Food Price Inflation Getting Worse, Farming on Idle Land Disallowed Due to Climate Goals: USDA

A customer shops for meat at a Safeway store in San Francisco, Calif., on Oct. 4, 2021. (Justin Sullivan/Getty Images)

Food price inflation is rising at an alarming rate, with the annual rate en route to becoming the highest in recent years, according to the U.S. Department of Agriculture (USDA).

The Consumer Price Index (CPI) for all food rose by 1 percent from February to March 2022. When compared to March 2021, food prices were higher by 8.8 percent in March 2022, data from the USDA shows. The agency predicts in 2022 all food CPI to rise by 5 to 6 percent, which is much higher than the 3.9 percent hike in 2021, 3.4 percent hike in 2020, and 1.9 percent hike in 2019.

The 20-year historical average CPI stands at 2.4 percent.

Prices for restaurant purchases, designated as “food-away-from-home” in the CPI, increased 0.3 percent in March 2022, a 6.9 percent increase from March 2021, the USDA reported.

Prices for grocery store and supermarket food purchases, designated as “food-at-home” in the CPI, increased 1.5 percent from February to March 2022, and were 10 percent higher than in March 2021.

Food-at-home prices are expected to increase by 5 to 6 percent in 2022, with food-away-from-home rising by 5.5 to 6.5 percent.

The 12-month prices of meat, poultry, and fish rose by 13.8 percent in March 2022; eggs rose by 11.2 percent; dairy products rose by 7 percent; fats and oils by 14.9 percent; fruits and vegetables by 8.5 percent; sugar and sweets by 8 percent; cereals and bakery products by 9.4 percent; nonalcoholic beverages by 8 percent; and other foods by 10 percent.

The rise in food prices is due to multiple factors including a shortage of labor, an increase in trucking costs, the rise in the cost of fertilizers, and Russia’s war in Ukraine. The war has disrupted the flow of food items from Ukrainian ports while also affecting the country’s spring planting. Russia and Ukraine together make up about 20 percent of the world’s corn sales and more than 25 percent of global wheat trade.

“Among the nearly 50 commodity-price series we study, wheat spot-price changes stand out as a bellwether for food price inflation,” analysts at JPMorgan Chase said in a note, according to Bloomberg.

“Given exceptionally tight labor markets and already-elevated inflationary pressure from commodity prices prior to Russia’s invasion of Ukraine, we suspect food inflation will remain firm in months ahead,” the analysts said.

In March, several agricultural groups—including the American Bakers Association, American Farm Bureau Federation, and Agricultural Retailers Association—wrote to the USDA (pdf), requesting that farming be allowed on idle land under the Conservation Reserve Program (CRP). About 26 percent of CRP acres are classified as prime farmland.

However, the USDA rejected the request, insisting that such a move would harm climate goals (pdf).

“It is critical to point out that if we allow the tillage of CRP acres, the marginal at best benefit to crop production will be coupled with a significant and detrimental impact on producers’ efforts to mitigate climate change and maintain the long-term health of their land,” the agency said in its response.