Throughout the past year the cost of foods purchased in a grocery store have risen a total of 1.4 percent. This is a comparatively fast jump, considering that the last time the Consumer Price Index saw such an abrupt increase within overall grocery costs it was an 0.8 percent jump in early 2011. With grocery store food prices continuing to hike, many people are wondering how many different factors are playing into this dynamic.
It turns out that the price jumps are not as simple as one may think. As some might remember, the winter storm Atlas struck South Dakota in October of last year, wiping out tens of thousands of cattle, and in some cases entire herds of cows. This was a blow like none other to many cattle ranchers in this area, laying waste to much of their production and income for an entire year.
This catastrophic turn of events meant that beef prices would be bumped up in the grocery store. Meat experienced the biggest price jump overall, with an increase of 1.2 percent in March. With the Ukraine being one of the world’s biggest exporters of corn and wheat, this reduces the availability of U.S. farm feed due to the current conflict between Russia and Ukraine.
Despite such harrowing circumstances, hiking grocery store prices may not be all bad news for consumers’ continuing food choices. Due to higher meat and dairy costs, some grocery shoppers have been prompted to opt for leaner meats such as turkey or salmon. In other scenarios, buyers have chosen to prepare more veggie-based meals. This has only been a moderate shift in consumer choice, however, with fruits and vegetables experiencing an overall price jump of 0.9 percent last month.
For India and China, currently the two fastest-growing populations in the world, the demand for food is also being pushed up. China’s consumption of meat is rising at an alarming rate, in part because of the expansion of its middle class. The more money that is flowing through the nation’s workforce, the more money people are able to set aside for higher-priced food choices. The country’s inhabitants are big fans of pork. Over 50 percent of the 107 million tons of pork produced in 2013 is being eaten in China alone.
This, in turn, has pushed prices for meat up in the U.S. China has consistently been eating about 50 million tons of pork every year since 2011, with the U.S. consumption of pork sitting around nine million tons for the last three years.
Further complicating the problem in the U.S., the government has offered various California farmers sizable incentives not to plant new crops on their land, in an effort to conserve water use. This is partly due to helping cities such as Los Angeles, Palm Springs and San Diego receive more drinkable water that is diverted from Colorado’s water supply.
There is yet another factor that decreases supply and drives costs upward. Al Kalin, of Imperial Valley, California, chose not to take the incentive for fallowing. The process of fallowing is leaving a farming area intentionally unsown or dry, in order to allow a new cycle of crop fertility to take place. With over 170,000 residents in the area, more than 50 percent of the jobs held are tied to agriculture, meaning that for farmers like Kalin not to participate in the fallowing program undoubtedly saves the livelihood and income of thousands.
Many farmers are also not fans of government implementations to increase ethanol production, a process that lessens the space and availability on farms to produce food crops. Ethanol fuel is also inefficient for driving cars, costing more per trip than regular fuel.
Perhaps most telling is the fact that throughout most of the nation’s past, the U.S. has relied on their food supply to be met by local farmers instead of shifting production elsewhere. Since California is still the U.S.’s largest producer of vegetables, and it costs a lot to get produce from California to other states, transportation costs and food costs have almost always moved in tandem.
In spite of the continuing hike of prices in grocery stores, it appears that consumers are doing their best to stay nimble with the fluctuations. Consumers that never looked into coupons before are now bringing them to the store every week, and other shoppers are only buying foods that are stocked along the walls of the grocery store. Consumers are focusing hard on the sales of the week, remaining hopeful towards the rest of the year.
By Brad Johnson