Food Prices Climb While Supplies Dwindle

When we see or hear something enough times, we become desensitized to it. What seemed startling the first few times eventually loses its edge. 

Lately we've heard much about rising food prices and food shortages. At this point, it might be falling on deaf ears. We may be accepting reality.

But unfortunately, rising prices and shortages have a long-term effect. The extra money we spend on food now will cost us in the near future. And the lack of some foods will hurt us nutritionally. 

Maybe even worse than that? These problems are increasing rather than improving.

The Situation Is Dire

The United Nations estimates that in the past year, global food prices have skyrocketed by nearly 33%. 

Fertilizer costs have gone up by more than 50%. Oil prices have risen by nearly 66%.

Antonio Guterres is secretary-general of the U.N. He warned of "the specter of a global food shortage in the coming months." 

The number of food-insecure people around the world has doubled over the past two years. And more than 500,000 are experiencing famine conditions. This is an increase of more than 500% since 2016. 

'A Crisis Upon a Crisis'

Kristalina Georgieva is the managing director of the International Monetary Fund (IMF). She recently addressed the World Economic Forum in Switzerland.

She said, "The anxiety about access to food at a reasonable price globally is hitting the roof." She added that food prices continue "to go up, up, up." 

The IMF predicts that global economic growth will slow from 6.1% in 2021 to 3.6% this year and next.

Georgieva called the war in Ukraine "a crisis upon a crisis," following the COVID-19 pandemic. "And that is a major setback for the recovery of the world economy." 

Multiple Factors Involved

There are many factors involved. The war in Ukraine is one of them. Rising inflation, a lingering pandemic and supply chain problems are others.

Combined, Ukraine and Russia produce about one-quarter of the world's wheat. A crippling heat wave in India has also affected wheat prices. Fresh vegetables in China cost 24% more than a year ago.

In Ethiopia, Somalia and Kenya, more than twice as many people are experiencing extreme hunger than last year. Afghanistan has been close to famine for several months.

Sri Lanka and Lebanon are experiencing economic emergencies. They have extreme shortages of food, medicine and fuel.

More Demand at Food Banks

Americans are used to hearing about global problems. But now they are hitting home more than ever.

In April, our consumer prices were 8.3% higher than in 2021. Food prices were up 9.4%. With some items – meat, poultry, fish, eggs – up 14.3%.

Two-thirds of the food banks in the Feeding America network are facing greater demand than normal.         

More than 70% of U.S. consumers report being somewhat or very concerned about shortages and out-of-stock items. 

Hoarding Leads to Shortages

Most of us are seeing rising prices and shortages in our grocery stores. Many shelves are emptier now than they've been for nearly two years. 

Some boxed food items are the same price as they've been, but smaller (shrinkflation). A number of other foods are priced significantly higher than before.

In some places, hoarding has started. In others, it's bound to follow. Folks get nervous when they can't find things they're used to placing in their carts.

Here's how a recent Bloomberg News Service headline read. "People Are Hoarding: Food Shortages Are the Next Supply-Chain Crunch."  

'Perfect Storm' of Food Issues

Stephen Salisbury is the district manager at warehouses in South Dakota, Nebraska, Wyoming and Colorado. Here's what he says. 

"What we're seeing now is the long-term effects coming out of (the pandemic). Not enough employees, too many people on unemployment, transportation is a big issue.

"Product ingredients, packaging for products, anything you could think of that's associated with food, there tends to be an issue."

The combination of the pandemic, supply-chain issues, winter storms, inflation and the lack of workers prompted Supermarketguru.com editor Phil Lempert to call it "the perfect storm."

Destabilized Workforce

The Wall Street Journal writes, "Global supply-chain bottlenecks are feeding on one another. With shortages of components and surging prices of energy and critical raw materials squeezing manufacturers around the world."

Food producers are also warning about shortages. Not that we need warnings when we see empty store shelves right in front of us.

Another major issue is the number of food industry workers who have quit their jobs. Due to low pay and unsafe working conditions.

Greg Ferrara is president and CEO of the National Grocers Association. He said, "The bottom line is that we must have access to a stable workforce in order to adequately meet the demands of American consumers." 

We See It in Stores

Geoff Freeman is president and CEO of the Consumer Brands Association. He says U.S. groceries typically have 5 to 10% of their items out of stock at any given time. 

But these days, it's more like 15%. At some stores, the unavailability rate is even higher. That's partly due to extreme weather.  

Labor and truck shortages also contribute to the problem in some areas. Patrick Penfield is a professor of supply chain practice at Syracuse University.

He said, "As you walk through a lot of stores you won't see the quantity and quality of items you are accustomed to seeing." 

Rising food prices and shortages are not going away anytime soon. We all need to do what we can to prepare.