Considering Food Prices

Terry H. Schwadron

June 2, 2021

Food prices are rising, most by modest amounts, but in the case of meat and pork by noticeable totals — the consequence of more demand for reduced stocks fueled by months of pandemic, says data from the Bureau of Economic Analysis.

Now, that trend will be worsened by shutdown of JBS plants, the world’s biggest supplier of meats, after a hack, apparently by Russian operatives, of its operations computers.

Those same reports, and the reactions of grocers, butchers, food researchers all suggest that the rises are likely temporary, the result of the same kind of economic glitches that are affecting the re-awakening of the economy overall.

But from the political world, you’d think that the sky was falling, because the biggest evil the country apparently faces is inflation, as opposed to, say, the failure of the marketplace to offer better wages to meet rising prices. For Republicans who oppose Joe Biden’s big government investment proposals, it’s a simple jump to outsized concern about food prices as a leading indicator of wider economic problems on the horizon, slowed growth, an end to profits and prosperity for corporations.

The American Enterprise Institute, which is commonly associated with conservative causes, has noted Republican interest in inflation as a political weapon to argue against economic gains under Joe Biden. With the economy reopening and stimulus cash flowing, the economy grew at a 6.4 percent annual rate in the first quarter, the big banks are predicting overall growth this year and next, and markets are up 12 percent since January. “Republicans have been looking for a counterargument that undercuts confidence in the emerging Biden Boom. And they hope they’ve found one” in the Republican Study Group insistence that “inflation is tied to the reckless spending bills.”

So, food is a stand-in for broadsides against economic good news.

The Numbers

There are a many factors contributing to immediately higher food prices that include interrupted international supply chains, in the same way that we are suddenly short on computer chips, temporary shutdowns and labor shortages in the meat-packing industry, tariff-induced losses in livestock production, higher transportation costs, weather problems — and the arrival of both summer barbecue season and the reopening of restaurants with re-stocking needs.

More demand, less immediately available meats, a slower-than-wanted return to full production spells higher prices.

Here are some numbers: Food prices rose 0.4 percent from March, and overall prices were up in April by 3.6 percent compared to a year ago, with the largest changes for meat. In the same time, disposable personal income fell 14.6 percent, the result of pandemic. In several states, stimulus checks boosting unemployment are being ended.

Food prices, of course, like gasoline prices, cause big emotion, and that drives unhappiness with whatever government is in office at the moment. If it’s summer, and it’s now coronavirus safe, we want our travel and backyard barbecues without a side of inflation, please. And right now.

But compare this to what’s happening around the world. The Washington Post notes that globally, the U.N.’s Food and Agriculture Organization has recorded seven consecutive months of rising meat prices, 5.1 percent higher than a year ago.

Inflation in meat prices in Argentina, a big beef producer, is up 65% over a year, prompting the government there to stop exports in an attempt to lower prices — much to the chagrin of business owners. Overall, that country is looking at an inflation rate that could be 50% this year.

It also means that U.S. livestock producers may have an additional market, as happened in China, where pork supplies were reduced substantially in 2018 by disease. American farmers saw the possibilities of additional markets abroad.

Many factors affect temporary food prices. The shutdown of that oil pipeline only lasted a week, for example, but there was a discernible impact on trucking, which affects perishable foods. Or that ship that got stuck in the Suez Canal had ripples in the world’s economies.

Meat processing plant shutdowns last year caused a drop in livestock population. As the pandemic got rolling a year ago, hoarding of meat became widespread, and many areas reported being unable to keep chicken on market shelves, for example.

Who’s Benefitting?

We should note that largely immigrant workers, documented or not, at those meat-packing plants are not thriving in this meat surge, nor are ranchers, particularly. Restaurants with the sudden need to re-stock their refrigerators are complaining about labor shortages and changing rules, and everyone is upset over trucking and transportations prices and delays.

With high prices and record exports, the market is generating unprecedented profits for the four main meatpackers — JBS, Tyson, Cargill and National Beef Packing Company/Marfrig — which together control 85 percent of the fed-cattle market, reports The Post.

Still, we are hearing voices like that of Sen. Ron Johnson, R-Wisc., saying that the marketplace is in control and that worker demands for higher wages is what is primarily driving prices up, and there is a Republican chorus to chant the mantra that federal minimum wage hikes are bad and that Americans on unemployment are too lazy or too accommodated by coronavirus boosts to jobless aid to return to work anytime soon.

The best guess is that the particular combination of factors will ease this summer for food, just as with toilet paper, so long as we show just a hint of patience with it all.

Government actually doesn’t set supermarket-level food prices, though it is active in maintaining emergency food supplies and policies that affect farmers, though admittedly mostly large agricultural combines.

Overall, food prices are a peek inside a transforming economy. The distressing part is that for the GOP, at least, and maybe Democrats too, the issue is on the appearance of price spikes, however temporary, rather than on our ability to live in a more predictable and equitable fashion.

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www.terryschwadron.wordpress.com

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Journalist, musician, community volunteer

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