Working Americans Turn to Food Banks as Fed Inflation Battle Drags On

https://www.msn.com/en-us/food-and-drink/general/ar-AA1xVTUn

by xivzgrev • 1 year ago

31 30 1 year ago

xivzgrev• 1 year ago

The article focuses on wages outpacing inflation as solution.

But why is no one focusing on why food prices are still increasing so much? We're long past shortages of COVID.

It seems there has been an unchecked rise in food supplier oligopolies which allows a small number of companies to collude

-Big potato: https://www.levernews.com/the-rise-of-big-potato/

-Big meat: https://blog.ucsusa.org/karen-perry-stillerman/will-the-bide...

-10 companies own most of the world's food brands: https://www.good.is/this-infographic-shows-how-only-10-compa...

elmerfud• 1 year ago

Is the consolidation of food companies and them artificially driving up prices to increase their profit margins the actual reason? I'm asking because I don't know. In my general experience that doesn't happen very often. They strive to keep their margins the same as a percentage of the cost. So this means the margin is a larger dollar value but as a percentage it's about the same. This would point to something else causing an increase in the supply costs. This also gets magnified down to the consumer because the retailer is still going to strive to keep their same profit margin percentage as well.

One thing that I suspect is that labor costs are going up. I understand people feel that wages aren't keeping up with inflation but wages are also going to continue to drive inflation. One thing that's always struck me as strange, is when I was young I remember food co-ops being a thing and farmers selling direct to consumers through the co-ops or other farmer markets. Those prices were always significantly less than what you would pay at the stores. There was still big box stores that could keep low margins. Walmart still existed large grocery chains existed, etc... now anytime I see a local farm stand or a farmers market or any co-op-based thing the prices far outpace what you get at even the most boutique grocery stores. Often times a lot of these farmers markets are simply selling repackaged goods from these grocery stores too.

I suspect the drive for all of this is that we have artificially inflated our food price at the supply level and it is now trickling down to everyone. The massive amount of subsidies we pay out to farmers and the massive amount of money that is spent to artificially keep prices high and the tariffs that are issued against imports of foreign foods all drive these crazy price increases. The fact that farmers feel like they need new tractors every few years and that big companies like John Deere have betrayed their customer base by blocking right to repair and the government has done nothing. That seed companies have taken over the agricultural industry and want to license the use of seed instead of selling it. And if you've ever engaged in one of those license agreements for seeds woe be unto you if you try and take a non-licensed seed because you will be sued.

I think if we want to really address the food price problem we need to start fixing some of the core agricultural problems. Cuz I don't believe it's with the food brands themselves it starts much earlier in the chain.

mistrial9• 1 year ago

I dont know either.. but I can say that in some extractive industry, for example timber and wood products.. in a commodity market that is an old, established market.. profit and economic expansion that occurs in other aspects of the economy do not reach the economics of the timber. In other words, newly minted millionaires by stock offering and corporate employment in the cell phone industry, do not move the needle on the core parts of the old, commodity timber products. Public news and government statements act as if there is "one economy" that is doing well or not doing well, but this is superficial .. trade goods transacted in the US dollar are sort of linked; trade of goods and services under a unified set of laws like USA interstate commerce laws are sort of linked.. but in Truth, there are winners and losers each year, and that extends to whole market segments, too..

This is a long introductory statement to say that.. just because landlords in Santa Clara County California are driving Porches, or ex-FAANG digital nomads count their money in units of $100k, does not at all mean that big, stable companies and their owners and investors, are seeing the growth that others nearby are seeing.. SO .. how to "catch up" when you are an big brand food company? raise prices.. "greedflation" .. but its not just greed, its a distribution system of profits.. this is an old situation. Stock markets are supposed to ameliorate this friction but not perfectly.. young Turks want Lambos, not fairness.

There have been sarcastic articles about medical doctors that are envious of stock brokers because the doctors cant buy the biggest houses anymore.. but it also includes a local Mexican restaurant going broke on labor and food costs, while Lambos drive by on their way to the airport.. source: personal musing

n4r92• 1 year ago

In my general experience that doesn't happen very often.

Pumping up prices is exactly what large corporations seek to do once they have a large market share. If possible, lowering costs at the same time. Matt Stoller has an article explaining how Walmart did this from the 70s through to this century: https://www.thebignewsletter.com/p/walmart-americas-food-gov...

toomuchtodo7• 1 year ago

Also, egg shortages are from Avian flu. Americans are uneducated and unsophisticated, believing someone can wave a magic wand and make food prices come down, when wages and supply must go up to accomplish this (price levels vs inflation). They also have no appetite to understand market consolidation being a root cause contributing factor of supply shortages or pricing power (depending on your view on the topic).

sympil3• 1 year ago

Americans are uneducated and unsophisticated, believing someone can wave a magic wand and make food prices come down,… when wages and supply must go up to accomplish this…

Government wields a magic wand that can make this happen. Americans aren’t dumber than other people. The President in the U.S. is the front person for “government” and asking why the President hasn’t accomplished something is one of the ways we put pressure on our leaders to lead.

treis• 1 year ago

I looked up Tyson Chicken's profits:

https://www.macrotrends.net/stocks/charts/TSN/tyson-foods/gr...

They had a phenomenal second half of 2021 but it quickly came down to below their average.

Food inflation in general follows the same pattern. Big spike around covid and then settling back down to historical averages:

https://tradingeconomics.com/united-states/food-inflation

There's huge corporations on both sides of these deals. Tyson Chicken has a 22% market share and Walmart has a 23% share of the grocery market. Practically neither is going to be able to bully the other. The little guy? To some extent sure, but distributors exist too and Sysco probably isn't getting bullied around either.

s1artibartfast• 1 year ago

Their 10 year profits are flat, which is actually a decrease if you account for inflation.

exabrial2• 1 year ago

We're long past shortages of COVID.

There were no shortages during COVID. Only a bunch of panicked buyers clogging the smooth running supply chains. Prices had to rise to quell the behavior or the whole system would collapse.

What happened afterwards is massive inflation from the federal government printing enormous amounts of money into existence, so as the supply chain caught up, prices had to stay high to keep companies afloat after their costs rose.

lifestyleguru• 1 year ago

10 companies own most of the world's food brands

This is not food. I don't buy nor consume any of it.

Yeul• 1 year ago

In my country it is not unusual to have 3 supermarket chains next to eachother. It keeps prices down.

defrost• 1 year ago

It keeps prices down.

Unless the three chains have common major shareholders and/or together dominate the bulk of the market and collude in the illusion of sales and price cutting.

This is not unusual.

eg: Australia: https://www.accc.gov.au/media-release/accc-takes-woolworths-...

silisili• 1 year ago

Food doesn't grow in a vacuum. I buy a lot locally and it's also more expensive, but they're open about it. Everything costs more. Pesticides cost more. Fertilizer costs more. The animal feed cost more. The drugs cost more. Labor cost more.

We seem stuck in some weird inflationary cycle between inputs and outputs going back and forth on increases. Maybe that's normal, I've not lived through a time like it that I can remember.

altairprime• 1 year ago

The school of macroeconomics believes as a core tenet that workers benefit from gaining efficiency through increased wages, as economics believes that the marketplace is fair and reflective of reality. However, corporations no longer pass efficiency gains to workers, which has undercut that key tenet of the macroeconomic model and thus threatens a basic assumption: that the government can lower inflation without regulating that banks loan out excess reserves or that corporate efficiency gains be paid to workers rather than to shareholders.

Critically, they believe that anything that raises the wages per hour will raise inflation, because their model fails to recognize that corporations have a Profit Level that is stickier than the macro Price Level. Graphing the real profit level versus the real price level of American corporations over the past eighty years would put it into stark contrast, and no existing lever held by the FOMC can influence that.

Only intolerable to current leaders policy ideas like, and this is drastic to convey it clearly, “impose a tax on earnings in excess of 3% real (inflation-adjusted) profits at 100%, due quarterly, to be paid out as a nationwide quarterly basic income”, would help reduce Profit Level to the target of 3% and thus pass efficiency gains to workers. This example explicitly carves off excess profits from domestic GDP efficiency gains that are not being repaid to workers and repays it to domestic households. It would crater the speculative-unprofitable VC market overnight, because sale of a firm for profit not distributed to its workers would be miserably unprofitable for the investor-gambler’s earnings — but the carrot on the stick is that if businesses simply lower their Profit Level, which they can easily do by paying higher wages, then they get to keep more of their profits and the macroeconomic imbalance corrects itself.

It’s of course also possible businesses would choose to lower prices rather than pay workers more, as prices as much less sticky than wages, which would directly reduce both Profit Level and Price Level in lockstep and creating positive supply and demand shocks across the marketplace as the previously-held efficiency gains shake out into higher basic income, higher wages, and/or lower prices.

Arguments that this would increase inflation do not hold water, as those efficiency gains were already priced into inflation when they occurred (or else the efficient market hypothesis itself is disproven, demonstrating the need for more invasive policy of this sort). Redistributing that resulting purchasing power from businesses to households has a net zero macroeconomic impact.

Some tax code finessing would need to be done to deal with e.g. Amazon’s manipulation of Profit Level to keep it at 0% in order to mask true gains, which under this model would need to be labeled a ‘for the primary purpose of’ tax avoidance scheme by IRS auditors, though I would tend to suggest taxing research at a fraction of the excess Profit Level tax, since research is a necessary step in having efficiency gains - but not when it’s used to avoid paying any of a firm’s efficiency gains back to workers as wages.

exabrial2• 1 year ago

Here's the bill I want to see passed: No more pay raises, ever, for members of congress and the executives in the executive branch. If they want a pay raise, they can lower the country's inflation rate to increase their purchasing power.

scientator• 1 year ago

Their government pay is meaningless to them. They can legally trade on insider information. That's their real paycheck.

scintill76• 1 year ago

I understand some economists theorize that small steady inflation is necessary for a healthy economy. If that’s true, Congress shouldn’t be contravening it for their own sake against the greater good of everyone else in the country. Anyway, like sibling commenter says, their other sources of income probably dwarf government pay.

Working Americans Turn to Food Banks as Fed Inflation Battle Drags On

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