Will Food Prices Finally Come Down In 2023?

Dairy farmers Stephanie and Steven Nash have recently outlined many of the problems that family farmers are currently facing. Among the key issues according to the fourth-generation dairy farmer are drought, supply chain disruptions and shortages and the increasing costs of running a business.

Stephanie Nash, a Tennessee farmer noted that she thought 2023 would be a tough year and that there would be “a food security threat”.

Food prices have been increasing over the past year far beyond the increase in inflation. The food prices in November 2022 had been 10.6% higher than the food prices had been the previous year. Meanwhile, inflation had been 7.1% according to the Bureau of Labor Statistics.

The increase in food prices has been driven by multiple factors including fuel and fertilizer shortages and price increases, the interest rates increase, and the extreme weather conditions of the past year. Nash also pointed to debt financing as a key tool used by farmers running their businesses.

Nash added that while 2022 was a “really hard year” she believed that there would be even more shortages going forward in 2023. Apart from a supply chain shortage, there will also be an increase in the price of food at the grocery store she noted. This is going to hurt the wallets of many American families.

The Department of Agriculture has reported that most U.S. farmers use short-term, variable-rate loans every year in order to pay for seeds, fertilizer, equipment and stock. With the Federal Reserve’s aggressive interest rate increases that have gone from as low as 0% to as high as 4.25%, the repayment of these loans has led to an increased cost in operations in the farming industry. This has also translated to higher costs of groceries.

About PND Staff Writer