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A massive recall back in February gets blamed for the current baby formula shortage. But economics experts say the industry has long been vulnerable because 98% of the US supply is manufactured domestically, and most of it by only four companies. Perfectly good and safe formula is available around the world, but we can't access it due to decades-old laws preventing an import infrastructure. The US is nearing an agreement to fly in 1.25 million cans of formula from Australia, but in the meantime rich parents are tapping into the black market.
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Grocery bills have been rising for months. Avocado prices, in particular, have hit a 24-year high as demand soars above supply. The continued Ukraine war has also exacerbated supply chain issues as countries impose trade restrictions to protect dwindling supplies of grains and other goods. For example, vegetable oil prices are up 22% because production is down in Ukraine and Russia, which together account for 60% of world production of sunflower oil. What to expect for the rest of the year? According to the USDA, grocery prices will increase between 3 and 4% and the cost of eating out will jump between 5.5 and 6.5% in the remainder of 2022. Tighten your belts.
Image Source: Reuters/Luis Cortes
Food prices jumped 20.7% worldwide last year, a record high, according to the UN's food agency. The Ukraine war is likely to cause another 22% surge, says the agency. Russia and Ukraine supply one-third of the global trade in grains, which account for 40% of calories consumed globally. As grain supplies tighten, trade restrictions will raise international prices even higher, all of which threatens to send world hunger to unprecedented levels. Food insecurity worldwide has doubled in the past two years, and 45 million people are already estimated to be on the brink of famine. Thanks, Vlad.
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Organic fruit and vegetable sales continue to outpace sales of conventional produce. In 2021, organic sales increased 5.5%, compared to a 1.9% increase for conventional produce. While the dollar share of organic in the marketplace hovers around 12%, total organic produce sales soared to $9.2 billion in 2021, the highest sales figures to date. Fresh organic berries, salads, and bananas lead the growth.
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US grocers usually have 5% to 10% of their items out of stock at any given time. During the pandemic, unavailability rates grew to 15%, according to Consumer Brands Association President and CEO Geoff Freeman. The big reason? Consumers have been buying more groceries while eating and living at home. The omicron variant has also worsened ongoing supply chain bottlenecks and labor shortfalls, causing temporary shortages of meat, cereal, and other items.
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Womp womp. Not-so-good news for the year ahead. But it's no surprise. In fact, some analysts would say it's about time the era of cheap food (and high collateral costs) gave way to one that reflects the real costs of the food business. We've been conditioned to expect low food prices. Maybe they are artificially low.