1 year ago

159

#food #riots
The same organizations that used the death of George Floyd to foment an attempted popular revolution in 2020 could use high food prices and potential shortages to foment 2020-like unrest.

In the summer of 2020, at the start of the George Floyd riots, former presidential candidate Andrew Yang warned that “Tens of millions of Americans are out of work. Race riots can quickly become food riots unless Congress makes bigger moves.” Yang, of course, wanted to spur big government action like Universal Basic Income, but his general warning remains true today. As the country struggles with food supply disruptions and rising prices, Americans’ inability to afford food is likely to trigger unrest.

What’s worse is that government efforts to alleviate pain – such as giving people extra money for food and gas – will only compound the problem by increasing demand for a finite supply. The big risk is that food prices don’t come down, despite the Fed hiking interest rates and running down their balance sheet. The Fed can’t create more food, but that’s exactly what they need to do here. Even if the Fed curbs demand to put downward pressure on prices, dislocations in the supply chain will continue to deplete some availability of food.

With high prices for fuel, fertilizer, and transportation, food prices are unlikely to retreat. Some supply dislocations will almost certainly worsen over the next year. I’ll give you an example. Here in central Texas, ranchers are selling off so many feeder calves due to the increased costs of feeding them that they’ve driven auction prices below what most ranchers are willing to sell for. Ranchers who can’t sell the extra calves, even at a loss, could cull them and ask the USDA for indemnity payments. Ongoing drought conditions are further exacerbating the ability for ranchers to keep their herds up. Due to higher feed costs and lack of water from drought, ranchers in drought-affected areas have been reducing herd sizes since last year. That’s ultimately decreasing the cattle population, which will likely result in beef shortages when demand starts to take off again. Beef shortages will keep prices high and shift demand to other meats, which will also support higher prices there. Smithfield Foods announced they’re closing a pork processing plant in California due to higher costs and the inability to turn a profit. The announcement states they’ll also reduce their hog herds. This may not be the last processing plant to close.

Labor shortages are also adding to dislocations in food availability. Meat processors report challenges in finding workers and keeping production floors staffed. USDA Secretary Tom Vilsack announced a $2 billion plan last month to bolster meat production by providing grants to help small meat processors expand. While it’s a step in the right direction, expansion of facilities takes time, is costly, and doesn’t solve the worker shortage, which is also being felt in the transportation industry. It also doesn’t alleviate pressure from accidents and potentially malicious activities affecting food production facilities across the country.

Meanwhile, Kraft Heinz and Mondelez International are two of the several food retailers who are warning that they’ll continue to raise prices for the next 6-12 months. McDonald’s is also studying how much they can raise prices without hurting sales.

Today’s conditions are the best they’re going to get for the foreseeable future. Worsening drought conditions, heavy rains, and diseases, such as the various strains of swine and bird flu, could continue to cut food production this growing season. I don’t see conditions appreciably improving this year and could worsen next year.

In today’s political and social climate, especially coming off an attempted popular revolution in 2020, high food prices, decreased availability, and the potential for shortages could be used to foment 2020-like unrest. We already know that unrest tends to rise following pandemics.

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