Food prices fluctuate based on labor and supply shortages

Monday 23 August 2021

Media contact: Gail Ellis | Communications Specialist, Writer | 620-515-2498 | [email protected]

This happens in large chain stores and local markets. After the wave of panic buying a year ago, a few empty shelves still haunt grocery stores and food prices continue to climb.

The US Department of Labor reports that in the last 12 months since July 2020, the consumer price index has increased by 5.4%, including 2.6% of home food prices. Meat, poultry, fish and eggs cost 5.9% more than last July, and meals prepared outside the home are 4.6% more expensive.

In a world still struggling with COVID-19, rising energy and labor prices are driving up grocery bills.

“We have never gone beyond the workforce issues. There are still a lot of unemployed and companies are scrambling to find workers, ”said Rodney Holcomb, Extension of Oklahoma State University food economy specialist.

The nationwide labor shortage, which includes truck drivers and warehouse workers, as well as restaurant and retail supermarket workers, “is slowing the flow of products through the marketing chain. “said Holcomb. “If we reduce the supply, the prices will go up. “

This is the classic definition of supply and demand. When supplies are low and few workers are available to ship the product, consumers can expect higher costs. Holcomb said fuel is a good example: Supply levels have plummeted and oil companies cut staffing services in 2020. A year later, motorists are paying an extra $ 1 per gallon.

Consumers pay 5.9% more for meat at the grocery store than in July 2020 (Photo by Todd Johnson, OSU Agricultural Communications Services)

Holcomb also shattered the theory that locally grown or produced produce is sold at lower prices because fewer miles to haul equals lower fuel costs.

“This is not true. It costs a lot less money per pound to move 40,000 pounds of fresh produce 500 miles than it does to move 40 pounds of produce over 50 miles to a farmers market… and with less waste too. “, did he declare.

The economies of size and scale in production and distribution are major factors in the price comparison of Holcomb. Although the cost of driving a semi-trailer a mile is higher than the cost of driving a farm truck a mile, the semi-trailer carries a lot more product. Therefore, the cost per pound of transporting 40,000 pounds of food a mile per semi is much smaller than the cost per pound of transporting 40 pounds or even 400 pounds per mile by farm truck. As a result, large amounts of food in refrigerated semi-trailers are transported much more efficiently over long distances than small amounts of food transported over short distances using cars or vans.

The benefit analysis prioritizes sending products to large population centers where most consumers can be served with limited resources. This could cause delays in local stores in small towns and rural areas. Clifford Brinson, owner of Laverne Venture Foods in Harper County, said it was already experiencing the snowballing effects of rising fuel prices and labor shortages. Flour, sugar, other baked goods, paper products, and even condiments, like ketchup, are scarce.

“Our warehouse isn’t receiving the amount of product it usually receives because things are no longer in stock,” said Brinson. “Branded items are harder to come by, so we try to compensate with non-brand options. “

Hiring workers has also proved difficult. Laverne Venture Foods has lost several employees, forcing management to work overtime. On the plus side, in a town of around 1,700 residents, Brinson said he was grateful for loyal shoppers who support a local business instead of walking 40 miles to the nearest big box store.

“We are very fortunate to have a community that helps and understands the current challenges in the market,” he said.

Food delivery services as well as curbside pickup functions at large chain stores also play a role in food pricing. While many consumers have discovered the convenience and security of these services during the pandemic, each is charging a fee which is factored into the total bill.

What does the future hold? Holcomb said there are too many variables to predict food prices for the remainder of 2021.

“If businesses start to shut down again because of the delta variant, we might see people start storing again. It will also drive up prices, ”said Holcomb. “We saw it last year in meat processing plants and with the workforce being used to pick fresh produce – if enough people are out of work, the supply chain will be pinched again. . “

In a volatile consumer market, take the opportunity to review your monthly spending habits and look for ways to tighten your budget. Cindy Clamp, an OSU extension specialist in human development and family science, offers the following tips for saving money for groceries.

  • Compare shop for frequently purchased items. Think about coupons and other stores.
  • Avoid buying groceries at convenience stores or gas stations.
  • Focus less on famous brands. Non-branded items may be cheaper.
  • Buying wholesale may not save money. Pricing the desired items per unit to determine potential savings.
  • Stock up on items you use most often if they’re on sale.
  • Be intentional in planning meals. Examine the refrigerator and cabinets to determine what needs to be eaten first before shopping.
  • Plan the leftovers.
  • At work, bring lunch, snacks, and drinks from home instead of eating out or snacking from a vending machine.
  • Avoid eating out. If you are on a budget, book your restaurant meals for special occasions.
  • Use rice and beans as nutritious diluents for meals – buy 100% whole wheat items.
  • Avoid impulse buying of snacks like chips, crackers, cookies and soda.

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