Food is more expensive because it’s getting more expensive to make food
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The price of pretty much everything aside from gasoline was up in August. The same goes for what we eat. The price of food at home was up 13.5% since a year earlier, the largest annual increase since 1979. Some categories — dairy and cereal products, for instance — were up more than 16%.
One reason food is getting more expensive is that it’s getting more expensive to make food.
Chip Bowling farms corn, soybeans and wheat in Newburg, Maryland. “For us, it started in the spring with higher diesel and gas prices. And then also a 100% increase in fertilizer. In some cases, more.”
The same problems that plague the car industry — a chip shortage and manufacturing issues — are affecting farm equipment.
“Your tractors, combines, tillage implements — those prices are up probably 20% to 30% this calendar year,” Bowling said.
Into this mix walked Mother Nature. Extreme drought took hold in the western Great Plains.
“That has very badly hurt wheat production and damaged corn production,” said Jack Scoville, vice president of Price Futures Group in Chicago. “We’re not gonna produce nearly as much as we thought.”
War in Ukraine and drought in South America earlier this year added fuel to the supply-and-demand fire.
“So it wasn’t one factor that made this happen. It was just an unfortunate perfect storm,” said Naomi Blohm with Total Farm Marketing.
So what’s next? “It’s up to Mother Nature,” Blohm said.
The next big harvest is gonna come from South America, and weather conditions look like they’re improving there. Energy prices are volatile, and the war in Ukraine is a wild card.
“That piece of food inflation that’s due to transportation costs could go away fairly quickly if the oil market resolves itself,” said David Just, professor of science and business at Cornell.
Other factors are more sticky, like rising labor costs and equipment shortages. Those take longer to go away — if they go away at all.
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