This is a post to update the state of our global supply food chain, because the recent Baltimore bridge disaster might disrupt USA’s soybean and tofu supply. Last year, Canada reported a shortage of maple syrup, due to climate change. The Russian war on Ukraine continues to affect the energy sector, and as Vox predicted, disrupted global food distribution. Now there is also market place manipulation, greed-based artificial food-cost inflation.
To understand where the global food supply chain is, requires some deep dives into very complex, cobwebs of interconnected, need, greed, controls, and raw power. Previous posts on food supply: I Want to Trust My Food is Real, Food System Connections, Pandemic: Changes to Food, and Putin’s War is a Global Domino.
—**—
The Global Supply Chain
Definition
I start where I always begin, with a definition. Wikipedia defines the global supply chain as: the distribution of goods and services throughout a trans-national companies’ global network to maximize profit and minimize waste.
Food Chain Disruption
The actual “chain” that a food item travels depends on 1) if it is a raw ingredient like cereal, vegetables, fruit, nuts, mushrooms, etc., or 2) if it is a processed food item like meat, flour, boxed food, etc., and 3) where the food is located.
Food and other products generally go through several states, from the farm to your house.
- Production (where the food is planted, grown, harvested)
- Handling to storage (after harvest to a holding facility)
- Processing + packaging
- Distribution + Retail
- Consumption + Disposal
These are the steps most all food follows to reach us. It moves systematically, in domino-like motion from producers to consumers (1). Every step along the way involves people, governmental or regulatory policies and procedures, as it passes from one country or state to another. The reason for using the phrase “domino-like motion,” is that if one part of the chain fails, it flips every other remaining domino in the chain (2).
For instance, Baltimore’s Francis Scott Key bridge collapse earlier this week. This bridge was the transportation avenue to and from the Port of Baltimore (the 5th largest port on the East coast, 17th largest in the USA). So right now there is a temporary halt on imports and exports, as they try to redirect the ships to the other, already over-stressed ports, on the East coast. WaPo writes that this shutdown will mainly affect certain car vendors and other products. However, they also wrote: Baltimore is also a niche port for the soybean trade, focusing mostly on high-value soy used in tofu, miso, tempeh and organic products, according to Mike Steenhoek, executive director of the Soy Transportation Coalition.
Type of Goods Disruption
All of these types of goods distribution will drive up costs.
The result of flipping dominos may result in durable goods disruption. Consider the critical semiconductor chip shortages (3) that are used to make a variety of electrical devices. Not just cars, trucks or RVs; think refrigerators, stoves, robotic vacuum cleaners, computers, games, microwaves, medical devices, and phones (4).
A flip in consumable products, had people keeping an eye on toilet paper, sanitation and cleaning supplies. We have already lived through pandemic buying and empty shelves, and I think weary eyes keep monitoring news for potential hits from a new pandemic or climate change. Although now, our eyes are now also catching the inflated prices for the everyday food we need.
For food products, a drop in available metals (aluminum and steel) resulted in manufacturers condensing consumer options to the “most in demand”, as cans were limited. Following the understandable pandemic-related increase in food and product costs, there was an immediate increase due to the rise in shipping costs and labor. But articles are cropping up now questioning the prices of many items, with consumers asking the question of WHY so high?
Greed
The continuing supply problems are exacerbated by the larger retail stores desiring ever increasing profits. The elevated costs of food and goods grew due to the pandemic, then by the reduction in supply due to climate change. But now, the increases in the profit marge by the larger retail stores and manufacturers (named by NYT: Walmart, Amazon, Kroger, C&S Wholesale Grocers, Associated Wholesale Grocers, McLane Company, Procter & Gamble, Tyson Foods and Kraft Heinz) continues to grow today, even though some of the supply problems have eased.
The Federal Trade Commission, according to the NYT, reported on March 2024 that the larger grocery stores took advantage of the global supply chain disruptions to attack smaller chains and gain profits by accelerating and distorting the snarled effects of supply chain difficulties. Specifically, they wrote, Food and beverage retailers also posted strong profits during the height of the pandemic and continue to do so today, casting doubt on assertions that higher grocery prices are simply moving in lock step with retailers’ own rising costs.
- Shrinkflation: aka package downsizing or weight-out, is the process of packaged items shrinking in size or quantity, while the prices remain the same
- Skimpflation: is the same priced item with less or less quality ingredients
- Inflation: Some wholesalers or retailers (or both) just raise the prices because they can and the consumer accepts it
Global Supply Chain Risks
From the viewpoint of a consumer there are unanticipated and known problems that occur to the global supply chain resulting in shortages, increased retail prices, or empty shelves.
Unanticipated Risks
Unanticipated problems are most often natural phenomenon such as earthquakes, tsunamis, floods, volcano eruptions, landslides, blizzards, droughts, and pandemics. But also there are unanticipated consequences of these problems, like increased energy prices, dramatic shipping costs, and awful wars.
- As an example of the effect of natural phenomenon, ScienceDirect wrote: During 2010 Iceland volcanic eruption closed European airports, Nissan’s inability to fly $30 air pressure sensors from Ireland to Japan kept the carmaker from producing $30,000 Nissan Murano SUVs.
- The Coronavirus Pandemic caused major issues with the food chain (5).
- Dumped milk, disposed perishable food, and culled livestock. Some farmers plowed under their fields.
- Slaughterhouses, processing and packaging plants closed (please see my Meat + Fowl Processing Plants post).
- The pandemic certainly closed borders to farm workers, but now the closure is purely political as we see in Florida and Texas. Affecting harvests, and thus supplies.
- The Russian invasion of Ukraine reduced the imports from and exports to both countries, and perhaps Belarus, as well as many other countries.
- There are reports of culled chickens and pigs due to infections with flu viruses (6).
With regard to food, these natural events can be a very big problem, as there are only certain times plants can be planted or harvested and if the problem disrupts those fixed seasons there may be a long (up to a year) delay in replanting that food.
Additionally, since the Global Supply Chain relies on the efficient, “just in time” supply of goods, if there is any hiccup at any point in the chain the chain breaks. Panic driven demand is a hiccup.
Any unanticipated event, especially if occurring in certain countries or areas, can reduce or remove adequate labor from all aspects of non-robotized production, and transport. So our over-reliance on food or products from mainly one country wound up reducing supplies in the chain. (Please see my Food System Connections post.)
Anticipated Risks
Risks include piracy (in the news recently), tariffs, trade policy and other geopolitical decisions; but also climate change is an anticipated issue the Western World is not ready to address. Unclear or short-term political decisions that affect other economies, can affect the whole global supply system in the longer term, resulting in increased prices, changes in demand, and reduction in supply.
- CMUSCM: Piracy is a disruption along important trade routes, the: Indian Ocean, Gulf of Aden, South China Seas, etc. In the Horn of Africa alone, piracy has caused losses amounting to almost $6 billion. Piracy not only makes international trade risky, but it also reduces the efficiency and functionality of global supply chains.
- There already is a reduction in viable land and water resources, which is putting global food production at risk; with added climate changes expected, water and ag lands are endangered.
- Grist: analysis found that heatflation could drive up food prices around the world by as much as 3 percentage points per year in just over a decade and by about 2 percentage points in North America.
- More data about food is being required to answer consumer demand for traceability and other details which are tracked on computers. (Please see my post on Food Chain Contamination.)
Global climate change will modify all international agricultural agreements as weather dictates adequate growing environments, affecting the economies of many countries and regions as they adapt to necessary changes.
Current Global Issues Detail
We have a number of unique, world-wide issues that have been and continue to occur globally, on every continent, at the same time, and affecting everyone and everything on this planet.
Shipping
The Guardian reports that shipping accounts for the movement of at least 90% of goods around the world and the cost of transporting things by sea has rocketed in the past year. For example, the Drewry world container index measuring the cost of moving a 40ft container is 170% higher than it was a year ago. The price on some particularly in-demand routes such as Shanghai to Rotterdam has increased by almost 200%; in the case of the Dutch port to New York, the cost has risen by 212%.
Political Tensions + Sanctions
The Trump administration imposed sanctions on several Chinese companies, like Huawei, with fairly quick results: some of those companies, and related industry companies downstream began hoarding as much supply as possible.
- Politics and tariffs were made due to a fundamental misunderstanding on where critical infrastructure components are manufactured, misreading the impact of component hoarding or manufacturing slowdowns, and the looming pandemic impact on supplies and transport.
- Shortages of chips have been a reoccurring theme with computers for a number of years, as various materials used in their production are limited. But politicians forgot just where those chips are being used, it is not just computers anymore. These chips are very important components in food growing through transportation as well.
- Due to pandemic and quarantining, the demand for electronic devices went up dramatically as people needed equipment to work from home and due to the expansion of e-commerce and food delivery businesses.
- Finally, there was a recently Congress passed bill proposed by Biden administration to build a chip manufacturing plant in the USA
PBS wrote: Retaliation by China, Canada, Mexico, Turkey and members of the European Union to tariffs imposed by the Trump administration have taken a bite out of U.S. agricultural incomes. They added: U.S. exports of agricultural products to China decreased by 63% between 2017 and 2018, from $15.8 billion to $5.9 billion. The effects of this were concentrated in Washington, Louisiana, Texas, California, and Oregon, which together accounted for nearly 80% of 2018’s exports, according to calculations based on data from the U.S. International Trade Administration.
Pandemic(s)
The Covid 19 pandemic caused all sorts of havoc in agricultural manufacturing, processing, packaging, and transportation sectors in every country as workers were getting sick, business were shutting down, and goods were not being delivered. That has continued till today, although it is no longer as dramatic.
- At several times during the pandemic major shipping hubs in China (and elsewhere) had to shut down as dockworkers, administration staff, truck drivers, shipping staff, and others fall sick or were isolated in quarantine.
- The pandemic is not really over yet, as we continue to experience waves of infection, the initial one (Omicron), then many others, to the most recent USA strain Eris. Unfortunately, these waves just further attack global trade already weakened by a year plus of shipping backlogs, labor shortages, manufacturing shortages, and geopolitical tensions.
- The results are critical components, raw materials, and products have slowed delivered across the globe; and there continues to be limited abilities to process at receiving ports and distribute to manufacturers or retail outlets. Now much more a matter of labor shortage than Covid.
At this point analysts are predicting that we will continue to experience waves of new Covid variations in the future as this pandemic settles in with humanity. This level of uncertainty and continued limitation on freedom of movement requires rethinking our supply chains and social interactions, perhaps reversing the global to more regional farming and manufacturing.
It should be noted, that Covid is not the only pandemic being experienced. The recent, and ongoing, bird flu continues to result in the death of many chickens and other fowl. According to the Guardian, While bird flu has been around for decades, the current outbreak of the virus that began in early 2022 has prompted officials to slaughter nearly 82 million birds, mostly egg-laying chickens, in 47 US states, according to the US Department of Agriculture.
Global Climate Change
We have been experiencing what our, and our grandchildren’s future is going to look like as climate and weather changes. Current agricultural efforts are trying to cope, but at this time we are just applying small bandaids to local problems, while the global political community continues to think short-term, and wrongly, about the issue.
- The maple syrup example is in part an issue directly linked to climate change as its production is impacted by warming temperatures, changes in precipitation, and changes in freeze and thaw cycles (7). The range of sugar maples is primarily from Virginia, USA to Quebec, Canada, but the range is shifting.
- The results are fewer trees, unhealthier trees, less sap production, decrease in sap quality, and shortening sap collection times.
- This then translates into shortages in the production of maple syrup for our groceries shelves, higher prices for the consumer, and potential financial losses for local governments and businesses. But there are cultural impacts as well, since maple trees and its syrup are a traditional source of food for several tribes (like the Menominee) in the Sugar Maple growing region.
Global Uncertainty
Uncertainty has flooded the system as well. Businesses did not adequately anticipate consumers response to the pandemic and were caught unawares with toilet paper, baking products, and sanitation items selling out due to panic buying. And the very efficient distribution system of “just in time” product deliveries were shown to be a disaster when those changes in consumer buying took over. The pandemic sparked a wariness within consumers and really fueled the panic buying.
- Some businesses, like chip producers, do not want to build more manufacturing plants for they are extremely expensive for a market that takes dips frequently; it is a way to lose money in the long term while making short term profits.
- Some like maple syrup makers will need to plant more trees which has a negative effect on the environment (monoculture) or move the location of maple syrup making to a whole new location in anticipation of the climate changes.
- Both are a complete gamble for we do not fully understand where the future will take us, only that we are now irrevocably on that road of change.
But additionally, corporate greed seems to be playing a part in the inflation in food costs. This has created a new term, “greedflation” (8).
Russian War Against Ukraine
The Russia war ignited against Ukraine also disrupts supply chains from those countries and the USA. While I will not get deep into this subject, it does need to be acknowledged as part of the global supply chain disruptions.
- Ukraine Bis.Doc.Gov: In 2019, of the $1.3 billion in U.S. imports from Ukraine, the top commodity sectors were Base metals (59.0%), Agriculture products (12.0%), and Machinery and Mechanical Appliances (9.5%).
- Russia USTR.Gov: The top U.S. import categories in 2019 were: mineral fuels ($13 billion), precious metal and stone (platinum) ($2.2 billion), iron and steel ($1.4 billion), fertilizers ($963 million), and inorganic chemicals ($763 million). U.S. total imports of agricultural products from Russia totaled $69 million in 2019.
The USA Supply Chain
Agricultural Consolidation Failures
The pandemic itself exposed ugly truths about the fragility of our consolidated global and local food-supply chains.
Restaurants, hotels, schools and other food providing services and businesses naturally closed over the pandemic. As of March 2022, there were still 11.6% fewer restaurant transactions than at the same time in 2019 (9).
As the large agriculture businesses who own the slaughterhouses, processing and packing plants had to close, farmers were directed to start euthanizing hundreds of thousands of pigs (6) and millions of chickens (7). And the large, industrial agricultural businesses, like the Dairy Farmers Association (5), also asked farmers to dump millions of gallons of milk during a time when there was an explosion of people needing food assistance. The argument was that there was no way to store all this food, nor could they be shipped to other countries due to the lockdowns, and the food evidently would not be processed to send to homeless shelters or food banks. So food was wasted.
Worse of course, was the continuing loss in the number of USA farms that has continued since 1982. To highlight the pandemic changes, there was an estimate of 1.89 million fewer USA farms in 2023, down 7% from the 2.04 million found in the 2017 Census of Agriculture. And these reductions (plus a highly contagious bird flu) triggered supply shortages, which lead to increasing prices of poultry and eggs by 26% and 8%, while demand for dairy milk products dropped by 33–60%.
And the cruelty was not limited to those animals that were killed. According to the CDC, Spring 2022, meat packaging plants were responsible for between 6 – 8% of all Covid-19 infections in the United States. It was even reported that at a Tyson pork-processing plant in Waterloo, Iowa, managers placed bets on how many workers would contract the disease (10).
Recognizing Failure to Change
We are now seeing change on the local neighborhood and family spheres with the return of home pantries for stock-piling and storing products under the “just in case” mantra. Not just pantries, but also, starting in 2020, freezers worldwide were selling out (11, 12) in anticipation of stock piling.
- We have highly contracted our farms so there are fewer, but larger, industrial farms in place of many small to medium sized family farms distributed throughout the land.
- These larger farms are failing under these current conditions and have required governmental financial bail outs, and exemption from lawsuits for non-Covid safety requirements. But even then they were flailing
- Business owners and their lobbyists influence politicians that will not governmentally support a return to small, distributed farming; regenerative agricultural practices; nor remove existing subsidies that effectively support only big ag business.
We know that local farms are directly related to the health of rural communities and require support to withstand all the benefits large companies receive by virtue of their size and influence over related businesses.
Conclusion
I hope this clarifies the situation, but am concerned I may just have overwhelmed you. Really, I do not believe we are in a state of “doom and gloom” regarding our supply sytem; we are however still experiencing some limited shortages during an increased demand for goods which will always result in concerns. But although we are not currently in a situation where world-wide panic is called for; supply chain disruptions continue primarily as a climate-change and bird-flu pandemic-related problem. Right now increased costs in food is, I believe, mainly an issue of greed combined with very short thinking.
But, in conclusion, let me clarify a few things.
- We are currently experiencing a continuing global supply chain breakdowns due, in part, to the unanticipated convergence of multiple global situations
- The way countries responded to the original Covid-19 pandemic and its subsequent variations
- The way countries respond to the continuing bird flu (13) or other ongoing, and devastating plant infestations (see my post Olive Trees + Oil)
- The wars that continue to rage across the globe (14) disrupting farming and the smooth movement of farming labor: Gaza, Sudan, and Ukraine for example.
- The lack of global organized actions on climate change, affecting farms everywhere
- Catastrophes due to lack of infrastructure maintenance and improvements that effect farming and transportation
- And, we are also experiencing extremely over-inflated food and supply costs due, in part, to just greed as businesses pursue ever expanding profit
I believe the best we can do as families, is make sure we all have stand alone freezers and large pantries (see my post Pantries are Necessary) to keep at least a month supply of basic food staples on hand.
- We need to support Farmers Markets to reinforce and support local farms, who may help us when we reach difficult food times
- We may find some food items will become scarce or, more likely for the USA, will cost more
- Limited chicken broth or canned soup, due to limited cans being manufactured, means making and freezing our own broth or soups in glass jars.
- We may find that our gardens become bigger as we choose to grow our own, if what we like is harder to find or is costly.
Do you think I am right, or am way off base?
—Patty
—**—