LANSING — Delayed plantings of crops have put Midwest farmers in a monetary bind with little wiggle room. Now, consumers worldwide wonder whether or not their family’s budget will be affected.
Will that 8-ounce pork chop cost more at Meijer? How about those gas prices — will they increase if corn (ethanol) prices rise? Then again, recent bad weather seemed to hurt fruit production, so worries start at the produce section, right?
These are all questions the public wants answers to, and why the Michigan Farm News asked American Farm Bureau Federation Chief Economist John Newton his take(s) on the Midwest rains and how it might affect food prices.
Here’s what he had to say:
In your words, will there be a short-term, long-term effect on consumer prices because of the Midwest rains? If so, what might that look like?
Newton: I think at this point in time it is too early to tell. We don’t know yet what the crop production will be. If the crop improves, or more acres were planted, consumer prices may not be impacted. If the crop is smaller than expected, then livestock feed prices could potentially increase. Whether or not retailers pass that on to consumers depends. Food price inflation has been very low and stable for five years now.
What commodities are the most affected by the rains if there is a shortage of, say, corn supply? Will higher corn prices/costs mean fewer livestock animals, as producers sell herds or breed fewer animals as an unintended consequence?
Newton: This could certainly occur. It all depends on the individual operation too. If they were able to forward contract feed for livestock, then the higher cash market prices may not impact their profitability.
If the consumer will not see any financial impact, then will other parts of the supply chain swallow those costs?
Newton: Assuming crop prices increase and livestock production falls, the costs can be absorbed along the supply chain and could include retailers, processors, food service and manufacturing as well as farmers.
The Consumer Price Index notes that food prices rose 2 percent from May 2018 to May 2019. Do you see this trend continuing?
Newton: I’d focus on food at home here, which was up 1.2%. Total food likely includes higher prices in the food service channel. Consumers benefit from the lower inflation in food consumed at home.
If increased food prices isn’t an immediate concern right now for the consumer, what is something that is keeping you at night?
Newton: I’m more concerned that consumers don’t really understand modern food production practices and are being misinformed by food companies seeking to differentiate themselves through misleading labeling and marketing. This is especially the case when it comes to banning certain types of seed or crop protection chemicals. By failing to embrace science-based technologies we are doing a disservice to people around the world who need access to a high-quality and nutritious food supply.