In this critical year on the world stage, with Cold War tensions peaking at two poles and the global economy panting louder and louder, there are two key global shortages that are being watched very closely, with people at risk of paying the price for even more once. Fears about food prices-Uncertainty about technological dependence on Asia.
Rapid shortage and reduction of fertilizer production is causing very high prices
Τhe first is caused by the rapid shortage and reduction of fertilizer production. This is due to the fact that Russia, one of the world’s largest producers and exporters of ammonium nitrate, the essential ingredient for fertilizer production, has reduced its production by 55% so that there is an even greater shortage of this component which is necessary to produce in addition to explosives, but also the fertilizers that are necessary in crops. This is causing a rapidly increasing shortage of fertilizers, with the result that their market prices are rising dramatically and disproportionately burdening farmers, especially in the developing world.
From South American avocado, corn and coffee farms to the coconut plantations and oil palm groves of Southeast Asia, high fertilizer prices are burdening farmers, making it much more expensive to grow and forcing many to cut back.
This means that food prices could rise further in 2022, after a year in which world food prices rose to a decade high. An increase would exacerbate hunger – already acute in some parts of the world due to the sharp decline in pandemic-related jobs – and hamper the efforts of politicians and central banks to curb inflation.
According to the International Fertilizer Development Center (www.ifdc.org), excessively high fertilizer prices could lead to a reduction in agricultural production in Africa alone “equivalent to the food needs of 100 million people”.
In a recent article, U.S. Senator Roger Marshall on rising fertilizer prices (https://www.marshall.senate.gov/newsroom/op-eds/sen-marshall-op-ed-why-high-fertilizer-prices-on-the-farm-could-hit-consumers-on-their-forks/) states that: “It is no secret that farmers are facing a fertilizer crisis. Prices for phosphorus and potassium-based fertilizers have more than doubled in Kansas, while nitrogen-based fertilizers have more than quadrupled. Fertilizer is vital for the nutrition not only of the country but also of the world. It contains essential nutrients for plant life and without it, US agricultural yields will suffer rapidly as will food prices at local grocery stores. As I discussed the other day, these crazy fertilizer prices will make it impossible for many US farmers to plant crops profitably this year. This means that much less food will be grown.”
On the other side of the world, the North Korean government is asking its citizens to start creating “homemade” fertilizer from their own waste. State media also encourage people to make “homemade” manure, The Daily Beast reported. A source in North Hamgyong Province told the Daily NK that residents began “producing fertilizers from human waste” after authorities launched a 10-day effort to increase production.
Lack of computer chips as well
The US Department of Commerce released the results of the Risks on the Semiconductor Supply Chain (RFI) Information Request (https://www.commerce.gov/news/blog/2022/01/results-semiconductor-supply-chain-request-information). Key findings from the report provided database information on the depth of the semiconductor shortage and highlighted the need for President-proposed $52 billion in domestic semiconductor production.
The RFI showed that the average stock held by chip consumers (including automakers or medical device manufacturers, for example) has fallen from 40 days in 2019 to less than 5 days in 2021. If a COVID outbreak, a natural disaster or political instability disrupt a foreign semiconductor facility, even for just a few weeks, has the potential to shut down a production facility in the US, endangering American workers and their families. At this point, the computer chips used to make cars and medical devices are particularly scarce.
The US and global markets are overwhelmingly dependent on Asia, as today Taiwan accounts for an impressive 63% of the world’s total computer chip production. The majority of chip factories are currently based in Asia, which accounts for about 87% of the semiconductor factory market share (with Taiwan alone accounting for about 63%), according to industry data. The political climate in the region and tensions between Taiwan and China have come under control, as the shortage has revealed how much US industry relies on these sources.
That is why the United States will defend Taiwan in every way possible in the event of a Chinese attack on this island country.
The energy crisis and rising energy costs will continue for many years
Flows from Europe’s leading gas supplier, Russia, remain subdued and tensions in Ukraine are high. The first month gas futures for the Netherlands moved between gains and losses after rising more than 4% at the beginning of trading.
The relief for European consumers from the increase in Russian shipments earlier this week was short-lived after the country’s supplies fell through a long route through Ukraine. In addition, supplies to Germany via the Yamal-Europe main pipeline remain frozen, with the connection returning to pumping in the opposite direction.
Traders and policymakers continue to worry that Russian flows could be disrupted if Moscow’s confrontation with Ukraine erupts. Meanwhile, price gains were kept under control by forecasts for temperatures above normal on the continent. To ensure that Europe is fed up in the event of a crisis, including any disruptions resulting from a Russia-Ukraine conflict, the US and its allies have approached several major gas importers in Asia. However, it will not be easy to replace the huge volumes that Russia is sending to the continent.
In recent months, all forms of traditional energy have become significantly more expensive, and this is fueling price increases around the world. This new global energy crisis is also directly responsible for the dramatic rise in fertilizer prices, it is a factor in the “explosion of inflation” we are seeing right now and unfortunately, these are just the beginning. Oil is the number one resource on which the entire world economy is built. High oil prices immediately lead to a food crisis and the collapse of governments. Politicians need cheap oil, but we will never see it again.
Neither wind nor solar energy will save the planet, it would require more investment of materials and energy than it already exists. This means that heating the houses will now cost much more. It also means a lot more money for car fuel. Needless to say, these also lead to vertical increases for food.
