| Fertilizer: The Fourth Horseman of the Food Apocalypse |
| By Luke Burgess Written Nov 25, 2021 |
| Over the course of the past two decades, the world has faced a number of destructive challenges. From terrorism to viral pandemics…From civil revolutions to disasters, natural and man-made…From disastrous financial crises to deep political, cultural, and economic divisions… The past 20 years have given us 9/11, the Indian Ocean Tsunami, Hurricane Katrina, the housing crisis, the Great Recession, an energy crisis, Arab Spring, endless wars in the Middle East, the Fukushima disaster, Donald Trump, deadly civil riots in first-world nations, the COVID-19 pandemic…The list is so long that it might seem, even to a reasonable man, surprising the world has endured all this — endured, and suffered through — and, even more surprising, suffered through to thrive. As devastating of an impact the Great Recession had on world economies, the global GDP adjusted for purchasing power parity actually increased between2008 and 2009.  But for all our ability to endure and thrive, the next global catastrophe may very well be the most devastating challenge the world faces in many decades. You think COVID-19 was bad?Well, the drug companies won’t be able to whip up a vaccine for this problem. The Global Food Crisis of 2022 You probably don’t need data or statistics to know that food prices are spiraling higher.Y our grocery bill tells you that.And you don’t need opinions on who’s to blame for the surging price of food. The mainstream media has plenty of opinions on that too. What you do need to know, however, is that food prices are still set to increase extraordinarily higher from here. And you need to be prepared for it now. What Is Driving Food Prices Higher? The first thing we need to consider about the price of food is it is connected to an unimaginable number of constantly changing variables. The price of food is not increasing for one reason, or two reasons, or a dozen reasons. The price of food is increasing for a million different reasons, all of which are constantly changing. Still, some factors play a much larger role in food prices than others. The price of food in 2021 has been driven higher by three main culprits:rising energy prices ,labor shortages, and supply chain issues. Each of these factors has contributed to some degree to your higher grocery bills. And each is expected to continue adding to your grocery bill with no relief in sight for energy, labor, or supply chain problems. But there’s a FOURTH factor that’s set to be a major driver of food prices in 2022 — one that only very few people are taking into serious account right now. Fertilizer: The Fourth Horseman of the Food Apocalypse The price of fertilizers absolutely skyrocketed in 2021.DTN, a world leader in agricultural intelligence and analytics, identifies eight major fertilizers in the market. According to DTN, FIVE of the eight major fertilizers on the market have more than doubled in price during 2021.DTN’s eight major fertilizers are:DAP (diammonium phosphate) — up 71% for the year.MAP (monoammonium phosphate) — up 68% for the year.Potash — up 105% for the year.Urea — up 123% for the year.10-34-0 — up 51% for the year.Anhydrous ammonia — up 138% for the year.UAN-28 — up 161% for the year.UAN-32 — up 142% for the year.  As per DTN’s most recent data, the price of DAP is now $814 per ton. Meanwhile, MAP fertilizer is $900 a ton. Those are prices not seen since the Great Recession. Meanwhile anhydrous ammonia (at $1,113 per ton) and UAN-32 (at $604 per ton) are now sitting on top of all-time price highs. Fertilizer prices are screaming higher. And of course, that means higher costs for farmers. But there’s a significant disconnect between current fertilizer prices and current food prices. Fertilizer and Food Prices The single most expensive part of growing a field crop like corn or wheat is the fertilizer costs. According to forecasts by the USDA’s Economic Research Service, fertilizer will account for between 14% and 36% of a farmer’s total cost of operation for eight food staples in 2021.On the lower end, fertilizer costs for peanuts, soybeans, and rice are expected to account for 14%, 18%, and 19% (respectively) of total cost of operation.And on the higher end, the fertilizer costs for corn, wheat, and oats account for 36%, 35%, and 32% (respectively) of a farmer’s total cost of operation. So any significant increase in fertilizer prices means a significant increase to a farmer’s cost of operation.But here’s the most important thing to understand about fertilizer prices and how they relate to food prices …Current fertilizer prices are not reflected in current food prices. The price of fertilizers are at, or nearing, record highs.But those record-high prices are not yet reflected in the price of food at the grocery store.And there’s a good reason for that: The food in grocery stores is probably much older than you think. Of course, heavily processed and packaged foods can last for months or even years. But even the “fresh” produce found at most grocery stores probably isn’t all that fresh. Truth is, many of the fruits and vegetables found in the fresh food section are weeks to months old. Ever wonder how grocery stores always have “fresh” apples when they only ripen for a short season in the fall? The answer is chemicals. Apples are harvested right before they naturally ripen, treated with a chemical called 1-methylcyclopropene (1-MCP) to delay the ripening process, and kept in cold storage where they sit for 9–14 months. Mmmmm… love that delicious 1-methylcyclopropene. But it’s not just apples.1-MCP is the Frank’s RedHot sauce of the commercial fruit industry: They put that shit on everything… tomatoes, bananas, pears, peaches, plums, apricots, kiwis, nectarines… half of the fruits at the grocery store are treated with 1-methylcyclopropene to extend their warehouse lives. Vegetables at the grocery store like potatoes and carrots are also often months old. Mashed.com says potatoes can be stored for up to 11 months and carrots up to nine months after being harvested.So a lot of the food in the grocery store now was produced several months ago. That means a lot of the food in stores now is priced with fertilizer costs several months ago, when fertilizer prices were only beginning to rise over long-term levels.  Fertilizer prices are, in short, a lagging factor in food prices.Current fertilizer prices are not reflected in current food prices. Current fertilizer prices will only be reflected in future food prices. So along with rising energy prices, labor shortages, and supply chain issues, add current fertilizer prices to the list of factors that are going to drive food prices even higher in 2022. Now here’s where things get really ugly because… This Is How Wars BeginGlobal food insecurity was already a major issue prior to the COVID pandemic.But it was actually getting a bit better. According to the U.N.’s Food and Agricultural Organization, the number of undernourished people in the world fell almost 20% from over 810.7 million in 2005 to 650.3 million in 2019. The prevalence of undernourishment around the world also declined from 12.4% to 8.4% over the same time period. Then COVID hit. And all the progress the world made in the fight against global food insecurity was set back 15 years. Global Undernourishment  Source: Food and Agricultural OrganizationBut that’s just where we’re at right now.With global food prices still set to continue soaring higher, we can expect world food insecurity to become much, much worse in 2022.For the United States and other wealthy Western nations, the global food crisis will be extremely painful. But for some nations, it might mean complete collapse. You see, here in the U.S. we spend about 10% of our income on food. If the price of food doubled, we’d be still only spending about 20% of our income on food. Heck, the price of food could triple and as long as you could make spending cuts somewhere else, you could probably afford it.But that’s because you live in the United States, where food is relatively cheap. In very poor and developing nations like Nigeria, Cameroon, Myanmar, and Bangladesh, the average person spends 50% to 60% of their income on food — and that’s the average person. According to SB Morgen Intelligence, Nigerians who earn less than the government-mandated minimum wage spend 95% of their income on food consumption. So what happens if the price of food doubles in those nations?Well, pretty simple — the average citizen can’t afford to buy food.And what happens then?Well, you know the answer…Civil unrest… rioting… destruction… death.Can it get any worse?Yeah, it can. Just look at what’s happening in Afghanistan right now. The Taliban regime that retook Afghanistan in 2021 does not have funds to procure food items and other essentials. This has created such an unprecedented surge in food prices and left the Afghan people still in the country desperate — so desperate that last week The Hindustan Times reported scores of hungry Afghans were selling their own children to survive.  Now, I don’t think we’re going to see people in wealthy Western nations selling their children for food. But most of the world lives in developing countries. According to the IMF definition, there are 152 developing countries that are home to some 6.6 billion people — 85% of the total world population.Are you starting to see the problem?This isn’t a political crisis, which can be solved through diplomacy.It’s not a financial crisis, which can be mitigated via government action. It’s not a military crisis, which can be fought by winning wars against enemies. It’s not a health crisis, which can be relieved with medical technology. The 2022 global food crisis will touch the lives of every single person on the planet—and with a deeper impact than any crisis of the past few decades. You’re going to see the highest food prices of your life. You’re going to see empty grocery store shelves again as people begin to hoard. You’re going to see civil unrest, wars, death, and destruction worldwide. The only thing you and I will be able to do is protect ourselves. Luke Burgess |
