Food prices are rising, but who will be impacted?
Food prices typically rise every year, but since the pandemic began, the rise in prices has been faster than before. What are food-price trends in Wayne and Holmes counties and who will be impacted?
“Consumer food prices are increasing, and this increase has been occurring over time, and in fact, this increase in food prices is normal, but the current price increases are faster than normal,” said Dr. Zoe Plakias, assistant professor of economics at the Ohio State University, during a recent presentation.
Plakias said rising food prices are not necessarily the concern, but what will impact households is how fast the food prices are rising and how quickly they rise relative to wages.
The U.S. Department of Agriculture tracks food prices by category, and across all categories, food prices spiked from 2019-20.
“This is not surprising since this is when we saw the onset of the pandemic,” Plakias said.
For most categories of food, the steep price increases continued from 2020-21. Beef supply-chain disruptions have been highly publicized in the news over the past two years, and both beef and veal have seen price increases of almost 10% in 2020 and 2021.
Further, the high complexity of food systems has exacerbated recent spikes in food prices. The food supply chain moves from farm-level agricultural production to food processing and distribution, until finally the food arrives in the hands of consumers.
And COVID-related illnesses have impacted every single point in the food supply chain, making it a major driver of higher-than-expected food prices.
“It is the compounding of labor challenges. It is COVID on top of the status quo design of our supply chains, which is that we've been operating in a just-in-time environment prepandemic,” Plakias said.
Add to those factors to changes in consumer demand, and all that has led to massive changes in the way food production and distribution works and why the status quo is no longer as effective or efficient.
Impacts in the area
Rising food prices have a range of impacts on businesses and consumers in Wayne and Holmes counties, up and down the food supply chain.
Alan Kozak is a dairy farmer in Holmes County. He and his wife have owned Clover Patch Dairy for almost three decades. Kozak is being hit by rising input costs for agricultural production.
“Everything is more expensive, from tires to fuel. Fertilizer prices are crazy, though we have manure, so that will help offset that,” Kozak said. “Corn is the second highest that it's been in a long time. And corn is between 20-50% of the feed. Soybeans are at a six- or seven-year high too. Labor is up too — we're paying our labor close to 25% over what we were three years ago.”
For a long time, dairy producers in Ohio have struggled with rising input costs and volatile dairy prices, but today’s rising input costs are far from typical.
“It's extreme," Kozak said. "The future prices for milk right now, at least some of them, are at an all-time high. But the inputs are also about as high as they have ever been. Supply-chain disruptions and shortages combined with the increased costs also impact how you manage.”
So when rising milk prices are accompanied by rising input costs, the higher prices may not lead to higher margins for farmers. And the ongoing supply-chain disruptions can increase risk too.
Negative impacts from rising food prices also may occur in unexpected places: the tourism industry.
Tiffany Gerber, executive director of Holmes County Chamber of Commerce & Tourism Bureau, said tourism has seen an increase in the county during the pandemic. She is concerned about how increasing food prices, compounded by food supply-chain disruptions, will impact the tourism industry that so many businesses rely upon in Holmes County.
“We worry as a tourist destination, for hotels and restaurants, at what point the rising food prices will be passed along to the consumer. How does that affect the visitor experience? That is definitely something I am keeping an eye on,” Gerber said.
Of course, rising food prices not only impact businesses, but also consumers. Households whose budgets are already tight will be impacted hardest by increasing food prices.
Darcy Becker, Ohio State University program coordinator for SNAP-Ed for Wayne and Holmes, shared what she has observed as the triple impact of rising prices, out-of-stock food and lack of transportation, meaning these low-income individuals may need to pay a taxi or bus to go grocery shopping.
“A big thing people are telling me about is after paying for transportation, then getting to the store they have chosen to go to and it doesn't have the food they need — this is a big disappointment,” Becker said.
Together, rising food prices and ongoing supply-chain disruptions continue to have an impact on farmers, businesses and communities. Moving into 2022, there are no signs these impacts are letting up.