DANIEL VAUGHAN: Preparing for inflation to famine

When inflation began appearing in headlines, it was early spring 2021 for Americans. The Democratic Party had already passed another COVID-19 relief bill, and the supply-chain crisis was starting to form. At the time, both Biden and the press called it “transitory.” They wanted to signal that everything was fine and issues would fade with time. The opposite happened.

A similar crisis is brewing now, and it involves food. Last week, I wrote about the general impending food crisis. This week, more stories are pouring in to prove that point. Farmers in Ukraine and Russia are struggling to do their jobs, and the world is watching with horror.

Food supply issues increasing.

The Wall Street Journal reports that the war in Ukraine is already taking its toll on the global food supply. The WSJ found, “Global concerns that Russia’s invasion would curtail Ukraine’s 2022 harvest have come to fruition. The crop shortfall will extend to the many countries that rely on Ukraine for wheat, corn and cooking oil.”

It’s not just seeds or planting impacted; it’s ever part of the agricultural supply chain. “With wheat already in the ground, and only a few weeks left to plant corn, farmers in Ukraine can’t get needed fertilizers and chemicals. They are low on fuel for tractors and other farm equipment. Workers are quitting to join the fight or to leave the country, leaving farms short-handed.”

The costs of basic things from seeds to fertilizer are going up. After that, there aren’t enough people to farm the land. Russian invasion and bombing prevent farmers from doing anything out in the open. Men are going to the front lines to defend their country. And the UN estimates that the war has displaced ten million people, making them refugees.

Recent surveys found Ukraine had a population of around 41 million people. An exodus of nearly a fourth of all people will cause shorters in industries more than just farms. In short, this is a real looming crisis, and there’s no sign that it improves.

The WSJ report found, “Ukraine’s nutrient-rich soils yield 10% of global wheat exports, 14% of corn exports and about half of the world’s sunflower oil, according to the U.S. Department of Agriculture. In just three weeks, war disrupted Ukraine agriculture, triggering higher prices as well as the threat of global shortages. Much of the exports go to developing economies already struggling with food-cost inflation.”

Food shortages lead to famine.

The UN is warning that the war in Ukraine could trigger a famine in the region:

The UN’s special rapporteur on the right to food, Michael Fakhri, warned on Friday of a global famine resulting from Russia’s invasion.

“For the last three years, global rates of hunger and famine have been on the rise. With the Russian invasion, we are now facing the risk of imminent famine and starvation in more places around the world,” said Fakhri.

Global supply chain experts doubt that countries relying on Russia and Ukraine for grain can replace those imports. If you’re living in an impoverished nation with few natural resources or farmable land, the threat of famine is real.

In the United States, the threat is a further increase in food inflation prices. Americans can produce their food, but the global demand for any food will increase costs to the consumer.

Concerning too, with famines comes the problem of more refugees. With tens of millions of Ukrainians fleeing their country, more millions may be forced to flee their countries to find food. As we witnessed in the aftermath of the Arab Spring, Europe can handle some refugees. But if those numbers continue increasing, political sentiment can sour fast.

The time to prepare is now.

The threat of famine and a food crisis cannot get solved by slogans. So far, the Biden administration has blamed all other problems on Putin, “Big Mean,” supply chain cartels, and oil companies. They can’t pivot here and start blaming farmers or agricultural companies. The threat is real and deserves a response now. If the White House waits to respond in the summer, it will be too late.

We’ve lived with inflation for a while now, even as it continues to increase. But even in the early days when inflation started squeezing Main Street budgets, the evidence was there. The evidence is mounting that famine and food crisis is on the horizon.

The WSJ says, “The war in Ukraine is inflating global food prices that are already at decade highs, largely from the pandemic’s lingering supply-chain troubles. Wheat futures are up 42% so far this year; the price of corn has risen 27%.”

The evidence is mounting, yet the preparation is not. Inflation looks to head higher, while the White House pivots to shifting blame. Blaming shifting is fine if you’re actively solving a problem. But if you never provide solutions, that eventually makes you part of the problem.