What’s Happening With Farmers and Food Prices

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Civilization has long depended on farmers to bring food to the table, but that’s not all farmers provide. Many people want farmers to grow crops like soybeans, to contribute to environmentally friendly plastics, fuels, etc. But with harsh weather conditions, high fuel prices, and increased fertilizer costs, farmers find it more difficult to deliver.

When they do deliver, the result could be higher food prices. There’s currently a drought in the Western United States that’s hurting production. How will this drought affect food prices? And how do the higher fuel and fertilizer costs factor in?

Droughts in US History

There’s no need to sound the alarm about sudden climate change. According to the National Integrated Drought Information System (NIDIS), a U.S. government website, droughts are a normal climate pattern.

They cite that tree ring archives show that agricultural droughts are cyclical and have happened periodically over the last 2,000 years. For example, the last substantial drought in the United States was in the 1930s.

The NIDIS notes that climate models show that droughts in the southwestern United States are common, similar to what is now occurring. Some episodes of drought have lasted decades.

The Midwest region isn’t currently in severe drought, but some areas of dryness are a concern. A few states that have had dry summers include Illinois, Kentucky, and Missouri. As a result, the NIDIS has an early warning drought update for Ohio, Minnesota, Wisconsin, and Iowa.

Drought in the West Could Affect Meat Prices

As of Aug. 30, 2022, 44 percent of alfalfa hay acreage in the United States was under drought. Forty-three percent of milk cow acreage was under drought. Hog and pig acreage faired a little better, with 26 percent under drought conditions. But 50 percent of cattle acreage was affected by drought.

This means that it will be more expensive for dairy, pig, and beef farmers to buy feed for their livestock. The result could be higher prices at the grocery store.

Rising Fuel Prices Plague Farmers

The average diesel fuel price is $5.70 per gallon throughout the country. It costs about six dollars on the coast. Farmers rely on diesel fuel. It costs them as much as $1,500 to fill up one tractor. That’s a lot more than the average soccer mom’s SUV.

The farmer’s fuel needs are just the starting point. The food still needs to be shipped to processing plants and then shipped to the stores.

Higher fuel prices are going to affect food prices.

Fertilizer at Record Prices

The United States is the third largest consumer of fertilizer, which is at record prices. Part of the problem is fuel costs, but a substantial contributor is the Russia–Ukraine war.

Russia, Ukraine, and Belarus produce key components for making fertilizer. These suppliers have been shut out. This has put a strain on fertilizer production and therefore increased costs.

In the past, farmers had switched crops, and now devote a record number of acres to soybean production. Unfortunately, soybeans use a lot of fertilizer.

Crops that are the three biggest users of the world’s fertilizer are maize with 16.2 percent, wheat at 15.3 percent, and rice using 13.7 percent.

Fertilizer is more expensive now than at any other time since the 2008 global food crisis. This significantly contributes to overall food costs.

Food Prices Rising Fast

As of July 2022, the unadjusted 12-month increase for food was 10.9 percent, according to the U.S. Bureau of Labor Statistics. That’s the overall cost of food. Eating at home costs 13.1 percent more than in July 2021, and the cost is steadily rising. July 2022 marked the seventh consecutive month that food prices had increased by 0.9 percent or more.

With the drought, fuel, and cost of fertilizer, it’s no surprise food costs are skyrocketing. Plus, you have to factor in overall inflation as a contributor.

Here’s a breakdown of where the increases are coming from. Flour is up 22.7 percent, milk increased by 15.6 percent, ground beef was up 9.7 percent, and bacon increased by 9.2 percent. Breakfast, lunch, and dinner are costing more.

Prediction for 2022 and 2023 Food Prices

Although eating-at-home food prices from July 2021 to 2022 increased by 13.1 percent, the U.S. Department of Agriculture’s prediction is that food-at-home costs are expected to increase another 10 percent to 11 percent by the end of 2022. That means the USDA is anticipating a slowdown or decline in food cost increases.

For 2023, the USDA predicts food-at-home prices will increase between 2 percent and 3 percent for the year. Food-at-home includes grocery store and supermarket purchases.

Food Prices May Not Stabilize

Food prices have risen due to the strain placed on American and international farmers. Drought conditions, high fuel costs, and high fertilizer costs all weigh in on creating a large grocery bill.

It will be interesting to see if the USDA’s optimistic prediction will come true. But before this prediction becomes a reality, it will need to rain a lot, and a war will need to cease.

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