China’s Role in Iran War, Global Fertilizer Disruptions, Matcha’s Supply Problem

25:28What is the role of potash in Canada's economy? It's very significant, particularly in Saskatchewan. 100 % of all the potash produced in Canada is produced in Saskatchewan. Very little is used in Canada and very little in Saskatchewan. So there's probably over 98 % of what is produced in Canada and, again, all in Saskatchewan, is exported to global markets. So of that, about 50 % goes into the United States to help farmers there grow corn, soybean, and oats. And the rest is exported out to countries like China, India, Indonesia, and Brazil are probably the main customers. Fortunately for U.S. farmers and for Canada's miners, Canadian potash has been kept free from tariffs, something former Deputy Prime Minister Freeland considers wise for all concerned.

26:17Two of the world's other leading potash producers after the full-scale Russian invasion of Ukraine. So I'm going to offer a little Canadian editorial here. A particularly bad time to have a trade war with Canada. There are lots of reasons a trade war with Canada is a bad idea. You need Canadian aluminum, for example, for U.S. manufacturing. And aluminum is basically electricity in solid form. But the fact that Canada is such a major producer of potash is another good reason. That we're a great trading partner. Fertilizers like potash may be somewhat protected from the Iran war, but they're not a perfect substitute for those nitrogen-based fertilizers coming through the Strait of Hormuz.

27:04And although prices of any commodity, including fertilizer, go up and down, for those who have spent their careers dealing with the fertilizer market, this time may truly be different. How does this compare with prior sort of crises, supply chain crises we've had? It doesn't. This is brand new. We have never experienced anything like this in the fertilizer market. I've been at it for 24 years now. I've never seen anything like it. Up next, affording your first house. It's getting harder and harder. We go to Australia and Singapore to take a look at two very different approaches.

27:43The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. If you follow markets, you know the value of long-term thinking. You plan, you diversify, you prepare for volatility. But in life, even the best strategies can't prevent every bad day.

28:25A fire, a loss, a disruption that demands immediate attention. When that happens, what matters isn't just what you planned, it's who shows up. That's where Cincinnati Insurance comes in. For more than 75 years, they've helped individuals and businesses navigate life's toughest moments with care, expertise, and personal attention. Together with independent agents, Cincinnati Insurance focuses on relationships, not transactions. Their approach is grounded in experience, follow-through, and trust built over time. Bad days happen, and when they do, you deserve an insurance partner who understands risk, respects what you've built, and is ready to help you move forward.

29:05The Cincinnati Insurance Companies. Let them make your bad day better. Find an independent agent at c-i-n-f-i-n dot com. This podcast is brought to you by WISE, the app for international people using money around the globe. When it comes to sending money abroad, many providers claim to offer free fees and competitive rates. But don't be fooled. This can be code for inflated exchange rates. With the WISE account, you can send, spend and receive money in over 40 currencies without ever having to worry about hidden fees. Sending pounds across the pond? Most transfers arrive in 20 seconds or less.

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30:19This is a story about robbing Peter to pay Paul. When it comes to buying a first house, people around the world are looking for some way to pay uncomfortably high prices. Earlier this year, White House Economic Council Director Kevin Hassett suggested Americans might dip into their 401k retirement funds. But does finding new ways to borrow really help first-time homeowners? Or does it just drive prices even higher? We went to two countries with very different models to find out. Jordan Davies and Jeff Chee don't know each other. They've never met. But they have one thing in common. Both just bought their very first house.

30:59Davies, a lawyer in Melbourne. Chee, a sales worker in Singapore. And they followed very different paths to achieve their goal. It's really hard when you see people who are doctors who worked so hard, studied for 10 years and trying to think about, well, I don't have a home yet. And I don't I don't yet have a family and putting off key decisions or key stages like having families because it's so unaffordable to get a home in in Australia, in the big cities in Australia. This is a plug-back housing from the HTV, our government. I bought it back in 2021 before it was built. At the point of time where we purchased this flat, we don't have to come up with a huge upfront of cash or money.

31:50All we need to get is probably 5 % of the down payment to secure the unit. And then five years later, when we collect our key, that's where we pay the remaining lump sum of 15%, amounting to 20 % down payment for us. I would say it's not difficult to buy a first home in Singapore. But Singapore might be the outlier. In the United States, the median age of first home buyers has risen from 33 in 2020 to 40 in 2025. And while the OECD's home price to income ratio has edged lower since its 2022 peak, it remains near record highs. Housing affordability is a key issue. Every American who wants to own a home will be able to afford one.

32:41So what can be done? President Trump has proposed extending the terms of mortgages from 30 to 50 years, lowering the monthly payments, but making homeowners pay more interest over a longer time. Another proposal from the White House to let buyers dip into their retirement funds is similar to a model found elsewhere around the world, including in Australia. Australia is among the countries where housing affordability is front and centre, particularly in its biggest cities. Saul Eslake is the principal of Corinna Economic Advisory and was previously chief economist at ANZ and Bank of America in Australia.

33:18The ratio of house prices across Australia to household disposable income per person aged 15 and over is now over 13 times. The median house price in Australia is a little over a million Australian dollars or about 700 ,000 US dollars. That is more than nine times average weekly earnings. You go back 30 years and house prices in Australia were about four times average weekly earnings. So housing affordability has deteriorated sharply, especially for younger Australians. Australia has a mandatory 12 % contribution to its 401k equivalent and now lets people take up to$50 ,000 from voluntary contributions made on top of that to put towards a home.

34:13and there were proposals to allow even greater withdrawals. At the last two elections, the right of centre parties in Australia, the Liberal and National parties, proposed to allow Australians to take up to 40 % of their superannuation savings out to use in order to assist with the purchase of a home. My work showed, I think fairly clearly, that that scheme would have added upward pressure to housing prices, wouldn't have helped those in the traditional first home buyer demographic because they don't actually have a lot of superannuation saved up to that point, and would have lowered the amount of income they had in retirement, even after taking account of whatever savings in housing costs that might accrue to them by not having to rent through their working lives or in retirement.

35:10Now, as it happened, of course, the right of centre parties lost the last two elections, so they weren't in a position to implement that policy. But Eslake says for all the policies governments throw at the problem, he's sceptical that they really want to fix it. The Australian psyche has shifted from viewing housing as something that meets basic human needs for shelter and security and connection with the communities in which they live, towards regarding housing as a vehicle for accumulating wealth. And a much higher proportion, close to two thirds of Australian household wealth is tied up in residential real estate than in almost any other country in the world.

35:54So I found myself saying in recent years that the reason why Australia's housing affordability problem will probably never be solved by any deliberate actions by government is because politicians know that a majority of Australians don't actually want the problem to be solved by housing becoming cheaper. It's a different story in Singapore, where it appears to be a genuine priority to make sure that everyone can own their own home. So the way Singapore thinks about is, it is the place to live. Sumit Agarwal is the professor of economics and real estate at the National University of Singapore. He's not convinced that allowing access to retirement funds is such a bad idea.

36:40So I think there are pros and cons of this. I mean, if you allow people to dip into their 401k, to get into housing, not necessarily public housing in the U.S., but any kind of housing, on one hand this could create inflation because now there is more money chasing same amount of housing prices will naturally go up the other aspect is we will provide democratized housing there are certain people they just don't have the right amount of money for down payment and they are as a result renting and wasting their money this will allow them to get into housing consume housing but also invest in the housing that will allow them to build long-term wealth Singapore's model is vastly different.

37:24It requires employers and employees to make mandatory contributions to what it calls the Central Provident Fund. That retirement fund, they allow you to cash out some of it, especially if you're buying housing. So you can do it two ways. One is to cash out to make a down payment for your house, also for your making your monthly housing payments. Around 75 % of Singapore's population lives in public housing. So typically what happens is in most countries when they decide to provide public housing, they segment it to lower income or minority neighborhoods. So those neighborhoods then become also very crime prone or risk prone.

38:07In Singapore, they make public housing for all around everybody. Public housing is all over the island, from the best neighborhoods to the fringe neighborhoods on the island. Having public housing supply at the level of Singapore might not be replicable in other countries. But while Singapore makes it easier for people to get into their first home, it also makes it more difficult to buy a second. In Singapore, there's something called an ABSD or additional buyer stamp duty. What that means is that if you're buying a second house in Singapore, you have to pay an additional stamp, a buyer stamp duty of 30 percent.

38:47Okay that's up front. So this discourages homeowners to become investors or buy second or third properties. Okay this democratizes housing and availability and also depresses pricing or doesn't grow house prices. Clearly this is a great idea that look we don't want to discourage you from buying and investing in housing as an asset class but we have to realize that housing is special. It's not just an investment, it's a consumption good. If tapping into pools of capital like retirement funds just raises prices, and taking real steps to lower those prices hurts those who already own their homes, is there any hope of solving the housing affordability crisis?

39:34The only way in which housing is going to get cheaper, I suspect, is if there is some kind of global financial upheaval that impacts the supply of credit that in turn reduces people's capacity to pay what they currently pay for housing and hence it becomes cheaper. But as I say, if that were to happen, there'd be enormous political pressure in this country on governments to do things to stop it happening. So what does Jordan Davies think? He spent years saving for his first home in Melbourne. Now that he owns one, has his view changed? I think I bought into this property with a view that eventually property prices in Australia will need to equalise in one way or another.

40:18I bought this as a place that I knew that I'd be happy just living in at the cost that it costs, you know, relative to what I might need to pay to rent in Melbourne. So I didn't go into the purchase thinking, I want this asset to significantly rise in value. I wouldn't like to see it plummet, that's for sure. So I'm of the same mindset as I was before. And what about in Singapore, where the system favors buying one, but only one home? I think that there are two different groups of people in Singapore. in my point of view. I belong to the one that I want to buy a few more properties, be it residential or commercial, to build a portfolio.

41:07As governments around the world take on the housing affordability crisis, the question may not be which levers to pull, but who is the Peter we're borrowing from to pay off which Paul? Coming up, what happens when the demand for specialty foods overwhelms global supply? We look at the growing passion for matcha.

41:54it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. If you follow markets, you know the value of long-term thinking. You plan, you diversify, you prepare for volatility. But even the best strategies can't prevent every bad day. For more than 75 years, Cincinnati Insurance has helped individuals and businesses navigate tough moments with expertise, personal attention, and independent agents who focus on relationships, not transactions. The Cincinnati insurance companies. Let them make your bad day better. Find an agent at CINFIN.com. This podcast is brought to you by WISE, the app for international people using money around the globe.

42:40When it comes to sending money abroad, many providers claim to offer free fees and competitive rates. But don't be fooled. This can be code for inflated exchange rates. With the Wise account, you can send, spend, and receive money in over 40 currencies without ever having to worry about hidden fees. Sending pounds across the pond? Most transfers arrive in 20 seconds or less. Spending reals in Rio? The Wise Travel Card gives you the mid-market rate on every purchase. No costly markups on your bill. Getting paid in dollars for your side gig? Avoid hidden fees and get the real exchange rate every time.

43:13With 24-7 access to live support, your international transactions with WISE are quick, transparent, and safe. Plus, WISE runs over 7 million daily checks to catch and prevent fraud. 15 million people already trust WISE to manage their money internationally. Be smart. Get WISE. Download the WISE app today or visit WISE.com. Terms and conditions apply.

43:43This is a story about globalization gone wrong. Social media has opened up new markets for acai, ube, matcha, and Dubai chocolate. Markets far from their countries of origin. But when demand spikes, it can show the limits of those long supply chains. Our colleague Scarlett Fu reports on what that means for your matcha.

44:06Let's go get some matcha. Whether you're browsing through a social media app or going to a grocery store, matcha is everywhere, from Starbucks to Trader Joe's to budding matcha cafes. This is your sign to stop drinking coffee and start drinking matcha. It tastes so close to the original. What? As a current Harvard student, I finally understand the science behind why matcha is so addicting. If you're gonna make a matcha, make a matcha. Don't be cheap with it. Matcha is just one of several food trends gone viral Thanks to social media, from acai. Do I regret buying a three-gallon bucket of acai?

44:38No. To ube. Will you be my ube? And Dubai chocolate. I got some Dubai chocolate as a light snack. Social media-driven food trends are reshaping demand faster than ever before. It's unbelievable how fast a trendsetter, an influencer, can generate huge spikes in the demand for products. Miguel Gomez is a Cornell University professor who teaches food marketing. It is a challenge for the supply chain to meet that demand at that very moment. Because if you miss a supply chain, you miss the opportunity that there is huge interest in a product such as desserts with Uber. The question is, are farmers prepared to react as fast to these trends as they should to meet the demand?

45:30This is hardly the first time that food has gone global. Social media is just the latest innovation to fuel widespread demand for foods from around the world. This has actually been happening for hundreds of years. The first inspection point in the globalization of food and crops dates to 400 years ago, with maize and tomatoes being produced in the Americas, being exported to Europe, and wheat and other grains being shipped from Europe to the Americas. But it was in the 1980s when the development of the containers for transportation really allowed many of the commodities to be really global. And then we have the latest trend that is driven by social media.

46:19When a trendy food takes off and goes global, Walk us through what typically happens on the supply side. Is there a specific sequence that takes place? When these products become truly global because of consumer demand in high-income countries like the U.S., Europe, etc., this poses big opportunities but big challenges to the supply chains. For example, ube, there is a huge explosion of demand for use of ube because of the beautiful color in confectionery, in desserts, in restaurants, but also in the supermarkets. And ube is native from the Philippines, but this demand is really putting, demand is just exceeding what Filipino farmers are able to supply.

47:08Another thing that is happening with these products, because these markets are relatively small, you know, these are very niche products, demand tends to shift dramatically. And this means lots of risk for farmers, because if you look at what has happened with products like ube, matcha, is that you see that the farm price for these commodities is very volatile because demand fluctuates so much, and production is trying to catch up with that demand. Matcha originated in China over a thousand years ago, before migrating to Japan, which is now the world's matcha capital. The drink itself is made from green tea leaves that have been ground into a fine powder.

47:54Rising demand has led to a dramatic increase in Japanese exports of matcha, a 25 percent jump to$244 million in 2024 from the previous year. And now China has overtaken Japan, supplying 60 percent of the world's matcha. We have seen incredibly strong growth on matcha within the last like two years, and I've been doing this for 10 years. So I think the last two years, there's been a real surge in the demand and awareness for matcha. Hannah Habes is a matcha pioneer in the U.S. She is CEO of Matchaful, a company she founded over a decade ago. Habes operates sales through her website and has seven storefronts in New York City.

48:36I was actually working in the processed packaged food industry right out of college. I started to notice changes in my health, consuming packaged foods every day. And around the same time, after being in this very heavily processed industry, I was introduced to matcha, which was this incredibly clean, beautiful caffeine alternative to coffee that made me feel more sustained, more focused, more calm. And it really was that lightning bulb moment for me, that epiphany of I've got to do something with this. And at the time, matcha really didn't have presence in the U.S. This was in 2012 when I kind of first took my sip of my life changing sip of matcha.

49:21In 2023, the global matcha market was worth about four billion dollars. That's half of its expected value by 2030. The U.S. is an example of the surge in demand. According to research firm NIQ, sales of matcha grew 86 percent in the last three years. It's accelerated to a point that I think last year was almost unsustainable. We saw farmers having supply constraints and people, you know, online trying to figure out, you know, where to get their matcha and how to make sure that they're not, you know, over consuming matcha. So there was a heightened awareness of this supply chain issue around matcha.

49:59It's more than specialty matcha cafes. Dunkin Donuts offers a matcha latte. Starbucks reported a 40 % year-over-year increase in matcha sales for the first quarter of 2025. And Blank Street Coffee sold so much matcha that it ended up dropping coffee from its name. So I think the interesting thing with Starbucks is they have actually had matcha on their menu, a form of matcha mixed with cane sugar, but they've had it on their menu for over 10 years, even before I started Matchaful. Starbucks had what was called a green tea latte on their menu. It had matcha in it, but they didn't necessarily call it matcha because I think at that point, not many people knew what matcha was.

50:39And now they're really leaning into matcha. Japan's matcha production tripled between 2010 and 2023. But even that failed to keep pace with demand as matcha is added to desserts and smoothies. The matcha market is now cracking under the weight of all the demand. To make matters worse, last year, farmers in Kyoto, who supply a quarter of the world's tea used for matcha, struggled after hot weather led to poor harvests. It's a plant, and I think it's important to remember that. And our farmers, we did see shortages on the matcha. So naturally, we did see prices rise on matcha, and we did experience some shortages.

51:16What is happening is that the supply chain is procuring matcha that is not following the standards that the Japanese employ to produce what they call matcha. So what you see is a huge difference in the quality of matcha produced in different origins. And that can create a long-term confusion in consumers or may affect the value of matcha for the Japanese traditional growers. Right now, for example, India, South Korea, China producing the product that we call matcha, but with different standards. So what is happening is that matcha, as we know as a Japanese ceremonial, very niche product, is becoming massified and is perhaps not of the same quality of the matcha that is produced in Japan.

52:12With matcha, quality does matter. And I think with the first harvest in Japan, it tends to be a little sweeter. It's traditionally what's coined as ceremonial matcha, really meant for drinking as a tea, in a latte. So we're seeing the demand for ceremonial grade continue to rise. But the pricing for ceremonial grade also is more expensive. And so I think with the second harvest culinary grade matcha, the pricing on that is a little more approachable. So I think there is a vast difference in quality and price point with matcha. And we're seeing matcha as a price point is rising because the demand is growing, because harvests are down.

52:56We are just seeing the price points continue to rise on ceremonial and culinary grade. And I think consumers are aware of this, but we don't necessarily see it impacting our business in any way at this point. I think people are very particular about their matcha. And I marketed this business well before we opened. So I taste tested 12 different matchas on TikTok to see what the consumer wanted. And they were very excited about the matcha that we selected. Sammy Nussdorf is the founder and CEO of Metal Lane, a gourmet food market in the Tribeca neighborhood of New York. OK, so this is something you knew coming in that you would have to offer to your clientele.

53:33For sure. And did you think in terms of you need to offer other kinds of matcha products, given how much interest there is in matcha overall? I didn't think so. I wanted to make the choice easy for the consumer. I think that people are stunned by too many options and we're stuck in this paradox of choice. I think that offering one and doing a lot of diligence on a product like matcha makes it easier on the consumer and it's like we've selected the best for them. I do think that a wealthier audience probably influences the masses into, you know, how can I treat myself? And food's being looked at as a status symbol right now.

54:10It's like these micro luxuries. Like a lot of people can't afford a Birkin, but they can afford a road lip gloss. And that is like an identifier as to like what you subscribe to and what's on trend and these micro luxuries that you can afford. which is like, I guess, similar to here. You might not be able to afford a$300 Michelin meal, but you can afford a organic, well-made, nicely sourced$23 salad. Even though Sammy says he doesn't believe in selling trendy food products, Metal Lane does respond to whatever food crazes his clientele is attracted to. Can a viral moment create demand faster than the supply can meet it?

54:50Yes, absolutely. I mean, as we saw with the opening, I think it was once the infatuation or eater, you know, came for press day and they tried certain menu items that we make here and they rated what their favorites were. That's what became very viral off the bat. And that shifts, you know, as the business progresses. Whether coming from Starbucks or a niche grocery store, the bottom line is it's important to understand your supply. What is the most misunderstood part about the globalization of niche foods, trendy foods, something that consumers get wrong about how supply chains work? We consumers in general know very little about how these products are produced, who produces them, where, how, and how is that product coming to our tables, in our houses, or in a restaurant.

55:47So I think what we need to do is to educate consumers. That does it for us here at Wall Street Week. I'm David Weston. See you next week for more stories of capitalism.

56:16If you follow markets, you know the value of long-term thinking. You plan, you diversify, you prepare for volatility. But in life, even the best strategies can't prevent every bad day. A fire, a loss, a disruption that demands immediate attention. When that happens, what matters isn't just what you planned, it's who shows up. That's where Cincinnati Insurance comes in. For more than 75 years, they've helped individuals and businesses navigate life's toughest moments with care, expertise, and personal attention. Together with independent agents, Cincinnati Insurance focuses on relationships, not transactions.

56:54Their approach is grounded in experience, follow-through, and trust built over time. Bad days happen, and when they do, you deserve an insurance partner who understands risk, respects what you've built, and is ready to help you move forward. The Cincinnati Insurance Companies. Let them make your bad day better. Find an independent agent at CINFIN.com. Sinesta Travel Pass makes traveling more rewarding, designed to help you get more out of every stay. Sign up at Sonesta.com to enjoy instant savings, bonus points, and valuable perks like early check-in, late checkout, room upgrades, and free stays over time.

57:33With Sonesta Travel Pass, every stay brings you closer to your next reward. Choose from more than 1 ,100 hotels across 13 distinctive brands and unlock the best available rates when you book direct with Sonesta Travel Pass. Here today, roam tomorrow. Join now at Sonesta.com. Terms and conditions apply. This podcast is brought to you by Wise, the smarter way to manage your money internationally. If you're getting a headache from juggling different currencies and different bank accounts in different countries, there's a better way to receive money in the currency you need without the slow transfer times or hidden fees.

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