Are Food Prices Hurting Our Economy?
By: Zach Corso
The next time you go to the grocery store or restaurant, you might see that you are spending more money on Fruit, Vegetables, and Dairy. This is in result of the massive drought in California and cold temperatures during the winter in the Midwest. This price increase is starting to having a huge impact on our economy. But what kind of impacts could just higher food prices bring to our economy, it only could benefit the farmers one might say. But this impact is only getting worse as jobs are being lost and there is not enough water to sustain the crops and wildlife for high demand. As food prices incline due to climate changes in California, and the Midwest our economy starts to feel the impact by job losses, and price hikes.
This is not the first year that California has seen massive drought. But what is hurting the crops is this is the third year in a row that California has suffered a such a big drought. Almost 80 percent of California is in an extreme drought due to low rainfall and extreme temperatures. This is making food prices spike. Shown in the graph above shows that Lettuce is going to see the biggest jump. A study at Arizona State University found that, “...a head of lettuce could increase in price as much as 62 cents…”( Morath) making one head of lettuce costing as much as $2.44. Also another food that can also get hit by the drought are avocados. Their prices are expected to rise 35 cents making their final total $1.60 each. The Shortage of both the fruits and vegetables is happening due to the drought in California. Because of the shortage the prices are driving up due to the Wants and Needs of these foods, to maintain a healthy diet. But what is also impacting the food prices is the water-supply shortage making farmers having one of the hardest choice of the year. Which crop should receive water and which crop should be left without water. The Opportunity Cost is what crop will they let get water and which will have to go without. Another factor that will lie on the opportunity cost is the cost/benefit. The farmers are going to have to take in consideration what crop can they get the biggest bang for their money. The crops that farmers are going to get the biggest return on our trees crops such as, almonds,walnuts, and pomegranates. These crops are considered permanent crops because you can’t move the crops. And these tree crops farmers have spent years trying to grow these trees for a big return, and they don’t want to lose their investment now. Also almost one third of California land is devoted to these tree crops. Our economy is projected to lose approximately 2.2 billion due to drought. But what is really hurting our economy is the 17,100 seasonal and part-time jobs that are getting lost due to this massive drought.
Not only is the California drought causing big problems with dairy but also the Midwest is playing a big roll. Today one gallon of whole milk is going to cost you $3.69 that is almost a 7.5% increase from last year. This has gotten to the point where milk has reached its highest price since September. One of the big reasons for this massive spike is China's demand for milk. The prices are rising due to a Want in dairy products and the Scarcity in dairy. This past year the Midwest faced freezing temperatures causing cows to produce a lower volume of milk than normal. And the California drought is hurting the dairy prices as well because cow feed is increasing and low amount of water. As shown in the video Hershey is increasing their prices due to the price hike in dairy and coco. But Hershey is not the only company seeing their prices increase. Already Wisconsin restaurants are raising their prices on dairy products. Kitt’s Frozen Custard, and Culvers, are a few of the many restaurants that are raising their prices due to the raise in darry. What is happening is the companies are trying to keep their prices down but when the prices keep going higher they are making less Profit. The price for custard mix has increase from $1.00 to more than $9.00 a gallon over that past summers. As the dairy and other foods increases due to the weather change so does the economic impact.
In conclusion, the next time you are going to the grocery store or restaurant expect more money to come out of your wallet. This is because of the huge drought in California, and the cold winters the Midwest faced. Prices are increasing because cows in the Midwest are not producing to their full potential. The California drought is expected to lose 2.2 billion dollars due to this drought. But what is really hurting us are the 17,100 jobs that are being lost in California. When food prices rise our economy feels the impact.
Bibliography:
"Attention Shoppers: Fruit and Vegetable Prices Are Rising." Real Time Economics RSS. N.p., n.d. Web. 8 Sept. 2014. <http://blogs.wsj.com/economics/2014/04/15/attention-shoppers-fruit-and-vegetable-prices-rising/>.
"Custard
stand owners, customers licked by rising prices." Milwaukee custard stand owners, customers licked
by rising prices. N.p., 8 Sept.2014. Web. 8 Sept. 2014. <http://www.jsonline.com/business/milwaukee -custard-stand-owners-customers- licked-by-rising-prices-b99330362z1-271888281.html>.
stand owners, customers licked by rising prices." Milwaukee custard stand owners, customers licked
by rising prices. N.p., 8 Sept.2014. Web. 8 Sept. 2014. <http://www.jsonline.com/business/milwaukee -custard-stand-owners-customers- licked-by-rising-prices-b99330362z1-271888281.html>.
I believe that the food prices are slowly hurting our economy. Zach is right the cold winters in the Midwest and the drought in California are what is hitting us the hardest. Its causing us not to be able to gain as much food as we normally would, and that is what is causing the food prices to sky rocket. The high demand is cause more and more people to fork over more money towards the products they want to buy. Overall it is hurting our economy, because more people are losing money and jobs because of the shortages.
ReplyDeleteThese increasing food prices will eventually get ridiculous and people will start to not buy certain goods. What Zach said in his first and second paragraph about the drought in California, he's right! Also the countries that are demanding certain goods? They probably won't get those for the price that they were paying last year because of this tragic event. This price increase of these goods is going to not only hurt our economy, but bring us to a point of tough decision making.
ReplyDeleteNice job Zach! I have actually seen this all over, and seeing the issue there is. This summer at restaurants they didn't give people lemons in their waters because of the droughts there was a huge scarcity of lemons. Its scary to think that the cold winter and the lack of rain could be causing thousands of people to be going hungry. It is obviously seen that this is a major hit for our economy since all theses jobs are on our soil and not outsourced.
ReplyDeleteI would first like to say that it looks as though you did a good deal of research to find two really good examples to use as evidence to the hike food prices. However what you could work on is your analysis. There some spots I thought you could have gone into more detail with, for example, I did not understand the connection you mentioned of water shortage in California affecting dairy production in the Midwest.
ReplyDeleteI would like to say you bring up a valid point that this is truly hurting our economy, but the shocking thing that sticks out to me is that no one ever seems to complain about how milk prices went up in the last year, but everyone complains about gas. It is strange how a necessity isn't worth everyone's attention but a luxury like a car and gasoline is the first thing everyone complains about. Secondly it seems like you really did your research on this with all the statistics you put in here, and the picture and video added to your main point. The increase in food prices could very well impact our economy immensely, but I was a bit thrown off when the jobs were mentioned considering the topic was food and shortage.
ReplyDeleteI think part of the reason people are more inclined to complain about gas prices than milk prices is because a person can survive without ever having to buy milk or dairy products (I mean, lactose intolerant people get buy just fine), but, because so many American have cars, nobody really lives close enough to their workplace to be able to get there without a car. I mean, my dad worked all the way in Milwaukee, and my mom works in stores in both Milwaukee and Oconomowoc; their trips to and from work already take a long time by car, so walking or biking is out of the question, and they don't have any friends that would be able to give them a ride, since their co-workers live/lived in different counties as well. This is the same situation a lot of Americans are in. And just think about people like plumbers or carpenters or arborists, who have to go to multiple clients' houses every day, many of whom live very far apart, especially in less densely populated areas like Pewaukee or most of Nevada. When milk prices go up, people can just choose to buy less milk or no milk at all, but when gas prices go up, nobody can really afford to not buy gas, because they NEED the gas in order to, at the very least, get to work and make money the money they need to afford all their other necessities, like their groceries.
DeleteI completely agree with the fact that Zach brought up with this whole article that the food prices will hurt our economy. It will hurt it in a way that food companies that deal with fresh foods will have much less to sell leading in for junk food to be sold more abundantly. Our country is already getting more over weight and now that food prices are rising even higher, junk food will still be cheaper. I thought that Zach made a good point with the drought in California and how dairy and some fruits and vegetables that most of the country gets from them will rise in price.
ReplyDelete