Food Prices On The Rise

Last week’s article covered Germany.
This week we continue with the topic of energy, pinpointing how energy prices and ‘supply chain problems’ affect your grocery bill, and there’s more…

From the utility bill to meat, vegetable and grain prices at the supermarket, we all pay for increased energy costs and hobbled supply chains one way or another.

The fact that media personalities, economists and bureaucrats righteously insist on blaming their own policy blunders on ’The Pandemic’ is irrelevant to the reality facing billions of people worldwide:

Prices are going up. Raw materials used to produce consumer goods are not as easy to secure as they once were. Using a never- ending pandemic to cut off resources incrementally does not change the fact that the resources are being cut off.

At best, the flow of resources is being impeded, and that’s putting it lightly.

Here’s another way to think of it:

If fuel costs for tractors used to plow fields go up quarter after quarter, the price at which farmers sell to distributors must go up. Distributors who sell to grocery stores pass on those price increases to the end consumer, and your grocery bill goes up (again).

From an economic perspective, cost increases to producers are passed on to consumers in the form of even higher prices at the pump, at the market and at the car dealership- to name a few.

Fragile Supply Lines In A Globalized World

In the globalized world in which we all live, it’s easy to forget how fragile the supply lines which keep goods and service moving are. 

Everything from the current high standard of living, to fuel in the car, to the abundance of diverse foods found on grocery shelves relies on massive supply lines (goods being moved by big rig trucks, trains, planes and cargo ships). 

The tomato in your grocery cart is much more than meets the eye.

That tomato is the result of a harrowing process of growing and harvesting, followed by an intricate network of communications systems and transactions which lands it on the shelf at your local grocery store. 

The fertilizer input into the soil, and the pesticides which keep the harvest from being destroyed by ravenous aphids and other pests, require large inputs of human capital, raw materials and petroleum to produce. 

And that’s just to produce the harvest, which then must be picked from the vines by people, arriving in cars (more petroleum) and loaded onto trucks which require more people to drive. And then there’s the fuel, logistics, delivery costs. 

So here we are, in a get-it-to-go world our ancestors wouldn’t have dreamed of, where convenience at all costs means being oblivious to the complicated nature of a supply chain that would leave store shelves empty in 3 days if the trucks stopped running. 

For all the luxuries and access to global goods we enjoy, it’s a shame that most take it as some sort of ‘right’- to have access to whatever you want when you want. 

But that’s just the core of the irony- that society not only fails to be aware of the bounty bestowed by efficient supply chains, but remains helplessly dependent on a day-by-day availability of goods and services which would cease to exist on store shelves and gas pumps within 3 days if trucks and trains didn’t run. 

What happens when abrupt policy changes “due to covid” hinder trucks’ ability to deliver goods in time?

Some would be surprised to learn that these very ‘policy changes’ are hitting the supply chain as we speak. 

Specifically, the Canada- U.S. border, is in the throes of a fiasco which has the potential to weaken supply lines in the U.S. further.

More on this next week