Jennifer Clapp

These countries have become highly dependent on food imports, highly dependent on imports of industrial inputs like fertilizers.

Suddenly, when everything changes and prices go up, they're kind of left holding the bag.

As food prices tend to rise, we tend to see higher financial investment in financial products like wheat futures.

There's all kinds of exchange traded funds and other kinds of commodity index funds.

Investors go into those products as commodity prices rise.

So as oil prices are rising, you know, oil is part of some of these commodity index funds that bundle energy.

They bundle things like fertilizer.

They bundle things like food prices all into a single investment product.

That's another way in which energy and food prices are coupled through financial investment.

And we haven't yet seen the kind of speculation we saw after Russia invaded Ukraine.

That was a more immediate speculative fervor.

And we had that speculative fervor again in 2008, partly because in those moments the amount of grain in storage was a little bit less than it is now.

So fortunately, we have a pretty good...

set of stocks in reserve right now of food, and that's keeping the lid on things.

But if there's a major climate event, or if this conflict lasts more months, it could balloon.

Although globally, the top four firms control maybe a quarter of the global fertilizer market on the global scale, if you look at the national level, it's often much, much, much, much more concentrated.

So in North America, it's like two companies control almost 100% of the potash because potash is so geographically bound.

And in nitrogen, I think it's 75% of the nitrogen market in North America is controlled by just four firms.

And it's the same if you go to Indonesia, it's 99% is a fertilizer market.

Nitrogen is controlled by four farms.