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Multiple factors affect fluctuation in food prices

Multiple factors affect fluctuation in food prices

Fruits and vegetables

Seasonal spikes, transportation challenges and other variables affect  the cost for fruits, meats, vegetables and other goods that originate on the farm.

Like most consumer goods, food products are subject to price fluctuations. But some things are more variable than others.

A number of factors can affect the cost for fruits, meats, vegetables and other goods that originate on the farm. Seasonal spikes, transportation challenges, weather and other variables affect prices. Throw in a once-in-a-century global pandemic and the system is further disrupted.

Ellen Rahn is aware of that. Rahn, who farms with her husband, Justin, in Carroll and Ogle counties near Mt. Carroll, Illinois, also manages production of green beans and carrots for Birds Eye. One factor — transportation — has been especially challenging during the ongoing COVID-19 outbreak.

“Freight this year has been astronomical,” she said. “When we brought carrots from the South this spring, our average load pricing increased probably $2,500. It’s harder to find truck drivers, and especially truck drivers with reefers (refrigerated trailers). And there’s a fuel shortage. It’s been like a double-edged sword.”

Even in times unmarked by a phenomenon as damaging as COVID, shoppers often find wide price fluctuations on the supermarket shelves. Produce including avocados, asparagus and bell peppers can experience sudden and unexpected price swings. One reason is perishability.

“Perishable fruits and vegetables have to be cleared on the market once they’re harvested,” said Zhengfei Guan of the Gulf Coast Research & Education Center in Wimauma, Florida. “So prices fluctuated a lot with supply, which is largely determined by weather and seasonality.”

It comes as little surprise to most that prices of fruits and vegetables sourced locally are lower when supply is higher, such as at harvest.

Foods imported from other regions of the world can vary widely in price also, but that’s not always the case. Staples such as coffee and bananas are imported, but they don’t normally experience the same price swings as many other products. Some of that may be attributed to marketing strategies, according to William Messina of the University of Florida.

“Bananas are kind of unique in many respects. They have perhaps the most well-established marketing chain of any imported agricultural product,” Messina said. “Also, they are one of the most popular fruits, considered almost a staple in the American diet. As such, grocery stores operate with smaller margins on banana sales and in some cases even use then as a loss leader, so they often absorb some of the fluctuations in wholesale prices.”

Still, many commodities that usually experience little fluctuation may be affected this year, according to an article in Financial Times. Weather disruptions in Brazil have led to soaring prices for coffee and sugar, the publication said.

Prices of some vegetables follow that of row crops grown in the Corn Belt.

“A lot of the produce crops — like our canning crops — float with the corn market,” Rahn said. “They look to see what the price of corn and soybeans are doing because a lot of times they have to compete with those crops.”

As with real estate, the key to stable prices of produce is sometimes location, location, location. Rahn said Birds Eye begins pulling carrots out of storage in the spring and then starts harvesting fresh.

“The cheapest carrots we have are from Colorado,” she said. “In that area they don’t need to use insecticides or fungicides because they’re between the mountains. It’s something unique to that location.”

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Nat Williams is Southern Illinois field editor, writing for Illinois Farmer Today, Iowa Farmer Today and Missouri Farmer Today.

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