More Supply Chain Crunches and More Potential for Disruption

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In today’s Money Morning…no fertiliser, no food…the future of agriculture is in the lab, not the paddock…and more…

If you thought the global supply chain issues were over, think again.

A key exhaust fluid for diesel vehicles, AdBlue, is in dangerously low supply, all because the suppliers of this key ingredient simply can’t get enough urea to make it.

As a result, the media has already started asking questions about what this will mean for our vital trucking industry, particularly as it’s the backbone of the road transport network. So if that is jeopardised, it could put even more pressure on domestic supply chains.

Needless to say, it’s all shaping up to be one big mess. And with no immediate end in sight, it could get worse before it gets better…

However, beyond the immediate diesel issues, I’m far more interested in another industry. One that is arguably at even more risk of delivering a big shock to everyday consumers: agriculture.

No fertiliser, no food

One of urea’s biggest uses is as a fertiliser and animal feed, helping farmers cultivate both crops and livestock.

As you can imagine, that makes it a pretty important product in global food supply chains. Something that is now at risk of leading to rising costs.

Naturally, this could lead to higher costs in the supermarket for consumers. Or worse, it may even put some farmers in a position where they’re unable to continue operating. It all depends on how long it takes to fix these crippled supply chains.

According to some industry veterans, we shouldn’t hold our breath.

The situation may even get worse in early 2022 before it gets better, with reports that global urea producers may be ‘sold out’ until the new year. A situation that could create drastic backlogs.

All of this comes on the back of an already tough time. The UN’s food price index is already at highs not seen since 2011, setting the stage for yet another inflationary headwind for not only markets, but everyday people.

But despite all this doom and gloom, I think it presents a very unique opportunity.

A chance for new solutions and disruptors to step up to the challenge.

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The future of agriculture is in the lab, not the paddock

While I’m sure it still seems alien to most, lab-grown or ‘cultured meat’ is the future of food. Products that are only going to become cheaper and more accessible as time passes. Directly contrasting the rising costs of farming.

After all, you have to remember that agriculture is heavily subsidised, with an estimate of some US$470 billion of support from governments all around the world for farming.

As the UN recently reported, though, a lot of this money isn’t particularly useful. It can in fact lead to price distortions and inefficient practices. A factor that only further complicates the rising issue of food security.

But lab-grown meat could change all of that.

There is no need for urea to farm livestock, nor is there any chance of seasonal outliers to impact output. And for the ethically minded, it involves no slaughter.

In almost every way, lab-grown meat is superior.

The only exception is the cost, currently. But like I said, that will only keep decreasing as the technology develops.

Keep in mind, this isn’t some futuristic pipedream either.

Just over a week ago, Singapore approved the first lab-grown meat product for sale. A type of ‘chicken bite’ that is made from chicken cells grown in a bioreactor and combined with plant-based additives.

Again, I’m sure that doesn’t sound all that appetising when you break it down like that. But it doesn’t change the fact that lab-grown meat is here to stay. Because even if the thought or taste may seem a little more unnatural, the economics are simply too beneficial to ignore.

Just another exciting opportunity to keep an eye on in the post-pandemic world.


Ryan Clarkson-Ledward Signature

Ryan Clarkson-Ledward,
Editor, Money Morning

PS: Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks. For information on how to subscribe and see what Ryan’s telling subscribers right now, click here.

About Ryan Clarkson-Ledward

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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