No matter where you turn, there’s been a lot of talk about global recession; not just in the United States and Canada, but also in other G7 countries are facing some really hard economic times ahead.
As interest rates have gone up, you’d expect protein demand to drop. This is not the case, as the demand has stayed quite strong. It has left many scratching their heads and wondering, what on earth is going on?
Not only have interest rates risen, but the average income around the world has escalated, too. This, says Don Close, chief research and analytics officer with Terrain, is likely the reason for increased demand.
“We have an untold number of examples of when somebody starts to earn more money, the first thing they want to do is eat better,” Close explains. “Even with the recessionary pressures — they are there today, I don’t want to talk around them — we are still seeing a lot of income globally. We’re seeing incredibly low unemployment rates, which even with the inflationary pressures, if somebody has a job, [they] can make more money next week.”
Looking ahead, there are certain pressures we need to be watching out for that would give an indication for cause for concern. The two biggest concerns, says Close, is the escalating COVID-19 crisis in China, and the Russia/Ukraine war — especially with questions surround whether it will expand to include additional countries.
Another concern with the situation in Russia and Ukraine, says Close, is the long-term repercussions economically, too.
“If you look at the economic damage that is occurring to Russia, because of the sanctions, and you look at just the physical structural damage that has been occurring in Ukraine. The time period for rebuild — it’s not going to be over with as soon as the fighting stops. This thing’s going to take a long time to unravel.”
Check out the full conversation between Close and RealAg Radio host Shaun Haney, on the long-term implications of changing demographics in China, a commodity outlook for 2023, what is going on with the hog industry, and more: