The Great Food Repricing David Morgan - (The Civilization Cycle Podcast #615)

So what I'm gonna start with is anchoring the discussion on something familiar to, to you more than me, and I've talked about it numerous times.

Energy drives everything, fertilizer, transportation, mechanic- mechanical agriculture, and disruptions in oil, natural gas, and geopolitics ripple into the food supply.

So food inflation is not just monetary.

It is physical scarcity and declining yields.

So my question number one is, are we looking at another inflationary wave or something more structural?

Yeah.

Thank you for having me on.

And just a quick answer, inflationary wave, because you have to think about the repricing in steps.

'Cause going back to your point, take it back to the year 2019 and now do an assessment on your food costs.

Everything would have doubled since that.

'Cause you gotta think that COVID was that step up and what I would consider like a stair step, a level up.

And this was, you know, we talked about this long ago, that you were gonna get these stair steps going up into...

Well, at that point you're gonna have to have something more, uh, valuable to trade than just your time or the fiat pieces of money to be able to get your, your foods in.

Now, as we come through, you have to think about the... it's not just the fuel up.

There, there's a pincer effect happening with everything where the diesel prices themselves, the gasoline prices, okay, now you take that into consideration.

Uh, on the farmer side, the farmers are gonna pay more just to plant, just to run the machines and get that to a storage facility.

That's just gonna cost more because diesel costs more.

To get the final end product into your supermarket, gasoline and diesel are gonna drive the price on that.

So then you have two legs up just on that one shortage alone or that disruption.

But then we come into the fertilizers and remember it's about a one-to-one.

It's not exactly, but for napkin math it's a one-to-one.

One percent, uh, application deficit on crop yields or on your crops leads to a one percent decline in the yield.

So if you remove one percent of your fertilizer application, you're gonna lose one percent of your yield out.

So take it down ten percent, you're gonna lose ten percent.

Most farmers in America, the news articles keep coming back and forth.