FOOD and ENERGY SCARCITY?

#168

Significant fires and other curious events have destroyed dozens of food processing plants, warehouses, and a Walmart Distribution Center. There have been twelve such fires in just one month! Some of the fires occurred after President Joe Biden warned that the United States faces food shortages. Tucker Carlson has stated, “This is a lot of industrial accidents at food processing facilities at the same time the president is warning us about food shortages.” The food supply was already vulnerable because of the conflict in Ukraine and the sanctions against Russia. Prices for raw materials used in the fertilizer market — ammonia, nitrogen, nitrates, phosphates, potash, and sulfates have increased. Since January 2021, anhydrous ammonia has risen by 315%. Urea has risen by 214%, liquid nitrogen by 290%, monoammonium phosphate (MAP) by 171%, and potash by 213%, according to the most recent data supplied by USDA. The availability of fertilizers has fallen below global requirements. Will this lead to severe food shortages?

Russia is the second-largest producer of ammonia, urea, and potash and the fifth-largest producer of processed phosphates. The country accounts for 23% of the global ammonia export market, 14% of urea, 21% for potash, and 10% of processed phosphates. Because of Russia’s large fertilizer production and its role as a global fertilizer supplier, the removal of the Russian output from the global marketplace will impact the supply of fertilizer worldwide. In 2021, the European Union (EU) imported around 45% of its gas from Russia, according to the International Energy Agency. In 2020, Russian oil imports accounted for about 25% of the bloc’s crude purchases, according to the region’s statistics office. Because of the war in Ukraine, the EU and England have restricted gas and oil from Russia. Germany produces only 5 percent of its gas from domestic wells, which comes from imports.

Russia has halted exporting gas to the countries of Poland and Bulgaria because they have refused to make payments to Gazprom using Russia’s currency, the ruble. Gazprom is a company and the largest supplier of natural gas to Europe and Turkey. While there is plenty of gas sitting in the Nordstream 2 pipeline, Germany refuses to tap into it for political reasons. Nordstream 2 is a natural gas pipeline from Russia to Germany running through the Baltic Sea, financed by Gazprom and several European energy companies. Because of western sanctions, Gazprom filed for bankruptcy. There are several other Russian-owned companies with sizeable revenues expected to file for bankruptcy due to western sanctions. These events fit a pattern. Is there a relationship between the fires destroying food processing plants with the potential of seriously limiting our food supply and the sanctions imposed against Russia that are hugely disrupting the world economy?

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Published by Kenneth E. Long

Author, college professor of economics, swimming and tennis enthusiast

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