Why Are My Eggs So D*** Expensive?

Before we dive into today’s newsletter, I wanted to remind everyone that we are only 1 WEEK AWAY from the Webinar – Global Outlook: 1 Year Into the Ukraine War. So if you haven’t already signed up, click the link below for more info.

Now back to the eggs…

It’s time we get to the bottom of the question on everyone’s mind…why are my eggs so damn expensive?

Inflation takes no prisoners, but we may have another source to thank for this…avian influenza, aka bird flu. This resulted in a massive loss of chickens and the culling of herds to prevent further infection. And can you guess how you get more chickens?

You have to hold back some of your eggs, and then you have to wait…and then raise the chickens (for 2-6 months) to the point where they can start producing eggs. Unfortunately for us, this is how almost everything works in agriculture. You can’t just build a facility and start producing wheat overnight, you have to account for an entire production cycle.

Now take this framework and apply it to the Ukraine War. What happens when the fifth-largest exporter of wheat, the fourth-largest exporter of corn and the largest exporter of seed oils goes offline? The world’s going to have bigger problems than egg prices…

Prefer to read the transcript of the video? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

TRANSCIPT

Still in San Diego, just had breakfast. And it occurred to me that, well, we’ve all been struggling with inflation for the last several months. But if you’ve noticed, eggs are by far the highest priced thing out there right now, based on where you are in the country, a dozen is now between $5 and $9.

The reason is not because there’s been a failure of the supply chain. The reason is not because there’s a shortage of imports. The reason, quite simply, is flu. The problem with maintaining chicken populations is that chickens are birds, and birds can fly…not the chickens that we raise for eating or for raising eggs, but other birds. And since birds are mobile, they carry their bugs with them and they crap. And the crap falls out of the sky. And sometimes it hits a domesticated bird.

Anyway, we had an outbreak of avian flu about a year ago, and as it roared through the Midwest and took out a lot of chickens, a lot of chicken farmers had to go through and cull their herds to prevent it from infecting anymore.

Now, from the point that you decide you want more chickens, you have to do two things. Number one, you have to hold some of the eggs back. So you’re talking about a reduction in output between a quarter and a half. Based on how fast you’re trying to recalculate. And then you got to wait because you got to raise these things. And it takes about I mean, it really varies greatly on the species, but somewhere between two and six months to raise an adult chicken to the point that it can be laying its eggs itself.

So this process started about three or four months ago. I mean, we have another 2 to 3 months to go before we really get that first huge additional generation assisting, and then we can start dealing with the backlog. So we are still looking at high egg prices for another 3 to 4 months. 

Now, this sort of thing is pretty common in agriculture. People forget that, you know, when we have a shortage in something like a car because we can’t get a spark plug or a semiconductor, once you get the new facility on line, all of the other parts can be in place. And then you just go through the semi-finished cars. You plug in this last piece and you’re good to go. Well, that doesn’t work with food. If you have a food shortage, doesn’t matter what it is. You’ve got to wait for an entire production cycle to go through. And if you’re talking about plant based agriculture, sometimes that’s another year. Everything has to be in place. The pesticide at the right time, the seeds at the right time, the irrigation at the right time, the fertilizers at the right time, the harvest at the right time. And if you miss any one of those pieces, if you have a yield at all, it’s going to be paltry compared to what you’re used to. And you simply have to wait for the next growing season for things to begin.

One of the things that we’re seeing in Ukraine more right now is that the Ukrainians have been favoring corn and seed oils in this food evacuation program that they basically have with the United Nations. Ships can come in and dock at Ukrainian ports. The Russians have promised not to bomb them. And so the Ukrainians have to choose what goes in. And as a rule, corn and oilseeds generate more income for them, then wheat. So that’s what they’ve been favoring. Wheat output from Ukraine has basically stopped whereas corn is more or less where it was before the war, maybe a touch higher replacing it that requires some other producer someplace else. Crop switching to wheat in order to plug the gap or bringing new land on line. Regardless, it takes a year. And remember, we haven’t yet seen the real disruptions to the Ukraine war because the Russians haven’t specifically targeted the ports in mass enough to disrupt large scale exports or really in totality. But we’re probably going to see that really soon.

By the time we get to spring, it’s going to be a different kind of war. The Russians are going to be very clearly going for the throat instead of targeting civilian electrical infrastructure, they’re likely to go after food production and transport. And if they do achieve a breakthrough in the southern front, they’re absolutely coming for Odesa because that’s where most of the commerce in and out of Ukraine transits.

We’re about to lose the world’s fifth largest exporter of wheat, fourth largest exporter of corn and top oilseeds exporter. And there’s no one in the world who has the scale or the spare capacity to replace that. And even if they did, you’re talking a year out. This is going to get a lot worse before it gets better, even if the Ukrainians actually win the spring offensive to come.

Alright. Until next time.

2023: Cheers to a New Year of Disruption

I’m always asked what I expect to happen over the next decade. Well, the globalization we’ve all come to love…you know, the one where everyone got everything they wanted…yeah, that’s changing.

The world has been globalizing since 1945 and even sped up after the Cold War. This caused the world map to shift. Colonies became countries; people started living in towns (aka cities), having fewer kids, and so on. The growth story since the Cold War can be surmised by one word – crazy.

But, we’ve hit a point of mass retirement across the globe. Consumption is falling. This is the point where history starts to turn. Welcome to the world of LESS.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

Why I’m Bullish on Houston

When you think about cities with bright futures, what are the factors you consider? Energy Production? Agriculture? Population? Manufacturing? There’s plenty more, but let’s focus on those.

Houston is a leader in all of that…and more. So once the global supply on each of these inputs and outputs dips into a deficit, Houston will be primed and ready to fill the need.

Established infrastructure + decreased supply = more money = more investment = Houston becoming one of the most dominant players in global production. Does me being bullish on Houston make a bit more sense now?

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

Trade and Reshoring in the USA

Despite what you might be hearing, the United States is in the midst of its greatest period of industrialization since WWII… if not ever. How did we get here?

For starters, the political environment of the last half decade or so has shifted rapidly. Part Trump, part COVID and supply chain SNAFUs and part post-Russian invasion of Ukraine, the time is ripe to bring more of the production and manufacturing of US-destined goods back to the US. There are natural advantages to operating in the US as well–thanks to shale, Americans have some of the lowest-cost energy in the world. And thanks to the US’ millennial baby-boom, we have a large cohort of relatively young people to lead consumption for decades to come.

Which brings us to Detroit. The current challenges facing America’s once mighty Motor City are well known—but there are plenty of reasons to be optimistic for Detroit’s future. It’s one time competitors like Germany and China are facing significant headwinds, and that production has to go somewhere. Detroit’s integration with southern Ontario’s manufacturing hub, America’s inland waterways and existing manufacturing base means the city is primed for much brighter days ahead.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

Some Economic Questions…and Some News!

The nature of the economic system so many governments are attempting to grapple with right now is unprecedented in modern history. For much of the span of human history since industrialization, governments could reasonably promise their subjects some kind of more. The promise of more held that the economy–no matter the political system in charge of it–could be expected to grow, largely through population growth and rising demand.

Enter the End of More. A central theme of my equally cheery-titled new book, The End of the World is Just the Beginning, the pie for many countries is as big as its going to get. This is especially true for countries staring down terminal demographies: Germany, Italy, China, Japan. With population growth firmly in the rear view mirror, these countries can’t rely on a baby boom to spur consumption-led growth.

Which brings us to our current problem with inflation. Central banks’ primary tool in battling inflation is through raising interest rates. Making borrowing more expensive usually dampens demand, thereby pressuring prices to fall. The trick is not dampening demand too much, and risking recession. For the world’s oldest populations, this is going to be an near-impossible balancing act. 

And now for a bit of good news–The End of the World is now officially a New York Times best seller! On behalf of myself and my entire team: thank you, thank you, thank you.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

The End of the (Developing) World?

In case you haven’t heard, my upcoming book The End of the World is Just the Beginning gets released this Tuesday, June 14. You can pre-order it here.

A lot of my work, and my books up to this point, have been about the rise of powerful nations and the global framework that got them there. This new book is a bit of a different creature. 

This book is about the end of that system–namely, globalization–and what that means for our collective future. Whether its agriculture or manufacturing or finance or energy, there’s a chapter for everyone on how the pillars of the developed economy will look on the backend of one of the largest upheavals of the global economy since the end of World War II.

Here’s a video paraphrasing several of the book’s themes, applying them to the raft countries that we today collectively know as “the developing world.”

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

Boomers, Mexicans, and Trucking

Demographics are at the core of what we do here at Zeihan on Geopolitics. More than just a count of population, demographic data–often expressed as a pyramid-shaped graph–can deliver a wealth of information about a society. Is the country in question rapidly aging? Are they going to experience a labor or tax revenue shortage, or a windfall? Coupled with other information, a firm grasp of a demographic profile can help you easily start to put together a country’s geopolitical reality. 

Here in the United States, our demographic realities have long been dominated by the Baby Boomers. The largest generation in American history, they have had an outsized impact on the rapid social and economic transformation of the American post-War era. And as the Boomers enter mass retirement, their exit from the labor force is going to have a similar impact on the American economy.

But these impacts won’t be felt equally across the board. Cultural and generational differences mean that in certain fields–such as the trades–American Boomers occupy an outsized percentage of jobs. Society pushed Gen X and millennials toward higher education and away from things like blue-collar work. The United States was able to lean on immigrant labor, chiefly from Mexico, to fill gaps. But it was still mainly Mexican Boomers coming to do the work.

With the Baby Boomers aging out of the labor pool en masse, and with immigrant flows from Mexico unlikely to ever reach their heyday of the late 1990s and early aughts, significant pressures on the US labor market are here to stay. One of the industries most impacted? Trucking. And the reverberations of that reality are being felt across the entire US supply chain.

If you enjoy our free newsletters, the team at Zeihan on Geopolitics asks you to consider donating to Feeding America.

The economic lockdowns in the wake of COVID-19 left many without jobs and additional tens of millions of people, including children, without reliable food. Feeding America works with food manufacturers and suppliers to provide meals for those in need and provides direct support to America’s food banks.

Food pantries are facing declining donations from grocery stores with stretched supply chains. At the same time, they are doing what they can to quickly scale their operations to meet demand. But they need donations – they need cash – to do so now.

Feeding America is a great way to help in difficult times.

The team at Zeihan on Geopolitics thanks you and hopes you continue to enjoy our work.

DONATE TO FEEDING AMERICA

Supply Chains No More: The Question of California

You’d be forgiven if you though the biggest challenges facing the US supply chain was its overreliance on the state of California. While some 40% of US containerized imports come through the ports of Los Angeles and Long Beach, the ports are not the problem. 

And while the cities of Los Angeles and Long Beach certainly haven’t been quick to come to the aid of their beleaguered–and admittedly quite advanced–port terminals, the problem is so much bigger than the administration of any one port complex, or city, or state. Even one as tremendously and tremendously afflicted as California.

Current supply chain woes aren’t just about goods getting to Southern California, or how efficiently Southern Californian dockworkers can get those goods in containers off of ships. It’s all ports, it’s all transport, and it’s about a cascading series of crises impacting not just how goods get to the US from China, but how we move goods from Savannah and Long Beach and Tacoma and Houston to Topeka and Louisville and Phoenix and Duluth.

REGISTER FOR SUPPLY CHAINS NO MORE

Please join us for our upcoming seminar tackling these issues and more. 

Scheduling concerns? No problem. Webinars will be recorded and shared along with presentation materials to all registrants to watch at their convenience. 

Part II: Supply Chains No More
Friday, November 19

And coming soon, 
Part III: The Face of Inflation
Wednesday, December 1

REGISTER FOR PART III: THE FACE OF INFLATION

Supply Chains No More: Semiconductors

The American economy faces shortages of every conceivable product, but few widgets have captured the public imagination as much as semiconductors. Ubiquitous and powerful, these little silicon bits are what separates the modern digital world from the rest of human history. We need them. Lots of them. In everything.

Unfortunately, manufacturing semiconductors isn’t nearly as easy as flipping a few switches. Each facility costs about $10 billion in funds, at least two years in time, and necessitates a small army of specially trained labor. Even worse, as our needs change, fab facilities must be retooled. Even if that could be done overnight — and it cannot — there’s a lengthy lead time between a fab beginning work and the first new chips coming out. Months. And that’s just to get the chips our the door. You still need to get them delivered to manufacturers who will put them into the components where we’ll use them: into flash drives, wiring harnesses, phones, microwaves, household appliances, televisions, computers, and so on. The months necessary to make the chips is just the beginning–they are only a part of completely separate, complex, and global supply and assembly chains.
 
And therein lies the rub. The long delay for getting a semiconductor supply system tuned just right is just the first thing that has gone wrong in our world of globalized manufacturing.
 
Join Peter Zeihan November 19 for Supply Chains No More, the second of a three-part series of seminar exploring the challenges facing the American and global economies.

REGISTER FOR SUPPLY CHAINS NO MORE

Also in this series:
 
Part I: Wither the Workforce
November 17

REGISTER FOR WITHER THE WORKFORCE

And Part III: The Face of Inflation
December 1

Please Join Us: Wither the Workforce

Peter’s back from chatting with dozens of firms across the manufacturing, finance and agricultural space and one topic kept popping up: what’s up with COVID vaccine mandates? The answer — from the business community — might surprise you!

The impact of vaccine mandates is only one of a plethora of issues impacting the American workforce. Join us Wednesday, November 17 for Wither the Workforce, a wide-ranging discussion of everything from COVID to manufacturing trends to technology to security to demographics, all from the point of view of the labor markets — with a heavy emphasis on the workforce of the United States and those of America’s partners and competitors.

REGISTER FOR WITHER THE WORKFORCE

Part I: Wither the Workforce is only the first of a three-part series on the life and times of current major economic trends. Also in this series,

Part II: Supply Chains No More
Friday, November 19

REGISTER FOR SUPPLY CHAINS NO MORE
 
And coming soon, 
Part III: The Face of Inflation
Wednesday, December 1