Be
ready for food and water shortages. Be prepared for food price
dramatic increase. Here some recent shocks on the global food system.
Global food crisis engulfs the world.
As
shown in an article by CNBC, China’s hog herd may drop by 55% from
fatal swine fever. Knowing that China is the #1 pork producer. That’s
a pretty devastating news.
To add fuel to the fire, the deadly African Swine Fever has currently
been testified in 36
countries around
the world, spreading all over Southeast Asia, through parts of
Europe, and has been found in Africa too.
Unusually long-lasting
and deadly monsoons in India are
leading to widespread crop failures in the nation. India is one of
the top exporters of onions globally, selling 2.2 billion kilograms
overseas. After the prolonged monsoon rains, India has decided to ban
its onion export.
The extended monsoon has also damaged key kharif
crops,
including pulses, oilseeds and cotton, as well as soy beans in India.
Since September 2019, food prices have soared by more than 200% in
the country.
And
it is not looking better for Indonesia,
where wildfires,
smoke and drought are
inflicting an increasingly painful toll on its agriculture, hurting
everything from oil palm
plantations to
rubber trees and rice fields. Indonesia is the world’s top producer
of palm oil and second-largest supplier of rubber.
The
orange greening disease which is on track to destroy Florida’s
orange crop (#1 citrus producer in the U.S.) has now finally
reached California,
the nation’s #2 citrus producer.
I
am not sure about updates from the U.S.
Midwest crop which
was significantly delayed in planting because of flooding this
spring, but the rare October heatwave in the Southeast and Midwest
threatens crops, with some total losses reported in South
Carolina.
Meanwhile, the price
of soy bean soars
in the U.S.
If
you missed this one, there is a fatal banana
fungus that
which will inevitably wipe out Cavendish banana crop likely within 10
years.
Of
course, none of these issues will spell food shortage on their own.
But when taken together, they are a really bad omen for 2020, and it
could/will worsen in the next decades if nothing is done.
Maybe,
governments aren’t focussing on the important issues right now. The
real threat isn’t sea level rise in 2100, but the collapse of our
agriculture system, of our food system and how big companies fool
producers (low prices) and consumers (high prices).
If
that headline sounds really bad to you, that is because the situation
that we are facing is really bad. Over the past few months, I
have written article after article about
the unprecedented crisis that U.S. farmers are facing this year.
In those articles, I have always said that “millions” of acres of
farmland did not get planted this year, because I knew that we did
not have a final number yet.
Well,
now we do, and it is extremely troubling. Of course there are
some people out there that do not even believe that we are facing a
crisis, and a few have even accused me of overstating the severity of
the problems that U.S. farmers are currently dealing with.
Sadly, things are not as bad as I thought – the truth is that they
are even worse. According to
the U.S. Department of Agriculture,
crops were not planted on 19.4 million acres of U.S. farmland this
year. The following comes directly from
the official website of the USDA…
Agricultural
producers reported they were not able to plant crops on more than
19.4 million acres in 2019, according to a new
report released
by the U.S. Department of Agriculture (USDA). This marks the most
prevented plant acres reported since USDA’s Farm Service Agency
(FSA) began releasing the report in 2007 and 17.49 million acres more
than reported at this time last year.
So
this is the largest number that the USDA has ever reported for a
single year, and it is nearly 17.5 million acres greater than last
year’s final tally of less than 2 million acres.
If
you have been following my articles on a regular basis, then you know
exactly why this has happened. The middle of the nation was
absolutely pummeled by endless rain and unprecedented flooding
throughout the first half of 2019, and this new USDA report shows
that the vast majority of the acres that were not planted come
from that
area of the country…
Of
those prevented plant acres, more than 73 percent were in 12
Midwestern states, where heavy rainfall and flooding this year has
prevented many producers from planting mostly corn, soybeans and
wheat.
“Agricultural
producers across the country are facing significant challenges and
tough decisions on their farms and ranches,” USDA Under Secretary
for Farm Production and Conservation Bill Northey said. “We know
these are challenging times for farmers, and we have worked to
improve flexibility of our programs to assist producers prevented
from planting.”
Of
course the 19.4 million acres that were not planted are only part of
the story.
Most
farmers were able to get seeds in the ground despite the challenging
conditions, but in much of the country the crops are not in good
shape.
In
fact, according to the latest crop progress report only 57
percent of
the corn is considered to be in “good” or “excellent” shape.
Unfortunately,
the nation’s soybean crop is in even worse shape. At this
point, only 54
percent of
the soybeans are in “good” or “excellent” shape.
Well,
it means that we have a real crisis on our hands. A lot less
crops are being grown, and a substantial percentage of the crops that
are being grown are not in good shape. Yields are going to be
way down across the board, and that means that U.S. agricultural
production is going to be way, way below initial expectations.
In
other words, we are going to grow a lot less food than usual.
One
bad year is not going to be the end of the world, but what if things
don’t bounce back next year? As I keep telling my readers,
our planet is becoming increasingly unstable in a whole bunch of
different ways, and global weather patterns have been shifting
dramatically. Many experts are issuing very ominous warnings
about what is ahead as weather patterns continue to shift, and some
believe that what we have witnessed so far is
just the very beginning of this crisis.
Almost
every day, there are new headlines about extreme weather and records
being broken. For example, one community in Colorado just got
pummeled by
hail the size of softballs…
Monster
hail fell from the sky and hammered areas of the central United
States on Tuesday, shattering a state record. Earlier on Tuesday
before the storms developed, AccuWeather Extreme Meteorologist Reed
Timmer warned that Colorado’s state hail record could be in
jeopardy given the intensity of the storms that he saw developing.
His
prediction came to fruition on Tuesday afternoon when a hailstone
with a maximum diameter of 4.83″ fell in Bethune, Colorado, on
Tuesday afternoon. The
record was confirmed on
Wednesday evening by the Colorado Climate Center and the National
Weather Service office in Goodland, Kansas.
For
some of my readers, this freakish incident is going to set off major
alarm bells.
We
are regularly seeing things happen that we have never seen before.
In other words, the seemingly impossible is happening so frequently
that it has become mundane.
Despite
all of our advanced technology, we are still completely and utterly
dependent on the weather. If the weather does not cooperate,
farmers cannot grow our food, and we will not eat.
Hopefully
harvest season will go smoothly, but even if that happens, food
supplies will be a lot tighter in the months ahead and that means
that prices will continue to rise steadily.
This
is a crisis that is going to affect all of us. I wish that I
could get everyone to understand this, but unfortunately there are
still a lot of people out there that are not taking this seriously.
We
haven’t seen anything like this since the Great Depression of the
1930s...
Leading
up to this year, farm incomes had been trending lower for most of the
past decade, and meanwhile farm debt levels have been absolutely
exploding.
So
U.S. farmers were desperate for a really good year, but instead 2019
has been a total disaster. As I have been carefully
documenting, due to endless rain and catastrophic flooding millions
of acres of prime farmland didn’t
get planted at all this year,
and the yields on tens of millions of other acres are expected to
be way,
way below normal.
As a result, we are facing the worst farming crisis in modern
American history, and this comes at a time when U.S. farms are
drowning in more debt than ever before.
Debt-to-asset
ratios are seeing the same squeeze, with more farms moving into a
ratio exceeding 80%. Barrett notes each year since 2009 has seen an
increase in the average amount of total debt among farmers, and 2017
was no exception. Average debt rose 10% to $1.3 million. The biggest
increase was in long-term debt, such as land.
Farming
in the 21st century has become an extraordinarily risky business, and
countless U.S. farmers were already on the verge of going under even
before we got to 2019.
Now
that this year has been such a complete and utter disaster, many
farms will not be able to operate once we get to 2020.
Minnesota
farmers Liz and Bob Krocak were hoping for better days ahead as this
year began, but things have been really tough and their debts have
become overwhelming. During a recent meeting with their
creditors, Liz was so distraught that she
literally burst into tears…
They
had to face their creditors at a mediation. There was Del, the
mechanic, whom they owe $28,000 and who now can’t help his son buy
a home. There was Steve, the feed store guy, who is 64 and has
delayed his retirement because of the Krocaks’ $311,000 bill.
Liz
recalled the mediator opening the meeting by saying, “This is going
to be an emotional day. I can see everybody really likes this
family.” Liz had burst into tears then – and she was crying again
now, describing the scene seven months later.
“We
just hope there’s a farm left at the end of it,” she said.
In
total, the Krocaks just happen to be 1.3 million dollars in debt.
At
this point, there isn’t a prayer that all of that debt will ever be
paid off. All they can really hope for is more patience from
their creditors, because without it the farm is going under.
The
Krocaks recently received a check for about 12,000 dollars from the
federal government, and they are very grateful for the money, but the
truth is that it isn’t even going to make a dent in their 1.3
million dollar debt.
If
the horrific weather and endless flooding wasn’t enough, about a
week ago the Chinese government announced that they would be
ending all
“purchases of U.S. agricultural products”,
and that was a devastating blow for farmers all over the nation.
In
particular, soybean farmers are going to see demand for their crops
absolutely collapse. In recent years, China has
purchased approximately
60 percent of
all U.S. soybean exports.
And
the truth is that it is extremely unlikely that Trump will change his
mind and cave in to the Chinese.
So
for the foreseeable future, U.S. farmers are going to be facing
weaker markets and lower prices, and that is going to be the final
straw for many of them.
Have
you ever been at a point in your life where you have endured problem
after problem and then one day a final crushing blow comes along that
takes away the last shred of hope that you were holding on to?
That is precisely what has happened to farmers like Bob
Kuylen of North Dakota…
“It’s
really, really getting bad out here,” said Bob Kuylen, who’s
farmed for 35 years in North Dakota.
“Trump
is ruining our markets. No one is buying our product no more, and we
have no markets no more.”
We
keep hearing about “government bailouts”, but they aren’t going
to be nearly big enough for most farmers. Kuylen has worked as
hard as he possibly could, but he was not able to overcome the
challenges he was facing, and now he is facing financial disaster.
He would walk away, but he says he can’t because “I’ve
invested everything I have in farming”…
Kuylen,
who farms roughly 1,500 acres of wheat and sunflowers, lost $70 per
acre this year, despite growing good crops. Current government
subsidies only cover about $15 per acre, he said.
“There’s
no incentive to keep farming, except that I’ve invested everything
I have in farming, and it’s hard to walk away,” he said.
It
would be nice to think that all of these farmers will somehow bounce
back next year, but that isn’t likely. It is very doubtful
that there will be any sort of a trade agreement with China before
the 2020 presidential election, and global weather patterns are
not going to be getting any more stable.
Sadly, it is entirely possible that next year could be even tougher
for U.S. farmers than this year was.
So
please say a prayer for our farmers. They grow the food that we
all eat on a daily basis, and their hard work is rarely recognized on
a national basis. They are unsung heroes, and right now most of them
are really, really hurting.
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