Will the United States witness food shortages, as President Joe Biden prognosticated overseas? Unlikely. Will consumers pay an arm and a leg for chicken breasts and wings? Most likely, and shoppers already face this added expense at the local Publix and Kroger. Food inflation has turned into a severe threat to cash-strapped US households across the country, and the key indicators suggest that this problem is not going away anytime soon. From surging fertilizer prices to growing labor costs, grocery bills for low- and middle-income families could threaten the state of their finances over the next year – and beyond. But the White House thinks this situation will subside because everyone will acclimate to these disastrous post-crisis circumstances. Americans may adapt, but what about the rest of the world?
Biden Says One Thing
As Liberty Nation recently reported, President Biden casually warned the world that “real” energy and food shortages are coming to the US because of Russia’s invasion of Ukraine. His administration disagreed with this prognostication, attempting to walk back his comments as they have done repeatedly over the last year.
Cecilia Rouse, the chair of President Joe Biden’s Council of Economic Advisers, told reporters following the release of the White House’s budget for 2023 that “we don’t expect a shortage here, because we are net exporters.” The IRI Supply Index suggests that the country is stocked up on food, but it does not mean the nation is immune to dramatic price hikes.
In February, before the military conflict in Eastern Europe, the food index soared to 7.9%, according to the Bureau of Labor Statistics (BLS). Every edible item was up, from fruits and vegetables to meat to bread. And the latest estimates suggest that more increases are coming.
Evercore ISI released its latest protein inflation note, forecasting most meat products are poised to rise “substantially” amid higher feed costs. Analysts anticipate chicken will climb 70% in the first half of 2022, while beef and pork are expected to increase 20%. The good news is that steak and ribeye prices could moderate or fall as consumers adjust their buying behaviors.
Indeed, the hard agricultural commodities have soared this year, driven by strengthening global demand, lackluster output, exhausting inventories, and the Ukraine-Russia war. Year-to-date, wheat has rallied 31%, corn has advanced 25%, and soybeans have surged 21%. Other crops, too, have increased dramatically over the last year, such as coffee (+87%), orange juice (+38%), and cocoa (+11%).
Fertilizer prices keep climbing amid tightening supplies, which is hurting farmers who are passing off these intensifying costs onto consumers. The benchmark DAP Fertilizer Price Index hit an all-time high of $1,014 per ton in the final trading week of March. Bloomberg Intelligence data show that the nitrogen fertilizer ammonia climbed 43% to a record high of $1,625 per metric ton. With Russia banning exports of fertilizers and energy prices continuing to trade higher, this crucial product to food manufacturing will become even more expensive.
Financial experts contend that many Americans can endure these conditions because of the pandemic-era pent-up savings, allowing these funds to cushion the blows from inflation. Indeed, middle- and high-income families might have put together an exceptional rainy-day fund, but the same cannot be said for low-income and impoverished US households. A recent Bloomberg Economics survey found that Americans in the bottom quintile will brace for an added $2,500 in annual expenses because of inflation. How could anyone survive in this kind of market when you live paycheck to paycheck?
‘A Humanitarian Crisis’
Millions of Americans will struggle to put food on the table, but the situation is vastly worse in other parts of the world, especially those that depend on food from Russia and Ukraine. As Liberty Nation reported in the early days of the pandemic, countries worldwide would be suffering from a food crisis, which, as ING now says, would transition into a full-blown “humanitarian crisis.” The financial institution wrote in a recent report:
“Europe is facing a humanitarian crisis and significant economic transition. The war is taking place in the ‘breadbasket’ of Europe, a key production area for grain and corn. Food prices will rise to unprecedented levels. Higher inflation in developed economies could be a matter of life and death in developing economies.”
Indeed, the war in Ukraine could exacerbate the devastation and destitution that have plagued Sudan for so long. The African country is one of the biggest importers of Russia and Ukraine’s wheat, potentially creating a situation where more than half of the country would “be food insecure.” At the same time, the United Nations’ World Food Programme warns that this “catastrophic global hunger” is being felt worldwide. In February, the Food Price Index surged to an all-time high, with nearly everything up: dairy, meat, cereal, and vegetable oil. The only item on the index’s list to come down was sugar.
The world can blame Putin, but the likes of Afghanistan, Iraq, Lebanon, and Venezuela have been grappling with food issues for the last two years. And they will continue to be paralyzed by these trends as the Western world and China try to scoop up crumbs off the floor. The global supply chain crisis has crippled many sectors, including the food industry. But the pain will be felt in two different ways. Westerners will feel the agony in their wallets. The rest of the world will suffer from hunger pains. Both parties can turn to democide as the sole cause of today’s problems. Indeed, billions of people survived the coronavirus pandemic, and all they got for it was higher prices and shortages.