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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is Wall Street Week. I'm David Weston. The world

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Speaker 2: is focused on oil and gas not getting through the

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Speaker 2: strait of hor moves. But it turns out there is

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Speaker 2: another key material being affected by the war in Iran.

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Speaker 2: It is fertilizer, which American farmers need right now to

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Speaker 2: plant their crops. Plus, the world is focused on making

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Speaker 2: housing more affordable, and that is something easier said than done.

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Speaker 2: We go to Melbourne and Singapore to see two different

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Speaker 2: systems for helping first time home buyers and get two

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Speaker 2: very different reactions from people who have just bought their

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Speaker 2: first houses. Plus, everyone craves macha. But it turns out

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Speaker 2: we may not have enough to go around what happened,

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Speaker 2: and so when globalization cannot keep up with the demand

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Speaker 2: for a trendy food. But we start with a summit

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Speaker 2: that did not happen, at least not yet. President Trump

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Speaker 2: was due to visit President g in China, but he

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Speaker 2: postponed that visit because of the war in Iran, something

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Speaker 2: that further complicates a relationship that was already complicated. Nicholas

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Speaker 2: Burns served as US ambassador to China that kept a

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Speaker 2: distinguished diplomatic career in which he was Under Secretary of

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Speaker 2: State as well as ambassador to Greece and to NATO.

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Speaker 2: He is now professor at Harvard's Kennedy School Ambassador Burns.

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Speaker 2: There was supposed to be a summit coming up in

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Speaker 2: China between Prison g and President Trump, got postponed because

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Speaker 2: of the Iran War. Give us your perspective on what

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Speaker 2: role the Iran War plays in US China relations.

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Speaker 3: It's had a decisive impact on the US China relationship

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Speaker 3: this winter and spring, because, of course, China's fundamentally engaged

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Speaker 3: economically in Iran, importing one point three million barrels a

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Speaker 3: day on a discount that favors the Chinese, and the

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Speaker 3: Chinese have major investments, in fact greater investments in the

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Speaker 3: Arab Gulf States than they do in Iran, so their

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Speaker 3: interests have been fundamentally affected. And of course President Trump,

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Speaker 3: I think rightfully sensibly took the view in the middle

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Speaker 3: of a war. He couldn't go off to Beijing to

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Speaker 3: stand beside shijin Ping and have three days of semetery.

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Speaker 3: He had to be at his desk running the war.

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Speaker 3: So I understood the decision by President Trump and supported it.

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Speaker 2: President Trump has called upon various nations to help, particularly

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Speaker 2: with the straight of Horror moves, including China. Is China

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Speaker 2: picking sides in this.

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Speaker 3: China is very much attached to Iran as a political ally.

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Speaker 3: But I think we've seen in the Chinese reaction over

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Speaker 3: the last three or four weeks of this war that

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Speaker 3: the Chinese care a lot more about the predictable supply

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Speaker 3: of oil and gas coming out of the Strait of

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Speaker 3: Hormuz because they're dependent to a very large extent on

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Speaker 3: that flow of energy, and their investments in the United

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Speaker 3: Air memorates in Saudi Arabia and Katdar and Bahar in

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Speaker 3: Kuwait are far more substantial than what they had coming

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Speaker 3: from Iran. So I think there are two minds about this.

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Speaker 3: They didn't want to see their political ally bludgeoned the

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Speaker 3: way it has. But it's interesting, David, they haven't really

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Speaker 3: lifted a finger to help politically and diplomatically Iran. They're

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Speaker 3: much more focused on ending the Iranian missile attacks at

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Speaker 3: the Gulf Arab oil and gas refineries. I think they

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Speaker 3: want a quick end to the war itself. And one

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Speaker 3: of the intriguing questions here is there's going to be

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Speaker 3: an endgame, There's going to be an attempt to resolve

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Speaker 3: this by diplomacy. Can China play a role in that?

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Speaker 3: And I would say behind the scenes pushing the Iranians

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Speaker 3: to an agreement that would be I think the American

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Speaker 3: hope that they might do that.

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Speaker 2: So that is promising potentially if China were to play

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Speaker 2: some role in that, given history, has China done that

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Speaker 2: in the past, Has it typically played that sort of

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Speaker 2: behind the scenes role.

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Speaker 3: It has not. It has in its own region, for instance,

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Speaker 3: me and Mark, which is a neighboring border state, China's

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Speaker 3: fundamentally involved in trying to steer the course of the

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Speaker 3: civil war there. But the Chinese have not taken this

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Speaker 3: step as the United States has been doing now for

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Speaker 3: seven or eight decades of being a peacemaker and a

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Speaker 3: leading diplomatic actor. I will say this. When I was

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Speaker 3: in Beijing two years ago, Wungi, the Chinese Foreign minister,

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Speaker 3: presided over a ceremonial handshake you may remember this between

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Speaker 3: the Saudi and Iranian foreign ministers, and the Chinese then

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Speaker 3: began to message me and kind of in my face

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Speaker 3: say we're a big power in the Middle East. Now, well,

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Speaker 3: they haven't been present in the negotiations to date. Over

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Speaker 3: the last three or four weeks, it's been the United

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Speaker 3: States in Israel and the Gulf Arabs being the major

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Speaker 3: actors in this drama with Iran. So I think China

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Speaker 3: in a way has taken a hit on its political

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Speaker 3: credibility if you combine their lack of action to support

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Speaker 3: effectively Iran diplomatically. I never thought they would intervene militarily,

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Speaker 3: and combine that with their silence. Really when the United

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Speaker 3: States went into Venezuela in the early part of January,

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Speaker 3: I think they look like a fickle friend to both

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Speaker 3: the Iranians and also the Venezuelans. But there's another side

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Speaker 3: of this coin Shiesh and Ping has been positioning itself

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Speaker 3: throughout this first year and a quarter of Donald Trump's

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Speaker 3: second term in office. He says, and this is quite hypocritical,

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Speaker 3: by the way, and you can see through it, but

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Speaker 3: it has some residence in the global South, where the

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Speaker 3: predictable country, we're the holder of stability in the world,

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Speaker 3: both economic and politically. We defend the United Nations Charter

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Speaker 3: point counterpoint in this duel that he and President Trump

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Speaker 3: are having a friendly duel in some respects as to

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Speaker 3: which leader is the most respected global leader.

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Speaker 2: Now, the world is necessarily focused right now in Iran

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Speaker 2: and what's going on with the war there, and will

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Speaker 2: be until that's resolved some way. But there were a

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Speaker 2: lot of expectations for this planned summit between Prision G

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Speaker 2: and President Trump before that, go back before the Iron War.

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Speaker 2: What were the major issues between these two countries.

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Speaker 3: Well, you know, it's interesting, Scott Besson, Secretary Bessin had

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Speaker 3: taken the lead in preparing this summit for President Trump,

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Speaker 3: which is a little bit unusual. Normally in the last

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Speaker 3: few decades would have been the Secretary of State or

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Speaker 3: the National Security Advisor, And that tells you a lot.

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Speaker 3: I think President Trump is seeking some degree of economic

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Speaker 3: and financial stability with the Iranians after the wild roller

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Speaker 3: coaster ride from Liberation Day last spring on and what

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Speaker 3: the two sides were working out. And I very much

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Speaker 3: think this is a good idea, a truce in the

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Speaker 3: tariff war. The tariffs won't change much, but there'll be

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Speaker 3: a certainty that until the end of this calendar year

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Speaker 3: in twenty twenty six, both countries will stay at their

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Speaker 3: current levels, and that helps it helps markets with predictability.

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Speaker 3: It helps the global economy and the two individual economies.

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Speaker 3: Second truth in the supply chain wars. So China would

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Speaker 3: agree through the end of twenty twenty six, it's not

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Speaker 3: going to withhold rare earth or rare earth magnets from

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Speaker 3: the global market. The United States would agree, it would

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Speaker 3: not play the cards that it played in the supply

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Speaker 3: chain wars with computer parts, airplane parts, that kind of thing.

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Speaker 3: That's also I think positive. Third, the United States agricultural

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Speaker 3: industry depends on exports to China. In fact, China's the

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Speaker 3: largest export market. In most years, one fifth of all

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Speaker 3: of our agricultural exports go to that one market. China

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Speaker 3: and the Chinese over the last couple of years, including

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Speaker 3: when I was ambassador in the last two years of

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Speaker 3: my time there twenty twenty three and twenty four, reduced

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Speaker 3: significantly their purchases of American soybeans and sorghum and wheat

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Speaker 3: and pork products. And that has a big negative impact

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Speaker 3: on American agriculture. So President Trump, and again I think

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Speaker 3: this is a good idea, has been promoting the fact

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Speaker 3: that we need to return to much higher purchases by

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Speaker 3: the Chinese government, and then fentanyl. David has been thrown

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Speaker 3: into this as well, as you know. It's the leading

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Speaker 3: cause of death in our society Americans eighteen to forty nine,

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Speaker 3: and the majority of the precursor chemicals come from the

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Speaker 3: Chinese black market, not from the government of China, but

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Speaker 3: the black market. We made I thought, significant inroads into

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Speaker 3: this in the last year and a half of the

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Speaker 3: Biden administration. I worked very closely with the Chinese government

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Speaker 3: to try to reduce the sale black market sale of this,

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Speaker 3: and President Trump, I think has done a good job

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Speaker 3: keeping this alive as an issue. So those are four

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Speaker 3: issues where I think when this summit is rescheduled, could

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Speaker 3: turn out to be net positive for the economic relationship.

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Speaker 3: And as recently as two years ago, we had a

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Speaker 3: seven hundred and fifty billion dollars two way trade relationship,

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Speaker 3: and goods and services is a very substantial market for

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Speaker 3: American companies. We've talked a lot, David about the war

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Speaker 3: and Iran, which has been catastrophic in the short term

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Speaker 3: for the global economy and ag flows. We talked about

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Speaker 3: what's happening in Europe with Putin trying to cross the

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Speaker 3: brightest red line take over someone else's state. In the

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Speaker 3: long term, there's a greater interest China. China is out

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Speaker 3: to outcompete the United States. China wants to overtake us

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Speaker 3: militarily in the Indo Pacific. They think that by putting

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Speaker 3: a major state investments into AI, quantum computing, biotechnology, cyber technology,

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Speaker 3: space technology, they will become the technological champion of the

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Speaker 3: world in the twenty thirties and forties and fifties. We

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Speaker 3: simply can't let that happen. So we can't take our

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Speaker 3: eye off the big challenge, which is we do need

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Speaker 3: to pivot to the Indo Pacific so that we can

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Speaker 3: work with our allies Japan, South Korea, Philippines, Australia are

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Speaker 3: partner India to outcompete the Chinese. And I'm afraid that

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Speaker 3: another Middle East war was not in our interest. And

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Speaker 3: so that to me, for future presidents Republican and Democrat,

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Speaker 3: for the America, for our kids, David and my case,

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Speaker 3: our grandchildren, we've got to keep our eye on the

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Speaker 3: China competition.

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Speaker 2: Coming up. It's planting season in America, but the fertilizer

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Speaker 2: farmer's need may be stuck in the strait of horror moves.

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Speaker 4: We have never experienced anything like this in the fertilizer market.

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Speaker 4: I've been at it for twenty four years now, I've

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Speaker 4: never seen anything like it.

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Speaker 2: This is a story about the other shoe dropping. The

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Speaker 2: war in Iran has sent the price of oil and

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Speaker 2: natural gas soaring, putting pressure on just about everyone from

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Speaker 2: central banks trying to deal with inflation.

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Speaker 3: The economics effect could be bigger, They could be smaller.

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Speaker 2: They could be much smaller or much bigger.

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Speaker 5: We just don't know.

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Speaker 2: To people filling their tanks at the gas station.

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Speaker 6: Before the gas prices went up, I could fill my

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Speaker 6: car up for like thirty already five dollars.

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Speaker 7: Now it's costing me right at sixty.

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Speaker 2: But the strait of horror moves isn't just affecting energy prices.

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Speaker 2: It's also hitting farmers who need fertilizer for the crops

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Speaker 2: they're about to plant.

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Speaker 8: What's happening to farmers right now is a double whammy

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Speaker 8: at a time when they're very vulnerable.

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Speaker 2: Our special contributor Christie Friedland was among those who spotted

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Speaker 2: the fertilizer problem as soon as the war began.

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Speaker 8: I am a farmer's daughter, and I'm also a former

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Speaker 8: foreign minister and a former finance minister, and one of

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Speaker 8: the first things I thought when this war started and

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Speaker 8: when it was clear that Iran was going to be

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Speaker 8: blocking the Strait of Hormos, was oh, no, what's going

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Speaker 8: to happen to the farmers.

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Speaker 2: Fertilizer accounts for about twenty five percent of the total

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Speaker 2: costs of farmers of row crops such as corn and soybeans,

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Speaker 2: and since the war with Iran began, prices for nitrogen

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Speaker 2: based fertilizer have risen dramatically.

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Speaker 4: We had seen a major impact on global nitrogen and

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Speaker 4: phosphate values.

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Speaker 2: Josh Linnville is vice president of fertilizer it's financial services

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Speaker 2: firm stone X.

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Speaker 4: Of course, as most farmers will tell you, those prices

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Speaker 4: have skyrocketed, and it's based on the fear of a

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Speaker 4: lack of supply that's out there. We have seen because

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Speaker 4: of the shutdown to the Persian Gulf, the global s

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Speaker 4: and D for nitrogen and phosphate as well, which isn't

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Speaker 4: getting as much traction, not as as much attention, We

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Speaker 4: are seeing both of those get extremely tight. So everybody

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Speaker 4: is talking about the oil and the gas and everything

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Speaker 4: else that flows through there. Few people know urea being

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Speaker 4: the most commonly traded nitrogen product of the world, about

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Speaker 4: a third of the world's product flows through that straight

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Speaker 4: of horor moves. When you look at the top ten

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Speaker 4: list of global urea exporters, three of them sit behind

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Speaker 4: the straight of horror moves. That's Iran, that's Guitar, and

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Speaker 4: that's Saudi Arabia. Those three nations represent three of the

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Speaker 4: ten largest anhydrous exporting nations, and even on the phosphate side,

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Speaker 4: not a lot of people understand this. Saudi Arabia is

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Speaker 4: one of the world's top five exporting nations for foster

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Speaker 4: exports around the world, and again, all of these products

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Speaker 4: are stacked up and backed up in production is suffering

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Speaker 4: until the strait of hormoses reopen to save traffic.

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Speaker 8: Farmers are very affected by the price of fertilizer. Fertilizer

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Speaker 8: accounts for, you know, about twenty five percent of the

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Speaker 8: costs for a farmer. And this is happening just at

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Speaker 8: seeding time, as they're getting ready to plant their crops,

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Speaker 8: and it's happening at a time when farmers have been

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Speaker 8: really beaten up. You know, the trade wars have been

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Speaker 8: really hard for farmers. For American farmers, I should say

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Speaker 8: COVID was really really hard for farmers, and Russia's invasion

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Speaker 8: of Ukraine and the economic impact was really hard for farmers.

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Speaker 8: So they've been having a hard time. And then on

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Speaker 8: top of that, you see the price of fuel, the

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Speaker 8: price of fertilizer skyrocket at a time when you're just

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Speaker 8: you know, going into your shop looking at your seed drill,

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Speaker 8: checking that everything works, getting ready to get out in

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Speaker 8: the fields.

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Speaker 2: US farmer's need for fertilizer is so great that they're

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Speaker 2: allowed to import it even from Russia, the largest exporter

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Speaker 2: of nitrogen fertilizers in the world, but they have nevertheless

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Speaker 2: been hurt by geopolitical events thousands of miles away.

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Speaker 9: So you've got to be able to move it in

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Speaker 9: a cost effective manner at scale.

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Speaker 2: Tom Halverson is CEO of Coobank, which provides financial support

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Speaker 2: to farms, cooperatives and agribusinesses.

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Speaker 9: At the same time, rural Americans in general and farmers

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Speaker 9: in particular, are not immune from macroeconomic conditions, including inflation.

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Speaker 9: For example, they are incredibly exposed to trade buying and

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Speaker 9: selling internationally. Producers have been squeezed quite dramatically over the

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Speaker 9: last twelve eighteen twenty four months by accombination of lower

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Speaker 9: commodity prices for what they sell on the one hand,

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Speaker 9: and significantly higher prices for the inputs you know, be

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Speaker 9: it fertilizer, seeds, chemicals, and things of that nature. And

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Speaker 9: therefore economic conditions are tougher than they have been, you know,

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Speaker 9: until you go back to the twenty eighteen twenty nineteen

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Speaker 9: period when we had our first trade conflict in general,

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Speaker 9: but particularly the one we had with the Chinese.

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Speaker 2: And when the costs go up for farmers, the price

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Speaker 2: of food cannot be far behind. With all that means

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Speaker 2: for inflation.

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Speaker 8: Higher fuel prices automatically translate into higher food prices, higher

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Speaker 8: fertilizer prices automatically translate into higher food prices. And you know,

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Speaker 8: the thing that I think is especially challenging about that

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Speaker 8: is the geopolitical and the political consequences. You know, A

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Speaker 8: lesson that I think I really learned during COVID and

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Speaker 8: during the inflationary their math of COVID was what a

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Speaker 8: huge and unpredictable political impact the price of food can have.

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Speaker 8: The people who are hurt the most are the most

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Speaker 8: vulnerable the people who are the most vulnerable in the world,

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Speaker 8: and that is the global South, and the people who

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Speaker 8: are the most vulnerable in our own countries. So you

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Speaker 8: know that means in the United States, people for whom

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Speaker 8: food is a really big part of their budget.

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Speaker 2: Since the war between the US and Iran began on

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Speaker 2: February twenty eighth, we've already seen the consequences start to

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Speaker 2: reverberate around the world. Just a week into the war,

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Speaker 2: the price of urea rose by nineteen percent, and with

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Speaker 2: each day those consequences spread and grow.

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Speaker 4: It's common waves in the way that we've looked at

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Speaker 4: it from a supply standpoint. We woke up Saturday morning

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Speaker 4: to the news that this attack had happened. From that

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Speaker 4: point on, we knew vessel traffic was going to stop,

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Speaker 4: because you've got to wait until safe passage. The ship

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Speaker 4: owners weren't going to put their crew in their vessel.

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Speaker 4: It harms way, and so we knew that if this

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Speaker 4: lasted several days, we're gonna have a shipment problem. But

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Speaker 4: we could solve that in relative short order if we

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Speaker 4: kept it to say, three to five days. After we

302
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Speaker 4: move past that period, now we start to wonder Okay,

303
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Speaker 4: we're losing some of the most important shipment times of

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Speaker 4: the entire year from this situation, and we had to

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Speaker 4: start worrying about what's the impact on production because storage

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Speaker 4: is finite in that part of the world. We finally

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Speaker 4: started to see it come true. We started to see

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Speaker 4: oil and gas production go down. We started to see

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Speaker 4: nitrogen production go down because they had nowhere else to

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Speaker 4: go with these tons until the vessels started to move again. Well,

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Speaker 4: here we are in the third week, and unfortunately this

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Speaker 4: has broke out and we're starting to see the tentacles

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Speaker 4: of the story start reaching out to other parts of

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Speaker 4: the world. And what I mean by that it is

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Speaker 4: no longer just a nitrogen phosphate Persian Gulf Straight of

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Speaker 4: Horror move story. Now it's moved to natural gas. A

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Speaker 4: lot of the world's natural gas flows through the Straight

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Speaker 4: of Horror moves. And why is that important. India, for example,

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Speaker 4: is the world's second largest producer of urea. A lot

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Speaker 4: of their gas input for their domestic nitrogen production facilities

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Speaker 4: comes from the Middle East. Their production rates are falling

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Speaker 4: drastically because they don't have the input to produce that

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Speaker 4: finish good. In fact, you're hearing stories about cooking gas

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Speaker 4: being hard to come by and prices skyrocketing as they are,

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Speaker 4: so you're seeing major global manufacturers starting to be impacted.

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Speaker 2: Lynnville says that even if the war were to end immediately,

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Speaker 2: there would be a delay in getting fertilizer to the

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Speaker 2: people who need it, like US farmers, and that delay

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Speaker 2: comes at a critical moment.

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Speaker 4: It's timing. Take the US market for example, our single

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Speaker 4: biggest month for UIA imports is the month of April.

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Speaker 4: And you might be thinking, well, that's okay, We're not

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Speaker 4: in April yet, right, We're middle of March. We still

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Speaker 4: got time. But vessels don't just show up overnight. If

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Speaker 4: there's so many snaps of finger, they get a wish

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Speaker 4: and everything is done. We can start loading vessels immediately,

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Speaker 4: and the very first vessel is going to point to

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Speaker 4: the US market. It's going to take a couple of

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Speaker 4: days to fill the vessel and get it pushed back

340
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Speaker 4: out to c and it's going to take about thirty

341
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Speaker 4: days in total between loading and arriving to a US shore,

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Speaker 4: and as of today middle of March, that means the

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Speaker 4: first vessel does not arrive until the middle of April,

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Speaker 4: and then you take it further. That's just on a

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Speaker 4: US shore. For most farmers, that doesn't help you. Now

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Speaker 4: you need to move that product from that shore into

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Speaker 4: the inland market where the farmer can get their hands

348
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Speaker 4: on it. That's another two three four week process, again

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Speaker 4: depending on where you are. So all of a sudden,

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Speaker 4: we're talking we're in the middle of March. Those tons,

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Speaker 4: if they were to ship today, don't arrive until the

352
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Speaker 4: middle of May, and for most farmers out there, that's

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Speaker 4: too late.

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Speaker 2: Given the pressure on farmers from the war and its

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Speaker 2: effects on fertilizer, the question remains how to respond and

356
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Speaker 2: what comes next. If I'm a row crop farmer somewhere

357
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Speaker 2: in the Midwest Pickup State, Iowa, Nebraska, Kansas, what are

358
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Speaker 2: my options? Are there any waves for me to hedge?

359
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Speaker 4: At this point, there are dola urea uan and DAP

360
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Speaker 4: phosphate future that the CME trades daily. That's a big

361
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Speaker 4: part of what we do, but unfortunately, those paper products

362
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Speaker 4: it's not going to help solve the supply situation that we.

363
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Speaker 2: Are in today.

364
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Speaker 4: Unfortunately, where we are with so little time between today

365
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Speaker 4: and planting and basically moving on from planting into spring,

366
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Speaker 4: we're out of time.

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Speaker 2: With more time to plan, farmers might change the crops

368
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Speaker 2: they plant, moving away from those like corn that need

369
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Speaker 2: nitrogen based fertilizer, but it's getting late in.

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Speaker 8: The season for that they'll be getting scared. One of

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Speaker 8: the things that is going to be particularly hard is

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Speaker 8: the mix of costs of different fertilizers has an impact

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Speaker 8: on what you should be seeding, and that, you know,

374
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Speaker 8: this unexpected event makes that kind of planning for farmers

375
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Speaker 8: really really difficult, and you know, we are at the

376
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Speaker 8: end of March. That's not a really good time to

377
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Speaker 8: change your plan for what you're going to seed.

378
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Speaker 2: One solution might come from closer to home. Nitrogen based

379
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Speaker 2: fertilizers like urea are not the only options available. US

380
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Speaker 2: farmers also rely heavily on fertilizers like potash, much of

381
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Speaker 2: which comes from Western Canada. Pam Schwan is the president

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Speaker 2: of the Saskatchewan Mining Association.

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Speaker 10: Well potash is one of the main fertilizers that used

384
00:21:23,000 --> 00:21:26,399
Speaker 10: to help make crops healthy and grow larger yields. So

385
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Speaker 10: as the world grows to ten billion people by twenty

386
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Speaker 10: fifty on less arable land, we need to be able

387
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Speaker 10: to grow crops more effectively and more efficiently that have

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Speaker 10: higher crop yields. So potash is one of those three ingredients,

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Speaker 10: along with phosphorus and nitrogen that make crop yields much improved.

390
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Speaker 2: What is the role of potash in Canada's economy.

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Speaker 10: It's very significant, particularly in Saskatchewan. One hundred percent of

392
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Speaker 10: all the potash produced in Canada is produced in Saskatchewan.

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Speaker 10: Very little is used in Canada and very little in Saskatchewans.

394
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Speaker 10: So there's probably over ninety eight percent of what is

395
00:22:02,640 --> 00:22:06,399
Speaker 10: produced in Canada. And again all in Saskatchewan is exported

396
00:22:06,440 --> 00:22:09,880
Speaker 10: to global markets. So of that about fifty percent goes

397
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Speaker 10: into the United States to help farmers there grow corn,

398
00:22:13,359 --> 00:22:16,439
Speaker 10: soybean and oats, and the rest is exported out to

399
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Speaker 10: countries like China, India, Indonesia and Brazil are probably the

400
00:22:22,359 --> 00:22:23,159
Speaker 10: main customers.

401
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Speaker 2: Fortunately for US farmers and for Canada's miners, Canadian potash

402
00:22:28,119 --> 00:22:31,640
Speaker 2: has been kept free from tariffs, something former Deputy Prime

403
00:22:31,640 --> 00:22:35,399
Speaker 2: Minister Freeland considers wise for all concerned.

404
00:22:35,320 --> 00:22:38,639
Speaker 8: Two of the world's other leading potash producers. After the

405
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Speaker 8: full scale Russian invasion of Ukraine. So I'm going to

406
00:22:43,280 --> 00:22:47,760
Speaker 8: offer a little Canadian editorial here a particularly bad time

407
00:22:47,880 --> 00:22:51,440
Speaker 8: to have a trade war with Canada. There are lots

408
00:22:51,480 --> 00:22:54,280
Speaker 8: of reasons of trade war with Canada is a bad idea.

409
00:22:54,680 --> 00:23:00,080
Speaker 8: You need Canadian aluminium, for example, for US manufacturing, and

410
00:23:00,119 --> 00:23:04,840
Speaker 8: aluminum is basically electricity in solid form. But the fact

411
00:23:04,880 --> 00:23:07,679
Speaker 8: that Canada is such a major producer of potash is

412
00:23:07,680 --> 00:23:10,919
Speaker 8: another good reason that we're a great trading partner.

413
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Speaker 2: Fertilizers like potash may be somewhat protected from the Iron War,

414
00:23:15,560 --> 00:23:18,680
Speaker 2: but they're not a perfect substitute for those nitrogen based

415
00:23:18,680 --> 00:23:22,240
Speaker 2: fertilizers coming through the Strait of Hormuz. And although prices

416
00:23:22,240 --> 00:23:25,879
Speaker 2: of any commodity, including fertilizer, go up and down, with

417
00:23:26,000 --> 00:23:29,520
Speaker 2: those who have spent their careers dealing with the fertilizer market,

418
00:23:29,600 --> 00:23:33,440
Speaker 2: this time may truly be different. How does this compare

419
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Speaker 2: with prior sort of crisis supply chain crises we've had?

420
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Speaker 4: It doesn't. This is brand new. We have never experienced

421
00:23:41,440 --> 00:23:43,280
Speaker 4: anything like this in the fertilizer market. I've been at

422
00:23:43,280 --> 00:23:45,879
Speaker 4: it for twenty four years now, I've never seen anything

423
00:23:45,960 --> 00:23:46,280
Speaker 4: like it.

424
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Speaker 2: Up next, affording your first house, it's getting harder and harder.

425
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Speaker 2: We go to Australia and Singapore to take a look

426
00:23:55,200 --> 00:24:07,600
Speaker 2: at two very different approaches. This is a story about

427
00:24:07,680 --> 00:24:10,879
Speaker 2: robbing Peter to pay Paul. When it comes to buying

428
00:24:10,880 --> 00:24:13,639
Speaker 2: a first house, people around the world are looking for

429
00:24:13,720 --> 00:24:17,720
Speaker 2: some way to pay uncomfortably high prices. Earlier this year,

430
00:24:17,800 --> 00:24:21,400
Speaker 2: White House Economic Council Director Kevin Hassett suggests that Americans

431
00:24:21,480 --> 00:24:23,840
Speaker 2: might dip into their four to one K retirement funds.

432
00:24:24,320 --> 00:24:27,080
Speaker 2: But this finding new ways to borrow really help first

433
00:24:27,080 --> 00:24:30,800
Speaker 2: time homeowners or does it just drive prices even higher.

434
00:24:31,280 --> 00:24:34,000
Speaker 2: We went to two countries with very different models to

435
00:24:34,040 --> 00:24:39,240
Speaker 2: find out. Jordan Davies and Jeff ch don't know each other,

436
00:24:39,480 --> 00:24:42,240
Speaker 2: they've never met, but they have one thing in common.

437
00:24:42,640 --> 00:24:46,439
Speaker 2: Both just bought their very first house. Davies a lawyer

438
00:24:46,440 --> 00:24:50,120
Speaker 2: in Melbourne, she a sales worker in Singapore, and they

439
00:24:50,119 --> 00:24:52,879
Speaker 2: followed very different paths to achieve their goal.

440
00:24:53,480 --> 00:24:56,240
Speaker 11: It's really hard when you see people who are doctors

441
00:24:56,280 --> 00:25:01,880
Speaker 11: who worked so hard, studied for ten years, and trying

442
00:25:01,920 --> 00:25:04,160
Speaker 11: to think about well, I don't have a home yet,

443
00:25:05,600 --> 00:25:08,399
Speaker 11: and I don't I don't yet have a family, and

444
00:25:08,520 --> 00:25:12,520
Speaker 11: putting off key decisions or key stages like having families

445
00:25:12,560 --> 00:25:17,760
Speaker 11: because it's so unaffordable to get a home in Australia.

446
00:25:17,760 --> 00:25:19,000
Speaker 11: In the big cities in Australia.

447
00:25:19,440 --> 00:25:24,120
Speaker 7: This is a public housing from the HDV our government.

448
00:25:24,480 --> 00:25:28,800
Speaker 7: I bought it back in twenty twenty one before it

449
00:25:28,920 --> 00:25:31,480
Speaker 7: was built. At a point of time where we purchased

450
00:25:31,520 --> 00:25:33,760
Speaker 7: this flat, we don't have to come up with a

451
00:25:33,880 --> 00:25:37,920
Speaker 7: huge upfront of cash or money or we need to

452
00:25:37,920 --> 00:25:41,760
Speaker 7: get the probably a five percent of the down payment

453
00:25:41,880 --> 00:25:45,960
Speaker 7: to do secure the unit. And then five years later

454
00:25:46,480 --> 00:25:49,480
Speaker 7: where we collect our key, that's where we pay the

455
00:25:49,520 --> 00:25:54,119
Speaker 7: remaining lam sum of fifteen percent amount things to twenty

456
00:25:54,119 --> 00:25:58,080
Speaker 7: percent down payment. For us, I would say it's not

457
00:25:58,200 --> 00:26:00,080
Speaker 7: difficult to buy a for so many single.

458
00:26:01,240 --> 00:26:05,120
Speaker 2: But Singapore might be the outlier. In the United States,

459
00:26:05,160 --> 00:26:08,199
Speaker 2: the median age of first home buyers has risen from

460
00:26:08,280 --> 00:26:12,080
Speaker 2: thirty three in twenty twenty to forty in twenty twenty five,

461
00:26:12,600 --> 00:26:15,840
Speaker 2: and while the OECD's home price to income ratio has

462
00:26:15,960 --> 00:26:19,240
Speaker 2: edged lower since its twenty twenty two peak, it remains

463
00:26:19,400 --> 00:26:23,320
Speaker 2: near record highs. Housing affordability is a key issue.

464
00:26:23,480 --> 00:26:25,640
Speaker 12: Every American who wants to own a home will be

465
00:26:26,160 --> 00:26:27,280
Speaker 12: able to afford one.

466
00:26:27,440 --> 00:26:30,680
Speaker 2: So what can be done. President Trump has proposed extending

467
00:26:30,680 --> 00:26:34,080
Speaker 2: the terms of mortgages from thirty to fifty years, lowering

468
00:26:34,160 --> 00:26:38,000
Speaker 2: the monthly payments but making homeowners pay more interest over

469
00:26:38,040 --> 00:26:41,399
Speaker 2: a longer time. Another proposal from the White House to

470
00:26:41,480 --> 00:26:44,520
Speaker 2: let buyers dip into their retirement funds is similar to

471
00:26:44,560 --> 00:26:48,240
Speaker 2: a model found elsewhere around the world, including in Australia.

472
00:26:48,800 --> 00:26:52,359
Speaker 2: Australia is among the countries where housing affordability is front

473
00:26:52,400 --> 00:26:56,560
Speaker 2: and center, particularly in its biggest cities. Saul Eslake is

474
00:26:56,600 --> 00:27:00,760
Speaker 2: the principle of Corinna Economic Advisory and was previous chief

475
00:27:00,760 --> 00:27:04,600
Speaker 2: economists at ANZ and Bank of America in Australia.

476
00:27:04,920 --> 00:27:11,520
Speaker 6: The ratio of house prices across Australia to household disposable

477
00:27:11,560 --> 00:27:16,760
Speaker 6: income per personage fifteen and over is now over thirteen times.

478
00:27:17,119 --> 00:27:20,280
Speaker 6: The median house price in Australia is a little over

479
00:27:20,600 --> 00:27:25,560
Speaker 6: a million Australian dollars or about seven hundred thousand US dollars.

480
00:27:26,119 --> 00:27:30,840
Speaker 6: That is more than nine times average weekly earnings. You

481
00:27:30,960 --> 00:27:34,680
Speaker 6: go back thirty years and house prices in Australia were

482
00:27:34,920 --> 00:27:41,640
Speaker 6: about four times average weekly earnings, so housing affordability has

483
00:27:41,760 --> 00:27:47,000
Speaker 6: deteriorated sharply, especially for younger Australians.

484
00:27:47,480 --> 00:27:51,120
Speaker 2: Australia has a mandatory twelve percent contribution to its four

485
00:27:51,160 --> 00:27:54,159
Speaker 2: oh one k equivalent and now lets people take up

486
00:27:54,160 --> 00:27:57,760
Speaker 2: to fifty thousand dollars from voluntary contributions made on top

487
00:27:57,800 --> 00:28:01,080
Speaker 2: of that to put towards a home, and there were

488
00:28:01,240 --> 00:28:03,720
Speaker 2: proposals to allow even greater with rowls.

489
00:28:04,480 --> 00:28:08,560
Speaker 6: At the last two elections, the right of center parties

490
00:28:08,640 --> 00:28:12,720
Speaker 6: in Australia, the Liberal and National Parties, proposed to allow

491
00:28:12,960 --> 00:28:16,320
Speaker 6: Australians to take up to forty percent of their superannuation

492
00:28:16,520 --> 00:28:20,919
Speaker 6: savings out to use in order to assist with the

493
00:28:20,960 --> 00:28:25,919
Speaker 6: purchase of a home. My work showed, I think fairly

494
00:28:26,000 --> 00:28:29,879
Speaker 6: clearly that that scheme would have added upward pressure to

495
00:28:29,960 --> 00:28:35,800
Speaker 6: housing prices, wouldn't have helped those in the traditional first

496
00:28:35,840 --> 00:28:39,320
Speaker 6: home by a demographic because they don't actually have a

497
00:28:39,320 --> 00:28:42,760
Speaker 6: lot of superannuation saved up to that point, and would

498
00:28:42,800 --> 00:28:46,440
Speaker 6: have lowered the amount of income they had in retirement,

499
00:28:47,080 --> 00:28:51,000
Speaker 6: even after taking account of whatever savings in housing costs

500
00:28:51,440 --> 00:28:53,920
Speaker 6: that might accrue to them by not having to rent

501
00:28:54,240 --> 00:28:57,719
Speaker 6: through their working lives or in retirement now. As it happened,

502
00:28:57,720 --> 00:29:01,400
Speaker 6: of course, the right of center parties lost the last

503
00:29:01,400 --> 00:29:04,160
Speaker 6: two elections, so they weren't in a position to implement

504
00:29:04,200 --> 00:29:04,880
Speaker 6: that policy.

505
00:29:05,120 --> 00:29:08,000
Speaker 2: But Sleke says for all the policies governments throw at

506
00:29:08,040 --> 00:29:11,680
Speaker 2: the problem, he's skeptical that they really want to fix it.

507
00:29:11,920 --> 00:29:17,120
Speaker 6: That Australian psyche has shifted from viewing housing as something

508
00:29:17,360 --> 00:29:21,680
Speaker 6: that meets basic human needs for shelter and security and

509
00:29:21,760 --> 00:29:26,000
Speaker 6: connection with the communities in which they live, towards regarding

510
00:29:26,120 --> 00:29:30,400
Speaker 6: housing as a vehicle for accumulating wealth. And a much

511
00:29:30,480 --> 00:29:34,920
Speaker 6: higher proportion close to two thirds of Australian household wealth

512
00:29:35,400 --> 00:29:38,760
Speaker 6: is tied up in residential real estate than in almost

513
00:29:38,920 --> 00:29:41,800
Speaker 6: any other country in the world. So I found myself

514
00:29:41,840 --> 00:29:46,280
Speaker 6: saying in recent years that the reason why Australia's housing

515
00:29:46,280 --> 00:29:51,240
Speaker 6: affordability problem will probably never be solved by any deliberate

516
00:29:51,280 --> 00:29:55,880
Speaker 6: actions by government is because politicians know that a majority

517
00:29:55,880 --> 00:29:59,080
Speaker 6: of Australians don't actually want the problem to be solved

518
00:29:59,480 --> 00:30:00,920
Speaker 6: by ho becoming cheater.

519
00:30:03,920 --> 00:30:07,040
Speaker 2: It's a different story in Singapore, where it appears to

520
00:30:07,080 --> 00:30:10,280
Speaker 2: be a genuine priority to make sure that everyone can

521
00:30:10,320 --> 00:30:11,240
Speaker 2: own their own home.

522
00:30:11,680 --> 00:30:14,600
Speaker 13: So the way Singapore thinks about is it is the

523
00:30:14,680 --> 00:30:15,440
Speaker 13: place to live.

524
00:30:16,280 --> 00:30:19,600
Speaker 2: Summit Agarwahal is the Professor of Economics and Real Estate

525
00:30:19,640 --> 00:30:23,400
Speaker 2: at the National University of Singapore. He's not convinced that

526
00:30:23,480 --> 00:30:26,880
Speaker 2: allowing access to retirement funds is such a bad idea.

527
00:30:27,040 --> 00:30:29,240
Speaker 13: So I think there are pros and cons of this.

528
00:30:29,800 --> 00:30:32,160
Speaker 13: I mean, if you allow people to dip into their

529
00:30:32,160 --> 00:30:35,120
Speaker 13: four oh one K to get into housing, not necessarily

530
00:30:35,200 --> 00:30:37,960
Speaker 13: public housing in the US, but any kind of housing.

531
00:30:38,480 --> 00:30:42,000
Speaker 13: On one hand, this could create inflation because now there

532
00:30:42,040 --> 00:30:45,960
Speaker 13: is more money chasing same amount of housing, prices will

533
00:30:46,080 --> 00:30:49,920
Speaker 13: naturally go up. The other aspect is we will provide

534
00:30:49,960 --> 00:30:53,680
Speaker 13: democratized housing. There are certain people they just don't have

535
00:30:53,760 --> 00:30:56,600
Speaker 13: the right amount of money for down payment and they

536
00:30:56,640 --> 00:31:00,440
Speaker 13: are as a result, renting and wasting their money. This

537
00:31:00,560 --> 00:31:03,600
Speaker 13: will allow them to get into housing, consume housing, but

538
00:31:03,800 --> 00:31:06,080
Speaker 13: also invest in the housing that will allow them to

539
00:31:06,120 --> 00:31:07,240
Speaker 13: build long term wealth.

540
00:31:08,400 --> 00:31:13,200
Speaker 2: Singapore's model is vastly different. It requires employers and employees

541
00:31:13,240 --> 00:31:17,520
Speaker 2: to make mandatory contributions to what it calls the Central Provident.

542
00:31:17,160 --> 00:31:20,600
Speaker 13: Fund, that retirement fund. They allow you to cash out

543
00:31:21,120 --> 00:31:24,280
Speaker 13: some of it, especially if you're buying housing, so you

544
00:31:24,320 --> 00:31:26,240
Speaker 13: can do it two ways. One is to cash out

545
00:31:26,480 --> 00:31:29,520
Speaker 13: to make a down payment for your house, also for

546
00:31:29,640 --> 00:31:31,920
Speaker 13: your making your monthly housing payments.

547
00:31:32,200 --> 00:31:36,680
Speaker 2: Around seventy five percent of Singapore's population lives in public housing.

548
00:31:36,920 --> 00:31:40,360
Speaker 13: So typically what happens is in most countries, when they

549
00:31:40,400 --> 00:31:45,120
Speaker 13: decide to provide public housing, they segmented to lower income

550
00:31:46,000 --> 00:31:51,000
Speaker 13: or minority neighborhoods. For those neighborhoods then become also very

551
00:31:51,520 --> 00:31:56,560
Speaker 13: crime prone or risk prone. In Singapore, they make public

552
00:31:56,560 --> 00:32:00,080
Speaker 13: housing for around everybody. Public housing is all over for

553
00:32:00,200 --> 00:32:04,520
Speaker 13: the island, from the best neighborhoods to the fringe neighborhoods

554
00:32:04,560 --> 00:32:05,200
Speaker 13: on the island.

555
00:32:06,120 --> 00:32:09,480
Speaker 2: Having public housing supply at the level of Singapore might

556
00:32:09,560 --> 00:32:13,360
Speaker 2: not be replicable in other countries. But while Singapore makes

557
00:32:13,400 --> 00:32:15,520
Speaker 2: it easier for people to get into their first home,

558
00:32:15,760 --> 00:32:18,719
Speaker 2: it also makes it more difficult to buy a second.

559
00:32:19,160 --> 00:32:23,160
Speaker 13: In Singapore, there's something called an ABSD, or additional buyer

560
00:32:23,440 --> 00:32:26,880
Speaker 13: stamp duty. What that means is that if you're buying

561
00:32:26,920 --> 00:32:30,160
Speaker 13: a second house in Singapore, you have to pay an

562
00:32:30,160 --> 00:32:35,560
Speaker 13: additional stamp buyer stamp duty of thirty percent. Okay, that's upfront.

563
00:32:35,960 --> 00:32:41,120
Speaker 13: So this discourages homeowners to become investors or buy second

564
00:32:41,160 --> 00:32:46,520
Speaker 13: or third properties. This democratizes housing and availability and also

565
00:32:46,920 --> 00:32:51,440
Speaker 13: depresses pricing or doesn't grow house prices. Clearly, this is

566
00:32:51,480 --> 00:32:55,520
Speaker 13: a great idea that, look, we don't want to discourage

567
00:32:55,560 --> 00:32:59,240
Speaker 13: you from buying and investing in housing as an asset class.

568
00:32:59,720 --> 00:33:03,200
Speaker 13: But we have to realize that housing is special. It's

569
00:33:03,240 --> 00:33:05,600
Speaker 13: not just an investment, it's a consumption good.

570
00:33:07,400 --> 00:33:10,440
Speaker 2: If tapping into pools of capital like retirement funds just

571
00:33:10,680 --> 00:33:14,240
Speaker 2: raises prices and taking real steps to lower those prices

572
00:33:14,320 --> 00:33:17,440
Speaker 2: hurts those who already own their homes, is there any

573
00:33:17,520 --> 00:33:20,520
Speaker 2: hope of solving the housing affordability crisis?

574
00:33:20,960 --> 00:33:23,720
Speaker 6: The only way in which housing is going to get cheaper,

575
00:33:23,840 --> 00:33:26,920
Speaker 6: I suspect is if there is some kind of global

576
00:33:26,960 --> 00:33:31,560
Speaker 6: financial upheaval that impacts the supply of credit that in

577
00:33:31,600 --> 00:33:35,720
Speaker 6: turn reduces people's capacity to pay what they currently pay

578
00:33:35,760 --> 00:33:38,360
Speaker 6: for housing, and hence it becomes cheaper. But as I say,

579
00:33:38,400 --> 00:33:41,200
Speaker 6: if that were to happen, there'd be enormous political pressure

580
00:33:41,240 --> 00:33:43,680
Speaker 6: in this country on governments to do things to stop

581
00:33:43,680 --> 00:33:44,240
Speaker 6: it happening.

582
00:33:44,880 --> 00:33:48,720
Speaker 2: So what does Jordan Davies think. He spent years saving

583
00:33:48,760 --> 00:33:51,720
Speaker 2: for his first home in Melbourne. Now that he owns one,

584
00:33:52,080 --> 00:33:53,440
Speaker 2: has his view changed?

585
00:33:53,760 --> 00:33:57,120
Speaker 11: I think I bought into this property with a view

586
00:33:57,320 --> 00:34:03,600
Speaker 11: that eventually property prices in Australia will need to equalize

587
00:34:03,600 --> 00:34:06,120
Speaker 11: in one way or another. I bought this as a

588
00:34:06,160 --> 00:34:08,200
Speaker 11: place that I knew that I'd be happy just living

589
00:34:08,280 --> 00:34:11,440
Speaker 11: in at the costs that it costs, you know, relative

590
00:34:11,480 --> 00:34:15,320
Speaker 11: to what I might need to pay to rent in Melbourne.

591
00:34:15,400 --> 00:34:18,919
Speaker 11: So I didn't go into the purchase thinking I want

592
00:34:18,960 --> 00:34:24,600
Speaker 11: this asset to, you know, significantly rise and value. I

593
00:34:24,640 --> 00:34:27,360
Speaker 11: wouldn't like to see it plummet, that's for sure. So

594
00:34:27,760 --> 00:34:30,040
Speaker 11: I'm of the same mindset as I was before.

595
00:34:30,560 --> 00:34:33,840
Speaker 2: And what about in Singapore where the system favors buying

596
00:34:33,880 --> 00:34:35,880
Speaker 2: one but only one home.

597
00:34:36,400 --> 00:34:40,400
Speaker 7: I think that there are two different groups of be

598
00:34:40,480 --> 00:34:43,719
Speaker 7: blaying sing up are in my power of view, I

599
00:34:43,800 --> 00:34:46,799
Speaker 7: belong to the one that I want to buy a

600
00:34:46,840 --> 00:34:53,200
Speaker 7: few more properties, residential or commercial to build a portfolio.

601
00:34:53,560 --> 00:34:56,680
Speaker 2: As governments around the world take on the housing affordability crisis,

602
00:34:57,120 --> 00:35:00,160
Speaker 2: the question may not be which levers to pull, but

603
00:35:00,239 --> 00:35:03,120
Speaker 2: who is the Peter we're borrowing from to pay off?

604
00:35:03,280 --> 00:35:08,239
Speaker 2: Which paul coming up? What happens when the demand for

605
00:35:08,320 --> 00:35:12,360
Speaker 2: specialty foods overwhelms global supply. We look at the growing

606
00:35:12,440 --> 00:35:18,560
Speaker 2: passion for macha.

607
00:35:24,800 --> 00:35:25,279
Speaker 7: This is a.

608
00:35:25,280 --> 00:35:29,480
Speaker 2: Story about globalization gone wrong. Social media has opened up

609
00:35:29,520 --> 00:35:34,160
Speaker 2: new markets for Asai, Ubei, Macha and Dubai chocolate, markets

610
00:35:34,200 --> 00:35:37,280
Speaker 2: far from their countries of origin, but when demand spikes,

611
00:35:37,400 --> 00:35:40,080
Speaker 2: it can show the limits of those long supply chains.

612
00:35:40,480 --> 00:35:43,360
Speaker 2: Our colleague Scarlet Food reports on what that means for

613
00:35:43,480 --> 00:35:47,120
Speaker 2: your macha.

614
00:35:47,480 --> 00:35:47,759
Speaker 14: Let's go.

615
00:35:49,760 --> 00:35:52,319
Speaker 12: Whether you're browsing through a social media app or going

616
00:35:52,360 --> 00:35:56,239
Speaker 12: to a grocery store. Macha is everywhere, from Starbucks to

617
00:35:56,320 --> 00:35:59,239
Speaker 12: Trader Joe's to budding macha cafes. So this is your

618
00:35:59,239 --> 00:36:01,480
Speaker 12: sign to stop your coffee and start drinking macha.

619
00:36:01,640 --> 00:36:04,680
Speaker 3: It tastes so close to the original what it's a

620
00:36:04,719 --> 00:36:05,640
Speaker 3: current Harvard Center.

621
00:36:05,719 --> 00:36:08,080
Speaker 1: I finally understand the science.

622
00:36:07,760 --> 00:36:10,120
Speaker 13: Behind why macha is so addictic. You're going to make

623
00:36:10,120 --> 00:36:10,520
Speaker 13: a macha.

624
00:36:10,560 --> 00:36:12,319
Speaker 8: Make a macha, don't be cheap with it.

625
00:36:12,360 --> 00:36:14,800
Speaker 12: Macha is just one of several food trends gone viral

626
00:36:14,800 --> 00:36:17,040
Speaker 12: thanks to social media. From Asai and do.

627
00:36:17,120 --> 00:36:19,879
Speaker 3: I regret buying agaska.

628
00:36:18,960 --> 00:36:22,560
Speaker 12: You know to Ube and Dubai chocolate.

629
00:36:22,600 --> 00:36:23,640
Speaker 7: I got some Dubai chocolate.

630
00:36:23,640 --> 00:36:24,360
Speaker 1: It's a light snack.

631
00:36:24,520 --> 00:36:27,920
Speaker 12: Social Media driven food trends are reshaping demand faster than

632
00:36:27,960 --> 00:36:28,600
Speaker 12: ever before.

633
00:36:28,760 --> 00:36:35,239
Speaker 15: It's unbelievable how fast a trendseted an influencer can generate

634
00:36:35,600 --> 00:36:39,200
Speaker 15: huge spikes in the demand for products.

635
00:36:39,320 --> 00:36:43,280
Speaker 12: Miguel Gomez is a Cornell University professor who teaches food marketing.

636
00:36:44,000 --> 00:36:47,840
Speaker 15: It is a challenge for the supply chain to meet

637
00:36:47,880 --> 00:36:51,640
Speaker 15: that demand at that very moment, because if you miss

638
00:36:52,360 --> 00:36:55,319
Speaker 15: us supply chain, you miss the opportunity that there is

639
00:36:55,760 --> 00:37:01,160
Speaker 15: huge interest in a product, soch as deserts with ube.

640
00:37:01,360 --> 00:37:06,440
Speaker 15: The question is are farmers prepared to react as fast

641
00:37:06,719 --> 00:37:10,040
Speaker 15: to these trends as they should to meet the demand.

642
00:37:11,040 --> 00:37:13,560
Speaker 12: This is hardly the first time that food has gone global.

643
00:37:13,920 --> 00:37:17,239
Speaker 12: Social media is just the latest innovation to fuel widespread

644
00:37:17,280 --> 00:37:20,120
Speaker 12: demand for foods from around the world. This has actually

645
00:37:20,160 --> 00:37:22,279
Speaker 12: been happening for hundreds of years.

646
00:37:22,640 --> 00:37:27,040
Speaker 15: The first infection pointing the globalization of food and crops

647
00:37:27,760 --> 00:37:32,000
Speaker 15: dates two four hundred years ago, with mace and tomatoes

648
00:37:32,120 --> 00:37:35,799
Speaker 15: being produced in the Americas being exported to Europe, and

649
00:37:36,440 --> 00:37:42,840
Speaker 15: withat and other grains being shipped from Europe to the Americas.

650
00:37:43,280 --> 00:37:48,560
Speaker 15: But it was in the nineteen eighties when the development

651
00:37:48,640 --> 00:37:52,759
Speaker 15: of the containers for transportation really allowed many of the

652
00:37:53,040 --> 00:37:56,920
Speaker 15: commodities to be really global. And then we have the

653
00:37:57,040 --> 00:38:00,440
Speaker 15: latest trend that is driven by social media.

654
00:38:00,680 --> 00:38:04,359
Speaker 12: When a trendy food takes off and goes global, walk auster.

655
00:38:04,520 --> 00:38:06,800
Speaker 12: What typically happens on the supply side. Is there a

656
00:38:06,840 --> 00:38:09,960
Speaker 12: specific sequence that takes place when.

657
00:38:09,800 --> 00:38:15,120
Speaker 15: These products become truly global because of consumer demand in

658
00:38:15,480 --> 00:38:19,880
Speaker 15: high income countries like the US, Europe, etc. This postes

659
00:38:20,320 --> 00:38:25,960
Speaker 15: big opportunities but big challenges to the supply chains. For example, Ubi,

660
00:38:26,400 --> 00:38:29,400
Speaker 15: there is a huge explosion of demand for use of

661
00:38:29,600 --> 00:38:35,160
Speaker 15: ube because of the beautiful color in confectionery, in desserts,

662
00:38:35,200 --> 00:38:39,120
Speaker 15: in restaurants, but also in the supermarkets. And ube is

663
00:38:39,760 --> 00:38:43,440
Speaker 15: native from the Philippines, but this demand is really putting.

664
00:38:43,640 --> 00:38:48,800
Speaker 15: Demand is just exceeding what Philippino farmers are able to supply.

665
00:38:49,600 --> 00:38:53,440
Speaker 15: Another thing that is happening with these products, because these

666
00:38:53,520 --> 00:38:58,719
Speaker 15: markets are relatively small, you know, these are very niche products,

667
00:38:58,840 --> 00:39:03,840
Speaker 15: demand tends to shift dramatically, and then this means lots

668
00:39:03,840 --> 00:39:07,840
Speaker 15: of risk for farmers because if you look at what

669
00:39:08,040 --> 00:39:13,160
Speaker 15: has happened with products like ube macha, is that you

670
00:39:13,239 --> 00:39:16,120
Speaker 15: see that the farm price for these commodities is the

671
00:39:16,239 --> 00:39:20,840
Speaker 15: rivolatile because demand flu two eight so much and production

672
00:39:21,840 --> 00:39:23,680
Speaker 15: is trying to catch up with that demand.

673
00:39:24,160 --> 00:39:27,320
Speaker 12: Macha originated in China over a thousand years ago before

674
00:39:27,360 --> 00:39:30,280
Speaker 12: migrating to Japan, which is now the world's macha capital.

675
00:39:30,880 --> 00:39:33,360
Speaker 12: The drink itself is made from green tea leaves that

676
00:39:33,360 --> 00:39:36,440
Speaker 12: have been ground into a fine powder. Rising demand has

677
00:39:36,480 --> 00:39:39,520
Speaker 12: led to a dramatic increase in Japanese exports of macha,

678
00:39:39,840 --> 00:39:42,319
Speaker 12: a twenty five percent jump to two hundred and forty

679
00:39:42,360 --> 00:39:45,600
Speaker 12: four million dollars in twenty twenty four from the previous year,

680
00:39:46,080 --> 00:39:50,200
Speaker 12: and now China has overtaken Japan, supplying sixty percent of

681
00:39:50,200 --> 00:39:51,040
Speaker 12: the world's macha.

682
00:39:52,120 --> 00:39:55,600
Speaker 14: We have seen incredibly strong growth on macha within the

683
00:39:55,680 --> 00:39:57,719
Speaker 14: last like two years, and I've been doing this for

684
00:39:57,760 --> 00:40:00,560
Speaker 14: ten years, so I think the last two years there's

685
00:40:00,600 --> 00:40:04,640
Speaker 14: been a real surge in the demand and awareness for macha.

686
00:40:05,320 --> 00:40:08,239
Speaker 12: Hanna Habes is a macha pioneer in the US. She

687
00:40:08,360 --> 00:40:12,279
Speaker 12: is CEO of Macha fol, a company she founded over

688
00:40:12,320 --> 00:40:15,440
Speaker 12: a decade ago. Habes operates sales through her website and

689
00:40:15,480 --> 00:40:17,320
Speaker 12: has seven storefronts in New York City.

690
00:40:17,680 --> 00:40:21,840
Speaker 14: I was actually working in the processed packaged food industry

691
00:40:21,920 --> 00:40:26,359
Speaker 14: right out of college. I started to notice changes in

692
00:40:26,360 --> 00:40:30,200
Speaker 14: my health consuming packaged foods every day, and around the

693
00:40:30,239 --> 00:40:33,840
Speaker 14: same time, after being in this very heavily processed industry,

694
00:40:33,920 --> 00:40:37,200
Speaker 14: I was introduced to macha, which was this incredibly clean,

695
00:40:37,960 --> 00:40:43,319
Speaker 14: beautiful caffeine alternative to coffee that made me feel more sustained,

696
00:40:43,440 --> 00:40:47,240
Speaker 14: more focused, more calm. And it really was that lightning

697
00:40:47,280 --> 00:40:50,640
Speaker 14: bulb moment for me, that epiphany of I've got to

698
00:40:50,680 --> 00:40:53,800
Speaker 14: do something with this. And at the time, macha really

699
00:40:53,800 --> 00:40:56,240
Speaker 14: didn't have presence in the US. This was in twenty

700
00:40:56,440 --> 00:40:59,160
Speaker 14: twelve when I kind of first took my sip of

701
00:40:59,200 --> 00:41:01,000
Speaker 14: my life changing sip of macha.

702
00:41:02,080 --> 00:41:05,000
Speaker 12: In twenty twenty three, the global macha market was worth

703
00:41:05,000 --> 00:41:08,560
Speaker 12: about four billion dollars, that's half of its expected value

704
00:41:08,560 --> 00:41:11,400
Speaker 12: by twenty thirty. The US is an example of the

705
00:41:11,440 --> 00:41:15,600
Speaker 12: surgeon demand. According to research firm NIQ, sales of macha

706
00:41:15,640 --> 00:41:18,200
Speaker 12: grew eighty six percent in the last three years.

707
00:41:18,320 --> 00:41:21,239
Speaker 14: It's accelerated to a point that I think last year

708
00:41:21,400 --> 00:41:26,239
Speaker 14: was almost unsustainable. We saw farmers having supply constraints and

709
00:41:26,560 --> 00:41:29,799
Speaker 14: people you know online trying to figure out, you know,

710
00:41:30,160 --> 00:41:32,359
Speaker 14: where to get their macha and how to make sure

711
00:41:32,400 --> 00:41:35,600
Speaker 14: that they're not, you know, over consuming macha. So there

712
00:41:35,600 --> 00:41:40,320
Speaker 14: was a heightened awareness of this supply chain issue around macha.

713
00:41:40,400 --> 00:41:43,920
Speaker 12: It's more than specialty macha cafes. Duncan Donuts offers a

714
00:41:43,960 --> 00:41:47,279
Speaker 12: macha laatee. Starbucks reported a forty percent year over year

715
00:41:47,280 --> 00:41:49,759
Speaker 12: increase in maja sales for the first quarter of twenty

716
00:41:49,800 --> 00:41:52,560
Speaker 12: twenty five, and Blank Street Coffee sold so much macha

717
00:41:52,640 --> 00:41:54,959
Speaker 12: that it ended up dropping coffee from its name.

718
00:41:55,160 --> 00:41:58,200
Speaker 14: So I think the interesting thing with Starbucks is they

719
00:41:58,280 --> 00:42:01,520
Speaker 14: have actually had macha on their menu, a form of

720
00:42:01,600 --> 00:42:04,120
Speaker 14: macha mixed with cane sugar, but they've had it on

721
00:42:04,160 --> 00:42:07,920
Speaker 14: their menu for over ten years. Even before I started

722
00:42:07,960 --> 00:42:10,839
Speaker 14: macha ful, Starbucks had what was called a green tea

723
00:42:10,920 --> 00:42:14,400
Speaker 14: latte on their menu. It had macha in it, but

724
00:42:14,440 --> 00:42:17,719
Speaker 14: they didn't necessarily call it macha because I think at

725
00:42:17,719 --> 00:42:21,040
Speaker 14: that point not many people knew what macha was, and

726
00:42:21,080 --> 00:42:23,080
Speaker 14: now they're really leaning into machra.

727
00:42:24,480 --> 00:42:27,960
Speaker 12: Japan's macha production tripled between twenty ten and twenty twenty three,

728
00:42:28,280 --> 00:42:30,879
Speaker 12: but even that failed to keep pace with demand. As

729
00:42:30,920 --> 00:42:34,480
Speaker 12: macha is added to desserts and smoothies. The macha market

730
00:42:34,520 --> 00:42:36,720
Speaker 12: is now cracking under the weight of all the demand.

731
00:42:37,320 --> 00:42:40,200
Speaker 12: To make matters worse. Last year, farmers and Kyoto, who

732
00:42:40,280 --> 00:42:42,560
Speaker 12: supply a quarter of the world's tea used for macha,

733
00:42:42,920 --> 00:42:45,480
Speaker 12: struggled after hot weather led to poor harvests.

734
00:42:45,760 --> 00:42:48,080
Speaker 14: It's a plant, and I think it's important to remember

735
00:42:48,120 --> 00:42:51,960
Speaker 14: that and our farmers we did see shortages on the macha,

736
00:42:52,080 --> 00:42:54,799
Speaker 14: so naturally we did see prices rise on macha and

737
00:42:55,320 --> 00:42:56,920
Speaker 14: we did experience some shortages.

738
00:42:57,160 --> 00:43:01,440
Speaker 15: What is happening is that the supply chain is a

739
00:43:01,480 --> 00:43:06,120
Speaker 15: procuring matcha that is not following the standards that the

740
00:43:06,280 --> 00:43:10,360
Speaker 15: Japanese employee to produce what they call matcha. So what

741
00:43:10,520 --> 00:43:14,640
Speaker 15: you see is a huge differences in the quality of

742
00:43:14,800 --> 00:43:20,400
Speaker 15: matchas produced in different origins, and that can create a

743
00:43:20,560 --> 00:43:25,800
Speaker 15: long term confusion in consumers or may affect the value

744
00:43:25,840 --> 00:43:30,680
Speaker 15: of matcha for the Japanese traditional growers. Right now, for example, India,

745
00:43:31,040 --> 00:43:35,120
Speaker 15: South Korea, China producing the product that we call matcha,

746
00:43:35,239 --> 00:43:39,680
Speaker 15: but with different standards. So what is happening is that

747
00:43:40,520 --> 00:43:45,440
Speaker 15: match as we know as a Japanese ceremonial very niche

748
00:43:45,440 --> 00:43:50,160
Speaker 15: product is becoming massified and perhaps not of the same

749
00:43:50,280 --> 00:43:54,600
Speaker 15: quality of the matcha that is producing Japan with macha.

750
00:43:54,719 --> 00:43:57,800
Speaker 14: Quality does matter, and I think with the first harvest

751
00:43:57,880 --> 00:44:00,680
Speaker 14: in Japan it tends to be a little sweeter. It's

752
00:44:00,760 --> 00:44:05,280
Speaker 14: traditionally what's coined as ceremonial macha really meant for drinking

753
00:44:05,520 --> 00:44:08,040
Speaker 14: as a tea in a latte. So we're seeing the

754
00:44:08,080 --> 00:44:12,240
Speaker 14: demand for ceremonial grade continue to rise, but the pricing

755
00:44:12,280 --> 00:44:16,239
Speaker 14: for ceremonial grade also is more expensive, and so I

756
00:44:16,280 --> 00:44:20,480
Speaker 14: think with the second harvest culinary grade macha, the pricing

757
00:44:20,520 --> 00:44:24,359
Speaker 14: on that is a little more approachable. So I think

758
00:44:24,480 --> 00:44:28,120
Speaker 14: there is a vast difference in quality and price point

759
00:44:28,120 --> 00:44:32,040
Speaker 14: with macha, and we're seeing macha as a price point

760
00:44:32,200 --> 00:44:37,120
Speaker 14: is rising because the demand is growing because harvests are down.

761
00:44:37,160 --> 00:44:39,400
Speaker 14: We are just seeing the price points continue to rise

762
00:44:39,600 --> 00:44:42,240
Speaker 14: on ceremonial and culinary grade.

763
00:44:42,640 --> 00:44:43,480
Speaker 13: And I think.

764
00:44:43,360 --> 00:44:47,680
Speaker 14: Consumers are aware of this, but we don't necessarily see

765
00:44:47,680 --> 00:44:50,560
Speaker 14: it impacting our business in any way at this point.

766
00:44:50,680 --> 00:44:53,200
Speaker 5: I think people are very particular about their macha. And

767
00:44:53,760 --> 00:44:56,640
Speaker 5: I marketed this business well before we open, so I

768
00:44:56,760 --> 00:45:00,759
Speaker 5: taste tested twelve different machas on TikTok to see what

769
00:45:00,800 --> 00:45:03,480
Speaker 5: the consumer wanted, and they were very excited about the

770
00:45:03,480 --> 00:45:04,440
Speaker 5: macha that we selected.

771
00:45:04,760 --> 00:45:07,720
Speaker 12: Sammy Nesdorf is a founder and CEO of Metal Lane,

772
00:45:07,760 --> 00:45:11,000
Speaker 12: a gourmet food market in the Tribeca neighborhood of New York, Okay.

773
00:45:11,000 --> 00:45:12,640
Speaker 12: So this is something you knew coming in that you

774
00:45:12,680 --> 00:45:15,400
Speaker 12: would have to offer to your clientele for sure, And

775
00:45:15,840 --> 00:45:17,799
Speaker 12: did you think in terms of you need to offer

776
00:45:17,880 --> 00:45:20,960
Speaker 12: other kinds of Macha products given how much interesters in

777
00:45:21,080 --> 00:45:22,160
Speaker 12: macha overall.

778
00:45:22,200 --> 00:45:24,480
Speaker 5: I didn't think so. I wanted to make the choice

779
00:45:24,520 --> 00:45:26,880
Speaker 5: easy for the consumer. I think that people are stunned

780
00:45:26,880 --> 00:45:29,560
Speaker 5: by too many options and we're stuck in this paradox

781
00:45:29,600 --> 00:45:33,120
Speaker 5: of choice. I think that offering one and doing a

782
00:45:33,160 --> 00:45:36,799
Speaker 5: lot of diligence on a product like macha makes it

783
00:45:36,840 --> 00:45:39,400
Speaker 5: easier on the consumer, and it's like we've selected the

784
00:45:39,440 --> 00:45:43,160
Speaker 5: best for them. I do think that a wealthier audience

785
00:45:43,239 --> 00:45:48,719
Speaker 5: probably influences the masses into how can I treat myself?

786
00:45:48,800 --> 00:45:51,359
Speaker 5: That food's being looked at as a status symbol right now.

787
00:45:51,680 --> 00:45:54,680
Speaker 5: It's like these micro luxuries, like a lot of people

788
00:45:54,760 --> 00:45:58,479
Speaker 5: can't afford a Barkin, but they can afford a road

789
00:45:58,560 --> 00:46:02,520
Speaker 5: lip Boss, and that is like an identifier as to

790
00:46:02,640 --> 00:46:05,200
Speaker 5: like what you subscribe to and what's on trend, and

791
00:46:05,239 --> 00:46:09,120
Speaker 5: these micro luxuries that you can afford, which is like

792
00:46:09,160 --> 00:46:11,040
Speaker 5: I guess similar to here, Like you might not be

793
00:46:11,080 --> 00:46:14,120
Speaker 5: able to afford a three hundred dollars Michelin meal, but

794
00:46:14,280 --> 00:46:18,200
Speaker 5: you can afford a you know, organic, well made, nicely sourced,

795
00:46:18,239 --> 00:46:19,320
Speaker 5: twenty three dollars salad.

796
00:46:19,800 --> 00:46:22,440
Speaker 12: Even though Sammy says he doesn't believe in selling trendy

797
00:46:22,440 --> 00:46:25,600
Speaker 12: food products. Metal Lane does respond to whatever food crazes

798
00:46:25,640 --> 00:46:28,480
Speaker 12: his clientele is attracted to. Can a viral moment create

799
00:46:28,520 --> 00:46:30,960
Speaker 12: demand faster than the supply can meet it?

800
00:46:31,600 --> 00:46:31,839
Speaker 7: Yes?

801
00:46:32,480 --> 00:46:35,520
Speaker 5: Absolutely. I mean as we saw with the opening, I

802
00:46:35,560 --> 00:46:38,640
Speaker 5: think it was once the infatuation or eater you know,

803
00:46:38,719 --> 00:46:41,240
Speaker 5: came for press day and they tried certain menu items

804
00:46:41,239 --> 00:46:44,520
Speaker 5: that we make here and they rated what their favorites were.

805
00:46:44,840 --> 00:46:48,480
Speaker 5: That's what became very viral off the bat, and that shifts,

806
00:46:48,600 --> 00:46:51,400
Speaker 5: you know, with the as the business progresses.

807
00:46:51,000 --> 00:46:53,600
Speaker 12: Whether coming from Starbucks or a niche grocery store. The

808
00:46:53,600 --> 00:46:56,920
Speaker 12: bottom line is it's important to understand your supply. What

809
00:46:57,040 --> 00:47:02,560
Speaker 12: is the most misunderstood part about the globalization of niche

810
00:47:02,560 --> 00:47:07,160
Speaker 12: foods trendy foods something that consumers get wrong about how

811
00:47:07,200 --> 00:47:08,160
Speaker 12: supply chains work.

812
00:47:08,719 --> 00:47:13,440
Speaker 15: We consumers in general, are known very little about how

813
00:47:13,480 --> 00:47:21,879
Speaker 15: these products are produced, who produces them, where, how and

814
00:47:22,040 --> 00:47:26,480
Speaker 15: how is that coming to our tables in our houses

815
00:47:26,680 --> 00:47:30,239
Speaker 15: or in a restaurant. So I think what we need

816
00:47:30,280 --> 00:47:34,280
Speaker 15: to do is to educate consumers.

817
00:47:36,719 --> 00:47:38,479
Speaker 2: That does it for us Here at Wall Street Week,

818
00:47:38,600 --> 00:47:41,560
Speaker 2: I'm David Weston. See you next week. For more stories

819
00:47:41,680 --> 00:47:57,840
Speaker 2: of capitalism,