous season, the sharpest drop in three decades, and production of arabica coffee is also dwindling.
Here in the United States, just like throughout much of the rest of the world, agricultural production will be well below initial expectations as a megadrought is ravaging the western half of the country, causing key reservoirs to hit dangerously low levels. As farmers’ supply of irrigation water drops, they’re having to choose which crops will survive and which ones will be destroyed. And the worse the drought gets the more severe the government’s water restrictions will be. According to the official forecast, we’re headed to the worst crop season in nearly four decades and the next wildfire season has the potential to be one of the most destructive ever.
Meanwhile, hunger is the one spreading like wildfire as global food supplies get increasingly tighter. The 2021 Global Report on Food Crises is warning that there’s a remarkably high severity and an exceedingly high number of people facing deep food insecurity in 55 countries. The study found that at least 155 million people are acutely food insecure and in need of urgent assistance – the highest level in five years of GRFC reporting. It marks an increase of roughly 20 million people compared to pre-outbreak levels.
All of those issues are already contributing to an explosion in grocery prices all over America. Yesterday, the US Department of Labor divulged an update in the Consumer Price Index, and overall consumer prices climbed 4.2 percent from a year earlier, the fastest pace since 2008, and considerably above economists’ forecasts. However, “core” consumer prices increased by 0.9 percent between April and March in the largest monthly increase since 1982.
At this point, US workers are finding it increasingly impossible to make ends meet, even those who are employed full-time. Stagnant wages and elevated food inflation are a threatening combination in a world recovering from a global economic recession. Periods of high inflation have previously sparked the rise of conflicts between the population and governments, with workers demanding higher pay to keep up with rising prices – and the same narrative has started to happen once again.
When the majority of the population starts to feel the financial impacts of higher food prices, we will undoubtedly see chaos taking over this country. Food inflation alone is plunging the entire globe back into a horrific economic crisis. That, in addition to rampant inflation for all consumer goods, widespread shortages, an upsurge in hunger, poverty, and unemployment, will escort us to an era of constant conflict and social tensions.
Don’t be mistaken thinking things will eventually turn around in 2022 or 2023 because we just started experiencing the effects of so many disruptions, and one thing we can tell for sure is that global supply chains will continue to face meltdown after meltdown due to extreme weather, dwindling supplies and rocketing demand. In other words, it means that we’re about to see distress erupt in every corner of the globe.