The world is facing an unparalleled crisis as a result of the ever-increasing food prices. As if it wasn’t enough, there will soon be disruptions in international farming communities adding even more headaches
BMO and Ipsos held a quarterly survey and found that 42% of adults changed their grocery shopping habits to avoid big brands, instead opting to go for cheaper, essential items.
People also prefer to eat at home instead of dining out. 46% of those surveyed said they would rather do so to spend less.
The factors that have caused food prices to rise are high energy costs and the Russian invasion. Additionally, every day this past week, gas prices reached record highs with AAA reporting a national average cost for gasoline at $4.85 on Sunday morning. Diesel also experienced increases during these same days reaching $5.64 per gallon.
The farmers’ reliance on gas made it difficult for them to utilize equipment and transport goods.
“By the economics textbook, higher costs work themselves up through the supply side of the market and raise prices,” said American Farm Bureau Federation chief economist Roger Cryan. “The prices are especially high right now because of the sudden lack of access to Black Sea grain, but if these energy prices stay high in the long run, then they will entirely work their way into food prices.”
A significant amount of these increases can be attributed to the invasion by Russia, which led many countries into an exporting crisis as they lost access or became unable to produce certain crops due their volatile situation there.
“Ukraine is one of the largest wheat producers and suppliers, so wheat is definitely under pressure,” said agriculture professor and Research Economist for Center for Global Trade Analysis Maksym Chepeliev. “Corn as well, because apart from the fact that Ukraine is a large corn producer and supplier that needs to be replaced, there have been issues with droughts in South America and also the U.S. that kind of reduced the corn supply, and China is demanding more corn, and that is pushing the global corn market.”
The recent avian flu outbreaks have led to soaring egg prices. Additionally, Florida’s oranges yield fell due to a bacterial infection affecting crops.
The food industry is predicting that prices for groceries and other foods will continue to rise. It’s not clear when they’ll come down again, but it seems inevitable since 40-year high levels of inflation have been sustained so far this year alone.