Food Costs Slow Rising
I don’t have to tell you food costs have increased over the past year. But when you look at the rate of increase and the percentage of our personal budget, we are fortunate to have an affordable food supply. Recently released USDA Economic Research Service data shows that 2021 food prices rose an average of 3.9% compared to 2020, the highest rate in 13 years. Diving a little deeper shows grocery food prices experienced a smaller increase than restaurants. In groceries, beef, pork and fresh fruit purchases reflected the highest price increases, while dairy products and fresh vegetables were relatively stable.
Despite the higher prices, the percentage of our personal budgets spent on food decreased by 10%, due in part to the largest increase in personal disposable income since 2000 and the nosedive spending on food away from home. Overall, we spent an average of 8.6% of our budget on food, but the numbers show all households are not equal. Lower income households spent an average of 27% of income on food while the highest income spent seven percent. These statistics validate the increase of food insecurity and need for food assistance programs.
Food costs are predicted to rise two to three percent this year. However, if the current Russian-Ukraine conflict continues, wheat and oils (sunflower) prices will be impacted as Ukraine is one of the world’s largest wheat and sunflower oil exporters. Rising food prices are never welcomed but the cost for food is more stable than fuel or farm costs.1
Where’s the Food … on the Shelf?
For most of us, seeing empty grocery shelves (except in the South the night before a snow storm is predicted), wasn’t a reality until March 2020. Suddenly, we saw toilet paper disappearing, then it was sanitizers, canned food, meat, potatoes and those pandemic bread baking supplies. But after the initial bumps of disrupted food supply, why are we still seeing empty spaces on grocery shelves?
According to Leah McGrath, RDN Corporate Dietitian for Ingles Markets, it’s about ingredient shortages, packaging and labor issues. As Leah told me during a recent conversation, “After 2020, shortages in 2021 became very specific like Gatorade, pet food, canned items and saltines … some due to ingredient shortages and others because of packaging (aluminum can) issues and even worker strikes.” She also mentions COVID-related worker/harvest issues and even the lack of truck drivers. Winter storms only compounded the issue. Her conclusion? “If a grocery store is fully stocked, you are very fortunate.”2
Farmers Still Farming
As a recent Farm Bureau blog noted “Supply chain issues aren’t a farm supply issue” as farmers and ranchers have navigated their way through similar supply chain issues to keep cows milking and crops harvested.3 Not only do those that produce our food experience these same grocery store issues but have to navigate their own “empty shelves” and labor issues. As Danita Rodibaugh, co-owner of Rodibaugh Farms, told me, “We can get crop inputs like fertilizer but at a much higher price than previous years. However, parts for equipment is an issue.” Due to supply chain disruptions, a combine or other piece of harvest equipment may have to remain idle when a repair is needed and the part is unavailable. When this happens, operations like Rodibaugh Farms have to outsource the work, increasing costs and decreasing efficiency.
Even though farmers are experiencing labor shortages, increased supply costs and fluctuating grain prices, few of those costs are passed on to consumers. What we need to remember is that crops like corn, soybeans and wheat are an integral part of the U.S. trade economy, and current world conflicts impact farmers more directly than the average consumer.
Where Do We Go from Here?
As we have experienced in the first two months of 2022, there will be challenges to what we perceive as “normal” over the next year. Higher food costs will affect some of us more than others. How do we manage? Like our partners along the food supply chain (food retailers, farmers and processors) resilience is the key to finding solutions. Let’s take the opportunity to evaluate what and where we buy; make food waste reduction a priority; and do our part to address food insecurity in our communities. Now is not the time to whine but to appreciate those from farm to fork who keep food on the table, respect the abundance of our food supply, and, most of all, be patient. We have food.
1. “Food Prices and Spending,” U.S. Department of Agriculture Economic Research Service, February 23, 2022.
2. Leah McGrath, @InglesDietitian on Twitter, 800-334-4936, [email protected]
3. “Ongoing Supply Chain Issues Aren’t a Farm Supply Issue,” American Farm Bureau Federation, by Jennifer Whitlock, January 11, 2022.