Food costs more dough due to multiple factors
Supply chain issues, increasing consumer demand, surging energy and transportation costs, and labor shortages are causing higher consumer prices.
Price tags are especially noticeable at grocery stores and restaurants, with animal products costing the most. According to the Labor Department, wholesale prices increased more than 8% between August 2020 and August 2021.
Other countries are feeling the pinch too. Food in Russia increased about 2% from August to September this year, and Albanians are protesting in the streets due to expensive groceries. Inflation is also affecting the U.K., where acute shortages of natural gas are spiking prices.
A bushel of corn for delivery in December traded at $5.30 on Friday afternoon. December wheat brought $7.33, while November beans fetched $12.43.
Green Acres are Seller’s Market: With food demand rising, so too is the price of farmland. While the U.S. has a significant amount of land compared to other countries, less than one-fifth of American land is suitable for farming. According to the USDA, the average price per acre of farmland has gone up 75% over the last 15 years.
Ag real estate is particularly sizzling in the Midwest right now. Cropland in Iowa, for example, is going for $13,000 to $15,000 an acre, with some farms selling for over $20,000 per acre.
This has caught the attention of investors, including foreign investors, who are buying up American property. Meanwhile, all of this is also impacting the housing industry and wilderness preservation, as they can’t afford to make purchases.
Walt Breitinger is a commodity futures broker with Paragon Investments in Silver Lake, Kansas.