YouSaid · the spoken record

Per Pinstrup-Andersen

lines on the record: 28
first: 2022-08-09
most recent: 2022-08-09
sittings or episodes: 1
sources: podcast

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“Movements or even guerrilla movements. So you wind up seeing a much higher propensity for civil unrest and even government overthrow. One of the consequences of that is mass migration. People leave their home when they can't get enough food to feed their families and especially if bullets are flying. We are seeing record numbers of forced migrants. So there are like 89, 90 million forced migrants at the end of 2021 before an additional 12 million Ukrainians were driven from their home. So we're probably up over 100 million forced migrants in the world today. We haven't seen numbers like that since World War II. What does that mean? First, it means the world has a humanitarian crisis, very expensive to address. It's much more expensive to try to feed people than it is to feed them in their homes. But secondly, debt migration causes lots of”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“Around the world. The resulting volume at 2013 Oxford University press book that I added in on food security and socio-political stability. Its core thesis was that food And the evidence behind that was pretty overwhelming and it's been followed up by a bunch of very careful quantitative studies demonstrating pretty convincingly that there is indeed a causal effect of high food prices on social unrest and violence. We saw this in 2008 with food price riots all through the developing world, notably in places that don't have reasonably robust safety nets. If governments are stepping in and protecting their population, then people don't take to this tree. But when food prices get high and the simple act of going out to buy bread for your family that day infuriates people, it is just one more bit of evidence already disgruntled people have that their government isn't actually representing their interest. And they become much more likely to take to the streets and they become much more easily co-opted by opposition.”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“We already started with about 3 billion people worldwide unable to afford a healthy diet. So adding another half billion onto that causes a crisis. And that can translate into knock-on effect political instability in developing countries in particular that don't have good safety nets so that people really feel the pain of these market gyrations, problems that exist as governments start to have conflicts with one another diplomatically because of things like export ban if governments are cooperating with one another on one thing, they tend to stop cooperating with one another on other things. The connection between high food prices and socio-political unrest as well established now. I was asked in 2011 by the U.S. National Intelligence Community to coordinate a group of experts around the world to probe what food insecurity meant for socio-political instability.”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“Specifically, Barrett warns that if we don't address the food crisis soon, there'll be severe humanitarian consequences, potentially undermining social stability in the most vulnerable developing countries.”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“That investment in RD is really fundamental in its long term. The window for that to happen is only the next maybe two to eight years. Once we get into the 2030s, if we haven't made more headway than we're making right now, we will have some significant problems.”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“Moving rural to urban areas. All three of those things drive added food demand. So that is unavoidable. The question is how quickly can food production rise to meet that demand? And we need to be investing more. We need significant investment in systems that will recover waste to turn it into fertilizers and feed for animals and thereby take pressure off the land. We need investments in controlled environment agriculture that can deliver significant expansion affordably for fruits and vegetables for urban population. So we don't rely on long supply chains with massive greenhouse gas emissions. And we need improvements in basic crops as well as alternative protein to help to satisfy some of the growing demand for animal sourced foods without having to turn in massive amounts of extra land into cultivation just for animals.”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“The key message is people need to not be distracted by the war in Ukraine as the big driver here. The wheat export loss from Ukraine that we believe is happening is less than 1% of global production of grain-based calories. So opening the port of Odette will reduce a little bit the losses of Ukrainian wheat, but it's not going to matter a whole lot to global commodity markets. If the war ended tomorrow, the fundamental problems of global agri-food systems are not going away. They existed before the war. They'll continue after the war ends. And the only way to address them is through major technological and institutional innovations that help us to produce more food on left land and with less water. Good demand is going to continue to grow. Human population is growing. Incomes are growing, and more people are growing.”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“All that said, Barrett doesn't believe that a resumption of Ukrainian grain exports will provide much relief. He argues that investing in technologies that increase food production using less land, water, and costly inputs is the only way to solve the global food crisis.”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“oil exporter. A study one of my colleagues at Cornell and I did a few years ago showed that when you have changed in the global oil price, that actually has a bigger and faster impact on retail food prices in Africa than does a shock to the global maize market, which seems really counterintuitive to people. So the impact to the war is felt through both of those channels, the oil markets as well as the agricultural input and output markets. But that's just the recent aggravation of an underlying problem.”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“in those commodities which drives prices up as importers have to look for a new supplier. And to get a new supplier, they typically have to pay a premium. But another big part is the disruption in oil market. For every dollar we spend as consumers on food, only about a quarter of it actually goes back to farms. About three quarters of what consumers spend on food globally is actually going into all the different things that happen when commodities leave the farm gate. So it's covering the transport, the storage, the processing, the manufacturing, the retailing, the wholesaling, et cetera. And oil is a big part of the cost structure of those things, as is labor. Both labor costs and oil costs have gone up a lot. Oil costs in particular increased markedly in response to the war because Russia is such a significant”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“Of what's been changing in the underlying fundamentals of agricultural commodity markets, we see significant growth in animal feed per person because as incomes have grown worldwide, especially in low and middle-income countries, places like China, you see a big added demand for animal source products. And that means you got to feed those animals. The inefficiency of feeding animals is a big source of the underlying structural demand increase for agricultural commodities. The war in Ukraine aggravated thing or two really basic reasons. One is that both Ukraine and Russia are major exporters of several important commodities, wheat and maize and sunflower oil, in particular, as well as inputs like fertilizers, nitrogen fertilizer in particular. And so the war is disrupting the regular trade.”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“And then add the disruptions caused by the pandemic other than the supply chain disruptions, including the fact that we've seen this math of reorientation from people eating outside their homes in cafeterias, at schools, in offices, as well as at restaurants. The packaging, processing, manufacturing supply chains are completely different for large-scale institutional sales to restaurants and cafeterias and such versus retail sales. And that has driven food prices markedly higher and caused changes in agricultural commodity markets. All of that stuff predated the war. And prices actually jumped more before the war. And the final bit part is livestock feed. Livestock feed and biofuels converting agricultural commodities to liquid fuels for transport primarily. Consume about half of the world's grain production. And that's a big part.”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“has actually jumped more in the year to last May than they did in the year to mid-May, put differently the run-up in prices in global food markets long predated anybody's serious concern about Russia invading Ukraine. It was coming from a combination of supply chain disruptions in markets for everything, as we've all seen. And that has impacted pretty heavily global agricultural markets. Agricultural commodities are relatively low value to weight. So you have a lot of problems with ocean freight service providers not wanting to”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“The global food crisis is really a global food price crisis, prices for food are about 20% roughly higher than they were a year ago worldwide. Basic commodity prices. And then add on to that oil prices are higher. So transport takes the basic wholesale commodity prices and adds the margin for delivery. So individual consumers going to their local market face even higher prices than we see in the global commodity markets because you have to add a transport margin off there. So this is creating a real cost of living crisis for lots of the world's poor and even the middle class because they spend a lot of their budget on food. For most poor populations, they're spending 30 to 70 percent of their income on food. If food prices double, they simply can't afford a healthy diet. So there are lots of different”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“I think we could see Brennet $60 to $80 a barrel, OPEC plus they're not hot to see big reduction in prices, and American frackers used to be the drill baby drill approach, but now the lenders and investors are saying, hey, we'd like to see some dividends, stock buybacks, some profits. So you don't have these things in free fall, but I do think you have a number of factors that are pushing oil prices down. Look at the agricultural sector. Now, of course, that's very weather dependent, but so far the weather in this country looks pretty good. Copper is used in almost anything it's manufactured, computers, plumbing fixtures, machinery, cars, and therefore it's a very good measure of global manufacturing. And I think that we're in or close to a recession on a global basis. So you get a cut back there. Also, a nice thing about copper in terms of forecasting is that it doesn't have cartels.”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“an excess supply and of course that pushes prices down copper supply is also coming out of the woodwork the international copper study group they see refined copper of 328 000 tons surplus this year versus a deficit last year of 475 000 tons speculators also tend to be on the same side of the same trade at the same time and it has very interesting implications because let's say you'll see a sell-off in wheat then you'll see a sell-off in copper why because a lot of the guys who are long wheat are taking a beating they've got to conserve capital so they liquidate their copper positions even though copper has nothing to do with wheat”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“And the dollar has been strong, and I think the will continues strong. It's a safe haven, and it makes life very tough for countries that have to buy commodities in dollar terms when their own currencies are weakening. You look at Brent. In early June, the peak, it was up 59% in dollars, but it was up two-thirds in Chinese one and 85% in Japanese yen. And it's much worse than some of the emerging markets. Many of these emerging economies simply don't have meaningful currency reserves. And they have current account deficits. If you have a current account deficit, it has to be covered by a reduction in your currency reserves. And I think that with the global recession, if that promise is going to increase on the supply side, the one thing to keep in mind about grains, and it's true of most commodities, high prices are the best fertilizer when you have high prices, farmers plant fence road to fence row, and you get...”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“A number of reasons that suggest to me that we've seen the peak in commodity prices. China, of course, which is a huge user of commodities. You think about China, their economy accounts for 18% of global GDP, but 24% of global manufacturing. A lot of what comes into China in terms of commodities is then turned into manufactured goods which are exported to the West. And with what I think is a recession developing in North America and Europe, this backs up to China. And of course, China's also had a problem with COVID and the shutdown. Another thing is the strong dollar of 45 well-traded commodities. 42 are traded in dollars. If you want to trade wool, you got to do an Australian dollars. If you want to trade amber, you've got to do in Russian rubles. If you want to trade palm arbor, you got to do it in Malaysian ringots. But the rest of them are in U.S. dollars.”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“Sir John Templeton said the most dangerous words in the English language are this time it's different. And I think you've got to have a lot of substantial evidence to say it is going to be different. And so to suggest that you're not going to have typical responses, I've heard that chorus many times. Maybe it finally will happen in the case of commodities, but it hasn't in a long time. And I've been in this business over 50 years.”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“If you look at commodities, and I'm looking at the broad CR. In a phase of huge commodity demand, and I'll give you two big sources of the demand. One was the American Industrial Revolution, which was in full flower during that last part of the 19th century, and the other one was the force industrialization of Japan in the last three decades of the 1800s. Huge commodity users. And yet, correctors for inflation prices came down. Yeah, they bounced back in wars. And when you get oil embargoes and things like that, but they're pretty short-lived. And I think the idea of shortages in commodities, boy, you're swimming upstream if you want to say that. I can remember when serious economists thought that the telecommunications business was going to come to Grinding Hall because there wasn't enough copper in the Earth's surface to make all the wires necessary. Guess what? Fiber optics came along and silicone is the second most abundant element on the Earth's surface. Human ingenuity beats shortages any day.”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“To overcome the history of poor returns? The answer is the sector needs a three-year track record. And when we go back and we look at historical supercycles, it gives you an idea why these supercycles last somewhere between 10 and 12 years. Years one through three track record. Years four through six, you put the infrastructure in place to accommodate that investment and it creates cost inflation. And then year 7 through 12, you debottleneck the system. And that's what happened in the 70s. That's what happened in the 2000s. The second reason is volatility. The volatility is really high is discourages investment in the context of the broader portfolio. And then number three is policy. What's different this time? Policy is more unfavorable, whether it's coming from ESG or if it's coming from the likes of windfall profit tax.”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“Despite the fact that the only assets up year to date besides a dollar and the ruble are hydrocarbons and carbohydrates, commodities are underinvested. One thing that's really important to keep in mind about positioning in commodities is that when we look at what happened to AUM since 2008, it's risen tremendously. But at the same time, the amount of assets in commodities declined sharply over that time period. So relative to total AUM, the amount of capital in this space is very small. When I speak with allocators, they indicate there is three reasons why their clients do not want this space. Number one, a history of poor returns. Remember, it was just two years ago, the losses in this space were nothing short than epic with negative oil prices.”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“Implications on growth for the following three decades brings into question who solved the inflation problem longer term. Was it Volker or was it Burns? Who was crucified during that time period by letting the system run hot? It created the largest CapEx boom that we've ever seen in modern economic data. The key point is that a recession is a temporary fix, not the long-term solution to the problem. We need investment and thus far we have yet to see an investment cycle begin to take root.”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“70 71 oil demand was relatively stable. In the 1970s, there were multiple recessions. The economy would go in and out of real growth in real contraction, but nominal GDP kept growing over that time period. And so did commodity prices as well as commodity demand during the 70s. A lot of focus is on Volcker raising rates to 20% and that killing off the inflation. Let's remember he did that in 1979 after a decade of a major fact, the biggest capex boom we can find on record here in that time period. And think about the benefits we got from that 1970s CapEx boom, debottlenecked oil supplies for two to three decades, refining capacity, metals production capacity, the military investment led to the internet. So that investment boom in the 70s had profoundly.”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“Recessions and demands of structure are a temporary solution to the higher prices. They're not a long-term solution. There is only one long-term solution here, and that is investment to debottleneck the system, either through increasing new supply or through technologies to improve productivity. It's important to remember food and fuel demand is not that cyclical. Copper and the metals can get hit hard, and that's why copper is sold off so sharply, but food and fuel don't really vary that much over the business cycle. The reason why most people's memories of how damaged oil demand was in the previous three recessions is the last one was a pandemic. So you shut down driving. The one in 08 was a credit crisis and everything shut down, which caused oil prices to collapse. And then the one in 01 was due to September 11th. But if you go back to the Fed induced recession,”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“In particular, Curry argues that a recession would only provide a temporary solution to high commodity prices, given underlying supply constraints that will require substantial capital and time to resolve. But even if we have deeply rooted supply shortages, if we end up in a global recession, won't demand just fall very sharply and end this high price environment for commodities.”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“It crashed and we ended up with underinvestment in the old economy, which then created supply constraints throughout the 1970s. Then in the 2000s, what preceded it? The dot-com boom. This one is no different. On the demand side, COVID was a crisis of inequalities. It forced macro policy to shift from a focus on financial stability to a focus on social need. And it did it simultaneously everywhere in the world in a global synchronous manner. There's three policies that are very distinct and common across everywhere in the world. Policies around redistribution, the environment, and deglobalization. R-E-D, we call it redlining commodity demand.”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT
“In October of 2020, we started arguing that we were entering a commodity super cycle similar to what we saw in the 1970s and in the 2000s, driven by structural underinvestment in pretty much everything in the old economy, which we called the revenge of the old economy. Put bluntly, poor returns in the old economy, saw a capital redirected to the new economy. Another way to say it is investors preferred Netflix over Exxon, and rightfully so. The return on equity in Netflix was substantially greater than that of Exxon. The issue is it went on far too long, creating supply shortages. This dynamic is rooted in history. We go back to the super cycle in the 70s. It started in 68 and ended in 80. What preceded? The Nifty 50, the new economy boom of that decade.”
2022-08-09 · Goldman Sachs Exchanges · Food, Fuel, and the Cost-of-Living Crisis · IDENTIFIED FROM THE TRANSCRIPT