What's Behind Rising Food Prices, Beyond U.S. Drought

By CnAgri2012-08-31 19:54:40 Print

American consumers like to send a message with their money, and recently, that message has been to support "local" food.

Consumers see buying from area farmers and producers as a good way to keep money and jobs close to home, improving the local economy while protecting American jobs.

But does buying local really make a significant economic difference?

"Everybody is looking for local food," says John Stanton, Ph.D., professor of food marketing. "But whether we like it or not, the food world is global and what happens in Brazil can have just as big an impact on U.S. consumers as what happens in Nebraska."

Although many U.S. consumers were alarmed to see news reports this summer of droughts leaving shriveled crops dying in the fields, Stanton warns other factors will have a greater effect on Americans' wallets.

"Price increases from the droughts are likely to have short-term effects, but global issues can have a longer and greater impact," Stanton explains, citing increasing demand from the rest of the world for crops like corn.

"The biggest cost in a box of corn flakes isn't the corn," Stanton says. "It's everything from the price of oil to transport the product to the marketing and the packaging. So something like the cost of oil will have a much more lasting effect on the price of your cereal than the supply of crops."

Stanton predicts higher food prices are an inevitability, whether the local food movement is here to stay or not.

"U.S. farmers are doing everything they can to keep America's food inexpensive," Stanton says. "But while I like to get my tomatoes from a local New Jersey farm stand or my mother's garden, most of the prices of the food products that I buy are likely to be just as affected by storms in China, a growing middle class in India, or drought in Argentina, as they are by a drought in the Midwest."