U.S. Food Prices Are Up. Are the Food Corporations to Blame for Taking Advantage?
U.S. Food Prices Are Up. Are the Food Corporations to Blame for Taking Advantage?

U.S. Food Prices – 2021 is a bad year for grocery bills. Shoppers paid 6.4% more for groceries in November 2021 than in November 2020, according to Consumer price index. All foods increased in price slightly more than usual but the biggest price increase came from meat, pork is 14% more expensive than it was a year ago and beef is 20% more expensive. These increases are slowing, every consumer price data Released January 12thorder, but shows no sign of dropping to pre-pandemic levels any time soon.

Dish the company said Rising prices are merely a free market – extreme weather and pandemic disruptions increase production costs and reduce food supplies while demand increases in the US and abroad as people start exporting from the pandemic. But Biden Administration and politicians like Senator Elizabeth Warren accusations of foul play. They argue that industry consolidation, particularly in the meat processing sector, will help a small number of companies profit from inflationary expectations by raising prices further. In a way, both sides are right.

Food companies face legitimately rising costs and unique shortages, but these don’t eat into their profits as economists might expect. In fact, the largest publicly traded companies have never had a higher profit margin. Such record earnings suggest that food companies have enough market power to pass all of their higher costs, and subsequently some, to consumers. Basic economic theory tells us that when a business charges too much, competitors will charge lower prices, oversell and erode profits. Unsurpassed, sustainable corporate profitability raises the question: how much competition are food companies really competing for? And if business consolidation helps competitors raise prices together, what can be done to remedy price gouging?

Food markets have been shut down since the pandemic began. Meat prices spiked for the first time as workers fell ill, factories closed and up to 40% of processing capacity shut down in spring 2020. Factories are back up and running but after about 86,000 workers COVID-19 cargo packer and 423 dead, according to a congressional report, many people pack meat is Struggling to fill gaps and raise wages. Across food supply chains, workers are returning from the pandemic and refusing too many hoursunsafe working conditions, and stagnant salary that’s not there keep pace with productivity growth for over 40 years. Eg, 1982 basic salary for meatpackers in the Union Food and Commercial Workers (UFCW) union is $10.69 or $29.14 adjusted for inflation. In May 2020 Average hourly salary industry-wide is $15.

While food companies focus on increasing labor costs as the primary source of their woes, there are a host of other factors driving shortages and new costs. Cattle, live pigs scale it down a bit last year during difficult times. Wheatcorn, and is different Grain prices are at their highest since 2012 due to drought and High demand from China, raising the cost of the main input feed. Prices of other crops such as Streettomato, and melons also increase due to extreme weather events. Even the shortage of food packaging persistence after a cold snap Texas Plastic Refineries Closed. Throw at portals with bones and delivery delay and companies are paying more to get food on grocery store shelves. While demand remains high as restaurants reopen, Americans buy more food than before the pandemicand other countries import more than the United States beef and egg.

The companies say that’s the whole story. But there is evidence that the monopoly market structure is making things worse. Food production has merge, consolidate significantly since the 1970s change in antitrust policy allowing many companies to acquire their competitors. Depending on who you ask, antitrust practitioners say the market is “authoritarian” or dangerously concentrated when the top four companies control 40% arrive 50% of the market, or more. A higher degree of centralization gives businesses more power in pricing and increases their ability to fix prices or manipulate markets. Today, the top four corporations control more than 60% of the US market for pork, coffee, biscuits, beer and bread. In beef processing, baby food, pasta and soft drinks The top four companies control more than 80% of the US market.

 

 

Source | U.S. Food Prices

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