The Global Factors That Are Keeping Food Costs High
People are spending more than ever at the grocery store checkout, and although it seems like everyone's looking for something or someone to blame, the unfortunate truth is that there are many factors driving food costs up. Adding insult to injury, they're not likely to improve anytime soon, either. According to the USDA, "food-at-home prices" jumped by 3.5% in 2021, a big leap from the norm, which is usually only 2% per year. Of the affected foods, meat and fish products experienced the biggest shift, with the cost of beef up 9.3%.
The prices of "key agricultural commodities," such as sugar, grains, dairy, and meat are getting higher all the time, says Ag Funder News, which also reports that the Food Price Index declined by 0.8% in April 2022. This is but a slight glimmer of hope, however, since the Index is still up by a whopping 30%.
One huge factor at play with rising food prices is the Russian invasion of Ukraine, which is causing massive spikes in wheat prices because those two nations normally put out 29% of the world's supply of wheat, says Food Dive. Since much of the world is refusing to do business with Russia right now, and obviously Ukraine has bigger metaphorical fish to fry, this major food sector is in a perilous state. As tempting as it is, we can't go blaming everything on Russia, though.
Other reasons for food inflation
According to at least one expert, commodities and securities research expert Kona Haque, food cost and supply disruptions are "all about weather and politics," reports Ag Funder News. They also predict that the "high price environment" will continue for at least six more months.
For one, major weather problems have seriously messed up the physical infrastructure of food production. Abnormally wet conditions in the upper Midwest portion of the U.S. have negatively impacted the planting of spring wheat, and droughts across the Central Plains have resulted in the lowest supply of hard red winter wheat (the type used to make bread flour) in decades, says Food Dive. Wheat-growing regions of China and India aren't faring much better, with the nations reporting extreme rain and drought, respectively. France is also struggling, with summer-like temperatures far earlier than normal, Bloomberg reports.
Then, of course, there's COVID-19, which just keeps on ticking. The pandemic shut everything down for a significant period, which exacerbated supply chain issues. This boosted shipping costs, thereby driving up food prices, says Ag Funder News. Then, when everyone began going out again, there wasn't enough supply to meet their significant demand. It's a vicious cycle, indeed.