BY BRITT GILLETTE
The political push to move away from fossil fuels to renewable energy, coupled with the supply/demand distortions caused by the COVID shutdowns, has resulted in much higher energy prices. This is particularly true in Europe where the accelerated push for green energy has led to a surging energy crisis. What does this have to do with rising food prices?
As Zero Hedge points out in this article:
"You can't make fertilizer without urea and natural gas. As the price of either of these goes higher (both are), it significantly impacts the price of fertilizer. The price of fertilizer impacts in turn the price of food. This is because fertilizer is the second largest cost component of most agricultural production. The first being... you guessed it, diesel."
The rising cost to grow food then impacts the feed cost for cattle, hogs, chickens, and other animals. This means higher costs for meat producers. Throw in increased costs for transportation, a global shortage of workers, and pandemic-induced supply chain problems, and the rising cost of food doesn't show any signs of slowing down soon.
Supply Chain Issues
Global supply chain issues are another reason we see rising food prices, but the broken supply chain is the primary reason many grocery store shelves have gone bare. While increased demand due to COVID lockdowns and hoarding play a factor, the majority of these shortages are due to problems rippling through the global supply chain.
In some cases, a lack of key inputs such as aluminum, cardboard, or artificial sweeteners means manufacturers can't produce or package certain items at the scale they used to (if at all). This results in fewer available products, and thus, empty shelves.
Supply chain problems have also resulted in a global shortage of urea. Not only is urea a key component in fertilizer, it's also a key ingredient in the diesel exhaust fluid AdBlue. AdBlue is used in cars, trucks, buses, and other vehicles equipped with a selective catalytic reduction (SCR) system for reducing emissions. All the diesel vehicles in South Korea and Australia use AdBlue, and China supplies 97% of South Korea's AdBlue and 80% of Australia's.
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