Inflation Nation

[Pro-Life]

Coming Food Crisis
By: Marty Armstrong | January 26, 2021

https://www.armstrongeconomics.com/markets-by-sector/agriculture/private-blog-coming-food-crisis/

We are staring in the face of a serious food crisis in Europe as food prices rise continuously, and with further draconian COVID measures within the EU, they are bringing the food supply chains to a standstill. Our models have been warning that this 8.6-year cyclical wave into 2024 will be one of commodity inflation due to SHORTAGES rather than speculative demand. All the indications that the world is heading for a serious food price crisis are in play. The Food Price Index (FFPI) of the Food and Agriculture Organization of the United Nations (FAO) averaged 107.5 points in December 2020, an increase of 2.3 points (2.2%) compared to November 2020, which represents an increase for the seventh consecutive month.

With the exception of sugar, all sub-indices of the FFPI recorded slight gains in December, with the sub-index for vegetable oil again rising the most, followed by that for dairy products, meat, and cereals. For 2020 as a whole, the FFPI averaged 97.9 points, a three-year high, 2.9 points (3.1%) higher than in 2019, but still well below its 2011 high of 131.9 points. It is also interesting that the FFPI in 2002 was still 53.1 points. It only increased significantly from the financial crisis of 2007/08, only to then level off in the 90-point range. Since May 2020 it has increased by 18%.

Governments are already starting to blame the speculators arguing that even back in 2002, 11 times the actual available amount of wheat was traded here. Look at 2011, the ratio of trades to the supply was 73 times the actually existing amount. These speculative transactions with food are inherently driven by actual supply and demand. Governments point to algorithms of the computers that dominate trading lead to increasing fluctuations. Totally ignored has been that we have lost more than 100,000 farms between 2011 and 2018; 12,000 of those between 2017 and 2018 alone. The headline in Time Magazine: "'They're Trying to Wipe Us Off the Map.' Small American Farmers Are Nearing Extinction." (NOVEMBER 27, 2019). Between taxing the rich and over-regulation, small farmers have become an endangered species as Bill Gates buys up all the land.

As the economic instability unleashed by these politicians and their draconian measures over the Coronavirus continue, they will further exacerbate the risk of a total collapse of the supply chains which will include food as well as goods accelerating inflation caused by a decline in supply...