Government Policy Impacts Food Inflation

GOVERNMENT POLICY IMPACTS FOOD INFLATION

By Jaclyn Krymowski for Protect The Harvest

Food security is a real issue for more and more Americans across all income brackets. Inflation is causing food prices to continually rise and stubbornly stay elevated. Food security and supply chain disruptions remain a topic many politicians are talking about, but few are providing solid solutions. Funding, policies, aid packages, and other political actions claim they are solutions to the problem, but they don’t appear to be effective yet.

With all the talk about solving our current problems, one issue is being ignored: the current policies in place. These policies are not contributing to greater food affordability, accessibility, or security. If this is the case, then why aren’t our politicians going after the real problem?

Despite What They Are Telling You, Food Prices Are Still Rising

The current inflation issues are significant and are being underplayed by certain political parties. The average consumer food price in the U.S. was up 10.9% in July, which is the highest since May 1979, according to the Bureau of Labor Statistics. Unfortunately, according to the Bank of America, this trend will continue throughout the rest of this year.

Our nation currently has people in power who either refuse to acknowledge the inflationary issues or are just oblivious to them due to their financial statuses. This strategy of ignoring the problem cuts to the deeper issue of policies they have enacted that are exacerbating the cost of food.

Food is Political Power

Food holds a lot of power, and its significance supersedes class and wealth alike. Despite being a first-world nation, the U.S. has continually faced challenges of hunger especially when there is economic turbulence. The current food safety net programs are struggling to keep up with the demand from hungry families.

Our energy and agriculture-related policies in place are simply not sustainable as evident by the massive repercussions of COVID lockdowns and global supply chain issues. Instead of placing the emphasis where it belongs – directly on the whole scope of the food supply chain from farm to plate – we see policies focused on external concerns such as climate which serve more as a hindrance to the immediate issue rather than a help.

In the political arena, food and agriculture are often coupled with other fiercely weaponized issues like climate, fuel, landowners’ rights, and energy. This has provided a scapegoat for those not wanting to deal with the real issues that farmers and ranchers face each day. These issues and policies that are being ignored determine if Americans will have food on their tables.
USAID Strategy Looks Just Like United Nation’s Sustainable Development Goals
According to the U.S. Agency for International Development (USAID), the country has a global food security strategy that seeks to end world hunger, poverty, and nutritional-related impacts. That strategy is eerily similar to the United Nations Sustainable Development Goals.

In 2021, USAID updated its strategy guide to include considerations for COVID, global conflicts, inequity, and climate change. To achieve their overall objectives, USAID says their steps now include incorporating sustainable ag-led economic growth, strengthened resilience among people and systems, and lastly creating a well-nourished population.

The efforts USAID is focusing on are reflected in many of the federal policies we are seeing put in place as a reaction to the current inflation crisis. The problem is that it is evident in the global and domestic food supply chains that this roadmap is not effective.

Government Policy Constrains Fossil Fuels and Fertilizer

The restrictions on important agricultural inputs, such as fertilizer and fuel, are a keystone in the food inflation issue. Fertilizer prices have skyrocketed compared to last year, and many of their essential ingredients come from global imports. These imports have decreased greatly due to shipping, logistics, and conflict-related issues.

America has been unable to compensate for these issues due to policies implemented by the current administration. These policies restrict our ability to obtain natural gas and fossil fuels which are used to produce fertilizer and fuels needed on farms.

Restrictions on fossil fuels already contributed to high fertilizer prices but coupled with a lack of importation has resulted in a crisis for farmers. Many farmers and ranchers have been forced into cutting back on the production of crops and animals.

Fertilizer prices don’t only impact produce. They also contribute to more costly ingredients in livestock feed, causing retail-end cuts of meat, eggs, and dairy to all go up. Many of these basic commodities are relied upon by families already financially struggling, but a rise in feed costs means even conventional brands must significantly raise their prices.

Destroying the Economy in the Name of Environmentalism

Shipping Costs Up 25%

According to the St. Louis Federal Reserve, it now costs roughly 25% more to ship goods in the U.S. compared to only a year ago. Shipping costs have been a significant contributor to inflation, due to labor shortages and fuel costs.

Much of the packaging used for our food is imported. Each time the price rises in the supply chain, that cost gets pushed onto the producer and/or the consumer.

New Regulations from the EPA

In late 2021, the Environmental Protection Agency (EPA) unrolled new regulations. The price tag on these new rules will cost over $1 billion per year to oversee methane emissions. This includes the full suite from the gas and oil industry of production, transmission, storage, and distribution. The current administration also overturned previous administration reforms addressing the EPA’s control over oil and gas laws.
How does that change the cost of your food? The fertilizer farmers need will further be regulated and that comes with a hefty price tag. All those costs have to go somewhere and will end up affecting the ranchers and farmers first, then will be passed down to the consumer.

Jumping the Gun on Alternative Energy

There is a push to move us towards alternative energy sources before our infrastructure is even close to being ready. The alternative energy sources currently available leave a major void in our power grid and they cannot step in fast enough to replace our current conventional sources.

Each time policies are created to further promote “green energy” they ignore the reality of our current power grid capacity and how these policies will harm those in the lowest income brackets the most.
Valuable Farmland is Being Consumed to Support Alternative Energy Goals
To achieve the “100% clean” electricity goal by 2035, the Energy Department says that solar will need to quadruple. Many solar companies have hit the real estate market looking to buy up farmland to expand.

When this land is used for solar panels, it can no longer be farmed and grazing space for livestock is greatly limited. This eats away at valuable land that could otherwise be used for food production. The reality is that if solar was our only source of clean energy, it would take over 11 million acres to power the U.S.

CRP - Leaving Farmlands Fallow

Another politically influenced cause of food supply shortages and increased food insecurity in America are the policies and programs being pushed by the Conservation Reserve Program (CRP).

According to the Department of Agriculture, the CRP essentially incentivizes farmers to leave their land to sit fallow for 10 to 15 years. They state that:

“The long-term goal of the program is to re-establish valuable land cover to help improve water quality, prevent soil erosion, and reduce loss of wildlife habitat.”

When Mike Seyfert, President and Chief Executive Officer of the National Grain and Feed Association, penned a letter requesting that these lands be cultivated to help alleviate some of the food crisis in light of the Ukraine-Russia conflict, Secretary of Agriculture Tom Vilsack promptly responded “no,” citing that such a move would have a “detrimental impact on . . . efforts to mitigate climate change.”

Inflation Leads Investors to Become Landowners

This year the Federal Reserve Bank of Chicago noted that land values went up 23% in the first quarter of 2022, largely due to wealthy investors purchasing more and more arable land. Many believe that some of these moves by wealthy investors are to provide a hedge against inflation. The problem is that this land could be producing more food if it were in the hands of farmers and ranchers.
The Inflation Reduction Act Focuses More on Climate than Food
Our current president recently signed the massive Inflation Reduction Act: a climate and tax bill worth over $700 billion. Any high school economics teacher could warn that this massive spending bill is not going to reduce inflation. More government spending directly relates to increasing inflation.

$20 billion of the $700 billion spending bill is going to “climate-smart” agriculture programs. What are these programs you might ask? They will incentivize farmers to adopt new practices that limit greenhouse gas emissions and increase carbon storage.

While these are attractive for farmers willing to implement new techniques and pick up some extra funds, what will the overall impact be on food production? The bigger question is: can these efforts even be proven to make an impact on climate?

Combatting Inflation

There is no single solution that can effectively combat the rates of inflation we are seeing today. However, one thing is clear, for the good of our nation and the rest of the world, the production of food needs to be prioritized.

Focusing heavily on secondary issues like climate, technology, and hypothetical situations in pages of complicated policy is not the solution. We must look at tried and proven ways that benefit farmers directly.

Food security is an important and serious issue especially as the changing world pushes demands in various directions. Families will continue to face hardships if we don’t get a grasp on how to handle the challenges we currently face.

We all have a role to play in protecting our food security in America. We must stay informed and inform others. We must get involved in our local communities and ensure that America can overcome these hardships.

Links

Article in NY Post about BIden Administration Fueling Food Inflation HERE

Article in Americans for Prosperity Regarding Rising Gas Prices HERE

Article in Barrons regarding Inflation and Food Supply HERE

Copy of Letter from Secretary Vilsak HERE

Link to US Department of State information about Food Security HERE

US Government Statement on Food Security Strategy on USAID website HERE

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