U.S. prices for organic soybeans used to feed livestock and manufacture soy milk have surged to record highs, triggering downstream price increases for food like organically raised chicken and coming as global food prices have risen to their highest levels in a decade.
Prices for organic soybeans delivered in the U.S. Midwest in September reached about $33 per bushel, topping the previous record of about $25 per bushel from 2014-15, according to commodity data firm Mercaris, which offers more frequent reporting compared to reports from the U.S. Department of Agriculture (USDA).
The most recent USDA report (pdf) painted a similar picture, with August spot prices for feed grade organic soy trading in the $32 dollar range, a historically elevated level.
The upward price pressure comes as shortages of container ships to import organic crops and logjams at U.S. ports are sending shipping costs to record highs. According to industry estimates, the United States imports around 70 percent of its organic soybeans and domestic production has not increased enough to keep up with robust demand.
Bell & Evans, a Pennsylvania-based organic chicken producer, has been affected by the rising input costs, raising all chicken prices in July and telling Reuters it will probably raise prices again.
“We’re in the most challenging time since the organic world started when it comes to feeding animals and selling an organic animal protein,” owner Scott Sechler told the outlet. “It’s a madhouse now.”
Debarshi Sengupta, chief financial officer for chicken producer Farmer Focus, told Reuters that if current price trends continue organic feed prices used to raise chickens will be up nearly 40 percent by the end of the year.
While much of the broader inflation story has been focused on surging energy costs and products affected by the semiconductor chip shortage such as used cars, rising food cost signals are increasingly flashing red.
Food prices across the world have risen to their highest levels in a decade on the back of tightening supply conditions coupled with robust demand, according to the Food and Agriculture Organization of the United Nations (FAO).
The FAO’s food price index, which measures world food commodity prices, has surged by 32.8 percent in the 12 months through September, coming in at a reading of 130 points, a level not seen since 2011. On a month-over-month basis, the index rose 1.2 percent.
In the United States, the Labor Department’s August inflation report showed that meat, poultry, fish, and eggs were up 8 percent over the past year and 15.7 percent from prices in August 2019, before the pandemic. Beef prices jumped 12.2 percent over the past year, and bacon was up 17 percent during the same period.
Experts say increasing energy costs around the world could exacerbate the problem.
“It’s this combination of things that’s beginning to get very worrying,” Abdolreza Abbassian, senior economist at the UN’s Food and Agriculture Organization, told Bloomberg in a recent interview. “It’s not just the isolated food-price numbers, but all of them together. I don’t think anyone two or three months ago was expecting the energy prices to get this strong.”
Food price inflation is also driving up consumer expectations for future price increases.
The New York Fed’s August survey of consumer expectations showed that Americans anticipate food prices to rise by 7.9 percent in a year, higher than the overall inflation expectation of 5.2 percent.
Emel Akan and Reuters contributed to this report.