Supply Chain Weirdness

I listen to a variety of podcasts, some of them covering topics I know little about. One that I’ve been following recently is Bloomberg’s Odd Lots podcast.
Some factoids about the supply chain (or, as they suggest, the supply web) from a recent episode bring out some surprising connections.

First, it’s common knowledge that one of the effects of the 2008 meltdown was the collapse of the housing market in the United States. Few houses were being built, which means that there were fewer boards being cut. Fewer cut boards meant that there was less sawdust. A lot of that missing sawdust would have made for better resting places for cows. Dairy cows were less comfortable than they might have been, and uncomfortable cows produce less milk than comfortable cows. Less milk made for higher milk prices. So, the upshot: the housing crisis brought about higher milk prices.

And a second example from more recent times. There was a severe shortage of semiconductors from early on in the covid epidemic. Fewer semiconductors meant fewer cars. Fewer cars meant fewer car seats. And fewer car seats meant less demand for leather and therefore less demand for cow hides. The production of fewer cow hides meant lower productions levels for gelatin, which made for higher gelatin prices. But gelatin is a crucial ingredient in gummy bears. The upshot: higher prices for gummy bears.

As I said, some of these podcasts cover topics I know little about, and surely there are complexities here that the Odd Lots co-hosts glossed over. But, still, I find this rather fascinating.