Why are food prices higher?
To reach my personal financial goals, I use a budgeting app that automatically categorizes my spending each month to help keep me on track.
However, one of the spending areas that I’ve noticed rising this past year is how much I pay for food.
Indeed, U.S. food prices were up 6% in December 2021 compared to a year earlier, according to the recently published U.S. Consumer Price Index.
The main factors behind the rising food prices include labor shortages and greater demand (including more food stockpiling at home) as consumers return to pre-pandemic spending levels, explains Jayson Lusk, a food and agriculture economist from Purdue University. (To learn more, visit https://econofact.org/what-is-driving-the-increase-in-food-prices.)
We’ve all felt the impact of rising prices for everyday essentials, including fuel and food, this past year as the economy works through pandemic infrastructure issues.
However, it’s important to remember: There isn’t a food shortage in our country. Iowa farmers continue to work each and every day to provide high-quality, nutritious foods for our tables.
Although food prices are higher, there are simple ways to spend less at the grocery store.
For example, you may want to check in with your serving sizes, says Iowa State University nutrition expert Sarah Francis. Re-adjust your portion sizes if they tend to be larger than recommended.
Just a 4- to 5-ounce portion of beef (roughly equal to the size of your palm) is considered one serving, according to the U.S. Dietary Guidelines.
You can also stretch your meals with a little creativity in the kitchen, such as thinly slicing leftover meat and adding it to veggies for a quick stir-fry, Francis says.
In addition, Francis recommends choosing budget-friendly canned or frozen fruits and vegetables, which are just as nutritious as fresh produce.
And often overlooked, canned meats and poultry are also affordable, healthy choices that are time-savers in the kitchen, Francis says.
“I use canned chicken to make chicken al a king, or you could cook it in a casserole,” Francis says. “You don’t have to worry about cooking (canned) chicken first before putting it in a casserole. Same with canned beef. You can drain it and add it to soup instead of cook your own. They’re healthy, nutrient-rich foods for fast meal prep.”
For more budget-saving tips and recipes, visit the Iowa State University Extension and Outreach “Spend Smart. Eat Smart.” website at www.spendsmarteatsmart.org.
Higher food costs don’t equal higher returns for farmers
Although food prices are higher, these rising prices don’t translate to a bigger payout for farmers, economists say.
According to the U.S. Department of Agriculture, farmers and ranchers receive only 8 cents out of every dollar spent on food away from home and food at home.
Iowa farmers are facing higher costs for farm inputs, including fertilizer, seed and herbicides, as the spring planting season nears.
“Farmers are generally price takers rather than price setters,” explains Sam Funk, Iowa Farm Bureau senior economist. “The higher costs for (farm) inputs in 2022 may result in lower profitability for some farmers without a higher share of the retail dollar.”
The rest goes for costs beyond the farm gate: wages and materials for production, processing, marketing, transportation and distribution, showing the complexity and number of players in the food supply chain, Funk says.
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