BlackRock’s Larry Fink worried about food supply
The world's biggest fund manager thinks it's food, not petrol, that is in for a real supply shock.
This Financial Times article shines a spotlight on the impacts of the fertiliser crunch on food prices around the world and the potential impact food price inflation could have on emerging market economies like those in Africa.
Read the full article here.
Below are our key takeaways:
- BlackRock founder Larry Fink thinks that the preoccupation with the energy crisis has distracted investors from the more dangerous impacts of inflation in food prices.
- Fink told the Financial Times, "We talk a lot about gasoline prices because that's what affects Americans, but the bigger issue is food," "Globally, the cost of fertiliser is up almost 100%, and that additional cost is reducing the amount of fertiliser used in farming".
- The World Bank forecast that global food prices would rise 20% this year.
- According to the African Development Bank, the impacts are especially bad for the African continent, which usually imports grain from Ukraine as well as produces its own food. Fertiliser prices in Africa have risen ~300%, and the continent is facing food shortages.
Putting aside all of the energy independence issues the world is facing right now, we think the markets are yet to catch onto just how significant the impacts of a global food crisis could be.
We are starting to see capital rotate into the energy industry.
The same can't be said of the world's food supply chains. With the Russia/Ukraine conflict contributing to a food security issue, the Financial Times article highlights just how big of an impact it is having on African food security.
The article highlights the need to look to alternate countries to fill the emerging food supply chain gaps.
This is where our Portfolio company Minbos Resources (ASX: MNB), fits in.
With its shovel ready phosphate (a key ingredient fertiliser ingredient) project in Angola and a proposed green hydrogen/ammonia project, MNB is looking to develop two projects that could help build out an agricultural industry in Angola and the broader Southern Africa region.
MNB is currently working towards a final investment decision on its phosphate (fertiliser) project, with the aim of having the project operational in 2023.
To see all the key reasons we are Invested in MNB, what we want to see the company achieve in 2022, and the key risks to our Investment thesis, check out our 2022 MNB Investment Memo here.