The Next 6 Months: What To Expect

The price of corn is up thirty-two percent in the first quarter of this year.  Beef is up seventeen percent.  The price of chicken is up twenty-five percent in just the last two months.  You have probably noticed the price of gasoline up forty-one percent as well.  Still, you may not have yet seen that the cost of a metric ton of olive oil is up one-hundred-eighty-two percent since the start of this year.  That hasn’t yet trickled down to your grocery store shelves, but it will.

So, what’s going on?  Gasoline is actually in a surplus.  There are mostly enough cows and chickens.  There hasn’t been a collapse in olive orchards.  Shortages aren’t always tied to singular events, but distinct events can lead to shortages for consumers.  When we think of shortages we tend to only think of them as the unavailability of a product because it isn’t available anywhere.  It used to be that when the potato got blight, or the drought wiped out crops, that was it.  None of that crop was available to anyone.  But shortages have become very complex over the years as a global supply chain has sprung up.  Sometimes there’s a shortage of a crop, but on a dock, somewhere, tons of it are rotting away.

This blog will examine some of the shortages looming on the horizon and what you can do about them.  From crops to pharmaceuticals to fuel, this year is shaping up to be the year of shortages.  Let’s take a look…

FOOD SHORTAGES

Recent research sponsored by the global credit ratings agency Moody’s concluded: “that by the end of the century, parts of the US and Europe are now bound to experience severe reductions in rainfall equivalent to the American ‘dust bowl’ of the 1930s, which devastated Midwest farming for a decade.”  Food shortages are the most glaring shortages we face, but they don’t have to just come from drought-induced crop failures.  More than 1,000 barges backed up on the major transport artery near Memphis after engineers discovered a significant fracture on the Hernando de Soto Bridge, connecting Arkansas and Tennessee via Interstate 40.  Many of those barges contained grain.  To put this in perspective, each barge has about seven semi-tractor-trailers full of grain.  This caused crop prices to soar higher than the record highs, and stopped the flow of grain to New Orleans, which accounts for 47% of grain exports.  This was a short-term disruption, but it hit crop markets, where soybeans and corn futures have risen to multiyear highs amid adverse weather in Latin America and a buying spree from China.  Even a short-term disruption like this causes a rippling price increase on everything from plastics to dog food to bread and corn syrup.

Food commodities are up 31% in price over last year.  This is a commodities increase.  That’s long before the farmer harvests, the manufacturer purchases and processes the raw materials, and so forth.  This price trickles down to the consumer in the form of smaller portions and higher prices.  You may have noticed that the beef for your last barbeque seemed a little pricier than usual.   That’s because the price had risen 17% this year before the product even arrived at your butcher.  

It’s about to get much higher.  A cyberattack on JBS SA forced the shutdown of all its U.S. beef plants, wiping out output from facilities that supply almost a full quarter of American supplies. Slaughter operations across Australia were also down, and one of Canada’s largest beef plants was idled.  JBS SA is the largest meat producer globally.   It’s unclear exactly how many plants globally have been affected by this most recent ransomware attack.  One thing that is abundantly clear is that ransomware hackers have focused in on infrastructure and commodities because they know that it creates the maximum pain and pressure and is most likely to result in swift and hefty ransoms being paid.  There have been over 40 reported attacks against food companies just in the last year, and attacks of this nature are accelerating.  Expect the price of beef to soar in the coming weeks.  Also, feeding the cattle that can’t be slaughtered means that feed grain bills and demand for feed grains will also skyrocket.  That will apply further pressure on an already challenged grain market.  Also, fewer truckers will be transporting those cattle to stockyards.  

Continued ransomware attacks aside, meat has been rising in price for some time.  It’s not just beef that’s about to soar in price.  Chicken is up 25%.  Salmon is up 33% this year.  But the supply seems fine.  We aren’t witnessing massive cow, chicken, or fish die-offs.  So, why the increased costs?  

Some might try to dismiss this or blame whatever current political leadership is in office, but they fail to see the bigger picture.  These are global prices. If you measure the increase in price in Russian Rubles or Japanese Yen or Icelandic Krona, the price increases are the same.  The reality is that these current spikes are for multiple different reasons.  In some cases, farming and production has suffered from poor conditions, and there are classic shortages.  In most areas, however, there is still an abundance.  In some cases, the global supply chains have been disrupted by the temporary closures of the Suez Canal, the Mighty Mississippi, even the Colonial Pipeline.  COVID-19 has impacted processing plant workers, agricultural workers, and even truckers.  It also slowed consumer spending, which forced some producers to ratchet back production.  Now, they are ramping up to meet high demand, but increased demand increases consumer costs.  

In some cases, the product is just being held back from the market in the hopes of a better price.  For example, vegetable oil prices have soared in recent months, placing upward pressure on food prices.  Sunflower oil has almost doubled since last year.  Olive oil has been affected by reduced yields across the Mediterranean, with rising prices amplified by some crushers’ reluctance to sell in anticipation of higher prices.  Consumers will soon see significant inflation in olive oil as Bottlers are trying not to buy and sellers are trying not to sell. That’s a perfect recipe for prices to skyrocket when the bottlers have to replenish stocks.  So, while the olive oil shortage is partly due to reduced yields, it is more driven by greed and manipulating the supply and demand equation.

You can’t dismiss these short supplies and high prices because you don’t eat corn, beef, chicken, or use olive oil.  Agricultural products are broken down into thousands of other food products.  Fuel, plastics, and fibers for countless products are all grown and sold.  As the price of olive oil soars, all those olive oil users will buy up the vegetable oil, reducing supply and driving up the price further there.  The reality of food shortages is that there can be plentiful harvests, but nothing makes it to your store or table, or you get priced out of the product altogether.  Expect food shortages to continue through this year with compounding, unique, and very nuanced problems that go far beyond low-yielding harvests.  A just-in-time production, processing, and distribution system that has already failed repeatedly in the last two years will continue to wreak havoc with consumer-side supply.

You can do three things to weather this problem that I see continuing at least into the near future for a couple of years: prep, grow, and cook.  Your best insulation from supply and price fluctuations is an adequate food supply on hand.  If you have a few days of food, build it for a few weeks of food.  If you have a few weeks of food prepped, make it a few months.  If you have a few months, you guessed it, make it to a full year’s supply.  Second, grow something.  Whether you are growing sprouts on your countertop or tomatoes on your patio, you need to be supplementing the consumption from your table with sources that aren’t tied to the US dollar.  Maybe that means investing in a good book on foraging and learning to cook with Dandelions or Purslane or hunt for Morel or Lion’s Mane mushrooms.  Finally, you may insulate yourself from coming food shortages by learning to cook and cooking on a daily basis.  Sadly, many are paralyzed when they can’t instantaneously grab a bite out or pick up the phone and get food delivery.  Food from restaurants is marked up considerably, and these rising costs and shortages will pass through the restaurant to you.  Remember when one fast food restaurant launched what they called the “Six Dollar Burger?”  The price wasn’t six dollars. That was just the high price name that they gave it to represent what a big, luxurious burger it was.  People at the time said they would never actually pay six dollars for a burger.  It was only $3.95 in 2001.  While they no longer carry that same burger, the cost today of a burger alone at the same restaurant ranges between 6 and 11 dollars.  Learn to prep, grow and gather your food, and learn to cook.  You will be more prepared for supply disruptions, your health will be better, and you will save hundreds and hundreds of dollars.

MEDICINE SHORTAGES

China is the world’s largest producer of active pharmaceutical ingredients or APIs. China is the source of 40% of the global APIs.  The bulk of those ingredients that make up everything from aspirin to antidepressants to throat lozenges get shipped to India.  Five years ago, India exported to the United States almost 4 billion dollars worth of pharmaceuticals.  That staggering number has only grown exponentially higher over the last half-decade.  Strained trading relationships with China and a staggering 28.2 million COVID cases in India are slowing and halting production and supply chains.  So, though China has restored the production of APIs, the output of over-the-counter pharmaceuticals and some prescription drugs are experiencing a slowdown.  While the inventory of over-the-counter medications is high, in most countries, panic buying and just regular consumption and expiration of drugs will lead to shortages.  A shortage of one drug can cause panic buying in another, which further exacerbates the shortage equation.

Global trading channels are shaking off their complete shutdown and reopening. Still, the actual production of products is now experiencing disruptions from lack of workers to lack of confidence in the product.  Alternative drugs may be less effective.  Reactions, dosage problems, and risk of error all accompany having to switch to new medicines.  At any given moment, the FDA reports over a hundred different drugs “Currently in Shortage.”  Over-the-counter remedies are often one of the most overlooked preps.  Most people, even preppers, find themselves with outdated medications or find themselves running out of medications after a disaster strikes because their supplies were insufficient.  You should treat your over-the-counter medications as one of your top ten preps.

FUEL SHORTAGES

We have come a long way from the 1970s, so the reasons for fuel shortages back then don’t always translate one-to-one with the shortages and prices we see today.  The gas crisis of the 1970s was prompted by two events, a war between Israel and surrounding Arab countries and the Iranian Revolution, both of which resulted in severe cuts in the supplies of oil from the Middle East.  While we continue to see conflict in the Middle East and may see a conflict there throughout our lifetimes, that is only part of the problem.

Production is high.  The only real shortage was brought on by panic buying of fuel depleting service station reserves on the East coast when the Colonial Pipeline was shut down by Eastern European, likely Russian, hackers.  While this completely stopped the flow of fuel in the main pipeline, reserves were high, and the flow was restored in short order.  The paying of the ransom by the owners of the Colonial Pipeline has only further emboldened this group and similar groups, and they will likely strike additional targets in the U.S and abroad.  There have been 40 reported ransomware attacks over the last 12 months and they are only increasing as a result of the Solar Winds hack of last year.  The attack on the beef industry was just today’s attack.  The Colonial Pipeline was just yesterday’s attack.  What’s next?  These ransom attacks on critical infrastructure absolutely will continue and may cause supply shortages at any time.

Also, millions of people stuck at home for more than a year are expected to hit the road for much-needed post-pandemic vacations this summer.  That’s a problem for multiple reasons.  First, there is a genuine shortage of tanker truck drivers.  Somewhere between 20% to 25% of tank trucks in the fleet are parked heading into this summer due to a lack of qualified drivers.  The pandemic has further dwindled the qualified driver’s pool.  Tanker operators are raising pay to try and attract more drivers, and they are passing those costs to retail outlets, which then pass the cost on to you.  There could be places throughout the country where they are completely sold out.  Even if only a few stations run out of gas, that could spark a run on gasoline as drivers start topping off their tanks to avoid running dry down the road.  A sudden spike in prices, a failing supply chain, a supply outage anywhere, any hurricanes hitting the Gulf Coast, and continued global conflict will all result in shortages and rising prices. 

What can you do, though?  If you had a military occupation as an 88M, you might apply to be a tanker truck driver.  Realistically, though, the shelf life of gas is between three and twelve months, and that’s if you even have the means to store it properly.  Driving less isn’t going to help you when it comes to fuel shortages or price spikes because the cost of transporting anything from food to televisions to electric cars will all be made up out of your pocket.  From plane tickets to train tickets, prices will go up.  From the cost of a hotel room to the cost of a meal out, prices will go up.  The cost of products getting from the field or manufacturer to your home will escalate.  Any perceived shortage can lead to panic buying and further disruptive ripples in the supply chains.  Even the power used in your home is tied to the fossil fuel industry.  The only real solution beyond a significant investment in energy and grid independence, which isn’t a possibility for most, is to reduce your consumption and need for consumption.

Having some alternate means of energy production like a small solar generator sufficient to run a small heater or a solar-powered cooler is becoming almost a necessity.  The energy infrastructure isn’t going to improve, so whether it is the grid going down or lack of tanker drivers, expect spikes in cost at the very least and shortages and outages at the worst.  Prepare accordingly and make sure you can live with minimal power if the situation demands it.

MORE SHORTAGES

So, understanding that shortages can occur even in times of abundance, we are all facing shortages of food, over-the-counter drugs, and fuel.  Here is a quick list of several other shortages that you may already be feeling:

COMPUTER-CHIP SHORTAGE

You may have noticed the chip shortage.  The chip shortage is a problem for consumers wanting anything with a computerized component, and that is pretty much anything you buy today.  From mobile phones to cars to televisions, if you don’t see high prices and backorders in your area, you will.  A drought in Taiwan coupled with COVID-19 woes have seen supplies evaporate.

PLASTICS

Texas is a crucial plastics exporter.  The winter storms forced many plants offline, and they are more challenging to restart than one might think.  Rising plastic costs result in rising packaging costs.  Those costs have increased 40% this year alone.  That cost gets transferred to the price of almost every product you buy.

PALM OIL

Palm oil production has suffered from both floods and labor shortages.  Palm oil is not used as a cooking oil. But it is widely used in food processing. It is found in many supermarket products, including bread, pastries, cereal, peanut butter, chocolate, and margarine. It is also used in personal products like shampoo, cosmetics, cleaning products, and biodiesel.  Global demand is growing dramatically at a time where output continues to dwindle.  So, while you may never feel a shortage because it isn’t in your pantry on a daily basis, you will feel the impact of the shortage when manufacturers and food processors have to stop or throttle back production.

LUMBER

While some mills were forced to close temporarily during the pandemic, a white-hot housing market, those working from home looking to delve into their home projects and build more space, and continued demand for furniture and pulp have all driven lumber prices up tremendously.  While inventory is high in some areas and low in others, the lumber problem is further complicated by the trucking and distribution difficulties.  Tariffs on Canadian lumber have also forced prices higher.  The cost of a new home is an average of 36,000 dollars.  If you’re looking for a bedroom set, get in the back order log, as you will be waiting for at least a few months for delivery.  So, while there is still lumber available, the soaring costs amount to a shortage of availability for the average consumer, drive up the prices, and lower the inventory of thousands of other consumer products.

CHICKEN & PORK

Due to increased demand and shortages caused by devastating winter storms in Texas, chicken is getting harder to get.  Raising chickens in large-scale production facilities isn’t easy nor very healthy.  It’s created a very fragile supply chain susceptible to failure.  Expect these shortages to continue, and you should try to find local sources for both eggs and chicken.  The pork shortage dates back to the early plant closures due to COVID outbreaks.  Now, inventories have been brought thin, so though plants are reopening, demand outstrips supply.

COFFEE

Coffee production is stable worldwide, only down a few percentage points from previous years, but shipping delays will cause shortages and price spikes.  Container ships are backed up at several key ports.  If you are a coffee drinker, now would be the time to stock up and long term, store some beans for later use.

CHLORINE

One fire at the chlorine manufacturer BioLab in Louisiana in September of last year has resulted in the worst chlorine shortage in US history.  This will affect pool owners but also anyone that uses chlorine-based products for cleaning or sterilization.  That would include individual consumers as well as manufacturers of other products.

CONCLUSION

While the three biggies of food, fuel, and medicine won’t get better in the near future, there are quite a few other shortages on the horizon which haven’t completely been fully realized.  Hopefully, this video has alerted you to a few of these coming scarcities.  If you take one thing away from this, it should be that decreasing your dependence on a just-in-time manufacturing and distribution system should be your priority.  If you want to run to the store for an extra couple pounds of beef or a couple extra bottles of olive oil, I can’t say that would be a bad idea.  A shortage, being completely out of inventory, or an outage isn’t tied any longer to the traditional notions of low yield or decimated crops.  It can be driven today by massive upheavals in the supply and demand equation, transportation and distribution disruptions, or just plain greed and profiteering.  Weather and climate, of course, are still right in the mix.

If you have been prepping for a while, now is the time to assess your future needs and adjust accordingly.  If you are new to prepping, you have your work cut out for you, as we are already amidst the supply shortages in several areas.  The solution is to become more local than global.  Take the time to seek out local sources for at least some of the food you consume.  The second part of the solution is to get lean.  Reduce your dependence on a system that is continually showing you how fragile and broken it is.  Finally, get prepping.  Get your food and water, and energy supplies up to a level to sustain you for a short period, and then continually start to build on that amount of time.  A solid prepper doesn’t have to worry too much about a shortage, as they have already set aside means of sustaining themselves, and they are already implementing the skills of self-sufficiency.

What do you think? What’s the shortage you think beginning preppers should most account for? What’s your solution when the supply stops?  

As always, please stay safe out there.