The impact of the health crisis on our economy is undeniable and its consequences are becoming more and more noticeable. Indeed, for several months, the prices of raw materials have been soaring: copper, iron, steel, aluminum, wood, corn, wheat, soy ... All this added to a Chinese demand that has exploded, we really witness a deep gap between the recovery of demand and supply that does not follow ...
A crisis that affects all raw materials
Few raw materials have escaped this surge; some are even running out because global production capacities have not been able to keep up and respond to the post-containment recovery.
Suppliers are currently insisting on long-lasting material supply shortages, and on the fact that they can neither guarantee delivery times, nor prices invoiced on delivery in line with those established at the time of the order... The pressure is thus real on companies that have no visibility as to the time required to complete the work and the prices applied.
The prices of agricultural commodities have also risen to levels not seen for several years.
How to explain this situation?
The reasons for these increases are multiple: the fall of the dollar, the drought in Brazil (which generated an explosion in the price of corn), frosts in Europe (particularly in France in mid-April), logistical tensions in the world (container crisis), trade tensions between China and Australia, the lack of labor in palm plantations, taxes on the export of Russian wheat ... Grain prices have thus risen by 22% over one year (the highest since 2016).
The price of oil is also at its highest level in over 2 years and has risen 30% in the last year ... In view of this trend, OPEC had also decided last June to maintain the pace of production, without mentioning the future in the short term and potentially the return of Iranian oil on the market ...
Wood and pewter in the center of the concerns...
For its part, the price of construction wood has tripled in the last twelve months. Although France is the4th country in Europe in terms of forest area (with a high percentage of oak trees), our country is paradoxically facing a shortage of wood; again a consequence of massive purchases from China.
Tin, which is used in electronic circuits, automotive components and batteries, is also at its highest level since 2011, with its price doubling in one year. The global tin market, which will be in deficit in 2020, has been the subject of speculative buying and, like all base metals, its price is closely linked to the good health of the Chinese economy. And finally, what can we say about the price of copper, which broke a ten-year old record in early May?
...but also supply difficulties
Supply difficulties are reaching a historically high level in the industry. Companies are severely handicapped by this, with not only postponed deliveries but sometimes cancelled orders. It is very difficult for a company to make the customer bear this explosion of costs, but it is also difficult for the company to bear this burden alone...
The question is clearly whether this will last and if so, for how long?
Difficulties that should persist at least until the end of the year
Globally, production capacity is expected to continue to grow; demand for certain materials is expected to remain strong over the long term, but supply capacity should, on the whole, adjust gradually.
A crisis that also affects the employment of seasonal workers
The hotel, restaurant and agricultural sectors are currently facing a serious lack of seasonal workers. Already present in previous years, this difficulty has worsened considerably. The main reason for this is the uncertainties linked to the economic recovery during the pandemic, the professional reconversion of some seasonal workers who have turned away from their usual summer jobs in order to position themselves in other jobs considered more "secure".
Recall that some seasonal workers found themselves without a winter season 2020-2021, with the result for them serious financial difficulties.
The Hotel and Restaurant sector hard hit
The hotel and restaurant sector has thus alternated good and bad news since the beginning of the pandemic: shock of the administrative closure of spring 2020, a glimmer of hope last summer and then a cold shower in the autumn... Not to mention the drastic sanitary measures, the gauges just compensated by an enlargement of the terraces last June, etc. Some positive points nevertheless: during the curfew periods, professionals in the sector have tried, successfully for some, to reinvent themselves, by focusing on home delivery and click-and-collect.
The current shortage of seasonal workers is yet another obstacle to the recovery of many activities
Solutions have nevertheless been initiated: pre-hiring (with the help of the DREETS - Regional Directorates of Economy, Employment, Labor and Solidarity and the UMIH - Union of Hotel Trades and Industries). Many establishments have also set up a dedicated system: seasonal workers who agree to join their teams receive a promise of employment in return, as well as guaranteed access to partial unemployment (until the employment contract is signed). Others offer accommodation at very moderate rates, reserved accommodation in student residences, or places in local campsites that are partners in these operations.
Simplifying and securing recruitment in the Hotel and Restaurant industry was also the objective of an HCR Employment platform launched last May; however, this was not enough. In addition to the lack of waiters, kitchen assistants and dishwashers in the restaurant industry, many positions in the hotel industry are in short supply: housekeepers, receptionists, etc.
Same observation for the Agriculture sector
And of course, the same is true for agriculture: harvesting, corn castration, grape harvesting... The agricultural and viticultural sectors are looking for all the corresponding profiles. These seasonal jobs, which are considered to be hard, have always been mostly filled by foreign workers. However, in a period marked by the pandemic, the sanitary measures specific to each country constrain foreign seasonal workers who cannot go to France.
Prices of agricultural products are soaring...
This trend in the markets has a direct impact on the budget of consumers who see the bill for their daily shopping increase.
Some countries have also initiated measures to curb food inflation. In the United Arab Emirates (which imports 90 per cent of the food it needs), the government has considered capping certain prices. Russia has introduced export taxes to encourage producers to sell their stocks on the domestic market. Unfortunately, this decision has the perverse effect of reinforcing the rise in market prices.
An increased risk for French farmers
French producers are struggling and cannot harvest and therefore cannot sell their products, there are clear risks to their treasuries and they are resorting to massive imports of products on our local shelves... This is what is currently at stake. Finally, with the objective of sustainable agriculture, this crisis highlights more than ever the importance of the choice of agricultural model(s), whose production costs, environmental footprint and, ultimately, impact on consumer-citizens differ greatly.
The next few months will be decisive, especially since the state of emergency in the West Indies has once again been declared; a new health protocol for schools has been established and the generalization of the health passport since August 9.
France has taken a new series of measures to contain the spread of Covid 19, against which nearly 70% of French people are now primo-vaccinated. Contaminations have started to increase again and hospitals are once again afraid of reaching saturation point. The end of the crisis for the sectors is therefore not foreseen in the short term with the threat of lasting impacts in case of reconfinement...
