Wednesday, January 3, 2024

The food crisis is getting worse, but most of us can't see the forest for the trees

 

For the past few years I and other commenters have been warning of massive food inflation, food shortages, and supply chain bottlenecks that will prevent that food from getting to where it's needed.  All of those things have been proven true over time.  The trouble is, most of the mainstream media have ignored the reality of the situation, and have instead hidden the truth behind a maskirovka of inflation adjustments and focusing on dollar rather than unit sales.  Global Data explains.


... while the continued (but significantly moderated) food inflation has allowed many branded companies, particularly the majors, to increase dollar sales, in many, if not most, cases they have turned in lower unit sales.

. . .

The rampant food inflation seen from 2021 to early 2023 raised the quarterly and annual sales growth rate for most major packaged foods companies over the last three years, evidenced by many groups reporting some of the highest dollar sales growth increases in recent history. However, much of the growth has been attributable to price increases rather than to brand marketing, sales promotion and the other traditional ways we use to boost sales.

That all changes in 2024. Packaged foods companies, especially the majors doing business in the US, not only should but must (to satisfy shareholders) put a renewed focus on growing unit sales.

Inflation and the resulting price increases have served as a “cheat sheet” of sorts for packaged foods companies, particularly the big guys, to grow dollar sales.

New rule: Pay as much or more attention to unit sales growth as we do to dollar sales growth in 2024.

Last week, Walmart CEO Doug McMillon said there’s a high probability the US will see deflation in 2024. If he’s right, packaged foods companies will have their biggest sales growth challenge in years. Not only will they need to have a renewed focus on unit sales but they’ll also need to focus like a laser beam on growing dollar sales, unlike what has been the case for the last couple of years.


There's more at the link.

That's a very common economic fig-leaf invoked by mainstream media financial journalists.  They say, "Well, two years ago American consumers were spending $500 million on this or that commodity, and this last Christmas shopping period they spent $600 million;  therefore, it's obvious that there isn't a shortage, and that people aren't strapped for cash."  There are two things wrong with that assumption.

  • The dollar amount spent doesn't reflect the real rate of inflation, only the number of dollars involved.  The value of each of those dollars today is probably less than half what it was two or three years ago, depending on whose inflation statistics you believe.
  • The dollar amount also doesn't tell us how many units, or packages, or containers of product were sold.  If, two years ago, consumers bought 100,000 units of the commodity in question, but last year bought only 70,000 units, that's effectively a massive drop in sales.  However, because nobody bothers to mention actual numbers of physically countable objects, people simply look at the dollar figures, see they haven't changed much, and assume that all's well.  It's not.
I dropped in at our local butcher yesterday, and asked him how he was doing after the Christmas season.  He looked very somber, and acknowledged that quantity for quantity, his sales have been declining for well over a year, and are currently about 25% less than they were at his peak.  In dollar terms he's holding his own, but his customers are getting that much less meat for their money, and they're hurting.  Some of his regulars have had to apologize to him because they've stopped buying at his butchery;  they love his products, but they simply can't afford to pay his prices any more.  They're reduced to buying off-cuts and canning or freezing venison, wild pig, etc.

Internationally, certain staple food groups are in a bad way as we enter 2024.  Forbes identifies several.


Olives and Olive Oil

In 2023, extensive heat and dry conditions and insufficient soil moisture in much of the Mediterranean adversely affected olive trees. Between April 2022 and May 2023, average temperatures, surpassing norms by up to 4°C were recorded in Spain, the leading global producer of olive oil. Persistently low rainfall for over a year, leading to severe drought resulted in a 50% reduction in Spanish olive oil production.

Consequently, the prices of olive oil reached unprecedented levels and stockpiles have significantly decreased compared to previous years.

The consequent increase in the cost of olive oil is impacting the prices of various products, including canned goods, such as sardines. With Spain exporting 70% of its olive oil production, domestic consumers are finding themselves in competition for this commodity in a progressively competitive global market.

Rice

Global rice supplies tightened in 2023 due to climate impacts experienced across the United States, Asia and the European Union. Throughout the year, rice prices remained elevated due to a sustained La Niña in March, followed by an El Niño anomaly in June. Additionally, India implemented restrictions on non-basmati rice in July, following concerns of a production shortfall caused by a delayed monsoon.

India, the world's largest rice exporter— accounting for 40% of global rice exports— responded to shortage concerns by imposing restrictions on shipments. Despite declining values in other grain markets, rice prices surged to their highest levels in 15 years in 2023, experiencing increases of 40%-45% in quotations at various Asian export hubs.

In October 2023, the United Nations Food and Agriculture Organization's All Rice Price Index averaged 138.9 points, a 24% increase from the previous year.

Italy, which contributes approximately half of the European Union's rice production and is the exclusive grower of crucial varieties for risotto such as Arborio and Carnaroli, recorded a decrease in rice output in 2023. Agricultural groups warned that Italian farmers, grappling with a second consecutive year of drought, are scaling back the cultivated land for rice to its lowest level in more than two decades.

Potatoes

A study published in the journal, Climate, indicates that potatoes face a significant threat from climate change, with global yields potentially declining by 18% to 32% within the next 45 years in the absence of adaptation.

European farmers are already experiencing the impact. In 2023, heavy rain led to one of the lowest potato harvests on record in the UK. According to a report from Bloomberg, farmers in Belgium and France had to park tractors due to waterlogged fields, which impeded collection. This resulted in soaring European potato prices.

Across the globe, in the highlands of Bolivia, where potatoes are the staple crop, the late arrival of seasonal rains and untimely frost— the likely the outcome of climate change— severely impacted potato harvests, lives and livelihoods.

Over recent months, Bolivia, along with much of South America, has experienced a "heat dome," resulting in unprecedented temperatures soaring to 45°C, a remarkable occurrence during winter. In August, Bolivia registered the highest winter temperature in the Southern Hemisphere.


Again, more at the link.

We may have plenty of some commodities here, but because of that, others may not be able to get them where they are.  For example, olive oil is in desperately short supply in Europe;  therefore, in a knock-on effect, we're already seeing US olive oil prices skyrocket, and availability (particularly of known and trusted brand names) is restricted.  Furthermore, global weather patterns are driving excessive price increases and restricting supply in many parts of the world.

Finally, the supply chain crunch has been with us for several years now.  I think many people have either forgotten that it's still a factor, or they've decided that we can live with it.  That's a dangerous assumption, because the two single largest bottlenecks in world trade - the Suez and Panama Canals - are in trouble right now, and there's no sign of any short-term improvement.  Something like 12% of world container traffic uses the Red Sea route to and from the Suez Canal, and it's been cut in half by the ongoing conflict with Houthi rebels in Yemen.  It can take up to 25% longer to re-route container ships around the Cape of Good Hope to Europe and America, and costs a lot more in fuel, crew salaries, etc.  All that affects the cost of the goods the ships carry.  The Panama Canal has endured drought for several years, meaning that the freshwater lakes and arteries that keep the canal filled with water have been depleted.  As a result, the canal authorities have restricted not only the number of transits, but how deep the ships may be loaded, resulting in an effective drop of up to 40% of capacity for the foreseeable future.

Remember, too, that every ship that's delayed takes capacity out of the market.  If you have ten ships to move a million tons of cargo, at a hundred thousand tons each, that's do-able, and the ships will be available for their next voyage almost at once.  However, when those ten ships take 25% longer to reach their destinations and/or are delayed at choke points like the canals, their carrying capacity is removed from the market until they can be unloaded.  That greatly increases demand for what ships are available, and may take too long for time-sensitive crops to reach safe long-term storage facilities.  The trouble is, there's not a massive oversupply of vessels to absorb that kind of pressure.  The shipping arteries can only handle so much before they run out of hulls to carry trade, including food.

That's a major reason why large parts of the world are looking at the overall food supply situation and getting in a panic about how they're going to feed their people this year and going forward.  They're right to be concerned.

Keeping it local, I'm just completing a sort-through of our emergency supplies, taking out older cans that won't keep past their due date (particularly those with acidic foods such as tomatoes, pineapple, etc.).  I'll send those to the food bank before they expire, and replace them with new cans that'll remain usable for a couple of years from now.  (Non-acidic foods such as beans, vegetables, etc. can be kept for years past their "use by" date without difficulty;  one just has to check to make sure the can is in normal condition - not bulged, not hissing when it's opened - before using them.)  I'll be doing the same with older packs of seasoning, herbs and spices, replacing older ones with fresh supplies, and I'll add a few more pounds of staples such as oatmeal, grits, cornmeal and pasta.  With the general availability of food still in a not very stable situation, I want to make sure we're up-to-date with our emergency preps.  (I'll have more to say about that later this morning.)

Peter


18 comments:

  1. Since the early 1980s I've used sales of canning supplies as a primary metric.

    Obviously there is bias since I have lived in rural areas. (Home canning is historically common in rural settings.) Being aware of that bias allows 'adjustments'. One such adjustment is to note sales of lids via vie jars. (Increase in jar sales denotes increase in number of new canners, usually.)

    In my travels which include mid-size and large cities, I do make note at grocery stores in those places. This involves inquiring of the store mgr wrt unit sales.

    Like most everything else, there is a boom/bust cycle in sales.
    One trend is the cycles are shorter time. And the bust phase is increasingly prolonged.
    This becomes more interesting in the consideration of the trend to smaller families.

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  2. I notice no mention of gardening, Peter. Given your medical history, that's probably reasonable.

    About "survival foods, BUY what you EAT. ROTATE that food, eat the oldest stuff as not to have to throw away-donate old stock. I find making a basic rotating plan for my eating over the year, generally allows me to plan for how many cans of tomatoe products I need. Yes, I have thrown away some food, but planning helps.

    Most "Survival foods" with 20-year storage and all that isn't something you want to eat, nor a good deal in calories. Not to mention aside from Mt House in my experience portion sized for my appetite and taste decent.

    Not everybody has gardening experience. Readers with information to share are welcome to expand my comment.

    Gardening is local. What grows well in NH, might fry and die in TX. Techniques like NH heavy mulching might make the garden eating slugs VERY Happy in GA.

    Choose seeds thinking about the local thing. I can admire a lot of seed catalogues offerings but even though I am "Officially" Zone 5, I've found almost half of my acreage acts like zone 4 with early and late frosts.

    So, I go for zone 4 acceptable plantings. Know your zone.

    Typical suburban Dirt isn't soil. Roundup-Scotts Yard and so on lawns are hostile to garden plantings. A general rule of thumb I've found was if Dandelions grow well there, you have non-roundup contaminated soil and can be made into a garden with work.

    Garden skills and soil development takes time. Expecting to plant some seeds into even a dandelion growing lawn is apt to produce a thin harvest for a LOT of work. Good soil = good strong pest resistant plants.

    Potatoes, garlic, cabbage (vit C), and beans are what I think of as a MINIMUM survival garden. Get the basics covered before growing nice sunflowers and fennel.

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  3. The bent toward blaming climate change in the articles for the food supply issues continues to amaze. Weather has controlled crop production since the dawn of time. Weather naturally impacts modern concentrated production farming more seriously.

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  4. A lot of 'olive oil' sold in stores is mostly soy, with a bit of olive oil to give it flavor and color. A friend has given up on buying olive oil because she's allergic to soy, and even the name brand imported is giving her hives. The only kind that doesn't give her trouble is domestic artesian brands, and those are incredibly expensive.
    Honey is also increasingly adulterated with corn syrup. As food continues to become more scarce and expensive, keep an eye out for more substitutions and adulterations.

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  5. If you are going to garden start now when you don’t need it. There is allot to learn. The survival seeds aren’t going to grow without good soil, fertilizer, water and the appropriate climate. Wife and I started 4 years ago and have gotten several neighbors to start small backyard gardens as well. Lots of failures and some success. Also look for local garden books there are many micro climates and an experienced gardener from your area will save you time and heartache.

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  6. Anonymous #1: It used to be the case that I could buy most any canning supplies in the early spring, before most people were thinking about canning. Now, the canning sections of WalMart and even our local supermarket always have empty spots where they're either sold out or cannot get new stock. Fortunately, I stockpiled lids and jars such that I have years of supply on hand.

    Michael: Gardening is something that one does all year long. We have a huge vegetable garden and I've already planned how each bed will be planted in May and June, and how many starts I'll need, plus extras for our few neighbors. We use only open pollinated seeds so we can save them year over year. Yes, cold/hot zones matter an awful lot for perennials. We are Zone 4 and when it comes to planting fruit and nut seedlings, I opt for Zone 3 hardiness.

    tweell: Honey is one of the most corrupted foods on the market, which is sort of good news for all of us local, small-scale beekeepers who sell the real stuff. If you've got a local feed store/farm supply store (not one of the big box places) they might be able to direct you to a source of local honey. It'll be more expensive than the supermarket stuff, but right now you're paying a premium for supermarket "honey" that contains a whole lot of cheap corn syrup.

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  7. The gardening comments are absolutely right. We’ve been growing for about 25 years. Some years the weather doesn’t cooperate - too hot, too rainy - some years it’s bug infestation. One year we had porcupines, other years its woodchucks. .22 took care of them. Some years all the seeds sprout and thrive, other times, only about half make it. It’s not easy, or what you read in a book. We’re still learning, and planning for next year’s crop. We get local manure every year, rotate the growing space, and catch rain water to water the garden. Some neighbors have gone dry watering their big garden, and doing daily household water use.
    Southern NH

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  8. 1. spending vs. plastic (credit card) debt by low-income groups.
    2. plundering, looting, pillaging (taking goods and walking out of the store with no intention of paying because you know nobody will stop you); I don't know the word for this (or if there is one)
    3. it's a very short step for these same people to take over your living space - you'll be unable to (legally) defend your property against them

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  9. Aldi here is closing out the Butterball turkeys for $.69/lb and I have bought and processed three.The meat is stripped off the bones after cooking and dries and the scraps and liquid is turned into bone broth in the Instapot. I put a brisket and two pork shoulders into a cure to make bacon and they will be ready in a couple of weeks. Whatever price you are seeing will seem cheap in a couple of months, stock up what you can.

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  10. I second learning to grow and can your own food. The last few years I've been experimenting with growing chickens for protein, in addition to our laying flock. My dad is learning to keep bees, and we got 2 1/2 gallons of honey last year - pure clover, lovely on toast.
    2020 was an exasperating year, as everyone rushed out to buy canning lids that are probably STILL sitting on pantry shelves unused. I made sure, after that, to have several years' supply of lids on hand.
    I've been working on growing low-input staple crops for my area - high desert, so tepary beans and other locally adapted veggies do best, as well as a surprising number of fruits and berries. Of course, I do the regular garden veggies as well, often in surprising colors. I discovered last year that red/purple cabbage makes a lovely sauerkraut.
    If you can your own tomato products, you don't need to rotate them quite as frequently, as glass won't get eaten by the acidity, and the lid doesn't touch the contents if you're doing the process right. For best nutritional content, rotation is still desirable, but it's not quite so necessary.
    All this said, we still keep an extensive pantry of store-bought canned foods, because sometimes it's just more convenient, and we go by first in, first out principles of rotation. We buy what we eat, for the most part.

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  11. So to the gardeners....

    I read a frightening article the other day about long term contamination of common herbicides. Can't find the exact article but a quick google search brought up hundreds of results from university agricultural extensions around the country. these are just the first 3 as examples.

    The gist of it is that you can't use any compost you didn't compost yourself because all commercial and community compost sellers or potting mixes etc... use yard waste in their compost, and 80+ % of it has herbicides it in it from roundup to weed killer to grass killers in one concentration or another. Some can persist for only months and some for years. When I purchased my home I could grow great tomatoes. I gave tomatoes to many people we grew so many. I dehydrated hundreds a year and even canned some. It's been a decade or more since I have been able to grow much. almost all attempts to garden have be really weak. I got mulch for free from the power company. Didn't stop to think that some of it was from under power lines where they have sprayed heavy herbicides designed to kill almost everything. I got probably 100 tons of it for free. I'm paying for it now.

    https://hortnews.extension.iastate.edu/herbicide-injury-garden-plants#:~:text=Some%20herbicides%20can%20persist%20in,may%20show%20herbicide%20injury%20symptoms.

    https://www.pesticides.montana.edu/reference/contamination.html

    https://content.ces.ncsu.edu/manage-compost-and-soil-contaminated-with-broadleaf-herbicides-in-gardens

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  12. The stores here are charging double the old price for rice. I hadn’t bought any in years, so it was a shock. Lately we like rice better than pasta, so I’m stocking up. We also found we like jasmine rice better, and that’s costing even more than regular rice.
    I expect it to increase for the reasons you listed above.
    Southern NH

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  13. For those of you who are interested in gardening, your local state extension office Master Gardener volunteer program will be of great help. Every single state has a Master Gardener program and these people absolutely live to help other gardeners. They can also put you in touch with people who can train folks in preservation of foods and other skills. Your tax dollars go to really excellent programs that you will want to check out.

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  14. I have been thinking that these are "The Good Old Days". Scratch that, we may hbe past "The Good Old Days".

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  15. Some shortages are cause by external factors like weather. Many are not. They are the result of manipulation. Some manipulation is to increase profit. Some is to decrease product volume. And some is intended to cause starvation. The leftist elite want to massively "thin the herd". The easiest and safest way to do that is by starvation. And they have NO qualms about using food as a weapon. Embrace this reality and plan accordingly.

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  16. Inflation and instability are putting a heavy whammy on farm product sales. Our premium, free-range turkeys normally sell for $6/lb and there used to be heavy demand for the big birds which are our specialty. This holiday season we barely sold our medium-size turkeys and had to cut price to $5/lb. Our big tom at 31 lbs is still in our freezer. How many people can afford a $150 turkey these days? And how many families are still large enough to want one?

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  17. When they blame man-made global climate change, I know they aren't serious.
    This is all political.

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  18. One thing I noticed in the beginning few paragraphs is the economist-style talking points put forth by corporations.
    Boring stuff, do more with less, we've all been to a company meeting like that, right?
    My take-away: companies are squeezing even more than before, and going to squeeze harder starting in 2024. They HAVE to start making more money, they are saying. We tightened our belts and used up all the accounting gimmicks, is what they are saying.
    So who's gonna get squeezed?
    Yep, you and me.

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