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Shipping Restrictions, China Lockdowns Among Factors Impacting the Looming Food Shortage

Multiple factors are impacting the global supply chain of food, including U.S. railway policy, China's COVID lockdowns, and the recent bird flu

The Biden Administration has warned of rising food costs and shortages that it believes will impact the lives of Americans in the months ahead. 

As the nation faces record-high inflation, one of the primary areas affected in the last twelve months has been the cost of food. The inflationary spike has been reported to be as much as 38% for the average American. 

While the war in Ukraine has been blamed for issues with the international supply chain, there are other issues facing the global supply chain of food. 

Russia is one of the world’s top fertilizer producers, and many have said the war has constrained the fertilizer supply in the U.S. However, there is another critical problem related to fertilizer shortages. 

The railroad industry has begun to impose shipping restrictions on the supplies farmers need to produce viable crops en masse. According to a statement by CF Industries, a leading manufacturer of fertilizer chemicals, the rail industry has slowed its ability to distribute its much-needed products. 

“CF Industries Holdings, Inc. … today informed customers it serves by Union Pacific rail lines that railroad-mandated shipping reductions would result in nitrogen fertilizer shipment delays during the spring application season,” the statement read. It goes no to note that CF Industries is “one of only 30 companies to face these restrictions.” 

CF Industries CEO Tony Wills said:

“The timing of this action by Union Pacific could not come at a worse time for farmers. Not only will fertilizer be delayed by these shipping restrictions, but additional fertilizer needed to complete spring applications may be unable to reach farmers at all. By placing this arbitrary restriction on just a handful of shippers, Union Pacific is jeopardizing farmers’ harvests and increasing the cost of food for consumers.”

The move by Union Pacific is part of an effort to increase efficiency and lower operational costs. They have chosen to remove a certain number of cars from their current trains, and the cars selected by the rail company are the cargo holds for the fertilizer products. 

Besides the railroad reductions, the recent surge in COVID-19 in China is set to impact the global food supply. With close to 400 million people in the country under some form of a lockdown, the world economy will begin to feel the impact. 

The Port of Shanghai, one of the largest in the world, is essentially shut down. The port handled about 20% of the nation’s $7.2 trillion gross national product in 2021. 

The problem results from shipping disruptions and the closure of factories across China. Many of the products we enjoy in the United States are manufactured in China, including food. The longer the lockdowns persist in China, the more likely Americans will feel the direct impact of China’s continuance of its Zero-COVID policy culture. 

Another issue impacting the future of food supplies and costs in the U.S. is the recent bird flu outbreak, which has killed millions of chickens and other avian species nationwide. The result has been an escalating rise in prices for eggs and poultry. 

On Friday, the U.S. Department of Agriculture announced another outbreak in Idaho, making it the 27th state where the virus has been found since February.

According to the USDA, the price of a dozen eggs was about $1 in late 2021. Currently, that price is $2.95 and climbing.

It remains to be seen what measures the federal government might take to address these issues. In the meantime, the economy is poised to see more inflation and supply struggles surrounding food. 

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