Great Bend Tribune
Published April 17, 2022
As of April 12, the Drought Monitor map is essentially unchanged. Eastern Barton County is in extreme drought with the rest in severe status as is most of our surrounding area. The six to ten-day outlook (April 19 to 23) indicates a 40 to 60% chance of above-normal temperatures and normal precipitation. The eight to fourteen-day outlook (April 21 to 27) indicates a 50 to 60% chance of above temperatures and a 33 to 40% chance of above-normal precipitation. It’s very hard for any of us not to notice the increase in general and specifically inflation when it comes to the price of food. Today, the why and that it’s much more complicated than any one single issue.
- The war in Ukraine has indeed affected prices and in several ways. The most obvious is the spike in oil and natural gas prices from Russia, however, Ukraine also exports fuels, petroleum products, steel, and transport equipment. All of these tie into increased food prices in transportation costs and the energy necessary to produce nitrogen fertilizer. Ukraine is also considered by many the “Breadbasket of Europe” as a major exporter of wheat, sunflower and safflower, along with vegetable oil and animal feed. Russia also exports cereal grains and legumes. In addition is a major fertilizer supplier to South America. Two reasons are causing grain and wheat prices to spike here. First, Ukraine isn’t able to export current stocks with the invasion and wants to ensure adequate foodstuffs for people. Second, markets are on edge that the Ukrainian wheat crop won’t be harvested and the 2022 summer crops won’t be planted. All of this contributes greatly to increased costs.
- The previous ties into energy prices globally. Oil prices are determined on a world market and while they have backed off significantly in the last few weeks, oil and natural gas prices are high and that impacts everything from transportation to fertilizer production costs.
- The extremely virulent avian flu is causing egg and poultry price spikes which will hopefully be short-lived. Fortunately, poultry numbers are much easier to rebuild than cattle or even hogs.
- Feed prices are up for meat production, however, while finished cattle and hog prices are significantly higher than a year ago, it’s not an increase that truly reflects the increased costs. Producers are being squeezed and the prices you are paying at the meat case aren’t only the result of increased purchase cost. Some experts feel the problem is a lack of competition due to only a few large processors who are underpaying the producers while overcharging their buyers and a lack of price transparency in the cattle market. Some also cite a need for increased capacity to go along with more competition.
- One last example. This past Thursday, a local elevator was offering $10.67 per bushel. A year ago, let’s say it was $5.33. Let’s further guestimate that after milling you had fifty of the sixty pounds you started with. So in general terms, a year ago you had 10.66 cents of wheat in that loaf a bread. With the price doubled, 21.3 cents of the cost would be the flour.
- And finally factor in labor shortages (resulting in increasing salaries) and supply chain disruptions as we have many ag inputs we need coming from around the globe.