When I started this blog 14 years ago, one of the first posts was about the cost of food. My last update on this topic was almost three years ago, so I thought I might check on the latest data. Need I say it ain’t pretty? According to the USDA, a family of four with two kids under the age of 11 paid $227 a week ($983 a month) for food in November of 2024. And that’s on their “thrifty” food plan, meaning people are buying the least costly food they can find and all food, including snacks, is prepared at home. That’s an increase of almost 32% since January 2021. The major reasons are listed below.
Operating Costs
Operating Costs – whether it’s an increase in the cost of fertilizer, seeds, water, labor or fuel, operating costs for farmers, ranchers, truckers, food manufacturers and grocery stores are up across the board. Take beef: many ranchers reduced herd sizes when drought affected feed costs – especially for grain – and interest rates climbed. When ranchers start selling their replacement heifers for meat, it takes at least five years to build the herd back up to have enough to sell beef to the feedlots. The same issues apply to those farmers raising grain or hay.
Weather
Weather – between drought and floods, there are a lot of farmers and ranchers who haven’t been able to reach their usual production targets. You can’t plant flooded lands or get into them to perform tasks like fruit tree pruning. Drought stops seeds from sprouting, stunts growing plants and increases the risk of plant disease due to stress. Many farmers and ranchers were just holding on by a thread, anyway, so they got out of the business.
Fewer Farms
Fewer Farms – Although farm bankruptcies declined between 2019 and 2023, the trend is not expected to continue. Worse, the total number of farms in the US dropped by over 140,000 between 2017 and 2022, with an additional loss of more than 5,000 farms between 2022 and 2023.
Disease
Disease – the price of chickens and eggs these days is partly related to the factors above. But bird flu decimated the factory farms over the last two years. Two historically inexpensive protein sources are inexpensive no longer (although still WAY cheaper than beef, lamb or pork).
War
War – the war in Ukraine meant decreased grain supplies and also affected fossil fuel availability.
Supply Chain Issues
Supply Chain Issues – the pandemic had a disproportionate effect on smaller food retailers, many of whom went out of business or downsized. The big players cornered the market by buying in large quantities. There’s also a world-wide truck driver shortage, with approximately 80,000 open positions in the US in 2022. I have a sneaking suspicion that the new president’s tariff plans will make the supply chain problem worse.
Corporate Profits
Corporate Profits – conversely, retail grocery revenues climbed by 7% over total costs in the first 9 months of 2023. In other words, there was price-gouging and shrink-flation (selling a smaller package size or weight for the same price).
If you buy your own food, there’s never been a better time to patronize your local producers. You want to keep them in business for the long haul, as the current trends noted above are likely to continue. And if you grow anything, try to increase your production.
