Did you know that in 2020, the average American spent 10.8% of their disposable income on food? By the end of 2021, that number had increased to over 12%, and it continues to climb today. Even with this increase, the United States has the lowest food cost in the world. One of the discussions I’ve been having a lot lately has been around the recent economic situation and how it will impact our farmers and consumers down the line.
The majority of people have felt the effects of inflation in the last few months- just look at gas prices, for example. In agricultural industries, inflation has caused significant increases in fertilizer and feed prices, causing a forecasted increase of 7% in farm production expenses according to the FAPRI agriculture baseline report. This report, however, was published in January prior to the invasion of Ukraine, and economists are now predicting even higher farm expenses due to increases in crude oil prices. What many people don’t realize is how interrelated these industries are. Increases in crude oil prices are tied to higher fertilizer costs and increased ethanol production. Higher fertilizer costs will impact forage and grain production expenses, making it more expensive to grow them in the first place. Then, the increase in ethanol production creates higher demand for products like corn. Higher production costs for all grains and higher demand for corn will result in increased expenses of inputs used in livestock feed. When hay prices and livestock feed costs increase, our total farm production expenses climb too, resulting in higher prices for the consumer.
In a normal year, USDA economists forecast an average food price increase of 2.4% annually to the consumer. This year, however, it is predicted food prices will increase between 4.5% and 5.5%. Given the increasing cost of food, what can consumers do to prepare? First and foremost, consider increasing your use of kitchen staples like rice, pasta, canned or frozen vegetables and fruit, onions, and potatoes. Many of these stables can be combined into a variety of meals on their own or can stretch the use of fresh protein and produce. Purchasing these items in bulk can be even more economical as they do have a long shelf life. Second, be sure to plan your meals out in advance and track down the best deals on those fresh ingredients. Planning your meals can help you to keep track of what you’re actually spending on meals and can reduce the number of impulse buys you make at the grocery store. Planning also allows you to shop the best deals- for example, look for sales on produce or protein before you make the trip to help avoid sticker shock at your normal store. Also consider buying generic or store brands. Finally, consider a shift in what you eat- meat, poultry, and dairy tend to be the most expensive to purchase right now- so use those items as a highlight instead of the feature in your dishes. While these tips won’t make or break your bank, a few dollars of savings here and there can make a big impact on your bottom line. Finally, I strongly encourage you to purchase locally. We have a number of fruit/vegetable and livestock producers in the county who sell directly to the consumer- this is a great time to support them and really know where your money is going. If you have questions about agricultural economics, please let us know at uge3181@uga.edu or 706-359-3233.
