Recent reports indicate that global food prices are at a 7 year high due to COVID related supply chain disruptions has resulted in price hikes in staples like meat, corn, soy and wheat.
News [00:00:03] Sylvain Charlebois of Dalhousie University joins us now as Selvy. Why our food costs going up? Well, they are actually three reasons meat, bakry and vegetables and all three are going to be driving the food inflation rate higher for the next year. Unfortunately, that will continue into twenty, twenty one.
Shikher Bhandary [00:00:30] Have you been spending more on food lately? Well, it's just not you. Recent reports indicate that global food prices are at a seven year high due to covid related supply chain disruptions. That has resulted in price hikes in staples like meat, corn, soy and wheat.
News [00:00:49] And so demand for flowers is high and wheat futures are way up. And so typically it really will increase input costs for bakers, industrial bakers. And so that bakery section will become more expensive, unfortunately, for the next 12 months. So instead of spending, say, 10 percent of your budget on food, we may end up by the end of next year, spending 11, 12, 13 percent on food, which is really going to put a lot of pressure on families.
Shikher Bhandary [00:01:20] So it looks like grocery bills, eating out bills, food delivery bills are all going to be high going into the next year. But what is really causing this and how do we mitigate the long term impacts? Stay tuned for more on this. By the way, this beyond meat products aren't as expensive anymore in comparison with real meat and in some places actually cheaper. So we have that.
Jed Tabernero [00:01:53] Welcome to THC, where we unpack the ever changing technology economy
Adrian Grobelny [00:01:59] hangout with Jed Shikher and Adrian as we tackle the industries of tomorrow.
Shikher Bhandary [00:02:05] This is things have changed. So as we look to the recovery of the economy in like 20, 21, vaccines are rolling out across the world. So it's looking like Q2, Q3. So that's good news. Finally, this whole ordeal of being at home ends and people can go out and spend stuff, spend, go visit Ionno, Paros, Vegas, Hawaii. Uh, the, uh, Hawaii is expensive. You have all this pent up demand that's sitting. You're not really spending savings rate is at an all time high across the world. With all this demand coming in, could there be increases in price? That's the whole trend, right? High demand, low supply because of covid potentially increasing the prices of goods.
Jed Tabernero [00:03:11] So what happens during covid is because the economy was suppressed and we've been talking about that all year throughout this podcast. There's very little supply of what the demand that's going to be produced when we start opening up is going to be. So there's going to be a supply and demand mismatch. Right. Think about how much you want to go out and how much you want to go to Coachella and go to all those events. Right. When shit opens back up, which is this year perceivably, you're going to go out there and do everything you fucking can. Right. You're going to spend a lot of money. So there is going to be that's what we mean when we talk about pent up demand. But yeah, absolutely. Like there's across the board, I think we've just seen so many industries crumble. And so the players in the space are also getting smaller. So there will be generally less supply.
Adrian Grobelny [00:04:03] And looking at the supply and demand of goods and services, just personally looking back at how my consumption has changed, you know, you have kind of pockets in what you consume. So you have your food, you have your oil for transportation, and then you also have your entertainment
Shikher Bhandary [00:04:23] and your hair gel,
Adrian Grobelny [00:04:25] your hair gel, your koczela tickets that Gedda's veining
Shikher Bhandary [00:04:29] never been to but always talks about.
Adrian Grobelny [00:04:32] Yeah, this is like a three of Jets Koczela craving. And so, so you have like a bundle of all these goods. So personally for myself I don't travel as much. Obviously working from home, I'm not driving as much, I'm consuming less fuel. And actually my car insurance is down now because they are aware that all the the whole everyone's mileage is going to be low. So they're kind of trying to help out and they understand that the risk for themselves is lower. So it's cheaper. But overall, transportation for myself is down. I'm sure it's for everyone else. Food consumption. I think I'm relatively the same, but my habits have changed and where I'm getting my food has changed.
Shikher Bhandary [00:05:19] So if inflation is more or less the same, so I guess prices haven't really changed a whole lot. But let me ask you this question, both of you. You guys eat outside delivery, upbraids delivery or whatever, right. How much have you been spending lately on your food deliveries? Has that changed?
Jed Tabernero [00:05:41] So, first of all, I'm offended you didn't mention caviar, but at the same time Mr. Brown did. I am the one person you know this since I've lived with you. I order a lot of takeout, especially the last two years. It's been crazy. I'm a terrible person. After a lot of takeout, my take out was pretty cheap when I lived in Arizona. Right. And I moved during the pandemic. I moved to Seattle, used to order like maybe 30, 40 dollar things from overeats, lots of desert, lots of shit, you know, really good food. And I'm I'm working all the time. So it's really helpful. Right. Lately since the pandemic started. My wallet's been taking a bigger hit. Let's just say that, OK, I actually noticed only like probably before I left for Christmas vacation where I was looking at my bills and I was like, damn, seventy dollars. No way. I'm I'm seeing 70 and then 60 comes up and then 80. And I'm looking at all my transaction like, fuck, dude, I'm going broke off of Obreht. So prices have definitely risen for me and I'm changing my habits because of those prices.
Adrian Grobelny [00:06:53] I mean, my favorite taco shop here in San Diego, Carina's tacos were like three fifty each. This is a bomb place. So talk isn't cheap, but you're paying for quality. And now they're four fifty a taco. It's like, come on, man, that's big.
Shikher Bhandary [00:07:08] That's that's that's how you see our favorite dog up dollar. You're like, hey, hey. I saw that, I saw that low
Adrian Grobelny [00:07:15] down and they're not going to they're not going to decrease it. After everything comes back to normal, they're going to keep it up.
Shikher Bhandary [00:07:21] Overfield Yeah. And there's there's some crazy numbers behind that, like grocery products. It's something that's called stagflation. So inflation of your agricultural products and produce and grocery products rose like four percent in twenty twenty. Obviously, people are sitting at home. They're cooking more at home. Covid has has restricted the supply, as Jed mentioned earlier. But what's interesting is when you just look at the numbers a bit more, you realize like. Staples, staples like wheat, Ritas up like 25 percent. It's probably some good wheat this year, but it's still 25 percent. You have corn that's up 35 percent. When was the last time you ate corn?
Adrian Grobelny [00:08:08] It's in everything I feel like, bro
Shikher Bhandary [00:08:10] bro, where you were at the outlet. I don't know.
Jed Tabernero [00:08:14] I literally just. I don't earn last year.
Adrian Grobelny [00:08:16] I'll set you up. I'll let you know. His car Enniscorthy broke. The last time I did,
Shikher Bhandary [00:08:21] I used to really chug those conflicts. But that's the only time I still to eat like corn.
Adrian Grobelny [00:08:28] The most processed corn
Shikher Bhandary [00:08:30] wrote corn still. Right. Just because I was corn in the name doesn't mean it's natural. But yeah, I mean, corn is up and the implications are so, so interesting to note because livestock feed is largely gone. So if corn increases, your meat increases. And so you can see how connected the economy is to the global economy in general, where a mismatch in supply and demand pushes one commodity prices high over, say, food, which could be corn, soy or wheat. And then that pushes every other thing that's associated with it. The byproducts that come with corn, high fructose corn sirup is basically in everything. So, yeah, something that's that's really interesting and which is definitely causing a rise in food costs, feed restaurant bills or even groceries.
Adrian Grobelny [00:09:25] So with this with this issue of deflation and higher food prices, I think we can dove into consumer trends. What kinds of trends are we seeing in US consumers and our buying habits and how has that changed the whole food industry landscape? So for me personally, I, I think I'm a lot more cautious and aware of what I'm purchasing. I recently purchased Spam because it was pretty cheap.
Shikher Bhandary [00:09:53] So I am done talking about spam. This guibord like so Jed Bartlet, so much spam and just left it. He just left it to me.
Adrian Grobelny [00:10:03] So personally, I'm definitely buying more canned goods. Spam got a shit ton of that stuff from Costco, definitely stocking up more often and going to the grocery store less. And I don't think it's just myself. I was reading articles where food analysts are seeing trends of people going into supermarkets and going out faster. They're not purchasing luxury goods anymore. They're looking for more of those staples, you know, basic wheat, basic corn, frozen things. Can items. They're not going for those luxuries.
Shikher Bhandary [00:10:34] No one buys corn.
Adrian Grobelny [00:10:37] No, they're buying the canned goods, the vegetables and those things that are have a higher shelf life because they don't know. There's a lot of uncertainty. People are panicking all the time. And you're not seeing these impulse buys anymore. You know, look at those at the at the checkout. You know, you have those chocolates, the mints, all the candies, all the things that you don't need, the sodas, those are fully stocked. No one's really buying those items.
Shikher Bhandary [00:11:03] Side note. Side note. But I have to say it, there was this super interesting article I read this week that said gum sales are chewing, gum sales are at all time lows because consumers are so busy with their cell phones that that at the checkout that that they don't really care what's at the checkout.
Adrian Grobelny [00:11:25] Was fascinating. I can see that, but I don't know if it's also just impulse, but buying is also down, but I think it could be both. Yeah, just being on your phone all the time, keeping your masks on and
Shikher Bhandary [00:11:41] I think you don't need to worry about. Thank you, Brett.
Jed Tabernero [00:11:43] Yeah. One of the guidelines for covid is to spend less time at the fucking grocery store. That's so I mean, it will happen regardless. People are trying to be away from people. We're just not spending a lot of time in public spaces anymore.
Shikher Bhandary [00:12:00] Have you seen a Costco?
Jed Tabernero [00:12:03] It's because I'm curious first to eat all that shit is lit, right, but still at the same time, like, imagine yourself going into that Costco.
Adrian Grobelny [00:12:12] Yeah, I even feel weird if I'm in a grocery store and I'm just like standing around kind of browsing. I'm just like, I should probably go home.
Shikher Bhandary [00:12:20] I mean, I
Jed Tabernero [00:12:21] don't have that problem.
Adrian Grobelny [00:12:23] So, yeah, like we have these trends happening and even even canning, like businesses that are manufacturing cans are killing it right now because there's so much demand for cans and the manufacturing of it so that they can keep up with all the products that people are purchasing. Can't. So that's just the food industry that's getting affected, its whole supply chain going
Jed Tabernero [00:12:48] because they've been stupid jokes.
Shikher Bhandary [00:12:52] So who are the winners here? I mean, you definitely have canned food that's out there. Apparently, corn is a big thing, but yeah, looks like alcohol is up.
Adrian Grobelny [00:13:01] Alcohol here. People are in the field, people
Jed Tabernero [00:13:05] wandering around in frat house. That's why I like all of them.
Adrian Grobelny [00:13:11] Yeah, we're contributing to the economy or participating.
Jed Tabernero [00:13:14] General Mills and Campbell Soup supported a 60 percent increase in sales in a four week period.
Shikher Bhandary [00:13:21] That that is staggering to those those Campbell's soups are like everywhere. I mean, it doesn't taste that great, but, I mean, you heat it ensured, you know, I was literally going to say you heat it to a high enough temperature that your tongue anyway. Your bones. Yeah, I don't
Jed Tabernero [00:13:42] mind if I'm sick. I don't want nothing else. Let that be known. All right. Before I die. Campbell's Soup, baby.
Adrian Grobelny [00:13:48] Yeah, one can. One can is like a week supply of your weekly dose of your salt intake.
Jed Tabernero [00:13:54] So, I mean, that that being said, you know, like we're seeing winners and losers in this space. We're seeing prices kind of increase in different areas of the the food economy. How is the food sector doing? How are the suppliers,
Adrian Grobelny [00:14:09] the domestic producers are doing? Well, you know, countries are having to depend on their own production of food with the restrictions of transportation borders being a lot slower to process and transport products and goods through. You go to Mexico, fine. But coming back, you're waiting six, eight hours in the line in your car just because they're trying to restrict travels and the volume of people going in and out. So. That goes into which countries are able to create and produce enough food and goods domestically, the US produces an enormous amount of agricultural products. They're actually the leaders leading food exporters in the world. I think they're
Shikher Bhandary [00:15:04] nuts just to think
Jed Tabernero [00:15:06] it is crazy. But I mean, it was part of imperialism, right? They actually installed that shit wherever they went. We had to buy their stuff.
Adrian Grobelny [00:15:14] So the US obviously is faring well in this time, being a lead, a lead food producer. And since you're the lead food exporter, that means that you have an abundance of food production and you don't have to rely on exporting that food. You can actually create it for your own imports, right?
Jed Tabernero [00:15:37] Yeah, we have food security. Yeah.
Shikher Bhandary [00:15:40] And I think that's that's more or less first of all, countries, you're seeing some crazy prices in these food insecure regions in the world. Like I was reading some stats from like Turkey, Nepal, where rises up like 15 percent. And it's just crazy when you when you are poor country and your prices are just rising and, you know, you're importing food, it's really hard. So the way the global economy is interconnected just seems like a small politbureau there just has huge ripple effects.
Jed Tabernero [00:16:14] Today we went over something called food inflation. Right. Which is a as Adrian was mentioning, a bucket in the inflation mix, if you will. Right. So earlier we're talking about inflation that can come from the energy sector, the food sector, transportation and whatnot. This is one of those sectors. Right. And we're giving you tools to be able to dissect what inflation really is and how to look at how prices are affecting overall inflation numbers.
Shikher Bhandary [00:16:45] Also, you know, maybe when things open up, supply gets better in this age where we have incredible forecasting models, supply chain optimization that is done on every level, maybe demand is matched by the supply and then we don't see a whole lot of inflation. So it isn't a sliding slope yet. Just headed one way and we cannot bring it back. So there are solutions that manufacturers can take to to ensure that we level out. Hey, thanks so much for listening to our show this week. You could subscribe to us and if you're feeling generous, well, you could even leave us a review. Trust me, it goes a long, long way. You could also follow @THC_PODon Twitter and LinkedIn. This is things have changed.