Labor Shortage And Surging Shipping Costs Are Biggest Drivers Of US Food Inflation

Setting aside the ever-present issue of the global supply chain crunch presently gestating in the PROC, where factories and ports are struggling with the most restrictive lockdown measures since the (Fauci-funded) “China virus” first burst forth out of Wuhan, the US is still facing serious shortages of workers and critical goods like foodstuffs and medicine.

The US labor market disappointed once again in December, while November’s similarly disappointing number was revised up only slightly. Meanwhile, those who are working are struggling with the fact that inflationary price pressures are hammering real wages. And regardless of what the Fed does next, it appears kinks in the economy created by COVID and the federal government’s response to COVID will continue to push food prices higher for the foreseeable future, as Reuters reports.

Citing three critical factors, high demand for groceries, soaring freight costs and “omicron-related” labor shortages, Reuters projects that prices for “food and fresh produce” will continue to climb for the foreseeable future.

Already, growers across the West and Midwest are paying 3x the freight costs from before the pandemic – all to guarantee shipment of perishables like berries and lettuce before they spoil.

Some companies are even holding back on shipping certain goods (like long-lasting onions) to see if shipping costs might ease.

Shay Myers, CEO of Owyhee Produce, which grows onions, watermelons and asparagus along the border of Idaho and Oregon, said he has been holding off shipping onions to retail distributors until freight costs go down.

Myers said transportation disruptions in the last three weeks, caused by a lack of truck drivers and recent highway-blocking storms, have led to a doubling of freight costs for fruit and vegetable producers, on top of already-elevated pandemic prices. “We typically will ship, East Coast to West Coast – we used to do it for about $7,000,” he said. “Today it’s somewhere between $18,000 and $22,000.”

One CongAgra subsidiary blamed labor shortages for the bulk of their troubles.

Birds Eye frozen vegetables maker Conagra Brands’ CEO Sean Connolly told investors last week that supplies from its U.S. plants could be constrained for at least the next month due to Omicron-related absences.

Earlier this week, Albertsons CEO Vivek Sankaran said he expects the supermarket chain to confront more supply chain challenges over the next four to six weeks as Omicron has put a dent in its efforts to plug supply chain gaps.

The packaged goods industry is missing more than 100K workers. Participants filled measly 1,500 jobs last month, according to the BLS data.

The situation is not expected to abate for at least a few more weeks, Katie Denis, vice president of communications and research at the Consumer Brands Association said, blaming the shortages on a scarcity of labor. The consumer-packaged goods industry is missing around 120,000 workers out of which only 1,500 jobs were added last month, she said, while the National Grocer’s Association said that many of its grocery store members were operating with less than 50% of their workforce capacity.

Of course, labor shortages aren’t the only issue. Demand for groceries remains sky high as millions of Americans remain hunkered down, too scared to eat at a restaurant – or too tapped out from their financial difficulties to justify dining at one.