Let's Talk About Food Prices

Has your grocery bill gone up lately? “Inflation” has been used to explain away rising food, gas, and input costs, but if inflation is truly the root of higher prices, why are big box grocery stores and oil companies making outsized profits right now? 

Below is a compilation of articles and podcasts from leading food journalists about the reality behind your higher grocery bill.

Why Food Price Inflation is Not Inevitable by ​​Errol Schweizer

“Inflation has been driven by the companies at the commanding heights of the food system pulling in massive profits throughout the pandemic. And it sure isn’t inevitable.” – Errol Schweizer

As input costs rise, corporations are pushing them downstream. The result? Corporate profit margins are at their highest rates since 1950. And while many of these companies may deflect to higher wages and labor costs to account for high inflation, Fed Chairman Jerome Powell said at the end of 2021 that wage increases were not a main contributing factor toward the high price jumps we saw beginning last year.

Food corporations aren’t the only ones bringing in outsized profits. Large grocery retailers are following suit; more on that in the next article.

What can be done? Schweizer poses a few possible responses – imposing price controls, enforcing antitrust laws, reframing food as a human right before a commodity, and subsidizing healthy, fresh food at the point of purchase. 

Grocery stores are excited to charge you higher prices by Nathaniel Meyersohn

For many large grocers, inflation is good for business. Don’t believe us? They’ve said as much themselves. In 2021, the CEOs of both Kroger and Albertsons were quoted referencing how their businesses benefit when inflation is between 3-4%. Why’s that? When these grocers mark up prices for inflation, they add a little more onto the top, betting that customers will just assume an extra 10 cents is part of the general inflation markup. Consumers end up covering the cost of inflation and then some. 

Where Do Grocery Prices Come From? by ​​Errol Schweizer

In this article, Schweizer works backwards, walking us through how prices are set at each level of the supply chain, starting with the retailer you shop at, then going back a step to the wholesaler, then CPG brands and produce growers. A key takeaway? “The downstream environmental, health and economic burdens… are… borne by the most vulnerable in society, particularly farmworkers, rural communities and the urban poor.”

“We have the ability to ensure good food, clean water, healthy environments and livable wages for all. But instead, the ongoing food pricing crisis illustrates a system rooted in precarious, transactional relationships and geared towards maximum profit, consolidation and externalized costs.” – Errol Schweizer

A Case Study: The Meat Industries

For Tyson, The Worst Inflation Since 1982 Has Meant Good Times by Chloe Sorvino

Meat prices are at record highs, all while, you guessed it, meatpackers are bringing in record profits. What’s more – these increased earnings are not making their way down to cattle ranchers.

Consolidation in the meat industry has given large meatpackers more pricing power than ever. Tyson - accused by the Biden administration of ‘pandemic profiteering’ - has nearly doubled its operating margins since 2019, even while costs of inputs have risen and ranchers are earning near historic low rates.

Record Beef Prices, but Ranchers Aren’t Cashing In by Peter Goodman

The four largest meatpackers – Tyson Foods, Cargill, National Beef Packing Company, and JBS – have increased their share of the market from 36% to 85% over the last four decades. How did this consolidation happen? What do antitrust laws have to do with it? And what does this mean for cattle ranchers?

Who Do You Want Controlling Your Food?

The skyrocketing beef prices we saw in 2021 were written off by many as a result of the chaos surrounding Covid, but really these prices reflect a trend in the industry that predates the pandemic. 

In this episode of The Daily, Peter Goodman and Diana Nguyen travel to Montana to speak with beef ranchers about the consolidation of the industry, and explore what it can teach us about a transformation in the American economy that has been decades in the making.