The $213 billion meat & poultry industry that includes
such corporate titans as Tyson Foods, Inc., Smithfield Foods, Inc., Cargill,
Inc., JBS USA and Hormel Foods Corp. have already closed 12 US plants and are
operating at far less than capacity at many others because of worker contracted
Covid-19 virus. According to the Wall Street Journal article 23 April 2020 Grocers
Hunt for Meat as Coronavirus Hobbles Beef and Pork Plants, production is
down 24% for beef, 20% for pork and 10% for poultry. The shutdowns by these
large food companies is an ominous sign that genuine food storages are arriving
sooner than you can imagine.
Furthermore farmers have been reluctantly dumping up to the
equivalent of 5% of the US annual milk production and reluctantly destroying
and burying crops because of the logistical and market disconnect of supplying
the consumer market directly.
Moving down the proverbial food chain, as outlined in the
MSN article 28 April 2020 Food
Banks Are Closing And Losing Their Work Force, the nation’s food banks are
closing because of several reasons:
·
Fewer donations.
·
Limited refrigeration capacity for perishable items.
·
Inability to re-stock because orders that normally
took 8-12 days to arrive now arrive in 8 weeks.
·
Increased demand ranging from 40%-100% due to a
deluge of suddenly unemployed workers who are in financial distress.
·
Fewer volunteers to operate them.
A superb analogy to this rapidly growing food crisis is a
scene from the movie Apollo 13 entitled Square Peg in a Round Hole,
in which the astronauts of the crippled spacecraft have plenty of total oxygen
but need to transfer from one unit into another where they reside. However the
two different units have incompatible oxygen systems. For this reason the NASA
engineers are then tasked with creating a system so that the oxygen can flow
from one unit to another with the limited parts available aboard to spacecraft
and communicate those instructions to the astronauts verbally.
The present-day plentiful foodstuff inventory already in
supermarkets and enroute will diminish rapidly in the next 2-3 weeks. This will
initially result in a price spike for food followed soon after by actual
shortages.
The civil unrest problems will emerge in the gap between the
price spike and the diminishing inventories because psychologically through
many generations Americans are accustomed to seeing aisle upon aisle of shelves
bulging with diverse food choices. Suddenly there will be either few choices or
none at all regardless how much money the consumer has. Frustration will turn
to anger as the warmer weather provokes short tempers.
According to the Department of Agriculture in 2018 there
were 37 million food insecure Americans. The world’s breadbasket may soon find
itself going from food secure to food insecure within a matter of weeks adding millions
more food insecure Americans to that list. The present-day brutal irony is that
market stocks are rising and food stocks are falling. The following pie chart
gives you a visual perspective of US food security status.
The next chart developed by the Urban Institute and
presented by Statista, an online German statistical service, provides greater
depth and “texture” to those Americans who are food insecure.
Adding to the aforementioned disturbing statistics is that
over 70% of Americans have less than $1,000 saved for emergencies. Below are
the pre-pandemic 2016 figures (provided by Statista) which are certainly far
worse present-day with the growing mass unemployment:
Savings | Pct of Americans |
$0 | 34 |
<$1,000 | 35 |
$1,000-$4,999 | 11 |
$4,999-$9,999 | 4 |
$10,000> | 15 |
Copyright 2020 Indo-Brazilian Associates LLC
Indo-Brazilian Associates LLC is a NYC-based think-tank and
advisory service that provides beyond-the-horizon contrarian perspectives and
risk assessments on energy investments, geopolitical dynamics and global urban
security.