Food prices rose 0.2% on the month in July after remaining unchanged in June, and rose 4.9% on the year, while food at home rose 3.6% on the year last month, government data released Thursday showed. Fresh fruit and vegetable prices rose just 1.2% year-over-year in July.
However, there were some big — even alarming — outliers: Frozen fruit and vegetables prices increased by 11.8% in July over last year, frozen vegetable prices rose 17.1%, and frozen non-carbonated juices and drinks prices rose 16.3%.
Those price rises are at odds with overall inflation figures. U.S. consumer prices rose to 3.2% in July from to 3% in the prior month, the Bureau of Labor Statistics said this week. It was the first increase in 13 months. Prices ticked up 0.2% in July over the prior month.
Why have the prices of frozen fruit vegetables shot up, while fresh fruit and vegetables have increased so little over the past 12 months?
Climate change and extreme weather conditions — from heavy rainfall to drought — particularly in California — have led to big problems for farmers. This is compounded by existing supply-chain issues related to the war in Ukraine, and an ongoing increase in the cost of labor, experts said.
As a result, a large portion of the fruit and vegetables on the market were shipped to the fresh food market — leading to a shortage of ingredients for frozen vegetables, said Brad Rubin, sector manager at Wells Fargo Agri-Food Institute. “Because of the late crop, lots of produce is being pushed to the fresh market to keep up with demand,” he said.
California weather
California has experienced some drastic weather conditions over the last 12 months. Some 78 trillion gallons of water fell in California during winter 2022 and early spring 2023, according to data from the National Weather Service, which delayed planting season. And that was followed by a months-long drought in the region.
What happens in California is felt by consumers across the country.
“California produces nearly half of U.S.-grown fruits, nuts and vegetables,” according to estimates from the Sciences College Of Agriculture, Food & Environmental Sciences at California Polytechnic State University in San Luis Obispo, Calif. “California is the only state in the U.S. to export the following commodities: almonds, artichokes, dates, dried plums, figs, garlic, kiwifruit, olives, pistachios, raisins and walnuts,” it says.
The subsequent price rises hit ingredients like strawberries and raspberries especially hard, Rubin added. Inventories for frozen berries are “near five-year lows” after winter storms in Watsonville, Calif. flooded agricultural fields, and damaged and delayed the strawberry crop. Most of the strawberries in the U.S. are also grown in California.
Labor costs
Another problem: Frozen fruit and vegetables have a longer supply chain than fresh produce, which can make them more vulnerable to disruptions in inventory, experts say. Rising energy prices are also pushing up the cost of cold storage.
Adding to their issues: Farmers are dealing with increased labor costs and fewer migrant workers, partly due to changes in government policies and the closure of borders during the COVID-19 pandemic, according to a February 2023 report from the Federal Reserve Bank of San Francisco in February
“Immigration has traditionally provided an important contribution to the U.S. labor force,” the report said. “The flow of immigrants into the United States began to slow in 2017 due to various government policies, then declined further due to border closures in 2020–21 associated with the COVID-19 pandemic. This decline in immigration has had a notable effect on the share of immigrants in the U.S. labor force.”
Russia’s invasion of the Ukraine also continues to affect agricultural production in the U.S., said Curt Covington, senior director of institutional business at AgAmerica Lending, a financial-services company providing agricultural loans. Because the war disrupted supplies of commodities like wheat and corn — also pushing up prices for those goods — farmers have been prioritizing planting those crops over vegetables.
“These escalating frozen-vegetable prices present a challenge for farmers as they grapple with increased production costs and labor pressures,” Covington said, and that presents a long-term challenge for farmers, “potentially impacting their profitability.”
All of these factors — from international supply chains to extreme weather conditions — will impact the price tags in freezers in America’s supermarkets. Ultimately, experts said, consumers end up paying the price.
Read the full article here
