Food Inflation?

Submitted Feb 1, 2011

The mainstream press has been giving significant amounts of attention to agriculture lately. Unfortunately, it has not always been positive. With increasing global population and improving economies in many regions of the world, demand for U.S.-produced food is on the uptick. Plus dry, variable La Nina weather patterns have driven global production estimates and grain stocks lower. Couple these factors with increasing amounts of grains being used for energy production, and the supply/demand curve indicates one thing: higher agriculture commodity prices.

Yes, we hear of food riots and uprisings globally, but most of the news items that I have read recently focus on domestic prices for food at retail. Here–in the U.S.–where we have spent roughly 10% of our annual income on food for decades! Estimates vary depending on levels of income, but Americans’ expenditures for food have increased between 10- to 15% since the beginning of the trend in 2007.

As food producers, America’s farmers and ranchers fully understand the effects of increasing costs with stagnant or decreasing incomes. We have faced these challenges for decades. We continue to find ways to improve our efficiencies of production. We adjust priorities and make tough decisions. And it will become increasingly important to continue our businesses with this mindset.

But during this pivotal time in production agriculture, we must also do something else. We must continue to tell our story to help shape consumers’ perception—both within the U.S. as well as abroad. We have seen our costs of production increase exponentially over the past several decades. Few—if any—articles were written about “farm riots” when costs for fuel, fertilizer, land, equipment, seed and other inputs rose steeply. We simply buckled down, made appropriate decisions pertinent to production levels, and assumed the risks of our occupation.

Now, this is not a time to become flippant of others’ struggles. Farmers and ranchers have always been a compassionate bunch, and we need not change that character. But as we hear from consumers about 10- and 15 percent increases in food prices (which actually equate to about one- to three percent increases of total household earnings, since food expenditures now represent between 10- and 20% of income), let us reinforce that food price increases since 2006 are the first significant increases since the 1980s. During that 30 year span, farmers’ costs of production have skyrocketed.

And most of all let us recall the following: None of us like to think of price increases, but it is a small price to pay to maintain our food production infrastructure in the U.S. Over the past twenty years, Americans have been increasingly concerned about our dependence on imported oil. We certainly do not want to become dependent on imported food.

American farmers and ranchers are some of the few folks who still PRODUCE a life-sustaining good domestically. As increasing numbers of careers in the U.S. become focused on creating a service or luxury item, ag producers still walk out the door each morning with one mission: to efficiently raise products essential for life itself. We should not need to apologize for commodity prices that might finally bring our wages close to average annual incomes of our urban and suburban counterparts. Let us continue our goal of producing the most healthful, wholesome, reasonably-priced food in the world. But let us also remind our consumers of the continued demands that cost of production place on our bottom line. And by the way…America’s farmers continue to purchase nearly all of their “higher-priced food” from the same grocery stores as everyone else.