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Has anyone squared the circle on why food prices are rising in spite of collapsed restaurant demand? I understand the constraints around meat packing (although

Has anyone squared the circle on why food prices are rising in spite of collapsed restaurant demand? I understand the constraints around meat packing (although given the monopolies in meat production, I’m still a little skeptical that it’s all based in reality), but why other goods?

cheez 6y ago
The food supply chain in US is heavily controlled by a few entities. They have been dying for a reason to raise prices. Google Tyson's full page ad. Edit: downvotes without response?
- mistrial9 6y ago
  recent articles in US Media about a price-fixing investigation by the "Big Four" meat packers.. just what the parent comment says, minus the meat specific part.. https://www.bloomberg.com/news/articles/2020-05-08/meatpacking-giants-face-u-s-antitrust-inquiry-amid-shutdowns https://www.bloomberg.com/news/articles/2020-05-08/meatpacki... look for "Cargill the worst company in the world" written by a US Congressman (!) for more background “In my 40-year long career in Congress, I took on a range of companies that engaged in abusive practices,” former congressman and Mighty Earth Chairman Henry Waxman writes in the report. “I have seen firsthand the harmful impact of businesses that do not bring their ethics with them to work. But Cargill stands out.”
  - cheez 6y ago
    People don't want to believe the extent to which they are slaves.
chiph 6y ago
One reason is that the food supply system is comprised of retail and commercial sectors. The commercial demand collapsed as restaurants & institutions closed, while the demand at the retail level skyrocketed when people panic-shopped. The packaging needs of the two sectors are different - retail packaging must have the nutrition & ingredients panels on it, while commercial packaging would typically only have it on the carton.
- mdorazio 6y ago
  To add on to this, the supply chains/logistics are somewhat different as well on top of already-stressed delivery infrastructure, so there are multiple bottlenecks in getting food to retail shelves. When demand skyrockets without warning (like it did), it's not really possible to immediately scale up, so you get shortages like we're seeing and thus food prices go up (temporarily) like you would expect.
- deleted 6y ago
  [deleted]
nine_zeros 6y ago
There's so much more demand for groceries, dairy and poultry because people aren't eating out. There is now more pressure to produce and supply goods that are meant for in-house eating. All the packaging and supply chain optimized for eating out has become useless and needs to be reoriented towards home eating. Until this is done on a massive scale, prices will remain high. Also, as demand is rising for home foods, producers have a newly gained pricing power and they sure are fully utilizing it. Also, production is low in general because of massive layoffs of farm work. Farm hands are not getting visas to come and actually harvest what farmers have been cultivating. Altogether, the prices are rising fast and nobody knows where it'll go.
- claudeganon 6y ago
  Ok, so it’s another example of over-optimized, inflexible supply chains. That makes sense to me relative to the other COVID-related shortages.
  - bsder 6y ago
    Ayup. Maximally efficient is minimally robust.
jim_and_derrick 6y ago
cant explain why this is happening but can confirm meat industry workers are getting boned hard. Family in indiana working at tyson plant, my family and co-workers are getting sick but still have to work. Basically it's a choice they have to make. Go to work, risk getting sick, but make $$$ and feed family. Or you can be safe, not go out to work , but family will have no food. It's an easy choice to make because your family needs to eat.
dbcurtis 6y ago
Well, there are two supply chain disruptions in play. One, restaurant demand is switching over to consumer demand, and the packaging and distribution is very different -- you don't buy 50lb sacks of pancake mix, half a pallet at a time, I reckon. Secondly, there have been food processing plant closures. This has a number of ripple effects. With the plant closures, farmers have been forced to destroy market-ready animals, dump milk, etc. So there is not only less processing capacity, but less input available when the plant opens again. I had a phone call from an aunt in rural Iowa yesterday -- she reported paying more than US$7/lb for ground beef... in a store literally 5 miles from my brother's beef finishing feedlot. The insanity of that situation boggles me.
gentleman11 6y ago
In Canada, the potato and/or dairy farmers associations are destroying their crops to prop up prices since fast food demand disappeared and there was such excess. Not sure what the difference between that and price fixing is but it seems to be a common practice. I first heard about it after reading the Grapes of Wrath Edit: better source: https://www.google.com/url?sa=t&source=web&cd=&ved=2ahUKEwiD66Tckd3pAhUOCjQIHeOqAkQQFjAAegQIAhAB&url=https%3A%2F%2Fwww.cbc.ca%2Fnews%2Fbusiness%2Fdairy-covid-19-1.5528331&usg=AOvVaw0gnfU_cRh8k5eIfNqYyC7l https://www.google.com/url?sa=t&source=web&cd=&ved=2ahUKEwiD...
- apta 6y ago
  That's extremely immoral and should be illegal. Someone should sue.
  - ac29 6y ago
    Who would have standing to sue? One of the problems with modern agriculture is that sometimes the cost to bring your product to market exceeds the cost the market is willing to pay. In that case, its not that uncommon for product to be destroyed to bring supply and demand closer together.
    - apta 6y ago
      It's the government's job to step in then and subsidize the costs.
perl4ever 6y ago
Doesn't it make sense that the costs of changing how supply chains work are factoring in to everything? Like, people want flour. There's probably plenty of flour, but at first the grocery stores didn't have a way to sell what the restaurants aren't using. There's a cost to changing how it is packaged and distributed. This isn't inflation, because it isn't a new baseline.

cheez 6y ago

The food supply chain in US is heavily controlled by a few entities. They have been dying for a reason to raise prices. Google Tyson's full page ad. Edit: downvotes without response?

mistrial9 6y ago
recent articles in US Media about a price-fixing investigation by the "Big Four" meat packers.. just what the parent comment says, minus the meat specific part.. https://www.bloomberg.com/news/articles/2020-05-08/meatpacking-giants-face-u-s-antitrust-inquiry-amid-shutdowns https://www.bloomberg.com/news/articles/2020-05-08/meatpacki... look for "Cargill the worst company in the world" written by a US Congressman (!) for more background “In my 40-year long career in Congress, I took on a range of companies that engaged in abusive practices,” former congressman and Mighty Earth Chairman Henry Waxman writes in the report. “I have seen firsthand the harmful impact of businesses that do not bring their ethics with them to work. But Cargill stands out.”
- cheez 6y ago
  People don't want to believe the extent to which they are slaves.

chiph 6y ago

One reason is that the food supply system is comprised of retail and commercial sectors. The commercial demand collapsed as restaurants & institutions closed, while the demand at the retail level skyrocketed when people panic-shopped. The packaging needs of the two sectors are different - retail packaging must have the nutrition & ingredients panels on it, while commercial packaging would typically only have it on the carton.

mdorazio 6y ago
To add on to this, the supply chains/logistics are somewhat different as well on top of already-stressed delivery infrastructure, so there are multiple bottlenecks in getting food to retail shelves. When demand skyrockets without warning (like it did), it's not really possible to immediately scale up, so you get shortages like we're seeing and thus food prices go up (temporarily) like you would expect.
deleted 6y ago
[deleted]

nine_zeros 6y ago

There's so much more demand for groceries, dairy and poultry because people aren't eating out. There is now more pressure to produce and supply goods that are meant for in-house eating. All the packaging and supply chain optimized for eating out has become useless and needs to be reoriented towards home eating. Until this is done on a massive scale, prices will remain high. Also, as demand is rising for home foods, producers have a newly gained pricing power and they sure are fully utilizing it. Also, production is low in general because of massive layoffs of farm work. Farm hands are not getting visas to come and actually harvest what farmers have been cultivating. Altogether, the prices are rising fast and nobody knows where it'll go.

claudeganon 6y ago
Ok, so it’s another example of over-optimized, inflexible supply chains. That makes sense to me relative to the other COVID-related shortages.
- bsder 6y ago
  Ayup. Maximally efficient is minimally robust.

jim_and_derrick 6y ago

cant explain why this is happening but can confirm meat industry workers are getting boned hard. Family in indiana working at tyson plant, my family and co-workers are getting sick but still have to work. Basically it's a choice they have to make. Go to work, risk getting sick, but make $$$ and feed family. Or you can be safe, not go out to work , but family will have no food. It's an easy choice to make because your family needs to eat.

dbcurtis 6y ago

Well, there are two supply chain disruptions in play. One, restaurant demand is switching over to consumer demand, and the packaging and distribution is very different -- you don't buy 50lb sacks of pancake mix, half a pallet at a time, I reckon. Secondly, there have been food processing plant closures. This has a number of ripple effects. With the plant closures, farmers have been forced to destroy market-ready animals, dump milk, etc. So there is not only less processing capacity, but less input available when the plant opens again. I had a phone call from an aunt in rural Iowa yesterday -- she reported paying more than US$7/lb for ground beef... in a store literally 5 miles from my brother's beef finishing feedlot. The insanity of that situation boggles me.

gentleman11 6y ago

In Canada, the potato and/or dairy farmers associations are destroying their crops to prop up prices since fast food demand disappeared and there was such excess. Not sure what the difference between that and price fixing is but it seems to be a common practice. I first heard about it after reading the Grapes of Wrath Edit: better source: https://www.google.com/url?sa=t&source=web&cd=&ved=2ahUKEwiD66Tckd3pAhUOCjQIHeOqAkQQFjAAegQIAhAB&url=https%3A%2F%2Fwww.cbc.ca%2Fnews%2Fbusiness%2Fdairy-covid-19-1.5528331&usg=AOvVaw0gnfU_cRh8k5eIfNqYyC7l https://www.google.com/url?sa=t&source=web&cd=&ved=2ahUKEwiD...

apta 6y ago
That's extremely immoral and should be illegal. Someone should sue.
- ac29 6y ago
  Who would have standing to sue? One of the problems with modern agriculture is that sometimes the cost to bring your product to market exceeds the cost the market is willing to pay. In that case, its not that uncommon for product to be destroyed to bring supply and demand closer together.
  - apta 6y ago
    It's the government's job to step in then and subsidize the costs.

perl4ever 6y ago

Doesn't it make sense that the costs of changing how supply chains work are factoring in to everything? Like, people want flour. There's probably plenty of flour, but at first the grocery stores didn't have a way to sell what the restaurants aren't using. There's a cost to changing how it is packaged and distributed. This isn't inflation, because it isn't a new baseline.