The Latest Warning Signs on Food Costs

The UN Food and Agriculture Organization (FAO) is reporting that global food prices hit their highest level on record last month, and that doesn’t account for the full effects of the Ukraine crisis. FAO’s food price index averaged 140.7 points in February, which beat the previous high in February 2011 by 3.1 points. 
 
In a separate analysis, FAO forecast world wheat production is projected to rise 1.9% this year, contributing to a small, 0.7%, increase in overall grain production. Ukraine’s corn and wheat production set records in 2021, but the FAO report noted that “significant damage to infrastructure, particularly port and rail facilities, could curb the export capacity to ship grains.”  This equates to higher prices for any product containing wheat!
 
Chicago winter wheat futures raised the exchange limit of 75 cents per bushel again last Friday to $12.09. Meanwhile, Russian fertilizer manufacturers were told by their government to stop exporting fertilizer. Experts say that action will put further pressure on fertilizer prices paid by U.S. farmers. 
 
EDITOR’S TAKE:

For the average consumer, the bad news just keeps on coming. If it’s not gas or housing prices, it’s food or fertilizer prices. Everywhere one looks the news is higher inflation. Worse yet, it’s not just in the U.S., the impact is global. Everyone can attest to the fact that inflation is definitely having a serious impact on families, especially lower income families. Ultimately, this will change purchasing decisions that will manifest by more emphasis on just the basics and putting off the purchase of larger ticket items. Much of that will be attributable to uncertainty that accompanies periods of this nature.

However, despite higher input costs, farmers/ranchers should be poised for another profitable year. That is precisely why we encourage CAD members to “Look Beyond Your Lot” and the current circumstances to determine who your best customers will be in the future. Hint – we believe it will be farmers/ranchers!