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|
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.