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question everything

(47,265 posts)
Wed Aug 31, 2016, 10:18 AM Aug 2016

Food Price Deflation Cheers Consumers, Hurts Farmers, Grocers and Restaurants

The U.S. is on track this year to post the longest stretch of falling food prices in more than 50 years, a streak that is cheering shoppers at the checkout line but putting a financial strain on farmers and grocery stores.

The trend is being fueled by an excess supply of dairy products, meat, grains and other staples and less demand for many of those same products from China and elsewhere due to the strong dollar. Lower energy costs for transportation and refrigeration also are contributing to sagging food prices, say economists.

(snip)

Nationwide, the price of a gallon of whole milk on average was down 11% to $3.06 in July over a year ago; the price of a dozen large eggs fell 40% to $1.55 in the same period. Those great bargains at the grocery store are spreading pain across the Farm Belt. Farmers and ranchers are getting less money for raw milk, cheese and cattle, forcing them to slash spending. Tractor suppliers like Deere & Co. are cutting production due to the farming slump.

Economists and food analysts say the supermarket price declines could last at least through year-end. The drop comes as weaker demand from China is resetting commodities prices in everything from cheese to iron ore. The current food-price slump soon could beat the nine months of year-to-year declines experienced in 2009 and 2010—the longest stretch since 1960, according to the Bureau of Labor Statistics.

(snip)

The glut is so severe in some places that dairy farmers have been dumping millions of pounds of excess milk onto fields. The U.S. Department of Agriculture just bought $20 million worth of cheese in response to hard-hit dairy farmers’ requests. The cheese was given to food banks and others through USDA nutrition-assistance programs.

(snip)

Falling costs are taking a toll on many food retailers. Grocery stores already have thin profit margins and deflation tends to reduce the value of their inventory. To stay competitive, they must cut prices on existing goods before lower-priced staples land on the loading dock, and have fewer opportunities to raise prices.

(snip)

Not all food has gotten cheaper. Total fruit and vegetable prices were up 1.4% in July from a year earlier in part due to the drought in California.

http://www.wsj.com/articles/food-price-deflation-cheers-consumers-hurts-farmers-grocers-and-restaurants-1472490823

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Can't win. Is this what "zero sum" mean?

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Food Price Deflation Cheers Consumers, Hurts Farmers, Grocers and Restaurants (Original Post) question everything Aug 2016 OP
In capitalism, someone always has to be the loser. Brickbat Aug 2016 #1
In theory it will create an incentive to innovate mythology Aug 2016 #2
Well a few years ago it was the opposite GummyBearz Aug 2016 #3
 

mythology

(9,527 posts)
2. In theory it will create an incentive to innovate
Wed Aug 31, 2016, 10:57 AM
Aug 2016

Find a way to either cut costs or find a different revenue source (other crop, perhaps add wind power turbines). In reality, it will probably lead to more consolidation of farms.

 

GummyBearz

(2,931 posts)
3. Well a few years ago it was the opposite
Wed Aug 31, 2016, 10:58 AM
Aug 2016

So what? We revert to the norm and the supply side gets pissed off? They are still getting massive government subsidies (ie. tax payer money) put right into their back pocket. Cry me a river

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