Is it the end of globalization?
Isn’t it always the case when grain prices are high, farmers are hampered by drought conditions and sky-high input costs.
Some farm groups are urging congress to open up Conservation Reserve Program acres to crop production because the war in Ukraine threatens to decrease grain production as many farmers there will not be able to plant crops this year. However, that may not be an option for many farmers especially those in drought impacted areas.
I read an article the other day from CNN Business that the war in Ukraine has signaled the end of globalization and relying on other countries for goods and services. The article quoted Larry Fink, CEO of BlackRock asset management company, saying that Russia’s isolation will “prompt companies and governments worldwide to reevaluate their dependencies and reanalyze their manufacturing and assembly footprints.”
That may be true in relation to energy usage because it has become apparent that the United States should produce its own oil and not rely on Russia or the Middle East for our energy needs.
In my opinion that would not work for U.S. agriculture. For one, ag depends on exports because we produce way more grain and meat than we can use here at home. And, conversely we do not have the raw materials here to produce inputs like fertilizer.
And there are some items like computer chips and other high-tech items that are used in agricultural machinery that cannot be produced here without importing rare earth minerals from other countries.
I’m sure you’ve all read the stories about auto dealers being short of vehicles because manufacturers can’t get enough computer chips. This also effects the farm equipment industry. The chip shortage has shut down factories that produce automobiles and farm equipment.
I hate to disagree with the CEO of a company that manages $10 trillion in assets but we let the globalization cat out of the bag several decades ago and it won’t be easy — and may be impossible — to put it back in the bag.
Although globalization may not be an option for Russia anymore which could be a good thing.
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