High fertilizer prices are forcing farm managers to rebalance cost-to-yield ratios for food production. Total synthetic fertilizer consumption has risen 800% since the 1960s, creating a system where single crops, monocultures, can produce an abundance. Fertilizer costs have risen steadily over the years but have been absorbed mainly in the cost-to-yield ratios. After Russia invaded Ukraine, however, food supply chains and the supply of affordable fertilizer were massively disrupted. Prices have sharply risen, and fertilizer now accounts for an unsustainably high 45% of a farm’s variable input costs.
This results in a few basic strategies for the farm manager. He can decide to simply not grow food in some of his productive fields and grow cover crops instead to replenish the soil. Cover crops like grasses (such as ryegrass or barley), legumes (such as alfalfa or clover), brassicas (such as radishes or turnips), and non-legume broadleaves (such as spinach or flax) are great for restoring soil nutrient levels. Still, they don’t contribute significantly to our food supply. And, planting cover crops reduces the amount of land being farmed that season for human and animal food consumption.
Another strategy, when faced with the soaring price of fertilizers, is to switch crops, but that’s not the easiest of tasks. A farmer’s crop is calculated and planned well before the first seed is dropped in the soil. Switching gears isn’t easily accomplished, and many farmers are reluctant to switch gears to a different crop for what could be a temporary shortage. The best example of this is the wheat deficit created by the Russo-Ukrainian War. America can’t just step up and fill the world’s wheat shortage. Spring and durum wheat, accounting for 25% of the US production of wheat, are typically planted as soon as soil conditions permit in mid-March through May and are harvested in the late summer or fall of the same year. Farmers had already plugged in all their calculations and likely obtained all the seed they would use and all the seed that was produced for replanting when Russia invaded at the end of February. Switching gear is no easy task at all.
Fertilizers, herbicides, and insecticides have all risen in price, some more than four times last year’s costs. The result of higher input costs and drought means crop yields for both cotton and corn, two major US crops, are expected to be down more than 50% from last year. A drop of that much devastates the food supply chain, from exports that keep an economy strong to manufacturers who process those harvests into usable food for your grocery stores and, eventually, your table.
In a nutshell, the global supply chain disruptions of the last two years, a twenty-year mega-drought in well over 50% of the country, the rising cost of fertilizer and fuel, and trying to balance the variable input costs to net any profits on the backend, are all sending spasms through our food supply chain. These are significant enough to potentially forever change our modern food supply.
RANCHERS
Long before your store runs out of your kid’s favorite breakfast cereal, ranchers will also experience lower yields. This means that flocks and herds will be downsized, the price of meat will rise, and its availability will drop. Milk and egg production, as well, will be reduced to align with input resources like feed and water. This is partly because of lower feed grain yields, but it’s also a logistics issue. During the pandemic, railways, already reportedly 25% understaffed, laid off a significant amount of their remaining labor force. Those laborers found other jobs and are reluctant to return to the long-hour, low-wage jobs that keep the trains moving. It’s significant enough that the Surface Transportation Board (STB) recently held a hearing about the issue.
It is a significant enough problem that Foster Farms, the largest chicken producer in the western U.S., pleaded with federal regulators to issue an emergency service order that would direct Union Pacific to prioritize corn shipments that thousands of dairy cattle and millions of chickens and turkeys depend upon. It’s significant enough of an issue to prompt 51 members of Congress to write and sign a letter to the Surface Transportation Board, pleading with them to work with all stakeholders to resolve railway issues for fertilizer and feed grain specifically.
They wrote:
At a time when global fertilizer supplies and global crop production are highly disrupted, imposing shipping curtailments on fertilizer inputs and grain, as recently proposed by Union Pacific, will cause major supply chain disruptions, hurt American farmers, and exacerbate the food crisis considerably. We must ensure critical commodities reach essential industries and workers, such as America’s farmers, who are essential to feeding our nation and the world. Food is a national security issue, and we must treat it as such.
Finally, if it isn’t feed grain for their herds, it’s water. Most western states are still in the grips of a devastating multi-decade drought and record-breaking heat. Drought and heat are a recipe for herd die-offs. Cattle can start experiencing heat stress at just 72 degrees Fahrenheit with 50% humidity. Compound that with a lack of water, it can lead to lower milk production, higher incidence of disease, and a higher death rate. The cost of watering animals has increased, and getting the proper water supply has become more complex. So, the production of feed grains is more costly with lower output, distribution challenges remain and are amplified, and a persistent drought leads to a reduction in flock and herd size and an escalation of prices. This all forecasts a hard road forward for the meat producers in the US. You can expect fewer selections, higher prices, and outright food scarcity.
TRUCKERS
72% of America’s freight moves by truck, and last year the US suffered a deficit of 80,000 drivers. That high demand hasn’t equated to higher wages for truckers. In fact, drivers’ pay has been cut from an adjusted median of $110,000 in 1980 to just $47,130 in 2020. If you’re an independent trucker, you might be considering a different line of work simply because of fuel prices. A big rig will get around 6 miles per gallon and has a tank capacity of about 150 to 300 gallons. The cost to fill that tank today to travel those 900 to 1,800 miles is between $800 and $1,600. That dramatically cuts into any profits. Taken together, 72% of America’s freight, a large percentage of which is food, is experiencing a doubling in cost to get from point A to point B to your doorstep.
Truckers are feeling the same fuel cost spike that farmers are. At the same time, they are experiencing a similar labor shortage that the railways are having. Truckers are willing to work, but the pay is not keeping pace. Many truckers are considered independent contractors and not employees of these trucking companies.
Despite the difficulties in this underrecognized industry, trucking schools are projecting a 32% increase in students seeking their commercial Driver’s Licenses. That’s a good solution, but it will take time to plug it in and see any results on the other end. Big trucking companies are boasting record profits. They’re saying that they’re in the most profitable position that they have been in history in some cases, primarily because they can demand higher prices. Those profits, however, are not translating into improvements for truckers’ working conditions and wages. Those profits aren’t trickling down to consumers unless you are a major shareholder, nor are they improving the overall economic forecast. On the contrary, a deepening recession is increasing in likelihood by the day.
Taken as a whole, the supply chain is spasming from the combination of railway and trucking logistical issues and a spike in costs. This makes it hard for farmers and ranchers to get what they need and to get what they produce to manufacturers and you.
WHAT DOES THIS MEAN TO YOU, AND WHAT TO DO ABOUT IT
We hate using the “perfect storm” analogy because it seems like we have used it so many times this decade. However, the perfect storm analogy fits so many scenarios as to what we see in these times. When we listen to the farmers, ranchers, railway workers, and truckers–all of those “boots on the ground” folk that put food on your table and a million other products to your doorstep– they’re all telling a tale of woe. When one of these critical systems temporarily experiences setbacks, say a crop fails, or truckers or meat packers strike, the disruption is often absorbed. When so many disruptions hemorrhage in these critical systems all at the same time, it’s possible that a new dynamic may emerge, or the system may never fully recover at all. It quite literally is a perfect storm here, converging now and for the foreseeable future.
You should be bracing for higher prices. The cost of fuel, fertilizer, and labor will eventually be transferred to consumers. Beyond higher prices, which, honestly, ask anyone, is inevitable, this time we are looking at the genuine possibility of food shortages and scarcity. This will result in fewer exports, damaging the country’s economic health and increasing the odds of a recession morphing into a full-blown depression. This will result in famine in some regions of the world. This will result in people needing to adjust their expectations of food security and their diets. This will result in panic buying when news of this starts promulgating through the media, and this will further exacerbate the food supply problems as available inventories are depleted. We can probably all adjust to fewer choices in the chip aisle, but it is significantly harder to adapt to a scarcity of available corn or soybeans because the grain being grown must be routed to feed operations. I single out corn and soybeans here because beyond their use as a source of food, they are also major components in Ethanol production, and Ethanol makes up 98% of US gasoline. So, in a vicious cycle, food and fuel prices spiral up together.
We should take heed when we listen to the warnings from truckers, railway workers, farmers, and ranchers, which are better sources than mainstream media outlets. The solutions you should be plugging in and the preps you should be prioritizing are to put away your 3-month or greater supply of foods. This goes beyond a 3-day or 3-week supply that can see you through typical disasters. Seek out and cultivate locally sourced food, even if that means changing the way and what you eat regularly. Buy in bulk and learn to preserve, dehydrate, or freeze-dry food. Plant something, anything, to supplement your food resources. Above all else, brace for this storm that is still in its early phases of forming but appears to be bigger than any storm we have faced in recent history. The luxury of affordable food in abundance may be coming to an end, and we preppers will need to adjust accordingly.
At the very least, even if there are no significant disruptions in the food supply in your particular region of the country or the world, you will see the price of everything continue to rise as these higher costs continue to get passed along to you the consumer. The global food supply chain is struggling to find some sense of equilibrium. Just one significant natural disaster or a continuation of the record temperatures and droughts through this year and next could be enough to push the house of cards entirely over.
If the boots on the ground are to be believed, and I believe them, the high yields from fertilizer and good weather through long growing seasons may be something we reflect back on as “the good ol’ days” of farming. With countries hoarding grain and a global supply chain that continues to try and find its footing, we aren’t precisely in opulent times. We may look at the periods in history earmarked with crop failures, dust bowls, and food scarcity to chart our course forward.
If you want to ensure you have all your bases covered, work from a plan like the Prepper’s Roadmap we have available which we’ll post a link below. Time is of the essence. Secure your food and water supplies and free yourself somewhat from the ongoing turbulence that the food supply will continue to suffer from.
As always, stay safe out there.