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Why Have Food Prices Risen?

Recently, I took a trip to the grocery store to restock on some essentials in my refrigerator. While there, I noticed something which I have been noticing for a long time. The prices of essential foods have been steadily rising. These are not luxury goods such as alcohol or ice cream. I am referring to essential staple crops which there are certainly not shortages of. The price of bread, cheese, milk, eggs and butter have all substantially increased to say nothing of meat and fish.

What is the explanation for this precipitous rise at the grocery prices? As far as I’m aware no horrific famine has struck the Midwest, the nation’s breadbasket where I am assuming most of our bread products come from. (There was a drought in 2012, but none in 2017). My milk, hailing all the way from Indiana, cost over three dollars. The similarly expensive cheese is also a domestic product, yet I have not heard of some sort of terrible plight striking down American cows. If there is a sufficient number of cows and therefore a sufficient amount of dairy products, then supply and demand can not be the culprit for rising food prices.

First, have food prices really risen? I could be merely remembering incorrectly. According to a chart I found, the cost of a gallon of milk in 1993 was 2.88. In 2017, it is 3.30. So, we can see that the prices really have risen at least when it comes to dairy products. In 1993, the price of one dozen eggs was .87 cents. In 2017, it’s 1.52.

According to the Balance, a financial news site, food prices have risen by 2.6 percent a year on average. The author blames high oil prices which does make sense. As the price of oil rises, so does the price of shipping food. In our increasingly globalized world, this drives up the price of food.

While free trade is known to normally drive down prices, this is one situation where free trade and globalization have had the opposite effect. As markets become increasingly connected, a famine or disaster in one country can negatively affect the prices in a country half-a-world away. The Iraq War and unrest in the Middle East drove up the price of oil. This rise in oil prices mean it costs more to ship food thus leading to an increase in food prices so that food producers can recoup the cost of shipping the food.

One environmental science professor, Paolo D’Odorico, stated that “Increasing reliance on local food, whenever possible, is a good approach (to solving the food price rise).”

One thing which struck me as odd was the high price of seafood at my local grocery store. While canned seafood was less costly, the fresh seafoood was prohibitively expensive. Much of it comes from Asian countries such as China or Thailand. I live in a coastal area that has always had a robust fishing industry. If the grocery stores were to buy seafood directly from local fishers, then they would not need to pay fuel cost to ship it in from another continent.

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