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MSU food economist says to expect a more expensive Thanksgiving dinner

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COVID-19, war in Ukraine, and the spread of avian influenza are among the factors leading to rising food prices, according to MSU economist David Ortega.

The price of food and gas has slowly been on the rise, but with Thanksgiving right around the corner, how big of a grocery bill should we expect for this holiday dinner?

David Ortega is a food economist and associate professor in the Department of Agriculture, Food, and Resource Economics at Michigan State University.

WKAR's Megan Schellong spoke with Ortega to discuss how much we can expect to shell out for dinner this upcoming holiday season.

Interview Highlights

On what’s driving the price of food this holiday season

So first, we can't forget about the effects that COVID had on the food and agricultural supply chains in the labor market. That led to rising energy prices, fuel, fertilizer, and all of those were on the rise prior to Russia's invasion of Ukraine, which is another factor that led to increases in grain prices, and vegetable oil prices. And we also have some category-specific events that are affecting specific food products at the grocery store. The high path avian influenza outbreak earlier this year, the bird flu outbreak, has affected over 40 million birds, many in commercial operations, it's affected more than 7 million turkeys as we head into Thanksgiving. And that's leading to a rise in prices for eggs, poultry products, things like chickens and that Thanksgiving turkey, which is going to cost significantly more this year than last year. Climate change, another big factor.

On who will be most affected by the increases in food prices

We're all going to be feeling these rising food prices when we go to the grocery store. But they're going to be hitting low-come households the hardest. These are the individuals and families that spend more of their income on food. And you know, that's where a lot of these tough decisions are going to be made with regards to, you know, adjustments in order to get food on the table for this Thanksgiving and holiday season.

On whether we can expect any relief from the price increases anytime soon

Unfortunately, we're looking at a period of rising food prices in the short to medium term. And it's really important to note and understand what inflation really captures, it captures an increase in food prices over a period of time. So just because that rate of inflation starts to come down, it doesn't mean that prices are going to come down or food is going to get cheaper all of a sudden. It just means that it's not going to be increasing in price as quickly. And you know, the challenge here in terms of bringing those increases and food prices down is that we really have to address the underlying factors and drivers of these increased food costs. And there's a lot of uncertainty with some of those drivers, things like the war in Ukraine. Climate change is here to stay with us for the foreseeable future. And so, you know, it's going to take some time, you know, months until we start to see that level of food inflation come down to a much more reasonable level.

Interview Transcript

Megan Schellong: We’re all familiar with the rising costs of gas and food, but with Thanksgiving right around the corner, how big of a grocery bill should we expect to pay for this holiday dinner?

David Ortega is a food economist and associate professor in the Department of Agriculture, Food, and Resource Economics at Michigan State University.

He joins me now to discuss how much we can expect to shell out for dinner this upcoming holiday season.

Thanks for being here.

Ortega: Thanks for having me, Megan.

Schellong: Can you give us a picture of the current cost of food right now compared to this time last year?

Ortega: Yeah, so the cost of food today is significantly more expensive than what we saw at this time last year. On average, grocery prices are up just above 12%, which is a significant increase from what we've seen in previous years. And the good news is that the rate of increase in food prices is down slightly from its peak in August. But there's no doubt that it'll be an expensive holiday season when it comes to putting food on the table.

Schellong: Okay, so tell me what’s driving this increase?

Ortega: Well, there really are a variety of factors that are really coming together. So first, we can't forget about the effects that COVID had on the food and agricultural supply chains in the labor market. That led to rising energy prices, fuel, fertilizer, and all of those were on the rise prior to Russia's invasion of Ukraine, which is another factor that led to increases in grain prices, and vegetable oil prices.

And we also have some category-specific events that are affecting specific food products at the grocery store. The high path avian influenza outbreak earlier this year, the bird flu outbreak, has affected over 40 million birds, many in commercial operations, it's affected more than 7 million turkeys as we head into Thanksgiving. And that's leading to a rise in prices for eggs, poultry products, things like chickens and that Thanksgiving turkey, which is going to cost significantly more this year than last year.

Climate change, another big factor. We saw the extreme heat and drought in parts of the American West, but in other agricultural producing regions of the world. And that leads to lower productivity, lower yield, which means less food in the market, leading to an upward increase, or pressure, on food prices.

Schellong: Who will be most affected by these food price increases?

Ortega: Well, so we're all going to be feeling these rising food prices when we go to the grocery store. But they're going to be hitting low-income households the hardest. These are the individuals and families that spend more of their income on food. And you know, that's where a lot of these tough decisions are going to be made with regards to, you know, adjustments in order to get food on the table for this Thanksgiving and holiday season.

Schellong: If you’re just joining us now, we’re speaking with a food economist about the rising costs of food ahead of the upcoming holiday season. So David, what tips do you have for folks looking to cut back on their holiday dinner bill?

Ortega: Well, there are a few things that consumers can do to sort of help ease the burden of putting food on the table when it comes to costs. The first one is that it will pay off to look for deals. And we're seeing from the latest industry data that consumers are shopping around, bargain hunting, so to speak. Second, is, you know, look for some of the private labels, or store brands which are at a significant decrease in price compared to some of the national brands. And oftentimes, you're not really sacrificing in terms of quality. And then, you know, it might be time to get creative, you can host a Thanksgiving dinner in terms of a style of potluck and have everybody contribute a dish to the meal to sort of help spread the costs around to the various guests at your tables.

Schellong: Can we expect any relief from the high prices of food soon?

Ortega: Well, unfortunately, we're looking at a period of rising food prices in the short to medium term. And it's really important to note and understand what inflation really captures, it captures an increase in food prices over a period of time. So just because that rate of inflation starts to come down, it doesn't mean that prices are going to come down or food is going to get cheaper all of a sudden. It just means that it's not going to be increasing in price as quickly. And you know, the challenge here in terms of bringing those increases and food prices down is that we really have to address the underlying factors and drivers of these increased food costs. And there's a lot of uncertainty with some of those drivers, things like the war in Ukraine. Climate change is here to stay with us for the foreseeable future. And so, you know, it's going to take some time, you know, months until we start to see that level of food inflation come down to a much more reasonable level.

Schellong: David Ortega is a food economist and associate professor in the Department of Agricultural, Food, and Resource Economics at Michigan State University. Thanks for your time.

Ortega: Thanks Megan.

This conversation has been edited for clarity and conciseness.

Megan Schellong is the local host and producer for Morning Edition on WKAR.
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