USDA's Food Price Outlook Suggests Surprising Inflationary Pattern

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Welcome to your weekly food & beverage report, where we cover everything you’ll need to know for the week ahead. This week, the USDA releases its Food Price Outlook projecting inflationary trends, persistent megadrought across the American West leaves farmers high and dry, and researchers explore a boozy new way to potentially arm crops against climate change. Let’s dig in. 

The USDA’s Food Price Outlook suggests surprising inflation patterns will emerge over the next two years

The USDA has released its latest Food Price Outlook report, which predicts that food-at-home prices will rise a total of 10-11% this year alone; next year however, the USDA projects a slowdown to a 2-3% increase in prices. Food-away-from-home prices are less extreme on both sides of the timeline, with projections estimating an increase of 6.5-7.5% this year, followed by a 3-4% increase next. July of 2022 saw the largest 12-month increase in food-at-home prices since March 1979, coming in at a whopping 13.1%.

• Eggstreme increase... The USDA has revised initial predictions to estimate prices increases across all food categories, with some categories estimated to see significant jumps. Egg prices, for example, are predicted to increase between 24.5-25.5% this year.
• Fingers crossed... Some factors, however, may help reduce food prices. Corn, soy, and wheat prices fell by 8.5%, 11.45, and 22.7% respectively between June and July 2022, which may provide some relief. Combined with increasing interest rates, there’s a shot the inflation numbers measure up below the projections.

Amidst extreme weather events around the world, researchers are looking for ways to provide relief

Megadrought, mega problems… The American West is in the midst of its worst megadrought in 1,200 years, forcing farmers to make tough calls around their crops. The American Farm Bureau Federation surveyed farmers, ranchers, and Farm Bureau staff in areas impacted by drought and the results were striking. 

• Can’t shield yields from heat… Of 652 respondents, about three-quarters reported lower yields due to drought. A third reported destroying crops because of extreme dry heat conditions, up 17% from last year.
• Dire straits… As of last week, approximately half of the continental US were experiencing drought. The Colorado River, which supplies 40 million people with water and is foundational to agriculture in the West, is having water deliveries cut by the Bureau of Reclamation.

Plants just wanna have fun… A peer-reviewed study published in the journal Plant and Cell Physiology last week suggests that ethanol could be an answer to increasingly alarming concerns facing global food insecurity. Research found that ethanol (alcohol) could help plants survive drought conditions, even so far as two weeks without water. 

• Sobering results… Researchers grew wheat and rice plants, providing them with water and healthy growing conditions, then added ethanol to the soil in the experimental group over the course of three days. Then, both groups were denied water for two weeks. Around 75% of the ethanol-treated plants survived after rewatering, while less than 5% of the untreated plants made it through.

Other stories…

• Spreading the word… TikTok is seeing a surge of its users posting about shrinkflation, with last Thursday tallying up 261 million views on videos involving shrinkflation alone.
• CO2 needs Goldilocks… Europe continues to grapple with industrial CO2 shortages, leaving the continent unsure how to answer serious implications for food and beverage processing.
• Woes for Wendy’s goers… A serious E. coli breakout across four states has been traced back to Wendy’s (WEN) romaine lettuce.

That’s all we have for you this week, do you have anything for us? We’d love to hear from you with stories or recommendations for new sections to include! Drop us a line at news@barchart.com with any feedback or input. 

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