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Prices for Some Food Staples Increase, as COVID-19 Impacts on Labor Remain a Concern

Bloomberg writers Agnieszka de Sousa, Ruth Olurounbi, and Jen Skerritt reported on Monday that, “As the coronavirus pandemic penetrates more deeply into global supply chains, prices for key staples are starting to soar in some parts of the world.

Rice and wheat — crops that account for about a third of the world’s calories — have been making rapid climbs in spot and futures markets. For countries that rely on imports, this is creating an added financial burden just as the pandemic shatters their economies and erodes their purchasing power. In Nigeria, for example, the cost of rice in retail markets soared by more than 30% in the last four days of March alone.

It’s unclear what the biggest drivers were for the retail prices, whether it was a trickle-down effect from grain futures or local logistical choke points or panic buying, or a combination.

The Bloomberg writers pointed out that, “To be clear, it’s likely the supply disruptions could prove temporary. And that will probably mean that wheat and rice will stabilize. In the last several years, food costs have been relatively benign thanks to plentiful supplies. Global rice and wheat reserves are both projected at all-time highs, according to the U.S. Department of Agriculture.

“But in the meantime, higher prices seen in recent weeks could hit countries that are more sensitive to fluctuations.”

“Key Food Prices Are Surging After Virus Upends Supply Chains,” by Agnieszka de Sousa, Ruth Olurounbi, and Jen Skerritt. Bloomberg News (April 6, 2020).

With respect to domestic food prices, Wall Street Journal writers Jaewon Kang and Jacob Bunge reported on Monday that, “Wholesale egg prices have more than tripled as consumers’ coronavirus-driven buying clears supermarket shelves, piling up costs for grocers as they struggle to keep the staple in stock and affordable.

“Egg prices for grocers across the U.S. averaged $3.01 a dozen at the end of last week, compared with 94 cents at the beginning of March, according to U.S. Department of Agriculture data.

“That rise far outpaces cost increases for other common foods like ground beef. Wholesale costs for whole chickens, butter, cheese and ham have fallen, despite consumers rushing to stock up, partly because of plunging demand from restaurants.”

“For Grocers, Eggs Are Getting More Expensive Amid Coronavirus,” by Jaewon Kang and Jacob Bunge. The Wall Street Journal (April 6, 2020).

The Journal article explained that, “Rising egg prices, along with rapidly changing prices for other food commodities, are compounding grocers’ budgeting and planning challenges as the coronavirus pandemic forces Americans to shift from restaurant dining to eating at home. Soaring prices are frustrating some grocery-chain executives, who are scrambling to secure supplies and girding for prices to rise even higher, while trying to hold prices stable for consumers.”

Meanwhile, Reuters writer Tom Polansek reported this week that, “Tyson Foods Inc said on Monday it shut an Iowa hog slaughterhouse after more than 24 cases of COVID-19 involving employees at the facility, in the latest disruption to the U.S. food supply chain from the coronavirus outbreak.”

“Tyson said it will divert hogs to other pork plants in an attempt to minimize the disruption from the closure of its slaughterhouse in Columbus Junction, Iowa, this week,” the Reuters article said.

And Jacob Bunge reported on Monday at The Wall Street Journal Online that, “The coronavirus pandemic is hitting U.S. meat operations, slowing and temporarily halting production at some plants as sickness and fear keep workers home.

“Meat plant employees, working by the hundreds in plants, with many standing side by side on processing lines, play a critical role in replenishing supermarkets. But workers’ concerns that they could contract the coronavirus have prompted walkouts and complaints, while a growing number of positive cases prompts some meat companies to scale back operations.”

“Coronavirus Hits Meat Plants as Some Workers Get Sick, Others Stay Home,” by Jacob Bunge. The Wall Street Journal (April 6, 2020).

Mr. Bunge noted that, “The slowdowns come as the $213 billion U.S. meat industry tries to adjust to the coronavirus-forced changes to American eating habits, reorienting the flow of ground beef, chicken breasts and sausage toward supermarkets and away from restaurants.”

Politico writers Adam Behsudi and Ryan McCrimmon reported this week that, “Richard Guebert Jr., Illinois Farm Bureau president, said his state’s meatpacking companies have fewer employees showing up because of concerns of being too close to other workers.

‘The industry is backing up on bacon and other products that they put together as cut-outs, so they’re slowing down and not doing the volume that they had,’ Guebert said.

Also this week, Reuters writer Karl Plume reported that, “Four workers at an Archer Daniels Midland Co corn processing facility in Clinton, Iowa, have tested positive for coronavirus, the company said on Monday.”

However, the article indicated that, “‘Right now, we are able to continue operations at the plant with some staffing adjustments. We are continuing to closely monitor the situation and are communicating with employees and local health authorities as things evolve,’ ADM spokeswoman Jackie Anderson said in an emailed statement.”

Beyond concerns associated with meat plant employees, Washington Post writer Abha Bhattarai reported on Monday that, “Major supermarket chains are beginning to report their first coronavirus-related employee deaths, leading to store closures and increasing anxiety among grocery workers as the pandemic intensifies across the country.”

“Thousands of grocery employees have continued to report to work as U.S. infections and death rates continue to climb, with many reporting long shifts and extra workloads to keep up with spiking demand. Many workers say they don’t have enough protective gear to deal with hundreds of customers a day. Dozens of grocery workers have tested positive for the coronavirus in recent weeks,” the Post article said.

In other ag labor news associated with COVID-19, the Florida Crop Progress and Condition report, published on Monday by USDA’s National Agricultural Statistics Service, noted that, “Multiple varieties of vegetables were being planted and harvested throughout the state; however, several producers reported abandoning, plowing under, or dumping millions of pounds of crops due to the impacts of COVID-19 on the food service industry.”

Keith Good

Keith Good

Keith Good is the social media manager for the farmdoc project at the University of Illinois. He has previously worked for the USDA’s National Agricultural Statistics Service, and compiled the daily FarmPolicy.com News Summary from 2003-2015. He is a graduate of Purdue University (M.S.- Agricultural Economics), and Southern Illinois University School of Law.

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